Episode Details

Our analysts Ariana Salvatore, Stephen Byrd and Devin McDermott discuss President Trump’s four executive orders around energy policy and how they could reshape the sector.

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Ariana Salvatore: Welcome to Thoughts on the Market. I'm Ariana Salvatore, Morgan Stanley's U.S. Public Policy Strategist.

Stephen Byrd: And I'm Stephen Byrd, Morgan Stanley's Head of Research Product for the Americas and Global Head of Sustainability Research.

Devin McDermott: And I'm Devin McDermott, Head of North American Energy Research.

Ariana Salvatore: Our topic today looms large in investors minds. We'll be digging into how the new policies proposed under President Trump's administration will fundamentally reshape energy markets.

It's Tuesday, February 4th at 10am in New York.

On his first day in office, President Trump declared a national energy emergency. He issued four key executive orders, setting out a sweeping plan to maximize oil and gas production. All of this on top of stepping back in tangible ways from the Biden administration's clean energy plans. We think these orders can have a significant impact on the future of energy, one of Morgan Stanley's four key themes for 2025.

So, Stephen, let's start there. One of the biggest questions is which segments of the power and AI theme stand to benefit the most, and which ones will be the most challenged?

Stephen Byrd: Yeah, Ariana, I'd say the two biggest beneficiaries will be natural gas and nuclear, probably in that order. And in terms of challenges, I do think, wind, especially offshore wind, will be quite challenged. So, when I think about natural gas, it's very clear that we have an administration that's very pro natural gas.

And natural gas is also going to need to be part of the power mix for data centers. It's flexible. It could be built relatively quickly. There are a lot of locational options that are perfect here. So, I do think natural gas is a winner.

On nuclear, we do think Republicans broadly, and also many Democrats, firmly support nuclear power. Nuclear is quite helpful, especially for larger data centers or supercomputers. They're large, there's a lot of land at these nuclear plants. And so, I would expect to see some very large data centers built at operational nuclear plants. And we do think the Trump administration will work hard to make that – from a regulatory point of view – make that happen.

I also think we'll see a lot of support at the federal level for new nuclear power plant construction, as well as bringing the U.S. nuclear fuel cycle back to the U.S. So those are a few of the areas that I would expect to do well.

Ariana Salvatore: Devin, same question for you on the energy sector. How are you thinking about the impacts?

Devin McDermott: Yeah, it's a good question, and there's a lot in these executive orders. I mean, some of the key things that we're focused on as impacting the sector include encouraging federal lands development and leasing for oil and gas activity, with a specific focus on Alaska. Resuming LNG permit authorizations, which lifts the ban that's been in place for the last year. Eliminating EV targets, including pausing some IRA funds tied to EVs. Broad support for infrastructure permitting, including pipelines. And then a broader review of environmental regulations, including some recent headlines that point to rolling back fuel efficiency and emission standards for cars and trucks – something that the prior Trump administration did as well.

The near-term financial impact to the industry of all this is fairly limited. But there are two key longer-term considerations. First, on the oil side, rolling back fuel efficiency standards and other environmental regulations doesn't stop the transition to