First in the world in oil production the US – The stakes of presidential elections for the industry

The importance of energy independence and autonomy was highlighted by the American president, Joe Biden, during his annual speech a few days ago on their state of the union. It is noteworthy that the US has now become the largest producer of oil internationally, as has the largest LNG exporters. These are important achievements with domestic and global impact, especially since Russia has accepted a storm of sanctions restricting its trade opportunities. As a result of the Russian conflict- West, Europe relies more on American gas than ever to meet its needs. The rise in hydrocarbon production in the US was made possible thanks to horizontal drilling technologies and hydraulic fracturing in shale formations. Their combination unlocked since the late 2000s huge reserves previously untapped in areas such as the Permian Basin. Coming on from the success of the industry, the White House places great emphasis on the first position the country takes in oil in the face of this year’s presidential election. However, the left wing in the democratic party is pushing Biden for a policy to limit new drilling and infrastructure to natural gas for environmental reasons. Today the industry is also faced with another challenge, since the very low gas prices in the USA forced some producers to cut down on the quantities they draw. On the contrary, better things are in oil, where the price has stabilised at a level close to $70/varelli that favours shale production. In this context, we should add that this type of production depends on continuous investments in new drilling, unlike in traditional deposits. Experts’ estimates show that in a hypothetical scenario where investments were completely discontinued for one year, then the country’s oil production would fall by 35% automatically. At the same time, analysts point out that more and more of the American oil production is not crude oil, but quantities derived from natural gas and classified as lower quality. In any case, the industry needs visibility to continue producing so much and that is exactly what it seeks from the two contenders of this year’s elections. Donald Trump may be the traditional advocate of fossil fuels, but Biden has shown realism because he knows he has to keep prices low for the consumer and for the whole economy. Within the next few months, the two of them will clarify their energy policies, while the oil companies will make strong lobbying in every direction to protect their interests.