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The Energy Crunch: Dealing With the U.S. Energy Crisis

Aired May 17, 2001 - 22:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is a CNN Special Report: THE ENERGY CRUNCH.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: If we fail to act this great country could face a darker future.

ANNOUNCER (voice-over): A presidential warning, and a plan.

BUSH: The plan addresses all three key aspects of the energy equation: demand, supply and the means to match them.

ANNOUNCER: But opponents say it's incomplete.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: The Bush-Cheney energy plan is not a plan for America's future, it is a page from our past.

REP. DICK GEPHARDT (D-MO), HOUSE MINORITY LEADER: The Bush energy plan gives no help now.

ANNOUNCER: Tonight: the extent of our energy problems, and whether there really is a crisis. Why prices are so high in some places, not bad in others. And whether your pocketbook will hurt next.

See how California got left in the dark.

UNIDENTIFIED MALE: We are paying blackmail, we are paying a ransom to these energy companies to keep our lights on.

ANNOUNCER: And whether your lights will stay on.

Pull up to the pump for a look at how expensive summer travel will be.

UNIDENTIFIED FEMALE: Outrageous.

UNIDENTIFIED MALE: I can't afford to go to work.

ANNOUNCER: We'll explore possible answers, and whether Washington can force a power plant, or power line, in your backyard.

UNIDENTIFIED MALE: They are noisy and visually disruptive. Put it someplace else. ANNOUNCER: Check out two families' approaches to conservation.

UNIDENTIFIED MALE: All the lights are compact fluorescent, and they use a fraction of the wattage. They put out the same amount of foot candles, the same amount of lumens as a 60-watt bulb.

ANNOUNCER: And get some conservation tips for your home and your car.

Tonight we look to our energy horizon to see whether the pursuit of happiness includes an unlimited right to guzzle and glow, and what obligations are down the road.

THE ENERGY CRUNCH: a CNN special report with Bill Hemmer at the CNN Center in Atlanta.

BILL HEMMER, HOST: And good evening. By now you know President Bush put out his energy plan today. But what we don't know is where this plan will go from here and how you might be affected. Some parts of the country are feeling the crunch much more than others. But in the next hour, is there a national crisis? We'll gauge the industry versus the politics tonight. We'll also talk with two senators with very different ideas on this front. And before you fill up next time, we have an expert who says he can save you money, guaranteed.

But first, what's the situation where you live? We begin in the West tonight where the problems are persistent and getting worse.

(BEGIN VIDEOTAPE)

RUSTY DORNIN, CNN CORRESPONDENT: This is Rusty Dornin in San Francisco. In the Pacific Northwest, a parch testimonial to a winter without enough snow or rain. Water, needed to make hydroelectric power. By this fall, customers in Washington, Oregon, Idaho and Montana could see wholesale electricity rates more than triple.

UNIDENTIFIED MALE: If we put in place the size of rate increase that we are talking about here, we would expect to see a further downturn in the economy of this region.

DORNIN: A closed aluminum plant in Washington. In Montana, a copper mine shut down. Business blames that state's recent plunge into deregulation. In the Golden State daily worries about being left in dark.

UNIDENTIFIED MALE: I really wish it would go away. This is a horrible thing.

DORNIN: Power here comes at a hefty price. Consumers and businesses powerless to take action.

Across the southwest, cities continue to mushroom into the desert increasing demand with shortened supplies. It's a crisis that could spread like those western wildfires.

JEFF FLOCK, CNN CORRESPONDENT (voice-over): This the Jeff Flock in Chicago.

UNIDENTIFIED FEMALE: We got a $528 gas bill.

FLOCK: Already reeling from a winter where tight supplies left natural gas bills higher than mortgage payments for some, the problem is now gasoline.

UNIDENTIFIED FEMALE: Outrageous.

FLOCK: Which today topped $2.07 for the average gallon of regular.

UNIDENTIFIED MALE: I can't afford to go to work.

FLOCK: A fire here at Illinois' biggest refinery, the closing of another here near Chicago, and not enough capacity to blend multiple versions of clean burning fuels are blamed.

UNIDENTIFIED MALE: This multiplicity of fuels has completely overwhelmed the refining and distribution system.

FLOCK: The region's worst energy whoa of the past, electricity has eased. Commonwealth Edison's old and brittle infrastructure which led to blackouts in Chicago two summers ago, has been upgraded. And the company has said it has already bought 5,000 more megawatts of power for this summer than its expected to need.

JOHN ZARRELLA, CNN CORRESPONDENT: I'm John Zarrella in Miami. The summer sizzle is nearly on the Southeast. but energy companies say there should be plenty of power to keep the AC chilling. Florida Power and Light, nuke power and the southern companies say they have energy reserves up to 20 percent, enough for the summer. But what about the future? Enron Corporation wants to build power plants in South Florida to operate when demand peeks.

UNIDENTIFIED MALE: They need facilities like this to meet the needs of South Floridians.

ZARRELLA: At public hearing, residents are telling Enron: not in my backyard. Meanwhile, with the price of gasoline, some folks probably wish they had oil well in their backyard.

UNIDENTIFIED FEMALE: It's getting way out of hand. People can't afford it.

ZARRELLA: AAA says take heart. The worst is over. Gasoline prices in the Southeast have leveled off and may start falling after Memorial Day.

BILL DELANEY, CNN CORRESPONDENT: This Bill Delaney in Boston. A part of the country where landscapes are lovely. But landscapes, too, with no indignous oil, coal or natural gas. Still, from New York City to Maine this summer, no major disruptions expected. Brownouts can't be ruled out in New York City, Long Island, New Hampshire, though a very diversified fuel supply helps.

UNIDENTIFIED MALE: If one price goes up, it's not all or nothing. There is other fuel sources.

DELANEY: Nuclear power is only 1/4 of New England's energy. With natural gas increasingly emphasized and plentiful pipe from Canada, in New York City a new system of mini-turbines should help avoid problems. And critically in New England, an industry-friendly permit process allowed nine major power plants on-line this past year alone. Six more planned by year's end.

(END VIDEOTAPE)

HEMMER: As so now we know the problems, and today the White House put forward its solution. George W. Bush stepped up to face an issue that may define his first year in office and possibly beyond. From the White House tonight, here's CNN's John King.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT (voice-over): The backdrop, a model in energy efficiency. Combined Heat and Power Plant in St. Paul, Minnesota.

UNIDENTIFIED MALE: The hot-water heating system, the boiler plant and the (UNINTELLIGIBLE) production.

KING: The challenge: saluting today's high tech conservation innovations while convincing the country they are far from enough to meet tomorrow's energy needs.

BUSH: If we fail to act this great country could face a darker future. A future that is unfortunately being previewed in rising prices at the gas pump, and rolling blackouts in the great state of California.

KING: Nothing in the 163-page administration report offers direct immediate relief. But it calls for dramatic and controversial steps to increase energy supplies over the long term. An easing of government regulations to encourage new coal and nuclear power plants. New government powers to clear the way for thousand of miles of gas pipelines and electricity transmission lines. And new oil and gas exploration in Alaska and in other federal lands now off-limits because of environmental concerns.

BUSH: Advanced new technologies allows entrepreneurs and risk takers to find oil. And to extract it in ways that leave nature undisturbed.

KING: On the conservation side, the president proposes $4 billion in tax credits to purchase energy-efficient vehicles. Expanded tax incentives for producing electricity from alternate sources, like methane gas. Using royalties from Arctic drillings to finance tax credits for wind and solar projects. And more money to help low-income Americans insulate their homes and deal with high- energy bills.

California's governor and Democrats in Congress rush to criticize the president's opposition to price caps on electricity, GEPHARDT: It really looks like the Exxon Mobil annual report, and maybe that is what it really is. This is a energy report that offers no short-term relief to these folks on the West Coast who need relief now.

KING: Outside the vice president's house, a gift from those who oppose to burning more coal. The opposition also took to the airwaves.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Sold: drilling rights in Arctic Refuge going to the gentleman from Big Oil. Next up: clean air.

NARRATOR: Does it seem like our environment is on the auction block these days?

(END VIDEO CLIP)

KING: And protesters shadowed the president. Another reminder of the difficult debate ahead. Mr. Bush took issue with those who say his plan is heavy on the supply side, slight on conservation. His two-word rebuttal? Rolling blackouts.

BUSH: We will always require some additional energy to power our expanding economy. We learned that from the California experience. California has been an impressive conservation leader.

KING: The debate now moves to Congress. Mr. Bush's travels design to sway public opinion.

(on camera)

Skepticism in Congress is hardly limited to the president's Democratic critics. Even many Republicans are grumbling that the administration plan, while heavy on long-term proposals, does little or nothing to address the country's immediate energy needs.

John King, CNN, the White House.

(END VIDEOTAPE)

HEMMER: And to hear the president's speech for yourself, head to our Web site at cnn.com. And while you are there tonight, take our quick vote. Tonight's question: Which would you rather have in your neighborhood: rolling blackouts or a new power plant? Results coming your way a bit later.

(BEGIN VIDEO CLIP)

GOV. GRAY DAVIS (D), CALIFORNIA: We are literally in a war with energy companies who are price gouging us.

(END VIDEO CLIP)

ANNOUNCER: It's the front line in the energy battle, when our special report, THE ENERGY CRUNCH, continues.

How the golden state got into a state of urgency.

Plus: Is it big business?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Oil companies.

(END VIDEO CLIP)

ANNOUNCER: The government?

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: The taxes, I don't understand that.

(END VIDEO CLIP)

ANNOUNCER: Our Jeff Flock, on who's behind those pumped up prices.

And later:

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: So we replaced all of our toilets.

(END VIDEO CLIP)

ANNOUNCER: From water-wasting toilets to power hungry refrigerators. We'll get tips from two families saving energy.

(COMMERCIAL BREAK)

HEMMER: In many ways, the problems in California drew the nation's attention to the energy crunch. But no matter where you live, there's concern that energy demand will skyrocket in the years to come.

CNN's Frank Buckley now, with the first of two reports gauging the national power drain.

(BEGIN VIDEOTAPE)

FRANK BUCKLEY, CNN CORRESPONDENT (voice-over): It may not look like much, but this nondescript building on the outskirts of Sacramento is ground zero in the California energy crisis. They're buying electricity in this room in a daily effort to keep California from experiencing this...

UNIDENTIFIED MALE: I don't see in the dark.

BUCKLEY: Rolling blackouts, which Californians have already experienced six times this year. It's an intense effort costing billions of taxpayer dollars. PETE GARRIS, CALIFORNIA ENERGY RESOURCE: You're spending a lot of money in this room. There is a lot of money being spent, but we're also purchasing a lot of power.

BUCKLEY: Because the utilities, the traditional buyers of such electricity, said last December, they were on the verge of bankruptcy, prompting the state to get into the electricity-buying business.

(on camera): The power purchases in that trading room have helped to make California one of the nation's largest buyers of electricity. So far this year, the state of California has spent more than $6 billion in taxpayer money to keep the lights on.

DAVIS: And we are just getting bled dry. This is the most massive transfer of wealth we've seen in the last 50 years.

BUCKLEY: Governor Gray Davis illustrated the markup with one purchase last week from an energy company that charged $1,900 per megawatt hour.

DAVIS: Fourteen months earlier, that was going for $30 a megawatt hour. They said they're doing that because California's credit is not good. Give me a break!

BUCKLEY: The governor's exasperation matched by consumers.

BUCKLEY: Heaviest users could see their rates increase by more than 50 percent.

HARVEY ROSENFELD, CONSUMER ACTIVIST: We are paying blackmail. We are paying a ransom to these energy companies to keep our lights on. And the threat is, if we don't pay, they're going to turn our lights off, and our economy with it.

BUCKLEY: But an industry spokesman says energy companies are simply responding to market conditions.

(on camera): But are you gouging?

GARY ACKERMAN, WESTERN POWER TRADING FORUM: No, we're not gouging. This is the price that society sets for electricity. And you don't get a market price unless there's a willing buyer and a willing seller.

BUCKLEY: Elected officials voted in 1996 to open the electricity market amid promises of more choice and lower prices for consumers. What went wrong?

DAVID FREEMAN, ENERGY ADVISER: It was an act of faith in the marketplace that, with the benefit of hindsight, was misplaced.

BUCKLEY: Other factors cited by experts: the lack of major power plant construction in California for more than a decade, higher natural gas prices, and fewer hydroelectric power imports. Today, California has 10 plants under construction, meaning relief is on the way. But it may be a couple of years away. JOHN BRYSON, EDISON INTERNATIONAL: I think by the year 2003, doing the right things, new power plants, conservation, investments in the power grid, dedication of existing power plants to stabilize rates -- we should be able to have it behind us in about two years time.

BUCKLEY: ... leaving Californians to wonder if the lights will go on this summer, when the sun sets in the west.

Frank Buckley, CNN, Los Angeles.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

DELANEY (voice-over): This is Bill Delaney in Boston. Power lines -- we're all out at the end of whenever we flick a switch, seemingly, straight. In fact, part of a tangled web, since the federal government let states deregulate half a decade ago.

BILL HOGAN, HARVARD UNIVERSITY: You think about this as a very complicated machine. We used to have one big machine. Now we're taking the gears apart, and we're giving everybody a different gear. And we're telling them to turn their individual gears, and we have to make sure they mesh.

DELANEY: Electricity's still mostly from coal, about 56 percent. Nuclear power generates about 13 percent of electricity. Natural gas, 10 percent. With oil and renewables like solar power making for a tight market, but essentially enough fuel, experts say, for enough electricity.

So why is there a problem?

(on camera): Well, along with an aging infrastructure, especially of north-south transmission lines, to deliver electricity, deregulation was supposed to create competition, to then naturally create more efficient electricity markets. California relied heavily on the free market. A more wary, managed approach is what seems to work here in the Northeast.

(voice-over): New England created a single, regional trading floor, overseeing energy supplies, prices, minute by minute. And like everywhere, there's enough electricity. New England simply increased ways for supply to match demand.

STEVE ALLEN, ENERGY ANALYST: We've built more power plants in the last year and a half in New England, than California has built in 10 years.

DELANEY: Management, some say, a model for a state like Texas, which only now, like much of the middle part of the country, is restructuring, opening more to competition. Others say, though, as deregulation shakes out, conservation will matter long-term.

DERRICK HASKEW, CONSERVATIONIST: We don't have a crisis. We have a choice. DELANEY: Choices, though, have already been made that will strain electrical supply as never before. This is a so-called Web hotel, a sort of Internet switching station mushrooming within the new economy. One building like this can drain as much electricity as a town of 20,000 people.

ALLEN: In the Washington, D.C. area, there are so many that they're right now requiring as much electricity as one new power plant. It just serves them, and there's only a handful.

DELANEY: However much electricity the United States has right now -- which is probably, for the most part, just enough -- we are going to need, and soon, a lot more.

Bill Delaney, CNN, Boston.

(END VIDEOTAPE)

HEMMER: And now to the pumps, where gas prices seemed to shoot up from nowhere recently. What happened? And how did we get to record highs? From the Midwest, where you can find some of the nation's highest prices, here's CNN's Jeff Flock.

(BEGIN VIDEOTAPE)

JEFF FLOCK, CNN CORRESPONDENT (voice-over): Is it big business?

UNIDENTIFIED MALE: Oil companies?

FLOCK: The government?

UNIDENTIFIED FEMALE: The taxes, I don't understand that.

FLOCK: Crude oil prices? Refinery fires? Gas guzzling cars? Gouging at the pumps?

UNIDENTIFIED FEMALE: I think everybody is to blame.

FLOCK: Outrage simmers.

UNIDENTIFIED FEMALE: Well, one more to add to the list.

FLOCK: Filling our the paperwork on the latest pump drive off in Bradley, Illinois. They're on the rise in the Midwest.

UNIDENTIFIED FEMALE: Maybe once a month last year. Twice a week this year.

FLOCK: This stopgashikes.com Web site was posted this week, calling for a June 1 nationwide boycott of gas stations. It protests big oil earnings, which soared last quarter: Exxon Mobil Up 51 percent, Chevron 55 percent, Phillips up 86 percent from a year ago.

UNIDENTIFIED MALE: It's ridiculous.

FLOCK: What's going on? According to the Energy Department last year, crude oil was most of the cost of a gallon of gas, almost half. That's down to a third. The government's tax bite is about the same. Marketing costs and retailer profits have shrunk, but the price paid to refine gasoline has more than doubled from last year.

DAVID SYKUTA, ILLINOIS PETROLEUM COUNCIL: The clean air act requires a number of what we call "designer fuels."

FLOCK: About 50 different blends nationwide in the high- pollution summer, says the Illinois Petroleum Council's Dave Sykuta. Refiners in Illinois alone, need to blend, tank and ship a dozen different summer blends to cut pollution.

SYKUTA: These fuels have been a big success. I mean, the air is demonstrably cleaner in Chicago and around the country.

FLOCK: But the industry says they have overwhelmed the refining and distribution system. And there is no help on the horizon.

(on camera): There hasn't been a new refinery built in the United States since the middle 1970s. In fact, the trend is headed the other way.

(voice-over): This is the padlocked Premcor refinery outside Chicago, closed this year. It was simply too old. Illinois alone has lost half its refineries since the 1980s. Throw in a requirement to put ethanol in some of the gas, and a refinery fire like this one in Carson, California last month, and they just can't keep up. This while demand, fueled by thirsty SUVs, keeps growing.

UNIDENTIFIED MALE: Having a motorcycle definitely helps.

FLOCK: Refineries are now beginning to catch up. Prices may start dipping just as the Memorial Day driving season starts. But the system has little room for error. A pipeline break, another refinery fire, unforeseen price or supply problems with crude oil, and some think $3 gas is not out of the question.

I'm Jeff Flock, CNN, in Chicago.

(END VIDEOTAPE)

HEMMER: And if you'd like to figure out how much you spend every year on gasoline, the answer is as close as our computer Web site, cnn.com/energy. Among other things, you'll find a gas budget calculator. Again, the address: cnn.com/energy. The AOL keyword there is CNN.

Certainly the president hopes for good mileage out of his proposals, but Democrats already are reaching for the brakes.

(BEGIN VIDEO CLIP)

GEPHARDT: We think the president's plan makes the wrong choices for America.

(END VIDEO CLIP) (BEGIN VIDEO CLIP)

BUSH: The truth is energy production and environmental protection are not competing priorities.

(END VIDEO CLIP)

HEMMER: Two senators, one Democrat, one Republican, debate the priorities when our special report continues.

(COMMERCIAL BREAK)

HEMMER: We've been focusing tonight on the president's proposals in his energy plan. And from Washington today, the cry was loud and clear from Democrats. Many say the plan does not address short-term solutions and fails to serve the public interest.

Let's talk more about it with two members of the Senate Energy and Natural Resources Committee, Democratic Senator Ron Wyden from Oregon; and committee chairman Frank Murkowski, a Republican from Alaska. Gentlemen, good evening to both of you. Good to have you tonight.

Senator Wyden, before the plan gets torn apart, tell us what you like about it.

SEN. RON WYDEN (D), OREGON: Well, there certainly are parts I like. Some of the modest incentives for conservation would be one example.

But the central problem is, it's really a trickle-down energy policy. The idea is turn the companies loose to make an awful lot of money, maybe some of it will eventually trickle down to consumer, but it sure doesn't look like a big trickle, it doesn't look like they are going to get much soon.

HEMMER: Senator Murkowski, what about the constant drumbeat when comes to the White House and ties back to oil companies. How do you face that down?

SEN. FRANK MURKOWSKI (R), ALASKA: Well, let's look at it. The difference between yesterday and today is we have a plan. Now, all I've heard all day from the Democrats is they don't like the plan. Kick big oil. It's not enough conservation, it's too heavy on supply.

What are they saying and suggesting that they propose to do about it? They don't have a plan. The American people want a plan. You know what their plan has been? Tin cup diplomacy. We sent Secretary Richardson over, under the previous administration, to beg OPEC to produce more oil. What did OPEC do? They tightened up the supply, and the price went up.

And then they said, well, let's open up the strategic petroleum preserve. And then they found we didn't have the refining capacity. We took 30 millions barrels out of it, and what did we do? We found our refineries full. It simply offset what we would ordinarily import. I think we only got three million barrels a day.

They had no energy policy. We have got a crisis. We have got a problem. And we've got a solution, and we are going to debate it, and my good friend Senator Ron Wyden, who I share in the Energy Committee, we are going to have something tangible to present to the American people.

The American people are fed up with just hearsay about -- well, this doesn't work, that doesn't work. We got a credible president who is willing to put his creditability and the vice president's credibility on the line...

HEMMER: Senator Wyden, I apologize for the interruption, but we are tied on time. What about that? Has the previous administration been sleeping at the wheel of this energy policy for eight years?

WYDEN: Here are three or four things we're for. First, let's turn the Federal Trade Commission loose on the price gouging. We've got red-lining, we've got a lot of anti-competitive practices out there.

Second, let's lift the veil of secrecy around the energy markets. Energy is being bought and sold, but you can't find out much about transmission or outages.

Third, let's reward conservation with real gains in the wallet, and go a lot further than the president is on conservation. And fourth, when you have energy developers that are meeting environmental standard, let's fast-track them through the permitting process. That would increase our energy production and comply with the environmental law.

HEMMER: Senator, I want to stop you there, because I want to get to the heart of matter. If anything is going to trickle down to the American people, certainly something has to come out of Congress on this. Where are you, Senator Wyden, willing to compromise?

WYDEN: I just outlined four steps that I think would be bipartisan. For example, I'm already talking with industry leaders about lifting this veil of secrecy around energy. I mean, energy is a commodity, but you can't find out much information on it.

HEMMER: Understood there.

WYDEN: Let's make the markets work.

HEMMER: Senator Murkowski, where would you compromise to get this thing through Congress?

MURKOWSKI: Well, we're starting -- we're going to have next Wednesday the secretary of energy before our committee. We will take up the legislative recommendations in the president's package. I would hope that we could begin the debate within the committee, get a bill, out a chairman's mark by mid-June, get to the floor of the Senate and hopefully we could have something done before the July recess. The American people want positive relief. They want a balanced energy program. That's what this is. It's conservation, it's supply, it addresses the transmission problems. It addresses the refinery problems. It addresses clean air concerns by cleaning up the coal. It addresses the nuclear dependence, because 20 percent of our power comes from nuclear.

It's got positive solutions -- and you remember, we're worried about $3 gasoline. But in 1973, we didn't have the gasoline. We had gasoline lines around the block. The public was indignant. We were dependent on OPEC. OPEC cut off the supply.

HEMMER: Got it. Senator Murkowski.

MURKOWSKI: That was 37 percent. Today, we're 36 percent!

HEMMER: Senator Wyden, 15 seconds left. You have the last word.

WYDEN: We want to work in a bipartisan way, but it has to work for others, other than the powerful. It has to work for everybody and there has to be a shared effort.

HEMMER: Got it. We could talk about this for an hour, or more. Senator Wyden, Senator Murkowski, thanks for coming on tonight, gentlemen. And we will certainly track this down the road. Thanks again.

ANNOUNCER: Is your refrigerator's appetite larger than yours? When our special report: "The Energy Crunch" continues.

Tips on how to save power, where you live, and in what your drive.

Plus, is this an energy crisis, or a power play by the White House?

(BEGIN VIDEO CLIP)

BUSH: It is real. It is not an imagination of anybody in my administration -- not out of our imagination. It's a real problem.

(END VIDEO CLIP)

UNIDENTIFIED MALE: The fact is you can drive to a gasoline station and not wait in a line and buy gasoline.

(END VIDEO CLIP)

ANNOUNCER: And later, can Washington force a power plant, or power lines, in your neighborhood?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You'll have people laying in the roads. It just won't happen.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

HEMMER: Welcome back to CNN's special report: THE ENERGY CRUNCH.

One element in the debate over energy is the issue of conservation. It's certainly one way to help keep your bills from getting out of control, but it certainly takes effort, too. And how willing are you? CNN's Anne McDermott visited two families with very different approaches to conservation.

(BEGIN VIDEOTAPE)

ANNE MCDERMOTT, CNN CORRESPONDENT (voice-over): Actor Ed Begley Jr., the consummate conservationist, has a secret. Yes, the man with the electric car, and the solar-powered stove, isn't completely pure.

ED BEGLEY JR., CONSERVATIONIST: See, it's not about the environment. I'm cheap. I'm a cheap person.

MCDERMOTT: He's kidding. Well, kind of. Because you can save money by saving power. Take Begley's low-watt compact fluorescent light bulbs. Sure, they cost a few bucks more, but they seem to last longer.

BEGLEY: These in here are actually from the '80s. They have not burned out.

MCDERMOTT: Then there's all those solar panels. They weren't cheap, but they help keep the electric bill for Begley's family of three to just $400 a year. Begley also uses non polluting detergents, recycles paper according to color, even has a recycled dog, a pound hound, a low-energy model.

(BARKING)

Now this is your average dog, and his average family. The Bierys who don't pretend to be Begley, but try to conserve, turning lights out, tossing water-wasting toilets out.

And lately, their electric bills have been going down, though they still pay about six times as much as Begley. Power officials told them their biggest energy hogs are the pool, the air conditioning, then they asked them about their fancy fridge.

UNIDENTIFIED FEMALE: And we learned it was an energy sucker.

MCDERMOTT: Begley uses a simpler, less expensive model, and saves on his vehicles, as well. He recently drove this Honda Hybrid from New York to L.A. Cost of the gas? $72.

The Bierys don't get that kind of mileage, but they don't drive monster SUVs, either. They are conservation conscious, except when it comes to...

(CRYING) Diapers. Their son, their daughter wear disposables.

UNIDENTIFIED MALE: No, did not even consider cloth diapers.

MCDERMOTT: Well, guess what? Ed Begley, Jr. has another secret.

BEGLEY: We have an actual disposable diaper here on.

MCDERMOTT: Which just goes to show, even the most ardent activists, are only human.

Anne McDermott, CNN, Los Angeles.

(END VIDEOTAPE)

HEMMER: So, if you drive a gas guzzler, don't despair. There are ways you can get better gas mileage with a few modifications. Perhaps no one knows this better than Joe Stronsick. His Web site, www.iwantfreegas.com -- love that one, Joe -- explains how alterations under the hood can save a big difference for you.

First of all, let's talk about gas relief. Here we go. Let's start with gas grades. Many people don't know the difference between 87, 89, and 92 octane. What should we know.

JOE STRONSICK, WWW.IWANTFREEGAS.COM: Well, basically, if your car recommends 87, stick to 87. If your car recommends 92, stick with 92. But 20 percent of the American population think you need to go to 92 to get a better detergent in the gas. EPA mandates that, detergents are put in all levels of the grades of the gasoline, so you don't have to buy into the 92.

HEMMER: Got it. OK. It worked for 97 percent of the others. Now to tires. You say pump it up, why? Is there a danger there, Joe?

STRONSICK: Well, back in the '70s, there used to be a scam, back in the oil crisis, people would blow their tires. The stat is, four to six extra pounds in a tire will give you two to three more miles per gallon. It will not degrade the tire. It will not cause any blow outs. It's under-inflation, when you run into the problem of that.

HEMMER: Now to oil, what should we know here, when we're changing our oil or putting oil in the car?

STRONSICK: Oil, you have to realize, and I want to just show this: on the bottom of oil, you got to look for the key words, energy conserving. That's not from the oil company -- that means that the EPA tested the oil to increase fuel economy.

A synthetic oil does outperform a regular oil, and you do not have to change that 3,000 miles. Synthetics can go 10-15,000 miles before you have to change it. Key word: energy conserving. Not all of them have that. Look for the energy serving.

HEMMER: I'm sure the garages would like to hear that. Spark plugs, there is a difference, larger in price and more. Tell us what the difference is.

STRONSICK: Your single spark plugs that 90 percent of our cars have, that have the side wire are horrible for fuel economy. They block the flame, so when the gas and fuel mixture comes, it doesn't explode as good.

They do have a spark plug in Europe, Germany -- they're starting to come into the United States: it's by Halo. Open ring, flames shoot in the center, it doesn't misfire. Standard plugs, 20 percent of the time, are misfiring -- it means that gas is not exploding. Coming up your back tailpipe.

HEMMER: Another thing you brought along with you tonight: clean air valve. I'm a guy. I don't know what this is, tell us.

STRONSICK: Well, we have a PCV valve. A PCV valve takes the exhaust, recirculates into the fuel air mixture, to again, explode. What you need to do know is that they do make a clean air valve -- it's called -- what it does is it takes that exhaust, makes the air cleaner.

So, when you have a fuel-air mixture, again it explodes better. And again, you get more efficiency. Everything we're talking about, we're talking about one or two more miles, another one or two. By the end of using all the tips, you could get an easy four to six more miles per gallon.

HEMMER: You're also stressing here that a lot of these tips are not expensive?

STRONSICK: Exactly. We have to change our oil all the time. Spark plugs need to be changed all the time. But when you go with the Halo -- for example: Halo. That's a 100,000 miles plus before you have to change it. So, yes, they might be initially more expense. But you aren't changing them as often.

HEMMER: How many people follow these tips, do you think, Joe?

STRONSICK: Boy, ever since we've been doing these talks, we feel that more and more people are curious, because it's making a realization that when you buy a new car, there are ways to get better -- more fuel economy. So, I think the more we talk about it, people will make a better choice when they put the products into their car.

HEMMER: Got it. Last thing, an air filter. I didn't know this: some can actually be reused. You clean them out, and put them back in the car.

STRONSICK: That's correct, that's correct.

HEMMER: How does it work?

STRONSICK: Well, you -- again, an air filter needs to be replaced 5,000 to 10,000 miles, depending on where you live. If it's smoggy like here in Los Angeles -- air filter, real simple. This air filter from KNN, if it gets dirty or -- underneath the holes, wash it out, throw it back in. Again, it's a lifetime air filter, one million mile guarantee on it. It will increase fuel economy, because you get a better flow of air.

HEMMER: Got it. Joe Stronsick, from L.A. tonight, thanks for coming by and giving us some tips, and thanks for the energy.

STRONSICK: Thank you, Bill.

HEMMER: No pun intended there. All right, Joe, we'll talk to you again soon.

Next year, we will drive down a bad memory lane. You may remember these: gas lines and an energy crisis that certainly was a crisis. We'll compare today to the 1970s when our special report continues.

And what do you think of this view? If it were good for the country, would you allow it? Stay with us and consider your skyline in just a moment.

(COMMERCIAL BREAK)

HEMMER: This isn't the first time the country has faced an energy crunch. So how does today compare to the 1970s? As CNN's Frank Sesno now reports, some argue it isn't a crisis at all.

(BEGIN VIDEOTAPE)

FRANK SESNO, CNN CORRESPONDENT (voice-over): Maybe you're old enough to remember the energy crisis of the '70s. Long lines at the pumps. Some stations closed or out of gas altogether. Prices soared to what today would be nearly $3 a gallon. The 55-mile-an-hour speed limit became law, and those big gas guzzlers, they averaged just 12 miles to the gallon then, became an endangered species.

Everyone felt the pain. The economy was reeling. Nearly half a million Americans lost their jobs.

PROF. ROBERT LIEBER, GEORGETOWN UNIVERSITY: The two oil crises of the '70s created the two worst recessions that the United States experienced since the Great Depression of the 1930s.

SESNO: And now?

PROF. FRED JOUTZ, GEORGE WASHINGTON UNIVERSITY: I would define the crisis -- the energy crisis, as the administration is calling it, as being more political rhetoric than reality. The fact is, you can drive to a gasoline station, not wait in a line, and buy gasoline.

SESNO: There are places where there are problems, of course. Across the country, gas prices are up, though the government says they may start coming back down by summer. In several regions, home heating bills, especially for natural gas, more than doubled last winter. In California, rolling blackouts have left some people and businesses in the dark. Nowhere else. Yet. Is energy in short supply?

JIM PLACKE, CAMBRIDGE ENERGY RESEARCH ASSOCIATES: It's not that it's not available, it's getting it where it's needed and wanted in a timely way. That isn't always easy to do.

SESNO: First, oil: the government says known global reserves in 1970s stood at about 470 billion barrels. Today, despite all the consumption since then, known reserves top a trillion barrels. Experts say oil can comfortably remain the world's dominant energy source for the next 20 years.

Next, electricity: there are surpluses in some parts of the country, and a wave of new generating capacity already under construction.

PLACKE: We see as much as 300 gigawatts being installed over the next five years, which would be equal to about 60 percent of the present generating capacity.

SESNO: Government and industry experts estimate that electricity prices should actually decline over the next 20 years, by as much as 6 percent for residential, 16 percent for commercial customers.

Then there's natural gas. It heats homes and fuels power plants. The price is up, and likely to stay there. Moving it is the issue.

Example: as a byproduct of oil drilling, Alaska's Prudhoe Bay produces eight billion cubic feet a day of natural gas. That's more than 10 percent of the country's total daily consumption. But because there are no pipelines there, the gas is pumped right back into the ground.

Does all this add up to a crisis?

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: If you're running a company on the West Coast, and you have your production interrupted by blackouts, or you're caught in a traffic jam in San Francisco, or you lost your job because your factory had to shut down because of a lack of energy, that's a crisis.

SESNO: Others beg to differ. Jimmy Carter's presidency was overshadowed by the '70s energy crisis. This, he says, is no crisis. Writing in the "Washington Post," Carter assails what he calls "misleading statements" that distort history and future needs. "Exaggerated claims," Carter writes, "seem designed to promote some long-frustrated ambitions of the oil industry at the expense of environmental quality."

All agree more needs to be done. Getting there is the challenge.

(on camera): A crisis can focus national attention. It can help leaders move public opinion and mobilize action. But if in the end, people don't buy it, it can also backfire. Ask Bill Clinton. He tried to transform the nation's health care system. He called it a crisis. Frank Sesno, CNN, Washington.

(END VIDEOTAPE)

HEMMER: So, then, if one of the solutions is building more power plants, you may wonder, what are we waiting for? But many in the industry say it's not that easy because of an all-too-familiar complaint.

CNN's Jeanne Meserve now on what the government might do in your neighborhood.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN CORRESPONDENT (voice-over): It could be dirty, could be dangerous, could be disruptive. And is, most certainly, big and ugly. Who would want a power plant in their neighborhood?

BRENT BLACKWELDER, FRIENDS OF THE EARTH: You don't. I don't. Put it someplace else.

MESERVE: It is called the NIMBY phenomenon, for "not in my backyard," and the energy industry says it has been a huge problem in building power plants, like the one planned near this Coyote Valley, California community.

ISSA AJLOUNY, COMMUNITY ACTION GROUP: You've got a park there, county parks with trails, and you don't want to be sitting there going on a trail with your family, and there is this humongous building putting out pollutants.

MESERVE: Among opponents to this proposed plant: Internet giant Cisco Systems. Though Cisco's computers suck up electricity, it says no power plant, not here.

(on camera): Does that strike you as hypocrisy?

THOMAS KUHN, EDISON ELECTRIC INSTITUTE: Well, it is -- you know, it's always easier for them to say, let's do it 50 miles away, but then we have to figure out whether or not the people 50 miles away would like the facility. And then secondly, you have to worry about the transmission system.

MESERVE: And the public doesn't want those in their backyard either.

BLACKWELDER: They are noisy and visually disruptive. And second, there is concern about the electromagnetic radiation, and there is a batch of conflicting studies about what are these impacts.

MESERVE: The power industry says more transmission lines are critically needed, but because the lines go from here to there without benefiting the communities they pass through, they have given rise to a new phenomenon called "what's in it for us," or WIIFU. A cousin of NIMBY, it's as problematic when it comes to finding a route for lines. The administration's answer: give the federal government the power to claim land for transmission lines through eminent domain.

UNIDENTIFIED MALE: To talk about running new power lines all over America with eminent domain, I mean, you'd have people laying in the roads. It just won't happen.

REP. RICHARD POMBO (R), CALIFORNIA: This particular legislation, I think we're going to have some battles over.

MESERVE: Though Congressman Richard Pombo was a member of the president's party and represents energy-strapped California, he is also a staunch property rights advocate.

POMBO: The right of the individual has to be protected and just because it may be for the greater good of society, the greater good of the U.S., that's great, but that doesn't override the rights of the individual.

MESERVE (on camera): The Bush plan also calls for more power plants and a possible loosening of environmental standards. Environmentalists claim this could lead to a spread NIMBY fever. If that's the case, the energy industry says the power of the people could keep power from the people.

Jeanne Meserve, CNN, Washington.

(END VIDEOTAPE)

HEMMER: And earlier tonight we gave you our quick vote question of the night at cnn.com. The question was: Which would you rather have in your neighborhood, rolling blackouts or a new power plant? The results so far: 30 percent would prefer rolling blackouts, 70 percent say they'd prefer a new power plant. As always, that poll online is not scientific.

Before we say good night tonight, we asked Garrick Utley to help us consider our American dreams.

(BEGIN VIDEO CLIP)

GARRICK UTLEY, CNN CORRESPONDENT (voice-over): The right to dream the American dream and consume without limits has become part of our pursuit of happiness.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

FLEISCHER: It should be the goal of policy makers to protect the American way of life.

(END VIDEO CLIP)

HEMMER: Coming up, a closer look at what we're protecting.

(COMMERCIAL BREAK)

HEMMER: Finally, America's a big country and often times we want bigger and better things. And for better or for worse that's our history. Tonight, CNN's Garrick Utley and finding a balance in the current American way of life.

(BEGIN VIDEOTAPE)

UTLEY (voice-over): From the beginning, those who came to this land called America, came to settle the land, cultivate it and then consume it: Consume the fruit of its soil, and the energy that lies beneath. Above all, the energy, that would fuel a nation's growth, and dreams as portrayed in Hollywood films such as "Boom Town."

The right to dream the American dream and consume without limits has become part of our pursuit of happiness.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president believes that it's an American way of life, and that it should be the goal of policy makers to protect the American way of life.

UTLEY (on camera): So here we are, trying to figure out how to afford this way of life. But wait, you might say. If technology and human ingenuity have made us so more efficient in so many ways, why is it that we're using so much more energy?

(voice-over): Look at our new homes. They are twice as energy efficient as they were 30 years ago. They are also 50 percent larger, and filled with ever more power driven computers, TVs, CD players and large jacuzzis. The things we drive are more efficient per pound, but put more pounds on the road. With each mile, we indulge our appetite for something bigger, as an extension of ourselves. Of course, deep down we know we need to slim down our appetites. But it's hard to do when it comes to our most basic consumption of energy -- food.

(BEGIN VIDEO CLIP)

UNIDENTIFIED ACTOR: Stay in control. Weight Watchers works. I know.

(END VIDEO CLIP)

UTLEY: True, we try to cut down on our caloric consumption. But the bottom line is that waistlines are growing as fast as gasoline prices. Rates of obesity in the United States are higher than ever. One third of Americans today are overweight.

(on camera): If it's s true that we are what we eat, are we also everything we consume; from energy to water, even to drugs -- legal and illegal? We are, after all, a consumer society. The consumer society.

(voice-over): Perhaps we don't always like to see ourselves that way. But in these uncertain times, consumers, our spending, is about all that's keeping the economy growing. That's why you won't hear political leaders calling on us to make painful sacrifices. Instead, the solution, as it has always been, is more. More production, more consumption. More of the American way of life. We just have to figure out how to pay for it.

Garrick Utley, CNN, New York.

(END VIDEOTAPE)

HEMMER: And with that, we turn out the lights on our special report this evening. I'm Bill Hemmer in Atlanta. For more on the power crunch, head to our Web site, cnn.com/energy. "SPORTS TONIGHT" follows next. Thanks for being with us tonight, and good night.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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