Betsy Newmark cites three possibilities (originally floated by Paul Rubin):
The President and his advisors are simply incompetent, or they prioritized labor groups over the environment (i.e. not overriding the Jones Act), or they wanted to exploit the crisis to push cap and trade.
Betsy may not be cynical enough to believe reason three, but I am. And I could add a fourth reason. For the past year Sarah Palin has been the most vocal and powerful political adversary. It's hard to imagine in the early days of the spill, Rahm Emanuel not making a case to the President that this fiasco would neutralize Palin, where "Drill Baby, Drill" morphs into "Spill, Baby Spill", This could have been compounded if the administration was amateur enough not to have foreseen that the long term political consequences would boomerang back to the Oval Office.
After all none of the conjectures above are mutually exclusive, so frankly they could all be in play.