The presidential election is only four months away. While Intrade currently has the likelihood of Barack Obama getting re-elected at 56%, the system isn't perfect, and a lot can happen in four months.
Should Intrade's prediction prove to be true, I'm here to tell you about a few energy companies that are poised to prosper from a second Obama term. At the end, I'll offer you access to a limited special free report that will explain other ways to profit from the election.
A scaled back cap-and-trade?
Back in May, award-winning columnist Ezra Klein of The Washington Post opined about what a second term for Obama might really look like. "Beyond the deficit, Obama's advisors see two big unfinished pieces of business from the first term: climate change and immigration reform." Of course, Obama will have to deal with the budget first, but that's required to be taken care of -- or at least kicked down the road -- by Dec. 31, 2012.
When it comes to a massive climate change bill, don't expect a wide-ranging deal that will change the face of energy consumption overnight. As Neera Tanden, former advisor to Obama and current president of the Center for American Progress, simply states, "I don't think [Obama] can move a climate bill." She says a piecemeal bill that moves us toward energy independence is more likely.
A scaled down version of the cap-and-trade system collapsed in the Senate in 2010, but the president would still like to see some movement in the area.
What's more likely would be an emissions control program. While there are several players in the automotive engine field, none look to be in a better position to capitalize than Cummins
Don't bet the farm on biofuels
During a second Obama term, renewable energy would be back in the spotlight as well. Biofuel companies such as Solazyme
But with the bad taste of Solyndra still in Congress' mouth, there may be stiff resistance to subsidizing biofuel companies that are just getting started. Though I own Solazyme for its groundbreaking technology, I also recognize that if Obama's re-election were the crux of my investment thesis, I'd be reconsidering my purchase.
Stay away from coal...
Though coal currently accounts for 21% of energy consumption and 45% of electricity generation, coal companies could be squeezed under Obama. The EPA recently came out with new regulations placing limits on the amount of greenhouse gases new power plants can emit.
Though the rules don't mention coal plants by name, there's reason to worry. A full 77% of coal plants in America were built before 1980, and if they are going to meet demand, a new fleet will need to be built or retrofitted. A standard plant would have a very difficult time meeting new regulations.
So even though stocks such as Arch Coal
But the real winner is...
Despite a desire to strike a more comprehensive solution, I believe Obama will see that fate has provided one big energy solution on a golden platter for him: natural gas.
It's true, there are some very serious concerns about the environmental effects of fracking and the pollution that it creates. But I see Obama taking steps to ensure that the process is more transparent.
Our reserves of natural gas are abundant and offer an easy way to wean the country off foreign oil. It also offers up an alternative to dirty coal plants for meeting the country's energy needs.
The safest plays in the sector are companies such as ExxonMobil, which is America's largest natural gas producer, or National Oilwell Varco, which provides the parts necessary to extract both oil and natural gas.
For investors looking for a larger risk/reward ratio, there's Westport Innovations
Heckmann, on the other hand, provides solutions for companies that have to dispose of wastewater produced from fracking. The company could potentially benefit from increased scrutiny from the EPA regarding the disposal of such water.
The Motley Fool owns shares of Heckmann, Westport Innovations, National Oilwell Varco, Solazyme, and ExxonMobil. Motley Fool newsletter services have recommended buying shares of National Oilwell Varco, Westport Innovations In, and Cummins. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.