In 2008, Barack Obama famously made “green jobs” a campaign buzzword, pitching his clean energy plan as an economic engine that would create 5 million new jobs.
Now Republican presidential hopeful Mitt Romney is doing the same thing—but with oil and gas jobs, instead of wind and solar jobs.
Both plans have merit as energy policy—but not as major solutions to the nation’s 8.3 percent unemployment rate, economists say.
Romney on Thursday plans to roll out new details of his energy plan at a speech in Hobbs, N.M., in a 2012 battleground state home to hundreds of acres of oilfields drilled on federal land.
He’ll make the case that aggressive new drilling will create up to 3 million jobs by 2020, while driving a robust economic recovery. He’ll speak at Watson Truck & Supply, a trucking and oil-services company that manufactures drilling equipment, services oil rigs, and hauls heavy equipment.
The venue underscores one of the Romney campaign’s chief economic arguments: that new drilling will create thousands of jobs on oil and gas rigs and millions of indirect jobs in industries such as construction and manufacturing—enough to provide a major jump-start to the entire U.S. economy and help restore the middle class.
But as with Obama’s promise of green jobs, the reality is a lot more complicated.
Romney’s energy plan boils down to six key proposals:
- Give states control over energy drilling on federal lands;
- Open new offshore areas to drilling, starting with the Virginia coast;
- Approve the Keystone XL pipeline to import tar-sands oil from Canada;
- Perform an assessment of all the nation’s oil and gas resources;
- Streamline permitting for new drilling;
- Leave development of new energy technologies largely to the private sector.
In many ways, the plan simply revisits the longstanding Republican push to “drill, baby, drill”—and much of it reads like an oil-industry wish list. But in an election that’s primarily about restoring the nation’s stagnant economy and boosting jobs numbers, Romney—like Obama four years ago—is pitching his energy plan as a job-generating measure for economic recovery.
“If we develop these resources to the fullest, we will not only guarantee ourselves an affordable and reliable supply of energy, but also enjoy benefits throughout the economy,” Romney’s new energy proposal states. “Our trade deficit will shrink, our dollar will strengthen, and tens of billions of dollars will flow to the treasury. Perhaps most importantly we will experience a manufacturing resurgence that delivers more jobs and more take-home pay for middle-class families across the country.”
To make the case for the plan, the Romney campaign relies on several recent reports and studies linking drilling and job development. Among the most frequently cited: a March Citigroup report concluding that aggressive new drilling could lead to the creation of 3.6 million new jobs and a 1.1 percent drop in unemployment by 2020. But economists say a closer look at the report raises a number of questions about Romney’s claim that his drilling plan will resurrect the economy.
First, they note that the boom in drilling has come about not through any government action, but rather through development of new, so-called “fracking” technology that has unlocked new resources of natural gas, mostly on private land, much of it in politically important battleground states such as Ohio, Pennsylvania, and West Virginia.
That drilling, which has led to a glut of cheap new natural gas, is likely to continue no matter which candidate becomes president. Obama, in his State of the Union speech in January, cited a similar report noting that the natural gas boom will create up to 600,000 new drilling jobs.
“Because that drilling is on private land, I don’t see much changing between Romney or a second Obama term on this,” said Charlie Ebinger, an energy expert at the Brookings Institution.
Even the rosiest energy-development scenarios probably aren’t enough to dent the nation’s unemployment rate in the next few years, because energy jobs—whether in fossil fuels or renewable sources such as wind and solar—are just a tiny sector of the economy. Out of the nation’s 132 million jobs, the oil, gas, and coal industries employed about 790,000 people in July, or less than 1 percent of the nation’s total employment, according to the Bureau of Labor Statistics.
Adding 550,000 new drilling jobs over the next eight years would be good news, but not enough to move the needle on unemployment. So what about those other 2.5 million “indirect” energy jobs, which would also take nearly a decade to appear?
“There’s a lot of hoopla going on there,” said Ebinger. “Those numbers are making a lot of assumptions, based on a lot of multipliers.”
Economists say that to keep the current unemployment rate of 8.6 percent from rising, the U.S. economy must create 150,000 to 200,000 jobs a month, and energy jobs are only one piece of the pie.
“If you want to create jobs, there are a number of more effective things you can do—building bridges, investing in education,” said Hillard Huntington, executive director of the Energy Modeling Forum at Stanford University. “There are better strategies to create jobs than promoting renewable energy or forcing states to give up environmental regulations and expand oil and gas.
“Energy should not be a jobs issue,” Huntington added. “The energy sector is an important sector, but it’s a small sector and it’s hard to imagine that it’s going to transform the U.S. economy by itself.”