It's High Time for Action in the Gulf of Mexico

You can't see me, but I'm genuflecting in the direction of an editorial entitled "An Illegal Drilling Ban" from Thursday's Wall Street Journal

The thrust of the piece is the folly represented by the Obama administration's refusal to provide permits that would enable the energy industry to resume drilling in the deepwater Gulf of Mexico. That drilling essentially has been halted since BP's (NYSE: BP  ) and Transocean's (NYSE: RIG  ) thoroughly documented tragedy last April.

You likely know that in October, the administration removed a blanket ban on deepwater Gulf drilling. Nevertheless, the industry is awaiting the granting of the first permit that would allow it to return to work.

Just last week, Federal Judge Martin Feldman gave the Bureau of Ocean Energy Management -- a unit of the Interior Department -- 30 days to act upon five permit applications, some of which have been pending for nine months. In responding to an action brought by Ensco (NYSE: ESV  ) , Judge Feldman called the perpetuation of the (lifted) drilling ban "unreasonable, unacceptable, and unjustified." We'll see what occurs as the judge's deadline, which is now approaching 20 days, comes closer.

In the meantime, the industry has hardly been twiddling its collective thumbs. Also last week, a group of major oil companies, led by ExxonMobil (NYSE: XOM  ) and under the auspices of their jointly owned Marine Well Containment Co., unveiled a system that they have developed to deal with major spills, such as occurred when BP's Macondo well blew out. Among other companies included in the group are Chevron (NYSE: CVX  ) , Royal Dutch Shell (NYSE: RDS-A  ) , and more recently, BP.

The system apparently is being reviewed by government engineers. At the same time, another company, Houston-based Helix Energy Solutions (NYSE: HLX  ) , is also developing a competing system.

Now, however, with the oil-rich Middle East and North Africa in chaos, crude prices have been marching steadily northward. An announcement on Friday by Saudi Arabia that it will raise its oil output by about 8% should only increase our frustration in the U.S. over the situation in the Gulf, along with a lack of any semblance of a coherent energy policy.

Indeed, turning to the Saudis, almost by rote, has obvious shortcomings. As economist Jeff Rubin said, prior even to the announcement from the kingdom: "Confidential cables from the U.S. embassy in Riyadh recently released by Wikileaks confirm ... (that) the country holding the world's largest oil reserves has little more to give."

How should we approach energy from an investment standpoint amid this cacophony of confusion? While the energy industry is awash with solid companies, I would only note that Chevron is the lone member of Big Oil with significant Gulf acreage -- for the day when its value increases -- and an upstream role in the Saudi Arabian kingdom.