Businesswoman Addressing Multi-Cultural Office Staff Meeting

Politicians won’t kill oil. Solid culture and balance sheets are key.

In conversations and social media posts, some industry figures are making the false claim that a Biden administration wants to shut down in the oil industry.  This needs to stop.

First, let’s review the facts.

Under the Obama-Biden administration, oil had its biggest boom ever, with U.S. production jumping about 74%. Next, presidents don’t exert as much control over our industry as some people claim. As factcheck.org has pointed out, the advances in our industry, particularly around technology, have been largely responsible for this growth no matter who the president is.

Even before the pandemic, the Trump administration was hardly delivering all good news to the energy industry. Last year, top experts discussed this in an ALLY panel. You can see the full panel below.

“Corporate tax cuts have helped a number of our businesses, but the trade war, the ongoing issues with China, is really hurting a lot of our businesses,”

Leslie Shockley Beyer, president of the Petroleum Equipment & Services Association (PESA).

“The unpredictability of the Trump administration has had an impact on the ability of oil and gas companies to raise capital… It would almost be better if we had certainty that there was this tariff at this price, at this level, even if it was onerous, because then we could be the creative, resourceful industry we are and work around it.”

Hillary Holmes, partner at Gibson, Dunn & Crutcher

Looking to 2021

Last week, as votes were being counted and before Biden’s victory was officially declared, Dan Pickering, chief investment officer of Pickering Energy Partners, gave his analysis during a KCA Houston Energy Breakfast that I was asked to moderate.

A Biden administration would mean “clearly a stronger commitment to renewables,” he said. “I think you can expect generally a tougher regulatory environment for conventional oil and gas companies, generally a favorable funding and supportive environment for renewable and green energy.”

Dan Pickering, chief investment officer of Pickering Energy Partners

As I wrote in a recent USA Today column, Texas has become the global leader in building renewable energy. Our state produced more energy from renewable sources than coal last year.

Of course, Covid-19 — for which the U.S. has one of the world’s highest death rates — has also clobbered our industry. Far more Americans trust Biden to lead the U.S. healthcare system amid the pandemic, and to end what many consider the world’s worst coronavirus response. There’s reason for optimism.

But ultimately, none of these is the biggest factor in determining the long-term success of energy companies. You know what is? Culture.

Culture breeds success.

It’s up to us to build inclusive, diverse, welcoming workplace cultures that tap into our most important and valuable resources: the hearts and minds of our workforce. 

The energy transition needs innovation and for oil and gas companies this means a focus on healthy balance sheets and ESG.  Where there are people, there are markets and both need a serious lens of diversity.  We need all forms of energy and all people to power this transition, and it’s going to be a long time, so we need to brace for changes but be pragmatic about the time it will take.

This year has been a helluva rollercoaster.

Together, we can start 2021 on the right foot. Let’s listen to and learn from each other. Let’s share our experiences and visions with an open mind. Let’s face the challenges ahead together. And let’s see the changes as an opportunity to continue to move energy forward despite the headwinds and tailwinds.  

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Responses

  1. While a greener future is something we’d all like to see, the truth is that fossil fuels will continue to contribute to our energy needs for decades to come. No 4-year term of an administration can alter that fact and the oil and gas industry will have to remain a strong focus of any political party in order to meet the country’s energy needs. Environmental, Social and Corporate Governance (ESG) will, and should, be a strong consideration in the energy industry of the future and this is where government policy should be focussing.

    Socially and environmentally sustainable energy generation will first and foremost be controlled by what we need, rather than what we want. Supply and demand underpin all industries, and none more so than the oil and gas industry. Politics can’t change this fact. They can slowly influence the transition but ESG will ultimately drive it.

    With the world having such a strong reliance on oil and gas and their associated products, we will see another boom for their supply given the lack of exploration and development that’s been done over the past 5 years. After such a long and deep downturn in the industry it’s only logical that it will have to be followed by a period of growth to be able to maintain supply on the worldwide demand.

    The next few years will be an exciting time in energy as the oil and gas industry bounces back, along with advances in alternative energy sources and renewables. There’s one thing for sure, the world will ALWAYS need energy of some form, and we can all contribute to the energy equation.