What the Future Holds for U.S. Energy Policy

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Domestic energy policy in the United States played a central theme during the first debate among presidential contenders. Both incumbent President Barack Obama and Republican challenger Mitt Romney said they favored a policy that focused on domestic energy resources. While most of the energy debate featured recycled rhetoric from much of the campaign so far, the candidates offered differing opinions on the shape an energy-independent United States will take.

Romney was able to gain some traction in the U.S. presidential contest in what has been an otherwise lackluster campaign. The former Massachusetts governor seemed to wander comfortably into centrist territory against an incumbent seemingly uncomfortable with sharing the stage. On energy, both leaders said they favored a United States that was more dependent on its own resources than on oil imports from overseas, though they differed on substance.

Obama during the initial salvo highlighted his administration's track-record on domestic oil and gas production. The Energy Department had said drilling offshore during the first six months of the year increased 50 percent when compared to the same period in 2011. Higher domestic crude oil production, meanwhile, meant the United States should rely on foreign suppliers to meet less than 40 percent of its energy needs in 2013 for the first time since 1991.

Romney, however, took issue with Obama's rhetoric on domestic production, saying the president has cut the number of permits for federal land in half. The Republican challenger added that offshore Alaska presented a lucrative opportunity for U.S. energy independence, though he ignored the fact that Shell was already working there and more leases were included in Obama's five-year lease plan.

Obama, meanwhile, referenced his "all-of-the-above" energy policy by saying "we've got to look at the energy source of the future, like wind and solar and biofuels." In his retort, Romney said the "$90 billion" in breaks given to green energy projects in one year represents "about 50 years' worth of what oil and gas receives." Federally-supported energy companies like solar panel company Solyndra have failed in the U.S. market while oil majors continue to make substantial profits despite what Romney says is a lack of federal support.

Regardless of the numbers, candidate Romney suggested some of the federal funds spent on green energy could have been spent more wisely. "I'm all in favor of green energy," he said. But most of those investments, he argued, have funded ventures that have failed, as did Solyndra.

Instead, Romney said he'd "bring that pipeline in from Canada," referencing the much-lauded Keystone XL pipeline. The project, however, has come to represent among environmental activists all that's wrong with a petroleum economy. Keystone XL is designated for so-called tar sands oil from Canada. Rival company Enbridge this week was ordered by the EPA, an agency Gov. Romney opposes, to do more work in Michigan to clean up a tar sands spill that happened more than two years ago. That spill was the costliest onshore incident in U.S. history and still needs a more thorough response. "And by the way," said Romney, "I like coal."

Both candidates touched on the same themes but from different perspectives.

"On energy, Gov. Romney and I, we both agree that we've got to boost American energy production," said Obama.

"Energy is critical, and the president pointed out correctly that production of oil and gas in the U.S. is up," said Romney.

Something left out of the debate, however, was the consequences of their decisions. Does the future of U.S. energy independence lie in a pipeline from Canada that carries a type of crude oil that raises concerns even among Canadians? Or does it lie in a green energy sector that can barely stay afloat even with the support of taxpayer dollars.

The future of U.S. energy policy, for better or worse, lies in the hands of the American voters.

By. Daniel J. Graeber of Oilprice.com

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