3 Industries Congress Left out in the Cold This Holiday Season

Like it or not, the government has a pretty big impact on many companies we invest in. And with gridlock becoming the norm in Washington, there are a number of industries that won't be enjoying a happy new year in 2012.

A bet everyone wants to take
One of the more puzzling things Congress barely discussed in 2011 was an online gaming bill that could be a boon for the likes of MGM Resorts (NYSE: MGM  ) and Caesars Entertainment. Legalizing online gaming -- and poker in particular -- has wide support on both sides of the aisle, and would generate revenue for the government. That sounds like a no-brainer to this Fool.

Nearly everyone in the industry, outside of Las Vegas Sands' (NYSE: LVS  ) CEO Sheldon Adelson, is for some kind of legislation to define rules for online gaming and regulate its operations. Until now, it's been a Wild West of offshore competitors and dubious financial transactions for those in the industry.

The timing couldn't be better, either, after Full Tilt Poker and PokerStars were shut down by the Feds in April, with the former being accused of being a ponzi scheme. For the sake of the industry and the safety of those playing online, I hope 2012 is the year this mess is finally figured out.

Sand, oil, and a pipeline held hostage
The Keystone XL pipeline has both hard-line supporters and critics. Proponents say the pipeline will create jobs (although the actual number is up for debate) and reduce our reliance on OPEC oil. Opponents say that the environmental cost of the pipeline outweighs the potential benefits.

No matter which side you believe, the government has kicked the can of making a decision down the road in 2011. First, President Obama declined to make a decision, and then Congress didn't force a decision before the year was out as it had proposed during the end-of-year tax battle.

So the pipeline proposed by TransCanada (NYSE: TRP  ) hangs in the balance, and Canadian officials look for other places to send their oil.

A solar subsidy that actually makes sense
Just as the solar industry is getting off the ground, Congress is putting up another roadblock as we enter 2012. The 1603 Treasury Program, designed to pay cash grants instead of tax credits, has been a great tool for the solar industry and has helped the industry grow to over 100,000 employees in just a few years. But in the next few days it will expire.

The cost has been relatively minimal. As of November, the program had awarded 3,600 grants for a total of $1.5 billion, supporting $3.5 billion in private investment.

Even if 1603 expires, a 30% tax credit will still be available until 2016, so the government will be paying these costs either now or later. With government borrowing at record low rates, the program could help drive more growth in 2012 for solar, one of the few industries that is growing significantly in 2011. This is one case in which spending now instead of spending later makes a lot of sense.

The impact for utility-scale developers like First Solar (Nasdaq: FSLR  ) and SunPower (Nasdaq: SPWR  ) is likely to be muted next year, because large investors have lined up to fund their projects in recent months. But manufacturers without a large project development arm, like Suntech Power (NYSE: STP  ) , Trina Solar (NYSE: TSL  ) , and Yingli Green Energy (NYSE: YGE  ) , will be affected without the extension, and so will a growing number of solar installers.

Gridlock likely to continue
I would love to say there's hope for Congress to act quickly to help all three industries early in 2012, but the way things are going right now, I'm not sure that's the case. Despite support for online gaming, the success of the 1603 program in 2011, and the need to make a decision on Keystone XL, these companies will probably be hung out to dry in 2012.

Fool contributor Travis Hoium owns shares of First Solar and SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of TransCanada and First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On January 05, 2012, at 8:37 AM, mnpat wrote:

    Mn. is investing in "Clean Coal" as our future energy, with the increase in air pollution we know solar wouldn't work in the long run. Of course we don't have any coal, but we haven't fingered out how to tax the sun or solar production.

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