Obama’s Energy Strategy: All of the Above—and a Lot of Oil

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Jason Reed / Reuters

President Barack Obama delivers remarks on energy policy at Stillwater Pipe Yard in Cushing, Oklahoma, March 22, 2012.

Why was President Obama speaking at the small town of Cushing, Oklahoma this morning? Whether or not you know the answer to that questions probably predicts where you stand on energy policy. Cushing is the Pipelines Crossroads of the World—they even have a monument. The town is the central hub for American oil pipelines, feeding crude to refineries around the U.S., and on any given day local storage tanks hold 5 to 10% of U.S. oil inventories. Cushing is where the price settlement point for West Texas Intermediate crude on the New York Mercantile Exchange, and helps set the global price for oil. If the American oil industry has a spiritual capital, Cushing is it.

And that’s why Obama came to town to talk energy—and oil. With pipelines in the background, Obama hyped his Administration’s record on oil and gas, reminding a skeptical audience that American crude production was up and the number of oil rigs operating in the U.S. was at a record high. He emphasized that oil was—and remains—a major part of American energy policy, one Obama wouldn’t stand in the way of:

So we’re drilling all over the place right now. That’s not the problem. In fact, the problem in a place like Cushing is that we’re actually producing so much oil in places like North Dakota and Colorado that we don’t have enough pipeline capacity to transport it all where it needs to go. There’s a bottleneck here because we can’t get all of our oil to our refineries fast enough. If we could, it would help us increase our oil supplies at a time where we need as much as possible.

That’s why before Obama arrived in Cushing, the White House announced that it would expedite the southern half of the controversial Keystone XL pipeline, the segment that would extend from the pipeline hub in Cushing down to refineries on the Gulf Coast. (Obama rejected the northern half of the Keystone pipeline, which would have carried hundreds of thousands of barrels a day of Canadian oil sands crude to Cushing, back in January.) With fuel prices rising and criticism mounting of the President’s energy policy—even though Obama bears little responsibility for costly gas—the Cushing trip and Keystone announcement was meant to defend Obama against charges that he’s somehow anti-oil. But will anyone believe him—and how will environmentalists, who have come to view Keystone as less a pipeline than a line in the sand, react to his dalliance with oil?

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Not well, I imagine. Here’s leader Bill McKibben on Obama’s Cushing speech:

Barack Obama has done a little more than his predecessors about climate change. But nowhere near enough. And no movie producer, fifty years from now, will be able to resist a scene that explains the depth of our addiction to oil: the president coming to the state that just recorded the hottest summer in American history, in the very week that the nation has seen the weirdest heat wave in its history, and promising not to slow down climate change but instead to speed up the building of pipelines.
It’s clear that the power of the oil industry drives political decision-making in America–that’s why we need to go after them directly. The first step is an effort to remove the subsidies that they and the rest of the fossil fuel industry enjoy.
McKibben is right: America is addicted to oil, and in many ways, Obama’s ultimate policy towards oil differs little from his predecessors. Oil production in the U.S. really is up, and if the President can’t really take responsibility for it—most of the new drilling is on private and state land, thanks to technological advances in fracking shale oil—he’s hardly standing in the way. While he may have blocked the northern half of the Keystone pipeline, he seemed to do it only reluctantly, and after a sustained popular campaign by grassroots environmentalists.

And even then, the White House made clear at the time that the rejection was likely temporary, and had more to do with local complaints about the risk the pipeline might post to Nebraska groundwater than the larger issue that building the pipeline would speed development of Canadian oil sands, with negative consequences for the planet’s climate. (That’s one reason why the White House had initially wanted to delay final approval until early 2013 pending more review–and conveniently, after the November elections.) Don’t forget, this is a President who in March of 2010 proposed a grand energy trade that would have opened up new territory to offshore drilling along the Atlantic coast and the Gulf of Mexico in exchange for support of climate legislation. That bargain was scuttled by the Deepwater Horizon oil spill, but I think it still represents Obama’s pragmatic—and largely pro-oil—energy mindset. No one should be surprised that he wants to fast track part of Keystone—especially after a Gallup poll that came out today showing that 57% of Americans want the government to give the green light to the pipeline, compared to just 29% who are against it. Michael Levi of the Council of Foreign Relations likely had it right when he called Obama the Driller in Chief.

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None of that is likely to make a difference to Republicans—or more importantly, the oil industry, which seems to automatically view Obama as an enemy. I suspect a lot of that is culture, on both sides. Oil people tend to come from the reddest parts of the country—Texas, Wyoming, Louisiana, Montana and Oklahoma, a state Obama mentioned in his speech that he hadn’t visited since the 2008 campaign. From roughnecks to tycoons, they look at an urban Democratic President and see someone who doesn’t know the first thing about their business or their way of life. (That’s without even getting into race.) And Obama likely doesn’t. Harold Hamm, the CEO of the oil company Continental Resources, told Bloomberg Businessweek about visiting the White House and talking to the President:

Hamm says he told Obama there’s plenty of oil to be found in the U.S. He felt the President blew him off. “It was like, if you’re in the oil-and-gas industry, you don’t matter,” he says.

But that’s politics and personality—when it comes to the policy of oil exploration, and the results, Obama really hasn’t been too radically different from his predecessor George W. Bush, an oilman himself who would have felt right at home in Cushing. Though the industry might want to, it shouldn’t forget that the President has had to deal with the Deepwater Horizon oil spill, and could have been far less lenient on offshore drilling—as his environmentalist allies urged him to be. And though Obama understands the importance of oil to America—perhaps better than he does the environmental cost—we would all be wise to listen to his larger energy message:

As I’ve been saying for the last few weeks, we use more than 20% of the world’s oil, but we only have 2% of the world’s proven oil reserves. We could drill every square inch of this country — we can get every drop of that 2 percent — but we’d still have to buy enough from the rest of the world to meet our needs. The price of oil will still be set by the global market. And that means every time tensions rise in the Middle East, so will gas prices at home.

That’s not a future I want for your kids, or my kids. That’s not a future I want for America. In this country, we don’t let other nations control our destiny. We control our own.

So yes, we’re going to keep drilling everywhere we can while protecting the health and safety of the American people. But while some have latched onto drilling as a be-all, end-all strategy, I believe we need an all-of-the-above strategy. That means producing more biofuels. More fuel-efficient cars. More solar power. More wind power — which, by the way, has nearly tripled in Oklahoma over the past three years. Every source of American-made energy. I don’t want the energy jobs of tomorrow going to other countries. I want them here. That’s a true all-of-the-above strategy. That’s how we break our dependence on foreign oil.

There will be oil—the U.S. is even inching closer to energy independence. What we need is the rest of it, lest Obama’s energy strategy become “one-of-the-above.”

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