May 22, 2008

"...every citizen of the state ought to be outraged at gas prices. It is an outrage, I don't know any other way to say it." -Governor Huntsman

KEN VERDOIA, KUED: Governor, thanks for joining us. The state's next budget year begins on July 1st. By that time gas prices will have increased more than 30 percent since the legislature created the budget. Now, unless this was luxuriously over—appropriated, there is going to be an impact on the state budgets by increasing fuel costs. Will you tell state agencies to absorb those costs through cutting programs or cutting back on staff?

GOVERNOR HUNTSMAN: We'll have to see what the numbers look like ultimately. The early revenue numbers, not that we have anything scientific at this point, are pretty strong, and showing that our economy is still alive and well. And indeed, with job growth at 2 percent, four times the national average, and unemployment at 3.1 percent, we're hanging in there reasonably well. So I don't know that we need to have this discussion any time soon. But I will tell you that every citizen of the state ought to be outraged at gas prices. It is an outrage, I don't know any other way to say it. And what to do? I drive a CNG car to work, I pay 65 cents a gallon. We had the conversion done here in the state by a local company, we draw from local resources to refuel the car, and I tell that story everywhere I go. I was up in Heber yesterday, and people started asking after, how can I get that done? And I wish more people would get that done. We're reaching a breaking point as it relates to energy economics. And when you look at the future markets that I looked at this morning, and you hook at, you know, 130, $136 per barrel of oil, this is outrageous. And to think that we're going to be at 4 and maybe beyond 4, it's to the point where people are saying, "I'm not going to take it any more, I'm going to consider alternatives, I'm going to take public transportation, I'm going to commute less, I'm going to look at CNG alternatives." And so we're in a very peculiar situation right now.

The demand side of oil economics would suggest that, you know, OPEC isn't increasing supply, and why aren't they increasing supply? Because at 120, 125, 130 bucks a barrel, people are still buying, and those people are in China, which has an economy that's still roaring along at 10 percent, 26, 27th year in a row. India's doing the same thing. I mean these are economies, to put it in perspective, that are going from, you know, 20 million cars on the road, now, to 500 million cars in China over the next couple of decades. Roughly the same number of cars in India, in fact fewer than that, to 600 million cars over the next couple of decades. So you consider where that is going to take us, as compared to the 200 million cars we have on the road here in the United States, which take about 11 percent of the oil supply generated per day, and you look at the collision course we're on if we don't do something about it. It the demand side is strong, and it will continue to be strong. Oil prices continue to increase. You know, the head of Saudi Arabia basically told our president to get lost when he had a meeting recently with him, and he asked about increasing output.

And so what's happening on the supply side? Not enough, apparently. And we either decide that we're going to look at alternative forms of transportation, all termtive fuels, which gladly the United States is moving very, very rapidly toward. I mean driving — — I never thought I'd drive a CNG car, and I do. And you know, I'm delighted that I can actually drive a vehicle for which I pay 65 cents a gallon. My wife is driving a hybrid, and I never thought we'd have a CNG and a hybrid in our parking lot, but that's where we are. And when you think that some of the other producers are going to have battery—powered cars in a couple of years, and the alternative fuels that are going to make the energy economy I think turn on its head, it is a very, very good thing. Because, you know, enough is enough. And people at this point in time, I think, are upset enough where they're beginning to pursue other options in the marketplace.

LISA RILEY ROCHE, DESERET NEWS: Governor, is there anything the state can do to deal with these high gas prices? You talked about things individuals like yourself have done to cope with the high costs of gas, switching fuel sources, you talked about maybe more public transportation. Those are all individual choices. What about the state? Is there any role for state in dealing with these high energy costs?

GOVERNOR HUNTSMAN: Well, I guess we could send nasty letters to OPEC, but that's not going to do anything. Already we're probably in the bottom quartile of gas prices. You know, I think the average today in the state was probably three bucks 69 cents, which is maybe a dime to 15 cents below the national average. But, you know, we have an abundance of resources here in the state. We have shale, for example, and and if we're really going to take seriously the idea that energy dependence is important for this country, then we all have to sit around a table, a round table, by the way, and look at what our options are.

And I'm here to tell you that, you know, the innovation that's occurring in the automobile industry is good, and we're all going to have lots of different choices in the next several years to choose from. The way we power our economy, you know, it's going to be the sun, it's going to be the wind, and maybe the atom in, you know, over the next 20 to 30 years, with a grid system that probably is a lot more reliable than it is today. That, you know, pushes demand where it needs to be in various corners of the world.

And the good thing is we in this state, I think, are at the epicenter for change. We have everything available to us. We have, you know, hydrocarbons we can draw from, we have natural gas, a cleaner—burning fuel, we have sun, we have wind, we have biomass, everything we could possibly want. So I think we're doing what we ought to be doing.

You know, we're converting the fleet, we have got an energy efficiency program under way, we have, we're looking at converting the way in which we power our economy over the next twelve years, so that we have more of a multiplicity of options to choose from, all of that is good. I'm going to look as a state at ways that we can do things like telecommute, car pool, you know maybe we can make more efficient use of lanes on highways, and people, call it some sort of congestion pricing index where people — — I've seen what they've done in Asia, they've done it in Europe as well, London specifically, and Bloomberg has tried it in New York, although it failed there. I'm not sure that that's the model that we're looking for, but I think we have to, you know, all options need to be on the table to look at how, you know, we move our people around in a cost—efficient way.

Gladly we have more public transportation to choose from, commuter rail couldn't have come on at a better time, and thank goodness for that. So I think we're doing as much as we can as a state, considering we don't have a lot of control over the international oil market.

ROBERT GEHREK, SALT LAKE TRIBUNE: One thing we do have control over and one thing that was an issue at the federal level is the fuel tax where Senator McCain is proposing a fuel tax Governor Huntsman holiday for the summer. The state has a 24 and a half cent fuel tax. Is that something that you would consider offering a holiday on, at least for the next few months?

GOVERNOR HUNTSMAN: You know, I feel that gas pain that, you know——don't misinterpret that one——that people are suffering. But I don't think it would be a good policy tool here locally. And I say that because the federal government can absorb it much more readily in their budget than we can locally. And let's say you do it from now through Labor Day, I'm not so sure the gas markets aren't going to correct themselves such that that isn't even taken into account and the discount isn't passed on to the consumer is concern number one.

Concern number two is when you quantify that, you know, 23, 24 cents, what does it mean on the other end in terms of projects that don't get done? Pot holes that don't get filled, projects that don't get built. And in a state that's growing as fast as ours, I think you have to look realistically on maintaining mobility, maintaining a network of roads that are properly maintained, and not defer something as important as that. So I would not choose to pursue that as a policy tool.

ROBERT GEHRKE, SALT LAKE TRIBUNE: Should— —

GOVERNOR HUNTSMAN: Totally. It's totally their call. Gladly I don't sit in that seat.

JEFF ROBINSON, KCPW: Governor, the Utah hospitality association is putting together a voter initiative to relax some of the state's liquor laws. You have suggested that might not be necessary because maybe the legislature will take action next session. What do you want to see happen on that front?

GOVERNOR HUNTSMAN: it's a good question, and far be it from me to ever guess what the legislature might or might not do. Let me thank the hospitality industry for doing what they do here in the state. I mean here we have an industry that's gone from 5 billion a year to 6 billion a year. We've gone from 17 million tourists to 20.2 million. We've crossed the 20 million threshold that we set for ourselves right after we were elected, and now we've set a new goal for ourselves which, you know, is 25 million over the next three years, and we'll hit it. And this industry means a lot to our state, and it reverberates through every corner of our state's economy, rural and urban, and it's something our state is very competitive in, the whole travel and tourism side.

Now, if we want to continue to take this industry seriously, I think we need to continue to do things that burnish our image and take care of the obstacles that many perceive to be in the way of continuing travel and tourism expansion. And every time I sit down with the travel and tourism people, they recite the same things over and over again, like our alcohol laws in the state, and I heard loud and clear during the election of '04, and I assembled an alcohol policy review team, and they took a good look at what we could do as a state, what we should do as a state, made recommendations. And I pushed them along early on. And the timing wasn't propitious, and it wasn't to be, and I'm going to continue moving those along. Because I know at some point we're going to hit a point in time where there will be the political will such that we can get some of these things done. And they would include, you know, the ounce and a half pour versus the ounce pour, which we did, and that's not where you leave off by the way. You take some criticism in various excellent newspapers like City Weekly, you know, for not doing enough. But I think we have to remember that it is an iterative process and you go step by step. And this is one step.

Next year I've said that we ought to take a good look at clubs, and I know that's a heavy lift for a lot of people. But let's sit around that round table and have the conversation and get it done. Because it does serve as an obstacle, and I think it does serve as a perception problem. And I think it's about time we address it, and I think if we do it legislatively, it would preempt an initiative which is time consuming, it's costly, and if we can do it legislatively and get it done within the next year, I think that would be a prefered outcome myself.

RICHARD PIATT, KSL-TV: Governor, as you know, a lot of legislators feel, you know, we are what we are, we should just accept us the way we are. How big a priority do you think this should be?

GOVERNOR HUNTSMAN: I tried to figure out, Rich, for a long time what, in fact, we are. We're a state that is moving with lightning speed. Every year we change. We add 100,000 new people to our state, businesses grow, businesses move in, university faculty members move into some great centers of excellence. Travel and tourism continues to boom like never before. And if we want to take seriously our economic destiny, and continue to maintain a certain viability in the marketplace, I think we need to recognize some of these long standing barriers, and deal with them realistically.

KEN VERDOIA, KUED: But you do recognize that there are voices that would view that as sacrilege. That we should hold on to these, whatever these principles are.

GOVERNOR HUNTSMAN: Of course.

KEN VERDOIA, KUED: And that change and evolution could diminish or dilute the purity of the purpose.

GOVERNOR HUNTSMAN: Well, I think that's probably why we're having this conversation, and we're here, and we have a few issues that we still need to work on. And you know, this is why, you know, you do what you do for a living and I do what I do for a living. There are no perfect and elegant solutions for a lot of these issues, and you have to work at them year by year, and keep moving toward, you know, an end point.

And in this case, you know, an end point of, you know, as Calvin Coolidge used to say, "greater normalcy." Not that that's a word, but work toward greater normalcy. And I think we will be, we will have arrived when we have, you know, our travel and tourism folks begin to say, we're hitting the mark, we're able to, you know, compete with the best of the destinations out there, and we're really benefitting the economy of our state.

Which, to me, means we get to pay our teachers, and we get to work on class size reduction, and we get to work on U—star industry clusters. All the things that take a lot of money, and that we ought to be paying for in this state, and we did pay for, and we have, to be sure. That takes a lot of work on the economic generation side. So for as long as I'm in this seat, you know, whether it's the end of the year or another four years, I'm going to keep working on, how do you generate a stronger economy?

And travel and tourism opportunities are abundant for us out there. And when they say we've got a few barriers we need to work on, the removal of which would mean a lot more in the way of opportunity for the state, I say I'm going to go to work on it and see if we can't help.

TOM JORDAN, METRO NETWORKS: While you're talking about economics, a couple of days ago we had in town the undersecretary of state for international trade, and the former prime minister of Australia, both of whom were pitching very hard on the issue of globalization and open markets, but also very strongly on free trade agreements. And south Korea, and Panama, and Columbia are up at the moment. What's in it for us as a state? This is something I know you focus on, but how does this benefit us?

GOVERNOR HUNTSMAN: Well, in the case of John Howard, who was prime minister in Australia for upwards of ten years, now replaced by Mr. Rudd, who's been an interesting head of state for Australia, a chain east speaker, I might add, and I worked on the U.S—Australia free trade agreement early in my career as a trade negotiator, as I did U.S—Singapore, and U.S.—Ausian in the early U.S—Korean relationship.

What you find is that we have the most open market in the world, with an average tariff rate at maybe 2 or 3 percent. And everybody wants into our market. But there isn't such a thing as basic reciprocity with a lot of the other markets of the world. So what we gain by a free trade agreement is forcing the other markets, if you want to continue selling things into our market, which you're doing and you're taking advantage of the open, the most open, largest market in the world, you need to show a little reciprocity, and you need to show a little reciprocity in all the sectoral areas that you've wanted to protect and close for a very long time.

And by a trade agreement you basically are able to open those up, balancing the playing field, which is good for our exporters. And so for every billion bucks you export, and in this state we export about 7 billion bucks, you know, you create 22,500 jobs, which gets right to the bottom line. So that's good for the United States. And so free trade agreements, by and large, are a good instrument for economic growth.

Now, the question going forward, really, will be, well what about labor rights? And what about environmental standards, which are things that we probably always ought to stand tall on as a country, but you'll find many of the countries of the world that will say, we're not to that level of development, we can't negotiate if you're going to impose these standards on us, we're just not there. So that will be the wrinkle going into the future.

But there's been an interesting, you know, change in the global environment over the last couple of years, you know. There's a lot of anti—trade sentiment out there. There's a lot in the way of state—run corporation empire building, particularly among the gasoline and oil monopoly companies, whether the Russians or the Venezuelans or the Iranians, and there's a lot in the way of, you know, heightened nationalism. Like you're seeing in China, just to give you one example.

And all of these things kind of stand in the way of the free flow of people and goods and commerce and ideas. And the world's just a little murky right now, you know, in terms of what Thomas Freedman would have called a "flat world." And he would probably argue it's maybe a temporary disruption. But as I look around the world, not that I'm paid to do that any more, you see a lot of uncertainty right now, that is a little disquieting.

ROBERT GEHRKE, SALT LAKE TRIBUNE: Your former chief of staff is trying to run for congress against Chris Cannon in June. Have you taken sides in that contest?

GOVERNOR HUNTSMAN: No, and I'm not going to take sides. I wish them both the best.

ROBERT GEHREK, SALT LAKE TRIBUNE: Do you think he'd be a good congressman?

GOVERNOR HUNTSMAN: I'll support whomever comes out of that primary. I don't live in that district. The last I looked, he didn't either.

ROBERT GEHREK, SALT LAKE TRIBUNE: He took a pretty good shot at you during the convention when he said global warming was a farce. What is your response to that? And did you discuss that with him? I understand you did discuss that with him before your speech.

GOVERNOR HUNTSMAN: No, I didn't discuss it with him, no. But I don't think returning a cheap shot makes for a good political dialogue, so I just won't do that. I wish them all the best.

LISA RILEY ROCHE, DESERET NEWS: Governor, your public safety commissioner has suggested that it might be time for Utah to stop issuing concealed weapons permits to people— —

GOVERNOR HUNTSMAN: But you like yours though, don't you?

LISA RILEY ROCHE, DESERET NEWS: Great come—back, there. Is that something you agree with? Is it time for Utah to stop doing that? Utah's already stopped issuing them to people who don't live in the United States because of difficulties in conducting required back ground checks.

GOVERNOR HUNTSMAN: Right.

LISA RILEY ROCHE, DESERET NEWS: And other issues. But the number of these permits just continues to climb, you've had to staff up to deal with these permits, and as I said, the public safety commissioner and others in his department have suggested it's difficult to police the people that are teaching out of state, the people that are getting these Utah permits, as well as to stay on top of whatever criminal activities they might end up being involved in. Is that something you're going to agree with and push for?

GOVERNOR HUNTSMAN: Well, it's a good point, and it's a very valid discussion. And when I heard about the international licensing that was going on, I asked our good commissioner, Commissioner Duncan, why we were doing that, and if, in fact, these foreign destinations were giving us reciprocity, which of course, they're not. So why are we wasting a second doing it? And I told him I didn't like it and I thought we ought to do away with it, and he agreed.

And I think the last legislative session there was this area that was actually remedied, and so now we've got, you know, other states, and you know, to get back to what we were discussing about in international trade a minute ago, is the reciprocity. You know, if there isn't reciprocity in terms of what we're able to do in their state, I question whether or not we ought to actually make that licensing available. And I'll sit down with our commissioner and get the facts on that, but I think it's a very real question and concern that we need to look at.

LISA RILEY ROCHE, DESERET NEWS: My understanding, though, is it's not a reciprocity issue, it's more a question of why are we not treating these as we do a drivers license? Utah doesn't issue drivers licenses to people who don't live in the state, but we honor those licenses from other states, as Utah licenses are honored. But if that's already happening, why do we need to be issuing these permits? I think that was the question that they were getting to yesterday.

GOVERNOR HUNTSMAN: And it's a good question. And like the international permitting and licensing which we've addressed and done away with, I'm going to take a look at this one and see what needs to be done, and make sure it is safe and fair to all concerned.

KEN VERDOIA, KUED: Governor, you will soon be part of a couple of significant events to benefit the campaign of John McCain for president of the United States, a couple of important local events. You've been a stalwart from the early days with Mr. McCain, Senator McCain, in supporting his bid. Is it in John McCain's best political interest to have the sitting president of the United States openly campaign for him? Or is there, in fact, too much negative bagage associated with President Bush and his very low ratings when it comes to domestic policies and foreign policies?

GOVERNOR HUNTSMAN: I think the president still does very well with Republicans when it comes to fund raising, and I think that's where he's spending a lot of his time, is by raising money for the Republican party and supporting candidates in various corners of the country, so I think the president is widely regarded as a party builder in that sense, and will be here not only as a party builder but as one who is helping John McCain, who of course he ran against in a vigorous campaign in 2000, and I think he'll be successful in helping to raise money for John McCain. And that, from what I understand, is his intention, and we'll see how that goes.

KEN VERDOIA, KUED: And you clearly keep the two separate. It's one thing to raise money, it's another thing to campaign among the general populace.

GOVERNOR HUNTSMAN: Well, I think they've been together during a couple of events, and that's something that the McCain campaign decides, I'm sure, on be an issue—by—issue and an event—by—event basis. Clearly they differ on issues, and those differences have come out. But the one thing that must be done in a presidential campaign is the fund raising aspect.

And until somebody comes up with a better mouse trap for financing campaigns, which I wish somebody would do, you know, there is these sums of money that must be raised, and it's kind of like the old arms race on both the Democratic side and the Republican side, and it's like there's no end in sight. A little bit like gas prices, you know? Let's be rational about this.

So it's fund rising be that is part of the process, it is an indispensable part of the process at this point, and John McCain has done quite well on the fund raising side. Probably not as well as Barack Obama has done, but he's doing much better, and I think the president will help to fortify that capability. Certainly in the state, and probably in the region, here.

TOM JORDAN, METRO NETWORKS: If you had a chance to tell the president something when he arrives next week, and you get a moment of conversation, what would you want to tell him that he could do to help Utah, or the west, in some way?

GOVERNOR HUNTSMAN: Well, the mountain biking is great. It's a whole lot better than Maryland. Of course I can't do that right now. But the message coming out of our state is very much tied to our economic vitality, and you know, this is a region, a state that is tied to innovation, to new ideas, to moving ideas out to the marketplace, to creating jobs, and I think we're a very, you know, 21st century state, increasingly becoming that.

And I hope the country maintains that eye on the ball as it relates to innovation. Using our universities as they ought to be used, using basic research as basic research ought to be used. One of my big laments, and I know a lot of people have the same lament, is what's happening to basic research in America? You know, it is the funding for basic research from which all good ideas are ultimately derived, whether cures for human disease or breakthroughs in energy. You know, what's happening on basic funding for research?

Are we going to be a cutting—edge nation, or are we going to be a nation that sort of cedes that to other rapidly—developing countries in the world? I think that we're innovative, we're creative, we're entrepreneurial, and I think the president will get a very good sense of that when he's out here why we are, in fact, one of the best economies in the country and the best managed states.

KEN VERDOIA, KUED: Governor, we have only about 30 seconds left, and any observer of this news conference would recognize that you are wearing the sling, recovering from the surgical repair of your injury. Just can you give us a quick 15—second update on your recovery from the surgery?

GOVERNOR HUNTSMAN: Doing great. The sling comes off in a week, and I start physical therapy, and will be back on a mountain bike hopefully shortly after that. The moral of the story is, listen to your doctor. Whatever your doctor tells you to do, hang on every word and you'll do just fine. Don't make the mistake the governor made.

KEN VERDOIA, KUED: That concludes this edition of the Governors Monthly News Conference. A reminder that a transcript of this and every news conference is available on line courtesy of KUED and the Utah Education Network. Good night.

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