From: Jim Landers, The Dallas Morning News
Published December 3, 2004 12:00 AM

Energy Remains Challenge for Bush

WASHINGTON − Among the challenges facing President Bush in his second term is a big one left over from his first: energy.


The nation's electricity grid is strained.


Coal, oil and natural gas prices are at or near record levels.


Ice is melting in the Arctic, heating up the debate about fossil fuels and global warming.


New Republican seats in the Senate may give Mr. Bush a bill to allow oil and natural gas drilling in the Arctic National Wildlife Refuge in Alaska.


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Air pollution regulations in states that voted for Sen. John Kerry for president may increase auto fuel efficiency while cleaning the air. One could add 1 million barrels a day to the nation's oil supply, while the other could conceivably conserve just as much. Democrats and Republicans will war over the measures.


Even if both succeed, that would cover only a couple years' worth of U.S. oil demand growth. China's oil appetite is growing at an even faster rate, which is a major reason prices shot up around the world this year.


"You just see this tidal wave of demand coming around the world," said Daniel Yergin, chairman of Cambridge Energy Research Associates.


Oil is causing the most anxiety. Some say world oil production has peaked. Others say it will soon top out everywhere but the Persian Gulf, which would concentrate enormous power in Saudi Arabia, Iran, Iraq, Kuwait and the United Arab Emirates. Still others argue the problem is access for drillers to politically sensitive areas.


Rep. Joe Barton, R-Ennis, chairman of the House Energy and Commerce Committee, looks to Mr. Bush's national security team for the biggest impact on the search for solutions. "Iraq is the one country that has significant potential to increase production," he said. "There were a lot of reasons to free Iraq and make it stable, but that's a big one for the United States."


Mr. Barton, however, sees little prospect of pushing through Congress the comprehensive energy legislation Mr. Bush has favored for four years. He says he won't exhaust his committee with another attempt to pass it.


Congress has tied itself in knots trying to satisfy the many energy and environmental constituencies linked in such a bill.


Comprehensive policy Senate energy committee chairman Pete Domenici, R-N.M., however, vows to press ahead with an overall energy bill as well as separate budget legislation that would open the coastal plain of the Arctic National Wildlife Refuge. Those are steps the White House wants as well.


"The president remains committed to enacting a comprehensive energy policy," said White House spokesman Trent Duffy.


Many in Congress expected high prices to act as the impetus to get a bill passed. Gasoline is up an average of 50 cents a gallon since Mr. Bush took office in January 2001. Natural gas prices have gone up 13 percent.


Late this year, Congress responded with loan guarantees for a natural gas pipeline reaching from the Alaskan Arctic to the lower 48 states and with tax cuts for alternate sources of energy.


Congress went along with Mr. Bush in increasing funding for the Strategic Petroleum Reserve, which will soon hold 700 million barrels of oil -- enough to replace all imports for about two months.


In the next few years, Mr. Yergin said, more oil will come into the market from places such as the Caspian Sea and West Africa. That will weaken oil prices and the political pressure for policy action.


"Several things have come together this year -- uncertainty in Russia, unrest in the Middle East, booming Asian oil markets -- to focus attention both on the challenge the oil industry faces to develop new supplies and also on energy security," Mr. Yergin said.


"In the next couple of years, we see a build up in non-OPEC supply coming into the system," he said. "Our view is there are ample resources if there is access and time enough to develop them. But this is one of those times when you need to do everything, from developing new resources to increasing efficiency."


California's strict new regulations mandating lower emissions of greenhouse gases may force automakers to build more fuel-efficient cars, said Therese Langer, director of transportation programs at the American Council for an Energy-Efficient Economy. The California regulation requires a 30 percent cut in carbon dioxide emissions by 2016 for new cars and light trucks.


Seven Northeastern states have in the past followed California's lead on tougher clean air standards, and may do so again.


"We definitely see the state work on this as a bright spot," Dr. Langer said. Automakers are expected to fight the California regulations in court. They disrupted earlier clean-air requirements when a federal judge ruled that only Congress had the authority to set fuel-efficiency standards for cars and trucks. The new requirement makes no mention of fuel efficiency, saying only that consumers should save more in operating costs than the $1,000-per-vehicle price hike expected to meet the greenhouse gases test.


Mark Baxter, director of the Maguire Energy Institute at Southern Methodist University, says opening the Arctic National Wildlife Refuge (ANWR) and increasing fuel efficiency through clean air standards would buy the country time needed to come up with more far-reaching solutions to the energy challenge.


"It takes a long time to put alternatives in place, and we are in a crunch right now," he said.


Mr. Baxter is looking to nuclear fusion to power a transition to hydrogen-fueled vehicles as the way to escape dependence on insecure, diminishing oil resources. But other alternatives -- solar power, plant-based ethanol fuel, wind energy -- could also achieve breakthroughs, he said.


"We need increases in production the Republicans are backing, and conservation moves the Democrats are making, to get us over the hurdle until we have time to figure out the best alternate way for producing energy to carry not only us, but the world, forward," he said.


Source: Knight Ridder/Tribune Business News


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