JEFFREY BROWN: With gas prices up more than a dollar since this time last year, solving the country’s energy needs has become a hot topic on the presidential campaign.
One of the sharpest differences is over off-shore drilling, the issue President Bush waded into today.
Yesterday, John McCain said he favored lifting a 26-year-old federal ban on off-shore drilling in the U.S.
SEN. JOHN MCCAIN (R), Arizona: We have proven oil reserves of at least 21 billion barrels in the United States, but a broad federal moratorium stands in the way of energy exploration and production. And I believe it is time for the federal government to lift these restrictions and to put our own reserves to use.
JEFFREY BROWN: Barack Obama responded quickly, noting that the Arizona senator had supported the drilling ban when he ran for president eight years ago.
SEN. BARACK OBAMA (D), Illinois: This is yet another reversal by John McCain, in terms of his earlier positions. And I think we could set up an interesting debate between John McCain 2000 and John McCain 2008.
It seems like a classic Washington political solution, which is to go out there and make a statement without any clear evidence that this would result in strengthening the U.S. economy or providing relief to consumers.
JEFFREY BROWN: The ban on drilling in the Outer Continental Shelf was first enacted by Congress in 1982. It protects nearly all of the Atlantic and Pacific coastlines and parts of the Gulf of Mexico.
Yesterday, McCain sought to allay concerns that opening the shelf to drilling would damage the environment and tourism industries of some states.
SEN. JOHN MCCAIN: We can do this in ways that are consistent with sensible standards of environmental protection. And in states that choose to permit exploration, there must be an appropriate sharing of benefits between federal and state governments.
But as a matter of fairness to the American people and a matter of duty for our government, we must deal with the here and now and assure affordable fuel for America by increasing domestic production.
JEFFREY BROWN: In recent weeks, the candidates have had several other sharp disagreements, over a summer holiday from the federal gas tax — McCain is for it, Obama opposed — whether to tax the windfall profits of oil companies — Obama has pushed this, McCain is opposed — and subsidizing corn-based ethanol production — Obama supports this, McCain is against. On nuclear power, McCain supports subsidies for new plants; Obama has said it can be part of the overall energy mix.
Obama spoke about his approach on Monday in Michigan.
SEN. BARACK OBAMA: We will invest in research and development of every form of alternative energy — solar, wind, and biofuels — as well as technologies that can make coal burn cleanly and nuclear power safe.
We will provide incentives to businesses and consumers to save energy and make buildings more efficient. That’s how we’re going to create jobs that pay well and can’t be outsourced. That’s how we’re going to win back control of our destiny from oil-rich dictators.
JEFFREY BROWN: With surveys showing nearly 80 percent of Americans saying they’re being financially affected by rising fuel prices, the issue is likely to remain a focus of the campaign.
Debating off-shore drilling
JEFFREY BROWN: And for a closer look at the candidates' different approaches, we're joined by senior policy advisers from the two campaigns.
Jason Grumet is with Barack Obama. Douglas Holtz-Eakin is with John McCain. He joins us from campaign headquarters in Arlington, Virginia.
Well, Mr. Holtz-Eakin, in now calling for an end to the ban on off-shore drilling, does Senator McCain believe that would have a quick impact on oil prices?
DOUG HOLTZ-EAKIN, Domestic Policy Adviser to John McCain: The impact would come in two forms. The first and most substantial would be increased production. Expanding global supply is part and parcel of any reasonable energy strategy, but it would take five years or so for dramatic amounts of new production to take place.
The more immediate impact would come from changing expectations, changing the behavior of participants in the energy futures markets that we've seen run up so sharply in recent months.
JEFFREY BROWN: Jason Grumet, what is the basis for Senator Obama's opposition?
JASON GRUMET, Senior Adviser to Barack Obama: Well, Jeff, Senator Obama just has a totally different vision for the future of energy policy and the future of our economy than that which Senator McCain and President Bush have laid out over the last couple of days.
It's time that we have a real, authentic discussion with the American people about the structural challenges we face. We are not going to get the job done with gimmicks, like the gas tax holiday...
JEFFREY BROWN: But off-shore drilling, you're calling that a gimmick?
JASON GRUMET: No, I'm calling that a false hope. The Department of Energy indicates that we're not going to get a drop of oil, even if we opened the entire off-shore, for at least a decade.
And by 2030, even if we drill all around the coast of this country, we will not have a meaningful impact on production or prices. And that's because we have a global energy market.
Three-quarters of every barrel we produce in this country goes to benefit somebody else. The only way we're going to regain any control of our own destiny, if we stop having this kind of silly debate about, "It's foreign oil versus domestic oil," and recognize we have to get off of oil.
Until we diversify our energy so that we are not dependent for 97 percent out of our transportation system on oil, we will be at the mercy of people who don't hold our interests at heart. Our economy will be vulnerable; our national security will be vulnerable.
And, you know, even Senator McCain three weeks ago acknowledged that drilling off the coast was just a kind of temporary salve with no real significance.
So we're not sure why he's going back to that old playbook, because we've been there for a long time. We've been on an energy policy holiday for 30 years, and I think it's time to get off.
JEFFREY BROWN: Well, Mr. Holtz-Eakin, respond to that. How does this fit into a much larger picture that he just raised?
DOUG HOLTZ-EAKIN: Senator McCain has pledged to have a real change in leadership in Washington. No one would run for president and say we need to be increasing reliant on especially the foreign sources of oil. They constitute a national security threat, an economic threat, and an environmental threat.
Senator McCain has been a leader in the attempts to move us to a different kind of energy approach. In three successive congresses, he worked across the aisle, worked against even the interests of his own party at times, to produce climate change, cap-and-trade legislation that would fundamentally alter the incentives to produce oil in the United States and around the globe and to use it in the United States.
But any realistic, honest discussion with the American people includes oil over the near term. The commission that Jason led came to the same conclusion.
And so it's important in being honest with the American people to provide real leadership with real solutions. And that includes expanding, where possible, in an environmentally safe way, and Senator McCain is insistent that states get to say where it's appropriate to explore, that we take advantage of the ability to relieve pressure in the world oil markets.
Changing gas prices now
JEFFREY BROWN: Jason Grumet, stay in the near term for a moment. Does Senator Obama think that anything can be done to affect oil and gas prices or do Americans now have to get used to these high levels?
JASON GRUMET: Well, until we fundamentally grapple with our oil dependence and we make more efficient choices in our economy and come up with alternatives, we are going to be struggling with a system that's out of our control.
In the near term, there's really one thing that we can focus on, and that is to address the speculation in the oil markets. Senator Obama has sponsored legislation to get the CFTC to take a harder look at what...
JEFFREY BROWN: That's the commodities...
JASON GRUMET: Commodity Futures Trading Commission. He has supported legislative efforts that would try to address that kind of speculation.
But short of trying to address people profiteering during the suffering, we have to have a much more honest conversation -- and I think -- I guess Doug and I may have different views of honesty -- you know, telling the American people, as Senator McCain did in his speech that you ran, that we have to assure affordable fuel by increasing domestic production is not having an honest conversation with the American people.
We do not have the resources in this country to assure fuel prices through domestic production. We have 3 percent of the globe's energy resources. We simply do not have the ability to turn the crank here and make ourselves safe and secure.
And it's that kind of return to those failed policies that we think is misdirecting the American people from the real conversation we need to have, and that's about investing in efficiency and investing in alternatives.
JEFFREY BROWN: Let me just turn to a few specifics here, Mr. Holtz-Eakin. ANWR, another drilling issue, Senator McCain in the past has opposed drilling there. Does he still?
DOUG HOLTZ-EAKIN: He still opposes drilling in ANWR. It is named a national refuge for a reason. It is an ecologically special place, and he has always felt it should be at the back of the line for any domestic exploration.
JEFFREY BROWN: Is this an area of agreement?
JASON GRUMET: Well, there's an area of agreement there, but I guess there's a question of consistency, because the coast of this country, the great national parks of this country, the places where the moratoria are in place are also special and fragile places.
And I think we have a misconception. This is not a choice about whether America needs to play a role in the energy market. We're the third-largest energy-producing country in the world.
Two-thirds of all the oil wells ever drilled in the world have been drilled here in the U.S. Eighty percent of the recoverable resources on the Outer Continental Shelf are presently accessible.
So, you know, the issue is, in our mind, that this is just not fessing up to the real challenges. We fundamentally have to have not just tinkering around the edges. We have to have a fundamental course correction in our approach to energy policy, and we're not going to get there by hoping to get a little bit more oil in 15 years from the Outer Continental Shelf.
Is nuclear power possible?
JEFFREY BROWN: All right, another issue is nuclear power. Both candidates have talked about some role here. Senator McCain has talked about subsidies for building new plants, Doug Holtz-Eakin. Why? And what future does he see for nuclear power?
DOUG HOLTZ-EAKIN: Well, John McCain actually puts action instead of just words on this issue. As I said, he's led on climate change. Nuclear power is zero emissions, available technology, powers 20 percent of our electricity today.
In the second of his addresses to the American people about the importance of fundamentally changing the way we do business, he said that we should aim for 45 additional nuclear power plants by 2030, moving us north of that 20 percent, ultimately building 100.
He talked about not a lobbyist's dream of handouts for tax credits on solar and wind power, but instead a rational system of sustained credits that bring those alternatives to the market and allow us to produce electricity cleanly.
And he made the commitment to be able to use our coal cleanly and to capture the carbon.
If you are going to be effective in changing the dynamic of global climate change discussions, we must be able to use our coal. We have a quarter of the world's supply, and China must be able to use it.
We can build the technologies, sell them to China, alter the landscape of the United States and around the globe. That's conversation he's having with American people, specific proposals, not saying, "America can't do this, America can't do that," provide the leadership, give the solutions, real reform to have prosperity and some change.
JEFFREY BROWN: On nuclear power, Senator Obama has talked about it being part of the mix, but not specific, from what I've heard.
JASON GRUMET: Senator Obama believes that we have a real crisis when it comes to the Earth's climate and believes that nuclear power is one of the most significant opportunities to bring non-carbon energy into the future.
It's 70 percent of our non-carbon energy right now. And Senator Obama believes that we need to do everything we can to create an opportunity for a future for the nuclear industry because of the concerns we have about climate change.
At the same time, he recognizes that there are serious questions about costs. There are concerns in the public's eye about safety. And we have real issues with waste storage and proliferation.
Rather than just coming up with a random number, kind of pointing for the fence and saying, "I want 100 new plants," Senator Obama believes we have to kind of grapple with those very real problems.
And, you know, the Energy Act provided very significant taxpayer supports already for nuclear power. We have insurance for the risks of accidents. We have taxpayer-supported insurance if we have delays in permitting.
What we don't understand is, beyond saying, "I'd like to have 100 new nuclear power plants," what is it that the McCain campaign is suggesting the taxpayers do for nuclear power that we're not doing already?
Government's role in new energy
JEFFREY BROWN: We're not going to be able to walk through all of the issues here this time, and I promise you we'll come back during the campaign.
But for a final question, a kind of philosophical question, the role of government in affecting our energy future. I'll start with you, Jason Grumet. How does Senator Obama think the government should -- how aggressive should the government be in pushing alternative energy or whatever the policy is?
JASON GRUMET: The challenges that we face right now in energy dependence and climate change are different in scope and in character than almost anything that we've really confronted as a country before.
And we need a different kind of leadership that's going to bring coalitions together to solve real problems, but that's also going to have an honest conversation with the American people.
This is not just about, you know, fancy new ideas. It's going to require a sense of shared commitment among the politics to actually move new solutions forward. We're going to actually have to acknowledge that we are in this together and that we're going to actually have to take real actions as a people, not just try to point to some hope for a future.
So I think that the concern that Senator Obama has of the energy policy is critical to our domestic security; it's critical to our economic security; it's critical to our national security. And he'll make it a real priority in the Obama White House.
JEFFREY BROWN: Doug Holtz-Eakin, the role of government?
DOUG HOLTZ-EAKIN: Senator McCain believes deeply that this is an important challenge that faces America, but the American people have always been the source of greatness that overcomes challenges.
He believes that an effective government will put in place those policies that unite corporate planners and environmentalists, bring venture capitalists together with those who want to use coal, and find the technologies and the innovations that will allow America to free itself of the threat that oil places us in a national security basis, an economic basis, an environmental basis.
He's going to put in place incentives for the private sector, turn it loose, and America can have reforms that make us cleaner, reforms that lead to prosperity, and rid ourselves of the threats that we face at this moment.
JEFFREY BROWN: All right. And we will come back to any number of these issues over the next few months. Douglas Holtz-Eakin and Jason Grumet, thank you very much.
JASON GRUMET: Thanks.
DOUG HOLTZ-EAKIN: Thank you.