TransCanada Corporation (USA) (TRP), Chesapeake Energy Corporation (CHK) – Obama’s Climate Plan: The Problems and the Opportunities

By now you know about President Obama’s “climate action plan,” which was unveiled on a hot Tuesday afternoon at Washington, D.C.’s, Georgetown University. As one who’s been in and around the traditional energy industry for some time, I’m attempting to come to grips with what I perceive to be a pair of major difficulties with the president’s proposal.

Its timing, given that it inevitably will cost the nation jobs and raise energy costs at least somewhat for us all, is irresponsible. It seems absurd to unleash such an employment-threatening program at precisely the time when, as The Wall Street Journal said in an opinion piece on Wednesday, ” the economy continues to plod along four years into a quasi-recovery.”

The atmosphere doesn’t recognize national boundaries. So an individual effort at unilaterally cutting emissions will be meaningless unless energy approaches change in a host of other countries, which is unlikely. That’s especially the case in view of the president’s admission that “Though all America’s carbon pollution fell last year, global carbon pollution rose to a record level.”

Will Keystone be blessed?
The president also touched upon TransCanada Corporation (USA) (NYSE:TRP)‘s proposed Keystone XL pipeline at Georgetown: “Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.”

It’s the global-nature-of-pollution thing again. If the line is disapproved, Canada’s oil will be piped west for shipment to China. As such, the issue of “carbon pollution” will essentially be unaffected either way.

Some prudent approaches
So, for Fools with investable approaches on their minds, the question becomes one of the companies or groups that will either benefit from or remain unscathed by President Obama’s plan. One sensible direction, it seems to me, is to look to the nation’s biggest gas producers. Cleaner-burning gas stands to replace coal as a fuel for power plants that are forced to operate under far stricter emissions standards.

As you probably realize, Exxon Mobil Corporation (NYSE:XOM) sits high atop that crowd, with Chesapeake Energy Corporation (NYSE:CHK) and Anadarko second and third, respectively. While I admittedly own shares in Chesapeake Energy Corporation (NYSE:CHK), I’m especially drawn to it, with its high ratio of gas to oil and its purely domestic operations. Given this mix, the beneficial effects it’s likely to feel from increased demand for natural gas should be more directly leveraged to its share prices than with other, more diversified, companies.