Leading up to this week’s GOP convention in Tampa, Mitt Romney outlined his plan for “energy independence.”
It’s full of big promises and shots at President Obama. But when you boil it down, it’s nothing more than the same old pipedream.
- Despite Price Cut, Apple Watch Sales Were Likely Sluggish During Fiscal Q2
- Takeaways From Apple’s Earnings Miss
- Apple Q2 Preview: Margins In Focus As Sales Set To Drop For The First Time In Over A Decade
- How Is Apple’s Revenue Composition Expected To Change Over The Next 5 Years?
- Can The iPad Pro Revive Apple’s iPad Franchise?
- Why We Expect iPhone ASPs To Trend Lower
Now, I don’t want to be too hard on Romney. After all, he’s really only guilty of doing what virtually every presidential candidate since World War II, including Barack Obama, has done: Promise to wean America off foreign oil.
There’s just one problem: It can’t be done – especially without renewable forms of energy, which Romney’s plan hardly addresses at all.
The reality is that the United States consumes more than 20% of the world’s oil and holds just 3% of global oil reserves. More specifically, we consume 18.8 million barrels of oil per day (bpd), while producing only 5.7 million bpd.
There’s simply not enough oil within U.S. borders to close that gap.
Romney glosses over that fact by highlighting the potential for shale oil. But there are still major questions surrounding the size of shale oil reserves, their rate of decline and the cost of extraction.
The U.S. Geological Survey stunned observers last year when it slashed its estimate for reserves in the Marcellus shale formation by 80%.
Additionally, oil needs to hit $80 to $90 a barrel to make shale oil worth extracting, compared to traditional resources which can be tapped for half that.
Still, Romney says the United States can “partner closely with Canada and Mexico to achieve North American energy independence by 2020.”
But there are problems with that theory, too.
First, we’ve already tapped out our neighbors’ resources. In 2010, Canada exported $90 billion of energy. The United States accounted for 98.4% of that total. Regarding petroleum products specifically, the United States accounted for 98.1% of Canadian exports.
Mexico – the third-largest supplier of foreign oil to the United States – saw its oil output drop by 25% between 2004 and 2009. Although it’s leveled off in recent years, it could soon lose the capacity to export crude altogether.
Given these considerations, it’s hard to see how more domestic drilling and imports from Canada and Mexico will be able to compensate for the 1.5 billion barrels of oil the United States imports each year from OPEC countries.
Now, we might be able to import slightly more oil from Canada and slightly less from Saudi Arabia. But there’s no cutting OPEC out of the picture altogether. After all, OPEC accounts for 40% of the global oil supply, and Saudi Arabia alone accounts for 20% of U.S. imports.
Indeed, Mitt Romney suggesting we can drill our way to energy independence is every bit as ridiculous as when Obama pledged to “end the age of oil in our time” back in 2008.
Neither is going to happen.
Oil will continue to be the primary source of U.S. energy for decades to come. And opening up more federal lands to drilling, relaxing regulations, and teaming up with Canada and Mexico won’t liberate us from OPEC.
The only way it could be even remotely possibly would be to boost investments in renewable energy resources – something the Romney plan completely overlooks.
That’s surprising, considering Romney was actually one of the greenest governors in the history of Massachusetts.
In fact, as governor, Romney employed the same energy policy used by the Obama administration – a state-backed green energy investment fund.
The $15 million fund financed 12 companies, three of which have since gone out of business, just like Solyndra.
“The Trust Fund has been growing for years, and I believe now is the time to refocus its assets in such a manner that it can become a major economic springboard for the Commonwealth by focusing on job creation in the renewable energy sector,” Romney said at the time.
Indeed, prior to Romney’s ascension as governor, the fund had raised $160 million from surcharges on consumer electricity bills.
As a result, a 2011 report showed that clean energy jobs in Massachusetts reached 64,000, up from a few thousand at the beginning of Romney’s term in 2003. And the American Council for An Energy Efficient Economy in Washington awarded the state its top rating last year. The group said Massachusetts ranks tenth in the country for solar energy jobs.
“Massachusetts is a living, breathing microcosm as to why clean energy makes sense,” Rob Pratt – who directed the state’s green energy effort under Romney for three years – told Bloomberg. “This acceleration started under Romney.”
Of course, you won’t find any of this mentioned in Romney’s energy plan. But if he’s serious about energy independence, it needs to be included. Oil and gas alone won’t get the job done.