• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Energy

Energy Projects Will Go Forward No Matter Who's Elected

Energy efficiency will become the prime tool for power grids to manage energy delivery.
By GLENN WILLIAMS
Nov 05, 2012 | 05:39 PM EST
Stocks quotes in this article: TRP, ENB, ENOC, EXC, CPN, DYN, NRG

It feels like News Year's Eve. The silly season is almost over and we will soon get some relief from the campaigns, pundits and intense advertising. For those of us living in swing states, the relief will be welcomed.

I don't have special insight as to who will be elected. I will leave political forecasting to others. But it doesn't matter much because some important energy projects will go forward no matter who is elected. Here are two.

Good Times Are Ahead in the Oil Patch

The U.S. and Canada will continue exploring and developing new sources of oil and natural gas. Delivering new products will be expensive, but it will provide new jobs, expanded infrastructure and provide new investment opportunities.

The primary driver behind these projects will not be government, but the energy markets and worldwide demand for petroleum products. For the first time in decades, the U.S. is beginning to export motor gasoline, diesel and jet fuels. Driving those exports is the newly formed price spreads between Brent and West Texas Intermediate oil markets. As long as that price spread continues, U.S. petroleum products will enjoy a competitive advantage worldwide.

This is one reason why the Keystone Pipeline will be built. This is an easy prediction to make because most of the pipeline is already built. The pipeline's first phase covers approximately 2,000 miles from Canada to Illinois and it went into commercial operations two years ago.

The second phase from Nebraska to Oklahoma went online last year. The third phase from Oklahoma to Texas is part of the so-called "Keystone XL" pipeline and its construction started in August. The final phase will duplicate and expand part of the Phase 1 pipeline to provide additional capacity, and it will likely be built no matter who becomes president.

It's not just a single pipeline driving domestic oil markets. TransCanada (TRP) and Enbridge (ENB) have been quietly developing dozens of new pipelines throughout North America. Today, TransCanada lists 15 active pipeline projects, representing $22 billion of investment. Not to be outdone, Enbridge lists 20 separate pipeline development projects.

Change Is Ahead in the Power Markets

While many rules are subject to Federal Energy Regulatory Commission oversight, most of the changes in the power markets are being driven by regional and state policies, not necessarily the White House.

Driving the change are energy efficiency and demand-response projects. They have become the industry's silver bullets because policymakers have found they are effective in reducing the need for more transmission lines and power plants. Since fewer power plants are needed to respond to peak demands, less pollution is produced and the states win again. Going forward it appears that energy efficiency will become the prime tool for power grids to manage energy delivery.

While this may be good news for consumers and companies like EnerNOC (ENOC), it will provide huge opportunities for new businesses. In the next decade, expect a number of killer applications that will help consumers respond to market signals and manage phantom loads (unnecessary devices that constantly consume small amounts of electricity). There could be dozens more Steve Jobs and Bill Gates in the making, so hang on to your seatbelts.

The good news on the industry's high technology side could spell challenging times for independent power producers who were accustomed to meeting peak demand and harvesting peak prices. With power prices shaved, producers such as Exelon (EXC), Calpine (CPN), Dynegy (DYN) and NRG Energy (NRG) will likely see lower margins going forward.

As such, no matter who becomes president, the nuclear power industry will likely remain stuck in neutral, power production from steam coal will remain bounded and investment in high technology gas turbines will be limited to regulated states.

No president can achieve energy independence for the nation and nobody is trying. The U.S. will continue to rely on Canada and other friends to provide most of the nation's oil imports. Canada may also provide growing amounts of electric power. The markets, not the White House, drive many of the industry's investment decisions.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication the author held no position in the stocks mentioned.

TAGS: Investing | U.S. Equity | Energy

More from Energy

Is Chevron Finally Ready to Make an Upside Breakout?

Bruce Kamich
Mar 1, 2021 1:44 PM EST

Let's check out some charts on the energy giant.

No Longer an 'Aristocrat,' This Dividend Stock Still Looks Pumped

Bob Ciura
Feb 25, 2021 2:30 PM EST

Suncor Energy has a bruised but energizing 3.0% yield.

As Plug Power Plummets, There Appears to Be More Risk Ahead

Bruce Kamich
Feb 25, 2021 2:03 PM EST

Let's check out the PLUG charts as traders react to the latest EPS numbers.

This Refinery's 5.8% Dividend Yield Is Betting on a Recovery

Bob Ciura
Feb 19, 2021 12:30 PM EST

Valero Energy's dividend has not been cut, despite hard times. There is the possibility for outsized returns from a quicker than anticipated bounce back in demand, but clear risk remains.

Looking for an Energy Boost? Try Royal Dutch Shell's 3.5% Dividend Yield

Bob Ciura
Feb 18, 2021 12:32 PM EST

Shell suffered along with the rest of the oil and gas sector last year. But it could be a good dividend play once again.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 06:05 PM EST PAUL PRICE

    Michael's (MIK) up on take-over rumors

    The NYT says talks are underway regarding a buyo...
  • 08:09 AM EST GARY BERMAN

    Monday Morning Fibocall for 3/1/2021

    Always a good idea to know where our bounce zones ...
  • 11:51 AM EST REAL MONEY

    Watch Bob Lang and Doug Kass Discuss Short-Selling!

    Bob Lang and Doug Kass with an engaging and educat...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login