[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

                              ----------                              
                                                                   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

                              ----------                              


                      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:]


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    [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:]

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    [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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