[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




                        SUBCOMMITTEE HEARING ON
                        THE IMPACT OF INCREASING
                          GAS PRICES ON SMALL
                               BUSINESSES

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

              SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT
                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 9, 2008

                               __________

                          Serial Number 110-82

                               __________

         Printed for the use of the Committee on Small Business


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

                                 ______

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


HEATH SHULER, North Carolina         STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas              ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington              SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona               TODD AKIN, Missouri
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois               MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas                 STEVE KING, Iowa
DAN LIPINSKI, Illinois               JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin                LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa                   DAVID DAVIS, Tennessee
YVETTE CLARKE, New York              MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana              VERN BUCHANAN, Florida
HANK JOHNSON, Georgia
JOE SESTAK, Pennsylvania
BRIAN HIGGINS, New York
MAZIE HIRONO, Hawaii

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

               Kevin Fitzpatrick, Minority Staff Director

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, PENNSYLVANIA, Chairman


CHARLIE GONZALEZ, Texas              MARY FALLIN, Oklahoma, Ranking
RAUL GRIJALVA, Arizona               LYNN WESTMORELAND, Georgia

                                  (ii)




                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Altmire, Hon. Jason..............................................     1
Fallin, Hon. Mary................................................     2

                               WITNESSES


PANEL I:
Williford, Mr. Tim, Chairman Government Affairs Committee, 
  Plumbing-Heating-Cooling Contractors - National Association 
  (PHCC).........................................................     4
Orza, Mr. Vincent F., Jr., Dean, Meinders School of Business, 
  Oklahoma City University, Oklahoma City, OK....................     6
Urbanchuk, Mr. John, Director, LECG, LLC, Wayne, PA..............     8
Graff, Mr. Michael J., President & CEO, Graff Trucking, Inc., 
  Natrona Heights, PA............................................    10
Gilberti, Mr. Gary, Chesapeake Rehab Equipment, Pittsburgh, PA...    12

                                APPENDIX


Prepared Statements:
Altmire, Hon. Jason..............................................    29
Fallin, Hon. Mary................................................    31
Williford, Mr. Tim, Chairman Government Affairs Committee, 
  Plumbing-Heating-Cooling Contractors - National Association 
  (PHCC).........................................................    32
Orza, Mr. Vincent F., Jr., Dean, Meinders School of Business, 
  Oklahoma City University, Oklahoma City, OK....................    36
Urbanchuk, Mr. John, Director, LECG, LLC, Wayne, PA..............    44
Graff, Mr. Michael J., President & CEO, Graff Trucking, Inc., 
  Natrona Heights, PA............................................    49
Gilberti, Mr. Gary, Chesapeake Rehab Equipment, Pittsburgh, PA...    52

                                 (iii)



 
                      SUBCOMMITTEE HEARING ON THE
                    IMPACT OF INCREASING GAS PRICES
                          ON SMALL BUSINESSES

                              ----------                              


                        Wednesday, April 9, 2008

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1539 Longworth House Office Building, Hon. Jason Altmire 
[chairman of the Subcommittee] presiding.
    Present: Representatives Altmire, Gonzaez, and Gohmert.
    Also Present: Representatives Ellsworth and Fallin.

             OPENING STATEMENT OF CHAIRMAN ALTMIRE

    Chairman Altmire. The hearing will come to order. I call 
the Subcommittee hearing to order to examine the impact of 
increasing gas prices on small businesses. Gasoline and diesel 
fuel prices have been climbing at unprecedented rates. And 
today we will hear about how these rising costs are negatively 
impacting our nation's entrepreneurs.
    With small firms being the nation's single largest 
employer, we need to do everything we can to help them thrive. 
Just a couple of weeks ago, oil reached an all-time high of 
$111 a barrel. According to AAA, the national average for a 
gallon of gasoline is now a record $3.33. In my own western 
Pennsylvania district, I have seen gas prices approach $4 a 
gallon.
    I hope today's hearing will give us a better understanding 
of how small firms are being impacted by these rising energy 
prices. I am sure we will hear from our panel of witnesses that 
the problem is widespread and impacts both consumers and small 
businesses. Continued energy price hikes mean sacrifices in a 
local business' bottom line. These costs can determine whether 
a construction firm is available to invest in a new storage 
facility and whether a family farmer can afford fertilizer for 
this year's crops.
    The situation creates hardships in virtually every industry 
throughout the nation. While it has hit some sectors harder 
than others, it affects businesses ranging from hotels and 
restaurants to the local grocery store that has to raise the 
price of bread that families depend on.
    Today we will hear from small businesses coping with rising 
energy costs. We also have experts with us who will discuss the 
increasing demand, limited supplies, and market conditions 
associated with the price increases and what solutions are 
available to combat this growing problem.
    Unfortunately, these trends deflate small business owners' 
expectations for expansion. In fact, two-thirds of 
entrepreneurs are anticipating lower profits this year when 
compared to previous years due in large part to increased 
energy costs.
    Also at issue are small businesses that use energy 
resources on a daily basis to meet their transportation needs. 
Take our nation's trucking companies. The trucking industry is 
on pace to spend an unprecedented $135 billion on diesel costs 
alone. This amount is $22 billion more than what was reported 
just last year. Such rapidly rising costs pose a severe long-
term challenge to U.S. small businesses.
    There are few options when it comes to confronting these 
costs as many companies are simply unable to reduce their 
energy consumption. Rising costs usually result in less 
available capital to expand small businesses, which spells bad 
news for our economy as a whole.
    To help ease the burden of increasing costs, we must 
consider and enact long-term solutions. There needs to be 
continued investment in renewable energy and recognition that 
alternative sources of fuel are a vital part of addressing the 
problem.
    We also need to continue providing business owners with the 
necessary resources to develop and purchase greater energy-
efficient technologies. That is exactly why this Committee last 
year shepherded the Small Energy-Efficient Business Act through 
Congress. Now that act assists small businesses through 
investment in new, renewable, and green technologies.
    The law also expands traditional SBA loan programs by 
broadening their criteria to help address energy needs. While 
this may not be the catch-all solution, that act took decisive 
steps toward addressing the energy needs of small firms. And we 
intend to continue that work.
    Our nation's entrepreneurs deserve our every effort to 
provide them with the tools they need. My hope is that today's 
hearing will be the first opportunity to discuss some of these 
challenges and offer solutions to assist our country's small 
businesses in dealing with the current grim circumstances.
    At this time I would welcome our new ranking member to this 
Committee, my good friend and colleague, Mary Fallin from 
Oklahoma. So I would yield to the Ranking Member Fallin for her 
opening statement.

                OPENING STATEMENT OF MS. FALLIN

    Ms. Fallin. Thank you, Mr. Chairman. And welcome to all of 
our guest panelists today. It is good to have you here. We 
appreciate your time to come and visit with our Committee. And 
thank you, Mr. Chairman, for having me as a new ranking member. 
It is a pleasure to be on this Committee. And, of course, small 
business is something that is near and dear to my heart.
    Let me just start out by talking about our consumers. Just 
like consumers, small business owners are feeling the financial 
squeeze of rising energy costs. And in most cases, these small 
businesses are having to reexamine their business plans, their 
future investments, the bottom line profitability, and even job 
creation.
    And it is very imperative that Congress needs to 
investigate possible steps to lower the cost for small business 
for fuel; encourage the use of energy conservation measures; 
bolster our national economy; and, of course, to reduce our 
dependency on energy from foreign markets.
    I would like to just say thank you to all of our special 
witnesses that have joined us here today to come and provide 
information that will be very important in helping us look at 
policy as a nation and especially would like to welcome a 
fellow Oklahoman, Dr. Vince Orza, who is dean of the Meinders 
School of Business, also an academic scholar and TV 
commentator, ran for a couple of political offices. And we are 
glad to have him come today to lend his expertise.
    Small businesses are the economic engine that drives our 
economy and job creation. Small businesses feed our families 
and provide goods and services to our community. They serve as 
seeds of innovation, producing 13 to 14 times more patents per 
employee than large firms. And small businesses participate in 
all major industries and represent 99.7 percent of all 
employees and employ 50 percent of all private sector workers.
    In addition, 39 percent of the high tech workers, such as 
scientists, engineers, computer workers, are all employed for 
the most part by small businesses. Rising gasoline and diesel 
fuel prices are impacting the economy from individual 
consumers, who buy from small businesses, to international 
conglomerates, who do business with them.
    Small businesses are consistently ranked as one of the 
hardest-hit sectors when it comes to rising fuel prices. These 
rising costs have per family impacted the day-to-day routine of 
running a business. Whether it is the cost of the 
transportation of goods and services, the operation of 
machinery, the mileage in employee expense reports, delayed 
receivables, or even tighter access to capital and loans, small 
businesses are feeling the pinch.
    Many large firms can pass on the increased fuel cost to 
their consumers, but because small business concerns often 
operate on razor-thin margins and very competitive pricing, 
passing on the fuel cost increase to their consumers could 
result in a loss of sales and in the long term even going out 
of business.
    Some small businesses have found ways to observe fuel costs 
and employ energy conservation steps. However, the practice of 
absorbing fuel costs cannot be sustained in the long term.
    The impact of high fuel costs upon some small businesses, 
like trucking and charter bus companies, can be greater than 
other market segments. Rising fuel costs have also become a 
barrier to entry for people planning to start a small business 
or even expand a small business.
    Well, this nation was built on the backs of hardworking 
small business owners. We have benefited greatly from a rich 
history of American innovation and entrepreneur spirit. We must 
do all that we can as a nation to support our small business 
owners and maintain an economic environment that is vibrant and 
rewards hard work and encourages sound investment.
    Now, Mr. Chairman, I look forward to working with you on 
this important issue and again want to thank all of you for 
being here today. And thank you for your testimony. I will 
yield back the balance of my time.

    Chairman Altmire. Thank the Ranking Member. And we will now 
move to testimony from the witnesses.
    Let me just explain the timer real quick. You will each 
have five minutes for your remarks. You will see the green 
light for the first four minutes. When the light turns yellow, 
that means you are into your last minute. Please sum up your 
remarks. And then red light means time is up.
    So at this point I want to introduce our first witness, Mr. 
Tim Williford. He is the Chairman of the Plumbing- Heating-
Cooling Contractors - National Association. As Chairman, he 
leads the Government Relations Committee study of federal 
legislation and the recommendations to the PHCC Board of 
Directors on positions on industry issues.
    Established in 1883, the PHCC is the oldest trade 
association in the construction industry and is dedicated to 
the promotion, advancement, education, and training of the 
industry for the protection of environment and health, safety, 
and comfort of society.
    Today PHCC Has more than 4,100 contractor members from open 
and union shops, who work in residential, commercial, new 
construction, industrial, and service and repair industry 
segments.
    Welcome, Mr. Williford. We look forward to your testimony.

  STATEMENT OF MR. TIM WILLIFORD, CHAIRMAN GOVERNMENT AFFAIRS 
  COMMITTEE, PLUMBING-HEATING-COOLING CONTRACTORS - NATIONAL 
                          ASSOCIATION

    Mr. Williford. Good morning. Thank you, Chairman Altmire 
and Ranking Member Fallin and members of the Subcommittee, for 
the opportunity to speak to you today regarding the impact 
rising fuel prices are having on small businesses.
    My name, as you said, is Tim Williford. And I come before 
you today as a small business owner and a representative of the 
over 4,000 member companies of the Plumbing-Heating-Cooling 
Contractors - National Association.
    I currently serve as Vice President of Finance and 
Administration for Southern Piping Company, a mechanical 
contractor founded by my father over 40 years ago in Wilson, 
North Carolina.
    I also serve as the Chairman of the Government Relations 
Committee of the PHCC. PHCC is the oldest trade association in 
the construction industry and, as I mentioned, represents over 
4,000 contractor members across the country, the majority of 
whom are small businesses.
    Anyone who has built or helped to operate a business, 
particularly a small one, will tell you that it is not an easy 
task. This has never been more true than today. Remaining 
profitable has become increasingly difficult with the rise in 
fuel prices.
    Unfortunately, the slowing economy has had a profoundly 
negative impact on all aspects of our industry. Data for 
February showed a decline of three-tenths of a percent in 
construction spending, marking the industry's fifth straight 
monthly decline.
    As a result, contractors are searching for ways to trim 
overhead. These efforts are, of course, complicated by the 
increased fuel prices. Recently PHCC solicited members' 
comments regarding the impact of fuel prices on their 
operations. And their response was overwhelming. Over 90 
percent said their businesses will suffer this year because of 
increased gas prices.
    In the past, many service and repair contractors tried to 
pass the increases on to consumers in one way or another. My 
opinion, however, is that consumers have probably reached their 
limit in terms of paying for the increased cost of contractors.
    Service contractors responded to our queries with 
thoughtful insight. One cited spending $47,000 in 2005 on gas 
and oil for a fleet of 16 trucks. In 2006, that number was up 
to $62,000 and then again up to $70,000 in 2007. This year they 
are on track to spend $88,000 after budgeting only $66,000. 
Rising gas prices will siphon $22,000 off their bottom line 
unless they can find a way to pass that increase along.
    For contractors engaged in construction, the actual 
installation of plumbing and mechanical systems, gas prices 
pose a particular risk. For projects lasting a year or more, 
contractors must make an informed estimate as to what prices 
may be in 12 or 15 months.
    Contractors build this price into their overhead cost for a 
particular project. And if the price exceeds what they 
estimated, they must absorb that cost, often causing a 
tremendous financial strain.
    One contractor told us, ``In January of 2007, our fuel bill 
was $13,000, in January 2008 $20,000. The sad news is we drove 
only 150 miles more during the same time frame.'' Annually that 
is an increase of $84,000, or 53 percent.
    At Southern Piping Company, we spent a million dollars for 
gas and oil last year. And we expect an increase of 250 to 500 
thousand dollars this year. Even a small change in the price of 
gas can have a significant impact. We know that for every 
increase of 10 cents a gallon in the price of gasoline, we 
incur an additional $35,000 in overhead.
    As a result, we and other contractors are evaluating ways 
to reduce gasoline consumption. And we certainly make every 
effort to be fuel- efficient. However, aside from those 
measures, our options are limited. Therefore, we are forced to 
consider reducing our contributions to our employees' 
retirement accounts, increasing the amount that employees must 
pay for their health insurance, and cutting other employee 
benefits. These are painful, painful reductions.
    We compete very hard for employees coming from a limited 
talent pool. And one of the ways that we do that is to offer a 
good benefits package. Rising gasoline prices put those 
benefits in jeopardy.
    At our company, for example, we recently shelved plans to 
implement a wellness program and postponed additional spending 
on our safety program. These are crucial initiatives to our 
company as we try to maintain a safe, healthy, and productive 
workforce.
    In the end, Southern Piping Company is no different than 
the rest of PHCC's members. And PHCC's members are certainly 
reflective of small businesses across the country. Gasoline and 
other petroleum products enable small businesses to remain the 
backbone of our economy. As those prices climb ever higher, the 
fortunes of America's small businesses grow more dim and, with 
them, the fortunes of the economy as a whole.
    Thank you for your time and your consideration. And I look 
forward to your questions.
    [The prepared statement of Mr. Williford may be found in 
the Appendix on page 32.]

    Ms. Fallin. It is my pleasure to introduce our next 
speaker, who is a fellow Oklahoman. Dr. Orza holds a doctorate 
of education degree from the University of Oklahoma and is the 
dean of the Meinders School of Business at Oklahoma City 
University.
    Dr. Orza is recognized for his contributions to business 
education and the civic community, and here are just a few of 
his accomplishments. He founded and served as the Chairman of 
the Board of Directors and Chief Executive Officer of Eateries 
Incorporated, a growing national restaurant chain that started 
out with an idea and grew to over $100 million in annual sales. 
Eateries has been named as one of the top 100 small business 
companies in America as well as the number one publicly traded 
company in Oklahoma. And he was also named as one of the top 
ten best performing CEOs by Restaurant Business magazine.
    He has been a television reporter, an anchor with ABC TV 
affiliate KOCO-TV in Oklahoma City. And he currently provides 
economic commentary and analysis for CBS and affiliate of KWTV. 
He is a speaker, a panelist, an organizer of many national 
conferences and conventions.
    So, Dr. Orza, we are thrilled to have you here today.

STATEMENT OF MR. VINCENT F. ORZA, JR., DEAN, MEINDERS SCHOOL OF 
               BUSINESS, OKLAHOMA CITY UNIVERSITY

    Mr. Orza. I have served as both an entrepreneur, founder of 
a company, as well as a corporate executive, a journalist, and 
an educator.
    Regarding the very simple issue of gas prices and small 
business, the simple fact is that virtually every product 
bought or sold in America winds up being transported in a car 
or truck at some point in the consumption process.
    So rising gas prices affect everyone, every business, and 
fuel surcharges are making matters worse simply because most 
small businesses absorb them. Those fuel prices have a 
multiplier effect since rising prices affect the cost of doing 
business for the company as well as the cost of living for the 
consumer.
    Historically small businesses run much thinner margins than 
do large competitors. They have less leverage in negotiating 
pricing for transportation, marketing, labor. There are two 
simple choices to reverse declining profits and minimize 
losses. We either cut costs or we increase prices.
    Typically the first way businesses attack rising prices or 
shrinking profits is to reduce labor costs. It is simply the 
largest cost center most companies face.
    When I was asked about shrinking profits and losses, like 
many small business owners, the first salary I cut was my own. 
The American economy is driven by consumer spending. When 
unemployment increases, consumer spending will likely decline. 
If you earn less, you spend less. That affects small business.
    The slides that I will show you are from a poll that the 
Meinders School of Business took last month. It is provided, by 
the way, to the Federal Reserve Bank, the Kansas City branch, 
and for the Open Market Committee. It mirrors what the 
University of Michigan poll shows. And, as you scan see, the 
decline in the graphs is noticeably negative.
    Business and personal expectations, 50 percent of consumers 
in 16 middle American states now say that they believe the 
coming year will be bad for business. That is up from 37 
percent in October and 20 percent last May.
    In terms of their current financial position, 39 percent of 
the respondents said they believe their financial situation 
will be worse. Forty- seven percent of the consumers believe 
the next 5 years will bring periods of depression versus 37 
percent in October.
    Women, you will notice, are considerably more pessimistic 
than men. The decline in the thinking now is also showing up in 
durable household items, the purchase of those down from 46 
percent to 38 percent.
    Consumers continue to change their habits as a result of 
gas prices. As you can see, for all categories, 53 percent of 
all consumers, 58 percent of women say they are now driving 
less. And, by the way, it goes across all of the different 
categories across the United States: north central, south 
central, and so on. All of the demographics are in the handout 
I have given you.
    SBA members document some of the problems already 
occurring. Business bankruptcy has risen. For the last four 
quarters, the same time business optimism, consumer sentiment 
optimism both declining as a result of rising unemployment.
    Inflation is impacting consumer prices. At three dollars a 
gallon, consumer discretionary spending winds up, in fact, 
impacting quick service and casual theme restaurants, who alone 
have shown a loss of ten percent of their customers so far in 
the last few months.
    Soft good purchases at chain stores, many of which operate 
as small franchisees and thousands of independent merchants are 
down along with ticket sales at movie theatres. Small 
businesses are also starting to impact hiring for many 
minorities, women, and immigrants, which is where they quite 
often begin their careers, and already face social and economic 
challenges and are now beginning to be squeezed as a result.
    Rising fuel prices pose an enhanced threat for business 
owners at a very time when we are talking about increasing 
diversity. Rising fuel prices have resulted in poor sales, 
declining profits, and losses from Macy's, Wal- Mart, Sears, 
Wilson Leathers, Applebee's, not to mention thousands of mom 
and pop restaurants and as well as high-end stores like 
Nordstrom's. Liz Claiborne is shuttering 54 Sigrid Olsen 
stores, Ann Taylor closing 117 of their 921 stores, Talbot's 
closing all of its men's and children's stores along with 22 
women's stores. Even Target and Starbucks are seeing a decline. 
All of those companies are serviced by small businesses, who do 
window washing, custodial services, paper products, delivery, 
alterations.
    Vacancy rates at shopping centers, regional malls down 
dramatically, national retail vacancy rates rose for the 11th 
straight quarter to the highest level since 1996. And there are 
34 million feet of new construction underway. All of that 
paints a dark picture for small business. Corporate defaults, 
bankruptcies, rising fuel prices not only threaten the airlines 
but all of the small businesses that service them.
    Recently members of Congress called in the heads of the oil 
companies to talk about rising profits. The truth of the matter 
is that is what will lead to a solution here. Rising profits 
mean an increase in drilling and increase in exploration and 
more jobs.
    And so we shouldn't penalize a company that is doing well, 
even if it is in the face affecting all of us in the near term. 
The problem is increased demand, China and India and a host of 
other countries increasing demand more than anyone would 
imagine just five or ten years ago.
    Thank you very much.
    [The prepared statement of Mr. Orza may be found in the 
Appendix on page 36.]

    Chairman Altmire. Thank you. And I want to recognize our 
colleagues from Texas who have joined us, Mr. Gohmert and Mr. 
Gonzaez. Thank you each for being here.
    At this point I want to introduce Mr. John Urbanchuk. He is 
an economist and serves as the Director of LECG in 
Pennsylvania. Mr. Urbanchuk specializes in applying economic 
analysis tools to individual firm and industry problems. This 
includes market analysis, business strategy development, and 
analysis of the impact of government policy and regulatory 
changes on business and industry. His research specializes in 
renewable energy, agriculture, and consumer foods.
    Since 1988, LECG has been providing independent expert 
testimony and analysis, original authoritative studies, and 
strategic consulting services. It has over 850 experts and 
professionals across 30 disciplines in 10 countries.
    Welcome, Mr. Urbanchuk.

      STATEMENT OF MR. JOHN URBANCHUK, DIRECTOR, LECG, LLC

    Mr. Urbanchuk. Thank you very much. I appreciate the 
opportunity to come here today and talk to you about the issue 
of rising gasoline prices.
    As you indicated, my name is John Urbanchuk, and I am a 
Director at LECG. Recently, for the past 20 or so years, I have 
been focusing on agriculture issues and biofuels/renewable 
fuels, issues. And I want to talk a little bit about the impact 
of not only rising gasoline prices but also potential for 
renewable biofuels to address this particular problem.
    American consumers and small businesses are reeling under 
the financial pressure of rapidly rising fuel prices. As you 
pointed out earlier, crude oil prices have topped the $100 a 
barrel level, which when combined with constrained refinery 
capacity has pushed retail gasoline and on-highway diesel 
prices to new records levels.
    According to the Energy Information Administration, 
Americans used about 138 billion gallons of gasoline and 55 
billion gallons of number two diesel fuel for highway use. At 
average pump prices, this amounted to about $397 billion of 
spending on gasoline and nearly $159 billion on diesel fuel.
    The national average retail price of gasoline for all 
grades reached $3.26 a gallon in March of 2008. That is 28 
percent above where it was just a year ago, while retail-level 
diesel prices were about 52 percent above a year ago levels in 
March, averaging $3.88 a gallon. And, frankly, there is no end 
in sight for rising prices.
    Yesterday the Energy Information Administration revised its 
short-term energy outlook and projected oil prices at $101 a 
barrel for the remainder of 2008 and increased their projection 
for next year to $92.50 a barrel for 2009. So we are in this 
mess for some time. Gas prices are expected now to average 
nearly $3.60 a gallon this summer, with projections for some 
areas of the country to top $4 a gallon.
    Increased motor fuel prices affect consumers in a number of 
different ways. First, high pump prices force drivers to 
allocate a larger share of disposable income to fuel. And 
perhaps most importantly, since rising fuel prices increase 
operating costs for businesses at virtually every stage of 
production and distribution, high fuel prices eventually affect 
the prices of all consumer goods and services.
    Rising fuel prices have been a major contributor to recent 
increases in inflation. The CPI for all items increased at a 
4.2 percent rate on average over the last four months. That is 
about twice where it was a year gao.
    Over that same period, the CPI for motor fuels increased at 
33.4 percent. The impact of rising fuel prices on other 
consumer goods is perhaps best illustrated by their impact on 
food prices. Many critics have blamed the recent increases in 
consumer food prices on rising grain prices, which is due, in 
part, to increased demand for biofuels.
    While grain and other agricultural prices have increased 
sharply over the past year, their impact on consumer food 
prices is overshadowed by energy and energy prices. Energy 
plays a significant role in the production of raw agricultural 
commodities, transportation and processing, and distribution of 
consumer finished food products.
    I conducted an analysis last year that was sponsored by the 
Renewable Fuels Association that concluded that an increase in 
fuel prices--and we looked at energy fuel prices particularly--
has twice the impact on consumer food prices measured by the 
CPI--that is what we all pay when we go to the grocery store--
as the same percentage increase in corn prices. That is just 
one raw material that goes into that basket of food.
    Ethanol and biodiesel biofuels have a significant impact on 
restraining the increase in motor fuel prices. Increased 
production and use of ethanol is helping to displace gasoline 
demand and reduce prices at the pump.
    Last year we produced six and a half billion gallons of 
ethanol. This year we are going to produce close to nine 
billion. The new Energy Independence and Security Act of 2008 
requires we use 36 billion gallons by 2022. This is 30 percent 
of the nation's motor fuel supply. That is going to extend 
supplies and increase and work to lower prices at the pump.
    We estimated in a very recent study that ethanol saved the 
American consumer an estimated 10.3 cents a gallon at the 
retail pump in 2007, for total savings of about $6.8 billion.
    Considering what is going on with regard to oil and 
gasoline prices now, we expect similar savings in 2008. And as 
we move forward in increasing the supply of biofuels, it is 
going to relieve pressure on consumer prices.
    Thank you very much.
    [The prepared statement of Mr. Urbanchuk may be found in 
the Appendix on page 44.]

    Chairman Altmire. Thank you.
    Michael Graff is my constituent. And he is President and 
CEO to Graff Trucking, Incorporated, located in Natrona 
Heights, Pennsylvania. He founded the company in 1986 with one 
vehicle as a part-time venture, but since then he has expanded 
the business to a full-time operation with 12 employees, 9 
vehicles, and 44 trailers. Graff Trucking works with both 
national and local businesses and operates primarily in the 
Northeastern states of Pennsylvania, New York, Ohio, New 
Jersey, and Maryland.
    Welcome, Mr. Graff.

    STATEMENT OF MR. MICHAEL GRAFF, PRESIDENT & CEO, GRAFF 
                         TRUCKING, INC.

    Mr. Graff. Thank you.
    You know, the fuel prices, they have been on the rise in 
this country, you know, for the past several years. And 
although there has been much publicity recently around rising 
prices, this issue has been ongoing to the trucking industry 
for several years. We have been suffering from increases that 
have caused us to lose efficiencies and erode our profits.
    In the past year, diesel prices have continued to increase 
while today averaging around $4 to $4.50 a gallon. At first the 
increases were simply borne by the trucking companies and 
became so high that operating without fuel surcharges or 
increasing prices was no longer an option.
    What continues to be amazing is the fact that diesel fuel 
is less refined and, therefore, costs less to produce but is 
averaging approximately 77 cents more per gallon than gasoline.
    While I struggle to remain in business dealing with 
escalating costs, our fuel companies continue to report record-
breaking profits. What remains extremely frustrating to all 
businesses and consumers who are facing higher costs is the 
same fuel companies continue to receiving tax breaks.
    Graff Trucking employs 12 employees. And despite a solid 
relationship and established 20-year history in business ,I am 
at a point that I am questioning my ability to continue to 
operate. The news reports almost daily on companies who are 
ceasing to operate or filing for bankruptcy, including three 
airlines just last week, due to the increase in operating 
expenses.
    One common thread for these companies and the trucking 
industry are the fact that the fuel is the highest expense and 
has driven them out of business. I request your help so that 
Graff Trucking is not the next company faced to follow this 
path.
    What is the driver for these outrageous fuel prices? Is 
energy trading and Wall Street playing a huge part in the root 
cause of the fuel prices? Wall Street is not driven to provide 
affordable energy supplies.
    Due to the limited overseeing of energy trading and the 
dominant position in oil futures by Investment banks and hedge 
funds, this may be a contributing factor of the volatility of 
prices leading to high gasoline, diesel, and oil prices.
    The government standard rate for transportation, rate per 
mile charged for similar type modes of transportation and fuel 
surcharge rates, equal. What we need there is some help from 
the government to come up with some standardized rates. Okay? 
This would allow for small business owners to be competitive 
and not allow large companies to dictate the rates, which is my 
fear.
    I hate to see any more government involved in business than 
it is today, but if the government does not step in now, what 
we are going to have is large companies only. And they are 
going to be dictating the transportation rates.
    The transportation industry is the first impacted by these 
rates and then filter further into the economy and touch all 
citizens, which everyone else has testified to. There is, 
potential for increased costs to all of our business sectors 
for our country is at risk. Government must take immediate 
steps to prevent the economy from slipping even further into a 
negative state than we are currently facing.
    Pennsylvania, where I am from, has the highest tax on 
diesel in the nation. The government is considering 
implementing a toll on interstate 80 as well as discussion on 
privatizing the Pennsylvania Turnpike, which is selling the 
Pennsylvania Turnpike. These actions would have a continued 
detrimental effect on the transportation industry.
    In Pittsburgh a ten percent drink tax was initiated to help 
address financial struggles of the mass transit, the port 
authority. These are not steps needed to resolve the issues we 
are facing.
    This Committee as well as the federal and state governments 
must work together to implement both short and long-term 
solutions to allow small business owners such as myself the 
ability to continue to operate allowing us to provide 
employment and service to our customers.
    Now what I would like to see our federal government help us 
out with are alternative auxiliary power units where these 
tractor- trailers do not have to sit along the roads in idle 24 
hours, whatever, so that the drivers may stay cold in the 
summer, stay warm in the winter, their auxiliary power units.
    I would like to see a grant, some type of grant, from our 
federal government. We would decrease the emissions and the 
fuel usage. These are the kind of answers that I am looking for 
from our federal government.
    I am not looking for free handouts, whatever. I am looking 
for grants, whatever so that we can reduce and help our own 
industry survive. This is what we need to have happening.
    And we need to limit the price of fuel increases on a 
weekly basis. So that Monday when we bid our freight rates out 
for the week, Tuesday the fuel price is up 14-15 cents a 
gallon. Our government needs to step in and help us with the 
cost rising throughout the weeks.
    We need set rates on fuel. No one else in the industry in 
this whole country can get away with what these oil companies 
do to us in this industry every week. These prices continue to 
fluctuate. They jump up. No reason. Because the wind blew wrong 
somewhere. It is crazy what goes on in this country with these 
oil prices. And the federal government needs to step in and 
give us a helping hand.
    Thank you very much. Appreciate you having me.
    [The prepared statement of Mr. Graff may be found in the 
Appendix on page 49.]

    Chairman Altmire. Thank you, Mr. Graff. Thanks for telling 
your story.
    And several weeks ago I had the opportunity to go to 
Chesapeake Rehab in my district in Plum. And Mr. Gilberti and I 
had the opportunity to talk there. And it is a medical 
provider, medical equipment provider.
    And when we talked about gas prices, it struck me at how 
pervasive this problem is across our economy, that it is really 
affecting every type of business that is out there. And that 
really was the genesis of this hearing.
    It is why we wanted to have the hearing to demonstrate for 
everybody that this was not just unique to the trucking 
industry and it is not something that you can just target as 
having hit one industry, but it really is affecting everybody. 
And that is why I am so happy that Mr. Gilberti is here to tell 
his story.
    Gary Gilberti is President of Chesapeake Rehab Equipment 
and is President Elect of the National Coalition for Assistive 
and Rehab Technology. They work to promote the interests of 
rehab and assistive technology industries, ensuring adequate 
consumer access to appropriate technology and services while 
creating a stable business environment for providers and 
manufacturers of rehabilitation and assistive technology.
    Chesapeake Rehabilitation Equipment is a small regional 
company which provides rehab technology products and services 
to disabled Americans throughout the Northeast, including in 
western Pennsylvania.
    Thank you, Mr. Gilberti.

   STATEMENT OF MR. GARY GILBERTI, CHESAPEAKE REHAB EQUIPMENT

    Mr. Gilberti. Thank you, Congressman Altmire and Committee, 
for having me here today. I appreciate the opportunity to 
discuss the impact of fuel prices on my business and other 
medical equipment providers.
    Chesapeake Rehab Equipment is a regional provider of home 
medical equipment and specifically in the rehab technology 
sector, where we serve individuals with severe disabilities.
    The National Coalition of Assistive and Rehab Technology 
represents companies like mine on issues such as Medicare and 
Medicaid issues and trying to assure the access to medical 
equipment for disabled Americans.
    The rehab technology industry is a small division of the 
durable medical equipment industry. Businesses in this sector 
provide home medical equipment and services to individuals with 
a variety of conditions and disabilities. Our delivery model is 
such that we must make deliveries and service calls to 
customers' homes on a daily basis.
    Companies in this industry are primarily small. The average 
company is anywhere from two to three million in revenue 
annually serving local or regional areas. Our companies employ 
fleets of vehicles and it is not uncommon to make 10 stops a 
day and serve a 150 to 200-mile area for each vehicle in a day.
    We are also in a price-regulated environment. Ninety-five 
percent of our reimbursement for the services we provide comes 
from Medicaid or Medicare or third party insurers. Anybody who 
knows anything about Medicare knows that they are implementing 
budget cuts and competitive bidding and other ways to cut 
costs. That trickles down to our industry, cutting our bottom 
line even further.
    When things like fuel prices hit our businesses, we get 
squeezed from two directions. We get squeezed by the increasing 
operating cost and then the decreasing revenue opportunity from 
regulation by our pay sources.
    We are unable to unilaterally raise our prices, unlike 
other home service agencies or home service companies, such as 
electricians or plumbers. We can't just increase our labor rate 
or add fuel charges to make back what we lose in operating 
costs.
    Just as an example, since 2003, my company has experienced 
a 126 percent increase in fuel prices. Fuel is now the third 
largest operating expense we have, behind payroll and facility 
rent. It has increased five times more than any other operating 
expense.
    In 2006, a study was done by the Moran Group that showed 
that home medical equipment companies, specifically rehab 
technology companies, experienced about a 1.6 net profit on the 
average. That means that half these companies are below that. 
When you increase fuel prices or any operating expense at the 
rate that this has occurred, you put an already very fragile 
industry under water.
    With Medicare and Medicaid continuing to look at where they 
can cut costs and with programs like competitive bidding where 
they are anticipating a 10 to 20 percent savings in what they 
are paying providers for the services we do every day, there is 
no room for us anymore.
    And I am concerned that if this continues and if fuel 
prices continue to increase the way they are, companies in our 
industry are going to be going out of business at an alarming 
rate. That means a lack of access to our services and goods for 
people who are severely disabled.
    Not only are we feeling the pinch on the direct operating 
lines of our business, but we also are subject to fuel 
surcharges from trucking companies because the goods that we 
provide come into our businesses and then we redeliver them.
    I understand totally why these individuals have to impose 
fuel surcharges. They have to run their businesses as well. But 
we have seen our manufacturers add three to five percent to our 
cost of goods in the last two years and that is another 
pressure on our operating cost.
    So, as you can see, we are in a squeezed situation. We 
can't increase our revenues, increase our prices, but our 
operating costs are increasing at an alarming rate.
    So I thank you very much for this opportunity. And 
hopefully we can see some solutions in the near future.
    [The prepared statement of Mr. Gilberti may be found in the 
Appendix on page 52.]

    Chairman Altmire. Thank you, Mr. Gilberti. And thanks to 
the entire panel.
    We will now open up for questions. I wanted to first direct 
my question to Dr. Orza. I was wondering about the small number 
of U.S. businesses utilizing traditional energy sources. Rising 
costs will have a detrimental impact on growth given the number 
of small U.S. businesses.
    Do you have information on how energy prices impact small 
businesses compared to large businesses? And if you could 
provide us with a comparison between the expenditures and 
percent of total revenues, for example, small businesses 
allocate to energy resources compared to their larger business 
counterparts?
    Mr. Orza. I think all of us would tell you that in small 
business, we do our financial statements to the hundredth of a 
percent because those hundredths of percents turn out to be a 
point, sometimes two points, profit or cost.
    And clearly with small business, you don't have the 
leverage to negotiate for product pricing, for fuel pricing, 
for insurance costs or anything else, much less labor cost. 
And, as a result, you are wholly held hostage to something that 
is completely out of your control, like fuel prices.
    As I showed you on how the country is dealing with gas 
prices in virtually every section of the country, everybody is 
driving less. Well, those are typically consumers that are 
driving less. That means they are using all of the services 
that are delivered by a trucking company, by a plumbing 
company. It is simply gas on the fire.
    I would go back to tell you again OPEC still controls an 
awful lot of this industry. Many of the states represented by 
the Committee, Pennsylvania, Oklahoma, Texas, are oil and gas 
states, which a few years ago were suffering. At $20 a barrel, 
it wasn't worth the trouble to go get some of the very deep gas 
and oil.
    Pennsylvania right now is a boon state again for natural 
gas. It is worth going after. That will build an economy. Along 
the way we have to make sure we don't bankrupt the businesses 
who can't afford the increases they are suffering. So it is 
clearly exacerbating the problem, certainly by trucking 
companies. They pay it immediately.
    There is one simple solution. And that is to suspend 
federal gas taxes or diesel taxes for some period of time. You 
know, Congress decided to send 117 million households a rebate 
check. And it took almost five months. We won't get them until 
May. You could suspend gas taxes immediately and help these 
businesses today.
    Chairman Altmire. Thank you.
    Mr. Williford, I understand from your comments that 
contractors sometimes place competitive bids on projects, which 
is something that this Committee has an intense interest in. 
And you mentioned the need to estimate and project numbers when 
placing a bid. And I assume you factor fuel prices into that 
bid.
    And I was wondering if you can give the Committee an idea 
of how you address the volatility of fuel costs when you 
prepare your long-term bids.
    Mr. Williford. Mr. Chairman, I don't mean to be flippant, 
but you hope. You hope that you got it right. Normally it takes 
us about six months after we bid and are awarded a project for 
us to mobilize and get on site. Now, that is on the 
construction side of our business.
    So, therefore, if we bid a project and are awarded that 
project today and we have factored into our burden for that 
project a price of $3.30 a gallon, if that goes to 3.50 in 6 
months, then we are actually on the project and expending funds 
for that project, then the project is already a loser.
    So you do the best you can. You look out into the future 
and take the estimates that some of these folks have referred 
to and hope that you get it right. And if you don't, then, as I 
said, you are already dealing with a loser.
    Chairman Altmire. Mr. Graff, you talked about the direct 
impact that gas prices have, which is obvious for everyone to 
see, but I appreciate you continuing to talk about the problem. 
But I am wondering about indirect gas prices because when you 
think of a trucking company, you think, well, the price of gas 
goes up. And, therefore, you have to pay more for gas, and that 
is going to hit your bottom line.
    But you are getting hit in other ways on gas prices also. 
And I was wondering if you could talk about the indirect ways 
the increase in fuel prices are hurting your business.
    Mr. Graff. The indirect ways, I mean, you have all of your 
expenses from your hospitalization, from your Workmen's 
Compensation to your health insurance. Everything that can be 
cut you are looking at and you are cutting. It was spoken here 
before. Health insurance. Employees have got to pay more for 
their health insurance.
    It all goes back to the trickle-down effect, the domino 
effect. We are cutting everything we can actually cut in our 
industry to stay alive.
    We need help in so many different ways. It was talked about 
suspending the state tax, the federal tax. Well, the 
governments don't want to hear this. They don't want to hear it 
because of their highway projects. They are not going to have 
anybody traveling these highways if it continues on the way it 
is.
    I mean, we need help in a lot of ways. And I am asking for 
this government to help. Put a panel together. Do something. 
Our industry is dying by the day. We have got to have help.
    Chairman Altmire. Thank you.
    And I am going to temporarily turn the chairmanship over to 
Mr. Gonzaez. And I am going to yield to the gentle woman from 
Oklahoma for her five minutes of questioning. I will be back.
    Ms. Fallin. Thank you, Mr. Chairman.
    I would like to address my first question to John, if I 
might. You were talking about some of the renewable resources 
and alternative fuels and ethanol, in particular. In your 
analysis of ethanol, when we look at the cost as a nation of 
ethanol compared to producing gasoline, can you tell me if 
there is a cost difference between getting that product to 
market?
    Mr. Urbanchuk. Well, the cost of getting the product to the 
market?
    Ms. Fallin. Producing it.
    Mr. Urbanchuk. Well, the cost of producing obviously today 
gasoline and diesel fuel are refined from petroleum. The single 
largest cost in producing those refined products is crude oil 
prices. When you are looking at ethanol or you are looking at 
biodiesel, again, the feed stock of whether it is corn or sugar 
in the case of other countries or soybean oil is the most 
significant cost item in producing those products as well.
    The biofuels industry in the United States is still 
relatively young. The relative cost of production for ethanol 
versus gasoline is still somewhat higher than gasoline is.
    We do have federal incentives in place, a volumetric 
ethanol excise tax credit, the VEETC, which provides a credit 
to the blender who buys ethanol to blend with gasoline and 
helps keep that product competitive with gasoline.
    The real issue here is perhaps not so much today's basic 
economics, which clearly I believe are favoring the use of 
biofuels, but as we move forward into the future if we increase 
our reliance and dependence on producing biofuels and the role 
that they play, those prices are going to come down. It is 
going to retain its competitiveness and improve the economic 
benefit to consumers across the board.
    Ms. Fallin. That was my question, I guess, because I have 
heard that it is like three to one for production costs of 
ethanol to gasoline and just actually producing it and getting 
it to the marketplace. It is more expensive.
    Mr. Urbanchuk. It is more expensive. I don't think it is 
three to one. I think the number is probably closer to one and 
a half, two to one today in terms of just flat-out production 
and distribution costs.
    Ms. Fallin. But if you add in the tax incentives that we 
have, why does that cause the different--
    Mr. Urbanchuk. If you add the tax incentives that are in 
place for ethanol--
    Ms. Fallin. It may be what the three to one is.
    Mr. Urbanchuk. --today, then, as we indicated, when you 
take a look at the costs of producing, distributing; that is, 
from the refinery to the consumer, when you blend 10 percent 
ethanol with gasoline in 2007, it provided a 10.3 percent 
benefit to consumers.
    The price of ethanol-blended gasoline was 10.3 cents lower 
than it would have been without the use of ethanol. And we 
expect that that number is going to be about ten cents in 2008 
as well. And when you move forward through time--and we have 
looked at this through 2017--we are looking at an average 
benefit that is somewhere in the area of about eight cents a 
gallon, so when you take all factors into consideration, 
production and distribution for gasoline, and compare that with 
production and distribution of ethanol in the blending of 
those, the consumer benefits from the use of ethanol, biofuels.
    Ms. Fallin. And I am all for looking at other sources of 
energy and biodiesel and renewable energy, all of the things 
that we need to be looking at.
    Dr. Orza, if I could ask you a question? I know as an 
economics expert, can you talk just a little bit about what we 
can do to reduce the price of gasoline and costs on businesses 
in America?
    Mr. Orza. Well, clearly alternative fuels, like ethanol, 
are a part of the solution, but they are only part of the 
solution. And there is a side bar to that that is a problem. We 
are one of the few countries in the world wealthy enough to 
actually use corn, which the rest of the world uses for food to 
use for fuel.
    One of the reasons you are seeing an increase in food 
prices--you can ask any American household--is because we are 
now using corn as a fuel alternative as well as a food source. 
And that is really affecting the price of milk and beef and 
everything else.
    The solutions are--and, frankly, it is pretty simple. The 
world is driven by oil, like it or not. And it is going to be 
driven by oil for a long, long time. We just can't stop all the 
cars and trucks we have.
    By the way, we are talking about $3 a gallon gas. We are 
actually talking about $4 a gallon diesel, which really affects 
trucking.
    The long-term solution is increased exploration, more 
drilling because the world is driven by oil and gas. And, as I 
said earlier, in Pennsylvania now wells that were locked up for 
a long time just weren't worth the trouble. As in Oklahoma, 
farmers and ranchers, who quite often made money off the wells 
that paid them royalties on their property, that money now is 
subsidizing the cost of farming and ranching. It is also 
subsidizing all the products that they buy are delivered by 
trucks.
    So, again, part of the problem also has a solution that 
causes another problem. The only real long-term solution is to 
increase production and define alternatives. The research for 
alternatives is being funded by the profits that oil and gas 
companies make. So while we may not like this, that is the 
long-term solution to a very difficult short-term problem.
    Ms. Fallin. Thank you so much, Mr. Chairman. I will yield 
back my time.
    Mr. Gonzaez. [Presiding] Thank you very much.
    The Chair is going to recognize himself for five minutes. 
The first thing I want to explain is you will see us looking at 
our Blackberries throughout. That seems to be rude, and 
sometimes it is. But sometimes we are actually asking our 
staffs to get some information to us so we can ask a question 
that becomes quite relevant during your remarks. And I do have 
one here that I am going to read to you in a minute.
    Secondly, I want to make the observation that many members 
of the Committee are somewhat familiar with your situations. 
And the reason for that is that Chairwoman Velazquez has these 
roundtable breakfasts. And we have different small business 
representatives there.
    So we are familiar with the heating, cooling, and plumbing 
industry and what is going on there. Dr. Orza, we have been 
familiar with the spillover and domino effect of higher cost of 
fuels as it affects small business.
    Mr. Urbanchuk, believe it or not, we have had a hearing on 
the opportunities presented to small businesses in the 
expanding biofuels and alternative fuel fields.
    Mr. Graff, we have heard from the truckers. We have heard 
from the independents. I am going to be asking you a question 
of why independents are treated differently, let's say, than 
the big outfits.
    And, Mr. Gilberti, believe me, we do know about durable 
medical equipment and competitive bidding. As a matter of fact, 
we just had a roundtable on that. So I think that Chairwoman 
Velazquez was way ahead of us all.
    It is important today, and I have heard some long-term 
solutions here. Dr. Orza has touched on it, Mr. Urbanchuk. I am 
from Texas. You know I am an oil and gas guy. And I have got my 
colleague to my left. And I have Oklahoma. So you know where we 
are coming from many times.
    But I think Dr. Orza is correct. It is a wide-ranging 
portfolio of fuel sources and not to, I guess, promote one at 
the expense of another. And we haven't been doing that. And we 
can go on and on with that.
    But the truth is when it comes to ethanol, how many E85 
stations do we really have out there? What we have today, we 
don't have the infrastructure. And these gentlemen here can't 
wait. They won't be in business by the time that we have that 
kind of infrastructure, when we finally get the cost of 
producing ethanol at a reasonable price and so on.
    So I guess what I really want to concentrate on is going to 
be what can we do immediately? And we have had a couple of 
suggestions here, such as waiving or reducing the tax today on 
diesel, for instance, because that is the fuel of choice for 
most commercial enterprises out there.
    I don't know how realistic that is at the state level, the 
federal level, and so on. I just don't see that actually 
happening. And for you to be able to pass it along, whether you 
are going to have surcharges built in your contracts, that is 
another issue.
    The question is, can we help you somehow in expensing it 
out? Is there something further that this government can do to 
help you in our tax policies that might assist you immediately 
improving on what you have available to you today?
    And I don't know what we do about fuel-efficient vehicles. 
To be honest with you, I am not real sure there are any out 
there for commercial use. I don't see hybrids out there when it 
comes to light or heavy duty trucks. I mean, none of that is 
happening. So it is the here and now.
    So, Mr. Williford, is there anything that the federal 
government can do immediately? And that is absent, you know, 
waiving all the taxes and all that, but is there anything with 
our tax code that we can do to assist you?
    Mr. Williford. Representative Gonzaez, I, frankly, don't 
know. I think that the immediate possible remedy that you could 
use in terms of tax policy is perhaps credits for purchasing 
hybrids.
    Now, you mentioned that there aren't any for commercial 
use. That is, in fact, I believe correct. However, we probably 
have 40 or 50 project management and overhead vehicles that we 
use that certainly it is not cost-efficient right now for us to 
purchase a hybrid. Obviously if that were made more attractive, 
we would consider that. Obviously that would be in terms of 
conservation efforts, but in terms of other items that could 
consider in terms of tax policy, I just don't know.
    Mr. Gonzaez. Thank you.
    Dr. Orza, any suggestions of what we can do immediately?
    Mr. Orza. I think, unfortunately, the answer is no. You are 
hearing people tell you they have cash flow problems today. So 
tax policy changes that they tax advantage of at the end of the 
year when they file their income taxes or whatever, or 
quarterly taxes, doesn't solve a $3 to $4 a gallon gas or 
diesel problem immediately. And I think you are hearing that, 
you know, from the airline industries on down to trucking 
companies and small businesses that have to drive to do their 
job.
    The hybrid solution isn't a solution, first of all, that 
costs five, six, seven thousand dollars more than a regular car 
or truck. So whatever you save on gas, you spend up front. That 
didn't solve anything. And, by the way, the trucking companies 
and car companies aren't producing enough of them to even fill 
the demand that there is.
    I think, again--and I would refer back to Congress decided 
to give everybody a $600 rebate, but we voted on it back in 
January or February. We won't see checks until May. These 
people can't wait five or six months with gas prices where they 
are. They need help immediately. And that is why I suggest that 
the real solution, the near-term solution, is suspension of 
some gas or fuel taxes because it is an immediate impact on 
their cash flow.
    Mr. Gonzaez. The only problem with that is the duration of 
that time out and the fact that along the way, you reimpose it. 
What are we waiting for to happen in that period of time that 
will promote some sort of solution for them in the interim? I 
don't have that answer.
    And I hate to disappoint you with that, but I think there 
has to be some sort of immediate relief. And I am not sure that 
you are going to get it with some sort of price controls. I 
don't know if anyone is going to go and suspend the gas tax. I 
think that needs to be viewed, actually, realistically.
    Mr. Urbanchuk, I know that you are into bios and so on, but 
these individuals here really can't wait for the development of 
the technology and the distribution system that would be 
required to aid them in a lower cost of fuel.
    Mr. Urbanchuk. Well, I think you provided part of the 
answer yourself, along with Dr. Orza. I think in the short-
term, there is very, very little that can be done other than 
emergency actions, such as reducing or eliminating part of the 
federal tax, whether it is going to be done at the states 
levels.
    There are all kinds of problems associated with that. 
Again, any time you take one action, there are countervailing 
actions on the other side that create additional problems that 
have to be analyzed. But that is short term. As you say, 
businesses can't wait for the intermediate term.
    The solution to this is a medium to long- term solution of: 
one, addressing the issue of demand, which is being done 
through the marketplace clearly. And technology is improving 
that but expanding supply. And that is where the issue of 
biofuels comes into play because if you use ten percent ethanol 
or you use biodiesel, you are increasing expanding the supply 
of motor fuel available.
    Today ten percent ethanol is the standard. Whether we get 
to E85 or not is an open question. I am not sure the E85 may be 
the answer. Maybe moving from 10 percent to 15 percent to 20 
percent blends of ethanol on a wider basis around the country 
would expand that availability of motor fuel and help relieve 
pressure on prices.
    That is going to take obviously some time to happen. That 
is an intermediate approach to that. So it is really a 
combination of the short-term emergency action and then 
expanding supply as we move forward, both by also addressing 
the issue of domestic production of oil that is domestic 
drilling.
    But, frankly, we have a problem in this country as even if 
we had more crude oil, we don't have the capacity to turn it 
into finished products. So we also have to move aggressively at 
the federal and the state level.
    Mr. Gonzaez. My time is running out. And I want to make 
sure I give Mr. Graff and Mr. Gilberti an opportunity. I am 
just talking about the here and now. What are we going to do 
immediately? I know you are saying suspend the tax, and that is 
about it.
    Mr. Graff, real quick, I just want to tell you that you 
asked a question, why is diesel costing so much more? And in 
San Antonio, we have got Valero and Tesoro. They are refiners. 
And I just want to tell you basically what they are always 
telling us. Price of crude is still a large factor.
    Number two, process and refining of diesel is now more 
expensive than processing gasoline. This is due to the fact 
that diesel has to meet new low-sulfur specifications and it is 
a more expensive process to meet those specifications.
    Diesel has been more expensive generally since 2004. Higher 
federal excise tax on diesel, six cents per gallon, but truly 
cost of oil and refining costs to meet low-sulfur are the 
largest drivers of cost diesel. So I thought I would tell you 
that was what I was doing with my Blackberry.
    But what do you want us to do? Because it is really the 
trucking industry that is hurting the most.
    Mr. Graff. Eliminate it. Eliminate your refining process 
for your tree-huggers, the ones that are pushing it. Get rid of 
your ultra low-sulfur diesel. Make it one diesel. And eliminate 
the process.
    Right there they told you that is the reason that the 
diesel is higher than the gasoline. Eliminate it. Eliminate 
that process. We didn't have it for years. And now you are 
seeing these process. They are telling you that is why diesel 
is moire than gas. Eliminate the process today.
    Mr. Gonzaez. Mr. Gilberti?
    Mr. Gilberti. I can't speak to the refining cost of diesel. 
Our trucks don't use diesel. We use generally smaller vehicles 
and--
    Mr. Gonzaez. What can we do for you to assist you in the 
short term? Are we--
    Mr. Gilberti. A little selfishly in our industry because 
our reimbursement is regulated by Medicare and Medicaid. We 
could hope for some sort of maybe fuel allowance in those 
reimbursement rates. And that doesn't help some of these other 
industries, but at least in our industry, it would help us.
    Mr. Gonzaez. Well, thank you very much.
    I would now recognize the gentleman from Texas for five 
minutes, Mr. Gohmert.
    Mr. Gohmert. Thank you, Mr. Chairman. Thanks for having 
this hearing. I will tell you, one of the things I like about 
serving on this Committee is the reasonableness of the people 
on both sides of the aisle and their sensitivity towards small 
business and the fact that it produces 70 percent of the new 
jobs in the United States.
     Now, I am going to try to go back and pull together things 
I have been hearing. For one thing, one comment was made that 
speculation has driven some of the more recent rises in the 
price of gasoline and oil.
    One of the things that affects speculation is when the 
marketplace sees that laws are being passed that put more and 
more of our oil and gas off limits, shale off limit. And I am 
on the Natural Resources Committee. It has been breaking my 
heart for the last 15 months. Bills that we keep passing in 
that Committee, I wouldn't necessarily call them tree-huggers. 
I know they love the world, they love the country, but they 
have the idea that the higher the price of gasoline, then the 
less people will use and, therefore, the better it will be for 
the country and world.
    And I appreciate that. I just don't appreciate passing 
bills that cause it to go up that put more and more of our oil 
and gas off limits and then blaming people on my side of the 
aisle for the rising cost in oil and gas. But what you see the 
market doing, it seems, is when they see us passing these laws, 
putting more off limits, then they end up, the speculation is, 
``Oops. The price is going to go up.'' And that drives the 
speculation up. Some I have heard estimate that we may have 20 
percent of the price of oil, maybe more, that is strictly due 
to speculation driving that price up.
    Dr. Orza, I appreciated hearing you say what I was 
concerned about and what I have come to be more aware of and 
shown figures that the vast majority of these huge profits that 
some would say were windfall profits are being reinvested in 
going after more energy.
    But, my friend Mr. Gonzaez, I didn't hear anything he said 
that I disagreed with. We want to help. I have concerns. I 
would love to see the gas tax reduced or eliminated. The 
problem with that is then you start developing road and 
infrastructure problems and we get too far behind. And we are 
already behind. You guys know that. We have problems with our 
highways. We are not keeping up.
    And here we do have a lot of the choir: Texas, Oklahoma, 
Pennsylvania, Louisiana. Those states are trying to produce 
energy, trying to help the nation.
    I filed a bill in the last Congress called the State 
Hypocrisy Reform Act that simply said--and I was just wanting 
to help our states that are being hypocrites by saying if you 
do not allow oil or gas exploration or production in your state 
or in your contiguous coastal areas, then you are prohibited 
from importing any oil or gas from states that do. You know, 
that way that will allow them to not be so hypocritical.
    And one of my friends from Florida said that helped make 
the point in Florida that if they are going to keep sucking 
energy out of other states, they ought to really allow it to be 
produced.
    I didn't realize until I got on the Resources Committee how 
much natural gas we have, vast amounts, off the West Coast, 
East Coast, Gulf that is not allowed to be tapped, Great Lakes. 
The good news is Canada is apparently tapping it. And they are 
willing to sell us our gas back.
    Cuba is allowing drilling off its coast to Russia, China. I 
think Venezuela is going to get in there. And I will bet they 
are going to be willing to sell us our own gas back. But it is 
ridiculous to put all of that off limits.
    I have concerns when I hear government needs to step in and 
dictate rates because that takes me back to the late '70s, when 
we had the long gas lines. But I love your comment about would 
diesel just eliminate the extra process.
    We had a refinery in my town growing up. And they said 
diesel will always be cheaper because it is lower on the 
cracking tower, doesn't cost as much to produce and, therefore, 
it will be cheaper. And we keep adding all of these 
requirements.
    So I appreciated your comments there. That might be 
something we could do quickly. And if the market sees us taking 
those actions, it might cut down and lower the speculation 
there as well.
    This hearing, we are so limited in what we can do and say. 
I just challenge you to think about these things, what won't 
hurt our highways, what won't hurt the economy, what won't 
create gas lines. It doesn't have to end at this hearing.
    You can submit us things in writing that we can consider, 
put together in bills because what I--I am not really kidding. 
This Committee takes small business propositions very 
seriously. And you will often see it being made into a law that 
is filed and getting support behind it.
    Let me just get comments. You had said you would like to 
see the auxiliary power unit so diesel rigs won't have to stay 
beside the road. My concern is that is going to have to be paid 
for somewhere. We probably have to add a tax to get that done.
    Do you see that as an immediate help?
    Mr. Graff. Yes. I see it within a year. I would be really 
shocked and happy to see the numbers. What it is, for anyone 
that doesn't know what an auxiliary power unit is, it is a 
small diesel engine, maybe this big, that mounts on a side 
frame of the tractor-trailer.
    These drivers are required to have so many hours off within 
the day. When they pull off the road, that motor, the big 
engine in the truck, no longer runs. Okay? It is an auxiliary 
generator, diesel-powered, that supplies heat and air 
conditioning to the truck. The big motor no longer runs. 
Emissions take the big dive. The fuel usage takes the big dive.
    On the average cost right now, there is $7,000 per unit per 
truck. I don't know if we could get a tax credit for those. If 
we could get some kind of federal grants, whatever, the numbers 
in the fuel, less amount of fuel used, would be great.
    Mr. Gohmert. Well, I see my time has expired, but I would 
just encourage you all to keep thinking. We have got some smart 
people here. And please submit us things in writing that you 
see could be hard and fast things we could do and do quickly.
    And I have worked with our Chairman before on bills. And I 
appreciate his common sense approach and would like to do that 
in the future.
    Thank you.
    Chairman Altmire. [Presiding] Thank you, Mr. Gohmert, the 
previous ranking member of this Committee.
    And I would now recognize the gentleman from Indiana, my 
good friend Mr. Ellsworth, for five minutes.
    Mr. Ellsworth. I think there is a red light on there. Thank 
you, Mr. Chairman. I apologize for being late. Armed Services, 
as you know, has General Petraeus and the ambassador in.
    Really, the only question I had in my review of the 
testimony before this was for Mr. Graff. Mr. Graff, I get a lot 
of trucking firms, especially small trucking firms, coming to 
my office in the district and talking about the proposal.
    And I think you mentioned in your written testimony about 
the fuel surcharge standard and helping small trucking 
companies compete with their larger counterparts. I don't know 
if that has been talked about today, but could you go into that 
in a little more detail, how that would assist the small 
trucking firms, perhaps what the opinion of the larger trucking 
firms is and just explore that a little more for me, please?
    Mr. Graff. The question was asked a little while ago about 
the difference between the fuel surcharges. What it is, you 
have your major carriers, which, by the way, only haul about 
ten percent of the freight. Okay?
    What they do, they are big enough and large enough to go to 
your big manufacturing companies and distribute their freight 
nationally. So they will go in and set their rates, their 
transportation rate, along with their fuel surcharge rates.
    What happens to the rest of the industry is this freight is 
sent out to brokers. Brokers are all nationally little closet, 
broom closet, people or whatever. And what they do is these 
companies give all their overflow freight to these brokers. The 
brokers contact carriers, such as me, and says, ``I have a load 
that goes point A to B. Here is my rate.'' It is a combined 
rate.
    What they are doing, why I would like to see some kind of 
guidance from the government is what they are doing is snagging 
part of the fuel surcharge and not passing it on to the 
trucking companies. Their profits have been greater. Ours are a 
lot less.
    And that is why I said I don't want to see any more 
government involvement. I think the government needs to step in 
here and find out where all of these fuel surcharges are going 
because everybody's fuel surcharge should be the same. It is 
the same.
    Are the carriers getting it? No. Your large carriers? Yes. 
Your small brokers, your small trucking companies are not 
getting it. That is the difference between the fuel surcharges. 
And that is what is happening.
    Mr. Ellsworth. Can you argue it from the other side, from 
the larger trucking firms, or would the larger trucking firms 
be on the same page with you or do I need to say what the 
brokers would say or is it better?
    Mr. Graff. Okay. Here is the issue--and this is what has 
happened to the large trucking companies, your major carriers. 
Last year they went in. You can negotiate a contract for a 
year. Okay? And they have an escalated cost, a scale. Last year 
they negotiated, ``Okay. If fuel goes up to $3.10, here is the 
max. This is what we will lock you in for a year.''
    The large companies were sitting there saying, ``We're 
maxxed out. Our fuel surcharge has been maxxed out for six 
months now. We're capped.'' Now they are starting to lose 
money.
    The brokers go in there, ``Hey, here is our fuel surcharge. 
We have a scale.'' Department of Energy puts it out every 
Monday. Okay? And here is the real kicker to it. They put it 
out every Monday.
    The brokers go out and say, ``Okay. Here it is. Here is 
what it is going to cost. So it is not going to cost that 
manufacturing company a little more. But the brokers are not 
passing all the money on to the small companies.'' It is a 
hidden cost that they are hiding. It is not that they are able 
to pocket part of the money.
    Mr. Ellsworth. Just as a follow-up, the impacts, long-run 
competition, long-term impact on small truckers?
    Mr. Graff. Long-term impact? Your small companies are going 
out of business daily. They are going out of business. Your big 
companies within two, three years are going to dictate to this 
whole country what it is going to be. And it is going to be 
worse than the Hoffa days ever were. They are going to tell you 
exactly what it is going to be.
    Mr. Ellsworth. Anybody else want to comment on my question 
from the panel? I am sorry I didn't review everybody's 
testimony.
    Mr. Orza. I would make a point on that. You know, Southwest 
Airlines has done pretty well over the last couple of years 
because they had futures contracts. But that is a gamble.
    Sooner or later, whoever promised them to sell them fuel at 
some reduced price based on banking on tomorrow would be better 
than today, sooner or later some of those guys trip. And it 
will happen to the trucking business also.
    Somebody will have a contract to sell a big supplier or big 
user fuel at X price, but they won't be able to afford to buy 
it themselves. And then you will see--do you know what is 
happening in subprime mortgages? That can happen in fuel also, 
where somebody makes the promise and isn't qualified to make 
the deal happen.
    So it is a huge problem for big trucking companies. It is 
substantially more of a difficult problem for small companies 
because they don't even have the wherewithal to negotiate 
futures the way large companies do.
    Mr. Ellsworth. Thank you, Mr. Orza.
    Mr. Chairman, I don't have any further questions.
    Chairman Altmire. Thank the gentleman. And thank you for 
your attendance.
    The gentle woman from Oklahoma has one final question. And 
then we will adjourn. The gentle woman is recognized.
    Ms. Fallin. All right. Thank you, Mr. Chairman.
    I appreciate all of your testimony today. And it has been 
very helpful, especially to hear from you who are directly 
affected by the rising cost of fuel prices.
    I was intrigued by Mr. Graff's description of technology 
that could be used during trucks that are idle and how you can 
save on fuel costs, save on even environmental concerns with a 
cleaner output from the energy you are using.
    But to all of you, do you have any suggestions that we can 
look at when it comes to businesses and their consumption of 
energy? And it may be gasoline. It could be diesel or it could 
be a piece of technology that can be used in your business when 
you consume energy in any way, shape, or form. It could be in 
the manufacturing of goods. It could be when you have a truck 
that is idle and you buy a piece of equipment that will help.
    Do you have any ideas of things that we can look at in 
Congress that would encourage you to use more energy-efficient 
technology to help reduce energy consumption and lower costs 
and, of course, help the environment, too? Any of you?
    Mr. Graff. Well, number one, new equipment, which, 
unfortunately, it was already pointed out, you can't afford the 
new equipment. You know yourself if you buy yourself a new 
automobile, the first couple of years, it is getting better gas 
mileage. Once it starts wearing out, it's not as good.
    The same thing with the transportation industry: newer 
trucks. Okay? But, I mean, there is one big savings there, but 
how do you afford it? These carriers can't afford it.
    Ms. Fallin. What would encourage you to be able to afford 
it that we could do policy-wise?
    Mr. Graff. Tax breaks.
    Ms. Fallin. Okay.
    Mr. Graff. Tax breaks, huge tax breaks. You know, somehow 
at the end of the month, you know, the fare has got to be paid. 
I mean, it is something that the government would have to look 
at. Can these people afford it?
    Ms. Fallin. And can any of you give me a specific example 
of a tax credit that would be beneficial to help you reduce 
energy consumption?
    Mr. Orza. I don't think there is anything in the near term 
or even over the next year or two that would have a measurable 
impact on businesses that are struggling today.
    One thing Mr. Graff might tell you is what are the miles 
per gallon for an 18-wheeler?
    Mr. Graff. Eighteen-wheeler, anywhere from between 3.9 to--
we haul heavy. We are in the beer industry. So we are at 
180,000 pounds, 4 and a half miles will go to 3.9 to maybe 6. I 
would say the average is probably five something per mile.
    Whether you can get on those industries, the manufacturing 
industries and the trucks, the way the government has got on 
the automobile manufacturers to increase their fuel mileage 
might be something you could look at.
    Mr. Orza. Congressman, if I may make a couple of quick 
points that really are kind of outside, but they are big 
picture. You know, the U.S. energy industry has led the world 
for 100 years.
    That is now being challenged by the growth that is 
occurring in China and Russia. Both of them now are in the 
energy business. And they are challenging us. And it is showing 
up in their political power, their military power, and their 
economic power.
    No one wants more pollution. There isn't an energy company 
or a trucking company or any of us that want more pollution. 
But we have got to drill. We have got to explore. And that does 
mean off the coast, and it probably eventually does mean new 
places like Alaska.
    It is good that we are using up Saudi oil before we use our 
own, but we are going to have to use our own as well. The 
industry has been pretty good in terms of drilling and 
cleanliness and spills and things of that sort. There are 
exceptions, but generally speaking we have been good at it.
    You mentioned earlier we haven't built a refinery in this 
country in a long time. That is a solution, but it is a long-
term solution.
    And, finally--forgive me. I don't remember the exact 
numbers, but somewhere over the next 10 or 15 years, China and 
India will add one billion new cars to the roadways. What does 
that do to the price of oil or gas or diesel? And we have got 
to be planning for that because we could be put out of business 
by nations that do have the different economy that is more 
socialistic and will support what they need to do to become 
military or economic powers at our expense.
    Ms. Fallin. You mentioned in your testimony, Dr. Orza, 
something about the Manhattan Project. And I think we didn't 
get to that portion of your testimony. Do you want to tell us 
real quickly what that means?
    Dr. Orza. Yes. You know, I am 57. So I don't remember the 
Manhattan Project, but I do know that there was a point at 
which the government said to the most brilliant people in 
America and around the world, ``We need to do something. We 
need a way to win a war, to end a war.'' This is a different 
kind of war. There is enough genius in this country to find 
great alternative solutions for energy.
    We get some comfort from knowing that a lot of this 
Committee comes from Texas, Pennsylvania, Oklahoma, you know, 
oil and gas states. Our American industry and our leaders of 
those companies and the people coming out of our colleges and 
universities can find alternatives.
    There are solutions. There are good ones. France figured 
out a long time ago, like it or not, nuclear works. And they 
have done it very, very well in France. We are afraid of some 
of these things, but we haven't been investing the money to 
make America energy- independent.
    Richard Nixon talked about it. It is the first time I 
remember hearing about it. That is nearly 30 years ago. We have 
got to invest the time and money. And oil companies at 100 
bucks a barrel are now spending the money to find alternatives 
because they know as well this is a dead end street at some 
point. And we need alternatives.
    Mr. Urbanchuk. Yes. Just to add to that, I think it is 
very, very important that we recognize that we are in a truly 
global economy and that what happens in other countries, and 
China and India particularly, is examples of rapidly growing 
and developing, literally moving from bicycles to internal 
combustion engines are putting tremendous pressure on resources 
globally. That means that we do need to move aggressively in 
developing new technology, not only in the area of biofuels but 
in the area of hydrogen and other alternatives.
    And there are people working on that. And we need continued 
incentives to stimulate that work, but we also need additional 
exploration and use of our own resources. And at the same time, 
we need to build that capacity to turn those resources into 
finished products.
    So it is a broad range of efforts that all have to move 
forward at the same time. The market is going to determine 
where we go with regard to those. And government can play a 
role in that. But the best thing government can do is, frankly, 
get out of the land, let businesses work most effectively in 
making those decisions.
    But, again, the problem is what we are talking about here 
are medium and long-term impacts. And it is sort of like the 
energy bill, the 2005 energy bill. There is a great deal of 
criticism of the fact that not much was going to happen about 
this. And people stopped to forget the fact that if you don't 
do something, you don't take some concrete first steps, nothing 
is ever going to get done. Before we know it, we are going to 
be in that medium and long-term.
    So we have to act today. And we have got to take those 
aggressive steps on all of those fronts simultaneously in order 
to really address this problem effectively.
    Chairman Altmire. Thank you.
    And I know I said that that was the last question, but I 
understand Mr. Ellsworth has another question. So he is 
recognized for five minutes.
    Mr. Ellsworth. Thank you, Mr. Chair. I won't take five 
minutes unless our guests do.
    This may be a little non-germane, but just sitting here 
thinking of Mr. Graff and Mr. Gilberti, did the recent stimulus 
package that we passed have any--I heard both ways on 
businesses-- impact in your businesses or the people you 
represent? Will it help from the business end, maybe not a 
personal end? Maybe Mr. Williford down there can chime in if we 
had any effect in that in the people you represent?
    Mr. Gilberti. It may affect my employees a little bit and 
their ability--one of the problems we have had with fuel prices 
is employees starting to look elsewhere to go to work because 
they want to be closer to their employment now because they 
have to commute. Maybe the stimulus package would be able to 
put some of that money to fuel to help them stay where they are 
working.
    Mr. Ellsworth. I was talking more about, you know, the 
business equipment and the--I have lost the word that I am 
looking for. The tax credits, I think Mr. Urbanchuk said that 
or Dr. Orza, helping with tax credits on the equipment side. So 
I didn't know if you had any opinions or were getting feedback 
from that.
    I had one trucking representative say, ``I can't afford to 
buy new trucks and depreciate my trucks. I can't afford to buy 
a truck because I can't make any money in the trucking 
business.'' That is what brought it to my mind.
    Mr. Williford. Representative Ellsworth, the accelerated 
depreciation has helped us some. But to sort of sidestep the 
issue there, there are things that the small business community 
and those who are interested in small business can do, sort of 
like Mr. Urbanchuk mentioned, if the government could step out 
of the way just a little bit, reduce the regulatory burden, the 
recordkeeping requirements on small business.
    Tort reform. In a former life, I was an attorney. So I know 
of what I speak. You know, that would be a big help. And I know 
that there has been pending in Congress before an effort for 
the government to withhold three percent on contractors for all 
of their contracts. The average profit, sort of like Mr. Graff 
said, the average profit for contractors is three percent. So 
you will be taking our profits. And I urge you all to oppose 
that with all your might.
    Mr. Ellsworth. Thank you, Mr. Chair. Thank you all for your 
testimony.
    Chairman Altmire. Thank you again for telling your stories. 
This helps us work through the issue and look at what the next 
steps might be. This is the first of what we hope will be an 
ongoing dialogue with each of you. And please feel free to 
contact any of us individually or through the Committee with 
any concerns or recommendations that you might have moving 
forward.
    At this time I ask unanimous consent that members will have 
five days to submit statements and supporting materials for the 
record. Without objection, so ordered.
    The hearing is now adjourned.
    [Whereupon, at 11:27 a.m., the foregoing matter was 
concluded.]
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