Obama

• Obama
  thinks we should stop driving
• Count on
  politicians to do the wrong thing
• Will BP get
  TARPed?
• Be a
  responsible energy investor

Last
night, President Obama delivered his first speech in the Oval Office. I’m
guessing he chose the Oval Office to give his speech about the BP (NYSE: BP) oil spill because he hoped to evoke a sense of authority
and intimacy for such an important and prickly topic.

After
nearly two months of oil spilling into the Gulf of Mexico,
this speech felt a bit flat. I think Obama might now realize that his skill in
delivering powerful, inspiring platitude-filled speeches about America and hope
and change, etc. doesn’t really transfer to the somber task of discussing plans
for oil spill cleanup and reparation.

Full
disclosure: I didn’t vote for the guy and while he’s certainly an accomplished
speaker and quite possibly a perfect politician, I think his ideas about energy
policy are completely useless if not outright wrong.

Forget last night’s disappointing speech for a second –
here’s a quote from Obama after he received the Democrat Party’s nomination for
Presidential candidacy:

"I will set a clear goal as president: in ten
years we will finally end our dependence on oil in the Middle
East.”

Is
this goal achievable? Sure! We just have to stop driving and flying, and we
could stop using oil from the Middle East
tomorrow. Why wait ten years?

But
the problem isn’t only that this goal is ridiculous – the problem is that
President Obama says these types of things not because he means them, or
because he expects to actually follow through, but rather because it’s a
politically justifiable and beneficial thing to say.

In that regard, it’s better to look at what politicians do, and completely
ignore what they say. And right now, the government is trying to set up a $20
billion escrow fund that BP will deposit money into – which will then be used
to cover future cleanup costs and compensation for the thousands of people who
owe their livelihoods to the bounty of the Gulf.

On
the face of it, this action appears to be “the right thing to do” – and I’m
sure politicians across the country will pencil it in on their talking point
memos for the upcoming election season.

But
I also have to wonder if this escrow fund will act as something of a financial
or legal buffer for BP, should the cost of cleanup and compensation exceed that
$20 billion mark.

I
haven’t seen many details, but I’d be shocked if BP didn’t arrange some kind of
beneficial deal in exchange for depositing money into the escrow fund. Will it
allow them to avoid class-action lawsuits down the road? Will it count towards
corporate taxes? How much interest will it earn? I don’t know – but if I’ve
learned anything from politicians, it’s that they frequently say things that
sound right as cover for simultaneously doing something wrong.

Think about the TARP funds – the American public was told that these funds
were vitally necessary to patch up our ailing financial system.

Was
that true? I don’t think anyone is in a position to say so for sure. But what
we do know for sure is that some of the world’s richest financial institutions
received the largest single sum of money ever created in the history of the world
– all at the expense of the taxpayer.

We
were told that the Government needed to act quickly to avert further disaster –
that tone of urgency spurred Congress to pass the bill quickly making it
unlikely that many members were able to read it, let alone understand the
undertaking.

When
it comes to unpopular legislation, it’s pretty clear that faster is
better.

Obama
used some of those same calls to urgency in last night’s speech:

“As we recover from this recession, the transition to
clean energy has the potential to grow our economy and create millions of jobs
-– but only if we accelerate that transition. Only if we seize the moment.”

Seize the moment, and do
what exactly? Shouldn’t you have seized the moment and allocated more resources
to the Gulf when the spill first occurred, nearly two months ago?

If Obama’s action plan at
all resembles the TARP bailout, then I think BP is probably in for smooth
sailing. That’s part of the reason I still think BP is a great buy. I’ve told you over the past couple months
that buying BP at $30 a share is a great, once in a lifetime opportunity. It could certainly go lower, but politicians
have proven themselves unwilling and/or unable to make tough decisions.

The right move would be to
lock BP out of all its American holdings until this spill is cleaned up. If
they can’t clean it up, we should auction off their holdings to the highest
bidder, and use the proceeds to pay the right people to clean the spill. BP
owns some of the largest oil and gas reserves in North
America – so it wouldn’t be out of the question to raise much more
than $20 billion.

But that’s simply not going
to happen. President Obama and other
politicians in Congress will use very strong words and condemn BP every day of
the week and twice on weekends, but when this is all over, British Petroleum
will still be making billions of dollars from American oil and gas.

It’s kind
of a lousy way to invest, but it’s not very risky to bet against the word of
politicians.

If you’re not as cynical as
I am, and you’re looking for an oil and gas investment that’s a little better
for the environment, and potentially just as lucrative, there are plenty of
American companies that are currently producing oil and gas on American land,
far away from oceans and other sensitive ecological areas.

Three such companies are
currently producing oil and gas from North
Dakota’s badlands in an area known as the
Bakken. This area could hold as many as
200 billion barrels of oil. As oil
prices continue to rise, the companies that can profitably get oil out of the
ground at $75 a barrel will see their profits explode.

You
can click here to read all about this opportunity to invest in responsible
American oil and gas companies.

Good investing,

Kevin McElroy

Editor

Resource Prospector