How A Government Shutdown Could Impact Energy Commodity Prices And Valuations

How will a U.S. government shutdown impact energy commodity markets and energy company valuations? Risk factors having the biggest impact include (i) which agencies will experience significant furloughs and which will be deemed essential, (ii) how the shutdown materially impacts consumer confidence and (iii) separate administrative actions impacting renewables which can amplify the impact of the shutdown. Notwithstanding the foregoing, the most impactful risk factor is over what period the shutdown will take place.

Short-Term Shutdown

A 30-day (short-term) shutdown will likely have a minimal impact on commodity prices with most of the impact attributable to a lack of reliable governmental data as weekly federal energy and economic data will be delayed or less reliable due, at least in part, to some non-essential federal agency employees being furloughed. The lack of reliable data could, however, lead to more price volatility. Significant downward pressure on the