G20: what did the leaders decide?
The G20 summit took place in Bali, Indonesia, on November 2022…
Joe Biden's plan: implications for the oil market
Information is not investment advice
A quick take
As you can see, two days separate these headlines; and yet, they stand in direct contradiction. What’s on the table in the US oil sector and how may it affect the oil price?
A thorough look
One of the signature characteristics of the Biden presidency plan is environmental care. The US President said he wanted to make the US carbon-free by 2050. To achieve that, he’d need to transition the US economy from fossil fuels to other energy resources. That would require the US re-joining the Paris accord in the first place (to be re-affirmed on April 22 during the Earth Day meetings). Here are some of the central implications discussed in the media now.
- The US oil industry lives on a huge labor force. That’s why thousands of regular workers worry that Joe Biden’s plan may cost them their jobs. The US President’s administration responds that thousands more will be created in the course of the clean energy initiative so the contraction of the oil industry labor market will be by far set off by the expansion of the labor market of alternative industries.
- Under ex-President Donald Trump, the US became import-independent in oil consumption. However, Joe Biden’s plan may reverse it because the scaling down and gradual contraction of the US oil industry would be inevitable. As a result, the US may become dependent on oil-producing states again – at least, while it’s making its way to oil-free functioning in 2050.
- Even if the US completes the plan the best way possible and becomes 100% carbon-free at no cost, the rest of the world (with minor exceptions such as Europe) will keep going with oil for decades ahead. Specifically, 90% of the world’s carbon emission comes from outside the US. Therefore, while Joe Biden hopes to fight global climate change, the US cannot do that alone.
An oil trader’s look
As far as the oil market is concerned, the smaller the input of the US oil industry to the global market, the higher the price of oil will theoretically be. In this sense, OPEC may be very much interested in Joe Biden’s green economy efforts as it may not only give room to the cartel’s expansion but may push the oil price, too. However, in the long-run, this process will not go without much fluctuation on the way because if Joe Biden makes the American industry carbon-free. It will eventually need less oil than before. Hence, the global oil demand is expected to suffer from this side. Nevertheless, through 2021, the channel between $55 and $65 appears to be the mainland for the WTI oil price performance. $75 may also be approached by the price in case the uptrend of 2017-2018 repeats itself in the coming 12 months.
Oil CFDs are available on FBS Trader
Similar
The End of Era: What Might the UK Face Next?
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
Why didn't oil prices calm despite OPEC+ attempts?
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
Popular
Will USDJPY slide lower in 2023?
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?
BoC Rates Could Alter The Trend on USDCAD and others
Today, at 5:00 pm (GMT +2), the Bank of Canada will publish the Overnight Rate, which represents short-term interest rates, and is pivotal to the overall pricing of the Canadian Dollar in the global markets. Let's look at how the markets are faring ahead of the BoC rates release.
MSFT faces gloomy forecasts ahead of earnings report
In a call scheduled for January 25, 00:30 am GMT+2, Microsoft will publish the company's earnings for the final quarter of 2022 and comment on the results, projections, and outlook for the nearest future of the company.
Choose your payment system
