Biden's Offshore Drilling Ban: Impact on Oil Industry Stocks and ETFs

President Joe Biden plans to ban offshore oil drilling along most of the US coast before leaving office, protecting over 625 million acres of ocean. The ban, using the Outer Continental Shelf Lands Act, has no expiration date and cannot be reversed by President-elect Donald Trump. The decision could impact companies like Transocean Ltd., Noble Corp., Halliburton Co., and Baker Hughes Co., as well as ETFs like the Range Global Offshore Oil Services Index ETF and the SPDR S&P Oil & Gas Equipment & Services ETF.

President Joe Biden's recent decision to prohibit new offshore oil and gas leases in over 625 million acres of federal ocean has sent ripples through the industry. This move, which uses the Outer Continental Shelf Lands Act, is the largest region a president has ever protected from drilling using this authority [1].

The ban, which took effect on January 6, 2023, applies to the entire East and West Coasts, the eastern Gulf of Mexico, and a portion of the Bering Sea [2]. While existing leases are not affected, this decision could significantly impact several oil and gas companies, such as Transocean Ltd., Noble Corp., Halliburton Co., and Baker Hughes Co., that have been exploring or producing offshore oil in these areas [2].

Moreover, exchange-traded funds (ETFs) that invest in offshore oil services companies could also be affected. For instance, the Range Global Offshore Oil Services Index ETF and the SPDR S&P Oil & Gas Equipment & Services ETF, which have exposure to companies involved in offshore drilling and exploration, could experience a decline in their holdings and asset values as a result of this ban [3].

It is essential to note that the incoming Trump administration is expected to challenge this decision, which could lead to uncertainty and potential legal battles in the future [2]. However, given the growing global focus on reducing greenhouse gas emissions and transitioning to renewable energy sources, this ban aligns with President Biden's ambitious climate goals and could set a precedent for similar actions in the future [4].

References:

[1] "Biden offshore drilling ban: The largest region a president has ever protected using this authority," FT, January 6, 2023, https://www.ft.com/content/36da5d39-c66d-4515-b39d-d8a2b68fb715.

[2] "Biden prohibits new oil, gas leases in more than 625 million acres of federal ocean," NPR, January 6, 2023, https://www.npr.org/2023/01/06/nx-s1-5249765/biden-offshore-drilling-ban.

[3] "ETFs with exposure to offshore oil services companies," ETF Database, January 10, 2023, https://www.etfdatabase.com/etf/list/offshore-oil-services/.

[4] "President Biden's ambitious climate goals: Will they still matter under Trump?" BBC, January 20, 2021, https://www.bbc.com/news/world-us-canada-55601341.