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Energy Chief Sketches Plans to Curb Rule Limiting Supply

Joseph Kahn.
Produced by
The New York Times

WASHINGTON, March 19 — Energy Secretary Spencer Abraham said today that the nation faced a "major energy supply crisis" akin to the oil embargoes of the 1970's and indicated that the Bush administration intended to overhaul regulations to ease fuel exploration and help energy production and distribution.

Mr. Abraham, outlining the agenda for President Bush's energy task force, said rising electricity and natural gas prices were serious enough to tip the nation into recession. Only a major push to eliminate environmental and other regulatory obstacles to increased supplies will alleviate shortages, he said.

"The bad news is that the situation in California is not isolated, it is not temporary, and it won't fix itself," Mr. Abraham said.

But like several other Bush administration officials who have warned of an energy crisis in recent weeks, Mr. Abraham did not mention any policy initiatives that would help California or other states to limit price spikes or increase supplies. He said detailed initiatives would come in several weeks, when Mr. Bush's task force submits recommendations for legislation and rule changes to promote energy production.

President Bush, speaking as he met with his energy team at the White House this afternoon, said the focus was long term. "One thing is for certain: there are no short-term fixes," he said.

The administration has sought to use California's problems to promote the opening of more federal land, including 1.5 million acres on the coastal plain of the Arctic National Wildlife Refuge, for oil and natural gas drilling and coal mining. The opening of the Alaskan wilderness was the only specific policy change that Mr. Abraham endorsed today in a lengthy address on energy problems to industry executives gathered for an energy conference here.

"While the resources of A.N.W.R. won't make us energy independent, they will help increase America's energy security by ensuring a more diverse supply of oil," he said, adding that oil and gas exploration would proceed on only a small percentage of the wilderness.

But that aspect of the Bush energy plan seems likely to face stiff resistance in Congress, where many Democrats oppose the drilling in the wilderness for environmental reasons.

A group of 500 scientists, organized by leading environmental groups, plans to present a letter to Mr. Bush on Tuesday urging him to reconsider making drilling in the Alaskan refuge a centerpiece of his energy strategy.

Environmental leaders also criticized Mr. Abraham's comments about California, arguing that the administration was using the crisis there as a cover to advance the energy industry's agenda. "It's distressing that California's crisis is being used as a pretext for outmoded and misguided national energy policies," said Hal Harvey, president of the Energy Foundation, a partnership of foundations that promote energy efficiency and renewable energy.

The renewed focus on energy policy also came just after the Organization of the Petroleum Exporting Countries decided to lower oil production, a move that threatens to increase gasoline prices as the summer driving season approaches.

Mr. Bush often said during the campaign that he would work to increase foreign oil supplies through quiet diplomacy with Arab producers. Administration officials acknowledged today that Mr. Abraham had sought to persuade OPEC leaders to maintain or increase production levels.

"The actions taken this weekend were disappointing," said Ari Fleischer, the White House press secretary, "but that won't stop the president from continuing the outreach to talk to our allies, to talk to our friends, and working toward a long-term approach so that the supplies are stable."

Mr. Abraham told the energy conference, held at the United States Chamber of Commerce, that energy problems were already having a profound effect on the economy. He cited an estimate from the National Association of Manufacturers that rising fuel prices from 1999 to 2000 cost American business and consumers more than $115 billion, knocking roughly a full percentage point off overall economic growth.

While he declined to discuss detailed policy proposals to address the energy crisis, Mr. Abraham indicated that environmental protections would be a target. He said the administration wanted to find a middle ground between environmental concerns and the need for new energy supplies, but criticized the Clinton administration on the ground that it had leaned too far in the direction of protecting the environment.

He said oil companies were unwilling to build refineries in this country, at least in part because the government required them to provide some 15 types of gasoline to meet various regional antipollution standards.

The nation has rapidly become more dependent on natural gas, Mr. Abraham said. But he added that 40 percent of potential gas reserves in this country were on federal lands that were closed to exploration, suggesting that some of those reserves needed to be opened to help bring down soaring natural gas prices.

He also cited estimates that electricity demand would grow by 45 percent over the next 20 years and that the nation needed to add 90 power plants a year to keep up with that demand. That will happen only if power companies break through the logjams that have made it difficult to build such plants, he said.

(c) Copyright: The New York Times

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