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How Romney’s Plan for Energy Independence Stacks Up

On a broader level, there's plenty of similarities with the status quo


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.

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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.

Where the Road Forks

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.

Expect More of the Same

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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