Oil industry expresses concern, not alarm, about Biden comments

[HOUSTON] Joe Biden's promise that he would "transition" the country away from oil and natural gas might hurt him politically in Texas and Pennsylvania, but it did not come as a surprise to many in the energy industry.

Oil and gas executives have been keenly aware that the world is starting to move from fossil fuels toward renewable energy, although they strongly argue that their industry will continue to provide cheap and plentiful energy for decades to come. And several of them said Friday that while they did not like Mr Biden's comments, they were not alarmed by them either.

What ultimately matters to the industry is not whether there would be an energy transition, but how rapid it would be and whether the companies would be allowed to exploit oil and gas reserves by offsetting their environmental impact by capturing and storing greenhouse gas emissions.

Large European oil companies are embracing the change that Mr Biden called for as concerns over climate change grow and investors begin to shun fossil-fuel businesses. For example, BP has announced that over the next decade it will shrink its oil and gas production by 40 per cent and increase investments of renewables tenfold, to US$5 billion a year.

But the US oil industry, which has donated much more to President Donald Trump's campaign than to Mr Biden's, has been more reluctant to change its business models.

Executives note that natural gas is rapidly replacing coal, the dirtiest fossil fuel. Gas also complements renewables by providing power when the sun does not shine and the wind is still. Some energy executives have even endorsed levying a tax on the emissions that are causing climate change, arguing that it would create incentives for carbon capture and storage, which would reduce emissions.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

"There needs to be a large workhorse, and ultimately that is what we are," said George Stark, director of external affairs for Cabot Oil and Gas, which has extensive natural gas operations in Pennsylvania. "We complement wind and solar. You need something that can run on an ongoing basis."

Mr Stark, like others in the industry, said he found Mr Biden's comments concerning, but stopped short of criticising the former vice-president harshly. "The opportunity will be there for a greener dialogue that has to take place regarding this whole notion of a transition," he said.

In Thursday's debate, Mr Biden said he would seek to replace fossil fuels with renewables "over time", noting that the oil industry "pollutes significantly". But he had previously said he was against ending hydraulic fracturing of shale fields, a common practice in Pennsylvania, Texas and Ohio. And some oil and gas executives said they liked parts of an energy plan that Mr Biden put out this summer.

After the debate, Mr Biden sought to clarify his remarks by saying fossil fuels would not be eliminated until 2050. In remarks that seemed designed to appeal to Democratic progressives and working class voters who rely on fossil fuel jobs, he added that he wanted to eliminate fossil fuel subsidies.

"Of course we were disappointed in the vice-president's comments," Mike Sommers, president of the American Petroleum Institute, the industry's leading lobbying group in Washington, said in an interview. "You can't just snap your fingers and get to a place where you are suddenly no longer using natural gas.''

But Mr Sommers also noted that Mr Biden had expressed enough ambiguity that a rapid change in oil and gas shale fields was not likely.

"Fracking right now is the political equivalent of Social Security," Mr Sommers said. "It is good news for this industry and the American people that both major party candidates understand the importance of this innovation that has made the United States almost energy independent."

The timing of the transition is hard to pin down, in part because the energy industry has been undergoing rapid change in recent years. The United States was importing increasing amounts of oil and natural gas just 15 years ago when suddenly hydraulic fracturing produced a glut of both fuels and made the United States a large exporter.

Now electric cars are becoming increasingly popular, and the costs of wind and solar power are dropping rapidly. Coal, which was the dominant power fuel at the beginning of the century, is in deep decline, losing out to natural gas and renewables.

"The fact that oil and gas are 70 per cent of the world's energy means that you can't change that on a dime," said Jon Olson, chairman of the petroleum and geosystems engineering department at the University of Texas at Austin. "If we don't manage the transition really well, we could end up with energy shortages and all kinds of disasters."

That still leaves the enduring politics of oil and gas in places like Ohio, Pennsylvania and Texas that the Democrats would like to win, but where tens of thousands of jobs are directly or indirectly linked to fossil fuel production or processing. One plant, being built by Royal Dutch Shell in western Pennsylvania to produce plastics from a natural gas byproduct, is providing construction jobs for thousands of workers.

After watching the debate, Mike Belding, chairman of the Greene County Commission in western Pennsylvania, said he was concerned about the economic consequences of a Biden presidency.

"Regionally, coal, natural gas and oil have been an economic and workforce-driving industry over the past century," he said in an email. "Newly developed technology, like fracking and cracker plant operations, have great potential to drive our economies for the next century."

But the growth of oil and gas exploration in recent years has also angered some voters in Pennsylvania, who said that it had not been an economic boon to many residents and criticised the industry's environmental record.

"We've been transitioning, and let's keep transitioning," said Lois Bower-Bjornson, a resident of Washington County in south-western Pennsylvania and a field organiser for the Clean Air Council, an environmental group. "It's a question of economics. They've produced too much gas and have nowhere to put it."

NYTIMES