The Case of Energy Independence

Weekly News Commentary

This will be first political addition to my page. It’s short and important, so give it a chance!

As the election looms near, one term has risen to the forefront of political messages as a central point of contention for the candidates: energy independence. Governor Mitt Romney has claimed that “energy independence” will be the country’s economic savior. And it would be accomplished with the creation of 12 million jobs as part of plans to pipe oil from Alaska through Canada to the mainland; dubbed the Keystone XL Pipeline. To note, jobs are clearly on the forefront of voters minds, but it’s not what will decide the election. Lowering the unemployment rate is also not the main idea behind energy independence, despite Romney’s message.

A main tenet of the case is to lower domestic gas prices so that consumers have more disposable income. If one lowers gas prices, people can move more, and if people move more, people spend more and the economy gets moving. With support from Clifford Krauss, here’s why this goal doesn’t really pan out:

Oil is a global commodity and maintains a price that is regulated by world prices. We already produce 55% of the oil we consume. Due to federal subsidies and a majority of consumption being supplied domestically, the United States already pays some of the cheapest prices for gas in the world. Not to mention, with new extracting technology (fracking) we’re on our way to producing so much oil (“Some experts think it could eventually hit 10 million barrels — which would put the United States in the same league as Saudi Arabia” – Krauss) that some companies are beginning to apply for export licenses.

So the Keystone XL Pipeline might create 12 million domestic jobs, and reduce our imports of oil, but how many jobs are left after the pipes are installed? And who benefits in the long run from diverting federal money from green energy exploration to domestic investments in oil? Would we really just be extending the inertia of the oil industry’s growth for another half century?

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