Not-Ready-For-Prime-Time Thoughts On Hillary And Her Anti-Fracking Comments During The Campaign -- October 19, 2016

A reader asked me about my thoughts with regard to Hillary and her campaign promise to kill fracking. This was my "not-ready-for-prime-time" reply with minimal editing:

I honestly don't know about Hillary. This is the problem: she is no longer (or never was) her own woman. She will be defined by whom she puts around her. (The White House Iranian Committee will grow larger, much larger.)

She had to be against fracking during the campaign to "keep" her base, and to fight off Bernie.

But deep down, she is a lot more reasonable: she was in support of the Keystone; she was in support of fracking before the primaries. I don't think she would spend three minutes with the Standing Rock Reservation; she certainly would not visit: they have no money to give her.

Hillary can be bought and persuaded; she is not ideological like Obama. She can be pragmatic. The unfortunate thing is that if she is ill, she will not have the stamina to be pragmatic and those around her will run the show.

If she wins by a landslide, the EPA is hers; and the fossil fuel industry is in for a shock.

If it's a close vote, and she has no mandate, it might not be quite as bad.

The good news: the Dems are no different than the GOP (in the House and the Senate) when it comes to watching their personal pocketbooks. They are all white males with silver/balding heads. Their only difference is their rhetoric, it seems. For all their talk, their sentiments are about the same.

At the end of the day, I think global events, Russia, and Saudi Arabia will account for 90% of where oil goes; what oil does. I think, at best, Washington politics will account for 10% of where oil goes; what oil does.

More likely, this is how it breaks down, what influences/accounts for where oil goes / what oil does / how it prices out:

• global, non-US, geo-politics (Saudi, Russia, Iran): 90% 
• integrated oil companies (CVX, XOM, COP): 9% 
• Washington politics: 1%

Saudi Arabia is truly in a fight for its life. It can't last two more years with $50-oil.

Russia can last a long time with $50-oil -- they held out in Stalingrad for a long, long time some decades ago -- but Putin won't like $50-oil. So, regardless of what the US wants, it's hard for me to imagine oil staying in a trading range of $50 to $60 for the next two years.

If the price of oil remains at $50, Saudi Arabia is toast: the Mideast will blow up as Iran, Iraq, and Russia all try to seize Saudi's oilfields.

I truly doubt Hillary will want to confront Putin in the Mideast over oil and the risk of initiating WWIII.

If Russia-US do end up in a shooting war because of Saudi Arabia, it will be do to a misstep, a mis-calculation, a la Bay of Pigs, or the Gulf of Tonkin, or the assassination of a Prince-Duke.

By the way, if Hillary wants to hold off Putin, she better be "Thatcherite-steel" in her first head-to-head with him; if she waffles, Putin "has her." Against Putin, I have no doubt Hillary can hold her own but I wouldn't bet the farm on her. If her health goes, which I suspect it will, the US may, in fact, be governed by a part-time president, which wouldn't be all bad. Except that Putin would pounce.

Having said all that, it has been said that historically two-term presidents focus on domestic issues the first term, and then when they fail at that, they turn to global issues.

My hunch is that with her SecState resume and her globe-trotting resume, she will focus on global issues sooner than her predecessor. He withdrew; she will get back into the global fray. The international stage is her comfort zone, although her health will preclude her from doing much traveling.

When it comes to international trade she is truly the antithesis of Trump, though that doesn't mean Trump's policies might be worse; he's a much better negotiator and that could make up for bad policy.

As long as gasoline is $2.00 / gallon, Hillary can do anything to and say anything about fracking; she can even kill it. But if she does, the price of natural gas sky-rockets in Philadelphia -- in fact, I think that's the problem for folks in North Dakota. They equate fracking with oil. Without fracking, the entire East Coast implodes -- they destroyed nuclear and coal, and shutting down fracking in Marcellus and Utica ... well, that's a show-stopper right there.

But back to gasoline (or natural gas, for that matter; it's just that I understand gasoline better): once gasoline starts heading to $3.00 in Oklahoma (least expensive in the US) it will head to $5.00 in California and that's when Hillary gets the memo, "maybe fracking is good for the US."

For investors this seems to be an open-book test: I can't see oil trending below $50. I have trouble seeing oil remaining in a trading range between $50 and $60.

For very, very conservative investors who fear anti-fracking forces in Hillary's administration, focus on legacy oil giants (XOM, CVX, COP).

For investors willing to take more risk, look at the survivors in Texas/Permian: EOG, Pioneer, etc.

For speculators, start accumulating shares in Bakken companies.

For me, I'm in the very, very conservative group.