As the United States faces spiralling fuel prices as a result of the crisis in the Persian Gulf, the country must find new sources of energy, President Bush's top legal and ethical adviser told an audience of more than 70 students at the Law School yesterday.

Alternative fuels such as natural gas and ethanol are ideal replacements for fossil fuels, said C. Boyden Gray '64, legal counsel to Bush since 1981.

"The most important renewable source is agriculture," said Gray, referring to ethanol, a fuel distilled from grain.

Gray also said that conflicts between the Department of Energy and the Environmental Protection Agency (EPA) continue to plague a coordinated energy and environmental policy.

Jurisdictional conflicts and troubles in Congress, are responsible for delays in passing legislation like the Clean Air Act, he said.

"Policy becomes a secondary player to who's on top and who's on the bottom," Gray said.

Gray also defended Bush's attempt to integrate federal environmental and energy policy. Some administrative officials hope to bring the EPA, currently an independent agency, into the cabinet.

On the environmental side, Gray showed his loyalty to the administration line on pollution policy by pushing for a "credits" program to reduce toxic emissions.

The system of credits will allow clean industrial plants whose toxic emissions are lower than federal regulations to sell their credits to firms not meeting federal standards, Gray said.

With increased federal and state regulation promoting more efficient sources, factories and automobiles will release less emissions, Gray said.

An ongoing experiment in Southern California using "clean fuel" has been environmentally as well as financially successful, he added.

The cost of fuel, clean or not, will probably rise in the next few years, Gray said.

Despite his belief that there will be an increased gasoline tax, Gray said that the Clean Air Act will stress a supply-side approach that will encourage energy efficiency.