Oil and Gas Look Like Promising Pool for Investment

Energy investors might see their average annual returns heat up to around 13% over the next two years if the incoming Trump administration makes good on campaign promises, according to AMG’s Economic Outlook “soft-landing” scenario.

Oil prices are expected to be relatively stable in coming months, ranging from the upper $60s to $70 per barrel, and natural gas prices could rise to over $3.50 per thousand cubic feet (MCF). Oil and gas investments can serve as a hedge against inflation and a buffer against geopolitical events, potentially an important consideration as tariff policies and ongoing conflicts threaten global supply.

Now that President Trump has reclaimed the White House, having campaigned on a promise to boost oil and gas production to ensure U.S. energy independence, investors should expect to see policies that roll back regulations, ease the permitting process, reopen petroleum leases on federal lands, and boost exports of liquified natural gas (LNG). Trump has also said he intends to eliminate subsidies for electric vehicles and reduce incentives for many renewable-energy sources.

To manage the new policies, Trump has nominated Chris Wright, the chief executive of Liberty Energy, to run the U.S. Department of Energy. Wright built his career in technology-driven oil and gas services, but has ties to alternative energy, including serving on the board of Oklo, a company developing advanced fission reactors. Liberty is also developing technologies to enhance efficiency of geothermal energy projects.

Industry has taken notice. Since the November election, both Chevron and ExxonMobil have said they plan to cautiously expand capital spending on oil and natural gas while continuing to invest in low-carbon solutions.

Clearly, the new administration intends to favor fossil fuels over the clean-energy policies of the Biden administration. But the switch is not absolute. The momentum of renewable energy development is likely to continue, albeit at a slower pace. Additionally, market forces and existing investments in clean-energy infrastructure may moderate the policy shift.