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2008 Presidential Initiative on Energy Concludes at Summer Meeting

Paula Cotter, Environment Project Director and Chief Counsel

Idaho Attorney General Lawrence Wasden made energy the centerpiece of his tenure as NAAG’s President. Drawing from a diverse group of legal, scientific and policy experts, Attorney General Wasden showcased a wide range of issues during a large meeting in held in Coeur d’Alene, Idaho in May. But energy is a broad subject, and additional discussions surrounding oil and gas questions had to be postponed until the final NAAG meeting of Attorney General Wasden’s term, the NAAG Summer meeting held June 17-20 in Providence, Rhode Island. During the June meeting, Attorney General Wasden moderated a panel discussion, featuring John Felmy, chief economist at the American Petroleum Institute, and David R. Hill, general counsel for the United States Department of Energy, to explore some of the most prominent issues in the areas of oil and gas.

Attorney General Wasden raised the subject of the oil market, asking whether Congress would be wise to impose greater transparency. Felmy stressed the play of market forces in explaining the current rise in the cost of gasoline, downplaying the concept of speculative trading. Hill emphasized the Department of Energy’s role in developing reliable statistics and explained that the Department does not regulate the price of petroleum or its derivatives.

NAAG Presidential Initiative on Energy Logo

Discussion and questions from the group also touched on other issues, including recurring concerns about price-gouging at the point of delivery—that is, at gas stations. Another item currently in the news is the prospect of drilling on the Outer Continental Shelf, which had recently been brought forward as a possibility by President Bush and U.S. Senator John McCain (R-AZ). The speakers also fielded questions about permitting and regulatory regimes and the balance between legitimate technical review and the need for efficacious development of new facilities. On a related note, both panelists mentioned new technologies that may change the calculus of oil availability by allowing for usable oil from previously unusable geologic formations, saying that both industry and regulatory bodies will need to anticipate new developments.

In addition to the panel discussion of oil and gas matters, author Robert Bryce delivered a luncheon talk. Bryce is the author of Gusher of Lies. The thesis of the book is that in today’s global market, it is unrealistic and unwise for the United States to attempt to achieve energy independence. It is sometimes argued that if American consumers reduce their consumption of gasoline, Middle Eastern oil producers will make less profit. The theory is that the oil-rich Middle Eastern regimes have historically given assistance to radical elements who are hostile to the United States, so reducing their profits will therefore fund fewer terrorist acts. According to the author, growing demand for energy on the part of India and China is driving the increased cost of oil and gas, not speculation; if American consumers stop buying from overseas producers, the Middle Eastern producers will simply sell to other parts of the world, who will sell to Americans, and the increasing demand will continue to raise prices.

Bryce favors increased drilling and refinery development in the United States. He noted, however, that the petroleum market provides such a significant portion of American energy that it would be almost impossible to move to alternative sources of energy within the next few decades—particularly in the transportation sector. Moreover, he argues, the American public will inevitably be making tradeoffs between low prices and other goals. For instance, if California’s economy shifts away from carbon-producing industries, the state will face either higher prices for fuel and cars, or consideration of nuclear plants and new refineries, or some combination of all these alternatives.

Attorney General Wasden plans to issue a short summary of the discussions at both the conference in Coeur d’Alene and the energy segments at the NAAG summer meeting, along with electronic versions of the materials developed for the meetings. Materials and the summary will be available on NAAG’s website in early August. In response to interest by the offices of the Attorneys General, NAAG has changed the name of its Environment Project to the Energy & Environment Project. The Project will support a wider variety of Attorneys General activities through the Project.

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