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President Says Supply Shortfall Driving Oil Prices
President Bush Tuesday dismissed Democrats’ claims that domestic producers are not actively pursuing their oil and natural gas leases and that excessive speculation is responsible for escalating crude oil prices.
It’s in producers’ “economic interest to continue to explore so as to reduce the capital costs of [a] project on a per barrel basis,” the president said during a briefing with reporters at the White House. He also noted that producers lose their bonuses if they fail to explore a federal lease within a set period of time.
“People say, ‘what about the speculators'” and their role in driving up energy prices. “I think you can’t help but notice there’s some volatility in price…On the other hand, the fundamentals are what’s really driving the long-term price of oil, and that is demand for oil has increased and supply has not kept up with it,” Bush said.
Moreover, he indicated that Congress was blind to the technological changes in the energy industry. There are “new technologies that have come to be and yet we’ve got an old energy policy that hasn’t recognized how the industry has changed.”
The president’s remarks come one day after he issued a memorandum repealing an executive ban on oil and natural gas drilling in much of the federal Outer Continental Shelf that his father put in place in 1990. Bush’s action now puts the ball in Congress’ court, which must lift its 27-year-old moratorium if the way is to be cleared for exploration and production off the East and West coasts and in the eastern Gulf of Mexico (see Daily GPI, July 15).
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