America’s shale story enters a new chapter

Will the two senate run-offs in Georgia, both of which went to the Democrats, make it easier for the Biden administration to steer a more progressive climate agenda?

The question is as consequential as it is hard to answer. Since 2014, riding on fracking, the United States has upturned global energy markets. Till September 2013, it was the world’s biggest importer of oil. By the autumn of 2018, however, the country had pushed aside Russia and Saudi Arabia to become the world’s largest oil producer. By the end of 2019, it had become the world’s third largest exporter of liquefied natural gas (LNG) – and counted amongst the top ten oil exporters.

The fallouts have been extraordinary. Shale, costlier to extract than oil wells like the ones in the middle-east, becomes viable whenever the price of oil rises beyond $50 a barrel. And so, after years of pushing oil prices as high as $100/barrel, OPEC found a fresh ceiling – whenever oil prices rose above $50/barrel, US production began kicking in, forcing prices down.

As the US tasted energy independence, its interest in keeping the middle east ‘stable’ reduced. As oil prices fell, smaller producers like Nigeria saw their oil revenues shrink. As US exports rose, countries like India saw intensifying competition between Russia, Saudi Arabia and the USA.

For all these reasons, since November last year, when Biden/Harris defeated Trump/Pence, energy sector executives and observers have been wondering if Biden, given his statements on climate change, would push shale – and energy exports – as enthusiastically as Trump did.

A couple of minor announcements. Despite the State went on sale from today. This marks the end of a period — focusing on the structures and processes shaping emergent India — that has lasted five years. I now need to rouse myself and get back to focusing on energy. The first instalment is this quick and dirty piece on how US policy on fracking and energy exports might change under Joe Biden. Do read.

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