Which of the following issues will be most important to you when it comes time to cast your vote in November?
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Hot-Button Election Issues & Your PortfolioSeptember 8, 2008 By Jamie Dlugosch, Contributing Editor, Investors Insights |
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Issue #3:
A New Millennium Energy Crisis
Obama’s short-term energy plan offers American’s a $1,000 emergency energy rebate check paid for with a windfall profits tax on oil companies. He also intends to crack down on excessive speculation, and he is not averse to using strategic reserves to lower current prices. Over the long haul he plans to invest $150 billion over the next 10 years in securing a clean burning energy future.
Analysis: Obama’s plan is an example of strong government support of a nascent industry. By encouraging investment in alternative energy, he hopes to accelerate our independence from Middle East oil. In addition, dollars spent now will be dollars saved later to the extent we can minimize or reverse the damage of global warming.
Net Stock Impact: Bullish
First and foremost, McCain believes high oil prices are a function of low supply. At the center of his plan are more domestic drilling and exploration. Doing so will greatly reduce our dependence on foreign sources. In tandem with greater drilling, he will promote use of clean cars by offering $5,000 tax credits. He supports nuclear power, alternative energy and a free market cap and trade system for reducing green house gases.
Analysis: McCain’s plan emphasizes free markets and deregulation in support of creating more supply. He favors private over public efforts but does offer tax incentives to consumers who change behavior. His plan’s stated objective is energy independence by 2025, thus he is taking a more incremental approach to the crisis. His plan will be bullish for oil companies and utilities that will have greater freedom to use currently available technologies including nuclear and clean burning coal to increase power production.
Net Stock Impact: Bullish
