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For Immediate Release
Office of the Press Secretary
April 25, 2006
Briefing by Al Hubbard, National Economic Council Director, on the President's Four-Point Energy Plan
2:27 P.M. EDT
MS. PERINO: Thank you everyone for joining. I am here with Al Hubbard, the Assistant to the President for Economic Policy, and he is the Director of the National Economic Council. And in addition to that, we are lucky enough to have Keith Hennessey. He is the Deputy Assistant to the President for Economic Policy, and the Deputy to Al.
Today, Al is going to expand on the President's remarks to the Renewable Fuels Association where he laid out his four-point plan. This will provide you some more context and detail. And then we'll take some questions and hopefully get all of your answers in.
DIRECTOR HUBBARD: Hey. Thanks, Dana. And thank you all for joining us. I'm sure you all heard the President's presentation today. Obviously, the President and all of us here in the administration are very concerned about high gasoline prices. We're especially concerned because of the impact they have on lower income people and small businesses. It's something that Americans have not budgeted for, and the President is very concerned about it and is committed to doing everything he can to reduce the high price of gasoline.
Unfortunately, as the President said a number of times, it took us a long time to get into this situation and it's going to take us a long time to get out. But there are a number of things that have been proposed that can have a short-term impact and -- but at the same time what's equally important is that we make the right decisions today so that we can eliminate our addiction to oil and where we won't be so dependent on unreliable foreign sources of fuel.
As you know, the President's presentation today included a four-part plan to deal with the high cost of gasoline. Number one is to make sure that consumers and taxpayers are treated fairly, and that is to make certain that everyone in the industry -- all the producers and the wholesalers and the retailers -- are operating in a way consistent with our laws, that there's no collusion going on, that there's no monopolistic pricing, that there's no price gouging. And he has directed the FTC and the Attorney General to work together to make certain that laws are being followed. And he's also asked them to contact -- which they've already sent out a letter -- contact the attorney generals of the states to encourage those attorney generals to, again, within their own states, to make sure that there's no inappropriate or illegal activity going on, and with a particular focus on pricing activities.
Secondly, the President is continuing to promote greater fuel efficiency. As you know, this is -- I mean, this is sort of Economics 101. The demand for fuel and gasoline has been -- we're in a world market. It's been growing dramatically, and the supply has not been growing as rapidly.
So when we're in a -- when you ever -- if you're in a tight supply/demand situation, the price goes up. There are two ways of dealing with that. That's either to increase the supply or reduce demand. The President wants to do both. To encourage more fuel efficiency, his proposal on hybrids -- right now, there's a limit on the number of hybrids that a given manufacturer can sell and get the investment tax credit -- or get the tax credit. He wants to remove that limit for 2006, and is asking Congress to do that in order to encourage more hybrid sales in America, because hybrids are more fuel efficient, and again, will reduce the demand for gasoline.
He also wants to boost crude oil and gasoline supplies. One way of doing that is, as you know, we -- SPRO has a ceiling of 700 million barrels of oil. During the Katrina crisis, we loaned out approximately 12 million barrels, and that 12 million barrels will be returned to SPRO. The President has directed that 10 million be delayed until the fall, until after the busy driving season. The other 2 million, for which there's already a contractual arrangement for it to be returned, the President has asked the Department of Energy to see if it's possible to, again, delay that until after the busy driving season. So again, that's to increase the supply of crude oil.
Also mentioned by the President was the importance that the oil companies invest a -- continue to invest a very high percentage of their profits in new production and alternative sources of energy. The President pointed out the need for ANWR, something that had that been done 10 years ago and not been vetoed by his predecessor, we would be enjoying a million barrels of oil a day from ANWR, which would increase our domestic production by 20 percent.
And then finally, the President talked about the importance of the long-term and investing aggressively in alternatives to gasoline so that we can eliminate the root cause of high gas prices by diversifying away from oil. And I think as all of you know, the heart of that effort is his Advanced Energy Initiative, which was announced in the State of the Union Address.
The good news is that our economy is continuing to grow. The President recognizes, and all of us here in this administration recognize, that the growth of the economy is not because of government. It's by getting government out of the way by leaving more money in the pockets of Americans and allowing them to pursue their entrepreneurial drive. And the result is that we've had just a remarkably strong economy that continues to grow faster and create more jobs and job entrants, and we're very proud of the 4.7 percent unemployment rate, and we believe that over the course of the rest of this year, the unemployment rate will continue to decline.
As I said, we are -- continue to be very concerned about the high cost of gasoline. This President is committed to addressing it, both in the short-term and in the long-term. He has a number of proposals to Congress that we hope they will act on very quickly.
And I look forward to answering your questions.
Q Hi, thank you. Have you calculated at all what impact on the price per gallon the easing of environmental restrictions on the gasoline additives could have this summer?
DIRECTOR HUBBARD: No. What's most important, in terms of waiving those restrictions, is to make sure there's -- is to prevent any kind of shortage from occurring.
With the conversion from MTBE to ethanol, there's concern -- we have concerns that there could be spot shortages because ethanol is not evenly distributed throughout the country, and it presents some challenges in terms of transportation. So that's why it's important that localities have the option of asking Administrator Johnson to waive certain regulations, which will be done on a case-by-case basis.
Q I see. And as a follow-up, is it correct that the President has the authority only for 20 days to waive those restrictions?
DIRECTOR HUBBARD: That is correct.
Q And so will he continually reauthorize that, or how will that be approached?
DIRECTOR HUBBARD: Again, we will address it as the need arises.
Q Thank you.
Q I'm curious what you think -- which actions the President is taking will have the most impact in the short-term on the prices consumers will pay over the summer?
DIRECTOR HUBBARD: Well, I think it's a combination of all of his actions. And as I said -- I can't remember if this was in his speech or not, but the bottom line is, every little bit helps. And we've got to use every tool at our disposal to work to increase the supply and to encourage more conservation. And that's why the President's proposals are -- involve a number of areas, not only dealing with SPRO, dealing with waivers, but also dealing with hybrids to encourage, again, more supply and a reduction in demand.
Q Has the White House considered any sort -- has the White House considered any sort of wider conservation campaign to reduce demand?
DIRECTOR HUBBARD: Well, we announced during Katrina a commitment to -- for conservation measures in the government, and that commitment has not declined at all -- I mean, has continued to exist. And, again, we encourage all Americans to think about conservation as they go about their daily lives.
Q All right, thank you.
DIRECTOR HUBBARD: You're welcome.
Q Just to clarify, the remark that the President made about allowing EPA to waive certain restrictions, certain regulations, has to do with the switchover from MTBE to ethanol and nothing else, is that right?
DIRECTOR HUBBARD: Well, any -- the bottom line is, it's important that the EPA be able to waive regulations when there are shortages. And we're certainly aware of the MTBE challenge. But given the demand-supply situation around the world, it's important that Administrator Johnson be in a position to waive regulations if there are other causes.
Q He could waive air pollution regulations, then?
DIRECTOR HUBBARD: That's what these regulations involve. And it's like what we did after Katrina, where, as you recall, we had a number of refineries down. We had a number of the -- significant amount of crude oil production down. And to counteract that, Secretary Bodman released crude from SPRO. We actually worked with the Europeans to release gasoline from their gasoline storage.
And then we -- Administrator Johnson waived some regulations. For example, we moved from summer to winter gas, I think it was around 30 days early, which, again, resulted in a significant increase in supply, the result of which was it limited the spike in pricing, but most importantly, it ensured that the supply was available to Americans throughout the affected areas.
Q Hello. Yes, I was -- as far as I can tell, there isn't actually a per se prohibition on price gouging, or a definition? What is the administration's definition of price gouging? And is there a need for some tighter restrictions on what companies can do as far as withholding or diverting supplies from particular markets?
DIRECTOR HUBBARD: Well, the important thing is that we have very good anti-trust laws, and it's very important that those laws are adhered to. Those laws prevent collusion -- you know, companies getting together to regulate supply, to regulate pricing. Those laws prevent monopolistic pricing. If a company has monopolistic power, using that power to achieve monopolistic pricing.
So those are the sort of activities that the Federal Trade Commission and the Attorney General's Office, and I'm sure the AGs around the country, will be investigating. If you want to get into more detail, I encourage you to talk directly with the FTC or the antitrust department of the Attorney General's Office.
Q Well, you're comfortable with what companies can concurrently do in terms of withholding or diverting supplies? You don't think that there needs to be any action on that, which was part of the Specter bill that --
DIRECTOR HUBBARD: Again, we -- what's important is that they are not able to use monopolistic power to price and that they're not able to collude -- to limit supply in order to increase the price. And I can -- the President is committed and the head -- the Federal Trade Commission and the Attorney General's offices are committed to making sure that doesn't occur.
Q Good afternoon. Quick question for you on the Strategic Petroleum Reserve here. You suggested in your remarks that there were about 12 million barrels we're talking about delaying until the fall. In the time frame, you're talking about the nation is going to consume about 3 billion barrels worth of refined product. That's only four-tenths of 1 percent of consumption at the time. How big an impact do you expect that 12 million barrels to have on price?
DIRECTOR HUBBARD: Again, every little bit helps, and the important thing is to do everything we can to increase supply, and again, everything we can to encourage conservation. And the important thing is to -- that all these activities occur at the same time. And, obviously, we were just talking about the Federal Trade Commission and the Attorney General's Office, their efforts to make certain that no illegal pricing activities or supply activities are going on.
Q So you guys haven't -- any estimate at all on how that might affect the price of oil?
DIRECTOR HUBBARD: No, we don't.
Q Okay. Just a quick follow up here on the price gouging. The FTC Chairman justified -- about price gouging legislation last fall and suggested that it actually would unnecessarily hurt consumers. At least that's what she told Congress last fall. I was wondering, are you guys expecting any new legislation on price gouging at a federal level since it's been the purview of states in the past?
DIRECTOR HUBBARD: Again, there are very good laws on the books. What's important is those laws be enforced aggressively. And that's what Deb Majoras, the Chairman of the Federal Trade Commission, and Attorney General Gonzales will be doing.
Q Do you think that there is collusion or some sort of price fixing going on at some level?
DIRECTOR HUBBARD: That's why they're going to be doing their investigation.
Q Because the administration thinks there is?
DIRECTOR HUBBARD: No, I didn't say that. We just want to make certain that the American people, American consumer is being treated fairly, and to make certain we've -- the President has made it very clear to the Federal Trade Commission and the Attorney General to aggressively investigate, to make certain there's no collusion going on.
Q Okay, thank you.
Q I'm wondering about two elements of this that the President has discussed in the past that are hard to quantify in their effects on oil prices but which I'm sure you guys have tried to separate out. One is, he's talked a lot about the increased demand from China and India, and that subject came up again when Hu Jintao was here last week. And the second, which is a more speculative one, but very hard to figure out, is how much the uncertainty in the oil markets about our growing confrontation with Iran is making a difference. If I could throw in a third one, which is, if you had had production resuming in Iraq, the way one had hoped at the beginning of -- at the end of the combat active part of the war in 2003, what kind of difference that would make?
DIRECTOR HUBBARD: Well, I think you can put your finger on a lot of the reason for the increase in price. It's because demand has increased significantly, especially in China, but also in India. And then there are actual supply challenges around the world. And then the Iranian situation obviously causes markets to -- creates angst in the marketplace, and the result of which is higher prices.
The important thing is, it just reinforces the point the President made at his State of the Union, that it is not appropriate for us to continue our addiction to oil, continue our addiction to a source of energy from places around the world that are not reliable. And that's why the President has called on Congress to -- and, in fact, he'll be meeting with some congressmen this afternoon to talk about it, to increase our investment in alternative energy sources. And we're confident, if that money is there, that we will start seeing the -- in the very near future, the rapid growth of alternative sources of fuel, which will reduce our dependence on foreign oil.
Q Just to follow up, though, on one element of that point. The President made the point that had ANWR been approved ten years ago, you'd get about a million barrels a day. Had the Iraq production resumed to the level that had been projected before the war, how much would that contribute today?
DIRECTOR HUBBARD: I actually don't know the precise answer to that. What's really most important, though, is that we've become less reliable on overseas sources of crude oil and other sources of energy, and more reliant on energy from within our 50 states [sic].
Q You have no estimate, though, about what Iraqi production could be?
DIRECTOR HUBBARD: I do not have it.
MR. HENNESSEY: We can get back to you.
DIRECTOR HUBBARD: Yes, we can get back to you with that, or --
Q That would be useful. I mean, just -- obviously, since the President has chosen one interesting example in ANWR, the Iraq one would be an interesting one to compare it to, whether that would be more or less than a billion -- a million a day.
DIRECTOR HUBBARD: Yes, we will have to get back to you on that.
Q I appreciate that, thanks.
Q Yes, why doesn't -- a representative of one of the attorney generals characterized a letter to them as saying you guys do the dirty work and we'll prosecute. If you want to encourage the states to prosecute on price-gouging law, why don't you favor a federal price-gouging law yourself?
DIRECTOR HUBBARD: Could you repeat the question, please?
Q Why encourage the states to investigate price-gouging? Why not support a federal price-gouging law?
DIRECTOR HUBBARD: Well, you know, there are federal anti-trust laws that we will be enforcing. And states have their own laws, as well. But our -- the federal anti-trust laws are very comprehensive. They deal with collusion, they deal with monopolistic pricing power. And the states have the enforcement authority to enforce the federal laws. But the federal laws are very comprehensive.
MS. PERINO: Let's make this next one the last question.
Q Regarding the President's proposal to ask Congress to lift the cap on the number of hybrid vehicles that would be eligible for the subsidy, if memory serves, I think that cap is around 60,000 vehicles per manufacturer, I may be wrong there. Do you have figures on how many hybrids are expected to be produced for sale in the U.S., and what the cost to the Treasury would be if all of those vehicles receive the -- are sold and receive the federal subsidy?
DIRECTOR HUBBARD: By the way, your number on the 60,000 is absolutely correct. I do not have here at my fingertips the answer to your question, but we will be happy to get that for you.
Q All right, who do I speak to, to get that?
MS. PERINO: Just call the Press Office, Chris.
Q Okay, thanks Dana.
MS. PERINO: Let me just go ahead and do one more.
Q Actually, my question was the same on the hybrid as far as the manufacturer's limit, and my understanding is that once that limit is reached, when you combine the total of the diesel fuel and the hybrid, that at that point, then the credit is phased out and you're just trying to lift that for this year?
DIRECTOR HUBBARD: That's exactly right.
MS. PERINO: And with that, we'll wrap it up, and if you have additional questions, which you may, certainly call the Press Office at the White House.
DIRECTOR HUBBARD: Thank you all so very much. We very much appreciate your interest.
MS. PERINO: Thank you. Bye.
END 2:53 P.M. EDT