On Monday, January 20, Donald Trump will take the oath of office and become the 45th president of the United States.
If you pay any attention to the financial media, you’re well aware that they are having fits trying to figure out how Trump’s policies will affect the U.S. economy and the stock market. Especially interesting will be the first moves he takes when he enters office…
Most commentators expect a flurry of executive orders on Day One. But which ones will be the focus?
Will it be action on Ukraine? Mass deportations? Hitting China with tariffs? Reversing the Tik Tok ban? Establishing a U.S. Bitcoin reserve? The list of possible actions is pretty long…and some carry a pretty high degree of difficulty.
Let’s assume that Trump decides to focus on some low-hanging fruit. His campaign promise to “Drill Baby Drill” is a strong contender to be first.
On the campaign trail, Trump said that “Drill Baby Drill” was the cure for a lot of what ails the US economy. Increase oil production, bring oil prices down and that impacts a wide range. Shipping costs, the price at the pump, manufacturing costs…
Lower oil prices would take a bite out of inflation and also put a little extra cash in American’s pockets from savings at the pump.
But you gotta wonder if Exxon-Mobil and other oil companies are really interested in spending a bunch of money to increase production and drive oil prices significantly lower.
Cold Reception
Case in point: two weeks ago, the Biden Administration opened up 400,000 acres of the Arctic National Wildlife Refuge (ANWR) for oil companies to bid on drilling permits.
There were zero bids. And this is the second time a permit auction for ANWR exploration has failed in the last four years.
Now, there’s more to drilling for oil in ANWR than just bringing in the rigs. You gotta build roads and pipelines and facilities for the crews…
Still, ANWR gets pitched as an example of burdensome regulation – some say this latest permit sale was designed to fail because the amount of land offered up was too small to make drilling viable. And that may be…
It also may be that oil companies aren’t really interested in investing a lot of money in new production that will lead to lower selling prices.
Follow the Demand
There is one aspect of “Drill Baby Drill” that makes all kinds of sense: natural gas.
America needs to increase its electricity production by 50% over the next few years in order to satisfy the insatiable demand coming from data centers. Yes, this is one of the reasons that nuclear stocks have been running so much. But the simple fact is: it will take years to get new nuclear power generation up and running. Trillion dollar companies like Microsoft and Google just don’t have that kind of time…
Natural gas is the quick, easy, cost-effective answer.
In fact, Facebook parent company Meta (NASDAQ: META) announced a new $10 billion investment in Lousiana. The local utility Entergy (ETR) will build three new natural gas power plants to provide 2,200 megawatts of power to Meta over the next 10 years.
In addition to America’s needs, now that Europe is completely cut off from Russian natural gas pipelines, demand from Europe is surging.
Right now, there’s not much chatter out there about the coming boom for natural gas demand. That’s going to change very soon.
My colleague Christian “Hammer” DeHaemer has just finished “deep dive” special report that features his top natural gas stocks. You’ll see it in your email inbox in the next couple of days…
Cheers,
Briton Ryle
Chief Investment Strategist
Outsider Club
X/Twitter: https://twitter.com/BritonRyle
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Hammer Nailed this Trade
