The first mention of energy came just 2.15 minutes after moderator Jim Lehrer kicked off the United States presidential debate with his first question. The second came at the 3.33 minute mark.
“I think it’s important for us to develop new sources of energy here in America,” President Barack Obama said on Wednesday night, as he gave a list of priorities that also included healthcare and employment.
Republican challenger Mitt Romney agreed. “My plan has five basic parts. One: get us energy independent.”
Energy, particularly the use of fossil fuels, has featured prominently in the 2012 elections. While both sides have advocated suspiciously similar ‘all of the above’ policies that support a broad spectrum of energy sources, they have differed over one seemingly simple point. Have hydrocarbon producers in the US benefitted over the past four years? Obama says “yes”; Romney says “sure, but…”.
“Energy is critical, and the president pointed out correctly that production of oil and gas in the US is up. But not due to his policies: In spite of his policies,” said Romney. He noted, also correctly, that the growth in US gas output has come from private land, while production on federal land has slipped (oil output in federal areas has instead edged upwards since 2006).
However, while it is true the Obama administration has been less permissive of oil and gas drilling on public land than the Bush administration was, this position may not be detrimental. The volume of gas produced (excluding gas that is reinjected) did, after all, increase by 24.5% between 2006 and 2011 and by 11.6% between 2009 and 2011, according to the US Energy Information Administration (EIA).
In that period, as the energy industry well knows, America saw an unexpected shale gas boom that transformed the country from a net importer to net exporter. The majority of that shale resource, however, is on privately owned land.
“Because the shale resource basins are largely outside of the federal lands, so too is shale production,” EIA Administrator Adam Sieminski told a House of Representatives committee in early August. “In this case, the geology is working in favour of non-federal landowners.”
The EIA does expect dry gas production to make a small drop in the short term, but that is primarily because prices have bottomed out as a result of the supply glut, not because of deterring policies. Liquids production, instead, is on an upswing.
This reveals both an economic no-brainer and a political win-win: at least for the time being, the US can increase supply without harming national parks or Alaskan polar bears – keeping both Big Oil and environmentalists at bay.