The Brawl over Oil and Natural Gas
Tuesday’s debate brought out stark differences between Obama and Romney on energy policy that directly affects the current recovery.
The two candidates could not be more different in their approach to energy policy. Obama leans heavily toward green energy and Romney tilts toward traditional fossil fuel.
It led to a heated exchange between them on oil and gas production on federal lands. Romney directly challenged Obama’s “all of the above” energy policy.
At stake in energy policy this election is the short-term cost of energy and job creation.
Energy policy is so important to Romney that he has made it central to his campaign. It is point #1 in his 5-point economic recovery plan.
The Obama-Romney Energy Argument
A debate brawl was triggered after Obama said under his administration that oil and natural gas production has increased.
Romney acknowledged production is up, but not because of Administration energy policy. He says it is up in spite of Obama energy policy, not because of it.
It led to this in-your-face exchange:
PRESIDENT OBAMA: And the production is up.
MR. ROMNEY: Production on government land of oil is down 14 percent.
PRESIDENT OBAMA: Governor —
MR. ROMNEY: And production of gas is down 9 percent.
PRESIDENT OBAMA: What you’re saying is just not true. It’s just not true.
MR. ROMNEY: I — it’s absolutely true.
So who is right? Is energy production on federal lands up or down? The answer puts an exclamation point to their opposing energy views.
Is Gas and Oil Production Down on Federal Land?
Oil and natural gas production in the United States is undergoing a renaissance. Domestic production is up for the first time in decades.
It is up everywhere except for federal lands.
The Energy Information Administration (EIA) annual energy outlook for 2012 reports that both oil and gas production started rising just before Barack Obama was elected:
The EIA projects the United States will be a net natural gas exporter by the early 2020s.
Earlier this year the Institute for Energy Research (IER) compared oil and natural gas production on private versus federal lands:
The IER shows overall production of both domestic oil and gas is up while, simultaneously, overall production of oil and gas is down on Federal lands.
In March of 2012 the EIA published this table showing Federal and Indian land oil and gas production from 2003 through 2011:
Do the math. Romney’s percentages are correct.
Romney is right. President Obama has reduced production of oil and gas on federal lands while private lands have more than offset the losses.
EIA Projected Cost of Energy in 2016
This revealing EIA table shows the 2016 projected cost per megawatthour for electricity generated by renewable and non-renewable energy sources. It is levelized to 2009 dollars.
Even with all the ARRA “stimulus” spending and tax subsidies, renewables will still be much more expensive than fossil fuels in 2016.
Natural gas-fired electric plants are the cheapest, most cost effective electric energy source, even when fitted with CCS to reduce their CO2 emissions to zero. Solar and CCS coal are prohibitively expensive. Nuclear, biomass and advanced nuclear are all more expensive than natural gas. Only onshore wind, but not offshore, is competitive with natural gas.
EIA Projected Energy Sources up to 2035
The EIA Annual Energy Outlook for 2012 projects that fossil fuels will still supply 78% of all energy in the United States in 2035.
Renewables, including biofuels, will only supply 15% of all energy in 2035. That is up from 8% in 2010.
Natural Gas and Global Warming
When it comes to global warming, natural gas is out greening, green energy.
We’ve entered a golden age of natural gas production. Its impact is so profound that it is curbing global warming by reducing CO2 greenhouse gas emissions into the atmosphere by replacing coal-fired electric plants.
Even fitted with CCS to reduce CO2 emissions to zero, natural gas would still be the cheapest widely used energy source there is many years into the future.
Because of growing natural gas usage, the United States is the only industrialized nation reducing its greenhouse gas footprint!!
No matter what, fossil fuels will be the most important energy source in the U.S. for many decades to come. Renewables are now and will remain more expensive energy sources for many years to come.
That will be true well beyond the current recession.
Domestic production of oil and natural gas is up. Contrary to what the President says, production on Federal lands have been reduced under his Administration.
The economy is in a fragile recovery right now. It could go either way. Energy costs and domestic energy production will play an important roll in this economic recovery.
Obama’s far-reaching green energy vision, though the proper course for the long-term future, it is not the proper course in the short-term recovery of an ailing economy. President Obama’s Blueprint for a Secure Energy Future sets production goals and policies for renewables, but nary a one for economically friendly fossil fuels.
The most logical energy policy is to push short-term domestic fossil fuel production and promote maximum use of inexpensive natural gas everywhere it can be used. It is the only energy source that has significantly reduced U.S. greenhouse gas emissions and the only one that will into the foreseeable future.
The more energy costs, the greater the drag on the economy. The lower energy costs, the more it strengthens demand. Lower energy costs has the same effect as a tax cut. It increases demand by putting more cash in the pockets of consumers. That has always been true. It always will be.
President Obama is pushing green energy that is dragging down the economic recovery.
When it comes to energy policy and the economic recovery, challenger Mitt Romney holds all the cards.