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How The Oil Industry Intends To Attack Obama
Over The Coming Year

By Steve LeVine

05 January, 2012
Foreign Policy

We recently remarked that a flurry of expert and news reports on the impending arrival of U.S. energy independence bore a striking resemblance to a lobbying campaign -- at a time of unusual economic distress, you dress up your long-time drilling wish list as a jobs initiative, and a way to achieve the decades-old romantic goal of independence from Middle East oil, and you have a salable pitch. Now, the other shoe has dropped -- the narrative has morphed into a full-throated presidential election-year campaign by Washington's leading business and oil lobbying groups. The chief message: Do what we say, Barack Obama, or else, reports the Financial Times' Ed Crooks.

Jack Gerard, chief Washington lobbyist for the oil industry as CEO of the American Petroleum Institute, unveiled the campaign yesterday. The spearhead is a push for Obama to approve the Keystone Pipeline, a proposed 1,600-mile line that would double the flow of Canadian oil sands to Houston-area refineries. If Obama fails to approve Keystone by a Feb. 21 deadline established in an unrelated deal with Congress, the institute and its friends will help to make sure that he suffers "huge political consequences," Gerard warned, reports the Associated Press' Matthew Daly.

But if Obama goes along with Keystone, and takes further steps including opening up long-closed offshore zones to drilling, the outcome in 15 years will be U.S. energy self-sufficiency, said Gerard, who calls his campaign "Vote 4 Energy."

Gerard is joined by another cutely named campaign by the ultra-powerful U.S. Chamber of Commerce -- the Partnership to Fuel America, writes Matthew Joseph at the National Journal. The chamber's goals appear to be identical to Gerard's.

In terms of geopolitics, this could be of serious consequence, though not on precisely the same grounds that its promoters assert. The chief virtue of higher U.S. oil production will not be lower or more stable gasoline prices, nor necessarily a wholly reliable supply: The U.S. will continue to pay global fuel prices, however stable or volatile they are at a given moment, because that is how the commodity is priced. If demand pulls the supply elsewhere, however -- say to Asia -- that is where the North American oil will go.

Instead, the benefit will be almost wholly in the drier category of U.S. balance of payments -- more of the hundreds of billions of dollars in cash paid each year by American motorists will stay in the United States, thus helping the U.S. economy. That is a worthy objective on its own merits, but is not the same thing as getting off of Middle East oil, which is the hidden campaign message.

The next thing to understand is why Gerard is so confident in his forecast. It is because the trend is happening of its own accord, according to forecasts by ExxonMobil, DeutscheBank and BP, among others. U.S. oil consumption is on a sharp decline, outlooks by these companies say, and by the middle of the 2020s, U.S. demand should be easily met by western hemisphere supplies. That means oil mainly from the U.S., Brazil, Canada and Mexico.

Deutschebank, perhaps the most daring of the group, thinks that U.S. oil consumption will be almost halved by 2030, to a little over 10 million barrels a day. Indeed, it will have to be, because voracious China and India will be slurping up virtually all the Middle East supplies that Americans and Europeans currently consume.


It is easy to see why industry lobbyists are claiming this outcome as a byproduct of their clients' desires: Americans have been pushovers for the energy independence schtick since Richard Nixon. Consider the video above, featuring news editors from the Wall Street Journal, who had just read this story by the paper's top oil reporter, Russell Gold.

Steve LeVine is a Schwartz fellow at the New America Foundation; writer on geopolitics and energy at Foreign Policy; adjunct professor, energy security, Georgetown University http://oilandglory.foreignpolicy.com He can be reached at Twitter @stevelevine




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