Romney's cheap-oil chimera

Tuesday , March 18, 2014 - 2:52 PM

Stephen Stromberg

To the .44-caliber issue of energy, Mitt Romney is bringing a BB gun of a plan and claiming it’s a bazooka.

According to the proposal his campaign released Thursday, Romney’s vision is to achieve "North American energy independence" by 2020 by opening up federal territory for more drilling and by approving projects such as the Keystone XL pipeline from Canada.

The plan’s most obvious problem is that it doesn’t even mention global warming. The other big problem is that promising energy independence is a common political fraud. Among other things, Romney suggests that achieving such independence would "guarantee" "affordable" oil prices and strengthen national security by establishing "freedom from dependence on foreign energy supplies."

But Romney can’t guarantee low energy prices, particularly for oil, and even if he could, it wouldn’t be because North America is "independent" of other regions. The market for crude is global; even if the United States produced all the oil it consumed, riots in Nigeria or pipeline breakdowns in Russia would still affect the price for everyone.

A study cited in Romney’s plan makes this point. Harvard research fellow Leonardo Maugeri writes, "The Western Hemisphere could return to a pre-World War II status of theoretical oil self-sufficiency, and the United States could dramatically reduce its oil import needs." Romney’s white paper quotes that passage but leaves out the next, critical point: "However, quasi oil self-sufficiency will neither insulate the United States from the rest of the global oil market (and world oil prices), nor diminish the critical importance of the Middle East to its foreign policy."

Participating in the global oil market keeps prices down across the board - market forces determine which fields to tap and how to transport which barrels of crude to which refineries and then on to which markets, meeting the requirements of the world’s economies for the least cost. If America weren’t hooked in, our fuel prices would probably jump, since we would be inflexibly dependent on local supplies that are relatively expensive to develop. But U.S. participation in the world market also means we are permanently exposed to its volatility - as long as we demand lots of crude oil.

More U.S. production helps job growth and reduces the trade deficit, and harmonizing energy plans with nearby allies is a good idea. Romney’s, however, is not an energy policy that reflects the big challenges we face. Instead of bragging about how much coal and oil he’s going to pull out of the ground, Romney should be talking about cutting U.S. consumption. But that would require political effort and, probably, higher prices.

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