TCC takes a look at the reason for Energy Transfer’s surge today
Donald’s Trumps emergence to power as the President of the United States has started to make headlines. Mr. Trump has gone ahead overriding former President Barack Obama’s decision in his first few months in office. The latest development that has seen headlines was his decision to pass executives orders for the government approval of the Keystone and the Dakota Access pipelines.
Mr. Obama took a rather harsh stance against energy companies during his tenure as President. The increase in global warming followed by environmental degradation and the construction of such pipelines stimulated him to pass the decision in the favor of the environmentalists, but his successor, Trump, takes a rather different approach and believes the project would reap substantial dividends for the US.
Companies in involved in the midstream segment are enjoying the benefits of Mr. Trump’s policy. Alerian MLP (NYSEARCA:AMLP) has risen by 2.06% since the news. In addition, Energy Transfer Partners (NYSE:ETP) and Sunoco Logistics Partners LP (NYSE:SXL) have also shown positive stock movements following Mr. Trump’s decision.
As reported by Barron’s Jay Hatfield from InfraCap MLP ETF indicated that Obama’s decision of not going ahead with the Dakota Access pipeline led to huge losses to Energy Transfer Partners. Like most energy projects, the project was quite expensive and the company had spent significant amounts in depressed environment.
The management of Mr. Trump is different and indicated that it would help companies with such projects. This is a blessing for energy companies who are already suffering due to a major drop in oil prices. This is expected to lead to groth in the sector. In addition would also help reduce regulatory risk and help the shares of Energy Transfer to Outperform the market once it seals the deal with Sunoco.