Seeking Alpha
Long only, newsletter provider, oil & gas, small-cap
Profile| Send Message| ()  

I'm not the sharpest tool in the shed, so when even I can see that high level government policy makes no sense, you know how bad it is. On Tuesday last week President Obama had this to say, according to the Associated Press:

WASHINGTON — As the high cost of gasoline takes a toll on politics and pocket books, President Barack Obama said Tuesday he is calling on major oil producers such as Saudi Arabia to increase their oil supplies to help stabilize prices, warning starkly that lack of relief would harm the global economy.

We are in a lot of conversations with the major oil producers like Saudi Arabia to let them know that it's not going to be good for them if our economy is hobbled because of high oil prices," Obama told a Detroit TV station.

This quickly brought back memories of 2008 and President Bush landing in Saudi Arabia hoping to beg the Saudis to do something to help lower the price of oil. So on one hand, we have President Obama trying to convince parties outside the country to increase their oil production to ease prices. That is good as we need all the oil as we can get. It isn't ideal though as that production comes from outside the United States and does nothing to help the American economy.

On the other hand back at home, we have President Obama saying this:

Now, I don't have a problem with any company or industry being rewarded for their success. The incentive of healthy profits is what fuels entrepreneurialism and helps drives our economy forward. But I do have a problem with the unwarranted taxpayer subsidies we've been handing out to oil and gas companies – to the tune of $4 billion a year. When oil companies are making huge profits and you're struggling at the pump, and we're scouring the federal budget for spending we can afford to do without, these tax giveaways aren't right. They aren't smart. And we need to end them.

So while one hand is asking for more production from other countries to whom the United States sends billions of dollars for oil every year, the other hand is taking cash away from companies who use that cash to increase domestic production of oil (and related jobs etc.). The ultimate outcome of course being more reliance on foreign countries for oil and fewer jobs at home.

I think Obama's intention to invest more in renewable energy is absolutely essential. But even more important is making sure the United States has enough energy in the near future, because those alternative sources are going to take a long time to make a difference.

The United States imports half of its daily oil supply. The United States imports more oil on a daily basis than virtually every other country in the world consumes. Any action that reduces the amount that can be produced on a daily basis is truly a mistake. Obama shouldn't be increasing taxes on domestic production, he should be increasing subsidies so that the United States is less reliant on countries like Venezuela to provide the fuel that feeds its economy.

This isn't the first instance in recent weeks where President Obama is actually taking action to worsen the energy situation in the States. He recently also indicated an intention to delay the approval of the Keystone Pipeline which could bring more oil from Canadian oil sands into the United States.

The past three or four years we have seen China entering transactions all over the world to secure oil resources to fuel their economy over the coming years - deals in the oil sands, Brazil, Russia and Africa. How has the American energy situation improved since oil hit $150 in 2008 ? Has anything been done to ensure that oil is going to be available to run the economy until a better substitute is available?

If, as an investor, you don't have exposure to oil, I think it would be wise to get some. With oil at $113, this might not be your best opportunity, though surely a pullback in prices will happen at some point in the fairly near term.

And if the potential for increased taxes through the end of subsidies for American producers concerns you, I'd recommend you look north of the border. One way to do so is through the Guggenheim Canadian Energy Income ETF (ENY) . Here is a look at the fund holdings as of the end of April:

as of 4/29/11


Ticker

Name

Shares

Market Value

Weighting

OTCQX:COSWF

CANADIAN OIL SANDS LTD

661,461

$22,753,952

8.00 %

SU

SUNCOR ENERGY INC

424,558

$19,513,068

6.86 %

IMO

IMPERIAL OIL LTD

334,228

$17,612,267

6.19 %

OTCPK:BLKPF

BLACKPEARL RESOURCES INC

1,877,584

$15,771,033

5.55 %

CVE

CENOVUS ENERGY INC

406,637

$15,590,930

5.48 %

OTCPK:MEGEF

MEG ENERGY CORPORATION

284,254

$14,966,886

5.26 %

OTCPK:STPJF

SOUTHERN PACIFIC RESOURCE CO

7,008,703

$13,738,934

4.83 %

OTCPK:ATHOF

ATHABASCA OIL SANDS CORPORATION

817,353

$13,274,395

4.67 %

CNQ

CANADIAN NATURAL RESOURCE

271,286

$12,725,868

4.47 %

IVAN

IVANHOE ENERGY INC

4,209,884

$11,801,962

4.15 %

BTE

BAYTEX ENERGY CORP

166,822

$10,272,867

3.61 %

OTCPK:CLLZF

CONNACHER OIL AND GAS LTD

7,263,966

$10,258,433

3.61 %

ERF

ENERPLUS CORP

286,146

$9,237,131

3.25 %

OTCQB:HUSKF

HUSKY ENERGY INC

231,219

$7,213,029

2.54 %

NXY

NEXEN INC

264,584

$6,979,541

2.45 %

PWE

PENN WEST PETROLEUM

229,470

$5,871,878

2.06 %

OTCPK:PBEGF

PETROBANK ENERGY & RESOURCES

275,219

$5,806,908

2.04 %

OTCPK:ATGFF

ALTAGAS LTD

174,836

$4,676,543

1.64 %

VRML

VERMILION ENERGY INC

82,027

$4,391,602

1.54 %

OTCPK:FRHLF

FREEHOLD ROYALTIES LTD

184,887

$4,364,724

1.53 %

PVX

PROVIDENT ENERGY LTD

459,523

$4,315,066

1.52 %

OTCPK:ZARFF

ZARGON ENERGY TRUST

181,246

$4,303,602

1.51 %

BNE

BONTERRA ENERGY CORP

72,120

$4,294,441

1.51 %

OTC:DAYYF

DAYLIGHT ENERGY, INC.

373,271

$4,272,249

1.50 %

OTC:FCGYF

VERESEN INC

297,219

$4,260,082

1.50 %

OTC:KEYUF

KEYERA CORP

102,569

$4,241,774

1.49 %

OTCPK:PEYUF

PEYTO EXPLORATION & DEV CORP

197,855

$4,199,610

1.48 %

OTCQX:PMGYF

PERPETUAL ENERGY INC

961,011

$4,193,061

1.47 %

OTC:PBNPF

PEMBINA PIPELINE CORP

164,345

$3,992,362

1.40 %

PGH

PENGROWTH ENERGY CORP

283,087

$3,985,922

1.40 %

EGBUF.PK

ENBRIDGE INCOME FUND

204,410

$3,970,360

1.40 %

OTCPK:BNPUF

BONAVISTA ENERGY CORP

129,669

$3,885,219

1.37 %

OTC:NOIGF

NAL ENERGY CORP

293,285

$3,854,417

1.36 %

OTCPK:CSCTF

CRESCENT POINT ENERGY CRP

84,504

$3,825,991

1.35 %

Source: With Obama's Foreign/Domestic Oil Production Hypocrisy, Look to Canada Oil Sands ETF for Oil Exposure