For decades now, the Gulf of Mexico has been central to oil and gas production in the U.S. But if President Obama's proposed budget passes without major changes, you may see fleets of rigs, production platforms, and supply boats abandoning the Gulf at full speed ahead.
The new administration is looking to raise at least $31.5 billion from the oil and gas industry during the next decade, and it appears that the Gulf has become a favorite target for these fundraising activities. For instance an estimated $5 billion would come from a new excise tax, potentially up to 13%, targeted for Gulf production.
Actually, a Gulf money squabble has been ongoing for about 10 years, since price triggers were mistakenly left off Gulf royalty contracts by the government in the late 1990s. Six companies, including Royal Dutch Shell
The majority of the companies involved in Gulf production -- ExxonMobil
But the clear winners in the budget draft are the renewable energy folks, companies like First Solar
Perhaps the Obama administration believes that new energy forms are simply waiting in the wings, ready to drive oil and gas into restful retirement. I'm convinced however, that whether we like it or not, for most of our lifetimes, hydrocarbons will do the heavy lifting relative to our energy requirements.
Further, I believe Fools should invest accordingly -- not loading up on traditional energy, but certainly staying represented in the sector. My favorites remain ExxonMobil with its ultra strong balance sheet and technological strengths, and improving BP
Exxon has been granted four stars by the Motley Fool's CAPS investment community, while BP wears five. Why not add your rating to the mix?