Last night’s third Republican debate of the election season did little to settle the field. Senators Cruz and Rubio grabbed attention with spirited performances, while Dr. Ben Carson and once-presumed frontrunner Governor Jeb Bush were less inspired.
When it comes to energy issues, the Republican candidates have been largely underwhelming. The first two debates were light on energy, in spite of a heavy emphasis on economic and national security issues.
Last night’s debate was similar: There was very little discussion of energy policy and security, as candidates spent most of the evening focused on tax policy, the national debt, and the state of the economy. Below, read about what occurred when the conversation did turn to energy issues.
First, in a heated exchange between Donald Trump and Ohio Governor John Kasich, Trump responded to Kasich’s claim that he was a good steward of Ohio’s economy. “First of all, John got lucky with a thing called fracking, OK? He hit oil. He got lucky with fracking. Believe me, that is why Ohio is doing well… and that is important for you to know,” Trump said.
Kasich was quick to respond. “First of all, Ohio does have an energy industry, but we’re diversified. We’re one of the fastest growing states in the country. We came back from the dead.”
Ohio has been home to a substantial wave of drilling for shale gas and oil. The prolific Marcellus and Utica Shales stretch from Pennsylvania into Eastern Ohio, with Ohio possessing relatively more natural gas liquids and oil compared to Central Pennsylvania, where the drilling frenzy began.
“First of all, John got lucky with a thing called fracking, OK? He hit oil. He got lucky with fracking. Believe me, that is why Ohio is doing well… and that is important for you to know,” Trump said.
Kasich has overseen the drilling boom, but still has a bit of a complicated relationship with his state’s energy industry. He strongly supported the industry when drilling began a few years ago, but has since supported higher taxes on oil and gas companies in order to lower state income taxes—a position that sparked pushback from the industry and ran into a wall of opposition in the state legislature.
However, the policy details of fracking were not expanded upon in the debate.
Oil industry subsidies and ethanol
Later in the evening, the CNBC moderators asked Dr. Carson about his previous proposal to remove oil subsidies and use the money to support the construction of ethanol refueling stations, a hot topic in the early voting state of Iowa. Carson responded with the following:
“Well, first of all, I was wrong about taking the oil subsidy. I have studied that issue in great detail. And what I have concluded is that the best policy is to get rid of all government subsidies, and get the government out of our lives, and let people rise and fall based on how good they are.”
The topic of subsidies is a tricky one. The American Petroleum Institute argues that the oil and gas industry does not receive subsidies, but merely benefits from certain provisions in the tax code that allow drillers to recover costs. Other groups disagree, citing favorable tax treatment particular to oil and gas companies, such as intangible drilling cost deductions.
The IMF took a more sweeping definition of energy subsidies in a report earlier this year that include all of the “true costs,” including not just direct subsidies but also unaccounted for damages to public health and the environment. The IMF pegs total worldwide energy subsidies at $5.3 trillion, or 6.5 percent of global GDP.
Carson: “Well, first of all, I was wrong about taking the oil subsidy.”
As for ethanol, the U.S. Congress passed a $0.51 per gallon subsidy for ethanol in 2004, which was reduced to $0.45 per gallon in 2008, and finally zeroed out at the end of 2011. That ended the direct federal subsidy for corn ethanol. However, the controversial Renewable Fuel Standard (RFS) remains intact, requiring an escalating volume of ethanol (increasingly requiring more advanced types of biofuel) to be blended into the nation’s fuel supply.
Dr. Carson’s previous statements referred to supporting refueling stations, however. When asked about the RFS while speaking in Iowa in May, Carson pivoted, saying that he “would probably be in favor of taking that $4 billion a year we spend on oil subsidies and using that in new fueling stations.” Last night’s comments suggest that he has changed his mind.
Finally, Governor Chris Christie was asked how he would address climate change, and while brief, his answer provided the lengthiest discussion on energy policy during the whole debate. He seemingly ruled out carbon pricing, or at least, some form of energy tax. “What we don’t do is do what Hillary Clinton and John Kerry and Barack Obama want us to do, which is their solution for everything, put more taxes on it.”
Instead, he described an approach very similar to President Obama’s “all-of-the-above” energy policy platform. “We’ve laid out a national energy plan that says that we should invest in all types of energy… We need to make sure that we do everything across all kinds of energy: Natural gas, oil, absolutely. But also where it’s affordable, solar, wind in Iowa has become very affordable and it makes sense.”
He also highlighted New Jersey’s success in rolling out solar. New Jersey indeed ranked third in total installed capacity for solar at the end of 2014, behind California and Arizona. The state added 240 megawatts of solar last year (sixth most), bringing the state’s total to 1,451 megawatts installed. Christie failed to mention that New Jersey’s solar achievement is made possible at least in part due to the state’s renewable portfolio standard.
Energy gets little play
Energy policy still has not garnered a lot of attention in the Republican presidential campaign—a fact that belies the range of critical energy issues that will be essential for the next President to address.
The crash in oil prices has provided some relief to motorists across the country. However, oil won’t stay cheap forever, and oil prices are nothing if not volatile. It is reasonable to expect prices to rebound in the years ahead. The next president should have a plan in place to address an oil price spike.
The next president should have a plan in place to address an oil price spike.
Similarly, how will the next President deal with America’s dependence on oil? The U.S. still consumes over 19 million barrels of oil per day—over 20 percent of total global demand. That dependence has costs, both in terms of the effect on the economy and how it influences American foreign policy, realities that are remain true even if the U.S. is also a major oil producer.
How will the next President approach rapidly changing energy markets? Gov. Christie’s comments about investing in “all-of-the-above” were the closest the field came to discussing the nation’s shifting energy portfolio. Even still, it isn’t clear how his strategy would differ from the Obama administration’s approach.
What approach will the next president take towards maintaining critical transportation infrastructure as the Highway Trust Fund languishes? There was no substantive discussion of using infrastructure and transportation policy to protect American competitiveness.
Finally, there was no discussion about planning for the energy problems of tomorrow. How will the next administration manage a transition to cleaner energy? And what about future energy technologies? The Republican Party has typically looked more favorably upon early stage R&D rather than subsidies for deployment, but thus far the details of such an energy strategy have not come up for discussion.