Washington — Power blackouts "appear inevitable" in California this summer and could spill into neighboring Western states, the Bush administration says, even as stocks of a gasoline additive raise concerns of another summer of price spikes at the pump.
Energy Secretary Spencer Abraham told a Senate hearing that the administration is trying to find ways to increase power supplies in the West, where prices have soared because of shortages. The administration strongly opposes price controls, he said.
The Environmental Protection Agency is issuing standards that would make it cheaper for refiners to blend gas with ethanol, administrator Christie Whitman said. EPA requires gasoline to contain oxygenates to burn cleaner.
"The problem will get worse, and blackouts this summer appear inevitable," Abraham said.
The administration's hope is that "California doesn't start a wave of blackouts that go beyond its borders," he said.
Abraham announced no specific actions to ease the Western electricity crunch, although he said he has discussed the possibility of a small amount of additional power being obtained from Mexico.
He said the administration opposes price controls on wholesale power sales in the West, despite pleas from California and the Northwest that federal intervention in "a broken market" is essential.
"Let me be clear on this," he told a hearing on price control legislation, "Any action we take must either help increase supply or reduce demand. ... Price caps will not increase supply or reduce demand."
He said that California tried price controls and prices soared. He said the debate over wholesale prices is diverting attention from the need to find ways to increase supplies and prevent blackouts.
"I believe in the free market," responded Sen. Gordon Smith, R-Ore., but in California and the rest of the West "what we now have is a broken market and a duty to do something."
"All we're asking for is help to prevent price gouging," added Sen. Dianne Feinstein, D-Calif. She said her state faces a shortage of 5,000 megawatts of power during peak demand periods this summer.
Smith and Feinstein have proposed legislation to require the Federal Energy Regulatory Commission to limit prices in 11 Western states.
No comments
Commenting is turned off for this story.