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| This could be worth knowing (TV).
Take a deep breath; the Earth is still revolving at 900 miles per hour. Okay, go ahead and take another one. Feel better? No? Last night’s roller-coaster ride may have left a bitter taste in your mouth this morning, but the reality of this situation (no matter who you voted for) is that we’re going to have at least four years of a Trump administration — which will also happen to coincide with the next bull market for oil. But who are going to be the real winners and losers from Trump’s energy policy? Buckle up: things should get interesting from here on out…
Trump, Energy, and What You Need to Know Look, you probably have a good idea where this is going. After all, it’s not like Trump was masking his plans for the United States’ energy future. We knew from the get-go where he stood on the issues. But in case you didn’t get a chance to catch the details of his energy policy, here are a few snippets from his platform: Make America energy independent, create millions of new jobs, and protect clean air and clean water. Conserve natural habitats, reserves, and resources, and unleash an energy revolution. Unleash America’s $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves. Become, and stay, totally independent of any need to import energy from the OPEC cartel, or any nations hostile to our interests. Open onshore and offshore leasing on federal lands, eliminate the moratorium on coal leasing, and open shale energy deposits. Encourage the use of natural gas and other American energy resources that will reduce both emissions and the price of energy and increase economic output. Rescind all job-destroying executive actions from Obama, and reduce or eliminate all barriers to responsible energy production. Back in September, Trump gave you a roadmap to his energy policies, saying: We will use our vast coal, shale gas, and other American energy sources in a clean and appropriate manner to benefit American families and workers, not for the economic benefit his energy politically-connected. Support coal jobs, safe fracking, energy from offshore and public lands, and the Keystone Pipeline, which can be done responsibly. Well, there it is in a nutshell… but to be honest, was there ever any doubt he would lean heavily toward fossil fuels? And even though some of the goals outlined by Trump are simply impossible (the idea that we will eliminate all of our oil imports from OPEC, for example), the door is wide open for us for the next four years. You have to make sure you’re backing the right horse in this race…
The Winners, the Losers, and the Downright Profitable If the winner hasn’t been clear in all of this, it’ll be the drillers in the U.S. that are eagerly awaiting a rally in crude oil prices. After all, we’re talking about an industry that Trump has called the lifeblood of America — and he wasn’t wrong! Not only will they be unhindered during a Trump administration that has repeatedly said there should be less regulation on energy companies, but these companies are ready to turn on the taps. Granted, that won’t occur until oil prices find more support above $50 per barrel, but there are more fundamental reasons to stay bullish. For starters, keep in mind that demand is going nowhere but higher over the next few years. We’ve been moving away from a bottom since prices reached as low as $26.21 per barrel back in February. Yet more pressure could come from Saudis and throw a wrench in the works. You see, the House of Saud is feeling a few jitters with a pro-tight oil/shale president being sworn in this January. It’s a legitimate fear that the Saudis will use this as an excuse to derail any output deal being formalized. But will they? What most people don’t realize is that the Saudis are nearly at a breaking point. Cheap oil has caused desperately needed revenues to plummet. In fact, the Saudis have canceled more than $266 billion in projects. Moreover, the Saudi Kingdom is strapped for cash, even having to delay billions of dollars worth of payments to construction firms and other contractors. If oil falls below $30 per barrel, it’s only a matter of time before OPEC collapses upon itself. The market isn’t fooled as to who will come out on top during a Trump presidency. I actually feel bad for anyone that shorted the market overnight out of fear. Today, crude oil climbed above $45 per barrel, and stocks across the sector are rebounding higher. Next time, we’re going to continue our look into the winners and losers of Trump’s energy policies, including one surprise that might come as a shock to some of you. Here’s a hint: I’m still not buying coal stocks. Until next time, Keith Kohl |