- The Washington Times - Tuesday, March 20, 2001

President Bush and key advisers yesterday said the nation faces critical shortages of electricity, natural gas and refined gasoline that could cause further price spikes and California-style power outages.
The White House's warning on energy came as California imposed rolling blackouts for a third time this year, cutting power to homes and businesses from San Francisco to Beverly Hills.
The administration predicts similar power shortages could occur in New York City and Long Island this summer, and make the electricity supply less reliable in the Midwest.
The California crisis and many other energy problems that have cropped up in the past year are largely homegrown the result of regulatory burdens and neglect of the nation's energy needs and infrastructure in recent years, Mr. Bush said after meeting with his energy task force at the White House.
"One thing is for certain: There are no short-term fixes," he said.
While much attention has focused on recent curbs in oil production by the Organization of the Petroleum Exporting Countries, the president said, "It's important for American consumers to understand that if we have a price spike in refined product, it's not going to be because of the price of crude oil being $25 or $26 a barrel; it's going to be because we don't have enough capacity, refining capacity."
No new gasoline refineries have been built in 25 years, Mr. Bush said, a shortcoming that, coming on top of high prices for OPEC's crude oil, led to last year's price spikes in reformulated gasoline in the Midwest and heating oil in the Northeast.
The nation also is not generating enough natural gas to meet an expected 62 percent explosion in demand in the next 20 years. And it has not built enough power plants to keep up with electricity consumption, the president said.
"We're beginning to pay the price for it," he said.
The solution will require an easing of the regulatory and political barriers that have caused a decline in energy production in the United States, Mr. Bush said, as well as cooperation with Mexico and Canada to boost energy supplies throughout the hemisphere.
The president cited his administration's move last month to ease environmental restrictions and enable California to more speedily build power plants as an example of what can be done right away to boost energy supplies.
He said he also is encouraging Mexico to let American companies explore for natural gas. Mexican law bars foreigners from drilling, at the same time the Mexican government lacks the cash it needs to explore on its own.
Gas, unlike oil, must be produced for the most part in North America because it cannot be shipped in large quantities. Yet 40 percent of the potential gas resources in the United States are on federal lands where drilling is either prohibited or severely restricted, and the last lease sale for drilling in the Gulf of Mexico was more than a decade ago.
Energy Secretary Spencer Abraham, in a speech before the U.S. Chamber of Commerce, yesterday blamed the Clinton administration, and derided California politicians, for first causing energy shortages by erecting regulatory and political barriers to development and then ignoring the consequences,
"Their energy strategy boiled down to: You can't find it, you can't transport it, and even if you get it, we don't want you to use it," Mr. Abraham said. "Through neglect or complacency or ideology, this approach has led to the crisis we face today."
Mr. Abraham noted that even President Clinton's much-ballyhooed remedy of releasing Strategic Petroleum Reserves last year to ease high oil prices backfired because the oil had to be shipped overseas to be refined.
The last decade's shortsighted policies have hurt the most in California, where politicians continue to block the building of power plants that are needed to end the state's energy crisis, he said.
"In California, workers are being laid off, companies are leaving the state, farmers and small businesses are losing millions, consumers are threatened with rolling blackouts, but local officials reject power plants with little regard for the consequences," Mr. Abraham said.
"Some people just don't get it," he said, holding up a full-page ad in the New York Times sponsored by environmental groups with the bold headline, "The last thing California needs is new power plants." Environmentalists say conservation and alternative energies like wind and solar power are the answer in California.
But far from curbing energy consumption, the demand for natural gas from California power plants driven by environmental policies that favor it over coal as a clean source of energy has helped create the most acute shortage faced by the country today.
With nine out of 10 new power plants coming on line in the United States due to be fueled by natural gas, just moving the amount of gas they need to market will require an additional 38,000 miles of transmission pipelines and 255,000 miles of distribution lines, at an estimated cost of up to $150 billion, Mr. Abraham said.
Environmentalists lately have been advocating the use of natural gas produced in Alaska's Prudhoe Bay fields as an alternative to drilling in the Alaska National Wildlife Refuge, which they vehemently oppose.
But Mr. Abraham said that without a pipeline to carry the gas from Alaska to the rest of the United States, the Prudhoe gas right now must be pumped back into the ground.
The energy secretary added that to accommodate an estimated 45 percent increase in demand for electricity driven in part by Internet use in the next 20 years, the United States would have to overcome environmental objections and build from 65 to 90 new power plants each year. Yet the country hasn't built so many power plants since 1985.
To meet the electricity needs, the nation must continue to rely on coal, he said, adding that the Bush administration's desire to avoid "regulating coal out of existence" is what prompted the president last week to decide against imposing a new regulatory regime requiring power plants to cap their emissions of carbon dioxide.
The economy will pay a price if the nation fails to address these energy problems, he said. "The nation's last three recessions have all been tied to rising energy prices, and there is strong evidence that the latest crisis already is having a negative effect."
The cost in lost wages, sales and productivity reached $2.3 billion in just two weeks in California in January, he said, while the economy as a whole has lost a full percentage point of growth.


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