[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
OIL SHOCK: POTENTIAL FOR CRISIS
=======================================================================
HEARING
before the
SELECT COMMITTEE ON
ENERGY INDEPENDENCE
AND GLOBAL WARMING
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 7, 2007
__________
Serial No. 110-19
Printed for the use of the Select Committee on
Energy Independence and Global Warming
globalwarming.house.gov
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SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING
EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon F. JAMES SENSENBRENNER, Jr.,
JAY INSLEE, Washington Wisconsin
JOHN B. LARSON, Connecticut Ranking Member
HILDA L. SOLIS, California JOHN B. SHADEGG, Arizona
STEPHANIE HERSETH SANDLIN, GREG WALDEN, Oregon
South Dakota CANDICE S. MILLER, Michigan
EMANUEL CLEAVER, Missouri JOHN SULLIVAN, Oklahoma
JOHN J. HALL, New York MARSHA BLACKBURN, Tennessee
JERRY McNERNEY, California
------
Professional Staff
David Moulton, Staff Director
Aliya Brodsky, Chief Clerk
Thomas Weimer, Minority Staff Director
C O N T E N T S
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Page
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Prepared statement........................................... 3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress
from the State of Wisconsin, opening statement................. 6
Hon. Earl Blumenauer, a Representative in Congress from the State
of Oregon, opening statement................................... 6
Hon. Emanuel Cleaver II, a Representative in Congress from the
State of Missouri, opening statement........................... 7
Witnesses
Ms. Carol P. Browner, former Administrator of the Environmental
Protection Agency and current Principal of the Albright Group,
LLC............................................................ 9
Prepared Statement........................................... 12
Answers to submitted questions............................... 38
Admiral Dennis Blair, United States Navy (Ret.), former Commander
in Chief, U.S. Pacific Command................................. 14
Prepared Statement........................................... 17
Answers to submitted questions............................... 42
OIL SHOCK POTENTIAL FOR CRISIS
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WEDNESDAY, NOVEMBER 7, 2007
House of Representatives,
Select Committee on Energy Independence
and Global Warming,
Washington, DC.
The committee met, pursuant to call, at 9:05 a.m. in room
2172, Rayburn House Office Building, Hon. Edward J. Markey
(chairman of the committee) presiding.
Present: Representatives Markey, Blumenauer, Larson, Solis,
Cleaver, Hall, Sensenbrenner, Shadegg and Blackburn.
Staff present: Michal Freedhoff.
The Chairman. Good morning. This hearing is called to
order.
Forty-five percent of the world's oil is located in Iraq,
Iran, and Saudi Arabia; and almost two-thirds of known oil
reserves are in the Middle East. Events in that part of the
world have a dramatic impact on oil prices and on our national
security.
In the late 1970s, the oil embargo, Iranian revolution, and
Iran/Iraq war sent the price of oil skyrocketing. Yesterday oil
surged to a new record of $97 a barrel, amid government
predictions of tightening domestic inventories, bombings in
Afghanistan and an attack on a Yemeni pipeline that took
155,000 barrels of oil off the markets. And with al Qaeda
threatening to attack Saudi Arabia's oil, with our continuing
struggles in Iraq, and with yesterday's announcement that Iran
now has 3,000 operating centrifuges for enriching uranium, each
day carries with it the possibility of major oil supply
disruptions, leading to economic recession and political or
military unrest.
The United States currently imports more than 60 percent of
its oil. Oil has gone up more than $70 a barrel in the last 6
years, from $26 a barrel in 2001. Each minute, the United
States sends $500,000 abroad to pay for foreign oil imports.
That is $30 million per hour, $5 billion per week.
This analysis only considers oil prices through August.
With the record prices of late, these figures will surely grow
by year's end.
Much of these funds end up in the pockets of Arab princes
and potentates who then funnel the money to al Qaeda,
Hezbollah, Hamas and other terrorist groups. With that kind of
money at stake, it is no coincidence that we have 165,000 young
men and women in Iraq right now, and it is no surprise that
much of our foreign policy capital also happens to be spent in
the Middle East.
Our energy policy has compromised our economic freedom, and
the American people want action because they know that the
price has become much too high.
Last week, a group of energy and military experts converged
in Washington to conduct an energy security war game. But the
truth is the scenario that unfolded didn't really seem at all
fictitious. Like today, the scenario began when oil prices had
gone up to trade consistently in the $95 per barrel range. Like
yesterday's attack on the Yemeni pipeline, the first event
leading to crisis involved an attack on the Baku pipeline. And
also like today, Iran's nuclear ambitions and U.S. efforts to
contain them prove to be a complicated endeavor that requires
us to maximize all of our diplomatic military and economic
leverage.
The problem is, with oil, we have almost no leverage. The
United States is home to less than 3 percent of the world's oil
reserves. Sixty percent of the oil that we use each day comes
from overseas. Global oil production levels are at about 85
million barrels per day, with excess production capacity at
only about 1.65 million barrels per day. Hurricane Katrina
alone removed as much as 1.4 million barrels per day from
supplies.
The Strategic Petroleum Reserve has just over a month's
worth of oil in it. The reality is is that there are no good
short-term options to help us deal with oil addiction.
We have, however, at the same time, a piece of legislation
which is now pending between the House and the Senate which has
the potential to raise the fuel economy standard to 35 miles
per gallon, would have 15 percent of our electricity produced
from renewable electricity sources, and it would also use
cellulosic fuels to substitute for oil which we could import.
That bill should be finished if we can work hard on it between
the House and the Senate over the next 4 weeks.
I look forward to learning more about Oil Shockwave from
our witnesses as well as their views about what Congress can do
to address our energy security challenges.
I now turn to recognize the ranking member of the select
committee, the gentleman from Wisconsin, Mr. Sensenbrenner.
[The prepared statement of Mr. Markey follows:]
[GRAPHIC] [TIFF OMITTED] 58246A.001
[GRAPHIC] [TIFF OMITTED] 58246A.002
[GRAPHIC] [TIFF OMITTED] 58246A.003
Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
Everyone who stops to fill up at the pump, and that is most
people in this country, know firsthand how the United States'
dependence on foreign oil affects them. They feel it in their
wallet, pennies at a time, as the price of gas creeps up.
And most Americans understand that the price of oil is
often influenced by events around the world. I doubt the
results of the Oil Shockwave simulations would surprise many
Americans. But I bet many Americans don't realize just how vast
the energy supplies are in the United States.
Beneath this great Nation there are enough energy reserves
to propel us towards energy security; and surely we have the
intellectual and scientific capacity to give us the energy
security that all of us, Democrats and Republicans, desire.
According to the Interior Department, there are potentially
120 billion--that is with a ``b''--barrels of untapped oil in
the United States, including offshore reserves in Alaska, the
Pacific and Gulf of Mexico. Add to that the potential of 635
trillion--with a ``t''--cubic feet of natural gas remains
untapped, and we have got what we need to start weaning
ourselves off the oil supplies from foreign countries that are
hostile to the United States.
But that is just the start. It is estimated that there are
250 billion tons of recoverable coal reserves, which is nearly
six times the combined U.S. oil and natural gas reserves. In
fact, it is believed that our coal supplies are larger than any
single energy source of any single nation, including Saudi
Arabia oil. The U.S. coal supply is equivalent to nearly 800
billion barrels of oil, more than three times the energy
equivalent of Saudi Arabia's oil.
I will bet many Americans don't know that coal can be
converted into a fuel that is comparable to gasoline and can
power any automobile. If we use coal to its fullest potential,
we can turn our back on the Middle East and never look back.
Right now, the type of scenario laid out in the Oil
Shockwave simulation is possible, and this scenario could cause
major disruptions to our economy. But there are some
indications that it might not have the same impact as that of
the 1970s oil crises. For every unit of economic output, the
U.S. now uses half the energy it did in 1980. Let me repeat.
That for every unit of economic output, the U.S. now uses half
the energy it did in 1980. Energy costs are a smaller
percentage of household budgets now than they were then, even
though some people would find that hard to believe.
Assessing our own natural energy reserves probably couldn't
happen as quickly as an Oil Shockwave. We should work to change
that. Through research and development of new technologies, we
can prepare for the worst.
We have the energy supplies. All we really need is the
intellectual energy and the political will to put them to work.
And I thank the chairman.
The Chairman. Now we turn and recognize the gentleman from
Oregon, Mr. Blumenauer.
Mr. Blumenauer. Thank you.
I, too, appreciate our witnesses spending time with us this
morning and sharing their experience.
I have been following the exercises for some time and have
been intrigued by the power to be able to demonstrate how
perilous we are balanced today on our petroleum dependence. In
my community, we had, over a year ago, the city government
forming a task force to explore these other entities, and 12
distinguished citizens came back with things that wouldn't
surprise our participants, but I think it was an important part
in sort of driving where we are going.
I appreciate the comments of the distinguished ranking
member, but one of the downsides of what he is describing is
that there are no technologies now available that don't make
the other part of our charge as a committee fighting against
global warming and greenhouse gasses, it will that make it
worse.
The simple fact is that we are the largest consumer of
petroleum. We have--we are consuming it at a rate 10 times what
our share of the world's proven supplies are, and we are
depleting our own reserves right now at a very rapid rate. And
given our security concerns for the future, those ought to be
the last areas that we try and pump as fast as we can, rather
than the first or, in the case of the Arctic, the next.
Mr. Chairman, one of the things that I would hope that you
would consider, the work that we have done has encouraged us to
look far afield, and we all have good ideas about where we
should go for a committee hearing and who we turn to next. I
know it is a very wide and rich field, and I think you have
done a great job of balancing it. But one of the things that
might be interesting would be for our committee to spend the
better part of a day experiencing the simulation.
Having dealt with the people who've designed it, having
watch it from afar, I think that it might shake some of us out
of our lethargy if we actually stopped pontificating and
actually go through a simulation where we have to make some of
these real-life decisions that we, as a Congress, have failed
to mitigate.
And if our committee might set the tone, Mr. Chairman, I
think it might be--there might be other people on both sides of
the aisle who would go through it. And if we could get even 10
percent of the Members of Congress to have to go through this,
devoting only half a day, I think it would be a sort of a
homework that might put some realism into what too often around
here is, I think, rather hallow rhetoric. Because I think all
of us ought to have the sense of urgency for the very reasons
you said in our opening statement, and I would hope we might
consider it because it is too good a model for us to at least
not test.
Thank you.
The Chairman. That is a great idea. I think we will try to
do that. We will try to set something up that can give each one
of the Members that experience.
The Chair recognizes the gentleman from Missouri, Mr.
Cleaver.
Mr. Cleaver. Thank you, Mr. Chairman.
It is difficult to follow up a powerful sermon like the one
that was just delivered by Mr. Blumenauer, which I would say
``amen'' to what he just said.
As I read this morning a number of newspapers, including
Financial Times, about what is going on in Pakistan, I became
alarmed. Not because Pakistan is a supplier of oil but because,
if things go further awry, it could completely destabilize the
Middle East in ways that Iraq never could. And thinking about
what is going on in Iran and hopefully dealing with this
concern internally, I could not help to think that conflict in
Pakistan, if it ends up in some kind of civil war and if the
tribal areas get weapons, there is no telling--or get more
weapons, U.S. weapons, there is no telling what could happen.
But it occurred to me that, even in the midst of all of
these developments in the Middle East, that we are not, even
after the Al Gore film and all of the discussions, we are not
retreating from our appetite for oil.
In 1980, the United States imported 27 percent of the oil
it uses each day; and today we are importing 60 percent of the
oil we use each day. So it is not like all of the awareness is
creating some reaction.
It is what Mr. Blumenauer said. You know, we talk about it,
and then we just continue to go ahead. We continue to splurge.
This is chilling.
And so I am looking forward to hearing your comments and
then engaging dialogically, because I am also frustrated that
we are not moving, and maybe something will happen after
November from next year.
Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
The Chair recognizes the gentlelady from California, Ms.
Solis.
Ms. Solis. Thank you, Mr. Chairman. I want to welcome our
witnesses and look forward to your testimony. I will submit my
statement for the record.
The Chairman. Great.
The Chairman. The gentlelady's time has expired, and we
will move to our witnesses.
Our first witness is Admiral Dennis Blair, who served as
Commander in Chief of the U.S. Pacific Command, the largest of
the combatant commands. Admiral Blair is a Rhodes scholar; and
he currently is a member of the Energy Security Leadership
Council, a group of U.S. military and business leaders united
to address America's energy and national security crisis.
Whenever you are ready, please begin.
Admiral Blair. Ms. Browner was an actual participant in the
shockwave process. As a member of the Energy Security Council,
I will follow up.
The Chairman. I would be glad to follow your lead.
Carol Browner, we will begin with you. She was the head of
the Environmental Protection Agency. She previously had served
as the Secretary of State of Florida's Department of
Environmental Regulations. Before that, she was Legislative
Director for U.S. Senator Al Gore. She is, without question,
one of the leading experts in the world on environmental and
energy issues.
We welcome you. Ms. Browner, whenever you are ready, please
begin.
STATEMENT OF CAROL P. BROWNER, FORMER ADMINISTRATOR OF THE
ENVIRONMENTAL PROTECTION AGENCY AND CURRENT PRINCIPAL OF THE
ALBRIGHT GROUP
Ms. Browner. Thank you, Mr. Chairman.
You would think I would remember how to do that. I did
spend a few years testifying before Congress.
It is a pleasure to be here with all of you today and to
share with you the experience we had in Oil Shockwave 2007.
But let me first congratulate you, Mr. Chairman, and all
members of the committee for all of the work you are doing on
this committee. It is incredibly important, as you all know, to
the people of this country. There are very tough issues to be
addressed, and I personally appreciate the time and energy you
are bringing to bear.
As you heard from the Admiral, I appear today as a
participant in the recent Oil Shockwave--Executive Oil Crisis
Simulation. It is the second time I have done this. There was
one several years earlier that I also participated in, and I
think--let me just set the stage for how this scenario unfolds.
First of all, the event was sponsored by Securing America's
Future Energy, SAFE, and the Bipartisan Policy Center; and it
was designed to show the possible consequences of U.S. oil
dependency and the ability of government officials to respond
in the event of a global oil crisis.
It is extremely important that you understand this was not
a partisan effort. It was bipartisan in every way. The
participants were divided between Democrats and Republicans,
and the whole point is just, to the best of our ability, to
demonstrate to the American people how a problem unfolds and
how members of the President's Council and senior staff might
respond to that problem.
It provides, I think, a number of important lessons for the
Congress as you look at the issues in front of you.
In the scenario that we did most recently last week, three
different things happened over a 3-month period. The year is
2009. It is post the election. There is no assumption in the
scenario whether a Democrat or a Republican has won the
election for President. It is unclear in the conversations, but
over a 3-month period, from May to August of 2009, the first
thing that happens is that a pipeline in Azerbaijan is
temporarily put out of service. The result of that is a loss of
one million barrels of oil to the world's market per day, and
very quickly there is an upturn in prices.
While this crisis is resolved in the course of the
scenario, over the next 3 months, Nigeria takes 400,000 barrels
a day off the market; and, in August, Iran and Venezuela cut
their combined oil production by 700,000 barrels per day. So by
the end of the simulation, the 3-month period, 1.1 million
barrels of oil have been taken off the world market; and the
price per barrel has shot up to over $160.
Again, it was a simulation, but I don't think any of this
is farfetched. Maybe not these precise things but certainly
things like this could happen virtually any day.
As is common in scenarios, each of us play a role. The role
that I was assigned was Secretary of Energy, and in this
position I was supposed to suggest a series of short-term steps
that could be taken by the American public to reduce oil use.
For example, I raised with my Cabinet in the simulation,
which was chaired by Bob Rubin, that we could impose a 55-mile
per hour speed limit, which would save 134,000 to approximately
250,000 barrels of oil a day. We could implement year-round
daylight savings time, which would save approximately 3,000
barrels per day. We could institute a Sunday driving ban, which
would save about 475,000 barrels of oil per day.
Suffice it to say, my colleagues in this event, other
Cabinet members, rejected these ideas. They did not think they
would be acceptable to the American people.
That turned the discussion to whether or not we should
access the Strategic Petroleum Reserve, which, as you know, is
under the auspices of the Secretary of Energy; and very quickly
a debate ensued over two issues with respect to the SPRO.
The first was, what is the appropriate use of the SPRO? Can
you use it to manage price spikes or can you only use it for
security matters? And, as Mr. Sensenbrenner pointed out, there
are significant barrels there, but the truth of the matter not
so significant that if this crisis had played out over a longer
term that you could really answer the problem.
The second debate that unfolded under the SPRO went to
whose oil is it. And several of the individuals participating
in the scenario representing various--I think the Department of
State, the Department of Defense raised the issue as to whether
or not does the military get first call, as opposed to the
American people. And the concern they were focused on was, with
growing unrest in the world in this scenario, would they have
to deploy additional troops and therefore be in need of
additional oil and should they get a first call on it?
I think the real lesson of oil shock and one that we seem,
unfortunately, hard-pressed to learn is the need to think
ahead, to make real and lasting commitments to a new approach,
rather than wait to respond once we are in the thick of it.
Short-term energy conservation is frequently difficult,
painful, and I think that was in part why the other
participants in the scenario did not want to recommend to the
fictional President that we take some of these steps.
As I look at the scenario and move into the issues that
confront you as a committee today and the House and the Senate
at large, I think the single most important thing would be to
embrace CAFE. If there had been a CAFE standards such as being
considered and passed by the Senate in effect during this
scenario we would not have experienced the kind of problems,
potentially could--would not have experienced the kind of
problems that were unfolding in the scenario.
The Senate CAFE proposal, if adopted this year, would
result in an oil savings of 1.2 million barrels per day by
2020. If you take into account the Senate renewable fuel
mandates, the estimated number of barrels of oil saved each day
from the Senate passed biofuel expansions would be 1 million.
It brings you to a total of 2.2 million. That would be more
than twice of the reduction that was needed by the end of Oil
Shockwave.
In closing, let me again note this is the second time I
have participated in this scenario. I think I was the only
person that participated both times, and the lesson was the
same. We need to get going. There are things we can be doing
today to try and reduce our dependence. CAFE is certainly not
the only thing, but I personally think it is an incredibly
important thing.
The other thing I would just note to Mr. Blumenauer's
point, the scenario did not take into account global warming.
As the Secretary of Energy, I tried to insert it into the
discussion, but the focus, because it was such an immediate
concern, always turned back to where do we get more oil
quickly, what do we need to do to solve the problem?
I think certainly as we think about these issues it is
absolutely essential that we think about what some of the
alternatives may mean in terms of greenhouse gas emissions, in
terms of our carbon footprint, in terms of how much more
difficult do we make the task of reducing greenhouse gas
emissions and carbon emissions.
So I thank you for the opportunity to share with you what I
thought was a really tremendous scenario and I think a very
enlightening one.
Thank you very much.
The Chairman. Thank you, Ms. Browner.
[The statement of Ms. Browner follows:]
[GRAPHIC] [TIFF OMITTED] 58246A.004
[GRAPHIC] [TIFF OMITTED] 58246A.005
The Chairman. Admiral Blair, whenever you are ready, please
begin.
STATEMENT OF ADMIRAL DENNIS BLAIR, USN (RET.), FORMER COMMANDER
IN CHIEF, U.S. PACIFIC COMMAND
Admiral Blair. Yes, sir, Mr. Chairman.
First, let me, on behalf of the Securing America's Future
Energy Project, accept what I think was a request that we
conduct an oil shock simulation, making it available to members
of the committee. I think that is wonderful. We will do it. We
will bring it here. We can do it somewhere else.
And I think it is just a wonderful thing. Because when you
talk to people like Carol Browner who have been in it, they are
not the same after they have done it from what they were
before. It just brings in an immediacy to this rather
theoretical discussion that I think gives you the burn to do
something about it. And we will gladly set that up in any way
that is convenient for you.
And I see from the opening statements what I am doing is
just pouring gasoline on a flame that already exists in terms
of the understanding of the issue and the immediacy for it. But
let me do that. Because I spent more than three decades in the
Armed Forces in the Navy and in joint commands, and I think
back over my career, so many times when we sent our young men
and women into combat, it was because we hadn't taken prudent
smaller action earlier, and we paid later with our treasure and
their blood for things that should have been done long before.
And I think this is really what impels those of us who are
retired senior military officers who serve on this Energy
Security Leadership Council, is that we want to advocate
actions which are--they are not easy, but they are doable now
in order not to be reduced to the sorts of desperate measures
that we saw in the Oil Shockwave.
In fact, the steady militarizing of many volatile and
underdeveloped areas of the world that has gone on over the
time that I have been in the Armed Forces from the days that we
used to handle the Middle East with a couple of ships and a
one-star Admiral to now we have an entire unified command, a
Central Command. We have hundreds of thousands of troops that
are there all the time in an area that is halfway round the
world that takes three ships to support every ship that is over
there, that take three Marines to support every Marine that is
over there--one who is there, one who is traveling, one who is
back home cleaning up getting ready to go back again.
So the burn that those of us who are on the Council who
served on the Armed Forces is, let us do the smart things now
to avoid having to do the dangerous, bloody, expensive things
later.
Ms. Browner reviewed the essence of the shockwave
simulation that we did last week. Let me just review some of
the lessons that I observed from watching it and having been
involved in the week of the Council.
As you saw there, we could have oil that is a hundred
barrels today, in the simulation that was over 160, with just--
with a couple of relatively small things affecting 1 percent of
the world oil supply, and these were the lessons I drew from
it.
The first is there is really no such thing as foreign oil.
Oil is fungible. A change in supply or demand anywhere will
affect prices everywhere. So distant places mean real things to
Americans.
I sometimes think the Good Lord is laughing looking down at
us in the places that he put them in the world. He put them in
these faraway places with these very unstable and difficult,
volatile situations; and a little tremor there affects all of
us at the pump.
And the second is that, because of the tight supply
situation now, the oil markets are precariously balanced. Even
small disruptions have dramatic effects because of the lack of
the buffer. I think we talked about it earlier, that what used
to be a $4 million a day Saudi buffer is down. It might be 1.65
million, as you say, Mr. Chairman. It could be less. Hard to
tell with the lack of transparency there. But we are just on
a--we are on a hair trigger here.
Second, when we have gotten to the point that the supply
disruption occurs, there just aren't many short-term options.
When I watched Ms. Browner and people like Secretary Rubin,
Secretary Armitage, General Abizaid wrestling with questions,
there weren't any good short-term options. It was all really
ugly, and all of them thought if we had just done something 10
years ago or 5 years ago, we wouldn't have to be doing it. And
don't we owe our successors 5, 10 years down the road some
efforts now so that they are not put in this terrible position?
The next one is that this Strategic Petroleum Reserve is
not the final answer. It doesn't solve the problems. As you
saw, real decision--experienced decisionmakers are wrestling
with it. Ms. Browner was certainly an advocate for using it.
The kind of objections around the table with various people
with a series of responsibilities made you realize that this is
not a magic wand that we can wave. So we have got to do--we
have got to do more.
And, finally, although we didn't explore quite as much as
we should have, this is an international problem. We have got
to be talking with the Saudi Arabias, the Chinas, the Indias,
the suppliers on the one hand, the great consumers on the other
hand. And China and India now are not members of the IEA. They
are not part of a team that coordinates strategic petroleum and
reserve action. They would be affected by it, as would
everyone.
And we have--this just drives us to get international
groupings together, thinking now, taking prudent American
actions so that we are not put in this position.
And it really brings us back to what all of us have thought
in this area, is that we need both greater conservation and
increased production, both of the petroleum substitutes like
coal, of more drilling of the petroleum that we do have, also
development of smart synthetic alternatives.
There is not a magic bullet for this thing. We can't have a
technological breakthrough out of it through the next term that
is going to solve it. We have to do something that is going to
affect everything, supply/demand alternatives.
And so there are a lot of lessons from 9/11. One of them
is, unless we take action early to put national security on our
terms rather than allowing vulnerabilities that other people
can do it to us, we really fail in our duties and we really
have to have a long-term strategy for reducing America's oil
dependence.
It is a grave national and economic security. It demands a
bipartisan approach, and it goes beyond the Congress to the
administration to the American people who I think are ready to
support action on this as long as it is done in a way that has
everybody taking the action, that spreads the sacrifices and is
clearly directed towards the national interests.
As Ms. Browner said, there is a bill out of the Senate--I
testified before the Senate Congress committee earlier this
year that works on an important part of the problem--setting
the auto efficiency standards goals to increase every year.
I would emphasize that it is a--because it is an attribute-
based system, it is a big improvement over the system we put in
the 1970s, the one that was in part responsible for the gains
that Mr. Sensenbrenner mentioned in which we have our oil
intensity of the economy, but this is--this compares like model
to like models. So it does not put the Detroit Big Three at a
disadvantage.
I am absolutely convinced that smart American engineering
and ingenuity and good American workers can, under this
proposal, knock the socks off any foreign competitors, sell
cars, lots of good cars that will not only be safe and the
right performance but will be much less thirsty for oil.
And in addition to that, we need to go on to the other
parts of program, smart alternatives, the results of R&D
investments in order to bring them on, whether it is cellulosic
methanol to complement the ethanol that we are getting from
corn, whether it is an energy efficient and environmentally
safe use of the coal conversion or the oil sands that already
exist.
We have got to continue with this three-part program if we
are to avoid the sorts of things that we saw in this shockwave
and if we are to do the right thing by our children, our
grandchildren and by the men in uniform, men and women in
uniform who will have to pay the price someday unless we act
now.
Thank you.
The Chairman. Thank you, Admiral, very much.
[The statement of Admiral Blair follows:]
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The Chairman. Let me turn and recognize for an opening
round of questions, the gentleman from Oregon, Mr. Blumenauer.
Mr. Blumenauer. Thank you very much, Mr. Chairman.
Admiral, I appreciate your willingness to inflict the
simulation on us, and I appreciate the chairman's interest in
perhaps exploring that as a committee hearing.
We actually did one of these versions in my community a
year ago involving campus-based activities. We actually fell
short in trying to structure for our governor and some of our
community leaders. But, for the committee, could you outline
what it would entail? We didn't really get the details in terms
of the number, the duration, the roles that were played. Just
how would that work for the committee if we were to follow up
on your generous offer?
Ms. Browner. Maybe we can do it together.
In both of the national simulations that have been done, it
is approximately 10 people who participate. You have usually
the President's Chief of Staff, who sort of runs the
conversation. You have everybody from the Secretary of the
Energy Department, Secretary of State, Secretary of Defense,
National Security Advisor, sort of a Joints Chiefs of Staff. So
there are roles that are assigned and you are, to the best of
your ability, asked to play the role and so you are given facts
that might be particular to the role that you are playing. You
can bring in, you know, sort of personal information or
experiences, but you do have to stay within your role.
Bob Rubin, who was sort of the master of ceremonies, if you
will, the Chief of Staff for this particular exercise, was
very, very good at making sure all of the points--as he was
when he served in the last administration--making sure all of
the points were put on the table.
You then have briefers who come into the Cabinet room, the
simulated Cabinet room or situation room, and start changing
the scenario on you. And sometimes they use reports. There is
like a CNN-style TV show that has been manufactured that is
providing new information or there are simply briefers who are
considered to be experts who are adding new facts.
It took us about two and a half hours to do it, and then we
had sort of 30 minutes of reflection. We stepped out of our
individual roles and sort of reflected from our experiences
either in that role or previous.
When I was in the prior administration, this is something
that Cabinet members do. In fact, the last simulation that I
participated in as a member of President Clinton's Cabinet was
in an anthrax scare. I think it was shortly before the 2000
election. Most of us couldn't pronounce the word ``anthrax''
when we showed up for the simulation. Most of the Americans are
now too familiar with it.
But whether it was in the government or in this one, the
value of these is really quite significant because, as the
Admiral said, what you quickly figure out is, even with all of
this power behind you, I mean, the Secretary of Energy had huge
amounts of power in this simulation, your choices in terms of
immediate action are very, very narrow and even those choices
immediately bump up with somebody else's view of the world.
For example, I said, yes, we should access the SPRO. That
got complicated in a hurry, because I think it was the
Secretary of Defense said, well, you know, that is the Navy's.
And I actually didn't know this about the history of the SPRO.
It actually originates back to the Navy. So suddenly we
couldn't find common ground on whether or not to take advantage
of this Strategic Petroleum Reserve.
I think for that reason it is worth doing. Things that you
think may be sort of automatic and easily done you find out are
not so automatic and easily done.
Mr. Blumenauer. So in terms of--with the technical help
that you folks have developed over the years, there would be a
role potentially for every member of the committee and could be
conducted in the framework essentially of what a significant
hearing would be?
Ms. Browner. It would be a large Cabinet.
Admiral Blair. Exactly. The time commitment, Mr.
Blumenauer, is probably 2 hours, sometimes a day or 2 ahead of
time just to be given some basic data and be told how the game
works; and we start at 10 o'clock in the morning. You know, Mr.
Markey might be playing the National Security Advisor, you
might be playing Secretary of Defense, Mr. Sensenbrenner might
be playing the Secretary of Energy; and in comes a card that
says the President wants a recommendation in 2 hours as to what
he is supposed to do because these things have happened.
And then the National Security Advisor and maybe the
chairman of the National Economic Committee, as they are, says,
okay, what do we think? What are we going to tell the
President?
And so you bat that around. It drives you. The time element
drives you to have to sharpen your thinking. You can't just do
nothing, because time is ticking away. And then you make that
recommendation and then say fast forward a week. Now these
other things happen. Now what are you going to do, big guy? And
the President wants some better options.
And we also had the President's press secretary, and he was
wonderful because he said, you are going to have the President
do what?
So it is part of that immediacy and responsible people
doing tough jobs that live with you, and we would have you all
in the role. It would take, as I say, 2 hours ahead of time to
be ready and 4 hours on the day.
The Chairman. The gentleman's time has expired.
The Chair recognizes the gentleman from Wisconsin, the
Secretary of Energy, Mr. Sensenbrenner.
Mr. Sensenbrenner. First of all, I shiver to think of the
Chair as National Security Advisor. Put him in another role,
please, and I think we will all be happier, in looking at, you
know, how we war game the strategy and what we can do ahead of
time.
The one question I have is, what is the role of Canadian
oil resources and oil shale in the West? I know that you can't
turn that spigot on as quickly as we would like, but if we are
looking at ways to prevent an oil shock from being extremely
severe, that seems to be the most convenient and secure way to
get increased oil or replacement oil.
Admiral Blair. The position that the Council took in the
report that we released almost a year ago was that the Canadian
tar sand resources would be a big part of the problem as soon
as they could be done in an energy efficient and
environmentally acceptable way.
So we saw that as part of the solution, but our
understanding was the technology was not quite there on those
two criteria. So we couldn't count on that and that--but that
the R&D should be put in to see if it is a viable alternative
as an alternative source.
Similarly, R&D should be put into other synthetic fuels in
order to make them part of the solution.
So it didn't seem to us, looking across that alternative,
as well as ours, that there was one that you say had all of the
right attributes to solve the problem. More work was needed.
Ms. Browner. An oil shock scenario did not deal with could
you explore and find other resources. Because it was a real
time. You had to solve the problem that day, that week.
I think SAFE has taken a position on whether or not some of
the thoughts you have are viable in the short term, and I share
their concerns that in the short term they are probably not.
They may also bring with them some other challenges. For
example, we need to understand--this is me personally speaking,
as someone who is very concerned about greenhouse gas and
global warming--what are the repercussions? Are we adding to
our global warming footprint? Are we diminishing it? That is
still something that still needs to be better understood.
I think part of the issue is what and where are the
technologies that we may end up using, because that may have
some bearing on what are the emissions.
Mr. Sensenbrenner. I yield back the balance of my time.
The Chairman. The gentleman's time has expired.
The Chair recognizes the gentleman from Missouri, Mr.
Cleaver.
Mr. Cleaver. Thank you, Mr. Chairman.
One of the problems we have, I think, is that we live in a
time in our country where everything is politicized. I am
frustrated over how we have politicized global warming, how we
politicized even the oil crisis. And so it is difficult for us
to coalesce and move towards a solution. Because what we say
and think reverberates across the land, and if you listen to
radio and television talk shows, you can see what has happened.
It is ugly out there. And rather than turn down the volume, we
continue to turn it up. So this issue has already become muddy
because of the way we have--because of the way it is
politicized.
Do you have any suggestions on how we might be able to
depoliticize the oil dependence issue or independence? Is there
something you--some way you can suggest, say, can we write a
song? Could we get Mr. Hall to write a hit song? I mean, what
do we need to do?
Admiral Blair. An Admiral giving advice on politics is like
a politician giving advice on maneuvering ships.
Mr. Blumenauer. What is your point?
Admiral Blair. But what those of us in the Council thought
was that what is required here is a compromise between those
who have opposed fuel efficiency standards on the grounds that
it is interfering with business and those who have opposed
further exploration and development of alternatives on the
grounds that it runs environmental risks and it is not pretty
to have an oil rig out the back door.
What we strongly recommended a year ago was that in order
to provide the political cover for everybody to do what
everybody recognizes is in the national interest, is both sides
have to give, and it has got to be a comprehensive package so
that it is recognized that all participants are doing the right
thing for the country. And even though they can be accused of
making a compromise with something that they pushed in the
past, it is in the common good.
And that is really--it is naive. It is kind of civics 101.
I am not a politician, but I think it is sort of a time that we
have to give a little to do the right thing for everybody.
So my answer to your question would be to, you know, both
sides of that center chair need to give a little bit and let us
do more conservation, let us do more domestic production, let
us do more alternatives.
We have taken polling data within the country, and the
people recognize it. But it is getting that popular support
shredded through the filter of individual interests into a
bill, which you all know better than I do, is a hard part of
this.
But it seems at the end of the day, if it is comprehensive
and the people will have felt that their elected
representatives, whether they are in the executive branch or on
the legislative side, have done the right things for the
country--so that is kind of a naive answer, Mr. Cleaver, but
that is one I would give.
Ms. Browner. I think the simulation actually would be a way
in which you might find some common ground.
In the simulation we did, there were--three of us were
noted Democrats. Everyone knew we were Democrats. There were
three that were well-known Republicans. You would recognize
them immediately as Republicans. And then there were some
former military brass, and we are never sure what they are.
They are very good about that.
But what happened is we were unanimous in our takeaway from
the experience. So it didn't matter what our political
persuasion was when we came to the scenario. Our experience of
the scenario was a shared one, and what we thought needed to be
done was remarkably similar across the party lines when we
stepped out at the end and resumed our regular identities.
So I think it could go a long ways to perhaps bridging some
of the gaps that inevitably exist as you all wrestle with
important legislation.
And if that doesn't work, I agree, Mr. Hall should write a
song.
The Chairman. The gentleman's time has expired.
The Chair recognizes the gentleman from Arizona, Mr.
Shadegg.
Mr. Shadegg. I want to thank our witnesses.
I want to apologize for being late. I want to thank you for
holding this hearing.
I appreciate the work you are doing in this area; and I
share your comments, Ms. Browner, about, you know, you set
aside the policy, the partisanship, and we need to be working
on the problem.
In that regard, I noticed in your testimony that you
applaud the renewable electricity standard in the House energy
bill. I do as well, except I have some concern.
Both of you, Admiral Blair and yourself, have talked about
the importance of conserving, using less; and, obviously, the
more we can rely on renewable fuels, the better off we are.
One of the concerns that I have is that there is this
ongoing struggle, unfortunately, I believe, somewhat partisan
in nature, over what to value achievements in efficiency. In my
State of Arizona, we have some renewables we can use. My
friends from the Deep South look at me and say, don't impose
renewable standards on us. We can't do it.
In both instances, I hear from the industry that efficiency
gains, at least in the short term, hold great potential. I
know, for example, that I pay the Shadegg family electricity
bill, and I found myself out on the stepladder pulling out the
incandescent bulbs and putting in the fluorescent ones
everywhere I can, and I am happy to save myself money.
Do you think that legislation strikes the right balance, or
do you think we should go further in rewarding, at least in the
short term--and maybe it is just in the short term--to educate
Americans and incentivize them to use more efficient
appliances, lighting, consumption of energy in every way?
You talked about CAFE standards. Obviously, that is a big
and a critical one, particularly in the fuel and in the oil
area where, for transportation purposes, oil is where we are
excessively dependent now.
But just my question is how about, I guess, do you think we
have struck the right balance on rewarding efficiency saving in
the renewable legislation that we passed?
Ms. Browner. I think it is absolutely essential that the
country gets on to making a commitment to a national standard.
The States are doing it. They are figuring out how to make it
happen. We have got 20 States now that have embraced some sort
of renewable electricity standards. Obviously, electricity is
different than oil.
One thing, in terms of the right balance, I will just be
pragmatic. It is the right balance if you can pass it. We are
down to sort of it is time to get this passed. I mean, it is
unfortunate that we haven't been able to do it thus far, and I
understand everyone is working hard, but it is time to get it
done.
One thing that I have become increasingly interested in is
how do you reward utilities for efficiency. You know, right
now, if I am running a utility, I make money when I sell
electricity. It is that simple. Now a few States--California
has looked at something called decoupling, but people like Jim
Rogers, who runs one of the biggest east coast utilities, is
talking to the North Carolina PUC about allowing him to make
money when his utility conserves, rewarding conservation by the
utility.
And that may be a way of getting at what you are
suggesting. How you get at it on an individual consumer,
obviously, there are tax credits that could be brought to bear.
But, you know, I am not wedded to one particular answer.
What I am wedded to is let us get a real standard. Let us send
the message to the marketplace that people who make appliances,
the people who use large amounts of utility are going to have
to start thinking differently about what they are doing.
One of the things I learned in 8 years as a regulator is
that once you set that standard, whatever it is, whether it is
a pollution standard, air, water, allowing some flexibility so
that businesses can find the most common-sense, cost-effective
way to get there inevitably gets you a better answer than
government sort of trying to dictate each sort of tiny piece of
the puzzle. Sometimes we need to dictate some of those, because
not everyone is going to follow the path.
But in most instances, if you were to figure out a way, I
think, reward utilities for efficiency, you would be very, very
pleased with the response you would get.
Mr. Shadegg. There are two major public utilities in the
Phoenix metropolitan area. One is an investor owned, and one is
public owned. The public ones have come to see me, and they
have very innovative programs. And they are arguing, yeah, we
have renewable resources we can use here in Arizona, but we
would also like to get rewarded for efficiency. Because they
understand the system incentivizes them to sell.
Admiral Blair, your comments on that point.
Admiral Blair. Yes, sir. I haven't looked at the entire
interconnected energy picture. I am really most concerned about
the amount of petroleum from unstable places, which brings me
to the transportation sector, which brings me to production of
the petroleum and petroleum substitutes and imports.
Mr. Shadegg. I just ran out of time.
The Chairman. The gentleman's time has expired.
The Chair recognizes the gentlelady from California, Ms.
Solis.
Ms. Solis. Thank you. And, again, welcome to our witnesses.
In your scenario, Shockwave, I know you mentioned that you
really didn't have time to do long-term planning. But given
diplomatic or lack of diplomatic efforts, could you shed some
light on that? Because you mentioned in the scenario that Iran
and Venezuela could cut off supplies. What, in your opinion,
can we do to help maybe prepare for these kinds of disasters
that may occur and what steps can we take? Was there anyone
talking about that at all in this role playing?
Ms. Browner. Yeah. At the end--remember, we are doing
``presented with facts''. We don't necessarily have an
explanation for why the particular fact has unfolded. It is
just presented as a fact. We are given the fact that Iran and
Venezuela were doing X, and we had to then quickly respond so
the President could respond to the American people.
When we stepped out of our roles, I think a number of
people from sort of the military side talked about the fact
that how we build relationships, how we maintain relationships
with various regions of the world with various leaders is
absolutely essential. There is no--again, not a single problem
we confronted in this scenario had a perfect answer or a single
answer. All of it was about things you do over a period of
time--in some instances, a very long period of time.
Admiral Blair. I think, Ms. Solis, I draw a contrast
between the way we deal with countries that really don't have
our economic interests in their hand and those who do. And when
I was a commander in the Pacific, we could deal with countries
in southeast Asia, Indonesia, Malaysia, some other problem
countries, and we weren't completely dependent on them for oil
supplies, so we could be a little sophisticated in our dealing
with them. We didn't have to turn to big, expensive, hair-
trigger military options right off the bat.
By way of contrast, when we are dealing with countries who
are controlling important parts of the world oil supply, we
are--we militarize our policy almost by default.
What we feel, if we can drop the oil intensity of the
United States economy, that is the amount of oil to produce
every dollar of GDP and, as Mr. Sensenbrenner said, we dropped
that between--after the first oil problems in the 1970s and the
1980s, but then it leveled out, and we are as dependent, as we
all know, now.
If we can do a combination of conservation and domestic
alternatives, get that down again, then we are not as subject
to being jacked around by these events and by these countries.
So it really is a case of lowering our dependence on this
as an economy to give these people who are in these shockwave
events a little more flexibility so that they can have time to
round up international support, so that they can use other
maneuvers.
It is just getting them on that hair trigger by the
increased demand and the increased dependence that makes it so
brutal when you come to one of these crisis situations like a
pipeline that pops. So it is really that dependence that we
need to work on.
Ms. Solis. I raise that issue because we see a lot of
climatic changes in Latin America, and I want to talk
specifically about Mexico because we do import a lot of
petroleum from Mexico.
There was a very bad flood that occurred in Tabasco where
they have a really large refinery. And I am wondering, things
like that that occur we may not feel immediately, but they will
have an impact a couple of months down the line. And I just
would hope that our leaders, our policymakers would start
thinking about how we can start providing assistance to our
friends, democratically elected governments, that we should be
helping to nurture and doing things in a manner that conserves,
is energy efficient, that has a less negative footprint on the
environment. And I want to throw that out there.
CAFE standards. I had a meeting with some folks from the
Automobile Alliance, and they were trying to explain to me that
really it is about the demand out there, the consumers' thirst
for these pickup trucks. And I just wanted to ask if you could
comment on that, Ms. Browner.
Ms. Browner. I just wanted to remind everybody that the
EPA, which I had the opportunity to run for 8 years, does not
handle CAFE. So I am not familiar about the program from a
regulator perspective but obviously have studied it. It is
handled by the Department of Transportation.
I think the Admiral, as he said earlier, what is important
about a CAFE proposal is that it is car to car. It is not
manufacturer to manufacturer. And so the opportunity for the
American public to continue to look at the vehicles they want
is preserved.
Having said that, again, my experience as a regulator does
tell me that you set the standard, and you know what, good old
American innovation and ingenuity rises to the challenge.
When Congress in 1990 banned chlorofluorocarbons, CFCs,
widely used in refrigeration, people in this body and in the
Senate said, oh, my God. What are we going to do? We are going
to have to drive our cars without air-conditioning. We are not
going to have sort of life as we know it.
Well, guess what? Once Congress said on a date certain, a
company saw an opportunity, brought a technology to the market
for less money, faster than anyone envisioned.
When I set the tailpipe emission standards for diesel
engines--it was one of the last things I did when I was in
office--one of the things we could require was not just clean
sulfur fuel but also there be a catalytic converter put on big
diesel trucks and diesel cars.
Ms. Browner. It did not exist. The scientists and engineers
were still figuring it out. Once they knew there was a
guaranteed market on a date certain, they figured it out pretty
darn quickly. So I never, ever want to underestimate American
innovation and ingenuity. We have a long history of rising to
the challenge.
Ms. Solis. Good point. Thank you very much.
The Chairman. Would you like to add to that, Admiral Blair?
Admiral Blair. Yes, just one thing.
I agree completely with Ms. Browner. I have heard these--I
have talked to the same car companies, and they are saying that
American people do not want more efficient cars; they want more
powerful cars with more cup holders. Therefore, we have to give
it to them. I think, as Ms. Browner says, they are
underestimating what they can produce. I think they are way
underestimating the American public, who understands that we
all need to have cars that are more fuel efficient, even if we
have to sacrifice that top-end performance that we have, but
they need to be told let's all do it together. Let us set a
standard that applies to everybody rather than to one that is
uneven.
I also, frankly, I do not have a lot of sympathy for these
car companies, because the price of that oil that we are using
does not reflect the full price of the American troops who are
doing all of this business around the world. If you factored in
the real price of that oil, it would be huge, and frankly, I am
sorry. It is not up to the car companies to make that judgment.
It is up to the leaders of the American people to make that
judgment.
The Chairman. Thank you.
The gentlelady's time has expired.
The Chair recognizes the gentlelady from Tennessee, Mrs.
Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman.
I thank both of you for being here, and I am listening with
interest to your comments about automobiles and the engineers
who are bringing those forward. As you know, in my district in
Tennessee, the 7th District of Tennessee, we have a good bit of
auto manufacturing both within the district and on the fringes
of the district. I have done a little car shopping lately, and
I have been amazed at how safe cars have become and the safety
features that are included in those cars. I agree with both of
you, and I think that, when our auto engineers in this country,
who are the best in the world, put their minds to it, they will
be able to solve some of these efficiency problems.
Admiral Blair, as you were saying, the market needs to
tell--the American people need to say this is something that we
are looking for and that we want. I remember the gas crisis of
the 1970s and what we went through there. I was a new mom with
a new baby, and I remember what we were dealing with with those
gas lines. So let me ask each of you:
How do you think the American public would respond to
rationing if we were to go through an oil crisis? We are
looking at back to the first of the year where we had $2.29 a
gallon, and now the average price in the country, I think, was
at $3.01 this morning. We have watched a barrel of oil since
the first of the year go from $55 to this morning when, I
think, the Asian markets opened at $98 a barrel. So you are
looking at a 75 percent increase in the cost of a barrel. You
are looking at a 34 percent increase at the pump.
So, if we were to move to rationing, in your opinion, how
do you think the American people would respond to that?
Likewise, what do you think would happen with our domestic
supplies if we only used our supplies and those of our close
allies like Mexico and Canada, who are our two largest oil
trading partners?
Ms. Browner. Well, if you only use our supplies and
Mexico's and Canada's, you would be in oil rationing. You would
not have a choice. You would be there.
Mrs. Blackburn. How do you think the American people would
respond?
Ms. Browner. I will be honest with you. I do not think, at
this point in time, particularly well, and I think that is
because, while individual families and Americans, in my
experience, are always prepared to do their part to solve a
problem, they want to know that the companies that make the
products are also doing their part. You know, I think there is
a frustration that the American people have that they cannot
get more fuel-efficient cars.
Having said that, several manufacturers are now bringing to
market the clean diesel engines which can get in a mid to--I do
not know how you size cars--but in a sedan, I mean, a sedan
that seats comfortably four and five people. You can get 32 to
38 miles per gallon in a sedan with a clean diesel fuel, and
those are becoming more and more attractive to people. So, when
offered a more efficient car within a class, people are looking
at them and are starting--you know, they are expensive right
now. They will come down. They are only in certain high-end
cars, but I think Ford is going to bring one to market in the
not too distant future.
So, you know, my experience is that, as people become
better educated and as there are more options, they will
gravitate toward things that they think are good for their
families, are good for their families' pocketbooks and for the
environment of their communities.
Mrs. Blackburn. Admiral Blair.
Admiral Blair. Yes.
I think the American people have two reactions to that
scenario that you have sketched out.
Number 1, they would be angry, frustrated and looking for
what got them into that fix. Number 2, they would roll up their
sleeves, and they would do what had to be done to make it
better, to work their way out of it.
I guess my feeling is, since we know that now, why don't we
take the actions now to avoid that crisis because we know it
would be so much harder on us if we brought it to that point.
Mrs. Blackburn. You are right, and changed habits is a big
part of that and looking at changed habits. Let me ask you
something in regard to that changing of habits.
You know, right now, we do a lot of transport by truck
across our Nation's highways, and I was reading something the
other day about the efficiencies of rail.
Do you all see any--and I am about out of time, but I would
love to hear what your thoughts are about moving more of our
movement of goods and commodities to rail and taking it off the
highways. Any thoughts there?
Ms. Browner. I, certainly, think it is something that needs
to be considered, and the rail industry has been out there
promoting what they can do.
The one note I would just add to it is, you know, again, we
are thinking here today about sort of a short-term oil shock,
but we should always be thinking about what else could happen.
So, for example, in a shift from one form of transportation to
another, what does that do in terms of greenhouse gas
emissions? What does that do in terms of conventional
pollutants? I am not suggesting that rail creates a problem. I
do not know the answer. It would be something worth
understanding.
Admiral Blair. Part of our proposals were that fuel-
efficiency standards should be applied to trucks as well as to
cars, and we should make the trucks that we have more efficient
also by applying the same sort of technology to them as we do
to cars, and we should raise the fuel efficiency standard of
our trucks as well as to our cars.
Mrs. Blackburn. Rail, do you see that as an option?
Admiral Blair. I think then that the market would make the
right adjustments, but I think we should work on the truck
sector as well.
Mrs. Blackburn. Thank you.
I yield back.
The Chairman. The gentlelady's time has expired.
The Chair recognizes the gentleman from New York, Mr. Hall.
Mr. Hall. Thank you, Mr. Chairman, and thank you for
holding this hearing.
Thank you to both of our excellent witnesses.
I did, actually, write that song in 1978 that started out
``just give me the warm power of the sun; give me the restless
power of the wind,'' et cetera.
I also wish that we, as a country, had started doing those
things, including conservation and all the renewables that were
available then, and we would be in a much different position
today.
Admiral, you talked about being ``jacked around'' by
countries that we used to have a freer hand to deal with. You
know, it seems to me that our options diplomatically or
economically had been limited in terms of how we deal, for
instance, with Saudi Arabia on one hand and China on the other
hand.
Is that what you would call a ``loss of sovereignty''?
Admiral Blair. Absolutely. The more you are constrained
because of your dependence on another country, the more
sovereignty you have lost.
Mr. Hall. Yes. It seems to me like we are going down a road
where residents of this country, where citizens of the United
States, have never understood what it is like to be in a
position like Brazil was in in the 1970s, for instance, where
the world financial markets dictated to them certain things
they had to do or else they would not get their next round of
debt floated. So I think we need to be aware of that, that oil
and our consumption of oil, is putting us in that position.
Admiral Blair. I think that is absolutely right.
Some of that came up in these simulations when the
Secretary of State said in the simulation, ``Well, I went to
country X, and asked them if they would increase their amount
of oil, and country X said, `Yes, I can do that, but there are
a couple of things I want from you, United States. I want you
to lay off hitting me on this policy that I am doing. I want
you to make this concession.' '' So it puts us in the position
of having to spend some of our blue chips to get some of
theirs, and we would just as soon not be there.
Mr. Hall. Sir, my point is--and I think you are agreeing
with me, and I am agreeing with both of you here--that what
your simulation showed is, in fact, happening already,
tangibly, that we are in a national security and sovereignty
emergency, that we are only recognizing, unfortunately, the
public end, you know, and that perhaps our political leaders
are only starting to get a handle on how fragile our situation
is.
Admiral, you talked about oil being a fungible commodity.
Would you agree that, to a large extent, conservation is also
fungible but that saving energy anywhere frees up other energy
somewhere else, I mean, understanding that liquid fuels are
different from electricity to the extent that hybrids or plug-
in hybrids or biofuels or the conservation of any of the above
will free up more oil?
Admiral Blair. It is not completely fungible. Turning down
your thermostat does not mean you import less oil
automatically.
Mr. Hall. Unless you are burning oil at home.
Admiral Blair. What we are mainly concerned about, as I
say, is the oil sector, but it is headed in the same direction.
Mr. Hall. Okay. Good.
Regarding demand, my colleague from Tennessee was talking
about demand, and her point is good. I just wanted to add to
that my observations, from watching what little hours of
television I have time to watch, that the advertising--and I
have experience in the advertising industry as well. I have had
songs used for advertisements, and I have always watched them,
you know, with that sort of professional eye.
It seems to me that Detroit is advertising power and speed
and style and is not advertising efficiency. Take notes, and
just make it a project one night to sit in front of the TV, and
every time a car ad comes on, make a note of what kind of car
is being advertised and whether they are touting efficiency and
reliability or whether they are touting sexiness and speed and
340 horsepower to leap out at the stop sign or at the merge
ramp.
I am driving by choice. Although I could have gone with an
import and could have gotten 20 more miles per gallon, I am
driving a--my own personal car is a Detroit-made, union-built
hybrid, full-time, four-wheel drive SUV, which is rated at 33
miles per gallon and would get better than that if you would
drive it at 55 miles per gallon and stay in the right lane and
let people whiz by you and take it easy going out from the stop
signs or from the stoplights. If you step on it and drive
angrily, you are getting into the 20's.
So I just wanted to throw that in and say your suggestion
of a possible national speed limit again is something that I
believe, you know, we should be considering, but it is going to
take--basically what you are talking about is leadership, I
mean as I hear it, that everybody needs to feel that the
sacrifice is shared, and the only way that that is likely to
happen is to have it come from a strong statement of the
leadership of our country that we are now all approaching this
together and are sharing the burden.
I am sorry to talk so much and ask so few questions.
My time has expired. Mr. Chairman, I yield.
The Chairman. The gentleman's time has expired.
The Chair recognizes the gentleman from Connecticut, Mr.
Larson.
Mr. Larson. Thank you, Mr. Chairman.
I want to thank both the Admiral and Ms. Browner for being
here.
Let me go on record as saying that I think that the
scenarios can be very useful and instructive, but I want to
acknowledge right from the outset that, because of his Martin
Sheen-like qualities, I think Ed Markey should be cast as
President of the United States as a role befitting the chairman
of the committee. Now, some may say isn't that a patently
suckup move? Yes, it is, and so I hope that my legislation will
be considered in order when the day arrives.
Admiral, you mentioned something very interesting in the
scenarios as it was laid out and, as I understand it, with the
consequences confronting you with the potential shutoff of
supplies from Iran and Venezuela. Here is my question.
In a situation such as that, you said that, by virtue of
the fact that we are dealing with unfriendly States, that it
almost becomes a de facto military situation. So the question
is: In the scenario, where would the military deem to strike,
if necessary, to recapture supplies--in this hemisphere or in
the Middle East?
Then bringing it to reality because, I think, that is what
makes these useful, should Americans be concerned when we have,
yet, another battle group doing maneuvers in the Persian Gulf?
Admiral Blair. I think the connection between the military
force and oil supplies is a little more subtle than that. We do
not go in and take over oil fields and sort of run them with
soldiers and with contractors. That is not really the point. I
do not think we invaded Iraq to get their oil.
What I am saying is the fact that that region supplies a
commodity, which is so fundamentally important to the United
States, means that the United States is intellectively involved
in the affairs of that region and will have to have a much
deeper involvement in them so that, when one State threatens
another or invades another as Iraq invaded Kuwait back in 1991,
an issue in which military force clearly has an application, we
will do it; we will use military force there.
The military situations that clearly call for a military
response in that part of the world are threatening to and
closing the Strait of Hormuz, the scenario that we had in the
tanker wars in the mid-1980s when both Iraq and Iran were
attacking oil tankers, and we ended up reflagging and escorting
them.
So it is not so much that, militarily, we go in and take
over oil fields, which is not a very useful alternative. It is
that we are in the region, and when military force is used, the
United States has got to consider what we do with our forces,
and we kind of get sucked into it the way that we have over
time.
What I think is going on here is that, if the United States
has a very great vulnerability of short-term interruptions in
countries like Venezuela and Iran, who are no friends of this
country, they can sort of throttle back for a while. It does
not hurt them very badly. It hurts us. It gives them advantages
across the board in dealing with their interests as opposed to
ours, which result in change.
Mr. Larson. So these maneuvers in the Persian Gulf should
be viewed as saber rattling to assist in diplomacy or are they
concerns that Members of Congress in any scenario should be
very much aware of?
Admiral Blair. I took the uniform off 5 years ago. It was
not my area, and we have got good people who took our places
there, and I think you need to talk to them.
Mr. Larson. And you said you were not a good politician.
Ms. Browner. If I might just note, in this scenario, one of
the things that did unfold from, I think it was, the Secretary
of Defense was a question for the President.
Should we change the Selective Service registration
requirements to capture women? Secondly, should we begin
thinking about some form of a draft? Because the concern in the
scenario that he was bringing to the table is that the military
is stretched very, very thin.
I might also note that, in this scenario, the President is
not in the room. There is sort of an Oz-esque figure behind a
curtain, so Mr. Markey would have to peek in occasionally, but
you would be a great Secretary of Treasury.
The Chairman. Well, I was thinking of letting him, Mr.
Larson, be Vice President so then it could reflect the real
power in the United States anyway.
The gentleman's time has expired.
So the Chair recognizes himself for a round of questions.
Under your scenario, only 1 percent of the world's oil
supply is taken off the market. It leads to $160-a-barrel oil.
It leads to the collapse of the economy.
What is it that has led to having the oil markets become so
tight that they can have such a profound impact in such a short
period of time?
Ms. Browner. Well, I think, in that scenario, it is a
combination of factors, but certainly, the failure of
efficiency, the failure to drive down the amount of oil we use
on a daily basis becomes pretty important because while the
actual number--it ends up at about 1 billion barrels a day.
That is not an amount that cannot be addressed through some
prudent steps taken, you know, sooner rather than later.
Admiral Blair. On that, I agree with you, Mr. Chairman.
That was sort of a surprising effect. You would think, on a
percentage basis, it would not be that big. The gameplay for
that result was done by a highly-respected, Canadian energy
consulting company that we fed the information to and then
asked them ``Okay. What did that do to the price of barrels?''
They ran their quantitative models, in their judgment.
What I think was at play there was that, with the oil
market so tight in the future primarily because of the
increases in non-U.S. production, India and China are leading
it. You find that non-U.S. oil demand goes up 38 percent over,
maybe, the next 5 years; whereas, U.S. demand goes up about 24
percent. That is just making the oil market so tight that the
power of expectations comes to play, and even relatively small
tremors make people worry about the future. Therefore, they
want to ensure their own supplies, and they bid up prices. So
you are just in this trigger in which a relatively small rock
in the pond has pretty big ripples.
The Chairman. So you talk in your testimony, Admiral, about
our ever-growing military presence in the Middle East.
Could you give us some sense of how you feel, for example,
as to how this growing dependence upon oil affects our
relationship with Saudi Arabia?
Admiral Blair. I think it gives Saudi Arabia much greater
leverage in its dealings with us, and it is no secret that
there are a lot of aspects of Saudi Arabia in the future that
we have real concerns about, and when you are that much--when a
country with those sorts of challenges has that much of a thumb
on you, it causes concern. So it is not a whole lot more
complicated than that, Mr. Chairman.
The Chairman. So the language that you both made reference
to, the 35 miles per gallon by 2020, actually backs out the
equivalent of all of the oil that we import from the Persian
Gulf on a daily basis by 2020.
How important is that, Admiral?
Admiral Blair. I think that would just put us in a lot
better position to be able to deal in a more balanced manner
with Saudi Arabia. I think it would have made the position of
those people in the shockwave much, much easier.
The Chairman. Ms. Browner, can you talk to this issue of
the 35-mile-per-gallon standard by 2020 and how important you
think it is for the Congress to pass that this year?
Ms. Browner. It is absolutely essential. We have got to get
on with doing this. As I said in my opening statement, this is
the second time I have participated in one of these. The last
was several years ago. The message from both of them was
identical, that taking steps sooner rather than later is key to
these problems.
In the case of CAFE and the proposal that the Senate has
passed, it would have solved the problem that we were
confronting. It was not as if this scenario was designed to
then conclude, well, you should have passed CAFE. It was just
the fact of, when you go back and look at how it unfolded, that
is one of the easiest ways, actually, to have solved the
problem.
The Chairman. Admiral, are you convinced that we can
improve the efficiency without compromising the safety of the
American people in terms of the vehicles which they drive?
Admiral Blair. Yes, sir, I am.
I tell you the strongest technical support for that
judgment was our updating of a study done back in 2002 by the
National Academy of Sciences, which looked at existing--we, the
Securing America's Future Energy Project asked the office to
update it to about 2000, 2005.
Are there available technologies which can influence and
which can improve sufficiency without sacrificing safety? The
answer from these technical experts was, unambiguously, yes, it
could. That was even without considering hybrids and some
other, more recent technologies. So I think the technical
answer is, yes, it can be done, and it should be done.
Another part of our proposal was that what if we are wrong?
What if this is resulting in unsafe vehicles? We provided in
our recommendations that the National Highway Traffic Safety
Administration have the authority to be able to waive standards
based on sound technical arguments having to do with safety and
with the economy, but we think the burden of proof ought to be
put on people saying why they cannot do it rather than why they
can, which is sort of where it is now. What you hear from the
auto companies, you know, is American consumers do not want it,
you know, blah, blah, blah. So we think we ought to shift the
burden in the other direction.
The Chairman. Ms. Browner.
Ms. Browner. You know, at the EPA, I, obviously, got the
chance to regulate the automotive industry, and they always
said no, no, no, no, no. Then they always turned around and did
it. I think, you know, Mr. Chairman, with your leadership on
CAFE and with your proposal on CAFE and with the Senate
proposal, there is no doubt in my mind that they can do it.
They will complain loudly, but they will end up being able to
do it.
The Chairman. So my time has expired.
Let us do this. I apologize to you. President Sarkozy of
France is about to address the House, and that is why the
Members have been leaving, because he is going to come out onto
the House floor in the next 15 to 20 minutes, so the Members
have been leaving for that purpose, and we had to move the
hearing up in order to accommodate that as well.
So what I would like from each of you is if you could give
us your take-away message, what it is that you want us to
remember over these next 4 weeks, especially as we consider
this energy bill, which is pending before the House and the
Senate, as we have this opportunity to pass the largest and the
most important energy bill in the last 30 years in the United
States Congress and as the world convenes in Bali in 1 month to
talk about the relationship between energy and climate, and as
Al Gore also goes to receive the Nobel Peace Prize. The world
is speaking to the United States in a lot of ways through that
prize.
Could you each give us your take-away message for the
Congress as we reach this final 4 weeks?
Admiral Blair.
Admiral Blair. Yes, sir.
My take-away message would be to pass this bill with
conservation members, to pop your champagne, but please do not
stop there. Go on to the other aspects of a comprehensive
solution having to do with supply, having to do with
alternatives, and keep on with steady pressure to have a
comprehensive strategy, but nail down that first step, which is
passing this bill which the Senate has passed.
The Chairman. Okay. Ms. Browner.
Ms. Browner. Please, I ask you to please pass the bill. You
know, this is a great, important moment, I think, in our
history. I agree with the Admiral. It is a first step. There
will be other steps we need to take, but it is an absolutely
essential step. We need to get started. We need to get started
on more fuel-efficient cars. We need to get started on
renewable electricity standards.
Mr. Chairman, the leadership that you and the members of
this committee have brought to this debate is remarkable, and I
feel like we are just sort of sitting on the edge of something
really great that is beginning. There will be a lot more to do.
Obviously, greenhouse gas emissions and carbon are going to be
important, but if we could get this done and if we could say to
the American people, you know, our leaders want to do something
and they want to work with you for a better future, it would be
wonderful.
The Chairman. Thank you, Ms. Browner.
This issue really is reaching the point of decision.
Speaker Pelosi, in January of this year, created this Select
Committee on Energy Independence and Global Warming as her only
select committee during the 2 years that she will be in her
first term as Speaker.
So, clearly, this is something that is very important to
her. It is now, as each day goes by, becoming increasingly
important to the American economy as well in addition to the
security of our country and of the climate.
On Monday of this week, we had 5,500 young people--young
leaders--from across the country come to Washington. They were
presidents of their senior class, the heads of their
environmental movements on campus. We had that hearing in the
Ways and Means main committee room. 700 young people were
packing that room with thousands of others surrounding the
Longworth Building as they were testifying about the
responsibility that this generation has to their generation,
the green generation, to solve this problem. So we need to play
our part in passing this first step and in beginning the
process of reversing this dependence upon imported oil and
fossil fuels.
We thank you both for your leadership on this issue.
With that, this hearing is adjourned.
[Whereupon, at 10:35 a.m., the committee was adjourned.]
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