Bush rhetoric on energy strays from the facts
By H. JOSEF HEBERT – 40 minutes ago
WASHINGTON (AP) — President Bush put politics ahead of the facts Tuesday as he sought to blame Congress for high energy prices, saying foreign suppliers are pumping just about all the oil they can and accusing lawmakers of blocking new refineries.
Bush renewed his call for drilling in an Arctic wildlife refuge, but his own Energy Department says that would have little impact on gasoline prices.
Asked what he is doing to try to get Saudi Arabia to pump more oil, Bush didn't answer directly. "We've got to understand there's not a lot of excess capacity in the world right now," he said. Blaming "the lack of refinery capacity" for high energy prices, he said Congress has rejected his proposal to use shuttered military bases for refinery sites.
Global oil supplies are tight, in part because OPEC nations including Saudi Arabia are refusing to open their spigots. But Saudi Arabia has considerable additional production capacity. It's pumping a little over 8.5 million barrels a day, compared to about 9.5 million barrels a day two years ago and has acknowledged the ability to produce as much as 11 million barrels a day.
On refineries, Congress has ignored Bush's proposal to use closed military bases. But the oil companies haven't shown much interest in building refineries either and have dismissed suggestions that military bases might be of use. They note, for example, that few bases are near pipelines needed to bring crude in and move finished product out.
When top executives of the country's five largest oil companies earlier this month were asked at a House hearing whether they wanted to build a new refinery, each said no.
While no new refinery has been built in more than 30 years, companies have been adding on to existing refineries. The Energy Information Administration estimates an additional 800,000 barrels a day of production will be added to existing refineries in the next three years. A joint venture between Shell Oil Co. and the Saudi Arabian oil company is expected to double capacity at a Port Arthur, Texas, refinery.
Even the industry's refinery expansion plans have been scaled back over the last few years because companies anticipate less demand for gasoline since the government now requires a huge expansion of ethanol as a motor fuel. They ask: Why should refiners make more gasoline if ethanol is to be used?
Bush has long called for opening the Arctic National Wildlife Refuge in Alaska to oil development, and on Tuesday he chastised Congress for repeatedly blocking the proposal.
"If Congress is interested, they can send the right signal by saying we are going to explore for oil and gas in U.S. territories, starting with ANWR," said Bush, adding that opening the Alaska refuge to oil companies "likely will mean lower gas prices."
Strongly opposed by environmentalists, most Democrats and a few moderate Republicans, drilling in the Arctic refuge indeed has been blocked, as the president complained.
Energy experts believe ANWR's likely 11 billion barrels of oil — pumped at just under 1 million barrels a day — would send a signal of increased U.S. interest in domestic energy production. However, in the long run, it likely would not significantly impact oil or gasoline prices. And it likely would have little impact on today's prices.
In 2005, the Energy Information Administration estimated that it would take about 10 years before oil would flow from ANWR if drilling were approved. By 2025, it said, the additional oil would have only a slight impact on global oil prices and cause a decline in gasoline prices of less than a penny a gallon, using constant 2003 dollars. Oil imports would drop from an expected 68 percent of U.S. demand to 64 percent, the EIA said.
Bush said "it is in our national interest" to continue pumping oil into the government's Strategic Petroleum Reserve — about 70,000 barrels a day — "in case there is a major disruption of crude oil around the world."
While some Democrats argue that halting the SPR fill would lower prices, most energy experts agree with the president that it likely would not. But the assertion that continued deliveries to SPR, which already holds 701 million barrels, is needed as a safeguard against a possible supply interruption may be a stretch.
"We have today a three-month supply of oil for emergencies," noted Sen. Kay Bailey Hutchison, R-Texas, who would like to see the deliveries stop. And that would assume a total cutoff of oil imports, an unlikely occurrence even if there are major supply disruptions. In the meantime, said Hutchison, "over the next four months we will deposit over 8 million barrels into the SPR at a very high price."
The president said Congress was "demanding emissions cuts that would shut down coal plants" and criticized lawmakers for hindering the expansion of nuclear power.
His remarks about coal were an apparent reference to climate legislation that would cap carbon dioxide emissions to address global warming. While such caps would significantly affect coal-burning power plants, the legislation also envisions having emission allowances, many of which would be used by utilities to keep coal plants running, though electricity prices would increase. And the emission limits also would spur development of carbon capture technologies from power plants.
On the nuclear issue, Congress has provided the industry loan guarantees, a streamlining of reactor permitting and other measures, all aimed at spurring construction of power reactors. It has shown little interest in a Bush plan to resume nuclear waste reprocessing, or in pressing ahead with the Yucca Mountain underground waste dump in Nevada.