Today I'm going to give you five stock winners from the energy bill that's likely to pass Congress this summer: Peabody Energy ( BTU - Get Report), Deere ( DE - Get Report), Chicago Bridge and Iron ( CBI), TransCanada ( TRP - Get Report) and Buckeye Partners ( BPL). You'll notice that there's only one "pure" energy producer on the list. That's because, as an energy bill, the current legislation is a sham. But it's not bad as a farm-subsidy bill, a construction-industry jobs bill or a pipeline-company guarantee bill. So four of my five winners come from those sectors. Let's start by looking at what the energy bill doesn't do. It doesn't do anything to cut U.S. oil consumption. According to the American Council for an Energy Efficient Economy, the final bill that was hammered out between the House and Senate would see U.S. oil demand rise from 20.5 million barrels a day today to 26 million barrels a day by 2020. Several provisions that would have kept consumption to 25 million barrels a day by 2020 died in the joint conference. Getting more miles per gallon is the fastest way to get a big reduction in oil use. But Congress, by a big margin, rejected attempts to significantly raise automobile fuel-efficiency standards.
The situation is only marginally better for natural gas. The U.S. is becoming more dependent on imports of liquefied natural gas: LNG is projected, again by the Energy Information Administration, to account for 21% of our natural gas supply by 2025. The bill does nothing to tax carbon emissions. This amounts to a huge subsidy to oil, gas and coal-based energy production, since power plants and vehicles burning those fuels can dispose of much of their waste for free by putting it into the air. (Yes, some specific pollutants are regulated, but carbon emissions aren't.) The big losers here are nuclear power and alternative technologies such as solar and wind. Nuclear gets slammed especially hard, because the government taxes nuclear plants to pay for waste disposal.
The U.S. sits on large domestic deposits of uranium, so nuclear power is a domestic replacement for foreign oil. Nuclear power doesn't add carbon dioxide to the atmosphere, a plus for anyone worried about global warming. And once a nuclear power plant is up and running, it produces cheap electricity -- about 1.7 cents per kilowatt hour vs. 1.8 cents for coal and 5.7 cents for gas. But the big costs for nuclear power are in plant construction and waste disposal. Add those and nuclear power costs 6.5 cents per kilowatt hour vs. 5 cents for coal. The bill attempts to fill some of that gap with loan guarantees for nuclear-plant construction and rules to speed construction. But, absent a carbon tax, nuclear isn't competitive with coal. That's certainly a problem if Congress really intends to get utilities investing in a new generation of nuclear-power plants, since claims of improved safety haven't yet been tested in real-world operations.