US Oil and Gas Production at Record Highs Under Biden, Election to Have Limited Impact
2min read Despite an election year that often brings speculation about changes in energy policy, U.S. oil and gas production has continued to reach record highs under President Joe Biden. According to research from Capital Economics, the outcome of the upcoming U.S. presidential election is unlikely to significantly impact commodity prices, including oil and gas, in the short term. Instead, the potential influence of each candidate’s stance on issues like vehicle emissions, liquefied natural gas (LNG) exports, and foreign policy toward Iran may play a more substantial role in shaping the energy landscape over the next five years.
Record Production Levels and Stable Regulatory Environment
Under President Biden, U.S. oil and gas output has reached unprecedented levels, challenging the perception that Democratic leadership typically hinders fossil fuel production. Vice President Kamala Harris has not indicated plans to regulate the sector more aggressively than the current administration, which has maintained a balanced approach despite focusing on renewable energy development. This regulatory stability under Biden has provided the oil and gas industry with a favorable environment, supporting the record-high production levels seen during his term.
Analysts suggest that production will likely remain steady, irrespective of the election’s outcome. Capital Economics argues that immediate shifts in commodity prices are unlikely, given the steady trajectory of U.S. energy policies. This outlook provides reassurance to energy investors, who may be concerned about potential disruptions due to election-related uncertainties.
Potential Long-Term Impacts Based on Policy Differences
While short-term impacts on energy prices may be limited, policy differences between candidates could shape the oil and gas market over the next several years. Key areas of divergence include vehicle emissions standards, LNG exports, and foreign policy toward oil-producing nations, particularly Iran.
Biden’s administration has supported vehicle emissions standards aimed at promoting fuel efficiency and reducing carbon emissions, a stance that indirectly influences oil demand. Conversely, former President Trump has expressed opposition to such standards, which could theoretically boost domestic oil demand if regulations are relaxed. However, Trump’s relationship with Tesla CEO Elon Musk introduces an interesting dynamic, suggesting that the transition to fuel-efficient electric vehicles may proceed steadily regardless of the regulatory environment.
On the international front, each candidate’s approach to countries like Iran could also influence the energy market. Biden’s administration has adhered to a more cautious stance on Iran, potentially limiting oil supply from the region, while a shift in foreign policy under a different administration could lead to altered sanctions, impacting global oil prices.
Electric Vehicles and Future Fuel Efficiency Trends
The role of electric vehicles (EVs) in the U.S. transportation sector has grown considerably, and this trend is expected to continue regardless of the election outcome. Trump’s close association with Musk suggests a complex picture: although Trump’s policy rhetoric has included reducing subsidies for EVs, his connection with Musk may result in a moderate approach that allows the EV market to expand. Meanwhile, under Biden, federal support for EV adoption and clean energy has contributed to the rise in fuel-efficient vehicles, even as oil and gas production remains strong.
The growing EV market is expected to affect long-term demand for oil, as consumers increasingly opt for electric and hybrid vehicles. This trend is seen as essential in the broader push toward fuel efficiency and carbon reduction, positioning the U.S. for a gradual shift in the energy mix, driven by both market dynamics and regulatory support.
Conclusion
The U.S. oil and gas sector has demonstrated resilience and growth under the Biden administration, reaching record production levels. Capital Economics’ research suggests that the upcoming election is unlikely to bring major shifts to energy prices in the near term. Instead, potential long-term impacts may emerge based on policy differences around vehicle emissions, LNG exports, and international relations, particularly regarding Iran. Both Biden’s and Trump’s potential policies could shape the energy market over the next five years, but record-high production and a growing focus on fuel-efficient vehicles suggest stability in the industry.
As the U.S. heads into the election season, energy investors can look to a steady outlook for the sector, with limited immediate impact expected on oil and gas markets. The interplay between traditional energy sources and the rise of EVs will continue to shape the energy landscape, offering a balanced outlook that emphasizes both growth in fossil fuel production and progress in fuel-efficient vehicle adoption.
