Bush Outlines Four Part Plan to Deal With Energy Crisis
By Freddie Mooche
Washington - President Bush today outlined his administration's
four-part plan to deal with high energy prices, especially that
of gasoline, which consumers have seen spot shortages of in
several regions of the nation this month alone and soaring
costs at the pump.
"What people are seeing at their gasoline pumps reflects the
global economy in which we live," said President Bush.
Consumers have seen the cost of gasoline rise over 25 cents a
gallon at the pump in less than two weeks. According to AAA,
the national average price of gasoline is now $2.91 a gallon,
41 cents more per gallon than a month ago and 67 cents per
gallon higher than last year at this time.
Three refineries on the Gulf Coast shut down by last fall's
hurricanes are only now reportedly beginning to return to
operation, or soon will be. Additionally, some refineries
that were not damaged by the hurricanes deferred planned
fall maintenance until this spring, so as to maximize
production immediately following the hurricanes. However,
this means that we now have refineries undergoing previously
scheduled spring maintenance, plus those that had deferred
maintenance from last fall. Compared to weekly data last
year for the similar period (the four weeks ending April
15, 2005), gasoline production for the most recent
four-week period is down 457,000 barrels per day, while
gasoline demand is up slightly compared to last year.
As a result, finished gasoline inventories have been
pulled down sharply, dropping more than 20 million
barrels over the past four weeks, despite large
volumes of imports. However, as these refineries
return to full operation, gasoline production
should increase, thus adding much-needed supply
into the system.
And so the fundamental question is, what are we going to do?
What can the government do?
President Bush emphasized that the Federal Trade Commission
was investigating whether the price of gasoline has been
unfairly manipulated in any way. Bush also ordered the
Department of Justice to work with the FTC and the Energy
Department to conduct inquiries into illegal manipulation
or cheating related to the current gasoline prices. The
FTC and the Attorney General are contacting 50 state
attorney generals to offer technical assistance to urge
them to investigate possible illegal price manipulation
within their jurisdictions.
"This administration is not going to tolerate manipulation,"
said Bush. "We expect our consumers to be treated fairly."
The President called on oil companies to accelerate plans
to expand refineries, as did OPEC's President Sunday when
he arrived in Doha for the 10th annual International Energy
Convention.
"These energy companies have got large cash flows, and they
need to reinvest those cash flows into expanding refining
capacity, or researching alternative energy sources, or
developing new technologies, or expanding production
in environmentally friendly ways. That's what the American
people expect. We expect there to be strong reinvestment
to help us with our economic security needs and our national
security needs," said Bush.
Dr Edmund Maduabebe Daukoru, President of the Organization
of Petroleum Exporting Countries (Opec), told reporters Sunday,
"If we do the right things by lowering international tensions,
oil prices will definitely stabilize."
President Bush explained that, "What people are seeing at their
gasoline pumps reflects the global economy in which we live.
See, when demand for oil goes up in China or India, two
fast-growing economies, it affects the price of oil worldwide."
Also affecting the price of oil is Iran, which produces 2
million barrels for export daily and is threatening to cut
off that production if the UN Security Council - or the
United States - attempts to stop the Islamic nation from
enriching uranium for its own use, which Iran insists is
for peaceful purposes, yet the US, UK and EU say is for weapons.
It's Iran which Daukoru was referring to when mentioning
"international tensions".
Bush also emphasized that as part of his energy plan, he was
asking Congress to remove $2 billion in tax breaks for oil
companies that search for deep-water oil and gas deposits.
"Congress has got to understand that these energy companies
don't need unnecessary tax breaks like the write-offs of
certain geological and geophysical expenditures, or the
use of taxpayers' money to subsidize energy companies'
research into deep water drilling," said Bush.
The President also said that America was moving toward hybrid
vehicles and the use of clean-diesel automobiles and trucks
that burn about 30 percent less energy than gasoline-driven cars.
"The easiest way to promote fuel efficiency is to encourage
drivers to purchase highly efficient hybrid or clean diesel
vehicles, which, by the way, can run on alternative energy
sources," said Bush.
More than 200,000 hybrid and clean diesel vehicles were sold
in the United States last year. It's the highest sales in history.
Congress expanded a tax credit for purchase of hybrids and
clean diesel vehicles up to as much as up to $3,400 per
purchase. The problem is that these tax credits apply to
only a limited number of hybrid and clean diesel vehicles
for each manufacturer. If the automakers sell more than their
limit, new purchasers are not eligible for the full tax credit.
"To get more of these vehicles on the road, I'm asking Congress
to make all hybrid and clean diesel vehicles sold this year
eligible for federal tax credits," said Bush.
The President declared that to increase the supply of oil
flowing into US refineries, he is ordering the Department
of Energy to stop making purchases this summer for the
Strategic Petroleum Reserve.
"Our strategic reserve is sufficiently large enough to
guard against any major supply disruption over the next
few months. So by deferring deposits until the fall,
we'll leave a little more oil on the market," said Bush.
The change over for refineries from the fuel additive MTBE
to ethanol has contributed greatly to shortages and higher
prices at the pump, so the President said he is instructing
the EPA to waive local fuel requirements on a temporary basis.
"I'm directing EPA Administrator Johnson to use all his
available authority to grant waivers that would relieve
critical fuel supply shortages. And I do that for the sake
of our consumers. If Johnson finds that he needs more
authority to relieve the problem, we're going to work
with Congress to obtain the authority he needs," said
President Bush.
Bush also stated that there were too many localized fuel
blends that in turn drove up costs for consumers.
The number of boutique fuels has expanded rapidly over
the years, and America now has an uncoordinated and overly
complex set of fuel rules. And when you have a uncoordinated,
overly complex set of fuel rules, it tends to cause the
price to go up.
"I'm directing Administrator Johnson to bring the governors
together to form a task force on boutique fuels. And the
mission of this task force will be to find ways to reduce
the number of boutique fuels and to increase cooperation
between states on gasoline supply decisions," said the
Prsident. "I want to simplify the process for the sake
of our consumers," Bush added.
One of the problems we face is we've got tight supplies because
we haven't expanded refining capacity. There hasn't been a
new refinery built in 30 years. One of the biggest
drawbacks has been environmental objections. but with
newer technologies available, developing new, more
efficient refineries can be accomplished.
Part of the reasons why we haven't expanded or built new
refineries to the extent we need to is because the permitting
process in this country is extremely complicated. Companies
that want to upgrade their equipment or expand their
existing refineries or build new ones often have to wade
through long, bureaucratic delays and/or lawsuits,
explained the President.
The President proposed that Congress streamline the application
process. "To make this gasoline supply more affordable and
more secure, Congress needs to allow refiners to make
modifications on their refineries without having to
wait for years to get something done," said Bush.
The President went on to say, "Congress also needs to
simplify and speed up the permitting process for refinery
construction and expansion. And so I'm going to work with
Congress. It's important for Congress to cut through the
red tape and guarantee refinery construction permits will
be processed within a single year."
The President took the opportunity to promote Congress
on the passage of ANWR, which has divided lawmakers
for years. Only now that the environmentalists themselves
can't fill up at the pump, Bush sees a chance at getting
ANWR passed into law.
"I fully recognize that the passage of ANWR will not
increase the oil supply immediately. But it's also
important to understand that if ANWR had been law a
decade ago, America would be producing about a million
additional barrels of oil a day, and that would increase
our current level of domestic supply by 20 percent.
We've got to be wise about energy policy here in America.
We've got to make sure that we protect the environment,
but we've also got to make sure that we find additional
supplies of crude oil in order to take the pressure off
the price of crude, which takes the pressure off the
price of gasoline at the pump," said Bush.
But the President also pointed out that America must get
away from its dependence on fossil fuels.
"The Advanced Energy Initiative is focused on three promising
ways to reduce gasoline consumption. One is increasing the
use of ethanol, another is improving hybrid vehicles, and
finally, one is developing hydrogen technology. All three
go hand-in-hand; all three are an important part of a
strategy to help us diversify away from hydrocarbons,"
said Bush.
Bush concluded by saying, "What I'm describing to you
today is a strategy that recognizes the realities of
the world in which we live. Our dependency on oil has
created economic security issues for us, and national
security issues for us. And therefore, this country
must use our brain power and entrepreneurial spirit
to diversify away from the hydrocarbon economy."
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