One of Houston’s top oil bankers sees reality setting in for the Biden administration as its green push collides with the deep roots of America’s fossil fuel economy.

After having a front-row seat to the country’s oil boom over the past decade as chair of Tudor, Pickering Holt & Co., a leading investment bank to the shale patch, Bobby Tudor now wants Houston to profit off the energy transition in the same way the city has profited from the age of oil.

But in Washington he thinks the Biden administration is only beginning to come to grips with how difficult the politics of that transition will be.

“It’s one thing to demonize the oil and gas business or in particular the major oil companies. It’s another thing to go to consumers and say, we need you to use a lot less of this stuff so what we’re going to do is we’re going to slap a big tax on it,” argued Tudor. “And consumers say ‘Whoa, whoa, wait a minute, we don’t want to be paying for this.’”

Tudor argues that this has been on full display in recent weeks as the climate-minded Biden administration lobbied OPEC+ to start pumping more oil to help bring fuel prices down. Surging costs threaten to undermine America’s reopening and economic recovery.

“The politics around consumption are really, really difficult,” says Tudor.

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What Houston Needs to Lead the Energy Transition

The Biden administration has sent conflicting messages on energy in its first few months in office as it tries to balance an aggressive climate agenda with the realities of U.S. oil dependence.

It has put climate change at the center of its governing agenda in a way no administration has before, describing the potential fallout from rising CO₂ in the atmosphere as an “existential threat.”

It has set ambitious new climate targets, paused new oil and gas leasing on federal lands, killed the Keystone XL pipeline, and pushed for new controls on methane emissions from the industry—among other initiatives.

Yet it has also drawn fire from climate activists for allowing oil to continue flowing through the controversial Dakota Access Pipeline in North Dakota, backing the Line 3 oil sands pipeline expansion, which would bring more crude across the border into Minnesota, and allowing a controversial Alaska oil project approved by the Trump administration to move ahead.

“This happened in the Obama administration. If you go back and track the rhetoric that came out of the Obama administration regarding oil and gas and how it changed over time—what happens is reality sets in,” Tudor told Energy Source.

Tudor says he sees signs of this same reckoning from the Biden administration, even as it continues to champion the energy transition.

“Energy Secretary [Jennifer] Granholm was just in Houston about three weeks ago . . . and she made very pointed comments around the importance of CCUS as a key component to any credible pathway to net zero,” Tudor said, referring to carbon capture and storage—a technology he thinks Houston should embrace as it eyes a low-carbon energy future.

“That was a really important statement because it reflects the reality that the world, and the U.S., are going to need to produce hydrocarbons in real size for quite a long time.”

This article is an excerpt of Energy Source, a twice-weekly energy newsletter from the Financial Times. 

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