Mideast Still a Player in Oil Markets
WASHINGTON - Among the boldest pronouncements in President Bush's State of the Union address was his goal to replace three-fourths of the country's oil imports from the Middle East over the next two decades by developing alternative fuels.
Senior administration officials acknowledged Wednesday that even if the president's push for substitutes for gasoline and diesel is successful, the reliance on Persian Gulf oil by world markets including the U.S. market is unlikely to change.
Energy Secretary Samuel Bodman and Allan Hubbard, assistant to the president for economic policy, struggled Wednesday in an attempt to explain what Bush had meant by "replacing" Middle East oil.
The United States currently imports nearly 60 percent of its oil and refined products more than 12 million barrels a day. About one-fifth of the oil comes from the Persian Gulf, much of it from Saudi Arabia.
The president, in his State of the Union speech Tuesday night, did not bother with nuance as he tried to ease concerns about America's reliance on oil from volatile areas such as the Middle East.
"Breakthroughs (on alternative fuels) ... and other new technologies will help us reach another great goal: To replace more than 75 percent of our oil imports from the Middle East by 2025," Bush said.
On Wednesday, Hubbard and Bodman acknowledged that Persian Gulf oil may, in fact, not be replaced at all, even if overall oil imports were to drop because of the increased availability of alternative motor fuels.
Bodman said the president's reference to a 75 percent replacement of Persian Gulf oil was "purely an example" of the kinds of reductions in overall imports that might be possible if U.S. demand for oil were reduced.
"It was not meant to suggest anything related to the politics of the situation. ... It was merely meant to give an example," Bodman added.
Hubbard, when pressed further, abandoned the suggestion that Middle East oil would be "replaced" as the president said. Instead, he said the oil savings would be "equivalent" to three-fourths of the projected imports from the Persian Gulf.
"Oil is a commodity. It is traded on the world market," said Bodman, acknowledging that regional-based supplies cannot be carved out for purchase or not for purchase.
Oil traders would continue to "make judgments" as to where best to buy the oil, including from the Persian Gulf producers, Bodman said in a briefing with reporters. "The president's goal ... is an improvement in our national security that would come from a more readily available supply of domestic motor fuel."
Hubbard said oil imports from the Persian Gulf by 2025 were projected by the Energy Information Administration to be 6 million barrels a day, compared with 2.5 million barrels a day in 2004.
As motorists were provided more alternative fuels such as bio-diesel and ethanol, the demand for oil would be reduced by 5.26 million barrels, according to the White House scenario, with 90 percent impacting imports.
"These new technologies will be able to reduce the imports of our oil enough to the equivalent to what we currently project to be 75 percent of what we would have imported from the Middle East" in 2025, Hubbard said.
Even if less Middle East oil comes into the country by 2025, the region's pivotal power to impact markets, including those in the United States, likely would not change.
"Achieving the president's goal of reducing Middle Eastern oil imports by 75 percent would be economically meaningless," argued Jerry Taylor of the free-market CATO Institute. "A supply disruption in the Middle East would increase the price of crude everywhere in the world no matter where or how it is produced."
http://news.yahoo.com/s/ap/20060202/ap_on_go_ot/energy_independence_1
WASHINGTON - Among the boldest pronouncements in President Bush's State of the Union address was his goal to replace three-fourths of the country's oil imports from the Middle East over the next two decades by developing alternative fuels.
Senior administration officials acknowledged Wednesday that even if the president's push for substitutes for gasoline and diesel is successful, the reliance on Persian Gulf oil by world markets including the U.S. market is unlikely to change.
Energy Secretary Samuel Bodman and Allan Hubbard, assistant to the president for economic policy, struggled Wednesday in an attempt to explain what Bush had meant by "replacing" Middle East oil.
The United States currently imports nearly 60 percent of its oil and refined products more than 12 million barrels a day. About one-fifth of the oil comes from the Persian Gulf, much of it from Saudi Arabia.
The president, in his State of the Union speech Tuesday night, did not bother with nuance as he tried to ease concerns about America's reliance on oil from volatile areas such as the Middle East.
"Breakthroughs (on alternative fuels) ... and other new technologies will help us reach another great goal: To replace more than 75 percent of our oil imports from the Middle East by 2025," Bush said.
On Wednesday, Hubbard and Bodman acknowledged that Persian Gulf oil may, in fact, not be replaced at all, even if overall oil imports were to drop because of the increased availability of alternative motor fuels.
Bodman said the president's reference to a 75 percent replacement of Persian Gulf oil was "purely an example" of the kinds of reductions in overall imports that might be possible if U.S. demand for oil were reduced.
"It was not meant to suggest anything related to the politics of the situation. ... It was merely meant to give an example," Bodman added.
Hubbard, when pressed further, abandoned the suggestion that Middle East oil would be "replaced" as the president said. Instead, he said the oil savings would be "equivalent" to three-fourths of the projected imports from the Persian Gulf.
"Oil is a commodity. It is traded on the world market," said Bodman, acknowledging that regional-based supplies cannot be carved out for purchase or not for purchase.
Oil traders would continue to "make judgments" as to where best to buy the oil, including from the Persian Gulf producers, Bodman said in a briefing with reporters. "The president's goal ... is an improvement in our national security that would come from a more readily available supply of domestic motor fuel."
Hubbard said oil imports from the Persian Gulf by 2025 were projected by the Energy Information Administration to be 6 million barrels a day, compared with 2.5 million barrels a day in 2004.
As motorists were provided more alternative fuels such as bio-diesel and ethanol, the demand for oil would be reduced by 5.26 million barrels, according to the White House scenario, with 90 percent impacting imports.
"These new technologies will be able to reduce the imports of our oil enough to the equivalent to what we currently project to be 75 percent of what we would have imported from the Middle East" in 2025, Hubbard said.
Even if less Middle East oil comes into the country by 2025, the region's pivotal power to impact markets, including those in the United States, likely would not change.
"Achieving the president's goal of reducing Middle Eastern oil imports by 75 percent would be economically meaningless," argued Jerry Taylor of the free-market CATO Institute. "A supply disruption in the Middle East would increase the price of crude everywhere in the world no matter where or how it is produced."
http://news.yahoo.com/s/ap/20060202/ap_on_go_ot/energy_independence_1
