News from the Oklahoma Corporation Commission

Jim Palmer, Director of Information

October 26, 2000

(OKLAHOMA CITY) – With those words, Oklahoma Corporation Commissioner Denise Bode closed her keynote address to some two hundred participants in a national energy conference co-sponsored by Governor Frank Keating and the Heritage Foundation of Washington D.C. Her remarks to the nearly 200 industry officials and experts gathered Tuesday inside the Phillips Pavilion on the grounds of the Oklahoma Governor’s Mansion emphasized the need for a blueprint for a more secure energy future.

Bode called for protection of consumers in the short term through greater federal and state support of the low income through LIHEAP and free weatherizing programs. Conservation and alternative fuels must also be a part of the plan.

The Commissioner said "to ensure abundant supplies of energy at reasonable prices for the long haul, the United States must immediately state its intention that ‘in the national interest’ it will encourage the rebuilding of our national energy production, refining and delivery systems and allow access to federal lands to provide reliable, abundant energy to fuel this high-tech, energy intensive American economy."

During a panel discussion entitled "Starving in the Midst of Plenty: The Reality of the Energy Shortage," the Director of OU’s School of Petroleum and Geological Engineering, Keith Millheim, Ph.D., suggested that the amount of money being invested in research and development in the oil and gas industry is way down. He said the large number of mergers are a contributing factor. Millheim said the failure to invest in research has created a "big lag time of some 10-14 years." He also called "shocking" the loss of quality, trained personnel in the industry brought on by both the recent (97-98) price declines and the downsizing created by the mergers.

Matthew R. Simmons, President of Simmons and Co. International, called the decade of the 90’s a wasted decade during which America climbed deeper into the energy crisis. He described the crisis as a "savage crisis" from which the nation will have to rebuild its infrastructure "brick by brick." He said the "future will be a tough-tough challenge for all."

Cuba Wadlington, Jr., President and CEO of Williams Gas Pipeline, said "the energy crisis is not a resource problem but an infrastructure problem." He said

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"new power generation facilities are needed now, not 5 years from now." Wadlington insists that market driven solutions are always the answer.

Red Cavaney, President and CEO of the American Petroleum Institute, points to the internet as the largest driver in the use of more power and he expects that to continue. He said there has been an "alarming erosion of the energy infrastructure." Cavaney cites the fact that "not one major refinery has been built in the last 25 years." Cavaney said the nation must have a more contemporary energy policy. He said America must realize that oil drilling is increasingly global and that access to federal lands is an increasing problem.

During the final panel discussion of the conference entitled "Planning for our Energy Future", Jerry Jordan who chairs the Independent Petroleum Association of America and Jordan Energy, Inc., said "oil and natural gas equal 65 % of America’s energy supply with demand for gas expected to increase by 30% over the next five years." He said "domestic energy policy must help independent producers and free the market."

Michael Johnson, Conoco’s Vice President of Natural Gas and Gas Products, pointed out that propane and butane are equally important with natural gas because of their use in the petro-chemical industry which employs hundreds of thousands of U.S. workers. Johnson called for "predictable government policies" and suggested that "high-tech companies have attracted a lot of the available capital that would otherwise be used for small to medium sized old economy companies." He also said painful and difficult changes will have to be made to transition to stronger companies and industry.

The Director of the Heritage Foundation’s Roe Institute for Economic Policy Studies, Angela Antonelli, indicated that when supply and demand are out of sync it triggers calls for reform. She said the best policy minimizes the role of Governments in micro-managing. Antonelli said domestic energy markets must be allowed to develop. She called the energy tax code probably as unfair as the individual tax code and cited a "downright dislike of our energy resources" by the federal government. She described the legitimate role for government as an education and information role.

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