Five Things to Know About Mitt Romney’s Energy Plan

Getting there, Romney argues, will require three big things. First, the United States will need to open up more federal lands and waters to oil and gas drilling. President Obama, he says, has been far too sluggish on this front. Second, the federal government will need to give states more power to approve permits, in order to speed up the rate of drilling. And third, Romney would focus on building pipelines like Keystone XL and partnerships with Canada and Mexico to take fuller advantage of those countries’ oil resources. (Remember, Romney is promising “North American energy independence,” not U.S. energy independence.)

There are a lot of different arguments about oil and energy embedded in Romney’s plan, so let’s look at five big points:

1) The United States is already shrinking its imports of oil and gas. It’s unclear how much Romney’s plan would accelerate the process.Over the past decade, thanks to advances in drilling techniques, the United States has been producing ever-greater quantities of oil and gas from places like North Dakota’s shale formations. Under existing policies,according to the Energy Information Administration, the United States is on pace to eliminate all natural gas imports by 2020 and shrink its net oil imports down to 38 percent. About two-thirds of those imports will come from Canada and Mexico. So we’ll be fairly close to North American energy independence in 2020 regardless. (And, EIA notes, we’ll get even closer if the Obama administration extends its new fuel-economy standards from 2017 to 2025.)

Now, Romney’s alternative appears to be largely based on a Citigroup report (pdf) that suggests the United States could boost its oil production further still, through a combination of pared-back regulations and advances in drilling technology. It’s worth noting, however, that Citigroup’s bullish forecast relies on some events that may not come to pass— such as California agreeing to open up its considerable oil resources in the Monterey shale for drilling.

2) Energy independence will require more than just drilling—it will also depend on fuel-economy standards that Romney has opposed.Mitt Romney’s plan spends a lot of time talking about drilling. But both Citigroup and EIA also credit the Obama administration’s fuel-economy standards for cars and light trucks as a major reason why America is now lurching toward energy independence. Once finalized, those CAFE standards are expected to reduce U.S. oil consumption by up to 2.2 million barrels per day by 2025. If those rules didn’t exist, energy independence will be extremely difficult. And Romney, for his part, has previously said he would overturn the CAFE rules. That’s a big asterisk in his plan.

3) Energy independence can’t protect the United States from high oil prices.The idea that North America wouldn’t need to import oil directly from Saudi Arabia or other OPEC countries is alluring. Still, as various energy experts have argued, there’s no such thing as “true” oil independence. Oil is traded on the world market. If tensions in the Middle East cause prices to spike, everyone is affected, regardless of where they get their crude. The easiest way to observe this is to look at Canada. Canada is a net oil exporter, a bona fide oil-independent nation. But gasoline prices in Canada still rise and fall in accordance with world events, just as they do in the United States or Japan or Europe.

4) More drilling could create jobs— though Romney’s claims may be oversold.The oil and gas boom has been a rare bright spot in the U.S. economic slump, creating jobs in places like North Dakota, Ohio, and Pennsylvania. According to estimates from IHS CERA, some 600,000 people were employed in U.S. shale production in 2010. And Citigroup’s Daniel Ahn has estimated that, in the long term, increased oil and gas production could boost U.S. GDP by 3 percent. That’s a significant economic bump.

But Romney’s claims that energy independence would create 3.6 million jobs requires some context. For one, other estimates have shown lower numbers. What’s more, as Michael Levi has noted, in a normally functioning economy, an oil boom isn’t likely to alter the unemployment rate, which depends on other structural factors. “Unless the U.S. economy remains deep in the doldrums for another decade,” Levi argues, “these [3.6 million jobs] will mostly come at the expense of jobs elsewhere.” Of course, this is true for most outsized claims about jobs.

5) Romney’s plan gives short shrift to other concerns, particularly global warming.At no point in Romney’s plan does he mention climate change. True, a boom in U.S. natural gasor even oil production isn’t necessarily incompatible with tackling global warming. (Indeed, natural gas could even help on that front, if it displaces carbon-heavy coal plants.) But simply expanding fossil-fuel production without a more comprehensive plan to tackle climate change will mean that emissions just keep rising and rising. Romney’s only suggestion here appears to be to repeal the EPA’s limits on carbon dioxide pollution from power plants. This is a big change from the 2008 campaign, when both Obama and John McCain proposed cap-and-trade plans to reduce carbon emissions.

Romney’s plan also says relatively little about safety standards for increased oil and gas drilling, except to criticize the Obama administration for imposing a moratorium on drilling in the Gulf of Mexico after BP’sDeepwater Horizonoil spill. The regulation question is particularly salient when it comes to natural-gas fracking. As the International Energy Agency outlined in a recent report, there’s a real risk that public concern over fracking could stymie gas development unless careful regulations are put in place.Romney’s plan has a line about how he would “strengthen environmental protection without destroying jobs, paralyzing industry, or barring the use of resources like coal.” But there’s a lot of elaboration on those last three points, and not much on the first one.