By Nancy Dunne in Washington
Published: March 19 2001 18:40GMT | Last Updated: March 20 2001 07:27GMT
The US faces a severe energy crisis and needs a new strategy to prevent supply
falling far behind demand, Spencer Abraham, the US energy secretary, said on
Monday.
The energy sector in the US, the world's largest importer and consumer of oil,
is "strained to capacity" and confronting its most serious shortages since the
Arab oil embargo and petrol queues of the 1970s, he said.
Mr Abraham used a speech to the US Chamber of Commerce in Washington to set
out for the first time publicly the magnitude of the crisis the Bush
administration believes it faces and the supply-oriented strategy it intends
to adopt. A task force, chaired by Dick Cheney, vice-president, is to have the
new policy ready in the next few weeks.
Attacking the Clinton government for taxing demand and neglecting supply, Mr
Abraham said the administration would announce a strategy to address
"antiquated" infrastructure, rising demand and falling supplies. "Our last
recessions were all tied to energy crises," he said. There was "strong
evidence" shortages and higher prices were hurting US business.
While he disagreed with last weekend's decision by the Opec oil producers'
cartel to cut production in a bid to boost prices, he said it showed the
importance of increasing domestic production. On current trends the US would
soon be importing nearly two-thirds of the oil it consumes.
Mr Abraham said all energy sources would receive support, though he raised
doubts that many of the tax incentives and subsidies proposed by the industry
would receive administration backing.
Instead he stressed broad regulatory reform rather than financial support.
The number of refineries had halved since 1980, he said. When President Bill
Clinton last year released oil from the Strategic Petroleum Reserve to damp
prices, it had to be sent overseas for refining.
The US will need 65 new power plants a year to keep up with electricity
demand. "This could be a conservative estimate," Mr Abraham said.
He said drilling for oil on federal lands was restricted or forbidden. The
administration is proposing to open a portion of Alaska's Arctic National
Wildlife Refuge for drilling.
The US will need massive construction of pipelines and transmission lines,
costing $120bn-$150bn (#83bn-#104bn), he said.
from FT.com
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