Obama to Outline Energy Plan

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Obama to Outline Energy Plan

Post by ToddS on Wed Mar 30, 2011 10:11 am


  • MARCH 30, 2011, 9:32 A.M. ET

Obama to Outline Energy Plan


By LAURA MECKLER


WASHINGTON—President Barack Obama, under pressure to
respond to rising gas prices, on Wednesday will outline initiatives to
cut U.S. reliance on foreign oil, including plans to expand oil
production, increase the use of natural gas in vehicles and boost
ethanol production.

He also is promising that the federal government will purchase only
alternative-fuel vehicles, such as hybrid and electric cars, by 2015.

Mr. Obama's latest attempt to take the initiative on energy policy
comes as Republicans in Congress are stepping up criticism of the
administration for not allowing more oil and gas drilling in the U.S. On
Tuesday, House Republicans said they would introduce legislation
requiring the administration to sell more offshore leases and to issue
drilling permits within a set time frame.

The political heat over energy policy is rising in tandem with the
price of gasoline and diesel fuels at filling stations, in a ritual that
has become familiar in Washington since the oil-price shocks of the
mid-1970s. "We've been having this conversation for nearly four decades
now," Mr. Obama said during a March 11 news conference. "Every few
years, gas prices go up; politicians pull out the same old political
playbook, and then nothing changes."

The White House will cast the new effort—a few new ideas combined
with many that have been previously announced—as an attempt to deal with
the nation's long-term energy challenge, as well as the high gas prices
of the moment.

Mr. Obama will put forward an overall goal of reducing oil imports by
one-third by 2025, with about half the reduction from decreasing
consumption and half from increasing domestic supply, the White House
said.

Driving the debate now is consumer grumbling about gasoline prices
that are up nearly 15% on average since Feb. 7, according to the Energy
Department. In some parts of the country, including southern California,
gasoline prices have hit $4 a gallon—the highest levels since the
gas-price spike of 2008. Worries over rising prices for gasoline, food
and other goods contributed to a sharp drop in consumer confidence in
the economic outlook, which had been rebounding since the depths of the
recession in 2009, the Thomson Reuters/University of Michigan Surveys of
Consumers said in a report last week.
The administration on Tuesday sought to focus attention on oil
companies, releasing a report from the Interior Department that said
more than two-thirds of the offshore oil leases in the Gulf of Mexico
and more than half of onshore leases on federal land aren't in use.
These leases give companies the right to drill but are neither producing
oil nor under active exploration, the agency said.

"This report shows millions of acres that have already been leased to
industry for oil and gas productions sit idle," Interior Secretary Ken
Salazar said in a statement. Mr. Obama also raised the issue of unused
leases in his March news conference, and his 2012 budget plan included
an extra fee on oil companies that hold idle leases. That proposal would
need congressional approval.

The White House said it would offer new incentives to more rapidly
develop these areas, though it wasn't specific about what they would be.
A fact sheet released Wednesday morning said the administration is
studying a graduated royalty-rate system used in Texas.

Oil-industry representatives say the administration's complaints
about unused leases ignore the reality of the oil-exploration business,
in which companies scour large areas to find the relatively few tracts
with oil and gas reserves worth developing.

Republicans also have complained that the administration has dragged
its feet in issuing permits for new domestic production since it
formally lifted a deep-water drilling embargo in the Gulf after the [You must be registered and logged in to see this link.] PLC oil spill.

"These bills will directly reverse Obama administration actions that
have locked-up America's vast offshore oil and natural gas resources,"
Rep. Doc Hastings (R., Wash.), chairman of the House Natural Resources
Committee, said in a statement accompanying the bills Republicans
outlined on Tuesday.
As part of its effort to reduce oil demand, the White House is
setting a goal for the nation to break ground on four new
commercial-scale cellulosic or advanced biofuel refineries to produce
ethanol in the next two years. It wasn't clear what incentives or
financing the administration would propose for the biofuel initiative.
The administration is also expected to back new subsidies for
governments or companies to purchase vehicles that run on natural gas
for their fleets, they said.

The White House had previously said it would continue raising
fuel-efficiency standards for cars and establish standards for heavy
trucks.

In his 2012 budget, Mr. Obama also proposed tax credits to encourage purchase of electric vehicles.
Mr. Obama also will reiterate a proposal contained in his State of
the Union address that the U.S. adopt a standard that would require 80%
of electricity to be generated from clean-energy sources by 2035. The
administration has defined clean energy as nuclear power, natural gas
and clean coal, as well as renewable sources such as wind and solar.


—Ryan Tracy contributed to this article. Write to Laura Meckler at [You must be registered and logged in to see this link.]


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