Amid a year of ongoing losses, energy companies finally have something to celebrate: a day of gains. And they have the new Republican majority to thank.
Energy stocks are rising Wednesday on hopes that Republicans will pass pro-energy policies, including a go-ahead on the Keystone XL pipeline and reforms of crude and natural gas export laws. The gain is a welcome relief to an industry that’s been battered by the market this year.
While the Standard & Poor’s 500 index has gained 10.7% in the year to date, the S&P 500 Energy index has lost 3.4% over the same time period. Those losses continued through yesterday as energy stocks dipped after oil prices reached a three-year low, finally gaining relief today on hopes of industry supportive reforms.
Coal companies, led by Alpha Natural Resources (ANR) and Peabody Energy (BTU), posted strong gains amid expectations that Republicans will go against any restrictions on the resource. Kentucky Republican Mitch McConnell, who is likely to become the next Senate majority leader and establish the legislative priorities for the next two years, wants to curb coal plant regulations and stop government efforts to control carbon emissions.
Pipeline company TransCanada (TRP) also posted early gains given speculation that conservative leaders will push through approval of the Keystone XL pipeline, which has lingered since 2008. The pipeline would transport crude oil from Canada’s oil sands down to Gulf Coast refineries.
Republicans have long said they would pass legislation to pursue the transnational pipeline and expand energy production on federal property, and it looks like it could happen as early as the first quarter next year.
“I think Keystone will be one of the first bills we’ll be able to put up in the new Congress,” Republican Senator John Hoeven from North Dakota, said Wednesday. “I’ve got a bill right now that’s got about 56 cosponsors. And with the election results, we’ll have over 60 who clearly support the legislation.”
If President Obama chooses to veto the bill, Hoeven said Republicans would force it through by attaching it to other must-pass legislation. Even with a new Republican majority, it’s unlikely that they would have enough votes to override a presidential veto.
—Reuters contributed to this story.