Presidential debate 101: In oil drilling spat, did Obama make his best case?

The exchange on energy policy on Tuesday night’s debate was possibly the most contentious area of disagreement.

Former Massachusetts Gov. Mitt Romney tried to get President Obama in a headlock over the number of drilling permits issued to try to find new oil. Mr. Romney kept circling Mr. Obama while he asked six times, “How much did you cut them (drilling permits) by, then?”

Obama blamed the oil industry for sitting on oil leases for decades and said the permits were taken away since they were not being used. But, regardless of the permits, Obama said, oil production is up.

Romney said, oh no, production on federal lands is down.

It would be surprising if anyone watching the debate were not confused.

Who is right? It turns out that there is truth in both statements.

First, there is no doubt that drilling permits fell. According to the Department of the Interior, permits dropped 36 percent in 2011 from the prior year. Romney claimed Obama had cut licenses and permits in half.

But what Obama did not say was that the reason permits dropped  was the giant BP oil spill in the Gulf of Mexico in April of 2010. After the spill, the Department of the Interior issued a moratorium on new permits until it could review safety procedures and draft tighter anti-pollution regulations. In October 2010 it lifted the moratorium after drafting tougher rules.

“When you have a spill that big you look around and ask, ‘Are we doing everything carefully,’ ” says Sarah Emerson, managing principal at Energy Security Analysis Inc. in Wakefield, Mass. “It was careful governance, but it would have an impact on production in the subsequent year.”

Instead, Obama said the industry was sitting on leases for decades. “So if you want to drill on public lands, you use it or you lose it,” he told Romney.

The government did take away some leases, agrees Amy Myers Jaffe, an energy expert affiliated with the University of California, Davis Graduate School of Management.

But she says Obama’s implication that the energy companies are lazy may be too negative.

“Sometimes it’s more complicated,” she says. For example, she says oil companies have to decide what their priorities are in terms of drilling. Sometimes, the best prospects may be in West Africa or Latin America. “You have to show management you are better off drilling here than somewhere else,” she says.

How about Obama’s contention that oil production has risen while he has been president?

That is true.

According to the Energy Information Administration (EIA), domestic production of oil, as of this month, is up by 26.4 percent over the end of President Bush’s term.

But Romney kept repeating that production was down this year on federal lands. “Production on government land of oil is down 14 percent,” he repeated over and over again.

Romney’s assertion is partly true, but from 2010 to 2011, not this year. According to the EIA, production of oil on federal and American Indian lands dropped 12.5 percent in that time period.

Natural gas production was off 11 percent, higher than the 9 percent claimed by Romney. However, production of natural gas in total was up 7 percent in 2011 from 2010 as companies drilled wells on private land in places like Pennsylvania, Ohio, and North Dakota. Since Obama became president, natural gas production is up 12 percent.

“Does it really matter whether it comes from federal lands or not?” asks Ms. Jaffe. She says the bigger question is whether or not the industry has access to drill for new oil. And the answer, she says, is yes. “They are drilling the daylights out of the land.”

If Romney were president, he said he would make the US “North American energy” independent within eight years.

Is that possible?

Currently, the US imports between 8 and 9 million barrels of oil per day.

Jaffe estimates the US could increase oil production from shale, offshore oil production, and some formations in Texas, Florida, Ohio, and western Pennsylvania. If all of those got drilled she says it seems reasonable that the US could increase production by 3 to 5 million barrels of oil per day “if nothing goes wrong.”

In addition, she can envision another 1 million to 2 million barrels of oil per day coming to the US from Canada.

Add in higher fuel efficiency standards for vehicles in the US, which were just raised by Obama and opposed by Romney. By 2025, the new standards mandate that an automobile manufacturer’s entire fleet averages 54.5 miles per gallon. That saves another 3 million to 5 million barrels of oil per day.

So, with increased oil production and better fuel standards, the US might not need to import oil from outside of North America. “But, we are talking 2025,” says Jaffe. “Not when these two men will be president.”