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Remarks Prepared for Energy Secretary Bodman

Much of my time lately has been devoted to explaining why the price of gasoline has risen so sharply.

President Bush understands the pinch this is creating for American consumers and has come forward with a variety of steps to address the problem.

Rapid economic growth in emerging economies like China and India-and the growth here in the U.S.-have pushed up demand.

Political unrest in some oil-producing regions has tightened supply. 

The transition from winter gasoline to summer blends, and the phase out of the additive MTBE in favor of ethanol, have increased the pressure on the market.

Most significantly, we have very little spare refining capacity in this country.

In part, this is a consequence of last year's hurricanes. 

Even as we prepare for the next storm season, refinery capacity is still less than peak. with several refineries only now coming back to full production, while others are conducting necessary maintenance that was delayed in the aftermath of Rita and Katrina.

Even apart from the damage the storms caused, we have not built any new refineries in this country in thirty years. 

That is why President Bush has called on Congress to ease the permitting process for new and expanded refineries, as part of his four-point plan for addressing gas prices.  

So I am pleased to have this opportunity to congratulate Motiva Enterprises--a joint venture of Shell Oil Company and Saudi Refining Inc.--on their progress toward expanding the capacity here at Port Arthur. 

I know they have already completed initial project scoping and process design for the possible expansion. 

This would help add much-needed supplies of transportation fuels to the U.S. market, especially the Eastern and Southern regions of the country, and make a significant contribution toward the industry-wide goal of an additional 1.5 million bpd of refining capacity.

I realize that there are still details to be worked out, because the factors involved in successful expansion are numerous and complicated. 

But I want to encourage you to move ahead with your plans as quickly as possible. and to bring additional capacity online at the earliest possible date.

At the same time, we are all aware of the challenges the industry must confront from hurricanes here in the Gulf. 

When you're talking about a level-five hurricane, with winds up to 150 miles per hour and coastal wave surges 20 to 30 feet high. there are limits on what we can do. 

But we have been working hard to be as prepared as we can be.

Our Department has sponsored several conferences and follow-up meetings with other federal departments, state and local officials, and industry. to share lessons learned. 

We are using the DOE's National Laboratories to develop better computer modeling of how storms affect the coast. 

Above all, we have been bringing together the relevant parties to ensure that improved communication and coordination will lead to a better federal response to future storms.
All of us hope the coming hurricane season will be less punishing than last year.

In any event, I can assure you the Energy Department has absorbed lessons from last year's experience and is prepared to do everything we can to mitigate disruptions to the nation's energy supplies. 

And once again, congratulations to Motiva on your progress toward expanding refining capacity.

Location: Port Arthur, TX

Media contact(s): Craig Stevens, (202) 586-4940