Romney Energy Plan: A Gift to Big Oil

Original article reposted from MNN.com, author Jim Motavalli

Photo: Justin Sullivan/Getty Images

Rather than achieving energy independence through a mix of renewables and fossil fuel, the Republican team is betting heavily on new oil drilling. The big problem: We don’t have all that much oil.

The Romney-Ryan campaign has been long on generalizations and short on detailed plans, so I was glad to see the 21-page “Romney Plan for a Stronger Middle Class: Energy Independence” plop with satisfying weight onto my desk. My smile faded when I saw that about half of the report was dedicated to cherry-picked media quotes.

The actual energy report is quite simple, and unburdened by an accumulation of facts and evidence. It advocates:

• Energy independence by 2020 by fully developing our resources, creating 3 million jobs in the process;
• Opening our entire coastline to oil drilling;
• Slashing environmental regulations and reviews to “streamline” the permitting process;
• Building the Keystone XL Pipeline;
• Turning decisions about energy development on federal lands over to the states;
• Working more closely with Canada and Mexico;
• Getting government out of the way and partnering with the private sector.

There, now you don’t have to read all 21 pages. What’s remarkable about the plan is what it doesn’t say. Electric or hydrogen cars (the latter a Bush favorite)? Nothing. Biofuels? Nothing. Wind and solar? Minor mentions, mostly negative. Geothermal? Nada. The failed Solyndra solar company gets a starring role, though. Maybe this isn’t that remarkable if you review Mitt Romney’ environmental record, especially lately.

Nuclear power? This one stumps me, because it gets only two lines, calling on the Nuclear Regulatory Commission to approve new reactor designs and “license approved reactor designs on approved sites within two years.” This isn’t much in terms of new policy and doesn’t add anything to George W. Bush’s full-steam-ahead nuclear policies, which didn’t add any new plants in eight years. This may reflect nuclear wariness after the Japanese meltdown. If Romney wants a nuclear America, he’s got to do more than this.

As MNN has reported, this plan is remarkably focused on new oil and gas drilling, and it makes grandiose claims about what it can achieve. All such projections, though, come up against the hard fact — unmentioned here — that America has a lot of natural gas but no longer big oil resources. Texas’ gushers are history; we have, today, 2 percent of the world’s proven oil resources. Even drilling in the Arctic National Wildlife Refuge (ANWR), a Republican holy grail for decades, won’t be an energy panacea.

Though the Romney plan depicts Obama as shutting off the oil spigot to favor his precious wind and solar projects, in fact in 2010 U.S. oil production was at its highest point since 2003. We produced 5.5 million barrels that year, compared to peak production (in 1970) of 9.6 million barrels. New oil rigs are up 5 times under Obama.

Obviously, America’s natural gas production has soared in recent years, despite government “red tape.” That’s not because of any political policies, but through new production techniques, especially the highly controversial practice of hydraulic fracking. Carbon dioxide production is at a 20-year low because of fast-and-furious natural gas development. The Romney paper makes much of how cheap domestic natural gas can bring manufacturing jobs back to America, but that’s already happening.

Aggressively going after offshore oil and exploiting federal lands won’t dramatically change the current energy picture. I seem to recall a few minor problems with under-regulated offshore oil wells [Deepwater Horizon, for example]. I cite no less an authority than Energy Information Agency head Richard Newell, who told the House Natural Resources Committee last year, “Long term, we do not project additional volumes of oil that could flow from greater access to oil resources on federal lands to have a large impact on prices given the globally integrated nature of the world oil market and the more significant long-term compared to short-term responsiveness of oildemand and supply to price movements.”

In other words, the Romney-Ryan claim of “lower energy prices for job creators and middle-class families” is not likely to be realized any time soon. Oil prices, as Newell points out, are set on international markets, and U.S. supplies aren’t large enough to affect them significantly.

Here’s some numbers that Romney-Ryan leaves out. In 2009, the U.S. had 20 billion barrels of oil in proven reserves, according to federal figures. The big snag in making America a big energy power is that other countries have much more oil: Canada (178 billion barrels), Venezuela (99 billion barrels), Saudi Arabia (266 billion barrels), United Arab Emirates (97 billion barrels). Even Libya’s supply of sweet crude (43 billion barrels) is more than double what the U.S. has.

Almost 200 billion barrels are “technically recoverable” in the U.S., though the irony here is that only high oil prices make such recovery feasible. In low-price scenarios, such as envisioned by Romney-Ryan, it’s always going to be cheaper to buy a barrel of oil on the spot market than dig it out of oil shale or tar sands.

And then there’s the consumption problem. We burn something like 18 million barrels of oil a day, making us the world’s largest consumer of black gold (despite our comparatively small population). In 2009, almost 12 million of those barrels were imported. An obvious answer would be conservation programs, but this doesn’t get even one line in Romney-Ryan.

Romney-Ryan cites a Citibank report that said energy independence is possible, NPR said, “provided there are sharp efforts to reduce energy demand. But energy conservation is not part of the Romney plan.” Don’t expect to surrender the Hummer keys if Romney-Ryan win election — it’s not going to be a return to Jimmy Carter and sweaters in the White House.

I concur with Foreign Policy, which wrote, “The biggest problem with the plan, though, is not what it does or promises–it’s what it leaves out. The United States remains vulnerable to global oil markets and constrained in its foreign policy because of its massive consumption of oil from all sources. Yet the Romney energy strategy does nothing to address this Achilles heel aside from promising to continue support for basic research.”

The Romney-Ryan claims arising from America the “Energy Superpower” are great: 3 million new jobs, $500 billion added to the gross domestic product; a stronger dollar and a reduced trade deficit; $1 trillion for federal, state and local governments; lower energy prices for everybody; a stronger national security resulting from “freedom from dependence on foreign energy supplies.”

But I’d like to see a phalanx of energy economists raising their right hand and swearing that this plan, centered on oil drilling, can actually achieve any of those things.