Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

ConocoPhillips (COP), Chevron Corporation (CVX): Obama and Alaska at Odds About How to Tax Energy

Drilling in the North Slope of Alaska is inherently expensive, and it has caused several major oil companies to steer capital expenditures away from the region. Both ConocoPhillips (NYSE:COP) and Royal Dutch Shell plc (ADR) (NYSE:RDS.A) have put major holds on their drilling programs in Alaska as of late, citing both high costs and regulatory uncertainty for the cutbacks. So while the more lucrative tax incentives may help, it may not be enough to turn Alaska’s production numbers around.

What a Fool believes
Agree with these policies or not, they are not binary outcomes for the industry. The Obama administration’s proposals to do away with tax incentives for the oil and gas industry and increased royalty revenue will probably have a negative effect on exploration and production, but they won’t cripple the industry. There are still several benefits to producing oil and gas in the U.S., and our dominance in shale gas drilling has led oil majors Chevron Corporation (NYSE:CVX) and ConocoPhillips (NYSE:COP) to restructure their growth plans to incorporate more U.S. shale drilling rather than exploration plans overseas.

As investors, we don’t need to play this situation as a binary outcome situation, either. With global demand for energy growing at a staggering pace, there are opportunities for both fossil fuels and alternative energy to grow immensely. Don’t let political rhetoric or emotional biases cloud your judgement when investing, especially in the energy space. One of Warren Buffett’s tenets of investing is to not let political and macroeconomic forecasts obscure your investment theory. Rather, take a step back and invest in great businesses dispassionately. While following this advice may not be easy, your portfolio will thank you for it.

The article Obama and Alaska at Odds About How to Tax Energy originally appeared on

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool. The Motley Fool recommends Chevron and National Oilwell Varco and owns shares of National Oilwell Varco.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.