Senator Reid offers serious solutions to the rising energy costs

The Senate Energy and Natural Resources Committee held a hearing today on the challenges and regional solutions to developing transmission for renewable electricity resources. Senate Majority Leader Harry Reid (D-Nev.) made a statement before the committee, discussing the bill he introduced, S-2067, which directs the President to identify and designate zones where renewable energy resources can generate at least 1,000 megawatts of electricity.

Reid’s bill will also provide new financing options for building transmission lines and connecting remote renewable energy zones to the grid. Renewable energy companies cannot always afford to pay up front for new transmission lines and the costs of connecting to them. Reid said his bill "is a serious effort to find solutions to the challenges of our energy security and global warming problems,” and offers funding for private companies to invest in renewable energy solutions.

Also present at the hearing was Kevin Kolevar, assistant secretary for Electricity Delivery and Energy Reliability at the Department of Energy. According to the Energy Information Administration estimates that by the year 2030, U.S electricity consumption will increase by almost 30 percent from the 2006 level. Kolevar said this opens up a new demand on electricity generations and that our nation can increase production from wind, solar, nuclear and coal generation to meet the need.

T. Boone Pickens, chairman and CEO of BP Capital, spoke in favor of wind energy development. Even though Pickens made his fortune off of oil, he said today that “we must develop and promote every available domestic energy resource to solve this crisis” and that private enterprise will invest money of Congress adopts clear, predictable policies. Pickens said that natural gas is the second largest energy resource in the country, and if the natural gas the U.S. is using for electrical generation is moved to transportation, the U.S. can replace 38 percent of our foreign oil imports.

White House Gaggle

Briefer: Tony Fratto,

President’s Schedule:

At 9.45 am, President Bush is briefed on the Midwest flooding situations. At 10:20 am, the President meets with the Former Commander of the International Security Assistance Force in the Oval Office of the White House. This afternoon, President Bush will make remarks in honor of Black Music Month.

Deputy White House Press Secretary Tony Fratto will brief the press at 12.30 pm today.

Flooding in the Midwest

Fratto was asked if they know what kind of economical impact this will have; and he said that the President will hear about this in this morning’s meeting and Fratto will get a readout from it that will give us a better view. “Obviously the human cost is something that you cannot put a value on … the impact on agriculture is also very substantial.” It has been a very well integrated effort both on federal and local levels, Fratto said.

The President is traveling to the region on Thursday but no exact itinerary has been announced yet.
When asked about the 27 levees that are said to be at risk, Fratto was questioned about the President’s confidence in the job of the Army Corps of Engineering’s. He responded that the Corps takes this very seriously and maintaining levees around the country is one of their top priorities. We will wait to see what will come out of the meeting and the Corps will report on those levees and the ones that have broken this morning.

When asked about the impact on food cost that are already high, Frattos said that food prices are very volatile and it is too early to speculate, but Ed Lazear of the White House Economical Council as well as the Department of Agriculture are looking at this right now.

Fratto was asked if the President has been told by Administrator Paulison or others, that this flooding is on the scale comparable with Hurricane Katrina, and he responded that he had not heard that comparison. “I am not sure that anyone would make those kinds of comparisons between really different kinds of natural disasters. …It is a very large significant scale affecting tens if not hundreds of thousands of people, and we’ve got life lost and money lost. He continued: “Katrina and the hurricane that followed …was one of the all time unusual natural weather events that this or any country ever had to deal with. This flooding is significant and has been referred to as one in 500-year-flood.” Fratto also said; “I think that the team that is involved in this, clearly learned lots of lessons from Katrina, and I think that those lessons appear to be paying off.”

Furthermore, Fratto talked about the importance of communication, integration and being able to anticipate what the needs are going to be, in dealing any kind of natural disaster.


Israel and Hamas
When asked about a peace agreement between Israel and Hamas, Fratto said that he had not heard that.

China, Cuba drilling for oil off Florida

Three steps that must be taken to maintain the United States’s economic position in the world were cited by Vice President Dick Cheney at the United States Chamber of Commerce. Cheney thanked the Chamber for understanding economic issues and motivated it to assist policy makers in decision making.

Cheney defended tax cuts made by President Bush, saying that a sudden tax increase is “not the prescription” the United States needs to secure its economic status. Cheney said that if Bush’s tax cuts are allowed to expire, taxes will increase by $280 billion a year. The thousand dollar per child tax break given to families would be halved, causing an average of $1,800 increased taxes for 116 million Americans. Cheney said that this “government greed” would have the most harmful effect on Americans in the lowest tax brackets.

Cheney also promoted free trade initiatives and argued against the protectionism promoted in some of the presidential campaigns. He said that a free trade agreement with Colombia would benefit the United States by allowing American products to enter Colombia without tariffs. According to Cheney, 90 percent of Colombian goods already enter the United States duty free. Cheney said that protectionism brings “false comforts” and that the demise of a trade agreement with Colombia would not only hurt the American economy, but would also cause the United States’s image in Latin America to suffer.

In light of increased gas prices, Cheney advocated that the United States increase domestic oil production, saying that an increase in supply is the only way to lower prices. Cheney supported initiatives that develop new energy technologies but reiterated that the United States’s dependence on oil cannot be erased overnight. Cheney not only pushed for oil production in ANWAR, but also supported oil production off of the East and West Coasts. Cheney said that China and Cuba are producing oil off the coast of Florida, noting that “even the Communists” understand increased oil production is economically vital.

House Republicans want to deliver “real change” for a “broken Washington”

House Republican Conference Chairman Adam Putnam (R-Fla.) said in a pen and pad briefing that the focus this week for House Republicans has been on short and long term solutions to make energy more secure. He says Americans recognize that Washington, D.C. is “broken” because they are paying 1.50 dollars more than they were at the beginning of the 110th Congress.

House Minority Leader John Boehner (R-Ohio) said the House will go on recess for Memorial Day without having completed a troop funding bill, a Columbia free trade bill, or a real plan to lower gas prices. He said that Republicans have been calling for an increase in domestic oil production for some time and for further interest into alternative fuels, such as biofuel and nuclear power. He feels that Americans believe that the United States can safely produce more oil.

Boehner said that General Petraeus had a good plan in Iraq, that the troops have done well, and that Iraqi troops have come a long way. He said Democrats have no choice but to admit “a lot of success” in Iraq. Putnam said that the Iraqi “hands on leadership style” brought factions together and might lead to broader participation in elections.

Putnam said Republican leadership has set a new standard on earmarks, and is holding the line on “ramping up” domestic spending. Boehner said the loss of three Republican seats in the House has helped the party learn how to set up for elections in the Fall. He said he is focusing on having successful elections in November, and does not have time to think about what will happen after the elections.

Disagreement on cause of food and oil prices

The Senate Committee on Homeland Security and Governmental Affairs met to discuss financial speculation in commodity markets and to hear statements as to whether or not investors and hedge funds are causing inflated food and energy prices. Witnesses discussed their findings on the influence of speculation on the global rise in commodity costs.

Michael W. Masters of Masters Capital Management, LLC., stated that a lack of lines at the gas pump and the availability of food on shelves, a clear indication of supply, does not warrant an increase in prices, an increase that would suggest greater demand. In addition, Masters refuted the suggestion that oil prices have increased due to increased demand from developing states such as China. Masters cited a Department of Energy report which said that Chinese demand for oil has increased by 920 million barrels over the last five years and compared that to increase in demand from index speculators, an increase of 848 million. According to Masters, this increase is not responsible for a 183% increase in oil prices in the last five years.

Thomas Erickson, the chairman of the Commodity Markets Council, mentioned five reasons as the cause of price levels: strong economic growth in China and India, increased demand, reduced yield due to weather events, export restrictions, and the weakening U.S. dollar. Jeffrey H. Harris, the chief economist of the Commodity Futures Trading Commission (CFTC,) said that price levels are the result of the laws of supply and demand and not due to speculation trends.

Senator Claire McCaskill (D-Mo.) expressed frustration with Harris, stating "The people of America are about to take-up pitchforks." McCaskill asked Harris what tools he and the CFTC need to see the influence of speculation on commodity prices. Under oath, oil company officials testified that $30-$50 dollars per barrel can be attributed to speculation.