    [Weekly Compilation of Presidential Documents Volume 42, Number 17 (Monday, May 1, 2006)]
    [Pages 786-792]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Remarks to the Renewable Fuels Association

    April 25, 2006

        Thank you all. Bob, thanks for the introduction. It's always good to
    be introduced by somebody who is referred to as the ``promoter in
    chief.'' [Laughter] For 25 years, the Renewable Fuels Association has
    been a tireless advocate for ethanol producers. Your advocacy is paying
    off. Renewable energy is one of the great stories of recent years, and
    it's going to be a bigger story in the years to come.
        I like the idea of talking to people who are growing America's
    energy security. I like the idea of policy that combines agriculture and
    modern science with the energy needs of the American people. I'm here to
    talk to you about the contributions you are making, and I'm here to talk
    to you about the need for this country to get off our dependency of oil.
        And so I want to thank Bob for the invitation. I want to thank Ron
    Miller, the chairman of the Renewable Fuels Association. I want to thank
    the board of directors and the members of the Renewable Fuels
    Association. I thank the members of my administration who are here--Clay
    Sell is the Deputy Secretary of Energy, who has joined us. I see Members
    of the United States Congress who are here. I appreciate Jack Kingston
    of Georgia, Jerry Weller of Illinois, and Gil Gutknecht of Minnesota for
    joining us. Thank you all for your interest in this very important
    subject.
        Before I talk about energy, I do want to share with you some
    thoughts about the war on terror. I just got off of a conference--a
    videoconference with our strong ally Tony Blair, and we were talking
    about a major development that has taken place in the war on terror.
    After months of patient negotiations, Iraqi leaders reached an agreement
    on a unity government. And that's positive. This is a Government--this
    new leadership reflects the diversity of Iraq, and it reflects the will
    of the Iraqi people who defied the terrorists and killers and went to
    the polls last December. This new Government is an important milestone
    for a free Iraq.
        And it's the beginning of a new chapter in our relationship with the
    Iraqi people. When I was in California over the weekend, I had the
    opportunity to speak to the three leaders--the President, the Speaker,
    and the Prime Minister-designate. I congratulated them on their courage
    and encouraged them to stand strong for the Iraqi people. I reminded
    them the people had voted, the people had expressed their desire for
    democracy and unity, and now there's a chance for these leaders to stand
    up and lead.
        I told them that they have important responsibilities to their
    people, to rebuild infrastructure and to improve their economy and
    enhance security. I was pleased with the response I got. It's important
    for the American people to know that these three leaders appreciate the
    sacrifice that our troops have made and that our taxpayers have made to
    help them realize a dream. And the dream is to live in a unified, free
    society. A free Iraq is in the interest of the United States of America.
    A free Iraq will be a part of laying

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    the peace for generations to come. And a free Iraq will be a major
    defeat for the terrorists who still want to do us harm.
        We've got good news here at home on the economic front too. This
    economy of ours is growing, and the entrepreneurial spirit in America is
    strong. We've cut the taxes for everybody who paid income taxes, and
    that tax relief is getting results. Last year, our economy grew faster
    than any major industrialized nation. Since August of 2003, this economy
    of ours has created 5.1 million new jobs. The unemployment rate
    nationwide is 4.7 percent. That's lower than the average rate of the
    '60s, '70s, '80s, and '90s. The American people are working.
        Farm income is up. Agricultural exports are growing. Real after-tax
    income is up over 8 percent per American since 2001. Productivity is
    high. More people own a home than ever before in our Nation's history.
    This economy is strong, and we intend to keep it that way. And one way
    to keep it that way is to make the tax cuts permanent.
        Yet amongst this hopeful--these hopeful signs, there's an area of
    serious concern, and that is high energy prices. And the prices that
    people are paying at the gas pumps reflect our addiction to oil.
    Addiction to oil is a matter of national security concerns. After all,
    today we get about 60 percent of our oil from foreign countries. That's
    up from 20 years ago where we got oil from--about 25 percent of our oil
    came from foreign countries. Now part of the problem is, is that some of
    the nations we rely on for oil have unstable governments or agendas that
    are hostile to the United States. These countries know we need their
    oil, and that reduces our influence, our ability to keep the peace in
    some areas. And so energy supply is a matter of national security. It's
    also a matter of economic security.
        What people are seeing at their gasoline pumps reflects the global
    economy in which we live. See, when demand for oil goes up in China or
    India, two fast-growing economies, it affects the price of oil nation--
    worldwide. And when the price of crude oil goes up, because it's such an
    important part of the price of gasoline, the average citizen sees the
    price of gasoline go up at the pump.
        Gasoline price increases are like a hidden tax on the working
    people. They're like a tax on our farmers. They're like a tax on small
    businesses. Energy prices are--energy experts predict gas prices are
    going to remain high throughout the summer, and that's going to be a
    continued strain on the American people.
        And so the fundamental question is, what are we going to do? What
    can the Government do? One of the past responses by Government,
    particularly from the party of which I am not a member, has been to
    have--to propose price fixing or increase the taxes. Those plans haven't
    worked in the past. I think we need to follow suit on what we have been
    emphasizing, particularly through the energy bill, and that is to
    encourage conservation, to expand domestic production, and to develop
    alternative sources of energy like ethanol.
        Signing the energy bill was one thing, and I want to thank the
    Members of Congress for getting a comprehensive energy bill to my desk,
    but there's a lot more to be done. First thing is to make sure that the
    American consumers are treated fairly at the gas pump. Americans
    understand, by and large, that the price of crude oil is going up and
    that the prices are going up, but what they don't want and will not
    accept is manipulation of the market. And neither will I.
        The Federal Trade Commission is investigating whether price of
    gasoline has been unfairly manipulated in any way. I'm also directing
    the Department of Justice to work with the FTC and the Energy Department
    to conduct inquiries into illegal manipulation or cheating related to
    the current gasoline prices. The FTC and the Attorney General are
    contacting 50 State attorney generals to offer technical assistance, to
    urge them to investigate possible illegal price manipulation within
    their jurisdictions. In other words, this administration is not going to
    tolerate manipulation. We expect our consumers to be treated fairly.
        To reduce gas prices, our energy companies have got a role to play.
    Listen, at record prices, these energy companies have got large cash
    flows, and they need to reinvest those cash flows into expanding
    refining capacity or researching alternative energy

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    sources or developing new technologies or expanding production in
    environmentally friendly ways. That's what the American people expect.
    We expect there to be strong reinvestment to help us with our economic
    security needs and our national security needs.
        Record oil prices and large cash flows also mean that Congress has
    got to understand that these energy companies don't need unnecessary tax
    breaks like the writeoffs of certain geological and geophysical
    expenditures or the use of taxpayers' money to subsidize energy
    companies' research into deep-water drilling. I'm looking forward to
    Congress to take about $2 billion of these tax breaks out of the budget
    over a 10-year period of time. Cash flows are up. Taxpayers don't need
    to be paying for certain of these expenses on behalf of the energy
    companies.
        Second part of a good plan is--to confront high gasoline prices, is
    to promote greater fuel efficiency. And the easiest way to promote fuel
    efficiency is to encourage drivers to purchase highly efficient hybrid
    or clean diesel vehicles which, by the way, can run on alternative
    energy sources. Hybrid vehicles run on a combination of a traditional
    engine and an electric battery. The twin sources of power allow hybrid
    cars and trucks to travel about twice as far on a gallon of fuel as
    gasoline-only vehicles. When people are driving hybrids, they're
    conserving energy.
        Clean diesel vehicles take advantage of advances in diesel
    technology to run on 30 percent less fuel than gasoline vehicles do.
    More than 200,000 hybrid and clean diesel vehicles were sold in the
    United States last year. It's the highest sales in history. Congress
    wisely, in the energy bill, expanded a tax credit for purchases of
    hybrids and clean diesel vehicles up to--as much as up to $3,400 per
    purchase. That made sense.
        If we're trying to conserve energy, if we want to become less
    dependent on oil, let's provide incentives for consumers to use less
    energy. The problem is that these tax credits apply to only a limited
    number of hybrid and clean diesel vehicles for each manufacturer. If the
    automakers sell more than their limit, new purchasers are not eligible
    for the full tax credit. And so here's an idea that can--gets more of
    these vehicles on the road, and that is to have Congress make all hybrid
    and clean diesel vehicles sold this year eligible for Federal tax
    credits. We want to encourage people to make wise choices when it comes
    to the automobiles they drive.
        Third part of the plan to confront high gas prices is to boost our
    supplies of crude oil and gasoline. It makes sense when--the supply-and-
    demand world, if prices are high, it means demand is greater than
    supply. One way to ease price is to increase supply. One immediate way
    we can signal to people we're serious about increasing supply is to stop
    making purchases or deposits to the Strategic Petroleum Reserve for a
    short period of time. I've directed the Department of Energy to defer
    filling the reserve this summer. Our strategic reserve is sufficiently
    large enough to guard against any major supply disruption over the next
    few months. So by deferring deposits until the fall, we'll leave a
    little more oil on the market. Every little bit helps.
        We also need to ensure that there are not needless restrictions on
    our ability to get gasoline to the pump. Under Federal quality--air
    quality laws, some areas of the country are required to use fuel blend
    called reformulated gasoline. Now, as you well know, this year we're
    going--undergoing a rapid transition in the primary ingredient in
    reformulated gas--from MTBE to ethanol. And I appreciate the role the
    ethanol producers are playing to meet this challenge. You're playing a
    vital role.
        Yet State and local officials in some parts of our country worry
    about supply disruption for the short term. They worry about the sudden
    change from MTBE to ethanol--the ethanol producers won't be able to meet
    the demand. And that's causing the price of gasoline to go up some
    amount in their jurisdictions.
        And some have contacted us to determine whether or not they can ask
    the EPA to waive local fuel requirements on a temporary basis. And I
    think it makes sense that they should be allowed to. So I'm directing
    EPA Administrator Johnson to use all his available authority to grant
    waivers that would relieve critical fuel supply shortages. And I do that
    for the sake of our consumers. If Johnson finds that he needs more
    authority to relieve the problem, we're going to work with Congress to
    obtain the authority he needs.

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        Secondly, we also need to confront the larger problem of too many
    localized fuel blends, which are called boutique fuels. The number of
    boutique fuels has expanded rapidly over the years, and America now has
    an uncoordinated and overly complex set of fuel rules. And when you have
    a uncoordinated, overly complex set of fuel rules, it tends to cause the
    price to go up.
        And so I'm asking Director--directing Administrator Johnson to bring
    the Governors together to form a task force on boutique fuels. And the
    mission of this task force will be to find ways to reduce the number of
    boutique fuels and to increase cooperation between States on gasoline
    supply decisions. I want to simplify the process for the sake of our
    consumers. And then I'm asking them to get these recommendations to my
    desk, and I look forward to working with the United States Congress to
    simplify the process.
        Listen, we need to expand our refining capacity. One of the problems
    we face is that we've got tight supplies because we haven't expanded
    refining capacity. There hasn't been a new refinery built in 30 years.
    If you're worried about the price of gasoline at the pump, it makes
    sense to try to get more supply to the market. That will be beneficial
    for American consumers, to get more supply to the market.
        Part of the reasons why we haven't expanded or built new refineries
    to the extent we need to is because the permitting process in this
    country is extremely complicated. Companies that want to upgrade their
    equipment or expand their existing refineries or build new ones often
    have to wade through long, bureaucratic delays and/or lawsuits. To make
    this gasoline supply more affordable and more secure, Congress needs to
    allow refiners to make modifications on their refineries without having
    to wait for years to get something--to get their idea approved. I mean,
    if we want more supply, let's reduce the paperwork and the regulations.
        Congress also needs to simplify and speed up the permitting process
    for refinery construction and expansion. And so I'm going to work with
    Congress. It's important for Congress to cut through the red tape and
    guarantee refinery construction permits will be processed within a
    single year.
        We also need to be mindful of the fact that we can find additional
    crude oil in our own country in environmentally friendly ways. The
    technology is such that we're capable of environmentally sensitive
    exploration. We got tight crude oil supplies, and it seems like it makes
    sense for us to use our new technologies to find more crude,
    particularly crude here at home.
        One of the issues that you know, that has been confronting Congress
    is ANWR. And I fully recognize that the passage of ANWR will not
    increase the oil supply immediately. But it's also important to
    understand that if ANWR had been law a decade ago, America would be
    producing about a million additional barrels of oil a day, and that
    would increase our current level of domestic supply by 20 percent. We've
    got to be wise about energy policy here in America. We've got to make
    sure that we protect the environment, but we've also got to make sure
    that we find additional supplies of crude oil in order to take the
    pressure off the price of crude, which takes the pressure off the price
    of gasoline at the pump.
        And all I've outlined here today are interim strategies--short-term
    and interim strategy. The truth of the matter is, the long-term strategy
    is to power our automobiles with something other than oil, something
    other than gasoline, which is derived from oil.
        And we're making progress. In my State of the Union Address, I
    talked about the Advanced Energy Initiative. And this is an aggressive
    plan, a wise way of using taxpayers' money to get us off our addiction
    to oil. We have a unique opportunity to continue forward with this plan.
        Technology is the way, really, to help us--to help change America
    for the better. Years of investment in fuels like ethanol have put us on
    the threshold of major breakthroughs. And those breakthroughs are
    becoming a reality for our consumers. I set a goal to replace oil from
    around the world. The best way and the fastest way to do so is to expand
    the use of ethanol.
        The Advanced Energy Initiative is focused on three promising ways to
    reduce gasoline

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    consumption. One is increasing the use of ethanol; another is improving
    hybrid vehicles; and finally, one is developing hydrogen technology. All
    three go hand in hand; all three are an important part of a strategy to
    help us diversify away from hydrocarbons.
        Ethanol is--has got the largest potential for immediate growth. Most
    people may not know this, but today, most of ethanol produced in America
    today is from corn. Most vehicles can use 10 percent ethanol--in their
    automobiles.
        What's interesting that Americans don't realize, with a little bit
    of expenditure, we can convert a--kind of, the standard automobile to
    what's called a flex-fuel automobile. And that flex-fuel vehicle can use
    ethanol that is--or fuel that is 85 percent ethanol. It's amazing, isn't
    it? Without much cost, your automobile can be converted to be able to
    burn fuel with 85 percent ethanol, or a product made from corn grown
    right here in America.
        Ethanol is a versatile fuel, and the benefits are--the benefits are
    easy to recognize when you think about it. One, the use of ethanol in
    our automobiles is good for the agricultural sector. I'm one of these
    people who believes when the agricultural sector is strong, America is
    strong. The way I like to put it, it would be a good thing when a
    President can sit there and say, ``Gosh, we've got a lot of corn, and it
    means we're less dependent on foreign sources of oil.''
        Years back, they'd say, ``Oh, gosh, we've got a lot of corn, worried
    about the price.'' Ethanol is good for our rural communities. It's good
    economic development for rural America. New bio-refinery construction
    creates jobs and local tax revenues. When the farmer--when the family
    farmer is doing well, it's good for the local merchants.
        Ethanol is good for the environment. I keep emphasizing that we can
    be good stewards of our environment and, at the same time, continue with
    our economic expansion. And ethanol will help meet that strategy. You
    don't have to choose between good environment and good economics. You
    can have both by the use of technology. And ethanol is an example of
    what I'm talking about. And ethanol is good for drivers. Ethanol is
    home-grown. Ethanol will replace gasoline consumption. It's a good--
    ethanol is good for the whole country, and we've been--[applause]. I
    thought you'd like that. [Laughter]
        The ethanol industry is booming. It must be exciting to have worked
    for as long as you have on encouraging alternative sources of energy and
    then all of a sudden see the work come to fruition.
        Last year, America used a record 4 billion gallons of ethanol. There
    are now 97 ethanol refineries in our country, and 9 of those are
    expanding. And 35 more are under construction. The ethanol industry is
    on the move, and America is better off for it.
        Many of these refineries are in the Midwest, the Midwest because
    that is where the source of that--the feedstock for ethanol comes from.
    That happens to be corn. But what's really interesting is, there are new
    plants springing up in unexpected areas like the Central Valley of
    California or Arizona or, of course, in the sugar fields of Hawaii.
    After all, sugar is also an important--can be used for ethanol. As a
    matter of fact, it's a very efficient feedstock for ethanol.
        Ethanol required our support. In other words, to get this new
    industry going, it required a little nudge from the Federal Government.
    Since I took office, we've extended the tax credit to 51 cents per
    gallon for suppliers. We've created a new 10-cent per gallon tax credit
    to provide extra help to small ethanol producers and farmers, provided
    $85 million of loans and grants for the ethanol business ventures.
        In other words, this is a collaborative effort. The Federal
    Government has got a role to play to encourage new industries that will
    help this Nation diversify away from oil. And so we're strongly
    committed to corn-based ethanol produced in America. Yet there--you got
    to recognize there are limits to how much corn can be used for ethanol.
    After all, we got to eat some, and the animals have got to eat.
        And so I am committed to furthering technological research to find
    other ways, other sources for ethanol. We're working on research--strong
    research to figure out cellulosic ethanol that can be made from wood
    chips or stalks or switch grass. These materials are sometimes waste
    products and are just simply thrown away. And doesn't it make

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    sense for us--I think it does--to use taxpayers' money to determine
    whether or not we can use these new--these raw materials to make
    something out of nothing, so that we continue the advance of ethanol, so
    the market for ethanol expands throughout the United States.
        We're spending--I proposed, and I'm working with these members of
    the Renewable Caucus--$150 million in next year's budget for research in
    advanced forms of ethanol. And that's a significant increase over
    previous levels. I think it makes sense. And surely the prices at the
    gas pump should say to the taxpayer, it makes sense for this Government
    to spend money on research and development to find alternative sources
    of energy.
        I also support biodiesel fuel, which can substitute for regular
    diesel in cars, trucks, buses, and farm equipment. Last year, I went out
    to see a biodiesel refinery in Virginia that's making clean-burning fuel
    from soybean oil. And it was a really interesting process to watch. I
    don't know if you know this or not, but they're able to use waste
    products like recycled cooking grease to manufacture biodiesel. In other
    words, research and development has led to new alternative sources of
    energy like biodiesel. So that's one of the reasons why I signed into
    law the first ever Federal tax credit for biodiesel producers. In other
    words, we're interested in addressing our energy security needs on a
    variety of fronts. It makes sense for the United States to have a
    comprehensive strategy to help us diversify away from oil.
        And so we also have got to understand that we got to research not
    only to find--to invest in ethanol and biodiesel, but part of a
    comprehensive strategy is to spend money on researching new battery
    technologies. And one of the really interesting opportunities available
    for the American consumer will be the ability to buy a plug-in hybrid
    vehicle that will be able to drive up to 40 miles on electricity. Seems
    to make sense to me, if we're trying to get us off gasoline, with crude
    oil as the main--as its main feedstock, then why wouldn't we explore
    ways to be able to have vehicles that use less gasoline? And one way to
    do so is to use electricity to power vehicles.
        And we're pretty close to a breakthrough. We believe we're close to
    a technology that will make it possible to drive up to 40 miles on
    electricity alone. And then if you have to drive more than 40, then your
    gasoline kicks in.
        But you can imagine what that will mean for a lot of drivers in big
    cities who, on a daily basis, they don't drive over 40 miles. And so
    therefore, a lot of drivers that are going back and forth from work in
    big cities won't be using gasoline. And that's going to help. We've got
    $31 million in our budget to speed up research and development into
    advanced battery technologies.
        And finally, one other opportunity that is more long-run than
    ethanol or biodiesel or plug-in hybrid vehicles or encouraging people to
    buy the hybrids that are on the market today, is hydrogen--we're
    spending about $1.2 billion over 5 years to research the use of hydrogen
    to power vehicles. And it makes a lot of sense when you think about it,
    because hydrogen produces zero emissions. The only emission it produces
    is water. And when I was out there in California, I visited the
    California Fuel Cell Partnership and saw buses and cars and SUVs that
    are driving on the highways out there powered by hydrogen. And the
    research and development money that we have spent has lowered the cost
    of hydrogen fuel cells; it's helped make them lighter. In other words,
    there's an industry coming, and it's an industry that will enable
    consumers to drive to work, just like we're doing today, but not rely on
    foreign sources of oil.
        What I'm describing to you today is a strategy that recognizes the
    realities of the world in which we live. Our dependency on oil has
    created economic security issues for us and national security issues for
    us. And therefore, this country must use our brainpower and
    entrepreneurial spirit to diversify away from the hydrocarbon economy.
    You all have known this a lot longer than most Americans. You've known
    that we've needed to have this strategy, and that's why you're on the
    forefront of incredible changes that are taking place in this country.
        You know, there's no doubt in my mind that one of these days,
    instead of people driving up to a gas station, they're going to be

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    going up to a fueling station. And they'll be able to have choices to
    choose from. Got a hydrogen-powered car, you'll be able to have that
    choice. If you want 85 percent, maybe someday 100 percent ethanol, that
    will be an option available too.

        We owe it to the American people to be aggressive on price gouging
    now. We owe it to the American people to be promoting alternative ways
    to drive their car so as to make us less dependent on foreign sources of
    oil. We owe it to the American people to be aggressive in the use of
    technology so we can diversify away from the hydrocarbon society. And
    that's precisely what we're doing, and I'm glad to stand with you.

        I appreciate your work for the United States of America. Thank you
    for letting me come by and talk to you, and may God bless you.

    Note: The President spoke at 10:10 a.m. at the Marriott Wardman Park
    Hotel. In his remarks, he referred to Bob Dineen, president and chief
    executive officer, Renewable Fuels Association; Prime Minister Tony
    Blair of the United Kingdom; and President Jalal Talabani, Speaker of
    Parliament Mahmoud al-Mashhadani, and Prime Minister-designate Jawad al-
    Maliki of Iraq. The Office of the Press Secretary also released a
    Spanish language transcript of these remarks.