Energy CEOs seek clarity on U.S. energy policy ahead of the election

Energy companies are increasingly calling on the U.S. government for greater consistency in energy policy to maintain the groundswell of funding seen in recent years. In October, Mike Wirth, the CEO of US oil giant Chevron, called for more consistency in US energy policy. Wirth declared“What really matters is a consistent and coherent energy policy.” Wirth added: “Affordable and reliable energy is essential to keep inflation at levels that economies can handle – and that’s why we need investment, and we need stable policies to encourage that investment.”

In the run-up to the presidential election, Wirth emphasized that energy is a crucial part of the global economy and suggested that if supply is limited due to political actions, this could trigger inflationary reactions worldwide. He also said the world is heavily dependent on the US market and energy companies want certainty when making long-term investments. Wirth said he wants a candidate who believes in free markets, competition and “the economic vitality of this country” to be elected, regardless of the party he represents.

In September, several U.S. energy leaders complained about the lack of clarity and consistency in U.S. policy toward natural gas Gastech 2024held in Houston. Several oil and gas company executives criticized the Biden administration for going back and forth on decisions about natural gas exploration, production and exports.

Lorenzo Simonelli, the CEO of Baker Hughes, said: “It appears that we do not have a coherent, collective decision on how to roll out the policy and also on the sustainability of that policy for the development of sustainable energy.” Meanwhile, ConocoPhillips CEO Ryan Lance was critical of the the government’s pause on new US LNG permits. Lance said, “You have to stop this crazy LNG pause from happening. We absolutely need reform, and we need more infrastructure.”

Chevron has diversified its investments to develop clean energy projects, but continues to support the expansion of natural gas and views it as a transition fuel that will be critical to U.S. energy security in the coming years. This is the case for several US oil giants that plan to further expand their natural gas sector while investing in clean energy and decarbonization efforts. However, recent actions by the Biden administration have created uncertainty for the sector.

In January, the Biden administration announced a temporary pause on pending decisions on LNG exports to non-FTA countries, calling on the Department of Energy (DoE) to prepare a new analysis on the potential impact of this export. The government declared“The current economic and environmental analyzes used by DoE to inform its LNG export permits are approximately five years old and no longer adequately take into account considerations such as potential increases in energy costs for U.S. consumers and manufacturers beyond current permits or latest assessment of the impact of greenhouse gases. gas emissions.” However, this pause was lifted by a federal court in July deemed the freeze would be “completely without reason or logic”.

This is not the first time the Biden administration has expressed uncertainty about the sector. During his first month in office in 2021, President Biden announced a halting new oil and natural gas leases on public lands and watersand a thorough review of existing permits for fossil fuel development. This move supported the announcement of a series of executive orders prioritizing climate change.

The current lack of political clarity seems to stem mainly from the fact that the US cannot agree on the future of its natural gas industry. While most major fossil fuel companies and several politicians view natural gas as a transition fuel that will be needed to fill the gap in global energy demand in the green transition, others view the proposed gas expansion as unnecessary. Various energy experts to believe that if the current pipeline for gas projects is developed, it could lead to an oversupply of fossil fuels in light of the rapid expansion of renewable energy projects. But in light of the international energy insecurity faced by sanctions on Russian gas, which led to global shortages, others disagree.

Although the oil and gas industry has faced uncertainty about the future of U.S. natural gas under the Biden administration, if Donald Trump is elected a second time, promised to gut the climate subsidies outlined in the IRA and other federal policies. Despite widespread support for the continued production of fossil fuels from the oil and gas industry, several companies have billions invested in green energy and clean technology projects since the introduction of the IRA, and the possible removal of financial incentives and rollback of climate initiatives could jeopardize this investment.

In the run-up to the presidential election, the two leading political candidates – Harris and Trump – are both threatening the consistency of US energy policy. While Harris would likely follow in Biden’s footsteps when it comes to decisions on natural gas, Trump is expected to significantly roll back climate subsidies and clean energy initiatives if elected. Meanwhile, several energy industry leaders have made clear that clarity and consistency in U.S. energy policy are essential to the nation’s and the world’s energy security.

By Felicity Bradstock for Oilprice.com

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