(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)
Last month the U.S. Census Bureau published results from the 2020 Census. The latest constitutionally mandated decennial count reveals that, as of April 1, 2020, the U.S. resident population was 331,449,281 – a 7.4% increase from the 2010 figure. Resident population data for the 50 states are used to apportion the 435 seats in the U.S. House of Representatives, with some growing states gaining seats in Congress and some states with declining populations losing seats. The Census Bureau pointed out that:
- Texas will be the only state to gain two seats in Congress
- Five states – Colorado, Florida, Montana, North Carolina, and Oregon – will each pick up one seat.
- Seven states – California, Illinois, Michigan, New York, Ohio, Pennsylvania, and West Virginia – will each lose a seat.
- The number of seats in each of the remaining states will stay the same.
The Census Bureau noted the new 435-seat configuration of the U.S. House will take effect when the 118th Congress convenes in January 2023. In the meantime, individual states will re-draw congressional district boundaries in the redistricting process. Who controls redistricting in individual states varies – state legislatures oversee it in 26 states, with various commissions taking on the responsibility elsewhere, according to the Loyola Law School-hosted All About Redistricting website.
As the bulleted list above suggests, redistricting will help Texas – typically a reliably “red” state that leans Republican in elections. Moreover, it will cost large “blue,” Democratic strongholds such as California, New York, and Illinois.
Also last month, the Biden administration proposed removing U.S. tax code provisions that allow oil and gas companies to “deduct drilling costs early in a project’s life cycle and are able to carry forward losses for several years,” Bloomberg reported. Oil and gas players are paying close attention to debate surrounding the Biden tax proposal, coupled with the impact of redistricting, according to one of Rigzone’s regular prognosticators. Read on for his perspective, along with other insights, in this preview of what to watch this week in the oil and gas markets.
Michael Osina, Partner-in-Charge, Energy – Tax, Grant Thornton LLP: The Biden tax plan accompanied by the new census redistricting will be interesting to watch in the near future. The overall Biden administration has the oil and gas industry square in its crosshairs, likely targeting several longstanding tax incentives for the fossil fuel industry. However, at first glance, the new census redistricting seems to provide another blow to the Democrats’ plans as it appears that red-leaning states will gain representatives and blue-leaning states will lose representatives.
Tom McNulty, Houston-based Principal and Energy Practice leader with Valuescope, Inc.: More and more large energy companies will announce climate transition strategies and other plans to become “net zero carbon” businesses. The buy-side will continue to be skeptical, and it will be wrong. The vast capital capabilities combined with the deep technical skills that big energy companies possess means that they will ultimately have the biggest possible ESG (Environmental, Social, and corporate Governance) and sustainability impacts going forward.
Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: Quarters have been fantastic with a couple more to come in. In particular the Canadian names are showing massive free cash flow profiles in this environment. Historical offtake constraints for the Canadians created lower declines, making it easier to maintain production levels during the 2020 crash, even with limited investment. Low-decline assets such as oil sands further support this. These companies now still have great production levels to take advantage of this new pricing environment.