Despite facing harsh criticism and stringent regulations from President Biden’s administration aimed at decarbonizing the U.S. economy, the oil and natural gas industry has seen significantly better performance during Biden’s term than under former President Donald Trump. This includes higher profitability, stock performance, and production levels. Ironically, President Trump, who promoted a “drill, baby, drill” policy and pledged to fulfill the energy sector’s demands in his potential 2024 presidential campaign, presided over a period of lower industry profits due to policies that led to oversupply and lower consumer prices.
President Biden has increased drilling costs on federal lands, introduced new methane emission reduction requirements, and paused the issuance of new natural gas export permits, adding more costs and complexity to fossil fuel extraction. Nonetheless, the industry remains robust, with the energy sector’s profit margin averaging 11.3% in 2023, according to S&P Capital IQ, with similar forecasts for 2024.
Comparatively, during Trump’s presidency, the energy sector’s profit margin was nearly zero, particularly impacted by the COVID-19 pandemic in 2020, which drastically reduced travel and crashed oil prices. Excluding the pandemic’s impact, the average annual energy profit margin was only 4.5%.
ExxonMobil (NYSE:XOM), a leader in the sector, mirrors this trend. After facing significant losses in 2020, ExxonMobil reported a record-breaking profit of $55.7 billion in 2022, showcasing a strong recovery. This illustrates that the dynamics of global markets and technological advancements, such as those seen during the hydraulic fracturing boom under the Obama administration, play a more significant role in the energy sector’s success than specific presidential policies.
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