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Donald Trump’s ‘Make America energy independent’ vision could backfire in an already oversupplied energy market and hurt oil companies’ profits should he win the November election, and investors would be wise to sell oil stocks under a Trump presidency, Quartz quoted an analyst as saying on Tuesday.
Even if Trump fulfills his promises to lift unnecessary regulations and “unleash America’s $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves”, Andy Goldberg at JP Morgan Asset Management told Quartz that higher output will add to the current energy glut. This, according to Goldberg, “might actually hurt energy prices, which might hurt profits and hurt the market”.
Although Trump’s view is clearly a pro-business policy, investors should watch out for its unintended consequences, Goldberg says.
At a September meeting in Pittsburgh, Trump outlined his America-First energy plan:
“This means opening federal lands for oil and gas production; opening offshore areas; and revoking policies that are imposing unnecessary restrictions on innovative new exploration technologies.”
Trump’s energy plans are focused on achieving a full American energy independence. He has even vowed to save the U.S. coal industry. He is also a supporter of oil deregulation, and tried last week to assure Colorado oil executives of his support, following some ambiguous remarks on fracking he had made in July. Trump is not a big fan of renewables, unlike his Democrat opponent Hillary Clinton.
The unconventional and increasingly controversial pick for a Republican presidential nominee is trailing Clinton by 9 points among likely voters in a three-day poll carried out between Saturday and Monday, according to The Wall Street Journal. But if Trump manages to clinch the U.S. Presidency, Andy Goldberg at JPMorgan Asset Management says: sell oil stocks.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.