Romney’s energy plan follows the money

August 24, 2012 at 4:32 pm
Contributed by: Chris

Plenty of ink has already been spilled about Mitt Romney’s so-called energy plan, released yesterday, so I will not offer a comprehensive critique of it. But a few additional observations are in order.

Essentially, it’s a regurgitation of the oil and gas industry’s media blitz over the past year. It attempts to legitimize this fact by crediting “analysts at Citigroup and Raymond James, to experts at think tanks like the Manhattan Institute, to scholars at the Harvard Kennedy School” for its provenance, and assembling a pile (constituting roughly half the document) of excerpts from various publications as evidence that its “energy independence by 2020” objective is realistic.

Anyone who follows the energy press closely will instantly recognize that nearly all of the authors and cited sources are either part of the oil and gas industry, or represent its interests. It relies heavily on this year’s much-ballyhooed forecasts of a team at Citigroup headed by longtime oil bull Ed Morse, which I critiqued in detail in April, and of Leonardo Maugeri, an oil company executive and senior fellow at a BP-funded center at Harvard, which I critiqued in July. I found that neither forecast stood up to close scrutiny (separately, David Strahan discovered that Maugeri got his math wrong), and concluded that both were essentially political salvos, dressed up as authoritative studies, and launched on behalf of the oil and gas industry.

Likewise, the Romney plan’s pretensions to defending states’ rights are naught but a transparent effort to break down all remaining barriers to oil and gas exploration on federal lands. As Eric Lipton and Clifford Krauss put it in the New York Times, “Giving states control over the energy resources on millions of acres of federal lands would be a radical shift from decades of policies under both Democratic and Republican presidents, dating all the way to Theodore Roosevelt, who first set aside vast tracts of territory to preserve wildlife.” In short, as Loren Steffy quipped in the Houston Chronicle, the plan is “nothing more than a sloppy wet kiss to energy companies, who have a lot more sway over state regulators, especially in oil rich states, than they do with federal agencies such as the Environmental Protection Agency.”

As I explained in March, the industry’s long-running push for greater access to federal lands will not bring us energy independence; it’s really just a cry of desperation:

After 150 years of intensively applying the world’s best extraction technology, we have nearly sucked our land dry, and the only remaining good prospects are offshore. If all limits on drilling were removed, including in the Outer Continental Shelf and the Alaskan National Wildlife Refuge, some estimates show that we might increase US oil production by 2 or 3 mbpd at most. That new production would probably take 10 years to come online, and 15 years or more to reach maximum output. It would be hardly noticeable as it compensated for the loss of oil production due to depletion. Barring export restrictions, much of it would be sold to the highest bidder, which is Asia. If it lowered prices at all, it would be by a few pennies per gallon.

As a longtime observer of the U.S. oil industry (who wishes to remain anonymous) remarked to me today, “One thing no one seems to understand, including the Romney plan authors, is that almost all the shale gas and tight oil is on private and state lands, with little to none on federal lands. So giving the states rights to open federal land within their boundaries changes essentially nothing. And it’s very hard to see the feds ceding offshore control to the states. Again, TX, LA, etc do have jurisdiction over near-shore drilling already, as I understand it. Finally, more than 35 million acres of federal land has already been leased, and is not being developed.” But such factual perspectives have no place in Romney’s industry propaganda.

Romney’s pitch also contains some whopper distortions of the data. For just one example, consider what Romney said at the unveiling of his plan. According to Philip Rucker in the Washington Post, Romney claimed the U.S. “produces about 15 million barrels of oil a day, about two-thirds of the country’s total demand.” In actuality, the U.S. is currently producing 6.2 million barrels of oil per day, importing a net 7.2 million barrels per day, and consuming 18.7 million barrels per day, according to official EIA data. Some might bring the production number up to around 10 million barrels per day by including corn ethanol, refinery gains, and natural gas liquids, but as I detailed in May, much of those additional liquids aren’t usable as vehicular fuel and aren’t equivalent to oil, and should not be counted as oil.

How Romney got to 15 million barrels, I have no idea, but as most of the country still has zero literacy in oil data, I’m sure he’ll get away with that statement. (In all the press I’ve seen about his plan, no one has critiqued that point. Even legendary oil man T. Boone Pickens decried the problem yesterday on a CBS News interview with Charlie Rose, saying, “They don’t know anything about energy in Washington.”) It’s a particularly strange claim to make since, in Romney’s own document, he cites a 2010 article saying that U.S. oil production was 5 million barrels per day. Does Romney really believe that U.S. oil production has tripled in two years, or does he even understand what he’s saying? In any case, his assertion that (after annexing Canada and Mexico) “by 2020, we’re able to produce somewhere between 23 million and 28 million barrels per day of oil” is utterly absurd. That would be more than the combined output of the world’s top two oil producers, Saudi Arabia and Russia.

A recent post by Cory Suter in policymic offered a stunning contrast to Romney’s current stance on energy by reprinting some excerpts from Romney’s 2010 book, No Apology; The Case for American Greatness. In it, Romney advocated for super-efficient cars; said that energy policy should be formed proactively and not left up to market forces; worried about the externalities of oil dependency and climate change; and was apparently a believer in peak oil:

“Many analysts predict that the world’s production of oil will peak in the next ten to twenty years, but oil expert Matt Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, presents a compelling case that Middle Eastern oil production may have already reached its peak.  Simmons bases his contention on his investigation into the highly secretive matter of the level of reserves in the Saudi oil fields. But whether the peak is already past or will be reached within a few years, world oil supply will decline at some point, and no one predicts a corresponding decline in demand. If we want America to remain strong and wish to ensure that future generations have secure and prosperous lives, we must consider our current energy policies in the light of how these policies will affect our grandchildren.” (p. 233)

But that was soooo two years ago. Romney’s current plan is all about “private-sector-led development of new technologies.” It repeats Maugeri’s assertion that there is “no ‘peak oil’ in sight” and does not mention the word “climate” once. It does mention “greenhouse gas emissions” once, in an item titled “The Obama Administration Has Imposed Regulations That Ensure A Coal Power Plant Will Never Again Be Built In The United States.” Romney is now pro-coal, after vowing as governor to close a coal plant because it “kills people.”

A few other word-counts:

  • “Renewable” is mentioned once in “Ensure that policies for expanding energy development apply broadly to energy sources, from oil and gas exploration, to coal mining, to the siting of wind, solar, hydroelectric, and other renewable energy facilities,” and twice in an item titled “Environmentalists Block Wind And Solar Projects Just As They Do Fossil Fuel Projects….”
  • “Solar” is mentioned 14 times and “wind” 11 times. Nearly all appear in a negative context, attacking federal restrictions, the Solyndra scandal, the scaling and cost issues that renewables have, and so on. Romney has been clear about his intention to let the production tax credit —  which has been responsible for the growth of the domestic wind industry — expire, ensuring another bust cycle in the long boom-and-bust history of renewable energy. But he’s still in favor of subsidizing the 150-year-old oil and gas industry.
  • “Oil” is mentioned 154 times, and “gas” 83 times.

In summary, Romney can call his white paper an “energy plan” in the same sense that a student who has cut-and-pasted together a document can call it a thesis. It’s nothing more than an oil and gas industry wish list.

This should surprise no one since, according to Lipton and Krauss in the Times yesterday, Romney received nearly $10 million from the oil and gas industry just this week. Romney’s chief energy adviser is shale oil baron Harold Hamm, one of his top super PAC donors, who stands to benefit handsomely if Romney takes the reins. Oil and gas employees and their families are the sixth-largest source of donations to the Republican National Committee, as Jim Snyder and Kasia Klimasinska reported for Bloomberg today, and the industry as a whole is the tenth-largest contributor to the Romney campaign. The fossil-fuel tycoon Koch brothers alone have personally contributed over $60 million to Romney’s campaign.

As I detailed in my data roundup on energy industry lobbying two weeks ago, if you want to understand U.S. energy policy, all you need to do is follow the money. That is precisely what Mitt Romney is doing.


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