U.S. Secretary of Energy Samuel Bodman Thursday, May 11, 2006, Indianapolis Motor Speedway MODERATOR: It's Ethanol Motor Day here at the Indianapolis Motor Speedway. As all of you know, 10 percent of the fuel mixture that is being run by the...
U.S. Secretary of Energy Samuel Bodman
Thursday, May 11, 2006, Indianapolis Motor Speedway
MODERATOR: It's Ethanol Motor Day here at the Indianapolis Motor Speedway. As all of you know, 10 percent of the fuel mixture that is being run by the Indy Racing League cars this year is ethanol, and it will be 100 percent next year. Other cars powered by ethanol are here, and the Wing Spread car driven by Steve King and the Mark Thomas Funny Car in addition to the 17 car by Jeff Simmons here at the "500." To begin our festivities here, if you will, Joie Chitwood, the president and CEO of the Indianapolis Motor Speedway, has a presentation for the Energy Secretary Samuel Bodman.
(President and Chief Operating Officer, Indianapolis Motor Speedway):
I'd like to welcome you on only what I can describe as a blustery May day, and we enjoyed your experience driving around the racetrack.
I wanted to present you with a 90th anniversary stainless-steel die-cast car. This is something we created that really pays homage first to the history and tradition of the Speedway. This is the first die-cast car we have done, and this is a picture of the gentleman that purchased the track in 1946. This is something we've done for our 90th anniversary.
I'd like to thank you for being here, especially the Speedway and the League, embarking on this great opportunity for ethanol and future that it has. Thank you so much for being here.
MODERATOR: Mr. Secretary, we did an interview as you stepped out of the two-seater in your ride around the two-and-a-half-mile oval. Let's go over that again.
First of all your impressions of the Indianapolis Motor Speedway because although you are from I believe Glen Ellyn, Illinois, not too far away, this is your first visit at least in this situation to the Indianapolis Motor Speedway.
SECRETARY BODMAN: Certainly my first visit. Kind of like a dream come true to be able to come here. It's a great experience. As I said to one of my colleagues walking over we are not going at the speed real drivers are pursuing, but I was surprised that at how tired I was going three laps. It took a lot out of me just going around, and I wasn't even driving. So it was very impressive.
MODERATOR: This is Ethanol Day here at the Speedway. President Bush has told us we are addicted to oil. What role can ethanol play in getting us out of this addiction?
SECRETARY BODMAN: Well, ethanol is manufactured largely in our country. So most of it is made in the Midwest and we today use about 5 percent of our motor fuel is made up of ethanol in the U.S.
We're very hopeful as we are developing new products, technology, techniques, that we can make more and make ethanol even less expensive than it is today and that gradually over time, and it's going to take time, it will take we believe we can wean ourselves from the commitment to oil and gradually use more and more ethanol in our motor fuel.
And the idea that the Speedway has made this commitment is so terrific. It's great for the country, and I frankly think it's great for the Speedway. It's a good thing, and it's in Indiana which is really leading the pack in terms of really processing and process techniques that are being developed here.
MODERATOR: What process or what procedure must be used as far as a passenger car is concerned where we as those who drive around our highways across the nation, what procedure must be used in order for us to run ethanol in our passenger cars?
SECRETARY BODMAN: It's the type of vehicle called a flex-fuel vehicle. When you manufacturer the vehicle it's relatively inexpensive, less than a hundred dollars to convert or to manufacture a vehicle that can use ethanol.
In many cases, the people who buy ethanol, so called flex-fuel vehicles, don't even know that they have it. So we are working on both the oil companies and the retailers of gasoline to include so-called E85, which is 85 percent ethanol and 15 percent normal gasoline, to manufacture more and to make it available and the car manufacturers to undertake the manufacture of so called flex-fuel vehicle, which is as I said relatively inexpensive. It's just a matter of getting them to commit.
MODERATOR: The IRL has been running 10 percent ethanol this year. What complaints, if you will, have you heard if any from the race teams that are running this?
SECRETARY BODMAN: I've talked to the team members that were around me and I did ask them that, and they felt that they got even a little better mileage and that the vehicle seems to be operating really well. I don't expect there to be any problem.
Q: If we're only at 5 percent using ethanol, where do you see that in 10 years?
SECRETARY BODMAN: We're hopeful of getting significant increases. The use of ethanol is increasing at about 30 to 40 percent per year, and so we're in a 5 percent -- it's about 6.5 million gallons, that's what we make, manufacture of ethanol. That's the good news.
The bad news is we use 140 billion gallons every year in this country. So we're going to need to have more. We expect it to increase. But we expect -- I expect there to be an upper level, I'm not quite sure where it is, caused by the fact that we are using corn crops. So the President (Bush) has instructed our department to work on developing a technology to manufacture ethanol products from cellulose from wood chips, which is much less expensive and will lower the price and that we think will get us up to where perhaps a third to a half of the total motor fuel of our usage of our country could be from ethanol.
MODERATOR: The Secretary does have some prepared remarks he would like to deliver before we have any further questions, so let's do that.
SECRETARY BODMAN: I just want to say, to tell you how pleased I have been to be here at the Speedway. I want to thank the drivers and everybody who was so kind to me to show me around. The reason that the "500" commands worldwide attention every year is the high level of competition that it provides and the technical theatre, which over time have led to changes in consumer products and consumer cars, and you all know better than I do the inventions that were made here trying to compete. Ethanol might be one of those products. We are hopeful that 30, 40, 50 years from now when we have the majority of our motor fuel coming from ethanol that we will look back on it and say, you know, it's really the commitment by the Speedway and by the people here to set an example for the rest of the country.
We all owe a debt to Team Rahal, and particularly Paul Dana, for advancing the cause of ethanol in IRL. Paul's death was a tragic loss, of course, for the sport and the country at large. He was in many ways a champion of the use of ethanol, and I didn't want to have the occasion go by without paying tribute to him. There really is no better tribute in my view than the IRL's commitment to complete the first conversion to full ethanol use next year, and I think that's a very suitable and fitting tribute to his memory.
Our president, President Bush, is a very strong believer in ethanol. As I mentioned he has set a goal for us, and we have committed that we're going to do our very best. Governor Daniels, he was there with me for the Meijer chain announcing the first -- their first commitment to an E85 pump at one of their local stores, one of their local outlets. General Motors has helped promote that so we had a gathering of the Meijer's leadership, General Motors senior executive, the deputy or the lieutenant governor and myself. So we had a terrific event, and it was really a tribute to them and to this state because following up at lunch, we had a session with the people from Purdue, and we got a real sense of the great technical expertise that the state offers in this area. So I'm very pleased and proud at what is going on in the state; so it mirrors what we're trying to get done from Washington. And it's really great for me to be here to see it firsthand, and I will carry very warm feelings back when I head back.
Q: Mr. Secretary, besides your exceptional appearance here today, is there anything else that can be done from Washington to help educate the public about the value of this renewable resource and the truth about it as a great source for us?
SECRETARY BODMAN: Well, I think certainly the political leadership, I know that the senators and the congressman from this state and this general region are very enthused about it. The governors are very enthused about it. So we are doing from a political standpoint, the President talks about it all the time, and it's very front and center.
So I think that we're doing things that we know how to do. This is my reason for coming is to help attract some attention and promote interest in this product and in this movement, if you will. It's really a movement that can eventually lead us to moving away from a total dependence on oil. We're as enthused as we can be, and we're doing everything we know how to do. If you have any good ideas, I'd be very anxious to have them because we'll have a go at it.
Q: Some in Congress have said that we need more ethanol or we need to lower our tariffs so we could import more ethanol. Where do you stand on that, do you support that, lowering tariffs?
SECRETARY BODMAN: The lowering of tariffs is a matter that we are studying in the department literally as we speak. On the one hand, we are seeing very rapid growth in the availability of ethanol that I mentioned. It's going up at 30 to 40 percent a year, which is a very -- it's going up as rapidly as we can build ethanol processing plants.
The President has expressed some interest in learning more about it. The way I see it, this is really something that the members of Congress will have to opine on. So we've said we'll work with them. The President said he wants to hear from Congress, hear what they have to say.
Many Congressmen, at least the ones that I know from this part of the world, really are not very supportive of removing the support levels for ethanol, and really don't want to lower the tariffs for fear that it's a fledgling industry, and from their standpoint it would do damage to the industry and limit growth.
So on the one hand we'd like to have the rapid growth. On the other hand, eventually, the support that is now provided today and that's why people are so heavily into it and expanding so rapidly will have to terminate and will have to be supported by the free market. But my own view is that may be a ways off, but as the President has said, he's anxious to hear from Congress and hear what they have to say.
Q. Why is this taking so long to take root when we've been working with putting ethanol in through Paul Dana's efforts for the last three years, and Brazil has become totally dependent on it's a sugar based ethanol crop, why is it taking such a large country that is so technologically advanced so long to do this?
SECRETARY BODMAN: You know, that's a very good question, ma'am. I think that first of all, we now manufacture ethanol in greater quantities than they do in Brazil.
Brazil gets this great credit in the sense that they have -- well, they have done -- they started 30 years ago, and so this is a question of they made a commitment years ago, there was a lot of criticism internally when they did it and when they made the commitment, and it seems to have worked out well. We in this country have been very focused on free markets, and that, by and large, has accrued to our benefit because the free-market system that we have is by any measure the best economy in the world, and has been for some time.
This activity, I think, has really taken hold now and has become a reality now because the price of oil is so high. And this is the first time in my lifetime that the suppliers of oil, and they are not always Mideastern countries, we think of it now, the swing supplier or largest supplier of oil in the world is Saudi Arabia. So if there were a swing supplier, they would be it. Prior to that it was the Texas Railroad Commission, and when they wanted to change the price of oil, they turned the valve off, produced more oil, reduced the price.
In this situation, the suppliers for the first time are right now unable to keep up with demand, and so that's why we've seen the spiking and great increase in oil price and a reflection which has been reflected in gasoline prices, so it's got everybody's attention.
I think it's unlikely that we're going to see a big down cycle. We'll see many decline, I believe, as more oil comes on the markets. But this is a huge, huge, problem. The world uses about 80 million barrels a day if you think about that, of oil every day. America uses 20 million barrels of oil every day, about a quarter of the world's usage.
So when the President has a goal over 19 years of getting us up to 5 million barrels a day, you can see that it's still a lot of that oil, by the way doesn't go into motor fuels; maybe half or 60 percent does, so it's the largest use. So 5 million barrels a day would be about a half or a third to a half of the motor fuel that would be used at that time. It would be a big change, but that's going to take a long time. It just takes time to physically build enough equipment to manufacture 5 million barrels a day of anything. So you're just talking about time that it takes human beings to do things. And so we've started, and I think particularly for this state and this part of the world, it's a great thing for you and I think it's a great thing for the country.
Q: As passenger cars become more readily available that are running on ethanol, and some of that may be what you just said, but my understanding is that right now the price is relatively the same, so what reasoning would you give or pledge to John and Jane Public to go out when they are available and buy --
SECRETARY BODMAN: I think first of all the cost of a vehicle that runs on ethanol is the same as a vehicle that doesn't run on ethanol, ethyl alcohol. So therefore, it doesn't cost any more. So the question then gets to be, assuming we can get enough of these vehicles manufacturers, why would you spend money on this kind of fuel versus the other kind.
And the main reason is the event we had, I used my own credit card, personal credit card and I bought enough E85 to fill the Governor's vehicle. And he really brought it in close to empty, I have to tell you, so he got his full money's worth from me. And all that money that goes through Meijer, through them, through the manufacturer, stays in this country. That's the big thing. It's here. It's American. That's the big thing.
That's what's so thrilling about this is this is an opportunity for the farmers of America to produce not just food stuffs, which has been their primary role in life over the years, but to produce energy, and it really works. And we got a glimmer now that we can really make this grow by a factor of 10 or more. And I find it as somebody who comes from this part of the country from Illinois originally, I find it thrilling. I think it's just terrific. So we are very enthused about it, and I hope you all are.
MODERATOR: Mr. Secretary, thank you.