(Updated with President Obama comments on energy policy, foreign oil)
NEW YORK (
) -- President Obama announced on Wednesday initiatives to cut U.S. reliance on foreign oil, calling for the U.S. to reduce oil imports by one-third within a decade -- half from increasing U.S. production and half from reducing oil consumption.
President Obama's plan includes support for natural gas vehicles, a pledge by the federal government to purchase only alternative fuel vehicles by 2015, and expanded oil and gas drilling in the U.S. Biofuel and ethanol production increases are also part of the White House plan for reducing reliance on foreign oil.
President Obama quantifed his goal for less reliance on foreign oil, stating, "When I was elected to this office, America imported 11 million barrels of oil a day. By a little more than a decade from now, we will have cut that by one-third."
President Obama, who spoke at Georgetown University on the energy proposals on Wednesday, is unveiling his latest support for a new energy paradigm as consumers become more anxious about the sustained higher gasoline prices at the pump and the Middle East political unrest continues to sustain higher crude oil prices. The Japanese nuclear crisis has already combined with the Middle East unrest to heighten the profile of energy policy.
"One big area of concern has been the cost and security of our energy.... The situation in Japan leads us to ask questions about our energy sources, and in an economy that relies so heavily on oil, rising prices at the pump effect everybody," Obama said early in his speech at Georgetown University.
On $4 gasoline, President Obama said, "We have been down this road before ... politicians waving their plans for $2 gas. You remember 'drill, baby drill,' ... none of it was really going to do anything to solve the problem.... The truth is that none of these gimmicks or slogans made a bit of difference. When gas prices finally did fall it was mostly because global recession had led to less demand for oil."
The White House plan was a mix of ideas that Obama has previously voiced support for and some new ideas. President Obama reiterated the ambition of requiring 80% of electricity to be generated from "clean" energy sources -- nuclear, natural gas, clean coal, wind and solar among them -- by 2035.
"We will keep on being a victim to shifts in the oil market until we finally get serious about long-term energy policy," President Obama said.
Nevertheless, there remains a gap between the White House pledge and the legislative reality, with comprehensive energy policy being the legislative holy grail that has so far eluded the Obama administration.
President Obama acknowledged the legislative reality, saying, "I've got to be honest, we've run into the same political gridlock and inertia that has held us back for decades and that has to change. We cannot keep going from shock when gas prices go up to trance when they go back down. We can't rush to propose action when gas prices are high and then hit the snooze button when they are low again. The U.S. can't bet our long-term security on a resource that will eventually run out and will get more expensive to extract from ground."
The White House plan sent stocks in the natural gas vehicle space much higher on Wednesday morning, yet these stocks have served as a good proxy for the gap between promises and legislative reality. In 2010, natural gas vehicle stocks rallied on the hope that the Natural Gas Act would be passed and stimulate adoption of natural gas vehicles, but it failed to find a legislative package.
Clean Energy Fuels
were among the natural gas vehicles plays rising on the latest legislative hopes.
Shawn Severson, who covers the natural gas vehicle sector for Think Equity, said that support from Obama doesn't change the legislative end game: they still need to get a specific bill for nat gas vehicles to get anything done quickly. "Nat gas has always had a lot of support but it keeps getting dragged down with bigger energy bills," Severson noted.
While Republicans are calling for the Obama administration to speed up what has become a slower drilling permitting process in the Gulf of Mexico since the BP oil spill -- the government recently approved the first handful of deepwater permits since the oil spill -- the White House released a report from the Interior Department on Tuesday noting that more than two-thirds of the offshore drilling leases in the Gulf of Mexico aren't being used.
"This report shows millions of acres that have already been leased to industry for oil and gas productions sit idle," Interior Secretary Ken Salazar said in a statement.
Geoffrey Styles, energy industry consultant at GSW Strategy Consulting, and a former energy industry executive, described the "idle leases" theory as "a distraction that just reinforces how little this administration, which includes essentially no senior officials with an energy or manufacturing background, understands the industry."
Energy industry executives have criticized the idle lease theory as not taking into account the fact that energy companies by up large swaths of land as part of regular practice without the intention of ultimately drilling on areas that have low resource potential.
President Obama responded to critics of the drilling permit process by saying during his speech, "We just spent a lot of time, energy and money trying to clean up a big mess. I don't know about you, but I don't have amnesia and it's important for us to make sure that we prevent something like that from happening again."
President Obama also noted that his administration has approved 39 new shallow water permits and 7 new deepwater permits in recent weeks.
"Any claim that my administration is responsible for high gas prices because we 'shut down' oil production is untrue," President Obama said.
Natural gas drillers popped at the open on Wednesday, and were rising more than the broader equities market and energy sector, though only
Cabot Oil & Gas
sustained gains of over 3% after Obama spoke.
Fadel Gheit, energy analyst at Oppenheimer & Co., said that all the natural gas stocks popped at the open on Wednesday, and it was somewhat an "unbelievable" trading event, since the White House plan was more or less repackaging what the Obama administration has stated previously in terms of energy policy ambitions.
"Independent oil and gas producers have been saying for years that we have enough natural gas to last 100 years and we can use it even faster with a plan and cut oil imports significantly in less than ten years, but we don't have support in Washington for a comprehensive energy plan."
The Oppenheimer analyst said that natural gas stocks have been incredibly strong in the past few weeks, with the natural gas contract cutting its year-to-date loss from 15% to 1% as the Japanese nuclear crisis has driven a sentiment trade on nat gas. The White House energy plan just tacks onto the sentiment trade that has already driven natural gas stocks higher, but the Oppenheimer analyst concluded that the industry is "ahead of the fundamentals" at this point.
The Oppenheimer analyst noted that the most recent prediction from the Energy Information Administration of the Department of Energy is for an average natural gas price of $4.10 in 2011. Natural gas futures traded as high as $4.37 on Wednesday morning.
The energy sector was outpacing the broad market gains on Wednesday morning, up 1.1%, versus an S&P 500 and Dow Jones Industrial Average gain of 0.7%.
Some of the more speculative plays in the U.S. drilling market were also higher, led by a 6% rise in shares of
were leading returns among the super majors on Wednesday morning, up more than 1.9% and 1.7% respectively.
-- Written by Eric Rosenbaum from New York.
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