Our nation faces a number of challenges to our
energy future, and I want to share with you my thoughts on how we
got where we are and where we need to be heading if we want to
maintain our current economic well-being.
May 16, Senator Lott and I, along with Senator Murkowski and
others, introduced S. 2557, a bill to revise and revitalize our
nation's energy policies.
have taken this step because for the last eight years the
Clinton/Gore Administration has done little or nothing to ensure
adequate supplies of conventional energy--the crude oil, natural
gas, hydropower, nuclear energy, and coal which the nation needs to
run its power generation systems and keep our trucks, railroads,
farms, and cars running.
fact, the Clinton Administration in many ways has adopted policies
designed to limit the use of fossil fuels without providing
alternatives (other than wind, solar, and biomass, which currently
account for about 3 percent of the country's total energy
Recently, Secretary Richardson released an
Energy Department report dealing with the nation's electric
generation and delivery system. He called it "a third world system"
and warned of catastrophic power failures this summer.
electricity industry is not a "third world system"--it is without a
doubt the finest in the world. It has some problems but it is not
on the verge of complete collapse.
did Secretary Richardson recommend to help our electricity grid?
Nothing, except demand side management--he wants us to reduce
electricity consumption. The report contains not one word about
increasing baseload generating capacity.
Clinton Administration's policies toward nuclear can be described
as "benign neglect." About 20 percent of our electricity comes from
nuclear power plants--the second largest source of electricity
after coal. Further, the United States has 2,200 reactor years of
operating experience, and many nations that rely on
nuclear--France, Japan, and South Korea--have achieved their goals
through partnerships with U.S. nuclear power plant suppliers. Yet
the Administration acts as though nuclear doesn't exist. Some in
the utility industry describe the Administration's attitude toward
nuclear power as overtly "hostile."
Fifty-five percent of our country's
electricity is generated by coal-fired boilers. Eighty-eight
percent of the electricity in the Midwest comes from coal that is
our most abundant domestic fossil fuel. But instead of focusing
hard on how to use coal more efficiently and more cleanly, the
Administration, through the Environmental Protection Agency, has
declared war on coal-fired generators by rewriting the Clean Air
Act and suing a number of utilities for alleged violations.
Indeed, the Administration's
global-warming and climate-change apostles have projected plans
that essentially zero out coal use by 2010--a most unattainable
and, in my mind, most undesirable objective, unless the plan is to
dump our economy.
Electricity from hydro provides about 10
to 12 percent of our electricity. It is clean, renewable power, but
Secretary Bruce Babbitt talks a great deal about taking down dams,
especially in the West, where we are highly dependent on power from
Finally, and most importantly, the
Administration has said no to oil and
gas exploration on the coastal plain of the Alaska National
Wildlife Refuge, no to outer
continental shelf exploration outside of western and central Gulf
of Mexico, and no to new oil and gas
leasing on our onshore public lands.
nation's most pressing long-term energy problem is our dependence
on foreign sources of crude oil and petroleum products. We should
be doing more, not less, to develop our domestic energy
2557, the legislation I mentioned earlier, has as its overall
objective to reduce our dependence on imported crude oil to below
50 percent of total demand.
crude oil and gasoline prices shot up this year we were importing
about 55 percent of our crude oil needs. According to the latest
Energy Information Administration (EIA) statistics on U.S.
dependence on foreign crude for the week ending June 23, 2000, it
was just over 57 percent--or about nine million barrels per
United States is now importing about 400,000 barrels per day more
than we imported in June 1999.
addition, the United States is importing more finished petroleum
products. In January 1999, our daily import level for motor
gasoline, for example, was 483,000 barrels per day. During the week
ending June 23, according to the EIA, the United States imported an
average of 562,000 barrels per day of motor gasoline. Given that
about 30 domestic refineries have closed during the Clinton/Gore
years, supply shortfalls and higher import levels are not
EIA estimates that our dependence on imports could rise to more
than 65 percent by 2015. Under current energy policies we may get
there before 2015.
crude oil production has fallen 17 percent since 1993, and the
price for a barrel of crude has risen from $16.40 in 1993 to $29.00
as of June 23, 2000.
Gasoline prices have risen sharply to a
national average of a little more than $1.60 per gallon. Prices
have been much higher in the Midwest because of reformulated
gasoline requirements and pipeline operational problems. Natural
gas (and this is the real sleeping story) has been selling for over
$4.50 per thousand cubic feet recently, up from $2.65 only a few
months ago. Most consumers won't feel this price rise until the
Administration has published National Energy Plans but they are
merely words on paper. The plans pay lip service to the need to
increase domestic oil and gas production, the need to use coal more
cleanly, the need to improve nuclear research, and the need to
conserve and enhance the use of renewable energy.
practice though, the Administration has consistently underfunded
research on more efficient and clean uses of coal for electric
generation. It has underfunded research into how we can improve the
efficiency and safety of our nuclear stations, and it has refused
to recognize hydropower as a renewable resource--as a matter of
fact, it is the Clinton/Gore Administration that removed hydro from
the list of renewable energy resources.
Instead, the Administration has supported
greater use of solar energy, wind power, and energy from biomass,
and has demanded significant increases in federal money to
encourage more use of these sources. The Vice President recently
offered a rehash of these ideas as his answer to solving U.S.
dependence on foreign oil. There is no new news here, just old news
from a different person.
There is nothing wrong with supporting
renewables, we have been subsidizing solar and wind now for
twenty-five years, but they represent only about 3 percent of our
total energy demand--and that is after $17 billion in direct
spending and tax incentives for renewables.
think renewables--including hydropower--must play a role in meeting
U.S. energy needs, but the real solutions lie in boosting domestic
oil and natural gas production and finding cleaner more efficient
ways to use coal to generate electricity.
bill that Senator Lott and I have introduced is the product of
several months of discussions and analyses by a number of Senators,
led by Energy and Natural Resources Committee Chairman Frank
Murkowski. It will not solve all of our energy problems, but it is
a big step in the right direction.
me take just a few moments to explain a few of the major steps S.
2557 takes to improve our energy situation.
bill will require the Secretary to report annually on progress
toward limiting our dependency on foreign oil to 50 percent or
less. The Secretary must lay out legislative and administrative
steps to meet this goal and recommend alternatives for reducing
crude oil imports.
increase our use of natural gas, the bill creates an Interagency
Working Group to design policy and strategy for greater use of
bill extends authority for the Strategic Petroleum Reserve and
prevents drawdown of the reserve until the President and the
Secretary of Defense agree that a drawdown does not pose a threat
to national security.
bill contains a title to protect consumers and low-income families
and to encourage energy efficiency. It expands eligibility for the
Residential Weatherization Program, creates a program to educate
and help consumers avoid seasonal price fluctuations, and
establishes a heating oil reserve to help the Northeast deal with
shortages and severe price fluctuations.
2557 also contains a title that addresses increased use of other
domestic energy sources like coal and more efficient uses of our
nuclear and hydro resources. It also requires the Federal Energy
Regulatory Commission to report on how costs for relicensing
hydroelectric facilities can be lowered.
bill also authorizes a federal oil and gas leasing program for the
Arctic National Wildlife Refuge in Alaska. The potential for large
oil reserves there is high--about 16 billion barrels. Production
from the reserve could be as high as 1.5 million barrels per day,
and production could last 20 years or more. That amount of
additional production alone would, if added to today's domestic
production, reduce our 60 percent dependence on foreign crude oil
to just over 50 percent--a huge reduction.
bill also contains provisions to streamline and reduce the costs
associated with oil and gas leasing on federal lands to enhance
domestic oil production and encourage small oil producers to keep
low volume oil wells operating during harsh economic times.
Finally, the legislation includes tax
credits for wind and biomass energy and for electricity produced by
steel-making facilities, tax incentives for residential solar
energy use, help for consumers who want to convert from heating oil
to natural gas and for consumers who need to refurbish home heating
oil storage equipment.
bill is only a first step in focusing on the energy problems the
Clinton/Gore Administration has deliberately ignored for the past
eight years. Rather than send Secretary Richardson around the world
with his tin cup, begging the oil sheiks and Venezuela and Mexico
to lower crude prices and increase their production, we are
providing the blueprint needed to reduce our dependency on imported
Crude oil and gasoline prices have been
slowly rising over the last several months after OPEC said it would
increase production last February. Alex Lawler commenting in the
Washington Post on May 12 about OPEC's
OPEC's recent increase in its oil-output
quotas may be too small to meet rising demand later this year, the
International Energy Agency said, indicating that prices could rise
from levels now at a seven week high.
Lawler was right. Gasoline prices since May have continued to rise
despite OPEC's increased crude oil output, and other problems, such
as pipeline outages, have contributed to gas prices as high as
$2.50 in the upper Midwest.
Because of the Clinton/Gore
Administration's continued neglect of energy matters we are facing
continued higher prices for gasoline and possible shortages of
natural gas and heating oil this winter. It's time to take action
and the Senate has taken the lead.
final note: The Senate has passed the Electric Reliability 2000 Act
(S. 2071). The bill provides a long-term solution to reliability by
creating a national reliability organization--similar in structure
to the Securities and Exchange Commission--it will give the Federal
Energy Regulatory Commission immediate authority to prevent outages
this summer. We may not be able entirely to avoid problems this
summer, but it is a start toward a more comprehensive legislative
product that would address impediments to free and open competition
and would increase domestic energy production
The Honorable Larry E.
Craig, a Republican, represents Idaho in the U.S. Senate.