It’s Obama ....
November 06, 2012
What will be the impact on the northern economy, on Alaska in particular with Obama’s win ?
- Keystone pipeline. Romney said he will approve its construction. This pipeline hauls bitumen from the oil sands to Texas. This would alleviate a pending capacity crunch for oil sands producers getting their product to market. Obama is not necessarily in favour of Keystone. Impact: bearish for oil sands producers, as it would delay the export of bitumen to markets.
- Defense expenditures. Romney wanted not only to maintain but grow the defense budget. The US spends more on defense than the next 10 nations combined, but defense cannot be cut. Go figure. With Obama there may be more of an inclination to reduce big defense expenditures (including Alaska’s).
- Government spending. Romney wanted to cut discretionary spending but leave entitlements unscathed. Obama is less inclined to reduce federal expenditures. Higher federal spending is good for the Alaska economy.
- The EPA Romney wanted to reduce regulations and one can foresee that the Environmental Protection Agency (EPA) would be high on his list. Under Obama the EPA has been quite activist, for example, launching a study on Bristol Bay mining development pre-empting the US Army Corps of Engineers. The EPA will continue to be activist. Look for the Pebble Mine not to move ahead.
- ANWR Romney made promises to move the US to energy self-sufficiency. The Arctic National Wildlife Refuge (ANWR) is a national wildlife refuge in northeastern Alaska, United States. It consists of 19,286,722 acres (78,050.59 km2) in the Alaska North Slope region. With Obama there will be no attempt to allow drilling in ANWR.
Since the 2008 financial crisis the United States has pursued a stimulative ($1 Trillion + deficits) fiscal policy while the Fed has followed an ultra-aggressive policy of easy money. Yet the wisdom of these policies is being questioned by some in the investment community as the US economy struggles with anemic growth of about 1.5%.
Any move to restore fiscal balance would be painful in the short-term. The Fed’s money-printing is causing lower economic growth. It will be difficult to unwind its $4 T balance sheet. More economic pain lies ahead.
- a)"The EPA's Pebble Beaching", Wall Street Journal, 1-Oct-2012, p.14.