Oilpatch wary of VP pick Kamala Harris, Green New Deal backer

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Kamala Harris, Joe Biden’s pick as running mate in November’s U.S. presidential election, isn’t welcome news to Canada’s oilpatch.

“Her stance is in line with Biden’s ambitious move to wean the U.S. off fossil fuels,” said Jeremy McCrea, an analyst at Raymond James in Calgary. “Obviously, the more supporters in the White House of the ‘Green New Deal,’ the more difficult it will be for oil and gas companies.”

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Oilpatch wary of VP pick Kamala Harris, Green New Deal backer Back to video

Harris, who was herself in the running to seek the presidency until last December, backed the Green New Deal last year alongside iconoclastic novice U.S. representative Alexandria Ocasio-Cortez, with its key component of fighting climate change by ending the use of fossil fuels.

However, analysts and economists say Harris’s ascension to the Democratic ticket represents less of a swing to the left than could have transpired, and is likely to be only marginally more unsettling to the sector than a Biden victory on its own.

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Shortly after Harris was named as Biden’s running mate on Tuesday, U.S. President Donald Trump attempted to boost his own support for re-election by pointing to her record on environmental issues and claiming she is “against petroleum products.”

A former prosecutor in California and ultimately the state’s attorney general, Harris joined other states in a 2016 probe of whether ExxonMobil Corp. had been dishonest with shareholders and the public about the risks climate change presented to its business. At a town hall last year, she reportedly boasted that she had “sued Exxon Mobil” even though her office never took the energy firm to court.

Her office did, however, file a civil suit against Phillips 66 Co. and ConocoPhillips Co. in 2013, alleging the companies had violated state environmental laws by failing to properly inspect and maintain underground tanks used to store gasoline.

Harris’s record and her position on controversial energy policies such as fracking put her to the left of Biden — who has himself pledged to cancel the Keystone XL pipeline and to have 100 per cent clean fuel vehicles by 2035 — but analysts who track Canada’s oilpatch don’t expect an immediate or deep impact on the industry from Harris’s inclusion on the Democratic ticket.

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“At the margin, it is concerning, though realistically we are not sure it is that influential,” Robert J. Fitzmartyn, managing director and head of energy institutional research at Stifel FirstEnergy, told the Financial Post.

At the margin, it is concerning, though realistically we are not sure it is that influential

Robert J. Fitzmartyn

He said he and other analysts at his firm believe the courts will be more influential than the policies of elected officials when it comes to determining whether oil and gas projects go ahead.

“The reality is the courts are the gating point,” Fitzmartyn said. “It is clear that (opponents of) fossil fuels have focused on this aspect and resources are deployed to disrupt the process of project approvals.”

Analysts and economists suggest equity markets have largely digested this landscape and were betting on a Biden victory that would shift the environmental agenda forward even before he chose Harris, who attended high school in Montreal.

“The energy platform is unlikely to change simply due to her addition to the ticket, because it was already calling for some significant changes from where the U.S. has stood under Trump,” said Avery Shenfeld, chief economist at CIBC Capital Markets in Toronto.

He added that U.S. vice presidents have rarely exercised the power to truly sway policy, with the notable exception of Dick Cheney’s “heavy hand in foreign policy” during the administration of George W. Bush.

“Had Biden wanted to use the VP pick to signal a more aggressive swing to the left, he would have opted for someone like Elizabeth Warren,” Shenfeld said.​​

McCrea, the Raymond James analyst, said investors are likely to take this year’s U.S. presidential election in stride.

“Investors in oil and gas have become accustomed to environmental regulatory headwinds and believe companies are already adapting for the future,” he said. “As such, although Harris will likely help push environmental changes, it’s hard to see if it will be any faster than what has been discussed already.”

Financial Post

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