The Hays Daily News from Hays, Kansas on June 19, 2006 · Page 8
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The Hays Daily News from Hays, Kansas · Page 8

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Hays, Kansas
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Monday, June 19, 2006
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Page 8
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A8 THE HAYS DAILY NEWS nMMIn HIVM MONDAY, JUNE 19, g006 O By JOHN HEBLPRIN ASSOCIATED PRESS WASHINGTON — Americans paying $3 per gallon at the pump have it relatively cheap when compared with prices globally, say oil and gas company executives who defend their record profits as essential to maintaining supplies. In parts of Europe and elsewhere in the West, gasoline prices are more like $5 per gallon to $7 per gallon, said the chairman of ConocoPhillips Co., James J. Mulva. "This is a global business, and it's not only that we need to add to supply, but we need to reduce demand," Mulva said. "In the United States alone, we have about 2 percent of world oil reserves, 5 percent of the population and yet we use about 25 percent of the world's consumption of oil." Mulva and two other executives who appeared on NBC's "Meet the Press" said they are optimistic about keeping a lid on domestic prices, unless their fears come true about the potential for damage to U.S. energy production from the hurricane season that began June 1. "I do understand why consumers are concerned. The thing that concerns all of us, I think, is that we're heading into hurricane season again," said the chairman of Chevron Corp., David J. O'Reilly. Scientists say this year's season could produce 16 named storms, six of them significant hurricanes. Last year's was the most destructive on record and the busiest in 154 years of storm tracking, with a record 28 named storms and 15 hurricanes. Thousands of oil company employees living in temporary housing along the Gulf Coast are "much more subject to having to evacuate if hurricanes were to return," O'Reilly said. "But absent the hurricanes, I'm optimistic" that prices will not spike this summer. Though many consumers blame high pump prices on oil companies greedy for profits, the oil company chiefs blame global competition for supplies. "If we didn't have this level of profitability, I don't think we could get the supplies to where they need to get to," said the president of Shell Oil Co., John Hofmeister. He emphasized that the companies are seeking greater access to federal lands and offshore waters for exploration. O'Reilly said "profits are in the midrange" and not as high as they could be, but that if prices were to decrease, the demand for oil and gas would increase and supplies could become short. "The issue here is not the price issue. The solution here is how to increase supply," he said. Hofmeister said his company has had "discussions with the White House quite frequently" on issues such as gaining greater access to more domestic supplies. The Bush administration has granted the companies ever-greater access to drilling areas on federal lands and waters. "On a global basis, we're competing for resources," Hofmeister said. "If we're going to be more independent, we're going to have to address the tough, tough question of should we allow more oil and gas development in this country" Officials: Deputy secretary of state resigning S||Q8r IS SW66t — 1 Of 6(1)31101 By ANNE GE.ARAN ASSOCIATED PRESS WASHINGTON — Deputy Secretary of State Robert Zoellick, the department's No. 2 official, is resigning, Secretary of State Con- doleezza Rice announced today. Rice praised Zoellick's "tireless work ethic" and said he had served as her "alter ego" in the department. She did not announce a replacement. "Our nation is stronger and safer because of your work," Rice said at a State Department announcement. "I appreciate your confidence and friendship," Zoellick replied. Zoellick, who served six years in the Bush administration, said he would join the Wall Street investment house Goldman Sachs Group Inc. In his resignation letter, dated Thursday, Zoellick, 52, did not say why he was leaving. A former U.S. trade representative, Zoellick reportedly wanted to be promoted to treasury secretary to replace departing secretary John Snow, but President George Bush nominated Goldman Sachs executive Henry Paulson instead. "I'm pleased to have built a ALEXANDRE MENEGHINI / Associated Press U.S. Deputy Secretary of State Robert B. Zoellick speaks to journalists during a press conference June 5 in Santo Domingo, Dominican Republic. first-rate team, offer counsel on a number of initiatives and backup the secretary," Zoellick said at the news briefing. "I've accomplished what I set out to do, and it's time to step down." White House spokesman Tony Snow said Zoellick had "been wanting to pursue options in the private sector for some time, and now he's going to do it." "Bob Zoellick is a guy who is highly competent and has served a number of presidents, but you also know at a certain juncture in an administration some people who have worked hard for a long time need to go back and pursue other opportunities." Zoellick is expected to leave the State Department in July, officials said. High value of crop might hamper production By FREDERIC J. FROMMER ASSOCIATED PRESS WASHINGTON — With the market for corn-based ethanol booming, lawmakers from sugar- producing states are hoping that beet and cane growers soon can jump onto the renewable fuel bandwagon. They cite the model of Brazil, which produces ethanol made from sugar cane. But critics, pointing out that sugar is much cheaper in Brazil than in the United States, question whether the economics of sugar-based ethanol would work in America. "Brazil is a unique situation," ConocoPhillips Co. Chairman James J. Mulva said. "Brazil is self-sufficient in energy... not so much because of ethanol. It's because they have a very strong, growing, thriving oil production, both onshore and offshore." The Agriculture Department is expected to issue a long-awaited study around July 1 on the viability of converting sugar into ethanol. Keith Collins, the USDA's chief economist, said the soaring demand for ethanol and Brazil's successful track record make it worth discussing sugar-based ethanol in the United States. "At some point in the future it may be worthy of commercial development," he said. "Technologically, it's possible. The question is: Is it economically feasible?" Collins noted that besides cheaper sugar, Brazil has higher yields per acre because of climate and investment in more-productive strains of sugar cane. "So, obviously, we can look at the technology of conversion, and learn some things from them about that," Collins said. "But it's a little hard for us just to look at Brazil and conclude that their structure of production would be our structure of production. We can't conclude that." Sugar in the U.S. is made from two sources: beets in some northern and western states, and cane in a few southern states and Hawaii. Minnesota is the largest producer of sugar produced from beets, while Florida leads in sugar from cane, according to the American Sugar Alliance, a trade group. "One of the things that people ... need to think about it is what generation of ethanol do they want to pursue? The corn-based or the sugar-based ethanol, which is called first-generation ethanol, is going right at the food costs," said John Hofmeister, president of Shell Oil Co. "... there's only so much corn, and if oil companies are attacked for the price of gasoline and we've seen ethanol go from $1.20 a gallon in 2005 to last week it was hitting $5 a gallon on the spot market — if we start sucking up, as oil companies, all the ethanol, it's going to hit the price of eggs, the price of bacon, the price of hamburger, the price of Doritos and Fritos, because there's only so much corn to go around," he said. Hofmeister, who appeared Sunday with Mulva on NBC's "Meet the Press," spoke of pursuing second-generation ethanol that uses materials such as wood chips and other carbon fibers. There is skepticism. "If I was going to guess, I would say the economics are not going to be there," said Steve Williams, president of the American Sugar Beet Growers Association, who farms about 700 acres of sugar beets in Fisher, Minn. 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To subscribe, contact The Hays Daily News Circulation Department at 628-1081 or 1-800-657-6017. If you have paid for your subscription, come by the office at 507 Main to pick up your Advantage Card or call and we'll have your carrier deliver it with your paper. The Advantage Card Program Is Brought To You By THE VOICE OF THE HIGH PLAINS Hf www.advantagehays.com ELLIS COUNTY COALITION HATS AREA CHAMBER OF COMMERCE I IT 1 ii M .'IsyJ ' "U'l n.1 , A 'VI. I i

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