Remarks Prepared for Energy Secretary Samuel Bodman
I appreciate very much the opportunity to be here.
I know President Bush was scheduled to appear before you today. At the last minute he found out he would not be able to make it. So he asked me to come in his stead.
Naturally I said yes. When the President asks you to fill in for him, you don’t refuse. In fact, I joked, I would be happy to fill in any time he needed me to -- the State of the Union address, hosting formal White House Dinners, signing bills, flying on Air Force One, throwing out the first pitch at the World Series. A guy could get used to such things.
Of course, those are merely the trappings of the office of the presidency. They are trifles. In reality, the job of President is fraught with the most serious of responsibilities, the heaviest of burdens. And it is in times of national crisis that the true nature of the job becomes so apparent.
That was the case four years ago this week, when 19 terrorists boarded planes in a bid to crash them into buildings, and sow fear and suffering on America’s shores.
So it is the case now, in the wake of nature’s expression of terror that crashed into the Gulf Coast last week, sowing pain and destruction on an almost unimaginable scale.
I am very proud of the job President Bush has done in the wake of Katrina. The quick and forceful action demonstrated by him, and by my colleagues in the Cabinet, has helped get a horrible situation under a semblance of control, and has helped save lives.
And I know that all Americans stand together as the nation deals with the somber tasks at hand – burying loved ones, grieving, surveying wreckage, salvaging personal effects – all the while looking ahead to the immense challenge of cleaning up, rebuilding, starting over.
I was very heartened by the remarks President Bush made last week when he said:
"All Americans can be certain our nation has the character, the resources, and the resolve to overcome this disaster. We will comfort and care for the victims. We will restore the towns and neighborhoods that have been lost in Louisiana, Mississippi and Alabama. We'll rebuild the great city of New Orleans. And we'll once again show the world that the worst adversities bring out the best in America."
Those five sentences sum up the spirit of this great nation.
Those five sentences explain the Herculean effort put forth in the aftermath of the storm by first responders, police, rescue officials, state and local leaders, military personnel, and others.
Those five sentences evoke the majestic character of this country, and suggest that – even amid the wreckage and devastation and suffering – all will not be lost.
I thought it might be helpful today for me to update you on the Administration’s efforts to deal with Hurricane Katrina, particularly with regard to handling the energy supply crisis and its effect on the national economy.
Katrina and its aftermath amount to a tragedy of monumental proportions. But to even describe it that way rings a bit hollow. It makes Katrina sounds like a singular event, when in fact it was one that encompassed tens of thousands of individual tragedies – relatives killed, homes destroyed, livelihoods ruined.
It will be a long time before we fully understand the size and scope of the devastation wrought. The power of this hurricane produced an area of destruction that is a mind-boggling 90,000 square miles. That is an area the size of Great Britain.
And given the concentration of drilling platforms, refineries, and pipelines in this area, Hurricane Katrina also produced the single largest disaster impacting the energy infrastructure of the United States in our history.
The magnitude of the destruction has created tremendous problems that have strained capabilities – federal as well as state and local – and hindered recovery efforts.
At the Department of Energy, our focus is on two aspects of the events in the Gulf of Mexico.
First, obviously, we are concerned about the direct impact of the storm on the residents of Louisiana, Mississippi, Alabama, Florida and other affected states.
And because the Gulf Coast plays such a critical role in supplying much of the nation’s energy needs, we are also concerned about the hurricane’s broader effect on the country as a whole and on international markets.
As the severity of the storm became apparent last week, I determined to commit the Department of Energy to doing everything in our power to meet the immediate needs of those affected by Hurricane Katrina, both on the Gulf Coast and throughout the rest of the country, and we have marshaled all of our resources to fulfill that commitment.
I am fond of saying that energy is the lifeblood of our economy. Lifeblood is perhaps too apt a word. In the days after the storm hit, it was apparent that electricity would be absolutely critical to saving and sustaining life in those hard-hit regions in Louisiana, Mississippi, and Alabama.
About 2.7 million customers throughout the South would find themselves in the dark in the immediate aftermath of Katrina. That isn’t just homes. It is hospitals and elderly care facilities too.
The electricity infrastructure that delivers power to customers – transmission lines and substations and distribution wires – was damaged or destroyed in New Orleans, Pascagoula, Biloxi, Jackson, Mobile, and so many other localities.
In response, our Department dispatched employees to emergency response centers throughout the southeastern United States to coordinate power restoration efforts.
We worked closely with state and local officials, first responders, and power companies to begin restoring power and fuel supplies as quickly as possible, wherever possible.
We arranged for a shipment of fuel to two companies that are manufacturing electricity poles. Without this fuel, the companies would have stopped making poles … poles that are critical at a time when so many snapped like twigs under the force of a massive hurricane.
We coordinated with over 10,000 crews to work on restoring power. These crews have come from all over the country, and even from Canada, to support utility restoration.
Let me to take a moment to praise them. They worked around the clock, sleeping in their trucks, fatigued, lacking food and water like much of the rest of the population.
And when they finished their work in one place, they would move on to the next.
I commend them and their labors, which will prove essential to efforts to rescue victims, house refugees, and get the affected regions back to some semblance of normalcy.
Indeed, power has already been restored in many places. I mentioned a moment ago how 2.7 million customers initially were without power as a result of Katrina. As of last night, that number was less than 750,000.
That represents substantial progress, though progress which will necessarily start to slow. Most of the remaining areas without power are places where people’s homes and businesses either literally no longer exist, or are submerged under many feet of water. Meanwhile the ability to generate or distribute power in these places has been largely destroyed. So restoring power to these customers presently is impossible.
Restoring and rebuilding electricity infrastructure and generating capabilities in these places cannot be done overnight. The publicly owned municipal and cooperative utilities in these states, with the help of other utilities and contractors from many states, are undertaking the massive job of restoring the system. But it will take time. A long time. And we will stay on top of the situation until it gets completed.
Of course, there is another aspect to the devastation caused by Hurricane Katrina that our Department must address. That is the effect of the storm on national and international energy markets.
The Gulf Coast has long been vital to meeting the nation’s energy needs. So it stood to reason that a cataclysmic hurricane hammering the Gulf Coast could send shock waves throughout the nation’s economy.
And at a time when the nation’s refineries were operating at capacity, and markets for crude oil and gasoline were already very tight, we had great reason to be concerned that supplies might be cut and prices could spike.
Indeed, the storm did have an adverse effect on production and supplies.
Nine refineries responsible for 10 percent of the nation’s gasoline were shuttered by Katrina and others were slowed in their production.
Thousands of energy industry employees in the Gulf Coast had to be evacuated.
Oil and gas production rigs and other massive infrastructure projects were damaged.
The main pipelines that emanate from the Gulf Coast and ship gasoline to the rest of the country were affected as well.
The Administration took extremely quick action minimize the effect that destruction in the Gulf might have on energy markets.
Perhaps the most important of these was the historic decision to tap the nation’s Strategic Petroleum Reserve, or SPRO. The SPRO was created to stockpile oil for use in the event of a severe energy supply disruption. Katrina would certainly seem to qualify.
The President authorized the sale of oil from the Reserve to help keep markets well supplied at a time when there were widespread fears of looming shortages. I authorized the Department to sell 30 million barrels of SPRO oil. The public sale process began earlier this week.
We reached an agreement with the International Energy Agency for its members to release an additional 33 million barrels of crude oil and refined products to world markets.
My Department also approved loans of 12.6 million barrels from the SPRO to refineries, beginning within a day of Katrina’s landfall.
All of these actions were taken as quickly as possible. Together, they have gone a long way to calming markets made jittery by the uncertainty caused by Katrina.
These are not the only tools the Administration has used in a comprehensive strategy to mitigate a disruption in fuel supply. In addition:
- The Environmental Protection Agency waived regulations to allow use of "winter blend" gasoline throughout the country. This action allowed use of the considerable stock of reformulated gasoline already in storage, and is already helping to increase the supply of fuels to consumers.
- The Department of Homeland Security rescinded legal restrictions on tanker transportation of fuel supplies. This action will allow more tankers and barges to transport gasoline into ports around the country that may have seen supply disrupted by pipelines running at lower capacity.
- The Treasury Department increased the supply of diesel fuel by permitting "dyed" diesel fuel to be sold commercially.
- The U.S. Navy and Coast Guard began surveying shipping channels, to make sure that there are no sunken obstructions that could affect gasoline tankers. The waterway between the Lower Mississippi River and all points east was effectively open yesterday.
- We arranged for a number of our European allies to provide extra cargo tankers, and more than 20 carrying gasoline are now on their way to the United States.
- The President also has called on the American people to conserve gasoline during this time of tightened supply. Conservation and energy efficiency actions – everything from carpooling to properly inflating your tires to driving slower – can have a surprisingly large impact on gasoline consumption.
- And finally, a variety of federal agencies have been working with pipeline operators and electric power companies to restore power to interstate pipelines that transport oil, natural gas, and refined products from the Gulf Coast to the Midwest and East Coast.
As to this last point, I am very happy to report that the Colonial and Plantation pipelines, the two major pipelines which deliver gasoline, diesel, and jet fuel to the Eastern United States, are now operating at 100 percent of normal operating capacity.
Calpine, a major crude oil pipeline serving the Midwest, is now running at over 80 percent of capacity.
And the Seaway Interstate Pipeline, which goes from the Gulf to Oklahoma, is operating at full capacity.
These are very positive developments. And I am sure they will help to bring gasoline prices down from the highs we all have seen over the last week. The nationwide average for a gallon of gasoline last week was over three dollars. According to the Energy Information Administration, that figure will likely fall in the coming weeks. EIA estimates an average of about $2.60 per gallon for the third quarter of this year, in no small part, I am convinced, because of the quick action taken by the Administration to deal with Hurricane Katrina.
What all of this points to, I think, is the resilience of America’s energy sector. At least with regard to energy, the fact that we could bounce back so quickly is an amazing success story – one that underscores the fundamental strength of the American economy and the American people.
Ladies and Gentlemen, I want to thank you for making me feel so welcome this afternoon. Thank you, too, for giving me the opportunity to share with you my Department’s story.
I am proud of everything the men and women of DOE are doing to deal with the aftermath of one of the worst natural disasters in our nation’s history.
I am proud of the men and women on the ground in Mississippi, Louisiana, Alabama, and other spots who are bringing power back to that region.
I am proud of the coordination with industry and with officials at all levels to get this job done as quickly as possible.
I am proud of our diplomatic efforts to engage allies and calm the markets.
These things are our job, of course. But what motivates us is not the stated responsibilities of our position, but the sense of obligation that arises when fellow Americans are in need. What motivates us is a sense that we should volunteer of ourselves to help our fellow citizens.
That spirit of volunteerism is a hallmark of America’s small towns. Gus Edwards is a prime example – a volunteer fireman who has given so much to Waynesville, OH. That ethic is a defining characteristic of America’s small communities.
I know a number of your towns have made or plan to make official offers of assistance to the Hurricane Relief effort. Others of you have contributed time and money privately, or even offered to house victims.
On behalf of President Bush, I thank you.
On behalf of the American public, I thank you.
I won’t presume to speak for the families that have been hit hardest by this tragedy, though I expect they appreciate those expressions of kindness and support.
The American people have demonstrated a common desire to restore the glories of the Gulf Coast, to help that beleaguered region rebound from adversity.
With your help, and by tapping Americans’ deep reservoir of charity, good will, and generosity, I have every confidence we can do it.