[Senate Hearing 109-192]
[From the U.S. Government Publishing Office]


                                                      S. Hrg. 109-192
 
                         KEEPING THE POWER ON:
      EXAMINING THE IMPACT OF SOARING ENERGY COSTS ON THE ELDERLY

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

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             JUNE 15, 2005

                               __________

                            Serial No. 109-9

         Printed for the use of the Special Committee on Aging



                 U.S. GOVERNMENT PRINTING OFFICE

23-940                  WASHINGTON : 2005
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government 
Printing  Office Internet: bookstore.gpo.gov  Phone: toll free 
(866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail:
Stop SSOP, Washington, DC 20402-0001




                       SPECIAL COMMITTEE ON AGING

                     GORDON SMITH, Oregon, Chairman
RICHARD SHELBY, Alabama              HERB KOHL, Wisconsin
SUSAN COLLINS, Maine                 JAMES M. JEFFORDS, Vermont
JAMES M. TALENT, Missouri            RUSSELL D. FEINGOLD, Wisconsin
ELIZABETH DOLE, North Carolina       RON WYDEN, Oregon
MEL MARTINEZ, Florida                BLANCHE L. LINCOLN, Arkansas
LARRY E. CRAIG, Idaho                EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania          THOMAS R. CARPER, Delaware
CONRAD BURNS, Montana                BILL NELSON, Florida
LAMAR ALEXANDER, Tennessee           HILLARY RODHAM CLINTON, New York
JIM DEMINT, South Carolina
                    Catherine Finley, Staff Director
               Julie Cohen, Ranking Member Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Gordon Smith........................     1
Opening Statement of Senator Herb Kohl...........................     3
Opening Statement of Senator Larry Craig.........................     4
Opening Statement of Senator Conrad Burns........................     4

                                Panel I

Margot Anderson, director, Officer of Energy Markets and End Use, 
  Energy Information Administration, U.S. Department of Energy, 
  Washington, DC.................................................     5

                                Panel II

Nelda Barnett, member, AARP Board of Directors, Owensboro, KY....    28
Donna K. Harvey, president, National Association of Area Agencies 
  on Aging, and executive director, Hawkeye Valley Area Agency on 
  Aging, Inc., Waterloo, IA......................................    40
Jim Slusher, executive director, Mid Columbia Community Action 
  Council, Inc., The Dalles, OR..................................    53

                                APPENDIX

Prepared Statement of Senator Talent.............................    61
Questions from Senator Talent to Margot Anderson.................    61
Questions from Senator Talent to Ms. Barnett.....................    62
Questions from Senator Talent to Ms. Harvey......................    62

                                 (iii)




KEEPING THE POWER ON: EXAMINING THE IMPACT OF SOARING ENERGY COSTS ON
                              THE ELDERLY

                              ----------                   
                        WEDNESDAY, JUNE 15, 2005

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 3:04 p.m., in 
room 215, Hart Senate Office Building, Hon. Gordon H. Smith 
(chairman of the committee) presiding.
    Present: Senators Smith, Talent, Craig, Burns, Kohl and 
Carper.

     OPENING STATEMENT OF SENATOR GORDON H. SMITH, CHAIRMAN

    The Chairman. Good afternoon, ladies and gentlemen. We 
thank you all for attending today's Aging Committee hearing 
entitled ``Keeping the Power On: Examining the Impact of 
Soaring Energy Costs on the Elderly.''
    The seemingly exponential rise in energy costs, especially 
as we head into the summer months, is a critical issue facing 
our Nation today. Prices of natural gas, oil and electricity 
impact each and every one of us no matter how old we are and 
how much we pay for everything from gasoline to countless 
everyday goods and services.
    The cost of heating and cooling our homes and fueling our 
automobiles has reached historic levels during this current 
trend of steadily rising energy prices, and it really does 
impact folks on fixed incomes, specifically many of our 
elderly. Compared with prices from 1999--2001, this past 
winter's natural gas prices increased 38 percent. The cost of 
propane increased 39 percent, and heating oil prices increased 
63 percent. In the past year alone natural gas prices have shot 
up 25 percent. High energy prices are being felt at the pump as 
a gallon of gasoline has rocketed past $2.00 with no signs of 
coming down in the foreseeable further.
    While soaring prices affect all Americans, as I said, our 
seniors are being hardest hit. Elderly citizens, a large 
percentage of whom live fixed incomes, are feeling the 
financial impact of high-cost energy more than any other 
segment of our society. These individuals and households spend 
a significant percentage of their income on energy bills, and 
in extreme cases, seniors are paying as much as 35 percent of 
their annual income toward these nondiscretionary and critical 
expenses. As a result of this high-energy burden, many elderly 
in our society must choose between heating and cooling their 
homes or purchasing essential medications or foods. Sometimes 
the situation is much graver, when the choice boils down to 
paying for energy or going hungry.
    Clearly something needs to be done to help our low-income 
elderly population make ends meet as we search for solutions to 
this ever-worsening problem. While passage of a comprehensive 
energy policy would better manage America's long-term energy 
needs, the question still remains: what can we do in the short 
run to alleviate the financial disastrous effects of 
skyrocketing energy prices that they are having on our senior 
citizens?
    In the Coos-Curry County area of Oregon, 60 percent of 
seniors receiving assistance are struggling to pay their 
utility bills or pay for their medications. Households in this 
area of my home State have experienced an overall increase in 
the price of their utilities of up to 40 percent from last 
year, and similar examples and statistics can be found all 
across the country and I am sure the case is the same in 
Wisconsin or in Idaho.
    The Low-Income Home Energy Assistance Program certainly 
does make a difference. LIHEAP assists many low-income families 
with paying their utility bills and serves as a vital safety 
net for households that cannot afford a residential energy cost 
to keep their home warm in the winter or cool in the summer. 
Higher energy costs have resulted in an even greater increased 
need for energy assistance among low-income seniors.
    Transportation is another area that is heavily impacted by 
the cost of energy. Affordable transportation is important for 
the elderly to maintain their independence and enable them to 
engage in everyday activities such as attending medical 
appointments, picking up groceries and visiting grandchildren. 
With gasoline prices surpassing $2.00 per gallon, many elderly 
are forced to curtail driving as they can no longer afford to 
pay for a tank of gas.
    Moreover, seniors are being further squeezed as high gas 
prices are coupled with an economic climate where local 
governments are curtailing services or increasing the price of 
public transportation services.
    Today's hearing will focus on the impact that high energy 
prices are having on America's elderly population and how low-
income seniors' energy assistance needs can best be met. This 
hearing is also timely in that we are debating and voting on an 
energy bill on the floor of the Senate as we speak.
    Our expert witnesses will talk about their experiences with 
these issues and how they are helping our elderly population 
manage with the limited resources that are available to them. I 
am especially pleased the Mr. Jim Slusher of the Mid Columbia 
Community Action Council in the great State of Oregon is with 
us today. Mr. Slusher is here to discuss the impact high-energy 
costs are having on the ability to provide energy assistance to 
low-income seniors in Oregon and how energy prices have 
impacted the demand for assistance.
    I look forward to hearing the testimony from all of our 
witnesses on these issues that are so important to our senior 
population.
    With that, I will turn to my colleague, Senator Kohl, for 
his opening statement, and then Senator Craig of Idaho for his 
as well.
    Senator Kohl.

             OPENING STATEMENT OF SENATOR HERB KOHL

    Senator Kohl. Mr. Chairman, we thank you for calling this 
hearing today. As the Senate starts work on a comprehensive 
energy bill this week, this hearing gives us an opportunity to 
learn about the impact of high gas and energy prices on our 
Nation's seniors.
    Last year the National Energy Assistance Directors 
Association confirmed that many seniors either turn their heat 
down to a dangerous level in the winter, or even skip taking 
prescription drugs in order to pay their utility bills. In 
addition, increased energy prices are felt by all consumers who 
have to pay more for manufactured goods and basic staples.
    For the past 24 years the Federal Government has attempted 
to provide financial help to low-income families and seniors 
who cannot pay their utility bills through the program known as 
Low-Income Home Energy Assistance Program or LIHEAP. 
Unfortunately, as demand for this assistance has increased, 
energy prices have reached records highs, the administration 
has not provided the funding necessary to serve those who need 
it the most. Between 2003 and 2004 LIHEAP payments to 
households decreased by approximately 30 percent. In the past 
the LIHEAP program was able to pay between 45 and 50 percent of 
a person's utility bill if they were eligible, but now the 
program can only cover between 25 and 30 percent of households' 
energy cost.
    Unfortunately, LIHEAP has always faced significant funding 
shortfalls going back beyond this administration. Funding is 
only increased from 1.8 billion in 1982 when the program was 
initiated to 2.3 billion here in 2005. Today the buying power 
of LIHEAP is roughly half of what it was back in 1982. In fact, 
because of the reduced buying power current funding levels 
provide only enough funding to help 17 percent of LIHEAP 
eligible enrollees. Yet even if LIHEAP's funding was adjusted 
for inflation to $3.6 billion today, it would still not be 
enough to provide assistance to all eligible households.
    Clearly we need to do more if we are serious about helping 
low-income families with energy costs. This brings us to the 
energy bill that is being considered on the floor. 
Comprehensive energy legislation has come up in each of the 
last 3 congresses, but has died because of controversy over 
different provisions. While I am pleased that the prospects for 
final passage of this legislation are better than they have 
been in the past, I am troubled by the fact that this bill is 
not doing more to help consumers who are facing higher energy 
prices.
    That being said, we are happy to be here today. We are 
looking forward to our witnesses and their testimony. We are 
looking forward to hearing more about high-energy prices and 
their impact on older Americans.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Kohl.
    Senator Craig.

          OPENING STATEMENT OF SENATOR LARRY E. CRAIG

    Senator Craig. Mr. Chairman, thank you for holding this 
hearing. I agree with both you and Senator Kohl. Its timing is 
impeccable as we debate a national energy policy on the floor.
    There is no question we have to address in part the cause 
of rising energy costs to all of our consuming public, but that 
portion of our public that largely lives on fixed and very 
limited incomes obviously feel the impact of higher-energy 
costs much greater as you both have well expressed.
    Of course, trying to help with LIHEAP and keeping it 
currently funded is ever more important as we move into the hot 
summer months. To some air conditioning is life providing, and 
we know that, and we have heard of those tragic situations 
where the air conditioner could not be repaired, did not exist, 
or they simply could not deal with the heat, and they lost 
their lives. That is a tragedy played out in some of our cities 
that should not have to happen, but it does.
    Dealing with this issue is important. Building a record as 
we work our way through a national energy policy and as we get 
to the appropriations on the Health and Human Services 
Subcommittee of Appropriations, where Herb and I serve, that 
will deal with these issues and with LIHEAP funding is ever 
more important.
    The Chairman. Senator Burns, welcome.

           OPENING STATEMENT OF SENATOR CONRAD BURNS

    Senator Burns. Thank you very much, Mr. Chairman, and thank 
you for talking about energy. I think it is pretty timely, as 
we are into an energy bill which we hope will maybe relieve 
some of the strain that we have.
    I was struck by a report that came out from the Department 
of Energy where the elderly right now are paying about 35 
percent of their income on energy costs, and to folks that are 
on these fairly restricted retirement incomes this is just 
terrible. They not only get hit in a couple places, 
transportation, especially in my State of Montana, where I have 
14 counties that have no doctors or offer health care. So you 
have transportation costs plus electricity costs.
    I realize that our electricity is maybe not as high in cost 
as other States, but nonetheless it has gone up recently, and 
we look at that and we try to figure out ways to soften the 
landing, so to speak, when we talk about energy cost. We do not 
talk about air conditioning in Montana all that much, but we 
talk about long winters and heating costs and transportation 
costs. So this hearing is important.
    It is also important that we work on our energy bill to 
where we can get some of these costs under control, and either 
through a larger supply or in some program that is offered by 
the Federal Government to cushion the increases that we have 
experienced in the last 4 or 5 years.
    It looks like gasoline prices are not going to go below 2 
bucks until 2006. Now, any time anybody wants to forecast what 
prices are going to do, you are either a damn fool or a weather 
man, but nonetheless all indicators are going that way and we 
have to do something in order to blunt the increases that 
befell these people that are on fixed incomes.
    Thank you for holding the hearing and I look forward to the 
testimony. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Burns.
    We are very honored to have with us Margot Anderson, 
director of Energy Markets and End Use. She is with the Energy 
Information Administration here in Washington. Ms. Anderson, we 
thank you for being here. We invite your testimony now.

   STATEMENT OF MARGOT ANDERSON, DIRECTOR, OFFICE OF ENERGY 
  MARKETS AND END USE ENERGY INFORMATION ADMINISTRATION, U.S. 
                      DEPARTMENT OF ENERGY

    Ms. Anderson. Mr. Chairman and members of the committee, I 
do appreciate the opportunity to appear before you today to 
discuss the outlook for energy prices and to examine their 
impact on the elderly population.
    The Energy Information Administration is an independent, 
statistical and analytic agency within the Department Of 
Energy. We do not take positions on policy issues, but we do 
produce data, analyses and forecasts that are meant to assist 
policymakers.
    Our views are strictly those of EIA and should not be 
construed as representing those at the Department of Energy or 
of the Administration.
    First I want to discuss the recent and projected energy 
prices and expenditures based on our most recent Short-Term 
Energy Outlook, which was released June 7th, and we have copies 
here for you. Then I would like to address consumption and 
expenditure patterns associated with elderly households.
    Since January 2005, monthly average crude oil prices, as 
measured by the price of West Texas Intermediate Crude Oil, 
have ranged between $46 a barrel and $54 per barrel. EIA 
predicts that crude oil prices will average $52 a barrel during 
the remainder of 2005 and $54 a barrel in 2006. If our 
prediction holds, prices in 2006 will more than double what 
they were in 2001.
    Several factors are contributing to these high crude oil 
prices. First, worldwide petroleum demand growth is projected 
to remain strong during 2005 and 2006. Second, projected growth 
in non-OPEC supplies is not expected to accommodate worldwide 
demand growth. Third, worldwide spare crude oil production 
capacity has been recently diminished. Fourth, downstream 
sectors such as refining and shipping are expected to remain 
tight. Finally, geo-political risks, such as the continued 
insurgency in Iraq, are expected to keep the level of 
uncertainty in world oil markets high.
    Heating and gasoline prices closely follow crude oil 
prices. In 2005 heating oil prices are expected to average 
$1.91 per gallon, compared to $1.22 in 2001. Average heating 
oil expenditures per household were $719 per year in 2001, and 
are projected to climb to $1,143 in 2006. We predict gasoline 
prices will stay above $2.00 per gallon through 2006, compared 
with $1.43 in 2001. Between 2001 and 2006 expenditures for 
gasoline are expected to increase from $1,300 per household a 
year to $2,088 per household.
    Natural gas prices have also been affected by changes in 
the world oil market, but to a lesser extent than gasoline and 
heating oil prices. While natural gas spot prices recently 
fell, the natural gas market is likely to tighten over the next 
few months as the summer cooling demand picks up. Prices are 
projected to continue to increase as the winter heating season 
boosts natural gas demand.
    Electricity prices and expenditures are expected to change 
less over time compared with oil and natural gas. As is the 
case for all Americans, direct energy expenditures for the 
elderly, defined here as those age 65 and over, are comprised 
of the energy costs for running the household--that would be 
heating and cooling--and energy cost for transportation fuel.
    There are also indirect expenditures embodied in the energy 
component of the costs for goods and services, but I am just 
going to be speaking about the direct cost for energy.
    Isolating energy consumption among the elderly is difficult 
because the elderly live in a variety of housing arrangements. 
Many live alone or with elderly or non-elderly partners. Some 
live in extended family households, either with primary 
responsibility for energy costs on in situations where they are 
in the care of younger household members, so may have only 
partial or no responsibility for energy costs. Still others 
live in institutional or retirement facilities where they may 
or may not pay directly for energy.
    EIA's own 2001 Residential Energy Consumption Survey shows 
that the average elderly household spends less per household on 
energy than non-elderly households because they often live 
alone or in two-person households. Compared to younger one- and 
two-person households, the elderly spend just about the same 
amount on energy.
    In terms of transportation use, the elderly drive quite a 
bit less than younger households, although when there are two 
or more elderly persons in all-elderly household, they tend to 
have two cars and tend to drive almost twice as many miles as a 
one-person elderly household.
    Looking at expenditures relative to household income, our 
data show that there is a floor of about $1,000 per household 
for energy expenditures regardless of income. Applying the 
generally higher 2005 energy prices to 2001 consumption levels 
shows somewhat higher expenditures. Energy costs fall most 
heavily on the lowest-income households, which are relatively 
more prevalent for the elderly than for the rest of the 
population.
    For transportation expenditures we used the Department of 
Transportation's National Household Travel Survey, and found 
that elderly households use their vehicles less than other 
households, and for any type of household composition, lower-
income households drive less. Even so, low-income elderly 
households spend several hundred dollars per year on vehicle 
fuel. Because gasoline prices have recently increased so much 
more than household energy prices, the difference between 2001 
consumption at 2001 prices and the same consumption at today's 
prices is relatively much larger than the increase for overall 
household energy costs.
    To the extent that energy consumption for both household 
and transportation use is different now than what it was in 
2001, the annual energy bill will also be different, but adding 
household and transportation energy cost together, many low-
income households, including low-income elderly, are now 
spending 10 to 20 percent of their income on energy. For 
comparison, higher-income Americans of all ages, those making 
more than $30,000 per year, spend on average about 7 to 10 
percent of their income on energy.
    This concludes my statement, Mr. Chairman. I would be happy 
to respond to any questions.
    The Chairman. Ms. Anderson, did I understand your testimony 
to say that the homes of the elderly are less energy efficient 
generally speaking?
    Ms. Anderson. Generally speaking, elderly households tend 
to live in older homes that may be less energy efficient. I do 
not think we have exact statistics on energy efficiency, but 
they do tend to live in older homes.
    The Chairman. How significant do you anticipate technology 
to influence future energy consumption? I mean all the 
appliances we use today are more energy efficient than the ones 
we used to use, but do you see technology reducing these costs 
or at least holding them steady?
    Ms. Anderson. Well, we think there are two sides to that 
coin. Certainly, as we have seen over time, there has been an 
increase in energy efficiency of our appliances and of building 
shells. At the same time we are using more energy for a lot of 
the appliances. We have more appliances, computers, palm 
pilots, everything that has to be recharged, cell phones, and 
so there is some energy use there. Certainly over time we have 
seen energy intensity or consumption per household per capita 
decline.
    Whether we will continue to see those gains at that rate in 
the future is unclear, but there is certainly movement toward 
more efficiency in the major appliances that we do use in most 
of our homes. Buildings continue to become more energy 
efficient.
    The Chairman. As energy becomes more expensive, obviously 
the cost of buying new technologies, I suppose you could say, 
is relatively less expensive because of maintenance and energy 
use would be less and may defray those costs. But would it be a 
fair characterization to say that the elderly are usually less 
likely to buy new technologies and have the advantage of those 
things?
    I mean I am speaking really about myself. I am sort of 
computer technology, not illiterate but just about. I wonder if 
the elderly generally are less inclined to go for the new 
technologies?
    Ms. Anderson. I do not think that our survey collects 
statistics on that. If I am wrong, I will certainly correct 
that for the record. But anecdotally you certainly hear a lot 
of people talking about the fact that the elderly are less 
inclined to buy some new technology, maybe less inclined to be 
on the Web and less inclined to buy cell phones and palm 
pilots.
    The Chairman. If that is the case and that there are 
perhaps energy efficiencies to be gained and therefore costs 
saved, what can the Energy Information Administration do in 
terms or outreach to the elderly community to make them aware 
of what is out there that could save them money?
    Ms. Anderson. Well, I will tell you what the Department of 
Energy is doing now, is we have a website. We can also be 
reached by telephone or certainly reached by letter, and have 
brochures and information that is available on the Web that 
help all Americans conserve energy tips for reducing your 
summer cooling bill, tips on conserving fuel costs--and so 
there are opportunities that folks have ranging from using 
fans, using ceiling fans, setting thermostats to different 
levels, simple things about using shades during the day to help 
drive down cooling costs, and simple things that people can do 
to consolidate errands, to keep tires inflated, and keep cars 
tuned up. All of that is information that's readily available 
to help shave off some of those costs at the margin and help 
reduce in the short term the average monthly energy bill.
    The Chairman. I know you made clear in your opening 
statement you obviously are not taking partisan positions, but 
we in the Senate are producing a fairly nonpartisan energy 
bill. Do you see that as helpful in reducing increases or will 
they actually result in some real savings in terms of energy 
costs and its impact on seniors?
    Ms. Anderson. The Secretary of Energy has certainly been on 
record of saying that the energy bill will go a long way toward 
increasing long-term supplies of energy to the extent that that 
helps all Americans whether through the diversity of supplies 
or, increasing supplies here at home, all of that can help 
contribute to reducing prices and reducing the volatility of 
prices that can help all Americans.
    The Chairman. I hope we get it to the President soon.
    Senator Craig.
    Senator Craig. Conrad, do you have questions you want to 
ask?
    Senator Burns. No. He asked every one of them, and she 
answered every one of them.
    The Chairman. Sorry for taking your question there, Senator 
Burns.
    Senator Craig. Thank you, Mr. Chairman.
    Ms. Anderson, thank you. Based on known sources of supply, 
what are the demand projections for Third World economies? By 
that I mean how accurate do we expect those projections to be? 
In the past of course we have seen China now take off, if you 
will, and start reaching into the world market and pulling a 
great deal of supply out. Is there any indication, looking at 
the economic growth in China today and other emerging nations, 
that similar things will happen? We think we are driving, with 
the legislation we have on the floor, toward some stabilizing 
potentially, but with these new emergences, what are you 
looking at and what are you projecting?
    Ms. Anderson. Sir, we come out with projections every month 
that do tend to look at what is going on in developing 
countries, and we are looking very closely at China and India. 
We, like other organizations, make adjustments month to month 
to these forecasts, but we think that Chinese demand growth 
will continue to be as strong as--not quite as strong as it was 
in 2005, but will continue to be strong in 2005 and 2006 and 
beyond. For India, we do not project any declines in demand 
growth. Certainly we look at other countries as well, and do 
not see that there is going to be large diminishment in demand. 
As their economies grown, energy consumption grows as well.
    I can get you the exact figures that we have for the 
predictions for the short-term as well as all the way out to 
2025. We do have those estimates. But certainly no demand 
abatement is foreseen as long as their economies grow, which is 
the main driver for energy demand.
    [Insert for the Record]

    Oil Demand Projections.--Based on known sources of supply, 
what are (energy) demand projections for third world economics?
    The Energy Information Administration's (EIA) International 
Energy Outlook 2004 (IEO2004), released in April 2004, projects 
strong growth for worldwide energy demand over the 24-year 
projection period from 2001 to 2025. Total world consumption of 
marketed energy is expected to expand by 54 percent, from 404 
quadrillion British thermal units (Btu) in 2001 to 623 
quadrillion Btu in 2025. Developing nations of the world are 
expected to account for most of the increment in world energy 
consumption. In particular, energy demand in the emerging 
economies of developing Asia, which include China and India, is 
projected to more than double over the next quarter century. In 
the developing world as a whole, primary energy consumption is 
projected to grow at an average annual rate of 2.7 percent 
between 2001 and 2025. In contrast, in the industrialized 
world--with its more mature energy-consuming nations--energy 
use is expected to grow at a much slower rate of 1.2 percent 
per year over the same period, and in the transitional 
economies of Eastern Europe and the former Soviet Union (EE/
FSU) growth in energy demand is projected to average 1.5 
percent per year.
    In the developing world, oil consumption is projected to 
increase for all end uses. In some countries where non-marketed 
fuels have been widely used in the past (such as fuel wood for 
cooking and home heating), diesel generators (as well as 
distributed generators, such as solar photovoltaics) are not 
sometimes being used to dissuade rural populations from 
decimating surrounding forests and vegetation--most notably, in 
Sub-Saharan Africa, Central and South America, and Southest 
Asia.
    Because the infrastructure necessary to expand natural gas 
use has not been as widely established in the developing world 
as it has in the industrialized world, natural gas use is not 
expected to grow enough in the developing world to accommodate 
all of the increased demand for energy.
    Energy use in the developing nations (China, India, Central 
and South America, Africa, the Middle East, and Other 
Developing Asian nations) is projected to increase more rapidly 
than in other regions over the coming decades. Population 
growth and urbanization in populous China and India are 
expected to produce lare increases in demand for residential 
energy services, and rising incomes and rural electrification 
efforts are generally expected to bolster demand for 
electricity-using appliances in most of the developing 
countries. Given the current low market saturation of such 
appliances, rapid growth in demand for electricity is projected 
over the forecast period as air conditioning, refrigeration, 
and laundry equipment become more commonplace. China's 
electricity supply system already is struggling to meet the 
demand of its customers, causing brownouts and curtailments. In 
South America, where air conditioning is more widely used, the 
electricity infrastructure is better established than in some 
of the other developing nations.

    Senator Craig. In discussing crude oil prices you testified 
that projected growth in OPEC supplies is not expected to 
accommodate worldwide demand growth and that worldwide spare 
crude oil production capacity had diminished. Later you said 
that gas prices are projected to rise only slightly in the next 
20 years due to increased production from OPEC and non-OPEC 
sources. At first glance at least these seem to be 
contradictory statements. Can you please clarify the 
assumptions on which those projections are based?
    Ms. Anderson. I hope that I said that non-OPEC supplies are 
not going to be adequate to maintain the increase in demand 
growth. It is non-OPEC supplies. We do expect that over the 
next 20 years in part because of higher prices there will be 
long-term growth in world supplies as well as in some 
additional U.S. supply, and that would have the impact on long-
term gasoline prices. So over the next 20 years we do 
anticipate that as new supplies come along, as there are some 
efficiencies worldwide, we would not expect to see the kind of 
growth in prices as we have seen in the last few years.
    So that is what that is in reference to, for the longer 
term. We hope there will be some mitigation.
    Senator Craig. In regards to elderly driving significantly 
less than younger households, does your date make a distinction 
between those who drive less because of costs versus those who 
drive less because of age-related conditions?
    Ms. Anderson. No, sir, I do not believe that our data would 
go into the kind of rationale for why there would be 
differences. I can get back to you if we have that information, 
but I believe we just calculate data on miles traveled by age 
group, not due to a reason that might affect their behavior.
    Senator Craig. Thank you, Mr. Chairman.
    The Chairman. We have been joined by Senator Carper. 
Welcome, Tom.
    Senator Carper. Thanks, Mr. Chairman.
    Hi, Ms. Anderson.
    Ms. Anderson. Good afternoon.
    Senator Carper. How have they been doing?
    Ms. Anderson. Great.
    Senator Carper. Are there any questions they have not asked 
you that you ought to be asked?
    Ms. Anderson. I do not think so, no, sir.
    Senator Carper. I want to follow up on a couple of things 
that I heard them asking, if I could. One of the--it may have 
been our chairman--was talking about the energy bill and 
aspects of the energy bill, which we very much need a good 
balanced piece of legislation. Part of our energy bill will be 
production. Some will be renewable, some will be non-renewable. 
Part of the energy bill will focus on conservation. What I 
would like to do is just to maybe focus a little bit on 
conservation with respect to the elderly. What I would like to 
do is see if we could not tie that in with funding for LIHEAP. 
I understand the LIHEAP can be used in part our electric bills 
or our gas bills or oil bills. It can also be used I think for 
weatherization if I am not mistaken.
    Would you just take a minute and share with us any insights 
that you might have on how meaningful that has been, how 
worthwhile that has been? If this is not something that is 
within your purview, that is fine, but I just thought I would 
like to ask.
    Ms. Anderson. I regret that it is not within my purview.
    Senator Carper. Why not? No, I am just----
    Ms. Anderson. I could explain that too.
    Senator Carper. Do you want to answer another question? 
Usually when we are asked questions that we cannot answer, we 
pretend that we are answering the question we have been asked, 
but then we just answer another one, sort of like we can stay 
on message. That is the way we do it. Do you want to try that?
    Ms. Anderson. Sure, why not? I will give it a shot. 
[Laughter.]
    Working for the Energy Information Administration, we do 
not really get involved in commenting on programs that DOE may 
have an interest in or programs of HHS. So I just do not have 
the numbers or the information on hand to opine about LIHEAP, 
but I know that the panel behind me knows a lot about LIHEAP.
    Senator Carper. Oh, good.
    Ms. Anderson. They are going to be talking at length 
about----
    Senator Carper. I see them back there nodding their heads 
to say, ``yes, we do know a lot.''
    Ms. Anderson. They are probably far more expert than I am 
about the provisions of LIHEAP and how that might be related to 
the current energy bill. I regret that I am not an expert in 
this area.
    Senator Carper. That is OK. Let me ask one more if I could. 
Unfortunately, I am not going to be able to stay here for the 
second panel, so I am just going to be putting all this 
pressure on you. But when we look at the run-ups in gasoline 
prices and the cost of oil per barrel, we look at the run-ups 
in natural gas prices, and we see those spiking. I am wondering 
what kind of correlation is there between, say, increases in 
natural gas prices, increases in oil prices, with the actual 
costs that elderly people are incurring for their energy costs?
    Ms. Anderson. Natural gas prices, like heating oil and like 
gasoline prices, although closely follow crude oil prices, 
although natural gas prices somewhat less so than gasoline or 
heating oil. So as we see crude oil prices rise, we see that 
those increases do filter through to the major fuels, and that 
certainly would include natural gas. Natural gas prices are 
determined also in part by what happens here in the United 
States, because natural gas of course is not traded nearly as 
much as crude oil is, and so those prices tend to reflect 
different kinds of factors within the United States that have 
to do with U.S. production and storage here in the U.S.
    Senator Carper. OK. A different kind of questions, and this 
is maybe asking you to look at the kind of expenditures that 
maybe our parents make for their energy costs and some idea of 
like the percentage of their income that maybe our parents or 
grandparents are spending for energy as compared to those who 
are a bit younger, their children and grandchildren. Any 
thoughts? Is it the same? Are they comparable? I seem to recall 
that--you may have mentioned it but I think before I got here--
that the elderly are spending anywhere from 10 to 20 percent of 
their income for energy costs. How does that compare to the 
percentage that their children or grandchildren might be 
spending out of their income for energy costs?
    Ms. Anderson. If we look at low-income elderly, we get the 
10 to 20 percent figure. For significantly low-income elderly 
it would be higher. Compared to the average American, all 
Americans--excuse me--compared to all Americans in higher-
income classes, perhaps making $30,000 a year or more, the 
percentage would be in the 7 to 10 percent category. We can 
break that down by income levels, but at those averages it is 
about half of the percentage of lower income households.
    Senator Carper. Last question, and you can go anywhere you 
want with this one, but if you were just giving us some advice 
here in the Senate as to what we can do to really make a 
meaningful difference for folks, whether it is this summer, 
this winter, older Americans in our respective States, whether 
it is Idaho or Oregon or Montana or Delaware, but some things 
that we might want to consider doing more of, less of, better, 
to help meet their human needs Ms. Anderson. Regrettably, I am 
not in a position to advocate any policy actions. If my boss, 
the Secretary of Energy were here, he would say pass the energy 
bill.
    Senator Carper. He is not here, but I am glad you are, and 
thanks for that advice.
    Ms. Anderson. Thank you very much.
    Senator Carper. Thank you.
    Ms. Anderson. Thank you.
    The Chairman. Thank you very much, Ms. Anderson. We so 
appreciate your time and your attention to this issue.
    [The prepared statement of Ms. Anderson follows:]
    [GRAPHIC] [TIFF OMITTED] 23940.001
    
    [GRAPHIC] [TIFF OMITTED] 23940.002
    
    [GRAPHIC] [TIFF OMITTED] 23940.003
    
    [GRAPHIC] [TIFF OMITTED] 23940.004
    
    [GRAPHIC] [TIFF OMITTED] 23940.005
    
    [GRAPHIC] [TIFF OMITTED] 23940.006
    
    [GRAPHIC] [TIFF OMITTED] 23940.007
    
    [GRAPHIC] [TIFF OMITTED] 23940.008
    
    [GRAPHIC] [TIFF OMITTED] 23940.009
    
    [GRAPHIC] [TIFF OMITTED] 23940.010
    
    [GRAPHIC] [TIFF OMITTED] 23940.011
    
    [GRAPHIC] [TIFF OMITTED] 23940.012
    
    [GRAPHIC] [TIFF OMITTED] 23940.013
    
    [GRAPHIC] [TIFF OMITTED] 23940.014
    
    [GRAPHIC] [TIFF OMITTED] 23940.015
    
    The Chairman. We will now call up our second panel. It 
consists of Nelda Barnett, a member of AARP Board of Directors. 
She is from Owensboro, KY; and Donna Harvey, executive 
director, Hawkeye Valley Area Agency on Aging from Waterloo, 
IA, and she is the president of National Association of Area 
Agencies on Aging; and then my constituent, Jim Slusher, 
executive director of Mid Columbia Community Action Council, 
The Dalles, OR. We welcome you all.
    Nelda, why do we not begin with you?

 STATEMENT OF NELDA BARNETT, MEMBER, AARP BOARD OF DIRECTORS, 
                         OWENSBORO, KY

    Ms. Barnett. That is fine. Good afternoon, Mr. Chairman and 
committee members. Thank you for this opportunity to be able to 
testify on behalf of AARP. I am Nelda Barnett and I am from 
Owensboro, KY, and I am a member of the AARP Board of 
Directors.
    Older Americans face some of the most serious consequences 
to rising energy costs. My remarks will focus on five critical 
issues.
    First, energy prices are projected to continue their rise 
dramatically into the cold winter months this year. According 
to the Department of Energy, household expenditures this winter 
for natural gas are expected to rise to 9.4 percent higher. 
Heating oil expenditures are expected to rise 34 percent, and 
propane prices 22 percent.
    Second, older Americans devote a higher percentage of their 
total spending to residential energy costs. About 1 of every 4 
low-income older households spend 19 percent or more of their 
entire income on home energy bills.
    Third, rapidly rising energy costs force older Americans to 
adjust their overall spending, sometimes resulting in life-
threatening choices. AARP recently surveyed about 850 older 
Americans across the country to determine if they had taken any 
steps to deal with the rising energy costs. We have found 61 
percent have limited the use of energy in their homes; 62 
percent have raised their thermostats in hot weather, lowered 
their thermostats in cold weather; 48 percent have limited 
their travel by automobile and 11 percent have turned to public 
transportation rather than driving their own car. A number have 
also delayed payment for their energy bills, 11 percent, and/or 
their bills for other services, 14 percent. In addition, rising 
energy costs led 11 percent of those surveyed to apply for 
energy assistance.
    Most troubling, however, are the significant number of 
older Americans that have taken more serious measures to 
account for their rising energy costs. Twelve percent have been 
forced to limit or do without food. Eleven percent have reduced 
or done without medical services, and 10 percent have done 
without their prescriptions.
    As we experience these hot summer days and look ahead to 
another cold winter, the safety and security of older Americans 
should not be compromised.
    Fourth, increased energy costs impact older Americans' 
reliance on transportation and transportation services. Rising 
energy costs are also reflected in gasoline prices, and 90 
percent of trips by older persons are by private vehicle. 
Transportation is the second highest expenditure category for 
households age 45 and above, second only to housing. 
Transportation consumes on average 19 percent of spending in 
these households. Services for seniors that rely on cars, vans 
and trucks, such as transportation services and meals on 
wheels, are severely challenged by the sharp increase in 
gasoline prices. Many meals programs have had little, if any, 
increases in funding and are operating in deficit to cover the 
higher gas costs. Higher gas prices particularly affect 
transportation service providers in rural areas where 
destinations are at greater distance from one another.
    Finally, Federal assistance programs such as the Low-Income 
Energy Assistance Program, or LIHEAP, and the Weatherization 
Assistance Program, offer life-saving assistance. LIHEAP 
provides financial assistance for home heating and cooling. 
Without this program older Americans would have to make an 
unacceptable choice, a warm home during the cold winter, or 
life-sustaining food and medicines. This winter requests for 
energy assistance are expected to rise at an all-time high, and 
LIHEAP has struggled to keep pace with the ever-increasing 
number of eligible households.
    The proposed LIHEAP budget will assist only 14 percent of 
the estimated 34 million eligible recipients. LIHEAP needs at 
least 3.6 billion for 2006 to simply maintain the assistance 
level it provided in 1982.
    The Weatherization Assistance Program, another valuable 
Federal program, offers services to low-income households free 
of charge, reducing the burden of their energy costs. We 
commend Members of Congress for your continued support of this 
program.
    In conclusion, AARP looks forward to working with the 
members of this committee and Congress to ensure the welfare of 
older Americans at a time when burgeoning energy costs have the 
potential to threaten their safety, health and welfare.
    Thank you very much for this opportunity.
    [The prepared statement of Ms. Barnett follows:]
    [GRAPHIC] [TIFF OMITTED] 23940.016
    
    [GRAPHIC] [TIFF OMITTED] 23940.017
    
    [GRAPHIC] [TIFF OMITTED] 23940.018
    
    [GRAPHIC] [TIFF OMITTED] 23940.019
    
    [GRAPHIC] [TIFF OMITTED] 23940.020
    
    [GRAPHIC] [TIFF OMITTED] 23940.021
    
    [GRAPHIC] [TIFF OMITTED] 23940.022
    
    [GRAPHIC] [TIFF OMITTED] 23940.023
    
    [GRAPHIC] [TIFF OMITTED] 23940.024
    
    The Chairman. Thank you, Nelda. I think you said that Meals 
on Wheels programs do not receive funding for increased energy 
costs.
    Ms. Barnett. They have not, and what they are planning to 
do, it looks like, is go to one meal, one hot meal and frozen 
meals for the rest of the week.
    The Chairman. So that is how they are dealing with the 
deficit?
    Ms. Barnett. That is how they are doing it, but you have to 
remember, most of our older people that are in a Meals on 
Wheels category are the ones that only see that meal driver 
from one day to the next, so we are forcing them into more 
isolated----
    The Chairman. So they may have been getting two meals 
before but will now only get one?
    Ms. Barnett. No. They would be getting probably the five 
meals, but there would be one hot meal and the rest will be 
frozen.
    The Chairman. What kind of frozen?
    Ms. Barnett. Well----
    The Chairman. Do they have the ability to cook?
    Ms. Barnett. They usually have the ability to reheat it, to 
reconstitute it through maybe microwave or through hot water, 
but they are able. You know, most of the homes they have gone 
in, they know this.
    The Chairman. You are talking about they get a TV dinner or 
something?
    Ms. Barnett. Yes, something of that nature.
    The Chairman. Do they have peas in the TV dinner? I am just 
kidding. That is my business. [Laughter.]
    Ms. Barnett. Or it could be a shelf meal in some instances, 
where they reconstitute it with water.
    The Chairman. I was just kidding you on this point.
    Ms. Barnett. I know you were.
    The Chairman. A lot of your members live in assisted living 
facilities. How are increased costs with assisted living 
facilities impacting seniors? Can you discern whether they are 
passing on costs to them?
    Ms. Barnett. In a lot of cases in the lower income housing, 
they cannot provide any assisted living.
    The Chairman. I see.
    Ms. Barnett. They have to have coordinated services in some 
way, but most of your assisted living is coming through your 
more affluent senior who can afford to pay for it.
    The Chairman. One more thing on the frozen dinners. Are 
they well rounded? I mean are the same kind of things----
    Ms. Barnett. Let me say that I have not had one of those 
meals. [Laughter.]
    The Chairman. I am really just more asking a nutritional 
question.
    Ms. Barnett. Right. Well, they would be nutritionally 
balanced. We have to have that.
    The Chairman. OK.
    Ms. Barnett. That is a requirement of the program, and we 
do have the nutritionists who oversee that.
    The Chairman. Thank you.
    Senator Craig.
    Senator Craig. Images of the Jolly Green Giant bouncing 
through my head. [Laughter.]
    Ms. Barnett. We will get the peas. [Laughter.]
    Senator Craig. Nelda, you commented that the Federal 
assistance programs such as Weatherization Assistance Program 
are reaching only a fraction of the eligible households. Why is 
that so? Are there barriers other than financial constraints? 
If so, what are the barriers to reaching more people?
    Ms. Barnett. Some of this could be limited outreach of 
where people are not aware of the program, and where we would 
know the programs have done everything they could to try to 
find these people. It may be that there are some that are 
missing it.
    Senator Craig. OK, that is all I have.
    The Chairman. We have been joined by Senator Talent, who is 
one of the brighter talents in----
    Senator Talent. Mr. Chairman, you really are too kind.
    I understand we have not yet heard from the other 
witnesses?
    The Chairman. We have not.
    Senator Talent. I think I will suspend and wait until they 
do.
    The Chairman. Thank you, Nelda.
    Donna, we will turn to you.

 STATEMENT OF DONNA K. HARVEY, PRESIDENT, NATIONAL ASSOCIATION 
  OF AREA AGENCIES ON AGING, AND EXECUTIVE DIRECTOR, HAWKEYE 
        VALLEY AREA AGENCY ON AGING, INC., WATERLOO, IA

    Ms. Harvey. Thank you, Chairman Smith, Ranking Member Kohl, 
who had to leave us, and other distinguished members of the 
committee. As stated, my name is Donna Harvey and I am the 
current executive director of Hawkeye Valley Area Agency on 
Aging in Waterloo, IA. If Senator Grassley were here he would 
tell you that is a suburb of New Hartford. I currently serve as 
the president of the National Association of Area Agencies on 
Aging, which represents 655 area agencies on aging, and 240 
Title VI Native American aging programs across this Nation, and 
we have been doing that for 30 years.
    I want to thank the committee for inviting me here today to 
testify on the impact of higher energy costs on older adults, 
and the AAA sponsored transportation and nutrition programs 
that serve America's seniors.
    Currently older adults over the age of 65 spend 
approximately 15 percent of their income on transportation. As 
a result of high fuel costs many adults have had to curtail 
their driving to make only the most essential trips. For the 10 
percent of seniors 65 and older living in poverty and the 30 
percent of older Americans classified as low income, rising 
gasoline prices can mean making tough choices between 
maintaining their mobility and meeting other necessities of 
life.
    Cutbacks due to rising fuel costs are not just impacting 
individual older drivers, they are also impacting the AAA 
sponsored transportation and nutrition programs that older 
adults rely on due in part to the fact that Older Americans Act 
funding for services such as transportation has not been able 
to keep pace with inflation and have made it necessary for AAAs 
to attempt to find additional funding streams to supplement the 
Older Americans Act funding. AAAs have drawn upon SSBG, DOT 
funds and other private and foundation grants in an attempt to 
cobble together the funding to continue to provide these 
essential services.
    Mr. Chairman, despite their best efforts to juggle multiple 
funding sources, many AAAs are now forced to shift additional 
costs to transportation recipients, as well as to make cutbacks 
in the level of transportation services they provide.
    At my own agency we have had to make several adjustments to 
the transportation services we can provide to seniors as a 
result of increased operating costs passed on to us from our 
local transit entity. We have been forced to restrict 
destinations and only fund transportation for seniors to go to 
congregate meals, grocery shopping, medical appointments and 
the pharmacy. Consequently, transportation services have been 
eliminated for all non-essential trips such as family visits, 
general shopping and work or volunteer activities. This 
limitation has unavoidably impacted the quality of life for 
seniors in our area.
    One of our main transportation providers now predicts that 
fuel expenditures for the fiscal year starting July 1 will 
increase by 20 percent over last year's expenses. To save fuel 
the provider has already taken steps to transition its fleet of 
vehicles to more fuel efficient mini vans where possible. 
However, they are limited in using these types of vehicles due 
to passenger capacity and accessibility considerations.
    In addition to dealing with increased fuel costs, this 
provider has been saddled with a 25 percent hike in its 
insurance premiums, equivalent to $500 per vehicle in its 
fleet. As a result of these escalating operating expenses the 
cost of providing a trip has more than doubled. Rising gasoline 
prices are especially burdensome to AAA programs that depend 
heavily on volunteers. My AAA currently reimburses volunteer 
drivers that deliver meals from preparation sites to congregate 
sites at the rate of 29 cents per mile. Within the last month 
many of our volunteers have requested an increase in the 
reimbursement to cover their rising fuel expenses, which we 
have not been able to provide. In addition, home-delivered meal 
directors report that uncompensated Meals on Wheels volunteers 
are decreasing their days of service due to the rising fuel 
costs.
    Mr. Chairman, in your home State the Community Connections 
of Northeast Oregon AAA based in La Grande, has reported their 
agency's fuel costs have increased 20 percent this fiscal year 
alone.
    This year the AAA has been able to maintain its commitment 
to serving the area's older adults only because it has 
successfully tapped into two new funding sources from the FTA 
under the Section 5310 formula grant and the Section 5311 rural 
formula grant. The AAA has also redesigned its transportation 
program to deal with the increased demands by limiting its 
services.
    Mr. Chairman, at the same time that AAAs are being 
confronted with growing costs in operating their senior 
transportation and meal programs, Older Americans Act Title III 
funding has remained largely level funded. With the 
reauthorization later this year Congress will have the 
opportunity to assess the increased cost of providing Older 
Americans Act services, such as transportation, and establish 
new authorization levels.
    In addition, with the reauthorization of the TEA-21 this 
year, Congress has indicated its willingness to further invest 
in senior transportation needs through the FTA's section 5310 
formula grant. We would also ask that more flexibility be 
allowed in those programs to allow the monies to go to 
operating costs rather than capital replacement.
    In conclusion, all Americans have been feeling the pain of 
higher gasoline prices, but this pain is compounded for older 
Americans on fixed incomes who can ill afford the rising cost 
of gasoline.
    We encourage Congress to make additional resources 
available to AAAs to better meet the growing demand for and 
cost of providing senior transportation and meal programs. The 
health, mobility and independence of America's seniors depend 
upon it.
    Thank you for holding this very important hearing.
    [The prepared statement of Ms. Harvey follows:]
    [GRAPHIC] [TIFF OMITTED] 23940.025
    
    [GRAPHIC] [TIFF OMITTED] 23940.026
    
    [GRAPHIC] [TIFF OMITTED] 23940.027
    
    [GRAPHIC] [TIFF OMITTED] 23940.028
    
    [GRAPHIC] [TIFF OMITTED] 23940.029
    
    [GRAPHIC] [TIFF OMITTED] 23940.030
    
    [GRAPHIC] [TIFF OMITTED] 23940.031
    
    [GRAPHIC] [TIFF OMITTED] 23940.032
    
    The Chairman. Thank you, Donna, for your testimony, your 
contribution here. I think it is probably logical to conclude 
that at least seniors who live in cities have public 
transportation alternatives, but places like La Grande, OR 
really do not, and really do depend on these kind of services. 
When we reauthorize the Older Americans Act, should there be 
included in there some sort of formula as to rural and city to 
make sure that some of these more distant places not be cutoff 
in times like these?
    Ms. Harvey. That has been a longstanding debate. I have 
been in the network 20 years, and Nelda was there longer than I 
was, but personally serving a rural area, I agree that it is 
time we look at it. I serve an urban area of 50,000 people, if 
you want to call that urban, and certainly the challenges I 
have in Waterloo-Cedar Falls is not what I have in the counties 
where I have no physicians or grocery stores or pharmacies 
available. Because money comes solely on income and numbers of 
seniors, it really does not allow adequate funding to do the 
extra outreach and provision of services to those isolated 
seniors in rural areas.
    The Chairman. Well, the question I asked, is it a subject 
of some controversy in your organization?
    Ms. Harvey. Yes.
    The Chairman. Sorry to put you on the hot seat.
    Ms. Harvey. Oh, no, that's fine.
    The Chairman. I am just trying to look at the inequities 
and what alternatives seniors might have when they live in 
different places, and I do not know what alternatives they 
would have in La Grande or in Iowa. You are from Iowa?
    Ms. Harvey. I am from Iowa. I might tell you, in Iowa we 
use some intergovernmental transfer funds, the dreaded word, 
but through those funds we build in a rural factor in the 
allocation, and it was extremely beneficial to the rural areas. 
Southwest Iowa is very, very poverty stricken, very few numbers 
of seniors, very few services, and for the first time they felt 
like they really received funding and they could do some 
creative program and meet greater needs of seniors. I think it 
is time that we look at that.
    The Chairman. Does Missouri have any good ideas or Senator 
Talent, any questions?
    Senator Talent. Missouri has plenty of good ideas. I do not 
know about Missouri's junior Senator today.
    You mentioned expanding 5310 formula grants to include 
assistance with operating costs such as vehicle maintenance, et 
cetera, But you also talked about the need to expand funding 
for Section 5310. Are there funds in that section now going 
unused because we do not have a broad enough definition, or is 
this a case where we are going to need additional funds, but 
then also allow them to be used for these transportation needs?
    Ms. Harvey. I believe it is where we are going to need 
additional funds. In a previous life I was a transportation 
provider, and it was always a challenge to look at those monies 
being primarily targeted toward capital replacement when in 
fact that may not be where your challenge was. It was really if 
you could expand services. Certainly the OATS system in 
Missouri is far and above some other services that other States 
have, but in Iowa it is a huge challenge. When you see that we 
have decreased services to seniors and yet they are purchasing 
new vehicles, it does not seem to correlate.
    Senator Talent. Right. So we may need additional funding 
but we need to give the managers the flexibility to use that 
funding in a way that will meet the transportation needs the 
best.
    Ms. Harvey. Certainly, certainly.
    Senator Talent. I was going to raise the issue you raised, 
Mr. Chairman, because this goes to the heart of what I see as 
the ability to provide services to seniors, and in fact, really 
to all needy people in rural areas. I see it all the time in 
health care, for example. We can do wonders with rural health 
clinics, but if you cannot get people to the clinics that is a 
major problem.
    So I think, notwithstanding the understandable maybe 
division within your organization, I think we need to look at 
this. Maybe some kind of an automatic surcharge, not surcharge 
but extra payment when fuel costs go above a certain amount for 
providers in rural areas because if they are not driving these 
folks around to get them from one place to another, there is 
nothing you can do in any of these areas.
    Ms. Harvey. Exactly.
    Senator Talent. I understand why you may not want to 
comment on that because the concern is that it will come out of 
somebody else's funding, but it is just so crucial in rural 
areas.
    Ms. Harvey. It truly is. If you think of the home care 
agencies that are facing the very same challenges, you know, 
how do you get to someone's home to provide homemaker services 
without incurring the extra gasoline costs for reimbursement.
    Senator Talent. It goes both ways.
    Ms. Harvey. Exactly.
    Senator Talent. In order to save money in other areas like 
to expand Tele-health, for example, which I think is hugely 
important for the seniors and everybody, but you have to get 
the patient to where they can set up the Tele-health, or even 
if you set it up in their home, you have to get the health care 
professional at least sometimes to that home.
    Ms. Harvey. Exactly.
    Senator Talent. So your transportation costs may be going 
up in efforts that will provide better care and lower cost as 
regards other programs.
    Ms. Barnett. Right.
    Senator Talent. That is a good point.
    Thank you, Mr. Chairman.
    The Chairman. We will take the controversy from your 
organization and bring it here. We are not used to controversy 
in the Senate.
    Senator Talent. We do not ever have to deal with that.
    The Chairman. It is a very good idea, will--you have given 
us, all of you, have given us some ideas for when we take up 
the Older Americans Act reauthorization.
    Thank you, Donna.
    Jim, you have come a long way. The Oregon Trail is a long 
way between Washington, DC, and The Dalles, OR, and we 
appreciate your efforts to be here, so we invite your testimony 
now.

  STATEMENT OF JIM SLUSHER, EXECUTIVE DIRECTOR, MID COLUMBIA 
                    COMMUNITY ACTION COUNCIL

    Mr. Slusher. Thank you, Senator. Mr. Chairman, members of 
the committee, good afternoon. My name is Jim Slusher. I am the 
executive director for Mid Columbia Community Action Council.
    We are a small, private nonprofit community action agency 
located in North Central Oregon, along the Columbia River 
Gorge. Our agency serves three rural counties, Hood River, 
Wasco and Sherman, with our mission being to eliminate the 
causes and conditions of poverty that exist in our area.
    I am also here today representing Oregon's 18 community 
action agencies, and all of us want to let you know about the 
rising cost of energy for seniors and people with disabilities 
and the impact it has on their lives, not only from a financial 
standpoint but also from a health and safety issue.
    In the past year our State has seen the price of home 
heating oil increase by at least 61 percent, natural gas prices 
by 18 percent just this past winter, coupled with another 18.7 
percent increase just a few years ago. In addition, Oregon's 
two largest utilities have raised their rates between 16 and 20 
percent, and currently have a request in to the Oregon Public 
Utility Commission for small rate increases this fall.
    These continued rising energy costs have a dramatic effect 
on seniors' lives, as they are often faced with difficult 
choices between heating their homes, purchasing necessary 
prescription drugs, or eating healthy, balanced nutritious 
meals. I believe we can and should do something about seniors 
not having to worry about staying warm in the winter by 
providing more resources to help this growing demand.
    In January Oregon's community action agencies produced a 
snapshot report on the status of the energy assistance 
situation. This report clearly shows that Oregon had over 
25,000 households waiting for energy assistance, but the 
agencies had no money to help them, and many of these 
households are seniors.
    My agency operates the Federal Low-Income Energy Assistance 
program--on the East Coast they call it LIHEAP, with the H; on 
the West Cost it is LIEAP--as well as Oregon's energy 
assistance program, OEA. This past year nearly 70 percent of 
our funds assisted senior or disabled households. This leaves 
very little funding for the general low-income population, for 
families who have children under the age of 6, over the age of 
6, and many poor working households.
    More seniors accessing the program has been a growing trend 
the past few years, and recognizing as more seniors continue to 
access the program, it will leave even less assistance 
available to the general population.
    In addition to the Federal LIEAP dollars or about 23 
million, Oregon raises an additional $15 million in energy 
assistance through our Low-Income Energy Assistance Meter 
Charge Program. Otherwise, Oregon's situation would be much 
worse than it currently is today.
    I would like to thank Senators and Congressmen and women 
who have recognized the need for low-income energy assistance 
and who have helped in the fight for more low-income energy 
assistance funding, which is sorely and desperately needed.
    I want to personally thank Oregon Senators Gordon Smith and 
Ron Wyden for their hard work in fighting to get more low-
income energy assistance funds released, thus allowing us to 
help thousands more people who would have otherwise gone 
without this assistance.
    In closing I would like to leave you with this thought: 
what can Government do to help? We have a couple of obvious 
options: (1) work on getting the prices of energy lowered or 
reduced; or (2) by raising the amount of the current energy 
assistance budget to meet growing demand.
    Thank you for allowing me to be here today to speak to you 
on the important issue of the dramatic rising costs of energy 
and its effect on low-income seniors, and I would also be happy 
to answer any questions that you may have.
    [The prepared statement of Mr. Slusher follows:]
    [GRAPHIC] [TIFF OMITTED] 23940.033
    
    [GRAPHIC] [TIFF OMITTED] 23940.034
    
    The Chairman. Thank you very much, Jim. Has demand for 
assistance for the elderly increased at a higher rate than 
other low-income segments of the population in the Mid 
Columbia----
    Mr. Slusher. In my area it has. I actually started in this 
program in 1977 before it was Low-Income Energy Assistance 
Program, and over the years we have seen an increase in the 
number of seniors that are using the program and it is now as 
high as nearly 70 percent. So when I open my doors to the 
general public on December 1--because seniors are given 
priority, seniors and people with disabilities are given 
priority, and we open that program to them in November. When we 
open our doors December 1, that is open to the general 
population, and only 30 percent of the funds remain. That is 
including the $15 million that Oregon raises itself. So without 
that 15 million we would be severely hampered.
    My agency was the front of the Oregon snapshot, when at 11 
o'clock the night before, on November 30, we had people lined 
up at our door. When we opened our doors at 8 o'clock there 
were nearly 300 people standing in line to get assistance that 
had started from 11 o'clock the night before.
    The Chairman. Whenever I drive through your community I 
marvel at that great hydroelectric dam there, and what a 
tremendous public asset that is. Do the seniors you serve 
understand the relationship of that dam and its non-use for 
creating energy much any more? Do they understand what that 
means to them?
    Mr. Slusher. Well, I think they do when they get ready to 
go pay their energy bills. I think they understand that the 
price has gone up, that they are not as able to afford that as 
well as they had in the past because of the rising costs. So I 
think they know it is there, but it is not always of value to 
us to.
    The Chairman. Is that a source of frustration to them like 
it is to me?
    Mr. Slusher. I believe that it is too.
    If I could expand just a little bit, one of the things from 
some earlier questions. Fifteen percent of the Low-Income 
Energy Assistance Program goes toward weatherization services, 
so we try to do a longer term effect. We also do energy 
education with our seniors and with people that are on the 
program as well, trying to teach them to reduce energy, reduce 
their energy consumption. It is one of the things that they do 
have some control over.
    So in addition to trying to provide energy assistance, 
weatherization and some energy education to help them reduce 
their bills, but we have seniors that live on $774 a month 
Social Security. Their energy bill sometimes is as high as $200 
a month. Luckily, this past winter was not a severe winter for 
us, but if you know anything about the Columbia River Gorge, it 
can be 114 or 115 in the summertime, and it can be 30-mile-an-
hour freezing winds in the wintertime. So we do have extreme 
temperatures that require a lot of energy.
    The Chairman. You no doubt see some very heart-rending 
cases of folks that live there, and I just applaud you for what 
you are doing and thank you for your public service.
    Mr. Slusher. Thank you.
    The Chairman. Senator Talent.
    Senator Talent. Since Mr. Slusher referred to it, and you 
said it also, Mr. Chairman, I just want to comment that it is 
important to focus on the fact that rising energy prices have a 
human cost. I think for a while people adopted almost an 
abstract view here toward energy, a kind of a ``well, you know, 
if gas prices go up 50 cents that will cause investment in this 
area and that will be good for this reason and that reason,'' 
and a lot of people were speculating that high energy prices 
might actually be a good thing.
    There is an enormous human cost to it in terms of lost 
jobs, and of course, as in everything else, whenever something 
gets harder, it is the people who are closest to the margin in 
the first place who suffer the most, which in many cases is 
seniors on a fixed income. So you all see it day to day, and I 
appreciate your raising that point with regard to hydro. I mean 
let us use the energy that we have, keep these costs as low as 
we can, and then keep the economy strong so we can help the 
needy.
    The Chairman. The interesting thing about the hydro issue 
is they live where this tremendous hydroelectric dam is 
located, and under a Federal court order right now it is not 
allowed to operate like it certainly can. The Pacific Northwest 
is 70 percent dependent upon hydroelectricity, and so the order 
is in place to spill water over the dams so that the 
fingerlings can get spilled hundreds of feet as opposed to 
barged around. So when you spill you do not create energy, and 
there is a consequence to energy prices of the Pacific 
Northwest, which used to be a very, very good deal, now are 
frankly little different from other places in the country.
    It is debatable whether it is helping fish or actually 
killing more fish, but I know it is hurting seniors and it is 
certainly hurting industries in his community that have shut 
down as a result of non-availability of electricity. So the 
human cost to this is staggering in a community like The 
Dalles, OR, and it is a great tragedy. It is a human tragedy. 
Obviously, where there are alternatives for environmental 
mitigation we ought to pursue them, but sometimes we do not 
factor in the human price that is being paid, and it is very 
high, and in my view, higher than it needs to be.
    Senator Talent. I could not agree more. You sound like 
somebody from Missouri, Mr. Chairman. We have a very clear view 
on these things in Missouri.
    The Chairman. Very, very frustrated.
    Senator Talent. The kind of things that will get us 
prosperity in the long run and help the needy in the long run 
are also better for the environment in the long run. You cannot 
have a poor country with high environmental standards, and we 
are getting off the subject of the hearing now, but I 
appreciate your comments, Mr. Chairman.
    The Chairman. I think it is one of the reasons why an 
energy bill is important because it really does go to the 
bottom line as it impacts the most vulnerable of our citizens, 
and it is affecting them probably disproportionately.
    You had a comment?
    Mr. Slusher. Well, my comment was my mother lives in 
Missouri, so I am partially from Missouri.
    Senator Talent. Oh, Mr. Slusher.
    Mr. Slusher. Sedalia.
    Senator Talent. Sedalia.
    Mr. Slusher. Yes. She said, ``My bill this last month, my 
electric bill was $195. Would you please tell those people to 
get the price of energy down?''
    Senator Talent. Yes, she is right.
    Mr. Slusher. It is very high for this time of the year for 
her.
    Senator Talent. Do you get to visit very often?
    Mr. Slusher. Every now and then.
    Senator Talent. Those beautiful wide streets and those 
great trees in Sedalia?
    Mr. Slusher. Oh, you bet.
    Ms. Harvey. Good peaches.
    Senator Talent. Come sometime for the State fair.
    Mr. Slusher. I have been there for that. Thank you.
    Senator Talent. You have to stay at your mom's house though 
because there are not any hotel rooms available. [Laughter.]
    You are invited too, Mr. Chairman, we would love to have 
you.
    The Chairman. I would love to come.
    Nelda, Donna, Jim, thank you so much for traveling all this 
way to add I think measurably to the public record in the U.S. 
Senate, and in the Aging Committee we hold these hearings to 
put light and heat on issues of real urgency, and we have been 
speaking of one today. So to add to the debate on the energy 
bill, we have held this hearing and you have contributed 
tremendously. Thank you.
    We are adjourned.
    [Whereupon, at 4:10 p.m., the committee was adjourned.]
                            A P P E N D I X

                              ----------                              


                  Prepared Statement of Senator Talent

    This is a timely hearing, as we are in the middle of 
debating an energy bill that we hope to pass this summer.
    The hearing highlights an important issue--energy costs are 
too high for all Americans, and recent increases hit the 
elderly especially hard, as many are on fixed incomes.
    This disproportionate impact makes imperative passing an 
energy bill that increases supply of conventional sources of 
energy while laying the foundation for increased use of new and 
renewable sources of energy to bring down the cost of energy.
    The bill is being discussed on the floor even as we proceed 
with this hearing. If it passes, it would:
    Increase the production of ethanol, both to reduce the cost 
of gasoline and also to create jobs and reduce our dependence 
on foreign oil.
    Improve the reliability of our electric grid, so that we 
don't face blackouts when demand for electricity is at its 
highest.
    Through conservation and efficiency measures, reduce demand 
for electricity by 50,000 MW by 2020, preventing the need for 
up to 170 300-MW power plants, and reduce the need for 1.1 
trillion cubic feet of gas, both of which wil help keep energy 
prices down.
    Encourage the development of renewable resources, clean 
coal, and nuclear power, which will provide cheaper and cleaner 
sources of energy.
    Encourage the importation of liquefied natural gas (LNG) to 
increase natural gas supply, thereby reducing prices to heat 
homes and produce electricity.
    Reduce the price of gasoline, natural gas, and home heating 
oil by allowing states to decide whether to allow drilling 
offshore to increase oil and gas supply.
    Fund research and development for hydrogen as a primary 
energy source, new and more efficient lighting, and other 
innovative technologies.
    These measures are our best hope to reduce the current cost 
of energy. Had we passed a bill four years ago when we first 
took up an energy bill, we may have avoided some of this 
supply-induced price spikes.
    I look forward to hearing your ideas on helping our 
nation's seniors with respect to energy costs.
                                ------                                


            Questions from Senator Talent to Margot Anderson

    Question. Has EIA factored into its figures increases in 
ethanol production and increased oil and gas drilling into its 
price projections?
    Answer. EIA's Annual Energy Outlook 2005 (AEO2005), which 
was released on the EIA website on February 11, 2005, does 
factor increased production for ethanol into its price 
projections for transportation fuels. The AEO2005 assumes that 
the United States will consume several billion gallons per year 
of renewables (mostly ethanol blended into gasoline) in 
transportation fuels and this number will increase by an 
average of 2.2 percent per year between 2003 and 2025. The 
price projections for transportation fuels using ethanol blends 
are highly dependent on the assumptions of the world price for 
crude oil. Currently, with West Texas Intermediate (WTI) crude 
oil priced at around $60 per barrel, the use of ethanol in 
gasoline actually lowers the pump price of blended gasoline 
since ethanol is less expensive than WTI. If crude oil prices 
were to decline to $25 (adjusted for inflation in 2003 dollars) 
per barrel in 2010 as the AEO2005 assumes, then use of ethanol 
in gasoline would be expected to increase the pump price by a 
few cents per gallon.
    Increases in oil and gas drilling are the result of growing 
demand for petroleum and natural gas as well as increasing 
crude oil and natural gas prices. In the very near term, end 
use prices will not be affected by current increases in 
drilling activity. However, the price incentives for increased 
exploration and drilling will add to productive capacity, 
increasing supply and thus relieving some of the upward price 
pressure caused by rising demand for fossil fuels.
    Question. The studies you reference compare 2001 energy 
costs to those in 2005 and 2006 projections. How much more 
would LIHEAP funding have to increase in order to keep LIHEAP 
support comparable to levels in 2001? Would this level of 
funding fully meet the need in FY 2006?
    Answer. It is difficult to determine what constitutes 
either ``comparable'' support or ``fully'' meeting needs in FY 
2006. Between 2001 and 2006 fuel oil prices are projected to 
increase about 60 percent, natural gas prices about 21 percent, 
and electricity prices about 12 percent.
    LIHEAP has historically provided a certain amount of energy 
assistance per household that covers some of the home energy 
costs. Whether increased funding would ``fully meet the need'' 
is difficult for EIA to answer since it raises many more 
questions about the goals of the program, eligibility, program 
effectiveness, etc., all of which are outside EIA's scope and 
fall within the purview of the Department of Health and Human 
Services, which adminsters the LIHEAP program.
                                ------                                


              Questions from Senator Talent to Ms. Barnett

    Question. On p. 8 of your testimony, you mention that the 
proposed $2 billion budget would reach only 14% of the 
estimated 34 million eligible recipients, and that it would 
take $3 billion in FY 2006 to fund LIHEAP at 1982 levels. What 
level of funding would be required to meet the needs of all 
eligible recipients, after state and local help is factored in?
    Answer. The most recent HHS LIHEAP estimates available show 
that there were 32,588,222 eligible households (averaging 2001, 
2002 and 2003 data) and approximately 5,768,805 received 
assistance in 2003. The figure of $3 billion needed is based on 
a raw percentage of eligible households served in prior years. 
This figure cannot be used to estimate total funding needs in 
future years; states provide varying amounts of assistance and 
the number of eligibles is dependent upon local and national 
economic conditions.
    The best estimates of the total number of eligible 
households can be found in the LIHEAP Report to Congress http:/
/www.acf.hhs.gov/programs/liheap/cps--eligibles.htm). A 2002 
AARP report entitled, ``Energy and Telephone Assistance in the 
States'' details how many individuals received various forms of 
assistance, and the states providing varying amounts of 
assistance for each category of assistance.
                                ------                                


              Questions from Senator Talent to Ms. Harvey

    Question. On. p 7-8 of your testimony, you mention that 
Section 5310 formula grants should be expanded to include 
assistance with operating costs such as vehicle maintenance, 
insurance premiums, and volunteer recruitment and training. Are 
there Section 5310 funds that are now going unused because of 
the need to broaden the eligibility definition?
    Answer. Section 5310 formula grant funds are not going 
unused. On the contrary, from what n4a has heard from Area 
Agencies on Aging and local transportation providers there is a 
need for additional funding and greater flexibility in the use 
of the funding to cover rising fuel costs and insurance 
premiums. While capital assistance funds are being fully 
utilized, many aging service providers have had to cut back 
transportation services and reduce the amount of rides they 
provide due to growing operating costs causing vehicles to 
remain idle when they could be more fully utilized if funds 
were better directed to areas of need.
    Question. On p. 8 of your testimony, you mention that the 
Older Americans Act has been flat funded, though fuel costs 
have risen 74 percent over the last five years. What level of 
additional funding for the Older Americans Act would meet the 
needs, after LIHEAP and other programs are factored in?
    Answer. As noted, from 2000 to April 2005, gasoline prices 
have skyrocketed by an average of $.95 a gallon, an increase of 
74 percent, with retail prices rising from $1.28 to $2.24 a 
gallon. This year alone, gasoline prices have jumped an average 
of over $.40 a gallon. During this same time, Older Americans 
Act Title III appropriations which fund Area Agency on Aging 
transportation services and home-delivered and congregate 
nutrition programs have received relatively nominal increases 
and in many instances flat or reduced funding.
    N4A believes that authorized funding levels of all the 
titles of the Older Americans Act need to be raised by at least 
25 percent over five years to compensate for inflation and the 
rising costs of providing services. This increase is required 
to ensure that the nation has the necessary resources to 
adequately serve the projected growth in the number of older 
adults and is essential to meet the needs of the nation's aging 
baby boomers--with a baby boomer projected to turn age 60 and 
become eligible for Older Americans Act services every 7.7 
seconds beginning January 1, 2006.

                                 
