The pain Americans are feeling today from high gasoline prices is real. And it is one of the President’s top concerns. But the difficulties we are going through today, I think, are also producing some gains.

The market conditions we are dealing with…and the volatile political conditions in the Middle East, Africa, and other regions that produce so much of the world’s oil and natural gas, are bringing Americans together in a broad consensus that we must take strong action to enhance our  nation’s energy security.

That means action on a governmental level, but it also means decisions and actions in the private realm of how we run our businesses, how we fuel our cars and how we heat and light our homes and offices.

Energy security is a vital part of our national security but it is also essential for our continued economic strength and competitiveness. The U.S. economy has continued its strong performance this year. But for it to continue to grow and for our nation to maintain its global economic leadership, we cannot leave ourselves overly dependent on energy sources whose price and availability is beyond our control.

Achieving greater energy security is a challenging but worthwhile goal that should concern all Americans. It affects all of us. Public policy makers, financial and industrial leaders…anyone concerned with America’s future prosperity, economic health and environmental well-being should be thinking about they can help make this happen.

As Energy Secretary, I’m regularly asked what I’m doing to bring down gasoline prices. Unfortunately, my answer is that there is no silver bullet; this is a problem that took decades to develop and it is going to take some time for us to work our way out of it.

The answer to high energy prices is the kind of comprehensive approach embraced by the President—that includes diversifying our energy supplies, developing new domestic sources, and increasing our reliance on energy efficiency and conservation.

Let me be clear: Encouraging greater energy efficiency is part and parcel of changing the way we power our homes and offices, and it is a priority for the Department of Energy.

This is an effort government cannot and should not manage on its own; it requires new thinking, new technologies and the active involvement of the private sector. We will need all your ingenuity to help us master the practical and technical challenges we face.

Developing renewable fuels like ethanol derived from biomass and new technologies like hydrogen fuel cells is part of the answer.

As I’m sure many of you know, the President called for increased spending on these and other energy technologies as part of his Advanced Energy Initiative.  I’m happy to say that Congress has so far been very responsive to his requests. These emerging technologies offer promising alternatives to our current reliance on oil, and I am very optimistic about their prospects. But it will take years to fully implement them and realize their savings.

Fortunately, there is another vital part of the solution that we can act on today. That is making more efficient use of energy in our industrial sector and in heating, cooling and lighting our buildings.

With the Advanced Energy Initiative, President Bush has put us on a path to displace demand for up to 5 million barrels of oil a day by 2025. We will get there by tapping the potential in new technologies.  We can also make substantial progress towards that goal through efficiency and conservation.

At the Energy Department we want to work with the private sector on research that tackles the technical challenges we face and to write rules and standards that encourage maximum energy efficiency. As I often say, the greatest source of untapped energy in the U.S. is the energy we waste.

For example, we estimate that developing more efficient heating and refrigeration systems will ultimately reduce electrical use and loads—and our direct and indirect use of natural gas—by the equivalent of 3.3 quadrillion BTUs, or quads, of energy annually. Shifting to more efficient window designs that cut heat and air conditioning losses will save another 4 quadrillion BTUs annually.

To put this in perspective, the U.S. economy utilizes nearly 100 quadrillion BTUs, of energy each year.  In 2003 our buildings sector alone consumed 27 quads of energy at a cost of $305 billion. We project that usage will increase to 39 quads at a cost of $425 billion by the year 2025. So these efficiencies could cut our energy use in this sector by almost 18% and our expenditures by $76 billion.

These are very big numbers and goals that are very much worth pursuing. The savings we can realize in the ways we operate our buildings, our appliances and our manufacturing plants will make our entire economy more resilient and better able to cope with future volatility we may encounter in the price of oil and natural gas.

I’d like to share with you some of the strides we have already made in joint research projects.

• Just last month, a new, more efficient residential hot water heater came on the market thanks to research that we helped fund. The new model, developed by A.O. Smith Water Products, achieves 90 percent thermal efficiency—a 12.5 percent gain over current models—through improved combustion and by substituting carbon steel for stainless steel in key components


• On the industrial front, a truly revolutionary new design for the furnaces used to melt aluminum is now in operation at Aleris International’s mill in Uhrichsville, Ohio.  Making aluminum is a notoriously energy intensive process but this new furnace cuts energy use nearly in half while also reducing emissions by more than 80%.

This design was developed in a partnership between Aleris, Apogee Technology, Drexel University and the Energy Department. It substitutes conduction produced by electricity for radiation produced by natural gas. If this new technology is adopted by 60% of the industry, it will save 34 trillion BTUs a year. That is almost 4% of the industry’s total energy consumption and will generate savings of $250 million a year.


• We are also supporting the development of new solid state lighting technologies for white light with $20 million in research funding this year. These include light emitting diodes and other technologies that last longer while using less energy than conventional lighting methods. This is also a rapidly emerging industry in which U.S. companies are positioned to be the global leaders.

Our Building America program is working with 470 private sector partners towards reducing the energy consumption of new homes by 70% over the next 20 years while boosting their on site energy output by 30%. New homes that use solar roof tiles to generate more than half the energy they will use on site are already being built under this program in California and Maryland.

On the regulatory front, we are pursuing the aggressive schedule we announced in February for setting new efficiency standards for 18 different types of household appliances.

And we are advising many of the biggest industrial and governmental users of energy on how they can boost their efficiency without replacing the systems they now use.

Through our Energy Savings Assessments program, we are working with 200 of the most energy-intensive manufacturing plants in the U.S. to help them cut their energy costs and natural gas consumption. I can tell you that had the opportunity to see one of our Energy Savings teams in action at a plant in Illinois and they do a very thorough job.

In the first 61 audits that have reported results, we have identified ways to reduce natural gas use by over 20 trillion BTUs a year—that’s enough to heat 300,000 homes—and deliver the plant operators nearly $200 million in annual savings. We expect those savings to rise to over 60 trillion BTUs and to $500 million by the time we are finished. This amounts to a 1% overall reduction in industrial consumption of natural gas and average 8% cost savings to the plants. But if those of us in government are going to prod all of you in the private sector to do more, then I firmly believe we also have to do more ourselves.

In the wake of Hurricane Katrina last year, we answered the President’s call to conserve energy by sending out teams of experts to advise federal facilities that are big users of natural gas and electricity on how they can operate more efficiently.

Our teams have now visited 34 federal sites and identified potential annual savings of 970 billion BTUs of natural gas and 184 billion BTUs of electricity. That equals 10% of the energy used at these sites and will save taxpayers $10 million in annual utility costs. We are also moving aggressively to realize further energy savings throughout the federal government. We are making broader use of the Energy Savings Performance Contracts that were reauthorized by last year’s Energy Policy Act. These allow federal agencies to reap the benefits of lower utility costs through capital improvements paid for by contractors, rather than from public funds. I believe they represent a win-win proposition for taxpayers.

This program was slowed for a time by uncertainties over its future. But since the Energy Policy Act removed that concern, federal agencies have been entering into ESPCs at an accelerating pace. Since last August, 13 new contracts have been awarded that represent more than $106 million in private investment in Federal energy saving projects and are guaranteed to deliver cost savings of $232 million. And the pipeline for new contracts is filling up.

Andy Karsner, my Assistant Secretary for Energy Efficiency and Renewable Energy, is taking the lead on this effort and would be happy to hear from you with any ideas you may have on how we can make even greater use of ESPCs.

I believe all Americans want to see our nation ease out of the energy bind we are in at the moment and gain more control over our energy and economic future. By working together, I know we will find the answers we need.

 Thank you for having me.