Gas Prices May Spur Progress on Energy Bill

On a day when oil prices breached a record high, a prominent House Republican said that steep gasoline costs will prod Congress to pass an energy bill this year and warned of a possible "horrible summer" because of power blackouts.

Rep. Joe Barton (search), R-Texas, chairman of the House Energy and Commerce Committee, said Monday that high prices — now topping $2.20 across much of the nation — will build support for the contentious energy bill after two failed attempts.

Barton and other politicians, along with energy officials, gathered Monday at an energy industry conference at Southern Methodist University.

Legislation to provide tax breaks to energy producers has stalled twice, partly due to environmental opposition. Last month, however, the Senate voted 51-49 in favor of drilling in the Arctic National Wildlife Refuge (search), renewing hopes for Barton and other backers of the energy legislation.

Barton warned that years of inaction have left the nation's electrical grid unable to cope with growing demand, raising the possibility of blackouts this summer.

"We could have a horrible summer this year," he said. "They haven't built any new power plants in California."

The consensus among the presenters was that technology, more drilling in Alaska, and liquefied natural gas would help meet growing energy demand for fuel.

But none of the officials promised that their ideas would offer quick relief from $2-per-gallon gasoline.

An Energy Department official noted that his agency would have to raise last month's forecast that gasoline prices would average around $2.15 per gallon by early summer. The agency said Monday that pump prices jumped 6 cents last month, to about $2.22 per gallon for regular unleaded, and the peak summer driving season hasn't even begun.

A barrel of light, sweet crude for May delivery touched $58.28 in intraday trading Monday on the New York Mercantile Exchange, before late profit taking sent prices back to a settlement of $57.01 per barrel.

Mazen I. Snobar, chief executive of Aramco Services Co. (search), a subsidiary of the Saudi national oil company, said his company is expanding production capacity, but he offered no figures.

Officials from Saudi Arabia and Kuwait said two weeks ago that their countries would increase production by April, but the statements have done little to slow the rise in oil prices, which briefly topped a record $58 per barrel Monday.

Saudi Arabia and other Middle Eastern nations in the Organization of Petroleum Exporting Countries (search) produce about one-fourth of the world's oil.

Snobar said technology and greater cooperation between oil-producing and oil-consuming countries will improve the balance of supply and demand.

"We are all aware that energy is no longer optional nor cheap," he said. "The United States cannot realistically expect to be energy-independent."

Sheikh Ali Bin Jassim al-Thani, a diplomat from the Persian Gulf nation of Qatar, said liquefied natural gas (search) from his country would account for 40 percent of U.S. imports of the fuel by 2010.

He said natural gas would sell for under $4 per million cubic feet in five years — a prediction that alarmed some domestic gas producers, who are benefiting from prices that are about twice that level.

Despite the finite supply, oil and gas will be the world's major sources of energy "for a long time to come," Sen. Kay Bailey Hutchison, R-Texas, told the gathering.

Snobar, the Aramco Services official, agreed. When asked whether his company was considering diversifying into other fuels, he had a ready and simple reply: "No."