The Iowa Caucuses concluded with former president Trump, now the clear Republican frontrunner, prioritizing his “drill, baby, drill” mantra in a victory speech. Whichever candidate eventually challenges Democratic incumbent Joe Biden will likely utilize American energy policy as a key part of their platform, hitting out at the often discordant actions and messaging emanating from the current administration. Oil prices are likely to rise from current levels throughout the year, according to EIA projections, while output growth is slated to slow significantly.
Energy prices have remained elevated throughout Biden’s term, relative to the Trump tenure of 2017-2020, perpetually undermining the current President’s economic approval rating. Part of that is bad luck and geopolitical events outside of Biden’s control, but White House officials have also reduced the auction of federal oil and gas leases to record lows, potentially making energy firms uneasy about US operations. Meanwhile, the prospect of a second Trump term, and an unlocking of more aggressive oil and gas expansion, could be a bearish prospect for crude prices.
Related ETF: Energy Select Sector SPDR Fund (XLE)
In a victory speech following the close of the Iowa Caucuses last night, the first electoral event of the US Republican Party’s 2024 primary race, former President Donald Trump’s first order of business was a promise to “drill, baby, drill – right away” if re-elected. The priority given to concerns regarding the US’s energy output by the Republican frontrunner appeals to Americans’ frustration with relatively elevated oil prices and an expectation that they will rebound again in the near future. A recent DailyMail.com/TIPP Poll indicated that 49% of 1,247 US adults agree with the “Drill, baby, drill” sentiment, compared to just 40% who disagree. WTI crude oil prices closed out trading yesterday near $73.00 per barrel, well-below the nearly $78.00 average price that has been forecast by the US Energy Information Administration (EIA) for 2024.
EIA data shows that the monthly average WTI crude price between the start of 2017 and end of 2020 was $53.01, compared to an average of $80.14 in the three years since – a more than 50% difference. While complex geopolitical situations and market dynamics played the largest role in that discrepancy, oil futures and the resulting impact on gasoline prices have dogged the perception of President Joe Biden’s economic policies among voters. Hiked-up gas prices have fed into rampant high inflation, which makes pressure at the gas pump all the more acute. Though gasoline stockpiles have been rising aggressively as of late, the days of US supply held in commercial crude inventories has thinned for seven straight weeks, reaching a three-month low of 26.1 in the most recently-reported data.
A recent poll of 2,228 US adults from ABC News and Ipsos showed that the approval rating for Biden’s handling of the economy is just 31% and a solid majority of 56% disapprove of his performance on this front. Gallup’s Economic Confidence Index, which…
To read the complete Intelligence Briefing, current All-Access clients, SIGN IN All-Access clients receive the full-spectrum of MRP’s research, including daily investment insights and unlimited use of our online research archive. For a free trial of MRP’s All-Access membership, or to save 50% on your first year by signing up now, CLICK HERE
