Four ETFs Likely To Be Impacted By Obama’s Energy Plan

In an attempt to address the rising costs of fuel and crude oil, President Obama stated that it is vital for the US to embark on a long-term plan to tap domestic resources and soften its dependency on foreign oil, which could potentially influence the iShares Dow Jones US Oil & Gas Expl and Prod (IEO), Oil Service HOLDRs (OIH), Market Vectors Glb Alternative Energy ETF (GEX) and the Market Vectors Uranium & Nuclear Energy ETF (NLR). 

The President specifically called for new incentives to boost production of crude oil, gas and biofuels as well as more stringent fuel efficiency standards on vehicles and further development of alternative energy solutions.  In particularly, President Obama reaffirmed his support for nuclear power and the usage of natural gas.  Although the specific incentives are still a work in progress some could include shortening lease terms, speeding up the process of securing lease and drilling permits, lowering the royalties paid to the federal government for leases and expanding production areas offshore.

According to the Department of Interior, there could be as much as 11.6 billion barrels of untapped crude oil and 59.2 trillion cubic feet of natural gas in the Gulf of Mexico, but fewer than half of the leases on federal land are active.  Many blame this on bureaucratic red tape and strict guidelines which make it extremely challenging for drillers to start drilling.

At the end of the day, President Obama’s energy plan is aimed to reduce oil imports by nearly one-third over the next ten years and bring some of the nation’s energy dependency back home. 

As mentioned above, some ETFs that are likely influenced by the President’s plan include:

  • iShares Dow Jones US Oil & Gas Exploration and Production (IEO), which includes companies such as Occidental Petroleum (OXY), Apache Corp. (APA), Devon Energy (DVN) and Chesapeake Energy (CHK) in its top holdings.
  • Oil Service HOLDRs (OIH), which includes Schlumberger (SLB), Baker Hughes (BHI) and Halliburton (HAL) as its top holdings.
  •  Market Vectors Glb Alternative Energy ETF (GEX), which is a diversified play on alternative energy.  Some of its top holdings include First Solar (FSLR), Vesta Wind Systems (VWS) and Cree (CREE).
  • Market Vectors Uranium & Nuclear Energy ETF (NLR), which is an equity play in nuclear energy.  Top holdings include Constellation Energy (CEG), Cameco Corp (CCO) and Exelon Corp (EXC).

 

Disclosure: No Positions

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About etftutor
Kevin Grewal is the founder, editor and publisher of ETF Tutor and serves as the editor at www.SmartStops.net, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was a quantitative analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton. He is contributing author on The Street - his articles can also be found published on various sites including Yahoo! Finance, The Globe and Mail , Daily Markets, MSN Money, Seeking Alpha, Fidelity Investments, Traders Library, and Minyanville. Prior to this, Mr. Grewal was an analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds

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