Released November 07, 2024 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--A victory for Donald Trump in the U.S. presidential contest was met by a volatile session for crude oil prices amid fears that his economic policies could usher in a trade war.
Trump and his fellow Republicans largely swept the board on Election Day in the United States, despite widespread polling indicating a tight contest against Vice President Kamala Harris. Voters presumably were more concerned about the economy and immigration than women's rights or worries over a right-wing government.
But his win was met largely with praise from the market, with the Dow up some 3% early Wednesday. Trump would be decidedly pro-business and pro-oil, likely unravelling much of President Joe Biden's environmental agenda.
"We congratulate President Trump on his election victory," said Mike Sommers, the president and chief executive officer at the American Petroleum Institute. "Energy was on the ballot, and voters sent a clear signal that they want choices, not mandates, and an all-of-the-above approach that harnesses our nation's resources and builds on the successes of his first term."
But even before the election, many energy companies were scaling back on their energy transition strategies as many new forms of power, such as hydrogen, remain uneconomical. BP (NYSE:BP) (London, England) was among the major energy companies revising its climate strategy, while U.S. utility company Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia) opted for a comprehensive power plan.
"No single energy source, grid solution or energy efficiency program will reliably serve the growing needs of our customers," Ed Baine, the president of Dominion Energy Virginia, said last month.
Biden had tried to incentivize the energy transition with support from the bipartisan Inflation Reduction Act, which was focused largely on building up a domestic supply chain for items such as lithium-ion batteries. But even with the support, demand for cleaner energy options such as electric vehicles has been weaker than expected.
That comes as the World Meteorological Organization warned that carbon dioxide was accumulating in the atmosphere faster than at any other time during human history. Wildfires in the Rocky Mountains and storms in the Gulf of Mexico were all influenced by a climate changing largely because of the burning of fossil fuels.
On the broader economy, Trump will opt for tariffs rather than at-home incentives as part of a broader protectionist economic plan. Tariffs on China, the second-largest economy after the United States, could be as high as 60%, while global imports could see a 20% tariff imposed. "These are taxes that will be paid by U.S. importers, typically wholesalers and retailers, when the products enter the U.S.," analysts at investment bank ING wrote Wednesday. "They then decide whether to absorb the extra costs or pass them on either partially or in whole to the customer."
Ole Hanson, the head of commodity strategy at Saxo Bank in Denmark, agreed. He said in a research note from Wednesday that tariffs could spark a trade war that could undermine global growth and lower the demand for energy, including oil, in the process.
"This anticipated decline in demand for oil and related products stems from concerns that an increase in tariffs may slow global economic growth, thereby lowering demand for energy," he wrote. "The geopolitical landscape will also attract close attention, especially the U.S.-Russia relations, the Russia-Ukraine war and the Middle East, where a Trump administration may tighten sanctions on Iranian oil flows."
Oil prices were in heavy retreat in pre-market movements Wednesday, but had clawed back some ground by midday to move in the $71 per barrel range. Prices may be influenced also by the threat from Hurricane Rafael, a Category 2 storm that's already prompted some rig evacuations in the Gulf of Mexico.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Trump and his fellow Republicans largely swept the board on Election Day in the United States, despite widespread polling indicating a tight contest against Vice President Kamala Harris. Voters presumably were more concerned about the economy and immigration than women's rights or worries over a right-wing government.
But his win was met largely with praise from the market, with the Dow up some 3% early Wednesday. Trump would be decidedly pro-business and pro-oil, likely unravelling much of President Joe Biden's environmental agenda.
"We congratulate President Trump on his election victory," said Mike Sommers, the president and chief executive officer at the American Petroleum Institute. "Energy was on the ballot, and voters sent a clear signal that they want choices, not mandates, and an all-of-the-above approach that harnesses our nation's resources and builds on the successes of his first term."
But even before the election, many energy companies were scaling back on their energy transition strategies as many new forms of power, such as hydrogen, remain uneconomical. BP (NYSE:BP) (London, England) was among the major energy companies revising its climate strategy, while U.S. utility company Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia) opted for a comprehensive power plan.
"No single energy source, grid solution or energy efficiency program will reliably serve the growing needs of our customers," Ed Baine, the president of Dominion Energy Virginia, said last month.
Biden had tried to incentivize the energy transition with support from the bipartisan Inflation Reduction Act, which was focused largely on building up a domestic supply chain for items such as lithium-ion batteries. But even with the support, demand for cleaner energy options such as electric vehicles has been weaker than expected.
That comes as the World Meteorological Organization warned that carbon dioxide was accumulating in the atmosphere faster than at any other time during human history. Wildfires in the Rocky Mountains and storms in the Gulf of Mexico were all influenced by a climate changing largely because of the burning of fossil fuels.
On the broader economy, Trump will opt for tariffs rather than at-home incentives as part of a broader protectionist economic plan. Tariffs on China, the second-largest economy after the United States, could be as high as 60%, while global imports could see a 20% tariff imposed. "These are taxes that will be paid by U.S. importers, typically wholesalers and retailers, when the products enter the U.S.," analysts at investment bank ING wrote Wednesday. "They then decide whether to absorb the extra costs or pass them on either partially or in whole to the customer."
Ole Hanson, the head of commodity strategy at Saxo Bank in Denmark, agreed. He said in a research note from Wednesday that tariffs could spark a trade war that could undermine global growth and lower the demand for energy, including oil, in the process.
"This anticipated decline in demand for oil and related products stems from concerns that an increase in tariffs may slow global economic growth, thereby lowering demand for energy," he wrote. "The geopolitical landscape will also attract close attention, especially the U.S.-Russia relations, the Russia-Ukraine war and the Middle East, where a Trump administration may tighten sanctions on Iranian oil flows."
Oil prices were in heavy retreat in pre-market movements Wednesday, but had clawed back some ground by midday to move in the $71 per barrel range. Prices may be influenced also by the threat from Hurricane Rafael, a Category 2 storm that's already prompted some rig evacuations in the Gulf of Mexico.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
