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Republican Backlash at Energy Tussle

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Power hungry U.S. is expanding its domestic scanner to tap offshore oil resources. On Friday, in a tussle of 235 to 186, the U.S. House of Representatives passed the Offshore Energy and Jobs Act bill. This republican backlash was the response to President Barack Obama’s coal killer climate strategy unveiled early last week. However we are apprehensive about the final outcome of the bill with the threat of Presidential Veto hanging high.

The republican ire against Obama’s energy moves is not new. Earlier also the Obama Administration’s 2012-2017 offshore lease plan that closed almost 85% of U.S. offshore areas for exploration came under republican fire.

In recent times, steady gains from adoption of new drilling and exploring techniques has increased the domestic supply and dramatically lowered the relative price of natural gas in the U.S. Following this trend, President Barack Obama recently unveiled a fresh climate change strategy affecting a number of coal-fired plants across U.S.

The so-called coal killer policy of Obama as touted by republicans was framed to limit pollution from existing coal-fired power plants. With directives for setting up dearer carbon pollution standards for active coal plants, the move at one go would make a large number of coal-fired plants unviable. As of now, approximately 40% of U.S. electricity is generated from coal fired plants.  

However Obama administration’s focus on clean energy is repeatedly coming under fire from republicans at a time when the domestic economy is on shaky grounds. The apprehension about the wrinkles in economy is also shared by us as we feel tax hikes and spending declines is expected to slow growth in the ongoing fiscal.

The republicans along with a cross section of democrats are pushing for unlocking the offshore areas which they feel would pump the U.S. economy with multi-million revenues and jobs. In addition to this, it would also drag down U.S. energy cost and trim the oil import bill.

In such a scenario, we would advise investors to keep a close watch on oil companies that could tap the federal shores. These include ConocoPhillips (COP - Free Report) , Royal Dutch Shell Plc (RDS.A - Free Report) , BHP Billiton Ltd. (BHP - Free Report) , and Anadarko Petroleum Corp. (APC - Free Report) .

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