“Overall, having a government that actually backs up what they say and that actually says, we’re going to support infrastructure, we’re going to support job creation, we’re going to support growth in America, and then actually does it. My God, this is going to be refreshing. So, I think, overall, I’m very, very enthusiastic about what’s going to happen with our country, very enthusiastic and it supports our industry.” – Kelcy Warren, CEO of Energy Transfer Equity (ETE)
Will the election of Donald Trump “Make MLPs Great Again?” Regardless of political leanings, changes are coming to the energy landscape in America. While information regarding exact policy is scant, many executives in the energy industry are very encouraged, even excited, by the election of Donald Trump. The Trump administration will be a partner and promoter of the development of the natural resources in the United States. To properly develop our resources, investing in domestic energy infrastructure is essential. We believe a significant amount of red tape will be cut away and projects like the Dakota Access Pipeline (DAPL) will be completed. President-elect Trump frequently discussed infrastructure investments during the campaign and it was evident he understands the importance of energy infrastructure. Below are some ways we think the new administration will impact the energy landscape in America:
Pipeline Regulation– the Trump Administration will streamline the permitting process for pipelines. This will enable projects to come on-line quicker and will lower the regulatory expense. Projects like the Dakota Access Pipeline, which has been in the news lately as protesters are preventing construction, will move forward. The Dakota Access went through a multi-year process of filing permits and applications in numerous different states only to see the federal government take an unprecedented step to try to halt the project. This federal over-reach won’t occur under Donald Trump. The highly debated Keystone XL project will likely get approved in the coming months to further enhance the energy security in the United States. We expect to see additional natural gas pipelines to move forward in the Northeast which will allow the Northeast to fully take advantage of the Marcellus Shale.
Clean Power Plan– the Trump administration will take aim at the Obama plan to regulate power plant emissions as the regulation will likely increase electricity rates throughout the country. Emissions from the United States have been declining for years and the shale revolution has further lowered emissions through the increased usage of natural gas.
Drilling on Federal Lands– the Trump Administration has promised to start issuing more permits for energy exploration on federal lands. They have also advocated for development of our vast offshore resources. More drilling will require more energy infrastructure, so this development is positive for MLPs.
Oil Prices- Despite common belief, politicians typically have a very limited impact on oil prices. However, the Trump administration has the ability to impact the prices. Unleashing drilling in the United States will lead to increased global supply and keep a lid on oil prices. On the other hand, abandoning the Iranian Nuclear deal and snapping the sanctions back could impact oil production in Iran, which would be bullish for oil prices. At the end of the day, we think that oil production in the United States will react more to the price of oil than any other factor.
We understand all the emotions surrounding a Trump Presidency. Many of his policies raise question marks in many peoples minds. But we believe his presidency will be very positive for domestic energy infrastructure and energy development. We don’t believe we’ll see a large influx of new coal power plants or large carbon emission growth. The shale boom, specifically natural gas, has put us on a path to a cleaner future and a Trump Administration will encourage and potentially accomplish true American energy independence. To sum it all up, we view this as a HUGGGE victory for the midstream energy sector.