June 2008 Newsletter

I'm pleased to report on the Institute for 21st Century Energy's work this month.  From participating in international energy summits in Beijing and Saudi Arabia, to sitting on panels with both presidential candidates, delivering Congressional testimony on oil supply and demand balance on Capitol Hill, and reaching citizens across the country, we have been busy serving as a steady voice on sensible energy action. 

On June 21-22, Karen Harbert, the Institute's Executive Vice President and Managing Director, accompanied me to Jeddah, Saudi Arabia for an energy summit to discuss the international energy market.  The summit was called by Saudi Arabia's King Abdullah and brought together energy ministers and heads of state from 38 major oil producing and consuming countries, CEOs, and executives of leading oil companies and international energy organizations.  The Institute was invited by the Saudi government to be an active participant and was the only organization of our kind in attendance.

The meetings served to put in stark contrast the entrenched views of producing and consuming nations on the causes of the rapid run up in oil prices.  Producing nations, led by Saudi Arabia, attributed the high prices to increased and "unmanageable" speculation, whereas consuming nations and most of industry ascribed the cause principally to the market fundamentals of supply and demand.  Both sides agreed, however, that this trend was causing economic hardships, particularly in the developing world. 

Three areas emerged for recommendations, and the difference between producers and consumers could not have been clearer.

Increased investment:  Producing countries called for more investment in downstream operations, principally in refining and mainly not in their countries.  Not surprisingly, consuming nations called for investment upstream to bring on more supply to the market.

Fiscal Reform:  Producing nations argued that consuming nations should reduce or remove taxes on oil and gasoline if there is a desire to lower prices.  Other nations argued that subsidies on gasoline should be removed so the real price of energy would be recognized by the consumer and therefore moderate demand. 

Energy Market:  Producing countries called for more managed oversight and regulation of energy markets and trading.  They also called for consuming countries to guarantee future demand to justify continued investment in expanding production.  Consuming countries called for more open markets and trade, sanctity of contracts, and predictable investment climates. 

Probably the most disturbing trend we sensed by both producing and consuming nations was increased discussion about needing to "manage the market."  It was clear that some nations are truly in economic panic and are prepared to abandon market principles.  The meeting ended with an agreement to hold another such summit in October, hosted by the United Kingdom, and to have the secretariats of the International Energy Agency and OPEC work in the interim on further analysis of the root causes of high oil prices.

All in all the deliberations we witnessed served to underscore the critical need for a new, bold energy strategy for the United States.  We came away more convinced than ever that we must rely on our own resources (both natural and human) to address our energy challenges.  In this time of energy uncertainty, the United States can and must provide global leadership.  

The oil summit in Jeddah followed the Institute’s co-hosted event in Beijing, "The 1st U.S.-China Forum in Sustainable Energy and the Environment."  Although the United States and China are vastly different countries, energy and the environment can be--and should be--unifying factors as we seek ways to diversify energy sources, invest in clean energy technology, and achieve greater energy efficiency.  At the conclusion of this forum, I joined the General Director of China's National Development and Reform Commission Energy Research Institute, Han Wenke, in signing a joint memorandum.  Among other actions, we pledged to meet again next year to advance further the cooperation between our two countries on mutual energy and environmental challenges.  The full text of the joint memorandum can be read on the Institute’s website.   

On Wednesday June 18th, I moderated an energy discussion organized by Senator John McCain at Missouri State University in Springfield, MO.  Also on the panel were Greg Boyce, Chairman and CEO of Peabody Energy; Michael Chesser, Chairman and CEO of Great Plains Energy; and Dr. Tammy Jahnke, Dean of the College of Natural and Applied Sciences at Missouri State University.  Senator McCain used the forum to highlight his energy security proposal to put America on a path to build 45 new nuclear reactors by 2030, expand offshore drilling for oil and gas, spend $2 billion on research into clean-burning coal, and increase the use of resources such as wind and solar power.

Last week, I traveled to Carnegie Mellon University for a U.S. competitiveness event organized by Senator Barack Obama.  I shared a dais with Rick Wagoner, CEO of General Motors; Steve Case, former Chairman and CEO of America Online, Inc.; Susan Hockfield, President of the Massachusetts Institute of Technology; and Vinod Khosla, founding CEO of Sun Microsystems, among others.  Senator Obama engaged the panelists on keeping America competitive in energy, infrastructure, health care, education, and innovation.  I highlighted the need to be proactive in planning our energy future and in diversifying resources, dramatically increasing efficiency, and advancing technology to provide national and family security for all Americans.

To bolster our efforts to elevate a fact-based discussion on our energy challenges and opportunities, I encourage you to mark your calendar for Wednesday, July 16, 2008 at 10:30 a.m. EDT, when the Institute for 21st Century Energy will lay out energy principles to guide America's political leaders.  Our program on July 16 will highlight:  What will it take to break the energy and climate juggernaut paralyzing policymakers?  What energy proposals should the next President and Congress adopt to secure affordable energy resources and protect our national security?  What lessons from past energy action can be applied to the energy crisis facing America today?  For more information or to RSVP, contact Ben Askin at (202) 463-5500 or by email at ncfevents@uschamber.com.

Today I am in Ojai, CA, to address the top 100 trade associations from across the country.  Energy is an issue facing the members of each of these organizations and if we work together, we can elevate a factual, common-sense discussion with the presidential campaigns, Members of Congress, and the American people to bring long-term, comprehensive energy solutions to the forefront.

I look forward to seeing you on Wednesday, July 16th and wish you and your families a happy and healthy July 4th holiday.

Best regards,
Jim Jones

OTHER RECENT ACTIVITIES AT THE ENERGY INSTITUTE

• On Monday, June 16th, Gen. Jones delivered remarks at the U.S. Chamber at the North American Forum highlighting the importance of North American cooperation to advance global energy security.  Read Gen. Jones' remarks.
• Karen Harbert penned a "Dear 44" editorial titled “Taking Back our Energy Future” highlighting the importance of domestic production that ran June 30 in the Politico. 
• From June 26th through the 29th Fred Smith, the Institute's Vice President, participated in a four-day energy forum on “How Will Supply Match Demand,” put on by the Aspen Institute in Aspen, CO.
• On Tuesday, June 19th in Colombia, MO, Karen Harbert addressed the Missouri State Chamber of Commerce’s Utility & Energy Conference on the role of comprehensive policies and advanced technology in a sensible and secure energy future.
• On Thursday, June 12th in Orlando, FL, Karen Harbert delivered remarks at the U.S. Chamber of Commerce’s Government Affairs on the Institute's strategy to lead a discussion on the energy challenges and solutions needed to power America’s growing economy.
• Executive Vice President and Managing Director Karen Harbert testified on global oil supply and demand before the House Select Committee on Energy Independence and Global Warming on Wednesday, June 11th. Read Harbert's testimony.
• On Wednesday, June 11th, Fred Smith addressed a meeting of the Center for New American Security in Washington, D.C. on the historic nexus between reliable energy supplies, national security, and economic prosperity. Read Smith's remarks.
• On Thursday, May 22nd, Karen Harbert participated in a panel at the Foundation for Defense of Democracies event, "Oil Dependence, National Security, and Fuel Choice:  Threats, Challenges, and Solutions."
• On Tuesday, May 20th, Karen Harbert appeared on BBC's TBD show to highlight the role of the private sector and international energy organizations in leading the global energy discussion.
• On Thursday, May 15th, Gen. Jones delivered remarks to the China Leaders in Development Forum in Washington, D.C on the importance of global energy cooperation.

FUEL FOR THOUGHT:  OIL AND NATURAL GAS
1. America produced an average of 3,044 barrels of oil per minute domestically, or approximately 5.1 million barrels per day last year.
2. Yet, more than 80 percent of the U.S. Outer Continental Shelf is still designated off-limits for domestic oil and gas exploration and production. 
3. America imports approximately 12 million barrels per day of oil.
4. Untapped oil and natural gas resources off America’s shores and beneath our land could yield 116 billion barrels of recoverable oil and more than 650 trillion cubic feet of natural gas for the American people. 
5. Accessing these onshore and offshore resources using environmentally responsible technology could provide enough oil to replace U.S. oil imports for 40 years and enough natural gas to warm all American households, heated with natural gas, for well over a century.