This is a tough time for our economy. Across our country many Americans are understandably anxious about issues affecting their pocketbook, from gas and food prices to mortgage and tuition bills. They're looking to their elected leaders in Congress for action.
Unfortunately, on many of these issues all they're getting is delay.
Americans are concerned about energy prices, and I can understand why. I think the last time I visited with you I said it was like a tax increase on the working people. The past 18 months, gas prices have gone up by $1.40 per gallon. Electricity prices for small business and families are rising as well.
I've repeatedly submitted proposals to help address these problems. Yet time after time, Congress chose to block them.
One of the main reasons for high gas prices is that global oil production is not keeping up with growing demand. Members of Congress have been vocal about foreign governments increasing their oil production; yet Congress has been just as vocal in opposition to efforts to expand our production here at home.
They repeatedly blocked environmentally safe exploration in ANWR (the Arctic National Wildlife Refuge). The Department of Energy estimates that ANWR could allow America to produce about a million additional barrels of oil every day, which translates to about 27 millions of gallons of gasoline and diesel every day.
That would be about a 20% increase of crude oil production over U.S. levels, and it would likely mean lower gas prices. And yet such efforts to explore in ANWR have been consistently blocked.
Another reason for high gas prices is the lack of refining capacity. It's been more than 30 years since America built its last new refinery. Yet in this area, too, Congress has repeatedly blocked efforts to expand capacity and build more refineries.
As electricity prices rise, Congress continues to block provisions needed to increase domestic electricity production by expanding the use of clean, safe nuclear power. Instead, many of the same people in Congress who complain about high energy costs support legislation that would make energy even more expensive for our consumers and small businesses.
Congress is considering bills to raise taxes on domestic energy production, impose new and costly mandates on producers, and demand dramatic emissions cuts that would shut down coal plants, and increase reliance on expensive natural gas. That would drive up prices even further. The cost of these actions would be passed on to consumers in the form of even higher prices at the pump and even bigger electric bills.
Instead of increasing costs and increasing new roadblocks to domestic energy production, Congress needs to clear away obstacles to more affordable, more reliable energy here at home.
Q: Would you support a summer moratorium on the federal gas tax?
President Bush: We'll look at any idea in terms of energy, except I will tell you this: If Congress is truly interested in solving the problem, they can send the right signal by saying we're going to explore for oil and gas in the U.S. territories, starting with ANWR. We can do so in an environmentally friendly way.
I proposed, you might remember, taking some abandoned military bases and providing regulatory relief so we can build new refineries. If we're generally interested in moving forward with an energy policy, that sends a signal to the world that we're going to try to become less reliant upon foreign oil, we can explore at home as well as continue on with an alternative-fuels program.
Q: Was that a "yes" on the moratorium?
A: I'm going to look at everything they propose. We'll take a look.
Q: What more can you do to persuade Saudi Arabia during your upcoming visit to reconsider output levels and cut prices?
A: I have made the case that the high price of oil injures economies. But I think we better understand that there's not a lot of excess capacity in this world right now. Hopefully high prices will spur more exploration to bring excess capacity on, but demand is rising faster than supply. That's why you're seeing global energy prices rise. And that's why it's important for us to try to take the pressure off by saying we're going to start exploring here at home.
Q: The World Bank says about 85% of the increase in corn price since 2002 is due to increased demand for biofuels. And your secretary of state indicated that she thought that might be part of the problem. Do you agree with that? And what more can the United States do to help make food more affordable around the world?
A: Actually, I have a little different take: I thought it was 85% of the world's food prices are caused by weather, increased demand and energy prices Â— just the cost of growing product Â— and that 15% has been caused by the arrival of ethanol.
By the way, the high price of gasoline is going to spur more investment in ethanol as an alternative to gasoline. And the truth of the matter is it's in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us.
Q: The gas tax moratorium (is) perhaps the most immediate relief to people who are buying gasoline every day, because it would be an 18.4-cents-a-gallon tax cut. Sens. Clinton and McCain are in favor of it; Sen. Obama is not. But Americans are hearing about this every day. So could you flesh out some of your thinking about why this would be a good idea or not.
A: If it's a good idea, we embrace it; if not, we're analyzing the different ideas coming forward.
Q: You just said there's not a lot of excess supply out there. Some energy experts think we may have already passed, or (are) within a couple of years of passing, the maximum oil-pumping capability. In other words, we may be close to tapping all we've got. Do you think that's the case? And if you do, why haven't you put more resources into renewable energy research, sir?
A: We've put a lot into ethanol. As a matter of fact, the solution to the issue of corn-fed ethanol is cellulosic ethanol, which is a fancy word for saying we're going to make ethanol out of switch grasses, or wood chips. And we're spending a lot of money along those lines.
But energy policy needs to be comprehensive. We've got to understand we're in a transition period. The problem is there's been a lot of focus by the Congress in the intermediate and long-term steps Â— the long-term steps being hydrogen; the intermediate steps being biofuels and battery technology. But not enough emphasis on the here and now.
You say that people think... there's not any more reserves to be found. Well, there are reserves to be found in ANWR; that's a given. I just told you that there's about 27 million gallons of diesel and gasoline from domestically produced crude oil that's not being utilized.
And not only that, we can explore in environmentally friendly ways. New technologies enable (drilling) like we've never been able to do before Â— slant-hole technologies and the capacity to use a single drill site to explore a field in a way that doesn't damage the environment.
Yet, this is a litmus-test issue for many in Congress. Somehow if you mention ANWR, it means you don't care about the environment. I'm hoping that when people say "ANWR," it means you don't care about the gasoline prices that people are paying.
Q: Fourteen senators, including your own senator, Kay Bailey Hutchison from Texas, are calling on you to stop filling the Strategic Petroleum Reserve. You've been asked that several times over the past few years. I know what your answer has been. But do you think now, with the rising prices, the record high oil prices, it's time to change course?
A: In this case, I have analyzed the issue, and I don't think it would affect price for this reason: We're buying, at the moment, about 67,000 to 68,000 barrels of oil per day, fulfilling statutory obligations to fill up the SPR. World demand is 85 million barrels a day. So the purchases for SPR account for 1/10th of 1% of global demand. I don't think that's going to affect price when you affect 1/10th of 1%, and I do believe it is in our national interests to get the SPR filled in case there's a major disruption of crude oil around the world.
One of the things al-Qaida would like to do is blow up oil facilities, understanding that we're in a global market (and) an attack on an oil facility in a major oil-exporting country would affect the economies of their enemy Â— that would be us and other people who can't stand what al-Qaida stands for.
Therefore, if that's the case, the SPR is necessary to be able to deal with that kind of contingency. If I thought it would affect the price of oil positively, I'd seriously consider it. But when you're talking about 1/10th of 1% of global demand, I don't think that on a cost-benefit analysis, you get any benefits from making the decision. I do think it costs you oil in the case of a national security risk.
Q: You have spoken today about opening ANWR for drilling and also refineries. But these are clearly long-term solutions to the problem of rising gas prices. What can you tell Americans about what your administration is doing in the short term?
A: Opening up ANWR is not long-term; it's intermediate term. But it sends a clear signal... to the markets that the United States is not going to restrict exploration, that the United States is going to encourage exploration.
Part of this is to set the psychology right (by saying) to the world: We're not going to become more beholden on your oil, we're going to open up and be aggressive and have an aggressive energy policy. (And) secondly, we're going to send the signal we're going to be building new refineries.
But there is no magic wand to wave right now. It took us a while to get to this fix. Congress (could have) responded (by passing) ANWR in the late 1990s... but it didn't go forward. It's my considered judgment that, given the technological advances, to say we'll destroy the environment is just (not) an accurate statement.