Big Oil Flourishes Under Biden Despite Regulatory Hurdles

Oil and Gas

Despite President Joe Biden’s critical stance on fossil fuels and strong push towards decarbonizing the U.S. economy, the oil and gas industry has surprisingly fared better under his administration than under former President Donald Trump. This comes as an irony given Trump’s “drill, baby drill” mantra and his promises to fulfill the energy sector’s wishlist if supported in his 2024 presidential run.

While Trump’s policies aimed at deregulation might seem favorable, they risked creating an oversupply that could depress consumer prices but harm the financial health of the oil and gas industry. In contrast, despite Biden’s introduction of stricter regulations—like higher drilling costs on federal lands, new methane emission standards, and halted approvals for new natural gas export permits—the sector remains robust.

In 2023, the energy sector’s profit margin averaged 11.3%, as reported by S&P Capital IQ, with forecasts for 2024 looking similar. This starkly contrasts with the near-zero average profit margin during Trump’s presidency, which saw a significant downturn in 2020 due to the COVID-19 pandemic.

ExxonMobil (NYSE:XOM), as the nation’s largest energy firm, exemplifies the broader sector’s performance. After a difficult decade and a significant loss in 2020, ExxonMobil rebounded to record a $55.7 billion profit in 2022, demonstrating a strong recovery influenced more by global market conditions and technological advancements in hydraulic fracturing than by U.S. presidential policies.

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