Among the many issues taking priority in the upcoming 2024 U.S. Presidential election, there’s one topic that 81% of voters across both parties say will be very important to their vote: the economy. And a primary factor that can significantly impact the economy and inflation far into the future is energy costs.
Over the last four years, increased energy costs have created challenges for consumers, businesses, and policymakers, adding to inflationary pressures and instigating necessary changes to business models across various sectors. From higher consumer costs, reduced economic growth, and inflationary pressure, the impact of rising energy prices is real.
To prepare for energy cost implications from the election’s outcome, Certified Energy Procurement (CEP) professional and resident ePro+ expert Bretton DeNomme shares what energy policies will look like from two different market perspectives.
Both Vice President Kamala Harris and former President Donald Trump have outlined contrasting visions for America’s energy future, which could significantly impact energy costs for the next four years. DeNomme examines the potential effects of each candidate’s policies on natural gas and electricity prices.
Bull Case: Former President Trump’s support for domestic fossil fuel production will likely lead to:
Bear Case: Relaxed environmental regulations could result in environmental backlash, litigation, or state-level resistance and supply chain disruptions. While the overproduction of natural gas might lower prices in the short term but could also lead to boom-and-bust cycles, hurting the industry’s long-term profitability. In addition, strained international relationships could impact LNG (liquified natural gas) exports, reducing market demand.
Bull Case: Vice President Harris supports the investment in renewable energy infrastructure to possibly:
Bear Case: A strong push for a clean energy transition could lead to higher regulatory costs for the natural gas sector. Plus, potential carbon pricing or restrictions on natural gas usage could drive up prices as supply chains adjust to stricter standards. Reduced natural gas exploration and production incentives could lead to supply shortages and price increases over the long term.
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Presidential elections often coincide with fluctuations in oil prices, which directly affect energy costs for businesses. For example, in the 2008 election year, oil prices reached a record high of $147 per barrel before plummeting to $32 by the end of the year.
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Bull Case: Former President Trump’s support for traditional power generation (coal, natural gas) could:
Bear Case: Lack of support for renewable energy could slow the transition to cheaper, sustainable energy sources, ultimately raising electricity costs in the long run as fossil fuel prices rise. An aging grid infrastructure may become more prone to failures, increasing maintenance costs and elevating electricity rates. International trade disputes could impact the cost of importing materials for energy infrastructure, affecting electricity pricing.
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Electricity prices have risen by approximately 20% since late 2020.
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Bull Case: A strong push for renewable energy (solar, wind) by Harris could:
Bear Case: Initial investment costs for renewable energy infrastructure and grid modernization may result in higher electricity prices in the short term. Possible phasing out traditional energy sources like coal and natural gas could lead to temporary supply constraints, raising electricity costs. Carbon pricing or additional taxes on fossil fuel-based electricity generation could increase costs for utilities and consumers.
The Harris administration could push solar and wind policies that have proven to be unsuccessful in Europe and continue to retire coal, nuclear, and natural gas power plants, according to DeNomme.
By contrast, DeNomme believes the Trump administration would be a positive catalyst for the expansion of nuclear power in the U.S., as well as opening up exploration for oil and natural gas domestically. “We would also see public/private partnerships for small modular nuclear reactors,” he states.
Contact an ePro+ expert today to proactively navigate the complexities of energy management, reduce costs, and drive sustainable growth in any market environment.
