5 Energy Questions for Mitt Romney
NEW YORK (TheStreet) -- The U.S. is set to become the Middle East of the 21st century, proclaimed a Citigroup report earlier this year. And that's, more or less, Mitt Romney's platform when it comes to energy.
The shale boom and the revolution in drilling technology mean that if there there's a will -- and a hands-off federal government, as far as the Republican Party has it -- there's a way in making America energy independent. In fact, Romney says we can accomplish the task in eight years. He's not the first American politician to set the ambitious goal of energy independence, though all who have come before him have failed. Yet, thanks to the shale boom, the goal is ever more in reach, or at least, within reason. It also leads to some important energy policy questions that haven't received enough focus amid the sound bites over creating jobs through oil and gas and getting away from "our addiction to Middle East oil."
With that in mind, here are five questions for Mitt Romney to answer about the implications of trying to make America energy independent in eight years.
1. The price tag for eight years to energy independence. In the oil and gas business, there's a chart know as "the scorpion's tale." It shows the point at which capital spending on new drilling projects bends all the way back around to wipe out the profit from existing projects and become an economic "wash" for the companies involved.Eight years seems like an ambitious target for making the U.S. energy independent. It will require a massive investment from companies that, by their nature, are extensively leveraged. A sudden change in the global economy and commodities prices can make leverage an existential crisis in a hurry. In the push to make the country energy independent, "getting out of industry's way" is a defensible idea, since they know much more about avoiding the scorpion's tail than the government does. But giving them this goal does beg the question: Have you given any thought to how much this is going to cost? 2. Geopolitical destabilization. Weaning the U.S. from foreign oil is a laudable goal that's been around for a long time. That said, there's about 100 years of geopolitical history that has been founded on the current status quo in the oil markets and, in particular, the Middle East. It doesn't seem like a simple point A (get off Middle East oil) to point B (no more geopolitical issues). In fact, as we have seen in the aftermath of the Arab Spring, democracy is messy. That doesn't mean there shouldn't be democracy, and doesn't mean there shouldn't be an effort to make the nation as energy independent as it can be. However, a lot of current and historical foreign policy is based, at least in part, on oil politics. You know what they say: Be careful what you wish for, you just might get it. How do you prevent destabilization in the Middle East as we break our "addiction" to their oil, and what is your specific foreign policy plan to manage this transition?
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV