[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




OVERSIGHT HEARING ON COMPROMISING OUR NATIONAL SECURITY BY RESTRICTING 
    DOMESTIC EXPLORATION AND DEVELOPMENT OF OUR OIL AND GAS RESERVES

=======================================================================

                           OVERSIGHT HEARING

                               before the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                    APRIL 12, 2000, WASHINGTON, DC.

                               __________

                           Serial No. 106-91

                               __________

           Printed for the use of the Committee on Resources


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
           Committee address: http://www.house.gov/resources



                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
67-822                     WASHINGTON : 2000

                                 ______

                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                NICK J. RAHALL, II, West Virginia
JIM SAXTON, New Jersey               EDWARD J. MARKEY, Massachusetts
ELTON GALLEGLY, California           BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee       DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado                PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California        ENI F.H. FALEOMAVAEGA, American 
WAYNE T. GILCHREST, Maryland             Samoa
KEN CALVERT, California              NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California         SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming               OWEN B. PICKETT, Virginia
HELEN CHENOWETH-HAGE, Idaho          FRANK PALLONE, Jr., New Jersey
GEORGE P. RADANOVICH, California     CALVIN M. DOOLEY, California
WALTER B. JONES, Jr., North          CARLOS A. ROMERO-BARCELO, Puerto 
    Carolina                             Rico
WILLIAM M. (MAC) THORNBERRY, Texas   ROBERT A. UNDERWOOD, Guam
CHRIS CANNON, Utah                   PATRICK J. KENNEDY, Rhode Island
KEVIN BRADY, Texas                   ADAM SMITH, Washington
JOHN PETERSON, Pennsylvania          CHRIS JOHN, Louisiana
RICK HILL, Montana                   DONNA MC CHRISTESEN, Virgin 
BOB SCHAFFER, Colorado                   Islands
JIM GIBBONS, Nevada                  RON KIND, Wisconsin
MARK E. SOUDER, Indiana              JAY INSLEE, Washington
GREG WALDEN, Oregon                  GRACE F. NAPOLITANO, California
DON SHERWOOD, Pennsylvania           TOM UDALL, New Mexico
ROBIN HAYES, North Carolina          MARK UDALL, Colorado
MIKE SIMPSON, Idaho                  JOSEPH CROWLEY, New York
THOMAS G. TANCREDO, Colorado         RUSH D. HOLT, New Jersey

                     Lloyd A. Jones, Chief of Staff
                   Elizabeth Megginson, Chief Counsel
              Christine Kennedy, Chief Clerk/Administrator
                John Lawrence, Democratic Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held April 12, 2000......................................     1

Statement of Members:
    Delay, Hon. Tom, a Representative in Congress from the State 
      of Texas...................................................    37
        Prepared Statement of....................................    39
    Fosella, Hon. Vito, a Representative in Congress from the 
      State of New York..........................................    45
        Prepared Statement of....................................    47
    Gekas, Hon. George W., a Representative in Congress from the 
      State of Pennsylvania......................................    20
        Prepared Statement of....................................    22
    Largent, Hon. Steve, a Representative in Congress from the 
      State of Oklahoma..........................................    10
        Prepared Statement of....................................    13
    Pallone, Hon. Frank, a Representative in Congress from the 
      State of New Jersey, Prepared Statement of.................   286
    Udall, Hon. Mark, a Representative in Congress from the State 
      of Colorado, Prepared Statement of.........................    58
    Vento, Hon. Bruce F., a Representative in Congress from the 
      State of Minnesota.........................................     4
        Prepared Statement of....................................     7
    Young, Hon. Don, a Representative in Congress from the State 
      of Alaska..................................................     1

Statement of Witnesses:
    Becker, Dan, Sierra Club.....................................   200
        Prepared Statement of....................................   203
    Bedell, Charles, National Ocean Industries Association.......   257
    Ebel, Robert E., Director, Energy Program, Center for 
      Strategic and International Studies........................   146
    Gee, Robert W., Assistant Secretary for Fossil Energy, U.S. 
      Department of Energy.......................................   105
        Prepared Statement of....................................   108
    Geller, Howard, Executive Director, American Council for an 
      Energy-Efficient Economy...................................   161
        Prepared Statement of....................................   163
    Hayes, David J., Deputy Secretary, U.S. Department of the 
      Interior...................................................    94
        Prepared Statement of....................................    96
    Hegna, Joseph H., Arco Alaska Inc............................   185
        Prepared Statement of....................................   188
    Hood, Gerald L., Secretary-Treasurer, General Teamsters Local 
      959, Anchorage, Alaska.....................................   173
        Prepared Statement of....................................   175
    Johnston, Honorable J. Bennett, Johnston & Associates, Inc...    66
        Prepared Statement of....................................    68
    Jordan, Jerry, Independent Petroleum Association of America..   147
        Prepared Statement of....................................   150
    McCormick, Walter B., Jr., President and CEO, American 
      Trucking Associations......................................   259
        Prepared Statement of....................................   261
    Surprenant, Monica T., Chairwoman, Louisiana State Mineral 
      Board......................................................   265
        Prepared Statement of....................................   267
    Thomasson, M. Ray, President, American Association of 
      Petroleum Geologists.......................................   132
        Prepared Statement of....................................   134
Additional Material Supplied:
    Editorial titled ``Energy Problems Can't Be Drilled Away''...    52
    Mr. Gekas' Bill..............................................    28
    Rothe, Ann L., Executive Director, Trustee for Alaska, 
      Prepared Statement of......................................   219
    Sierra Club, The best selling car in America could get 42 
      mpg, information submitted by..............................   215
    Letter from American Petroleum Institute.....................   274


 
OVERSIGHT HEARING ON COMPROMISING OUR NATIONAL SECURITY BY RESTRICTING 
    DOMESTIC EXPLORATION AND DEVELOPMENT OF OUR OIL AND GAS RESERVES

                              ----------                                
  


                       WEDNESDAY, APRIL 12, 2000

                  House of Representatives,
                            Committee on Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 11 a.m., in room 
1324 Longworth House Office Building, Hon. Don Young (chairman 
of the committee) presiding.
    Present: Representative Young.
    The Chairman. [presiding] The committee will come to order.

 STATEMENT OF THE HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF ALASKA

    The Chairman. I want to thank all of you for participating 
in what will be, I hope, an interesting hearing regarding our 
national energy policy. It's not the first hearing we've had. 
We've had hearings over the years considering energy policy. 
They have not produced very much. We hope this will produce 
something other than just comments.
    This hearing will focus on the alarming fact that while our 
nation is one of the largest consumers of fossil fuels, it 
lacks a coherent energy policy. Americans are forced to rely on 
what I call a policy of knee-pad diplomacy, begging those 
countries that produce our fossil fuels. Essentially, our 
energy policy consists of, very frankly, the Clinton-Gore 
Administration sending diplomats abroad, as I mentioned, to beg 
other nations for the oil necessary to supply our national 
demand.
    This committee's jurisdiction relates to public lands so 
our focus today will be on how public lands could play a 
meaningful role in protecting our national security by 
increasing domestic production and reducing our reliance on 
foreign sources of energy. Coming from Alaska, I can't think of 
a better example of unrealized potential than the coastal plain 
of the Arctic National Refuge, the development of the coastal 
plain of ANWR, which clearly holds the most significant 
untapped oil and gas reserves in our nation.
    If I may digress, and I'm the chairman; I guess I can, from 
this opening statement, it seems just like deja vu, we were in 
this room, this exact room, in 1973 in March of that year, 
discussing our dependency on foreign imported oil. At that time 
it was 36 percent and we were talking about Alaska and the 
necessity for building a pipeline to deliver the largest 
deposit of oil that we knew of at that in Prudhoe Bay.
    Some of the arguments we'll hear against this proposal of 
ANWR will be exactly the same we heard back in 28 years ago. I 
would like to remind my audience that some of you, especially 
younger people, go back and study the record and see some of 
those comments that were made.
    To truly understand the importance of our Alaskan oil, we 
need to take a trip back in time, as I just mentioned. 20 years 
ago, the Trans-Alaskan pipeline actually, in fact, was 
completed in 1976 and 2 million barrels per day and foreign 
imports were around 35 percent. And, remember, it was 37 
percent when we started. Now, in the year 2000, the Trans-
Alaskan pipeline is moving about 1 million barrels a day and 
foreign oil makes up 57 percent of our domestic demand.
    There's no question the State of Alaska holds a place of 
promise when it comes to producing crude oil. However, in the 
face of declining domestic supplies, the administration refused 
to put in place an energy policy that includes the development 
of significant prospects on Federal lands, frankly, including 
Alaska. If I may say so, neither did the past administrations. 
This makes my sixth administration I've been under and the 
Congress itself has not seen fit to set forward a policy that 
develops all forms of energy and not dependent on just one.
    In fact, looking to bolster production on Federal lands, 
this administration has done the reverse. Our domestic oil 
production is the lowest it's been since World War II. Keep 
that in mind. It's the lowest it's been since World War II as 
far as domestic production. And I've often said anybody who 
owns 56 percent or 57 percent of your company, you're going to 
do exactly as they tell you to do.
    The major factor in the decline of domestic production, 
down 17 percent since 1992, is the rise in regulations and 
taxes. The administration is currently finalizing regulations 
that will increase domestic producer's tax burden by over 60 
million per year.
    What about coal? Let's get away from oil. More than half 
the electricity produced in this country is generated by coal-
fired power plants and yet the administration utilized the 
Antiquities Act to lock up the cleanest burning coal in the 
lower 48. This is not a policy that promotes energy security or 
important high-paying American jobs.
    While we feel the impact at the gas pump, and all of us do, 
high oil prices and our dependence on foreign sources of energy 
have larger consequences. Our economy is prospering, but we 
need the stable source of natural resources to meet our energy 
needs and sustain our economic growth. Importing such high 
volumes of foreign fossil fuels account for one-third of our 
trade deficit. It's not automobiles, it's not TVs. In fact, it 
is oil.
    Americans are spending $300 million per day on foreign oil. 
This added up to $100 billion last year. That is $100 billion 
of American dollars, American job security, very quickly, are 
exported each year.
    Not only can a declining domestic industry affect American 
jobs, our dependency on foreign oil can have catastrophic 
effect on our economy. While the administration often claims 
credit for the prosperous economy we now enjoy, this can 
quickly change. If you don't believe me, check the NASDAQ as of 
yesterday.
    It has been reported that a $10.00 increase in Federal law 
equals .5 percent increase in inflation, a .25 percent decline 
in economic growth. Suppliers like Iraq continue to increase 
their exports to the United States. In January 1997, Iraq 
exported less than 100,000 barrels per day to the United 
States. By last December, that number had steadily increased to 
nearly 800,000 barrels per day.
    When we went to war against Saddam Hussein less than 10 
years ago to have a greater role in providing for our domestic 
energy needs, do we really trust foreign suppliers like 
Algeria, Angola, and Iraq enough to give them the level of 
control over our economy and energy security? It's not in our 
national interests to become so reliant on foreign oil that 
countries like Iraq can exert so much control over our economic 
future.
    The root of this problem is the development of our domestic 
oil and gas resources. The USGS forest as much as 16 billion 
barrels to be typically recovered from Alaska. The single new 
source of domestic production will replace Iraq's import for 
more than 54 years. Our nation holds vast natural resources 
with more discoveries being made daily. Not only are our 
domestic natural resources plentiful, but we have the most 
stringent environmental laws in the world to ensure that 
there's a balance between our energy needs and environmental 
safety.
    Clearly we can do both. Frankly, in Alaska we've done that. 
We've proven with a track record of safety producing oil and 
gas resources for decades in the Arctic. With the advances in 
technology on ice roads and better directional drilling, the 
environment is protected. Federal public lands and Federal 
waters hold significant promise and should be developed to 
secure America's energy needs. The simple fact is Americans are 
dependent upon oil, gas, and other natural resources. We need 
electricity to live, oil to heat our homes, and gasoline to 
move our airplanes, cars, and buses.
    Even that famous association that supports me every day, 
the Sierra Club, will be testifying today. They need these 
resources to carry out day-to-day business. They like, many 
organizations, utilize the Internet. A large percentage of the 
total electricity is consumed in activities related to the 
Internet. The increasing use of the Internet is estimated to be 
responsible for more than half the growths in electricity 
demands. A two megabyte e-mail uses a pound of coal or five 
ounces of oil. Add up all the messages that are sent, and 
you're talking about a significant amount of fossil fuels.
    Let's face it. Whether or not you support the production of 
natural resources, you use them every minute of every day and 
they are needed to live if you want to live as American people 
and all those other people in the world should live.
    Americans use about 6 million barrels of oil in the United 
States and more than 56 percent of this volume is supplied by 
four nations. Even if you support alternative sources of 
energy--and, by the way, not many of you who support 
alternative sources support it. I don't know how many times 
I've suggested that you support nuclear power, you objected. I 
suggested that you support more coal burning, you object to 
that. I suggest hydropower and you object to that. Each time, 
you object to alternative sources of fuel then, in fact, you 
put yourself on more dependency on foreign sources of energy.
    The United States already holds an abundance of natural 
resources that we must develop among our Federal lands because 
we do own, the Federal Government, the American people, own 
about 875 million acres of land and the Federal waters on the 
Outer Continental Shelf.
    This nation needs and deserves a coherent energy policy 
that includes all forms of energy, not just fossil fuels. But 
so far, we depend so much on fossil fuels any time one of the 
foreign countries burps, we have a stomach ache and we need 
that fuel. We shouldn't go through that.
    With that, I'll yield to the gentleman from Minnesota.

   STATEMENT OF THE HON. BRUCE F. VENTO, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MINNESOTA

    Mr. Vento. Well, thanks, Mr. Chairman. I'll put my full 
statement in the record.
    I'm pleased to note our friend and former colleague, 
Senator Johnson, and others that are here and so interested. 
It's good to see him back. We've worked with him on the many 
different energy problems over my career starting with, I might 
mention, synthetic fuels.
    [Laughter.]
    A name that will live in infamy. But, in any case, in his 
work on nuclear power and waste and with our former colleague 
and our mentor, Mo Udall, and so many others, obviously the oil 
issue is one that separates us. I feel a little bit like a 
hostile takeover here today in the Resources Committee with 
regards to the folks that have a view with regards to ANWR.
    My view, of course, as a sponsor, lead sponsor, which, with 
170 members joining me in the House on this measure to protect 
and set aside this area as wilderness long been a debate about 
where we're going to go in terms of how we deal with our 
Federal lands. Actually, while the chairman has pointed out 
that domestic production of oil and gas are up from 89 to 98 
and a substantial portion of that, about 25 percent now, as 
opposed to about 15 percent comes off the Federal lands, so 
we've actually increased the amount of oil.
    Certainly there's a potential to do a lot more with the 
existing leases that are outstanding through something called 
due diligence as opposed to building up portfolios of leases 
that are not being developed and utilized. Of course, there's a 
lot of reasons for that. Some will suggest that the price of 
oil has to go up. There are a lot of other factors that have to 
be considered in the mix. Obviously, if oil stayed at $30.00 a 
barrel, some of that oil in Texas that's been remaining and is 
hard to recover and expensive to recover would all of a sudden 
be possible to bring to the market, as an example.
    But the fact that we have had a problem and that we have 
been vulnerable and, to an extent, a greater increase in terms 
of imports is evident to all of us. The fact is that in the 
mid-1970's, it was summer and the range of 35 percent was 
imported. Today it's over 50 percent as the chairman has 
pointed out.
    But part of that, of course, is due to the consumption 
aspect of what we're dealing with and how much we're using. 
And, considering on a global basis that we're using about 1/5 
the energy when we have a population that is, of course, 5 
percent of the total world population gives us some indication 
of where we could make adjustments and where we may not be 
willing to make those.
    But, clearly, as far as OPEC is concerned, OPEC now is 
responsible for less than half of the oil that we import comes 
from OPEC. So we've actually, in a sense, reduced the 
dependence on OPEC, but increased our dependence on foreign 
sources of oil.
    And, of course, we know ourselves that we're part of the 
international marketplace. Even some of this oil from the North 
Slope that we keep telling ourselves is pretty much for 
domestic consumption, especially on the West Coast, even a 
small portion of that, about, I guess it's, actually, Mr. 
Chairman, I misstated this someone was pointing out. I pointed 
out 5 percent and they said I was overstating it. It's actually 
5.5 percent so I was being a little conservative.
    But that is exported and, obviously, based on the policies 
that you have sponsored, Mr. Chairman, we can obviously look 
forward to exporting even more of that oil down the road. But 
we are part of the international marketplace in terms of these 
issues.
    Now I think that, while we've opened up a lot of areas in 
Alaska most recently, of course the National Petroleum Reserve 
has been opened and available. I expect this takes a long time 
to come on line is what my competition might say, but that oil 
has been opened up. And there is reason to believe that these 
areas, and, of course, the demise of oil production in Alaska 
has been long predicted but it has not occurred. Frankly, there 
has been and is substantial areas where there is oil possible 
from West Sak and other areas to be developed that will 
continue to keep that pipeline relatively full.
    That is say, of course, and, of course, the environmental 
problems and concerns we have with regards to wildlife are 
something we can debate for a while. But, clearly, I think the 
values with regards to ANWR, with regards to its diversity and 
its importance in terms of the Native American group, the 
Gwich'in that are there, is more important. It reminds me of 
our friend, Geraldine Ferraro, who we served with who said that 
some of us seem to know the cost of everything and the value of 
nothing.
    So I do think, as a nation, we need to look at continuing 
to try and set aside some of these special areas, especially to 
balance that off with meeting our economy and other needs, as I 
said in the context of diligence, in the context of work that 
needs to be done.
    And to recognize the limitations that we have with regards 
to spills. There have been, you know, literally hundreds of 
those spills that have occurred in the Trans-Atlantic pipeline 
since the late 1970's. There are many changes, environmental 
changes, that have taken place there that are of concern. We 
can take about ice roads and dewatering activities that gone 
on. We can talk about the small footprint. But, while the size 
is small, the effect of it is very profound in terms of what 
goes down.
    Mr. Chairman, I, obviously, look forward to the hearing 
from this. This hearing is a little bit of a mystery. By some 
it's been perceived that there's a great threat and the 
administration's energy policy is compromising our sovereignty 
by some mysterious rogue states and international schemes. But, 
fortunately, our caped crusader that wears a blue sportscoat, 
Mr. Richardson----
    The Chairman. And now the gentleman's time has run out, 
when you're talking about the----
    Mr. Vento. And his lucky blue sportscoat has been 
successful in beating down the opposition. So I don't think 
there's any great mystery. I don't think this is going to 
compete for a script with James Bond. I think that or do we 
need any more black helicopters added to the mix of this issue.
    The Chairman. The gentleman's time has run out.
    Mr. Vento. We have some problems and hopefully we'll be 
able to deal with it in a rational way. And, Mr. Chairman, 
thank you for the time.
    [The prepared statement of Mr. Vento follows:]

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    The Chairman. The gentleman's time has expired. I 
appreciate it and I'd just like to clarify one thing. Waiting 
for 8,650,000 a day from other countries, the majority is from 
the OPEC countries.
    No. 2, the money from the oil that's been supposedly 
exported from Alaska is 55,000 barrels a day of heavy crude; 
55,000 barrels of oil from California. And your State alone, I 
believe, exports about 16,000 barrels of energy in some form.
    Mr. Vento. Mr. Chairman, if I might reply. This week we're 
making the ultimate sacrifice. A brewery in my district, a 
brewery, is going to now start producing ethanol.
    The Chairman. Ethanol, which has cost more money to produce 
than--it takes more energy to produce ethanol than the ethanol 
that's produced to produce energy.
    Mr. Vento. Yes. But we're all praying that the ethanol 
production won't cut into the beer production.
    The Chairman. All right. I appreciate that.
    The gentleman, Mr. Largent, the first panel up today is Mr. 
Largent was here first and he gets to speak first. Steve.

   STATEMENT OF THE HON. STEVE LARGENT, A REPRESENTATIVE IN 
 CONGRESS FROM THE STATE OF OKLAHOMA; ACCOMPANIED BY THE HON. 
GEORGE W. GEKAS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
PENNSYLVANIA; THE HON. TOM DELAY, A REPRESENTATIVE IN CONGRESS 
     FROM THE STATE OF TEXAS; AND THE HON. VITO FOSELLA, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

              STATEMENT OF THE HON. STEVE LARGENT

    Mr. Largent. First of all, that I am a member of the Energy 
and Power Subcommittee on Commerce. I come from an oil-
producing State, the State of Oklahoma. My hometown and the 
center of my district is Tulsa, Oklahoma; it's known as the oil 
capital. So this is an issue that I am knowledgeable of and am 
sensitive to. And so I appreciate you holding this hearing and 
giving me a chance to testify.
    I read, just as an aside, I read a fascinating book called 
The Prize by Daniel Yergin and would highly recommend it to 
this committee. In particular, it's a book that Daniel Yergin 
won the Pulitzer Prize and it's basically the history of oil in 
this country, in fact in the world. And it may be a little 
intimidating because of its length. If it is, then you should 
know that PBS also produced a videotaped series of this book 
called The Prize. And I would highly recommend it to my 
colleagues.
    And so I would like to deliver my testimony at this time.
    In response to the recent upsurge in prices at the pump, 
Congress and the President are scrambling to decrease prices. 
Suggestions include eliminating 4.3 cents per gallon Federal 
gas tax, pressuring OPEC nations to produce more oil, and 
encouraging the development of alternative energy sources. 
While I understand the logic and support aspects of each of 
these ideas, I believe the real answer may literally be right 
under our noses.
    We need to focus on developing a long-term energy policy 
based on self-reliance. This policy must promote domestic oil 
and gas exploration and production. Rather than directing our 
efforts at short-term Band-Aid fixes, we need to work to 
prevent future price fluctuations. We need to stop treating the 
symptoms of our dependence on temperamental foreign producers 
and work to find a long-term cure.
    Every administration since Eisenhower has concluded that 
the level of oil imports threatens national security. Earlier 
this year, the Clinton Administration released a section 232 
analysis which concluded that imported oil poses a serious 
threat to our national security. Because our economy is based 
on energy and, more specifically, petroleum, America should be 
prepared to meet as much of this need as we can. While I 
support free trade and relationship building between the United 
States and OPEC nations, it is unhealthy for this relationship 
to threaten American economic independence.
    During the last few years, the American oil industry has 
been overregulated and overtaxed. The administration's 
regulations place ridiculous restrictions on how, where, and 
when producers can work. Producers are subject to excessive 
reporting and permitting rules that increase their overhead, 
hurt their profit margins, and decrease their likelihood of 
survival.
    There are not one or two big regulations that harm 
producers. Rather, there is a vast mosaic of rules and 
restrictions from several agencies that interact to slow 
production and frustrate producers.
    We need to develop a tax policy that helps this vital 
industry. We should develop a tax policy that eliminates the 
net income limitation and 65 percent net taxable income limit 
on percentage depletion. The tax policy should also modify the 
alternative minimum tax. Then we need to save marginal oil 
production through an aggressive tax incentive program. 80 
percent of the oil produced in Oklahoma is from marginal wells, 
wells that produce less than 10 barrels of oil per day.
    Regulations and perverse tax incentives have cost the oil 
industry 65,000 jobs, many of which were in my State of 
Oklahoma. Curiously, domestic crude oil production has 
declined, while American oil consumption has increased. Today 
we import 56 percent of our crude to meet domestic demand.
    During the recent gas price increase, politicians of all 
stripes have expressed concern. However, the focus on the 
short-term puzzles me. Rather than wringing our hands and 
sending the Secretary of Energy overseas to plead for increased 
international production, we need to look at the factors that 
have increased gas prices.
    First, the United States needs to reduce regulations on 
domestic producers. While drilling should be safe for workers 
and the environment, producers should be given the freedom to 
run their operations efficiently and effectively.
    Second, the administration and Congress should be willing 
to explore resource-rich areas in the United States, like the 
Outer Continental Shelf, the Rockies, the Arctic National 
Refuge. About half the oil and one-fourth of the national gas 
in the Outer Continental Shelf is in areas that are off-limits 
to exploration. A recent Department of Energy report argued 
that opening these lands to production would not be 
environmentally dangerous.
    Third, the United States should examine energy policies to 
determine the impact that these policies will have on fuel 
prices. Before gas taxes are imposed and before environmental 
treaties are signed, the United States should examine the 
economic impact of these policies.
    In conclusion, without a strategy for reducing our 
addiction to Middle Eastern oil, we will continue to be 
vulnerable to the whims of foreign nations. To prevent future 
reliance on imported oil, the United States should reduce red 
tape on domestic producers, explore oil rich areas in safe 
ways, and evaluate the impact that energy policy decisions will 
have on consumers and our economy.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Largent follows:]

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    The Chairman. Thank you, Mr. Largent. May I congratulate. 
It's rare I have a Congressman stick within 5 minutes. I mean, 
I want to compliment you.
    The Honorable George Gekas from Pennsylvania, would you 
please take the witness stand? Yes, sir, you're up.

               STATEMENT OF THE HON. GEORGE GEKAS

    Mr. Gekas. I thank you, Mr. Chairman. The opening statement 
of the chairman acts as a backdrop for the presentation that I 
am about to make, because the chairman decried the absence of a 
long-term energy policy. And that was endorsed by the gentleman 
from Oklahoma who complained, properly, that whatever policy we 
have is bits and pieces; it's going to the OPEC companies and 
begging for more production, begging them to sell us more oil. 
That's some policy that we see in effect.
    So what we need, the chairman says and Mr. Largent agrees, 
everybody agrees, is a long-term energy policy. The bill that 
I've introduced about 2 weeks ago with the cosponsorship of the 
chairman of this committee, who's name escapes me at the 
moment, oh, Don Young. This piece of legislation crystallizes 
our vision of the long-term energy policy.
    How does it do it? It calls for the immediate formation of 
a bipartisan, blue-ribbon commission that would explore all of 
the alternative sources of energy, all of the tax provisions to 
which Mr. Largent has referred, all of the combinations of 
ethics and conservation and drilling issues that could come 
before it, and determine that, within 10 years, putting X, Y, 
and Z and D and A in place, we could become self-sufficient. 
The goal would be 10 years.
    Before anyone laughs, that's what John Kennedy projected 
for putting a man on the moon and it was done within 10 years. 
We can become self-sufficient in 10 years, I am confident.
    Only recently, for instance, the administration did come 
through, for the first time, in response to the latest crisis, 
on some proposals having to do with tax credits. Unlike 
previous Congresses, which did away with the oil depletion 
allowance which hurt Oklahoma so badly and Texas, back in that 
age, that many wells were capped, the oil depletion allowance 
was a kind of a tax credit that could have helped was ripped 
away from the books and wells were capped.
    On top of that, previous Congresses imposed excess profits 
taxes, exactly the wrong kind, that's a disincentive to 
drilling and to investing and to do our domestic self-
sufficient work. And so this commission that I envision would 
analyze all of these and return to a sane prospect of tax 
credits and exploration incentives for the domestic market.
    And offshore drilling, as the gentleman from Oklahoma says, 
is not going to allow the Continental Shelf to sink in and lose 
the whole country while we drill for oil. It will take 
conservation measures and environmental issues into 
consideration. But we need to do that.
    So, just as the wording of the bill itself says, this 
commission would explore alternate sources of energy: ethanol, 
solar power, electricity, natural gas, coal, hydrogen, wind 
energy, and any other forms of alternative power sources that 
the imagination can conjure up. Not to mention the initiatives 
that are purely American in energy, ever since oil was 
discovered.
    So we can do it; 10 years and we'd become self-sufficient. 
No more begging OPEC. No more relying on 55 percent of our 
energy to come from foreign sources. It's a national security 
issue, as well as a domestic security issue. I urge everyone to 
join the chairman and me in the formation of this commission 
through this bill.
    By the way, what this would do, it seems to me, would 
amalgamate all the ideas. There are some people who would think 
tax credits are the real way to accomplish self-sufficiency. 
Others think that unabated Continental Shelf offshore drilling 
would do it. Others believe that changing the price schedules 
and doing some other kinds of tax improvements would help.
    This commission, made up of experts that we would have a 
role in choosing, would put all of this together and come 
through with a nice, comprehensive, long-term energy policy 
that, little by little, will eat away at our dependency on OPEC 
and bring about self-sufficiency and make us absolutely 
independent politically, domestically, and internationally.
    I thank the chairman.
    [The prepared statement of Mr. Gekas follows:]

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    The Chairman. I thank you, Mr. Gekas. I have just a couple 
of questions and I am the sponsor of that bill and you do know 
my name. That's going to cost you a lot of money, by the way.
    Mr. Gekas. Yes.
    The Chairman. But when's the timeframe if that bill is to 
pass, which, I agree with you, Congress can never agree.
    Mr. Gekas. Yes.
    The Chairman. Mr. Vento wants to conserve his into 
posterity.
    Mr. Gekas. I'm not wed to any timetable because I really 
cannot fathom how best to get it started, but if we would pass 
this bill tomorrow and have it signed into law, I believe that 
by the end of this year, this commission would be fully at work 
and we could have a report within a year to give us the 10-year 
plan.
    The Chairman. OK. Before we go to any other questions, Mr. 
DeLay, welcome aboard. We are glad to have you here. We have 
heard from Mr. Largent and Mr. Gekas and you're up now.
    Mr. Gekas. I'm going to give you a copy of my bill, to 
start.
    [The Bill H.R. 4035 follows:]

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    The Chairman. And, by the way, what's the number of that 
bill, Mr. Gekas? What's the number?
    Mr. Gekas. This is H.R. 4035.
    The Chairman. 4035. OK, good. Go ahead, Mr. DeLay.

STATEMENT OF HON. TOM DELAY, A REPRESENTATIVE IN CONGRESS FROM 
                       THE STATE OF TEXAS

    Mr. DeLay. Well, thank you, Mr. Chairman and I apologize 
for being late. There's a lot going on before we recess Friday.
    [Laughter.]
    I'm hearing calls for Thursday.
    Mr. Chairman, I will focus on the restrictions in 
exploration and development of our oil and gas resources and 
the important role that our Federal land policies play in 
framing our domestic energy picture.
    As I speak, our energy policy is in a shambles. Over recent 
years, the multi-use component of Federal lands have been 
sacrificed at the altar of environmental extremism because some 
don't think these lands should be used at all.
    The recent fluctuations in oil and gas prices have served 
to intensify this debate and the stakes have never been higher. 
Our growing dependence on foreign imports have now exceeded 56 
percent of our nation's energy needs and is a direct threat to 
our national security. But the real tragedy here is that all 
could have been avoided were it not for the Clinton/Gore 
Administration's Federal lands policies of lock them up now and 
ask questions later.
     The four Federal land management agencies own nearly one-
third of the land in the United States and with proposals being 
considered to further increase Federal and State land 
acquisition. That percentage is likely to grow each and every 
year. By abandoning an important mission of the multi-use 
Federal land system, the responsible resource extraction and 
energy production, we have increased our reliance on foreign 
nations.
    We have seen the consequences of this anti-energy energy 
policy at the gas pump and in the oil patch. In a little over a 
year, oil prices have fluctuated from some of the lowest levels 
on record to some of the highest. In the process, more than 
136,000 domestic oil wells and 57,000 gas wells have closed up 
since 1997 and we're left at the mercy of OPEC to make up the 
difference.
    But that's only half of it. Layer upon layer of new 
government red tape and bureaucracy advanced unilaterally by 
this administration has undermined the vibrancy of the domestic 
oil and gas industry. Some of these include moratoriums on road 
construction, abuse of the Antiquities Act, restrictions on new 
pipeline and dam construction, obscure interpretations of our 
mining laws, increased fees for offshore production in the Gulf 
of Mexico, and expansive interpretations of the Endangered 
Species and Clean Water Acts that have, in many cases, 
unnecessarily denied permits on public and private lands.
    And these are but just a handful of the harmful policies 
pushed forth by this administration.
    Now, under fire, the President has said we should pass tax 
incentives for small producers. Now the President must have a 
very short memory, because just last year, Congress passed 
incentives for increased domestic oil and gas production as 
part of the Taxpayer Refund and Relief Act. The President 
vetoed this measure just months before prices began to rise.
    In response, even Energy Secretary Bill Richardson admitted 
that the administration was caught napping while the price of 
gasoline jumped to nearly $2.00 a gallon.
    So where can the President act to help the situation? 
First, to the north. He can look toward Alaska, Mr. Chairman. 
In 1995, he vetoed legislation that would have allowed oil 
exploration and development on a tiny portion of the Alaskan 
National Wildlife Preserve. He claimed it would undermine the 
environment, but only three square miles would have been 
affected. The rest of the area, which would have been 
untouched, is the size of Rhode Island.
    In the south, the President should repeal the increased 
royalty fees that this administration unilaterally imposed. The 
Rigs to Reef program in the Gulf of Mexico has proven that we 
can drill for oil in the Outer Continental Shelf using new 
technologies to the benefit of both the industry and marine 
life.
    Such capability is possible across-the-board. After all, a 
sound environment and a prosperous economy are not either/or 
propositions. They go hand in hand.
    Mr. Chairman, it is possible to conserve the environment 
while meeting our domestic energy needs with a minimal 
dependence on foreign sources of energy, but the President must 
take common sense action to do it. And I thank you for allowing 
me to testify.
    [The prepared statement of Mr. DeLay follows:]

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    The Chairman. Thank you, Mr. DeLay, and I understand you 
have to go. I have one question to ask you and Mr. Largent both 
because you've alluded to the closing of wells, the capping of 
wells. Is that a Federal law or are those State laws that 
require the capping, or is that voluntary?
    Mr. Largent. Mr. Chairman, it's my understanding it's all 
of the above. But the State also has certain prerequisites that 
have to be met when you close and cap wells. But it's 
principally an economic decision when you cap a well. When it's 
costing you more to produce it than you can actually make, 
then, economically, it's no longer feasible to keep those wells 
open.
    Then the process that you actually have to follow to cap 
the well, you know, there are EPA concerns, and----
    The Chairman. What I'm looking at, because we lost about 3 
million barrels per day from capped wells from 1986 until now. 
I believe that's about the figure. Maybe I'm wrong. What would 
be wrong with an incentive to keep those wells from being 
capped and using that oil as a reserve? And I'm just I'm 
looking because once it's capped, if I'm not mistaken, it's 
actually plugged.
    Mr. Largent. That's correct.
    The Chairman. And you lose that production, maybe 10 
barrels a day. But if all the wells were available, it seems to 
me, that that would be a possibility that we might want to look 
at.
    One thing I'm looking for all three you gentlemen, you've 
alluded to it, is if we don't get the commission like Mr. Gekas 
has suggested, some of you suggested some ideas. I like, you 
know, you are oil, I'm oil. We sit down with an idea of what we 
can do with oil, beyond what Mr. Gekas is talking about because 
he includes all the energy sources, which we have to do.
    Because I don't think, contrary to what people say, we'll 
ever be self-sufficient in fossil fuels. But we don't have to 
be 57 percent. If we can get back down to 37 percent, 33 
percent, they can't direct us on how we should manage our 
business. That's what they're doing right now. And if you think 
this price is going down, it's going back up again. Read the 
Wall Street Journal yesterday, as, actually, they say, it's 
going to go back up. And so that's one of the things.
    And Mr. DeLay does have to leave. Does anybody have any 
questions for Mr. DeLay?
    Mr. Vento. Just on that point, Mr. Chairman, I won't keep 
him. I appreciate Mr. DeLay working to conclude our business 
tomorrow. He's the leader and, in spite of his, obviously, 
concern about getting the work done.
    But I think that on the stripper wells that, in fact, there 
is, in the administration of those activities in terms of 
taxes, that there are the opportunity at least to, in fact, 
take off the royalty payments on them and to prevent the 
continued production. Of course, I think there are differences 
about when that's to go on or off.
    And, of course, for a long time we had criticism in this 
country because of the cheap oil policies abroad. In fact, many 
of our oil price controls were initially put on with the idea 
of building a floor so that there would be production. It's 
ironic they ended up being ceilings at various times. But I 
think we've got to look very carefully at what we're doing here 
and I think most of us want to look at that and talk about what 
the cost is and what we're getting back for it.
    I'd just point out, I didn't disagree, Mr. Chairman, with 
you that we had increased imports. It's that OPEC makes up a, 
where they had made up a substantial portion of the import tax, 
they make up, I guess, at one point less than half, maybe it's 
more than half again right now, in 2000 numbers. But I did want 
to comment.
    The Chairman. Let me have one more witness and then we have 
other witnesses in the room. Mr. Vito, you're not excused for 
being late. You're penalized. Mr. DeLay, you do have to go. 
Anybody have any questions for Mr. DeLay?
    Mrs. Cubin. Mr. Chairman, I have but one brief statement to 
make about Mr. DeLay's and Largent's testimony, but mostly Mr. 
DeLay. You referred to being able to use the public lands and 
not having access to the public lands. You referred to multiple 
use. Right now the Forest Service, through regulation, is 
trying to change the multiple use of the public lands from 
multiple use to pre-European condition. And that is just one 
example of how the administration is doing everything they can 
to block access for purposes of production of coal, uranium, 
hard rock, and fossil fuel, all the fossil fuels.
    So I just wanted to say that.
    Mr. Delay. I thank the gentlelady and she makes my point 
for me. Thank you very much. Thank you, Mr. Chairman.
    The Chairman. Vito.

    STATEMENT OF THE HON. VITO FOSELLA, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Fossella. Thank you very much, Mr. Chairman, and please 
accept my apologies. I was in the Commerce Committee discussing 
vital national issues regarding low-flow and high-flow toilets 
and so the basis of my delay was voting, which is a good segway 
into the testimony I'm about to offer.
    Mr. Chairman and members of the committee, I would like to 
thank you for the opportunity to testify today about an issue 
that greatly impacts America's long-term national and economic 
security. A recent spike in oil and gasoline prices have shined 
a bright light on a problem that has been brewing for many 
years and, if left unaddressed, is a potential threat to not 
just not just our economic well-being, but our safety and 
security as a nation and a people.
    At the heart of the problem lies a simple and unambiguous 
fact: The present administration lacks an adequate 
understanding of our nation's energy needs as well as a plan or 
strategy to allow the marketplace to meet the demands of the 
American people. In other words, our Federal Government has now 
become too often the problem and, in fact, not the solution. 
High taxes and regulatory burdens inhibit the private sector 
from meeting the demands of the American people and stifle 
domestic production.
    Despite statements by the President dating back 6 years and 
America's growing reliance on foreign oil to make the United 
States vulnerable to the whims of potentially unstable and 
unfriendly nations, the Energy Department has failed to 
articulate a clear, concise, and coherent policy.
    In the words of the President several years ago, quote, ``I 
am today concurring with the Commerce Department's finding that 
the nation's growing reliance on imports of crude oil and 
refined petroleum products threaten the nation's security 
because they increase U.S. vulnerability to oil supply 
interruptions.'' The nation's growing reliance on imports 
threatens the nation's security. I agree with the President.
    Yet, rather than taking the needed steps to encourage 
domestic production, the administration has stood silently as 
demand for foreign oil surged dramatically from 51 percent in 
1994 to 56 percent today, a jump of almost 9 percent. In fact, 
since 1992, domestic crude oil production is now 17 percent 
while our consumption has increased 15 percent. This is simply 
not acceptable.
    Our growing reliance on foreign oil has once again garnered 
much attention. This past winter, unusually harsh weather and 
OPEC production caps pushed the price of home heating oil past 
$2.00 a gallon. We experienced Economics 101, the laws of 
supply and demand.
    I first called attention to the rise in oil prices in the 
early days of winter, hoping the administration would act 
quickly before the situation spiralled out of control. In the 
short-term, I urged the administration to pressure OPEC to end 
its production cutbacks. For nearly a year, these cutbacks have 
decreased the supply of oil in the world market by more than 4 
million barrels per day. And, frustrated by the lack of action, 
we requested congressional hearings in the Energy and Power 
Subcommittee to explore the matter more deeply and to 
underscore the rising cost on America's economy.
    During the hearings, I was left speechless and some of my 
colleagues when officials of the Energy Department conceded, 
quote, ``It's obvious that the Federal Government was not 
prepared. We were caught napping. We got complacent,'' end 
quote. Tell that to the guy at the pump.
    This is simply unacceptable, but not surprising, coming 
from the same agency and administration which over the past 7 
years has not developed a strategy that realistically meets 
America's needs. OPEC is a cartel and over the past year we've 
clearly seen what this cartel has the ability to do, their 
ability to influence our economy, our politics, our markets, 
our everyday life.
    This winter, we saw ballooning heating oil prices as 
residents of the Northeast were forced to pay exorbitant 
heating oil bills and, in fact, some had trouble paying and 
even getting oil to their homes or business. As winter turns to 
spring and the shortage of oil increased gas prices at the 
pumps to nearly $2.00 a gallon. Americans are once again forced 
to dig deep in their pockets.
    We have not seen these effects only in our heating, oil, 
and gasoline bills. Our shipping companies, taxis, airport 
shuttles, airlines, trucking companies all were forced to tack 
on fuel surchages to the services they provide to Americans. 
Once again, the consumer paid the price.
    We tried to get a trip to Vienna. The OPEC was meeting with 
Congressman Joe Barton and several others to pressure OPEC and 
underscore again American needs in terms of increasing 
production. The administration, surprisingly, the Secretary of 
Energy, shortcircuited the trip and urged us not to attend.
    We wanted to go to OPEC to see the ministers in OPEC to 
remind them that American lives were lost to defend the 
sovereignty and freedom of their nations and that the time for 
diplomacy and more meetings had long since passed. The price 
has spurred OPEC to increase production, which should bring 
some relief to the gas pump over the next few months, but not 
enough.
    Mr. Chairman, I sit on the Energy and Power Subcommittee, 
along with Mr. Largent, who is also testifying, as you heard 
today. And I'd like to let this committee know that Chairman 
Barton plans to have a series of hearings examining our 
nation's energy needs and how to best address them, taking a 
close look at what we can do as a nation to ease our foreign 
dependence, to ease the regulatory and tax burdens on the 
energy industry, and to encourage and increase our reliance on 
domestic energy resources. We have an opportunity now. Let's do 
it.
    What our country has experienced this year not only 
strengthens my belief that America needs to develop a long-term 
strategy that reduces our reliance on foreign oil, but reminds 
us that never again should the United States be forced to wait 
on bended knee for the assistance of other nations when our 
economic and national security are at stake.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Fosella follows:]

 Statement of Hon. Vito J. Fossella, a Representative in Congress from 
                         the State of New York

    Mr. Chairman, Members of the Committee, I would like to 
thank you for the opportunity to testify today about an issue 
that greatly impacts America's long-term national and economic 
security. The recent spike in oil and gasoline prices has 
shined a bright light on a problem that has been brewing for 
many years and that, if left unaddressed, has the potential to 
threaten not just our economic well-being, but our safety and 
security as a nation and a people.
    At the heart of the problem lies a simple and unambiguous 
fact: The present Administration lacks an adequate 
understanding of our nation's energy needs, as well as a plan 
or strategy to allow the marketplace to meet the demands of the 
American people. In other words, our Federal Government is too 
often the problem, and in fact not the solution. High taxes and 
regulatory burdens inhibit the private sector from meeting 
demands of the American people and stifle domestic production.
    Despite statements by the President dating back 6 years 
that America's growing reliance on foreign oil could make the 
United States vulnerable to the whims of potentially unstable 
and unfriendly nations, the Energy Department has failed to 
articulate a clear, concise and coherent policy. Rather than 
taking the needed steps to encourage domestic production, the 
Administration has stood by silently as demand for foreign oil 
has surged dramatically, from 51 percent in 1994 to 57 percent 
today, a jump, of 6 percent. In, fact, since 1992, domestic 
crude oil production is down 17 percent while our consumption 
has increased 15 percent--this is simply not acceptable.
    Our growing reliance on foreign oil has once again garnered 
much attention this past winter when unusually harsh weather 
and OPEC production cuts pushed the price of home heating oil 
past $2 a gallon. We expected Economics 101 and the laws of 
supply and demand to come into effect, but this did not happen. 
I first called attention to the rise in oil prices during the 
early days of winter, hoping the Clinton Administration would 
act quickly before the situation spiraled out of control. In 
the short term, I urged the Administration to pressure OPEC to 
end its production cutbacks. For nearly year, these cutbacks 
have decreased the supply of oil on the world markets by more 
than 4 million barrels per day. Frustrated by the lack of 
action, I requested a Congressional hearing in the Energy and 
Power Subcommittee to explore the matter more deeply and to 
underscore the rising costs to America's economy.
    During the hearings, I was left speechless when officials 
of the Energy Department conceded, ``It's obvious that the 
Federal Government was not prepared. We were caught napping. We 
got complacent.'' This is simply unacceptable, but not 
surprising coming from the same Agency and Administration which 
over the past 7 years had not developed an energy strategy that 
realistically meets America's needs.
    OPEC is a cartel--and over the past year, we have clearly 
seen what this cartel has the ability to do--their ability to 
influence our economy, our politics, our markets--our everyday 
life. This winter we saw ballooning heating oil prices--as 
residents of the Northeast were forced to pay exorbitant 
heating oil bills and some in fact had trouble even getting oil 
to beat their homes and businesses. As winter turned to spring 
and the shortage of oil increased gas pump prices to nearly S2 
a gallon. Americans were once again forced to dig deep in their 
pockets. But we have not seen these effects in our heating and 
gasoline bills--shipping companies, taxis, airport shuttles, 
airlines and trucking companies all were forced to tack on fuel 
surcharges to the services they provide to Americans--once 
again the consumer paid the price.
    Last month, when OPEC convened to discuss raising 
production levels, I, along with Energy and Power Chairman Joe 
Barton sought to arrange a Congressional delegation to attend 
the meetings and bring added pressure on the cartel. I believed 
the United States had to show a united front to spur OPEC to 
action. The Administration short-circuited the trip, but not 
before we reminded OPEC's oil ministers that, less than a 
decade ago, the United States brought peace and stability to 
the region when Iraq invaded neighboring countries. We reminded 
them that American lives were lost to defend the sovereignty 
and freedom of their nations, and that the time for diplomacy 
and more meetings had long since passed. The pressure spurred 
OPEC to increase production, which should bring some relief to 
the gas pumps over the next few months.
    Mr. Chairman, I sit on the Energy and Power Subcommittee of 
the House Commerce Committee--along with Mr. Largent who is 
also testifying here today. And I'd like to let the Committee 
know that Chairman Barton plans on having a series of hearings 
examining our nation's energy needs and how to best address 
them--taking a close look at what we can do to ease our foreign 
dependence, to ease the regulatory and tax burdens in the 
energy industry and to encourage an increase in reliance on 
domestic energy sources. We now have an opportunity to take a 
long term approach to this issue--let's do it.
    What our country bas experienced this year only strengthens 
my belief that America needs to develop a long-term strategy 
that reduces our reliance on foreign oil. Never again should 
the United States be forced to wait on bended knee for the 
assistance of other nations when our economic and national 
security are at stake.
    The Chairman. I thank you. And, at this time, the gentleman 
from Louisiana, do you have a question for this panel?
    Mr. Tauzin. Well, a very short one, Mr. Chairman. Most of 
you are focused on the problems with foreign oil imports and 
those who have a relatively good memory remember the long lines 
at gasoline stations when OPEC last declared an embargo on the 
United States. Steve, you were probably in high school at the 
time. And so were you, Vito. But I know George wasn't. George 
remembers.
    What was interesting then was that our dependence was 
basically improving. And some members of OPEC, Venezuela, in 
particular, abandoned the OPEC oil embargo and continued to 
supply us with crude. And we got through that period of pretty 
hard times. In fact, in my State of Louisiana, we had the 
biggest shortage of any State in America, the biggest 
curtailments of natural gas of any State in America, believe it 
or not, even though we were one of the biggest producers.
    But we got through it. With the help of some friends, even 
in OPEC, like Venezuela. We ought to remember that.
    But today we've got a different form of dependence that is 
even more frightening, I think, for our country. Not only are 
we more dependent upon crude than ever before, even before the 
embargo, but now our dependence is also growing in refined 
products, as we in this country have failed to continue the 
pace of authorizing, licensing, and building refineries in 
America. The last one built in America was built in my 
district. The last one repaired and restored is in my district.
    And the concern that I don't hear a lot about and I wonder 
if you might want to comment, any one of you, real quickly, on 
policy that would make us independent. How do we recommend 
changes? What do we do to encourage America to have more 
refining capacity, on the assumption that we can find a friend 
who will sell us crude when we need it? If we can't refine it 
and get it to the marketplace, if we depend upon Saudi 
refineries, if we depend upon OPEC refineries to supply us with 
refined products, and that shuts down, what are we going to do? 
Anybody have a thought on that or a comment on it? George.
    Mr. Gekas. Mr. Chairman and I'd say to the gentleman that, 
as I envision my proposal coming into effect, I could see that 
the gentleman from Louisiana would be one of the first 
witnesses to testify before the Blue Ribbon commission that I 
envision on trying to blend the considerations of the oil 
refinery problem with the crude oil problem with the tax 
incentive problem with the exploration of ANWR with the other 
tools that might be at hand for a comprehensive policy, but 
always to keep the oil refinery problem in the topic that is at 
hand, namely, the comprehensive long-term policy.
    We can't have a long-term policy without dealing with the 
refineries. This is what I'm getting at in the comprehensive 
planning that this Blue Ribbon commission would recommend to 
the Congress.
    Mr. Largent. I would respond to the gentleman by saying, 
and I'm just pulling these numbers off the top of my head, that 
if they're not exactly right, they're really close, that in 
1979, the number of refineries that we had in operation in this 
country was around 47. Today, the number is about 23. And I 
think the last new refinery that was built in this country, you 
mentioned that it was in your district, I believe it was 1981 
was the last refinery that was built in this country.
    So, again, this is the result of the continued pressure 
from a lot of different sources, economic sources, 
environmental sources, that are putting pressure so that we're 
not only seeing a depletion of the refineries in this country 
where we have the ability to, you know, refine the crude oil, 
but we're also seeing a reduction in the number of drilling 
rigs that are available. They're rusting in Oklahoma today 
because it's just not economically viable to produce oil in 
this country because of the tax policies and the regulatory 
policy.
    I'll give you two examples and one hero story about the 
domestic production. First the hero story. In Oklahoma, the oil 
producers formed an organization called the Oklahoma Energy 
Resource Board. It's an independent agency that's owned, 
operated, organized by domestic producers in the State of 
Oklahoma. They voluntarily donate a percentage of each barrel 
of oil that goes into the Oklahoma Energy Resource Board.
    The Oklahoma Energy Resource Board has two functions. 
First, it disseminates information about the domestic 
production industry. The second thing that it does it clean up 
abandoned well sites. And in the process of the last several 
years, they have cleaned up hundreds of wells that had been 
abandoned in the State of Oklahoma that never would have been 
readdressed had it not been for the domestic producers. And 
it's a tremendous hero story. Something that was done without, 
you know, government legislation, but was done on a voluntary 
basis.
    Two examples of some of the regulatory burden. And, believe 
me, the regulatory burden that's on this domestic production 
industry, they're being nickel-and-dimed to death. I mean, 
these don't sound like huge things, but there's thousands of 
little things that are just nickel and dime. It's death by a 
thousand cuts.
    One example. The Migratory Bird Act placed a burden on the 
domestic producers by saying they had to place nets over all of 
their barrels that they have to capture salt water that comes 
out as a result of drilling. So the salt water has to be pumped 
into these large barrels.
    And they were finding that some of the migratory birds were 
landing in these barrels that literally are no bigger than the 
circumference of this table right here. And they had to buy 
these nets to put over several of these barrels--I'm calling 
them barrels, tanks is what they actually are, water tanks. And 
there will be three or four tanks at every well site.
    Well, they had to net those because of the Migratory Bird 
Act. Well, the nets, you know, maybe cost, you know, $5,000, 
$7,500 bucks, but then when you multiply that times every well 
that has three or four barrels, it gets very expensive. Well, 
that's just one example of being nickel-and-dimed to death.
    Another example would be the EPA has issued this decree 
that says that domestic producers have to have a toxic release 
inventory about the different components, products, that they 
use at the well site. And, as a result of that, they have to 
prepare this lengthy document. And once they did it, when this 
first came about, they realized we're going to spend, you know, 
thousands of dollars preparing this document about the toxic 
release inventory. Who do we turn it over to? EPA didn't even 
know who to turn it over to.
    Well, they have to turn it over to the fire department. So 
they turned it over to the local fire department, they didn't 
know what the heck to do with it so----
    The Chairman. Steve, I don't want to interrupt you. Whoever 
has got a phone in this room, I don't believe knows my rule. If 
you've got a portable phone and it's on, get out. It's that 
simple. And it's not a hard rule to follow. You've got a 
buzzer. If you don't have a buzzer, get a new phone.
    Mr. Largent. It have been mine.
    The Chairman. I don't care whose it is. I'm just saying 
leave.
    [Laughter.]
    Mr. Tauzin. I've been thrown out already, Steve, so don't 
be embarrassed.
    The Chairman. The gentleman's time has expired. I do 
appreciate, you know.
    Mr. Vento. Mr. Chairman, just for the record, I want to put 
an editorial in that I know that you'll enjoy reading.
    The Chairman. That depends. Who's it from?
    Mr. Vento. The Minneapolis Star Tribune. ``Energy Problems 
Can't be Drilled Away,'' Mr. Chairman. I'd submit it for the 
record. And I would ask that Mr. Gekas' bill on the commission 
be put in the record.
    [The information referred to follows:]

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    The Chairman. Without objection. The gentleman from 
Kentucky--Tennessee. Folks. We're all the same. Go ahead.
    Mr. Duncan. Thank you, Mr. Chairman, and thank you for 
holding this hearing. You know, one of the things that I do is 
chair the Aviation Subcommittee and their transport association 
told us a few days ago that with each one penny increase in 
their fuel costs, that they lose $200 million a year, the 
airlines do. $200 million a year for each one penny increase in 
their fuel prices.
    And what I've said, you know, the rise in the gas prices is 
not only hurting us in aviation, it's hurting us in 
agriculture, tourism, and almost every industry imaginable. And 
it also causes us the most serious problems, I think, for those 
who live in small towns and rural areas because so many of 
those people have to drive further distances to go to work.
    And I have noticed over the years that these environmental 
extremists who don't want us to drill for any oil almost always 
come from very wealthy families and maybe they don't realize 
how much they're hurting the poor and the working people of 
this country.
    But I have a statement, a full statement, that I want to 
put in the record.
    But I have some very, very strong concerns about this. I 
read recently that our domestic oil production is at its lowest 
level since 1951. And Mr. Largent mentioned the refineries that 
I have closed. And I think it's very sad that we're sitting on 
all of this and these billions of barrels of oil up in Alaska 
and also billions more offshore and we have become so dependent 
on foreign oil.
    But primarily the concern I have is that we are hurting the 
poor and the working people of this country by driving up 
prices and destroying jobs. And it's going to cause us some 
very serious problems if we don't act on some of this 
legislation.
    And I want to put my full statement in the record. But 
thank you very much.
    The Chairman. All right. And I want to thank the gentleman 
from Tennessee. And the one reason I--sometimes I have a hard 
time with it, but his name is Jim Duncan. Jim Duncan ran 
against me last time in Alaska and that gives me a little 
problem. And, without objection, so ordered.
    The Chairman. The gentleman from American Samoa. The 
gentleman from California.
    Mr. Calvert. Thank you, Mr. Chairman. I find it interesting 
that this administration or the Justice Department would go 
after Microsoft, but they tend to not want to do anything about 
OPEC.
    One thing I wanted to point out that Mr. Largent brought up 
about the refining capacity, most of the refineries that are 
closed in the United States closed in one State and that was 
the State of California. And the reason why those refineries 
closed was because California has a clean air standard that's 
different than anywhere else in the United States.
    I don't say that, necessarily, is a bad thing. We have a 
reformulated gasoline standard in California that's done a lot, 
dramatically, to increase air quality in California. We have a 
sulphur standard right now at 30 parts per million that being 
dropped by California clean air folks to 15 parts per million.
    But one thing I want to point out to my friend from 
Louisiana and from Texas and other States that have a 
tremendous amount of refining capacity, whatever is left, is in 
the process when California went through this transfer to new 
technology on refining, many of the small refiners did not have 
the capital in order to invest to stay in business and so they 
closed up. And so we had about 12 refineries in California and 
that went down to about 6 in California today.
    And that's caused a big problem. And that's one of the 
reasons why we probably experience, we do experience, the 
highest gas prices anywhere in the United States. We're right 
about $2.00 a gallon, isn't that correct, Mr. Pombo? It depends 
on where you go shopping for gasoline. And that has put a 
tremendous amount of stress on folks in California.
    But as you well know, the EPA has made a determination that 
all refineries will have to go to the 30 part per million 
standard pretty soon, by 2004, I believe. And I would hope that 
we could work with the Commerce Committee and the Ways and 
Means Committees and whatever we need to do around here to 
remove the unintended consequence of refineries going out of 
business in this country.
    Because if California is any evidence of what will happen, 
refineries in Louisiana and Texas will suffer because of this. 
It may be a great thing for clean air, but we ought to 
recognize that it's a tremendous amount of money. We need to 
help, especially, small refineries and large refineries to make 
these technological changes in order to meet Federal regulation 
that they're being imposed upon to do that without removing too 
much competition from the marketplace.
    And I would like to agree with the chairman that we need to 
get more oil production in the country and that's part of the 
problem.
    But, also, many nuclear facilities are going off line here 
in the next several years. And we have great new nuclear 
technologies that are clean. It's not the same technology that 
folks experienced 30, 40, 50 years ago. And I think we need to 
better explore new nuclear technologies, which, by the way, 
produces power for about three cents a kilowatt. And, 
obviously, it's clean. There's no so-called greenhouse effect. 
And I would hope that the environmental community would take 
another new look at the new nuclear power that is out there 
today.
    And, with that, I thank the chairman.
    The Chairman. The gentleman, Mr. Udall.
    Mr. Udall. Thank you, Mr. Chairman. I want to welcome the 
panel. And it's always great, in particular, to see my 
colleague Mr. Largent not in a baseball uniform throwing his 
big sweeping curve ball at your head and then it ends up over 
the plate.
    But I want to thank the panel today. One very brief comment 
from a set of comments, Mr. Chairman, and I'd ask unanimous 
consent to include my statement in the record. I'm one of the 
cochairs of the Renewable Energy and Energy Efficiency Caucus, 
a bipartisan group. There are about 160 members in the House. 
And we ought to have more members, frankly, because there are 
renewable energy projects going on in almost every single 
congressional district in the country.
    And when I look at the title of the hearing, ``Compromising 
Our National Security,'' I think it's important to remember 
that there's great opportunity in the renewable area and in the 
energy efficiency area and we ought to be doing more in this 
Congress to invest in those research and development efforts. 
And that, in the long-run, would help us economically as well 
as making us less dependent on foreign sources of oil.
    The petroleum geologists tell us that the world supply of 
oil is finite and eventually we're going to run out. So, yes, 
we should be doing all we can within the environmental laws and 
within protecting the safety of the workers and so on to 
extract as much oil as possible, but we ought to be 
complementing that with additional efforts in this exciting new 
area of renewable energy and energy efficiency.
    Again, I thank you, Mr. Chairman, for the time and I yield 
back what time I have left.
    [The prepared statement of Mr. Udall follows:]

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    The Chairman. Thank you. The gentleman from Pennsylvania, 
Mr. Peterson.
    Mr. Peterson. I would like to thank the panel this morning 
and, I guess, remind them that I come from where it all 
started. I live five miles from Great Swale where the first oil 
well was produced in this country. I was actually a dug well, 
68 feet deep. The oil sand came that close to the surface where 
it had been oozing out of the ground for years and the stream 
was called Oil Creek nearby because there was always oil in the 
water, naturally.
    Any way, we're not a major player in the oil field. We were 
always considered the premium or Quaker State, Penzoil, where 
all the major brands came from because we were a paraffin-based 
oil. We still have some oil production, but I've lived to watch 
that business pretty well wither up and dry, especially when 
oil became so cheap for so long. And also with the regulations 
and the controls.
    But I know Oklahoma, and I'd like to ask the gentleman from 
Oklahoma, is a State that is one of our major producing States 
and I guess, with oil being 40 percent, the recent figures I've 
seen that 40 percent of our energy today comes from oil, for 
all uses, mostly transportation, but for all uses, that oil is 
still 40 percent of our energy, can the spigot really be opened 
in a State like Oklahoma with fair policies and fair 
regulations and some tax incentives?
    Mr. Largent. I think the answer to that is absolutely. The 
economics are what drive domestic producers. And, frankly, I 
would like to concur with what Mr. Vento said. I didn't read 
the article that he submitted for the record, but saying that 
drilling will not solve all of our energy problems, I agree 
with that. I don't know that if we open up all of these areas 
that we will be able to supply 100 percent of our domestic 
needs.
    But we certainly would not be reliant to the tune that we 
are today on foreign oil and I think that's what we need to 
examine, especially in light of the national security risk that 
it inevitably leads to.
    Mr. Peterson. I know in Pennsylvania, 10 or 15 years ago 
when the decline happened, the huge unemployment, the number, 
the people. It was the working man who lost his opportunity and 
there were, I don't know, about Oklahoma, but in Pennsylvania 
we never really replaced those jobs when we lost the oil patch 
jobs. Those were working jobs from the average working people, 
blue-collar people, who went out and worked in those fields and 
that was a work force that's never been replaced. Most of them 
cannot go to work in high-tech factories. They don't have the 
skills.
    Mr. Largent. Well, I would just respond by saying that 
you're exactly right and that's taking place in my State of 
Oklahoma where 50,000 jobs have been lost here just in the last 
5 years. And what happens is not only are we losing the ability 
to use the equipment--the drilling wells that are rusting, the 
drilling equipment that's rusting, it's irreparable, it's going 
to take years to replace that--but we're losing the manpower 
and the experience as well. As those jobs are lost, people are 
moving on into other jobs, as you would expect. And we lose 
that as a resource as well.
    And so what I'm saying is the longer we wait and prolong 
moving forward and developing a sound national energy policy, 
the longer it's going to take us to cycle back up to where we 
need to be.
    Mr. Peterson. To revive your patch, we need to move 
quickly, right? Thank you.
    Mr. Tauzin. Would the gentleman yield a second?
    Mr. Peterson. you bet.
    Mr. Tauzin. Just to say, one thing that's also missing in 
this equation, but we get a lot of people saying why don't we 
just produce alternatives to oil and gas? The problem is, once 
you've become as dependent upon OPEC oil as we've become, then 
all the folks who might want to go into alternative forms of 
energy know that any day OPEC can drop that price just by 
opening their spigots, they can drop it down to $8.00 a barrel, 
and destroy anybody who's invested in an alternative energy 
form.
    So that the reliance on OPEC oil is creating a disincentive 
to go out and explore other ways of producing alternative 
energy for America. It's doing the perverse effect of 
discouraging us to become more dependent on alternative forms.
    So, in a sense, the very people who are putting all these 
regulations and suppressing the development of ANWR and 
suppressing the development of oil and gas in our own country 
have built a reliance now that makes it even more difficult for 
us to move to the alternative forms that they recommend for the 
country. It killed the goose that laid the golden egg.
    The Chairman. The gentleman, Mr. Pombo. The gentlelady, 
Mrs. Cubin.
    Mrs. Cubin. Thank you, Mr. Chairman. I will continue to 
point out the problem of access to the public lands as we go 
throughout this hearing today for purposes of energy 
development. There are alternative sources that people on the 
other side have talked about, for example, coal bed methane, in 
the State of Wyoming. This is a huge resource. It's a very 
clean-burning fuel that needs to be considered as part of our 
national energy policy.
    But because of administration regulations, road blocks, and 
so on, coal bed methane is literally going into the air because 
coal bed methane, as you might expect, is methane that is in 
the coal seams. And when we can't get permits for pipelines to 
transport this wonderful clean-burning fuel to markets, then 
there is a waste of a resource that we could be using that is 
not, you know, one that people think of right off the top of 
their head.
    I think that access to public lands is very important and 
certainly Wyoming suffers from the same problems that you have 
described with the oil industry, oil and gas. And I hope that 
we will be able to come up with some suggestions for how much 
of our energy should be supplied, what percentage should be 
supplied, through domestic sources, whether it's uranium, 
whether it's geothermal, solar, oil and gas, coal. Whatever it 
is, we need to have a policy that says this much, this 
percentage of production will make us nationally secure and 
will provide the energy that this country needs.
    Mr. Vento. If the gentlewoman would yield briefly?
    Mrs. Cubin. Certainly.
     Mr. Vento. Listen, obviously, on the oil issue, in the 
last 10 years, from 1989 to 1999, the numbers I've seen, 
actually from the Federal lands, that the amount of oil has 
increased from about 16 percent to 26 percent, from the Federal 
lands. Now domestic production may have gone down and some 
other factors, but the question is what are the State lands 
producing? What are the private? And I think we've heard a 
little bit here about the uneconomic nature of some of the 
wells because of tax and other incentives.
    But I think that, you know, just as far oil is concerned in 
that issue, you know, there hasn't been this decline, 
necessarily, in the percentage of domestic oil coming from 
Federal land. If anything, it's increased by about 10 percent 
from the total of domestic oil that's produced.
    Now there are other problems outstanding, but I didn't 
want----
    Mrs. Cubin. Reclaiming my time. The National Petroleum 
Council, which is an advisory group to the Secretary of Energy, 
just published a study that's called, ``Meeting the Challenges 
of the Nation's Growing Natural Gas Demand.''
    Mr. Vento. Natural gas. That's not oil. I'm talking about 
oil.
    Mrs. Cubin. That is true. That is true.
    Mr. Vento. I'm not talking about----
    Mrs. Cubin. Reclaiming my time. The principal factor is 
improving Federal land access. And that includes on OCS.
    The Chairman. I want to thank the panel. I hope you, if you 
leave this room, don't forget it----
    Mr. Vento. Mr. Inslee wanted to comment, Mr. Chairman.
    The Chairman. Oh, I'm sorry. You're down at the bottom of 
the well. Go ahead, Mr. Inslee.
    Mr. Inslee. Thank you, Mr. Chairman. I know you mean me no 
disrespect, at least publicly, which we appreciate.
    Have any of you read any recent scientific information 
about the climate change issue, carbon dioxide? Is that 
something that's been on your radar screen at all? Yes, global 
warming phenomena?
    Mr. Gekas. The only thing I can say about global warming 
if, indeed, it is developable as a real fact, let's assume that 
it is, that would help exploration of solar energy technology 
that would improve our capacity for using solar energy. So I 
see some good coming from, if there is indeed global warming, 
of which I'm very much skeptical. But that's a climactic change 
that we'd have to take into account in a long-term energy 
policy.
    Mr. Inslee. Vito, do you?
    Mr. Fosella. Yes, to a degree I'm aware of it, yes. And I 
also understand that there is some dispute in the scientific 
community as to the nature of the problem and, as Mr. Gekas 
says, to what extent it exists if at all.
    But, if I may, just briefly articulate and it sort of comes 
in different ways listening to the respective members of this 
committee, the fundamental notion of, it's a mindset. I think 
the American people want a balanced approach to meeting the 
demands of the marketplace and their needs. With economic 
growth, with, whether you drive a taxi or a truck or just 
driving your family, you know, to the store, you want to be 
able to meet your needs but, at the same time, government 
cannot be disconnected from the reality of the needs of the 
American people.
    And I think, too often, it's knee-jerk responses, whether 
they're the nets for migratory birds or preventing the 
reasonable access in Congressman Young's district. What you 
find is that there is no balance. And, at the end of the day, 
the American people suffer.
    Let me just give you one small example as to how the least 
fortunate suffer the most. In my district, there's a taxi 
company and for years the gentleman who owns it had offered 
senior citizens a discount of $2.00. Well, for the first time 
in 20 years, he had to eliminate that discount because gas 
prices rising cost him about $1,200 more per week. So he was 
absorbing that cost all that time, but now he could no longer 
afford it. So it was the senior citizen, living on a fixed 
income, who suffered the most.
    So, while I agree with and appreciate your efforts, I also 
think, in the near-term, there's got to be some, I guess, for 
lack of a better phrase, grasp of reality that the American 
people and some of the least fortunate are suffering. And if 
you want to take a long-term view, fine. I think we should. But 
I think there is just no grasp of what's going on right now.
    Mr. Inslee. Let me ask you a great favor. If I sent you 
something about this issue, at least a short synopsis of the 
science on the issue, I know you fellows are interested in 
energy issues, could I ask you to read it? Could I get your 
agreement to take a look at that? Because I think there are 
some interesting things going on in the science recently about 
this issue.
    I'll send you some, because I just think it's a beautiful 
day outside, but I think there are some things going on out 
there; that the science is showing that you and I, assuming 
we're back here in the next few years need to deal with. And I 
just am using this opportunity to share a little----
    Mr. Largent. If I could respond just briefly, I mean, this 
is one of the real paradoxes that I've found in my time in 
Congress is that let's assume that global warming is taking 
place. And I think, you know, that the reviews are mixed on the 
scientific evidence for that, but let's assume that that, in 
fact, is taking place. We know, according to that same 
evidence, that one of the leading contributors to the demise of 
the ozone and the warming of the globe are coal-fired 
generators for electricity.
    If that, in fact, is the case and you're really concerned 
about global warming, what is the paradox to me is to find that 
the same people that are screaming global warming, global 
warming, you know, the sky is falling are also the ones that 
are the most vehemently opposed to the alternative sources like 
nuclear and like hydro. Those are the most environmentally 
friendly sources. Actually, natural gas is also equally 
environmentally friendly, to produce electricity.
    But I find the people that are screaming global warming are 
also the ones that are opposed to these alternative sources 
that are much more environmentally friendly. And I have not 
been able to reconcile those two different perspectives.
    The Chairman. The gentleman's time has expired. Before we 
excuse the panel, I would like to remind everybody in New 
Mexico approximately 12 million years ago there was 284 feet of 
ice. I don't know how the ice got there. I have no question 
about that. But I always wondered what melted the ice clear up 
to the North Pole. I just want everybody to think about that a 
moment. The panel is excused.
    At this time, I'm going to call the Honorable J. Bennett 
Johnston of Johnston & Associates; David Hayes, Deputy 
Secretary, U.S. Department of the Interior; Bob Gee, Assistant 
Secretary for Fossil Energy, U.S. Department of Energy.
    And we're going to alternate Chairs here. Mr. Tauzin is 
going to handle this Chair. Mrs. Cubin is going to handle the 
next Chair. And I'll be in and out, if you don't mind. But Mr. 
Tauzin is going to be taking the Chair. Mr. Pombo can handle 
the third panel, all right?

  STATEMENT OF THE HONORABLE J. BENNETT JOHNSTON, JOHNSTON & 
    ASSOCIATES, INC.; ACCOMPANIED BY DAVID J. HAYES, DEPUTY 
SECRETARY, U.S. DEPARTMENT OF THE INTERIOR; AND ROBERT W. GEE, 
   ASSISTANT SECRETARY FOR FOSSIL ENERGY, U.S. DEPARTMENT OF 
                             ENERGY

         STATEMENT OF THE HONORABLE J. BENNETT JOHNSTON

    Mr. Johnston. Mr. Chairman, thank you very much for your 
kind comment. You are hale, hearty and spunky as ever. Mr. 
National Parks.
    And, Mr. Chairman, I must note that since I have left the 
Congress and done an occasional bit of lobbying, I must remark 
at how much better looking and smarter all of you seem now then 
when I was there.
    [Laughter.]
    Mr. Tauzin. [presiding] Flattery will get you everywhere.
    Mr. Johnston. Mr. Chairman, I think it was in this room, I 
was last here in 1995 when we were here at the Conference 
Committee of the Royalty Relief Bill. At that time, oil imports 
were about 50 percent. Today they are 57 percent. The Energy 
Information Administration says they are going to be 70 percent 
by the year 2020.
    In the midst of that, we've had gasoline prices that have 
been bumping on the underside of $2.00. People are pointing 
fingers at one another on the television, you hear the people 
at the gas pump saying it is outrageous what is happening.
    And, you know, whose fault is it? Is it the President's? Is 
it the Secretary of Energy? Is it the Congress? Is it God's? 
Just whose is it? Well, the real question, Mr. Chairman, is can 
the Congress do anything about it, actually and really?
    I would like to suggest three things that are practical, 
that are real, that ought to be done. They are, first of all, 
opening up ANWR. Second, requiring drilling or allowing 
drilling on the Destin Dome off Florida. And, third, renewing 
the Royalty Relief Bill.
    I won't go into ANWR a great deal because I know you know 
about it. Let me just say this. There is not a single pound of 
commercial seafood produced off ANWR. The sport fishery I think 
is limited to Members of Congress who go there. In Louisiana, 
we produce a billion pounds, more than a billion pounds, of 
commercial seafood. We have hundreds of rigs that have been 
there for 50 years and more and have never done any harm.
    Now you can believe that ANWR is the Serengeti if you want 
to. I've been there five times. Believe me, Serengeti, it is 
not. I've never seen a polar bear. I've never seen a brown 
bear. I've seen a few musk ox, not many. They were, by the way, 
an imported animal. They're not native. And if you believe that 
the Caribou herd is a problem, I say, look at the great 
experiment which took place right next door in Prudhoe Bay 
where the caribou herd increase 7 times over.
    Mr. Chairman, to say that it is too fragile, that it is too 
dangerous to drill in ANWR when we do it out in the greatest 
fish hatchery in the world, the Gulf of Mexico, is absurd and I 
would hope the Congress would recognize that.
    Second, Destin Dome. There are, according to the Department 
of Energy, 2.6 trillion cubic feet of dry natural gas about 25 
miles offshore. It has been declared by the State of Florida to 
be inconsistent with their coastal zone management program. And 
briefs are now being filed. The Secretary of Commerce will make 
a ruling on that I think in August. This being an election 
year, you can guess how it will probably come down because, 
bipartisanly in Florida, they believe this is a danger.
    Now, Mr. Chairman, this is dry natural gas. You cannot see 
it from the shore of Florida. It would be pipelined into the 
Mobile Bay area. It would be serviced from Alabama. How anyone 
can, with a straight face, say that this is a danger to the 
fishery out there when you've got, as I say, 2 billion pounds 
of seafood over 50 years with hundreds of rigs that have never 
hurt anything off Louisiana. It's simply absurd.
    Mr. Chairman, if the Congress can have a willing suspension 
of disbelief and allow Floridians, on a bipartisan basis, to 
say that there is this imaginary danger which prevents 2.6 
trillion cubic feet of natural gas from being brought in, which 
is badly needed and a great solution to this clean air problem, 
then, Mr. Chairman, when people whose fault is it, everyone 
should point at himself.
    Finally, royalty relief. Charts one and two connected to my 
statement show the vast increase in drilling on the Outer 
Continental Shelf of the deepwater that occurred immediately 
after the passage of the royalty relief bill. Now, Mr. 
Chairman, there is a new article just out yesterday that 
actually hasn't been published by Andrew Derman and Daniel 
Johnston and I would ask that that be distributed if it has 
not.
    It examines this question of royalty relief in great detail 
and comes to the conclusion that the Royalty Relief Bill was, 
in fact, the reason or one of the principal reasons, for the 
huge upsurge in drilling in the Outer Continental Shelf. You 
know it is the only place in America where there has been a 
real upsurge in drilling. It will be $9.5 billion by the year 
2005 in drilling alone, not to mention bonuses and royalties 
and income taxes paid.
    Mr. Chairman, I believe this committee ought to hold 
hearings and go in depth, ask NMS, ask DOE, to come up and 
testify about what the effect of it is. Because if it is as 
important as I believe it is, as the figures seem to show, then 
it ought to be continued.
    Mr. Chairman, thank you very much.
    [The prepared statement of Mr. Johnston follows:]

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    Mr. Tauzin. The Chair thanks you, Senator Johnston. We will 
now recognize David Hayes, Deputy Secretary of the U.S. 
Department of the Interior. Mr. Hayes.

                    STATEMENT OF DAVID HAYES

    Mr. Hayes. Thank you, Mr. Chairman and members of the 
committee. I have a written that I would appreciate entering 
into the record.
    Mr. Tauzin. Without objection, so ordered.
    Mr. Hayes. Thank you.
    I'd like to talk briefly, orally, Mr. Chairman and members, 
about the issue of oil and gas production on Federal lands. As 
Congressman Vento has accurately explained, in this 
administration, oil and gas production on Federal lands has 
increased steadily.
    In 1992, for example, 500 million barrels of oil per day 
were produced on Federal lands. Today, that number is at least 
100 million barrels per day higher. In 1992, 19 percent of our 
energy supply was supplied by energy from Federal lands. Today, 
the Federal lands provide more than 26 percent of the energy 
supply of the United States.
    And there are some areas both offshore and onshore that 
illustrate the activity that is leading to these increases in 
energy production. Let me mention the offshore first and 
reference what Senator Johnston talked about as well.
    Senator Johnston, of course, was a leader in the Deepwater 
Royalty Relief Act and that has had a dramatic impact on oil 
and gas production out of the Gulf of Mexico. From 1992 to 
1997, leasing activity in the Gulf of Mexico has increased 
tenfold. The Department of the Interior, through the Minerals 
Management Service, has had a very active leasing program. 
We've had a 50 percent increase in oil production from the Gulf 
in the last 6 years.
    Currently, 1.34 million barrels of oil per day are coming 
from the Gulf and the number continues to go up. 40 million 
acres of Federal offshore lands are currently under lease. 
7,600 of these are in the Gulf. 1,500 are elsewhere.
    Three weeks ago, there was a very successful lease sale in 
the Gulf, the latest example of our policy of opening up the 
Gulf, pursuant to current law and regulation. We received 469 
bids on 344 blocks. In fact, I should mention that, in terms of 
offshore production, in the 7-years of the Clinton 
Administration, we have now exceeded the numbers of acres 
leased as was leased during the entire Reagan administration. 
In the past 7 years, we have leased over 34 million acres of 
Federal offshore lands for production.
    Onshore, we also are engaged in significant activity. The 
Bureau of Land Management, which is our primary land holding 
agency, has leased over 28,000 leases and approved over 15,000 
permits to drill since 1993. It has concentrated its effort in 
the area of greatest potential. We expect to process more than 
1,000 applications for permits to drill in the Powder River 
Basin this year, by way of example.
    Also the Bureau of Land Management expedited an 
environmental review that led to the approval of the opening of 
nearly 4 million acres of additional lands in Alaska in the 
National Petroleum Reserve for oil and gas exploration.
    We are busy. We think it's appropriate that the Federal 
lands play their part in meeting our energy security.
    I must say, though, that I disagree with Senator Johnston 
on one point. The administration believes that oil and gas 
exploration should not occur everywhere. And when it comes to 
Arctic National Wildlife Refuge, as I explained further in my 
written testimony, we do not believe that it's appropriate to 
initiate oil and gas investigations in that area.
    The Arctic Refuge is the only place in the United States 
where the full spectrum of Arctic and Sub-Arctic ecosystems is 
protected in an unbroken continuum. The largest caribou herd in 
the United States by far, 160,000 caribou, are in the narrow 
Arctic plain, which is the only area that is being targeted for 
oil and gas production. It is the most sensitive area of the 
entire 19 million acre Arctic National Wildlife Refuge.
    We believe it is appropriate to explore and drill in the 
Arctic, hence our recent affirmation and opening up of major 
new lands in the National Petroleum Reserve. In fact, that led 
to, last year, a lease bonus sale of over $100 million for 
those new lands that have yet to produce but that are now open 
for additional domestic exploration and production.
    I will close there. I will mention one thing if I can, in 
closing, the last 3 seconds. Actually, I'll save that for 
questions. Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Hayes follows:]

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    Mr. Tauzin. The Chair thanks you, Mr. Hayes. And, finally, 
I'll recognize Mr. Bob Gee, the Assistant Secretary for Fossil 
Energy for the U.S. Department of Energy. Mr. Gee.

                   STATEMENT OF ROBERT W. GEE

    Mr. Gee. Thank you, Mr. Chairman and members of the 
committee. I've submitted a statement for the record.
    Mr. Tauzin. Without objection, it's submitted for the 
record.
    Mr. Gee. And I'll take only a few minutes to summarize it.
    The recent volatility in the domestic and global petroleum 
market remind us again that energy is an integral facet of 
everyday life and that every American can still be affected by 
actions that occur well outside of our borders. The most recent 
spike in oil prices was the result of attempts by both OPEC and 
non-OPEC producing countries to compensate for the 1998 plunge 
in oil prices. Unfortunately, the production cuts imposed by 
these countries came at the same time the recovery in Asia 
began to push demand back up.
    Extreme market volatility, volatility which is neither good 
for the energy consumer nor good in the long-run for the energy 
producer. High home heating oil prices created hardships for 
many Americans living on modest incomes and for other energy 
consumers. At the same time, the wild swings in oil prices have 
created difficulties for the nation's oil producers. When 
prices were low, domestic production dropped off and jobs were 
lost. Even when prices rebounded, financial markets have 
remained cautious and money continues to be tight. Reinvestment 
in the domestic industry continues and has been fully 
materialized.
    I've outlined in my formal statement several guiding 
principles of our energy policy that are geared to restoring 
market stability. They include both short-term efforts, such as 
the diplomatic initiatives successfully pursued in recent weeks 
by Energy Secretary Richardson, and longer term efforts to 
increase production from our considerable domestic energy 
resources.
    Several of the most important domestic initiatives include 
Secretary Richardson's direction to renegotiate delivery 
schedules for royalty crude oil coming into our strategic 
petroleum reserve. This has made more oil available to the 
market this spring and, in return, you will receive more oil 
for the reserve later this fall.
    The President's call on Congress to reauthorize the 
strategic petroleum reserve, the authorities to which have been 
allowed to lapse. The President's support for legislation to 
create a regional heating oil reserve. Several new tax 
incentives to stimulate domestic oil and gas production and to 
diversify domestic energy supplies.
    And the continued investment in better technology that can 
boost domestic oil and gas exploration and production. It is 
this latter area, better technology, that I believe offers our 
best hope for a long-term future and greater price stability.
    The track record shows, Mr. Chairman, that investment in 
technology pays off. Technology has helped double the odds that 
an exploratory well will find producible reserves. And when 
producible reserves are found, technology has greatly increased 
their quantities.
    In the 1970's, an exploratory well, on average, added about 
10,000 barrels of new reserves. Today an exploratory well adds 
about 40,000 barrels of new reserves. Technology has helped 
reduce the footprint of oil and gas operations. When Prudhoe 
Bay was first drilled, for example, the well pad required about 
65 acres. Today the well pad needs less than 10 acres. Today 
horizontal drilling allows producers to reach multiple targets 
from a single well pad. With extended reach drilling, those 
targets can be miles away from the surface well.
    Seismic energy has been improved, providing resolutions 
many times better than just a decade or so ago. In the Gulf of 
Mexico where 3-D seismic has proven so valuable, we are now are 
seeing the application of 4-D seismic, adding time to the data 
set. In one instance, this has increased reservoir recovery to 
a previously unheard of 70 percent.
    Drilling and production rates are moving into greater and 
greater depths and, increasingly, we are producing both oil and 
especially natural gas from formations that were unreachable a 
few years ago. These technology advances could not have come at 
a better time because our demand for liquid and gaseous fuels 
continues to grow.
    In the last 15 years, our appetite for oil in this country 
has increased by 20 percent. In the next 15 years, our demand 
for natural gas is likely to increase by a third or more. There 
is little doubt that meeting this demand will require better 
technology and, equally importantly, it will require access to 
areas where that technology can be applied.
    The Department of Energy continues to strongly support 
rational, responsible, and environmentally protected 
development of energy resources on Federal lands. We recognize 
that some areas have environmental concerns such that, as a 
matter of policy, preclude development. Such is the case with 
the Arctic National Wildlife Reserve.
    Yet there are other areas that offer considerable potential 
for environmentally sound oil and gas operations. For example, 
as noted, we supported the opening of the northeastern portion 
of the National Petroleum Reserve in Alaska. And later this 
month, we will hold a workshop in Anchorage to review the 
latest technologies for carrying out oil and gas operations in 
this and other Arctic environments.
    In a similar vein, we are working with both State and 
Federal land management agencies to resolve environmental 
concerns in the Rocky Mountain area. This area was highlighted 
by the National Petroleum Council in its recent study on 
natural gas.
    Finally, Mr. Chairman, we've taken several steps to return 
to the private sector those oil and gas properties which the 
Department of Energy had previously held as part of the Naval 
Petroleum and Oil Shale Reserves. In 1998, as you are aware, 
Mr. Chairman, we sold the Elk Hills Petroleum Reserve in 
California in the largest divestiture of Federal property in 
our history.
    This year, Secretary Richardson has proposed returning the 
84,000 acre Naval Oil Shale Reserve in Utah to the Northern Ute 
Indian Tribe in what would be the largest voluntary return of 
Federal land to Native Americans in more than a century. There 
may be considerable gas potential on this property and it is 
appropriate that the Utes have the opportunity to benefit from 
its development.
    These actions, Mr. Chairman, demonstrate our belief that 
the private sector is best able to develop our natural energy 
resources most effectively in an environmentally sound manner. 
We will continue to work with our colleagues at the Department 
of Interior and others to share with them the advances being 
made daily in science and technology as they make future 
decisions regarding development of Federal lands.
    This concludes my opening statement, Mr. Chairman, and I'll 
be pleased to answer any questions you may have. Thank you.
    [The prepared statement of Mr. Gee follows:]

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    Mr. Tauzin. The Chair thanks the gentleman and the Chair 
now yields to the chairman of the committee, Mr. Young, of 
Alaska for a round of questions.
    The Chairman. [presiding] I know your position as far as 
the administration goes. And I want to thank the panel. I did 
hear some of your testimony in the back room. I was meeting 
with some other people back there. I did like, Senator, your 
testimony was excellent. I want you to know that.
    [Laughter.]
    The administration's, you know. Since I can't really 
believe this administration has any desire to produce any oil. 
You wouldn't have taken increased the royalties, which you did, 
ironically, just as the prices started hiking.
    You have not let any public lands available for oil 
exploration. And you may say PET Four, but not the areas that 
we chose. And I have to say this and I'm going to say it again. 
I said it when we were talking about the pipeline. I've heard 
this argument 95 percent of Alaska is open for, in fact, I 
think you said it before Dan Murkowski's committee, is open for 
drilling, which is not true.
    And, unfortunately, there's some thought in the 
administration that just because you can drill there, that 
there might be oil there. I've often said that just because a 
pool table is green, there's no rabbits. And yet there's some 
idea--I hope nobody caught that, for god's sakes, but that's 
what the administration thinks, that they can drill because 
there's the land available.
    The lands we identified in PET Four were not the lands, by 
the way, that you let be open for oil drilling. The bids were 
very minimal compared to what we thought they should have been 
because you wouldn't give us the areas that we thought were 
best. That's beside the point.
    But, in your testimony, I would happen to agree that the 
caribou herd that you mentioned is probably the largest one. 
But what is the number of caribou right now in Prudhoe Bay? 
Anybody like to address that?
    Mr. Hayes. Mr. Chairman, I believe it's quite a small 
fraction of the porcupine herd. I believe it's about 20,000 
compared to 260,000.
    The Chairman. But the reason I asked that question: How 
many caribou were there before we drilled Prudhoe Bay?
    Mr. Hayes. I'm not aware of the exact numbers. The number 
fluctuate significantly.
    The Chairman. Well, I understand that. But, see, that's why 
be aware. We heard the same arguments given in this committee. 
I was sitting down where Mr. Simpson is sitting, by the way, 
and Mr. Staggers was sitting up here. The same arguments, same 
story, 25,000 caribou. And how many did you say were in the 
bay?
    Mr. Hayes. There are about 20,000.
     The Chairman. That's amazing to me. And my god, we drilled 
and they multiplied. Let us drill some more.
    [Laughter.]
    I mean, and we even built walkways, by the way, for those 
who don't know. We required the pipeline to have walkways over 
it so the caribou could walk over and go from one side of the 
pipeline to the other. It costs us $28 million to build those 
walkways.
    To this day, no one's ever found a walkway that's being 
used by caribou. Now goats used it a couple of times. But the 
most amazing thing is, guess what the caribou do? They walk 
under it and rub their backs to get rid of those boils on their 
backs on the pipeline. But we spent $20 million doing it.
    And, to our knowledge, most of the wildlife--and I'd say 
all of the wildlife--in the area have increased, not decreased, 
because of the activity and because of the inactivity of taking 
game in that area.
    And so we hear the argument about ANWR, it doesn't hold 
water. You know, it's a terrible idea that we're going to 
destroy that area, which is nonsense. The refuge, 19 million 
acres, that's the size of the refuge, right? 19 million acres? 
OK. How many acres are we actually going to use in that refuge 
to develop ANWR if it's opened?
    Mr. Hayes. The Arctic Plain is less than 1 million acres, 
but it is, as I mentioned in the oral testimony, our belief is 
it's a key acreage in terms of the biology of the refuge.
    The Chairman. But that's no more different than any other 
is, including Prudhoe Bay. It's exactly the same and we've done 
no damage.
    Now you've got less than 1 million acres. Probably less 
than 12,000. Probably less than 3,000 total acres is going to 
be disturbed. They could deliver oil to the pipeline 64, 74 
miles away.
    And, by the way, we can sit in this room. All you people 
who are against this or for it, whatever it is. It is going to 
be opened. It is going to be developed. And anybody that 
doesn't think that is smoking pot. Right up in front of 
everybody, it's going to happen. The difference is will it 
happen under stress or will it happen under due diligence?
    I was, again, sitting right down there. We opened the 
pipeline. We built the pipeline in 3 years. Should have taken 
us probably 10 years. Because why did we build it? Because we 
were short, Mr. Bennett was here, we were short of oil and OPEC 
was enforcing their stranglehold on our throats. And we built 
it and delivered the oil, 2 million barrels a day; 1976 it 
began.
    Why can't the administration think about the future? This 
is not the Serengeti everybody says it is. That's nonsense. 
I've been there. I've walked it. I've seen it. Now if you go a 
little bit further south, it is. It's gorgeous. And I think 
maybe you ought to look at it. Have you been up there?
    Mr. Hayes. Yes, sir.
    The Chairman. When were you up there?
    Mr. Hayes. Last summer.
    The Chairman. Oh, I love you guys. You go up in the 
summertime?
    [Laughter.]
    Ah. Why don't you go up in the wintertime when the wind's 
blowing 40 miles a hour? And you could stand out there and say, 
my god, this is beautiful.
    [Laughter.]
    Mr. Hayes. Mr. Chairman, I was scheduled to go in February, 
but I had to testify in front of this committee that day.
    [Laughter.]
    The Chairman. Well, I tell you, I want to thank--not in 
front of me you didn't.
    Mr. Hayes. No. I believe it was Mr. Doolittle's 
subcommittee.
    The Chairman. No, not in front of me. But I do believe next 
time I'll make sure--you won't be around--but I'll make sure 
that the next guy who wants to go see this area, which I say is 
really--I'm going to make sure you get up there in the middle 
of January. We'll cancel the hearings. And then I want you to 
stand there and tell me how gorgeous.
    And, by the way, I have to say this in all seriousness, 
because I mentioned it will be developed. I've had some great 
ideas and I bet the oil people in the audience won't like this, 
if you really want to reserve, you really want to control those 
OPEC countries, you develop it. You explore. You sell the 
leases. You explore it. You develop. You tie it in. And I'd 
even be willing to pay the oil companies not to pump the oil.
    We can produce 2,200,000 barrels a day with that pipeline, 
if we had the refineries to refine the oil. But we could do 
that. That's a true reserve, not SPR or whatever you want to 
call it. We don't have the refineries that they can do that.
    But we would have that on line and say, OK, you guys think 
you can raise the price like you've done. We're going to take 
and produce another 1,200,000 and we would lower the prices. 
And that's why, it's not just you, I did pass it in 1995 and 
you guys vetoed it. I had trouble to do it before. Very nearly 
had it happen before.
    But I'm just saying the administration, I understand why. I 
understand the makeup of your administration. The environmental 
community, they can direct and pull your strings, but it is 
wrong for this nation. That area should be explored, sold, 
explored, and developed, and hooked it.
    Mr. Johnston. Mr. Chairman.
    The Chairman. Yes, Mr. Senator, go right ahead.
    Mr. Johnston. I took a bunch of senators up there a few 
years ago and one of them got up there and looked around at 
that barren landscape and said, my gosh, if I told the people 
in my barrooms back home that we couldn't drill here and we 
were going to be short of oil and I was going to be responsible 
for that, they'd laugh me out of the barroom. Lo and behold, 
that senator ended up voting against us because, you know, some 
of her people thought it was Serengeti. But those who have been 
there know it is not.
    The Chairman. Well, I appreciate that, Senator, and before 
I finish I have to say that when we were fighting this battle 
in 1995, they had some posters put out, the Sierra Club put 
them out, and I loved it. They had a wolf laying next to a 
caribou calf. Now that's a cold day in January when that will 
ever happen. Or July, I don't know which way you want to see 
it. That was a great--good in Philadelphia. Good in San 
Francisco, New York, and maybe DC., but not in reality. And I 
do appreciate your coming. Gentleman.
    Mr. Tauzin. Fair to say you'd find rabbits in a pool table 
before you'd see that happen.
    Mr. Vento. The gentleman reminds me of my mentor, Mr. 
Udall, and he always said that the lion may lay down with the 
lamb, but the lamb isn't going to get much sleep.
    [Laughter.]
    Well, I think there are a lot of issues here. Obviously, my 
chairman has pointed out the volatility or the dynamic nature 
and crash of caribou populations that exist there. He pointed 
out that even the Alaska Department of Fish and Game in 1995 
revealed a 23 percent decline in the population of the central 
Arctic herd around Prudhoe Bay and then a 41 percent decline in 
the caribou herd in the vicinity of the Kubak field.
    So, I mean, they do go up and down, clearly. The presence 
of caribou might represent the absence of our friend the grey 
wolf and/or bear and other predators. So there are a lot of 
factors that get into this that we kind of take and turn around 
to suit what our needs are.
    And I'd say, though, that this area which we're debating 
here, this 1.5 million acres is something we set aside in the 
Alaska Lands Act that we have to make a decision upon. 
Obviously, I favor it being declared wilderness and 170 
sponsors in the House favor that, along with a pretty close 
margin in the Senate, as we know, favor not opening this up and 
continuing the protection.
    I think the issues here in terms of going to what's 
happened in Prudhoe Bay are important. I have information that 
indicates that, since it was opened in 1977--and I have an 
interest in this. My brothers were part of the 3-year welding 
team that put that pipeline together, I might say. They're 
ironworkers who said if I had behaved myself, I could have had 
a good job like their's.
    [Laughter.]
    The Chairman. That's not the area that's leaking is it?
    [Laughter.]
    Mr. Vento. I don't think so. You could probably have them 
up there and check up on it. I think it's probably those 
caribou rubbing against it that are causing it.
    But, in any case, we obviously have some firsthand 
knowledge, through their experiences, about this issue and 
about some of the events. And I've visited in both the winter 
and the summer, Mr. Chairman. I must say, it's more fun in the 
summer, but there's no place like it in the world, that's for 
sure. And it's sort of an Arctic desert, as was implied here, 
when you talked loosely about ice roads and talked about the 
problems in building paths and, you know, mining gravel out of 
whatever part of the Brooks Range has been carried down toward 
the ocean. We're talking about a very fragile environment.
    It's an area that's almost a window on the Ice Age. And we 
don't have much of that left anywhere in the world. And, 
obviously, some of us think a little bit of preservation. So I 
don't look at the Great Rift Valley or the Serengeti, Bennett, 
but I look at it as something a little different. So I don't 
need to carry on. You know what my passion is here.
    But the issue is we've got a lot of problems we haven't 
resolved up there in Prudhoe. As Mr. Hayes knows, he points out 
in his testimony, that we've got air pollution problems. He 
didn't have time to give that information, Mr. Chairman, 
orally, but it's in his written statement. He points out 
there's how many oil spills that we've had in Prudhoe Bay, Mr. 
Hayes? Can you give us any indication of that in the last 23 
years? There have been hundreds, haven't there?
    Mr. Hayes. We have had hundreds. And there was just a 
felony conviction 2 months ago, a $15 million fine against BP 
for some environmental violations.
    The Chairman. May I suggest, respectfully, that is 
nonsense. What size oil----
    Mr. Vento. Well, I'm just trying to get to the bottom of 
it----
    The Chairman. I'll get to the bottom of it. I will check 
your testimony and I want you to verify it. An oil spill is a 
teardrop to you. Now don't be telling me there's oil spills 
there.
    Mr. Vento. Mr. Chairman, I have, you know, my information 
tells me that there have been 640-some oil spills.
    The Chairman. You drop one drop of oil, it's considered an 
oil spill. And I want to tell you, go down the street and look 
at any automobile and I'll tell you there's an oil spill under 
every automobile in this town. Right now. Including your car.
    Mr. Vento. Just relax. Enjoy your yogurt there.
    [Laughter.]
    Mr. Tauzin. And don't be spilling it.
    Mr. Vento. I don't want you to get indigestion, Mr. 
Chairman.
    But the issue that we've had a phenomena going on with the 
air quality conditions that are rather unique, haven't we, Mr. 
Hayes?
    Mr. Hayes. Yes, certainly. In terms of there have been 
emissions from the field. There also have been emissions down 
in Valdes.
    But, quite frankly, Congressman, it is the point you made 
earlier. We do not object to the activities in Prudhoe Bay. We 
are proposing that there be additional drilling in the National 
Petroleum Reserve. We have $100 million that's been put on the 
table by oil companies to take advantage of the opening.
    The primary point is that this is the only place on the 
entire North Slope where Congress has said no to drilling. We 
think this area should be kept pristine.
    The Chairman. Point of information. Would you tell me when 
has the Congress said no?
    Mr. Vento. In the law.
    The Chairman. The law does not say that, now. The law says 
that Congress can make that decision. We made that decision 
that it would be drilled and you vetoed it.
    Mr. Hayes. Well, NWLCA has a explicit provision that 
expressly says----
    The Chairman. And NWLCA says that area, the ANWR, shall be 
opened if the Congress says so. It did not set it aside. Now 
read the law.
    Mr. Vento. It's a rather reserved negative, Mr. Chairman. 
In any case, that's a distinction, maybe, without a difference. 
But it is, obviously, reserved to Congress for a future 
decision to do that which precludes it from being done at this 
point.
    I just wanted to point out that the temperatures in the 
Arctic, for instance, have, on a Fahrenheit basis, apparently 
increased almost three degrees in the past few decades. So that 
there are some changes going on, whether we think it's a larger 
part of a global phenomena and other factors is to be debated. 
Obviously, there is a pretty significant body of information 
that we could look at to make decisions about this.
    One of the questions I raised earlier in my testimony, 
unrelated to this, Mr. Hayes, and I don't know where your 
responsibility is here, but it had to do with due diligence and 
the amount of leases that have been out. You pointed out 34 
million acres of new leasing on the Outer Continental Shelf 
largely, I think, for gas, as my friend and colleague from 
Wyoming has pointed out, the numbers there are going up where 
the Federal Government produces about 30 percent of it.
    But what about oil? That's sort of the nexus of what we're 
talking about here. Oil leases have gone up, as you pointed 
out, significantly. But what about this question of due 
diligence and the amount of land or the amount of acreage under 
leases today, totally, between all of the different land 
management agencies and the national government? For oil 
purposes, can you give me a number there? You obviously pointed 
out 4 million new acres in the National Petroleum Reserve.
    But the question is, and, of course, my beyond that 
question is, are we, in fact, gaining performance, adequate 
performance, out of these particular leases that we're putting 
out? Or are we just building up somebody's portfolio of leases? 
In other words, what type of pressure should we be putting on 
them in terms of obtaining the type of domestic production from 
national lands? So can you give me a ringing defense of the 
Clinton Administration's aggressive conduct with regards to 
this?
    Mr. Tauzin. [presiding] Other gentlemen have comments, so 
ring it quickly.
    Mr. Hayes. I'll answer very quickly, Congressman, and I 
will get the information to you specifically about how much 
acreage is available. And I could probably--Mr. Gee could 
probably answer this better than I. Our sense is that the major 
limiting factor in terms of increased oil and gas production on 
Federal lands has been the low price of oil over the last 
several years. Obviously, oil has spiked up and now there is 
more of a financial incentive to do more activity, but there is 
an enormous amount of lease holdings available for production 
that is not being taken advantage of and probably the largest 
factor has been the price.
    Mr. Vento. Mr. Chairman, just to point out. My point is not 
just what is under lease, but whether we need to do more in 
terms of due diligence. I understand market factors indicate 
the prices and what the demand is, but the question is how much 
is already out there and has not really even been explored, 
much less developed.
    Mr. Tauzin. Well, the gentleman's time has expired. Now the 
Chair recognizes the gentlelady from Wyoming, Mrs. Cubin.
    Mrs. Cubin. Thank you, Mr. Chairman. There's one thing that 
I would like to say that Chairman Young and I have in common. 
We have a lot of things in common, but one is that sometimes 
our passion is mistaken for anger and so I just wanted to say 
that because, you know, he really got totally out of hand there 
for a minute.
    [Laughter.]
    And I agreed with every single word you said.
    The Chairman. Yes, will the gentlelady yield for just a 
moment? I have to go, but I've got to go back to my friend. You 
said you were in ANWR?
    Mr. Hayes. I was in the North Slope.
    The Chairman. You were not in ANWR?
    Mr. Hayes. No, I'm sorry. I thought you were wondering if I 
was up there.
    The Chairman. You were not in ANWR?
    Mr. Hayes. No, I was in the North Slope. That's correct.
    The Chairman. But you were not in ANWR?
    Mr. Hayes. That's correct.
    The Chairman. You didn't see the Serengeti Plain?
    Mr. Hayes. No, I did not.
    The Chairman. Well, everybody had the illusion you were 
there. That was my interpretation.
    Mr. Hayes. I apologize if you misunderstood or if I 
miscommunicated. Second, Mr. Chairman, if I can----
    The Chairman. Not yet. I've got to go.
    Mr. Hayes. OK.
    The Chairman. The Canadian government opposes this, right?
    Mr. Hayes. Pardon me?
    The Chairman. The Canadian government opposes drilling in 
ANWR.
    Mr. Hayes. Yes, that's my understanding.
    The Chairman. The National Congress of American Indians 
opposes this.
    Mr. Hayes. Yes.
    The Chairman. The Tanana Chiefs Conference?
    Mr. Hayes. Yes.
    The Chairman. The Council of Alasabasken Tribal Groups? The 
Episcopal Church and other numerous religious organizations? 
But why I want to question this is out of all those groups, 
only two people oppose it that you mentioned. The rest of them 
outside the United States, including the Canadian government. 
Is that correct?
    Mr. Hayes. Yes. Yes.
    The Chairman. In other words, the Canadian government is 
dictating our energy policy.
    Mr. Hayes. No. No. It's meant, Mr. Chairman, as an 
illustration, of some of the many folks who are concerned about 
potential drilling. Probably the most relevant of those groups 
are the Alasabaskens, the Gwich'in native folks.
    The Chairman. OK. The other thing is the Saudi Arabians are 
against this too, aren't they?
    Mrs. Cubin. Reclaiming my time.
    Mr. Tauzin. The Chair will start the gentlelady's time 
again and we'll commence.
    Mrs. Cubin. Thank you, Mr. Chairman. And Chairman Young's 
points really bolster mine. I guess they team up, if you will. 
In your oral testimony, you talked about how more production is 
taking place on Federal lands as if to disprove my assertions 
that access to public lands is the No. 1 problem that we face.
    And I have to point out that the production you are 
referring to is, No. 1, OCS production and, No. 2, PET Four 
production and permits for PET Four and so what I'm asking you 
is show me the money in the Lower 48. It isn't there. It is 
plain not there.
    Last year, we appropriated, I'm referring to coal bed 
methane, I mean, do you dispute me that in the Lower 48 it 
isn't there? It is happening at PET Four. It is happening on 
the Outer Continent Shelf, the oil production, but it is not 
happening in the Lower 48.
    Mr. Hayes. It certainly is true that most of the increase 
in production is offshore, Louisiana, and----
    Mrs. Cubin. And don't you think that that truly is a 
distortion of the reality when I talk about access to public 
lands? I'm talking about acres in the Rocky Mountain States. 
Gas, for example. Northern Montana. Gloria Flora put off-limits 
the most highly prospective area for natural gas production in 
the Lower 48.
    Last year, for Fiscal Year 2000, we--and I worked very hard 
to get this appropriation, $2.5 million earmarked for APDs for 
the coal bed methane project in the Powder River Basin. Out of 
that money, 11 new employee--and I realize they needed more 
employees, and that's why I, you know, worked so hard for the 
appropriation.
    But out of that, they bought 12 new trucks and hired 11 
more people and before the ink on the EIS was even dry, they 
came to realize that the cumulative effects of the coal bed 
methane development that the BLM did have to acknowledge that 
the number of wells that they had studied was already spoken 
for and so now they're requiring a new EIS which, again, the 
industry will pay for.
    So what happened to the other $2.5 million? Is there any 
way BLM can reprogram some of that money to get some more of 
those permitted?
    The problem is that the BLM wasn't forward-looking enough 
in their overall environmental look at the whole area to 
address this. So now producers, explorers, are in a position 
that they can't move forward. And it is causing a horrible 
hardship in Wyoming.
    Mr. Hayes. Congressman, I'm not aware of that specific 
issue. I'm happy to look into it. I passed a note in terms of 
onshore natural gas production, which was one of your questions 
of whether there's really been onshore increases in natural gas 
production. And since 1992----
    Mrs. Cubin. And oil.
    Mr. Hayes. And oil.
    Mrs. Cubin. And permitting.
    Mr. Hayes. Sure. Sure. But just a point of fact, the 
natural gas production has increased, onshore, in the Lower 48 
from 1.2 trillion cubic feet in 1992 to 2.0 trillion cubic feet 
in 1999.
    I don't deny your point, though, Congresswoman. And 
certainly there are individual cases where access has been 
difficult on Federal lands. There's no question about it and 
there's certainly some cases where access is essentially being 
denied, like the Arctic Refuge. But we are trying to work with 
the industry to increase production where appropriate.
    Mrs. Cubin. You know what bothers me about your testimony, 
Mr. Hayes? It's that I generally think assessing blame is not a 
constructive thing to do. When we find ourselves in a situation 
that is damaging to ourselves personally, to our families, to 
our country, that assessing blame for getting in that 
situation, generally, isn't constructive.
    What is constructive is looking at the current situation, 
the facts that are at hand, and trying to figure out a way to 
get out of it. And what I got, and I recognize that if people 
can misinterpret Mr. Young's and my passion for anger that, you 
know, I can misinterpret your testimony today, but it seems to 
me that rather than the administration saying let's really do 
something about access to public lands.
    I mean, this was an agency that advises the Secretary of 
Energy that said access is the problem. Instead of accepting 
that and saying let's look at it, it seems that this 
administration only defends the things that have happened in 
the past that are currently happening today in my State I know 
instead of trying to move forward. And I would just implore you 
and the agency to try to move forward.
    And if the chairman would just grant me one question for 
Mr. Gee. Wyoming, as you know, I said earlier that we have to 
address all forms of energy in order to meet our national 
security needs and our energy consumption needs for our 
standard of living.
    The Department of Energy has the authority, jurisdiction, I 
don't know what you want to call it, to offer grants for 
studying coal technology so that, you know, coal would be a 
more friendly fuel to the atmosphere. Wyoming is far and away 
the largest producer of coal, as you know. And yet a very, very 
small fraction of the money that is given for research into 
coal technology has ever been seen by the State of Wyoming.
    And I realize that, politically speaking, we have one 
representative and two senators, but I think there is coal 
technology for efficiency in burning coal that is just as 
important as clean coal technology for those fuels that have a 
higher sulphur content. And I would just ask the DOE to be more 
open-minded and look at, you know, the consumption of coal that 
comes out of the Powder River Basin and help us fund research 
so that it can be a more efficient fuel, not just an 
environmentally friendly fuel, but more efficient and, thereby, 
more environmentally friendly. Thank you.
    Mr. Tauzin. The gentleman may respond.
    Mr. Gee. I may respond? I appreciate your suggestions. What 
my testimony points out is that of our key tenets of our energy 
strategy, and we can debate whether that's a well-thought-out 
strategy, is fuel diversification. And it does still continue 
to recognize the importance of coal in our energy portfolio. We 
have, in fact, asked for more coal research and development 
appropriations in this latest budget request.
    We also have, you should know, some ongoing solicitations 
for various projects for existing programs that are now being 
looked at to increase energy efficiency in coal generation and 
in clean coal technology. So, certainly, to the extent that you 
have some constituents who have some worthwhile proposals that 
we ought to look at, we would certainly be happy to.
    And I understand the spirit of your remarks. We don't look 
to see whether a particular State has one or two or three 
Members of Congress.
    We look at the merits of the particular proposal. If it 
makes good sense from a scientific and energy technology 
standpoint, we look at it. If we think that those benefits that 
would come from a particular research project are going to 
benefit not just your constituents, but the country as a whole 
in continuing to maintain a diverse energy resource portfolio 
mix, if we think it's a worthwhile project, we'll certainly be 
happy to talk to you and to any project sponsors that might be 
in your State that would be of interest in working with us.
    Mrs. Cubin. And I'd like to add, as may well be expected, 
from my point of view, the Department of Energy has been much 
more conscious of trying to find solutions to our national 
energy problems than the BLM and the Forest Service. And I 
think we need to work together as a team.
    Mr. Gee. On that, my I add----
    Mr. Tauzin. We've got some bills. Let me ask the 
gentlelady, I'm going to put her in the Chair in just a second. 
I have to testify----
    Mrs. Cubin. And then I'm just going to talk on and on as I 
want to.
    Mr. Tauzin. Let me ask the gentleman if he would hold his 
response. I need to do one thing before I leave though, very 
quickly. Mr. Hayes, your testimony says that the Department has 
seen great success in the Outer Continental Shelf program since 
the enactment of the Oil Relief Act. Does your Department 
support reauthorization of the Act?
    Mr. Hayes. We supported the legislation when Mr. Johnston--
and I don't think it's been presented to the administration for 
a position yet.
    Mr. Tauzin. So you have no position as yet?
    Mr. Hayes. I am not authorized, no. I don't believe it's 
been sent to the administration for a position.
    Mr. Tauzin. Steve, do you have a position on the 
reauthorization of the Act?
    Mr. Gee. Reauthorization of the--excuse me, what was the 
question?
    Mr. Tauzin. Reauthorization of the Deepwater Royalty Relief 
Act.
    Mr. Gee. We don't currently have a position on that as a 
department, Congressman. We're working with the Department of 
the Interior and discussing what are the relevant facts.
    Mr. Tauzin. It would be very good if both of you could seek 
some guidance from your departments to give this committee some 
information on it. As one of the recommendations Mr. Johnston's 
made, we'd like to hear your recommendations, also.
    The Chair recognizes for 5 minutes Mr. Faleomavaega and 
will put Mrs. Cubin in the Chair.
    Mr. Faleomavaega. Thank you, Mr. Chairman. I, too, would 
like to offer my personal welcome to Senator Johnston to the 
committee and someone that I certainly have the utmost respect 
for over the years and when he served as chairman of the Senate 
Energy & Natural Resources Committee. And I would really like 
to add my thank you for all of the help that you've given, 
especially to the insular areas.
    And, of course, welcome Secretary Hayes and Secretary Gee 
for their comments and their responses. Nothing pleases me more 
than to have than Chairman Young and the gentleman from 
Minnesota always having a very interesting dialog when it comes 
to issues referencing the environment and the oil industry.
    I read a couple of years ago that our country currently 
consumes about one-third of the world's energy resources. I 
don't know if it's every day or every year, but I wanted to 
know if there was any truth in that. Do you have any statistics 
as to exactly how much our nation consumes per year as far as 
all the world's energy supply is concerned?
    Mr. Gee might have some reference for that.
    Mr. Gee. I have heard, Congressman, I have heard that, 
roughly the same number. It is true that because we are the 
most industrialized and developed country in the world, it 
would not surprise me that our total aggregate consumption 
would be of the magnitude that you describe. I do know that, 
certainly, we are the largest consumer of oil in the world. We 
consume 19.3 million barrels per day.
    If I may. The total amount that has been given to me is 
that we consume 94 quads. We consume 94 quadrillion BTUs of 
energy, although that's getting a little too technical, of 
energy per day and that is a substantial sum. The total global 
number, I'm told, is 402 quadrillion BTUs and we consume 94 
quadrillion BTUs. So it looks to me to be about probably one-
quarter, judging by that number.
    Mr. Faleomavaega. Along those same lines, Secretary Gee, 
the fact that we do consume a lot, what percentage do we waste?
    Mr. Gee. I guess waste is a relative term. Let's say that 
the way we consume energy has embedded a number of 
inefficiencies, from the point of production to the point of 
use. Whether that's from the supply end of the equation and the 
end use end. And we are spending a great deal of our time and 
resources as a Department trying to boost efficiency, certainly 
in power generation, to boost our natural gas turbines from, 
say, a 40 percentile up to a 60 percentile, and our coal 
generation from a 30 percentile to a 40 percentile rate of 
efficiency.
    On the end use side, we're trying also to find ways to 
maximize at the industrial end as well as in the residential 
end ways to minimize consumption through a higher applied 
standard of efficiency, CAFE standards for the automobile, and 
that sort of thing.
    Mr. Faleomavaega. Mr. Secretary Gee, you make mention in 
your statement about the OPEC countries and the crisis of the 
situation that we're in. This is not some cynical or purposely 
done effort to try to undermine the concerns that we have as 
far as energy supply is concerned in our nation. It is partly 
because of the Asian crisis that we find ourselves now in this 
kind of a predicament.
    And I'm just curious, we, here again, I understand that we 
have enough coal supply here as an energy resource to last us 
for another thousand years. And adding onto what our good lady 
from Wyoming indicated, has the Department of Energy made any 
serious effort to look at this?
    Now, as I listen to what Mr. Tauzin said, that we're in 
somewhat of a catch-22. We increase production of oil and then, 
at the same time, when we look at alternative energy resources, 
this always seems to bring us back to a crisis. It doesn't 
really answer the question.
    But I think that, following what Congressman Cubin was 
saying, what can we do with this tremendous amount of resource 
that we have right in our backyard. If we have enough to last, 
I mean, a long time. Is it because the means to refine it are 
difficult, or we just don't want to bother with it, or we just 
prefer using other sources offered, such as fossil oil fuel is 
because it's more convenient?
    What's the basis of our policy as far as coal is concerned, 
because it seems to me if we have this resource, why aren't we 
looking to the technology and perfecting it and refining it to 
use it as such?
    Mr. Gee. Well, Congressman, the short answer is that we 
are. Coal makes up currently 55 percent of electric generation 
needs. We have an ongoing program at the Department to try to 
find ways to utilize coal as a potential means of providing 
liquid transportation fuels as well as electric power as well 
as process heat. That is an ongoing program which could lead to 
the conversion of coal to a transportation fuel.
    Let me add that one of the key cores of our energy policy, 
and I know, again, some would dispute whether that a well-
considered policy, is fuel diversification. And by that I mean 
that the range of all of the fossil fuel technologies and 
resources, but also renewable energy, solar, photovoltaic, 
wind, geothermal, as well as energy efficiency technologies, 
both at the generation end and the end use end.
    Our consumption of petroleum went up by 20 percent since 
1985. One of the things we need to focus on, in conjunction 
with our supply end concerns, obviously, is the end use and the 
efficiency end, as you recognized. We think that energy 
security can be found, certainly, in our supply side 
alternatives, but also in the way we maximize our efficiency 
and use of energy.
    Mrs. Cubin. Eni, I have to go for a vote. And I hate to ask 
the panel to wait until we come back. I will get over there as 
quickly as I can and back. I know Congressman Duncan did want 
to, at the very least, make a statement for the record and so, 
if you would indulge us and we'll get back as quickly as we 
can.
    [Recess.]
    Mrs. Cubin. Take your positions at the table. I'd like to 
recognize Congressman Duncan.
    Mr. Duncan. Thank you, Madam Chairwoman, and I've been told 
that this panel has to leave and I'll try and be very quick.
    But let me just say that I think that one of the problems 
here may be that when people look at a map of the entire United 
States and they see it on one small page in a book, they don't 
realize how big this country is. And this Arctic Wildlife 
Refuge is 19.8 million acres. And we say that so easily, yet I 
represent half of the Great Smokey Mountains National Park, 
which is the most heavily visited national park in the country 
with some 10 million visitors. And those people come there and 
most of the people that come there are in awe of the size and 
the beauty of that park. And yet ANWR is 35 times the size of 
the Great Smokey Mountains National Park.
    And I've read many articles about this. And every article 
says that they only want to drill or impact on about 2,000 or 
3,000 acres. One article, I think, estimated it may possibly be 
as much as 12,000 acres. 12,000 acres, if that's what it is, 
out of 19.8 million acres. I'm not even sure if I could figure 
that out, but that's probably less than 1/100th of 1 percent. 
It's phenomenal how small the impact would be and yet how 
exaggerated the impact is made by some of these groups.
    I mean, I went up there. Senator Johnston mentioned that 
he'd been up there five times, I think. Is that correct, 
Senator? I went up there four a half years ago to Prudhoe Bay 
and to Barrow. And I've seen it described as a flat brown 
tundra, although a big part of the year, apparently, it's 
covered in snow, in this coastal plain, which it was mentioned 
earlier, is less than 1 million acres, although every article 
I've seen says it's 1.5 million acres.
    There's hardly a tree or bush on it. And yet all these 
groups, very falsely and very misleadingly, run these pictures 
of the parts of the Arctic Wildlife Refuge where there are 
trees and bushes and mountains and streams and all that. And, 
sure, those are beautiful areas, but nobody has ever advocated 
drilling for oil on those parts of the Arctic Wildlife Refuge. 
And so it's worse than misleading; it's just false propaganda 
comparable to what they used to do in countries opposed to 
everything that we've always stood for in this country.
    And I'll say again there are some of these groups who don't 
seem to want people to drill for any oil, dig for any coal, or 
cut a single tree. And it's sad because they've not only 
destroyed thousands and thousands of jobs, they drive up prices 
and they hurt the poor and the working people most of all. And 
yet they sit there and do it and act like they're for the 
little man. And it's really disgusting.
    The geologic survey says that there's almost 16 billion 
barrels of oil up there. Chairman Young told me that he thinks 
there's far more than that up there. And then you take billions 
more offshore and all of this to be done in an environmentally 
safe way, gotten to. And I think some of these groups are 
funded by some of these big companies that benefit if we don't 
drill for any oil in Alaska or we don't drill for any oil 
offshore, because there are shipping companies and there are 
oil companies from other countries that benefit greatly.
    So what we do, we hurt the poor and working people in this 
country and we help these big companies that benefit if we 
don't produce any oil domestically.
    I think it's very sad and it's particularly sad coming from 
people that try to pretend like they're in favor of the little 
man in this country. So, with that, I'll stop and we can move 
on to the second panel, I suppose.
    The Chairman. [presiding] I thank the gentleman. This panel 
is excused. I want to thank, especially, the senator for 
appearing. And get out and start talking about it. I do thank 
the administration for appearing, although we differ. You know, 
time does flies fast, thank God.
    Next panel. Dr. M. Ray Thomasson, president of the American 
Association of Petroleum Geologists; Robert E. Ebel, director 
of energy programs, Center for Strategic and International 
Studies; Jerry Jordan, Independent Petroleum Association of 
America; Howard Geller, executive director, American Council 
for an Energy-Efficient Economy; and Gerald L. Hood, secretary-
treasurer, General Teamsters Local 959, Anchorage, Alaska.
    Will the panel please take their seats? I do thank the 
panel and, for those that have been waiting patiently, this is 
a process we have to go through. Many Congressmen, including 
myself, have a tendency to speak too long, but the information 
you give us written and vocally will be in the record as we 
review this and we hopefully will do so when it comes to 
drawing an energy policy up either this year or next year, 
whenever we're going to do it. So I do welcome it.
    Dr. Thomasson, you're the first one up.

STATEMENT OF M. RAY THOMASSON, PRESIDENT, AMERICAN ASSOCIATION 
    OF PETROLEUM GEOLOGISTS; ACCOMPANIED BY ROBERT E. EBEL, 
      DIRECTOR, ENERGY PROGRAM, CENTER FOR STRATEGIC AND 
  INTERNATIONAL STUDIES; JERRY JORDAN, INDEPENDENT PETROLEUM 
  ASSOCIATION OF AMERICA; HOWARD GELLER, EXECUTIVE DIRECTOR, 
AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT ECONOMY; AND GERALD L. 
    HOOD, SECRETARY-TREASURER, GENERAL TEAMSTERS LOCAL 959, 
                       ANCHORAGE, ALASKA

                 STATEMENT OF M. RAY THOMASSON

    Mr. Thomasson. Thank you, Mr. Chairman, for the opportunity 
to provide the view of the petroleum geology community on these 
important issues. My name is M. Ray Thomasson. I've been a 
practicing petroleum geologist for 41 years. I'm president of 
the American Association of Petroleum Geologists, a 
professional organization composed of more than 30,000 field 
scientists engaged in the exploration and development of energy 
resources throughout the world. The AAPG is proud of 
contributing to the supply of reliable and inexpensive energy.
    Crude oil and, more recently, natural gas have fueled the 
economic development of our country. Today the U.S. imports 
more than one-half of our crude oil and refined product needs. 
Mr. Chairman, the domestic production of crude oil has declined 
from 8.9 to 5.9 million barrels of oil per day since 1985 and 
the production of natural gas is essentially flat because of 
changes in the tax code and increasing restrictions in access 
to public land.
    The resources are there. Predictions about a supply 
shortage have been made for over 75 years. Every prediction has 
been proven blatantly wrong. The next figure shows previous 
estimates of the ultimate size of U.S. crude oil resources 
versus cumulative production. The resource has grown slightly 
faster than has cumulative production. New science and 
technology are permitting us to do a better job.
    Crude oil can be moved between world markets with relative 
ease, but natural gas cannot. The natural gas that we need must 
come from U.S. production as well as from imported from Canada. 
Assessments of the Gas Research Institute and Energy 
Information Administration each show a demand for as much as 32 
trillion cubic feet of gas per year by 2015. This is a 50 
percent increase over current domestic production.
    Presently, we are barely replacing our current annual 
production with newly discovered reserves. Since 1967, over 300 
exploratory wells have been drilled offshore of the Canadian 
Atlantic and discovered at least 12 trillion cubic feet of 
natural gas and 2 billion barrels. The estimated ultimate is 50 
trillion cubic feet of gas and 10 billion barrels of oil. This 
geologic trend, with similar possible greater potential, 
projects southward for some 1,000 miles off the East Coast of 
the U.S.
    All of these wells and platforms are operating in the prime 
commercial fishing waters and off the pristine tourist 
coastlines of eastern Canada. Production coexists with tourism, 
commercial fishing, for the betterment of all concerned.
    Mr. Chairman, the National Petroleum Council and the AAPG 
believe that the resource base is sufficient to support the 
expected growth in demand. However, a substantial portion of 
that resource base is, at present, either not accessible due to 
Federal moratoria or accessible with onerous restrictions that 
destroy the economic viability of development.
    The NPC study also notes that the necessary increase in 
capital expenditures needed for exploration and production will 
have to increase from about 32 billion per year now to more 
than 50 billion per year by 2015. Public lands contain a 
substantial portion of the undeveloped oil and gas resources 
this country needs. These lands are underdeveloped because of 
two categories of restrictions: non-accessible and accessible 
with restrictions.
    The 1002 area of ANWR, as well as the similar coastal plain 
area of NPRA should be open to exploration and development. The 
1002 area represents less than 10 percent of the 19 million 
acres of ANWR and contains potential oil reserves of a range 
11.6 to 31.5 billion barrels.
    The Department of the Interior's management of the 
resources on public lands and the Rocky Mountain region and 
elsewhere needs to be reformed. We request that Congress reform 
both the Clean Water Act and the Endangered Species Act and 
thwart the EPA's efforts to severely regulate the use of 
hydrologic fluid bore-hole fracturing methods. No additional 
areas of public land should be removed from access, especially 
by the sole action of the President of the United States, until 
a proper assessment of their resource potential is conducted.
    Lastly, petroleum exploration and production are extremely 
capital-intensive. Major tax reform that more fairly treats 
capital in its effort to find and development new sources of 
domestic oil and gas will dramatically help our ability to 
provide safer and more secure resources.
    In summary, Mr. Chairman, without improved access to public 
lands and fairer tax and regulatory treatment, we will continue 
to jeopardize our nation's economic stability and, thus, our 
own national security.
    [The prepared statement of Mr. Thomasson follows:]

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    The Chairman. Thank you, Doctor, and I do appreciate that 
you restated some of the comments made previously and I think 
the trend here is exposing itself and, hopefully, we can 
recognize it. We have two choices. One is to become self-
sufficient or somewhat self-sufficient or to continue down that 
path of responding to the foreign countries. So I do thank you 
for your testimony.
    Robert.

                  STATEMENT OF ROBERT E. EBEL

    Mr. Ebel. Thank you very much, Mr. Chairman. Let me begin 
by noting that the general public's view of developments in the 
world oil market is very limited. It's limited to that little 
window on the gasoline pump at their favorite filling station. 
If the price per gallon is essentially unchanged since the last 
visit, then what's the problem? If the price happens to be a 
little bit higher each time they visit, then what are the oil 
companies doing to us now? The question of where that oil comes 
from is rarely if ever raised. Oil is oil and what matters is 
the price at the pump.
    Policymakers do understand that our increasing reliance on 
imported oil threatens our national security. Three findings to 
that effect have been made in the past 12 years. But what to do 
about that increasing reliance? The answer from our government 
has been that present policy suffices, or words to that effect. 
That is, yes, there's a problem but don't expect any actions 
from your government which might help alleviate the situation.
    But just what are these present policies? Our energy policy 
continues to be guided by two considerations. First, that the 
marketplace make the decisions and, second, U.S. companies are 
encouraged to search for oil outside the United States, but 
away from the Persian Gulf. Do we let the marketplace make the 
decisions? Of course not. That's an opportunity which 
governments cannot afford to bypass.
    It seems to me a bit incongruous that our government 
encourages the search for oil outside the United States. To 
take that posture means we have consigned ourselves to greater 
and greater dependence on foreign oil. That means that oil 
exploration dollars are spent, but outside the United States. 
And that means, in effect, we have given up on ourselves.
    Should we give up on ourselves? I think not. We all know 
individuals who have had great potential, but for some, they've 
never been able to live up to that potential. Nations are much 
the same way, having a recognized potential is not necessarily 
a guarantee of success. You have to work at it to develop their 
potential. Perhaps the most disappointing are those who turn 
away from what might have been. How can it be that the world's 
sole super power finds it so easy to turn its back on its 
inheritance?
    What might happen if we would reverse our policy and 
encourage the search for oil and gas in the U.S. with our 
potential fully available for exploitation, rather than locked 
away? What will it take? Another oil embargo like we had in 
1973, 1974?
    Our energy policy is one-sided and inward-looking. Where 
were we, when the price of oil had fallen to $10.00 a barrel? 
We were rejoicing because cheap oil helped fuel our great 
economic growth. Did we care about the exporters facing 
financial difficulties? No, that was their problem, not ours.
    But when they took collective action to raise prices, 
success probably surprised them as much as it did us. We 
watched over the months as prices tripled to $30.00 a barrel. 
Now the problem became not one for the consumers, but for the 
producers as well, because they had to look at the impact of 
these high oil prices.
    The U.S. is considered vulnerable because of our steadily 
rising dependence on foreign oil. And the oil exporters have a 
vulnerability of their own and that's their heavy reliance on 
oil-derived revenues. Few have diversified economies and few 
have even tried to diversify. Oil is their strength and their 
weakness and we should not be surprised when oil is used to 
express that strength or to overcome that weakness.
    Mr. Chairman, whenever oil prices are rising, like the one 
we're in today, we reach for that shelf entitled project 
independence and we dust off the remedies of opening up 
prospective lands, now denied, for exploration. We take a 
second look at alternative forms of energy and we once again 
discuss the need to become more efficient in our use of oil.
    But then the crisis passes, as this one will. And the 
remedies are returned to the shelf to once again gather dust to 
be revisited upon the time of the next crisis, which will 
surely appear but I don't know when or in what form. Mr. 
Chairman, in conclusion, I must ask the question when will we 
ever learn to act rather than react?
    Thank you. And I would ask that my oral statement be 
entered into the record.
    The Chairman. Without objection, so ordered. And thank you, 
Robert. Jerry.

                   STATEMENT OF JERRY JORDAN

    Mr. Jordan. Yes, Mr. Chairman, members of the committee. I 
am Jerry Jordan, chairman of the Independent Petroleum 
Association of America, IPAA. Today I'm testifying on behalf of 
the IPAA and the National Stripper Well Association and 32 
cooperating associations, State and regional associations, 
around the country. These associations represent thousands of 
independent oil and natural gas producers in the country. 
Independents drill 85 percent of the wells drilled in the 
United States and produce two-thirds of the natural gas.
    These hearings have been triggered by the recent OPEC 
actions and the price increases that changed the price of 
gasoline, diesel, and heating oil. So what happened and how can 
we avoid a repeat?
    We have an economy that's based on petroleum, as you 
already heard, crude oil and natural gas. Petroleum remains the 
predominant energy source and will continue to do so for the 
future, at least the foreseeable future.
    Domestically, we import over 55 percent of our crude oil 
demand. Natural gas, on the other hand, is largely a domestic 
resource with imports mainly from Canada. In the future, 
domestic oil and natural gas production will be more and more 
dependent on a healthy independent exploration and production 
industry. Major oil companies began shifting their exploration 
efforts overseas after the oil price crisis in 1986 and this 
pattern will probably continue.
    Oil prices are set on the world market. The U.S. is a price 
taker as we've just recently found out. Independent producers 
are the most vulnerable to shifts in prices. We were damaged 
most severely during the low oil price crisis of 1998 and 1999. 
We are recovering slowly, but we need stability and we need 
policies designed to bolster our industry. It is critical to 
our country.
    Our current energy policies make no sense. We rely too much 
on foreign oil and too little on our own resources. We talk 
about shifting to a broader use of natural gas, but we are 
constantly thwarting those producers who are exploring for gas. 
We need different policies, but, of course, as always, there's 
no single answer.
    The previous testifier said he didn't know when the next 
crisis is going to be. I think I can predict that we will have 
at least a mini-crisis within the very foreseeable future 
because our natural gas demand and our natural gas supplies and 
decline curves on the wells that are producing in this country 
and offshore are heading for a collision. I don't mean it's 
going to be some big energy crisis. I don't know how bad it's 
going to be. But I think it will at least cause price increases 
and I think you ought to be warned of it. And I want to take 
the time out of my testimony to raise that question, since he 
said that.
    I think our solutions are, first, we do have to continue to 
work with the foreign producer nations, as we have been doing. 
Second, we must start treating the domestic oil and natural gas 
production industry as a critical element of our national 
economic security. To do this, we must direct our efforts to 
the two areas which can have the greatest effect: access to 
government-controlled lands and water for exploration and 
production and access to capital.
    With regard to land access, this committee's jurisdiction, 
of course, is at the heart of the developing policies on this 
question. Unfortunately, the administration not only avoids 
dealing with the clear need to allow exploration and production 
on Federal lands, both off and onshore, it seems to be 
dedicated to expanding the restrictions and prohibitions. In 
doing so, it is attempting to take additional western and 
offshore areas out of our exploratory inventory. This practice 
is going to cause large problems for our country as we attempt 
to meet our natural gas demands.
    There have been successes, as described by Senator Johnston 
when he talked about the Deepwater Royalty Relief Act. That was 
a great success and, obviously, that should be pursued for 
renewal.
    Mr. Hayes in his testimony, I think, showed that if you 
open it, they will come, interestingly enough. They simply 
aren't opening enough. And I thought his testimony actually 
proved our points better than his points.
    What can we do? No one can expect that the long list of 
restrictions and limitations can be instantly revised. We're 
not dealing with one particular action on the restrictions to 
access. We're dealing with a whole series of actions. We're 
dealing with permit restrictions. We're dealing with 
prohibitions, moratoriums. It takes many, many forms. And 
they're very hard to fight because of this.
    We do things like declare areas to be roadless areas. I 
happen to think, as a recovering lawyer, that I don't think you 
can do that, to take a multi-use property and then say, well, 
you can't really use it for the purposes intended because we 
won't let you build roads. And we intend, I intend, to advise 
that we ought to test that in court if it actually happens. But 
these are the kinds of things that we face and they are very 
complicated and there's a number of them.
    We first need to do an inventory, as this committee has 
recommended, an inventory of the properties that are being 
taken off the list of available Federal lands and Federal 
waters. Second, we need to make a clear list of the impediments 
that we are encountering, all the laws, regulations, permitting 
regs, all the environmental requirements, and basically take an 
inventory of them as well as the lands.
    Finally, we must promptly open up the areas in the West 
which have been restricted. And we must stop the additional 
moratoriums. I don't know what the plural of moratorium is, but 
we must stop these actions that have been taking place and look 
like they're going to take place more in the next year.
    Finally, with regard to capital, I would be remiss if I 
didn't mention a unique opportunity that we have. For the first 
time, we have an administration, as evidenced by statements of 
the President in his recent radio broadcast and also the 
Secretary of Energy, the industry, Members of Congress, all 
seem to think that we ought to do this little package of tax 
features or tax reform that have already been discussed. We 
ought to do that right now.
    And we ought to do it with a rifle-shot approach, not a 
shotgun. Don't hang all the other things on it that make it 
lose. We have agreement among all these different interests on 
those issues and it won't be a solution, but it will help bring 
capital to our industry. And, other than land access, capital 
is the biggest problem we have.
    I know I've overstayed my time and there are other things I 
could say, but thank you for the opportunity.
    [The prepared statement of Mr. Jordan follows:]

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    The Chairman. You notice I didn't hit the gavel, Jerry.
    Mr. Jordan. I know.
    The Chairman. The next one is Howard Geller, executive 
director of American Council for an Energy-Efficient Economy.

                   STATEMENT OF HOWARD GELLER

    Mr. Geller. Thank you, Mr. Chairman. I'm Howard Geller, the 
executive director of the American Council for an Energy-
Efficient Economy, a non-profit organization based here in 
Washington.
    In my oral statement today, I would like to make four 
points. One, domestic oil production in the United States is 
falling and will continue to fall, with or without opening the 
Arctic National Wildlife Refuge to petroleum exploration.
    Two, growing oil imports is a serious threat to national 
security and our economic well-being.
    Third, reducing consumption of petroleum products through 
improving the fuel economy of new vehicles is our single most 
effective and desirable strategy for cutting oil importants.
    And, fourth, tougher fuel economy standards should be 
adopted to increase the efficiency of new vehicles.
    Total crude oil production in the United States peaked in 
1970 and generally has been falling since then, as I show in 
figure one in my testimony. Domestic crude oil production in 
1999 was 39 percent less than peak output 30 years ago. This 
has occurred because we are running out of economically 
recoverable oil in the United States. Furthermore, the 
Department of Energy and many other organizations project that 
domestic crude oil production will continue to fall in the 
future.
    I am not an expert on the potential costs and benefits of 
allowing oil production in the Arctic National Wildlife Refuge, 
but one thing seems clear. Opening up ANWR to oil production 
would not make a significant contribution to curtailing our 
growing dependence on oil imports.
    As Mr. Hayes has stated, the U.S. geological survey 
estimates that there are 2.4 billion barrels of economically 
recoverable oil under ANWR at an $18 per barrel market price. 
If this amount of oil is produced over 25 years, additional oil 
production from ANWR would average 0.26 million barrels per 
day. Even assuming twice as much economically recoverable oil, 
ANWR production would average only 0.53 million barrels per 
day. And total domestic oil production in the year 2010, in all 
likelihood, will be less than it was in 1999.
    The Congress should be concerned that oil imports are high 
and growing. We and our allies are dependent on unstable 
nations for our vital oil supplies and our economy is 
vulnerable to another oil price shock. Even without a price 
shock, the Department of Energy projects that our oil import 
bill will climb from $60 billion in 1999 to $110 billion by the 
year 2010.
    Unlike the poor prospects for increasing domestic oil 
production, there are good prospects for reducing oil demand by 
raising the efficiency of our vehicle fleet. In fact, if we had 
the foresight and political will to steadily increase the fuel 
economy of new vehicles sold in the United States during the 
past 12 years, as we did during 1975 to 1987, we probably would 
not have experienced the recent run up in oil prices.
    Of course, we can't go back and redesign the vehicles sold 
over the past 12 years. But we can enact policies today to 
ensure that vehicles sold during the next few decades are gas 
sippers rather than gas guzzlers. Tougher CAFE fuel economy 
standards are essential for significantly increasing new 
vehicle efficiency.
    Independent analyses, including those from our national 
laboratories, have concluded that the initial CAFE standards 
were largely responsible for the near-doubling in the average 
fuel economy of cars and a more than 50 percent increase in 
light truck fuel economy from 1975 to 1987, resulting in oil 
savings of over 3 million barrels per day. The standards were 
met largely through better technologies without negative side 
effects.
    We recommend increasing the current fuel economy standards 
by 60 percent to 44 miles per gallon for cars and 33 miles per 
gallon for light trucks by 2012 with further increases at the 
rate of 2 1/2 percent per year beyond this date. Car 
manufacturers say it can't be done or it will cost a fortune, 
as they did when the original CAFE standards were debated. But 
policymakers and the Congress and the Ford Administration 
enacted standards in 1975 in the face of industry opposition 
and the car companies complied at reasonable cost. Tougher 
standards are now long overdue and should be adopted before we 
face another oil price shock.
    We estimate that tougher fuel economy standards I just 
referred to would reduce gasoline consumption by 1.5 million 
barrels per day by 2010 and over 4.5 million barrels per day by 
2020. With this level of savings, oil import growth would be 
moderated during this decade and imports would then fall after 
2010. The potential oil savings from such standards far exceed 
the potential oil supply from opening ANWR to development, as I 
show in figure four of my written statement.
    The Chairman. How much more time do you have?
    Mr. Geller. Let me just conclude here and say that 
increasing vehicle fuel economy was our key response to the oil 
crises of the 1970's. This strategy can and should be applied 
again to avoid new oil crises in the 21st century.
    Thank you and that concludes my statement.
    [The prepared statement of Mr. Geller follows:]

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    The Chairman. Thank you. My good friend Mr. Hood from 
Anchorage, Alaska, president of the Teamsters. Mr. Hood.

                  STATEMENT OF GERALD L. HOOD

    Mr. Hood. Thank you, Mr. Chairman. I'm here today not only 
representing the 7,000 members in Alaska, but I also am 
speaking for the entire 1.5 million members of the Teamsters 
Union throughout the country.
    And I submit that there are some in denial that there 
exists in this country today a gas crisis or an energy crisis 
that we haven't seen the likes of since the early 1970's. Gas 
prices are at an all-time high and are projected to increase 
even more, notwithstanding OPEC's recent indication to increase 
production and regardless of what you read in the press. Yet, 
due to the lack of a comprehensive energy policy, this country 
continues its dependence on the importation of foreign oil from 
countries that don't necessarily share our global philosophy 
and have agendas that are directly in conflict with our own.
    Our solutions to this energy crisis must be multi-faceted. 
One of the components has to include an increase in our 
domestic supply of oil which, whether you like it or not, will 
require making Federal lands available for leasing. We 
desperately need to reverse the trend of importing roughly 56 
percent or 9 million barrels a day of our petroleum needs.
    And I'd remind the committee that 25 years ago this country 
only imported 35 percent of the oil it consumed. Domestic 
production is down 17 percent over the last decade and 
consumption has risen 14 percent. You don't need a road map to 
see where this trend is taking us.
    We must develop a program to hold our allies and trading 
partners accountable for their actions. The United States 
didn't hesitate to protect the sovereignty of Kuwait during 
Desert Storm and, in fact, we drove the Iraqis from those oil 
fields after they had set them on fire. Had it not been for 
America and American expertise, much of the oil now being sold 
to us at such high prices could still be burning.
    We must look to areas of our own country where the 
potential for hydrocarbon fuel production is greatest and where 
it can be developed with the highest standards and performance 
and environmental protection. The State of Alaska currently 
produces approximately 1 million barrels of oil a day, or 20 
percent of our domestic supply, and the coastal plain of ANWR, 
according to the USGS, has the potential of producing up to 1.5 
million barrels per day. In my estimation, this would be a 
tremendous step in reducing our dependence on foreign oil.
    And there's another testimony that disputes the figures 
with regard to how much oil there may be in ANWR. Let me just 
point out that when we drilled in Prudhoe Bay, we estimated 
then that there would be 9.6 billion barrels of oil. Today, 
we've produced 10.5 billion barrels of oil from Prudhoe. We 
anticipate, by the time we're finished with Prudhoe Bay, we'll 
recover about 14 billion barrels of oil. Now this is just 
Prudhoe Bay. It doesn't include Nully Point, Alpine, and 
Kuparuk and the other surrounding fields.
    Now there are those who argue we shouldn't ravage and 
pillage and plunder this last pristine wilderness in the 49th 
State. Let me just say that ravage and plunder and piller 
aren't my words. Those are the words of the extremists that 
want to preclude our developing section 1002 of ANWR.
    We in Alaska have explored and produced oil for over 30 
years. We've done so with the greatest of respect for our 
environment because this is, after all, the land that we live 
in and we work in.
    I spent time in Prudhoe Bay here recently visiting 
exploration and production facilities where my members work. 
And I was reminded of some years ago we had a Russian 
delegation visit us in Prudhoe Bay and they didn't believe that 
we were producing oil. And we asked them why. It's because we 
don't see any leaking or we don't see any on the ground.
    So I would ask those who vigorously oppose the exploration 
of ANWR, where would you rather see oil exploration done? In a 
place of the world where there's little or no environmental 
protection or regulation or in a place in our own country where 
we have the strongest and strictest environmental regulations 
in the entire world?
    Now members of organized labor have worked in Alaska's 
North Slope oil fields since their discovery in 1967. And we've 
done so correctly in an environmentally sound manner. Our 
workers are the most efficient, the best trained, the most 
skilled, and the safest workers in Alaska's oil patch.
    As I testified before the Senate Committee on Energy and 
Resources in 1995 and again last week, I want to emphasize to 
this committee as well that the development of ANWR will create 
somewhere between 250,000 and 750,000 jobs throughout this 
great nation of ours. And the difference between these jobs 
that we will be creating and the ones that have been created 
recently is that they are higher end jobs with excellent wages 
and excellent benefits, not like the jobs created here recently 
which are service sector and minimum wage jobs.
    Mr. Chairman, the issue before you today is important to 
the members of my organization. My organization includes 
600,000 drivers who turn the key on a truck to start their work 
day. And whether they drive cement mixers, deliver packages or 
bread, or move freight throughout the country, they rely on 
gasoline and diesel fuel to get their job done.
    We're asking for a comprehensive national policy, which 
includes the leasing of Federal lands for oil and gas 
development, recognizing the consequences of high priced oil to 
a national economy that relies on trucks to transport 80 
percent of the freight in this country.
    I thank you for this opportunity to testify before the 
committee today.
    [The prepared statement of Mr. Hood follows:]

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    The Chairman. Thank you, Gerry. And I was going to bring it 
up a little later on. We talked about fuel-efficient cars and 
fuel-efficient that, you cannot save your way into prosperity. 
Anybody who's been in a bank knows that. And everything that's 
delivered to us is delivered to us by a truck of some type.
    And, at this time, I'll let the good lady take over the 
Chair for a few moments and I'll be back.
    Mrs. Cubin. [presiding] Thank you, Mr. Chairman, as you 
leave. And I just love it because here I get to talk as long as 
I want. Although, you know--oh, good.
    I want to make one statement about Mr. Hood's testimony. As 
you all know, I represent the entire State of Wyoming. I was in 
a small town in Wyoming and the President had been on touting 
the 8 million jobs that his policies had created since he's 
been in office. And I had a lady come up to me and say, you 
know, I believe that the President has created that many jobs. 
She said, I know. I've got three of them. That's how much it 
takes for me to make a living.
    And so your point that service jobs have been created, but 
good paying jobs that can result from a healthier energy 
industry are not plentiful. And, you know, the minimum wage 
jobs that are created simply aren't adequate for what we need 
for the people that we represent in this country. So I 
appreciate that point that you made.
    I'm the only person I know that can't see at a distance, at 
my age, but I can read stuff. So forgive me for a minute, but I 
want to see your faces when I ask you questions.
    I want to ask one thing. Most of you mentioned access to 
lands to explore for energy sources, most of you mentioned that 
in your testimony. What was your reaction when you heard the 
witness from the Department of the Interior deny that access 
was a problem and brag about the increase in production on 
public lands? I would like each one of you to respond to that. 
You want to start, Jerry.
    Mr. Jordan. My reaction is that we're playing games. You 
know what they say about numbers and what games you can play 
with numbers. The point is that we have had a studied, steady 
campaign to take huge areas of our government lands out of our 
exploratory inventory, notwithstanding the numbers they may be 
able to play with what they listed. I mean, they've been taking 
million-acre blocks, bites, and that's what's important here. 
And it's got to stop or we are not going to be able--you know, 
I agree with Ray completely and the National Petroleum, which I 
serve on, on the Gas Committee.
    We've got the resource base to produce the natural gas that 
we're going to need, but if we don't take these restrictions 
off the access, there's no way we can do that. So it is 
critical. And I don't know what kind of games he's playing. I'm 
sure he's telling the truth, technically, so don't get me 
wrong. But I think that it's painting the wrong picture.
    Mr. Thomasson. May I respond?
    Mrs. Cubin. Certainly. Please do, Dr. Thomasson.
    Mr. Thomasson. I was struck by the fact that the place 
where those acres have become available is in the offshore and 
the place where production has gone up dramatically is the 
offshore. I think simple logic would allow one to come to the 
conclusion that if you open up access, you're going to open up 
our ability to find and develop more resources.
    And I second what Jerry says. Not only do we have an 
enormous resource base, but because of technology today, that 
resource base is not shrinking, it's expanding. So I disagree 
very strongly with Mr. Geller and his statement that we are 
running out of resources. It's not true.
    Mrs. Cubin. Yes and I agree with you, from all of the 
information that I've been able to glean through the 
subcommittee that I chair.
    I would like to address this question probably to Jerry, 
but to any of you who have an idea on it. As Mr. Jordan stated 
that independent producers drill 85 percent of the wells and I 
think he said produce two-thirds of the gas production in the 
United States. And because of that, I really have a goal of 
trying to do everything I can to create an environment where we 
can help independent producers along.
    I have a problem with some of the policies that the major 
oil companies have pursued. Because I realize that they have to 
answer to their stockholders. However, I still think that there 
ought to be some patriotism and that there ought to be some 
regard for national security. And where they spend their money 
for drilling, while it is none of my business, it's irritating 
to me. I think that independents have a harder row to hoe, if 
you will.
    So I would like to ask you, do any of you think that it is 
realistic that the majors might move their money, if we could 
create a better environment, might move their money back to 
exploring in the United States?
    Mr. Jordan. Shareholders are interested in returns. 
Unfortunately, we've been in a dotcom economy and it's very 
difficult, whether you're a major or an independent, to make 
the kind of returns, if you've got shareholders and if you have 
to answer to shareholders and sometimes to bankers, it's very 
difficult to justify drilling sort of where you ought to rather 
than where you want to.
    The majors, I know, have to do what they--I mean, I think 
they're doing what they feel that they absolutely have to do. I 
know many of the executives, I know they are dedicated to our 
country being more energy independent, just like the 
independents are. But I think it's very difficult for them and 
I think that so often the policies and I've dealt with people, 
with majors, who are selling properties in the United States 
and they say, we don't really want to sell them, but we don't 
have any choice.
    But it really works out well for the country because they 
sell them to independents and the independents go on and 
develop them. So it's this partnership that we have between the 
majors and the independents. And some of the independents are 
getting very large. And as they get very large, I'm happy to 
report that there are a lot of little bitty independents, it's 
kind of like the food chain, there are a lot of little bitty 
independents forming all over this country.
    And if we create the kind of economic climate that we need 
to promote our industry. And we already pay big taxes. I mean, 
if we make a lot of money, we pay a big percentage of taxes. 
And the oil companies pay taxes just like everybody else. But 
they also apply, if they do their practice is sometimes they 
get to delay paying taxes and that's considered an abuse, but 
it's not an abuse. It's a value judgment made by our system 
which says if you'll put your money back in and help develop 
resources, we'll let you defer those taxes. It's a value 
judgment.
    These industries have to balance all these things. And I 
think that the system is working, but we need to push harder, 
just like Ray has said, we need to push policies that will 
encourage drilling and encourage exploration. And then, of 
course, we have to give them land access to do it because most 
of our lands in the West are controlled by the government.
    Mrs. Cubin. Right. And I don't disagree with anything 
you've said. I do think, from my own experience in talking to 
independent producers, that they have fewer resources to go 
through the environmental impact studies, the archeological 
studies, the endangered species studies, and all of the sort of 
things, the hoops that the Federal Government puts in front of 
people even when the land is not shut off by roadless areas, 
for example, and wilderness study areas, for example, and those 
sort of things. I guess that was the point I wanted to make.
    I would like to address this question to Mr. Geller. You 
talked about standards that you'd like to see for efficiency in 
motor vehicles. Do you know what total production would need to 
be if, in fact, in the United States--no, not production in 
United States. What total consumption would be if those 
standards were adopted? Do you have any statistical information 
on that?
    Mr. Geller. Yes. The savings I indicated, 1.5 million 
barrels a day by 2010 and 4.5 million by 2020 can be compared 
to our total consumption which I think is around 18, 19 million 
barrels per day. Perhaps other on the panel--19.
    Mrs. Cubin. But are you speaking of only consumption for 
motor vehicles and not any other?
    Mr. Geller. Oh. That's total oil. Motor vehicles, I think 
our gasoline and diesel fuel use is 55 percent of our total oil 
consumption. OK, so, total oil consumption right now is 
something around 10 million barrels per day for motor vehicles. 
That's both passenger vehicles and heavy trucks. So that 
increasing these standards can do quite a lot in terms of 
saving a very significant amount of the total consumption that 
we have today and the projected consumption that we have in the 
future.
    The thrust of my testimony is that there's two sides of the 
equation. There is a supply side, of course, and we don't deny 
that. We can't just run our country on energy savings. Of 
course, that's true. We need supplies.
    But there's also the demand side of the equation and let's 
not forget about it and let's look at the opportunities to save 
energy, which will reduce oil imports, saving oil, which will 
reduce oil imports. The margin will be there in reducing 
imports from efficiency improvements in vehicles. That's the 
biggest opportunity on the demand side. And I would suggest a 
much greater opportunity for reducing imports than these other 
kinds of actions being discussed here.
    That is oil, domestic crude oil production has been 
declining in this country for 30 years. Every forecast that 
I've seen, I haven't seen them all, but every forecast, 
government and non-government, is showing further declines in 
the future in domestic crude oil production.
    Mrs. Cubin. And I don't think that there's anyone that 
would argue that efficiencies and conservation of energy is 
something that we should not do. I believe everyone thinks that 
we should do that. How we do that is what's in controversy and 
whether government standards mandating that should be the way 
to go or whether the free market should be the way to go, I 
think, is where the argument and the disagreement occurs.
    And I also, I don't know if you were here during the first 
panel's testimony, but, you know, I think back to Mr. Largent's 
response in answer to a question that it seems to be the very 
same who are saying we have to have mandatory efficiencies, we 
have to, you know, conserve, that we have to do something about 
our oil and gas consumption, or, particularly, or oil 
consumption, we have to do that.
    But these are the very same people that over and over and 
over again will vote, in the Congress, and will rile against 
the things in the country that would promote other sources, 
whether it's nuclear, even the windmills that, you know, we 
have some in Wyoming. And if you drive over into California, 
you see this whole field of these windmills, you know, to 
produce wind energy.
    I'm not saying I don't think that should happen, but, my 
goodness, to me that's way uglier than an 18 inch stick 
sticking out of the ground where they've drilled for gas. And, 
you know, as far as the aesthetics of the situation, I think 
people speak on one hand of what we need to do, but they are 
not willing, on the other hand, to do what we need to do to 
accomplish a reasonable energy policy.
    I don't see that I have any other questions. Congressman 
Simpson, did you have some?
    Mr. Simpson. Not really questions, Madam Chair. It seems 
like we're, from the testimony we're faced with, we have two 
options. Either increase production or reduce the demand. And I 
think, in reality, it's a combination of both. I think you're 
going to have to increase production in this country and you're 
going to have to reduce demand.
    When we talk about fuel efficiency in automobiles, we 
always talk about the cost and how much the public can save by 
having increased fuel efficiency in automobiles. And I don't 
think that that's a bad thing by any means, but we also, for 
every action, there's equal and opposite reactions, and we 
never seem to talk about the number of deaths that have been 
caused by lighter vehicles on the road and so forth. The 
accidents that they get involved in are more serious.
    Do you have any studies on that, Mr. Geller, on what's 
happened to the number of deaths on the road and how many of 
them have been attributed to lighter vehicles and such because 
of increased fuel efficiency?
    Mr. Geller. Yes, Congressman. In anticipation of this 
question, I addressed it in my written testimony. If you would 
be so kind to look at figure three, if you have my written 
testimony.
    Mr. Simpson. I've got it somewhere in this stack.
    Mr. Geller. I can hold up the figure if you can't find it.
    Mr. Simpson. I'm sure I can find it somewhere.
    Mr. Geller. The figure shows two lines: the on-road fuel 
economy, the average from 1970 until today, showing the 
increase from about 13 miles per gallon up to close to 20 miles 
per gallon today. And it shows, over the same period, the 
fatality death per million vehicle miles of travel, per unit of 
driving, which declined from about close to five deaths per 
million vehicle miles of travel back in 1970 down to less than 
two deaths per million vehicle miles of travel today.
    So while we were improving fuel economy through better 
technologies, we were also improving the safety of our 
vehicles. The two can be done and have been done together. 
We've made our vehicles safer and we've made them more fuel 
efficient.
    Mr. Simpson. You wouldn't deny that more vehicles are, that 
the lighter vehicles that are made of plastic today, are more 
dangerous in an automobile accident going 70 miles an hour, per 
se, would you?
    Mr. Geller. The statistics are showing that driving has 
gotten safer.
    Mr. Simpson. Because of air bags and seat belts.
     Mr. Geller. Seat belts, improved designs, better 
engineering, more crush space. All kinds of things that have 
been done and that continue to be done to keep our vehicles 
safe and make them safer. It's a matter of engineering on both 
sides, on the fuel economy side and the safety side. We can cut 
emissions of air pollutants, we can improve fuel economy, and 
we can make vehicles safer.
    And I would submit that Federal standards are key drivers 
of all those public goods that we're interested in. We had fuel 
economy improvements when we had fuel economy standards enacted 
under the Ford Administration.
    Mrs. Cubin. Would the gentleman yield?
    Mr. Simpson. Yes.
    Mrs. Cubin. I just am sorry, but I have to make the point 
that in the very timeframe you're referring to is when law 
enforcement nationally, State by State, decided to really crack 
down on drinking and driving. And that is just something that 
you can't leave out of the equation.
    I have a friend right now that has children that are just 
starting to drive and one of them wants an SUV. And he said, 
no, you can't have that because it kills more people. Well, you 
know, I bought a truck for each one of my kids not only because 
they need to haul things from our place in the country but 
because they're going to be safer in it if they get in an 
accident. What is wrong with--I mean, why not make the standard 
heavier vehicles so that people are all safer instead of, like 
the Congressman is talking about, plastic, tinny vehicles that 
crunch when you--I mean, we're not going to make semis smaller. 
So forgive me.
    Mr. Thomasson. Madam Chairman, could I answer Mr. Geller's 
comment about production one more time, with an illustration?
    Mrs. Cubin. Please.
    Mr. Thomasson. Skip, could you put up the first one right 
there on top and then get out the gas one? What this shows is 
that, as cumulative production has gone up, our resource base 
has gone up as well. And what that means is that we are finding 
more resources than we thought we had just the year before the 
year before the year before.
    Similarly, if you take gas that happens to be crude oil. 
Now the fact that production has come down in crude oil, and it 
has, is a direct result, frankly, of the policies that have 
inhibited our ability to react. But I want you to look at 
natural gas where there's been a concerted effort, because of 
pressure by the administration and, mostly, by economics.
    And you can see the black curve is the curve that was 
projected by King Hubbard back in 1956. And that was for gas 
production. He correctly predicted oil production was going to 
peak in 19--you can show that one--in 1970. He was right on. 
But you notice we are now 37 percent over what he projected. In 
gas, we're actually back up at almost flat in our production.
    My point is, and then if I could make one more point with 
the pyramids, that, as our technology becomes better and what 
this chart is showing is increasing technology allows us to cut 
further down into the resource pyramid. Think about in mining 
terms. At the very top, a nugget of gold that gets more finely 
disseminated as we go down. And as you slice further down, you 
expand exponentially the resource base available to you.
    And your basins in Wyoming, the greater Green River Basin 
is a good example, that particular basin has, now listen to the 
number, please, Mr. Geller, 5,000 trillion cubic feet of gas in 
place and we're learning how to get that gas out. And we're 
going to learn more about how to get that gas out. And we will 
get a great deal of that gas out as we slice further down that 
pyramid.
    So we are actually expanding our resource base now and we 
can increase our production.
    Mrs. Cubin. You know, I have trouble, and a lot of us have 
trouble, trying to imagine what is a trillion? Whether it's a 
trillion dollars. What's a trillion? It's a number too big to 
understand.
    So my staff, we sat down and we said, OK, how do we figure 
out what a trillion is? And here's what we came up. If I'd 
opened a business the day Jesus Christ was born and lost a 
million dollars a day every single day from then until today, I 
wouldn't have lost my first trillion dollars. And we're talking 
5,000 trillion. This is a large resource.
    Mr. Simpson. Well, thank you, Madam Chairman. And I just 
want to--I'm not opposed to the CAFE standards and I think we 
will have increased fuel efficiencies in the future and we will 
also have new technologies and we will have more use of 
combination engines, electric engines, gas engines, and so 
forth. I know they're doing a lot of the research on electric 
automobiles and stuff out at the INEL and in Idaho and stuff. 
And I've been there and seen some of those things. And those 
things will come along. And I think we need to encourage them 
to the extent we can.
    That doesn't mean that we can't have and shouldn't have and 
must have, I think, more exploration and development of the oil 
reserves in this country and the gas reserves in this country.
    It's the combination of the two. It's not an either/or and 
we shouldn't be on the sides fighting these things and 
certainly we can disagree on particular areas that are 
appropriate for drilling or not drilling, but the reality is 
that we're going to have to have more oil production in this 
country if we expect to be self-reliant or closer to self 
reliance in this country. Plus we're going to have more 
efficiencies and so forth and look at demand side.
    So I appreciate the testimony of this panel.
    Mrs. Cubin. I'd like to thank the panel very much for their 
valuable testimony and thank you for being here with us and 
taking the extra time. This panel is dismissed.
    I'd like to call the fourth panel forward at this time. Mr. 
Joseph Hegna, of ARCO; Dan Becker of the Sierra Club; Charles 
Bedell of the National Ocean Industries Association; Walter B. 
McCormick, Jr., the president and CEO of the American Trucking 
Association; and Monica Surprenant, chairwoman of the Louisiana 
State Mineral Board.
    I'd like to welcome you all to the hearing. And, please, 
would Mr. Hegna begin his testimony.

STATEMENT OF JOSEPH H. HEGNA, ARCO ALASKA INC.; ACCOMPANIED BY 
    DAN BECKER, SIERRA CLUB; CHARLES BEDELL, NATIONAL OCEAN 
INDUSTRIES ASSOCIATION; WALTER B. MCCORMICK, JR., PRESIDENT AND 
CEO, AMERICAN TRUCKING ASSOCIATIONS; AND MONICA T. SURPRENANT, 
           CHAIRWOMAN, LOUISIANA STATE MINERAL BOARD

                  STATEMENT OF JOSEPH H. HEGNA

    Mr. Hegna. I have written testimony that I would like to 
summarize orally.
    I represent not only ARCO Alaska here, but the Alaska Oil 
and Gas Association whose 17 members are responsible for the 
majority of exploration, production, development, marketing, 
refining, and transportation of oil and gas in the State of 
Alaska.
    It occurred to me while I was sitting back here that not 
only have I visited the North Slope during February, I actually 
moved there. I was crazy enough to have moved up there in 
February 1985. Those first 2 weeks are some of the most 
memorable, as the wind chill temperatures were down below 100 
below zero and I watched the frost crawl down my wall and 
attack my bed. And it finally started warming enough so it 
retreated. But visually, I remember that quite well.
    I was asked to speak today on Alaska on how we work to 
minimize our impacts to the environment. And lately we've been 
referring to this as just simply ``doing it right.'' What I'd 
like to do is step back for a minute and characterize not just 
what we're doing now with some of the newer developments, but 
to try to talk a little bit to what we've done in the past, 
speak to the record because this has been an issue several 
times today.
    First of all, the North Slope is huge. It's 88,000 square 
miles, roughly the size of Idaho. It's 9 months of snow and ice 
on the ground there. Typically, you'd be looking at 30 below 
zero during the winter with wind's blowing 30 miles an hour.
    Prudhoe Bay, which was discovered in 1968 and came on line 
in 1977, was the first of the oil fields. Now we've grown to 
where we have actually six producing locations, including 
Prudhoe, Kuparuk, and several others.
    Through that period of time, we've produced over 12 billion 
barrels of oil. Our environmental record, I think, is unequaled 
by any other location in the world. I feel like not only have 
we done it right, but I think we are the best of the best.
    You've heard that the caribou speaks minimal impact that 
we've had on wildlife. The central Arctic herd has grown from 
less than 3,000 animals to roughly 20,000 today. What we 
haven't heard is about the minimal footprint that is left 
through the early developments. Prudhoe Bay, Kuparuk, the 
earlier fields that were developed were developed with less 
than a 2 percent foot.
    A footprint is where we set down gravel on the tundra so we 
can put a facility on it and we protect the environment. 
Prudhoe Bay at 2 percent, if you compare it to the space center 
down in Florida which is 5 percent, that's very, very limited 
impact. And where we've are to today, is even more incredible.
    I heard some discussion on spills. And I would like to 
clarify some things around spills. First of all, we report all 
spills, no matter how small, whether it's a cup or a gallon. So 
the spills that you hear of being referred to, most of those 
are less than a gallon. And the vast majority of spills never 
reach the tundra because they almost always occur over the top 
of the gravel pad. So the damage that's been done by spills on 
the North Slope is relatively insignificant.
    We talked about doing it right. The best example that I can 
think of is the current Alpine field, which is truly setting a 
new standard for doing it right. That field is due to come on 
line this fall and it's roughly 429 million barrels of proven 
reserves.
    But the interesting thing from my perspective is the 
limited impact that we've had on the environment, not only in 
finding, but in developing that field.
    In the exploration process when we're doing seismic work, 
there was no impact at all. When we went out to drill, we set 
down ice roads, we set down an ice pad, brought the rig in, and 
when we took it out, there was no evidence outside of the well 
that's left there.
    If you look at the total footprint that has been left by 
Alpine, it's 2/10 of a percent of the surface area of the 
field. That's a 40,000 acre surface that has only got 97 acres 
gravel.
    We've been able to do that by using some new technology. In 
the past, we had drilling muds and cuttings that were set aside 
in an impoundment on the surface called a reserve pit. We no 
longer require that. We're the first oil fields in the world 
that have gone basically to zero discharge on drilling waste. 
We grind and inject all the waste, inject them down into the 
Cretaceous zone where they are sealed 3,000; 4,000 feet below 
the surface.
    Additionally, we talked about the ice roads. An ice road 
eliminates itself.
    But the other development that's helped us out quite a bit 
in reducing our impact is directional drilling. Someone 
referenced it earlier by saying that we can extend out. We can 
go out about four miles. A good example would be putting a 
drilling rig on the White House lawn. We could drill the entire 
DC. area and a good majority of the Arlington area as well 
without impacting any of those areas, except where that 
drilling rig is up.
    So, truly, if you're looking at environmental impacts on 
what's being done on the North Slope, there are great examples 
of doing it right. And come on up in the winter. Come on up in 
the summer and you can see those, too. But the majority of the 
activity is done in the winter so we can minimize the impact.
    Thank you.
    [The prepared statement of Mr. Hegna follows:]

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    Mrs. Cubin. Thank you for your testimony. Is October the 
winter or summer up there, or fall, I mean, winter or fall?
    Mr. Hegna. It's clearly winter. There's winter and--
winter's coming on.
    Mrs. Cubin. Because I was there in October.
    Mr. Hegna. It's the only two seasons we have up there.
    Mrs. Cubin. Right. I was there in October and I remember 
the cost of putting a light under a passageway like so that the 
fish could find their way where they were going. And I couldn't 
help but--never mind.
    Thank you for your testimony. And welcome to the committee, 
Mr. Becker. And would you please present your testimony.

                    STATEMENT OF DAN BECKER

    Mr. Becker. Thank you very much, Madam Chair, members of 
the committee. I am the director of the Global Warming Energy 
Program at the Sierra Club and I want to thank you for the 
opportunity to testify on behalf of our more than \1/2\ million 
members nationwide.
    And our message--well, let me just say I will summarize my 
testimony if that's OK and would like to submit two additional 
pieces of documentation for the record.
    Mrs. Cubin. Without objection.
    Mr. Becker. Thank you.
    Our message is short. We should not drill under the Arctic 
National Wildlife Refuge for oil. We should drill under Detroit 
by making our cars and light trucks more efficient.
    Once again, oil prices have risen because OPEC is 
manipulating the supply to increase profits. Once again, we 
have been made vulnerable by our dependence on oil. And once 
more, Americans, tired of being victimized by OPEC, are looking 
to our leaders for real solutions. But we can't drill our way 
out of this problem.
    We import 55 percent of our oil, but we sit on only 3 
percent of the world's known reserves. It's a simple case of 
supply and demand, as we said here earlier. We can do very 
little to affect the supply, but we can do an enormous amount 
to affect the demand.
    In 1975, for example, Congress passed the most successful 
energy saving law ever, the CAFE standards, which were signed 
into law by President Ford. It doubled fuel economy. It cut oil 
consumption by 3 million barrels of oil a day. And it helped 
put OPEC on the ropes.
    But since 1996, Congress has blocked CAFE standards with an 
appropriations rider. And the industry has churned out gas 
guzzling SUVs at a prodigious rate. As a result, fuel economy 
has sunk to its lowest level since 1980. Oil demand has risen 
by 500,000 barrels per day. OPEC has come roaring back to life.
    The biggest single step we can take to curb our consumption 
of oil is raising the CAFE standard. And had we started doing 
that in 1994 at a stately pace of 6 percent a year, we would 
have now been saving 35 million gallons of oil a day and $52 
million a day and we'd be saving twice the U.S. share of the 
OPEC shortfall.
    At 45 miles per gallon and 34 for light trucks, we would 
save more oil than we import from the Persian Gulf plus what 
may lie under the Arctic National Wildlife Refuge plus what may 
lie in offshore California. We would also be cutting global 
warming.
    Mrs. Cubin. Excuse me. Would you repeat that, please?
    Mr. Becker. Sure. If we raised the CAFE standards to 45 
miles per gallons for cars and 34 miles per gallon for SUVs and 
other light trucks, we would save more oil than we import from 
the Persian Gulf plus what might lie under the Arctic Refuge 
plus what might lie under the offshore California fields.
    Mrs. Cubin. Over how much time?
    Mr. Becker. It would take a phase-in period of 10 years to 
have all the new cars replacing the existing fleet. Basically, 
10 percent of the auto fleet retires every year. So it would 
take 10 years to phase-in.
    But that is frankly the same period of time that is 
envisioned for bringing the Arctic National Wildlife Refuge 
field on line. So the timeframe is a similar one and we can 
begin saving by improving fuel economy this year.
    The technology exists, through more efficient engines, 
improved transmissions, better aerodynamics, to make these 
changes to our vehicles. These kinds of technologies could 
change the Ford Explorer from a 19 mile to a 34 mile per gallon 
truck. And it would save $5,500 on gas for the owner over the 
life of the truck. The investment in technology to achieve that 
$5,500 savings would be only $935.
    Even better technology is on the new Honda Insight, which 
you can buy right now. I saw one on my way over to testify. 
It's a 65-mile-per-gallon car that has 2 engines side-by-side, 
a gasoline engine that recharges the electric motor that mostly 
runs the car. Toyota will sell a 55-mile-per-gallon 5 passenger 
Prius beginning in June. But Detroit is not going to reverse, 
in part because of this rider.
    Rather than cutting back on energy efficiency, what we 
should be doing is using energy efficiency to cut back on our 
oil dependence. What we must not do is pillage the Arctic 
National Wildlife Refuge for a fix of oil.
    The coastal plain of the refuge represents the last 5 
percent that remains off-limits of Alaska. This is, as has been 
said before by this panel, although not necessarily 
respectfully, America's Serengeti. It is a home to unique 
wildlife: wolves, polar bears, musk ox, myriad bird species. 
It's the camping ground, as been said before, of the porcupine 
caribou herd, which migrate hundreds of miles to this special 
place to give birth to their young.
    No one knows how much oil lies beneath the Arctic Refuge. 
The USGS's most recent study determined that a mean estimate of 
3.2 billion barrels of economically recoverable oil may lie 
there. That's less than a 6-month's supply and, even at peak 
production, would represent less than 2 percent of total U.S. 
daily demand and would take 10 years, as I said a moment ago, 
for it to come on line.
    But it doesn't really matter how much oil lies under the 
Arctic Refuge. It would be shortsighted to drill there just as 
it would be shortsighted to dam the Grand Canyon for hydropower 
or to tap Old Faithful for geothermal energy or to pop the Mona 
Lisa into the fire to warm your house. We must not sacrifice on 
of America's most spectacular national treasures just for a fix 
of oil.
    Oil drilling in the Arctic Refuge would require 
construction of a large industrial complex with hundreds of 
miles of pipelines and roads, numerous drilling pads, 
production wells, power plants, and housing for thousands of 
workers.
    Such a massive industrial facility would destroy this 
pristine wilderness. The Arctic National Wildlife Refuge is 
public land. It belongs to all of us. And it should be 
protected for future generations to enjoy and explore and 
discover. We cannot drill our way out of our oil dependence but 
we can save our way out of it. Now is the time to take the 
single biggest step to cutting our oil addiction by raising the 
CAFE standards.
    Thank you very much and I'd be happy to answer any 
questions that you may have.

    [The prepared statement of Mr. Becker follows:]

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    Mrs. Cubin. Thank you very much.
    Next, the Chair would like to recognize Charles Bedell. Is 
that the correct pronunciation?

                  STATEMENT OF CHARLES BEDELL

    Mr. Bedell. Yes. Thank you, Madam Chairman and members of 
the committee. I am here today to represent the National Ocean 
Industries Association. The National Ocean Industries 
Association represents over 260 companies engaged in all 
aspects of the exploration and development of the nation's 
Outer Continental Shelf natural gas and oil resources.
    We have testified numerous times over the years and it's 
been interesting, again, to be sort of on the final panel here 
and hear all the byplay and back-and-forth and all the issues. 
Many of the things we'd like to say have been said. And, at 
this point, I think the basic question that brought us here 
today was, though, to take a look at the Clinton 
Administration's policies and what impact they may or may not 
have had on the situation we now find ourselves in.
    25 years ago, we had gas lines going around the street back 
here on C Street several blocks. I know. I lived down there and 
worked in this building. And we haven't seem to have learned, 
as an institution or as a country, from these past lessons. And 
we haven't gleaned the truth that has been stated here today 
several times, that we need both things.
    We seem to have this philosophy that, OK, we need to jerk 
America by the neck or by the collar and say you must go and 
save this or do that and then suddenly, somehow, we will stop 
using energy. And we have a complex society, one that can't be 
changed and turned around on a dime. Sort of like a law of 
physics. It has a lot of momentum.
    And I think that what the administration has done hasn't 
really, to this point, helped out on that. What I'm speaking of 
in particular is that, for example, the administration had a 
report in September 1999 called, ``Turning to the Sea: 
America's Ocean Future.'' This report takes a balanced approach 
to offshore energy, surprisingly enough.
    And not only does it recognize how vital oil and natural 
gas resources on the OCS are to our domestic energy supply and 
the nation's security needs, but it highlights the importance 
of natural gas reserves on the OCS, as natural gas will be the 
necessary ingredient to meeting our growing energy needs, and 
especially for helping our clean air situation.
    Now, however, there is an old adage that says actions speak 
louder than words and, unfortunately, the administration's 
record hasn't been one of following its own policy advice. Now 
there's a chain of events that's taken place since 1995. Back 
then, the administration issued a national energy policy plan 
that was called, ``Sustainable Energy Strategy.'' Now this plan 
in part states that the administration is, and I quote, 
``committed to enhancing the competitiveness of domestic oil 
producers,'' close quote. And, ``expanding the role of clean, 
efficient, and domestically produced natural gas,'' close 
quote.
    Later, in March 1998, the administration released yet 
another study called ``In the Year of the Ocean.'' These were 
discussion papers, as it was called. And these were prepared by 
Federal agencies with ocean-related programs and this document 
states that the environmentally sound development of the 
nation's OCS will help advance the energy policy plan outlined 
in the earlier 1995 document.
    In addition, the document asserts that, and, again, I 
quote, ``The offshore development, under proper environmental 
safeguards, poses less risk for large oil spills than does 
importing foreign oil in tankers,'' close quote. Pretty good.
    Now in April 1998, the administration released another 
document, ``Comprehensive National Energy Strategy.'' This one 
says that it seeks to arrest the decline of domestic oil 
production by the year 2005 by supporting, again, quoting, 
``environmentally responsible development of leased Federal 
lands for oil recovery,'' close quote.
    It also seeks to increase, it says, ``domestic production 
of natural gas by as much as 6 trillion cubic feet per year by 
the end of 2010.'' But on--there had to be a but--on June 12, 
1998, during the National Ocean Conference in Monterrey, 
California, President Clinton issued an executive order 
extending and expanding the moratoria on oil and gas leasing 
off of most coasts of the United States outside the central and 
western Gulf and parts of Alaska until 2012. In making this 
announcement, the President said, quote, ``We must save these 
shores from oil drilling,'' close quote.
    There's yet another study, a September 2, a paper or report 
entitled, ``Turning to the Sea: America's Ocean Future.'' Vice 
President Gore introduced this one and said that natural gas 
reserves on the Outer Continental Shelf are particularly 
important because natural gas has major environmental benefits 
over other fossil fuels. Yet 80 percent of our OCS is off-
limits. Yet this administration opposes development of the 
project that Senator Johnston mentioned earlier, the Destin 
Dome 56 unit project off Florida, which has at early 1990's 
levels, I think it was 30 years of commercial natural gas for 
the State of Florida.
    To summarize, Madam Chairman, I think it's clear that the 
offshore industry in the United States, if 25 years ago, we had 
sat in this hearing room and someone had said what we can do 
today was going to be possible, I think we would roll our eyes 
and said, oh, my goodness, you know, 8,000 feet of water, 
production and technology that it's safe for people, for the 
environment and it's proven.
    Yet, again, we have this sort of aversion to drilling. The 
word ``drilling'' sets off incredible reactions in people. Yet 
the facts are there and we can't seem to make these things 
match and make policy based on science and on facts and not 
sort of hysterical reaction.
    The natural gas dependency is growing and you can't just 
bring that stuff in by tanker. We can't just get it easily. 
We're going to be dependent on it for electricity in the State 
of Florida itself. Even though it also opposes the Destin Dome 
project, it is not opposing natural gas pipelines coming into 
the State. Yet, what are we going to do? Are we going to wait 
for there to be brownouts throughout the State? Are we going to 
wait for gas to be $12.00 at MCF and have terrible impacts on 
our economy?
    No, we shouldn't. We should start doing something today to 
prevent that kind of thing from happening. We should be 
reactive all the time. Again, that's been something that's been 
said.
    America's offshore industry is here. You don't have to 
build it and we'll come. We're already here and we're already 
doing our job. And if we had time, I could show you all the 
maps showing that small companies like mine, as well as majors, 
are taking the risk. We're producing the goods. And it's here 
for America and we'll do as much as you'll let us.
    Thank you.
    Mrs. Cubin. Thank you very much.
    The Chair now recognizes Walter McCormick of the American 
Trucking Association.

                STATEMENT OF WALTER B. MCCORMICK

    Mr. McCormick. Thank you, Madam Chairman. On behalf of the 
nation's responsible motor carriers, thank you for having me 
here today.
    Madam Chairman, the title of this hearing is ``On 
Compromising our National Security.'' And I can tell you from 
the firsthand accounts that have poured into my office that the 
current high fuel prices are devastating industries like the 
trucking industry.
    In the trucking industry, we have seen a clear example of 
the frustration around the country with the recent truck 
rallies right here in our nation's capital. They were put 
together by a group of those entrepreneurs who were being 
forced out of business.
    Madam Chairman, skyrocketing diesel fuel prices and the 
lack of a long-term national strategy to address them are a 
significant threat not only to the American trucking industry, 
but also to the U.S. economy as a whole. Trucking represents 5 
percent of the gross domestic product and today more than 70 
percent of America's communities relies solely on trucks to 
deliver their goods. Runaway fuel prices are the soft 
underbelly of the U.S. economy. They make our country's 
economic future vulnerable. Simply put, if trucking breaks 
down, so does this historic expansion.
    While prices have dropped over the last few weeks, they 
remain excessively high. Last week, the national average retail 
diesel fuel price was $1.44. Prices peaked at $1.50 in mid-
March, which was the highest price ever since the Energy 
Department starting collecting data. That price was a 50 
percent increase over last year. So you can see that the modest 
six cent decline that we have experienced recently does not 
give the trucking industry much relief.
    Earlier this year, the fuel crisis was concentrated in the 
Northeast. Now it has spread to all regions of the country. 
This underscores the need for a national policy.
    Madam Chairman, with the crisis at the pump, many carriers 
are rapidly burning through their cash reserves. Others are 
seeing their operating ratios approach 100, which means no 
profit, none. If carriers are forced to either limit their runs 
or to shut down their rigs, there will not be a way to pick up 
and move all the freight. And, as you know, trucking is what 
brings the goods to our doors and to our stores.
    The other modes of transportation, which are also feeling 
the brunt of high fuel prices, cannot help in this regard. If 
we start to see bottlenecks, shippers who today object to a 
fuel surcharge will have to scramble to get their freight 
delivered at any cost. It's easy to see where that leads. 
Consumer prices rise and inflation snuffs out our country's 
economic expansion. It is a quick, short path to inflation.
    But we believe that today's crisis can be addressed. A 
release of oil from the Strategic Petroleum Reserve would have 
an immediate salutary impact. On March 28, OPEC agreed to 
increase production quotas. This is a step in the right 
direction. But production increases will not be sufficient to 
reduce the current world deficit. Demand continues to outstrip 
supply and OPEC continues to pursue a policy of forced scarcity 
that threatens our economy.
    One thing to keep in mind is that petroleum prices are very 
fungible. Therefore, we believe that a release of oil from the 
Strategic Petroleum Reserve would have an immediate impact at 
the pump. Some say it will take weeks to help. It's not true. 
The market is very efficient, particularly when it comes to 
commodities. It will react and react quickly to fuel prices 
based upon an increase in supply.
    To speak for just a moment on the subject of this hearing, 
which is our national security. It is important to recognize 
that while there is credible scientific research being done on 
the fuels of the future, diesel fuel is and will be the fuel 
that drives this country for decades to come.
    Madam Chairman, I know that you understand and that 
Chairman Young understands the importance of a continued flow 
of oil. And that Chairman Young's interest in opening up the 
Arctic National Wildlife Refuge to production in an 
environmentally sound fashion is due in part to his concern 
over the dependence on foreign oil. The same concerns hold true 
for other potential areas of discovery, including parcels in 
the Outer Continental Shelf and under other lands held by the 
Federal Government for the people of the United States.
    Madam Chairman, the ability of trucking to keep consumer 
costs down has been a driving force in this historic economic 
expansion. It's something we're proud of. We don't want to see 
this booming economy go bust.
    Therefore, I want to thank you for holding this hearing and 
for the leadership that you have shown, that Chairman Young has 
shown, the members of the committee have shown on this issue of 
vital national importance to our economy and to our security.
    [The prepared statement of Mr. McCormick follows:]

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    Mrs. Cubin. Thank you very much for your testimony.
    The Chair now recognizes Monica Surprenant for the 
Louisiana State Mineral Board.

               STATEMENT OF MONICA T. SURPRENANT

    Ms. Surprenant. Thank you, Madam Chairman, and thank you 
for allowing me to come and share with you what Louisiana's 
experience has been with recent advances in technology. And 
that's what I'd like to share with you in my very brief moments 
here today with you.
    We have seen substantial advances in the technology that is 
in this industry. I don't think many people realize how far 
we've come. A few minutes ago, my fellow on the panel here, Mr. 
Bedell, made a reference to it. But what we have seen recently 
with the advent of deepwater projects in the Gulf of Mexico 
right off Louisiana is truly outstanding.
    What we have been doing, and we originally started this 
type of production in water deeper than 1,000 feet, calling 
that deepwater drilling. By November 1999, there were 32 
deepwater rigs in the Gulf. Today are 90 prospects out there, 
serious prospects for oil.
    Names like Mars Field, Neptune, Genesis, these types of 
rigs or these types of fields, really is more accurate, are in 
water 1,900 feet to over 2,900 feet. That's deep water. And 
when we hear old timers talk about these fields and production, 
they talk about them almost in hushed tones, as if they never 
would have believed that this would be possible.
    And when I talk about old timers, I'm talking about people 
my age. I'm not that much older than they, because no one who's 
seen this business in the last 20 years or so would ever have 
believed this could be done. And it's being done. And the same 
technology that brought this about, the same technology that 
allowed the drilling to these depths is the same technology 
that's keeping it safe out there. At least that's what the 
statistics show and I'll get to that in a minute.
    But the 2,900 feet is really nothing, as was previously 
mentioned. In July 1997, Shell had a production at 5,300 feet. 
Not only was it the deepest at that point, but it was 58 miles 
away from the platform. 58 miles. That's how far they were able 
to get from the source to a platform. In August, 1998, that 
record was shattered by Chevron with an exploratory well at 
over 7,700 feet. And that was 175 miles southeast of New 
Orleans.
    We think that these records are going to be broken in the 
year 2000. This work is out there. It's being done on a daily 
basis. And these rigs are operating in a very--what we see to 
be a very safe manner.
    Not only has Louisiana experienced and seen what the oil 
industry can do in deepwater, Louisiana still has the only 
offshore port in deepwater. And that's LOOP, the Louisiana 
Offshore Oil Port. Now that may be old news. That port was put 
in place and has operated for almost 20 years now, but no one 
else has built such a deepwater port.
    We're the only one in the world where an ocean-going 
vessel, these large tankers that can't come in port anywhere 
else, can take their cargo and unload it. And unloading it out 
there at that port is a lot safer than bringing it anywhere 
near the land. It's an amazing facility that LOOP has and it's 
really a modern marvel. They're able to offload these tankers 
with flexible lines anchoring the ship to the bottom of the 
Gulf of Mexico while being able to turn 360 degrees so as not 
to be impaired by wind or currents and waves while they're 
doing that. It's truly a marvel.
    In all the years that LOOP has been out there offloading, 
at least in the first 15 years that we know of they've 
offloaded 250 million barrels of oil of over 3,300 tankers, 
they've never had a significant spill. So we know this is 
working. We've seen it working.
    I can tell you that I looked before I came here at the MMS 
spill data for what is going on out there in terms of are we 
really having problems? We have the technology. It seems to be 
working. In all of 1999, from January to December 1999, the 
total spillage reported to that agency, and they have to report 
even an ounce, was 8,400 gallons. Now that's gallons. Not 
barrels. They are producing hundreds of thousands of barrels 
out in the Gulf, but of that, there were 8,404 gallons that 
were reported to be spilled.
    I don't like spillage of any amount. I wish not one ounce 
would be spilled. But you need to look at the hard facts. And I 
think the hard facts say the technology is there. The 
technology is working. And the technology is working not only 
to get oil out of the ground, but to keep us safe.
    Although we have been very proud of what we've seen in the 
Gulf, we do know that an ounce of prevention is worth a pound 
of cure. And we have, at times, had to step back when things 
have given us cause for concern. I am the chairman of the 
Louisiana State Mineral Board. And, in that capacity, we're in 
charge of leasing Louisiana State minerals.
    And for those of you who are familiar with Louisiana, 
particularly southeast Louisiana, you may be aware of Lake 
Pontchartrain. Lake Pontchartrain is as vital to the City of 
New Orleans and the South Louisiana as its culture, its food, 
its jazz, and its relationship with the Mississippi River.
    And the issue has come up, time and time again, regarding 
whether we're going to drill for oil in Lake Pontchartrain. And 
I'm proud to tell you that, as the chairman of the board, my 
board has consistently issued a moratorium on drilling in the 
lake, not because we're not willing to listen to people but 
because no one has come up with a plan to use directional 
drilling, or to tell us what they can do in a safe way. But 
these are things that are out there. We know the technology is 
out there, but people need to put that technology to work and 
come up with plans that will work, as they're working in the 
Gulf.
    I see my time is up, Madam Chairman. Thank you for your 
time. It's been a pleasure being here and I hope I've provided 
some information you'll find useful.
    [The prepared statement of Ms. Surprenant follows:]

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    Mrs. Cubin. I think you certainly have. As a matter of 
fact, I'm anxious to personally see LOOP and, you know, maybe 
take the subcommittee out to look at that and have a hearing in 
the district out there. I think that would be very beneficial.
    One thing that I have observed from all the witnesses today 
is that no one seems to disagree with the fact that we do need 
a national energy policy. I think there are differences in how 
we should get there, but I think the most important thing is 
that we all are going to have to work together to arrive there, 
regardless of what our philosophies are, because if we don't 
work together, we'll never arrive. We will be here again and 
again and again, as everyone has testified.
    By the way, before I forget it for the fourth time, I'm 
going to ask unanimous consent to enter a letter from the 
American Petroleum Institute into the record. Without 
objection, it's so ordered.
    [The information referred to follows:]

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    Mrs. Cubin. I wanted to ask you some questions. I'm going 
to throw you some softballs, Mr. Becker, because, you know, 
there aren't a lot of I have over here to help you, but they're 
not all softballs.
    Mr. Becker. Sure.
    Mrs. Cubin. You testified that efficiency in motor vehicle 
use would go a long, long, long way to solve the energy crisis 
that we're in and to help come to a good, strong energy policy 
for the country. Now is your claim that that alone would be 
adequate to solve our energy problems?
    Mr. Becker. No, not at all. What I was trying to point out 
was that you can get a lot more oil out of saving oil in 
vehicles than you could out of pumping the Arctic National 
Wildlife Refuge. Obviously, we're going to need more than just 
energy efficiency.
    What we advocate is both supply side and demand side. Where 
there is ongoing drilling, where the land has been disturbed 
and you don't have a pristine ecosystem, we have not objected 
to drilling. And there are places where there has not been 
drilling heretofore which we also don't object to.
    The question isn't an allergy to drilling. The question is 
where and how appropriate it is and how special the ecosystem 
is. One could chip off pieces of Mount Rushmore as a souvenir. 
That's not appropriate. That's not something that we think is a 
reasonable thing to do as a society. And the society as a 
whole, the American people as a whole, believe that there are 
special places that we should not either damage or threaten to 
damage in the search for oil.
    But, no, of course we agree that there needs to be more 
than just efficiency. We do favor continued drilling in places 
where it's been going on. We favor tertiary recovery. We are 
strongly in favor of developing new resources, both fuels for 
vehicles and replacements for electricity generation from 
renewable sources, preferably. And we recognize that some of 
those aren't available yet.
    But, as you pointed out in your own State, there are wind 
farms I believe in Carbon County, ironically.
    Mrs. Cubin. That's correct. Yes, right. And there's only 
one carbon molecule.
    So that was going to be another question that I asked. Are 
there types of exploration for oil and gas, such as diagonal 
drilling, tertiary recovery, and those sorts of things, that 
your organization does support? Because I think we really, 
really need to try to find commonalities in what we do support, 
agree on that, put it behind us, and then go to the more touchy 
subjects like where can we drill and how can we become more 
independent.
    Mr. Becker. Yes, we do support many of those technologies. 
Again, it's a matter of the appropriateness. We wouldn't want 
to drill right through the floor of this august chamber. But 
there are places where it's appropriate to drill. So it's a 
matter of weighing----
    Mrs. Cubin. If someone put a giant vacuum under there and 
sucked a few out of here, it wouldn't be that bad. No one in 
this room, however.
    I think, when we're talking about statistics and the 
estimations or assertions or whatever that you gave about how 
if we could increase the CAFE standards over 10 years, what the 
results of that would be. I think of Mark Twain's book that he 
said there are three kinds of lies: lies, damn lies, and 
statistics. And, being a chemist by training with an emphasis 
in math and physics, I know a little bit about statistics and I 
think I know that we all choose to believe the ones that are 
more aligned with our fundamental philosophical beliefs.
    And you chose to say that the median volume of economically 
recoverable oil would only satisfy the national appetite for 6 
months, but I choose to think of it more in these terms that if 
the median amount of technically recoverable oil, as estimated 
by the USGS, was actually found and produced, it could displace 
for 29 1/2 years the imports from Saudi Arabia.
    So I think that's an area where we really do need to get 
some information that you can believe and that I can believe. 
I'm sure that the facts about what the reserves are and what 
the consumption is is probably somewhere in between, but I'd 
really like to, you know, be able to come to sort of an 
agreement on that.
    Mr. Becker. Well, if I could just respond to that.
    Mrs. Cubin. Please.
    Mr. Becker. I think one can always compare a specific 
statistic to another relevant or irrelevant statistic. The key 
question that concerns the Sierra Club and our many members and 
lots of other people in the United States isn't exactly how 
much oil is there. We're not going to agree on that. But the 
appropriateness of drilling and disturbing this very special 
place, you know, there are lots of places where one could drill 
for oil. This is one place where--I have two girls. They are 
five and a half and nine and a half. And I'd like for them to 
be able to visit this very special place when they grow up with 
their grandchildren.
    Mrs. Cubin. In the summer.
    Mr. Becker. I'm sorry?
    Mrs. Cubin. In the summer. Excuse me. Go ahead. No, and I 
agree with you. I have sons that I'm sure I love as much as you 
love your two daughters. And I would absolutely agree that 
there are places where we should not be drilling, we should not 
be mining, we should not be harvesting timber. I absolutely 
agree with that.
    But I also know what the alkaline high desert plains of 
Wyoming look like that are blocked from exploration because of 
what I consider to be really radical extreme environmental 
policies that have been put forward by this administration. And 
forgive me if it seems crass, but with the support of your 
organization and other organizations like it, where, you know, 
it would be more beneficial to drill there, to create jobs 
there because there are so many thousands of acres, millions of 
acres that look just exactly like it. At any rate, that's 
something we can discuss at another time.
    I wanted to address this to Mr. Bedell. You testified 
before my subcommittee last August when we heard testimony on a 
bill to further lock up the eastern Gulf of Mexico, which was 
Congressman Goss' bill. Since that time, I wondered if Florida 
Utilities has changed their plans to convert their power 
generation from coal to fuel oil or to natural gas.
    Mr. Bedell. Madam Chairman, the latest developments there I 
believe are that there are at least two pipelines that are 
undergoing review by FERC, proposals to put large pipelines 
from Mobile Bay over to Tampa, the Tampa Bay area. And that the 
plans are going ahead to convert power plants from coal or 
other fuels to natural gas in that area of Florida.
    My mother lives there and I was just visiting there 2 weeks 
ago and there were articles in the newspaper then about ash, 
fly ash or something, coming from one of these coal-fired 
plants. And, you know, I think that there needs to be, as was 
discussed earlier, a lot of continuing research on how coal can 
be used because it is a vital natural resource.
    But, on the other hand, Florida has not objected to the 
routing of these pipelines, which are 36, I believe, inches or 
more in diameter and 500 miles long. They go within five miles 
of the proposed Destin Dome 56 unit where the platforms and 
things would be. They follow pretty much exactly the same route 
as an eight-inch pipeline that we had proposed running from 
that site offshore Pensacola to Mobile Bay. And yet Florida 
said that our eight-inch pipeline for that short distance 
violated their coastal zone management plan. And yet they don't 
object at all to these huge pipelines going across 500 miles of 
offshore Florida.
    Mrs. Cubin. I can't help but think of the seeming 
contradiction that can't drill for oil off of Florida, but it's 
OK to use the oil--or, excuse me, gas, but it's OK to use the 
gas that they produce off the shore of Louisiana when, in fact, 
Louisiana's economy is also dependent on tourism and, you know, 
its natural beauty.
    Mr. Bedell. And we have better fishing than they do, too.
    Ms. Surprenant. We dispute that.
    Mr. Bedell. No, that's right. Louisiana has much better 
fishing.
    Mrs. Cubin. I wanted to ask Mr. McCormick a question. As 
you noted, many truckers, especially independent operators, and 
I have spoken with many in my State because that's how we get 
most all of our products in Wyoming is from the trucking 
industry, but many independent operators cannot afford the high 
diesel prices that they're faced with and I honestly have 
talked to many who expect to be going out of business in the 
very near future, if they aren't already.
    And it's my understanding that my colleague, Nick Rahall 
from West Virginia, is devising legislation to address this 
situation involving, you know, the fuel surcharges. I wondered 
if you're familiar with this legislation. And if you are, would 
you comment on it for us?
    Mr. McCormick. Yes, I am. Madam Chairman, I am aware that 
Mr. Rahall has been exploring with the Owner/Operators and 
Independent Drivers Association the introduction of legislation 
that would impose a mandatory uniform fuel surcharge across-
the-board in the event that fuel prices increase.
    We've had discussions with Mr. Rahall about that. We've 
been going out to the broader trucking industry that we 
represent to get their views on it and hope to be working with 
him in the future on that.
    It would have the impact, Madam Chairman, of taking the 
increased costs of fuel and passing them on. And, in that 
regard, might well help the trucking industry, but it continues 
to leave the economy as a whole with the problem of increased 
costs of fuel.
    And, as you know, my testimony really focused on the fact 
that this is a difficulty today for the trucking industry, but 
the trucking industry is the canary in the coal mine when it 
comes to the nation's economy. And what we're seeing is that, 
because of the increased costs on us, truckers are beginning to 
go out of business. Those costs, when they get passed on, 
impact other areas of the economy and will result in an 
economic slowdown.
    So, while the trucking industry is very appreciative of Mr. 
Rahall's efforts to help us, we also feel that we, as a nation, 
need to address the larger issue of this dependence on foreign 
oil. OPEC, as you are aware, came out with a new rule that they 
are not going to just set production quotas at meetings. They 
have now given to the chairman of OPEC, the minister from 
Venezuela, the ability to set production quotas should the 
price of oil go below $20.00 a barrel. Today it's at $22.00 a 
barrel.
    What you see here is the power to control price. And so we 
need to address that dependence on foreign oil and that's why 
we're here today.
    Mrs. Cubin. Thank you for that. And I intend and hope that 
all of you and all of your organizations will give input into a 
national energy policy. I intend to have more hearings and try 
to come up with some concrete recommendations for a national 
energy policy that addresses more than just the oil and gas 
industry, which is what this hearing has been more focused on. 
But that's because, you know, Mr. Young is the king and, you 
know, I'm the sometimes court jester and sometimes the queen. 
It depends on who you ask. But, at any rate, we will be having 
more hearings on an overall national energy policy.
    Now, Mr. Hegna, you're now with ARCO Alaska and I wondered, 
after the merger of BP/ARCO, do you think that you'll be hired 
by Phillips Petroleum. Do you think you'll be working for them?
    Mr. Hegna. I won't be working for BP. The ARCO assets in 
Alaska are going to be sold to Phillips.
    Mrs. Cubin. To Phillips, right. That's right. Do you think 
you'll be working for Phillips?
    Mr. Hegna. Well, it depends on how this testimony came 
across.
    [Laughter.]
    Mrs. Cubin. Well, if they want a reference and you won't 
how it's going to be, but have them call me.
    Do you think that the new regime of companies, if you will, 
will have the desire and the wherewithal to get the stranded 
gas to the Lower 48 States?
    Mr. Hegna. Definitely there's a tremendous--there's what, 
26 trillion cubic feet of gas on the North Slope? But it's 
currently not commercial to bring that down. But there's a very 
active project team that includes BP and Phillips that are 
aggressively working those issues. So there's a number of 
things that will make it more economic, but I don't think the 
changes in Alaska with ARCO merging with BP will change that 
one bit.
    Mrs. Cubin. You heard Mr. Becker express the view that 
ANWR, and please correct me, Mr. Becker, if I don't 
characterize this accurately, but that ANWR should be forever 
protected from drilling. Do you think, with your expertise in 
Arctic oil and gas development and also as an Alaskan, that oil 
and gas resources could be produced from ANWR and protect the 
environment at the same time?
    Mr. Hegna. Absolutely. And as I've gone through here, we 
have a tremendous record of minimizing the impact and doing it 
right to the environment. And, we're getting incredibly better 
as time goes on. So, yes, I'm convinced. I wouldn't be 
associated with the companies if they weren't good.
    I have four sons, by the way, all that are of the age where 
they have to start producing. They have to start making money 
for their own families instead.
    Mrs. Cubin. Yes, because you might have to support them if 
they don't.
    Mr. Hegna. Absolutely. But we can do it right. And I have 
no concern about us going into ANWR and not being able to 
develop while protecting the environment.
    Mrs. Cubin. Mr. Becker, all of you, sometimes we get a 
piece of information and then we might not understand the basis 
for someone's opinion. And I don't think I ever asked you and I 
don't think it was in your testimony. Exactly what is it that 
you object to about drilling in this area? Is it the aesthetics 
that you wouldn't want to look at the oil rigs and the pumpers 
that are required to bring the oil out? Is it a potential for 
environmental accidents? Exactly what are the features that 
cause you to object to it?
    Mr. Becker. That's an excellent question and, no, we're not 
the aesthetic society, we're Sierra Club. What we are concerned 
about here is that there is a very special ecosystem. As a 
scientist, you know that the delicacy of an ecosystem can be 
affected by removing or changing any of the constituents of it.
    So, for example, right now we have a pristine Arctic 
wilderness. There is no industrial activity in that area. 
There's activity in 95 percent of or 95 percent of the rest of 
Alaska is open to that activity. This is a very special place 
where a unique animal resource, the porcupine caribou herd 
comes across the Brooks Range and comes to the very place where 
they want to put the oil platforms and delivers its young each 
year.
    There are native peoples who depend upon that herd for 
their survival. There are other animals that are either 
endangered or of concern to environmentalists and others which 
live in this very special place. And it's very difficult to 
imagine how you bring in the air strips, the industrial 
activities, the roads and pipelines that would be necessary, 
the oil drilling pads themselves, the housing for the people 
who are going to have to live there, without disturbing this 
very special ecosystem.
    So it's not just a matter of aesthetics. It's a matter of 
picking apart something that has been that way for aeons and 
changing it with industrial development. That is the chief 
concern. It is the last place like this in the United States 
and it is a place that we would like to keep that way for 
people in future generations. It is part of the patrimony that 
our nation has inherited from our ancestors and we want to pass 
it on that way to our children.
    There's lots of places you can go and look at oil 
development. I've been to parts of Louisiana and parts of 
California where oil development has taken place and seen what 
the place looks like. It isn't the same as it was when it was 
pristine. And there's no way that this unique ecosystem would 
be the same after the development took place there.
    Mrs. Cubin. And the statement that I'm about to make is not 
meant to be argumentative about the point you just made. I 
don't have the expertise to argue with you on that.
    But I want to tell you about an experience that I believe 
it was the second year I was in Congress. There was a bus from 
the West, public land States primarily, and I really wanted to 
impress upon the leadership how we can be good stewards of the 
environment and good stewards of the land and still produce 
natural resources, whether it's timbering, agricultural, 
minerals, or whatever. And we didn't want them to think we were 
just showing them the best and the most current technology. We 
wanted them to see how it really was.
    And so one of the things we did is we took them on a bus 
ride. And, actually, Dick Armey's comment about this trip that 
we took them on was the first thing that he was going to do 
when he got back to Washington was offer a bill to increase the 
speed limit in Wyoming because we spent so many hours on 
highways on buses.
    But at any rate, we took them to the Salt Creek Oil Field, 
which is about 100 years ago. And it's ugly. I mean, I love 
Wyoming and there isn't an ugly square inch in it, but other 
people who don't love it that way would consider it ugly. The 
pumper stations are real close together. The wells are too 
close together. It has a bad smell. It's just not what we have 
today. It's 100-year-old technology and it looks like it.
    But while Newt Gingrich was standing there discussing the 
situation with me, a little rabbit ran across his foot. We saw 
an antelope that was lying in the shadow of a tank. And also 
there were some eagle nests that were over beside one of the 
pumper stations.
    And my point to you is that, yes, we want to preserve some 
areas to be exactly like they are now, aesthetically. But, you 
know, sometimes I think that ecosystems can survive and be 
healthy with human activity in the area as well.
    Mr. Becker. I take your point and I understand it. I guess 
where I would disagree is that when you have an opportunity to 
create as much oil as you do by saving it from cars, why go 
destroy a special place? It'll still be there in 500 years if 
we don't drill for it. And if we sometime need it and decide 
that it's more important to drill there than it is to save it, 
it won't have disappeared and it won't be erased from the 
memory of humankind.
    But if we do drill it, in 100 years, who's going to look 
back and say, gee, I'm really glad that we pumped that place 
for oil? Whereas I think they would be glad to say that we made 
cars cleaner and didn't need to pump that place for oil.
    Mrs. Cubin. In making cars cleaner, and, please, if other 
members of the panel have anything to say, please, I mean, it's 
just us now, just you and me, babe, in increasing or making 
more stringent the CAFE standards, living in a place like 
Wyoming where the distances are so vast between one population 
center--and when I'm talking about population center, I'm 
talking about 1,500 people to the next town of 750. We're 
talking about 100 miles, 150 miles, 200 miles.
    And, in fact, there have been studies to show that the 
lower speed limit has actually caused an increase in highway 
fatalities because people tend to fall asleep and long straight 
highways that just go through nothing but high desert plains of 
sagebrush and an occasional antelope.
    We're very concerned about the performance of vehicles. 
And, as a matter of fact, one of the reasons that SUVs and 
light trucks are so popular in the area that I live is that the 
performance of those vehicles comes closer to meeting our 
needs. Give me an idea what the downside in terms of 
performance of vehicles would be when the higher standards are, 
assuming they were, adopted?
    Mr. Becker. There would be no change in the performance of 
vehicles by using this technology.
    First of all, let me step back and say that the way the 
CAFE standards are designed--and were signed into law by that 
radical environmentalist from Michigan, Gerald Ford--the way 
they're designed is as a fleetwide average so that if in 
Wyoming you want to buy the biggest, least efficient vehicle, 
but in California they want to buy more efficient vehicles, the 
two are averaged together.
    So it's not that every vehicle needs to become more 
efficient. And not every vehicle would. But enough of the 
inefficient ones are balanced out by enough efficient ones to 
make the average meet at the standard.
    But the way that we propose improving fuel economy is the 
way that the auto industry improved it from 1975 until by the 
end of the 1980's, by adding better transmissions, better 
engines, improved aerodynamics. These don't affect the 
function, the use of the vehicle. They don't affect whether 
they're car or truck. What they do is they dramatically improve 
the efficiency of the vehicle and, as I said in my testimony, 
they save more on gas than you pay for the technology up front.
    So it's a win-win for the consumer. It's a win-win for 
Detroit, if they'll think about it, because the Japanese 
manufacturers are beginning to sell these advanced vehicles in 
the United States and the American manufacturers are sitting 
there hoping that they don't sell. And it's a win-win for the 
environment and our energy consumption because we can tell OPEC 
that we don't need their oil because we'll be saving 3 million 
more barrels a day if we make these changes to our vehicles.
    So if the technology's there, it's--one caution that I 
would raise is I hope that the vehicles that you bought for 
your sons were ones that won't roll over in an accident because 
many of the SUVs, because they're designed to have a very high 
center of mass, do get into roll over accidents and 62 percent 
of the deaths in trucks occur in roll over accidents; only 22 
percent in cars.
    Mrs. Cubin. Thank you. While I do disagree with your 
estimates of the benefits just on efficiencies and while I do 
think that we really drastically need to increase production, 
not just of oil and gas, but of many of our energy sources in 
order to have a viable energy policy that gives us national 
security and meets the needs of consumption that we have, I do 
appreciate your view.
    What energy sources, I guess do all of you, think are the 
best? Fossil fuels for you, Mr. Becker, probably.
    [Laughter.]
    I don't need to ask you, Joe. I guess Mr. Becker.
    Mr. Becker. Well, what we would propose is that we use--
first of all, we develop the cleanest energy sources that we 
can, recognizing that they're not all on line now, and that we 
use them in order of their cleanliness. So, to the extent that 
we can use renewable energy, wind energy as you pointed out, 
solar energy, that would be fine. That's not going to affect 
oil consumption, however, because those technologies primarily 
go to generating electricity and only about 5 percent of our 
electricity is generated by burning oil.
    But we favor renewable energy. We favor using natural gas, 
especially over the next years, as renewable energy comes on. 
We favor using----
    Mrs. Cubin. Would you please tell the administration that 
so that we can get the natural gas out of the Powder River 
Basin in Wyoming? Excuse me.
    Mr. Becker. Again, it's a matter of appropriateness. We 
don't favor putting solar panels in the middle of people's 
living rooms and we don't favor all oil and gas development. 
But there are oil and gas developments that we have found 
acceptable. And the one that Senator Johnston mentioned earlier 
and others as well that we don't favor is nuclear. We oppose 
new nuclear generation in favor of the rapid but reasonable 
phase-out of existing nuclear power plants.
    Mrs. Cubin. Thank you.
    Mr. Bedell. Madam Chair, if I could address one of the 
alternative fuels that was mentioned earlier, I think it was 
the gentleman from Minnesota, Mr. Vento, had mentioned it, it 
was ethanol.
    And I've had some experience in a group that was founded by 
U.S. oil companies and the Department of Energy called the 
Western Hemisphere Oil and Gas Environmental Forum. This group 
was put together to unite companies in North and South America 
to have us exchange ideas and information on how to deal with 
environmental questions and how to proceed with environmental 
stewardship, as well as producing resources. And we've met in 
Brazil a number of times at Petrobras, which is the national 
oil company which is now--through the private oil hosted us.
    And during one of those visits, they mentioned the ethanol 
situation in Brazil. And they had come to rely on ethanol, had 
legislated, mandated, you know, use of ethanol in a fairly--I 
don't remember, forgive me, the exact proportions or percentage 
of the fuel that had to have ethanol in it.
    But one of the things that happened that was rather ironic 
and which they didn't anticipate was that when the price of 
corn went up in the world markets for food consumption, they 
suddenly had a gas crisis in Brazil because there wasn't enough 
ethanol because the farmers were selling the corn to Australia 
or China or wherever and suddenly there wasn't just OPEC to 
deal with but there was another variable that they hadn't 
counted on.
    I don't say that to say anything against ethanol, but just 
that there are problems in just about anything we can come up 
with as a quote, unquote, ``solution.'' We need to have 
everything moving together at the same time.
    And I think, as far as the environment is concerned, from 
my sort of humble beginnings as an ecology animal behavior 
biology student in undergraduate school and 25 years of 
experience in the field, I think there are, over biological 
periods of time, when we go in and do some oil and gas 
development that seems today to have disturbed something even, 
that doesn't mean that 50 or 100 years from now you'll ever be 
able to tell that we were there.
    The tundra is a really unique situation. I understand that. 
But I think that ARCO and the other companies that have 
pioneered work on the North Slope have demonstrated that 
they've been able to come a long way and to just about 
eliminate, I think, over, again, biological time periods the 
fact that anyone will ever know we've been there.
    When we come there, we aren't there forever. Unfortunately, 
those resources where we find them are finite. We keep finding 
new resources where we think there was only a smaller number, 
as other people have testified today or in a smaller amount. 
But we aren't there forever and I don't think that, in 
biological time, we destroy an ecosystem. I think ecosystems 
are a lot less fragile.
    Mrs. Cubin. I do too.
    Mr. Bedell. And I've seen beautiful birds wading right 
beside the road in Louisiana where we have traffic going by and 
they seem to be surviving quite well, too.
    And one other thing, if I could, quickly. Leases sold to 
companies, another gentleman raised the issue earlier with the 
members of your committee that seemed to imply that companies 
are just accumulating leases by buying them up at lease sales, 
offshore lease sales, and that somehow these were just sort of 
kept in our back pocket until some time when we decided we'd 
just get around to drilling them.
    That's far from the case. As anyone who knows the 
regulations that MNS has in place, when you buy a lease, you 
have to perform. You have to do certain things or you lose your 
lease and it goes back to the government. If there are large 
numbers of leases, apparently, that people think are just out 
there for speculative, economic purposes being held, I think 
it's a misperception. There are a certain number of years in 
which you have to act and do things and drill aggressively to 
try to find resources or give up the well. You have to maintain 
production or you lose your lease.
    So, looking, again, it's one of those things with 
statistics. You can find things that seem to alarm you, but I 
think when you dig beneath that situation, you find one that 
there really isn't any plot going on here to grab all of these 
leases and hold onto them until they become more valuable.
    Mrs. Cubin. And I think that that is a really valid point, 
counterpoint--well, really actually not a counterpoint, but one 
that is relevant to the situation as wilderness study areas 
that are designated in, I'm speaking particularly of the Lower 
48 States, that are treated as though they are wilderness 
areas, totally off-limits and those wilderness study areas have 
been in place for 10, 15 years.
    And, in my opinion, as a matter of fact, this is just a 
little self-serving lobbying, hoping you'll all agree and come 
to the Congress and lobby your representatives, that the 
government needs to either decide they are, do the study, 
determine that they should be wilderness areas or release them. 
And I think that is another point that would be very helpful.
    Mr. Bedell. I appreciate you bringing that up. That was one 
in my notes here too was I looked up the definition of 
moratorium and it takes about--this was in an unabridged 
dictionary. I didn't write the name of the dictionary down--
it's a temporary cessation of activity considered dangerous. A 
moratoria is something that would seem--it also mentions about 
in an emergency or something.
    And it seems to me, I guess in this room, is where the 
moratoria started. And at one point, people were forbidden to 
expend funds to study the situation and find out what it is 
that might or might not be wrong and how to get around it.
    They are incredible, these stipulations on leases we get 
from them and that's right now that tell us you can't do this; 
you should do that; you shouldn't overfly this area in certain 
times of year because whooping cranes nest there; or this and 
that and the other thing.
    And, you know, I think that your point is excellent and I'm 
glad that at least someone here is sensitive to that and 
understands it.
    Mrs. Cubin. I want to address the ethanol issue you brought 
up as well. I'm sure you're familiar with the ethanol plant 
that is in southeastern Wyoming and it just brings to mind what 
a complicated world it is. Farm prices depressed. The energy 
very expensive and it's complicated. We all need to work on it. 
We need to work on it together.
    I'd like to thank you all for your participation and the 
record will be open for a week I guess--10 days, excuse me--for 
any additional information that you'd like to submit and for 
questions from the committee. Thank you very much. The 
Committee on Resources is now adjourned.
    [The prepared statement of Mr. Pallone follows:]
    [GRAPHIC] [TIFF OMITTED] T7822.197
    
    [GRAPHIC] [TIFF OMITTED] T7822.198
    
    [Whereupon, at 3:46 p.m., the committee was adjourned.]
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