by: Justice Litle posted on: September 04,
It’s too early to tell whether Democrats or Republicans will make history in November. No matter who gets elected, though, alternative energy wins.
As a general rule of thumb, your humble Taipan Daily editor tries to avoid talking politics like the plague.
When forced to hear about the merits of Democrats or Republicans (having been cornered at a party or what have you), the closing paragraph from George Orwell’s Animal Farm comes to mind:
Twelve voices were shouting in anger, and they were all alike. No question, now, what had happened to the faces of the pigs. The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but it was already impossible to say which was which.
Having got that cynical bit out of my system, I’ll admit there are some substantive differences this time around.
From an investment trend standpoint, though, at least one thing seems certain: No matter who gets elected, alternative energy wins.
A Real Horse Race
To quickly recap events, both candidates stepped up and helped their own causes last week.
On the Democrat side, Obama was widely seen as meeting or exceeding expectations with his historic acceptance speech. The Clintons also did their part for party unity (and graciously refrained from wrecking the convention).
On the Republican side, John McCain shook up the race (and garnered huge media attention) with his surprise pick of Sarah Palin, governor of Alaska and mother of five, for VP. In response, the talking heads were either elated or infuriated. Debate rages on.
The bottom line is, this thing looks like a horse race. The polls are close as I write, though that could obviously change in a “heartbeat.” (Why do I suspect we’ll be sick of that word by November.)
History buffs are excited because 2008 will be a landmark year for the White House, no matter who wins. Here’s why alternative energy investors should be excited, too.
If Obama wins, the “greens” will have a powerful upper hand.
An Obama administration will be deeply beholden to the “greens” on multiple levels. Party players, green lobby interests, and grass-roots supporters will create a powerful alignment.
On the player side, think of elder party statesmen like Al Gore. Love him or hate him, Gore has reinvented himself as the larger-than-life face of environmentalism. If his party wins, he’ll play a big role... and get an even bigger megaphone. You’ll also see and hear more from green voices with clout, like New York Times columnist Thomas Friedman.
Green lobbyists and grass-roots supporters will not be shy in holding the Democrats’ feet to the fire if they win. With control of both the executive and legislative branch, there will be an overwhelming sense of “If not us, who? If not now, when?”
As for who will pay for the tens of billions (or even hundreds of billions) in green subsidies if Democrats win, that’s easy: Big Oil. (Three words: windfall profits tax.)
This is one of those cases where backroom politics and emotional sentiments perfectly align. The Dems are drooling at the thought of sticking it to the Big Oil fat cats, and using the money they extract to help save the planet at the same time.
One of the big worries for the green movement is too big a decline in fossil fuel prices. The general fear, already voiced loudly by pundits like Friedman, is that America might be tempted to go back to “business as usual” if a gallon of gas gets cheap again.
With Obama in the White House, though, the moral imperative of going green will keep the money flowing to green projects no matter what. Even if the price oil continues to fall, the greens will be humming along with The Who: “Won’t get fooled again.”
If McCain wins, the oil and gas “fear premium” will be back with a vengeance.
John McCain, on the other hand, relishes his image as a maverick warrior. His habit of playing the impulsive gambler has proven both a blessing and a curse over time (the raging debate over his VP choice serving as latest example).
On the plus side, McCain’s willingness to “tell it like it is” endeared him to many during the 2000 presidential campaign and cemented his reputation for blunt honesty.
On the negative side, McCain’s habit of making light of serious things has raised eyebrows in the past. (Like when he sang “Bomb, bomb Iran ” to the tune of the Beach Boys’ “Barbara Ann.”)
And when it comes to Russia , the famed McCain temper comes into play... because the man simply hates Vladimir Putin’s guts.
In a foreign policy speech in March of this year, McCain openly called for booting Russia out of the G8 (a club of the world’s wealthiest democracies). In the rarefied world of international diplomacy, that’s the rough equivalent of spitting in someone’s eye.
McCain has also flatly accused Russia of “nuclear blackmail” and “cyber attacks.” And when the South Ossetia conflict broke out, McCain took sides aggressively, declaring “We are all Georgians” to the press.
For various reasons, as you can see, a McCain White House would be close to a war footing with Russia from Day One. (In Moscow they know this full well also.) Some columnists have joked about the possibility of McCain taking things to the brink with Putin... and then having “hockey mom” Palin step in. (It’s almost a funny thought but not quite.)
Make no mistake; the “new energy cold war” has already begun. On Monday, the UK Telegraph reported, “Fears are mounting that Russia may restrict oil deliveries to Western Europe... in response to the threat of EU sanctions and Nato naval actions in the Black Sea .”
If McCain is elected, though, energy traders will have something new and potent to chew on.
While an Obama White House is likely to err on the side of caution, geopolitically speaking, a McCain White House is far more likely to err on the side of aggression. With Russia especially, but others, too (like Iran or Venezuela ).
That shift in the risk matrix would put global slowdown on the back burner of oil traders’ minds and make supply disruption worries a key factor once again.
Which, in turn, would send the price of oil climbing back towards $150 as the fear premium heats up... keeping the pressure on to find and fund alternative energy solutions.