Chu Focuses on US Energy, Not What OPEC Should Do

WASHINGTON (THE WALL STREET JOURNAL via Dow Jones Newswires), Feb. 20, 2009

Energy Secretary Steven Chu -- whose agency has long taken the lead on global oil-market policy -- said Thursday he doesn't know what the Obama administration would urge the Organization of Petroleum Exporting Countries to do at its meeting next month.

"I'm not the administration," Mr. Chu said during a meeting with reporters Thursday. OPEC members are scheduled to meet March 15 to discuss the possibility of production cuts to respond to slumping prices. "I will be speaking and learning more about this in order to figure out what the U.S. position should be and what the president's position is," Mr. Chu said.

Mr. Chu said he would "do what I can to encourage stability" in oil prices, but he added that his time would be better focused "on the issues that I have control over," such as increasing U.S. funding of alternative energy technologies.

On Wednesday, when approached by reporters after a speech to a group of utility regulators, Mr. Chu declined to offer an opinion on whether OPEC should cut production, saying the issue was "not in my domain." He later told reporters on a conference call that his response to the question reflected "more of my naivete than anything else."

Mr. Chu said Thursday he feels "like I've been dumped into the deep end of the pool" in confronting questions about oil policy, such as whether the administration would consider delaying scheduled deliveries of oil this spring to the nation's strategic petroleum reserves.

Mr. Chu is still without a deputy, and the administration has yet to nominate people to fill other high-level Energy Department posts, reflecting a broader challenge the administration faces staffing up cabinet departments to handle an array of initiatives called for by President Barack Obama. Mr. Chu was accompanied Thursday by Matt Rogers, a senior adviser who is a former McKinsey & Co. executive with more than 20 years of experience in the energy industry.

Mr. Chu's predecessors traditionally used the bully pulpit of their office to lobby oil-rich foreign governments to open their spigots in the interest of keeping energy prices low. The last Democrat to run the Energy Department -- New Mexico Gov. Bill Richardson -- was particularly visible in his efforts, jetting across the Middle East in the spring of 2000 trying to persuade governments in the region to boost production. OPEC nations did subsequently increase output, though oil prices continued to rise.

An Energy Department spokeswoman said Mr. Chu "will continue to encourage OPEC nations to avoid price spikes" but said Mr. Chu believes that the primary focus for U.S. policy makers "should be making our country energy independent through investments in efficiency and renewable energy."

Mr. Chu appeared more comfortable Thursday answering questions about how his agency plans to distribute roughly $40 billion provided to it under the recently passed economic-stimulus legislation. He said the agency intends to disperse 70% of the money by the end of next year. By as early as April or May, he said the agency would start awarding loan guarantees to companies implementing alternative energy projects that would otherwise have trouble raising financing from private sources.

Mr. Chu said he wasn't prepared to explain in detail how the Obama administration intends to fulfill a pledge to double within three years the amount of wind, solar and geothermal generating capacity in the U.S. These sources together currently account for about 1% of U.S. electricity supply. Making greater use of wind energy, many industry officials say, will require building more transmission lines to convey power from remote areas in the central U.S. where it is generated to more densely populated areas where it is most needed.

Construction of such lines often meets local opposition. Mr. Chu said he wasn't ready to advocate legislation giving the federal government greater authority to intervene in such disputes, as some business groups have called for, but he said "there's a new realization" among policy makers in Washington that electricity transmission and distribution is "a national issue" and "no longer a local issue."  

(Ian Talley contributed to this article.)

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