Thank you, Matt Gonring, for that nice introduction.

I’d like to thank Steve Eisenbrown, Ted Crandall, John McDermott and Bob Russ of Rockwell Automation for putting on this marvelous event.

Rockwell is a great company which has been a leader in terms of energy innovation and efficiency—a topic I’d like to discuss today. It’s the No. 1 priority for manufacturers, and it is one of the most important issues facing our nation.

Hurricanes Katrina, Rita and Wilma exposed a secret that no one in Washington has wanted to reveal for over 20 years—the United States has a fundamental weakness in our energy infrastructure, and it’s only going to get worse. Without immediate action by our leaders in Washington, our country is poised to experience larger disruptions of our economy, higher prices for a gallon of gasoline, record-high home heating bills and inflationary pressures because of the cost of energy to produce every manufactured and agricultural good.

As the hurricanes hit our coastlines, they slammed into our energy infrastructure in the Gulf of Mexico, cutting national supplies. Today, half our energy production in the Gulf region is still damaged. Underwater pipelines, including vital chokepoints where gas comes in from different wells, are broken.

As quickly as rapid-reaction crews perform underwater repairs, the damage has caused natural gas prices to skyrocket.

Consumers will pay 48 percent more for natural gas this winter than last year—and at least 31 percent more for home heating oil. The average household heating bill will top $1,000 for the first time. In some parts of the country, like my home state of Michigan, those figures could be much higher.

For manufacturers, the problems are magnified. Dow Chemical’s plastics plant in St. Charles, La.—a 2,000-acre city of pipes, steel towers and spherical holding tanks—uses about 100 billion btu of natural gas every day. The St. Charles plant produces a range of man-made compounds needed to make everything from shampoo to shaving cream, from plastic cups to house paint. We don’t even think about these compounds, but they are essential to make the products we use every day.

Every time natural gas prices go up just one dollar, costs at that chemical facility go up about $100 million per year.

It’s not that the Dow plant isn’t conserving energy. They’ve cut their usage per pound of output by 22 percent in the last year.

But this year for the first time, Dow’s energy costs are expected to exceed 50 percent of the company’s overall sales.

And that story is typical. Every time the price of oil, now at $60 a barrel, goes up another dollar, it costs another manufacturer, Goodyear Tire, $20 million. Goodyear is cutting production 30 percent this year.

Energy costs are hitting small manufacturers especially hard.

Kellie Johnson, president of aerospace supplier Ace Clearwater Enterprises in Torrance, Calif., said her natural gas bills were about $9,000 per month a year ago. Now they’re $14,000. And they’re climbing.

Fletcher Steele, president of Pine Hall Brick in Winston-Salem, N.C., said his natural gas bills have shot up $700,000 per month. In January, he will have to close down major parts of his operation and lay off 150 people to stay in business. That’s half his work force.

At the NAM our phones are ringing off the hook with stories like these.

The rising cost of energy is beginning to affect consumer prices. The government’s consumer price index reported in September jumped a record 5 percent over the previous September—due in large part to energy prices. The price of eggs jumped 8 percent in a month—the largest one-month increase in five years—partly due to energy prices. Food Lion, the grocery chain, is spending an extra $24,000 per day simply because the cost of plastic grocery bags has gone up.

The price of U.S. natural gas is now about $13—the rough equivalent of paying $7 a gallon for gasoline.

It’s more than double what they pay in China, and 50 percent higher than the cost in the United Kingdom. The U.S. price is 20 times what Saudi Arabians pay.

Dow Chemical’s CEO Andrew Liveris said, these prices “render the U.S. chemical industry—which uses natural gas as both a fuel and a raw material—simply uncompetitive with the rest of the world.”

That means jobs. High energy prices have been a primary factor in the loss of 100,000 jobs in the chemical industry alone. The forest and paper industry has closed 200 mills and lost 146,000 jobs since the run-up in natural gas prices began.
 
Jobs have gone overseas. One reason is, our international competitors have taken a different approach to energy development than the United States. China is spending $50 billion to build 30 nuclear power plants in the next 15 years. India is ramping up coal power.

While Japan built 23 liquefied natural gas (LNG) terminals to import less expensive natural gas, the U.S. built only four.

In the time France built 58 nuclear power plants, which now supply 80 percent of that country’s electricity, we built only one.

In the last 25 years, our energy consumption has grown by 30 percent, while supply only increased at half that rate. In just the past decade, as our economy grew, energy consumption increased by more than 12 percent. But our domestic production increased by less than one-half of 1 percent.

Meanwhile, our energy use is much more efficient:

• Caterpillar developed a technology that reduced emissions from its vehicles while boosting fuel economy 25 percent.
• DuPont launched 75 energy improvement projects, each of which reduced energy costs $250,000 per year.
• Emerson developed a cooling technology in its compressors that reduced consumer energy consumption by as much as 40 percent.
• Rockwell has saved water utilities tens of thousands of dollars through efficient technology. Rockwell is part of the solution.

But between now and 2025—just 20 years from now—we will need 55 percent more electricity than we generate today and consumption of all sources of energy will increase:

• petroleum by 47 percent
• natural gas by 49 percent
• coal by 30 percent
• renewable energy by 46 percent

With our present policies, energy producers in the United States can’t keep up with this demand. That will force further dependence on foreign sources of energy, higher costs for consumers and threats to job security for working Americans.

The question before America’s policymakers is this: Do we want the United States to be able to compete and succeed in the marketplace of the future, or are we willing to allow political expediency to drive our competitive edge into the ground?

Some want to look past our borders and blame others for the predicament in which we now find ourselves. But no one in Beijing or Brussels is holding us back when it comes to energy. We need to take action ourselves. Right here in America.

The Energy Bill enacted this summer—the first comprehensive energy strategy in many years—was a good start toward building an infrastructure and supply for the future. The bill was a product of negotiation and consensus.

The next energy legislation must be bold, forward-reaching and without the impediments imposed by those who have held us back.

The National Association of Manufacturers—combining the strength of U.S. industry, our workers and their families—is calling on our nation to enact a bold new energy plan.

We call on Congress and the administration to build a plentiful, flexible, diverse and affordable energy supply through the following actions:

• First, provide access to the Outer Continental Shelf (OCS) for exploration and development of oil and natural gas resources. Currently, 85 percent of all federally controlled coastal waters are off-limits to energy production. Access to the energy-rich OCS was restricted by the federal government nearly half a century ago. The OCS has over 420 trillion cubic feet of technically recoverable natural gas resources and 102 barrels of oil—enough natural gas to heat 100 million homes for 60 years, and enough oil to drive 85 million cars for 35 years. That is enough oil to replace current Persian Gulf imports for 59 years.
• Second, Congress also should increase onshore access to oil and gas by allowing exploration and development in the North Slope of Alaska in the area known as ANWR. ANWR could provide nearly 1 million barrels per day, every day it is in operation, for several decades. This drilling would occur on only 2,000 acres of ANWR’s 19 million acre expanse and only during the time of year when the ground is frozen. That’s an area roughly one-fifth the size of Dulles Airport compared to the state of South Carolina. ANWR is a necessary part of our diverse and flexible energy strategy.
• Third, Congress should expedite the permitting process for energy infrastructure such as power plants and LNG terminals. Power plants can take 10 years to achieve necessary permitting and 10 years to build. The Pentagon, by comparison, was permitted within a few months and built in less than a year and a half. The 40 LNG terminals now proposed, along with new power plants, must be expedited.
• Fourth, Congress should remove obstacles to building new refineries. Since 1981, with the removal of refinery subsidies, the number of oil refineries has decreased from 315 to 144 at the end of 2004. The decrease in refineries also can be traced to the environmental restrictions in the Clean Air Act Amendments of 1990. The operating costs of meeting these regulations became too high for many smaller refineries, which had to shut down.
• Fifth, the administration should create an action plan to transform a system of locally planned transmission facilities into a modern interstate bulk-powered delivery system under the authority of the Federal Energy Regulatory Commission. The administration should help states integrate energy transmission by streamlining jurisdiction over distribution and generation resources. The Energy Policy Act of 2005 provides the necessary groundwork for this to happen.
• Sixth, the administration should authorize the construction of new nuclear plants to generate 50,000 megawatts of nuclear energy by 2020. Nuclear energy, an American invention, holds great promise as a clean, safe, unlimited source of power for our nation. We already produce one-quarter of the world’s nuclear power. We can do more.
• Seventh, Congress should double its funding of hydrogen research in a Manhattan Project-level initiative with the goal of making fuel cells a standard alternative to the internal combustion engine within 10 years.
• Eighth, Congress should ease restrictions and invest in clean coal production. The United States has nearly 275 billion tons of recoverable coal—about equal to Saudi Arabia’s oil reserves on a btu-equivalent basis. We have a 250-year supply, with greater opportunities for coal use in transportation and industrial production on the near horizon. Since the early 1980s, coal-to-liquid technologies have produced more than 700 million barrels of synthetic fuels and today are capable of producing clean, zero-sulfur synthetic oil and oil products. We can produce this fuel at a cost of $35 to $40 per barrel, compared to current oil prices that average $60 per barrel.
• And finally, Congress should create regulatory stability and predictability for power generation by replacing the outdated New Source Review program with Clear Skies legislation. We must provide greater certainty to those who risk capital if we want to expand safe, clean sources of energy that will make us less dependent on foreign sources.

Energy isn’t the only thing, it’s the beginning of everything.

It’s the key to reducing our manufacturing costs to stay competitive. It provides our economy the strength to ensure a level international playing field on trade. It provides the foundation for innovation and technological advancement. And it is essential to build the economic work force for the 21st century.

We must have a plentiful, flexible and affordable energy supply to improve our schools and our health care system, to provide opportunity for our children and grandchildren. It all comes from building a strong economy fueled by energy.

It’s time to start our future now. Certainly we face obstacles. Achieving our goals will take determination and perseverance. But 25 years from now, people will look back and say, I like my hydrogen vehicle. My energy bills are lower. We have more power, the future is bright and the environment is clean.

In our challenges, ladies and gentlemen, lie our opportunities. Now is the time to launch our economy into the future. Now is the time to POWER America.