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Ärende: Press Release (060425) for Tue, 2006 Apr 25
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President Discusses Energy Policy
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For Immediate Release
Office of the Press Secretary
April 25, 2006

President Discusses Energy Policy
Marriott Wardman Park Hotel
Washington, D.C.


˙˙˙˙˙ Fact Sheet: President Bush's Four-Part Plan to Confront High Gasoline
Prices ˙˙˙˙˙ In Focus: Energy ˙˙˙˙˙

10:10 A.M. EDT

THE PRESIDENT: Thank you all. Bob, thanks for the introduction. It's always
good to be introduced by somebody who is referred to as the "Promoter in
Chief." (Laughter.) For 25 years, the Renewable Fuels Association has been
a tireless advocate for ethanol producers. Your advocacy is paying off.
Renewable energy is one of the great stories of recent years, and it's
going to be a bigger story in the years to come. (Applause.)

I like the idea of talking to people who are growing America's energy
security. I like the idea of policy that combines agriculture and modern
science with the energy needs of the American people. I'm here to talk to
you about the contributions you are making, and I'm here to talk to you
about the need for this country to get off our dependency of oil.

And so I want to thank Bob for the invitation. I want to thank Ron Miller,
the Chairman of the Renewable Fuels Association. I want to thank the board
of directors and the members of the Renewable Fuels Association. I thank
the members of my administration who are here -- Clay Sell is the Deputy
Secretary of Energy, has joined us. I see members of the United States
Congress who are here. I appreciate Jack Kingston of Georgia, Jerry Weller
of Illinois, and Gil Gutknecht of Minnesota for joining us. Thank you all
for your interest in this very important subject. (Applause.)

Before I talk about energy, I do want to share with you some thoughts about
the war on terror. I just got off of a conference -- a videoconference with
our strong ally Tony Blair. And we were talking about a major development
that has taken place in the war on terror. After months of patient
negotiations, Iraqi leaders reached an agreement on a unity government. And
that's positive. (Applause.) This is a government -- this new leadership
reflects the diversity of Iraq, and it reflects the will of the Iraqi
people who defied the terrorists and killers and went to the polls last
December. This new government is an important milestone for a free Iraq.

And it's the beginning of a new chapter in our relationship with the Iraqi
people. When I was in California over the weekend, I had the opportunity to
speak to the three leaders -- the President, the Speaker, and the Prime
Minister-designate. I congratulated them on their courage and encouraged
them to stand strong for the Iraqi people. I reminded them the people had
voted, the people had expressed their desire for democracy and unity, and
now there's a chance for these leaders to stand up and lead.

I told them that they have important responsibilities to their people, to
rebuild infrastructure and to improve their economy and enhance security. I
was pleased with the response I got. It's important for the American people
to know that these three leaders appreciate the sacrifice that our troops
have made and that our taxpayers have made to help them realize a dream.
And the dream is to live in a unified, free society. A free Iraq is in the
interest of the United States of America. A free Iraq will be a part of
laying the peace for generations to come. And a free Iraq will be a major
defeat for the terrorists who still want to do us harm. (Applause.)

We've got good news here at home on the economic front, too. This economy
of ours is growing, and the entrepreneurial spirit in America is strong.
We've cut the taxes for everybody who paid income taxes, and that tax
relief is getting results. Last year, our economy grew faster than any
major industrialized nation. Since August of 2003, this economy of ours has
created 5.1 million new jobs. The unemployment rate nationwide is 4.7
percent. That's lower than the average rate of the '60s, '70s, '80s, and
'90s. The American people are working. (Applause.)

Farm income is up. Agricultural exports are growing. Real after-tax income
is up over 8 percent for Americans since 2001. Productivity is high. More
people own a home than ever before in our nation's history. This economy is
strong, and we intend to keep it that way. And one way to keep it that way
is to make the tax cuts permanent. (Applause.)

Yet amongst this hopeful -- these hopeful signs, there's an area of serious
concern, and that is high energy prices. And the prices that people are
paying at the gas pumps reflect our addiction to oil. Addiction to oil is a
matter of national security concerns. After all, today we get about 60
percent of our oil from foreign countries. That's up from 20 years ago
where we got oil from -- about 25 percent of our oil came from foreign
countries. Now, part of the problem is, is that some of the nations we rely
on for oil have unstable governments, or agendas that are hostile to the
United States. These countries know we need their oil, and that reduces our
influence, our ability to keep the peace in some areas. And so energy
supply is a matter of national security. It's also a matter of economic
security.

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 nation -- worldwide.
And when the price of crude oil goes up, because it's such an important
part of the price of gasoline, the average citizen sees the price of
gasoline go up at the pump.

Gasoline price increases are like a hidden tax on the working people.
They're like a tax on our farmers. They're like a tax on small businesses.
Energy prices are -- energy experts predict gas prices are going to remain
high throughout the summer, and that's going to be a continued strain on
the American people.

And so the fundamental question is, what are we going to do? What can the
government do? One of the past responses by government, particularly from
the party of which I am not a member, has been to have -- to propose price
fixing, or increase the taxes. Those plans haven't worked in the past. I
think we need to follow suit on what we have been emphasizing, particularly
through the energy bill, and that is to encourage conservation, to expand
domestic production, and to develop alternative sources of energy like
ethanol. (Applause.)

Signing the energy bill was one thing, and I want to thank the members of
Congress for getting a comprehensive energy bill to my desk. But there's a
lot more to be done. First thing is to make sure that the American
consumers are treated fairly at the gas pump. Americans understand, by and
large, that the price of crude oil is going up and that the prices are
going up, but what they don't want and will not accept is manipulation of
the market. And neither will I.

The Federal Trade Commission is investigating whether price of gasoline has
been unfairly manipulated in any way. I'm also directing 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. In other words, this
administration is not going to tolerate manipulation. We expect our
consumers to be treated fairly.

To reduce gas prices, our energy companies have got a role to play. Listen,
at record prices, 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.

Record oil prices and large cash flows also mean that 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. I'm looking forward to Congress to take about $2
billion of these tax breaks out of the budget over a 10-year period of
time. Cash flows are up. Taxpayers don't need to be paying for certain of
these expenses on behalf of the energy companies. (Applause.)

Second part of a good plan is -- to confront high gasoline prices is to
promote greater fuel efficiency. And 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. Hybrid vehicles run on a combination of a traditional engine and
an electric battery. The twin sources of power allow hybrid cars and trucks
to travel about twice as far on a gallon of fuel as gasoline-only vehicles.
When people are driving hybrids, they're conserving energy.

Clean diesel vehicles take advantage of advances in diesel technology to
run on 30 percent less fuel than gasoline vehicles do. 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 wisely in the energy bill
expanded a tax credit for purchase of hybrids and clean diesel vehicles up
to as much as up to $3,400 per purchase. That made sense.

If we're trying to conserve energy, if we want to become less dependent on
oil, let's provide incentives for consumers to use less energy. 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.
And so here's an idea that can get more of these vehicles on the road, and
that is to have Congress make all hybrid and clean diesel vehicles sold
this year eligible for federal tax credits. We want to encourage people to
make wise choices when it comes to the automobiles they drive.

Third part of the plan to confront high gas prices is to boost our supplies
of crude oil and gasoline. It makes sense when the supply-and-demand world,
if prices are high, it means demand is greater than supply. One way to ease
price is to increase supply. One immediate way we can signal to people
we're serious about increasing supply is to stop making purchases or
deposits to the Strategic Petroleum Reserve for a short period of time.

I've directed the Department of Energy to defer filling the reserve this
summer. 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. Every
little bit helps.

We also need to ensure that there are not needless restrictions on our
ability to get gasoline to the pump. Under federal quality -- air quality
laws, some areas of the country are required to use fuel blend called
reformulated gasoline. Now, as you well know, this year we're going --
undergoing a rapid transition in the primary ingredient in reformulated gas
-- from MTBE to ethanol. And I appreciate the role the ethanol producers
are playing to meet this challenge. You're playing a vital role.

Yet state and local officials in some parts of our country worry about
supply disruption for the short term. They worry about the sudden change
from MTBE to ethanol -- the ethanol producers won't be able to meet the
demand. And that's causing the price of gasoline to go up some amount in
their jurisdictions.

And some have contacted us to determine whether or not they can ask the EPA
to waive local fuel requirements on a temporary basis. And I think it makes
sense that they should be allowed to. So 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.

Secondly, we also need to confront the larger problem of too many localized
fuel blends, which are called boutique fuels. 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.

And so I'm asking Director -- 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. I want to simplify the process for the sake of our consumers.
And then I'm asking them to get these recommendations to my desk, and I
look forward to working with the United States Congress to simplify the
process.

Listen, we need to expand our refining capacity. 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. If you're
worried about the price of gasoline at the pump, it makes sense to try to
get more supply to the market. That will be beneficial for American
consumers to get more supply to the market.

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.

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 -- to get their idea approved. I
mean, if we want more supply, let's reduce the paperwork and the
regulations.

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.

We also need to be mindful of the fact that we can find additional crude
oil in our own country in environmentally friendly ways. The technology is
such that we're capable of environmentally-sensitive exploration. We got
tight crude oil supplies, and it seems like it makes sense for us to use
our new technologies to find more crude, particularly crude here at home.

One of the issues, as you know, that has been confronting Congress is ANWR.
And 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.

And all I've outlined here today are interim strategies -- short-term and
interim strategy. The truth of the matter is, the long-term strategy is to
power our automobiles with something other than oil -- (applause) --
something other than gasoline, which is derived from oil.

And we're making progress. In my State of the Union Address, I talked about
the Advanced Energy Initiative. And this is an aggressive plan, a wise way
of using taxpayers' money to get us off our addiction to oil. We have a
unique opportunity to continue forward with this plan.

Technology is the way, really, to help us -- to help change America for the
better. Years of investment in fuels like ethanol have put us on the
threshold of major breakthroughs. And those breakthroughs are becoming a
reality for our consumers. I set a goal to replace oil from around the
world. The best way and the fastest way to do so is to expand the use of
ethanol.

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.

Ethanol is -- has got the largest potential for immediate growth. Most
people may not know this, but today, most of ethanol produced in America
today is from corn. Most vehicles can use 10 percent ethanol in their
automobiles.

What's interesting that Americans don't realize, with a little bit of
expenditure, we can convert a -- kind of the standard automobile to what's
called a flex-fuel automobile. And that flex-fuel vehicle can use ethanol
that is -- or fuel that is 85 percent ethanol. It's amazing, isn't it?
Without much cost, your automobile can be converted to be able to burn fuel
with 85 percent ethanol, or a product made from corn grown right here in
America.

Ethanol is a versatile fuel and the benefits are -- the benefits are easy
to recognize when you think about it. One, the use of ethanol in our
automobiles is good for the agricultural sector. I'm one of these people
who believes when the agricultural sector is strong, America is strong.
(Applause.) The way I like to put it, it would be a good thing when a
President can sit there and say, gosh, we've got a lot of corn, and it
means we're less dependent on foreign sources of oil. (Applause.)

Years back, they'd say, oh, gosh, we've got a lot of corn, worried about
the price. Ethanol is good for our rural communities. It's good economic
development for rural America. New biorefinery construction creates jobs
and local tax revenues. When the farmer -- when the family farmer is doing
well, it's good for the local merchants.

Ethanol is good for the environment. I keep emphasizing that we can be good
stewards of our environment, and at the same time, continue with our
economic expansion. And ethanol will help meet that strategy. You don't
have to choose between good environment and good economics. You can have
both by the use of technology. And ethanol is an example of what I'm
talking about. And ethanol is good for drivers. Ethanol is home-grown.
Ethanol will replace gasoline consumption. It's a good -- ethanol is good
for the whole country, and we've been -- (applause.) I thought you'd like
that. (Laughter.)

The ethanol industry is booming. It must be exciting to have worked for as
long as you have on encouraging alternative sources of energy, and then all
of a sudden see the work come to fruition.

Last year America used a record 4 billion gallons of ethanol. There are now
97 ethanol refineries in our country, and nine of those are expanding. And
35 more are under construction. The ethanol industry is on the move, and
America is better off for it.

Many of these refineries are in the Midwest -- the Midwest because that is
where the source of that -- the feedstock for ethanol comes from. That
happens to be corn. But what's really interesting is there are new plants
springing up in unexpected areas, like the Central Valley of California, or
Arizona, or, of course, in the sugar fields of Hawaii. After all, sugar is
also an important -- can be used for ethanol. As a matter of fact, it's a
very efficient feedstock for ethanol.

Ethanol required our support. In other words, to get this new industry
going, it required a little nudge from the federal government. Since I took
office, we've extended the tax credit to 51 cents per gallon for suppliers.
We've created a new 10-cent per gallon tax credit to provide extra help to
small ethanol producers and farmers; provided $85 million of loans and
grants for the ethanol business ventures.

In other words, this is a collaborative effort. The federal government has
got a role to play to encourage new industries that will help this nation
diversify away from oil. And so we're strongly committed to corn-based
ethanol produced in America. Yet there -- you just got to recognize there
are limits to how much corn can be used for ethanol. After all, we got to
eat some. And the animals have got to eat.

And so I am committed to furthering technology research to find other ways,
other sources of ethanol. We're working on research -- strong research to
figure out cellulosic ethanol that can be made from wood chips, or stalks,
or switch grass. These materials are sometimes waste products and are just
simply thrown away. Doesn't it make sense for us -- I think it does -- to
use taxpayers' money to determine whether or not we can use these new --
these raw materials to make something out of nothing, so that we continue
the advance of ethanol, so the market for ethanol expands throughout the
United States.

We're spending -- I proposed, and I'm working with these members of the
Renewable Caucus -- $150 million in next year's budget for research in
advanced forms of ethanol. And that's a significant increase over previous
levels. I think it makes sense. And surely the prices at the gas pump
should say to the taxpayer it makes sense for this government to spend
money on research and development to find alternative sources of energy.
(Applause.)

I also support biodiesel fuel, which can -- (applause) -- which can
substitute for regular diesel in cars, trucks, buses and farm equipment.
Last year I went out to see a biodiesel refinery in Virginia that's making
clean-burning fuel from soybean oil. And it was a really interesting
process to watch. I don't know if you know this or not, but they're able to
use waste products like recycled cooking grease to manufacture biodiesel.
In other words, research and development has lead to new alternative
sources of energy like biodiesel. So that's one of the reasons why I signed
into law the first ever federal tax credit for biodiesel producers. In
other words, we're interested in addressing our energy security needs on a
variety of fronts. It makes sense for the United States to have a
comprehensive strategy to help us diversify away from oil.

And so we also have got to understand that we got to research not only to
find -- to invest in ethanol and biodiesel, but part of a comprehensive
strategy is to spend money on researching new battery technologies. And one
of the really interesting opportunities available for the American consumer
will be the ability to buy a plug-in hybrid vehicle that will be able to
drive up to 40 miles on electricity. Seems to make sense to me. If we're
trying to get us off gasoline, with crude oil as the main -- as its main
feedstock, then why wouldn't we explore ways to be able to have vehicles
that use less gasoline? And one way to do so is to use electricity to power
vehicles.

And we're pretty close to a breakthrough. We believe we're close to a
technology that will make it possible to drive up to 40 miles on
electricity alone. And then if you have to drive more than 40 miles, then
your gasoline kicks in.

But you can imagine what that will mean for a lot of drivers in big cities
who on a daily basis, they don't drive over 40 miles. And so therefore, a
lot of drivers that are going back and forth from work in big cities won't
be using gasoline. And that's going to help. We've got $31 million in our
budget to speed up research and development into advanced battery
technologies.

And finally, one other opportunity that is more long run than ethanol or
biodiesel or plug-in hybrid vehicles, or encouraging people to buy the
hybrids that are on the market today, is hydrogen. We're spending about
$1.2 billion over five years to research the use of hydrogen to power
vehicles. And it makes a lot of sense when you think about it, because
hydrogen produces zero emissions. The only emission it produces is water.
And when I was out there in California, I visited the California Fuel Cell
Partnership and saw buses and cars and SUVs that are driving on the
highways out there powered by hydrogen. And the research and development
money that we have spent has lowered the cost of hydrogen fuel cells, it's
helped make them lighter. In other words, there's an industry coming. And
it's an industry that will enable consumers to drive to work, just like
we're doing today, but not rely on foreign sources of oil.

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. You all have known this a
lot longer than most Americans. You've known that we've needed to have this
strategy, and that's why you're on the forefront of incredible changes that
are taking place in this country.

You know, there's no doubt in my mind that one of these days, instead of
people driving up to a gas station, they're going to be going up to a
fueling station. And they'll be able to have choices to choose from. Got a
hydrogen-powered car, you'll be able to have that choice. If you want 85
percent, maybe someday 100 percent ethanol, that will be an option
available, too.

We owe it to the American people to be aggressive on price gouging now. We
owe it to the American people to be promoting alternative ways to drive
their car so as to make us less dependent on foreign sources of oil. We owe
it to the American people to be aggressive in the use of technology so we
can diversify away from the hydrocarbon society. And that's precisely what
we're doing, and I'm glad to stand with you.

I appreciate your work for the United States of America. Thank you for
letting me come by and talk to you, and may God bless you. (Applause.)

END 10:43 A.M. EDT

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