The U.S. economy, environment, and energy are inexorably linked, Mobil Corp. Chairman Allen E. Murray told the American Petroleum Institute annual meeting last week in Chicago.
Murray, addressing the second of two general sessions, said, "The same importance should be placed on the economy and the energy to fire it as is placed on the environment.
"The impact each has on the other is seldom considered during the legislative process."
Murray also said he believes the United Nations embargo of Iraq is working, gasoline price gouging has not occurred, and after the crisis ends crude oil and gasoline prices likely will return to levels that existed before Iraq's invasion of Kuwait.
The chairman of API, Murray commended the Bush administration for its handling of the Middle East situation and expressed belief the current standoff can be brought to an end without further hostilities.
Charles J. DiBona, API president and chief executive officer, said the presence of adequate supplies and absence of significant lines at service stations have kept consumers from perceiving the threat of an oil shortage.
This, he said, has reduced pressure on Congress to improve access to federal land and take other actions to avert a shortage.
Deputy Energy Sec. W. Henson Moore said the Middle East crisis has drawn attention to the national energy strategy DOE will unveil next month. The document will list consequences likely to result when various energy choices are made.
INEXORABLE LINKAGE
Preserving the environment is essential, but it cannot be preserved in a vacuum, Murray said.
"Americans everywhere we, the people-have the right to consider the costs and benefits of energy from all sources weighed against the costs and benefits of additional environmental regulation.
"And we need to carefully consider the effects of what we do on the American economy."
It even takes energy, he noted, to build and install pollution control devices, manufacture catalytic converters, and refine reformulated gasoline.
The validity of environmental concerns is receiving wide recognition, Murray said.
For example, if the Middle East crisis were considered only in terms of energy, one might expect the U.S. to bolster domestic energy supplies by allowing drilling offshore and on the Arctic National Wildlife Refuge in Alaska and weigh the potential of coal, nuclear, and other sources.
But the U.S. is unlikely to do those things, Murray said, because politicians pay more attention to extremist environmentalists than to the Saddam Husseins of the world.
INDUSTRY'S RECORD
Murray said the oil industry has its own three E's: essential, effective, and excellent.
The industry is essential because there is no viable substitute for oil as a transportation fuel for the foreseeable future.
It is effective because it gives the U.S. the world's highest living standard, and the major military and economic power, making it the only nation capable of containing Hussein's military machine.
Excellent describes the level of achievement of the industry's people, who have accomplished nearly impossible tasks in spite of hard times, political interference, economic roller coasters, and technological obstacles.
At a press conference, Murray said he believes world oil price stability can return even if Hussein remains in power in Iraq, under certain circumstances he did not detail. He noted that Moammar Khadafy remains in power in Libya, but his power has been diminished.
He also said Mobil is studying the ways rumors and news events affect the stability of oil futures trading.
POLITICAL DILEMMA
DiBona described a political dilemma confounding industry's access to much of the U.S. petroleum resource.
Past oil supply crises have pushed the U.S. to increase federal leasing or approve major energy projects. The current crisis is different. Congress has rejected pressures for price controls, so the market has been able to adjust and prevent a shortage.
Because there are no significant lines at service stations, consumers see no threat of a shortage.
"American consumers are confronted with adequate supplies at higher prices," DiBona noted.
"That makes them angry but does not cause them to see that falling domestic production is contributing to their problem or that ending drilling moratoria could help solve the problem."
Congress, therefore, feels no pressure to allow leasing of the Arctic National Wildlife Refuge Coastal Plain or lift restrictions on leasing of the Outer Continental Shelf.
But DiBona sees hope in the election failures of several state environmental initiatives early this month. The votes, he said, reflect new public concern about the economy.
As economic pressures build, "we may find that (voters) are more willing to recognize some connection between the cost of environmental extremism and their own economic welfare."
IMPROVING LEGISLATION
The API chief also sees hope in industry's ability to improve the worst originally proposed elements of this year's Clean Air Act reauthorization and oil spill liability bills. As passed, both bills pose "serious difficulties" and raise costs, DiBona said.
"But the clear facts and rational arguments this industry continued to press during the debate helped produce better bills than we at one time expected."
For example, methanol mandates contemplated early in the Clean Air Act debate failed. "We convinced a majority of congressmen that cleaner reformulated gasolines were, on every count, a better way to go."
But the reformulated fuel mandate presents new challenges-and opportunities.
No one knows how to produce a fuel able to meet the new law's emission performance standards. And the challenge is complicated by an "unnecessary oxygen content requirement that was incorporated thanks to the self-interest of the ethanol lobby."
Nevertheless, if industry can fulfill the law's tough requirements by the 1995 deadline, "we will ensure that gasoline is the fuel of environmental choice for decades to come. Moreover, we will create a new market for those able and skilled enough to participate."
ENERGY STRATEGIES
DOE's Moore said that Iraq's Aug. 2 invasion of Kuwait might have reawakened public concern for energy policy.
"There is now an interest in the national energy strategy where perhaps 6 months ago there was not," he told a press conference.
DOE is assembling energy strategy options to present to President Bush early in December.
Moore blamed fear of warfare in the Middle East for recent crude oil price increases.
If price were based solely on supply and demand, he said, it would be now about where it was before the Iraqi invasion.
Calling himself "a veteran in the losing battles in Congress over energy," the former Louisiana congressman described DOE's highly public energy strategy formulation process as "a mechanism for making people understand the consequences of their choices."
The product will be a list of 65 energy policy options for Bush.
The options will include estimates of how they would alter a "base line reference." That reference projects economic growth and energy consumption through 2030 under the assumption of no official action on energy.
The reference case sees a decline in oil's share of the energy market to 36% from 40% at present. But 80% of the oil would have to be imported-"the shocking factor," Moore said.
Crisis in the Middle East creates a unique opportunity to act on energy, he said. DOE has worked on its energy strategy for 16 months, and now "we have the problem of energy being brought to the attention of the people."
Usually, he noted, problems catch government and the voters unprepared.
"The issue's here. The solution's here. And we can't let that opportunity escape."
GULF LEASING
Interior Sec. Manuel Lujan Jr. and Minerals Management Service Director Barry Williamson kept the industry guessing on OCS leasing, especially regarding the Gulf of Mexico.
The 5 year OCS lease sale schedule, due by yearend, will provide "more of a pin-pointing than the general area leasing we have done in the past," Lujan told a press conference.
Asked if area-wide leasing will continue in the Gulf of Mexico, a critical question for the offshore producing industry, Lujan said, "That will continue."
Williamson, however, did not dispel industry doubts. When asked the same question about area-wide leasing in the gulf, he said, "Why don't we wait until we see the plan?"
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