Big Oil boomed under Biden. So why does it hate him?

Among west Texas oilmen, the lesser prairie-chicken is a subject that quickly raises hackles. 

The unusual-looking animal famed for its elaborate mating dance roams the scrubland of the vast Permian Basin — the epicentre of US oil production — and was listed as endangered last year. Its new status now restricts where, when and how oil can be drilled.

For the industry, the rights granted to the bird are emblematic of the regulatory onslaught it claims to have suffered at the hands of President Joe Biden, who executives believe will bring about the ruin of their sector.

“It’s death by 1,000 cuts,” says Steve Pruett, chief executive of Elevation Resources, sitting in his office in Midland, Texas. “It’s the worst presidency with regard to energy policy I’ve ever seen — and I’ve been involved in energy for 40 years, my entire career.”

After the regulatory bonfire of Donald Trump’s four years in office, Biden made tackling climate change a central priority for his administration and vowed to crack down on America’s oil and gas industry. He has brought in environmental rules that range from endangered species protections and a clampdown on methane leaks to restrictions on offshore leasing and the suspension of new licences for the multibillion-dollar terminals needed to liquefy American gas and ship it abroad.

To many Democratic voters, such restrictions are long overdue. But in Midland, the west Texas frontier town where George W Bush spent his childhood, they have made Biden an unpopular man. The city sits at the heart of the Permian, which at 6.1mn barrels a day pumps more than Opec powerhouses such as Kuwait, Iraq or the UAE — and has made the US the biggest oil producer in history.

With six months to go until the presidential election in November, energy policy has emerged as a key battleground between Biden and Trump. The former president is attempting to harness the discontent by telling voters in fossil fuel states that, if re-elected, he would adopt a policy of “drill, baby, drill”.

Yet the rhetoric of the two candidates belies an inconvenient truth for both: America’s oil and gas industry has flourished under Biden. At more than 13mn b/d, production is at record levels, exports of American hydrocarbons have surged and the scale of annual profits has been unprecedented — largely driven by a jump in commodity prices following Russia’s full-scale invasion of Ukraine in 2022.  

Investors in the industry have reaped rewards too, as cash-rich producers showered them with returns. Shares in ExxonMobil have more than doubled since Biden took office and, emboldened by high prices, the industry has also splurged on mergers and acquisitions, making some of the biggest deals in decades.

For many in oil and gas, however, such successes have occurred in spite of the White House — not because of it. Escalation of the regulatory clampdown under a second Biden administration could cause real long-term damage, they warn, chasing away capital and hurting production in the years ahead.

“In Biden’s campaign to become president, he said he was going to end the oil and gas industry — he is doing that,” says Stephen Robertson, executive vice-president of the Permian Basin Petroleum Association.

“There have been over 200 actions taken by this administration opposed to the oil and gas industry,” he adds. “There’s not one of these that will be the end of the industry . . . but there’s going to be a straw that breaks the camel’s back.”

The lesser prairie-chicken was classified as endangered last year, leading to restrictions on oil drilling in the Permian Basin where the bird roams © Mikael Males/Dreamstime

But Ali Zaidi, Biden’s national climate adviser, counters that claims the administration has declared war on the industry is a “misplaced characterisation” of its intentions.

“The focus is not on a firm. The focus is not on a fuel. The focus is on emissions — and on setting our country up to win the economy of the future,” Zaidi says. “The global consensus is that the world needs to transition away from fossil fuels on an accelerating pace in this decade and obviously continuing into the decades that follow.”

Biden had successfully steered clear of the topic of the oil industry’s future during the 2020 election campaign.

But in the dying minutes of the final presidential debate in Nashville, Tennessee, Biden declared that, if elected, he “would transition away from the oil industry”.

“The oil industry pollutes significantly,” he said, responding to repeated badgering by Trump. “It has to be replaced by renewable energy over time.”

The remarks four years ago sent a shudder through the oil industry from Texas to North Dakota. “It’s like being in the cattle business and him saying they’re going to take away beef from the grocery stores,” says Kirk Edwards, an oil executive based in Odessa, 20 miles from Midland.

Biden hit the ground running. On his first day in office he signed an order revoking a crucial permit for the Keystone XL pipeline — in effect killing an $8bn project designed to shuttle oil from Alberta, Canada, to Gulf Coast refineries. 

More policies followed: a temporary suspension of drilling on public lands; freezing and then scrapping leases in an Arctic wildlife refuge; and introducing a charge on methane leaks, the country’s first nationwide fee on a greenhouse gas, to the delight of environmental groups.

“From day one, the Biden administration has made a strong commitment to addressing climate change,” says Alexandra Adams at the National Resources Defense Council, a non-profit.

Steve Pruett, chief executive of oil and gas company Elevation Resources, in his Midland office in Texas. He says the Biden administration’s energy policies are the worst he has experienced © Sergio Flores/FT

But in February 2022, when Vladimir Putin ordered tanks into Ukraine, Biden’s approach changed. As petrol prices soared, the president and his advisers — fearful of a hammering in that year’s midterm elections — urged US drillers to pump more oil. He also pledged to help replace Europe’s reliance on Russian gas by encouraging US liquefied natural gas exports to the continent. 

As a result of higher prices, 2022 was the most profitable year on record for publicly traded US oil companies. The country’s top-10 listed operators by value amassed a combined net income of $313bn in the first three years of the Biden administration, almost triple the amount in the same period under Trump. Oil and gas production in the US hit record levels in 2023.

“One of the great ironies of President Biden’s first term is that he campaigned on a pledge to address climate change and make significant changes to oil and gas policies, yet through this first term, profits and production for these companies have both boomed,” says Andrew Gillick, a managing director at energy consultancy Enverus.

13mnBarrels of oil produced per day in the US

How much of this windfall can be placed at Biden’s door is a topic that stirs intense debate. Despite the vitriol and political rhetoric, the ability of an incumbent president to influence oil production is limited, say analysts, with market forces beyond Washington’s control the key driver.

As prices escalated and profits for producers skyrocketed, the industry and the White House clashed. Biden lashed out at ExxonMobil, which he said was making “more money than God.” Then he called Chevron boss Mike Wirth “sensitive” after the executive accused him of seeking to “vilify” the industry.

An uneasy truce followed as Biden sought to avoid policies that could be deemed to contribute to high oil prices that might be felt at the petrol pump. He waved through ConocoPhillips’s $8bn Willow project in Alaska to the dismay of his progressive base. His administration’s landmark climate law, the Inflation Reduction Act, included legal provisions that tied future development of renewable energy to holding oil and gas auctions.   

But ahead of a tough re-election campaign, tensions between the president and the industry have resurfaced. Biden has implemented a slew of policies cracking down on oil and gas: suspending new licences for LNG terminals; restricting offshore drilling leases in the Gulf of Mexico; and issuing strict tailpipe emissions rules to push Americans towards electric vehicles.

Trucks parked in Midland, Texas, part of the oil-rich Permian Basin. Biden’s policies have cracked down on oil and gas pollution, including through strict tailpipe emissions rules © Sergio Flores/FT

This has riled the industry, which is waging a multipronged legal battle against the administration, arguing that the new rules will hurt America’s ability to produce in the years ahead and undermine the energy security of the US and its allies. 

“We need predictability. And when governments change rules at the drop of a hat without much consultation that sends a signal that if you’re going to invest in that place your investment may be at risk,” says Mike Sommers, head of the American Petroleum Institute, an industry body.

In January, the institute launched a multimillion-dollar pre-election advertising blitz to promote increased oil and gas development and to work towards dismantling what it sees as threats to the industry, including some Biden climate policies. 

In Midland, local industry players say the policies hit smaller businesses hardest as they lack the financial firepower to comply. “For the small guys, it’s even more of a daunting reality, because we don’t have the balance sheet to lean on like our publicly traded friends to go tackle some of these mandates that are slowly trickling out,” says Jared Blong, chief executive of Midland-based Octane Energy.

A roadside billboard in Somerset, Pennsylvania — paid for by groups linked to the fossil fuel industry — highlights how Biden’s energy policies have become an important campaign issue in resource-rich states. 

“Stop the BS and Wasted Tax dollars: You Need Energy from Fossil Fuels to live,” it reads, alongside a photograph of local Republican politician Camera Bartolotta. A conservative group, Job Creators Network, is also running adverts in the state criticising Biden’s LNG pause.

Pennsylvania, America’s second-largest shale gas producing state after Texas, is one of a handful of swing states that will determine who wins the White House. Trump triumphed in the state in 2016, but four years later it was Biden who won there by a narrow margin.

Biden’s decision to freeze new LNG permits has not been well received in the state, where about 80,000 people work in the oil and gas sector. In contrast, Trump received rapturous applause at a rally last month when he told supporters he would immediately scrap it if he won. Local Democratic politicians, including governor Josh Shapiro, who is a close ally of Biden, have distanced themselves from the controversial policy and called for its swift repeal. 

$7mnAmount that the Trump campaign has received from the oil and gas industry

Frackers warn the pause is destabilising the industry at a time when gas prices have fallen to near record lows due to oversupply. “When you look at the war on our industry this has a chilling effect and it does threaten jobs,” says Toby Rice, chief executive of EQT, one of the largest gas producers in the US, which is based near Pittsburgh. “Voters know that when you pause LNG, you pause natural gas development and you pause our ability to keep natural gas prices affordable for Americans.”

The pause highlights the tightrope the president has had to walk on energy policy as the election draws near. It was widely viewed as an effort to boost support among environmentally conscious younger voters, many of whom are disillusioned not only by the Biden administration’s record on climate but also on other issues, such as the war in Gaza.

A CNN poll last month showed Biden trailing Trump by 11 points among young people, with 40 per cent of voters aged 18 to 34 saying they will vote for him, compared with 51 per cent for Trump.

“Young people are more sceptical now,” says Sof Petros, a 26-year-old climate activist who lives in Seattle, pointing to the Willow project in Alaska as one particular disappointment. She adds: “I don’t see young people I work with on climate issues voting for Trump but frankly the real danger is that they don’t vote at all.”

But the pause has galvanised opposition within the oil and gas industry, with big donors who initially funded Republican rivals such as Nikki Haley and Ron DeSantis pouring money into the Trump campaign.

It has received about $7mn from the oil and gas industry, according to the non-profit OpenSecrets, with $500,000 coming through his official campaign and the rest coming through affiliated super Pacs — aligned groups that can pull in unlimited donations from mega donors.

Among the largest donors are George Bishop of Texas oil producer GeoSouthern Energy and Kelcy Warren of Energy Transfer, one of North America’s biggest pipeline groups, who have given $1mn and $815,000, respectively.

Harold Hamm, founder of Continental Resources — one of the industry’s most vocal Biden critics — has contributed just over $200,000 to Trump groups, although he initially backed Haley.

“We have what we call punitive regulation and punitive policy that has been brought about by this administration,” says Hamm, adding that a Biden win would be “disastrous” for hydrocarbon production.

The industry has also funnelled tens of millions of dollars into the campaign war chests of congressional candidates this cycle, according to OpenSecrets, with contributions to Republicans outnumbering those to Democrats nearly seven to one, in line with other cycles since 2012.

All of the top 10 recipients of oil and gas money since the beginning of this campaign cycle are Republicans, including House Speaker Mike Johnson and House majority leader Steve Scalise. Among Democrats, the only campaigns in the House to receive more than $100,000 from the oil and gas industry are a handful of candidates running for office in Texas.

But despite the industry’s bankrolling of Republicans, there remain deep concerns about a second Trump presidency, particularly among companies with overseas operations.

Many executives privately worry that the former president’s volatility on the world stage could undermine the sector, especially if he became embroiled in tit-for-tat tariff wars that could hurt trade and undermine demand. 

His promise to significantly increase production is also unlikely to become a reality, analysts say, pointing to investors’ insistence on returns over expensive and risky drilling campaigns.

Trump has also promised to rip up the IRA, whose lucrative tax breaks for hydrogen and carbon capture are benefiting oil companies including Exxon, Chevron and Occidental Petroleum. This pledge may also alarm Republicans whose constituencies have benefited from the billions being invested in clean energy and technology under the legislation.

“It is hard to know what Trump’s position is: you never know if it is going to change from day to day,” says Mary Landrieu, a former Democratic US senator and now a lobbyist with oil and gas clients. “The industry is caught between Trump and Biden.”

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