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Press Briefing by Tony Fratto
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For Immediate Release Office of the Press Secretary June 18, 2008

Press Briefing by Tony Fratto James S. Brady Press Briefing Room

˙ /news/releases/2008/06/20080618-7.wm.v.html ˙˙Press Briefings
˙˙Audio


12:36 P.M. EDT

MR. FRATTO: Good afternoon. I just have just one quick announcement for you
on a -- FEMA will be hosting a conference call this afternoon at 2:00 p.m.
to talk about the federal response to flooding. This will be at 2:00 p.m,
and if you just check in with FEMA and they'll get you the information for
call-in and they'll tell you about the whole federal response to the region
affected by the flooding.

Yes, Terry.

Q On the President's offshore oil statement today, it didn't seem like he
really wanted to cooperate much with Congress. He's calling them
obstructionists, and blaming them for the high price of oil. Where do you
come up with the idea earlier that he wanted to work closely with Congress
on this?

MR. FRATTO: No, we certainly do want to work closely with Congress. And I
think the point is, the only way to get this done, to get the moratorium
lifted so that we can begin drilling in the Outer Continental Shelf and on
the other elements that the President talked about is through Congress. We
need congressional action to get this thing done.

Congress -- the Democrats in Congress, either with a Republican majority or
under Democratic control, there's no question their position on drilling on
the Outer Continental Shelf or ANWR has been relatively clear, just as much
as it's been clear for us that we would like to open up those areas. And
that's a fact. We'd like them to change their view, especially given where
prices of gasoline are going right now.

And so I think that comes -- that's common sense to most Americans that if
you have a resource that's in great demand at increasing price, you want to
try to bring that resource to market so you can lower the prices and get it
to more people.

Q Well, since it's clear that Congress is not going to do what the
President wants, why doesn't he take the step himself and let the --

MR. FRATTO: No, I don't think it's clear. Well, people have asked a lot,
and I think someone shouted it out at the statement about why doesn't the
President just turn -- we talk about this as a two-key operation, you need
both keys to be able to open up the OCS to drilling. The President turning
his key alone isn't going to do it. But he made perfectly clear that he
will turn that key, that he will lift -- or that he will announce the
withdrawal if Congress can take action.

Now, the part that we're talking about where Congress needs to take action
in lifting the moratorium isn't simple. We think it can happen relatively
quickly, but there are parts to it that we're talking about that are of
great interest to the state, so this has to be a communication with
Congress and with the states. And we want to hear from governors,
obviously, because we're talking about revenue-sharing for these areas, and
we're talking about what kind of limits in terms of where -- how many miles
out from shore are appropriate for drilling. And these are conversations
that we want to have with states. It would require legislation to work
these things out.

So we have to do it with Congress. That's where the onus is, and that's
where the most complicated part of this is. And I think it might take the
President 20 minutes to do the withdrawal over here, but it's a much more
complicated and intricate piece involving the various levels of government
that we're talking about with Congress.

Q Tony, the Democrats have made it clear for a long time that they're
absolutely opposed to this. This appears to be going nowhere. Are there any
other ideas that the White House is exploring that can actually do
something about the high gas prices?

MR. FRATTO: There is -- anyone who is -- anyone out there saying that
something can be done overnight or in a matter of months to deal with high
gasoline prices is trying to fool people. There is no tool in the toolbox
out there that will lower gas prices overnight or in weeks, and probably
not even in months. People -- there have been a lot of things talked about
out there.

But in terms of where Congress can be on this issue, we know where Congress
was when the price of gasoline at the pump was a dollar. We know where they
were when it was $2. Maybe there will be more members of Congress in the
right place with gasoline at $4 a barrel -- at $4 a gallon. I don't want to
find out where Congress and what Congress thinks about this if gasoline
gets to $5 or $6 a gallon. So this is a time to do it -- it's actually well
past the time to do it.

We hear people saying, well, this isn't going to make a difference today to
get this done. Maybe that's the same thing they said five years ago and
eight years ago, but it would have made a difference today had they taken
this action five years ago or eight years ago. There are a lot of things
that we invest in for the future. I don't hear anybody out there saying
that we shouldn't invest in education because the payoff is four years from
now. It's an investment; it's an investment in our economic security and
it's an investment in our national security to get this done.

Q But one of the people who is saying that something could be done
overnight is John McCain, with the tax moratorium. You're not trying to say
he's trying to --

MR. FRATTO: He has a view on the tax moratorium and that's his position,
and we talked about looking for it. The President has been looking at it,
but what the President has been focused on is the root of the problem,
which is supply and demand. And we've done a lot on the demand side, in
terms of conservation. We passed an energy bill last year that increased
CAFE fuel standards, and that will put billions of alternative fuels out
there that our cars are going to run on. We have done a great deal of
investment in technologies for long term, for future automobiles and other
forms of alternative fuels. That's on the demand side.

Now what we really need to do is something on the supply side. I gave the
statistic earlier today in the gaggle that over the past three years or so,
maybe a little bit longer, the annual -- 85 million barrels per day of oil
being produced in the world, and we have seen millions of consumers out
there -- in this country and in places like China and India and South
Africa and Brazil and Russia and other emerging countries -- that are
putting millions of new cars out on the road and they're increasing demand.
So we see demand increasing and we're not seeing a corresponding increase
in supply. And we have supply here at home and we should use it.

Yes, Wendell.

Q Two questions. First, is there some technical reason that Congress has to
act first on the OCS drilling?

MR. FRATTO: No, I'm just saying that if the President did the withdrawal it
wouldn't result in an oil platform going up anywhere along our coastline.
We need Congress to take action because they've got the most complicated,
intricate part of this.

Q The second is, there's apparently an EPA draft -- a draft of the EPA's
coming report suggests that the agency believes that automakers could
increase CAFE standards much faster than the President has called for.

MR. FRATTO: I haven't seen that. I haven't seen any EPA reports, and I'd
refer you to them.

Q Because it hasn't been released yet --

MR. FRATTO: Okay. (Laughter.)

Q -- and the suggestion is that the EPA Administrator probably will not
release that, though the scientists have found that they believe that the
industry could, in fact --

MR. FRATTO: I think you're asking the wrong person about a report that --
if it hasn't been released -- and what the EPA Administrator would do, but
I'd love to hear what Steve Johnson would have to say about that when he's
ready to say something about it.

But don't forget that for the first time in 30 years last year, we
aggressively increased corporate economy fuel standards, okay. I mean, this
was something the President called for, and we were able to get it done.
And the President aggressively called for the use of more alternative
fuels, and we got that done. In fact, we were pushing further than Congress
was prepared to go in this.

Q Let me try and follow that one more time.

MR. FRATTO: Okay.

Q If $4-a-gallon gasoline is enough to make people rethink drilling on the
Outer Continental Shelf, is it also enough to make people rethink perhaps
raising the CAFE standard requirements for automakers?

MR. FRATTO: It might, but I'll tell you what -- what you have are knowns
and unknowns, okay. (Laughter.) Do I want to go that way? (Laughter.)

Q Do you want to go there? (Laughter.)

MR. FRATTO: I don't know what the technical capability in terms of the
internal combustion engine can do in squeezing out miles per gallon. I
don't know what the ultimate limit of that is. And obviously there are
people out there trying to find that out, and there are people -- the
automakers out there are trying to learn this also. With this price of --
the gasoline at the prices they're seeing out there, they're out there
trying to find cars that meet the demand of their consumers, of the
consumer market. And what they're finding from consumers right now are
consumers want lighter, smaller, more fuel-efficient vehicles. And like
anyone out there, they're going to -- like any business out there, they're
going to try to give their consumers the products that they want to buy.
So, yes, that could have an incentive on it, on that end.

In terms of drilling, we know where the oil is. As Keith said this morning,
a lot of these areas have been previously explored and they had the
geologists in there trying to determine how much oil there might be. And so
we know it's there and the only thing that's stopping us from getting to it
and bringing it to market are these federal regulations.

Q Tony, even though increased domestic oil production would be years away,
the White House position is, by Congress acting now, that would have an
impact on the markets, which are forward-leaning. How does that square with
the administration position that speculation is not behind driving up these
current prices?

MR. FRATTO: I'm sorry, that it would --

Q You're saying that by Congress acting now, this would have an impact on
the market --

MR. FRATTO: Sure.

Q -- because they'll know that there will be an increase in future supply.
But at the same time, you're saying speculation isn't a factor.

MR. FRATTO: That's not speculation. I mean, if you know what the sources of
oil production are going to be over the course of, say, 5, 10 or 15 years,
and you have a general trend rate of what demand is going to be for global
use of something, that's not speculation. That's just trying to have an
understanding of -- and trying to price something based on supply and
demand. That's an analytical judgment; that's not a speculative judgment.

There is speculation on any given day out there, but that's not -- but
looking at the future and looking at supply and demand and making an
investment decision, that's not speculation. That's just an investment
decision like millions of people every day.

Now, if you're not basing it on those things and you're basing it on the
direction of market movements out there where you see unusual trading,
that's something different. That's the kind of things that Walt Luken over
at the CFTC is looking into. But there's absolutely no denying that the
overall source of price increase in oil globally, and gasoline here at
home, is a function of supply and demand. That's the overwhelming reason,
that's the core reason.

There could be other factors in there. No one is saying that there aren't
other factors that could have an impact. But the largest and most
significant reason is supply and demand.

Ann.

Q Why is he pushing Congress on this, and not pushing the oil companies
that have 33 million acres of leased area that they aren't developing,
that's not under the --

MR. FRATTO: The first step in development in the oil business is actually
exploration. They hold these leases -- I've heard people up on the Hill,
"the oil companies are sitting on leases", as though the oil companies --
I'm not here to defend oil companies; I'm just telling you that they have
every incentive in the world to go out there and pump more oil. I mean,
Ann, if you've got --

Q -- without Congress lifting the ban?

MR. FRATTO: I'm sorry?

Q Are there not leases out there that are not -- that have already proved
-- that have not been developed, that they could be doing and they're not
doing?

MR. FRATTO: It's not a question of whether -- oil companies can say that on
any given piece of lease that they're holding whether it's productive or
not. I'm just telling you I can't imagine an oil company not wanting to
produce oil today. And what we see are oil companies out there looking to
try to produce and do more drilling. But it takes many, many years, and
millions, if not hundreds of millions of dollars to go from a lease to
actually pumping oil.

So you need to send sophisticated people in there and figure out whether
the oil is there and whether you can extract it, and whether you can bring
it to market, and do you have the power, and is it a good business decision
in the sense of how much it costs to take the oil out of the ground and get
it to market. But at these prices -- which no one could have anticipated
three, four or five years ago -- I can't imagine the incentives being more
properly aligned for oil companies to go out and try to get every barrel of
oil out of the ground.

Q Perhaps I was inelegant in how I asked the question. Are there not leases
that are out there that could be developed, explored and developed right
now, and which do not need to lift any kind of ban, and the companies
haven't done it? Why isn't the President turning to the oil companies and
telling them to explore some of the leases they currently hold?

MR. FRATTO: I think what we have heard and what the oil companies have
testified to is that they are trying to develop those. You can't develop
all of them at once. They make their priorities and they go to the ones
that they think they can develop and bring the product to market. I think
it's -- I can't think of a product out there that has seen --

Q But that's not the point, Tony. The point is --

MR. FRATTO: It is the point, though. I mean -- I'm sorry, the --

Q Are the oil companies doing everything they can to explore and drill
where they already have permission, without opening up the OCS any more, or
ANWR?

MR. FRATTO: I can't speak to every business decision that oil producers
make, and I'm not here to defend what they can do and can't do; they can
answer those questions for themselves.

Q Is the President satisfied the oil companies are doing all they can -

MR. FRATTO: Like I said, I can't imagine their incentives being better
aligned than to go out and develop. And I think --

Q I'm not quarreling with you on that, I'm just saying --

MR. FRATTO: And I think they are.

Q But the President is satisfied that he does not need to push the oil
companies; it's Congress that's the problem?

MR. FRATTO: Well, Congress is the problem in this case, in terms of the
Outer Continental Shelf and ANWR. And also -- do not want to forget the
other two proposals that the President talked about today on oil shale and
on the refineries. And remember, one of the -- the cost bottlenecks that we
have here in the United States has been this inability to produce new
refineries or expand refineries because of regulatory hurdles and so forth.
So I thought that was also another important --

Q Uncle. (Laughter.)

MR. FRATTO: -- another important proposal for the President.

Yes, Roger.

Q Different subject.

MR. FRATTO: Actually, stay with oil and then --

Q Yes, go ahead.

MR. FRATTO: Go ahead, Jon.

Q Speaker Pelosi says, as far as the topic Ann was asking about, that 80
percent of oil available in the OCS is open for leasing -- I think the
phrase she used was that the oil companies just haven't found it useful or
a good use of their time. Also she said, as far as oil shale, that that's
-- the lack of production there is a function of the market and economics,
and not a matter of regulation inhibiting it. If those things are true, I
mean --

MR. FRATTO: Well, they're not.

Q Okay, they're not.

MR. FRATTO: I mean, there have been regulatory hurdles with oil shale, and
Keith talked about them at -- a great deal today. In terms of the available
oil in the Outer Continental Shelf, I mean, that's not -- we have known for
years, for 20 years, 30 years, that oil is there, and it has been a
moratorium that has kept producers from going there to put up platforms and
do it. And look, at that time when oil was relatively cheap, that was
probably a sacrifice that the country could make, to say that -- and at the
time when we weren't maybe as technologically advanced in our ability to
put platforms out there in the water that are environmentally safe. And
these firms have learned a lot over the past two decades and three decades
about their ability to go out and put a platform in water and extract oil,
and do it in a way where they're not causing any environmental harm at all.

So now, at this time, where we see oil at $130, near $140 a barrel, and we
have come as far as we have in terms of the technological ability to do
this right and do it in environmentally friendly ways, we think this is the
time to be able to get out to that oil. The strains on our economy are
significant, and we need to put ourselves in a better place, and this is
one way to do it.

Q I'll press for documentation from Pelosi's office as far as her claim on
the 80 percent, but do you guys have information, statistics to verify --

MR. FRATTO: The Energy Information Agency over at the Department of Energy,
and Department of Energy can give you every data point they have available.
They'll be more than happy to do it.

Yes, Victoria.

Q The President took a fairly aggressive approach towards Congress this
morning, and he says he wants to work with Congress on this issue. Did he
really strike the right tone if, in fact, he wants to get business done
with Congress?

MR. FRATTO: Okay, you know, I'm always amazed by these kinds of questions,
where the President states a matter of fact, and the matter of fact is that
Democrats in Congress have opposed this policy in the past for a very long
time, and we need to work with Congress to try to get things done. That's a
basic statement of a matter of fact. In anything we do involving
legislation, it's just what the lay of the land is, what our position is,
what their position has been, and how we need to get to a successful place.

The things we hear coming out of Congress sometimes are pretty caustic and
vitriolic, and I never hear anybody coming up here and saying, do you think
that what members say about the President will harm our ability to get
something done? I could tell you, we -- whether we want to work with
Congress, we need to work with Congress. It's the only way to get this
moratorium lifted, and we're willing to and ready and able to do that, and
that's our goal.

Anyone on oil? I can take one more on oil and then --

Q Just on the Jeddah conference.

MR. FRATTO: Yes.

Q Can you talk about the expectations for that, now that that delegation
has been announced?

MR. FRATTO: Well, look, I think we want to learn a little bit more from the
producers and consumers there about how the market is operating. No one is
expecting to see announcements of increased production. We'll want to
explain our view of how the markets are operating in terms of supply and
demand, and also in terms of some things that we think would help, like
transparency and greater investment in oil exploration and development
around the world. So those are some of the things that Sam Bodman will be
talking about, and we'll see what comes of it.

Okay, Roger.

Q The war supplemental is up in the House tomorrow. What's the White House
position on that? Because it's got the GI Bill feature in it --

MR. FRATTO: I haven't seen -- yes, I haven't actually seen legislative
language on it. I mean, our position -- you know our position, it's been
the same for a long time, that we want to see -- we don't want to see any
language that ties the hands of our commanders in the field, and we want
the funding. And on the GI Bill, the President wants to have a GI Bill. He
talked about it. We have been having conversations with sponsors there
about ways that can meet what the President needs.

Now, what the House has done apparently is come back -- or plans to come
back with the identical bill that failed last time they brought it.

Q It's got the unemployment benefits part in it, too, which was veto bait
--

MR. FRATTO: Yes, we were -- I think we made our position clear on
unemployment insurance.

Q So he would probably veto it then if the House passes that version?

MR. FRATTO: If it's the same bill that they sent up last time, I think you
can expect that.

Les.

Q Thank you, Tony. Two questions. The AP reports that Senator Obama said
that Osama bin Laden is still free in part because of Republican
strategies. And my question: Does the White House believe this claim is
either accurate or fair?

MR. FRATTO: I'm not going to get involved in campaign politics, Les.

Q All right. The Oklahoma House of Representatives, by a vote of 92-3,
passed a resolution affirming Oklahoma's sovereignty under the 10th
Amendment, and serving notice on the federal government to cease and desist
from any interference with how the state protects itself from illegal
aliens. And my question: What is the White House reaction to this, dealing
with the federal government?

MR. FRATTO: Yes, I don't know. I wasn't aware of that vote, Les, and not in
a position to comment on it.

Q Can you take a look at it and give us some information on this?

MR. FRATTO: Maybe. Maybe I can.

Q There are reports in the Israeli press that the U.S. is mediating between
Israel and Lebanon over Shebaa Farms as an effort to get peace negotiations
started. Comment?

MR. FRATTO: I don't know that I can put it that way. I don't know enough
about the nature of those discussions. But obviously we want to see those
border issues resolved, and if they're able to do it that's something that
would be good for the neighbors there.

Q Can you tell us anything about the meeting the President has with the
Chinese delegation today?

MR. FRATTO: He'll have an opportunity to just talk about the U.S.-China
economic relationship. They're here meeting as part of the Strategic
Economic Dialogue that Treasury Secretary Paulson put together -- and a
large number of our Cabinet are involved in these discussions with the
Chinese -- and just talk about the importance of the economic relationship.
So that will be occurring over at the EEOB.

Q Thank you.

MR. FRATTO: I'm sorry, can I just grab Brianna because --

Q Tomorrow President Bush is awarding the Medal of Freedom to General Pace.
And in the past when he's awarded that medal to other architects of the war
-- George Tenet, General Franks -- there's been some criticism from
Democrats that they're too controversial to give the award to and it's
really just kind of a concession to quiet their criticism, perhaps, of the
war in their retirement years. Do you have any response to that kind of
criticism?

MR. FRATTO: The only thing I would say is that I think President Bush is
incredibly honored to give the award to Peter Pace. He's someone he has
great affection for and respect for, and I'll let him talk about that
tomorrow when he has the opportunity to do it.

Thank you.

Q Is this the last briefing of the week? Are you going to brief on Thursday
with the trip, and Friday's trip?

MR. FRATTO: You're right.

Q Bye. (Laughter.)

MR. FRATTO: Is that "bye" or "good riddance"? (Laughter.)

Q Just "bye."

MR. FRATTO: Okay.

Q FEMA teleconference, not press conference?

MR. FRATTO: I think it's a teleconference.

END 1:05 P.M. EDT
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