Bush Administration Looks at Supply Options, Long-Term Fixes for Energy Crisis

Mar. 20, 2001

Bush Administration Looks at Supply Options, Long-Term Fixes for Energy Crisis

By G. Robert Hillman

Forecasting potentially crippling energy shortages for the next 20 years, Energy Secretary Spencer Abraham said Monday the Bush administration was completing a diverse, hemispheric plan to meet the "magnitude of the challenge."

The nation's energy "crisis," as he repeatedly called it, is not limited to electric blackouts in California or to soaring natural gas bills in the Northeast, but is rooted in rising across-the-board demands for more electricity, oil and natural gas.

"The good news, I think, is that America's energy problems can be solved," Mr. Abraham told a national energy summit at the U.S. Chamber of Commerce. "The bad news is that the situation in California is not isolated, it is not temporary and it will not fix itself."

Even as the energy secretary spoke in Washington, a round of rolling blackouts began in California because two power plants unexpectedly went down.

"We're not building enough power-generating plants to meet demand, and we're beginning to pay the price for it," President Bush told reporters later at the White House.

"America has got to understand that energy is an issue, and we're going to deal with it."

Already, Mr. Bush has reneged on a campaign pledge to pursue new federal rules on carbon dioxide emissions from power plants, which Mr. Abraham defended as the "right decision" in the wake of California's problems.

"If America is to have reliable electricity over the next 20 years," he said, "coal must continue to play a major role."

And he made clear that the carbon dioxide turnabout and Mr. Bush's call for oil and gas exploration in Alaska's Arctic National Wildlife Refuge would be but two pieces in the energy strategy being fashioned under the direction of Vice President Dick Cheney.

"It will reach across every department that touches the energy marketplace -- from the Interior Department and the EPA to the Transportation Department to the Department of Energy," Mr. Abraham said.

And it will include a "broad mix of supply options -- from coal to windmills, nuclear to natural gas," he said. "It will leapfrog the myths that stifle change, rejecting the notion that there is no middle ground between environmental protection, regardless of the cost, and energy exploration, regardless of the impact."

Drilling in the Alaskan refuge seems likely to face stiff resistance in Congress, where many Democrats oppose it for environmental reasons. And environmental leaders criticized Mr. Abraham's comments about California, arguing that the administration was using the crisis there as a cover to advance the energy industry's agenda.

At the White House, Mr. Bush met with Mr. Cheney, Mr. Abraham and a roomful of other top aides for an assessment of the nation's energy needs and an update on the development of the energy policy.

"The energy crunch we're in is a supply-and-demand issue," Mr. Bush said. "We need to reduce demand and increase supply ... and that's what we're going to do."

He said administration officials did not foresee higher gasoline prices during the peak-driving time this summer because of the decision last weekend by the Organization of the Petroleum Exporting Countries to hold oil prices up by cutting production a million barrels a day.

But the president said prices could rise because of a shortage of U.S. refineries. "We're not generating enough gasoline to meet demands," he said.

Mr. Bush, who like Mr. Cheney was an executive in the oil industry in Texas, said that the vice president's energy task force was "making good progress" but that there were "no short-term fixes" in sight.

"The solution for our energy shortage requires long-term thinking," Mr. Bush said, pointing to increased conservation, more oil and gas exploration and development of other energy sources.

"It also requires good foreign policy," he added, promising closer cooperation with Mexico and Canada.

It was up to Mr. Abraham, though, to lay the groundwork for the administration's energy policy, which he said would be finished in a few weeks.

In a detailed address at the chamber's energy summit, the former Republican senator from Michigan ticked off one energy problem after another, blaming the Democratic Clinton administration for what he said were eight years of neglect.

"Their energy strategy boiled down to: You can't find it, you can't transport it, even if you get it, we don't want you to use it," Mr. Abraham said. "Through neglect, complacency or ideology, the approach has led us to the crisis we face today."

Acknowledging many other warnings of energy shortcomings going back more than a century, Mr. Abraham insisted: "The failure to meet this challenge will threaten our nation's economic prosperity and compromise our national security and literally alter the way we live our lives.

"The world has not run out of oil or other resources," he said. "Yet, here we are, with the most serious shortage since the days of oil embargoes and gas lines."

And energy forecasts suggest only a worsening situation, he said. In the next 20 years, U.S. demand for oil is expected to increase by 33 percent, electricity by 45 percent and natural gas by 62 percent.

Mr. Abraham noted that the nation's last three recessions were linked to rising energy prices, and said, "There is strong evidence that the latest crisis is already having a negative effect."

Whatever the recommendations of Mr. Cheney's task force or their fates in Congress, Mr. Bush and Mr. Abraham indicated two actions already had been ruled out: any sort of price controls and tapping the Strategic Petroleum Reserve.

And Mr. Abraham dismissed out of hand price controls, such as those imposed in the 1970s.

Clearly on the table, though, is more oil and gas exploration, particularly using new technologies, and changes in regulations.

"From a regulatory standpoint, our view of oil and gas exploration hasn't changed much since we saw Jed Clampett strike 'black gold' and split for Beverly Hills," Mr. Abraham said.