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October 11, 2012 at 04:13 AM
The results of the upcoming presidential election will, naturally, impact American investors and their clients in many ways. But, experts point out, energy investing and dividend taxation are two important and related areas in which the candidates’ differences are fairly clear and their policy implications’ pretty straightforward.
“Governor Romney had five points on energy policy that he highlighted in the first debate, and one was energy independence, which is a key area of difference from where President Obama stands on energy policy,” said John Derrick, CFA, a portfolio manager with U.S. Global Investors, in an interview with AdvisorOne.
“The Obama Administration favors alternatives energy sources to a large extent and has blocked drilling and the Keystone Pipeline, for instance,” explained Derrick.
“And the feeling in the investment community is that this administration is not that friendly to the [traditional] energy business,” he noted. “That would shift with Romney, who favors less regulation, less government involvement and more opening up of federal lands to drilling. Also, offshore areas that are now restricted could be opened.”
Other experts agree. “An Obama election is better for alternatives, like wind and solar, which are heavily dependent on government [and other] subsides to be viable, and judging from the pre-election rhetoric, Romney is not in favor of this strategy,” said Geoff Jay, head of energy-sector research and analysis with Janus Funds, in an interview.
When it comes to oil and gas investing, “Obama says he favors growing more energy at home,” added Jay. “But the hurdles would be lower under a Romney presidency, … and the climate for traditional oil and gas companies [to invest and expand operations] would be easier under a Romney presidency.”
Another factor to consider, says Geoffrey Styles, head of the consultancy group GSW Strategy Group, is that much of the increase in U.S. energy production has come from natural gas and shale development. In contrast, production from renewable sources is taking a long time to come on stream.
“If Romney is elected, there could be a feeling of relief for the energy industry that it can move forward with some [projects] that are not possible in the current environment,” Styles said in an interview.
