BP's (NYSE: BP) oil spill in the Gulf of Mexico has dominated the news since a Transocean (NYSE: RIG) rig exploded and burned, unleashing a nonstop oil gusher from its badly damaged well.
Nevertheless, I couldn't believe my eyes when I came across this shocker: In this, its first week of meetings, the commission appointed by President Obama to investigate the spill was taking issue with the administration's newest Gulf drilling moratorium. This version is being called a "suspension." And since it was formed of members without energy backgrounds -- but full of antidrilling activists -- the commission's conclusions appeared predetermined.
But its second day-long session included a big surprise: Its co-chairmen -- former Florida Senator Bob Graham and William Reilly, former head of the Environmental Protection Agency under the first President Bush -- questioned the need for a six-month ban. In fact, Graham, who long fought against drilling off Florida's coast, said, "We're going to look over (the administration's) shoulder and have some comments to make as to whether we think the judgments they made are appropriate."
Beyond that, the president's selections are so one-sided that even five Senate Energy Committee Democrats sided with Republicans in voting for an "independent" congressional commission to investigate the disaster in conjunction with the White House's appointed group.
Industry critics of the drilling halt, including the National Ocean Industries Association (NOIA) and the American Petroleum Institute (API), have joined together to address key issues in the tragedy, including containment and spill response. The NOIA has also pointed out that a moratorium by any other name is still a ... well you get the point. The new ban is set to run until Nov. 30.
This suspension follows a stay of an earlier moratorium by two federal courts, following a lawsuit by Hornbeck Offshore (NYSE: HOS). Ensco (NYSE: ESV) has also challenged the administration's handling of the new drilling requirements under the old moratorium, claiming it violated the federal rulemaking process. Interior Secretary Ken Salazar announced the latest ban soon after testimony by Diamond Offshore (NYSE: DO) CEO Larry Dickerson to the commission. Diamond has already moved two deepwater rigs overseas and is challenging the deepwater drilling ban as well.
Lawsuits against the new moratorium remain uncertain. But with a third of the shallow water fleet now idled by the moratorium and with the new suspension perhaps more restrictive, I wouldn't be surprised by legal action by a shallow water type like Hercules Offshore (Nasdaq: HERO).
So, our domestic energy picture becomes more chaotic by the day. Nevertheless, I'm convinced that crude prices are headed higher. As such, Fools should have representation in the sector, perhaps by a company with global reach that shouldn't miss a beat no matter what happens to the Gulf, like ExxonMobil (NYSE: XOM).
Fool contributor David Lee Smith doesn't own shares in any of the companies named above. He welcomes your questions or comments. The Motley Fool has a rock-solid disclosure policy.
