by Aaron Levitt | August 24, 2012 2:21 pm
An influx of attack ads can only mean one thing: We’re getting ever-so close to election time.
America’s presidential candidates have begun seriously unveiling their various platforms across a variety of issues, the latest of which stem from Republican nominee Mitt Romney’s camp. This past week, the campaign unveiled a 21-page whitepaper giving an overview of the candidate’s energy policies.
Overall, the Romney energy plan calls for less red tape, more traditional fossil fuels production and a call for energy independence by 2020.
Aside from the differences in rhetoric, the real question is just how different Romney’s viewpoints/potential policies are from what is currently going on. We here at InvestorPlace have been documenting America’s shift toward becoming energy self-sufficient for months now, so evaluating what the Republican wishes to do seems prudent.
The Romney campaign estimates that if the U.S. is able to achieve energy independence, it will create roughly 3 million new jobs, generate more than $1 trillion in government revenues, and provide a stronger dollar and lower energy prices.
The surprising thing about Romney’s energy plans is that they share a number of similarities to current policies — with a few key details.
One of the biggest points in the plan is making sure that the drilling permits process goes quicker and that there is more access to federal lands for drilling. Currently, the rate of permitting for federal onshore lands has dropped by more than 37%, and it takes roughly 307 days to receive the permits to drill a new well. Romney’s plan highlighted the fact that some states — such as North Dakota and Colorado — can do a permit in as little as 10 days. That’s certainly a quicker turnaround time.
By pushing the permitting job to states, Romney estimates that we can get regulatory programs that address state-specific and we should see overall higher production. The campaign’s whitepaper did say that its energy policies would exclude “lands specially designated off-limits” — i.e., national and state parks being tapped for hydrocarbon reserves.
Aside from opening offshore fields on the East and West coasts, the differences in current and potential energy policies are negligible.
One of the other major central themes of Romney’s energy plan is increasing drilling offshore and in the Gulf of Mexico. While deepwater drilling in the Gulf took a huge hit because of BP’s (NYSE:BP) 2010 rig disaster and oil spill, permitting activity in region has come back with a vengeance. Oil production in the Gulf is up nearly 10% this year in a continuation of a three-year trend since the spill.
At the same time, the Obama administration currently is on the cusp of allowing Royal Dutch Shell (NYSE:RDS.A, RDS.B) to begin drilling in Alaska’s Arctic waters. That’s the first time in 20 years that an energy firm has been able to tap those waters. So the move to unconventional offshore assets in the U.S. already is occurring.
In terms of energy logistics — which we’ve highlighted as being a major source of importance for realizing energy independence — Romney’s plan to fast-track various energy infrastructure projects could be a welcome sign for any company in the pipeline industry. Additionally, his plan to reduce regulation affecting the coal and nuclear industries is an about-face versus the current administration’s policies.
Perhaps the biggest shift in the Romney’s energy plan has to do with the fate of alternative energy.
Romney didn’t specifically call for an end to subsides for wind and solar in his policy brief, but instead called for the government to stop “distorting the playing field.” The campaign likened the current Department of Energy to venture capitalists making direct bets on specific companies and outcomes. Romney would like the government to support advanced energy development at the basic research level, not at the commercialization phase — citing Solyndra and Ener1’s bankruptcies as examples as reasons against. The policy overview said these organizations were “operating more on faith than on fact-based economic calculation.”
On the flip side, the Obama administration has made alternative energy a prime target in its energy policies. The president and his team have invested millions into renewable energy companies and projects and notes that most firms funded under stimulus programs are still going strong.
Despite being just a brief overview of the campaign’s stance on energy production, Romney’s policy whitepaper does highlight some of the potential for America’s future as an energy-independent nation. However, many of these factors are already in play, as regular readers of InvestorPlace already know.
While the real differences between current and potential energy plans come down to oversight regulation and subsidy rates for renewables, the unconventional reserve revolution marches on. Romney’s energy plans are just reinforcing those ideals.
As of this writing, Aaron Levitt was long RDS.A and RDS.B.
The opinions contained in this column are solely those of the writer.
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