Nationwide power shortage predicted

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Nationwide power shortage predicted

Posted at 10:37 p.m. PST Monday, March 19, 2001

BY JIM PUZZANGHERA

http://www0.mercurycenter.com/cgi-bin/edtools/printpage/printpage_ba.cgi

Mercury News

WASHINGTON -- California's electricity problems have helped trigger a national energy crisis that threatens to plunge the nation into a recession, the U.S. energy secretary said Monday as the Bush administration continued to press for increased oil and natural gas drilling.

As California was plunged again into rolling blackouts Monday, Energy Secretary Spencer Abraham predicted that summer shortages would also hit New York City, with low capacity threatening power reliability in the Midwest, Southeast and the Northern Plains states. He told business leaders that the current situation represents ``the most serious energy shortage since the days of oil embargoes and gas lines'' in the 1970s.

Abraham warned that the nation could be headed for a recession as a consequence.

`The nation's last three recessions have all been tied to rising energy prices, and there is strong evidence that the latest crisis is already having a negative effect,'' he said. Abraham pointed to California's flawed 1996 power deregulation law as an example the rest of the country should avoid.

He sometimes used inaccurate or exaggerated information to portray California's energy problems as a harbinger of those facing the country if more federal lands are not opened to drilling and more refineries and pipelines are not constructed.

``In California, workers are being laid off, companies are leaving the state, farmers and small businesses are losing millions, consumers are threatened with rolling blackouts, but local officials reject power plants with little regard for the consequences,'' said Abraham, referring to the proposed Calpine power plant in Coyote Valley that was rejected by the San Jose City Council. ``Is it really any mystery why there hasn't been a single new power plant built in California in the last decade?''

The last point was incorrect, and one that has been misstated numerous times in Washington recently by those critical of California's handling of its energy problems. While California has not built any major power plants in the last decade, it has built seven small power plants, with a total generating capacity of 916 megawatts, according to the California Energy Commission.

Abraham also referred early Monday afternoon to ``blackouts that have swept through California'' in recent months. At the time of the speech, before Monday's rolling blackouts, there had been a total of five hours of rolling blackouts, on Jan. 17 and 18, limited to Northern California.

Scare tactics charged

Environmentalists charged that the Bush administration is using scare tactics to deliver on an agenda backed by energy industry executives, who poured millions into Republican coffers during last year's campaign.

``They've moved from compassionate conservatism to catastrophic conservatism, relying on hyperbole and scare tactics to make their point,'' said Deb Callahan, president of the League of Conservation Voters. ``Clearly the California situation is being distorted, and I think it's sad when you take a serious issue that really impacts citizens and you use it as an excuse to justify a policy agenda that's driven by special interest.''

As the Mercury News reported last month, there are ties to the energy industry throughout the highest levels of the Bush administration. Bush, a former Texas oilman, received $2.8 million in campaign contributions from the energy and natural resources industries last year, more than any other candidate. Abraham, in his unsuccessful Senate re-election bid, was third in contributions from the industry with $407,898.

After his speech to an energy forum sponsored by the U.S. Chamber of Commerce, Abraham denied that the administration has been engaging in scare tactics. ``I'm not the one whose been putting these energy stories on the front pages; all of you are,'' he said. ``It's not something that's in any way exaggerated.''

President Bush, meeting later in the day with Abraham and other top officials to draft an energy policy, reiterated that the solution to the nation's power woes is a major boost in domestic energy production.

There are ``no short-term fixes'' Bush said. The long-term solution, he stressed, involves ``not only good conservation, but exploration for oil and gas and coal, and development of energy sources that exist within our 50 states.''

Abraham and Bush said Monday that the decision by OPEC over the weekend to cut oil production only bolstered the point that the United States needs to reduce its reliance on foreign oil. Earlier, White House spokesman Ari Fleischer described OPEC's move as a ``disappointment'' for Bush, who said during the campaign he would be better able to convince Middle East allies to increase oil production than President Clinton had been.

Abraham laid the blame for the current energy crisis squarely at the feet of the Clinton administration. He said that for eight years the domestic energy industry was stifled by regulations.

Demand rising

By 2020, demand for natural gas will soar by 62 percent, demand for oil will jump by 33 percent and demand for electricity will increase by 45 percent, Abraham said, citing U.S. Energy Information Administration projections.

But Abraham didn't mention that the same Energy Department agency also projects that the U.S. will be able to meet those demands and avert a shortage. He said the nation needed a balanced energy policy that reduces increased reliance on natural gas and increases use of oil, coal and nuclear power.

Drilling for oil in a small portion of the environmentally sensitive Arctic National Wildlife Refuge in Alaska is part of that balance, and said it was a myth that such drilling could not be done without disrupting the wildlife there.

Among the other myths Abraham cited about the current energy crisis are that the problems are ``due to an energy industry engaged in a massive conspiracy to gouge consumers by limiting supply to drive up demand.''

Abraham said that recent rulings by federal regulators that energy companies have overcharged California utilities by about $135 million in the past year don't prove a conspiracy and miss the point that more supply is needed.

But Sen. Dianne Feinstein, D-Calif., said the skyrocketing prices charged by power wholesalers show there has been price gouging. She also was critical of the administration's lack of action, such as instituting temporary price caps, to solve the problem in California before this summer.

Seth Borenstein of the Mercury News Washington Bureau contributed to this report.

-- Swissrose (cellier3@mindspring.com), March 20, 2001


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