The Winners and Losers in Biden's Oil Future
Be careful what you wish for.
The moment President Biden set foot in the White House, it was clear he planned on following through with his campaign promises.
The new paint wasn’t even dry in the Oval Office when he put the kibosh on the Keystone XL pipeline. Of course, we talked before about how that decision may have a few unintended repercussions.
But given the ludicrous speed at which today’s news cycle flows, that’s ancient news at this point.
And every day, U.S. companies across the country — from the toolpushers in the Marcellus all the way to the worms in Alaska — are waiting with bated breath for the next turn of the card.
Biden’s next move will most assuredly determine who the winners and losers are the U.S. oil industry.
Is this the end of America’s oil empire?
The End of America’s Shale Empire?
Whenever I see media headlines purporting the end of the oil era, it’s difficult to take them seriously.
I’m not saying the transition away from fossil fuels isn’t currently underway and gaining momentum every day.
But I’m not sure the investment herd understands that it isn’t going to be a simple flip of the switch that’ll take place overnight.
Keep in mind that in 2019, petroleum accounted for 37% of our energy consumption. Last week, U.S. demand for petroleum products topped 20.3 million barrels per day.
That’s not nothing, dear reader.
But that doesn’t even give you a clear picture of what I mean.
You see, unlike coal, which is being displaced by natural gas and renewables at an increasing rate, our oil demand is nearly as high as it has ever been — and we still haven’t seen a true post-pandemic recovery yet.
In 2019, more than 91% of the transportation sector was powered by oil.
Close your eyes for a second and think of all the hype we’ve seen regarding electric vehicles since Teslas started rolling off their assembly lines.
In fact, Gigafactory 1 was churning out batteries in the middle of 2018 at an annualized rate of 20 GWh, officially making it the highest-volume battery plant in the world at the time.
To be fair, we knew the EV revolution was going to take years — if not decades — to overtake traditional ICE vehicles in the United States.
Until that happens, oil will remain on its throne.
Carefully taking Biden’s aggressive anti-oil policies and rhetoric into account, you can bet there will be winners and losers as we barrel out of the pandemic and into a recovery period.
Can you spot them?
Well, I’ll show you some right now...
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The Winners and Losers in Biden’s Oil Future
When Biden nixed the Keystone XL pipeline, the clear winners we mentioned were rail stocks that companies will depend on to deliver their product to refiners and the pipeline players that already have their infrastructure laid out.
Shareholders of Canadian Pacific Railway have seen their stake rise nearly 20% since that executive order was signed in late January. Investors in rail players like CSX Corp. saw similar gains.
President Biden’s actions did more than stymie the flow of Canadian heavy oil.
However, it was his halting of oil and gas leasing that could narrow down that list of winners and losers as the U.S. oil industry comes roaring back. President Biden’s commitment to climate change action was one of the key campaign promises he made to his voters.
One of the biggest losers from this policy is New Mexico, a state that had been undergoing a quiet oil boom for years.
The Land of Enchantment’s good fortune is now in jeopardy should President Biden make that leasing ban permanent.
You see, more than half of New Mexico’s daily oil and natural gas output is extracted on federal lands. Remember, the state is pumping out over 1 million barrels per day right now, making it the third-largest oil-producing state.
Of course, with that strong crude output comes cold, hard cash, which supplies the state with roughly one-third of its budget.
However, while drillers in New Mexico brace themselves for a harsher crackdown from President Biden, it’s an entirely different story just across the border.
The lean players in the Permian Basin are where you’ll find the early winners in the post-COVID recovery.
And those independent Texas operators won’t have much trouble should President Biden decide to tighten the noose further.
Until next time,
A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing's Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
Energy Demand will Increase 58% Over the Next 25 Years
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