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Kicking the tires on Obama’s energy speech

By ,

JIM YOUNG Reuters

“It was just three years ago that gas prices topped $4 a gallon. I remember because I was in the middle of a presidential campaign. Working folks certainly remember because it hit a lot of people pretty hard. And because we were at the height of political season, you had all kinds of slogans and gimmicks and outraged politicians — they were waving their three-point plans for $2 a gallon gas.  You remember that — ‘drill, baby, drill’ — and we were going through all that. And none of it was really going to do anything to solve the problem. There was a lot of hue and cry, a lot of fulminating and hand-wringing, but nothing actually happened. Imagine that in Washington.”

— President Obama, March 30, 2011

 

With gasoline prices soaring to $4 a gallon, President Obama delivered Wednesday a major address on energy policy — as well as an ad-libbed dig at Sarah Palin. Let’s take a tour through some of his numbers and assertions.

(At the end, we will also examine an interesting, Pinocchio-worthy fact in a preemptive floor speech on energy by Senate Minority Leader Mitch McConnell.)

“And today I want to announce a new goal — one that is reasonable, one that is achievable, and one that is necessary. When I was elected to this office, America imported 11 million barrels of oil a day. By a little more than a decade from now, we will have cut that by one-third. That is something that we can achieve. We can cut our oil dependence — we can cut our oil dependence by a third.”

Under this goal, the United States would only be importing 7.25 million barrels a day by 2025. If you look at the current statistics, net imports dropped to 9.4 million in 2010, but that is largely because of the recession. As Obama acknowledged elsewhere in his speech, “now that the economy is recovering, demand is back up.”

Interestingly, to reach this goal, the administration is largely betting that a bulk of the reduction would come from the aggressive fuel-efficiency standards for vehicles (known as “CAFE standards”) announced by Obama in 2009. The new standards are supposed to save 1.8 billion barrels of oil over the life of passenger vehicles sold between 2012 and 2016. So, notwithstanding this week’s speech, the most significant action taken by the president to reduce dependence on foreign oil has already been taken.

“Now, last year, American oil production reached its highest level since 2003, and for the first time in more than a decade, oil we imported accounted for less than half of the liquid fuel we consumed. So that was a good trend.”

We have dealt with this statistic before, and gave the president a Pinnochio for it. Domestic oil production is up largely because oil companies have begun to extract oil from a vast shale field in North Dakota and other states. Meanwhile, the independent Energy Information Administration is forecasting that domestic crude oil production will decline this year and next. Imports went down because of the recession and are expected to revive. So the predicted trends are not in the right direction.

“Last year, more than 150 members of Congress, from both sides of the aisle, produced legislation providing incentives to use clean-burning natural gas in our vehicles instead of oil. And that's a big deal. You know, getting 150 members of Congress to agree on anything is a big deal. And they were even joined by T. Boone Pickens, a businessman who made his fortune on oil but who is out there making the simple point that we can't simply drill our way out of our energy problems.”

Actually, Pickens made most of his fortune in natural gas, as well as speculating on oil stocks. (He made unsuccessful takeover bids of a number of oil companies in the 1980s, pocketing millions of dollars on his investments.) The main source of his wealth was a company he created, Mesa Petroleum, which his Web site says “produced more than 3 trillion cubic feet of gas and 150 million barrels of oil from 1964 to 1996.” Many of his current ventures involve alternative energy, suggesting his current campaign has a measure of self-interest.

“We've also made historic investments in high-speed rail and mass transit, because part of making our transportation sector cleaner and more efficient involves offering all Americans — whether they are urban, suburban or rural — the choice to be mobile without having to get in a car and pay for gas.”

Obama did not mention that Florida Gov. Rick Scott (R) recently turned down $2.4 billion in federal funding for a high-speed rail system in his state.

 

As for Mitch McConnell

 “Just three of the areas we could tap in Alaska are thought to hold enough oil to replace our crude imports from the Persian Gulf for nearly 65 years. So the problem isn't that we need to look elsewhere for our energy. The problem is that Democrats don't want us to use the energy we have. It's enough to make you wonder whether anybody in the White House has driven by a gas station lately.”

Obama, in his speech, “America holds about 2 percent of the world’s proven oil reserves.” So how does that track with McConnell’s numbers?

 Obama is talking about actual proven reserves — and the areas in Alaska referenced by McConnell are currently off-limits to drilling and thus don’t count. The proved reserves in Alaska amount to 3.5 billion barrels. The mean probability of the technically recoverable oil in coastal plain of Alaska is about 10 billion barrels, according to the Energy Information Administration. (The mean probability is that there are 10 chances out of 20 the crude oil can be recovered.)

 Finally, note that McConnell mentioned crude imports from the Persian Gulf. Despite the popular image of Saudi Arabia filling U.S. gas tanks, the United States imports most of its oil from the Western Hemisphere. In 2010, Persian Gulf imports amounted to just 18 percent of total net imports, or 1.7 million barrels a day. By keeping the focus on the Persian Gulf, McConnell is able to stretch his fact far into the future.

 Still, over 65 years, that would amount to about 40 billion barrels. The EIA says there is just a 5 percent probability (meaning one chance out of 20) that as much as 42 billion barrels of crude could be recovered in Alaska. That seems to really stretch the definition of “thought.” 

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