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Friday, September 29, 2006

Bush on Energy Policy

The Wall Street Journal interviews George Bush on energy issues:

Interview With President Bush, Wall Street Journal:

THE WHITE HOUSE
Office of the Press Secretary
(Birmingham, Alabama)

Internal Transcript
September 28, 2006

INTERVIEW OF THE PRESIDENT BY THE WALL STREET JOURNAL

Q: I think I would like to just start on the topic that you were on just now -- energy. Obviously, it's a huge priority for you and I wonder if you can just talk about where it goes from here.

THE PRESIDENT: I think energy diversification is a priority for the nation. And by energy diversification, I mean that a policy that promotes technological change so that we become less dependent on crude oil from overseas.

The best way to become less dependent on crude oil from overseas is to change the driving habits of the country. My vision is that, ultimately, we'll be using hydrogen-powered automobiles; in the meantime, we'll be diversifying our fuel mix from gasoline to more ethanol. Conservation will be achieved by new technologies, such as batteries that enable a car to go for the first 40 miles on electricity and your car doesn't have to look like a golf cart.

It's interesting, this diversification has required federal involvement -- federal involvement through tax credits for ethanol, as well as research dollars. But those research dollars are being complemented by research dollars in the private sector. And one reason why the research dollars in the private sector are coming is because the price of crude oil, the rise in the price of crude oil has made it clear that there is profitability for private dollars when they invest...

Q: Do you envision more policy down the road?

THE PRESIDENT: I envision more money being spent to accelerate that which is possible. You heard a full discussion today about the possibility of switch grass and two types -- using switch grass as a raw material and two types of manufacturing processes.

The market for ethanol will evolve differently than the market for gasoline, because transportation is part of the bottleneck of finished product, and therefore in order to get ethanol penetration throughout the country, there are going to have to be locally-built plants so as to reduce transportation costs. And, therefore, there's going to be the need for locally-grown raw materials for those plants. And some places just aren't that good for growing corn or sugar, therefore, we're going to have to develop alternatives to be able to use to make ethanol. ...

Q: And do you envision the money being spent in that area, in particular?

THE PRESIDENT: Well, we're spending, since I've been President, about $29 billion on dealing with alternative forms of energy, which it affects the warming issue. In other words, as you diversify away and/or improve the capacity to burn certain fuels, you're developing environmentally friendly technologies.

And so our effort is multifaceted. You know, for example, you heard me mention the need to deal with nuclear waste. And I believe we ought to reprocess, as well as have fast burner reactors that can deal with that fuel, which reduces the amount of waste substantially, which then makes it easier to store, which then makes it easier to convince people that nuclear power is the way to go. Nuclear power is renewable. Nuclear power is going to be necessary for the production of hydrogen, which is the new kind of -- which will be the new source of powering automobiles, plus it's clean. It deals with the warming issue.

Q: So that's another area, is it fair to say, where you envision some new policy?

THE PRESIDENT: Well, we've got the policy, now we want to see these plants built and we want to continue to facilitate the building of plants. But the new policy will come when it comes to the reprocessing and fast burner reactor. We're in the process of combining resources with Japan and Russia, Great Britain -- I don't want to leave anybody out -- France, in order to develop these new technologies. ...

Q: Okay. Could you address, specifically, the bottlenecks that you talked about? ...

THE PRESIDENT: Well, for example, in order to make sure that ethanol becomes more widely used, there has to be -- people will have to be able to buy ethanol in a convenient way. In other words, consumers are used to convenience when it comes to buying gasoline, and if they have to drive 10 miles to find an E85 pump, or one mile, or half-a-mile to fill up with gasoline, they're going to choose the gasoline. And, therefore, one of the real challenges is how do you make sure that retailers ... make it convenient for people to but it. ...

The other bottleneck is that when you're buying ethanol from a plant in Illinois, like these people are, it ultimately could be cost prohibitive. ... Therefore, there has to be manufacturing plants close to markets where people will be using the ethanol.

Now, the good news is, is that the manufacturing plant is relatively inexpensive compared to gasoline refinery, for example. So there are two bottlenecks right there.

Q: But is federal policy going forward? Are you going to try to do more to eliminate those bottlenecks?

THE PRESIDENT: Yes. And the best way to eliminate the bottleneck is to encourage research into alternative feed stocks that make ethanol. For example, ... if you can use switch grass, switch grass can be grown in a lot of places where corn probably can't be grown.

So the more raw material -- and you heard him talk about a plentiful supply of wood products here in Alabama. And, therefore, if they're able to develop a technology that can use woodchips to make ethanol, then you begin to envision more ethanol production facilities using different types of raw material... But it makes it easier, then, to set up a distribution network.

Q: And could you compare energy as a priority to some of the other things you've got coming up in the domestic area?

THE PRESIDENT: Energy is a significant priority. And as a matter of fact, it's one of the top priorities because energy diversification -- in other words, diversifying away from foreign sources of oil not only has got economic implications, it's got national security implications.

It's very important for the President and the administration to think about that which has to happen in order to achieve long-term -- positive long-term consequences for the country. Energy diversification is one. Encouraging conservation of energy, non-renewable energy sources, all goes hand-in-hand with diversification...

Q: What about the cap and trade issues? A lot of states are now, as you well know, adopting a patchwork of regulatory programs. Do you see that as a potential concern or a reason for federal --

THE PRESIDENT: I have said that -- you know, we laid out a program that we believe will reduce greenhouse gases relative to economic growth, and I put some targets out there and we're meeting those targets. But should we not meet the targets, then I said that the country ought to consider a cap and trade. So long as we're meeting the targets, ... then I think that we ought to pursue the current track we're on, which is the use of technologies to make us achieve energy independence, as well as dealing with the warming issue.

Listen, all these issues require intense -- the issue of warming, the environmental issue, requires intense focus and dedication to new technology. New technologies will not only enable us to be good stewards of the environment, but will also achieve another important objective -- it will achieve a national security objective and an economic security objective.

And that's what makes this debate -- other than the politics, there is commonality between people who say, well, I'm worried about national security matters, others who say, I'm worried about global warming, achieve the same objective by the use of technology. And we're spending a lot of money on the issue. And we're taking the lead when it comes to the global warming issue...

Q: Do you -- how soon do you envision people being able to drive along the interstate and get E85 wherever they want or biodiesel?

THE PRESIDENT: I think it's going to take awhile, but market penetration in the Midwest has been pretty significant. Listen, we've gone from -- we're about 5 billion gallons of ethanol now, a year. And that is a substantial increase in a four-year period of time -- a five-year period of time. My only point is, the markets are beginning to -- the market is beginning to shift and beginning to change.

I think you'll see -- I think what you'll see is regional penetration, depending upon where the feed stocks are being grown. And as you see new breakthroughs on cellulosic ethanol production, then you'll see production plants springing up around, where, you know, woodchips become economically feasible. As the guy said, he's thinking about converting a pulp mill into a place to manufacture wood chips.

So I think -- I'm confident you'll see more ethanol use, and you'll see more penetration, a localized penetration -- I guess, regional market penetrations.

I also believe relatively quickly you're going to see a new battery in your automobile, where you can drive the first -- there's a total of 40 miles, they anticipate, on electricity. Which all of a sudden changes the consumption patterns significantly. You can imagine if the 10 major cities in the United States where people don't drive 40 miles a day were able to power their cars with --

Q: Plug-in.

THE PRESIDENT: New batteries -- yes, plug-in hybrids. It really changed the consumption. And then all of a sudden, meeting the goals of reducing our dependence on foreign oil becomes realistic, more realistic. I guess what I'm telling you, John, is that the strategy is not a single strategy. The strategy is a multiplicity of strategies by developing new technologies that will achieve the objective I've set out. And we're going after it in a very focused, in a very smart way, in my judgment.

I guess part of my frustration is that what we have been doing hasn't quite penetrated into the American psyche. It was, why aren't you diversifying? Why aren't you doing something? But this administration has done more than any administration has done. And I believe that the investments we're making -- the other thing that's important for people to understand is research and development takes time. You know, when you start a research and development project, there's a lot of trial and error and a lot of experimentation and a lot of money is required. And it's hard to predict when you'll see the breakthrough that enables one to achieve the objective.

But the American people have got to know there's a lot of research and development going on. And as I mentioned to you earlier, research monies come not just from the federal government -- we're putting a lot in, but a lot of it's now coming from the private sector, as well. Which is an interesting sign, you know. And it's an encouraging sign.

Anyway, thank you.

Q: Thank you, very much.

THE PRESIDENT: I've thought a lot about the subject.

END

Source: The White House

Not a very inspiring vision. The full interview also touches briefly upon Social Security reform, immigration, and a few other issues. On Social Security, it simply says he is considering combining the Social Security and Medicare reform efforts, and that he and Secretary Paulson are watching the elections closely and "strategizing."

    Posted by on Friday, September 29, 2006 at 05:19 AM in Economics, Oil, Policy, Politics | Permalink  TrackBack (0)  Comments (8)

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