‘Energy independence’ is a farce

By Ben Adler
October 19, 2012

It can be hard to find areas of agreement between the presidential candidates on economic or domestic policy. Tuesday night’s debate, though, revealed one exception: energy policy. Alas, what it also revealed is that both President Obama and Governor Romney are making their policies based on a false premise, and they are pandering to Americans’ ignorance instead of telling them the truth.

The second question in the debate at Hofstra University came from audience member Phillip Tricolla, and was directed to Obama: “Your energy secretary, Steven Chu, has now been on record three times stating it’s not policy of his department to help lower gas prices. Do you agree with Secretary Chu that this is not the job of the Energy Department?” The premise that the Energy Department can lower gas prices is incorrect. But Obama chose not to confront Tricolla with the hard truth — that global economic forces have put gasoline prices on a long-term upwards trajectory, and that trajectory is beyond our government’s control.

“The most important thing we can do is to make sure we control our own energy,” said Obama, neglecting to answer the actual question. He went on to boast that domestic production of oil, coal, natural gas and clean energy has increased, while he has also raised fuel efficiency standards. “And all these things have contributed to us lowering our oil imports to the lowest levels in 16 years,” said Obama. “Now, I want to build on that. And that means, yes, we still continue to open up new areas for drilling.”

Romney responded that Obama should not take credit for the increases in oil and natural gas production because they have occurred on private land. Romney promised to drill our way to “North American energy independence.”

“I’ll get America and North America energy independent,” said Romney. “I’ll do it by more drilling, more permits and licenses.”

The candidates then proceeded to argue with one another over whether Obama has or has not increased oil drilling. This might create an illusion of disagreement, but on the underlying premise they agree: drilling is good, because it will help us reach “energy independence.”

To state what should be obvious to anyone with a basic understanding of macroeconomics, and yet seems to elude most politicians: there is no such thing as “energy independence.” Commodities such as oil can be used in China just as easily as Ohio. Therefore, the price is set by the equilibrium between global supply and global demand. Unless we nationalize the oil companies, American consumers will be bidding for gasoline against drivers in other countries. This is how markets work.

That, in turn, means that increased U.S. production of oil will only reduce prices insofar as it increases global supply vis-a-vis global demand. An Associated Press study of 36 years of statistics found, “more U.S. drilling has not changed how deeply the gas pump drills into your wallet…. That’s because oil is a global commodity and U.S. production has only a tiny influence on supply. Factors far beyond the control of a nation or a president dictate the price of gasoline.”

As long as we rely on huge amounts of oil to power our transportation and heat our homes, we will be susceptible to price shocks. Even if we produced exactly the same amount of oil that we burn, a supply disruption in other oil producing countries would still cause prices to spike. As Brad Plumer pointed out in the Washington Post, “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.” Gas prices recently spiked in Canada to $5.83 U.S. dollars per gallon.

As long as we drive everywhere, and use an internal combustion engine, the Middle East is going to have priority in our foreign policy. And even if we bought only oil that came out of the ground in Alaska, our high level of total consumption would still indirectly enrich political adversaries that sell a lot of oil, such as Venezuela.

And, for what it is worth, we are not going to produce as much oil as we consume unless we drastically reduce our consumption. The U.S., according to BP’s annual survey, accounts for 9 percent of global output, but it consumes 22 percent of the available oil. No amount of drilling can compensate for that gap.

Republicans tend to be more egregiously dishonest — or, if they actually believe what they are saying, ill-informed — on this topic than Obama is. During the primaries Rep. Michele Bachmann (R-MN) and former House Speaker Newt Gingrich both promised to bring gas prices down to specific amounts within four years, solely by increased drilling. (Bachmann offered $2 per gallon, Gingrich $2.50.) These promises pandered to Americans’ ugliest sense of entitlement to cheap gasoline and their childish expectation that the president will somehow magically suspend the laws of supply and demand to deliver it. Romney, like Gingrich and Bachmann, is offering to achieve the impossible.

Whether the candidates are right to support more drilling depends on how you weigh the jobs it would produce versus the environmental havoc it could wreak. But “energy independence,” that imaginary goal we keep chasing, has nothing to do with it.

PHOTO: Traffic moves on Lincoln Boulevard, near a sign posted with gasoline prices at a Mobil gas station in Santa Monica, California October 4, 2012.  REUTERS/Jonathan Alcorn

24 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

since 1973, nothing has been done or achieved to gain energy independence. this points to some kind of influence by an unseen hand which directs action toward a status quo and allows those in there to achieve wealth at the expense of the common good. Could you lend me ten million or so….then I can run for office, my constituents will pay the interest rate you seek.

Posted by rikfre | Report as abusive

@Gordon2352

I understand your points, I just disagree with them.
Anyway, let’s just stop here because it looks like this heated up too much now.

Have a nice day.

Posted by trevorh | Report as abusive

@Gordon2352,

I’m guessing that you don’t see the irony in making Armageddon predictions like “The die off would make the Black Death in Europe look like a mild cold.” and “renewable energy would certainly cause the death of billions of people that are currently surviving solely by this mechanized society.” and that efforts “to shut down whatever energy systems currently exist (e.g. coal), which will only hasten Judgement Day for the human race” all the while accusing your environmentalist foes of “quasi-religious … theology.”

This was mostly just humorous from my perspective as I’ve grown accustomed to the ideologues calling each other ideologues and the zealots calling each other zealots. The next part is a bit embarrassing though and I must say that I almost hesitated to bring it up as you seem a reasonably rational person (at least until someone mentions environmentalists). You see, before you cite a source you should always be sure not just to read it but to actually understand it. The problem here is that you claim that EROEI “is a physical law of nature that limits how much energy can be obtained as an output from various energy sources, and renewable energy is TERRIBLE in terms of EROEI. So bad, in fact, that it CANNOT be used as a substitute for oil/nuclear.” and regardless of the fact mentioned by @jer8877 that EROEI is not in any way, shape or form a “physical law of nature” and despite your flawed definition, the very source you cite states that the EROEI for wind energy (18) is higher than that for both oil (12-14.5 for conventional oil, 5 for shale oil and 3 for tar sands) and nuclear (10). The figure of 6.8 for solar referenced in the Wikipedia article is an average from a study performed in 2005 and since that time EROEI as high as 23 have been actually measured for operating commercial PV systems. And while the EROEI for both solar and wind has been steadily increasing, that for all fossil fuels has been consistently decreasing. In fact the EROEI of 10 cited for natural gas is from 2005 before fracking became a source of any significant amounts of gas, and fracking is far more energy intensive than previous extraction techniques so natural gas would likely have an EROEI lower than 10 today. I would be very interested to know who introduced you to the concept of EROEI and, particularly, what other rubbish they’ve been feeding you.

The really interesting thing to me will be how you, as a self proclaimed pragmatist, will react to the realization that the only meaningful support that you presented for your argument, EROEI, proves the exact opposite of what you were trying to argue. My guess is that, like any typical ideologue, you’ll dig in your heals and double down. As the old adage goes “it’s not easy to teach somebody something they don’t already know.” Why all the envirohate anyway? Did a hippie steal your girlfriend back in the ’60′s, or maybe your mom backed over your puppy with the Prius?

Posted by jtfane | Report as abusive

The writer is overlooking the fact that natural gas can replace diesel and gasoline. It will moderate gasoline and diesel prices, it is already, though not yet perceptible.

Natural gas is the future of energy. It is replacing dirty, dangerous, expensive coal and nuclear plants. It is producing the electricity for electric cars. It will directly fuel cars,pickup trucks, vans, buses, long haul trucks, dump trucks, locomotives, aircraft, ships etc. It will help keep us out of more useless wars, where we shed our blood and money. It lowers CO2 emissions. Over 2,300 natural gas story links on my blog. An annotated bibliography. The big picture of natural gas. Ron Wagner

Posted by ronwagn | Report as abusive