Biden’s infrastructure package to weigh on energy markets – CE

FXStreet reports that Biden’s infrastructure package is ambitious, but economists at Capital Economics doubt it will pass in its current form. 

“It is unlikely the Plan will pass as a standalone bill, especially not in its current form. To do so, the President would have to garner support from at least 10 Republican senators or eliminate the filibuster, both of which appear unlikely. As a result, we think the most likely outcome is that the Plan is passed through budget reconciliation sometime after October this year, in a bill that would probably include aspects of the American Jobs Plan and Made in America Tax Plan.”

“On the energy side, it would pose a significant downside risk to our long-term oil, natural gas and coal price forecasts through an accelerated adoption of electric vehicles and the replacement of fossil fuels in electricity generation. However, we are particularly sceptical about whether the carbon-free electricity generation target will end up being included in any final bill.”

“While there could be a sizeable impact on the prices of nickel and cobalt from faster EV adoption, we think that the impact on most industrial metal prices would be fairly small.”