Vicky A. Bailey
Assistant Secretary
Office of Policy and International Affairs
U.S. Department of Energy

American Association of Blacks In Energy (AABE)
26th National Conference
Theme: Building the Business of Energy
"What is the Global Energy Picture: Energy Issues Around the World"
Philadelphia, April 23, 2003

Opening

Thank you for that kind introduction, and good morning.

It is a pleasure to be with you today in Philadelphia (Philly) to participate in the 26th National Conference of the American Association of Blacks in Energy or AABE.

Secretary Abraham sends his regards, and best wishes for a successful 26th National Conference. In addition, the Secretary asked me to relay greetings to Mr. Frank Johnson (Chairman of the Board of Directors) and Mr. Robert Hill (Executive Director), as well as to the distinguished guests, AABE members, and to the conference participants.

I am honored to be here today and to be given the opportunity to address this esteemed organization. Professionally and personally, DOE and AABE share similar goals, such as promoting energy security and sustainable energy development, enhancing economic prosperity, both domestically and internationally, and creating opportunities for African American policymakers, experts, and entrepreneurs.

I like your theme, "Building the Business of Energy," which so very clearly expresses what AABE has been doing since its existence and what we also do at the Department of Energy. Like the theme, AABE has been building and building, and has become an influential organization that allows African-American energy experts to more fully participate in the policymaking process in the United States and to influence policy and investment decisions here and abroad.

To further strengthen the Department of Energy's partnership with AABE, I am glad to announce that my office is supporting the AABE International Training Institute in the form of a grant.

[On a lighter note, Mr. Johnson and Mr. Hill, as I left my office yesterday, I was informed ... that the check was in the mail. The grant is expected to finalized in the coming weeks.]

We feel that a grant to the AABE Training Institute is appropriate because the Institute's proposed activities will help to advance critical Departmental international and domestic objectives, including capacity building for oil and gas producing countries in Africa and the Caribbean, opening markets for energy services, and promoting opportunities for minority, small- and medium-sized enterprises.

The AABE Training Institute is a most promising public-private partnership and we hope that other partners will be enlisted as well.

I. Introduction

I would like to give you a snapshot of the "Global Energy Picture," or more precisely, "Energy Issues Around the World."

Undoubtedly, energy is one of the most important elements contributing to economic development. Over the past century, we have witnessed the dynamic power of energy to drive economic growth. We saw from the energy crises in 1973 and 1979 the effect of energy shortages on the economy, not only in the U.S. but internationally as well.

As a result, we realize that reliable, affordable energy is a necessary ingredient to sustained economic development. Over the coming decades, rapid economic progress in the world will require expanded supplies of energy.

II. Energy Supply and Demand Forecasts

A major consideration when we look at our energy picture is the current and projected supply and demand of oil and natural gas. Let me highlight for you some recent trends and figures to illustrate the effect on U.S. energy policy:

• Average domestic oil production in the U.S. in 2003 is expected to decrease by 1.1 percent. For 2004, a 2.4 percent decrease is expected.
• Internationally, oil supplies are projected to gradually return to more normal levels. OPEC, led by Saudi Arabia, has increased its crude oil production, which has been instrumental in stabilizing global energy markets from disruptions from the war in Iraq.
• Natural gas prices have risen as supplies dropped in early 2003 to record lows. However, we are working to increase our stocks as quickly as possible. The low levels of stocks will contribute to the continued price volatility due to tight market conditions
• Despite high natural gas prices, growth in natural gas demand of 2.7 percent is projected in 2003, particularly if the industrial sector as a whole expands as expected.
• In terms of oil demand, the Energy Information Administration projects that total annual U.S. petroleum demand will increase an average of about 2.5 percent, per year between 2002 and 2004. Continued moderate economic recovery, the resumption of normal weather patterns, and increasing supply/demand tightness in natural gas markets are all expected to contribute to the rise in petroleum demand.
• International oil demand is also expected to increase about 1.1 million barrels per day in 2003. About 40 percent of this increase is projected to come from the U.S.
• We expect that continued world economic growth in 2004 will lead to world oil demand growth by as much as 1.4 million barrels per day.

III. Energy's Role in National Security

Our national security, and the security of our allies, is linked to reliable access to energy. The U.S. is the largest single energy market.

As a result, U.S. energy policy plays an important role in maintaining global energy security. In addition, the U.S. is affected by political and natural events and decisions over which we have often limited control, which have disrupted energy exports to the U.S. this year.

Some considerations that we look at when we evaluate U.S. vulnerability in terms of international energy supply are:

• Energy imports supply about half of our oil needs, and an even larger percentage of the needs of some of our most important allies and economic partners.
• Two-thirds of proven world oil reserves are in the Middle East, while the United States has 2 percent of proven world oil reserves.
• OPEC members provide about one third of the total oil exports, but also control two-thirds of world reserves.
• Oil supply shocks in any region of the world have an almost immediate impact on our economy through the international oil markets, as we saw recently in Venezuela.

As a result of these considerations, we believe that an effective energy security policy must focus on three main areas:

1. Promotion of increased and diversified production of energy from a range of foreign suppliers in many regions.
2. Coordination of effective international measures to respond to physical oil supply disruptions, through investment in strategic oil stocks and cooperative mechanisms to draw on them in case of a severe oil supply disruption.
3. Consultations with major oil producing countries to promote responsible production policies that will support a growing world economy and reduce oil market price volatility.

Our policy on energy security must complement U.S. economic and foreign policy goals, to help ensure economic growth and prosperity at home and with our trading partners. The policy must ensure that the U.S. can pursue its foreign policy goals, and our sovereign right of self-determination and self-defense, without being constrained by energy concerns.

IV. National Energy Policy

Almost two years ago, President Bush developed a National Energy Policy or NEP to address concerns regarding energy security. The NEP is a long-term and balanced plan for energy security that promotes reliable, affordable and environmentally sound energy for the future.

The NEP recognizes that over the next 20 years our country will demand large and timely increases in energy to keep our economy growing and the nation secure. It balances conservation and efficiency measures with production measures, and economic concerns with environmental considerations. It balances short-term actions with long-term strategies that are required to meet growing energy demand. And it balances domestic activities with international efforts required to ensure U.S. security.

The NEP also promotes a full range of energy choices, including hydrocarbons, nuclear and renewable energy, and energy efficiency.

Over the past two years, the Administration has launched several research and development initiatives, which focus on developing long-term solutions to our energy challenges. These initiatives aim to develop new types of fuels, new sources of energy and new production technologies, including hydrogen, fusion, nuclear and carbon sequestration, and new opportunities.

These initiatives are not limited to domestic activities. We are partnering with key energy producing and consuming countries to help create new technologies and develop new energy sources that will enhance U.S. and global energy security. These international partnerships allow us to share costs, increase our knowledge base, and eventually expand markets for advanced energy technology.

Of particular significance are two Presidential initiatives that I would like to take a moment to highlight: one on hydrogen and one on fusion.

Hydrogen

Last year, the President announced the FreedomCAR initiative, a program designed to greatly accelerate the pace of development of hydrogen vehicles. The benefits of the program to the energy policy of the U.S., and to national and global energy security concerns, are apparent, and cannot be ignored:

• Hydrogen can be produced from diverse domestic sources, freeing us from reliance on foreign imports for the energy we use at home.
• When hydrogen is used to power fuel cell vehicles, it will do so with more than twice the efficiency of today's engines.
• And hydrogen-powered vehicles would have a tremendous positive impact on the environment, as they would produce none of the harmful emissions of gasoline-powered fleet. The only byproduct of the fuel cell is pure water.

These factors also led to the development of the President's Hydrogen Fuel Initiative, which he announced earlier this year during the State of the Union Address.

The initiative provides a plan for the future hydrogen economy, and it has already generated tremendous enthusiasm among the energy and auto industries - partners that will be integral to transforming our nation's energy future from one dependent on foreign petroleum to one that utilizes the most abundant element in the universe.

As the President has said, his goal is to see to it that the first car driven by a child born today could be powered by hydrogen and pollution free. To support this vision, the U.S. will invest $1.7 billion in hydrogen and fuel cell research over the next four years, and $1 billion over the next ten years.

Fusion

Earlier this year, President Bush announced that the U.S. would join with the international community to develop the International Thermonuclear Experimental Reactor. When built, ITER [E-ter] is expected to achieve the first sustained burning plasma, an essential next step in demonstrating the feasibility of commercial fusion energy systems.

Fusion energy plants would produce no harmful emissions, no long-term radioactive waste, and because no fissile materials are required in the fusion process, it presents virtually no proliferation threat.

Both our hydrogen initiative and our fusion energy research program will depend on Congressional funding and approval, and we look forward to working with Congress to ensure that these initiatives are fully supported.

While these initiatives hold enormous promise for the future, we recognize the reality of the current situation and the need for immediate actions to address the growing demand for oil and natural gas - a demand that is increasingly dependent on energy from foreign sources.

V. International Activities

Our efforts to address America's energy security are not limited to domestic activities.

An important focus of our National Energy Policy is the recognition that we cannot and should not attempt to meet energy challenges in isolation.

The Administration has been hard at work - bilaterally and collectively - to enhance U.S. energy security. We are working to diversify energy supplies and promote the development of new resources in Africa, in other parts of the Western Hemisphere, Russia, and the Caspian Region.

We are working to enhance our dialogue with key energy producing and consuming countries to better predict and monitor oil market developments and offset energy crises. And we are working to expand global capabilities to protect against energy supply disruptions.

Western Hemisphere

We believe that while we must maintain and strengthen our friendships around the world, our work begins with our neighbors in our own hemisphere to build a stronger partnership.

North American Energy Working Group

Shortly after taking office, the Administration made our energy relationship with Mexico and Canada, the top two energy suppliers to the United States a top priority. In April 2001, President Bush, Canada's Prime Minister Chretien and Mexico's President Fox launched the North American Energy Working Group to further integrate, streamline and strengthen the North American energy market.

I co-chair the Working Group with my Canadian and Mexican counterparts.

We meet regularly to develop and implement strategies that enhance North American energy trade and interconnections and, most of all, energy security. We work to identify and overcome regulatory, technical and policy obstacles to increased production and delivery of energy within North America in an environmentally friendly manner.

Last June, the three North American governments released "North America - The Energy Picture," which jointly measures the energy stocks, trading balances, and energy flows in the continent. This report marks the first time we have truly looked at North America as a unified market. It is an important first step towards greater integration and energy security.

In December, we released two other reports. One report, "North America - Regulation Of International Electricity Trade," is an overview of regulations governing the construction and operation of power lines and the authorization of electricity exports and imports in the three countries. The other report, "North American Energy Efficiency Standards and Labeling," highlights Mexico's recent adoption of new standards for energy efficiency that resulted in regional harmonization on minimum efficiency requirements and test procedures for several major appliances and a strengthening of the regional market for high efficiency products.

These reports will serve as important reference documents and guides for participants in international energy trade in North America.

Also, the Working Group is examining a broad range of issues related to energy science and technology, natural gas, and critical infrastructure protection. We plan to complete a North American natural gas market vision by the end of 2003.

The reliability of North American energy trade is also enhanced by geographic proximity. But more important than geography alone is the rule of law and predictable investment conditions created by the North American Free Trade Agreement or NAFTA, integrated pipeline networks, closer cooperation between our governments and energy companies, and long-term reliable supply relationships.

Our policy is to deepen further this framework for trade and predictable investment conditions in North America and to use it as an example as we seek to build similar frameworks in other regions.

Other Hemispheric Activities

The North American effort is just part of our overall efforts to strengthen our energy relationships with our friends in the Hemisphere. We have been working with our partners in the Hemisphere to promote increased oil and gas development and regional integration. We have met with our counterparts from Mexico, Canada, Bolivia, Brazil, Ecuador, Colombia, Peru and Venezuela - all of whom are determined to develop and expand their vast energy resources and would like to be secure suppliers to the U.S.

The Department of Energy is establishing a hemispheric energy center at Florida International University. The center will coordinate projects that strengthen cooperation on policy, commercial, technical, infrastructure, and regulatory issues and enhance U.S. access to energy resources in the region.

Venezuela has had a strong energy relationship with the United States for many decades. Unfortunately, Venezuela's recent political unrest has affected their ability to be a secure supplier in the recent past. We are encouraged to hear that production reportedly has recovered to about 2 to 2.5 million barrels per day, compared to a pre-strike production of about 3 million barrels per day.

U.S. firms are returning to full operation in Venezuela, and Venezuelan-owned CITGO continues to operate in the U.S. as a commercial entity. The benefits that these reciprocal energy investments bring to both parties, and to the relationship, are clear, and we hope to maintain a robust energy dialogue with Venezuela.

In the Caribbean, Trinidad and Tobago is an important source of LNG to the United States. Trinidad provides about 15% of New England's gas needs and 40% of the East Coast's LNG imports. Trinidad is poised to help meet the energy needs of the Caribbean region. It has been moving forward aggressively to expand LNG production

As the concept of free trade and open markets continues to take hold, many Latin American and Caribbean countries are now open to foreign investors to bid on oil exploration, development and production sharing concessions.

Sub-Saharan Africa

Traveling across the Atlantic, I would like to focus on the African continent, a land of ancestors for many here and a land of vast challenges, opportunities, and promises.

Energy from Africa plays an increasingly important role in our energy security, accounting for nearly 15 percent of America's oil imports, and is a key engine for economic development in Africa. We are pleased with the resolve of African nations to facilitate private sector investment in the development of energy resources.

At last year's U.S.-African Energy Ministerial Conference in Casablanca, Morocco, which I attended, the U.S and African countries reaffirmed a commitment to good governance and stable regulatory structures and discussed additional steps to encourage private investment in the energy sector.

At the Casablanca Ministerial Conference, which included forty countries, Secretary Abraham and other U.S. officials met with government and industry representatives to discuss ways to improve energy trade and facilitate energy sector development to better serve U.S. and African economic growth and development.

Notably, West Africa, or the Gulf of Guinea region, which extends from Nigeria to Angola, is one of the world's fastest growing sources of oil and gas. Nigeria is currently the fifth largest supplier of crude oil to the U.S. Oil reserves generate a large share of government revenue in countries such as Nigeria, Angola, Gabon, Equatorial Guinea, Republic of Congo and Cameroon.

Emerging potential producers, such as Sao Tome [sau- TO-may], Chad and Mauritania also will begin producing significant new oil supplies in coming years. And other African countries, including the Gambia, Liberia, and Sudan, offer promise for sustainable energy and economic development.

The opportunities and also the challenges are bountiful.

Democratization and the development of responsible governing institutions are particularly important in reducing oil related conflicts and promoting African supply stability. Accountability and transparency are necessary to ensure that oil revenues benefit the population and support development.

Expanding oil and gas production could be an engine for national and regional economic development and political stability in these countries. However, this will not happen if energy development is accompanied by corruption, the disruption of other economic sectors, and a disenfranchisement of the citizenry

We have an interest in helping African nations solve these problems, not just out of altruism, but also self-interest in Africa becoming a fully reliable energy supplier to international markets and fully engaged in the vast associated economic benefits.

Substantial foreign direct investment is needed to develop African energy resources both onshore and offshore. Broadly, we support this process by encouraging the reforms needed to improve the investment climate. For instance, we have negotiated a bilateral energy cooperation framework agreement with Nigeria. We also favor the World Bank's involvement in independent monitoring arrangements in the Chad-Cameroon pipeline project.

In terms of specific activities with African countries, I would like to highlight the following:

Through an agreement with the U.S. Agency for International Development, my office implements a comprehensive energy program with Nigeria, which includes energy reforms and power and natural gas development activities.

In terms of natural gas development and addressing gas flaring, DOE is working with Nigeria and South Africa, exploring ways to engage the Angolan Government on this issue as well, and routinely advocating for the West African Gas Pipeline Project, which would transport Nigerian gas to markets in Benin, Togo and Ghana.

Also, DOE is a member of the steering committee for the World Bank Gas Flaring Reduction Initiative, which involves several African countries as well.

My office is working on the Second African Women in Energy Policy Training Program, which is in the early planning stages and scheduled for early next year. This event could be facilitated by the AABE Training Institute and held in an African country.

DOE spoke at the Africa Growth and Opportunity Act or AGOA [ah-GO-ah] Forum, held in Mauritius in January. Specifically, we addressed a private sector workshop that focused on small- and medium-sized enterprises, local content, capacity building opportunities, and village-level interventions using off-grid and energy efficient technologies.

We believe that energy, particularly in the areas of services and infrastructure, is critical to increased trade and investment and we will continue to work through the AGOA process and other trade policy mechanisms.

DOE is participating in the negotiations for the U.S.-South African Customs Union Free Trade Agreement, which involves Botswana, Lesotho, Namibia, South Africa, and Swaziland.

In terms of renewable energy technologies, we are working on a rural electrification project in Nigeria, participating in a leveraged funding venture with the Overseas Private Investment Corporation regarding solar ovens in Uganda, and supporting commercialization of geothermal technology in Kenya.

Through our Climate Change Technology Initiative, DOE is providing assistance to Ghana, Mauritius, Nigeria, and South Africa on the assessments of technical needs and economic priorities as a part of the technology transfer process.

Through different initiatives, including with AABE, we want to undertake capacity building activities that will help ensure that local content requirements can be met.

Persian Gulf

Within the Persian Gulf context, the Middle East holds two-thirds of proven world oil reserves and has the lowest production costs in the world. Saudi Arabia, the world's largest oil exporter, has pursued a policy of investing in spare oil production capacity and storage, and diversifying its export routes.

These enormous investments allow Saudi Arabia to credibly assure markets that it has the capacity to help mitigate supply disruptions in international markets.

Saudi Arabia and other major Gulf producers, such as the United Arab Emirates (UAE), Kuwait, and Qatar, repeatedly emphasize their commitment to be reliable suppliers of oil and natural gas to world markets. And they have demonstrated their leadership by offsetting the recent disruptions of Venezuelan and Iraqi exports.

Despite frequently expressed concerns about "dependence" on the Middle East, the world and U.S. economies clearly benefit from these supplies. In fact, this region is a core supplier not to the U.S., but to our key economic partners, primarily in Asia. Without Gulf supplies, we would expend scarce economic resources to secure the energy we need at higher cost to the world economy and our citizens.

Therefore, our policy of diversifying global oil supplies should not be interpreted as diversifying "away" from Saudi Arabia or other Gulf producers, who have proven their energy reliability. Gulf producers will continue to have an indispensable role in the world market.

We will encourage them to increase foreign investment to steadily expand supplies, and increase their own economic potential. However, just as the disruption from our own hemisphere in Venezuela has shown, the world needs a highly flexible, resilient oil market that will allow for some regions to compensate for ebbs and flows in others.

And, the greater diversity and growth in world oil production we seek, the better the market will work.

Iraq

What about Iraq? Right? Well, allow me to take a moment to address the issue directly and forthrightly.

The Administration has been clear that our actions in Iraq are not "about oil."

As the President has assured the world, Iraqi oil belongs to the Iraqi people. The U.S. will ensure that the proceeds from Iraq's oil are applied for the benefit of the Iraqi people. Iraq's oil and other natural resources belong to all the Iraqi people - and the United States will respect this fact.

Looking to the future, a vibrant, independent and responsible Iraqi government - free of weapons of mass destruction and at peace with its neighbors - will contribute to the stability of the international oil market, as well as the political stability of the region.

That is the goal for the U.S., for the coalition, and for the international community.

Russia

With respect to Russia, we continue to strengthen our energy relationship with the world's second largest crude oil exporter. Last year, Presidents Bush and Putin launched a new era in our bilateral cooperation by creating a new strategic energy initiative between our two countries.

Under the Energy Working Group, our experts meet regularly to exchange information and technical expertise. Earlier this month, we held a very successful meeting in Washington. The objective of the cooperation is to help create the regulatory and investment conditions required for increased energy development in Russia as well the infrastructure necessary to deliver the energy to the outside world.

Caspian Region

The U.S. has a strong interest in resource and infrastructure development in the Caspian Sea region. We have long supported oil and gas development in the region, urging governments to establish the necessary legal, fiscal, and regulatory environments to safeguard the large investments required to develop these new resources.

The Caspian Basin has proven reserves in the 17-33 billion barrel range (3 to 5 percent of the Persian Gulf reserves), with possible oil reserves of about 233 billion barrels (about 34 percent of Persian Gulf reserves). With sufficient investment, the Caspian region could produce 3.5 to 4.0 million barrels per day by 2010.

Producer-Consumer Dialogue

We have been strengthening our dialogue with key producing and consuming countries to better monitor energy market developments and respond to supply disruptions.

We continue to participate in the International Energy Forum (IEF), a multilateral effort to enhance relationships between oil producing and consuming nations. Secretary Abraham attended the most recent IEF meeting in Osaka, Japan in September, and we are undertaking measures to further strengthen U.S. participation in this Forum.

A key focus of the IEF is a joint effort to improve the transparency, timeliness, and accuracy of the data that guides global oil markets. This initiative, begun by the United States, has garnered broad support from both producers and consumers. Also, we are encouraged by the progress on realizing a viable IEF Secretariat in Riyadh, Saudi Arabia.

G-8 Energy Cooperation

We are also working closely with our other friends in major consuming countries to address our common energy challenges. Last May, Secretary Abraham co-chaired with his Canadian counterpart a meeting of energy ministers from the G-8 countries in Detroit.

We reaffirmed the importance of emergency oil reserves and our commitment to coordinate their use. We agreed to work together to meet growing energy demand by encouraging the investment that will be needed in energy development, production and infrastructure, as well as in improved energy efficiency.

Asia Pacific Economic Cooperation (APEC)

We also participate in the Energy Working Group of the Asia Pacific Economic Cooperation or APEC, most notably in the APEC Energy Security Initiative, which the United States originally proposed in 2000 and which was endorsed by APEC Leaders in at the 2001 Shanghai Leaders Meeting.

Shorter-term actions under the initiative include enhancing the transparency of the global oil market and sharing ideas on energy emergency preparedness. Longer-term actions include cooperation on energy efficiency, renewable energy, and alternative fuels.

U.S.-U.K. Energy Dialogue

I would also like to highlight a Presidential initiative, the U.S.-U.K. Energy Dialogue, which President Bush and Prime Minister Blair agreed to last year. The Dialogue promotes discussion and collaboration on domestic and international energy policies, focuses on strengthening cooperation on environmental, economic, and developmental issues, and incorporates the private sector in implementing these objectives.

One of the working groups under this Dialogue deals with energy and development issues in Africa. Notably, we are pleased with the overall progress on this important initiative.

Cooperation on Natural Gas

It is important to spend a few minutes talking about efforts to address growing natural gas demand. We may be close to the point where domestic-or even North American- supply of natural gas will be insufficient to meet our growing natural gas demand.

In order to address this challenge, we have stepped up our cooperation on natural gas issues. We have undertaken a joint study on natural gas with Canada and Mexico to assess future supply and demand projections.

Additionally, Secretary Abraham and Algerian Energy Minister Khelil hosted a liquefied natural gas (LNG) Summit last November, which discussed policy, regulatory, investment, and infrastructure requirements to expand bilateral LNG trade.

Bilaterally and multilaterally, including through the World Bank initiative, DOE is working with various countries and organizations to promote the development and utilization of natural gas resources. In turn, these efforts will directly contribute to the reduction of gas flaring and venting, create economic opportunities, and mitigate the adverse environmental impacts.

We are encouraged by promising gas projects in North America, Africa, and other regions, which would provide economic opportunities, diversify fuel options, and enhance energy security.

Let me take a moment to emphasize that the Administration strongly supports the construction of a commercially viable Alaska natural gas pipeline as a critical part of our energy security portfolio, and believes that market forces should select the route of the pipeline.

The Administration opposes a price-floor tax subsidy or similar provision because it would distort markets. It is also likely to undermine Canada's support for construction of the pipeline, setting back broader bilateral and hemispheric energy integration.

VI. Emergency Preparedness

Emergency preparedness is also a priority for this Administration and for the Department, and we coordinate closely with energy producers and consumers to address this. In the event of a severe disruption, we will look to producers to make a maximum effort to use spare capacity to replace lost supply.

We are intensifying consultations with our partners in the International Energy Agency or IEA and, if necessary, we are ready to make an appropriate emergency response, primarily based on coordinated drawdown of strategic stocks. The 26 IEA members collectively hold over 1.3 billion barrels of government-controlled stocks, representing 114 days import coverage.

Here, in the United States, the President has authority to draw upon our Strategic Petroleum Reserve (SPR) to counter a significant disruption in supply. The SPR contains almost 600 million barrels of crude oil.

In the event of a drawdown, DOE can deliver oil to the market in 10-15 days, pumping at a maximum rate of 4.3 million barrels per day for up to 90 days, then at a declining rate.

Led by the newest IEA member, South Korea, recent additions to Asian oil stocks bolster world energy security. The IEA is working to encourage large non-IEA countries, such as China, to hold stocks and, thereby, provide additional security to world oil markets.

VII. Small- and Medium-Sized Enterprises

As I mentioned earlier with respect to the AABE Training Institute and some of our cooperative programs, there is a niche role for small- and medium-sized enterprises in the energy arena.

On May 12-15, DOE will be holding the 4th Annual Small Business Conference in Albuquerque, New Mexico. You can register online for the conference at www.smallbusiness.ourtreach.doe.gov. There are great opportunities to do business with the Department of Energy.

DOE is recruiting small businesses to perform work as prime and sub-contractors. Of $19 billion annually awarded for goods and services under management and operating contracts, about $4 billion is subcontracted to small businesses. For more information, you can contact the Office of Small and Disadvantaged Business Utilization through the Department's website. Available information includes business forecast for contracting opportunities and a listing of small business program mangers across the country.

VIII. Conclusion

As I have highlighted, the global energy picture is a panorama of dynamic factors, such as increasing supply diversification, growing and shifting energy demand, and emerging technological advances. Any of these factors could drastically change the view.

In that global picture, from the Administration's perspective, energy security is a dominant factor. As noted, our National Energy Policy is a roadmap to achieving greater energy security.

In the long run, we need new technologies that can fuel our economy without posing threats to the environment or our national security. In the interim, our international energy policy must address challenges posed by a hydrocarbon-based economy where oil and gas reserves are concentrated in various challenging regions of the world.

We are placing special emphasis on making the integrated North American market work better. To counter oil disruptions, we stand ready to use the SPR, with our IEA allies, to deploy a collective response, if needed.

We will continue to engage intensively with energy partners all over the world to diversify supplies, improve investment opportunities, and assure that market forces work as transparently and efficiently as possible.

Like the war on terrorism, achieving energy security will not be achieved by one dramatic breakthrough but rather by sustained, patient and determined efforts.

With respect to AABE and in general, I believe that we have a responsibility to create proverbial waves. Waves that will elevate and empower, that will allow us to capitalize on the vast opportunities, challenges and promises, that will allow us to fully realize our potential as policymakers, experts, entrepreneurs, and global players in the energy arena.

Let us remember while reaching out to new and emerging energy markets, we should further develop opportunities in our energy sector, the capacity and local content

Again, thank you for allowing me this wonderful opportunity to speak to you today and enjoy the rest of the conference.