President Obama and Oil & Gas

After all the hype then President Obama was re-elected in the US Presidential Election earlier this month. Not having Congress onside has hurt Obama in Term 1; his wish to extend credit and reflate the US economy ensured he suffered electorally. That’s’ American politics for you folks. Presidents need Congress.
Related to our industry of Oil & Gas, we ask, how harmful is Obama’s re-election to the Global Oil & Gas Industry anyway? The flexing and scaremongering of those implicit in their view that Obama naturally is predisposed to taking antagonistic positions against said O&G companies.
Has the industry fared badly? We think not! Consider the facts.
O&G production has risen sharply, in our estimation it simply represents the bullish price activity related to persistent high prices which have created a ‘demand pull’ not ‘cost push’ pricing effect. These rising prices have allowed O&G companies to reinvest an increasing degree of profit share into new project development.
It is this very creation of these infrastructures which are unlikely to impact on O&G prices for some time to come. There is always a ‘lag’ in some sense prevalent where infrastructure projects are affected.
Historically O&G companies fared well under Obama. The AMEX Nation al Gas Index; the Index increased between Obama first term inauguration by 85%! Not bad!! On the Oil side for instance Chevron went up by 75% under Obama’s Presidency.
It’s obvious to the writer here that it is not the predisposition of politicians towards energy that matters, more the fact that external factors ‘trump’ presidential policies when looking at company and sector performance. As in any business, product price sets the agenda, yet it those companies with superior management and great decision making skills who can make money in the bearish markets; when prices are actually falling.
Price per barrel 4 years ago $30, we now look toward $150. Personally fossil fuel investments have always appealed to me as a secure ‘banker’ irrespective of political climate.
The USA in 2015 will become the world’s O&G producer. That fits in with our analysis.
We welcome your comments. Thank you.