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Donald Trump’s re-election as US president has sparked a surge in petroleum and gas stocks while renewable energy shares experienced declines.
On the day following Trump’s election victory, the energy sector saw significant gains, with the SPDR Energy Select Sector Fund (representing energy stocks in the S&P 500 index) rising by approximately 4%. This reflected market optimism for fossil fuel investments under Trump’s administration, known for its pro-petroleum and gas policies. In contrast, renewable energy companies faced setbacks, with shares of US solar giant First Solar plunging more than 10%.
Market reactions and policy expectations
These market reactions indicate that Trump’s second term is expected to prioritize traditional energy sectors, likely limiting support for renewables while advancing petroleum and gas development.
Trump’s vision for US petroleum and gas
In his victory speech, Trump emphasized plans to further expand US petroleum and natural gas production, which had already reached record levels. He underscored that the US holds more "liquid gold" than countries like Saudi Arabia and Russia. His re-election places him in a position to make significant energy policy changes aimed at bolstering fossil fuel production.
Pressure on states and the private sector
Trump has criticized green technologies, such as wind turbines and electric vehicles, pledging to eliminate unused climate budgets. However, private businesses are expected to continue investing in clean energy technologies. Many states are also likely to maintain their clean energy initiatives regardless of federal policy changes. Over the past decade, even during Trump’s first term, the renewable energy sector experienced significant growth due to private investments, though federal spending might now face cuts.
Proposed reductions in climate and environmental programs
Key figures in Trump’s circle advocate dismantling federal climate initiatives, including repealing tax incentives under Biden’s Inflation Reduction Act. Some have proposed eliminating the Department of Energy’s Loan Programs Office and sections of the Environmental Protection Agency focused on climate-related activities.
Impact on clean energy credits and loans
The Trump administration may attempt to limit clean energy tax credits and scale back support for projects like green hydrogen production. Additionally, Trump could target the Department of Energy’s Green Technology Loan Program, which currently provides substantial funding for new technologies. Some stakeholders support redirecting this funding to fossil fuel investments.
Key energy sector implications
Broader implications for US energy policy
According to Oil Price, Trump’s victory signals a return to prioritizing fossil fuels while challenging climate programs, potentially reshaping US energy policy. While federal approaches may shift, state-level and private-sector efforts to invest in renewable energy are expected to persist, reflecting the ongoing tension between environmental goals and economic interests.
BY WPB
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