Beyond the Tariff Clouds: Navigating Energy Investments in 2025’s Transition
15min read The U.S. energy sector is navigating a storm of tariff-related uncertainty, yet Energy Secretary Chris Wright insists this is merely a “short-term issue.” As trade policies reshape global supply chains and geopolitical tensions simmer, investors must parse the noise to identify opportunities in oil, renewables, and next-gen energy.
Ask Aime: Invest in energy stocks or renewables?
The Tariff Landscape: Short-Term Pain, Long-Term Strategy?
Wright’s administration has imposed a complex web of tariffs targeting countries purchasing Venezuelan oil (25% on all imports) while exempting U.S. energy partners under the USMCA agreement. The baseline 10% tariff on global imports remains, with delays for most nations until July 2025. For investors, this creates a bifurcated market: oil and gas imports remain tariff-free, but sectors like steel and semiconductors face significant headwinds.
Ask Aime: "Should I hold or sell my energy stock with the tariff uncertainty?"
Data shows WTI plummeted from $80/barrel in January to $63 by April, reflecting tariff-driven volatility.
Oil & Gas: Profitability Under Pressure
The oil industry is feeling the pinch. liberty energy, Wright’s former firm, reported a 30% profit drop in Q1 2025, with stock prices falling 40% year-to-date. Falling oil prices and tariff-induced cost inflation—particularly in steel—are squeezing margins. Yet Wright remains bullish: “$50 oil is not sustainable for producers,” he stated in April, hinting at a cyclical rebound.
Investors should note that while short-term pain persists, Wright’s push to streamline permitting for fossil fuel projects (e.g., opening federal lands for drilling) could unlock value later in 2025.
Renewables: Stumbling, But Not Out
Wright’s skepticism toward renewables—calling subsidies “lunacy”—has led to cuts in federal funding for wind and solar projects. Yet the sector’s growth remains unstoppable. Geothermal energy, with its domestic supply chain and bipartisan support, stands out. Despite tariff-related steel cost hikes, projects like Black Rock Geothermal in California are resilient, relying on “off-the-shelf” infrastructure.
Despite policy headwinds, renewables attracted $480 billion in 2024, outpacing fossil fuels by 20%. Geothermal adoption is growing at 5% annually, a fraction of solar’s 15%, but with higher stability.
The Nuclear Option: A Quiet Revolution
Wright’s advocacy for nuclear energy—repurposing coal plants in Colorado—is a stealth opportunity. With utilities like Xcel Energy already investing in small modular reactors (SMRs), nuclear’s role in firm power generation could expand. This aligns with his vision of energy driven by economics, not subsidies.
The U.S. aims to add 30 GW of nuclear capacity by 2030, a 20% boost from current levels, with $20 billion in federal backing.
Risks: The Contradictions Lurking
Wright’s mixed messaging creates uncertainty. While he touts market-driven solutions, his administration’s trade policies risk stifling renewables and tech. Federal Reserve surveys reveal that 60% of oil firms now cite tariffs as their top operational challenge. Meanwhile, his dismissal of climate concerns clashes with global trends: renewables now supply 17% of U.S. energy, up from 12% in 2020.
Funding for renewables has been slashed by 30% since 2020, while fossil fuel projects receive 40% more federal support.
Conclusion: Invest in Resilience, Not Rhetoric
Wright’s “short-term issue” narrative may hold water—if tariffs resolve by late 2025. For now, investors should prioritize geothermal and nuclear plays, which thrive under his policies. Oil stocks like Liberty Energy offer a gamble on price rebounds, but their volatility demands caution. Avoid renewables unless valuations drop further.
The data is clear: while tariffs create chaos today, the energy sector’s transition is inevitable. Those betting on Wright’s “long-term gain”—geothermal’s stability, nuclear’s scalability—will outlast the storm clouds.
