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Romney Steps into Energy Conversation

One of the most remarkable things about the U.S. energy revolution is how quickly it is changing the conversation. On Wednesday, Mitt Romney released a 21-page policy paper outlining how he intends to encourage domestic energy (oil) production in order to reach partial energy independence (using only North American sources) by 2020. The Financial Times reports:

The strategy picks up on the assessments of analysts at Citigroup and Raymond James, among others, who have argued that the upturn in US production resulting from the shale oil boom makes it possible that by the end of the decade, the country could be importing crude only from Canada and Mexico.

Mr Romney said his vision was for the US to be an “energy superpower, increasing our own production and partnering with our allies Canada and Mexico to achieve energy independence on this continent”.

The plan, naturally is not without its critics. In particular, many believe that 2020 is far too soon to contemplate full energy independence, while others question whether energy independence is a reasonable goal in the first place. In perhaps the best critique, Michael Levy argues in Foreign Policy that America’s resource wealth is not sufficient to achieve independence from world energy markets:

In any case, energy independence requires more than impressive arithmetic. As long as the United States is fully integrated into the world oil market, U.S. fuel prices will rise and fall along with events on the other side of the globe — say, a war with Iran. Greater domestic production will blunt the economic shock of rapidly rising prices — better to suddenly be sending massive sums to North Dakota than to Saudi Arabia — but because oil producers everywhere are relatively slow to spend their windfalls, skyrocketing prices could still knock the economy on its back.

Many of these critiques have merit, and we would be surprised if America is completely energy independent in only eight years. But if full independence isn’t quite in the offing, America does have the opportunity move a long way toward that goal in the coming years, and we will need a serious political discussion about what all this may mean for the future. The fact that Romney released this report means that this conversation has begun in earnest.

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  • ms

    With energy independence we would not be exempt from the shock of high prices, but we would be free from the threat of embargo. And that is no small thing.

  • Walter Sobchak

    The NYTimes was unable to control its excitement about an anti-fracking letter signed by 140 fools:

    “More than 140 artists and celebrities, including Lady Gaga and Paul McCartney, have signed on to a coalition to try to persuade Gov. Andrew M. Cuomo to ban the use of hydraulic fracturing — also known as hydrofracking or fracking — to extract natural gas in parts of New York State. Yoko Ono and her son, Sean Lennon, plan to host an event on Wednesday in New York City to introduce the coalition, called Artists Against Fracking. …

    “Ms. Ono and Mr. Lennon discussed their intention to form the coalition on the NBC program “Late Night With Jimmy Fallon” in July. Mr. Fallon is listed as a member on the Web site, as are the author Salman Rushdie, the restaurateur Mario Batali and some big show-business names, like Anne Hathaway, Hugh Jackman, Julianne Moore and Gwyneth Paltrow. Some in the group have homes near the upstate areas where the new drilling could take place. The group lists an eclectic mix, among them: Fred Armisen, Alec Baldwin, Jackson Browne, David Byrne, Deepak Chopra, Zooey Deschanel, Carrie Fisher, Roberta Flack, Joseph Gordon-Levitt, Jeff Koons, John Cameron Mitchell, Bonnie Raitt, Todd Rundgren, Amy Ryan, Cindy Sherman, Patti Smith, Uma Thurman, Liv Tyler and Rufus Wainwright, as well as bands like the B-52s, Kronos Quartet, My Morning Jacket, Scissor Sisters, Wilco and Yo La Tengo. Such star power represents a coup for an antifracking movement in New York that has counted on only a few celebrities, led by the actor Mark Ruffalo, who is also listed as part of the coalition, to burnish its image.

    * * *

    “It is uncertain how much weight the artists’ opinions will have. But they are likely to further energize the environmental movement, which includes advocacy groups, scientists and politicians, in the debate against the oil and gas industry, landowners and officials in communities that see the drilling as a source of new investment and jobs.”


    I mean really folks, why should anybody care about what these half educated nimrods think?

  • Mrs. Davis

    Obama plans to achieve energy independence in four years through demand reduction.

  • Nathan

    ms @ #1 – I fully agree. While many focused on the economic aspects of the Keystone XL Pipeline and the wider effort to develop energy in the United States, that isn’t the real benefit. Energy independence is a foreign relations play far more than an economic one.

    Walter Sobchak @ 2 – While I agree with the general thrust of your post, I’d also point out the irony of the celebrity anti-fracking letter: Mitt Romney proposes to allow New York to do *exactly* what the artists propose by giving the state of New York control over its drilling lands. If the state of New York wants to forego the hydrocarbon boom, under a Romney presidency they might (this would need to pass Congress) be fully empowered to do that.

  • Luke Lea

    @ – As long as the United States is fully integrated into the world oil market, U.S. fuel prices will rise and fall along with events on the other side of the globe

    Not only that. As long as the United States is fully integrated into the world economy, the U.S. economy will rise and fall with the economies of Europe and Asia. The idea that we can free ourselves from exposure to events in the Persian Gulf and other oil-producing regions is simply wrong. Our leaders know this of course.

  • Mark in Texas

    We could be a lot closer to transportation energy independence if the EPA permitted us to convert our cars and light trucks to optionally run on compressed natural gas and if it were not a crime to sell methanol as a motor fuel.

    Anywhere else in the world it costs about $1000 to install a kit that allows a gasoline car to run on compressed natural gas and then switch back to run on gasoline if the CNG runs low. Due to EPA required certification it costs about $25000 to install the same kit in the United States. If you install an uncertified kit, you are subject to fines of $5000 per day for tampering with your engine’s pollution controls even though the engine will emit less pollution when running on CNG. At present prices running on natural gas is like using $1.00 a gallon gasoline.

  • Mick The Reactionary

    “As long as the United States is fully integrated into the world oil market, U.S. fuel prices will rise and fall along with events on the other side of the globe”

    This is oversimplified, dumb-down view from 10000 miles. Probably OK for Financial Times small investor readership, does not give much of insight for policy analysis.

    Among major factors that VMead citations (I haven’t read the article, it does not look too valuable) ignore are:

    1. Reserve production capacity, significant reserve will dampen price spikes in middle-long term

    2. Time required to bring reserves on line

    3. Government role. Fuel taxes run around 10-15%. Price spikes generate unearned bonanza for states and Feds. States and Fed may agree to limit their take during spikes to pre-crisis amount or even reduce it to minimize negative shock to economy.

    Temporary targeted (probably will be tainted by cronism) fuel tax rebates to government favorite businesses could be deployed. Personally I would be against that.

    Of course by far the major points were lightly covered:

    1. No more embargoes.
    2. More money to the good residents of oil-producing US states, hopefully much more money.
    3. Less money, hopefully much, much less money, to jihad spreading terror states and thuggo-states like Russia and Venezuela.

  • WigWag

    Mark in Texas (# 6) hits a gusher with his comment. He’s got it exactly right. Romney has it exactly wrong, but then so does Obama.

    There is a stunningly good article in the June 10, 2012 issue of the American Interest entitled, “The Folly of Energy Independence” written by Gal Luft and Anne Korin. The authors suggest that,

    “It has been an article of faith at least since Nixon Administration that in order to strengthen its security and through that, its international position generally, the United States should reduce its dependence on imported oil particularly from the Middle East. The only significant difference between Republicans and Democrats on this point has been their choice of methods” (Republicans prefer drill baby drill and Democrats prefer conservation).

    Luft and Korin go on to argue that because both parties have labored under a series of misconceptions about how international oil markets work, “the goal of import reduction was misguided.”

    They make precisely the same argument that Mark in Texas makes; the solution to America’s energy issues is not to find more domestic oil, it’s too insure that oil is no longer the dominant fuel in any particular sector. Already, oil has become irrelevant to electricity production; in fact it accounts for less than two percent of the fuel used to generate electricity. Oil is also continuing to lose market share for home heating.

    Unfortunately, oil still dominates as the fuel of choice for transportation and as the third world develops demand for oil based transportation fuels is escalating rapidly.

    According to the article, “the problem that we face is not about supply but about price. In recent years, America’s volume of imported oil has dropped significantly even as the price we have paid and are still paying for it has sharply increased.”

    Accusing both Democrats and Republicans of sheer stupidity they argue, “the idea that energy independence is mainly about the security of supply is still one stuck in the heads of most Americans and even most policy makers.” The authors insist, “this assumption is completely wrong and our inability to rid ourselves of this generic misunderstanding is still leading us to overlook a readily available remedy for our problems.”

    The solution is simple; natural gas. The article points out that domestic natural gas supplies are enormous and expanding and that the prices are continuing to be held in check. Moreover, the two primary natural gas users, the chemical and utility industries are limited in their ability to absorb more natural gas.

    The natural answer to this energy bonanza is to find an outlet for this gas before drilling slows due to a lack of increased demand. The most logical outlet is to use natural gas as a transportation fuel.

    This can be done in three ways; (1) the gas can be used to generate electricity which is used to fuel electric cars or gasoline/electric hybrids; (2)cars and trucks can built or converted to use compressed natural gas for fuel or (3)natural gas can be used to generate methanol which is a highly efficient fuel source for automobiles and trucks. Methanol is globally traded and its current price is about $1.10 per gallon. The added cost to make methanol a useable fuel for most cars and trucks is, at most, $100 per vehicle. This is the solution that Luft and Korin recommend.

    The authors suggest that a true solution to the grip of foreign oil already exists if only we had the wisdom to grasp for it. Of course it’s not wisdom our two political parties can be counted on the grasp for; they prefer straws.

    By the way, for those who are not familiar with it, the American Interest is a wonderful periodical with some truly excellent articles (of course, there are a few clunkers too).

    For those who may be familiar with AI only through Mead’s blog, the magazine is well worth a read. I like to look at it on my Kindle.

  • WigWag

    Not all Republicans are idiots but some are.

    To read an energy plan from a Republican idiot (Mitt Romney) go here,

    To read an energy plan from an intelligent Republican (Tom Ridge) go here,

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