Questionable Numbers in Rick Perry’s Energy Plan

tl;dr: Yay for an energy injection into the 2012 primary. Boo for numbers that don’t add up.

In a previous post, I wrote about how we were unlikely to hear substantial discussion about energy in the 2012 Presidential contest unless Texas Gov. Rick Perry became the Republican nominee. It looks like Perry’s playing offense on this issue earlier than I’d expected: He made energy his signature topic at the debate in New Hampshire tonight.

In the first three minutes, Perry opened with his plan to “[put] 1.2 million Americans to work in the energy industry,” and returned to it three times after that. Other candidates spoke about energy only in response to Perry: Rick Santorum piled on shortly after the opening salvo, claiming that “we need to drill” (and making the debatable assertion that Pennsylvania is now the natural gas capital of the U.S.), while Huntsman and Romney made passing comments later on.

So what is Perry actually proposing? All we have to go on is his New Hampshire Union Leader op-ed published this morning. It’s pretty light, so I hope to see more detail soon, but here’s my take:

  • Things that seemed perfunctory: An energy strategy described as “all of the above.” This lays the groundwork for a preordained lurch toward the center should Perry become the nominee, in which case he’d be able to tout his wind energy bona fides.
  • Things I like: Full hydrocarbon production from shale formations. I admit that it’s kind of a cheap point because the free market is taking care of this anyway, and it’s important to note that there are still substantial long-term issues to work through in shale extraction (particularly the cleanup of flowback and produced water from the wells). With that said, natural gas is an important bridge fuel to a low-carbon future and a vital enabler for intermittent wind and solar generation. Finally, it was refreshing to see a candidate use the world “nuclear,” implicitly acknowledging that the U.S. is, in fact, the world’s biggest nuclear generator by a wide margin, and our plants aren’t going away any time soon.
  • Things I don’t like: Drilling in ANWR (a drop in the bucket of consumption with significant environmental cost) and “returning immediately to 2007 levels of permitting in the Gulf of Mexico” – if more stringent safety rules put in place after Deepwater Horizon are slowing down permits for offshore drilling, that’s a delay I’m glad to embrace. Finally, the “job-killing” language with regard to the EPA really rankles: Republicans who claim that CO2 regulation will reduce economic activity would be wise to look to our country’s pioneering application of cap-and-trade to nitrogen and sulfur oxide emissions, where George W. Bush’s Office of Management and Budget calculated that regulation had a net economic benefit.
  • Where I sighed a bit: Perry claims that increasing domestic energy supply will reduce prices, benefitting everybody. I patently dispute this. On the electricity side of the coin, natural gas prices have already been low for some time – and gas accounts for less than a quarter of domestic power production anyway, so marginally cheaper fuel won’t have a noticeable impact. (Plus, electricity prices remain on the low end of the same 8¢ +/- 2¢ per kWh range they’ve been in since 1970.) On the transportation fuel side, crude oil is a global commodity market where U.S. production represents only 11% of supply – so I doubt that we’ll swing prices by growing to, say, 13%.

What I really scratched my head at, though, was Perry’s jobs math. The plan claims that going all-out on mostly-oil-and-gas-plus-some-other-stuff will create 1.2 million new jobs; Perry attributes 425,000 of them to conventional oil production alone (185,000 in Alaska and 240,000 in the Gulf Coast and the Atlantic’s Outer Continental Shelf). But according to the Bureau of Labor Statistics, there are only 179,900 people working in oil and gas extraction in total in the U.S. today. Doubtless the plan expects that there will be lots of pipe-fitters and waitresses ultimately supporting the guys in coveralls – Perry’s number is extremely close to the American Petroleum Institute’s projection of 1.1 million new jobs from aggressive domestic hydrocarbon extraction, a figure that has itself been attacked for implausible exaggeration – but I find it tough to swallow.

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