For the past five years, it’s become an all too familiar refrain for energy investors: Oil and gas prices drop, but sector stocks fall harder. Then when prices rebound, the shares lag the recovery.

The pattern has also largely held this year, despite the fact that the S&P Energy Index has consistently shown up among the top performing S&P 500 sectors. No matter how positive underlying conditions have become, many investors still favor the commodities to energy stocks.

On the other hand, it’s much harder to ignore the good news that’s increasingly flowing from American energy companies. First quarter 2019 results once again showcased the recovery up and down the energy value chain. And as highlighted in the previous issue, the macro outlook strongly suggests this will continue.

Last November, Colorado voters defeated Proposition 112, a ballot measure that would have imposed significant new limits on oil and gas drilling. This month, the state’s senate advanced legislation that would have much the same impact, if the state house and governor give their assent as expected.

By no means will the new law end energy production in Colorado. But it will for the first time allow city and county governments to use planning and land-use powers to regulate drilling, and with a mandate to prioritize public health and the environment. At a minimum, that means more hurdles for companies to jump through before they drill or build new midstream infrastructure, at least in some jurisdictions.

As our feature article highlights, the “Centennial State” isn’t the only place in the US that’s tightening regulation of energy companies. Even Oklahoma has ramped up industry oversight in recent years, following a dramatic increase in earthquakes.