US presidential debates likely to focus on energy


During the 2008 campaign, Americans worried about dwindling oil supplies, rising demand and skyrocketing prices. Today, a revolution in domestic energy production has erased the supply worries, and energy-industry jobs are a bright spot in an otherwise-sluggish job market.

How to further develop America's energy potential stands at the center of both presidential campaigns, and the question of which candidate can do it better is likely to come up during the debates that begin Wednesday.

Energy independence is the first point in Republican candidate Mitt Romney’s five-point plan to rejuvenate the economy. He says unleashing domestic oil and gas production could create more than three million jobs, shrink the trade deficit and revitalize American manufacturing.

“It will provide us with a lot of jobs in the energy sector and in manufacturing because when energy is less expensive, manufacturing will come home,” Mr. Romney said at a campaign rally last week in Virginia.

President Barack Obama, in the second plank of the four-point economic plan he laid out at a Virginia rally last week, also calls for greater domestic oil and gas production, and decreased imports of foreign oil. But he offers much more support for clean energy as a way to kick-start the economy.

“We've got a better plan where we keep investing in wind and solar and clean-coal technology, and where farmers and scientists are harnessing new biofuels to power our cars and trucks,” Mr. Obama said, “where we're developing a 100-year supply of natural gas, where we cut our oil imports in half by 2020 and create hundreds of thousands of jobs.”

While Mr. Obama often proudly says that under his watch US oil production rose to the highest level in nearly a decade, many in the oil and gas industry say the president's policies aren't fostering the boom.

Critics cite his refusal to approve the Keystone XL pipeline to carry oil into the US from Canada and proposed new rules for hydraulic fracturing - the technique credited with a boom in oil and gas production - on federal lands.

“I believe that Gov. Romney and his team see energy as a major stimulus” for economic growth and job creation, said Jack Gerard, the chief executive of the American Petroleum Institute, a trade group, and a frequent critic of the Obama administration. He cites North Dakota as a prime example of how unleashing energy production triggers economic growth.

Mr. Romney's energy plan - and its projected benefits - draw heavily from a March report by Citigroup titled, “North America, the new Middle East?”

The Citigroup report painted a picture of abundant energy and a rebounding economy, projecting that energy changes could create 2.7 million to 3.6 million net jobs by 2020. It said the transformation was already under way and wasn't premised on changes by any future administration.

“This is what we see happening, given no major shifts in policy,” said Eric Lee, a co-author of the report. The report also backs conservation as a boon to the economy. An Obama conservation effort, higher fuel-efficiency standards for cars, has been attacked by the Romney camp.

Despite increased US oil production, gasoline prices have remained high, with the AAA national average at $3.782 on Monday for a gallon of regular gas. Mr. Romney says more drilling could help lower prices at the pump. Mr. Obama stresses fuel efficiency as the best way to take the bite out of high prices.

One of the key differences between the Romney and Obama energy plans involves federal lands. Mr. Romney has called for oil companies to have much greater access to federal lands and has advocated giving states the leading role in regulating new oil and gas output on federal lands within their borders.

The administration has opened up acreage for oil and gas production in areas where exploration has traditionally been done - such as the central and western Gulf of Mexico - but hasn't opened up more controversial areas for drilling, such as the Atlantic coast or Alaska's Arctic National Wildlife Refuge.

Companies see considerable prospects for new oil supplies in federal land currently off-limits - particularly the offshore parcels - but natural-gas output would be less likely to benefit.

Companies are already curtailing gas exploration because of low prices, though they have rebounded lately, and most of the new sources for gas lie on private, not government, lands.

Dow Jones Newswires

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