Real Money asked me to outline the winners and losers of President Trump's decision to abandon the Paris climate accords.
The answer here is pretty easy and obvious: The winners will be a few coal companies, most likely Arch Coal (ARCH) , Peabody Energy (BTU) and Cloud Peak Energy (CLD) , all three of whom advised against leaving -- and their gains will more than likely only be short and temporary.
The losers are virtually everyone else.
I don't say that merely from an environmental point of view, but let's look at the very long term first. We have an ongoing progression of energy sourcing that dates back to the 1800s, when the major energy source for the growing nation was wood-based. As the Industrial Revolution gained steam in the 1850s, coal overtook wood in powering our nation. The progression continued in the early 1900s with the advent of fossil fuels, including natural gas and oil refining, with crude oil remaining the larger component in transportation and electricity generation.
Natural gas has become an ever more important component of core energy production, and the progression is naturally continuing toward natural gas and away from crude oil. Ultimately, alternative energy sources are the next step and will at some point become the dominant form of energy.
We may argue about the timing and speed of this progression, but the outcome is universally agreed upon -- even among oil and coal companies.
With the withdrawal from the Paris agreement, drawn with the assent of virtually every other nation on the globe, Trump is not only denying climate change and the U.S. role in carbon emissions. He is also literally trying to distort the natural progress of civilization.
Oil companies are still the largest recipients of alternative-energy rebates from the government -- they invest tens of millions of dollars on developing biofuels and other fossil-fuel proxies. They know that renewable sources of energy will continue to gain in importance as time goes on and they very much want to be a part of that progression.
The Paris accords were a construct of voluntary contributions that needed no public repudiation from Trump -- his evisceration of the EPA and increased drilling incentives in the Arctic and Atlantic Ocean have made compliance with Paris all but impossible anyway. His announcement yesterday comes as a mere act of defiance and destruction, a small fulfillment of a campaign promise to a handful of coal miners and his friend Robert Murray, the CEO of Murray Energy.
You might think all energy companies would benefit as well from the retreat, but that is hardly the case. The oil industry has just experienced close to three years of crude oil and natural gas surpluses, causing cratering prices and destroying shareholder value. The last thing oil companies need, as oil attempts to finally right itself from this bust, is the resurgent competition of coal as an energy source, or marginal oil producers, incentivized by reduced carbon emissions to add to the already swelled supply. That is why President Trump received personal letters from many oil companies, including the CEO of Exxon Mobil (XOM) .
Few winners, many losers. In all ways, the retreat from Paris may be the most shortsighted move yet from an already incredibly unaccomplished Trump administration.