Welcome to "Ask the White House" -- an online interactive forum where you can submit questions to Administration officials and friends of the White House. Visit the "Ask the White House" archives to read other discussions with White House officials.
August 4, 2008
Hello from the White House. Washington, DC was built on a swamp, and were always reminded of that in August. Im here today to discuss energy policy.
The national average price of gasoline is $3.96 per gallon, and its much more in some areas. If youre like me, you get upset every time you have to fill up your car or truck. Why dont those people in Washington DO something about it?
Well were trying, and we need the help of Congress. The Presidents basic answer is that we need to do everything. We need to reduce demand by encouraging car manufacturers to make more efficient cars, and we did that last year by proposing and enacting the first increase in mandated fuel economy since the 1970s. We also need to encourage the purchase of hybrid vehicles, which weve done with a hybrid tax credit. We need to encourage the development of alternatives to oil and gasoline, whether thats ethanol made from corn or biodiesel made from other agricultural products. We need to accelerate research on new technologies for better batteries to make plug-in hybrid vehicles cost effective, and into alternative fuels so we can make ethanol from sources other than corn. And, most importantly, we need to expand both the domestic and global supply of oil. Its going to take years for new technologies to be developed and come online, and in the meantime were stuck depending on oil as our principal fuel source. So we need more oil supply, here and around the world.
The more oil is produced domestically, the less we will have to transfer dollars earned in the US to those who own the oil in other nations. And the more oil is produced domestically and globally, the more relief there will be on the price of fuel at the pump.
These solutions are not magic bullets, and they will have only a modest immediate effect. It takes years to explore for and develop new oil fields. But thats all the more reason to start now rather than waiting. Were in this fix in part because our predecessors dilly-dallied for years without increasing supply. We need to take the steps to increase supply now. That will have a small positive effect today (because oil markets adjust based on what investors think will happen in the future), and a larger benefit in the future.
The President has proposed four policy changes that Congress should enact immediately. Congress should:
1. repeal the prohibition on leasing for oil and gas drilling off the U.S. coast, and allow environmentally responsible drilling to begin, as it is now happening in the Gulf of Mexico and off the Alaskan coast
2. repeal the prohibition on leasing for oil production from shale in the Rocky Mountain area
3. repeal the prohibition on drilling or oil in Alaska
4. create an expedited process for the expansion of new refineries in the US.
We think its likely that a majority of the House and the Senate would support drilling off the U.S. coast. Unfortunately, Speaker Pelosi and Leader Reid have so far used their control of the legislative process to prevent a clean up-or-down vote on this question. We hope that will change when the Congress returns in September.
Now let's get to some questions.
Kim, from Kentucky writes:
Within the US, you've basically got it right. One significant barrier to the adoption of more nuclear power is that there were some examples a couple of decades ago in which a nuclear plant was built, and then protests shut it down before they could turn it on and start operating. If you think of it from the standpoint of an investor, it's a big risk to spend billions of dollars on an investment that might get shut down before it can begin to operate.
Unfortunately, opponents of nuclear power have made it extremely difficult to change the law as you suggest (much as might like to do so). But we have a new regulatory process in place that is designed to reduce that risk. There are now applications at the Nuclear Regulatory Commission for 19 new projects. You can learn more about that here:
The other big problem is the storage of nuclear waste. We need a permanent solution so that spent fuel can be removed from reactor sites and stored. Unfortunately, Sen. Reid (from NV) has been blocking the necessary legislation to make that happen at Yucca Mountain.
We need more nuclear power, and President Bush has taken every step possible to get more of it faster. I'm hopeful we'll see results from that push over the next several years.
Robert, from Virginia writes:
We're hopeful that Speaker Pelosi and Senator Reid may change their minds over August, when they and other Members of Congress are back home in their districts, listening to the people who elected them. We'll continue to explain the importance of drilling (as well as other solutions) and push for a vote when they return in early September.
Wesley, from Fort Worth, Texas
Cuba has talked with some foreign countries, including China, about the possibility of drilling in Cuban waters that would also be less than 50 miles from the US coast. As best I can remember, however, none of those wells have so far been developed. But that could change in the future.
Tony, from W.P.B Florida writes:
He did successfully push for opening an additional portion of the Gulf of Mexico, which resulted in a new law in 2005 that is now creating new leases down there.
It is true that the push to drill off the East and West Coasts is new for us. It just wasn't legislatively feasible before gas prices started spiking -- and now we hope that it is.
Ian, from Boca Raton, FL
Lisa, from Salt Lake City, UT writes:
But that's no reason not to take action. We're in this position precisely because Washington swings wildly between two extremes. When gas prices are low, people say, "We don't need to do anything about it, and it will take a long time so we'll see no short-term benefit from taking action now." When gas prices are high, people say, "DO SOMETHING NOW!!!"
A long journey begins with the first step. We need to take that first step now.
Also, futures markets react to projections of future changes in supply and demand, and they "bring forward" those changes to affect the current price. If markets were confident that there would be a significant increase in US oil supply years into the future, that would affect (lower) the market price today.
Malcolm, from Unknown writes:
Thanks for time.
An Executive Order is a tool the President can use to better organize his management of the Executive Branch and to more effectively implement the law. The problem in this case is the law, and that's why we're asking for Congress to change it to allow the above three things.
Kim, from Kentucky writes:
There are basically three classes of environemntal concerns with offshore drilling: the potential for spillage, damage to coral, and people don't like to look off their coast and see oil rigs.
Spillage is a much smaller risk than it was in the 70's or 80's. You may remember the Exxon Valdez spill in 1989 -- 240,000 barrels of oil were spilled. Now fast forward to 2007 when Hurricanes Katrina and Rita tore through the most productive portion of the Gulf of Mexico, hitting hundreds of oil rigs. Less than 6,000 barrels of oil were spilled under conditions dramatically worse than in the 1989 case.
On corals, it's pretty simple. The Marine Management Service is a portion of the Department of Interior that develops the leasing plan. They can and do look for sensitive areas of underwater coral, and they rule those areas off-limits for drilling.
On the horizon, don't forget that the Earth ain't flat. Even if you had infinitely perfect vision, you couldn't see an oil rig beyond 20 or 30 miles, because the top of the rig would be below the horizon. And all the bills being considered in Congress would allow drilling only much farther off the coast than that.
We think that it is possible to access billions of barrels of oil (at least 18B) off the US coast in ways that are environmentally responsible.
John, from kingman, AZ
Gasoline is expensive because oil is expensive. And oil is expensive because demand around the world has been growing steadily, and supply has not.
Oil is sold in a global market. Big countries like China and India are growing fast, and adding lots of new drivers each day. Their demand for oil and gasoline has placed steady upward pressure on the world's supply.
The problem is that much of the world's supply is controlled by governments, and those governments don't always do what a private sector person might do. Normally, a high price is a signal to the producer, "What you can produce is very valuable right now. Make more." Those price signals encourage producers to increase supply until the price comes down again.
But when governments control supply, they don't always follow market signals. Instead, they restrict production, which quite obviously results in prices staying high, or even going higher.
I wish I could say this was just a problem in other oil-producing nations, but it's a problem here as well. Remember that the US is a major oil producer, and unfortunately the Congress has been ignoring the price signal and prohibiting new domestic oil production.
Until those policies change in the US and around the world, I find it hard to imagine a scenario in which the price of gasoline drops dramatically and for a sustained period.
Ken, from North Carolina writes:
With oil >$120/barrel, and with gasoline around $4/gallon, we need access to oil resources wherever they can be found, and then to allow market force to dictate where it can be produced most cheaply to have the greatest effect on the price at the pump.
As for the tax argument, our view is that oil companies do not need special new tax breaks, but that they also should not be signaled out for tax punishment. So when the Congress enacted a law in 2005 that created new tax relief for oil and natural gas, the President called on Congress to repeal those provisions. But when the Congress says they want to create a non-level tax playing field by picking out six specific companies and raising their taxes, that's just plain bad tax policy. To the greatest extent possible, private firms should compete on a level tax playing field, neither being particularly advantaged or disadvantaged by the tax code.
Lee, from Salem, OR.