Miller/Howard Investments
Miller/Howard Commentary
Trump's Impact on Financial Policy: How does "America First" impact your portfolio?
Part 4: LNG Exports Provide Trade and Job Growth Opportunities
Michael Roomberg, CFA, Portfolio Manager/Research Analyst
Part 1: A Review of the Markets Since Election Day
Part 2: Our Views on Oil and Gas Industry Regulation
Part 3: Coal Will Continue to Decline, Regardless of Politics
Part 4: LNG Exports Provide Trade and Job Growth Opportunities
Part 5: Outlook on Automation, Geopolitics, and Energy


Nathan Dean: I mean, I've had several energy analysts, and I'm not an energy analyst, but just talking to them, say that if you compare Donald Trump to Barack Obama, you may actually come out with a similar story about how things have worked so far. Is Donald Trump answering the rhetoric with actual policy goal, or is he actually trying to deliver on policies that he's put in the campaign?

Michael Roomberg: I think it's a great question. The shale revolution occurred under Obama, it didn't happen because of Obama, but it didn't happen in spite of him either. Today, we have an abundance of oil and gas, a glut of oil and gas, and prices remain low. I think the best thing the administration could do is pursue policies that increase the demand for these products.

One of the things that we've heard a little bit about without any real specifics yet, but is encouraging, is LNG exports. There is no better way for Donald Trump to deliver on his dual campaign mandates of creating good skilled-labor jobs, and narrowing the trade deficit, than pursuing additional LNG export agreements with places like China, India, Korea, and Japan. China and India are going to double their imports of LNG over the next five years.

There are currently six LNG export facilities that are under construction in the United States. Each of these is a multi-billion dollar project. There's about 3,000 construction jobs directly on site. And if you consider the entire value chain that supplies that facility, whether it's the pipelines, or the drillers in the field, or the regulatory folks, or all the way down to the country store that has to serve the workers out in the field. All told, one of these facilities will generate about 10,000 jobs.

And so, this is something that is incredibly potent from that perspective. It's one of the few things that the United States manufactures that is cost competitive with the rest of the world. So I think one way to translate some of this protectionist rhetoric and sort of brouhaha at the negotiation table. Obviously Rex Tillerson is aware of this, and Gary Cohn, and certainly Donald Trump, is to talk to these counterparts, and say, "My entire candidacy was about becoming more equal partners with you in trade. If you would like to avoid or avert a trade dispute, perhaps buying more of our LNG would be a good way to start."

Nathan Dean: So you mentioned LNG, and I have to ask this question because of it. Do you see Donald Trump playing a role in the Qatar-Saudi Arabia debate? Is there a market impact, or several of our analysts put out a note saying that you should just keep calm and carry on. What are you thinking?

Michael Roomberg: Well it's a great question. So, this is obviously a bit of a Byzantine conflict, and one that I don't think will have a big macro impact. But what it does do is remind LNG buyers that Qatar, which provides 30% of the world's LNG, that diversity of supply and security of supply from various places is equal to or greater in importance than price. The country of Japan, their entire economy would shut down overnight if they had no access to regular LNG imports. So I do think it's something that we can capitalize upon.

In terms of that individual conflict, I've seen mixed media reports about whether the U.S. is kind of supporting one side versus the other, whether there's legitimate claims, or it's sort of just a historical grievance. The U.S. has 11,000 active service members stationed in Qatar, and I think the world is full, generally speaking, of kindling, and its best to kind of take the matches away whenever we can as a policy, and hopefully that will ... I say that strictly from the portfolio management standpoint, because I think it's important for risk.


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