Energy and Opec are at the centre of the US election campaign

Jim West via Alamy/Reuters

The energy sector is assuming an outsize role in the US presidential election and could be the key factor that tips the November vote in swing states.

Moreover, whoever wins in the contest between Kamala Harris and Donald Trump will – one way or another – be in hock to a large chunk of the American energy sector, be it oil, gas or renewables.

That will have big consequences for the oil producers of the Middle East and the producers’ organisations, Opec and Opec+.

A contest that, in energy terms had looked fairly simple just a few weeks ago – Trump for oil and gas, Harris for “green” energy – is now much more complicated since Harris changed her mind on shale fracking.

It was a big issue for the Democrats, who had been hamstrung in the campaigning by their parties perceived opposition to new exploration and production in shale fields, in favour of renewable energy.

Although President Biden himself took a much more pragmatic stance once in the White House, allowing and even encouraging new exploitation of shale fields, Harris had initially been opposed, but kept her reservations to herself as vice president.

That changed in an August TV interview with candidate Harris where she declared herself and her possible future administration open to fracking. “We can increase a clean energy economy without banning fracking,” she said.

That was something less than a whole-hearted endorsement of an industry that has helped make the US the world’s biggest oil producer, self sufficient in hydrocarbons.

Some voters in swing states – notably Pennsylvania – are less than convinced by her change of heart. For these, as well as others in energy states like Texas and New Mexico, Trump is the candidate they would rather entrust with the future of US oil and gas.

After all, didn’t he promise to advance the hydrocarbon producers’ interests if he wins office – as long as they (reportedly) chipped in $1 billion to his campaign funds?

It is not just over fracking where Trump has an edge in the energy sector and its voters: there is also the long-term question of pipeline permits (often opposed by Democrat state officials) and exports of liquified natural gas (the Biden administration has paused approvals of new terminals).

All this makes energy a tricky question for Harris and the Democrats as the campaign reaches fever pitch.

They just cannot shake the image of being opposed to oil and gas, and therefore the interests of hundreds of thousands of voters, whose rise to global dominance is a source of pride to many Americans.

That image was reinforced by a recent complaint from the Federal Trade Commission (FTC) alleging price fixing by a senior entrepreneur in the oil industry.

John Hess, founder and CEO of the Hess Corporation, is accused of conspiring with foreign governments to keep oil and gas prices artificially high. He is the second oil mogul to be thus accused, following an earlier complaint against Scott Sheffield of shale leader Pioneer. Republicans see a Biden witch hunt of business opponents.

The FTC moves have direct relevance for the Gulf because the “foreign governments” on the other side of the alleged conspiracy are the members of Opec, of which Saudi Arabia is the leading producer and in which the UAE has a lot of influence.

Alamy via Reuters

It is still a long way from Federal legal action, but the sight of Saudi and Emirati oil officials being subpoened to give evidence or appear in court would be highly embarrassing and detrimental to US-Gulf interests.

It also raises once more the prospect of Nopec legislation (a No Oil Producing and Exporting Cartels Act) being enacted in the US.

American hostility to the Opec organisation – viewed as a cartel in much of the country – is deep-seated, with origins in the oil price spike of 1973.

Congress has on a couple of occasions passed Nopec legislation that would make Opec illegal, with grave consequences for the US and Gulf energy sector.

But it never made it past the president’s desk. Ironically, Trump was the most vociferous proponent of Nopec when he was in the White House, but Congress never passed the proposed bill.

It does not seem to matter that most of the evidence against Hess and Sheffield looks extremely flimsy, mostly relating to management of oil supply during the post-Covid oil crisis of 2020 when the world was awash in crude and prices were trading in negative terms.

Some Democrats want to push the FTC to go all the way, and resume Nopec bills if Harris wins next month.

For her credibility in the energy states, and for the sake of US-Middle East trade, she should immediately shut down the FTC probes and rule out any Nopec laws under her administration.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia and is a media adviser to First Abu Dhabi Bank of the UAE