Bush to propose new energy policy

WASHINGTON - Under pressure over high energy prices, President George W. Bush will propose tackling the root causes of the problem by encouraging new oil refineries be built at closed military bases and jumpstarting construction of new nuclear power plants.

In a speech, Bush will also propose giving federal regulators the lead authority to decide where to locate terminals for processing imported natural gas. States have increasingly been taking the lead on this issue.

And the president will propose adding vehicles that use clean-burning diesel fuel to the list of automobiles eligible for $3.49 billion in tax credits over 10 years to encourage further use of this technology. Other eligible vehicles are hybrids powered by petrol and electricity and fuel-cell vehicles.

Senior Bush administration officials unveiled details of the president's proposals on Tuesday night. It will be his second energy speech in a week.

A Washington Post-ABC News poll showed that less than half of Americans support the way the president is handling energy policy. Bush met Saudi Crown Prince Abdullah at his Texas ranch yesterday but reached no agreement that would lower petrol prices in the near term.

Energy legislation is moving on Capitol Hill. The House of Representatives has passed a version, while the Senate will begin debate next month. Administration officials want to work with congressional leaders to include Bush's proposals.

Speaking to small business leaders on Wednesday, Bush will call on federal agencies to encourage construction of new oil refineries at the sites of former military bases closed in recent years.

The agencies would work with states, local communities and potential investors to encourage the use of the sites, the administration officials said.

The lack of adequate refining capacity is frequently cited by experts as one reason why petrol prices have surged dramatically in recent years. No new refineries have been built in recent years even though the demand for petrol has risen.

On nuclear, Bush will propose offering companies risk insurance to mitigate the cost of delays due to any potential failures in the licensing process. The last generation of nuclear power plants was built in the 1970s and 1980s.

"There is a new and better licensing process. However, there is substantial uncertainty with potential investors about the ability to move through the new licensing process," one senior official said.

Liquified natural gas terminals take compressed, supercold natural gas shipped from overseas and warm it into usable energy. Only four such terminals exist in the United States amid increasing demand for natural gas.

Bush will propose the Federal Energy Regulatory Commission become the lead authority in granting licenses, overruling what has increasingly become state jurisdiction.

A senior official said there are 32 proposals to build new terminals, and Bush's proposal would "provide some regulatory certainty" in order to get them built. Rules on the terminals vary from state to state, and California, for example, has not wanted to cede state authority.

- REUTERS