There's an old joke about the powerlessness of the old-timey, club-carrying, English bobby. Unable to unleash a fusillade of hot lead (like his American counterpart, at least in the movies) upon seeing a fleeing criminal, he can only yell, "Stop! Or I shall shout 'stop' again!"

Allow me to repeat myself again, one more time
Today, the Obama administration, already twice slapped down by courts for its arbitrary Gulf of Mexico deepwater drilling moratorium, shouted "Stop!" again, but with far more damaging consequences. The reworded moratorium aims to stop most new deepwater drilling until Nov. 30. It's not without a certain smirk-worthy irony, coming on the day that BP (NYSE: BP) has placed what may be a leak-proof cap on the shredded remains of the doomed well that has caused so much trouble.

It's easy to understand why President Obama might take this tack. Following the disaster of the blowup on Transocean's (NYSE: RIG) Deepwater Horizon, he was understandably frustrated as oil flowed, pretty much unabated, into the Gulf of Mexico. Unfortunately, anger doesn't cap oil wells. As the President tried to look tough and pledged on NBC to find an "ass to kick," he got his aim horribly wrong.

Ask the experts -- then ignore them
To begin with, there's not much point in taking populist swings at ExxonMobil (NYSE: XOM) and other big oil companies, when you may need them as suitors to buy assets from BP. Worse yet, the President planted his wing-tips squarely in the posteriors of thousands of regular people who work in oil industry. The moratorium has a disproportionately dire effect on smaller companies, like Hornbeck Offshore Services (NYSE: HOS), the plaintiff whose lawsuit overturned the original moratorium – and whose press release this morning seems to set the stage for another trip to court. Then there are the ripple effects. Kill smaller oil service companies, and you don't just lose a few thousand jobs directly -- you lose tens of thousands of others who depend on an economy largely supported by the oil and gas industry along the Gulf Coast.

So, while I understand the President's urge to look presidential, and to look like he's doing something, I am disappointed that he and his interior secretary, Ken Salazar, may have not only ignored the oil-industry engineering experts they commissioned, but also potentially misled the public. They implied that a blanket moratorium was the right thing to do, but the panel from the National Academy of Engineering had argued exactly the opposite, noting that the damage to the economy in such a case could be much worse than the environmental damage.

Second verse, worse than the first
If anything, this new moratorium is worse than the old one, with the potential, as NPR reported this morning, to apply to more rigs. And among its unintended consequences, it has paralyzed the shallow-water industry it allegedly exempts, because of new red tape and the accompanying uncertainties. There's a great firsthand account of this by an industry insider on one of our Motley Fool Hidden Gems message boards. (Trial required.)

This "pause" is already costing thousands of jobs and tens of millions in tax revenues, and pulling billions out of the Gulf economy -- much of which may never return. And it is just the latest bit of evidence that suggests that the administration really has no idea what it's doing, or why. Yesterday, Salazar flummoxed the presidential commission on the Deepwater Horizon incident, suggesting that the administration was hoping that the commission could (at its first meeting) inform it about the moratorium. The committee chair later said this was precisely not a task the committee was intended to tackle.

Clearly, the oil spill is a disaster that we all wish never had happened. But it's equally clear to anyone who knows anything about engineering for harsh environments (or anyone who ponders doing plumbing in a place where methane turns to slush) that accidents are inevitable. That doesn't mean we shouldn't demand that the industry do everything it can to avoid catastrophes, nor that we should allow oil companies to ignore obvious warning signs or take low-cost shortcuts.

What's an investor to do?
Despite the rebound in many stocks serving the Gulf of Mexico, I think there's still money to be made on drillers, equipment makers, and service providers. The abovementioned Transocean was recently selling near tangible book value -- sort of like paying for some of the world's rarest, most expensive gear, and getting the expertise to run it for free. And it will keep running, albeit in alternate locales.

Diamond Offshore Drilling (NYSE: DO), a Gulf of Mexico peer, is moving assets halfway around the world, rather than waiting for the government to come to its senses. And among smaller equipment and service companies, there are similar bargains such as Oceaneering International (NYSE: OII). This company provides the robots that are attempting to contain the BP well, and it already does half its business in foreign markets. If you like a little (or a lot?) more risk, you might consider Cameron International (NYSE: CAM), which produced the failed blowout preventer on the Deepwater Horizon.

Personally, I believe the next court to review the government's attempt at face-saving will reach pretty much the same conclusion as the first two did. But even if it doesn't, there's long-term potential in this space. That's why, for the past couple of months, I (along with my colleagues at Motley Fool Hidden Gems) have been doubling down on our research on oil patch plays. We just published a special report with eight of our favorites in the field, and you can get it along with a risk-free, 30-day trial.