Energy was a hot topic yesterday. And President Obama would like it to become a focus of the country to reduce our reliance on foreign oil by one-third in the next ten years.
So what does that mean for investors? Here is my translation of what President Obama had to say yesterday.
Obama: "To keep reducing that reliance on imports, my administration is encouraging offshore oil exploration and production."
Investing translation: Drill baby, drill. That means companies like shallow water driller Hercules Offshore (Nasdaq: HERO ) and companies with deepwater capabilities like Transocean (NYSE: RIG ) will be busy in the near future.
Obama: "Last year, more than 150 members of Congress from both sides of the aisle produced legislation providing incentives to use clean-burning natural gas in our vehicles instead of oil ... So I ask members of Congress ... pass a bill."
Investing translation: Natural gas is the only "easy" alternative to oil and Clean Energy Fuels (Nasdaq: CLNE ) can provide the infrastructure we need. Fuel System Solutions (Nasdaq: FSYS ) will also play a big role by converting gasoline-powered vehicles to natural gas, so these two companies should benefit from such a bill.
Obama: "Another substitute for oil that holds tremendous promise is renewable biofuels." He went on to say, "In fact, the Air Force is aiming to get half of its domestic jet fuel from alternative sources by 2016."
Investing translation: Get on the horse, Syntroleum (Nasdaq: SYNM ) and Rentech (AMEX: RTK ) , we need your fuels on a mass scale ASAP. Syntroleum set the military synthetic fuel standard. so the Air Force is ripe for the picking.
If you want to know where the President's priorities are headed you just need to look at the energy sources he mentioned. Wind and solar were both mentioned just five times -- but natural gas and biofuels were both mentioned nine times each. It's clear that these two sources will be the focus for our short-term energy solutions.
That doesn't mean that electric vehicles, wind energy and solar power -- all of which were mentioned -- won't be a focus. But the more visible, short-term energy sources have broader support and will be easier to push through in the current political environment.
Foolish bottom line
Offshore drillers like Hercules Offshore and Transocean will play a vital role in improving U.S. energy independence, but the bigger winners may be the four companies most investors have never heard of. Clean Energy Fuels, Fuel System Solutions, Syntroleum, and Rentech all have capabilities the President specifically pointed to in his speech, and should be among the big winners in the long run.
Time will tell how exactly these companies are affected but for now they have the President of the United States in their corner. Not a bad cheerleader if you ask me.