Oil shows record growth. Will Obama 2.0 warm to fossil fuels?

Oil production in the US jumped by a record 800,000 barrels a day in 2012. As President Obama maps out his second term, he will have to decide how much to nurture the booming oil and gas industries.

President Barack Obama champions renewables as the future of energy. The latest numbers tell a different tale.

Consumption of renewable energy in the US declined by 2.5 percent in 2012, according to the US Energy Information Administration, while US crude oil production jumped by a record 800,000 barrels a day over 2011. Production averaged 6.4 million barrels daily in 2012, and the EIA expects it to increase to 7.9 million barrels a day in 2014. That number would mark the highest annual average level of production since 1988.

Bolstered by new drilling techniques, natural gas inventories hit record highs in November 2012, but ended the year only slightly ahead of last year's level.

As the president maps out his second term, he will have to decide how much of his "all-of-the-above" approach to energy should nurture the booming oil and gas industries as opposed to renewables.

There are hints of a rapprochement between the president and the energy industry. Jack Gerard, president and CEO of the American Petroleum Institute, predicted Tuesday that Mr. Obama would soon act on whether to approve the Keystone XL pipeline, EnergyWire reports. He added that he was "encouraged" by what he was hearing from the White House.

"The oil and natural gas industry has been a bright spot in the last few years of sluggish economic growth and listless job creation," Mr. Gerard said in the API's State of American Energy address, "and we are ready to do more." 

Oil and gas companies support 9.2 million jobs, according to Gerard. That number could increase 1.4 million by 2030 – that is, unless Washington gets in the way, Gerard said. "As Washington’s elected officials and opinion leaders search for common ground on tax policy, fiscal policy and regulatory regimes, we need to focus on solutions that will support our ability to provide for a secure American energy future."

With 2012's record-shattering temperatures and hurricane Sandy fresh in memory, Obama says he will work with environmentalists to curb the detrimental effects of heat-trapping carbon emissions. But he may do so cautiously, careful not to stifle job creation or US oil production's projected ascension to No. 1 in the world.

"If the message is somehow we’re going to ignore jobs and growth simply to address climate change, I don’t think anybody’s going to go for that," Obama said in a November press conference, his first after reelection. "I won’t go for that."

Last year's oil and renewable energy production numbers don't tell the whole story. Clean energy advocates take a longer view of the narrative, saying investments in wind and solar will pay off in the decades to come, as the technologies become cheaper and more flexible.

And there's promise in the short-term data for alternative energy, too. Wind-powered generation grew by 17 percent in 2012, the EIA reports, and consumption of solar energy is projected to have grown by 32 percent. Gains made in wind and solar, however, were more than offset by a 13.7 percent decrease in hydropower production.

The data is a stark reminder that despite making tremendous strides in renewable innovation, the US is still heavily dependent on fossil fuels for its energy.