C-SPAN’s Newsmakers

PEDRO ECHEVARRIA, CSPAN: Mr. Kupfer, Leslie (ph) probably explained this to you, but I’m only here really much to play traffic cop, so to speak. I’ll introduce you. I’ll introduce our guests and then our guest will be asking you questions for about 25 minutes or so.

JEFFREY KUPFER, ACTING DEPUTY ENERGY SECRETARY: OK.

ECHEVARRIA: So your exchange will most likely be with them and you for the most part. I may interject halfway through to reintroduce everybody just in case someone was turning in to the show and wondering what was going on between the four of us here.

And then at about 25 minutes I’ll say thanks for joining us. We’ll take a pause. We’ll let you get off the set and then we wrap up the show for the final five minutes. Stay if you wish. You can go if you wish. It’s totally up to you.

KUPFER: OK.

ECHEVARRIA: And then we’ll – you’ll be done.

KUPFER: OK.

ECHEVARRIA: OK? Fair enough; are we – so we’re going 25 straight, correct.

KUPFER: Is that right? OK.

ECHEVARRIA: Thanks for doing this, by the way.

KUPFER: No problem.

UNIDENTIFIED PARTICIPANT: One minute.

KUPFER: So do I get to ask these guys questions too.

ECHEVARRIA: You could. They may or may not answer you.

UNIDENTIFIED PARTICIPANT: I have no answers whatsoever. I especially have no opinions about anything.

ECHEVARRIA: Just as long as you aren’t just staring at each other.

KUPFER: As long as thing are going on.

UNIDENTIFIED PARTICIPANT: We have all the answers. We’re just not telling.

UNIDENTIFIED PARTICIPANT: Twenty seconds.

ECHEVARRIA: Joining us on Newsmakers this week, Jeffrey Kupfer is the Acting Deputy Energy Secretary. Welcome to you, sir.

KUPFER: Thank you very much. Glad to be here.

ECHEVARRIA: Our guests that will be interviewing Mr. Kupfer today are Chris Baltimore, the Energy Correspondent for Reuters and Steve Mufson, the Energy Correspondent for the Washington Post. To both of you, welcome.

UNDIDENTIFIED PARTICIPANT: Thank you so much.

ECHEVARRIA: And Mr. Baltimore you get the first question.

CHRIS BALTIMORE, ENERGY CORRESPONDENT, REUTERS: Thank you. Mr. Deputy Secretary, we should be talking about oil markets and gasoline prices today. Today oil prices had their biggest one day jump every in dollar terms.

They were up $6 a barrel today after investment bank Morgan Stanley came out with a report that oil prices could hit $150 a barrel by the July 4 weekend. Meanwhile, gasoline pump prices nationwide are just shy of averaging $4 a gallon.

Are record high oil prices and gasoline prices a crisis for this administration and what can be done about it?

KUPFER: The high prices that we’re seeing now are clearly a serious problem. There’s no question about that. It’s taken us a long time to get into the situation that we’re currently in. It’s going to take us some time to get out the situation that we’re in.

None of us are happy about either the high crude prices or the high gasoline prices that we’ve seen. In our view those prices are really the result of the tight market that we’ve seen, the tight fundamentals that we’ve seen; supply that has been fairly stagnant over the last few years, and we’ve seen increasing demand around the world.

And even in the United States, as demand has moderated and even begun to slow, in other places in the world demand is continuing to grow, and so when you have that supply that’s been pretty stable, not increasing and you see the demand that’s slowly rising, you end up with a tight market and therefore high prices.

STEVEN MUFSON, ENERGY CORRESPONDENT, WASHINGTON POST: Sure we’re in a serious situation now. The data is showing some eerie similarities with things that were happening in the 1970s and the early 1980s when we saw the last serious, you know, U. S. economic slowdown.

We’re starting to see in data that people are driving less and that these high prices are starting to bit into actual consumer choices at the gasoline pump. Would you say that right now things are better or worse than they were in 1979?

I mean, obviously we don’t see gasoline lines, but we are starting to see rising concern. Is this a serious problem for the United States economy?

KUPFER: Well it’s clearly not a good thing for the economy. I mean, it’s a headwind for the economy that we need to deal with. These high prices act as a tax, effectively, on the American people and it’s causing them to spend money on fuel and on electricity that they would prefer to spend on many other things, myself included and I’m sure you as well, so it’s not welcome for people and it is a problem.

In terms of our economy; our economy’s been remarkably resilient over the last few years even as the prices have risen. Part of that is because the economy uses less energy as a share of the GDP, sort of the energy intensity, than it has in the past, so the economy’s been able to weather some of the high prices.

The administration has also tried to take some action in terms of passing a stimulus package earlier in the year and trying to get some money into the hands of people which can help them to deal with some of these higher prices, so sure it’s a problem.

BALTIMORE: A serious problem, but not a crisis yet; not a crisis.

KUPFER: Well I’m not going to – I don’t want to say it’s a crisis or not a crisis. I mean, it’s a real problem and that’s why we’re taking action to try to deal with it, and I don’t want people to be left with the impression...

MUFSON: Well I think the key question is what action is. I mean, this has been good commentary, but what about – what are you doing that you feel is going to have some impact and what can you do?

KUPFER: Well I think in – as one looks at how we got into the problem and how we’re going to get out of the problem it’s really a series of actions that are going to pay out over the long term, and so what the administration is doing and has been doing for a period of time is on a number of fronts.

First, in terms of trying to look at alternative fuels, alternatives to oil; the President has said numerous times that the United States is addicted to oil, that we need to reduce our dependence on oil and we’re in the process of doing so.

The administration has been heavily pushing a movement into various biofuels to try to reduce the amount of oil that we need. At the same time – and besides moving to alternative fuels we also think it’s very important that we continue to produce and look at ways to get more resources from within the United States.

We can talk about ANWR. We can talk about the outercontinental shelf. We can talk about different places in the United States’ continent itself on the land, but the bottom line is there’s many places in the United States where we could be producing our own oil, our own natural gas that would help to alleviate some of the supply concerns that we see out there.

On the demand side of the equation, which is as important as the supply side, the administration and the President in last year’s State of the Union called for increased CAFE standards. Working with Congress we passed those standards at the end of last year and they’ll be taking effect over a period of time, increasing those standards by 30 percent over the next decade or so, and so that’s very important.

We’re trying to address it on both ends of the side, but in terms of sort of a short term silver bullet fix to these prices, unfortunately, there isn’t one out there.

MUFSON: Well, of course, when Carter was President he did things like lower the speed limit, and there was a sense that, at least they’re trying to do something like that. I suppose that would save a little bit.

KUPFER: Well, I think that...

MUFSON: Has there been any consideration of that kind of thing?

KUPFER: I think that what we do in the Department is we try to make sure that we educate people, we speak to people, we explain all the various things that people can do to try to save on their fuel bills and save on their energy bills, and so that includes telling people that it’s important to keep your car well maintained, inflate your tire pressure, all that. It’s important to use energy-efficient appliances. We have an Energy Star program with EPA that we use when we work with the industrial sector to make sure...

MUFSON: Although that’s not really connected to oil prices.

KUPFER: ...well it’s all – I mean, prices have risen across the board for fuel prices and for power, so I think it’s all part of that as well, and people don’t need the government to tell them the various ways to save energy.

I mean, we’ve seen a lot of people moving to mass transit. We’ve seen a lot of people doing things on their own that are helping them to save fuel in their automobiles, so I don’t think it’s a question of – it will only occur if the government stands up and says you shall do this.

I mean, people are smart out there and they will react accordingly and are doing that.

BALTIMORE: One thing that has come up – we do keep hearing, you know, from Bush administration officials and others in the industry that there is no silver bullet, that it’s been a long time getting into this situation and it will be a long time getting out.

At least two presidential candidates had raised the possibility of waiving Federal gasoline taxes this summer to at least give some reprieve to consumers at the pump. Is this a viable option in your opinion?

Is this something that could work or should we be not paying much attention to that?

KUPFER: The President said he would take a look at all of the different ideas. I think the one thing to keep in my is we evaluate the different ideas out there as what is a sort of short term fix that – and what is a long term solution.

And waiving the gasoline tax for a couple of months is not going to necessarily help over the long term in terms of either increasing supply or reducing the demand for fuels, and the other part of that is where some of the revenue goes that is collected by the gas tax.

It goes for mass trans. It goes to keep our roads in good shape, and so I think it’s...

BALTIMORE: What about the SPRO, the U. S. strategic oil stockpile? We have 700 million barrels sitting in salt caverns out a couple of states in the Gulf coast.

Recently Congress passed legislation that required the Energy Department to stop filling the SPR until prices fell and the Bush administration has been adamant about not using supply from the reserve except in a severe supply emergency such as the hurricanes that hit the Gulf coast in 2005.

Is there any price where oil prices constitute a supply emergency in such that the United States government should be responding to a supply crisis vis-à-vis prices high enough that cause so much economic pain that the SPR is a viable option?

KUPFER: Chris, I think it’s important for people to remember why the SPR was originally created, and it was created in the mid-70s after there was a severe supply interruption, sort of a physical supply interruption where the oil was not coming to the United States.

And in response to that the administration at the time, and Congress, created the SPR and the idea was to put oil in the SPR equivalent to a certain amount of days of import protection for the United States, so that if supplies were then cut off or if something happened, a natural disaster, at some point in time we would have enough oil to be able to continue to use it in this country.

And so over time administrations, both Democrat and Republican, have continued to fill up the SPR and we’re now at the current level of what you said, about over 700 million barrels of oil.

We look at it – this administration looks at is as a national security asset. We look at is as an insurance policy for this country to be used in the case of a physical, severe supply interruption and so right now the SPR constitutes about 58 days of import protection for the United States in terms of the amount of oil that we import per day.

That’s about the same level of import protection that we’ve had over the last number of years. It’s down from where it had been at one point in time in the mid-80s when it was a higher days of import protection.

And so we really see it as this critical national security asset. Your specific question about should we release therefore to try to affect prices as various people have called for we don’t think makes a lot of sense for the country.

BALTIMORE: (INAUDIBLE).

KUPFER: Let me just – we do not see it as a piggy bank that should be used to try to manipulate prices.

MUFSON: Well, the other possibility, of course, since most of the oil in there is pretty high quality oil is that you could release some of that and replace it with some lower quality oil that would reflect the, still, higher than average quality that the mix our refineries use in any case.

KUPFER: Well, the amount of oil that’s in there and the composition of the oil that’s in there has been designed over time to try to provide the most value for our refineries, to reflect what the refineries use and also so that if we do need to release the oil it’s oils that refineries can easily take and that refineries can easily turn into the most amount of gasoline that they possibly can do.

And so that’s why we have the current mix in there. The idea of trying to take out some of that oil and put in other oil – one would undermine the fact that we want it to reflect what the refineries find most valuable and most useful.

And second of all, the physical structure of the SPR – it’s a variety of salt caverns in these different locations in Louisiana and Texas – trying to mix and match different types of oil in there is also physically difficult to do and may not result in any of the price savings, in any event, that people have said that it may.

So I think that it’s a physical reason and also just a substantive reason as to what kind of oil we want in there.

MUFSON: Now, you talked earlier about supply and demand issues, but what about financial players in the market and the role they’re playing. We’re seeing very wild swings in prices, you know, up to 30 bucks in some of the out months.

Do you see something happening there aside from supply and demand? After all, there is no supply shortage. No refinery will tell you that he’s really having serious problems getting supplies. There are no gasoline lines.

OPEC’s saying we’re building inventories or at least not drawing them down, so what’s happening out there, in your view, really? And then part two, if there is something happening in terms of speculation or unusual speculation or manipulations or some sort of government policy that should be taken to address that like raising margin requirements on futures markets and things like that.

KUPFER: There’s no question that we have seen an increase in the amount of money that’s flowing into commodity funds and various index funds that deal with the oil market and with crude oil and other commodities.

There’s no question about that. The issue that is there is, is that money following the market itself? Is it following sort of a rising market or is it the one that’s actually driving the market to different prices?

In our view, and we have a statistical arm of the Department, the Energy Information Administration, that runs the models and looks at all the available data out there and it’s a group of professionals that have been doing this for years and continue to do it.

In their model they come very close to what the current market prices is, just looking at the supply and demand issues, and so their analysis is that we really have these fundamental issues that are driving it.

It’s the lack of spare capacity in different places around the world. It’s the lack of non-OPEC supply coming on line as has – when you look back a few years ago there was a thought that there would be more non-OPEC supply that would come on line over the last few years, and that has been continually delayed, so we’ve got a lack of supply coming on.

And we’ve seen this increasing demand that we talked about earlier, so we really look at it as the fundamentals that are driving most of what’s going on out there. There’s probably a small amount of the price swings that are due to financial transactions that are going on out there.

There’s probably some of the price swings that are due to geopolitical risk and other events around the world that we see all the time, whether it’s issues in Nigeria or in the Middle East that certainly play into the markets, but we do not see speculation as being either a primary driver for what’s happening through the prices or as something that has significantly – that has played a significant role in those rising prices.

I think it’s certainly a legitimate question for people to ask; OK, what is going on with a lot of this money that’s flowing into the marketplace? But at the same time, people should think through and propose solutions to it or propose answers to it.

Whether there should be a little more disclosure that’s out in some of the unregulated marketplace is something that we’ve looked at as an administration and the Commodity Futures Trading Commission is doing that and looking at some of these unregulated markets.

BALTIMORE: Mr. Deputy Secretary, along those lines; we’ve heard a lot from Congress in the last couple of weeks about a large percentage of trading in the benchmark U. S. oil contract, West Texas Intermediate Oil, which has a delivery option in the United States in Cushing, Oklahoma that about 30 percent of the trade at that market takes place in what some folks would call dark markets and markets that are not overseen by the CFTC, mostly in markets in London that are under the operation of the Intercontinental Exchange also another exchange in Dubai.

Do you think that U. S. regulator are seeing the complete picture right now, being that about a third of the pie of global oil trading is outside their reach or their jurisdiction?

KUPFER: I am not – the Department of Energy is not a regulator, and so I don’t want to be in the position of speaking for the regulators. I think the regulators feel they have a good handle on what’s going on in the markets that they regulate and they think that a lot of that carries over into some of these other markets.

But it’s a legitimate issue, and I think that the CFTC and others will be looking at whether there are ways that they could have some more insight into some of those other markets, but at the end of the day, Chris, I do think it’s important to remind everyone that we do not see speculation, financial transactions, any of those type of activities as what’s driving the prices right now.

BALTIMORE: You mentioned non-OPEC supplies as being, you know, coming in under the mark recently that supply and demand is, then, driving this market. OPEC, which, you know, controls about a third of U. S. – I’m sorry – of global oil supplies has consistently said that they don’t need to be increasing production right now.

They pointed to surging oil inventories in the United States. President Bush has visited Saudi Arabia twice in recent months to essentially ask OPEC and Saudi Arabia to increase production.

He’s been essentially rebuffed both times. He got somewhat of a token increase, 300,000 barrels per day which is, you know, out of the nine million barrels per day that the Kingdom pumps, which possibly begs the question is the Kingdom a friend of the United States, an ally of the United States in its search for energy independence?

Are we both on the same team here?

KUPFER: We talk all the time with members of the OPEC countries and we talk to them about the importance of keeping the market well supplied and they have their view about what they should be doing and we talked to them about the importance of making sure that there’s enough oil on the markets.

You mentioned that at the President’s recent trip there Saudi Arabia did agree to produce another 300,000 barrels a day, brining their current production up to around 9.4, 9.5 million barrels, which is pretty close to as high as they’ve been over the last few years.

The issue is spare capacity as well in some of the OPEC countries, and so that’s why we’re continuing to encourage them to invest in additional spare capacity to try to meet the growing demand around the world.

I can tell you that, from my perspective, and I’ve had some of these conversations with the OPEC ministers and others, it’s sometimes an awkward situation when you go and you say, hey, we want you to produce more and they look at you and they say, well, what are you doing in your country to produce more?

And you don’t have a particularly good answer because we aren’t producing in some places in this country where we could produce more oil, so I think we need to always look at ourselves when we go around shaking our fists at other people to produce more oil.

MUFSON: Let me shift gears a little bit for you and come to a couple of issues on the Hill; three things, actually, but let’s take the first one, which is the ethanols mandate passed just five months ago, pretty much very similar to what the President had advocated and now there’s a lot of concern about the impact on food prices.

Feeling any buyer’s remorse about this mandate, and should there – some adjustment be made in the President’s own home state? Of course the governor and Senator Hutchison have asked for a waiver from the mandate to ease pressure on people raising livestock and other animals that use corn as fee.

What’s your feeling about that?

KUPFER: Well, I think that, in terms of buyer’s remorse for the mandate, the answer is no. I think we think it makes sense to increase the amount of alternative fuels that we have in our system.

Food prices are rising around the world. Once again, I mean, there’s no question about that, but many drivers for the rises food prices include demand for food around the world. It’s certainly something that’s out there.

We’ve had droughts in a number of places around the world which has reduced some of the supply and increased energy costs have also made it more expensive both to produce and to transport some of those foods to market.

So there’s no question that prices are – food prices – are increasing around the world. The question is, is our ethanol policy or the ethanol mandate or other things that we’re doing here a major contributor to the increase in food prices.

We’ve looked at it as an administration. The analysis from the Council of Economic Advisors and others in the government is that maybe three percent of the overall rise in food prices globally has to do with our ethanol production in the country.

But it’s also important to remember that the mandate itself right now is lower than the amount of ethanol that’s being produced in the country, so there ethanol that’s being produced and ethanol that’s being produced because of market forces, because it makes sense economically to produce it even beyond what the mandate currently is.

So it’s not clear that the mandate itself is what’s leading to the rise in any food prices whatsoever. At the same time, there’s no question that, as we increase the amount of biofuels that we use, that we should not be using food-based crops to do so in the long term.

We do so now and that’s kind of the first stage of ethanol and biofuels that we’re producing in the country, but we’ve spent all of our attention at the Department of Energy in terms of research and development looking at second and third generation biofuels, biofuels that don’t use food crops.

And we’ve spent over a billion dollars – we’ve committed over a billion dollars in the last year that goes towards non-food based biofuels and we’ve done that by partnering with the private sector to invest in refineries around the country, refineries that will use wood pulp and other things, citrus peels to produce it.

And we also have invested on the basic science side to try to figure out enzymes and other things to break it down, so I agree with you that we need to be looking towards this next generation of biofuels and not just focusing on food-based.

BALTIMORE: Mr. Deputy Secretary, we’re talking here about cellulosic ethanol, which the Congress and the U. S. government are making some pretty heavy bets on in terms of the future of availability of cellulosic ethanol to fill a large gap in biofuels.

Meanwhile, some opponents are calling cellulosic ethanol the holy grail of fuel sources, that we haven’t really cracked the genetic codes yet to find these enzymes that you’re referring to that are going to break down the wood chips or the grasses into usable fuels.

Do you think that this technology will pay off? Are you confident that cellulosic ethanol will bear out?

KUPFER: Everything that we’ve seen suggests that we will be able to use the ingenuity of the American people. We have some of the best scientists in the world that are working on these issues, that we will be able to crack the code as you say, and to get this up and running in the next few years.

That’s why the Department has set up these various bio-centers around the country in order to do that. One of the problems in breaking down the fuel is that plants are actually very strong when you think about it.

I was talking to one of our scientists the other day about the issue and he was reminding me that when you have a rosebush and you have a petal at the top of the rosebush you have this very thin stem holding up, at least as a plant, something that weighs a decent amount and this thing just keeps it straight up in the air for a long period of time.

Think about holding your arm up and holding a five pound weight in it. Over a period of time you’d get tired at some point, and so you have this stem and you have a lot of these wooden lignins in the stem itself and what you need to do is come up with a way to be able to break that down in order to be able to use the cellulose to turn it into ethanol.

And so it’s not a simple issue to do it and that’s why we have some of these world class scientists around the world being able to do it, but we have confidence that we will get there.

ECHEVARRIA: Thirty seconds.

MUFSON: Another Hill issue; renewable energy tax incentives come up several times, keeps getting knocked down. What’s the administration going to do to try to get these into some kind of bill?

KUPFER: We have been supportive in the past of extending the renewable tax incentives, whether it’s for wind power or solar power. We continue to ...

MUFSON: But opposed to almost every vehicle they’ve put in ...

KUPFER: Well the reason that we have opposed it is because in each vehicle there are other provisions in there that have singled out specific companies for treatment for companies that we think – if it’s important for our country to increase supply in the united States, singling out for disparate treatment the same companies that we want to go explore for oil and other products around the world.

And saying that you should be taxed at a higher rate we don’t think makes a lot of sense to have some of this retroactive taxation, and so we’ve been opposed to that part of the legislation that we’ve seen.

If people want to work together to try and come up with an acceptable way to deal with these renewable tax incentives we’d be willing to work with Congress.

ECHEVARRIA: We are out of time. Jeffrey Kupfer serves as the Acting Deputy Energy Secretary. Thanks for joining us.

KUPFER: (INAUDIBLE).

ECHEVARRIA: And we’ll be right back. Steve Mufson of the Washington Post, from that interview that you got it seems like one of the themes that he brought up time and again was supply and demand as well as the current condition of our energy sources, particularly to oil.

MUFSON: Sure, and that’s something the administration’s been consistent about. I think the real question, now that we’re in year eight of the Bush administration, is, you know, he’s right in talking about long term trends as there is a limited amount that perhaps policymakers can do, not nothing, but a limited amount in the short term.

But this is year eight of the administration, so the question is what kind of responsibility do they share for the long term picture that we’re in, you know, we’re in now.

ECHEVARRIA: And how would you answer your own question?

MUFSON: Well, I think that they didn’t push for things about – to reduce demand early on, and especially when it comes to fuel efficiency, one in ten barrels of crude oil used in the world goes into American automobiles and it wasn’t until well into his second terms that the President really made any kind of push for fuel efficiency.

ECHEVARRIA: And from his exchange, he said it’s not the Department’s goal really to teach people about conservation. I’m not putting words in his mouth. He said, you know, they can do it on their own.

MUFSON: Right, and they asked, you know, when Jimmy Carter was President he lowered the speed limit, and that was pretty unpopular and I’m sure no one wants to go there again, but as a practical matter it would reduce fuel consumption somewhat.

ECHEVARRIA: And Chris Baltimore, the one thing you didn’t call it was a crises.

BALTIMORE: Yes, and the one thing that we continue to hear from the President and the Bush administration and Energy Department officials is that the U. S. economy is remarkably resilient. Remarkably resilient is their mantra when oil prices were at $75; the U. S. economy was remarkably resilient.

Oil prices hit $100 a barrel; the U. S. economy is remarkably resilient. I’m just not sure how much longer this will hold. Oil prices are headed up according to experts. So far U. S. consumers have been protected somewhat by the fact that oil companies haven’t been able to pass through as much of the cost of attaining that oil and turning it into gasoline.

For example, Exxon Mobil says that they’ve only been able to profit perhaps four cents a gallon on the oil base, down from perhaps 10 cents a gallon a year or so ago. Because oil prices are so high, they haven’t been able to pass the price through to the U. S. consumers.

But when oil prices go even higher, it stands to reason that, you know, pump prices will go higher too. About a year ago I remember Secretary Bodman saying that oil prices could be entering what he called the danger zone.

And oil prices haven’t gone any lower since then, for sure.

ECHEVARRIA: Just talking about one thing you talked to him about, when you asked about speculators, he said it wasn’t a driver, wasn’t a considerable force. How would you respond to that?

BALTIMORE: Well, speculation is very hard to define and many experts have tried to put a dollar figure on how much of the price of crude oil is speculation. I heard a consumer advocate this week saying that it was – at $130 it was one-third of extraction cost, one-third was OPEC, and one-third was speculation.

But again it’s very hard to come up with any real black and white answer.

MUFSON: Speculation’s a loaded term really. I mean, speculation is what goes on in markets all the time. The question is, is there some manipulation of the market or have we established a set of rules that has made it easier for people – the flow of money to move in and make certain financial bets that are the kind of bets you see in markets all the time, but maybe would be modified by certain types of fairly simple regulatory action.

BALTIMORE: (INAUDIBLE) Billions of dollars of money is pouring into commodity markets which is a reaction to several things. One is the weakening U. S. dollar. As the dollar declines, as the U. S. economy weakens, big trading houses are seeing oil prices as a hedge against economic weakness and as a way of preserving their wealth, which in turn drives oil prices higher.

And, you know, like we heard from the Deputy Secretary, it isn’t a prime mover but clearly it’s something that’s on the radar screen of Congress and I think U. S. regulators are paying increasing attention to it.

ECHEVARRIA: Steve Mufson, he gave a great example of a rose petal, or a rose, when he talked about alternative...

MUFSON: Yes.

ECHEVARRIA: ...fuels.

MUFSON: The rose.

ECHEVARRIA: My point is where do we go with alternative fuels, not only as far as the government is concerned, but where the Congress is concerned as far as looking to decrease the demand on petroleum?

MUFSON: Well, of course the President has pushed for more ethanol use, and now we suddenly, I mean, it’s hard to believe it’s only been five months since we just passed this large increase in mandate for ethanol use and already people are questioning that.

Clearly ethanol has some sort of role to play in our fuel mix. The question is how much? How much should we be subsidizing it? How much should the Federal government be ordering its use up? And I think there’s still a lot of debate about that.

It’s taken some of the pressure off oil prices where use is probably back down to about 300,000 barrels a day of oil that we might have to get elsewhere, but, you know, the question is if we had been using these subsidies to do something else maybe we would have been better off, and these are the kind of trade-offs that I think people are still debating.

ECHEVARRIA: Steve Mufson is the Energy Correspondent for the Washington Post. We’ve also been joined by Chris Baltimore of Reuters, their Energy Correspondent. To both of you, thanks for joining us on Newsmakers.

MUFSON: Thank you.

BALTIMORE: Thanks so much.

END