Yves here. I am sure NC readers can recalibrate this article in light of their own view about the merits of having a new president be nice to Big Energy.
By Michael McDonald, an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. Originally published at OilPrice
As the 2016 presidential race starts to heat up it is time to take a look at the remaining serious candidates and what each one might mean for energy policies and energy companies in the U.S. While a lot can happen in the next couple of months, the current leaders for the Republican Party are Donald Trump, Ted Cruz, and Marco Rubio. For the Democrats, the race will likely come down to a long brawl between Hillary Clinton and Bernie Sanders. As a bonus, it’s also worth looking at what Michael Bloomberg might do for energy if he enters the Presidential race and wins.
Donald Trump
Defying skeptics and conventional wisdom Donald Trump appears to be a real possibility as the Republican Presidential nominee. Trump disappointed with a second place finish in Iowa’s caucuses, but he is doing well in New Hampshire and nationally in the polls. Should Trump win the nomination and then the election, it is likely that oil and natural gas companies would get a big boost. Trump has actively discussed his interest in confronting OPEC and making the U.S. energy independent. He is a firm advocate for oil and its importance in the overall U.S. economy. A Trump presidency would definitely help investors in most conventional energy companies, especially if the Republicans retain control of Congress as many are projecting.
Ted Cruz
Despite being a Republican, Cruz is perhaps not as favorably inclined towards energy companies as Trump or Rubio. Cruz is cited as opposing all energy subsidies including those for oil companies. While he has supported revoking offshore drilling moratoriums in the past, it is very unclear at this stage if that point would be relevant for energy companies given the current price of oil. Cruz is a supporter of the Keystone XL pipeline, however, and has supported the view that global warming is a natural phenomenon rather than manmade.
Macro Rubio
Rubio appears to be a supporter of conventional fossil fuels like Trump and Cruz. In particular, Rubio is in favor of stopping the EPA’s clean Power Plan, which would likely help certain utility companies tremendously and could provide a small boost to coal miners. Rubio as President would also considerably diminish the power of the EPA as a regulatory authority instead giving more of a role to states and local governments. This would likely help many conventional energy companies.
Hillary Clinton
Hillary Clinton as president would likely continue many of the policies advocated by President Obama. For instance, Clinton has been cited as being against offshore oil drilling, against the Keystone XL pipeline, and against drilling in the Arctic.
In addition, Clinton supported the December 2015 Paris Climate Accord. All of this suggests she would likely be inclined towards new regulations that would harm utilities, conventional energy companies, and automakers. As a staunch advocate of environmental policies, Clinton would likely take various actions to support solar and wind power companies. With the recent passage of continuing subsidies for those industries, it is unclear what additional concrete measures Clinton could take to help renewable energy companies, so a Clinton Presidency might have a muted effect on those firms. It would likely have a pronounced negative impact on all conventional energy firms.
Bernie Sanders
Sanders is arguably even more progressive than Hillary Clinton, so it is likely that he would adopt all of the same policies as Clinton or Obama, and potentially put even greater restrictions on conventional energy production. While Obama’s proposed $10-per-barrel tax on oil is not going to happen during his presidency, if Sanders were to become president, it is possible circumstances could arise that would allow him to implement that tax, which of course would be extremely damaging to oil companies. Sanders is also in favor of a tax on carbon emissions which would have wide ranging impacts for numerous businesses across a variety of industries. By and large then, a Sanders presidency would likely be harmful for most major U.S. manufactures and energy companies.
Michael Bloomberg
If Michael Bloomberg does end up entering the race and running for President it could certainly throw both political parties into turmoil. Should Bloomberg become President, it’s likely that he would represent a middle ground between anti-renewables policies of the Republicans and anti-conventional energy policies of the Democrats. Bloomberg has certainly shown support for climate initiatives and environmental concerns. The coal industry, however, would not be spared. Bloomberg has spent a lot of money trying to kill off coal plants in the United States.
However, Bloomberg has also shown a steak of non-ideological pragmatism that includes being willing to approve the Keystone XL pipeline under certain conditions. Given that pragmatism and his reputation as a centrist, Bloomberg would likely have a positive impact on both conventional energy companies and renewables firms alike.
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I am reminded how Bush Jr ran on a semi environmental platform w/ some intent in order to steal Gores thunder…. until he was read the right act by the economic overlords and industry apparatchiks…
…whereupon he crashed the global economy and fossil fuels – or they crashed themselves… environmentalism and mitigating against global warming by shutting down industry are/were the balancing act to keep the economy in check because it was polluting us to death. Maybe. So who would have opposed destroying everything to save everything? That really is the choice, i think. I see secret agendas everywhere and I honestly think Little George was a dedicated (but secret) environmentalist. I like to think so because it ties together all the loose ends.
Clinton may not appear to be friendly domestically, but she sure is a champion outside our borders – see Mexico.
“Hillary Clinton as president would likely continue many of the policies advocated by President Obama. For instance, Clinton has been cited as being against offshore oil drilling, against the Keystone XL pipeline, and against drilling in the Arctic.”
I guess the key words are cited, but not acted upon. This would be the same President Obama that let Shell assume leases it’s leases in the Arctic? The Same President Obama that opened areas in the Gulf in 2014? The same President Obama that appointed the Fracking Queen, Sec. of Interior Sally Jewell?
With Hillary and Obama it’s almost a safe bet that their actions behind the curtain of bureaucracy are opposite to their spoken (and danced around, implied) words.
http://www.theguardian.com/environment/video/2015/aug/29/barack-obama-defends-decision-shell-drill-oil-arctic-video
http://americablog.com/2014/07/obama-leasing-millions-gulf-acres-offshore-oil-gas-drilling.html
http://www.bloomberg.com/bw/articles/2014-07-03/sally-jewell-obamas-pro-fracking-climate-czar
http://www.nakedcapitalism.com/2016/02/links-2716.html#comment-2545192
The author appears to view Obama as an anti-fossil fuel environmentalist. And thinks Clinton is, too. So much for the author’s credibility.
I had OilPrice in my RSS feed for a long time, this guy is undoubtedly their most worthless contributor. Even in a short article like this there are a number of telling signs that his analysis is limited to Fox News talking points:
Yes, but he’s doubtless used to writing for publications where this kind of bitching is de rigeur.
The oilpatch (and their trade press) is filled with men who soak themselves in this po’ us we are so mistreated by the Liebruls! whining. They are comfy in their echo-chamber and actually shocked and angered when they encounter a different point of view. It’s an interesting sort of hippie-punching entitlement thing.
I would imagine the best President for the oil and energy industry is the one who does most to provoke outright war in the Middle East. A guarantee of fat profits as prices shoot up. A toss up between Rubio and Cruz then, I would imagine.
Re: the Sanders paragraph. A $10/bbl tax would certainly not damage energy companies in this environment. I just paid less than $20 to fill up the Prius — fuel is practically free right now. What would hurt them is if the $10/bbl tax is used to incentivize alternatives.
I like Obama’s oil tax, but only if it is selectively applied to imported oil. Why not do something to assist US oil producers against the predatory pricing that is now occurring on world oil markets?
We’ve got close to 20 million barrels per day of crude oil demand and yet our country is supposed to back off from the 9.2 million barrels of oil per day that we produce to placate the rest of the world? What gives?
If Big Energy supported the Democrats, would they be less interested in throwing all of these oil and gas jobs and oil and gas equity investors in the trash?
If we are to have a rational plan moving towards a carbon neutral energy policy, then, yes, those jobs need to move into the rubbish heap. Then those people could be employed doing jobs that don’t damage our environment.
The people whose jobs will move into the rubbish heap are likely to take note of this. (In a sense they already have–Clinton was the last Democrat to capture West Virginia’s electoral votes.) Jobs in emerging technologies will require a higher level of training, so the transition will not be smooth, but will cause significant dislocations.
Reading this post reminded of the song “President Gas” by the Psychedelic Furs.
Two days in a row & I mention a song in my comment. Sheesh.
Who has he found to argue with on this point? HRC? BC?
No one moaned and wailed when NAFTA and its siblings killed the US manufacturing industry. No one grabbed their pearls and cried “But what about all those poor workers?” as their jobs got on the boats and airplanes and traveled to exotic ports.
Yet now we’re supposed to react with horror and outrage that killing the fracking industry, which is killing people as we speak, will put people out of work?
Gotta love the priorities.
What a biased analysis toward the Corporate Dems — The current tar-sands extraction has nothing to with keystone, but instead Buffet’s bomb trains, which are even more dangerous. Furthermore, how can Hillary ‘likely continue’ the administration’s policies and be against arctic drilling:
a little off-topic, but does anyone know sources for finding out if the Clinton Foundation Global Initiatives force African farmers to buy GMO (Monsanto) seed? Search engines are pretty scrubbed, and although BC says in an article they “can buy seed and fertilizer at wholesale prices” at warehouses and touts it as “high-yield and pest-resistant”, I am suspecting they have no choice, what with HRC’s connections with head of Monsanto and the whole banning of seed-saving and lawsuit threats for “cross-contamination” of crops with patented seeds. There is no source that tells me where the seed is coming from. thanks in advance.