One thing to start: the oil price is in freefall again, as coronavirus lockdowns in advanced economies return and fear descends on markets once more.
On to today’s newsletter — and the unavoidable topic of the US presidential election. Energy has not been at the top of the agenda during the campaign. Still, the outcome of the vote will have seismic repercussions for the sector — from wind turbines and drill rigs to methane leaks and jobs.
Our first item is on the embarrassing paucity of the energy debate during the campaign — a shame, given everything at stake. Our second looks at the partisan state of US politics and asks whether conservative environmentalists would consider jumping ship. Data Drill charts the role oil and gas producing swing states could play in the vote.
Energy Source will be off next Tuesday. To our American readers, make sure you get out and vote if you haven’t already.
Thanks for reading. Please get in touch at firstname.lastname@example.org. You can sign up for the newsletter here. — Myles
The campaign has lacked substance on energy
T-5 days until we’re done with this journey of a campaign season.
Forget the debates about masks, about whose kids have benefited most from their political fathers, or about which candidate will be harsher on China. For ES readers, the most dispiriting feature of the presidential election has been the dire level of discourse about energy and climate.
Start with Joe Biden . . .
His election would bring radical change to the American energy system. Investment of $2tn in clean energy is, by anyone’s standards, a huge commitment. Rejoining the Paris deal: ditto. Cracking down on oil-sector pollution, limiting new drilling on federal lands, ending subsidies for oil producers, or ending sanctions on Iranian oil (a possibility Mr Biden has floated): this is big stuff.
We’ve covered all of it extensively, both in the newsletter and in the FT.
But aside from one long speech in Wilmington, Delaware, Mr Biden’s main comments on energy have either been to repeat slogans (“When I hear the word climate change, I hear the word jobs”) or try to walk back earlier statements, usually about fracking or, most recently, how he would end the oil industry.
Electioneering has always been that way. But that doesn’t mean we need to be happy about how the energy topic — a pretty crucial one for, say, the planet, geopolitics and, yes, jobs — has fared in this campaign.
How, exactly, would Mr Biden decarbonise the US power generation sector by 2035? All renewables? Less natural gas? A carbon tax? What carbon price would he support to justify the rollout of carbon capture or accelerate new nuclear plants over the next 15 years?
It would be nice to know. But in the last debate the candidate himself wrongly named the date by which his climate plan pledges to make US electricity carbon-free (it is 2035, not 2025). That was before he said he would “transition away from the oil industry” — a comment his campaign team walked back within hours. So energy details might not be Joe’s thing.
What about Trump . . .?
The biggest thing Mr Trump’s team is doing on the energy front is continuing to claim that Mr Biden would ban fracking — he wouldn’t. For all the Biden camp’s lack of detail, at least they’re not relentlessly lying about the other side’s energy plan.
As far as the specifics of what a second Trump term would mean for energy, he’s given us even less than Mr Biden has put forth. The US would officially be out of the Paris deal, but that wouldn’t change much. There would be more “deregulation”. It wouldn’t be a good time to be a dunes sagebrush lizard, or live next to a leaky natural gas pipeline.
In other words, more of the same. It’s hardly an inspiring message.
And Mr Trump has struggled to command even a basic grasp of the industry. Even oil industry executives donating money to his campaign privately admit that the president doesn’t understand their business.
This is a man who relentlessly badgered Opec producers to lower the price of oil — only to plead with them to do the opposite after prices collapsed this year.
He’s also the man who stood in front of a rig in the Permian Basin in July and thanked Saudi Arabia and Russia for helping him save the shale patch — just months after their price war helped drive US oil prices below zero.
If $40 WTI, a 15 per cent drop in production, a rig-count collapse, and more than 100,000 sector job losses is Mr Trump’s idea of saving shale, imagine what happens when he starts calling for cheaper oil again.
Among the things we’d want to know from Mr Trump: Does he agree that the US is losing an electric vehicle race with China — and what would he do about it? How would he unblock the permitting snafus that are stalling pipeline and other projects? Would he boost a growing offshore wind sector with more subsidies?
We won’t find out before the election, which has reduced energy to the question: “Will you vote for the guy who says he won’t ban fracking after all, or the guy who says the other guy will ban fracking after all?”
It is a shame. Energy and climate, arguably the most pressing issues on Tuesday’s ballot, have been sloganised to death in this dispiriting campaign. (Derek Brower)
Will young conservative environmentalists back Biden?
Despite the lack of campaign substance on energy and climate, those very same topics mark perhaps the most prominent faultlines in America’s utterly polarised political discourse.
Democrats have put climate change and environmental protection at the heart of their identity, while Republicans — especially under President Trump — have prioritised support for fossil fuels.
That has proved a headache for a rapidly growing conservative subgroup: young environmentalists.
“Honestly, as a young person, this issue isn’t political to me, I might be conservative on other issues. But this is just about the environment. It’s about climate change,” said Benji Backer, 22, president of the American Conservative Coalition, a right-leaning environmental non-profit.
Surveys show a growing divide between younger Republicans and their elders on energy and environmental issues. A recent poll by Pew Research found double the number of conservative Millennials believed human activity caused climate change when set against the Boomer generation.
Less than half of young conservatives supported the expansion of fracking and offshore drilling compared to about two-thirds and three-quarters, respectively, of their older peers.
But, given the distrust and animosity on both sides of the political aisle, will young conservative environmentalists back Joe Biden next week?
“It’s been one of the biggest internal battles I’ve had, and our entire team has had and our entire activist base has had,” Mr Backer told ES in an interview.
The contrast between the two presidential candidates could not be more stark:
The Trump administration has rolled back more than 160 federal climate rules, on everything from methane emissions to Arctic drilling, according to Columbia University; he has pulled the US out of the Paris climate accords; and he’s made backing for oil, gas and coal producers a cornerstone of his campaign.
Joe Biden, meanwhile, has vowed to pump $2tn into clean energy jobs, ramp up wind and solar energy capacity, electrify large parts of the US transportation sector and rejoin the Paris agreement.
But that doesn’t mean right-leaning environmentalists are rushing to jump ship.
“The vast majority of our base and our team are people who feel disenfranchised and left behind because they have fiscal conservative values,” said Mr Backer. “They don’t want to support a Democratic nominee that they don’t have shared values with on other issues. But yet their own candidate doesn’t embrace climate change or environmental protection. And that is a tough thing.”
The conservative approach to environmentalism
Mr Backer is currently roadtripping across the country in a bid to highlight conservative solutions to climate change.
Democrats, he said, have focused too much on an expensive, top-down, federal government-led approach and not worked closely enough with business and local government.
“To pretend that we have this ‘Holy Grail’ solution — whether that’s the Green New Deal, or a different multitrillion-dollar climate plan — we think is very foolish. And to rely only on the national level and not really try to engage corporations and local governments and state governments.”
That makes it all the more difficult to back Mr Biden next week, he said. “I don’t know what I and others are going to do. We have talked about it and we’ve talked about what goes through our mind when we’re trying to figure this situation out. But to me holding your nose and voting for someone is not how we should be approaching democracy.”
But regardless of how next Tuesday’s vote pans out, he said, the groundswell of support for environmental issues among younger voters on both ends of the spectrum means this election should be the last where a Republican candidate is dismissive of their concerns.
“Once November 3 hits, the days of climate change being a polarised and politicised issue are over. It’s never going to be an issue of denial versus alarmism I don’t think ever again. Young people are the reason for that.”
Just five US states account for about 70 per cent of national crude production. Another five (with some overlap) account for the same proportion of national gas production.
Four of these states — and their combined 85 electoral college votes (16 per cent of the total) — could go either way next Tuesday, according to the FT’s poll tracker: Pennsylvania and Colorado are leaning Democrat. Texas and Ohio are a toss-up.
Little wonder then that Donald Trump sought to speak directly to voters in these states following Joe Biden’s (later retracted) suggestion that he would “transition away” from oil by 2050:
“Will you remember that, Texas? Will you remember that, Pennsylvania? Oklahoma? Ohio?”
Derek Brower takes a deep dive into why ExxonMobil is ramping up oil production even as its competitors make the shift towards cleaner energy.
David Sheppard digs into what each presidential candidate could mean for oil prices — a more complex question than it might appear.
European renewables stocks have surged this year, while oil equities have plunged, report Neil Hume and Anjli Raval.
Energy Source is a twice-weekly energy newsletter from the Financial Times. Its editors are Derek Brower and Myles McCormick, with contributions from David Sheppard, Anjli Raval, Leslie Hook and Nathalie Thomas in London, and Gregory Meyer in New York.