Today – President Obama finalized new standards to increase the average standard to 54.5 miles per gallon by 2025.

Mitt Romney called President Obama’s energy policy “extreme” as a response. Meanwhile – America’s dependence on foreign oil is at a 16 year best and for the first time since 1949 – the U.S. is a net oil exporter. All of that is “extreme” apparently.

“Governor Romney opposes the extreme standards that President Obama has imposed, which will limit the choices available to American families.  The president tells voters that his regulations will save them thousands of dollars at the pump, but always forgets to mention that the savings will be wiped out by having to pay thousands of dollars more upfront for unproven technology that they may not even want.”
~Romney spokeswoman Andrea Saul  

This statement by the Romney campaign is an utter embarrassment.  The Republican party’s only answer to America’s energy problems comes down to “drill, baby, drill”.  That’s basically it.  When you look at a market economy – prices tend to go up and down based off the supply and demand of the market (and as with all commodities – we’ll look at the role of oil speculation and price fixing).  The United States consumes over 25% of the world’s oil on any given year so what we do will have a significant impact on global oil prices (source).

“These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil.”
~President Obama 

If mileage standards are increased – then demand for oil goes down because consumers won’t need to fill up their cars as frequently.  Consumers win.  Oil companies and Wall Street lose.  And how does the Romney campaign respond – they call it “extreme”.  But America can’t drill its way out of this problem.  Over 70% of domestic oil production capacity comes from the Gulf of Mexico and 93% of those oil wells were shut down and workers airlifted because of Hurricane Isaac (source).  And these types of things are inevitable whether its a domestic situation or a situation in the middle east, but as long as we are completely reliant on oil as our main source for fuel … America’s economy will be vulnerable.

And if you STILL believe “drill, baby, drill” is the solution to America’s energy problems – then read this HERE from the Congressional Budget Office.  Spoiler alert – they say we can’t drill our way out of this problem:

NBC News reports on the finalization of standards HERE:

New American vehicles will need to get an average 54.5 miles per gallon under the updated Corporate Average Fuel Economy, or CAFE, standards that aim to save consumers money at the fuel pump and cut dependency on foreign oil imports.

The new fuel efficiency standards will save consumers $1.7 trillion in gasoline costs and reduce U.S. oil consumption by 12 billion barrels over the period, according to the White House.

Republican presidential candidate Mitt Romney has opposed the standards, and his campaign Tuesday called them extreme and said they would drive up the price of new cars. Any savings at the pump would be wiped out by rising costs of cars, the campaign said.

Republicans on the House Oversight and Government Reform Committee have been critical of the administration’s tactics in developing the rule and of California’s role in shaping the standards.

This deal was supported by auto companies, union workers and environmental groups; it’s not often that you get those three groups agreeing on anything.

Now Romney would like to eliminate fuel standards and also – in addition to that … he wants to eliminate the regulations that Obama put in place to minimize or eliminate the role of Wall Street speculating on oil and thus driving up the costs for consumers by as much as 25%.  Coincidentally – the Republican party gets a lot of money from the oil industry when they vote the way the oil industry wants them to (source).  They truly want to see consumers hooked on oil.

NPR explains Romney’s energy plan HERE:

The Romney energy plan, laid out in a 21-page white paper, relies heavily on creating deeper partnerships with Mexico and Canada. Mexico could use technical help to reverse its declining oil production, he said, and “Canada has oil sands. We’re going to take advantage of those, and build that Keystone pipeline and work with Canada to make sure we have advantage of their great energy sources.”

All told, that would dramatically boost oil and gas production, the candidate said.

“I will set a national goal of … North American energy independence by 2020.”

The Romney white paper cites a study by Citibank showing that is possible — provided there are sharp efforts to reduce energy demand. But energy conservation is not part of the Romney plan.

Energy independence is often cited as a way to be free of price fluctuations caused by conflicts in oil-rich regions. But that wouldn’t actually lock in stable oil prices.

President Obama has gone after the oil speculators which I have written about HERE and HERE.  And Wall Street is suing in court to allow them to manipulate the price of oil as they’d like (source).  Romney sides with Wall Street; he thinks free markets should apply so if Goldman Sachs wants to buy all the oil … that’s just free market economics baby.

In addition to going after oil speculators, setting new standards to reduce American demand … President Obama has still aggressively pursued domestic oil production to increase domestic oil supply.  As a result – domestic oil production is a 12 year high (source) and for the first time since 1949 (source).

And as I have written about HERE – this formula is working.  Our dependence on foreign oil is at its lowest level in 16 years thanks to a focus on reducing America’s demand in addition to increasing American supply.

And with all of that – if you’re still interested in finding out more … you can read the “Politics of Oil” if you want an even more detailed description of how interrelated our politics are with the oil industry.

Comments

comments