Oil wars: The state squares up against private sector finance as the Trump administration attempts to force banks to invest in Arctic oil

The Trump administration hopes to spark an Arctic oil rush by lifting Obama-era safety regulations limiting drilling in the region (Reuters, 2020), and encouraging oil companies to make the more contentious drilling bids, like those on the Arctic National Wildlife Refuge, or indigenous lands by mid-December (Louise Boyle, 2020). The administration's quick-fire implementation of the bidding process is likely hoped to make it difficult for a new Biden presidency, which is against Arctic drilling (Joe Biden, 2020), to roll it back.

However, while the moves have been welcomed by oil industry trade groups (Reuters, 2020), it is unclear what the actual take up by oil companies will be, particularly as conservationists and large shareholders are successfully leaning on corporate insurers to not support Arctic oil ventures (Alastair Marsh, 2020). Likewise nearly all major US banks are refusing to invest too, likely informed by the 2017 mass divestment by clients of $4.4 billion from firms associated with the controversial Dakota oil pipeline (Jennifer Dlouhy, 2020).

The Federal government aims to hit back at the private sector’s refusal by proposing new rules to prevent large banks from denying finance to Arctic drilling, justifying the measure as preventing discrimination against Alaska natives who rely on the industry for their livelihoods (CBC, 2020). However, the proposal is unlikely to be effective as banks remain able to refuse projects based on politically “impartial” risk factors, and Arctic drilling, despite easing conditions, is still a large financial risk (Economist, 2015), particularly with the current lows in crude oil prices (Rasoul Sorkhabi, 2020). A US Arctic oil rush is unlikely then to kick-off before a Biden presidency can pull the plug.