[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

[[Page 787]]

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

[[Page 788]]

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.

[[Page 789]]

    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

[[Page 790]]

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

[[Page 791]]

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

[[Page 792]]

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.