For example, America imports some 12 million barrels of oil per day, yet maintains a Strategic Petroleum Reserve (SPR) whose maximum is 727 million barrels (and its inventory is currently lower, 701 million barrels, because the government cut off shipments to it last year in an effort to modulate gasoline prices.)

The math gets even more discouraging when you work in the fact that the SPR's daily drawdown capacity is only 4.4 million barrels - so America is completely unprepared for any worst-case scenarios, or even the bad-case ones.

It's not that the United States doesn't have the capacity for domestic energy production. Administration after administration, Republican as well as Democratic, is simply choosing to legislate it away.

Designate the land above one of the biggest, cleanest coal deposits in the world a national monument, rope off huge swaths of offshore waters to drilling, threaten stringent new mining laws, derail hydroelectric projects, and America is handing foreign suppliers its own barrel for the country to crawl under.

Speaking of administrations... how about the new one? Will President Obama's promised green policies make a difference? As we laid out in the November 2008 edition of Casey Energy Opportunities, the short answer is no.

In fact, we believe that if Obama pushes through the goals as he's outlined, the United States is actually headed for a more, not less, dangerous path. Green energy isn't enough to offset the pressure he plans for the "dirty" energies.

A bull market will come for the traditional energies in the long run; the problem lies in the shorter term, in the instability of America's energy portfolio before the Obama administration realizes that nice girls don't wear that much paint.

With this in mind, let's look at each power generation technology from an investor's view.

Coal
However you slice it, the coal industry is in for a hard time under Obama. He proposes a tough 100% cap-and-trade system that will make coal plants uneconomical to run at almost any electricity or coal price around now.

This goes for existing as well as new plants, and installing the latest-generation scrubbers will just be another route into the red for many companies. Did we mention that coal generates almost half of America's electricity?

As a result, we expect coal prices and coal utilities to trade well below their worth for the next few years. We're closing our position on a coal ETF in our portfolio, which we recommended in February 2007 and took a free ride on in June. But as time goes on, America will realize how overambitious Obama's targets are and come back to the tried and true.

With the help of the coal industry's powerful coal lobby in Washington - not to mention all the voters the coal industry employs - coal will catch fire once more, and we'll reevaluate our position then.

Natural Gas
While a thermal-generation technology like coal, natural gas is less likely to feel pain under Obama because of its cleaner burning. And as natural gas is already one of the cheapest power technologies available, the industry would weather a cap-and-trade system better than coal. Natural gas is set to push to the forefront of the electric world.

So far, so good. The next factor changes things a bit for the savvy investor, however. Without Russia's heavy hand on the tap to deal with, prices should shadow market patterns in United States.

Due to the country's large natural gas reserves and resources in both gas shale and coal bed methane, we predict natural gas prices will drop in the near term. Thus we're avoiding all but the best U.S. natural gas plays in the Casey Energy Opportunities portfolio.

Nuclear
Obama's stance on nuclear energy is decidedly neutral. He appears to recognize its benefits for domestic energy security as well as its carbon-reducing qualities.

He's also aware it's still a touchy subject for many Americans, even with the Yucca Mountain waste disposal site moving forward. We add this up to mean that nuclear reactors currently in planning stages are likely to go ahead unimpeded by federal or state meddling. This is good news for our uranium picks.

There's another bullish influence coming for uranium: the sunset of America's current Highly Enriched Uranium (HEU) agreement with Russia in 2013. At best, Moscow will demand to renegotiate the bargain-basement price it's now obligated to offer under terms of the agreement.

More realistically, it will threaten to shop its converted weapons-grade uranium elsewhere - another barrel over the land of the free - and Russia actually has several incentives to do so. Sooner or later, the United States will return to sources within its own borders, then from Canada.

Wind
Wind energy has much to gain from Obama's plan, which, as it stands, has some $15 billion slotted for clean energy initiatives. His target of "25% by 2025" would require roughly double or even triple growth for the wind industry.

Obviously this growth is achievable only through government subsidies, which may or may not be sustainable. Only a few areas of the United States, such as around the Great Lakes and offshore in territorial waters, enjoy the steady stiff breeze that wind farms require to be viable.

Offshore projects raise another hurdle: transmission lines. For fun, let's run some numbers for President Obama. For wind power to supply 20% of America's power by 2030, the country would need to build an estimated 12,000 miles of 765 kV transmission lines.

At a cost to generate power of US$0.06 - about the same as geothermal - the transmission lines would cost $2.6 million per mile (in today's money), or $31 billion total. That figure would account for 21% of the total budget for clean energy alternatives, or to put it another way, two years' funding for NASA.

A company with projects bearing very good wind reserves near an existing transmission line is the only kind of investment we'd consider here. For now, however... like T. Boone Pickens, who recently announced he's putting his giant Texas wind-farm project on hold because of the credit crunch and falling energy prices - we, too, are steering clear of wind energy.

Solar
Sun-powered electricity is a great long-term energy provider. Despite advances in the technology, however, it continues to be one of the highest-cost producers; and there will always be the issue of what to do when the sun doesn't shine (and not just on cloudy days - there's every night).

And while the Mojave Desert isn't as remote as China's Gobi, the incoming administration still needs to consider cost of infrastructure when promoting solar farms. That said, we still believe that our investment in two hand-picked solar stocks will return good profits in the next few years.

Geothermal
Many projects generating electricity from hot water would run into trouble if oil were to go below $50 per barrel. True still, but geothermal continues to appeal nonetheless. First, oil is unlikely to stay this low for long; and more fundamentally, geothermal's load factor - as high as 95% - pushes it far to the head of the renewables class and comparable to natural gas and nuclear.

Its limitation is geographical. At the very best, only 10% of the United States could be supplied with geothermal power, according to the Department of Energy, and we find that figure optimistic. Geothermal currently represents 0.35% of America's power generation.

We're willing to invest in geothermal companies because of the robust economics and the fact that they're likely to do well under the cap-and-trade system that appears inevitable. We want to pick those that have not only good resources but also customers, so two top-quality geothermal companies are currently in the Casey Energy Opportunities portfolio.

Hydroelectricity
On the scale of energy generation technologies, hydroelectricity tends to rate as reliable, and generally cheap and environmentally benign. Like Europe, however, the United States has little hydroelectricity left to exploit, and even the newer run-of-river technology is unlikely to bump its contribution up much from hydropower's current 10%.

Biofuels
Unlike the Casey Research Energy Team, Obama is fond of this stuff. Biofuels are both heavily subsidized and currently high-cost alternatives to reducing carbon - second generation (from non-food organic material) and third generation (using algae) included.

However, the White House is soon to hold a former senator from Illinois, one of the largest ethanol producers in the United States, so biofuels are likely to hang around in some form or another. We'll keep our eye on research, as well as industry developments in the near future.

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