Bangkok--3 Dec--Standard & Poor's
While U.S. President-elect Barack Obama presented an ambitious energy plan as a major centerpiece of his campaign, the current economic environment as well as falling oil prices will likely hamper this effort, according to a report published today by Standard & Poor's Ratings Services. The report, entitled "How Will President-Elect Barack Obama's Policies Affect Energy Firms?," examines the effect of the incoming administration's policies on energy companies.
According to the report, the need to facilitate the U.S. economic recovery and financially support struggling industries--such as the auto, financial, and housing sectors--is likely to constrain what would be an ambitious energy policy.
"The primary focus of the new administration will be on improving the conditions of the domestic economy, which makes energy policy a secondary concern," said Andrew Watt, Managing Director, Standard & Poor's Ratings Services. Moreover, funding of the plan will be problematic in this deteriorating economy that has also seen a rapid decline in crude oil and natural gas prices.
"We also don't expect the incoming Obama Administration's energy policies to significantly affect credit quality in the sector in the near term," noted Mr. Watt. "While specific initiatives, such as higher tax rates or more offshore drilling, may have an impact on companies' margins, the worsening global economy is the chief concern today," he continued. The Obama Administration's goal to implement fiscal and monetary measures to limit the severity of the U.S. recession could--in an indirect way--preserve creditworthiness in the sector.
The new administration is also likely to support natural gas development and production, although it competes directly with some alternative fuels and does not meaningfully reduce reliance on foreign oil.
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected]. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
David Wargin, New York (1) 212-438-1579, [email protected]
Analyst Contacts:
Andrew Watt, CFA, New York (1) 212-438-7868
Suzana Zayed, New York (1) 212-438-4021
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