Who's Better for Oil/Gas Investors in 2012? Democrats or Republicans
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Investors positioning ahead of the upcoming presidential election should consider the following statistics:
On average over the past 24 years:
"In summary," according to analyst Fadel Gheit of Oppenheimer & Co, "under Democrats, energy stocks and the stock market in general did better and inflation was lower, while oil and gas prices rose more under Republicans."
While the statistics are black and white, they might not tell the full story.
"We think major oil stocks, especially Royal Dutch Shell, could benefit from easing restrictions on Arctic drilling, more likely under Republicans.," added Gheit. He also thinks refining stocks like Valero Energy (NYSE: VLO) would gain from easing environmental regulations and from the approval of the Keystone XL pipeline, which allows US Gulf Coast refiners access to discounted Canadian crude.
Natural gas producers such as Chesapeake Energy (NYSE: CHK), Devon Energy (NYSE: DVN), EOG Resources (NYSE: EOG), and Southwestern Energy (NYSE: SWN) would benefit from increased gas consumption, by replacing coal in electricity generation and by replacing gasoline and diesel in transportation, a policy favored by the current administration.
The bottom line, according to Gheit, is that coal producers, electric utilities, and pipeline companies should fare better under Republicans because of the usually tougher environmental regulations and safety standards under Democrats. Innovative companies involved in developing renewable and alternative energy sources, including so solar, wind and cellulosic ethanol, are likely big winners under Democrats.
On average over the past 24 years:
- S&P 500 gained a 14% annually under Democrats; no gains under Republicans.
- Crude oil gained 7% under Democrats; 10% under Republicans.
- NYSE ARCA OIL & GAS INDEX gained 9% under Democrats; 7% under Republicans.
- Natural gas prices declined 2% under Democrats; gained 6% under Republicans.
- CPI gained 2% annually under Democrats; 3% under Republicans.
"In summary," according to analyst Fadel Gheit of Oppenheimer & Co, "under Democrats, energy stocks and the stock market in general did better and inflation was lower, while oil and gas prices rose more under Republicans."
While the statistics are black and white, they might not tell the full story.
"We think major oil stocks, especially Royal Dutch Shell, could benefit from easing restrictions on Arctic drilling, more likely under Republicans.," added Gheit. He also thinks refining stocks like Valero Energy (NYSE: VLO) would gain from easing environmental regulations and from the approval of the Keystone XL pipeline, which allows US Gulf Coast refiners access to discounted Canadian crude.
Natural gas producers such as Chesapeake Energy (NYSE: CHK), Devon Energy (NYSE: DVN), EOG Resources (NYSE: EOG), and Southwestern Energy (NYSE: SWN) would benefit from increased gas consumption, by replacing coal in electricity generation and by replacing gasoline and diesel in transportation, a policy favored by the current administration.
The bottom line, according to Gheit, is that coal producers, electric utilities, and pipeline companies should fare better under Republicans because of the usually tougher environmental regulations and safety standards under Democrats. Innovative companies involved in developing renewable and alternative energy sources, including so solar, wind and cellulosic ethanol, are likely big winners under Democrats.
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