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Bob McNally and Jason Bordoff on Handling an Energy Crisis
Brief
Bob McNally and Jason Bordoff retraced their White House experiences to draw lessons about managing acute crises and long-term energy transitions. McNally (Bush administration) emphasized hands‑on crisis management — restarting Nymex after 9/11 (an anecdote about arranging a barge with a diesel generator), tracking oil installations during the 2003 Iraq campaign, and coping with electricity shortfalls in California caused by transmission constraints (Path 15) and the lack of grid storage. Bordoff (Obama administration) described balancing economic recovery, energy security, and a rising climate agenda: the Recovery Act’s energy efficiency efforts, the early recognition of the shale gas boom, and analytical debates about LNG exports and the social cost of carbon. Both men stressed the difficulty of doing rigorous analysis under political pressure and warned against simplistic or administratively unworkable programs (e.g., lessons from Cash for Clunkers).
They discussed how expectations mismatched reality: Bordoff recalled the Obama team’s modest LNG export scenarios (12 BCF/day) compared with later growth (nearly 20 BCF/day and heading toward 30–35 BCF/day), and how shale turned the U.S. into a net exporter around 2019. Both called lifting the crude export ban — part of a bipartisan package that included long-term renewable tax credits — a major success that increased resilience. On supply disruptions, McNally argued that the administration often has limited short-term levers over oil prices, recounting the choice not to use the SPR for Venezuela in 2002 and criticizing post‑invasion SPR sell‑downs and non‑energy uses of reserves. Bordoff and McNally agreed on the need for better cross‑government coordination (analytic frameworks, prepositioned inventories and shipping) and larger, cooperative strategic reserves; McNally added that coordination should even include China. They differed slightly on politics and culpability — Bordoff called some later disruptions “disruptions of choice” tied to policy decisions, while McNally stressed sympathy but urged clearer military and logistical planning for scenarios like a Strait of Hormuz closure. Both concluded that rigorous, non‑partisan analysis, contingency planning, and federal coordination are critical to balance affordability, security, and decarbonization.
Why it matters
Jason Bordoff: President Obama set a goal to reduce U.S. oil imports by about one-third by 2020; the shale revolution outpaced expectations and the U.S. became roughly a net oil exporter around 2019.
Key details
- Jason Bordoff: White House analysts initially put a high-case for U.S. LNG export capacity at ~12 BCF/day; actual LNG exports rose to nearly 20 BCF/day and Bordoff said they could reach 30–35 BCF/day.
- Bob McNally: During the Bush administration California faced near-daily electricity scarcity (transmission bottleneck at Path 15, no large-scale storage), creating chronic blackout/brownout risk with few policy tools to mitigate it.
- Bob McNally: When Venezuela’s PDVSA strike cut U.S. imports in December 2002, the administration debated using the Strategic Petroleum Reserve (SPR) but instead relied on diplomatic pressure and Saudi/UAE spare capacity; McNally emphasized limited short-term leverage over oil prices.
- Jason Bordoff: Libya’s 2011 civil war removed roughly 1.5 million barrels/day from markets; IEA/US deliberations led to an SPR/IEA release only in June (months after the February disruption), illustrating delays and coordination challenges.
- Bob McNally & Jason Bordoff: Both highlighted the bipartisan win of lifting the U.S. crude export ban (tied to renewable tax credits), warned that repeated drawdowns and non‑energy SPR sales weakened preparedness, and urged larger, better‑coordinated reserves (including engagement with China).