Ed Hirs lectures on energy economics at the University of Houston, where he is an Energy Fellow in the College of Liberal Arts and Social Sciences.

The 2024 presidential election will have a big impact on oil and gas, but perhaps not what you expect. Energy issues are on the second page of voter concerns behind the economy, abortion, immigration, social security, aging candidates and the fate of democracy. The oil and gas industry’s best strategy is to support both sides.   

What would President Joe Biden’s reelection mean?

Oil and gas production under Biden has reached unprecedented highs, at least in part because of his focus on keeping fuel prices down as he runs for a second term, as well as efforts to limit the impact of sanctions on Russia. But there’s no guarantee that would continue in a second term. In fact, the industry should expect an increased focus on climate policies and a stronger push to move away from fossil fuels. 

Upstream, access to federal lands, onshore and offshore, will be reduced. Midstream, the status quo is about the best that can be expected. Downstream, we can expect more hurdles for permits for refineries and petrochemical plants.

If Biden wins and gains Democratic majorities in both the House and Senate, expect a cap-and-trade system for limiting carbon emissions. It is the system most favored by thousands of bureaucrats and the cottage industry it would spawn. It would be better for producers and consumers to have a carbon tax at the wellhead, port-of-entry or coal mine. Even Congress would benefit with another revenue stream to fund pet projects.     

With Donald Trump, the question is: could his second act be better than his first?

The first lesson of the Trump presidency was that access mattered. For energy, oil and gas in particular, it is clear that his administration’s decisions benefited those with direct access.   Today, candidate Trump is chanting “Drill, baby drill”—not music to the ears of the oil and gas industry because Trump’s goal is lower prices, including at the gas pump. Trump lobbied Saudi Arabia for lower oil prices and, in exchange, gave the Saudis a pass for the 2018 murder of journalist Jamal Khashoggi.

Construction of five pipelines was pending when Trump took office. Only one, the Dakota Access Pipeline, was completed, reducing the cost of taking Bakken oil to market. The Keystone XL pipeline did not advance at all—much to the benefit of the Saudis, who continue to export heavy crude to the U.S.

Under Trump, the Constitution and Atlantic natural gas pipelines were canceled. Producers who planned on greater access to domestic and foreign markets via these pipelines were blocked. So, who benefited? Producers of associated gas in the Permian, Rockies and Dakotas. The Mountain Valley Pipeline project to take gas from West Virginia to the Virginia coast is progressing under the Biden administration.

The Trump administration limited offshore development even more than the Biden administration. The five-year Gulf of Mexico lease plan was not issued by the Trump administration, but subsequently by the Biden team. Trump prohibited oil and gas development off the west coast of Florida and all along the Atlantic seaboard. This protected onshore independents at the expense of the domestic majors.

Their differences in the electricity market are more subtle. 

Both Trump and Biden are pursuing similar agendas for electricity markets, albeit from different angles. For decades, the nation has needed to harden its fragmented electric utility systems against extreme weather, keep up with demand growth and repair aging infrastructure. Because wind and solar development necessarily is in rural areas, a massive buildout of transmission must happen. Consumers will question the “free” part of renewable energy, but the transition is upon us.   

Proponents of renewables and pro-volatility commodities traders have become unexpected bedfellows, accelerating the transition away from fossil fuels and nuclear power plants at the cost of reliability and much higher prices for consumers. Grid operators warn the public that electricity rationing, or “rolling blackouts,” will be the new normal.

Republicans opt out of leadership by calling for “market solutions,” a catchy phrase that really means “it hurts my brain to think about the executive leadership that is required.” The fact that Republicans tout the Texas grid as a success shows either willful ignorance or enormous disrespect for the electorate. The North American Electric Reliability Corporation points out that the nation’s other grids are not secure either. It is a matter of national security.

Where does that leave us? Still on the second page of voters’ concerns. Support both sides. Someone will win, and the only losers will be those on the sidelines.