Trump’s Continuous Coronavirus Pandemic has been Terrible for Oil Companies
While Trump was blasting Biden for saying that the US would be using less oil, that will be a very long range adoption of Electric cars, which are only selling at about 5% of new cars. Also, electricity has to be increased by around 40% to charge an all electric fleet. Using natural gas to charge cars at night saves about 30% in emissions over oil, but doing better means we have to build more clean electricity. For renewable sources, this means charging during the daytime, so businesses and workplaces have to be equipped with charging, as well as most gas stations. Other countries are still developing nuclear power to provide reliable clean electricity throughout the year and around the clock.
An intermediate solution is to continue the Obama Clean Energy drive to a 55 mpg fleet average. This can be done with better gasoline engineering, and with lighter cars which will be safer and more fuel saving with electronic driving technology. Hybrid cars and plug-in hybrids also use gas more efficiently, and use electric motors which are more efficient.
There are a lot of methane emissions in pumping and refining oil, which can be eliminated with rather inexpensive strict regulations, which Trump has thrown out. The pollution caused by fracking can also be prevented by choosing better technologies, after Trump is gone.
US oil stock prices have dropped to less than half this year with Trump’s inability to minimize the pandemic and get businesses and schools back, as many countries have done. Even now, many times daily, Trump is holding packed, unmasked, cheering rallies for hours in states which are having winter surges of new Coronavirus cases. The fact that he ONCE said that masking is patriotic does not make up for this.
Here are the highs of the last 52 weeks of oil companies, which were largely stable before the pandemic, today’s prices, and the percent of their highs that are today’s price.
BNO, US Brent Oil Fund, LP: high 21.98, today 9.64 — 44%.
WTI, W&T Offshore Inc: High 6.10, today 1.480 — 24%.
RDA-A, Royal Dutch Shell: High 61.17, today 24.42 — 40%.
CVK, Chevron: High 122.94, today 68.41 — 56%.
COP, ConocoPhillips: High 67.13, today 28.82 — 43%.
XOM, Exxon Mobil: High 73.72, today 32.85 — 45%.
BP p.l.c., British Petroleum: High 40.08, today 15.14 — 38%.
After Trump, we can keep a partial and highly efficient oil economy.
Oil is complicated and international, and I only know a small amount about it which I read in newspapers. But here is how I understand it.
Trump brags that he has made the US energy independent. For oil, this is just on paper. Roughly, the US uses 20 million barrels a day, and produces about the same. But the US exports roughly 10 million barrels a day, and imports about the same amount. It depends where you are, and that imported oil is shipped into the west coast, and shipped out of refineries. It also depends on costs. Saudi oil sells for less than $10 a barrel, whereas US fracked oil costs around $50 a barrel. A barrel holds 42 gallons of oil, although some goes to petroleum products and jet fuel.
Earlier this year, Russia and Saudi Arabia were pumping more freely, dropping the price below $50 a barrel and cutting into US fracking production. Trump made some sort of a deal for them to limit production to drive the price back up to save our fracking production. This, of course, drove the price back up for US consumers. The difference between $50 a barrel and $10 a barrel is $40 a barrel, or about a dollar a gallon! We don’t know what kind of concessions Trump made to these dictatorships to get them to limit production. We are still selling arms to Saudi Arabia, as well as other Middle East countries, and Trump never speaks out against Russia.
So, being “energy independent” has a cost to pay. We are not currently at war with anybody to necessitate energy independence. If we really did not import and export, but had to take longer sea routes to deliver or to build new pipelines across the US, the price would go up.
So even if the US and Europe starts converting more to electric cars, there will still be a market in the developing world for oil, and the US oil industry might not be hurt. Many more cars can be driven with highly efficient hybrids.
As Biden claims, and California and Texas have found out, many new jobs can be created by switching to renewable energy sources.
There are as of Q4 2019, 3.36 million jobs in Clean Energy, compared to 1.19 million in Fossil Fuel employment, roughly a 3 to 1 ratio.
Here are the distribution among industries:
Energy efficiency: 2.38 million;
Renewable energy: 0.52 million (solar 0.35, wind 0.11);
Grid and storage: 0.15 million;
Clean vehicles: 0.27 million; and
Clean Fuels: 0.040 million.
The top six states were California (537,000), Texas (241,000), Florida (166,000), New York (159,000), Michigan (125,000), and Illinois (125,000). President Obama pointed out that Biden’s plan would create one million jobs in building electric vehicles, and 10 million in clean energy.
So much for Trump telling Biden that he will tattle to the fossil fuel states about switching to clean energy. Pennsylvania was number 11 in the list.