Wednesday PM June 18th, 2008
by: Ed Mayberry, June 18, 2008 6:06:21 pm
Saying "there is no excuse for delay,'' President Bush is calling on Congress to lift the ban on offshore oil and gas drilling that has been in place since 1981, saying it could eventually yield 18 billion barrels of oil. The White House characterizes his call as a new position for Bush, who has kept in place a separate executive order that also bars offshore drilling. Bush says that if Congress lifts its ban, he will lift the executive restriction. But he wants Congress to take the step first. Bush says that with gasoline prices topping $4 a gallon, American families are looking to Washington for help. Senator John Cornyn of Texas says it's about time.
"I think it's long overdo that America develop its own natural resources and quit depending on foreign sources of oil from the Middle East and from dangerous neighbors like Hugo Chávez in Venezuela . So I think it's a good message, it's an important one and now it's up to Congress to act. My hope is the pressure is mounting, the public concern of about high gas prices is rising. Congress will wake up and get out of the way and let America produce more of its own energy."
Bush also proposes opening the Arctic National Wildlife Refuge for drilling and lifting restrictions on oil shale production in the Green River basin of Colorado, Utah and Wyoming. The proposal was quick to draw fire from Congressional Democrats. House Speaker Nancy Pelosi says the president's plan sounds like it was "literally written by the oil industry."
Governor Rick Perry applauds the president and Senator John McCain's call for expanded offshore oil exploration. But California Governor Arnold Schwarzenegger disagrees, although he says he still supports McCain's presidential bid. A federal moratorium has been in place for 27 years. California Senator Dianne Feinstein, a Democrat, said lifting the moratorium is an unnecessary risk that could allow unreliable oil rigs to be as close as three miles to California's beaches. Florida's governor says it's time to let states decide where offshore oil and gas drilling should be allowed. Governor Charlie Crist had supported a Congressional ban on the drilling. But now that gas prices have gone "through the roof," as he put it, he's changing his view. Democrats have criticized McCain's proposal, saying countries that allow offshore drilling have even higher prices. And they say new areas aren't needed, because oil companies have failed to fully exploit their current leases.
President Bush is sending Energy Secretary Samuel Bodman to Saudi Arabia for a one-day meeting of oil producers. Bodman is leading a U.S. delegation to the meeting on Sunday in the port city of Jiddah in Saudi Arabia, the world's largest oil producer. The CEOs of Chevron and BP will also attend. Saudi Arabia has called the meeting of oil producing countries and consumers to discuss ways of dealing with soaring energy prices and preventing further increases. The director of the President's Economic Council, Keith Hennessey, said oil costs are soaring because demand exceeds supply. Saudi Arabia takes the position it is pumping enough oil to meet the requests of all buyers.
Toyota is laying off 200 temporary workers and slowing production at its San Antonio truck plant. Toyota spokesman Mike Goss says the workers were told that they'll be let go over the course of the summer. The workers are temporary employees who had hoped to land permanent jobs at the Tundra plant. Goss says the company will also schedule 14 days between now and October when no trucks will roll off the assembly line. Record high gas prices and a struggling economy have hurt large truck sales, but Toyota continues to employ about 2,000 full-time workers at the San Antonio plant.
Belgium's capital has been the scene of protests over soaring fuel prices. Hundreds of farmers, truckers and taxi drivers have been blocking roads into Brussels on the eve of the European Union Summit. Police say convoys are already blocking parts of the city's inner ring road, and they expect up 1,000 trucks, tractors and taxis to join. The protesters say higher fuel prices are threatening their livelihoods. They are demanding EU governments immediately step in with subsidies. Barricades have been put up around EU headquarters and some 800 riot police are on standby. Protests there two weeks ago by fishermen from Spain, France and Portugal turned violent, leading to smashed windows and overturned cars. An EU spokesman says there's little the EU can do directly about the high fuel prices, except to promote longer term reforms.
Airlines executives are continuing to cut jobs and consider new fees on passengers as they battle high fuel prices. Those prices could result in record losses for the nation's carriers. Executives from United Airlines gave more details on plans to shed up to 1,600 salaried jobs at an investors' conference in New York. Delta Air Lines said it would cut domestic capacity another three percent later this year, on top of a previously announced ten percent reduction. The common threat hanging over all the carriers is the cost of fuel, which has risen for years and nearly doubled in the past 12 months. The Air Transport Association, a trade group for the big airlines, warns that the industry could lose a record $13 billion this year. Forecasts like that have renewed talk that big airlines could face bankruptcy by early next year unless fuel prices fall or fares rise sharply.
The CEO of Southwest Airlines expects to carrier to grow modestly through next year. But Gary Kelly said Dallas-based Southwest may freeze its expansion plans if oil prices and the economy remain challenging. Kelly also says high fuel costs will force Southwest to continue raising fares and have wiped out thoughts of acquisitions that looked attractive just six months ago. Southwest expects to increase capacity about four percent this year. That comes while other airlines are cutting flights and laying off thousands of workers. But Kelly told investors at a conference in New York that plans for next year are not set. Southwest still expects to add 14 new jets in 2009--but hasn't decided how many older planes to retire. Southwest has lower costs than other carriers, largely because it hedged against rising fuel prices.