Oil stocks such as Chevron (CVX) are marching higher despite news that U.S. President Joe Biden has banned offshore oil and gas drilling along most of America’s coastline, including in the Gulf of Mexico.
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Biden’s executive order protects 625 million acres of ocean along both the U.S. Atlantic and Pacific coasts, as well as in the Gulf of Mexico and Alaska’s Bering Sea. The president is employing the 1953 Outer Continental Shelf Lands Act that gives the president the power to indefinitely withdraw unleased lands from the outer continental shelf.
The ban is seen as a significant victory for environmental groups that have long argued further drilling is contradictory to the U.S. government’s climate change goals. It is also viewed an attempt to protect President Biden’s climate legacy from the energy policies likely to be pursued by president-elect Donald Trump when he takes office on January 20.
‘Drill, Baby, Drill’
Biden’s latest ban takes the total area of ocean he has protected to 670 million acres — higher than any other president in U.S. history. Trump, in contrast, campaigned for re-election in 2024 on a promise to let U.S. oil and gas companies “drill, baby, drill.”
Biden’s new ban could frustrate Trump’s plans to gain an economic boost from increased oil and gas production. During his first term in office, Trump tried to overturn previous bans on ocean drilling for oil and gas, but those efforts were struck down by the courts. This means that it may take an act of Congress to reverse Biden’s ban on oil and gas drilling in U.S. coastal waters.
Despite widespread news of the offshore drilling ban, stocks of oil and natural gas companies are rising on January 6. CVX stock is up more than 1%, while the stocks of Occidental Petroleum (OXY) and Shell (SHEL) are up about 2% on the day.
Is CVX Stock a Buy?
Chevron’s stock has a consensus Strong Buy rating among 18 Wall Street analysts. That rating is based on 15 Buy, three Hold, and no Sell recommendations issued in the past three months. The average price target on CVX stock of $174.44 implies 16.78% upside from current levels.
