If Trump is elected, will it benefit the energy industry and push up oil prices? History shows: quite the opposite.

Despite the praise from US Republican presidential candidate Trump for oil exploration which has sparked multiple energy stock rebounds, considered to be a typical "Trump trade," some Wall Street professionals believe the opposite. In the past few months, from the market trends, Trump's election is favorable for the energy industry, while the Democratic Party's election is unfavorable for the energy industry: After the current president Biden performed poorly in a debate with Trump earlier in the summer, the energy industry saw funds flowing in for three consecutive weeks, the longest since 2024. After Trump's assassination attempt, the S&P 500 energy index surged in mid-July, as the attack was believed to increase Trump's chances of winning. With Harris replacing Biden as a candidate and leading Trump in opinion polls, investors began to leave the energy industry, causing a reversal in fund flows. Opinion polls since the first week of August showed a higher likelihood of Harris winning the election, and since then, energy funds have seen weekly outflows. After the highly-anticipated Trump vs. Harris debate on Tuesday, many experts and voters believed Harris had the upper hand, and the next day, Wednesday, the energy sector led the decline in the S&P 500 index. Looking back at history, the conclusion is counterintuitive: According to statistics since 1933, during the 52 years when Democrats were in the White House, the S&P energy index rose 2800 times, while during the 40 years of Republican presidential rule, the index only rose by 10 times. Recent history also yields similar conclusions: during Trump's four-year term, the S&P 500 energy index fell by 40%, while it rose by around 96% during Biden's term. The logic behind it all In fact, many counterintuitive results have profound logic behind them. Trump's policy agenda is to promote increased oil production and deregulation. Last month, at a rally in Pennsylvania, Trump promised to encourage hydraulic fracturing and energy workers in the state to increase production on his first day as President of the United States, as well as open more power plants and revoke policies encouraging electric vehicles. Some industry veterans point out that any policy seeking to increase oil and natural gas production could disrupt delicate supply-demand balances and lower fossil fuel prices. Trump's proposed policies should help reduce consumer energy expenditures but may not help the energy industry increase profits, thus boosting stock prices. Thanks to the shale oil boom, the US is now the world's largest oil producer, with production hitting historic highs, surpassing Saudi Arabia. While theoretically possible to continue increasing production in an oversupplied market, doing so could lower oil prices for years, especially if the radical production increases Trump advocates were to occur. From a policy and regulatory perspective, the Democratic Party's rule tends to be stricter, restricting oil supply and often leading to higher oil prices. Dan Pickering, CEO of Pickering Energy, believes: The reason for paying attention to the energy sector is not the "Trump trade." The energy sector is worth watching for reasons such as undervaluation, record free cash flow, and increasing stock buybacks. Trump's energy policies are uncertain; he has previously asked Saudi Arabia to produce more oil, which could harm US producers. If investors expect Trump to win, it makes more sense to sell or short the stocks of renewable energy companies in the wind power sector. The negative impact of Trump's election on clean energy is greater than the positive impact on oil and natural gas. Investors typically prefer capital returns in the form of dividends or buybacks rather than using funds to expand production. Industry insiders point out that capital discipline and avoiding excessive drilling activities are important for the energy sector. If they were to return to extensive drilling, it could actually be detrimental to the industry, especially from an investor's perspective. Of course, the performance of the energy sector also depends on many other factors. OPEC decisions, the health of the global economy, geopolitical situations, and the ongoing transition to clean and renewable energy all influence the energy sector's trends. This article is compiled from "Wall Street News," by author He Hao; GMTEight Editor: He Yucheng.