What are the presidential candidates saying about energy? How could their policies affect MLPs?
Choosing a presidential candidate is not easy. There are so many issues to consider, and to understand where each candidate stands on every subject is no small feat. If you have a television, it’s likely that in the past few weeks, you’ve heard enough name calling and overdramatized headlines to last a lifetime. My goal today is to stick to the issues, and provide investors with a useful look at each candidate’s stance on energy. I’m going to discuss the polices of both democrats and the three republicans with the highest ratings in the polls (Trump, Cruz, and Rubio). We’ll go in alphabetical order starting with Ms. Clinton.
After reading energy related materials on Hillary’s website, the recurring themes I take away are that updating existing energy infrastructure and eventually transitioning into renewable energy are her top priorities. Clinton suggests that there are many oil and gas pipelines in the US that are in need of repair and the alternative, transportation by rail carries significant risks. Her goal in committing resources to the revamp of America’s current system is to reduce leaks, increase safety, and ease climate change. The democratic frontrunner also hopes to forge a path to renewable energy. One way she’s planning to do this is through her “Clean Energy Challenge” which would award competitive grants to cities and rural communities that take the lead in reducing pollution and reducing energy costs. Additionally, if elected, Secretary Clinton also hopes to establish a North American Climate Compact with the leaders of Canada and Mexico that would encourage coordinated energy policies toward fewer emissions, renewable infrastructure investment, and general efficiency.
Next up is Texas’ own Ted “the bear” Cruz. When it comes to energy policy, Mr. Cruz is focused on making the most of the energy renaissance. If it were up to Cruz, he’d approve the Keystone Pipeline, end greenhouse gas regulation by the EPA, and shut down the Clean Power Plan. Senator Cruz believes that encouraging pipeline build-outs such as Keystone will stimulate job growth. He thinks that reducing environmental regulations will free small businesses and farmers from burdensome regulation. In March of 2015, Ted Cruz introduced the American Energy Renaissance Act of 2015. Several of the aforementioned goals are outlined in the act, as well his plan to open federal land and resources to private sector oil and gas development.
Third in our discussion and currently in third place in the Republican primary race is Marco Rubio. Midstream Business reported that Devon Energy Corporation (DVN) co-founder Larry Nichols, who is set to retire this year, is aiding the Rubio campaign with energy policy. (While DVN itself is not an MLP, the company owns about a third of EnLink Midstream Partners (ENLK).) Given this, it’s not surprising that Senator Rubio shares many of the same sentiments as Senator Cruz such as approving Keystone and abolishing EPA regulations. Mr. Rubio also makes clear statements about eliminating government interference when it comes to “handing out subsidies” to particular companies. In other words, providing subsidies for renewable energy companies, but imposing regulations on businesses that work with hydrocarbons is unfair in his opinion. Rubio is in favor of promoting competition between traditional and renewable energy resources. He believes that modernizing the regulations and permitting process for all energy sources will “encourage energy diversity.”
Bernie Sanders is up next. I think it’s safe to say the Vermont senator separates himself from the other candidates in that the impacts of climate change are his chief concern. While he does agree with Ms. Clinton that updates to our current infrastructure system are needed, his focus is set squarely on converting to renewable energy sources. Mr. Sanders believes America should “accelerate a just transition away from fossil fuels” and forge ahead to a day where electric cars are the norm and charging stations are as easily accessible as gas stations. Sanders thinks that building out renewable energy infrastructure will also create jobs. His vision is for the US to lead the world in solving climate change.
Last is Donald Trump. As far I can tell, Mr. Trump does not discuss energy on his campaign website. Lucky for me, the internet is always listening. His tweets tell us that he supports fracking, and he’s evidently into building Keystone XL because he “wants a piece of the profits.” When it comes to energy independence, Mr. Trump seems to believe in the goal. At a January debate, Trump said, “Energy independence is a requirement if America is to become great again.”
After reading though these five paragraphs, you might be left with the conclusion that the policies of the republican candidates are better for traditional energy and therefore, better for MLPs. This could be the simple reality, but after thinking about it more, it may not be as straightforward as it seems. Maybe one day renewable energy could be the predominant energy source, but until then, we’ve seen many instances where natural gas serves as the transition fuel. How else do you think (some) electric charge stations generate electricity? Or where does the energy come from for industrial plants to produce a chargeable battery for an electric car? The reality is that just like the outcome of the presidential election, none of us know for sure what will happen. All we can do is try our hardest to understand what each candidate believes and take the time to ask ourselves what we think about the issues that matter to us.
