Remarks Prepared for Energy Secretary Bodman

I am honored to be introduced by the very first U.S. Secretary of Energy, whose portrait I pass every day in the hallway leading to my office.

Let me also thank the Center for Strategic and International Studies for hosting this event, and express my gratitude to Minister al Naimi for traveling to Washington to be with us today. 

I am very pleased to join my Saudi counterpart to discuss the ways that Saudi Arabia and the United States can improve communication, and enhance our bilateral commercial and strategic relationship.            

As the world’s largest exporter of oil, and the world’s largest oil consumer, respectively, our two countries have a special relationship.   Indeed, as the title of this session indicates, we are in certain respects, partners. 

But the subject that concerns us today really transcends our two nations.   The energy situation we currently face represents a major global challenge, which will require, of course, a global response.

We all know that continued robust growth in the global economy depends on secure, affordable supplies of energy. 

Over the last several years we have seen unprecedented increases in world-wide oil demand… of about two and half million barrels per day in 2004 alone. And numerous trends indicate that this thirst for petroleum will continue to grow, particularly in the burgeoning economies of Asia. 

This means that both developed and developing nations must take part in finding ways to address our shared challenges… just as oil producing and consuming nations must work together to ensure reliable supplies of affordably priced energy.  

As demand is rising, oil production capacity seems to have increasing difficulty keeping up. 

It is no secret that most of the world’s spare oil capacity is concentrated in one country—Saudi Arabia. We recognize the Kingdom’s leadership in maintaining this spare capacity, which can be used to offset unexpected disruptions elsewhere; and we acknowledge Saudi Arabia’s role as a moderating force in the global oil trade.

Yet the world oil market has also suffered from terrorist attacks on installations around the world, as well as labor strife and political turmoil in several producer nations. 

All of which has pushed the price of oil to very high levels—a fact which, as U.S. Energy Secretary, I am acutely reminded of every day.

When I am asked about this, I try to remind people that global economic growth—which is driving oil demand—is, in one sense, a good thing.  

Nevertheless, these high prices are now affecting petroleum consumers across the board—from individual car owners, to airlines, to the plastics and chemical industries.          

The tight market is also revealing, perhaps more urgently than ever, the need to expand the global oil and gas infrastructure at all levels. 

Given the $50 per barrel price of oil, one would think that private investors, as well as nations holding untapped oil reserves, would be leaping at the chance to cash in on the high prices, and accelerate oil development. 

Some of that is, in fact, happening. 

But we are also seeing, I think, how the volatility and uncertainty of the market may be making suppliers and potential investors skittish. 

It is sometimes said that because our oil refineries are operating at full capacity, the question of increasing crude oil supply is moot.  

This point has some truth, though it does not capture the entire picture. 

What I think is most pertinent is that the strain on our refining capacity means that we can no longer afford to put off the necessary technological and infrastructure improvements in this country. 

Saudi Arabia is also interested in expanding its domestic infrastructure.   I have been very impressed with the Kingdom’s plans that I understand are already underway.         

As each of us seeks to implement the appropriate climate for attracting investment, I am pleased to see that Saudi and U.S. negotiators have made great progress over the past several weeks toward reaching bilateral agreement on WTO accession. 

We both look forward to a successful conclusion of that process.

Of course, the United States and Saudi Arabia are not only partners in commerce, but also strategic allies in the war on terrorism. 

As President Bush and Crown Prince Abdullah noted in their joint statement in Crawford last month, we are joined in our “close cooperation to combat terrorism and to choke off resources intended for terrorists and their support networks.

We honor the memory of the victims of terrorism—and those who have lost their lives fighting terrorists—and pledge to work together until terrorism no longer threatens our nations and the entire world.”     

The war on terror reminds us that the world can be a dangerous place. 

Events happen that are beyond our control, and things sometimes move in ways that we neither want nor expect. 

So I would hope that our American audience will recall that while discussions such as this are extremely valuable, it remains a fact that oil is bought and sold in a global market, which is subject to fluctuations, uncertainty, and price spikes. 

And, of course, we know that oil is not an unlimited resource. 

That is why, now more than ever, I hope the American people will see the importance of implementing a comprehensive agenda for enhancing our long-term energy security. 

President Bush recognized our looming energy challenges early in his first term, and commissioned a National Energy Plan to address those challenges. 

And the Department of Energy has been hard at work implementing much of the President’s ambitious agenda. 

In the transportation sector, for instance, we are expanding the use of ethanol, biofuels and other alternative fuel sources. 

This year alone, we’re proposing to spend over $200 million on research into alternative fuels, including ethanol.

We have also proposed $1.2 billion for the development of hydrogen fuel cell vehicles. 

And the President has asked for tax credits for consumers who purchase hybrid gas-electric vehicles.

Our Administration is also pursuing the transformative power of technology to achieve a more diversified energy sector. 

In particular, we are encouraging the greater use of fuels that do not emit greenhouse gasses, such as nuclear and renewable energy sources. 

And we are expanding our efforts to improve energy efficiency, as well as accelerating research and development into new, environmentally friendly energy sources. 

We didn’t get into the current situation overnight, and we cannot fix it overnight. 

But we won’t fix it at all, unless we act decisively and intelligently today. 

Our Administration has already accomplished a lot; but we need to do even more. 

That requires, first and foremost, getting Congress to send a comprehensive energy bill to the President’s desk this summer. 

 don’t think Minister al Naimi will object to my taking a moment to touch on that point, because—as this dialogue demonstrates—each of us has a keen interest in the health of both our energy sectors.

On that note, let me conclude by saying that I am glad to have had this opportunity to reaffirm the importance of our bilateral relationship. 

Among our other efforts, the United States strongly supports the work of the International Energy Forum, based in Riyadh; and particulary the Joint Oil Data Initiative… which seeks to bring greater transparency and integrity to hydrocarbon data.  

I also look forward to maintaining an open line of communication with you, Minister al Naimi, and I hope that we can establish frequent ministerial-level contacts… as well as ongoing technical and policy discussions between our agencies. 

Working together, I believe that we can make the ties between our nations even stronger.

Our Department remains steadfastly determined to see relations flourish between our governments, our commercial and business institutions, and our people.

Thank you.

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Location:
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