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Forbes.com

 

Romney Chooses a Tech-Centric Energy Plan to Jumpstart Jobs and Economic Growth

August 23, 2012

By Mark P. Mills

Presidential energy plans. Talk about a field littered with ignominious failures. It’s not just this Administration’s anemic results from its $70+ billion stimulus for alternative energy. Remember Carter’s Synfuels Corporation, or Clinton’s Partnership for a New Generation of (80 mpg) Vehicles? Thus far, every energy plan would work better in Hollywood than Houston. Romney’s new plan is the first that has a shot at succeeding because it reflects technology reality.

Why? Romney’s roadmap focuses on producing more hydrocarbons � oil, coal and natural gas. He avoids the politically easy rhetoric about this being a necessary bridge to some alternative energy future. Many Republicans might have gone down that road. Romney didn’t. His goals appear focused on practical technologies. If ever there were an age that needed a practical President, it is ours.

Romney’s plan reflects three indisputable facts. First, hydrocarbons supply 85 percent of what America and the rest of the world consumes, a share that will change little for decades to come based on every credible forecast including our own Department of Energy. Second, hydrocarbons are where the vast majority of current and future energy-related jobs reside. And third, the most important technology progress in energy has occurred with hydrocarbons, making them more abundant, affordable and greener.

This last point appears heretical considering the tide of popular media and policy nostrums about energy tech. But consider patents as a key indicator. Over the past five years alone more than 150,000 hydrocarbon-related patents have been granted, compared with 60,000 in all alternative energy technologies. The preoccupation with technologies directed at creating alternatives to hydrocarbons misses how technology also unleashes alternative sources of hydrocarbons themselves.

The transformative progress in hydrocarbons has launched a new era of production that Romney seeks to accelerate. Largely without help and in the face of heavy political headwinds, the U.S. has in the past few years reversed a 40-year decline in crude production, doubled our exports of petroleum products, generated a tidal wave of natural gas, and so enhanced mine productivity that we have so much coal we don’t know what to do with it, except export more to a hungry world.

And in largely unheralded news that would have made headlines if the facts were inversed, early this August the U.S. Energy Information Administration (EIA) announced our nation’s proved reserves of oil and natural gas rose by the highest amounts ever recorded since they started 35 years ago.

The technologies that have unlocked this abundance are the familiar fruits of our era: better materials engineering, sensors, controls, and information-related systems that radically improve all operations. One manifestation is precision steerable drilling using real-time microseismic imaging and continuous data acquisition enabling companies to weave through meandering hydrocarbon-rich seams. When you combine this new tech with the older technique of hydraulically pressurizing the now horizontal wells, you get the simplistically labeled "fracking."

Modern information systems are now the sine qua non of today’s hydrocarbon domains. As Bill Gates recently said: "The one thing that is different today [in energy] is software, which changes the game." It does and it has. According to IBM a typical oil or gas field generates so much data that engineers spend one-third to 60 percent of their time on data-mining. The world is on track to generate more data traffic associated with hydrocarbon production than the total amount of global consumer Internet traffic of just a few years ago.

Here’s another fact Romney surely knows: essentially all the domestic increase in oil and gas production has occurred on private and state lands, courtesy of thousands of small businesses and entrepreneurs. The revolution has put powerful technologies in the hands of small businesses, not just the majors.

The chicken-littles who have serially claimed we’re running of out energy completely miss the fact that resources are a function of technology, not geology. Governments and policies�access to land, restrictions on businesses, and so on�create the limits. This explains why states from North Dakota to Texas are now awash in energy and jobs. The Romney plan clearly aims to emulate that nationally.

Romney also proposes forging an energy alliance with Canada and Mexico, where our collective hydrocarbons resources are some five-fold greater than that of the Middle East. The only thing missing from the Romney plan? There is potential for North America to go beyond independence, and become the world’s swing supplier of fuel, unseating the Middle East. (For more on these resource and export realities, see my Manhattan Institute White Paper, Unleashing the North American Energy Colossus.)

Of course there are a lot of new and promising non-hydrocarbon technologies too. But this Administration’s Solyndra fiasco indelibly highlights the policy differences. There are deep risks in government trying to make industrial winners out of likely losers, not least of which is making losers out of potential small company winners whose funding can’t compete with the Federal purse. More important is that while solar electricity offers huge growth potential, it is still broadly impractical. Getting from today’s 2 percent of our energy (counting wind too) to say 10 or an optimistic 20 percent offers enormous growth for some lucky investors � - but it doesn’t move the needle on the central challenge Presidents have wrestled with for decades.

In the everyday world hydrocarbons supply 80-plus percent of our energy. The Keystone XL Pipeline, which the Administration halted in its tracks, represents abundant affordable energy, and exactly what the world is hungry to buy in staggering quantities, and it’s where the jobs are. The Romney plan is Keystone times ten in terms of economic opportunity.

Original Source: http://www.forbes.com/sites/markpmills/2012/08/23/romney-choses-a-tech-centric-energy-plan-to-jumpstart-jobs-and-economic-growth/

 

 
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