Obama: Drill, Baby, Drill

NEW YORK ( TheStreet) -- President Obama will present a bill Wednesday to open up wide swaths of the Atlantic Ocean for offshore drilling, defying the environmental lobby he courted in the election and bringing smiles to the faces of his right-wing opponents. Why is he doing this?

If the resources over the 167 million acres of oceans, from Maryland down to Florida, would yield unlimited quantities of oil and natural gas, we might be convinced that the move was really about energy independence. But it won't. Studies have shown over and over that this traditional "hands-off" area for drilling, an area that even "drill, baby, drill" screamers in the Bush White House and the McCain campaign wouldn't touch, holds a relatively small reserve and will be inaccessible for at least another seven years.

So what's going on here?

Obama's Oil Plan is Bush's Oil Plan

Some see this as a first salvo in a game to give a little to the oil interests in the U.S. before making a strong push for much more stringent climate control legislation, of trying to woo the recently defeated right on health care into the president's camp.

But the right wing in Congress and the nation has shown little appetite to support this president, even if the proposals he makes are straight out of the Sarah Palin playbook, as this one is.

My own take is that the president is beginning to get to a consolidated energy policy, one that will definitely expand green initiatives and alternative energy incentives but will also clearly look to isolate one new area of energy technology: Fracking in the Marcellus, Barnett and other shale areas.

I believe this olive branch to drillers is also a response to the many energy advocates of expanded water injection technologies that are needed to fully mine Marcellus shale. He is telling me that he is unwilling to take on the growing environmental clamor of mining, carbon gas emissions and particularly water contamination that fracking entails. We can forget about government incentives for shale mining of natural gas from this administration.

While this only subtlety changes the investment equation on oil services, it may portend a game changer in nat gas companies - particularly Devon ( DVN) and Chesapeake ( CHK), almost entirely levered into domestic on shore natural gas -- this latest move from the president might have Devon CEO Larry Nichols questioning his recent move to sell his remaining Gulf of Mexico assets to BP ( BP) to concentrate on onshore assets.
Offshore Drilling

Two quick moves to look at Wednesday -- how Chesapeake and Devon react. Watch that, along with offshore drillers, of course -- particularly Diamond ( DO), but also industry-leader Schlumberger ( SLB).
Who Owns Devon?

I'm disappointed with the president on this one -- it looks like a pandering move to the Republicans and oil drillers to garner support for one upcoming policy, while signaling the abandoning of another more difficult policy of onshore shale mining that we so desperately need.
At the time of publication, Dicker was long Devon and Diamond, but positions can change at any time.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 20 years' experience. He is a licensed commodities trade adviser. Dan's recognized energy market expertise includes active trading in crude oil, natural gas, unleaded gasoline and heating oil futures contracts; fundamental analysis including supply and demand statistics (DOE, EIA), CFTC trade reportage, volume and open interest; technical analysis including trend analysis, stochastics, Bollinger Bands, Elliot Wave theory, bar and tick charting and Japanese candlesticks; and trading expertise in outright, intermarket and intramarket spreads and cracks.

Dan also designed and supervised the introduction of the new Nymex PJM electricity futures contract, launched in April 2003, which cleared more than 600,000 contracts last year alone. Its launch has been the basis of Nymex's resurgence in the clearing of power market contracts over the last three years.

Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts as an analyst of the oil markets on CNBC, Bloomberg US and UK and CNNfn. Dan is the author of many energy articles published in Nymex and other trade journals.

Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.