<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=343345&amp;fmt=gif">

Fossil Fuel & Energy Infrastructure

03.17.2019 | Ben Phillips, CFA

Blog Images

The Policy in Focus series highlights a new policy driven investment theme (legislation or regulation) our team is monitoring. You can subscribe to the Weekly Market Recap to receive this report each week and visit www.EventSharesFunds.com for our investment solutions. 

 

Login to Library ➔

 

Subscribe to weekly

 

 

Background: Fossil Fuel & Energy Infrastructure

 

• The Trump administration has aggressively pushed to deregulate energy infrastructure, including natural gas pipelines, oil drilling, and gas shipping terminals. For example, one aspect of the administration's overall plan would shorten the time a state has to issue water permits, which are needed for construction of interstate natural gas pipelines under Section 401 of the federal Clean Water Act.

 

• Increasing pipeline capacity and energy transportation networks may lead to increased exports of crude and/or natural gas. The U.S. currently has a lack of infrastructure to manage energy transportation, especially in the Permian Basin where drilling activity is strongest.

 

• The Trump administration has also pushed to redefine "navigable water" under the Waters of the United States rule. The Obama administration had pushed for a wide definition, which the energy sector claimed brought every puddle of water under federal jurisdiction. If the Trump administration is successful in changing the definition of navigable water, the energy sector may be able to expand infrastructure more quickly and less expensively.


• The Trump administration continues to encourage development of the U.S. coal industry, by relaxing emission standards for utility owned coal power plants and pushing for exports of U.S. coal.
 

 

 

Our Take & Timing: The Opportunity

 

President Trump campaigned on building energy infrastructure and expanding the U.S. pipeline network. However, the Trump administration has not experienced much success in rolling out new energy infrastructure. We attribute this to broad energy changes away from fossil fuels to cleaner, more renewable energy sources. While the Trump administration has pushed aggressively to save the coal industry, we note that even the president can't stop changing industry dynamics.

However, the broad environmental deregulation push will benefit liquefied natural gas and oil pipeline development. As the U.S. extracts increasing amounts of oil, the country's infrastructure will have to be built out. In our view, the administration's regulatory actions (e.g. limiting the amount of waterways under federal jurisdiction in the Clean Water Act and opening up federal lands to energy infrastructure) will play a role in that build out.

 

 

LEARN MORE: This research is a byproduct of our active ETF.

 

 

Charts: Trading Range & Relative Performance

 

Energy Infrastructure  

 

Impacted Companies: Stocks to Watch

 

  • Liquefied Natural Gas Terminals: Cheniere Energy (LNG)
  • Energy Infrastructure Builders: Quanta Services (PWR), Fluor (FLR), Halliburton (HAL)
  • Utilities: NextEra Energy (NEE), Duke Energy (DUK), Exelon (EXC), American Electric Power (AEP), Ameren (AEE), PG&E (PCG), Edison (EIX), Southern Company (SO), Dominion Energy (D), Consolidated Edison (ED)
  • EventShares manages a portfolio of our best ideas.

 

 Subscribe to weekly

 

 

About EventShares

 

EventShares is an investment management firm dedicated to translating legislation and regulation coming out of Washington D.C. into real world investment solutions. The firm's goal is to provide its clients with attractive, long-term results by following a disciplined and differentiated approach to investing.

Headquartered in Newport Beach, CA EventShares serves individuals, financial advisors, as well as institutions and offers its sophisticated investment strategies through active ETFs and separately managed accounts (SMAs).

 

Fund Site ➔

 

 

If you like this research report, visit www.EventSharesFunds.com to learn more about our portfolio solutions. 

 

 

Subscribe to our Newsletter

New Call-to-action

Related posts:

Important Information

Active Weighting Advisors LLC ("AWA") is an SEC-registered investment adviser that manages ETFs under the brand name EventShares Funds. The opinions expressed herein are those of AWA as of the published date and are subject to change. It is provided as general market commentary only, and it does not consider the specific investment objectives, financial situation or particular needs of any one client. The comments may not be relied upon as recommendations, investment advice or an indication of trading intent. AWA is not soliciting any action based on this document. Investors should consult with their own financial adviser before making any investment decisions. 

There is no guarantee that any future event discussed herein will come to pass. The information herein was obtained from various sources, which we believe to be reliable, but we do not guarantee its accuracy or completeness.Returns assume no management, transaction or other expenses and no reinvestment of dividends, interest and/or capital gains. Past performance does not guarantee or indicate future results.

Investing involves risk, including the possible loss of principal and fluctuation of value. AWA disclaims responsibility for updating information. In addition, AWA disclaims responsibility for third-party content, including information accessed through hyperlinks.