Yahoo Finance’s Akiko Fujita and Dan Eberhart, Canary LLC CEO, discuss what Biden’s energy stance could mean at the polls.
Video Transcript
AKIKO FUJITA: Energy and climate policy among the topics discussed during that final presidential debate last night. The exchange highlighted some key differences between the two candidates. Take a listen.
JOE BIDEN: I do rule out banning fracking because the answer we need– we need other industries to transition to get to ultimately a complete zero emissions by 2025. What I will do with fracking over time is make sure that we can capture the emissions from the fracking, capture the emissions from gas. We can do that, and we can do that by investing money in doing it. But it’s a transition to that.
AKIKO FUJITA: Let’s bring in Dan Eberhart he is the CEO of Canary, LLC, also author of the new book “Switching Gears.” Dan, I know you’ve been a longtime supporter of President Trump. You were watching this closely yesterday. I saw your tweet saying you thought Joe Biden’s answer on this was a big mistake that could turn off some key voters in swing states. What did you hear?
DAN EBERHART: Yeah, well, I think that Biden, you know, Biden is– was against fracking before he was for it and is now for fracking, you know, if we can– if he can capture the methane and, again, banned fracking on federal land. So he’s basically tied himself into a pretzel, and I think that’s ostensibly to play well in particularly Pennsylvania and then a little bit in Ohio and in the Democrats’, I guess, hope of being able to pull off Texas.
But to me, his comments run kind of flat. I think his embrace of the Green New Deal is foolhardy. It’s aspirational at best. It’s gonna cost, you know, 15 or 20 times what we can afford. And then more– more concretely, what he’s saying on emissions and being carbon-neutral by 2025 is just not– it’s just flat not realistic. The consumers are only gonna bear a small incremental increase in the price of petroleum, the gas at the pump, the price of the plane tickets, et cetera. And Biden’s energy policy is more an applause line than something that can be actually implemented in my opinion.
AKIKO FUJITA: When you talk about the response we got yesterday in that debate, though? I mean, how much of that do you think– how much of what was said during that discussion will actually matter? When you think 50 million people have already cast their votes, there’s a lot of early voters that have already gone to the polls there. Um, how do you think this is really going to affect the state of play?
DAN EBERHART: Yeah, I feel like that muddies– muddies the water in general. And I wish they, you know, personally wish they had the debates before people started voting. I think that would make a lot more sense. But I think that, you know, a lot of this stuff, what really matters to voters is gonna be different for every voter. But if energy matters to you, I think what you’ve heard from Joe Biden was, I’m embracing the Green New Deal on this kind of climate change agenda at all costs, and I’m against oil and gas and traditional fossil fuels, and I’m against those industries.
And ultimately, bottom line is I think it hurts him in Pennsylvania. And Pennsylvania is a state both campaigns are fighting over right now.
AKIKO FUJITA: Having said that, Dan, I mean, isn’t there an argument to be made here that Joe Biden’s just good at reiterating what we’ve already heard from some of the big oil and gas producers? You look at a company like BP, they have slashed oil and gas output by 40% this year. They’ve had investments into offshore wind projects you’ve roiled up. Shell’s cut 10% of its workforce as they try to pivot towards reducing emissions as well.
I mean, isn’t he just reiterating what we’ve already heard from some of these companies?
DAN EBERHART: Well, everybody’s moving in the same direction. Actually, if I can plug my book for a second, one of the things I talked about in my book is, you know, it’s free market versus the regulatory affects. So is it gonna be aspirational, uh, and the government sets a deadline and tries to kind of ram industry into that deadline to be carbon-neutral or whatever? Or is it going to be that companies and consumers make choices around being green, how much they’re willing to pay for it, and how good the technology is as a substitute for, you know, the electric car versus the internal combustion engine, for instance, and we’re gonna get there that way?
You know, I, for one, think it’s gonna be a matter of we’re going to choose the iPhone and put down our BlackBerry as opposed to the government telling us to move to the iPhone. I think that’s what’s gonna happen, and I think, you know, you fast-forward five years or 10 years, I think that’s what you’ll find happens, not what Joe Biden is selling right now.
AKIKO FUJITA: Let’s talk about your outlook for oil. We heard the IEA come out with a new forecast last week saying the agency doesn’t expect oil demand to return to precrisis levels until 2023. How realistic do you think that timeline is? Is that the most optimistic scenario?
DAN EBERHART: Yeah, I mean, I think that’s– I think that’s optimistic. Look, we could see a bunch of growth, but I think we’re in for a lower-for-longer scenario. Oil demand’s down about 7% or 8% before the pandemic. And I think a lot of that’s jet fuel usage and some of that’s transportation.
But, you know, to me, just as a regular person, I don’t see that demand coming back, you know, in full force. I think it’s gonna come back incrementally. And so we’ve got really a long hill to climb to get back to where we were for oil demand in February.
AKIKO FUJITA: What does that mean for price action? And when you say lower for longer, we’re looking at WTI trading at 39.83 a barrel. Brent crude above that $40 mark– how much lower are we talking about?
DAN EBERHART: Yeah, I don’t think it’s gonna go much lower. And I think as long as OPEC keeps the supply off the market as they’ve agreed to do– there’s no cheating in OPEC, which is not a foregone conclusion– I think we’re gonna have a floor in the, you know, $37, $38, which is right near where we are for WTI for oil.
But I think it’s gonna go incrementally or it’s– I think we’re headed towards a super spike in oil prices in late 2021 because we’ve taken so much demand. And, you know, capital spending in the industry is down 50% or 60% year over year. And so you’re really gonna see, you know, once you see demand tick up a little bit, the supply is just not gonna be able to keep up and you’re gonna see a price spike. But I think that’s gonna be, you know, Q3, 2021, or something like that.
AKIKO FUJITA: And how much of that spike is really contingent on the vaccine? Because as we’ve seen with this virus and the demand that’s gone down from oil as a result of it, you know, it comes in waves. And we’re talking about a new surge yet again with those virus cases going up.
DAN EBERHART: Yeah, I think we’ll definitely see oil. Oil will be one of the industries that spike if we see a vaccine announced, you know, one day soon or one day in 2021.
