(Story updated with Whiting analysis by Jason Wangler, analyst at SunTrust Robinson Humphrey)
NEW YORK (TheStreet) -- A genuine setback in TransCanada's (TRP) crucial Keystone oil pipeline system running from Canada to the U.S. could lead to a spike in a variety of energy stocks, according to analysts.
President Barack Obama 's rejection last Wednesday of a key permit for this highly strategic pipeline beneficial to U.S.'s energy independence and job creation goals fueled nationwide outrage, but did very little to boost shares of energy-related companies that could have benefited from Keystone stumbling blocks.
"Perhaps this is because the rejection was so foolish by the Administration pandering to environmentalists in an election year that investors are assuming it gets approved eventually when rationality prevails in Washington," says a money manager who prefers to be kept anonymous amid company fundraising efforts.
|Keystone Oil Pipeline Construction - North Dakota|
Bill Gunderson, president of Gunderson Capital Management, says if the Republicans win the election this year, the Keystone pipeline system will definitely be completed. But if Barack Obama is re-elected, "I think it's 50-50." Canada is reportedly already exploring options to ramp up oil sand exports to China. "If we get a Republican president, then it's highly likely that Keystone will move forward -- with an administration that is more supportive of the U.S. becoming more energy independent, particularly from the Middle East," Alan Lammey, energy analyst at WeatherBell Analytics agrees. "It very much depends on who's elected. If we get Obama for another four years, we're going to have more of the same anti-oil industry actions." Jeffrey Sica, manager of SICA Wealth Management adds, "if the application is stalled for a longer time frame than after the election or there are significant changes over the feasibility of the project," a number of stocks could appreciate. Energy stocks that could benefit most from a real setback for the Keystone Pipeline project would include U.S. Bakken Shale as well as alternative energy plays, as less U.S. imports of Canadian oil essentially could lead to a better guarantee of demand for their products, say analysts. Importantly, Bakken Shale producers would also benefit from the additional support of the U.S. benchmark WTI price -- factoring in the long-term potential reduction of supplies from Canada. Shale names included in this category are Hess (HES), Continental Resources (CLR) and Whiting Petroleum (WLL), according to managers.
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