Obama on Energy

How will President-elect Obama affect your portfolio? Keep reading our special series for the lowdown.

During the second presidential debate, Barack Obama was asked to rank health care, energy, and entitlement reform in terms of pressing priorities. Energy came in at the top of the list.

It took $4-a-gallon gasoline to do it, but our leaders (and leaders-to-be) have finally recognized that "borrowing from the Chinese and sending money to Saudi Arabia" is not an energy plan. So what exactly does the president-elect envision for our energy future, and what does it mean for investors?

Well, let's frame our discussion using the bullet points of the Obama/Biden New Energy for America plan:

Provide short-term relief to American families facing pain at the pump.
This first item has lost a great deal of its urgency in recent months. Thanks to the commodities crash, I filled up my tank for about $30 this week.

The whole windfall profits tax notion, which somehow survived my withering critique last May, will most likely be left on the shelf. Sure, ExxonMobil (NYSE: XOM  ) just notched another record quarter, but that's a high-water mark unlikely to be matched in the foreseeable future.

Help create 5 million new jobs by strategically investing $150 billion over the next 10 years to catalyze private efforts to build a clean energy future.
This potential green largesse runs the gamut, from plug-in hybrids to next-generation biofuels, and from clean coal to energy-efficiency technologies. Cleantech investing has been red hot, with the venture capital community pouring $1.6 billion into U.S. firms in the third quarter. The October carnage has certainly had an impact on cash-constrained start-ups, but the sector may bounce back to bonanza mode thanks to an Obama bump.

I was initially hesitant to recommend that all Fools make room in their portfolio for clean energy, because this market is a minefield. On second thought, however, you're not limited to pure plays like Suntech Power (NYSE: STP  ) and LDK Solar (NYSE: LDK  ) . For instance, there's Google (Nasdaq: GOOG  ) , whose gigawatt-scale ambitions we have documented and even defended. You've also got Intel (Nasdaq: INTC  ) , IBM (NYSE: IBM  ) , and countless other multinational stalwarts angling for pieces of the renewable pie. So do go ahead and work some green into your portfolio -- if only indirectly.

Within 10 years, save more oil than we currently import from the Middle East and Venezuela combined.
The idea here is basically to combine higher fuel economy standards for our gasoline-fueled vehicles with a transition to plug-in hybrid electric/flexible fuel cars. If you think I'm going to recommend an automaker for investment, well, forget about it.

Put 1 million plug-in hybrid cars -- cars that can get up to 150 mpg -- on the road by 2015, cars that they will work to make sure are built here in America.
Still not interested in the automakers, but if you see another investment angle here, I'm all ears.

Ensure that 10% of our electricity comes from renewable sources by 2012, and 25% by 2025.
If the idea of $15 billion a year in government cleantech investment wasn't enough to make you see green, then a 10% federal "renewable portfolio standard" ought to do the trick. The response by utilities like Duke Energy (NYSE: DUK  ) in conforming to state-level standards has been solid, and a nationwide mandate would really get the megawatts moving.

Implement an economywide cap-and-trade program to reduce greenhouse gas emissions 80% by 2050.
This proposed cap-and-trade program is absolutely crucial for the Obama/Biden green investment plan, because a portion of the pollution credit auction proceeds will seed the $15 billion investments mentioned previously. Importantly, we have the European Union experience to draw from, and we have a better shot at getting our carbon priced at a proper level from the get-go.

A Foolish final word
The policies outlined above are obviously preliminary, and a weak economy will pose a real challenge to some of these programs. At the same time, that very weakness cries out for new jobs, new profit centers, and new efficiency standards. I have to agree with money manager Jeremy Grantham that a massive green government stimulus program could offer a "long-range bonanza" for this country.

Intel is Motley Fool Inside Value recommendation, and the Fool owns shares of it. Google and Suntech are Rule Breakers selections. Duke Energy is an Income Investor recommendation. Elect to take a free 30-day trial of any of our Foolish newsletter services, and we can set you on the road to a profitable future.

Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (23)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 07, 2008, at 1:11 PM, beyondgreen wrote:

    Energy Independence needs to be included in the realm of our economic issues. Our dependence on foreign oil impacts every aspect of our society and economy. This past year is a testimony to that fact. Jeff Wilson has a great new book out called The Manhattan Project of 2009 Energy Independence NOW. I highly recommend this book to anyone interested in seeing our country become more energy independent.

  • Report this Comment On November 07, 2008, at 1:31 PM, jlevine16 wrote:

    There are potential investments regarding hybrid vehicles that are out there - specifically the company that can design the batteries that power these cars. I haven't done a lot of research on these companies, but they are out there. One company (who actually helped GM build an electric car in the 90s, they do other things to) is Aerovironment. They are actually up about 45% over the last year, so I'm not sure they are a great investment, but I'm sure there are competitors worth looking at.

  • Report this Comment On November 07, 2008, at 2:01 PM, EPS100Momentum wrote:

    Put it this way? The more electric cars in use the more electric producing companies like AES will profit.

    Its like the gold rush in the 1800's, the only people that made money was the one's selling picks & shovels.

    Today's electric companies will be the biggest benefactor of the Obama alternative energy policy.

  • Report this Comment On November 07, 2008, at 7:39 PM, kavlayou wrote:

    When Pelosi took office I urged investment in technology to avoid what we have just gone through. no one listened.Gas went up some profited some lost all. now gas is back down. If you do not realize how vulnerable we are then we can be crushed like a bug if we do not invest in new technology which in turn will spur new jobs we must move in a new direction of manufacturing and energy grids and energy production techniches in the short term to assure our principles are maintained in this country. New business will emerge new members of society will have the opportunity to emerge into the upper classes and our laborers will be there to work and make this merchantile market come back on its feet. Invest the money and in markets that will change our future and reliance. it is the way to go it is the way of change and the future will automatically choose its course in emergence.

  • Report this Comment On November 08, 2008, at 12:05 PM, PorgyPorgy wrote:

    It's interesting that the fools have no comment regarding Boone Pickin's energy plan. At the core of the plan is natual gas; for auto fuel and heating etc. We already own and produce enough to lessen our dependence on the arabs dramatically and yet it's all but ignored in energy viability discussions. Electric cars would still require fossil fuel power plants to provide the juice so why not use what we already have?

  • Report this Comment On November 08, 2008, at 3:19 PM, gebby9 wrote:

    what about the economics of global warming? this is always left out of the articles and the commentaries. it is no longer about oil price or availability. it is about life on the planet and national security. does this change because oil price has declined in the short term? under the democrats i think not

  • Report this Comment On November 08, 2008, at 5:53 PM, mas113m wrote:

    Dems = no drilling, no nuke, no clean coal. Buy oil companies, then you can make money while people hope for alternatives.

  • Report this Comment On November 08, 2008, at 11:44 PM, 9622C wrote:

    Administration has too many other pressing problems to deal with first; employment, mortgage fiasco, Middle East, health care. Will take another prolonged round of $4-5/gal gas for the Dems to even start thinking about doing anything in this area. Besides with GM and Ford in such great shape! who gets the dough to build these 150 mpg cars! Toyota? As for alternate energy sources, ever try to start a wind farm? They've been at it for 3 years here locally and haven't even signed land contracts due to the backlash from "environmentalists".

  • Report this Comment On November 09, 2008, at 7:43 AM, WhiteHatBobby wrote:

    Liberals have always cheered for inefficiency. They prefer wind farms and solar that would take up 300 miles of coast to produce the same as 1/2 mile of a nuclear energy.

    The greenie weenies of the Left want to destroy every industry that doesn't appease their environmentalist agenda.

  • Report this Comment On November 12, 2008, at 8:21 PM, markcox wrote:

    2.5% of the US coastline could house 860,000 5 megawatt wind turbines and provide all the electricity America needs. A recent report noted that in 3,600 renewable energy sites in the US, 44 times all the American annual energy needs could be met if fully exploited.

    Nuclear is no doubt safe and easier now but it still has waste, geopolitical, health, pollution, reliability and huge subsidy problems. These are called externalities. Fossil fuels have all these AND climate issues too. The MOST republican values are served by protecting the community with a long term vision to get renewable energy technologies installed as soon as possible but its taken far sighted democrats to get here.

    Many permanent bonuses come from this; better health, more jobs, no geopolitics from energy, a potential export business and something few think of.... no energy inflation becuase there is no purchased and volatile fuel involved.

    Its about time an adminstration that 'gets it' arrived.

  • Report this Comment On November 16, 2008, at 1:07 PM, fetterc wrote:

    Not mentioned in the article was what effect the cap and trade system will have on things like coal (devastating), or electrical power costs (devastating). The real shame is that, unless China and India also reduce CO2 emissions, our pain will be for naught, our manufacturing base will be in ruins, and we will lose our competitive advantage. As an engineer, the only win-win way out of this mess is to concentrate on reducing consumption of all forms of energy through greater efficiency. High prices for energy will of course accomplish that, but wouldn't it be better to keep costs as low as possible? And there is my conflict because I believe that the free market is the right way to go. How do we steer markets toward energy conservation without big, expensive government programs? The best way, and this hurts to say, is a Carbon tax. A Carbon tax will have an immediate impact, and require very little new bureaucracy. There would ensue a natural and gradual shift toward lower emissions, and isn't that the objective? This is coming from someone who thinks that CO2 is not a major cause of global warming, but realizes that convincing the non-technical liberal elite of that is not possible.

    Write your Senators and Reps. Cap and Trade is a very bad idea.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 771744, ~/Articles/ArticleHandler.aspx, 10/20/2014 1:08:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement