What happened

A new president is in the White House, a new "green energy" policy mandate is ascendant in Washington -- and that's not looking like good news for oil stocks on Thursday.

As of 1:40 p.m. EST, shares of oil giant ConocoPhillips (COP 1.89%) are down 5.4%, while smaller oil and gas producers Devon Energy (DVN 1.51%) and Murphy Oil (MUR 1.24%) are down 10.2% and 13%, respectively.

Three red arrows going down and crashing through the floor

Image source: Getty Images.

So what

Why are oil stocks down? Honestly, I think it's probably for the same reason that non-oil stocks -- solar stocks in particular -- are up today.

As recently as yesterday, megabank Citigroup was saying Conoco stock should be put on a positive "catalyst watch" for signs of "competitive growth" -- but that's not the way things are working out for Conoco or its fellows today. Instead, we're seeing an incoming Biden administration wasting no time in signing a slew of executive orders: 

  • Rejoining the Paris climate accord;
  • Revoking permits to build the Keystone XL pipeline;
  • Setting up an interagency working group on greenhouse gas emissions; and
  • Generally preparing to undo as many as 100 or more executive orders, memoranda, and permissions related to the environment issued during the Trump administration.  

Now what

While all this sounds like good news for the environment, it may be less than great news for the oil industry. At least, that seems to be what investors are worrying about today.

Citi's endorsement notwithstanding, and despite oil prices holding up pretty well today (WTI and Brent crude prices are both down just a small fraction of a percent in afternoon trading), oil stocks are taking it on the chin. Part of the reason is probably the evident crackdown on the oil industry that's afoot. And part of it is the new administration's express intent to favor renewable energy over fossil fuels.  

As Greentech Media reports, 70% of new-built energy capacity in the U.S. this year will be of the green variety -- 81% if you include spending on the development of battery storage banks for electricity. That's a clear indication of where the energy industry will be heading, for the next four years at least. And as the trend progresses, with hundreds of billions of federal dollars invested in growing renewables, the market price of green energy sources is only going to get more competitive with that of oil.