Mr Bush and Energy

The United States, according to President Bush, finds itself in the worst energy crisis since the oil embargoes of the 1970s

The United States, according to President Bush, finds itself in the worst energy crisis since the oil embargoes of the 1970s. Such language, under normal circumstances, might have had a seriously adverse effect on the US and world economies. This, fortunately, has not been the case. The most striking reason for calm on the financial markets is that analysts and investors appear to be convinced the assessment contained in Mr Bush's energy plan amounts to serious exaggeration. There may be some local difficulties such as the one which has left California - the most prosperous region on earth - without electricity for protracted periods. That problem, however, appears to be due to logistical inefficiency rather than shortages of fuel.

Mr Bush's plan is interesting in that it gives a greater indication about where he is coming from than where he is going. Oilmen throughout the world - and it should be remembered that Mr Bush and his vice president, Mr Dick Cheney, fall into this category - will be encouraged by proposals to open up public lands, including the Arctic National Wildlife Refuge, and possibly other places in Alaska, the Rocky Mountains and along the Gulf Coast, to exploration companies.

Mr Bush and Mr Cheney, in their roles as politicians however, will realise that attempts to push legislation through Congress to allow oil companies explore America's Arctic wilderness may be doomed to failure. A great deal of the plan, therefore, seems to have been designed for public-relations purposes rather than to solve any energy crisis, real or imaginary.

On a more serious level, Mr Bush proposes to ask the Justice Department to look at, and perhaps drop, several costly lawsuits initiated by the Clinton administration against power utilities that have been accused of ignoring their legal obligations. By doing this, Mr Bush has left himself open to challenges that the presidency is prepared to become involved in interference with the enforcement of the law. There is good news in the plan for a number of important US businesses. The motor industry in Detroit will be happy with proposals to promote hybrid cars, which use a mixture of petrol and electricity. Internationally, Japanese manufacturers such as Toyota and Honda - whose plans for similar automobiles are well advanced - would benefit too, at a time when the Japanese economy is in desperate need of any boost it can get.

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There is a payback for West Virginia in the plans to use coal reserves as a method of combating the proclaimed crisis. But for the rest of the world, considerable concern will remain about Mr Bush's attitude to the world's ecology following his rejection of the Kyoto protocol on global warming and his new commitment to end a quarter-century ban on Sellafield-style nuclear reprocessing. Conservation items among the 105 initiatives outlined in the Bush plan do not go far enough to alleviate these fears.