President-elect Donald Trump filled in another piece of his leadership team yesterday (Wednesday, Dec. 14), nominating former Texas Governor Rick Perry to be the next secretary of energy. If confirmed by the Senate, Perry will replace outgoing secretary Ernest Moniz, who played a significant role in crafting the Iran nuclear deal.

While Perry will not bring doctorates in Physics and academic credentials of the last two energy secretaries –  Ernest J. Moniz of M.I.T. and Nobel laureate Steven Chu of Stanford – to the office, he is by no means a pushover.

Donald Trump's nominee is Texas’ longest-serving governor, in office from 2000 to 2015, and before that was the State’s agriculture commissioner. Perry, 66, who left office January last year, holds a bachelor’s degree in animal science from Texas A&M University.

As governor of the oil-producing state, he oversaw the twelfth largest economy in the world through the worst of the Great Recession. Implementing energy-friendly policies, Perry was able to create jobs and carry the state unscathed through those troubled times. In fact, he is credited for generating more employment than all 49 other states combined during his tenure.

No doubt, Trump has hailed Perry as one who ‘created a business climate that produced millions of new jobs and lower energy prices in his state’ and hoped that ‘he will bring that same approach to the entire country as secretary of energy.’

Despite all his achievements as a governor, Rick Perry is still haunted by his failed GOP presidential candidature of 2012. In particular, he is ridiculed for famously forgetting the name of the Department of Energy during a live Republican primary debate in 2011, yet describing it as a part of the federal government he would dismantle if elected president.

He also unsuccessfully campaigned for the Republican presidential nomination in 2016, only to drop out of the race early -- as first of the 17 GOP candidates. Interestingly, Perry and Trump traded blows during the Republican primary campaign. While Perry described Trump's political appeal as "a cancer on conservatism," Trump poked fun at Perry’s glasses.     

The Job Profile

Before analyzing the pros and cons of Rick Perry’s nomination as U.S. energy secretary, let’s delve into the Department of Energy’s job profile.

Contrary to its name, the department’s primary focus doesn’t actually have anything to do with fossil fuels, but rather, in designing nuclear weapons, protecting the nation’s aging arsenal, thwarting their proliferation and ensuring the cleanup and proper dumping of the nuclear radioactive wastes to help protect the environment. The department’s crown jewels are the 17 national laboratories that are considered unrivaled in the field of scientific research and engineering development.   

About 60% of the Energy Department’s overall budget goes toward managing the National Nuclear Security Administration, which is focused on improving America’s security through the military application of nuclear science.

Another Oil Industry Ally and Climate Change Sceptic  

First Scott Pruitt, then Rex Tillerson, and now Rick Perry.

Last week, the climate action advocates went into a tizzy after President-elect Trump nominated Oklahoma Attorney General Scott Pruitt – having a history of suing the Environmental Protection Agency (‘EPA’) over its restrictions on power plants – to head the agency.

The anti-fossil fuel crowd was in for more shock after the confirmation of ExxonMobil Corp. (XOM Quick QuoteXOM - Free Report) Chairman and chief executive officer (CEO) Rex Tillerson as the secretary of state.

Finally, the choice of Perry adds to the list of oil industry friends and drilling proponents who have been tapped for top jobs in the Trump administration.  

Expectedly, environmental organizations are girding for a fight and have attacked Perry’s appointment for his preference for fossil fuel development and being pro-fracking. Environmentalists point out that Perry has repeatedly questioned science that shows that greenhouse gas emissions contribute to climate change. This could have profound impact for the U.S. environmental policy.

As it is, with Trump promising to cancel the landmark Paris deal and stimulate coal production once he takes office in January, the prospects of clean energy are far from being encouraging. Not only has Trump called climate change a hoax created by China, he has pledged to remove Obama’s Clean Power Plan.

But Some Hail Perry as the Perfect Choice

Certain sections see the former Texas governor as the perfect man to implement America’s policy of promoting affordable, abundant energy. As discussed before, his well-devised pro-energy plans created jobs and saved the state of Texas from the worst of depression. Notwithstanding Texas’ enviable oil and gas deposits, it’s Perry’s support to energy production and a conducive business environment that led to impressive economic results during his tenure.

Apart from advocating the removal of obstacles for energy sources, he encouraged building new nuclear power plants, and, surprisingly presided over a large ramp-up of Texas wind power production. These policies helped Texas reduce its electricity prices by a fourth since 2008, at a time when the national average has gone higher.

Leading the nation's second most populous state for so many years, Perry is also said to have the experience in taking over a department with tens of thousands of employees and a big annual budget.

How Will Perry’s Appointment Affect Oil & Gas Firms?

It’s no surprise that having Rick Perry in office would be attractive for energy companies. With Perry at the helm, the U.S. energy department is likely to see more business-based approach.

Oil stocks are already on the move this month on the news that several industry-friendly executives are being appointed to important posts. The Energy Select Sector SPDR – an assortment of the largest U.S. energy companies – jumped 4.70% month-to-date, while supermajors ExxonMobil, Chevron Corp. (CVX Quick QuoteCVX - Free Report) and Royal Dutch Shell plc each rose around 5%. Shell currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

If the U.S. Senate confirms Perry’s appointment, Energy Transfer Partners L.P. stock could be the biggest winner. As Energy Secretary, he is likely to push through the controversial 1,172-mile Dakota Access Pipeline primarily owned by the Dallas-based pipeline operator.

Beyond his tenure as Texas governor, Perry has been serving on boards of Energy Transfer Partners and Sunoco Logistics Partners L.P. – another developer of the pipeline designed to shuttle over 470,000 barrels of crude daily from North Dakota's prolific Bakken formation to an existing pipeline in Patoka, Illinois, which environmentalists claim could pose a threat to the local water supply.

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