NOT BIDEN ANY TIME IN REMAKING U.S. ENERGY POLICY
Having emphasized a theme of unity in his inaugural address, President Joseph Biden is bound to walk a fine line as he strives to balance the interests of his party with those of both the U.S. economy and the country’s foreign partners. He certainly tested the limits of international concurrence with this sentiment on his first day in office by revoking the permit for construction of the Keystone XL pipeline to begin his energy policy.
Biden has come out strongly against climate change, and, de-spite a pledge by Keystone XL to purchase enough renewable energy to offset the pipeline’s power usage, nixing the project was always a priority. Of course, because the pipeline was supposed to transport approximately 800,000 barrels of crude per day to the Texas Gulf Coast from the Canadian province of Alberta, Canada has much invested in it and, not surprisingly, reacted to the move with a degree of resentment. Whereas Canadian Prime Minister Trudeau diplomatically expressed mere disappointment in Biden’s executive order, Alberta Premier Jason Kenney was more candid, charging, “The leader of our closest ally retroactively vetoed approval for a pipeline that exists and which is co-owned by [the] Canadian government, directly attacking by far the largest part of the Canada U.S. trade relationship, which is our energy industry and exports.”
In other energy news, OPEC promised deeper relations with the U.S. despite Biden’s likely hostility toward crude oil. Although the clean-energy movement will surely pick up steam under the Biden Administration, the U.S. will continue to play a prominent role in oil markets—both because of its customarily large demand and because of its considerable production capacity due to fracking—so markets will closely monitor how the President treats the oil industry both domestically and internationally. For its part, OPEC has unexpectedly continued its curtailment of oil production, which has helped stabilize oil prices against the persistent weakness in demand. Oil prices have also rallied as stimulus talks and expanding vaccine deployment stir hope for an economic rebound and stimulate overall demand.
Such positive developments could boost natural gas and power prices as well. Hopefully, President Biden will not to let his agenda backfire by endangering the heart of the U.S. economy.