The U.S. Environmental Protection Agency (EPA) has been coming up with more stringent rules for the energy market with a bid to lower green house emissions.
Per the Energy Information Administration (EIA), motor gasoline and diesel consumed for transportation in the U.S. during 2015 emitted a total of 1,545 million metric tons of carbon dioxide (CO2). This accounted for almost 83% of the U.S. transportation industry’s total CO2 emission. This is where the urgent need for reducing pollution and saving the environment rises.
Amid a situation when caring for the earth has become the central theme for most of the regulatory bodies, President-elect Donald Trump selected Scott Pruitt — attorney general of Oklahoma — as the next leader of EPA. Pruitt’s appointment will undoubtedly be in favor of the energy industry as he is known to be pro-fossil fuel.
Scott Pruitt to Lead EPA
Republican Scott Pruitt is a skeptic of climate change and is well known for playing a leading role to halt the EPA’s ‘Clean Power Plan’ – an attempt by the Barack Obama administration to cut emissions of greenhouse gas from coal-fired power units.
After choosing Scott Pruitt, Trump has given a clear indication of nullifying a host of regulations associated with the climate legacy of President Obama. In other words, the nomination of Scott Pruitt reflects Trump’s strong inclination towards fossil-fuels.
Energy Firms Welcome Pruitt
Expectedly, the energy industry is happy with the decision of Trump and is confident that Pruitt, being an ally of fossil fuel, will not come up with any regulations that will inhibit the oil and gas sector.
In fact, Mr. Pruitt’s statement “Scientists continue to disagree about the degree and extent of global warming and its connection to the actions of mankind,” clearly indicates that he strongly doubts the theory that fossil fuel leads to increases in earth’s temperature by emitting greenhouse gas.
On the other hand, environmentalists are outraged over the nomination of Mr.Pruitt as they believe that with this selection Trump has paved the way for polluters to fill up their pocket at the expense of global warming.
Oil & Gas Stocks to Get a Boost
After taking office on Jan 2017, Donald Trump and his energy sector friendly EPA chief has to decide which fossil fuel — among oil, gas and coal — to choose.
Overall, whatever policy Trump decides on, it is almost a clear indication that they are not going against fossil fuel and might implement all the policies in favor of the energy industry. So the revolution for producing clean fuel by saving environment is no longer going to be a threat for the oil and gas stocks.
4 Safe Bets
Let’s focus on those players that are involved in upstream energy operations and will go on producing more oil and gas without any restrictions from the EPA. We have employed our proprietary screening methodology to choose five oil and gas stocks that are carrying either a Zacks Rank #1 (Strong Buy) or #2 (Buy).
We believe these companies should prosper in the Trump-Pruitt era.
San Antonio, TX-based Abraxas Petroleum Corp. (AXAS) is involved in producing oil and gas in the U.S. The company currently carries a Zacks Rank #2 and has surpassed the Zacks categorized Oil & Gas-U.S Exploration and Production industry, year to date. Over the aforesaid period, Abraxas gained more than 97%, while the Zacks categorized Oil & Gas-U.S Exploration and Production industry improved only 48%.
Headquartered in Midland, TX, Diamondback Energy Inc (FANG) is engaged in the exploitation and development activities in the oil and natural gas resources in the Permian Basin in West Texas. The company sports a Zacks Rank #1 and outperformed the Zacks categorized Oil & Gas-U.S Exploration and Production industry after improving more than 57% during the above mentioned period.
Denver, CO-based SM Energy Co (SM), previously known as St. Mary Land & Exploration Company, is an independent oil and gas firm engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. SM Energy carries a Zacks Rank #2 and has surpassed the Zacks categorized Oil & Gas-U.S Exploration and Production industry after gaining more than 80%.
Resolute Energy Corp (REN) — based in Denver, C) — is involved in the exploitation and development of oil and gas resources in the U.S. The company carries a Zacks Rank #2 and has beat the Zacks categorized Oil & Gas-U.S Exploration and Production industry after improving as much as 660%.
Confidential from Zacks
This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today’s Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report