Obama's Climate Plan: The Problems and the Opportunities

By now you know about President Obama's "climate action plan," which was unveiled on a hot Tuesday afternoon at Washington, D.C.'s, Georgetown University. As one who's been in and around the traditional energy industry for some time, I'm attempting to come to grips with what I perceive to be a pair of major difficulties with the president's proposal.

  • Its timing, given that it inevitably will cost the nation jobs and raise energy costs at least somewhat for us all, is irresponsible. It seems absurd to unleash such an employment-threatening program at precisely the time when, as The Wall Street Journal said in an opinion piece on Wednesday, " the economy continues to plod along four years into a quasi-recovery."

  • The atmosphere doesn't recognize national boundaries. So an individual effort at unilaterally cutting emissions will be meaningless unless energy approaches change in a host of other countries, which is unlikely. That's especially the case in view of the president's admission that "Though all America's carbon pollution fell last year, global carbon pollution rose to a record level."

Will Keystone be blessed?
The president also touched upon TransCanada's proposed Keystone XL pipeline at Georgetown: "Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation's interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution."

It's the global-nature-of-pollution thing again. If the line is disapproved, Canada's oil will be piped west for shipment to China. As such, the issue of "carbon pollution" will essentially be unaffected either way.

Some prudent approaches
So, for Fools with investable approaches on their minds, the question becomes one of the companies or groups that will either benefit from or remain unscathed by President Obama's plan. One sensible direction, it seems to me, is to look to the nation's biggest gas producers. Cleaner-burning gas stands to replace coal as a fuel for power plants that are forced to operate under far stricter emissions standards.

As you probably realize, ExxonMobil sits high atop that crowd, with Chesapeake Energy and Anadarko second and third, respectively. While I admittedly own shares in Chesapeake, I'm especially drawn to it, with its high ratio of gas to oil and its purely domestic operations. Given this mix, the beneficial effects it's likely to feel from increased demand for natural gas should be more directly leveraged to its share prices than with other, more diversified, companies.

Beyond that, you might consider initiating or adding to a position in the ever-popularNational Oilwell Varco . The company occupies a vital position in the oil and gas industry as the manufacturer of a number of the components used on drilling rigs. The lion's share of its products are shipped internationally, providing it with significant immunity to the effects of tightening domestic energy policies.

Finally, I'd consider Schlumberger . As I've noted to Fools previously, the big enchilada of oilfield services is easily energy's technological leader, a crucial position in an industry wherein new ways to define reservoirs and produce oil and gas from complex formations becomes increasingly important. The large company also works in dozens of countries and conducts meaningful research operations in such significant locales as Saudi Arabia, Russia, Brazil, and, of course, the United States.

The president's new initiative notwithstanding, and given a host of other global and domestic economic issues, I continue to consider energy to constitute an appropriate backbone for Foolish investment portfolios. The aforementioned companies are but a start in an industry that is replete with compelling players.

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The article Obama's Climate Plan: The Problems and the Opportunities originally appeared on Fool.com.

Fool contributor David Smith owns shares of Chesapeake Energy. The Motley Fool recommends and owns shares of National Oilwell Varco and has options on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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