The 2024 election is shaping up to be a massive one for energy stocks. That’s because 34 seats are up for grabs in the Senate, plus all 435 are contested in the House alongside 11 gubernatorial elections. This means the pendulum can swing very far in one direction in just one year.
Should that pendulum swing in the direction of the Republican Party, the red wave could potentially change the future of energy production in the United States. It’s no secret that the energy stocks Republicans prefer and support tend to be from the oil and gas industries. After all, many of the conservative strongholds in the United States are oil-producing states like Texas, Alaska and North Dakota.
As such, the constituents of these states and the major companies that drive their economies lobby for policies that favor oil and gas. Investors now more than ever may want to keep an eye on the following energy stocks as the political landscape could change dramatically.
ExxonMobil (XOM)
One of America’s largest oil companies and the direct descendent of the Standard Oil company, ExxonMobil (NYSE:XOM) has had some complex relationships with former President Donald Trump over the last decade. While Trump had an affinity for its excellent management, picking Rex Tillerson as his secretary of state during the early days of his first administration, the oil giant has not been one of the main contributors to Trump’s recent campaigns.
That doesn’t mean, however, that they don’t stand to gain a lot from the Trump presidency, which will essentially open up drilling permits and federal land for XOM’s exploitation. The company, much like many other oil and gas giants, relies on the steady flow of oil for its long-term solvency.
While the price of oil may dictate its current profit margins, what determines its future is how easy and affordable it is for the company to develop new deposits. As such, XOM might be one of the best energy stocks to buy simply due to Trump’s policies for making business and resource exploitation easier in the United States.
Schlumberger (SLB)
As one of the most well-managed offshore drilling companies, Schlumberger (NYSE:SLB) has some of the strongest financial bases on which to build its future investments. Thus, with a higher likelihood of a Trump presidency following the most recent presidential debate, keeping an eye on how Trump’s policies could shape offshore drilling rights in the United States would be critical for getting the right timing to buy SLB stock.
Moreover, investors who are wary of the future of oil and gas should know that Schlumberger has 85% of its investments operating at a breakeven oil price of $50 a barrel or below. This means that the company can drive profitability from drilling will, even in the event of a production glut in the United States following the Trump presidency.
That’s because it’s unlikely for oil to fall to its pandemic-era prices, but it can decrease in value if supply rapidly increases from pro-oil and -gas policies.
BP (BP)
While BP (NYSE:BP) may be an originally British company, many of its most profitable wells around the world rely on cooperation with American companies and policymaking to remain successful. Moreover, BP is somewhat of a more diversified play among energy stocks thanks to its recent investments in hydrogen technology and further improvements in emissions from its oil and gas production.
Moreover, per a report by Greenpeace back in 2020, BP remains known for its lobbying efforts toward the Trump administration. This came as it worked to try to decrease and relax some of the safeguards around oil drilling in the United States.
There’s a chance should Trump return to the presidency that he’ll follow through with this lobbying attempt from 2020. Making expansion and investment easier for BP does improve this energy stock’s long-term profitability outlook.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
