With gas prices now at $4.01 in San Francisco, $3.93 in San Jose and $3.91 in Oakland, the president says the best short term solution is to find new sources of oil -- in Alaska.
The president said drilling in the protected Arctic National Wildlife Refuge (ANWR) would likely lower the price of gasoline. After all, if you increase supply, wouldn't that mean lower prices? The key here is, how much are you going to increase supply and over what time period?
The president told reporters Congress is to blame for failing to help lower gasoline prices.
"Members of Congress have been vocal about foreign governments increasing their oil production, yet Congress has been just as vocal in opposition to efforts to expand our production here at home," says Bush.
President Bush said drilling in the Arctic National Wildlife Refuge could increase supply by a million barrels a day -- for 20 years or so.
"It would be about a 20 percent increase of crude oil over U.S. production levels and it would likely mean lower gas prices," says Bush.
That's what an industry spokesman told us as well.
"There is a pipeline in Alaska that currently is under utilized. There's about room in the pipeline for about 1.2 million barrels a day that could be brought to market," says Tupper Hull of Western States Petrolium.
Hull says the area of the Arctic National Wildlife Refuge, where the drilling would take place, is fairly small. It's an area known as 1002, a coastal plane on Alaska's northern shore. The Sierra Club says this is the biological heart of the Arctic.
"This is where 150,000 caribou come and have their young. It's their calving ground. This is the key area along the coastal plane, where millions of water fowl are nesting raising their young and then disperse all over the lower 48. So, it's the duck factory for North America," says Sierra Club Executive Director Bruce Hamilton.
The Sierra Club's fear is that the coastal plane will come to resemble Alaska's Prudhoe Bay oil fields. The president isn't convinced by those concerns.
"To say that this will destroy the environment, I don't think is an accurate statement."
But, how accurate is it to say that drilling in Arctic National Wildlife Refuge will lower the price of gasoline? We put the question to the head of U.C. Berkeley Energy Institute.
"You might want to drill in ANWR simply because there is valuable oil there and it will generate wealth. It'll be mostly for the oil companies," says Professor Severin Borenstein.
Borenstein says the U.S. Treasury will get royalties for leasing the oil tracts.
"But the idea that drilling in ANWR will noticeably lower our gasoline prices is just misguided," says Borenstein.
Gas prices are pegged to oil prices. The price of oil is set on the world market. The world uses 80 million barrels of oil a day -- that's the demand.
So there's 80 cents that represents 80 million barrels per day. Now add a million barrels a day from Alaska and that's one more penny. It doesn't change much.
