Lost amidst the outrage over last week's video of GOP presidential candidate Donald Trump making lewd comments about women and the GOP's ensuing civil war was another WikiLeaks release of emails involving Democratic candidate Hillary Clinton. Unlike the previous emails that have dominated the news cycle over the last year, this batch allegedly (Ms. Clinton's campaign has refused to either confirm or deny their veracity) provides excerpts from high-paid and often secret speeches that she gave to members of the international business community. These speeches were a major point of contention during the lengthy Democratic primary campaign, in which supporters of Bernie Sanders repeatedly but unsuccessfully pushed for Ms. Clinton to release the speech transcripts.
The supporters of Mr. Sanders feared that the contents of Ms. Clinton's speeches differed from her stated positions on issues ranging from financial regulation to energy policy. Those fears came to fruition last week as WikiLeaks released emails purportedly obtained from the account of Ms. Clinton's campaign chairman and long-time advisor John Podesta. The emails show Ms. Clinton expressing laissez-faire positions on free trade, business regulation and, most damningly in the eyes of many on the political left, shale gas production. Among other things, Ms. Clinton stated during her speeches that the federal government pioneered hydraulic fracturing technology, attributed the U.S. economic recovery to the recent dominance of natural gas in the electric utility sector, accused Russia of funding anti-fracking and environmental groups, boasted of her promotion of fracking around the world, and spoke favorably of U.S. exports of natural gas and petroleum. One excerpt from September 2014 in particular indicates that Ms. Clinton has little in common with those in her party who would use federal policy to strand oil and gas assets:
"I'll make a couple of points, because it's really an important question. Number one, because of changes in technology as all of you know, we are now producing more oil and gas than we ever have in our history and we're on our way to be the number one producer in the world. Now, that is a tremendous opportunity, as long as we are smart about it. And we have to start by being smart about making sure we extract oil and gas in ways that don't destroy water tables, leak methane into the air, undermine the quality of life for people who live near the wells. And we have to do that. And there will be some places, frankly, where we will have to decide we can't do it there. But, many places we'll be able to, as long as we have the appropriate precautions undertaken."
In 2013, she went so far as to state that she supports a broad approach to energy policy that includes both fossil fuels and renewables:
"So I am an all-in kind of person, all-of-the-above kind of person when it comes to America's energy and environmental future. And I would like us to get over the political divide and put our heads together and figure out how we can be really, really smart about doing this. I mean, fracking was developed at the Department of Energy. I mean, the whole idea of how fracking came to be available in the marketplace is because of research done by our government. And I've promoted fracking in other places around the world. Because when you look at the strangle-hold that energy has on so many countries and the decisions that they make, it would be in America's interest to make even more countries more energy self-sufficient. So I think we have to go at this in a smart, environmentally conscious way, pursuing a clean-energy alternative agenda while we also promote the advantages that are going to come to us, especially in manufacturing, because we're now going to produce more oil and gas. And that's what I would like to see us talking about instead of standing on two sides of the divide and not working to try to minimize the damage and maximize the upside."
The excerpts from Ms. Clinton's speeches show someone who strongly supports an "all of the above" energy policy as long as it is implemented in a responsible manner. In other words, President Hillary Clinton's energy policies would represent a continuation of her predecessor's policies. While Mr. Sanders's supporters are understandably outraged that the excerpts weren't leaked during the Democratic primary, the excerpts don't appear to be especially meaningful from the perspective of energy and climate policy.
Not meaningful, that is, except for one important detail: Under strong pressure from Mr. Sanders and environmentalist Bill McKibben, the Democratic Party adopted a campaign platform last July that opposes natural gas production and combustion in the U.S. in favor of renewable energy.
Environmental groups have strenuously opposed shale gas production since hydraulic fracturing first became widespread in the U.S. on the grounds that it might pollute watersheds and harm human health in surrounding communities. More recently these groups have further claimed that all fossil fuels, not just coal, need to be left in the ground so as to prevent the 450 ppm atmospheric carbon threshold from being exceeded and the global "carbon budget" from being exhausted. This opposition has largely been limited to the fringe of the political left due to a mainstream interest in U.S. energy security and the recognition that replacing coal with natural gas reduces greenhouse gas emissions, as President Barack Obama recently pointed out in a discussion with actor Leonardo DiCaprio. The 2016 Democratic Party Platform therefore represents a major shift away from both mainstream political opinion and historical energy policy motivations.
The publication of the excerpts from Ms. Clinton's speeches muddies the waters in terms of predicting how U.S. energy and climate policy will develop following her likely election victory in November (she is up by 11 points over Mr. Trump in the most recent national poll following last week's disclosures while Nate Silver rates her chances of victory at 86%). On the one hand, Ms. Clinton was paid roughly $200,000 per private speech, a sum that would cause many people to play any tune that the audience requested. (If each speech lasted 60 minutes, then Ms. Clinton earned $55/second. Put another way, if she noticed a $100 bill on the ground by her feet during a speech and she paused for two seconds to pick it up, she would actually lose money by doing so if paid by the second.) Judging from the speech excerpts, it does not appear that Ms. Clinton was staking out many positions that were at odds with those of her audiences.
On the other hand, party platforms represent the pinnacle of political window-dressing. The drafting of the platform is an opportunity to fix any intra-party fractures that developed during a contentious primary campaign by giving the losing candidates seats at the policy table. Like the primary campaigns themselves, the party platforms therefore represent the view of the political party that drafts it rather than the diverse and often counter opinions that hold sway in the Federal government's actual policymaking bodies such as Congress. Many (most?) platform planks quickly fall by the wayside even when the party's candidate moves into the White House. The 2008 Democratic Party Platform, for example, lists a number of planks that remain unfulfilled after eight years, including the creation of a national workplace pension scheme, linking the national minimum wage to inflation, the defeat of Al Qaeda, the de-nuclearization of North Korea, the closure of Guantanamo Bay, etc. The 2016's goal of replacing natural gas consumption with renewable energy could easily join that list when Ms. Clinton ultimately leaves the White House.
Implications for investors
Speaking broadly, the release of the speech excerpts is good news for investors in the energy sector. Natural gas and oil reserveholders can take comfort in the fact that Ms. Clinton is not inherently opposed to fossil fuels so long as they are part of a transition to additional renewable energy production. If she was unwilling to adopt a clear-cut anti-fossil stance in the lead-up to her presidential campaign, then she is unlikely to do so as president, especially if the GOP maintains its majority in the House of Representatives (even if the GOP Senate majority is likely now out of reach following Mr. Trump's latest drop). Ms. Clinton's relatively moderate private stances on fossil fuels make it less likely that major fossil reserveholders such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP) will be forced in the U.S. to strand their assets, as many environmentalists insist will happen shortly. Similarly, her stated support for oil and gas exports, which environmentalists argue should be prevented by the Federal government so as to keep them underground and unused, is potentially bullish for their prices, which investors can gain exposure to via the iPath Crude Oil Total Return Index ETN (NYSEARCA:OIL), United States Oil ETF (NYSEARCA:USO), and PowerShares DB Oil ETF (NYSEARCA:DBO) for crude and the iPath Natural Gas Total Return Sub-Index ETN (NYSEARCA:GAZ) and United States Natural Gas ETF (NYSEARCA:UNG) for natural gas.
This news is also good for renewable energy consumption and, by extension, producers of renewable electricity units with large U.S. exposure such as First Solar (NASDAQ:FSLR), JA Solar (NASDAQ:JASO), and Hanwha Q CELLS (NASDAQ:HQCL). Levelized costs of renewable pathways such as wind and utility-scale solar PV have become competitive with many fossil fuel pathways, in part due to manufacturing cost declines, but also because of low natural gas prices. Natural gas consumption via "peaker" units is required to overcome the intermittency of wind and solar PV. The levelized costs of renewable electricity pathways when battery storage is used in place of natural gas to overcome intermittency are substantially higher. By keeping renewable electricity costs down, inexpensive and abundant natural gas spurs both renewable electricity capacity expansions and overall electricity demand.
Investors have gained some certainty over the last week following the release of the video of Mr. Trump and his subsequent meltdown in the polls. It now appears that Ms. Clinton will oversee the next several years of U.S. energy and climate policy, and her views on both are very different from those of Mr. Trump. The release of Ms. Clinton's speech excerpts adds some uncertainty for investors, unfortunately, although it now appears that she is less likely to be a disruptive presence in the energy sector than her party's environmental wing has hoped. The biggest policy battles involving the energy sector over the next four years could be between elements of the Democratic Party rather than between Democratic and Republican politicians as a result.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.