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Bloomberg
Oil industry gets surprise boost in Biden plan (it’s asphalt)
(Bloomberg) – President Joe Biden, who has made clean energy a staple of his campaign, plans to spark another oil boom before shadows descend on fossil fuels. of $ 2.25 trillion unveiled Wednesday, Biden allocated $ 115 billion. for roads and bridges, and an additional $ 16 billion to force laid-off oil field workers to plug abandoned wells across the country. These are in addition to massive investments in EVs and renewables, sectors more in tune with the administration’s green tint. Since taking office two months ago, Biden has been more a bargain than a curse. for a fossil fuel industry wary of the rise of a politician determined to accelerate the energy transition. Instead, the president’s focus on things like ramping up Covid-19 vaccinations and cracking down on reckless environmental practices has had the effect of boosting fuel demand and restraining the destructive growth of price of national oil production. In the infrastructure plan, the biggest benefit to oil explorers and refiners would come from the expected surge in demand for asphalt to repair crumbling roads and pave new ones. Since asphalt is derived from the heaviest and densest material in a barrel of crude, Canada’s oil sands producers could be the biggest winners, given their status as a source of some of the most common oil. thick of the world. The mines – some of which have been abandoned for more than a century in places like Pennsylvania – would mean paychecks for workers excluded from high-paying jobs during the back-to-back oil havoc that began in 2014. Although details remain Little on how the general plan will be implemented, the often opposing forces of fossil fuels and environmentalism have welcomed many of the measures set out in Biden’s plan. “It’s absolutely historic,” Collin O’Mara, president of the National Wildlife Foundation, said of the plan to tackle abandoned wells and mines. “We realize that by working together, we actually share more common goals than previously thought.” Without work The lobby group which represents more than 700 manufacturers of petroleum equipment and services was also satisfied with the initial scope of the plan to recruit employees. “There are a lot of companies out there that would really like to get involved in this area,” said Tim Tarpley, senior vice president of government affairs at the Energy Workforce & Technology Council. “I think it would be economic aid; The extent of the assistance that will be provided will depend on the details, which unfortunately we do not yet have. North American oil explorers are still recovering from last year’s historic crude crash and pledging to limit production growth for the benefit of investors – favorable measures such as dividends. Home to the third-largest oil workforce in the world, the United States saw its workforce cut by 11% in 2020, which reduced the number of employees to just under a million, according to Rystad Energy . According to the energy data provider’s forecast, around 10,000 more job cuts are expected this year. . Now, assuming some or all of Biden’s wishlist is accepted, heavy crude from Western Canada could be on the verge of a rebound. “The asphalt industry should be thrilled with Biden’s plan to upgrade 20,000 miles of roads in the United States,” said Charles Kemp, a senior consultant at Baker & O’Brien Inc. “However, this announcement promotes heavier oil production outside the United States, which contains approximately double the amount of asphalt relative to the asphalt content of light crudes in US domestic production. ” cannot translate into higher profits for oil companies, given that the other side of the spending plan includes corporate tax increases to fund all new work. “James West, analyst at Evercore ISI, said in an email. “However, the corporate tax hike is adding another burden to the US oil industry, which is probably beyond the good news.” Even market watchers don’t expect an immediate result. “the ramifications of the infrastructure plan,” said Rob Haworth, senior investment strategist at US Bank Wealth Management. “Typically, infrastructure spending spans eight to ten years, so it will take a long time to get it implemented, much cheaper in the market. “For more articles like this please visit us at bloomberg.com. stay ahead with the most trusted source of business news . © 2021 Bloomberg LP
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