- The Washington Times - Friday, May 18, 2001

President Bushs energy plan lives up to advance billing of being a long-term cure that includes no "magic bullet" to immediately reduce record high gasoline prices or stop expected power outages in California this summer.

But gasoline prices are starting to ease even without the plan, energy analysts say. And, in any case, the atmosphere of looming crisis in California and elsewhere may be needed to force through legislation in Congress to increase energy supplies this year.

"Remember, it took an emergency Arab oil embargo in 1973 and 1974 for Congress to pass legislation that allowed the Alaska pipeline to be built," created the Strategic Petroleum Reserve and abolished energy price controls, said Ron Gold, an energy specialist with the PIRA Energy Group.

"Energy policies do not seem to be made well outside of emergencies in this country," he said. "Our only hope is California is enough to provoke some rational changes."

Political leaders in California did not begin to find solutions to the state´s serious power shortage until a crisis developed this year with rolling blackouts, the insolvency of the state´s major utilities, and lately, the rapid deterioration of the state´s economy and finances, Mr. Gold said.

"It´s amazing how an emergency focuses the mind," he said. "It took that to get the kind of rationalization of environmental regulatory policies" and the quick approval of power plant projects that eventually will enable California to emerge from its crisis.

California´s problems already have prompted officials in New York to take many of the steps that will be needed to avoid similar power outages in Manhattan this summer.

"The plan will do very little immediately. It´s not going to cure the California price spikes nor prices at the gas pump," said John Dingle, managing director of Barrington Energy Partners.

Despite the heated political rhetoric surrounding the energy plan, public anxiety about California and high energy prices already has started to produce agreement among Democrats and Republicans in Congress to enact measures to ease shortages of natural gas and electricity, Mr. Gold said.

An energy plan offered by Senate Democrats, for example, includes incentives for more oil and gas drilling in the Gulf of Mexico and developed areas of Alaska, as well as for building a trans-Alaska pipeline to transport natural gas to the lower 48 states.

Another measure in the Bush plan — giving the federal government eminent domain powers to ensure the nation has adequate power transmission lines — while a potentially revolutionary change in federal-state relations, is likely to secure approval because of the crisis and bottlenecks that have emerged in California and elsewhere, analysts said.

But the public´s angst probably is not great enough to force through Mr. Bush´s more controversial proposals to start building more nuclear power plants and open up a portion of the Arctic National Wildlife Refuge in Alaska for drilling, Mr. Gold said.

Mr. Bush has proposed or hinted at a myriad of administrative reforms — from expedited review of power plant and refinery projects to a streamlining of gasoline formula specifications — that could come out quickly in bits and pieces and start to ease high energy prices, Mr. Gold said.

"Those things that are within his power to change, like accelerating leasing of federal lands, certainly will happen," he said. "Those proposals could be put into effect fairly quickly, but they´re going to have incremental effects."

But even seemingly fast administrative actions can get bogged down by due-process requirements and legal challenges from environmental groups, which have promised to fight much of the Bush energy development plan.

Still, the dozens of proposals to remove roadblocks to energy supplies in the plan eventually will be "the salvation of our energy woes," Mr. Dingle said.

Several Bush proposals to ease restrictions on refineries, power plants and other energy providers imposed by the Clean Air Act of 1990 hold the most promise of providing relief to consumers in the next year to 18 months, he said.

But the solution to a good deal of today´s energy problems already was on the way, he said.

High energy prices have prompted a doubling of investment in oil and gas drilling in the past two years, while refineries have ramped up production and power companies have rushed to draw up plans for new facilities.

"They´re taking credit for some of the market activity that was already under way," Mr. Dingle said, but the plan will ensure that projects come on line quickly.

The White House estimates that the nation must build between 1,300 and 1,900 new power plants in the next 20 years and $150 billion of new pipelines and transmission facilities. Credit Suisse First Boston estimates that the investment shortfall in power plants alone amounts to $1 trillion.

Mr. Dingle said the Bush proposals, while substantial, are not enough to spur that much building activity.

On the other hand, he said, the administration may be exaggerating the size of the problem.

Jerry Taylor of the Cato Institute said investors already are "pouring billions of dollars into the energy sector" and a power plant construction boom is in place that "will not only burst the electricity price bubble but will probably produce an electricity glut in the near future."

Gasoline prices in the United States are so high that producers around the world have been rushing to take advantage of them, prompting a surge in imports that could cause gas prices to decline when they usually peak during the summer, he said.

"Whether additional federal lands are opened to the industry or not, the price bubble will burst of its own accord," and in the meantime, high prices will "induce more conservation than any possible set of government subsidies or efficiency orders," he said.

The Bush plan contains "a smorgasbord of handouts and subsidies for virtually every energy lobby in Washington," he said. "It won´t do much good, but it won´t do much harm either."


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