Energy Investing - The election and oil fundamentals - Energy Investing - InvestorVillage

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Msg  452406 of 501593  at  10/1/2022 7:39:09 PM  by


The election and oil fundamentals

There's been lots of discussion today on technicals and fundamentals on both oil and the economy.   IMO, oil and the stock market will not necessarily trend together and once the election is over, we might see some changes to oil fundamentals that have nothing to do with the global economy or interest rates.
The dems were under lots of pressure to reduce gas prices, especially last summer when the price popped to over $5.   Thus, the administration has put an unprecedented amount of SPR into the economy.
While rank & file moderate voters might be concerned about the price of fuel, environmental and climate change progressives are less interested in low priced fossil fuels.   In fact many of them want the price of fossil fuels to increase so there is conservation and switching to alternative fuels.   As a result, we might anticipate an end to the SPR draws once the election is over as the progressive voices in the administration get their way.
The other big concern for energy companies is the windfall profit tax.   If Repubs get at least one house of Congress, a windfall profit tax won't be enacted.  If the Dems retain both houses, the risk of the windfall tax continues for two more years.
When it comes to energy valuations, politics does matter.   The point of this is not to advocate one party over the other for the election, but rather understand how it will impact energy investments.

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