California Governor Rejects Bush Energy Blueprint
DONNA KELLEY, CNN ANCHOR: President Bush took to the airwaves today to help sell his energy blueprint. But the governor of the most embattled state isn't buying it. California's Gray Davis delivered his own radio address today, telling the president that it's time to stop talking and start acting, even if those new actions test old loyalties in the energy industry. CNN's White House correspondent Kelly Wallace is joining us with the latest. Hi, Kelly.</s>KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Hi, Donna. Well, Governor Gray Davis of California appears to be trying to step up the pressure on the White House, using a national radio address to once again call on President Bush to impose temporary price controls on the prices out-of-state energy suppliers can charge in his state. Davis said failure provide relief to California won't only just affect his state's economy, it could have affect on the entire nation.</s>GOV. GRAY DAVIS (D), CALIFORNIA: Mr. President, runaway energy prices are not just a California problem. With all due respect, I urge you to stand up to your friends in the energy business and exercise the federal government's exclusive responsibility to ensure that energy price are reasonable.</s>WALLACE: President Bush vigorously opposes price controls, because he believes those would make the situation worse by discouraging investment to boost production at a time of very high demand for energy. Now, the president for his part did not mention price controls or California directly in his radio address. Instead, he seemed to be following a message he tried to put forward yesterday when he visited an environmentally-friendly hydroelectric power plant in Pennsylvania. There, and again today in the president's radio address, he appeared to be trying to deflect criticism that his plan benefits the energy industry, but hurts the environment.</s>GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Too often Americans are asked to take sides between energy production and environmental protection. The truth is, energy production and environmental protection are not competing priorities. Both can be achieved with new technology and a new vision.</s>WALLACE: And the president will try to keep getting that message out, also the message that he believes his plan is a balanced approach between conservation and production. But his critics think he is very vulnerable on this issue. That is why environmentalist are already running new television ads, and Democratic lawmakers have been holding almost daily news conference to try to defeat the president's plan -- Donna.</s>KELLEY: Kelly Wallace at the White House, thank you. And for a closer look at the politics and the policies simmering beneath this issue, we want to turn to "Financial Times" correspondent Carola Hoyos. She has an extensive background covering energy and oil issues. Carola, thanks for coming in to talk with us.</s>CAROLA HOYOS, "FINANCIAL TIMES": Nice to be back, Donna.</s>KELLEY: In your reporting as you look at the president's plan, what do you see long-term and short-term that he has proposed?</s>HOYOS: Relatively little short-term, and this something that Governor Gray Davis is very worried about. Long-term, on the electricity side, he's looking at creating more plants that create electricity, either coal producing -- plants that use coal to produce electricity or plants that use nuclear power to produce electricity. That's quite a medium, if not a long-term view. That's not really going to help California out, but it will help some of the other states that are facing a potential problem just like California, for example here in New York.</s>KELLEY: Well, the president says that his plan is a balanced plan, and he is thinking about the environment, which he has certainly has taken some hits from some groups, of course. But he says if you don't do this, in his radio address, the environment actually will suffer, if you don't go long-term and look at some things that need to be developed. In the meantime, the governor of California, Davis, said that he should stand up to your friends in the energy business and exercise a federal government's exclusive responsibility to ensure that energy prices are reasonable. He says there's some price gouging going on. What have you found in California?</s>HOYOS: Well, in California we don't have any conclusive evidence that price gouging is going on, but it is definitely worth investigating. And that's something that President Bush has been very hesitant to do, and there again he is politically vulnerable because of his contacts to the energy world. It's definitely worth investigating, and some investigations have begun. But I am told those are concluded. It's not a good idea to start pointing fingers. It's a very complex system in California. They are trying to deregulate the electricity market, and because it's a messy system, there are winners and there are losers, and there are big winners in this one. They need to be investigated.</s>KELLEY: The governor in California wants price caps. President Bush does not want to have anything to do with that. Do you see anything that anybody is proposing, Democrats or any groups proposing, that can be done -- something that can be done in the short-term?</s>HOYOS: Not really. I mean, price caps is something that people are hanging on to for the short-term solution. I think that making sure that maintenance, which does disrupt power production, is kept to a minimum at the very key moment, which generally is done anyway in the industry. That's one thing to look at, but really a price cap would be very, very important, and a re-look at the entire way the system is deregulated. On the medium to long-term, it's key to get some of those difficult restriction on producing or building power plants, and for example on the oil side, refineries lifted, so that we do loosen some of those bottlenecks. But that will take several years. Building a refinery can take five to 10 years, and building a power plants can take at least two years, so lots of long-term solutions, very few short-term solution, much more tricky.</s>KELLEY: What do you see happening this summer if it goes to more power blackouts in California and these higher energy prices, for business and for individual families?</s>HOYOS: Well, two things. Governor Gray Davis, which you saw in his address, is clearly flailing. I mean, politically this is very, very difficult for him. So on the political side, I would see big political shifts there. Otherwise, on the economic side, California is in trouble right now. You have got the downturn in the Internet sector. So, companies going bankrupt up in San Francisco, and then electricity prices -- I mean, they are -- incredible -- blackouts are an incredible nuisance for consumers, but they are a life and death issue for businesses such as farms and such as, for example, meat cooling or meat transporting industry. And so, California is looking at a decrease in economic investment at a time when globally and nationally, we are not in great shape.</s>KELLEY: From "The Financial Times," correspondent there Carola Hoyos, thanks very much. We are glad you could come and talk with us.</s>HOYOS: You're very welcome. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com