The question of how to work toward our shared goal of enhanced energy security is becoming ever more critical.  Consider that worldwide energy demand is expected to grow by more than 50 percent over the next twenty years. 

 

And because all nations rely on safe, affordable, and dependable supplies of energy for economic growth, the question of energy security is a matter of economic and national security as well.

 

So in a world that can expect to see a massive jump in demand for energy over the next two decades, what steps must be taken to ensure this security?

 

I would like to take this opportunity to emphasize the importance of the business, financial, and investment communities in helping us meet these challenges.  We must embrace and promote a market-oriented approach that will encourage investment, competition, market pricing, energy efficiency, as well as transparency, stability, and reliability. 

 

A stable and welcoming business climate naturally attracts the investment to develop resources, and therefore helps benefit the entire economy, indeed, elevates and benefits an entire society.  Having worked in the private sector for many years, I know first-hand that government can impede--or encourage--business investment.

 

A truly market-oriented approach – allowing the market to determine pricing, an atmosphere that encourages investment, competition and ensures regulatory certainty for businesses is fundamental to creating an investment climate that facilitates economic security. 

 

And the same principles will be essential to developing the vast energy resources in this region--resources which will be so critical to future global energy markets.

 

We must recognize that attracting the significant capital required for energy projects requires a respect for intellectual property rights, protection for the sanctity of contracts, transparency and the establishment of a level playing field where laws and regulations are clear, and consistently applied.  

 

If we in government are not dependable, we can hardly expect the private sector to function with confidence or effectiveness. 

 

In the U.S., we don’t tell our companies where to invest or where to buy oil.  It is up to them.  Just as it is up to them to assess risks and determine the economic feasibility of investment, whether in infrastructure, exploration, or new technologies.

 

Neither do we set the prices that consumers pay.  We feel the market does a better job of establishing and changing prices than any government entity could.

 

The United States discovered this the hard way.  In the early 1970s, our government instituted price controls on gasoline.  The hope was that it would keep a lid on inflation and protect consumers.

 

The policy failed utterly.

 

Instead of low-priced gasoline for our citizens, there was no gasoline.  The policy led to shortages, hoarding, rationing.  Instead of stability, we got panic.

 

It was a painful lesson to learn and live through, but we learned it, and learned from it.

 

And I think that a large part of the credit for the economic expansion the United States has experienced since the 1980s is due to the fact we put those notions behind us, and put more faith in letting the free market determine prices. 

 

And this remains our approach today.

 

For example, the U.S. seeks to expand liquefied natural gas use.  That is a public policy goal.  But our approach is to allow our private sector to lead the effort in building and securing the necessary energy infrastructure.  Our government’s job is to create the framework of laws and rules that will allow companies to form partnerships with confidence in the security of their arrangements, and to operate in a competitive market and free trade environment.

 

To facilitate the market’s efforts, the Energy Policy Act that Congress passed and the President signed last summer simply paves the way for increased LNG capacity by streamlining our regulatory and siting processes.  About 40 proposals for receiving terminals are under consideration right now in the U.S.  All of the proposed projects require completion of the same regulatory documents to the Federal Energy Regulatory Commission.  The FERC will then approve all the projects that meet regulatory requirements, but the market will ultimately determine which projects receive financing and reach fruition. 

 

In addition to investment and regulatory issues, market efficiency requires communication among all parties involved in energy exploration, development, and transport.  The U.S. recognizes the importance of the producer-consumer dialogue, and believes we should fully utilize the mechanisms that we established.  We support the International Energy Forum and the other multilateral energy events that bring together producers and consumers.

 

To help ensure a safe and secure energy infrastructure, let me say that the U.S. supports G8 efforts to promote physical energy security, and welcomes the opportunity to exchange best practices. Similarly, we must strive to mitigate energy supply disruptions through emergency response mechanisms, including the coordinated use of oil stockpiles, protecting and strengthening energy infrastructure.

 

Advanced energy technologies along with renewable sources of energy will play a key role in securing our energy future. The development and deployment of efficient and clean energy technologies will help ensure sustainable growth world-wide.  The G8 Summit at Gleneagles endorsed more concerted action on energy efficiency and we should ensure that we carry that forward.

 

Energy security is a goal we all share. As global economic leaders, it is also a responsibility we all share.  Working together will provide our countries many opportunities for increased trade, investment, and cooperation.  If we are to achieve energy security, all of our governments have an important role to play.

 

It is critical to continue to work together to remove barriers to energy investment and trade; ensure open, free, and equitable access to global markets; accelerate the use of new and renewable sources of energy; and modernize and secure the global energy infrastructure.

 

Thank you.