Last week I brought some numbers to the energy plan proposed by the now-confirmed Republican nominee for President of the United States. Today I take a look at President Obama’s energy claims and promises.
The fundamentals of Obama’s energy plan are as follows:
- Encourage safe and responsible domestic oil and gas production in response to the Deepwater Horizon oil spill by reevaluating the permitting process.
- Develop domestic oil and gas production to increase America’s energy independence.
- Provide consumers with more efficient cars and trucks to combat gasoline price volatility.
- Improve the energy efficiency of residential and commercial buildings.
- Establish a Clean Energy Standard in order to double the share of electricity from clean energy sources.
- Continue investment in clean energy technologies through programs such as ARPA-E, clean energy hubs, and encouraging federal organizations to become first adopters.
Pretty comprehensive, but it’s probably no surprise that I have some comments. First, the Obama administration is quick to point out that the US domestic production of energy sources is the highest that it has been in more than a decade. I would like to remind you that no Presidency acts entirely in isolation. This is something that a campaign likes to remind you when hard times hit, but quietly forgets when good things happen. It’s true that, according to the Energy Information Administration, US crude oil production increased in 2009 more than it had since 1955 (on a percentage basis), but the lead time between permitting and production for drilling and production can be anywhere between 3 months and 4 years. That means, at least some, if not a fair bit, of the production that is occurring during the Obama’s administration is thanks to former-President George W. Bush.
US Production of Crude Oil. Source: EIA 2012.
Meanwhile, representatives from the oil and gas industries claim that regulations imparted by the Obama administration have discouraged the development of federally-owned lands. They claim that the additional regulatory burdens are the reason that the number of new wells drilled in 2010 is less than half of the new wells begun on public land in any year in the past decade (Greenwire 2012).
And yet, the new wells drilled represent only one third of the total number of permits issued in 2010. In previous years up to 75% of the permits issued were used, suggesting that there are other factors at play. These factors include the cost of opening new wells, the low price of natural gas, and improvements in technology that make existing wells more productive. Proponents of the Obama regulatory reform point to a lower price of oil as the main reason for this downturn. (This excellent piece from Greenwire is my source and outlines these points in more detail.) Permits are an integral part of domestic energy production and unnecessary regulation is burdensome on the economy, but the private companies that operate these wells make their decisions based market factors as well as long term strategy; it is a complex system.
Both candidates seem to think domestic production is a priority. And while US production may be up now, new drilling appears to be going down. No Presidency acts entirely in isolation, so who is going to take responsibility for what happens next?