The upcoming US presidential election has high stakes for the American energy sector. Former President Donald Trump and Vice President Kamala Harris have different priorities and dramatically different stances, which means the election results may shift the whole sector.
Investors know money can be made in all kinds of markets, even during challenging times. However, with careful preparation, you can ensure your finances are positioned best to weather this election year.
Trump boosted US oil and natural gas
During his presidency, Donald Trump prioritized increasing the domestic supply of oil, natural gas, and coal. His administration took significant steps to deregulate the energy sector, opening up federal lands and offshore areas for drilling, rolling back environmental regulations he argued were restrictive, and promoting energy independence as a national security goal. This approach was designed to boost production, lower energy costs, and solidify the United States as a global energy leader.
Trump’s policies were effective in boosting US energy production, particularly in the oil and natural gas sectors, leading to record levels of production and turning the US into a net exporter of energy for the first time in decades. These policies were beneficial for the energy industry and regions reliant on fossil fuel production.
A second Trump presidency would likely result in an increase in domestic oil and gas production, along with a corresponding rise in natural gas-fired power plant installations.
How a Harris presidency could impact US oil and natural gas interests
In stark contrast, Vice President Harris has previously advocated for an outright federal ban on fracking, yet during the most recent presidential debate, Harris was quoted as saying, “I will not ban fracking. I have not banned fracking as Vice President of the United States. In fact, I was the tie-breaking vote on the Inflation Reduction Act, which opened new leases for fracking.”
Additionally, because fracking is a necessary part of the US’s energy production, it’s “highly unlikely” that Congress would pass any new laws banning the practice. While Harris’s recent softening of her stance on fracking could be an effort to appeal to more moderate voters, she would likely continue to pander to environmental extremists who promote the illusion of “green energy.”
I call green energy an “illusion” because wind and solar projects, while touted as solutions, are highly inefficient and require massive federal subsidies — as well as consistent reliability and availability — to be viable. These projects also often have hidden environmental impacts, leading to higher electricity bills that contribute to inflationary pressures, placing a significant financial burden on everyday Americans.
Let’s also consider the more local impacts a sudden shift to renewable energy would have. Families in many communities, especially those in areas heavily invested in oil and gas, depend on these industries for their livelihoods.
How is a wise investor supposed to prepare? By following a few simple guidelines.
Guidelines for investing in an election year
Diversifying your portfolio can protect it from unforeseen events of many kinds, including the outcomes of major elections. In particular, consider investing in assets outside the energy sector rather than just renewables or fossil fuels. That way, you’re covered no matter who wins.
Next, inform yourself about the candidates’ positions and keep track of their evolutions on this issue. This will help you adapt your financial strategy as necessary.
Finally, don’t get too caught up in the election and miss the bigger picture. While elections are important and do have consequences, investors do best when they take a long-term approach. If you maintain a diverse and stable portfolio, then you’ll be able to weather whoever lives in the White House for the next four years.
Indeed, US production of oil and natural gas has been increasing even under the current Biden administration. This strongly indicates that, regardless of political rhetoric, both parties recognize the critical importance of domestic oil and gas production for America’s energy security and economic stability.
Set yourself up for growth no matter who is in office
Oil and gas are not going away anytime soon. The demand for fossil fuels will remain strong for at least the next several decades, so it’s still crucial to keep the power supply running and meet our energy needs. Oil and natural gas are the backbone of the energy market.
Savvy investors should understand all these factors and invest in companies that are not only aware of all dynamics at play but also strategically prepared to navigate them. By diversifying their investments, staying informed, and investing in companies with a long-term strategy, investors can better set themselves up for growth, regardless of policy changes or who is in office.
