Samuel Bodman hosts Ask the White House

Samuel Bodman

It is a pleasure to be here with you once again on Ask the White House. I should start off by saying that I know that rising energy costs are a concern to everyone. I look forward to addressing your concerns in my discussions with you today and explaining what we in the Administration are doing to help alleviate these prices. But, before I take your questions, I want to tell you about my trip yesterday to the Indianapolis Motor Speedway for Ethanol Day.

The Indy Racing League is setting an important and influential example for the rest of the country. The Speedway is, as you may know, the home of the Indy 500. I took a few laps around the speedway yesterday at speeds up to 200 mph and the car was powered by 10% ethanol. I'm particularly pleased that next year, the Indy Racing league will use 100 percent ethanol fuel to power their vehicles. Seeing ethanol meet the demands of an Indy car moving at more than 200 miles an hour will help convince many Americans that it can also meet their everyday driving needs. By adopting ethanol, they will gain a fuel that offers higher octane and better economy than methanol while delivering an equivalent level of safety.

On gas prices, President Bush is very focused on this issue and very concerned about the impact that high prices are having on family budgets and small businesses. If he could snap his fingers and bring prices down, he would do it; but because even someone as powerful as the leader of the free world can't do that, the President and we in his administration are working hard to take steps that we believe can help in the near term, the medium term and over the long term.

That's why the President has put forth a four point plan to help deal with high gasoline prices that proposes measures to ensure Americans are being treated fairly at the pump. We are increasing our efficiency through additional incentives for hybrid vehicles and increased fuel economy in our cars and increasing supplies by taking steps to keep more oil on the market, alleviate local and regional supply bottlenecks due to complicated fuel specifications and increase domestic supplies of oil and gas. Also by investing in new technologies like cellulosic ethanol, biodiesel fuels, plug in hybrids and hydrogen-powered cars, we are taking steps that will ultimately allow America to move beyond our dependence on hydrocarbons to meet our transportation needs.

This last point really is the most important. Even though we all want to do what we can today, we must remain focused on the ultimate goal to leverage American innovation, science and technology to fundamentally transform the way America produces and uses energy. This goal is at the heart of both the Advanced Energy Initiative and the American Competitiveness Initiative announced by the President in this year's State of the Union.

With that, I'm eager to get to your questions and talk more about these issues.

Vincent, from Hollis, Nh writes:
Secretary Bodman, Do you see a nationwide switch from gasoline to ethanol in the next twenty years? Thank you

Samuel Bodman
I believe that ethanol is going to become an increasingly more important factor in meeting future U.S. energy needs. As you may know, most ethanol today is made from corn, which obviously has other important uses as well and can make current ethanol production a bit expensive. As part of President’s Advanced Energy Initiative, the Department of Energy will be funding research to produce “cellulosic ethanol” which is made from agricultural waste products, wood chips and grasses. We believe this new type of ethanol holds great promise and can be commercially competitive in the next five or so years.

We already use about 4 billion gallons of ethanol a year in the U.S. By the end of this year we’ll probably get up to about 5.5 billion gallons. If we can increase that even more, we can reduce our dependence on foreign sources of fuel and also loosen our overall need for crude oil – which we hope would have a moderating affect on prices.

But ethanol is only part of the solution. The Department, in cooperation with American industry, is working to develop better hybrids with better batteries and cars powered by hydrogen fuel cells that, hopefully, will be in showrooms and on the highways by 2020.

Sean, from Virginia Beach, VA writes:
Do you see the price now on oil effecting our nations entire economy? Will it make a significant impact on larger corporations that are dependent on gas?

Samuel Bodman
Fortunately, the economy is strong and growing stronger. Almost all the key economic indicators point to prosperous times ahead. Unemployment is holding steady at 4.7 percent, lower than the average rate for the 1960s, the 1970s and the 1980s and the 1990s and the economy has created close to 2 million new jobs in the last 12 months alone. But it’s important to recognize the reasons why prices are so high including the growing world demand for energy, particularly in India and China (probably the most important factor); government red tape that makes brining new refining capacity on line very difficult; and the seasonal switching of fuel blends that always creates some tightness in the market. These conditions didn’t develop overnight Some of them, like the lack of new refinery construction in the United States, have been 30 years in the making. We want to do everything we can to help the market get the price of gasoline back down – which sometimes means getting the government out of the way.

Art, from Astoria, OR writes:
Given the economic incentive for alternative fuels, why is it that natural gas isn't much higher in priority, given the distribution availability now, it's relative ease for increased distribution, its relatively low cost(and clean burning qualities) for automobile conversion and incorporation, and given the tremendous N. American reserves known and probable, all of which would not involve being hostage to OPEC. Ethanol seems to me to be a largely lobbyist-pushed initiative because the advantages of ethanol over natural gas are few and far between, other than in theory being a so-called renewable resource, but please explain how it is more economic given the full unsubsidied costs and inefficiencies to produce it vs. natural gas. I'm not in the natural gas business nor directly or indirectly affiliated with it; I simply want what's best for the country, and I expect you to feel likewise. Thanks, Art, Astoria, OR

Samuel Bodman
Thanks for that question, Art. Natural gas as a fuel does have the advantage of being relatively clean-burning and many experts believe the U.S. has significant untapped reserves, especially in offshore areas along the Continental Shelf and in the Gulf of Mexico. This Administration favors opening up more offshore areas to environmentally sensitive drilling for new reserves in areas where nearby states favor such exploration.

At the moment, though, the U.S. is a net importer of natural gas and much of it is used to generate electricity. As I often joke, using natural gas to generate electricity is like washing your dishes in fine scotch! That’s why this Administration is working to encourage wider use of clean coal technologies and nuclear energy to meet the nation’s need for electric power. Over time, we hope that this will free up more of our natural gas supply for other uses, including manufacturing needs which will also help us keep jobs here at home.

Branden, from Lake Wales, FL writes:
Why is the government of the United States not focusing more on ethanol to find independence from foreign sources of oil? Why don't we follow the the Brazil method?

Samuel Bodman
Thanks for the question Branden. I can tell you we are focusing on making ethanol a more widely available and more cost effective choice for American consumers. One important step to doing that is finding ways to diversify the feedstocks we use in making ethanol. As I mentioned in an earlier response, President Bush has asked Congress for $150 million in next year’s budget to fund research and development on ways to derive ethanol from cellulosic biomass materials such as corn stalks, switch grass and wood chips. If this research is successful we will be able to broaden the geographic areas where we grow the raw materials for ethanol and reduce pressure on the nation’s corn crop, which is now our main source of supply. The President has set a goal of having of finding a way to produce a cost-competitive form of cellulosic ethanol by 2012.

We have taken a careful look at Brazil’s approach to ethanol production and there are some ways in which it can serve as a good model for the U.S. One is in their wide use of flex-fuel vehicles that can run on either gasoline or ethanol. I have been urging all auto manufacturers who do business in the U.S. to increase their production of these vehicles and I am pleased to say that we’ve seen some positive developments. DaimlerChrysler, for instance, recently committed to build 500,000 flex-fuel vehicles a year by 2008, or 25% of its total production. However, some methods Brazil relies on won’t work in the U.S. Brazil derives its ethanol from sugar cane, which grows easily there because of the subtropical climate and heavy rainfall. Sugar cane can only grow in a very limited part of the United States.

But you are right, expanding the use of homegrown ethanol, whether from corn or from other feedstocks can go a long way towards making America more energy independent. Just yesterday when I was in Indiana, I filled up the flex fuel vehicle I was riding in with E85, a fuel that is 85% ethanol and 15% gasoline. I have to tell you, it felt really good when I went to pay the bill that the money I was spending was staying here at home to support America’s farmers rather than going to pay for crude oil that most likely came from another country.

Anthony, from Charlotte, NC writes:
What's the state and status of Biodiesel initiatives? I simply can't understand why we do not have a urgent strategy to develop this industry? Am I, like many Americas, simply uninformed? Is this a major goal for the Administration this year?

Samuel Bodman
Anthony, we are very interested in promoting wider use of biodiesel fuels. They can deliver better fuel economy than gasoline while also reducing harmful tailpipe emissions. The Energy Policy Act that Congress passed last year and the President signed calls for nearly doubling the nation’s combined production of ethanol and biodiesel fuels to 7.5 billion gallons a year by 2012. The law also provided for tax credits of 50 cents a gallon for producers of biodiesel fuel made from waste grease and $1 a gallon for biodiesel fuel made from soybeans or other agricultural products.

The administration has also finalized rules that will reduce the emissions of sulfur and nitrogen oxides from on and off-road diesel engines by more than 90%. There is growing interest in bodies fuel in the marketplace and nearly all diesel-powered vehicles currently in service can run safely on a fuel mix that includes up to 20% biodiesel fuel.

Tim, from Columbus, Ohio writes:
Can the President issue an executive order to allow drilling in ANWR, off the coast of California, and the coast of Florida?

Samuel Bodman
Tim, the Administration is still urging Congress to approve environmentally responsible oil and gas exploration in the Artic National Wildlife Reserve. Some estimates are that there may be as much as 10 billion gallons of oil reserves there waiting to be tapped. But there are laws on the books that prevent drilling there that the President cannot simply ignore. Given the rising interest among U.S. consumers that something be done about the rising cost of gasoline, it is my hope that we can work with Congress to clear the way for environmentally responsibly exploration in ANWR this year.

But more domestic exploration for oil and gas isn’t the only answer. The President has also called for new investments in refinery capacity and has expressed his desire to work with Congress on legislation to help accomplish this, as well as improved efficiency in our automobile fleet, more hybrid vehicles and for funding to support the development of new technologies that will reduce our dependence on oil and gas altogether.

Jake, from Baldwin, New York writes:
Mr. Bodman,In order to truly be able to convert from using gasoline in cars to using the e-85 ethanol, ethanol must first be made mandantory in all 50 states, and future production of cars must include cars that are able to process ethyl. Does the government have any plans on making ethanol mandantory, or are we just expected to go forth and do it with a type of 'honor system'? -Jake

Samuel Bodman
Jake, I understand the frustration you must be feeling. But that is not up for us to decide. That is for the market to determine. It’s been my experience that when government thinks it knows better than the market, it usually doesn’t. The addition of E85 stations and pumps to the mix will come as Detroit puts more flex fuel vehicles on the road. If consumers ask for them, they’ll get them. I would also note that the Energy bill signed last year by President Bush includes tax credits for service stations that install E85 pumps.

I’m happy to report that I am already seeing movement in this area. As I mentioned in my opening, I was in Indianapolis just yesterday to cut the ribbon on the newest E85 pumps at Meijers. These pumps, incidentally, are being put in thanks in part to financial assistance provided by the U.S. Department of Energy – but also because the good people at Meijers and their partner General Motors recognize that demand for E85 is increasing and it makes sense for them to help meet the need.

Robert, from Van Alstyne Texas writes:
Mr. Bodman can we continue placeing existing tax on gasoline and fossil fuel with no tax for farmers produceing ethanol products only?

Samuel Bodman
That’s an interesting idea Robert, but I’m not sure it’s very practical. There are ways, however, that we are using the tax code to encourage the use of flex fuel and hybrid vehicles. In the Energy Policy Act that President Bush signed last August there was a tax credit worth up to $3,500 for hybrid vehicles sold in the U.S. The law said that each automobile manufacturer could sell a certain number of hybrids this year, but once that number was reached, no more credits would be given. The President, as part of his four point plan to confront rising gas prices, has asked Congress to lift that cap and make all the hybrids and bio-diesel vehicles sold this year eligible for the tax credit.

So, if you or anyone else logged in to Ask the White House happens to be in the market for a new car, I want to encourage you to consider a hybrid vehicle and check with your local car dealership about how you can qualify for the tax credit.

John, from Cincinnati,OH writes:
Why has this administration not been more aggressive with the research and funding of alternate fuel sources(Such as Hydrogen fuel cells)? War on terrorsism aside this is not a new issue. This country has been rushing headlong into this problem for decades.

As I mentioned earlier, the President believes, as do I, that new technologies that will allow America to move beyond our dependence on fossil fuels are the ultimate solution to our energy challenges and that remains our ultimate goal.

The development of alternative energy sources and fuels was an important part of the National Energy Policy released in 2001, and of course, the President announced the Hydrogen Fuel Initiative in 2003. But the President is continuing that commitment with the Advanced Energy Initiative that he announced in the most recent State of the Union Address. Hydrogen is a major part of that. In fact, hydrogen is at the center of our nation’s long-term strategy for energy and environmental security--because it can be produced from diverse, domestic energy resources, and it can be used in a fuel cell to produce electricity that powers a vehicle, or just about anything else that uses electricity, with only water and heat as byproducts.

To support this work, the President has asked Congress for $289 million in the budget request for FY 2007.

And that is just part of the Advanced Energy Initiative, which also includes research into promising energy technologies like solar cells, better batteries for gas-electric hybrid cars, ethanol and biofuels, as well as next-generation nuclear power. All in all, the President’s Initiative will increase our investment in these technologies by nearly 25%.

Bill, from Martinez, CA writes:
What are your plans to speed up our turn back to nuclear based electric power generation?Cheap reliable electric power is absolutely key to any other economic developement, don't you agree?

Samuel Bodman
You're right Bill that the future of power generation in the United States includes a renewed commitment to nuclear power. It’s safe and, as Greenpeace founder Patrick Moore recently wrote in the Washington Post, is the only large-scale, cost-effective energy source that can reduce carbon emissions while continuing to satisfy a growing demand for power. As you may know, the Energy Department estimates global energy demands may increase by as much as 50 percent by 2025. Where electricity is concerned, the growth may approach 75 percent. The rest of the world has already determined that nuclear power is going to play a role in meeting future energy needs.

There are 130 new reactors under construction or consideration around the world. The explanation for this is simple. The world needs more energy, cheaper energy and from sources that produce less carbon. But it also needs engineers and technicians and scientists to design, operate and construct them.

To meet the growing demand for electricity many emerging industrial economies, particularly India and China, are constructing new reactors. Others are expected to follow suit. The world must find a way to share the benefits of nuclear energy while minimizing risks to security.

In his 2007 budget, the President proposed a $250 million initial investment in the Global Nuclear Energy Partnership, a new program to reduce waste produced by nuclear power generation and that helps reduce the risk that nuclear materials or technology will fall into the wrong hands.

If you're interested, you can read more about the Global Nuclear Energy Partnership at www.energy.gov.

Cliff, from brimfield, Ohio writes:
Secretary Bodman: Out of all the Advanced Energy projects on the drawing board. Which one seems to be the most advanced and will be able to support Americans consumption in the near future? or are we talking long term on all? Thank You

Samuel Bodman
That’s an interesting question. All of the technologies under the Advanced Energy Initiative show great promise--that is why we are focusing on them. But some, as you suggest, are long-term projects. The International Thermonuclear Experimental Reactor, for instance, is just that--experimental: we are trying to discover whether clean energy from nuclear fusion is possible.

Some technologies, like solar photovoltaic cells are--we believe--on the verge of major technological breakthroughs. Others are already part of our energy mix. Clean coal technologies are allowing us to generate half of the nation’s electricity needs with vastly less pollution than was produced in the 1970’s; and we are getting much closer to making something called carbon sequestration commercially viable, which will address the greenhouse gas effects of coal plants. Other energy technologies such as ethanol and biodiesel are also up and running, helping to reduce our dependence on foreign sources of oil. The purpose of the Advanced Energy Initiative is to expand their use and reduce their cost, making them an even bigger part of our energy supply.

I want to thank everyone for their very interesting questions. I am grateful for this opportunity to explain some of the things we are doing to address our current energy challenges, and help ensure reliable and affordable energy supplies for the future. As always, you can find much more information on all these initiatives on our web site at www.energy.gov.