In addition, if Trump throws Ukraine to the wolves, so to speak, and forges a deal with Russia, that will take Russian oil off the sanctions list.
The Republicans will kill those inquiries about methane leakage and stop states from restricting usage of natural gas in kitchens.
and that will not be good news for big borrowers like electric companies or frackers or LNG terminals.
On the other hand, a big reduction in corporate taxes would be meaningful because, believe it or not, some of the big energy companies actually do pay taxes.
ADVERTISEMENT Stock market prices for the market as a whole (S&P 500), oil companies, utilities and clean energy companies as of the close on November 1 (Friday), November 4 (Monday), November 5 (Tuesday) and November 6 (Wednesday).
The markets were boosted by the Republican Party’s unexpected election sweep, which surprised us anyhow. We chose to consult our all-around expert, the renowned Question Man, because of the vagueness of the policy proposals and the potential for foreign policy to impact energy supply and demand.
Q. Deregulation and drilling, drilling, drilling is good for oil, right?
a. It will, however, free up more acreage for drilling and lower drilling and operating costs (no more bothersome regulations). And since that will boost oil supply without raising demand, you will have to make your own judgments about where the price will go. Furthermore, if Trump strikes a deal with Russia and, in effect, throws Ukraine to the wolves, Russian oil will no longer be subject to sanctions. More supply, then. Who else benefits more than the drilling companies?
1. What about natural gas?
A. . increased optimism. Republicans are going to eliminate the investigations into methane leaks and prevent states from limiting the use of natural gas in kitchens. Additionally, they may be more accepting of LNG exports. GOP opposition to renewables may even boost electric utilities’ purchases of natural gas. Power plant sales, however, are the major growth to watch. Recall that this sector has long advocated switching from coal-fired to gas-fired power plants. The incoming government has now granted them permission to do this. And keep an eye out for those pledges to achieve “net zero by 2050” to gradually fade away as well. On the down side, sales of gas for winter heating will decline due to warming weather trends. The market for American LNG could be negatively impacted if a Russian agreement on Ukraine opens up global markets to Russian gas once more. Is that a favorable enough image to place a large wager?
Q. What about energy?
A. Unquestionably negative. potential losses from subsidies. Even worse, Trump despises electric cars despite his admiration for Elon Musk. More than data centers, EVs have the potential to increase sales more than the electric industry has seen in decades. In exchange, coal burning encouragement and a relaxation of pollution enforcement will occur. Increasing electrification appears to be the future, but decarbonization is not an option that I had considered likely. Does that make sense as a trade-off?
Q. What are renewable energy’s short-term prospects?
A. Are you serious? You may perceive a sort of religious zeal to defend Americans against malevolent ecologists. Do away with the subsidies. Put an end to the investigation. (Let the Chinese do it?) In addition, the tariffs will significantly raise the cost of renewable equipment. Is there a bright side? Perhaps. The need for off-grid, resilient energy systems is becoming more and more obvious as severe weather causes electrical service interruptions in some areas for longer and longer periods of time (don’t mention “climate change”).
1. I hear about nuclear a lot.
a. New nuclear power plant construction in the United States should be deader than the proverbial doornail if Republicans persist in their stance. Why? For two reasons. First, gas and coal are far less expensive to build if CO2 emissions are no longer taken into consideration when assessing new power plants. Second, high import tariffs, which are likely to be implemented under the new administration, would negatively affect the foreign components of many proposed SMRs.
Q. What else should I think about?
a. Yes, yes. Many economists (not that they are experts) contend that higher tariffs will result in inflation, which could raise interest rates once more. This would be bad news for large borrowers like LNG terminals, frackers, and electric companies. However, several large energy companies do pay taxes, so a significant cut in corporate taxes would be significant.
Q. How did the election affect the market?
a. From the Friday before the election to the Wednesday following it, the prices are shown in this chart.
Oil and stock market prices for the overall market (SandP 500).
utilities, clean energy firms, and businesses as of the end.
on Friday, November 1, Monday, November 4, and Tuesday, November 5.
along with Wednesday, November 6. (November 1 is equal to 100).
Take note of the price lines’ divergence. The market seems to be indicating that the Trump win will benefit business overall, possibly slightly better for oil companies but not significantly, likely bad for utilities, and bad for clean energy stocks. That’s essentially what we’re arguing, right?
1. I’m grateful, Mr. Dot Question Man. Your commentary is consistently impressive.
A. . Is that flattering?
By William I. Hyman and Leonard S. Hyman. Tilles. .
Additional Recommended Readings from Oilprice.com.
Under Trump, Citi sees oil prices falling to $60.
Crude oil imports from China are still declining.
Oil prices will continue to be determined by OPEC+ tapering mechanisms.
