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August 28 2012

17:53

Romney's "Oil Above All" Energy Plan Short on Variety, and on Energy



Last Thursday, Mitt Romney presented his “oil above all” energy plan, in which he promised “North American energy independence” by 2020. Far from comprehensive, the plan echoes the familiar “Drill, Baby, Drill” mantra from the 2008 presidential campaign, and offers no energy strategy beyond increasing domestic production of oil and gas, and increased access to Canadian tar sands crude.

Proving his devotion to "oil above all" was the graph that the presidential hopeful presented while unveiling his plan to a "modest crowd" in New Mexico. As far as graphics go, it's  confused and misleading, so let me walk you through it in case you missed CNN's live coverage.

Though it's titled "North American Oil Production: Energy Independence by 2020," the demand line represents only the United States' oil needs. Hey, at least the Romney team doesn't anticipate our oil consumption to rise over the next eight years.


The bar on the left represents the roughly 15 million barrels per day that the U.S. produces, and the roughly 7 million barrels per day that we import.

Each bar to the right represents a theoretical production or import "gain" that could be achieved by 2020 under Romney's plan. Another 2 million barrels per day from unrestricted offshore drilling. Another 2 million barrels per day from "tight oil" or shale oil that can only be recovered through fracking.  Another 1 million barrels per day from unrestricted drilling in Alaska. Increased production of natural gas liquids and biofuels, a head scratcher since this graph is supposedly about "oil production." Then, the tentative imports from Canada and, to a lesser and less certain degree, Mexico.

This “oil above all” plan was announced just two days after Romney attended an industry fundraiser that helped to raise $7 million for his campaign.

The 21-page “energy policy white paper” that officially defines the plan bears the clear imprint of shale oil billionaire and top Romney energy advisor, Harold Hamm. Hamm stands to benefit greatly from the transfer of control of energy development projects from the federal government to states, which generally have more relaxed permitting processes for exploration and development of oil and gas resources.

Besides “empowering states to control onshore energy development,” Romney’s plan calls for rapid expansion of offshore drilling and rapid, rubber-stamp approval of new fossil fuel pipelines, like the Keystone XL, from Canadian tar sands sources.

The energy plan does not mention “climate change," nor are the words or concepts of energy efficiency and conservation anywhere to be seen.

Regardless of how you personally feel about an energy “plan” that treats oil drilling as a cure-all for America’s energy challenges, it’s worthwhile to take a look at the numbers to see just how realistic the plan actually is.

Even if there weren’t grave climate and environmental implications for drilling every last drop of American oil, just how far would that get us to actual “energy independence”?


Let’s start by looking at the proven reserves of petroleum on American lands and offshore.


Proven American Petroleum Reserves

According to the Energy Information Agency’s latest numbers, there are 25.2 billion barrels of oil in proven U.S. reserves.

At 2010 levels of consumption (6.049 billion barrels/year), those proven reserves would last a little over 4 years.

Let’s be clear that these “proven reserves” numbers are constantly changing, as they represent only, according to the EIA, “the volumes that geologic and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.”

In other words, “proven reserves” are the stashes of oil that are within our grasp — those that have already been discovered and measured and that some company already has a claim on.

On top of these “proven reserves,” there are the greater volumes of oil “resources.” Estimates of U.S. oil resources vary enormously, but let’s use a Congressional Research Service report (pdf) from December of last year that Romney's energy plan itself cites as proof of America’s vast domestic supplies.

That report, U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary (pdf), which describes quite clearly the differences between resources and reserves and the feasibility of extracting various sources, finds a total of roughly 140 billion barrels of oil that they define as “undiscovered technically recoverable resources.”

Add those to the 25.2 billion barrels that we know we have, and that’s a total of 162 billion barrels of oil that we could possibly drill, to say nothing of the economics or the environmental or climate impacts.

Those 162 billion barrels would last the United States under 27 years at 2010 levels of consumption.

Of course, Romney was careful to state that his plan is one for “North American energy independence,” emphasizing his intentions to immediately approve the Keystone XL pipeline and deepen America’s reliance on foreign oil from our friendly neighbors up north.

So what of those Canadian tar sands? There’s no question that there is an immense volume of crude that could be refined out of the vast Athabasca tar sands reserves. Again, this analysis is only of the numbers, and not to even get into the considerable climate and environmental implications.

The most ambitious estimates from the oil industry-friendly think tank Institute for Energy Research guesses that there are 320 billion barrels worth. But it’s still incredibly expensive and energy intensive to turn that tar sands into usable crude, and production is neither happening as fast as Romney’s plan demands, nor is it something that an American president would have any control over.

To wit: according to the government of Alberta, tar sands production is expected to increase from about 1.3 million barrels/day in 2008 to 3 million barrels/day in 2018.

Yet according to the chart that Romney pointed to throughout his presentation, it looks like he is counting on roughly 4-5 million barrels/day of Canadian crude by 2020. By even the most ambitious estimations, the total volume of tar sands crude produced will be 5 million barrels/day by 2010. In other words, Romney’s plan calls for 80-100 percent (or more!) of Canada’s tar sands crude to be consumed by Americans in 2010.

Finally, Romney repeatedly claimed that his energy plan would “lower energy prices” in the U.S., a claim that is demonstrably false. Oil prices are set on a global market, and that, as the Associated Press proved with a statistical analysis earlier this year, there’s “no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.”

The only realistic way to lower oil prices in the U.S., which consumes just under one-quarter of the world’s oil, is to reduce demand.

Curiously absent from Romney’s energy plan is any mention of doing that. It’s not hard to find painless, economically-viable ways to do it.

Look no further than the Obama administration's new fuel economy standards that Congressional Republicans are fighting tooth and nail. If enacted, these rules would save the average driver somewhere on the order of $500-600 per year, would create around 700,000 jobs, and — most relevant to this discussion — reduce American oil demand by roughly 2.2 million barrels per day by 2025.

That’s more than all the oil that Romney plans on getting from additional offshore drilling, or from shale oil, and more than twice as much as he hopes to get from Alaska, in his “oil above all” plan. 

Why has it become fashionable among the GOP to completely ignore the enormous potential to reduce oil demand through efficiency and conservation?

August 27 2012

19:41

Fuel Economy Standards To Save U.S. Consumers Billions, Create Jobs, Yet Republicans Say Too Expensive

A proposed rule by the Obama Administration to raise fuel economy standards for cars and “light-trucks” is facing mounting attacks by Republican lawmakers. The proposed rule would require all newly manufactured automobiles that fall under the car or light truck category to achieve a minimum gas mileage of 54.5 miles per gallon by the year 2025.

The crusade against the new CAFE standards is being led by Republican Darrell Issa, the chairman of the House Committee on Oversight and Government Reform. Issa claims that the new standards amount to “coercion” of the auto industry. Rep. Issa has received more than $188,000 from the oil industry during his career, according to the Center for Responsive Politics.

Issa’s statements show how out of touch he truly is with both economics and business, as the new standards were the result of cooperation between the Obama Administration and the auto industry itself.

The new fuel economy standards have been approved by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar, Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo, who together control 90% of the United States’ auto sales market.

U.S. News and World Report details the contention over the standards, as well as the benefits for consumers:
  

Fuel economy standards have become a surprising example of tougher government rules that benefit practically everybody. In 2007, the Bush administration raised the gas mileage requirements automakers had to meet. Then in 2009, the Obama administration raised them further. Those rules, which are about to be finalized in detail, will require each automaker's fleet to average a lofty 54.5 miles per gallon by 2025—roughly double the mileage requirement of just five years ago.

The aggressive new standards are controversial, especially among Republicans opposed to activist government. GOP presidential contender Mitt Romney, for one, characterizes the new rules as just another effort to "insert the federal government into the life of the private sector." He has suggested that if elected, he'll roll back or even seek to eliminate federal mileage standards.

Yet so far, the new mileage rules have generated tangible benefits for consumers, with few of the downsides opponents have predicted. "Without a doubt, the new rules have been a win-win for everybody," says Jesse Toprak, of the car-research site TrueCar.com. "It's a win for consumers, a win for manufacturers, and a win for the environment."

Boosting fuel economy by four or five miles per gallon might not sound earth-shattering—until you bank the savings. A 5 mpg improvement would save about $525 per year for a motorist who drives 15,000 miles annually, if gas were at $3.50 per gallon. With gas at $4 per gallon, the savings would amount to $600 per year.
 

But the benefits of the new standards extend far beyond personal bank accounts. Reports show that the new fuel standards would create an estimated 700,000 new American jobs.

Republicans like Darrell Issa claim that the $192 billion price tag that the standards impose on industry is too lofty to incur right now, but that view is incredibly short-sighted and dishonest.

The new standards will save a projected $1.7 trillion for U.S. consumers by the time of full implementation, meaning that the investment will pay off tenfold. Additionally, by the year 2025, reports show that consumers will be saving an average of $8,000 a year per vehicle.

Issa is not alone in his crusade against the new standards. Joining him in the fight is Republican Representative Mike Kelly from Pennsylvania, who happens to have amassed his $11.9 million personal fortune from the car dealerships that he owns in Pennsylvania. Kelly made the following statement about the new standards: “The new CAFE standards will limit choice, compromise safety, and increase costs to millions of Americans.”

Unfortunately for Kelly, there are no numbers or statistics to back up any of these claims, particularly his statement about compromising the safety of consumers. Safety and fuel economy aren’t two things that are directly related, so it would be interesting to find out where he pulled that from.

Again, all of the major automobile makers have signed onto the new standards, and agree they are necessary to save consumers money, to help their businesses survive in a competitive economy, and to help reduce air pollution emissions.

The only people who stand against the new standards are the politicians beholden to the dirty energy industry.

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July 26 2012

21:10

Consumers Opting for Better Fuel Economy This Year

The fuel economy of the cars purchased inched up in the first six month, largely because consumers opted for smaller models, an analysis suggests.

November 16 2011

19:06

U.S. Formalizes Fuel Economy Standard

Proposed fuel standards will slash oil consumption by four billion barrels and cut greenhouse gas pollution by two billion metric tons over the lifetimes of the 2017-to-2025 models, the administration says.

July 27 2011

15:41

A Battery That Squeezes More Miles Out of Gasoline

Ioxus is testing a hybrid battery that marries an ultracapacitor with a conventional battery to provide a quick charge for a hybrid car when the light turns green.

July 25 2011

12:19

An Odder Look to Fuel-Efficient Trucks

The TrailerTail protrudes about four feet from the back doors of a tractor-trailer and reshapes the vortex left behind on the highway, minimizing it.

May 25 2011

21:14

The New Fuel Economy Labels

Auto dealers welcomed the new design and said they were was relieved that the federal government had rejected a letter grade label.

May 20 2011

14:46

Who Will Reap the Dividends of Fuel Economy?

Because the Big Three's light trucks and larger cars have farther to go, they have greater potential to add consumer value through improved fuel economy, a report says.

April 13 2011

16:46

A Curmudgeon's View of the Energy Challenge

An environmental professor believes simple tools for energy conservation already exist but that rich nations choose not to deploy them.

March 31 2011

21:01

February 23 2011

12:45

Hybrids vs. Nonhybrids: The 5-Year Equation

With some models, a hybrid owner won't come close to recouping the extra expense in five years through gasoline savings. But with some models, the buyer will -- and then there's that "green feeling."

December 02 2010

19:18

A Spin in the Chevy Volt

A booster of plug-in hybrids shows off his three-month loaner, saying it saves him two and a half gallons of gas a day.

October 07 2010

17:33

October 01 2010

19:55

Fuel Economy Will Be, Um, Better

Four plans announced by the Obama administration for improving cars' fuel economy raise many open questions about cost, adoption of new technologies and measurement issues.

September 30 2010

14:20

Obama on Climate Change Strategy

A shift in energy policy may have to be legislated in "chunks" rather than through a comprehensive bill, the president says.
12:27

Tractor-Trailers With Mileage Stickers?

Anticipation of the federal government's first-ever rules on fuel economy for heavy trucks is stimulating some new thinking about technology and about saving money.

April 23 2010

11:14

A Greener Humvee?

A company sets out to market a lightweight composite Humvee for the military.

February 05 2010

19:56

Trucking and Oil Industries Protest Fuel Mandate in California

The trucking and petrochemical industries are calling California's new clean fuel mandate unfair and prohibitively expensive.
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