Bush Says High Oil Prices Make Other Sources Viable


Feb. 21 (Bloomberg) -- President George W. Bush said the rising cost of crude oil is making the development of energy from agricultural waste and other alternative sources economically viable.

Higher oil prices over the last year are acting ``like hidden taxes'' on U.S. consumers that can be removed only by developing alternatives to imported petroleum.

``In order for us to achieve this national goal of becoming less dependent on foreign sources of oil, we've got to spend money'' on research, Bush said at the National Renewable Energy Laboratory, an Energy Department research facility in Golden, Colorado, involved in investigating solar power and agricultural waste and hydrogen as usable power sources.

A former Texas oilman, Bush visited three states in two days this week touting the benefits of gasoline-electric hybrid vehicles, the future of solar energy, electricity generated by wind and expanding nuclear power. He's seeking to address public concerns about rising oil prices, which are up about 20 percent from a year ago, by focusing on efforts to develop alternatives to gasoline power.

Bush's remarks come at a time when oil supplies are unstable from some corners of the world market. Oil prices rose in New York today after rebel attacks in Nigeria cut by about 20 percent output from Africa's largest producer. Earlier this week, Venezuelan President Hugo Chavez said his country's natural gas is for the domestic market and South America, and not the U.S. Crude oil for March delivery rose $1.27 to $61.15 a barrel at 11.25 a.m. on the New York Mercantile Exchange.

Oil Addiction

In his State of the Union address to Congress Jan. 31, Bush said the U.S. is ``addicted'' to imported oil and he set a goal to cut by 75 percent oil imports from the Middle East by 2025. To help the transition, his 2007 budget proposal seeks funding for development in energy from hydrogen fuel cells, coal, solar power and wind, as well as money to advance the use of fuel additives made from corn and farm waste.

Reversing a 29-year-old government policy, Bush earlier this month proposed to reprocess the waste produced by nuclear reactors in the U.S. and other countries.

His 2007 budget proposal, released earlier this month, requests $250 million for development of a process to reduce and recycle radioactive waste. The process would foster expansion of nuclear power in the U.S. by reducing by 80 percent the amount of waste sent to the storage site in Yucca Mountain, Nevada.

Bush is also backing exploration of offshore oil and natural gas resources and drilling in the Arctic National Wildlife Refuge in Alaska.

Cutbacks

The research facility that Bush visited today announced on Feb. 7 that trim 32 workers -- eight researchers and 24 support staff out of about 930 workers -- because of budget cuts. On the eve of Bush's arrival in Colorado, the Energy Department notified U.S. Senator Wayne Allard, a Republican of Colorado, that the funds for the workers would be shifted from ``unused funding from other accounts'' and the fired workers should be recalled, according to a statement from Allard.

In the panel discussion in front of about 200 NREL employees, Bush acknowledged ``mixed signals'' when it comes to funding for NREL. ``I think we've cleaned up those discrepancies,'' Bush said.

Funding for the facility for the current fiscal year is about $175 million, down from a peak of $230 million in 2003. Bush asked for $190 million for NREL in his 2007 budget request.

Spending on energy in the U.S. rose last year to 8.6 percent of gross domestic product last year, up from 7.4 percent of GDP in 2004, according to government estimates. In a report released earlier this month, the White House said ``we are likely to face tight crude oil markets for a number of years.''

One way to alleviate the strain, Bush said, is to use other sources of fuel for the nation's cars and trucks. In addition to using agricultural products and waste to power internal combustion engines, the president said the big ``breakthrough'' will be development of new, more powerful batteries.

``This is coming,'' Bush said. ``It's going to require more research dollars.''



To contact the reporter on this story:
Brendan Murray in Milwaukee and Michigan at brmurray@bloomberg.net
Last Updated: February 21, 2006 12:41 EST