Donald Trump’s second act is here, and so is his unapologetic love for oil.
The man who once shouted “drill, baby, drill” is wasting no time shaking up energy policy. In his first hours back:
- Paris climate deal? Exited.
- Oil output? Full throttle.
- EV sales targets? Scrapped.
- Windmills? Leases canceled.
During Trump’s first term, oil stocks floundered, falling nearly 20% in his first three years (even before COVID-19). Oversupply and a looming economic slowdown hammered the sector.
Meanwhile, clean energy stocks soared over 40%, riding super-low interest rates and massive project funding.
This time, the backdrop is trickier.
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The fallout begins
Trump’s swift moves have already hit Europe’s wind power sector. Orsted, the offshore wind giant, plunged 17.5% on Tuesday, with turbine makers Nordex and Vestas following suit.
But don’t expect an oil boom just yet.
US energy stocks aren’t buzzing, and crude prices are trading lower. Why? Simple economics: more oil production ➡️ oversupply ➡️ lower oil prices ➡️ shrinking margins for oil companies.
Oil has been stuck in neutral for a year, pressured by record US output. Flooding the market with more barrels could mean more pain for already struggling energy stocks.
Bank of America’s January Fund Manager Survey shows energy as the most underweight sector. Big money isn’t betting on a Trump-fueled revival.
Read more: Looking to Trump-proof your portfolio? Here’s the cheat sheet
Winning bet: Clean vs dirty?
Clean energy’s golden era might be forever elusive. Interest rates are much higher (above 4%) than they were back then, and it’s unlikely they’ll go back to where they were anytime soon, even with the Federal Reserve cutting rates.
Still, traditional energy stocks offer potential bargains. Chevron and Exxon trade at forward P/E ratios of 15x and 14x, with solid dividend payouts. Occidental and ConocoPhillips aren’t far off.
A Goldman Sachs survey shows 75% of investors expect oil stocks to match or beat the S&P 500 by 2025. More than 50% see clean energy doing worse than the wider index.
But don’t count on gains for either side. Whether it’s wind turbines or oil barrels, the road ahead is bumpy — and MONIIFY isn’t buying the hype on either.
Edited by Ankush Chibber. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
