Bush has plan to end oil 'addiction'

Education, Social Security initiatives in State of Union speech

President Bush's speech topics included Iraq, entitlements for baby boomers, Iran and energy.
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INITIATIVES

Cut 140 government programs
 

Launch commission to examine impact of baby boom retirements
 

Increase research into clean energy
 

Train 70,000 high school teachers to lead courses in math and science

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WASHINGTON (CNN) -- On the heels of a politically tough year, President Bush used his State of the Union speech Tuesday to propose weaning the United States from its "addiction" to imported oil and studying how the baby boom generation may strain federal entitlements.

The president also spent a good deal of his address on the U.S.-led war in Iraq, efforts to fight terrorism and Iran's nuclear program.

An instant CNN/USA Today/Gallup opinion poll of people who watched the speech found that more than half reacted positively. (Watch a slide show of the highlights of the speech)

Bush also offered a proposal aimed at ending U.S. dependence on foreign oil as more Americans express concern about the rising cost of gasoline and home heating fuel. (Watch the president describe America's 'serious' addiction to oil -- 2:20)

"Here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world," the former oil executive said.

"Tonight, I announce the Advanced Energy Initiative -- a 22 percent increase in clean energy research at the Department of Energy, to push for breakthroughs in two vital areas," Bush said. "To change how we power our homes and offices, we will invest more in zero-emission, coal-fired plants; revolutionary solar and wind technologies; and clean, safe nuclear energy.

"We will increase our research in better batteries for hybrid and electric cars, and in pollution-free cars that run on hydrogen. We will also fund additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips, stalks,or switch grass." (Domestic points)

To produce the technicians that might bolster such energy research, Bush also called for a federal education initiative "to double the federal commitment to the most critical basic research programs in the physical sciences over the next 10 years."

"This funding will support the work of America's most creative minds as they explore promising areas such as nanotechnology, supercomputing, and alternative energy sources."

That commitment would also make "permanent the research and development tax credit, to encourage bolder private-sector investment in technology," he said.

On the international front, Bush invited Americans to choose action over isolationism in his policy against tyranny and to strengthen U.S. economic ties with other nations.

"We will choose to act confidently in pursuing the enemies of freedom -- or retreat from our duties in the hope of an easier life," Bush said. "We will choose to build our prosperity by leading the world economy -- or shut ourselves off from trade and opportunity."

Instant poll

In interviews with 464 adult Americans who watched the speech, 48 percent said they had a very positive reaction. That's well short of the three-quarters of viewers who reacted favorably to Bush's 2002 State of the Union address.

Twenty-seven percent of Tuesday's viewers said they had a somewhat favorable reaction to the speech, while 23 percent said they felt negatively about it. (See the poll results)

The poll had a margin of error of plus or minus 5 percentage points.

Because the poll reflects the opinions of only those who watched the State of the Union, it reflects more favorable opinions than a random sampling of the country as a whole. The audience was 43 percent Republican, 23 percent Democratic and 34 percent Independent.

War in Iraq

The president was optimistic about the war in Iraq that has claimed more than 2,200 U.S. troops since March of 2003. (International points)

"The road to victory is the road that will take our troops home," Bush said. "As we make progress on the ground, and Iraqi forces increasingly take the lead, we should be able to further decrease our troop levels -- but those decisions will be made by our military commanders, not by politicians in Washington, D.C."

And the president also focused attention on Iraq's neighbor Iran, which U.S. and European officials suspect is using a civilian nuclear power program to develop nuclear weapons.

Iran is "defying the world with its nuclear ambitions -- and the nations of the world must not permit the Iranian regime to gain nuclear weapons," Bush said. (Transcript)

According to a CNN count, the president was interrupted by applause 64 times, one of those interruptions coming from the Democratic side of the aisle when he said:

"Congress did not act last year on my proposal to save Social Security. ..."

Bush's longest applause lasted 52 seconds, for his mention of war veteran Daniel Clay. The speech lasted about 50 minutes.

Baby boomer retirement

Bush announced initiatives on entitlement issues in the wake of his Social Security private accounts proposal, which failed to gain popular support.

"Tonight, I ask you to join me in creating a commission to examine the full impact of baby boom retirements on Social Security, Medicare and Medicaid," Bush said. "This commission should include members of Congress of both parties, and offer bipartisan answers. We need to put aside partisan politics, work together and get this problem solved."

Bush is coming off a difficult year. Hurricane Katrina devastated the Gulf Coast and the government's response hurt the administration politically. That, a lobbying scandal on Capitol Hill and rising discontent over U.S. involvement in wars abroad has lowered Bush's approval rating to 43 percent in a recent CNN/USA Today/Gallup poll.

New court judge

Bush took the rostrum in the House chamber during a significant political shift in the Supreme Court. Earlier on Tuesday, the GOP-dominated Senate voted to approve his nominee Samuel Alito, who was sworn in just months after the president's first pick to the high court, John Roberts, assumed the role of chief justice.

Alito joined his new colleagues at Bush's address. (Full story)

He recognized the Supreme Court's "two superb new members, Chief Justice John Roberts and Justice Sam Alito."

Delivering a Democratic response Tuesday was the moderate governor of Virginia, Tim Kaine, who defeated a Bush-backed candidate in November. (Full story)

"The federal government should serve the American people," Kaine said. "But that mission is frustrated by this administration's poor choices and bad management. (Watch Kaine call for a better way -- 10:43)

"Families in the Gulf Coast see that as they wait to rebuild their lives. Americans who lose their jobs see that as they look to rebuild their careers. And our soldiers in Iraq see that as they try to rebuild a nation. I want to offer some good news tonight -- there is a better way."

Bush: End 'addiction' to oil

In State of the Union, also focuses on education, health care and defends handling of the war on terror

BY CRAIG GORDON
WASHINGTON BUREAU

February 1, 2006

The Energy Security Leadership Council, a group of former military leaders and top business executives, has formed to lobby Congress to launch a serious and sweeping campaign to cut America's thirst for foreign oil. The group is co-chaired by a retired commandant of the Marine Corps, Gen. P.X. Kelley, and by FedEx founder Frederick Smith.

The group's call for higher fuel-economy standards for cars and trucks is a no-brainer. Standards for cars haven't been raised in two decades, and standards for light trucks have been only slightly increased. The group's call for greater development of ethanol and other biofuels also makes sense.

But more drilling for oil in the United States and off its shores, another goal for the group, is a temporary step that could produce lasting environmental damage if pursued indiscriminately. The United States has less than 3 percent of the world's oil reserves.

Even so, lobbying from military and business leaders will be invaluable if it helps prod Congress into sensible steps to cut America's foreign oil dependence. It's critical for national security, and it's good for business' bottom line.

The future of energy

The end of the Oil Age

Oct 23rd 2003
From The Economist print edition

Ways to break the tyranny of oil are coming into view. Governments need to promote them.

“THE Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” This intriguing prediction is often heard in energy circles these days. If greens were the only people to be expressing such thoughts, the notion might be dismissed as Utopian. However, the quotation is from Sheikh Zaki Yamani, a Saudi Arabian who served as his country's oil minister three decades ago. His words are rich in irony. Sheikh Yamani first came to the world's attention during the Arab oil embargo of the United States, which began three decades ago this week and whose effects altered the course of modern economic and political history. Coming from such a source, the prediction, one assumes, can hardly be a case of wishful thinking.

Yet a generation after the embargo began, the facts seem plain: the world remains addicted to Middle Eastern oil (see article). So why is Sheikh Yamani predicting the end of the Oil Age? Because he believes that something fundamental has shifted since that first oil shock—and, sadly for countries like Saudi Arabia, he is quite right. Finally, advances in technology are beginning to offer a way for economies, especially those of the developed world, to diversify their supplies of energy and reduce their demand for petroleum, thus loosening the grip of oil and the countries that produce it.

Hydrogen fuel cells and other ways of storing and distributing energy are no longer a distant dream but a foreseeable reality. Switching to these new methods will not be easy, or all that cheap, especially in transport, but with the right policies it can be made both possible and economically advantageous. Unfortunately, many of the rich world's governments—and above all the government of America, the world's biggest oil consumer—are reluctant to adopt the measures that would speed the day when the Saudis' worst fears come true.

The $7 trillion heist

If treating the West's addiction to oil will be costly, is it really worth doing? To be sure.

 Petro-addiction imposes mighty costs of its own.

First, there is the political risk of relying on the Organization of Petroleum Exporting Countries (OPEC). Oil still has a near-monopoly hold on transport. If the supply is cut off even for a few days, modern economies come to a halt, as Britain discovered when tax protestors blockaded some domestic oil depots two years ago. And despite what sound like large investments in new oil fields in Russia and elsewhere, Saudi Arabia's share of the world oil market will actually grow over the next two decades simply because it has such huge reserves of cheap oil. Geology has granted two-thirds of the world's proven oil reserves to Saudi Arabia and four of its neighbours. Because of this continuing concentration of supply, the risk of a disruption to oil flows will continue to be a threat, and may even rise.

That points to a second sort of cost. According to one American government estimate, OPEC has managed to transfer a staggering $7 trillion in wealth from American consumers to producers over the past three decades by keeping the oil price above its true market-clearing level. That estimate does not include all manner of subsidies doled out to the fossil-fuel industry, ranging from cheap access to oil on government land to the ongoing American military presence in the Middle East.

The final disguised cost of oil is the damage it does to the environment and human health. Unlike power plants, which are few in number and so easier to regulate, cars are ubiquitous and much more difficult to control. The transport sector is a principal source of global emissions of greenhouse gases.

The only long-term solution to this connected set of problems is to reduce the world's reliance on oil. Achieving this once seemed pie-in-the-sky. No longer. Hydrogen fuel cells are at last becoming a viable alternative. These are big batteries that run cleanly for as long as hydrogen is supplied, and which might power anything in or around your home—notably, your car. Hydrogen is a fuel that, like electricity, can be made from a variety of sources: fossil fuels such as coal and natural gas, renewables, even nuclear power. Every big car maker now has a fuel-cell programme, and every big oil firm is busy investigating how best to feed these new cars their hydrogen.

Another alternative likely to become available in a few years is “bioethanol”. Many cars (quite a few of them in America) already run on a mixture of petrol and ethanol. The problem here is cost. At the moment, the ethanol has to be heavily subsidised. But that might alter when biotechnology delivers new enzymes that can make ethanol efficiently from just about any sort of plant material. Then, the only limit will be how much plant material is available (see article).

All in good time

Such changes will not occur overnight. It will take a decade or two before either fuel cells or bioethanol make a significant dent in the oil economy. Still, they represent the first serious challenges to petrol in a century. If hydrogen were made from renewable energy (or if the carbon dioxide generated by making it from fossil fuels were sequestered underground), then the cars and power plants of the future would release no local pollution or greenhouse gases. Because bioethanol is made from plants, it merely “borrows” its carbon from the atmosphere, so cannot add to global warming. What is more, because hydrogen can be made in a geographically distributed fashion, by any producer anywhere, no OPEC cartel or would-be successor to it could ever manipulate the supplies or the price. There need never be another war over energy.

It all sounds very fine. What then is the best way to speed things up? Unfortunately, not through the approach currently advocated by President George Bush and America's Congress, which this week has been haggling over a new energy bill. America's leaders are still concerning themselves almost exclusively with increasing the supply of oil, rather than with curbing the demand for it while increasing the supply of alternatives. Some encouragement for new technologies is proposed, but it will have little effect: bigger subsidies for research are unlikely to spur innovation in industries with hundreds of billions of dollars in fossil-fuel assets. The best way to curb the demand for oil and promote innovation in oil alternatives is to tell the world's energy markets that the “externalities” of oil consumption—security considerations and environmental issues alike—really will influence policy from now on. And the way to do that is to impose a gradually rising gasoline tax.

By introducing a small but steadily rising tax on petrol, America would do far more to encourage innovation and improve energy security than all the drilling in Alaska's wilderness. Crucially, this need not be, and should not be, a matter of raising taxes in the aggregate. The proceeds from a gasoline tax ought to be used to finance cuts in other taxes—this, surely, is the way to present them to a sceptical electorate.

Judging by the debate going on in Washington, a policy of this kind is a distant prospect. That is a great shame. Still, the pace of innovation already under way means that Sheikh Yamani's erstwhile colleagues in the oil cartel might themselves be wise to invest some of their money in the alternatives. One day, these new energy technologies will toss the OPEC cartel in the dustbin of history. It cannot happen soon enough.