Tuesday, September 16, 2008


One of the oil industry’s most influential voices called Monday for a temporary 1970s-style rationing of gasoline in parts of the United States to help avoid hurricane-related shortages and declared that the Bush administration, the Congress and the two men running for president have failed to exhibit the courage needed to solve America’s longer-term energy problems.

“We need to get a Congress that is willing to make some courageous decisions, and we need to have a president willing to make courageous decisions with respect to energy supply,” former Shell Oil Co. President John Hofmeister told editors and reporters at The Washington Times.

Mr. Hofmeister, who now serves as chairman of the National Urban League, also said that America’s current economic crisis is disproportionately hurting middle- and lower-income families.

“The economy is actually quite weak for middle- and low-income folks because of the drain on their disposable income” resulting from soaring energy, food and health care costs, he said. “America is suffering a lot more than is being reported.”

Mr. Hofmeister laid blame squarely on the country’s political leaders, saying President Bush unnecessarily waited 7 1/2 years as gas prices soared to lift a presidential moratorium on offshore drilling and that Congress has made only token gestures to solve an energy crisis that requires significant action.

As for the men seeking to succeed Mr. Bush, Mr. Hofmeister said he has talked with energy advisers to both Democrat Barack Obama and Republican John McCain and hasn’t heard a comprehensive solution.

Both candidates, for example, oppose drilling for oil in the Arctic National Wildlife Refuge, although Mr. McCain recently reversed his opposition to most offshore drilling and has endorsed a massive expansion of nuclear power.

“Both campaigns have good ideas,” Mr. Hofmeister said. But “this whole energy set of issues needs a short-term, a medium-term and a long-term set of solutions. Neither campaign is looking at it holistically.

“If you are running a corporation, you always have a short-, medium- and long-term strategy,” he added. “If you are running U.S. government, you tend to run it on political time, which is, ‘What do we have to do in preparation for the next election?’”

Mr. Hofmeister suggested that the government impose limited gasoline rationing over the next four to six weeks, targeting regions where supplies will be reduced because hurricanes have shut down Gulf Coast refineries by temporarily cutting off their power.

Mr. Hofmeister recommended introducing an odd-even plan that he said successfully addressed short-term gasoline shortages during the energy crisis of the early 1970s. Drivers whose license plates ended in an odd number would be able to purchase gasoline on odd-numbered days. He also recommended limiting the amount of gasoline drivers can purchase.

The United States will be in “a world of hurt” for the next four to six weeks as the oil industry recovers from the damage from Hurricanes Gustav and Ike, said Mr. Hofmeister. The areas where rationing will be needed include the Southeast and extend northward toward Denver, the upper Midwest and Washington, D.C., he said.

Not everybody is on board with that idea.

“It’s hard to support rationing,” said Mary Novak, managing director of energy services at Global Insight. “We didn’t ration after Hurricanes Katrina and Rita in 2005. Until we are experiencing some extraordinary pricing, rationing should not be necessary.”

The U.S. Department of Energy (DOE) also declined to endorse Mr. Hofmeister’s rationing recommendation.

“It’s normal for prices to increase following periods of constraint - that’s what happens when supply and demand are imbalanced,” said DOE press secretary Healy Baumgardner. “The Department of Energy is mitigating impacts to American families by working with the EPA to issue multi-state fuel waivers, releasing emergency exchanges from the Strategic Petroleum Reserve and monitoring gas-price gouging.”

Mr. Hofmeister also lashed out at the U.S. political system’s failure to muster the courage to address the nuclear waste problem.

He lamented the “fundamental problem in Congress,” where he said it appeared to be more important to follow the rules of the Senate that permit two senators representing 2.5 million Nevadans to block the solution to the nuclear-waste storage problem at the expense of 300 million other Americans.

Mr. Hofmeister decried the “lack of an energy policy in this country for most of the last 50 years,” saying Americans became spoiled during the 1990s when energy prices hit “bargain-basement” levels, when oil sold for as little as $10 per barrel. He stood behind a statement he made in congressional testimony earlier this year as the price of oil headed toward $147 per barrel.

“$65 is a pretty good price,” he said.

Mr. Hofmeister recently founded Citizens for Affordable Energy, which advocates increasing the supply of energy from all sources and making major investments in energy infrastructure.

“We need a whole lot more energy to sustain the lifestyle we’ve chosen for ourselves,” he said.

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