Bush Talks Up a Pro-Energy Industry Agenda

For years, the federal government has had a touchy relationship with the energy industry. Enter a new president from the oil patch who promises change in ways that the industry cheers and environmentalists deplore.

Explore for more oil and natural gas on federal lands. Expand the nation’s fuel pipeline networks. Invest in new coal-mining technology. Relax some environmental constraints. Those are among the changes the industry has sought and President-elect George W. Bush has suggested that it might get them.

“I strongly believe that we must work in concert to increase the amount of supply available for American consumers--supply of natural gas, supply of coal, supply of plant and equipment,” Bush said Wednesday at a news conference in Austin, Texas. “When we’re undersupplied as a nation and demand increases, prices will go up. And that’s what’s happening in the energy field.”

Clinton administration officials said that so far the new agenda sounds surprisingly like their own. And indeed, many differences over federal energy policy--for instance, regulation of the interstate power grid--are more regional than partisan.

Both Clinton and Bush have advocated versions of federal electricity deregulation--a subject that is much on the minds of Californians who face the state’s own electricity shortage and wonder what Washington can do to help.

Bush on Wednesday even plugged two short-term measures that Clinton and congressional Democrats have promoted all year: renewed diplomatic overtures to oil-producing nations to stabilize flows of crude oil and an increase in federal contributions to a winter heating program for low-income households.

Bush Acknowledges Conservation Issues

Notably absent from his remarks was his campaign promise to seek to open a portion of the Arctic National Wildlife Refuge to oil drilling--a politically controversial proposal that would be sure to test Bush’s relations with many Democrats in Congress. Bush, instead, has talked about being sensitive to environmental concerns.

Reviewing what Bush has said in recent days about energy, one administration official said: “Is he talking about a sea change or is he talking about a continuum? It sounds like a continuum.”

But as Bush’s appointees take power and as the Republican-led Congress develops new legislation without fear of a Clinton veto, a more substantial shift may get underway.

Even without legislation, the new president will wield a vast array of administrative tools--in the Energy Department and other agencies--to affect federal energy policy.

And the powerful Federal Energy Regulatory Commission, which Bush can stock with appointees, has jurisdiction over interstate transmission of natural gas and power and has been a key player in California’s growing electricity crisis.

In California, which has been pushed repeatedly to the brink of power outages and where electricity bills in many parts of the state are expected to rise, officials are watching developments in Austin and Washington warily.

Gov. Gray Davis would welcome help from Bush in clearing regulatory obstacles to the development of new electric power plants. Nine have been approved and more proposed. Davis’ press secretary, Steven Moziglio, said the governor would continue to argue that the federal government should impose a strict cap on the price of wholesale electricity--not likely to be a popular idea with many of Bush’s energy industry backers.

“Now the federal government holds all the cards,” Moziglio said. “If a bunch of free marketeers are running the show in Washington, then that’s bad news in California.”

It may be weeks before the full Bush energy team is in place. But judging from their records, Bush and Vice President-elect Dick Cheney are likely to be receptive to the arguments of the energy industry.

Bush, governor of Texas, is a former oilman. Cheney was head of the oil services firm Halliburton Co. During the campaign, oil and gas interests gave nearly $4 to Bush and Cheney for every dollar they gave to Democratic candidates Al Gore and Joseph I. Lieberman.

Bush’s early appointments include Commerce Secretary Don Evans, chairman and CEO of the oil and gas company Tom Brown Inc., and National Security Advisor Condoleezza Rice, a director of the Chevron Corp.

Key Concern Is Supply, Demand

The energy industry hopes that a new, sympathetic administration first will take stock of supply and demand. Said John Felmy, chief economist of the American Petroleum Institute: “What we really need to do is a thorough assessment. Where do we stand now in terms of energy and where are we going?”

Bush called Wednesday for a review of all federal land policy “to make sure that we’re not missing an opportunity to explore for natural gas.”

Oil companies want reviews of the many agencies that have a piece of energy regulation: Environmental Protection Agency policy on oil refineries; Department of Transportation policy on fuel pipelines; Department of Interior policy on drilling for gas and oil, especially in the Rocky Mountains, and on leasing offshore drilling sites in the Gulf of Mexico. In the electricity sector, an array of competing interests has been fighting for years over whether and how to deregulate interstate power transmission. Bush may have to referee that dispute--certainly taking into account California’s problems.

Congress is likely to weigh in too.

Several prominent Republicans in Congress are from oil states, including House Majority Leader Dick Armey and House Majority Whip Tom DeLay, both Texans.

Sen. Kay Bailey Hutchison (R-Texas) said she doubts that Bush would encourage new drilling where people don’t want it--such as off the coast of California.

Even Senate Minority Leader Tom Daschle of South Dakota said he agrees with Bush’s emphasis on energy.

“It’s critical that we not ignore it,” Daschle said. “It’s an issue that both Republicans and Democrats recognize is a higher priority than it would have been a year ago.”

But environmentalists warn that some proposals could take a heavy toll.

Travis Stills, staff attorney for the Citizens Oil and Gas Support Center in Colorado, said there are 156 million acres of federal and Indian land in the Rockies, and gas producers “have their eye on all of it.”

And a new technology called coal-bed methane could greatly expand the territory available for drilling, Stills warned. This method involves pumping water out of aquifers above beds of coal, allowing the coal to release its methane. Wells then would extract the natural gas.

In all, 19 states contain coal beds that could produce natural gas this way.

“There’s a certain pride the nation has in the Rocky Mountains,” Stills said. “They should not be converted to an oil patch. But anyone who lives anywhere who has coal underground should understand that natural gas production could be in their backyards too.”