Deputy Secretary's Speech

Deputy Commerce Secretary David A. Sampson
International Conference on Energy and Security
Moscow, Russia

Good morning. I am honored to be here today to speak on behalf of President Bush and the U.S. Commerce Department about the critical challenge of securing energy supplies for our citizens.

This is truly a global problem and requires cooperation among all nations, especially among major producers and consumers, as we are seeing today.

In 2005 at their summit, President Bush and President Putin renewed their commitment to a strategic energy dialogue. Energy ministers from the G-8 nations will meet later this week here in Moscow on developing a common agenda for leaders to consider at their annual summit this July in St. Petersburg.

Energy security will also be a key issue at next week's summit of European Union leaders. And today, we're meeting to consider how governments, private business and scientific researchers should be coordinating their efforts.

All of us know the reasons behind today's high energy prices: rising global demand--war and uncertainty in the Middle East--and the impact of extreme weather in the U.S. and elsewhere on oil and gas production. And as you'll hear during this conference, there are many points of view on how to respond.

But there is one thing I urge you to keep in mind: History has clearly demonstrated that market-based solutions offer the best solutions to economic problems.

In the United States, the main reason we have such a strong economy and low unemployment is that we allow our businesses to innovate in response to market forces. We provide the conditions for the private sector to flourish and to create jobs.

Because of private sector innovation, for example, U.S. energy efficiency increased nearly 50 percent over the past 30 years. As a result, U.S. economic growth averaged 3.2 percent per year over the 10 years, while energy consumption grew only 1.2 percent per year.

That, in large part, explains why our economy continues to expand--with low price inflation--despite a near-tripling in oil prices.

Now that doesn't mean we can afford to be complacent. The United States, as President Bush has said, is "addicted to oil" and must change its ways.

Last year Congress passed the President's national energy policy bill--the first such measure in 30 years. This new law will reduce our dependence on foreign energy supplies. It will encourage conservation. And it will encourage entrepreneurs to develop a new generation of alternative energy sources (such as solar, wind and bio-mass) and more energy-efficient technologies.

In January, President Bush took another step forward in announcing an Advanced Energy Initiative to increase clean-energy research.

The United States has also joined with Australia, China, India, Japan and South Korea in the Asia Pacific Partnership on Clean Development and Climate. The goal is to accelerate clean energy development and reduce carbon emissions.

The partnership will focus on practical steps to create new investment opportunities, build local capacity, and remove barriers to the use of clean, more efficient technologies.

President Bush wants the new partnership to be industry-led, technology driven--and results-oriented. The Commerce Department is very pleased to be a part of this initiative.

I hope you will carefully consider market solutions in today's discussions. And I hope the same is true when the G-8 energy ministers meet to consider ways to improve market stability, diversity supply, and promote wider use of "clean" technologies.

One of our jobs today is creating a framework for partnerships among companies from Russia, the United States and other nations.

Obviously to achieve this, governments must provide the rule of law, clear tax regulation and sanctity of contracts. It's natural and proper that governments regulate energy markets in ways that ensure supply, fair competition and efficient allocation of investment capital.

However, opportunities are lost when governments fail to welcome private capital. And this is particularly true for energy development due to the large amounts of investment that are required. Lower barriers for private companies that want to introduce new technologies and to develop new energy reserves will lead to increased supply, and reduced demand.

In short, partnerships facilitate energy security. And there is vast potential for commercial cooperation as Russian companies seek to bring new energy resources into production.

We're beginning to see it happen, and we hope to see a lot more in the future. For example, both Russia and the U.S. will benefit greatly if Gazprom works more quickly with American companies in developing Shtokman natural gas to sell LNG to the U.S. and other markets around the world.

And if you need proof that we can work successfully--whether bilaterally or multilaterally--on complex projects, consider the Caspian Pipeline Consortium. It represents a huge undertaking, a $3 billion investment that required a dozen international partners. We look forward to more cooperation, and to expanding the pipeline's capacity.

Private investment is a two-way street. We're pleased that U.S. companies are producing oil in Russia. But we are equally pleased that a Russian company has expanded its retail network along the U.S. eastern seaboard.

We see signs that Russia will need fresh investment so it can build on the impressive gains in oil and gas output of recent years, and to expand its role as a vital global energy supplier.

Given current high energy prices, Russia can raise capital on its own. But in the long-term, it will be advantageous to consider foreign capital, which is another reason to make it easier to do business in Russia.

U.S. energy companies stand ready to form partnerships. They have some of the best technology. They have experience in exploration, production, and project management, including in the most challenging arctic and offshore conditions. And they have the ability to finance large-scale projects that can greatly enhance Russia's energy sector.

Going forward, we also hope to see transnational energy deals involving the United States, Russia and other countries, because international cooperation on any front--political or economic--promotes growth, peace, and ultimately, a better quality of life.

All of our countries must meet the challenge of securing energy supplies for our citizens. We must foster transparent business climates that allow capital and innovation to respond to markets, and get to work in solving our common energy problems.

Thank you.