Samuel Bodman hosts Ask the White House

Samuel Bodman
It’s a pleasure to be here with you once again on Ask the White House, especially given the occasion. Today marks the one-year anniversary of the signing of the Energy Policy Act of 2005 by President Bush. EPAct was a landmark piece of legislation - the first comprehensive overhaul of our nation’s energy policy in over a decade. Carrying out its directives has been a top priority for the Department of Energy over the last year.

Since I last participated in one of these exchanges, I visited Iraq and saw firsthand the heroic efforts made there to rehabilitate that nation’s electric power grid and oil infrastructure under the most severe conditions. I also traveled to Alberta, Canada, and saw the work that is taking place to develop the rich resources of the Oil Sands. Their output will be critical to meeting the future need for oil, both in the U.S. and around the world.

But turning to more recent events, I’m sure that many of your have heard of the situation concerning the possible shutdown of a pipeline that feeds 400,000 barrels of crude oil to U.S. refineries, especially to California. The Department of Energy is working closely with other government agencies and industry to assess the situation and to ensure the pipeline can come back online in a timely and safe manner. We are also in constant contact with BP and with the affected refiners.

Also, earlier today the Energy Department’s independent statistical arm, the Energy Information Administration (EIA), released its Short Term Energy Outlook. They were able to put together some information that is relevant and helpful as we look at the totality of the situation.

And the news is by and large, good.

According to the EIA, lost production from Prudhoe Bay production can be made up for in several ways including a drawdown of crude oil inventories or product stocks and substitution of Alaskan crude oil from other supplies. Crude oil stocks on the West Coast are almost 5.5 million barrels higher than July last year. Also, the U.S. stocks are up more than 15 million barrels over last year to 333.7 million barrels, up from 318 million barrels – so we believe it is safe to say that there will not be any gasoline shortages in the West. In addition, we will continue to obtain more information on the needs of Western refineries and look to have crude oil shipments supplemented, if necessary.

I look forward to taking your questions on these, and other important matters.

Cliff, from Brimfield, Ohio writes:
Secretary Bodman: Like any new program or policy in its first year. There will be adjustments and corrections needed. This being the first annv. of the ENERGY POLICY. Are there areas that we think we need to look at again or are we pretty much on track with the original plans? I still read about scheduled black outs in parts of the country and with gas the way it is. It appears that some fine tunning, be it in time or policy needs to be looked at. Thank You

Samuel Bodman
Today does indeed mark the one-year anniversary of the signing of the Energy Policy Act of 2005 by President Bush. EPAct addresses America's need for greater energy security while providing the nation with a comprehensive energy strategy built around modernizing our energy infrastructure. This includes increasing our energy efficiency and expanding and diversifying our domestic production from renewable and traditional energy sources. Over the past year, we have made steady progress, but there is still more work to do.

Just today, the Energy Department released the results of a congestion study we performed on the nation's electric power grid. It identifies areas in the country where bottlenecks exist in our electric transmission system and is a first step towards building up our transmission capacity to meet the demands of our growing population and economy. To look at the report, visit: http://www.oe.energy.gov/epa_sec1221.htm.

Also today, to commemorate the one-year anniversary of EPAct, we released "On the Road to Energy Security" - a status report on all that has been accomplished, to date, as a result of this important legislation. You can take a look at this too, by visiting www.energy.gov.

Under EPAct, along with President Bush's Advanced Energy and American Competitiveness Initiatives, which he announced in his State of the Union Address this past January, the Energy Department is moving ahead and making great strides in terms of encouraging and providing incentives regarding the construction of new nuclear power plants, the development of clean coal technologies, as well as accelerating the development and use of clean and renewable energy sources such as ethanol, hydrogen, wind and solar power.

charles, from avonpark writes:
what do you think of the e-85 alternative fuel program as a viable alternative to fossil fuels?

Samuel Bodman
It's not only a good idea, it's a key portion of the Energy Department's strategy to enhance U.S. energy security, as well as a key component of President Bush's Advanced Energy Initiative. For those of you to don't know, the Advanced Energy Initiative provides a 22 percent increase in clean energy research at the Department and seeks to reduce our reliance on imported sources of energy to change the way we power our cars, homes and offices.

Just yesterday, I joined Maryland Governor Robert Ehrlich at the opening of a new E85 fueling station in Baltimore that will be used by state vehicles. It's part of an ongoing commitment Maryland is making to further the use of clean energy - this includes increasing the number of flex-fuel vehicles in the State's fleet that run on either gasoline or E85 (a blend of 15% gasoline and 85% ethanol).

There are currently millions of flex-fuel vehicles on the road – and unfortunately, some people might not even be aware that there car is considered a flex-fuel. So part of my job at the Energy Department – as well as other Energy Department employees – is to first, make a concerted effort help get more E85 fueling stations around the country. And second, to educate the public on such alternatives to petroleum. There are nearly 1000 stations in the U.S. that sell E85; the number is growing rapidly and I hope that soon E85 will be available in all parts of the country.

To encourage more stations to offer E85 and other alternatives to petroleum – as a result of EPAct - fueling stations are eligible to claim a 30% credit for the cost of installing clean-fuel vehicle refueling equipment. This includes E85, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, and any mixture of diesel fuel and biodiesel containing at least 20% biodiesel. I know that sounds like a mouthful, but everyday, I'd like to see consumers have more practical and affordable options when going to fill up their car or truck.

David, from Tennessee writes:
What is Americas' policy on drilling and refining oil in our own country and what are the political barriers preventing it and is there anyone with the guts to take this issue and move it forward?

Samuel Bodman
That's a lot for one question. But the short answer is that President Bush has long been committed to winning Congressional approval for environmentally responsible oil and natural gas exploration in parts of the Outer Continental Shelf and in the Arctic National Wildlife Refuge.

Congress has taken a number of significant steps to move forward with this, but we still have a long way to go. Both the Senate and the House recently passed a bill to allow oil and gas drilling in a section of the Eastern Gulf of Mexico – that will provide some relief, but it’s not enough. It is my hope that, because of EPAct and subsequent legislative action by Congress, we will soon be able to increase both U.S. refinery capacity and domestic oil and gas production. Technology being underwritten by the Department of Energy also appears ready to help us do more with less.

Through widespread use of state-of-the-art CO2-enhanced oil recovery procedures, for example, we could recover an additional 89 billion barrels of oil from wells that had previously been thought tapped out.

Shahab, from California writes:
Hello, I was wondering what the government is doing about not wasting Energy, Such as using Renewable Energy and Alternative Fuels. Thanks.

Samuel Bodman
If the government is going to ask Americans to be more conscientious about saving energy, I think it must lead by example. The Energy Department is engaged in two ambitious programs to increase energy efficiency at both large government buildings and major industrial facilities. The first is called the Energy Savings Performance Contract program, which allows private contractors to help federal agencies improve the energy efficiency of their facilities. In this year's budget alone, federal agencies have executed contracts for energy efficiency savings worth an estimated $86 million.

We are also working with large industrial users of energy on voluntary agreements to reduce energy consumption. Last October, we announced a campaign to save energy in 200 of the most energy-consuming plants in the country through voluntary energy savings assessments. These assessments allow DOE to better understand energy usage in specific industries. They also identify important energy-savings opportunities and provide the basis for negotiating long-term voluntary agreements with industry. As of this week, 130+ energy savings assessments had been completed. For the 93 sites for which reports have been finalized, 26.6 trillion BTUs – or about $246 million in potential energy savings – have been identified – enough to power 370,000 homes!

There are also many options available to consumers in terms of saving money and energy. Under EPAct, through December 2007, consumers are eligible for a tax credit of up to $500 if they buy and install energy efficient windows, insulation, doors, roofs, and heating and cooling equipment in their homes. They can also receive a tax credit equal to 30 percent of qualifying expenditures, up to $2,000, for buying and installing qualified photovoltaic property and solar powered water heaters. Special incentives for commercial builders allow a tax deduction for energy efficient commercial buildings that reduce annual energy consumption by 50 percent as compared to 2001 standards.

I encourage everyone to visit at www.energysavers.gov to find useful tips for saving energy and money on your utility bills.

Robert, from Hillsboro, Oregon writes:
Is it true that an untapped oil reserve has been discovered that exceeds 2 trillion barrels in the Green River Formation under the Rocky Mountains?

Samuel Bodman
You're right. And as yesterday's closure of the BP pipeline in Alaska reminds us, the oil market is very tight right now; so we must pursue every option for increasing our domestic supply of petroleum.

The reserve under the Rocky Mountains is what is known as oil shale, and there is a huge quantity of it there. Unfortunately, oil shale can't just be pulled out of the ground by means of regular drilling, like liquid petroleum. It must be heated to a very high temperature before it can be pumped.

But thanks to various provisions of the Energy Policy Act, we are able to put a good deal of effort toward developing the technology to make these "unconventional fossil fuels" more appealing, especially in terms of price and turnaround time. Altogether, domestic oil shale represents a resource, which, if economical, could play a significant role in meeting the nation's needs for more liquid fuels over the next several decades.

Scott, from Amarillo, TX writes:
I applaud the current administrations effort to move from our heavy dependence on oil to energy resources that are in many cases more environmentally friendly, less costly, and renewable. However, I would like to know if the government can do something to give American car manufacturers a push towards greater fuel efficiency and better technology. Are incentives for consumers who buy more efficient vehicles a possible solution?

Samuel Bodman
Good question. The Department of Energy is working on this right now. Under Energy Policy Act guidelines, consumers purchasing hybrid vehicles can receive a tax credit of up to $3,400 for purchasing the most fuel-efficient hybrid vehicles. This tax credit has been such a success - more than 115,000 fuel-efficient hybrid vehicles have been sold in the United States since January 2006 – that the President several months ago asked Congress to revisit the issue and remove the cap from the number of vehicles eligible for the credit. This, of course, is only the beginning. The efforts to change the marketplace coming out of Detroit and from the other automakers are impressive – and while the government can provide the research and support to automakers, we believe industry is the best place for such changes to originate.

john, from texas writes:
When the government buys new vehicles for its fleet will it be buying hybrid or other high-mileage cars?

Samuel Bodman
We are making a very serious effort to convert a large portion of the Department of Energy's vehicle fleet to more efficient vehicles and vehicles that can be powered by alternative fuels. This year, the Office of Management and Budget has set a standard for all federal agencies that at least 75% of their replacement vehicles must have alternative fuel capability. At the Department of Energy we are well ahead of that target. Most of these are flex fuel vehicles that run either on gasoline or the E85, a blend of 15% gasoline and 85% ethanol.

To make it more practical to run these vehicles regularly on E85, the Department has opened E85 fueling stations this year at its facilities in Pittsburgh, Pennsylvnia; Morgantown, West Virginia; and Richland, Washington.

And among vehicles in our headquarters fleet, as of next month, 65% will be capable of running on either E85 or compressed natural gas. Whenever opportunities to replace a vehicle come up, hybrid vehicles as well as alternative fuel vehicles are considered. Wherever possible, we also have been replacing sport utility vehicles in our fleet with more fuel-efficient light trucks and sedans.

Jeff, from Ely, Nevada writes:
How much progress has been made since last year when the President's energy policy was signed?

Samuel Bodman
Just over the last week, I have made announcements around the country about three major areas where we are moving ahead to advance goals set by the EPAct. Last week, I announced that the Department would commit $250 million towards the establishment of two new bioenergy research centers. These will work on breaking down the remaining technical barriers to producing cellulosic ethanol (a domestically produced alternative to petroleum) and other biofuels.

Over the last few days, the Department has also released the specifics of its risk insurance program that is designed to encourage the construction of new nuclear power plants by providing builders of the nation’s first six new plants with up to $2 billion in construction costs caused by certain delays and regulatory uncertainties. And yesterday, I also announced the details of a new Loan Guarantee program that the Department will administer. This will provide up to $2 billion of guarantees for loans made to finance the commercialization of new energy technologies.

Gregory, from Torrance, CA writes:
Dear Secretary Bodman: What is the Administration doing to promote the use of nuclear energy ie the building of reactors? Thank you.

Samuel Bodman
I am always glad to address this important subject. Today, nuclear power is the only mature technology with significant potential to supply large amounts of power without emissions of pollutants or carbon dioxide. The nation's 103 nuclear power plants now supply about 20 percent of our electricity. But as those plants continue to age, this amount will necessarily decrease. At the same time, the demand for electricity is expected to increase by 50 percent over the next 25 years. Clearly we need more nuclear power.

One important thing to keep in mind though, is that the United States has not licensed a new nuclear plant in over 30 years, partially because of bureaucratic hurdles, and safety and environmental concerns. Those who worked on getting the Energy Policy Act signed into law recognized this, which is why my announcement of providing up to $2 billion dollars (total) in federal risk insurance for the first utility companies building the next six new nuclear power plants in the United States was so significant. Many people in the industry remember that when the current generation of nuclear power plants was being built, costs often skyrocketed due to various legal and regulatory delays. The program I just announced is specifically designed to help address this problem.

We encourage the production of new nuclear power plants, but we only support such production if safety is the first priority. This includes security of facilities as well as nuclear power that is environmentally responsible, effectively manages nuclear waste, and minimizes the dangers posed by nuclear proliferation and terrorism.

Our Administration also recognizes that nuclear power is an increasingly attractive energy option for the rest of the world. To help the growing demand for power in the developing world--and do so in an environmentally responsible way--the President proposed the Global Nuclear Energy Partnership, or GNEP, earlier this year. This is a cooperative partnership aims to perfect the technology for recycling nuclear fuel, and providing safe, affordable, and proliferation-resistant power plants to developing nations, while also reducing the amount spent fuel.

On that point, let me also mention the critical importance of opening Yucca Mountain in Nevada as the nation’s geologic repository for spent nuclear waste. Congress has voted for Yucca as the best site. The science supports Yucca as the best site. We need to get Yucca Mountain open, and our new Assistant Secretary for Civilian Nuclear Waste, Ward Sproat, recently unveiled to Congress an ambitious plan to do just that.

John, from Savannah, GA writes:
In President Bush's first term Vice President Cheney chaired a commission on outlining and recommending solutions for the United States related to energy policy. Since the findings were made public what progress has been made on the recommendations? What steps have you and the current administration taken towards implementing the recommendations? Thank you

Samuel Bodman
Enhancing U.S. energy security was a priority for the Bush Administration on its first day in office – and it will be a priority for this Administration on its last day as well. You have to remember that when the Administration came into office it had been at least a decade since anything like a long-term national energy strategy had been put in place. In that time, thanks to technology and a commitment from the Bush Administration, there have been a number of scientific breakthroughs that will change the way we power our homes, our businesses and our transportation sector. So the first thing we needed to do was put a strategy in place, which we finally did through EPAct last year.

EPAct, which is based on the three pillars of enhancing energy security – increasing the diversity of supply, enhancing efficiency in production and consumption and modernizing the infrastructure – is already producing results. In the year since it was signed into law, we’ve seen construction start on 27 new ethanol plants; 500 million gallons of new annual ethanol production have gone online; and more than 400 new flex fuel E85 pumps have been installed across the country. Also, the nuclear power industry has announced plans to build 26 new reactors; 2,000 megawatts in new wind power have gone online; and, 540,000+ American homes have become powered by wind energy.

I think that's a pretty good record, but it's just the starting point. Under the President's Advanced Energy Initiative, we will be moving ahead even farther with research and development of renewable energy supplies originating in wind, solar and biomass technologies. We're also moving ahead with the next generation of coal-fired power plants - where CO2 emissions will be sequestered underground rather than expelled into the atmosphere - and with new ways to build nuclear reactors.

Courtney, from North Carolina writes:
What, specifically, is the current administration doing to decrease the energy burden of the American public? We are all struggling with increasing costs at the pump, in our homes, and as the increased energy costs drive up the costs of everything else. I see very little action of the part of the current administration and am ready to vote a strictly non-incumbent ticket should things not improve. I have seen some release of strategic oil reserves and obviously that is just not enought. With this morning's news about BPs pipeline closure, what are you going to do to help those who are struggling?

Samuel Bodman
I understand how the high price of oil is hurting consumers' pocketbooks and as I've said before, if I could wave a magic wand and make the price go down, I would do so in a heartbeat.

But the global marketplace sets the price of oil, and is being pushed up by strong economic growth here in the U.S. and in the developing world--which is not something we would want to discourage. High demand for oil around the globe, as well as political instability in certain parts of the world, are keeping the price of gasoline uncomfortably high, issuing, in essence, an unbudgeted tax on American families.

Suppliers are having trouble keeping pace with this high demand, which means the market is even tighter right now. As I mentioned earlier, the government is already working and is in conversation with BP and the affected refiners to see what the needs are. Current inventories of crude oil are at pretty high levels along the west coast. And that's good news.

Should the government need to act, we have a number of options that could increase the available crude oil supply. We have a Strategic Petroleum Reserve that has about 688 million barrels of crude oil, and is available in the case of severe supply disruption. In addition, if needed, we could request a waiver of the Jones act from the Department of Homeland Security which would allow more barges to transport crude oil around the country. Something else to consider is that the EPA could issue temporary waivers that would allow more gasoline to be distributed to different regions of the country.

To put this in perspective, when Hurricanes Katrina and Rita struck the Gulf Coast, we lost more than 1 million barrels a day of production - and we made it through and recovered quite well. We are also sensitive to the fact that every measure that is taken to repair the pipeline needs to be environmentally sensitive. The oil industry has a proven record of implementing repairs to this type of infrastructure all around the world and doing so in an environmentally sound manner that allows for the continued or reduced production of petroleum.

I am confident, that by working together, we will have the fuel we need for families and businesses to work and to play this summer.

As to your larger question, we are seeing is the culmination of years of unfocused direction and lack of investment in new technologies and energy infrastructure. In order to strengthen our nation's energy security, it will take years of work and specific upgrades throughout the energy sector. Thankfully, that work is already underway.

Over the past five years, the Bush Administration has taken steps to increase the domestic supply of energy, including alternative and renewable sources, to improve energy efficiency, and to make our energy infrastructure more secure and reliable. Today we celebrate the first anniversary of President Bush's signing of the Energy Policy Act of 2005 - the first comprehensive energy legislation in more than a decade. The long term strategy laid out in the Act takes a crucial step toward realizing the President's goals of reducing our dependence on foreign sources of oil and reinventing the way we power our homes, businesses and vehicles.

Tom, from Ann Arbor, Mich. writes:
I have read a little bit about the oil sands in Canada. What is the likelihood that they can assist in providing some relief to our need for oil? Is Canada willing to work with us?

Samuel Bodman
Actually I just had the opportunity to visit the oil sands in Alberta, Canada, a few weeks ago. I'm proud to say that I was the first U.S. Energy Secretary to actually pay a visit there. And I was tremendously impressed by the scale of the operations that go one there. Nearly 175 billion barrels of oil are located in the sands. Northern Alberta, home of the oil sands, holds the world's second largest oil reserve, behind only Saudi Arabia.

Over the last 40 years the Canadians have overcome many technical difficulties to tap this resource and today the oil sands are producing more than a billion barrels a day of crude oil.

Today's rising oil prices are making this resource more attractive than at any time in the past. More than $100 billion in private sector investment is now going into expanding the production of synthetic crude oil from the Oil Sands.

Their output is expected to quadruple over the next 15 years to four million barrels a day. The United States is the natural market for much of this production and the Canadians are willing to work with us to make that happen. Additional pipeline and refinery capacity is needed on both sides of the border to make the best use of the output from the sands but I believe both countries are committed to making that happen.

Michael, from Powell, TN writes:
What do you believe could be the major sources in 10 years?

Samuel Bodman
The experts at the Energy Information Administration predict that global energy use will continue to rise significantly over the next ten years. And that means there will probably be more use of fossil fuels but also of alternative and unconventional energy sources and wider use of some well-established sources such as nuclear power.

We don't really know yet which alternative or unconventional sources will prove to be the most practical and cost-effective. Having said that, our hope is diversify our nation''s energy mix, allowing industry to bring a variety of alternative energy sources to mix, which will, in turn, allow consumers to determine which options best fit his or her needs – an example of the free market operating in its truest sense.

We anticipate renewable fuels like ethanol, hydrogen, wind and solar power will all be widely adopted. Nuclear power could be transformed if experiments currently underway in nuclear fusion and efforts to develop new fuel recycling technologies through initiatives such as GNEP prove successful. That is why we are pursuing an aggressive research program into new technologies at the Department of Energy and throughout the federal government.