In his acceptance speech at the Republican National Convention, Mitt Romney referred to his plan for the United States to achieve energy independence by 2020. That plan is explained in a little more detail in a document entitled “A Romney Plan for A Stronger Middle Class: Energy Independence”, which was released earlier this week by the Romney-Ryan campaign.
Whether it is realistic to assume that energy independence can be achieved by 2020 is beyond the scope of this column. Nevertheless, the Romney-Ryan plan makes for an interesting read. While the plan proposes to support a wide range of energy production—petroleum, gas, coal, and even renewables—its promise of energy independence centers on the purported existence of large quantities of economically recoverable domestic petroleum and the assumption that a lot more economically recoverable domestic petroleum will soon be discovered.
Energy independence is a laudable goal, even if based on large increases in domestic petroleum production. Although its allegedly favorable impact on gasoline prices is oversold, increasing the domestic production of liquid hydrocarbons would make U.S. energy supplies more secure, improve our balance of trade, and create significant additional domestic employment.
What is not mentioned in the Romney-Ryan plan, however, is that all of these benefits would be temporary. According to the American Petroleum Institute, the current estimate of undiscovered, technically recoverable domestic resources of crude oil currently stands at 116.3 billion barrels. Assuming that all that oil was suddenly recovered and devoted to domestic consumption, that is roughly a 16 year supply (based on domestic consumption continuing in the 18-20 million barrels a day range).
At the end of 16 years, of course, you have a problem. Either you have discovered a lot more technically recoverable domestic petroleum or you are right back to where you started—but this time having used up all your reserves. While past experience may support the assumption that more recoverable reserves will be discovered, if we have learned anything over the last few years in the energy space it is to be a bit wary of technological assumptions.
Properly understood, the Romney-Ryan plan is not a solution. It is a Band-Aid. Band-Aids, however, have value: they buy time for a body to heal. The Romney-Ryan plan may buy some time. The real question, which I hope that the Romney-Ryan and Obama-Biden teams will both address in the weeks ahead, is how are we going to use the extra time that new petroleum production technology may have bought us to address the still very real long term problems of energy security, climate stability and petroleum dependence?
Electricity storage technology, deployed in automotive and grid-supporting applications, is certainly part of the long term solution. Funding the necessary development and deployment of that technology during a period of relative petroleum abundance will be difficult for the private sector to do alone. We should watch with interest what the two campaigns have to say about this issue in the weeks ahead and not allow the country to be lulled into complacency by promises from either campaign of a short term fix.