Get the latest market trends in your inbox
Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Denver news in your inbox
Catch up on the most important stories affecting your hometown with Axios Denver
Des Moines news in your inbox
Catch up on the most important stories affecting your hometown with Axios Des Moines
Minneapolis-St. Paul news in your inbox
Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul
Tampa-St. Petersburg news in your inbox
Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg
U.S. oil production is in a steep decline, but one question is how much November's elections will affect how much it does — or doesn't — bounce back.
Why it matters: The powerful price and demand headwinds from the coronavirus pandemic are creating a financial crisis in the oil patch.
- The fallout will be continuing come November, which will bring a choice between candidates with hugely different energy and climate policy plans.
- Joe Biden is vowing new steps to stem heat-trapping emissions and accelerate the transition to cleaner fuels and power sources, while President Trump opposes climate regulations and curbs on fossil fuel development.
The big picture: Under the base case of an analysis by Rapidan Energy Group, the "near-term macroeconomic risk remains skewed firmly toward longer, deeper economic weakness," but recovery awaits.
- U.S. production is a million barrels per day lower by 2023 under Biden than Trump.
Yes, but: Under a weaker price and demand recovery forecast, the effect of Trump's policies compared to Biden's is much smaller.
- "U.S. shale’s outlook under a weak macro environment differs negligibly under a Trump or Biden presidency," they note, citing the financial strain on the sector and problems accessing capital.
- "Trump policies would do little to resurrect the sector while Biden policies would do little additional harm."
One level deeper: Rapidan analyzed market scenarios through 2023, and then grafted the policy overlay onto that outlook.
- The base-case scenario sees Brent crude prices rebounding to the low-$50s in 2023 and a 10 million barrel per day recovery in demand.
- But the weaker-recovery scenario sees prices only in the low-$40s in 2023 and a demand revival that's about 25% smaller than in the base case.
The intrigue: Under the base case, various Biden policies that act as a check on the amount of shale production levels include requiring stronger emissions controls, thwarting fossil fuel infrastructure, and allowing more Iranian barrels onto the market.