The presidential election is only four months away. While InTrade currently has the likelihood of Barack Obama getting reelected at 56%, the system isn't perfect, and a lot can happen in four months.
Should InTrade's prediction prove to be false, I'm here to tell you about a few energy companies that are poised to prosper from Mitt Romney's potential first 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.
Clear drilling steps
Mitt Romney has made no secret what he intends to do regarding energy when he steps into office. For starters, he has stated that he will issue an executive order to boost domestic energy production.
At first, this might seem a little odd, given that America became a net fuel exporter for the first time since 1949 under Obama. But Romney expands to include specifics that make the picture clearer:
Romney will significantly expand the areas available for energy development -- including in the Gulf of Mexico, the Outer Continental Shelf, Western lands, and Alaska. He will also strengthen partnerships with Canada and Mexico to expand opportunities for American companies in the development of those nations' resources. And he will encourage continued development of unconventional reserves like shale gas and oil that hold enormous promise for expanding the base of U.S. reserves.
The first thing that sticks out here is the fact that drilling for oil, especially deep-water drilling, would be expected to experience a dramatic resurgence. Romney's camp states that it will "implement a process for rapid issuance of drilling permits to developers with established safety records."
That would certainly be a boon for deep-water drilling leaders like Transocean, but also smaller companies like Hercules Offshore (Nasdaq: HERO), which is the largest rig operator in the Gulf of Mexico.
Another way to play the deep-water boom would be to take a look at companies that provide parts to companies like Hercules and Transocean. When it comes to that realm, there's no safer bet than National Oilwell Vacro. As fellow Fool Aimee Duffy recently pointed out: "Ninety percent of the world's rigs have National Oilwell Varco equipment on them."
What about alternative fuels?
The end of Romney's directive does state, "he will encourage continued development of unconventional reserves like shale gas and oil." That means that even if drilling for more oil is the centerpiece of his energy strategy, he's keenly aware of the value proposition natural gas offers for weaning our dependence on foreign oil.
Though its not crystal clear, it seems unlikely that some newer form of the NAT GAS Act would pass under Romney's watch. That would be a setback for the likes of Clean Energy Fuels (Nasdaq: CLNE) and Westport Innovations (Nasdaq: WPRT).
Clean Energy is building out a network of natural gas filling stations, while Westport designs engines that run on natural gas. While there's still a powerful economic incentive for businesses to convert to natural gas, tax breaks provided by the Act would help speed the process along.
The same could be said for biofuel companies like Solazyme (Nasdaq: SZYM), which produces tailored oils through the use of its patented micro-algae. Although the company could survive without government help -- it has three different revenue streams -- it also has agreements in place with the U.S. Navy that some consider to be too expensive.
A boon for coal?
Finally, there'd be more reason to be optimistic about coal under a Romney administration. While the EPA released guidelines this year that make the building of new coal power plants seem less feasible, a Romney administration could reverse the decision.
Although that might make industry leaders like Arch Coal (NYSE: ACI) more tempting -- with its beaten-down price and large dividend -- investors should still approach cautiously. There's still a real possibility that natural gas could start replacing coal in electricity production.
For more potential opportunities and threats from the coming 2012 election, click here for strategies on how to protect and grow your wealth, no matter which candidate wins in November.
