Motor fuel transition may be starting, presidential campaign aides say

Record high crude oil and gasoline prices may be starting a transition to clean fuels from renewable and alternative resources, energy advisors from the three leading US presidential campaigns said.

Record high crude oil and gasoline prices may be starting a transition to clean fuels from renewable and alternative resources, energy advisors from the three leading US presidential campaigns said.

"I believe we'll see a demand response to higher prices. That said, I also think commodity markets are responding to uncertain policies. So while we're not in an emergency situation, we are in a transition. There are several areas where we can start working. Energy efficiency is the low hanging fruit," said Elgie Holstein, an advisor to the campaign of US Sen. Barrack Obama (D-Ill.).

Emphasizing that it was her personal opinion, and not that of her boss, US Sen. John McCain (R-Ariz.), Rebecca Jensen Tallent said that Americans tend to make dramatic energy changes when their pocketbooks are hit hard. "We may be at a point where we're ready to move away from oil-based transportation fuels and conventional coal-fired power plants. We're at the brink," she said.

"We're beginning to see a transition, but with a growing awareness of global warming. The question now is how quickly the federal government will begin to play a role. The states have had to take the lead up until now," said Dan Utech, who advises US Sen. Hillary R. Clinton's (D-N.Y.) presidential campaign.

The trio, which spoke at an energy forum at the Center for Strategic and International Studies, said that their candidates do not favor authorizing oil and gas leasing within the Arctic National Wildlife Refuge. The candidates' outlooks toward leasing more of the Outer Continental Shelf ranged from Clinton and Obama's opposition (with Clinton saying more leasing may be appropriate in Gulf of Mexico areas where an immediately adjacent state wants it) to McCain's support for giving a coastal state authority to seek an end to federal leasing bans off its coast.

Environmental emphasis

While they agreed that the issues are closely related, the three presidential campaign advisors spoke more about the environment than energy. Tallent said that she was taking care not to say much about energy because McCain plans to do "a fairly massive energy rollout" within the next few weeks. But she added that the Arizona Republican's stance on climate change has been stronger "than many other members of his party including the current administration, to be frank."

McCain proposes returning US carbon emissions to 2005 levels by 2012 and to 1990 levels by 2020, she continued. "He believes that a cap-and-trade system must harness human ingenuity in pursuit of market-based alternatives to carbon-based fuels. He also believes that an effective climate policy must support rapid, sustained economic growth. This probably will be a key issue in the upcoming debates," Tallent said.

Clinton considers heavy US dependence on foreign oil and global climate change two of the biggest issues in the 2008 presidential campaign, according to Utech. She would back a repeal of tax breaks for major oil companies and support a basic cap-and-trade framework similar to Obama and McCain's, he said.

Her approach differs from the other two candidates by using complementary programs in other areas to achieve climate change goals, the advisor said. For example, she thinks that a national Renewable Portfolio Standard could keep carbon allowance trading from producing windfall profits for some companies, he indicated.

Obama's climate plan includes a cap-and-trade program with auctions, an 80% reduction in carbon emissions by 2050, a low-carbon fuel standard, a 25% RPS by 2005, a ban on new coal-fired power plants using traditional designs, support of verifiable international offsets and emissions reporting, an effort to reduce deforestation and re-engagement with other countries in efforts to reduce global warming, Holstein said.

Oil import dependence

The Illinois Democrat also sees heavy US dependence on foreign oil producers, growing imports and tightening global supplies as a major 2008 campaign issue, his advisor said. He said that Obama would propose an alliance of oil-importing nations, including China and India, to work together for reduced demand; treat oil dependence as a national security threat, and "involve the American people in the fight."

The advisors were vague on their candidates' stances toward congressional proposals to give the US Department of Justice authority to prosecute the Organization of Petroleum Exporting Countries for violating US antitrust laws. "Sen. Clinton believes OPEC is a cartel and we should use the tools we have to influence," Utech said.

Obama has not spoken out on this issue, Holstein indicated. "But I believe one pillar of the argument toward more aggressive action toward OPEC is its collusive behavior in setting production levels. This collusive, or should I say collaborative, behavior is in contrast to the traditional free market approach which America favors," he said.

Contact Nick Snow at nicks@pennwell.com

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