[Senate Hearing 110-1023]
[From the U.S. Government Publishing Office]
S. Hrg. 110-1023
ENERGY SECURITY: AN AMERICAN IMPERATIVE
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HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
JULY 22, 2008
__________
Available via http://www.gpoaccess.gov/congress/index.html
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana TOM COBURN, Oklahoma
BARACK OBAMA, Illinois PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri JOHN WARNER, Virginia
JON TESTER, Montana JOHN E. SUNUNU, New Hampshire
Michael L. Alexander, Staff Director
David McIntosh, Legislative Assistant, Office of Senator Lieberman
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Amy B. Carroll, Minority Professional Staff Member
Trina Driessnack Tyrer, Chief Clerk
Patricia R. Hogan, Publications Clerk and GPO Detailee
Laura W. Kilbride, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Lieberman............................................ 1
Senator Collins.............................................. 2
Senator Voinovich............................................ 11
Senator Domenici............................................. 13
WITNESSES
Tuesday, July 22, 2008
T. Boone Pickens, Founder and Chief Executive Officer, BP Capital
Management..................................................... 4
Gal Luft, Ph.D., Executive Director, Institute for the Analysis
of Global Security, and Co-Founder, Set America Free Coalition. 25
Geoffrey Anderson, President and Chief Executive Officer, Smart
Growth America................................................. 28
Habib J. Dagher, Ph.D., Director, Advanced Structures and
Composites Laboratory, University of Maine..................... 31
Alphabetical List of Witnesses
Anderson, Geoffrey:
Testimony.................................................... 28
Prepared statement........................................... 64
Dagher, Habib J., Ph.D.:
Testimony.................................................... 31
Prepared statement........................................... 71
Luft, Gal, Ph.D.:
Testimony.................................................... 25
Prepared statement........................................... 58
Pickens, T. Boone:
Testimony.................................................... 4
Prepared statement with attachments.......................... 41
APPENDIX
Deutsche Bank's Report titled ``From Shale to Shining Shale,''
submitted by Mr. Pickens....................................... 125
ENERGY SECURITY: AN AMERICAN IMPERATIVE
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TUESDAY, JULY 22, 2008
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 9:35 a.m., in
room SD-106, Dirksen Senate Office Building, Hon. Joseph I.
Lieberman, Chairman of the Committee, presiding.
Present: Senators Lieberman, Carper, Collins, Voinovich,
and Domenici.
OPENING STATEMENT OF CHAIRMAN LIEBERMAN
Chairman Lieberman. The hearing will come to order. Thank
you very much for being here. Good morning and welcome to this
hearing, which is entitled ``Energy Security: An American
Imperative.''
The high price of gasoline today is literally wounding
American families, businesses, and farmers, and it is causing
the American economy to stagger. It threatens to impose
terrible hardship this winter on families in places like New
England that rely heavily on home heating oil.
The near total dependence of our economy, the energy sector
of it--and particularly the transportation sector--on oil is
weakening our Nation's position in the world while enriching
and strengthening a lot of countries in the rest of the world,
many of them volatile and some of them just plain hostile to
the United States of America.
For well over a generation, America's leaders have seen
this growing dependence on foreign oil but essentially sat back
and watched passively as trillions of dollars of our American,
hard-earned wealth has been used to buy that oil and thereby go
to countries abroad. And during that more than a generation,
America's leaders have done little or nothing about that
problem. Apparently, it took $4-a-gallon gasoline to wake up
the American people and their leaders here in Washington, to
make all of us angry and anxious enough to get serious about
breaking our national dependency on foreign oil.
And at this moment of crisis and opportunity in America, T.
Boone Pickens comes on to the national stage with a classically
American message of honesty, determination, and can-do
optimism. He said some things in that advertisement on
television that I think are going to be long remembered and
that have aroused a lot of Americans, who, like him, are sick
of talk and want some action. I, for one, as a Senator who has
been here for a while, have been very pleased with what T.
Boone Pickens has done. And he is not just talk. He has offered
us a plan--the Pickens Plan--which has been described,
accurately, I believe, as a sweeping and innovative action
program to loosen the grip that oil has on America.
The Pickens Plan has attracted attention, in part, because
the author of the strategy to cut our reliance on oil is
himself a legendary oil man. It has also attracted attention
because T. Boone Pickens has invested a large amount of his own
money to educate the public about the crisis and his proposed
response to it. But, most important, I think, the plan has
attracted attention because it is bold.
I am very pleased to have Mr. Pickens here as a witness
today. Frankly, I am pleased because I hope his boldness will
infect a lot of other people here in Washington with the power
to do something about it so that we will be motivated to come
together, forget our political differences, and do what is
right for our country by getting something big done to break
our dependence on foreign oil.
We have taken incremental steps over the years, and I have
supported them. But the fact is they are woefully inadequate to
the crisis that America faces. I, for one, am spoiling for some
bold T. Boone Pickens-type action, and I know I am not alone.
We have a second panel that will testify today--three
witnesses who, like Mr. Pickens, are well positioned to
recommend strong steps that can enhance U.S. energy security
and lift an economic burden from American families, farmers,
and businesses.
Immediately after this hearing, Senator Collins and I are
going to join Senators Brownback and Salazar in taking one such
bipartisan step. We are going to introduce a bill called the
Open Fuel Standard Act. One of our witnesses, Dr. Luft, has
helped craft that bill, and I would not be surprised if he
discusses it this morning. For me, this morning's hearing
provides an important opportunity to listen, learn, and then,
together, act.
Senator Collins.
OPENING STATEMENT OF SENATOR COLLINS
Senator Collins. Thank you, Mr. Chairman.
First, let me thank you for holding this hearing this
morning. You and I have worked on a lot of important issues
together, and I believe that our undertaking this hearing is
one of the most important, for the fact is that our Nation
faces an energy crisis.
The soaring price of oil is causing great harm to our
economy, from the major industries that move our Nation to the
small businesses that are the backbone of our communities. As I
travel throughout Maine, I hear time and again of the hardship
the skyrocketing cost of gasoline and home heating oil is
causing families.
Although it is still summer, Mainers are deeply worried
about how they will stay warm this winter. One woman told me
that every month, half of her Social Security check goes to
meeting the budget plan for her home heating oil. She is
literally choosing between keeping warm and eating well, a
choice that no American should ever have to make.
Beyond the impact on countless families struggling with
high costs, our growing dependence on foreign oil is a threat
to our national and economic security. One of our witnesses,
Mr. Pickens, has vividly illustrated our ever-increasing
dependence on foreign sources of oil in the Middle East and
Venezuela. We are impoverishing ourselves while enriching
regimes that are in many cases hostile to America. Ending our
dependence on foreign oil and securing our own energy future is
an American imperative.
Our Nation must embrace a comprehensive strategy to reduce,
and ultimately eliminate, our reliance on Middle East oil. We
must expand and diversify American energy resources, and while
doing so, improve our environment.
To understand how we can meet the challenge of energy
security, we can look back a half-century ago to another time
when our Nation faced a great test. On October 4, 1957, America
was in shock. We were stunned by an object the size of a beach
ball, weighing just 184 pounds. That object was the Soviet
satellite called ``Sputnik.''
We responded not by giving up, but with our own satellite
launches and later an energetic commitment to land a man on the
Moon. A strong partnership of government, research
institutions, universities, and the private sector formed to
support a bold new initiative in scientific advancement. And,
as a result, in 1969, an American flag flew on the Moon.
The most remarkable aspect of that story is not that
America met a challenge by developing superior technology, but
that we embarked on that journey confident that the American
spirit and know-how would triumph.
By contrast, our Nation missed an enormous opportunity on
another October day 35 years ago. On October 17, 1973, the
Organization of Arab Petroleum Exporting Countries, the
predecessor of the Organization of Petroleum Exporting
Countries (OPEC), hit the United States with an oil embargo.
The immediate results were soaring gasoline prices, fuel
shortages, lines at filling stations, and an economic
recession.
Unfortunately, after the immediate crisis passed, the long-
term result was a steady increase in oil imports and a
dependence that worsens each day. The 1973 embargo was a wake-
up call that we failed to heed. The current crisis is a fire
alarm that we must not ignore.
Meeting this challenge requires the skills and commitment
that we see in our line-up of witnesses today--the
entrepreneurial spirit of the private sector, an understanding
of the specific economic and environmental issues at stake, and
a commitment to the research and development of new
technologies in all regions of our country.
It also requires action by government. From establishing a
timeline for energy security to undertaking critical
investments to stimulate research in alternatives to expanding
the production and conservation tax credits, government has a
critical role to play.
Above all, we must follow through. Let me give my
colleagues one example of the lack of resolve that has been all
too common for all too long.
The easternmost city in the United States is Eastport,
Maine. Visit this pretty little city, and you will find the
remnants of a tidal power project initiated in the 1930s by
President Franklin Roosevelt, who grew up observing the
incredible tidal range there from his family's summer home on
Campobello Island, across the bay in New Brunswick. Causeways
to impound the water to turn the generators were built, as was
housing for thousands of construction workers. Then, after just
2 years of preliminary work, Congress pulled the plug and
canceled the project.
Why? Because Congress decided that it would be cheaper and
easier to rely on conventional, fossil fuel generation closer
to the population centers of southern New England. The
challenges of building a transmission system to connect this
rural region of Maine to the cities were deemed not worth the
effort. Federal and State authorities failed to cooperate. The
project was abandoned.
The technology of generators to tap tidal power has
advanced greatly since the 1930s. Regrettably, the need for
government to be more farsighted has not.
I have called for American energy independence by the year
2020, the same 12-year time frame that elapsed between Sputnik
and Apollo 11. Some experts believe that such a goal is too
ambitious, but I know that no goal is ever reached without
first being set. Just as the America of a half-century ago
boldly stated its intentions to reach the moon, we must now
declare our intention to achieve energy independence and energy
security.
Today, we will hear four proposals for improving America's
energy security. I welcome Mr. Pickens to his first appearance
on Capitol Hill since he unveiled his comprehensive plan to
bolster America's energy security. Dr. Luft and Mr. Anderson
will discuss transportation and community planning. And I am
particularly pleased to welcome an engineering professor with
whom I have worked closely, Dr. Habib Dagher of the University
of Maine. I know that the Committee will be very interested in
his presentation on harnessing the power of winds offshore and
geothermal energy underground. Our witnesses will provide
invaluable perspective on how we can progress toward a goal
that is truly the new American imperative.
Thank you, Mr. Chairman.
Chairman Lieberman. Thank you, Senator Collins, for that
excellent statement and, if I may say so, for your own bold
plan and proposal.
Mr. Pickens, thanks very much for being here. Thanks for
this extraordinary act of leadership, I would say patriotism.
The Committee looks forward to hearing your testimony now.
TESTIMONY OF T. BOONE PICKENS,\1\ FOUNDER AND CHIEF EXECUTIVE
OFFICER, BP CAPITAL MANAGEMENT
Mr. Pickens. Chairman Lieberman, Ranking Member Collins,
and Members of the Committee, thank you for having me here
today. We are more fragile today from a national security
standpoint than we have been since World War II. The danger
stems from our overwhelming $700 billion dependency on foreign
oil annually.
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\1\ The prepared statement of Mr. Pickens appears in the Appendix
on page 41.
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In 1945, we were exporting oil to our allies. By 1970, we
were importing 24 percent of our oil. By the 1980s, it was 37
percent. And in 1991, during the Gulf War, it was 42 percent.
Today, we are approaching 70 percent.
Much of our dependency is on oil from countries that are
not friendly, and some would even like to see us fail as a
democracy and as the leader of the free world. I am convinced
we are paying for both sides of the Iraq war. We are giving
them tools to accomplish their mission without ever having to
do anything but sell us oil.
This is more than a disturbing trend line. It is a recipe
for national disaster. It has gone on for 40 years now. This is
a crisis that cannot be left to the next generation to solve,
and it is a shame if we do not do something about it. And we
can, without bringing our economy and way of life to a halt.
I have been traveling the country with a simple message.
Our country is in a deep hole, and it is time to stop digging.
I have a plan to do just that. The response from the American
people has been overwhelmingly positive, and I have talked to a
lot of people.
The Pickens Plan starts with harnessing wind and building
solar capabilities. We are blessed with some of the best wind
and solar resources in the world. The Department of Energy
estimates that we can produce 22 percent of our country's
electrical energy needs just by utilizing the wind resources in
the Great Plains. And, actually, if you wanted to go beyond 22
percent, you could go to 40, 60, 80, whatever you want. That
resource is unlimited. The plan substitutes electricity
generated by natural gas-fired plants with wind-generated
electricity. Natural gas-fired is 22 percent; the wind is going
to replace that 22 percent.
The natural gas freed up is directed to transportation
needs of the country. The natural gas is cheaper, cleaner than
gasoline, and its supply is plentiful. And, most of all, it is
American.
The Deutsche Bank today released a 50-page report,\1\ which
is called ``From Shale to Shining Shale.'' What they are
telling us is that there is a huge amount of shale gas
available to us in the United States. Don't confuse this with
the oil shale that is on the western slope of the Rocky
Mountains. It is not the same geological situation.
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\1\ The Deutsche Bank report referenced by Mr. Pickens appears in
the Appendix on page 125.
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The result would be a reduction of our dependency on
imported oil by 38 percent. This plan is based on proven,
existing technologies. It is simple, and it is doable. It
provides a significant bridge--``bridge'' underlined--to the
future that gives us time to develop the next generation of
alternative fuels, including electric or hydrogen vehicles. It
results in revitalizing much of rural America; $1 trillion of
private investment would go into the Great Plains of this
country. Instead of enriching other nations, we would actually
recover our rural areas. It can be accomplished with private
investment, but it cannot be achieved unless our national
government clears the way for action.
Government should move immediately to build the east-west
transmission corridor to ensure wind power gets to market. This
would include transmission rights-of-way. I envision this could
be like in the Eisenhower Administration when they declared an
emergency and built the interstate highway system. The way I
recall it--and I have been around for a long time, so I should
be able to recall it--there was an emergency because of the
Cold War, and it was a way to move, if we had to move rapidly,
our military.
But I also feel that this is an emergency, too, and believe
maybe that could be the approach as it has to be done quickly
because we are pressed by not only the 70 percent we are
dependent on foreign oil, but the $700 billion a year that we
are pouring out. And I am convinced that $700 billion is a
minimum number because I think the price of oil is going to go
up. I would project out for 10 years it is going to cost us--if
we continue on the same route that we are on now, we will have
bought $10 trillion worth of oil from foreign producers.
Government must extend for at least 10 years the production tax
credits (PTCs). The cost pales in comparison to the cost of
foreign oil.
Let me quickly address what I call the five Pickens
principles that should be used to assess any of the energy
plans brought before you.
First, the plan has to slash our dependence on foreign oil
by at least 30 percent in 10 years.
Second, the plan needs to rely on 100 percent North
American resources.
Third, the plan needs to utilize existing and proven
alternatives to foreign oil.
Fourth, the plan needs to call on private enterprise to
execute quickly.
Finally, the plan requires the Federal Government to clear
the path for implementation.
We have walked into a trap, and we have got to get out of
it. We are the ones that put ourselves there. Nobody else. I am
not pointing the finger at anybody. It is not going to help.
But we have to work together and solve this national security
crisis together. Thank you.
Chairman Lieberman. Thank you, sir. That was an excellent
beginning.
We will do 6-minute rounds so we can get as many Senators
involved as possible.
Focus in, if you will, on exactly what you would like to
see the Federal Government do to play its part in the
implementation of the Pickens Plan. In other words, what are
the kinds of tax credits, for instance, that you would like to
see us adopt?
Mr. Pickens. OK, let me identify--I will answer all
questions. You know that. But I would like to comment that our
problem and the reason why we have not done the things that we
should have done to protect ourselves is because of cheap oil.
And we sat here and really said, ``Send us the oil. Never mind
the price.''
Chairman Lieberman. Right.
Mr. Pickens. Then the price went vertical, and when it did,
everybody said, ``I can't stand it. I didn't know I was signing
up for this.''
And so here we are, and we can expect that price to remain
vertical. It will maybe plateau and go again, but I promise
you, the people that have the oil are going to get the best
price they can for it. I do not care what they say. I do not
believe them. I do not believe when they say we want to
stabilize prices. When Russia, the largest producer with Saudi
Arabia, both about 9 million barrels a day, are having meetings
to stabilize the price, I do not think that is what they are
talking about.
Chairman Lieberman. I think you are right.
Mr. Pickens. And here we are, we are the odd man out in the
deal.
The PTCs for 200,000 megawatts of power, the PTCs for that
would be $15 billion a year, and that would start it moving.
Now, I know you are struggling with the PTCs now, and it
expires in December, and you extend it one year at a time. To
stabilize the opportunity, to cause the money to come into it,
you should give a 10-year extension of the PTCs. But when you
look at $700 billion going out of the country every year for
the purchase of oil, a $15 billion PTCs is somewhat
insignificant.
Chairman Lieberman. Right.
Mr. Pickens. I am not saying throw money away. You know
that. But the $700 billion is so overpowering. But, anyway, 10
years with the PTCs----
Chairman Lieberman. Would you change it at all from the way
it is structured now to incentivize, for instance, wind and
solar?
Mr. Pickens. I am sorry. I cannot answer that. I am not
that familiar with what the----
Chairman Lieberman. Good enough. So you are saying lock in
the production tax credit for a 10-year period so people can
count on it.
Mr. Pickens. Yes.
Chairman Lieberman. And be prepared to put in $15 billion
into that a year.
Mr. Pickens. Right. And what will happen, I believe--and I
have heard this, too, from some of the manufacturing companies
that would like to be involved in developing some of this. They
say if we could have PTCs for 10 years, we can move into the
area, and we can develop this.
Now, let me give you an example. I am doing the largest
wind farm in the world at Pampa, Texas. It is 4,000 megawatts.
That is about the equivalent of two and a half nuclear plants.
We will have manufacturing there. We had an economic study, and
it would create 1,500 jobs for that area. And it amounts to
$380 million a year in economic benefit to that.
And you can just see, I mean, the model town for this is
Sweetwater, Texas. The town's population was 12,000, and it
went below 10,000. Now it is above 12,000. Over 20 percent of
the jobs there are related to wind energy. And you can see, I
mean, it is a model that--it is not something that we studied
and believed would happen. We know it will happen.
Chairman Lieberman. In other words, it is real.
Mr. Pickens. It is real.
Chairman Lieberman. Some people are still coming around to
the point that they think wind energy, and even solar, is a
little bit flaky or a vision. But I have never associated the
word ``flaky'' with you, now that I think about it. [Laughter.]
But we know it works.
Mr. Pickens. We know it works. And, if you look at the most
wind energy per size of country, it is Germany. And Germany
does not even have good wind. We have fabulous wind. I would
like to ask you to look at the map on the right.\1\
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\1\ The posters referenced by Mr. Pickens appear in the Appendix on
page 53.
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Chairman Lieberman. Yes. We have copies of that up here.
Mr. Pickens. Yes, you have it in front of you there.
Chairman Lieberman. Yes, we do.
Mr. Pickens. But that is a fabulous resource for this
country, and you have it all along the coast, too. I mean, that
is available if the people want it.
Now, I do not want it mandated that we have to develop for
wind. I am telling you, the people in that central part of the
United States call me. I have leased 300,000 acres to put wind
turbines on.
The other day we were in Sweetwater, Texas, and we were
with an ABC crew. And the ABC people were asking questions, and
they said to one of the locals there in Sweetwater, ``Are
people unhappy with the development of the wind turbines?'' He
said, ``No. The only people here that are unhappy are the ones
that don't have the turbines.''
Chairman Lieberman. Got it.
Mr. Pickens. They want them because it is income to them,
and they need the income.
Chairman Lieberman. Last week, former Vice President Gore
made a proposal, another bold plan, which is to try to get
America to produce within 10 years 100 percent of its
electricity from renewables. Is that doable, do you think?
Mr. Pickens. I do not know. Mr. Gore and I talked the other
day--his concern is global warming.
Chairman Lieberman. Right.
Mr. Pickens. And global warming for me is page 2. Page 1
for me is national security because of the 70 percent that we
are importing. And also the $700 billion that is flowing out of
the country. And I told Mr. Gore, I said, ``Al, I will get to
page 2 after I clean up page 1.'' So mine is a different
approach. And he said, ``Well, you are for outer continental
shelf (OCS) drilling.'' I said, ``I am for everything that is
American. Everything.'' Am I opposed to the electric car?
Absolutely not. Plug-in electric, let's do it.
Chairman Lieberman. Flex fuel? Anything that works.
Mr. Pickens. Anything that is American. I only have one
enemy, and that is foreign oil. That is what I want to get rid
of. And if you look at it, my plan will reduce our dependency
on foreign oil by 38 percent. And it was not designed this way.
It just happened to be. It is a coincidence, maybe. But we have
plenty of natural gas to do what we need to do, and if we could
use natural gas for transportation fuel as a bridge fuel to
hydrogen, electric, or whatever, by 2050 we have to be off of
hydrocarbons. We will still have hydrocarbons in the country, I
hope, but that will not be our primary transportation fuel. But
if you look at our imports, 38 percent of our imports come from
the Mideast and Africa, the two most unstable areas.
Chairman Lieberman. Interesting.
Mr. Pickens. We can replace 38 percent of the
transportation fuel with natural gas.
Chairman Lieberman. Excellent. My time is up. Thank you.
Senator Collins.
Senator Collins. Thank you.
Mr. Pickens, your plan focuses on land-based windmills in
the Midwest, and it has the advantage of helping to supply the
electricity needs of a lot of the populated areas of the
Midwest. I am obviously not from the Midwest. I am from New
England, which has a huge reliance on natural gas for
electricity. It is about double the national average, and that
is something that I agree we need to change.
What do you think that we should do in the Northeast, and
New England in particular, to help reduce our reliance on
imported oil? Eighty percent of the households in my State of
Maine use heating oil, so this is truly a crisis in our State.
Do you have any suggestions for broadening your plan to help
the coastal areas of our country?
Mr. Pickens. I will use a broad brush sometimes, OK? And if
it is too much, well, pin me down. But heating oil--that is
foreign. Assume it is foreign because we are importing almost
70 percent. Some of it may come domestic, but, anyway, that is
foreign. Get that over to natural gas, is what we should do,
and the Northeast should get off of heating oil.
As far as your using natural gas for power generation,
don't worry about it. Keep doing it. What will happen is the
power generation, the natural gas will move out of that sector
as it moves into transportation fuel. So we do not have to shut
down all of our natural gas power generation. It will just
happen naturally. But what we have to do is we have to mandate
the use. For instance, all government vehicles purchased in the
future would be natural gas. That will send a message to
General Motors, Ford, Chrysler, and all the others--I never
recognize any manufacturers in the United States except those.
Pardon me for that, but that comes with age. I just know three
car manufacturers. I say that and I own a Honda GX natural gas
car because I cannot get an American natural gas car.
But GM makes 19 vehicles in the world today for natural
gas. None are made in the United States. They are made in South
America and Europe. So I know they know how to make them. So if
the government mandated that all vehicles at some point would
go to natural gas on new cars, they would get them. They would
make them, and it would be a revitalization of the auto
manufacturers in the United States. And God knows they need it,
too. They need the help. They need all of it.
This has great economic benefits for rural America, car
manufacturers, and all kinds of different areas that we could
help our economy with it. But it will happen if the leadership
will say let's do this. Then let it unfold, and it will take
place. Private industry will build the grid if you will give
private industry the corridors that they can build in. That is
what you have to do for us.
And if the government wants to build the grid, that is
good, too. But I think we should start to look at the future
for energy for America, and that is that we have a national
grid, that we can put this together and get the foreign oil
dependency out of the way. We can do it. We have not been
tasked, the American people have not been tasked to do what has
to be done.
For instance, people told me at breakfast this morning,
``Well, wind is only 40 percent of the time.'' That is OK. Use
the 40 percent. Baseload it with something, peak it with
something. I am not an authority on power generation. That is
not my field. I am a geologist. I know about the oil business.
But I do know that we have not been charged with the
responsibility to do it. Go do it, and everybody in this
country will join together. The people will follow if we have
the leadership, that's what it takes. And you are going to have
to tell them that--explain to them first. They don't know. I
promise you, the American people do not understand what we are
up against. I know that from polling. I know it because I have
been in the field; I have talked to people; I have looked at
the focus groups. I have done everything. I think I am prepared
to respond, and I know I would have never committed the $58
million to telling this story had I not felt like the people
did not understand.
I will tell you what they do understand. They know it is
something very bad about energy. They do not think they are
being told the truth about energy. And it is confusing to them.
I think when we come out of this, by the time we get--I want to
elevate this into the presidential debate, and it is not there
yet. OK. Elevate it there. By the time we get the elections
over, whoever wins, the American people are going to demand
they know the truth about energy, they know what they are up
against, and they will respond.
We will see the energy use go down dramatically when they
see what it is going to cost. They can see that it does not
have anything to do with Exxon or Chevron or anybody else
running up the price. It does not have anything to do with some
speculator on Wall Street. That is not what we are faced with.
We are faced with 85 million barrels a day of production in the
world, and we are using 25 percent of it, with 4 percent of the
population, and we only have 3 percent of the reserves. In the
United States, we have nothing to do with the price of oil. We
only have 3 percent of the reserves.
And so you tell me that a guy in China is buying a barrel
of oil for $140 that he thinks it is somebody's fault in the
United States. He does not think that. He understands. They
know what it is. It is a global price for oil. You look at
Brent crude, sold on the London exchange every day, and it is
very close to West Texas Intermediate (WTI) crude.
So, anyway, I have drifted off the question, but I really
do get somewhat carried away with this subject.
Senator Collins. Just a quick follow-up, if I may, Mr.
Chairman.
Chairman Lieberman. Go ahead.
Senator Collins. When we look at your map, in addition to
the wind corridor up through the Midwest, from Texas to the
Canadian border, the other areas that have a lot of wind are
offshore, for example, offshore of Maine's coast, the Great
Lakes region. Do you see potential in offshore wind to also be
part of the answer?
Mr. Pickens. Sure. I see everything American is good--
offshore wind, central part of the country wind, electric car.
Everything American is good. I am for that. Offshore, OCS
drilling, Arctic National Wildlife Rescue (ANWR) drilling, yes,
all of it. I want to see all of it. I want to get off of
foreign oil. Yes, all that.
If I could put up the map of the world there, and you have
that in front of you, I believe.
Senator Collins. Yes.
Chairman Lieberman. Yes, we do.
Mr. Pickens. But here, if you will notice, the United
States has the best wind energy in the world. Now, you can see
some areas over in Europe and around different places, but on
landmass alone, we have the best wind energy. And we are going
to use it. There is no question we are going to use it. And it
can be melded with baseload peak and wind. Solar comes into
play. Solar and wind work very well together. But we have not
been pushed against--we are against the wall now, but we have
not been charged with getting ourselves straightened out in
America. And the reason is because the oil is so cheap. That is
it. We sat around and just kind of lazied it, and here we are.
Senator Collins. Thank you.
Chairman Lieberman. Thank you, Senator Collins. Senator
Voinovich.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. Thank you, Mr. Chairman.
What you have had to say is music to my ear. I have been on
this Committee now 10 years, and we have had an environmental
policy--you are talking about cheap oil, but we have had an
environmental policy around here that ignores our national
security, our economy, our energy needs, and the chickens have
come home to roost. And now we are trying to figure out how we
are going to get out from under this.
Many of us feel that we ought to go after every drop of oil
that is available to us, can be taken out environmentally. Many
of us also believe that we need to have an Apollo type program
as we did--President Kennedy said we were going to put a man on
the moon in 10 years, and by golly, we did. There is no reason
why we cannot figure out how we can get off of our appetite for
oil.
But one of the things that I never gave any consideration
to, Mr. Pickens, was natural gas, and the reason--I have looked
at renewables, plug-ins, hybrids, you name it. But I did not
look at natural gas for the simple reason that the cost of the
natural gas in this country has skyrocketed to the point where
in my city of Cleveland, Ohio, my State, we were paying about
$3 a Mcf back in 2000; now we are paying about $10 a Mcf, and
the people in the gas association here in Washington say we may
go up to $14 or $15 a Mcf. And part of the reason why, as you
know, we went to natural gas is we made it easy for energy
companies to use natural gas because it was cleaner and did not
have as much emissions as, say, coal or something else.
So I would like you to respond to the issue of how can we
do this when natural gas has skyrocketed, and I think you
probably know that in 1998 and 1999, we were exporting about
$19 billion worth of chemicals. Today, we are a net exporter,
and the reason why is because natural gas is a feedstock of the
chemical industry, urea. So that is one question.
The other one is the issue of wind in that currently wind
produces about 1.5 percent of our energy in this country. I
think renewables are about--let's see, about 9 percent, most of
it is hydroelectric. How can you ramp that up over a quick
period of time? And, second of all, as you know, down in Texas
you have had some times when the wind just kind of stopped and
you have had some reliability problems. And if you are going to
use wind, you know that if you are going to have reliability,
you are going to have to back up that wind with some ordinary
baseload energy generation.
So those two questions. How do we do this with the high
cost of natural gas as it is? And, second of all, the whole
issue of the reliability of wind in terms of a baseload
provider of energy in this country.
Mr. Pickens. Senator, on the expense of it, one Mcf of
natural gas equals 8 gallons of gasoline in energy. OK. They
will do the same job, one Mcf and 8 gallons. Today, natural gas
is selling for $12 per Mcf. If you had 8 gallons of gasoline at
$4, it would be $32. So natural gas is the cheapest of the
fuels now. Natural gas is selling at 40 percent of heating oil.
In the winter, heating oil and natural gas trade at parity. In
the summer, not so, and we are in the summer now. So natural
gas--I almost hate to tell you this--is cheap compared to the
other fuels. When you look at oil at $140 per barrel, natural
gas, at $12 or $15 per Mcf, is cheap.
Senator Voinovich. Where do we get the natural gas? In
other words, what we have done in a way is we have increased
the demand for natural gas, but the supply of natural gas is
down and, therefore, the price is up. And how do you reconcile
that in terms of what you are talking about?
Mr. Pickens. Supply is up. We are up year over year. We
have increased the reserves of natural gas in the United
States. We have doubled them in 5 years.
Senator Voinovich. How come, then, we are going to be
paying $15 an Mcf in Ohio for natural gas? And I think around
the country they are predicting--they are coming to Congress
right now and asking for more Low Income Home Energy Assistance
Program (LIHEAP) money because of the fact that the natural gas
costs are going to be skyrocketing.
Mr. Pickens. It is because your energy costs are higher, is
what it is. I mean, it is not a case that somebody is gouging
you. Natural gas is selling at 40 percent of the cost of
heating oil. Heating oil, you can call it foreign. So you are
being--I mean, it is all swinging off of the price of oil, is
where you are coming from. And when natural gas gets cheap
enough that it will do a job that coal--I mean, it can compete
with coal at times, it will get that cheap. It did a year ago.
We were down to $6. Now it is up to $12. If not, it is $10. But
it has been up to $12 this summer.
But you are dealing with a market. I am going to send you
this report that came out today on how we have developed in
this country. In 5 years, we have doubled our gas reserves.
This is huge. And as a geologist, if you had told me this would
have happened 10 years ago, I would have not given you one
chance in 10,000.
Senator Domenici. What is it you have, Mr. Pickens? What is
it you are going to give us?
Mr. Pickens. Oh, I am going to send you this report from
Deutschebank today. It is called ``From Shale to Shining
Shale.''
Senator Domenici. OK.
Mr. Pickens. It is about the technology and how much gas
has been discovered in the United States and how much we can
have in the future. But this is nothing more than a bridge to
the next fuel because when you get to 2050, we are pretty well
maxed out on hydrocarbons as a transportation fuel. And 70
percent of the oil is used for transportation. When a barrel of
oil comes to the United States today, it will be moved to a
refinery, refined, then go into marketing, then go into our
cars, and in 4 months it is gone. It is gone. We burn it up. It
is out of here. And so we have to get a hold of this situation
and realize that we cannot control--one thing, though, that I
will say, we have plenty of natural gas to do what I am talking
about, and we can do it for 20 or 30 years.
Senator Voinovich. If the price is way up and it seems that
the supply must not be up, as much up in terms of the demand,
you are telling us that we have the natural gas available, we
just have to go after it. Is that what you are saying?
Mr. Pickens. Sure. We have to develop the natural----
Senator Voinovich. And you can't do this program without
going after more natural gas in this country?
Mr. Pickens. But don't get the idea that you are going to
have natural gas cheap. All energy is more expensive. The
cheapest that you are going to find is wind and solar. The rest
of them are going to be expensive.
Chairman Lieberman. Thanks, Senator Voinovich.
Senator Domenici, welcome. I know that Mr. Pickens knows,
but Senator Domenici was the long-time chair of the Energy
Committee and is now the Ranking Member. We are glad to have
you here this morning.
OPENING STATEMENT OF SENATOR DOMENICI
Senator Domenici. Thank you. Mr. Chairman, he knows me from
a lot longer ago than you know me.
Mr. Pickens. Senator Domenici and I have had business for
40 years.
Senator Domenici. And I am most amazed to see him at his
age take this new business venture, and I am very pleased with
the expertise that you are applying to it.
I want to suggest a couple of things. You are so right that
we must get the people to understand; that the United States is
sending so much of our resources to foreign countries just to
acquire crude oil; that it should be doubtful in the minds of
intelligent people as to whether America can continue this kind
of exportation of our assets, of our resources to foreign
countries for 5 or 10 years. I actually do not believe we can.
I believe we will become poorer and poorer and poorer as we
send $500 to $700 billion a year overseas for crude oil. We are
in a real mess.
Some people tell me what you are for, and they confuse me,
and so I want to ask you so we will get it here on the record.
We have a bill coming up on the floor of the U.S. Senate that
is supposed to create an energy debate. Even though it is the
end of the year, we are supposed to have some time to discuss
some of our energy woes and do something positive about them.
You are not against us opening more of the offshore assets
of the United States where there are 85 percent that are locked
up in a moratorium of one type or another and you cannot drill
even if you wanted to. Are you on the side of those who say
lift those and start drilling in an appropriate----
Mr. Pickens. I am saying do everything you can do to get
off of foreign oil, is what I am saying.
Senator Domenici. And that is one.
Mr. Pickens. That is one. It is not going to do it.
Senator Domenici. Oh, no. Of course not.
Mr. Pickens. It is not big enough. You do not have enough
reserves in the offshore to do it. It will just be a piece of
our problem.
Senator Domenici. Right.
Mr. Pickens. And that is it.
Senator Domenici. From the standpoint of the United States
and paying what we are paying for oil, if we can get a reserve
that is anywhere from 14 to 30 billion barrels, that is a
pretty good addition to the world availability of oil that we
are going to be committing to the pool if we take off those
moratoria and say it is available.
Mr. Pickens. If you did 13 billion, added 13 billion, you
would add another Prudhoe Bay. Prudhoe Bay was the largest
field ever found in the United States. If you added 13 billion,
you would add--our reserves today are about 20 billion. So you
would have 60 percent more than what we have now.
Senator Domenici. It is commonly understood that without
even using modern techniques for evaluating the asset value
resource--because we have not applied modern techniques. We
have not wanted to spend money, if you would believe it, to do
a seismic evaluation of these assets because for 27 years we
have locked them up with moratoria. That is a nice way to treat
an American asset for 27 years, lock it up and then say we do
not know what it is worth because we have not inventoried it.
Mr. Pickens. Let's look at what we are talking about in the
east and west coast, not ANWR.
Senator Domenici. Yes.
Mr. Pickens. The U.S. Geological Survey (USGS), I think,
says you have 85 billion barrels. Now, know that is an in-place
figure. That is not a recoverable all figure.
Senator Domenici. Correct.
Mr. Pickens. When they talk about the 90 billion off the
coast of Brazil, that is an in-place figure again, not a
recoverable. And I have seen some that have compared those two,
that the Brazilians have 90 billion barrels, and we have about
the same. Their 90 billion is not a proven number, and it is
thrown around pretty loosely. But go to the facts and the
biggest basin that we have where we have recovered the most oil
in America is the Gulf of Mexico. So look at South Louisiana,
Gulf of Mexico, and what have you recovered there? You have
recovered 40 billion barrels, and it is by far the preferred
place to look for oil instead of off the west coast or the east
cost of the United States.
Senator Domenici. Twenty-five percent of America's oil
comes from just where you said.
Mr. Pickens. That is right. And so it is--I am not a big
believer--I think you are going to get a rude awakening as to
value of the east and west coast when it is opened up and when
it is put up for sale. When those tracts are put up for sale, I
think you are going to be surprised at the price you get for
the tracts.
Senator Domenici. We will see. But, in any event, it is
certainly worth it for the United States, for our people to
understand that this is an asset of theirs and we ought to see
what we have got and see how we can use it. And I just want to
make sure that----
Mr. Pickens. I agree.
Senator Domenici [continuing]. You said that was so.
Let me talk a minute with you about turbines that run the
wind generation. I understand that the United States does not
manufacture these turbines. Is that correct?
Mr. Pickens. No. I bought them from GE, $2 billion worth of
them, to do a thousand megawatts on our first step of our
4,000-megawatt project. And they are manufactured in the United
States by General Electric.
Senator Domenici. It is generally understood by those of us
who have been briefed that most of the turbine production is in
Germany, not in the United States. Now, maybe GE produces----
Mr. Pickens. Well, Siemens is in Germany and Vesta is in
the Netherlands, and Mitsubishi is in the game, too. But we can
get all that business into the United States.
Senator Domenici. That is the point.
Mr. Pickens. Yes. We can get it all here.
Senator Domenici. If, in fact, we are on a stable path of
multiple-year use, we can get them to move here.
Mr. Pickens. If they know that we are committed to doing
it, is where we are coming from.
Senator Domenici. It seems to me it is kind of strange that
all of a sudden we have come back to natural gas in cars. About
10 years ago, we were pretty much hitting hard on let's get gas
in fleets, let's have police fleets, let's have bus fleets. And
then we sort of let it all pale off. And now there is a big
push to get natural gas automobiles. Am I correct?
Mr. Pickens. Yes, you are. And, actually, it was further
back than 10 years ago. I was in Albuquerque, and because of
the air quality there, they were interested in natural gas to
replace gasoline and diesel. That was about 15 years ago.
Senator Domenici. All right.
Mr. Pickens. And Las Vegas has the same problem. And, of
course, Los Angeles does. But if you look at the largest bus
fleet in the world today, it is in Beijing--all natural gas. I
was there in July of last year, and they have over 4,000 buses.
The second largest bus fleet is Los Angeles MTA. And when you
look at the Port of Los Angeles, which is switching over now
from 22,000 18-wheelers, it is switching over to natural gas.
And I think the first tranche was 8,000 18-wheelers there.
But look at what happened last week, Senator. Gazprom
announced they are building natural gas fueling stations all
over Europe.
Senator Domenici. Yes.
Mr. Pickens. They are switching over, too. But here we are,
we still drift. There are 8 million natural gas vehicles in the
world today--8 million--and that has gone from 5 to 8 million
in 2 years.
Senator Domenici. And where are we?
Mr. Pickens. One hundred and forty-two thousand.
Senator Domenici. Right.
Mr. Pickens. Out of 8 million. We have done absolutely
nothing.
Senator Domenici. Well, we are not promoting it. We have
not yet decided that--your testimony here today, where you say
there is an abundance of natural gas, we as a Nation have not
yet decided that is true because we have had such pressure from
the chemical industry and others that use it as feedstock to
make it available to them so they can keep jobs here, that we
have not focused on automobile engines to be fed by natural
gas.
I believe we are on the track right now, with electric
automobiles, if we could add a bigger incentive for natural gas
cars and trucks--if we could get that going, it seems to me
that we would have taken a giant stride in the right direction
toward minimizing our use of crude oil from overseas because
automobiles and transportation drive our dependence.
Mr. Pickens. If you take 22 percent of our power generation
and make it with wind and take the 22 percent of natural gas
that is doing power generation to transportation fuel, you will
reduce our dependency by 38 percent. And what you will do is
you will bring down the price of gasoline. I promise you that
you will do that. And we will do it with our own fuel. It will
not be some other--now, one thing--and Senator Voinovich
mentioned that he is concerned about the price of natural gas.
Senator Domenici. Yes.
Mr. Pickens. But what happens is that we are not protecting
the chemical industry with cheap anything. It is not our job to
provide it cheap to the chemical industry. I mean, they are
going to have to compete globally. Well, you think natural gas
is cheap in Europe? Natural gas is $18. If you want a load of
liquified natural gas (LNG) spot on the market day, you will
pay $18 for it. And so we are in a global market, and the price
of energy can be graded every day all around the world.
Senator Domenici. Well, the report that you are going to
give us on natural gas is coupled with some new reports that
are saying that we have new finds of natural gas that you did
not even dream of when you were a gas man. They are all over
the country, and it is shale gas, and it is 5,000 to 6,000 feet
deep, and it is in States like Ohio, States where we never did
develop any natural gas, we are developing it. But that has not
reached us yet in terms of information.
Mr. Pickens. Let me say that the largest gas field in the
United States, believe it or not--I can see it out the window
of my office. If somebody had told me in the Fort Worth basin
that Barnett shale would become the largest gas field in
America, I would have bet you $100,000 to a cup of coffee and
figured I would start drinking the coffee right away.
[Laughter.]
But what you have is the largest gas field, and that
happened in 5 years. Now, the Hainesville, which is in northern
Louisiana and East Texas, the Hainesville is five to six times
the size of the Barnett. And then you have the Marcellus in
Appalachia, and it is twice as large as the Barnett. And, you
go to Fayetteville, you go to Woodford, you go to these
different shale basins, there are 21 of them now, and the
technology was developed by us--not me, but America. We did it
here. We developed the technology to extract natural gas in
large quantities. But on the price of that, though the cost to
develop that, you are talking about $7 an Mcf. Everything is
more expensive, is what it is. The big frac jobs go into that,
but we have that resource here.
I almost think it is divine intervention to have the gas
show up at such a critical time for this country, and to be
able to use it as a bridge to the next fuel in the next 20 or
30 years.
Chairman Lieberman. Thanks, Senator Domenici.
Senator Domenici. Thank you, Mr. Chairman.
Chairman Lieberman. How do you take your coffee?
[Laughter.]
We will do a second round of 6 minutes.
I want to come to the price effect here. You mentioned it
briefly in response to one of Senator Domenici's questions, and
I understand if we implemented the Pickens Plan and we moved to
wind and solar and natural gas, moved over and took over part
of the transportation sector, that we would achieve for America
and for our economy a significant reduction in the transfer of
our wealth abroad. That is a major accomplishment.
But let me come back to the consumer side of it because in
a way, what has finally, as I said in my opening statement,
sounded the alarm, Paul Revere-like, for the American people
and even their leaders in Washington is that the price of
gasoline has gone over $4 a gallon. I know it is hard to say
this with any certainty, but if the Pickens Plan were
implemented totally, in 10 years what do you imagine the
effect--I am not asking you for an exact penny prediction here,
but what would be the effect on the price of both electricity
and energy to power our transportation sector? Do you think it
would, generally speaking, go down a little, a lot, go up, stay
the same?
Mr. Pickens. We are 10 years out now?
Chairman Lieberman. Yes.
Mr. Pickens. There is no question that if I am right on the
peak oil at 85 million barrels, in 10 years we are going to
have less than 85 million barrels available to the world. Now,
the question is: What is the demand?
Chairman Lieberman. Right.
Mr. Pickens. I have to think in 10 years the demand for
oil--because the price now is going up. In 10 years, you are
going to have $300 a barrel oil. Maybe higher, I don't know.
But this is really--it is a tough question to look out 10 years
on this one. But I can tell you this: In 10 years, if we
continue to drift like we are drifting, you are going to be
importing 80 percent of your oil. And I promise you, it will be
over $300 a barrel.
Chairman Lieberman. I am just imagining the movement on the
commodity exchanges right now in response to what you just
said.
Mr. Pickens. Imagine the pain that you are going to----
Chairman Lieberman. Yes, but I presume that what you are
saying is, if we adopted your plan, the prices, generally
speaking, for the consumer of electricity and transportation
would be less than they would be if we do nothing.
Mr. Pickens. They would be less if we do nothing?
Chairman Lieberman. Than if we do nothing.
Mr. Pickens. If we do nothing----
Chairman Lieberman. Go with the status quo.
Mr. Pickens [continuing]. It is going to be over the top.
Chairman Lieberman. Right.
Mr. Pickens. Say you go with my plan and we do get on wind
and we end up with, say, 400,000 megawatts in the central part
of the country--let's talk about everything now. You have
revitalized rural America at this point. You have helped the
economy at this point. Now, what is the cost of your energy? I
am guessing in 10 years you are going to be a long way down the
track to an electric vehicle. But, remember, an electric
vehicle does not do heavy duty. So you are going to have to
continue to use natural gas will do heavy duty.
Chairman Lieberman. Heavy duty, you mean the longer trips?
Mr. Pickens. No. I am talking about 18-wheelers.
Chairman Lieberman. Bigger vehicles, got you.
Mr. Pickens. Heavy-duty vehicles.
Chairman Lieberman. Right.
Mr. Pickens. So you have to look at the whole thing. I
think that your power costs in 10 years, you could--I am not
sure you could get them down. You could get them stabilized
maybe. But at that point--and you mentioned that there was only
1.5 percent on wind now.
Chairman Lieberman. Right.
Mr. Pickens. And that people are skeptical, you are not
going to get too much on there. And then it is intermittent.
But all these things are going to be solved. You are going to
be able to store electricity. That is not too far in the future
that we can store it. So I would say cheaper.
Chairman Lieberman. Cheaper is good enough. It certainly is
going to be a lot cheaper than it would otherwise be if we
stuck with the status quo.
Mr. Pickens. If you stick with the status quo--it will be
much cheaper than that.
Chairman Lieberman. Much cheaper.
Mr. Pickens. Yes.
Chairman Lieberman. Let me draw a few observations from
what you have said this morning. The first point is an obvious
one, but around here it is worth saying the obvious. You gave
an example of what happens to a barrel of oil after a few
months. We import it, it is refined, and it is gone. And then
we have to go out and find another barrel.
The great thing--I know you know this; that is why you are
recommending it--about wind and solar is that they are always
there, the good Lord willing. So it is literally a renewable
source. You have already put the whole thing on a different
plane.
The other thing I want to say is that I appreciate the
extent to which you have sketched a larger time horizon here.
The Pickens Plan, as you have described it generally publicly
so far, is a 10-year plan. Fair enough. And it is bold. And
during that time, you have said develop any energy you possibly
can here in North America, stop importing oil. But you have now
taken at least me this morning to a longer time horizon and a
higher vision, and you have basically said that we need bridges
to take us out to 2050 and maybe beyond because we are moving
to a time when we are going to have just about a non-
hydrocarbon-based energy system. It is going to be all the
renewables, electric, biofuel, and all the rest.
Am I hearing you right? Because I think that is an
important vision, and maybe it will be helpful to some people,
for instance, right now who are concerned about offshore
drilling. That is one way to have a bridge to somewhere better
for our economy and our environment, getting to page 2.
Mr. Pickens. Well, oil is the key to the conversation here
as I see it, and oil is--we had produced 1 trillion barrels of
oil at the turn of the century. It is kind of interesting
because if you look at King Hubbert's extension, peak oil, and
what would happen, the guy was great, in my estimation. I am a
disciple. I don't think there are 2 trillion barrels of oil as
I see it right now. Now, then you say take the oil shale on the
western slope and you take this and that and everything. You
can add up a bunch of stuff. When you add it up, it is going to
be very expensive oil. But in looking at conventional oil--I
live and you live and everybody in this room lives in the
hydrocarbon era, and that era started with the automobile in
1900. Half of the oil that I see out there had been produced by
the year 2000.
Now, we have another trillion barrels, and you say, well,
that is another hundred years. No. You started slow, ramped up,
and now the next trillion is going to go out of the system here
within the next 50 years.
So you are going to be forced to abandon the hydrocarbon
era. Can you imagine researchers 500 years out that come back
and look at us? They are going to say, ``That was a strange
crowd. They lived on oil as a fuel.'' And that is not going to
even be used at that point. Oil will be used and oil will still
be around, but it will be used for other purposes and will be
very special and very expensive; that is the way it is going to
turn out.
But, yes, we are going to have to make it to the next fuel.
But what is going to happen, if I am right on what I am trying
to do, I am going to awaken the American people, and they are
going to see what they are up against. When they walk out of a
room, they will turn off the lights. They do not do that now.
Chairman Lieberman. That all helps, doesn't it?
Mr. Pickens. It helps. Every bit of it helps. I grew up in
a home with a very frugal grandmother, and she said, ``Sonny,
if you don't turn the lights out, you are going to get the bill
next month.'' And I turned off the lights. It made sense to me.
Why not? If I am going to leave them on, I should pay for it.
So as it unfolds, we are going to become much more
sensitive to energy in this country, and that is good. We are
going to conserve. That is a big item. We are going to use
different light bulbs. All these things count. Every bit of it
counts. And so, as you unfold with this in mind, but if
everybody understands, it is a lot easier to accomplish.
Chairman Lieberman. Well, you have helped everybody
understand. Incidentally, I had a very similar grandmother.
[Laughter.]
Mr. Pickens. Everybody must have.
Chairman Lieberman. We are getting back to Grandma's wisdom
now.
Mr. Pickens. Yes.
Chairman Lieberman. Thank you. Senator Collins.
Senator Collins. Thank you.
Mr. Pickens, you have made a very important point this
morning when you stated that the cost of implementing your plan
pales by comparison to continuing to export $700 billion year
after year after year, in some cases to countries that do not
wish us well. But do you have an estimate of what your plan
would cost for achieving 20 percent of our electricity from
wind?
Mr. Pickens. I think I can give you a number. Let me see.
You can go from my 4,000 megawatts to get to the number, and
4,000 megawatts ramped up to 200,000 megawatts, which would be
20 percent, would cost--it would cost about $500 billion.
Now, you say, well, wait a minute, that does not include
the--let me have that other map that was up there.
Senator Collins. Does that include the transmission line?
Mr. Pickens. It does not, but I am going to give you that
number right here. If you can see the green lines on there,
that is the Department of Energy's grid. And that grid, I
believe they projected $70 to $100 billion. So now you are
talking about a production tax credit of $15 billion; you are
talking about the cost of the 200,000 megawatts is $500
billion; and you are talking about a grid of $100 billion. It
is interesting. You are starting to approach 1 year's supply of
oil that you are buying. But don't get the idea this replaces
that oil. It does not. It will only replace 38 percent.
So it is a beautiful payout if that was it, and we would
all love it if you said, ``OK, Boone, do it,'' and I come back
in here in 3 years, and you said, ``Did you do it?'' So we got
it. We did it, and it is appreciated so much, you opening
corridors. We did do it, and we have reduced it by 38 percent.
That would be beautiful.
I am not sure I am that good, but I have confidence, and I
know it has to be done.
Senator Collins. And you have talked about the importance
of the production tax credit. It seems to me that it is
critical that Congress stop letting the production tax credit
expire. There is too much uncertainty about when it is going to
be extended. Do we need a long-term commitment to the
production tax credit to bring your plan about?
Mr. Pickens. That would, I think, solve the PTCs. Yes, the
long term would help. It would bring the manufacturers in
because they would see you are committed, and it would bring in
the money to develop. I have kind of broken new ground here,
which I have credit doing that several times. Sometimes it did
not make people very happy, but, anyway, I have gone out and
committed to the 4,000 megawatts, and Shell Oil Company has
done 3,000 megawatts. They are building a hundred miles
southwest of me. So this is unfolding. And I think the biggest
producer of wind energy now is Warren Buffett with his
operation in the Midwest.
So, I mean, people believe in this. They know it will work.
And if you do give an extension of the production tax credit, I
think it would just accelerate the whole thing.
Senator Collins. And just to clarify the cost issue,
obviously the production tax credit is critical for this
investment to take place. But you are largely talking about
private investment, correct?
Mr. Pickens. I am talking about private investment. But if
the government wanted to build a grid, I mean, do it. But if
they don't want to do it, I think the money is there to do it
privately. And so it is kind of like either do it or get out of
the way, but give us the corridors to put it in, and it will be
done.
You could put this on a very fast track if you wanted it to
be on, and we have got to do it. There is no question we have
got to do it. Are we going to do it fast, or is it going to be
done over a long period of time?
Senator Collins. You were just talking with Senator
Lieberman, quoting your grandmother on turning off the lights.
How much of the solution also should encompass energy
conservation?
Mr. Pickens. Oh, it has got to be on page 1, of course. We
have got to conserve. There is no question about that. We have
been very wasteful. But in our defense, we had cheap oil. We
had cheap oil. And as long as we had cheap oil--I don't know
whether you have seen this guy--I think it is Jim Kunstler. But
his last name is Kunstler, and it is not the guy that was the
lawyer back years ago that was in the Chicago 7 or whatever it
was. It is not that guy. But it is another person. I went over
to Southern Methodist University (SMU) and heard him the other
night. He is worth hearing. He is a generalist, but he tells us
where we made the mistakes. We did not develop our rail system.
You look at the world today, we go places and we want to
ride on a 200-mile-an-hour train. We have to go to a foreign
country to do that. We don't have that. Why don't we have it?
Because we had cheap oil. It didn't make sense for us to. It
was expensive. We were going to subsidize it. And, it just
didn't make sense for us. And he has got--we built too far away
from our work. He says you are going to move to your work now
because of the cost of energy. And it was really interesting
because this was 2 years ago and the guy nailed it. I listened
to what he had to say. I watched what has happened, and he was
right on.
Senator Collins. Thank you.
Chairman Lieberman. Thanks, Senator Collins. Senator
Voinovich.
Senator Voinovich. Well, things have changed. We are in a
global marketplace, and there are a lot of people who want what
we have, and so we are paying more for it.
We do rely on foreign oil too much, about 60 percent of our
oil coming from overseas. But one of the things--and maybe you
are aware of this--is that we do send that money overseas, but
some of the same countries that we are buying oil from are also
investing in our debt. As a matter of fact, since 2001, 70
percent of the new debt has been picked up by China, Japan, and
the OPEC nations. And I don't know about you, but I am worried
about being at the mercy of people for our oil, and then before
you know it, we are at their mercy in terms of our debt. And if
they try to put the squeeze on us, we are in pretty bad shape.
Mr. Pickens. I agree.
Senator Voinovich. I went to some war games at the National
Defense University, and they talked about the vulnerability
that we have. And some folks out at Stanford said that in the
next 10 years there is a 80-percent chance that the cut-off of
oil will bring our economy to its knees. So we have a certain
urgency that we have right now to get on with this.
Mr. Pickens, from a public policy point of view, as I
mentioned to you, I did not have natural gas in the
alternatives to oil. I had biofuels, ethanol, we have got to
get cellulosic, electric hybrids, we are working on the
batteries, fuel cells--we need hydrogen for the fuel cells--and
natural gas. And some have contended that in terms of where we
should put our money is in the area of electric hybrids for the
simple reason that you do not need to build an infrastructure
for them. In other words, if you go to natural gas, you have
got to have places where people can get it. If you go to fuel
cells, you have got to go someplace where you can get the
hydrogen. And if we go to the plug-ins, you just go home at
night and plug it into your electric socket.
What is your attitude towards that in terms of the
infrastructure necessary to get us to that alternative so we do
not have to rely so much on foreign oil?
Mr. Pickens. This is the way I envision natural gas as a
transportation fuel. We have 142,000 natural gas vehicles.
There are 8 million in the world today. And you mandate the
government fleets. Other fleets are mandated also to do the
same thing. You have the Port of Los Angeles going to it very
quickly now. All that can be done without--you don't have to
subsidize that. That can be done between user and seller on
that.
As far as your plugging in at home, of course, I think--
listen, I am not knocking anything that happens in America. But
the electric vehicle is not going to have very much range. But
natural gas, you can plug in at home, too. In fact, my car, my
Honda GX, I can plug in and my cost of fuel is $1.50 a gallon.
I just buy the natural gas right off of my gas line that fuels
my home and heats my home and cooks my food. So it is the same
natural gas. I just have a small compressor. It is called a
``fill'' and it fills my car.
So these things I think are minor. One that is pretty
interesting is Aubrey McClendon, CEO of Chesapeake Energy, and
they are the biggest, I think, natural gas producer now in the
United States. And Aubrey says, look, don't tax the oil
companies, windfall profits tax, but also tell them that we
will sidestep the tax, but you build the stations and take
25,000 filling stations and put an island for natural gas in
it. Four hundred thousand dollars is what it costs, so $400,000
times 25,000 stations is $10 billion. And 25,000 stations, that
will pretty well do it. But everything you----
Senator Voinovich. You think that they would be more likely
to do that. We have tried to encourage these depots for
ethanol, for example, and there are a few more of them, but not
a whole lot. We have got all these E85 cars out there that
can't go someplace and get it. So you are thinking that you are
going to be able to get the infrastructure to support natural
gas a lot better than you would for ethanol?
Mr. Pickens. Well, the point on that is ethanol is a light-
duty fuel. Ethanol cannot work for heavy duty. But natural gas
can. So I am approaching it from natural gas would be heavy
duty, first and all, but when it comes to a passenger car, let
it be up to the individual on a passenger car. If they want
natural gas, if they want electric, if they want E80--whatever
they want, they have. Don't mandate anything for them. Let them
do it. They will the cheapest way is what will probably happen.
But just let that unfold however it goes. But mandate to the
fleets that they have got to go to natural gas and American
fuel. The movement of goods in America, back to the same number
again, 38 percent--38 percent of the fuel used in America is
used to move goods. And that is with trucks. So you have 38
percent comes from the wrong foreign countries. You have got 38
percent we get with natural gas, and that moves the goods.
I think it works. If you said, can you assure me that it
does, I know some part of it does. Enough of it does that we
will be helped.
Senator Voinovich. I have a theory--and I don't know
whether it is a good one or not, but I believe that if this
Congress, hopefully working with the next President or maybe
even before that, would make it clear to the world that we are
going after every drop of oil that is available to us, that we
are going to do everything we can, as I just mentioned, to have
some type of a pilot project that we are going to become less
reliant on oil, and that includes your proposal and a bunch of
other proposals, that would send a real message throughout the
world that the United States finally is dead serious about
dealing with our energy and oil problem, and that would have
some impact on the price of oil that we are paying for right
now and in the future.
Mr. Pickens. I was in the Middle East last year, and they
don't understand why we don't develop our resources, and they
don't understand why we keep telling them to produce more. I
mean, it is a little bit confusing, the message that we send.
But think with me just a second. Let's say that had we
developed ANWR 20 years ago and it went on production 10 years
ago, it would have been halfway depleted now. So one thing
about it, what we have not done we still have. And so I think
that is interesting. Had we done it 20 years ago, the oil price
would have been $15 a barrel. Today it is close to $150 a
barrel. So the asset that we have not developed is worth 10
times as much as it was 20 years ago.
So that is pretty sobering, too, and I said I am ready to
open it up, get everything we can. I think we would look a lot
better to the world to develop our own resources than to say we
are off limits but you are not. I think that is a hard sell,
and it is not received well in the Middle East.
So, again, I know you are finishing up on me here. I think
maybe you have some timer. But what we have got to do is we
have got to do everything American. Whatever it is, we have got
to do it and get off the foreign oil.
Chairman Lieberman. Thank you. Mr. Pickens, that is a good
note to end on. I really thank you for being here. You have
been not only educational but I think motivational, which is
what we need to do. You are effectively putting a lifetime of
experience in this field to work for your country in some ways
that I suppose have surprised people. But you are not
approaching it as an oil man--maybe in some ways you are
because of that experience. You know the reality of the fact
that we only have a limited amount of oil potential left in the
world. Your recommendations are--actually, though they are
visionary in one sense, they seem to me to be very practical in
another sense and very balanced. And I not only thank you for
this service to our country, but I hope you will stick with it.
Knowing you, I know you will stick with it because I think in
the end you have touched not only the nerve of a problem here,
but also, if I may continue the anatomical metaphor, you have
touched an American muscle, which is the muscle that when we
see a problem, we have the ability, if we will it, to solve the
problem to our benefit. That is the spirit you bring to the
table, and may it reach the highest levels of our government
and enable us to get something done really soon. Thank you.
Mr. Pickens. I appreciate very much your time and your
interest in what I have to say. But know this: I am first an
American and second an oil man.
Chairman Lieberman. Amen. And you know what? If everybody
up here on Capitol Hill and elsewhere in Washington and in our
government approaches it that way, I am first an American and
everything else I am--Democrat, Republican, whatever else I
am--is behind that because this problem is an American problem,
and we can together devise an American solution. That is the
road that you have shown us here this morning.
Mr. Pickens. And, I have announced I am nonpartisan in this
race. This issue is way above Democrat or Republican, and we
need to approach it that way. I think we will approach it that
way. I want to get it in this debate, and I want the American
people to know.
Chairman Lieberman. Thank you, sir. God bless you and good
luck.
Mr. Pickens. Thank you.
Chairman Lieberman. We will now call the second panel of
witnesses: Dr. Gal Luft, Geoffrey Anderson, and Dr. Habib
Dagher.
Gentlemen, welcome to the table, and thank you for being
here. That is a tough act to follow, but you have all been
active and leaders in this area. As I said at the outset, I
think you each have made some proposals that are bold as well
and can inform what we hope to do here in Washington. So we
welcome you. We thank you for being here. And, Dr. Luft, please
proceed with your testimony.
TESTIMONY OF GAL LUFT, PH.D.,\1\ EXECUTIVE DIRECTOR, INSTITUTE
FOR THE ANALYSIS OF GLOBAL SECURITY, AND CO-FOUNDER, SET
AMERICA FREE COALITION
Mr. Luft. Thank you, Mr. Chairman, Senator Collins, and
Senator Voinovich. I was not planning on responding to the
Pickens Plan, but I am afraid that in light of what I have
heard today, I would like to make some comments on the plan
because I think that there are some serious
mischaracterizations that we heard here today.
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\1\ The prepared statement of Mr. Luft appears in the Appendix on
page 58.
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The most important one is that when we talk about national
security, we need to realize that 63 percent of the world's
natural gas reserves are in the hands of Russia, Iran, Qatar,
Saudi Arabia, and United Arab Emirates. These countries are now
in the process of developing and discussing the establishment
of a natural gas cartel. So shifting our transportation sector
from oil to natural gas is like jumping from the frying pan
into the fire. This is a spectacularly bad idea for us to shift
our transportation sector from one resource that we do not have
to another that we do not have. And we only have 3 percent of
the world reserves of natural gas. The situation is very
similar to our situation with regards to oil. So we do not want
to give at this point in time a gift to Iran.
Second, one good thing that happened after the 1973 embargo
is that we weaned the power sector from oil. We no longer
produce electricity from oil, unless you live in Hawaii; and,
therefore, solar, wind, nuclear, all these sources of energy
have nothing to do with our oil dependence. Unless we have
serious deployment of electric cars, these sources of energy
are irrelevant.
Now, Mr. Pickens says that we take 20 percent of our
natural gas and replace it with wind. I am sorry, but our
energy system is not a Lego. You do not take one cube and
replace it with another. If we increase wind production, which
is an excellent idea--excellent idea, we should do it--nothing
guarantees that it will displace natural gas. It could displace
coal. It could displace solar. It could displace geothermal.
How do you control what the wind will displace.
Just food for thought, and I want to move into the things I
really want to talk about and start by agreeing with Mr.
Pickens that we have a serious problem. Just to remind the
Committee that 10 years ago, Osama bin Laden predicted that oil
would be $144 a barrel. Everybody laughed at him. Oil was only
$12 a barrel at the time. He was right, and as a result, we are
exporting hundreds of billions of dollars. This is the first
year that we actually are going to pay foreign countries more
than we pay our own military to protect us.
So in order to understand what should be the road to energy
security, we must first understand why we are where we are.
There are many reasons why we have the oil crisis now. Of
course, strong demand in developing Asia, speculation,
geological decline, geopolitical risk, all of them have
contributed their share. But, in my view, by far the main
culprit is OPEC's reluctance to ramp up production. This cartel
owns 78 percent of the world's proven reserves, and it produces
about 40 percent of its oil production.
If you refer to page 2 of my testimony, you will see that
in 1973, OPEC produced 30 million barrels of oil every day.
Today, OPEC produces 32 million barrels of oil every day. In
other words, OPEC today produces almost as much oil as it did
35 years ago. Even though the world economy almost doubled,
non-OPEC production almost doubled, OPEC included last year two
new members--Angola and Ecuador--and they still produce almost
the same amount of oil as they did 35 years ago. This is a
scandalous practice, and we are stepping on our toes not
telling OPEC that they are the main culprit behind everything
that is happening now.
Clearly, it is not in OPEC's interest to provide relief to
the struggling global economy. The cartel enjoys a vertical
monopoly of the world vehicle fuel supply, and it is currently
at the receiving end of the biggest transfer of wealth in human
history.
Our energy security problem stems from the fact that our
transportation sector is dominated by petroleum. And while
being in a hole, we continue to dig. We put on the road
annually 16 million new cars, almost all of them gasoline only,
each with an average street life of 16.8 years. A Senator
elected in 2008 will witness the introduction of 102 million
gasoline-only cars during his or her 6-year term.
The source of our predicament is that we have a cartel
married to a monopoly, and if we want to solve our energy
security problem, we must break both the cartel and oil's
monopoly in the transportation sector. This means that neither
efforts to expand petroleum supply nor those to crimp petroleum
demand through increased Corporate Average Economy Fuel (CAFE)
standards will be enough to reduce America's strategic
vulnerability. Such non-transformational policies at best buy
us a few more years of complacency, while ensuring a much worse
dependence down the road when America's conventional oil
reserves are even more depleted.
To those who believe that increased domestic drilling is
the solution, I propose to take a look at page 4 of my
testimony, where you see OPEC's graph that clearly shows that
when we drill more, they drill less. That is the history of the
past 35 years.
Rather than focusing on solutions that perpetuate the
petroleum standard, we should invest in transformational
policies that aim to diminish the strategic importance of oil
by breaking its monopoly in transportation. We should do to oil
what was once done to salt. Throughout history, salt was used
to preserve food, enabling armies to march across continents.
Those who owned the precious mineral acquired wealth and
international prestige. Those who did not had to either pay for
it or fight for it, just like with oil today. Salt-rich domains
like Orissa, Tortuga, Boavista, and Turk Island enjoyed great
strategic importance equivalent to that enjoyed today by city
states like Dubai and Abu Dhabi. All this ended with the
invention of canning and refrigeration. Salt is no longer a
strategic commodity shaping global trends. It is just another
commodity.
The first thing we must do is to turn oil into salt and to
ensure that the cars rolling onto America's roads are platforms
on which fuels can compete. For the cost of $100 extra,
automakers can make virtually any car a flex-fuel vehicle,
capable of running on any combination of gasoline and a variety
of alcohols such as ethanol and methanol, made from a variety
of feedstocks.
Now, we are all familiar with ethanol, and everybody has an
opinion about it. But I would like to talk here about another
alcohol that China is actually deploying at the moment, and
that is methanol. Methanol today is China's alternative fuel of
choice. Several provinces in China are already blending their
gasoline with methanol, and scores of methanol plants are
currently under construction there. The Chinese auto industry
has already begun producing flex-fuel models that can run on
methanol. Methanol packs less energy per gallon and is more
corrosive than ethanol. But it is cheaper and far easier to
produce in bulk. While ethanol can be made only from
agricultural products and biomass, such as corn and sugar cane,
methanol can be made from agricultural waste, coal, industrial
garbage, natural gas, and even carbon dioxide. Yes, in my view,
this is perhaps the most promising way of dealing with our
carbon dioxide problem, is turning it into methanol.
Electricity is key to the solution. As I said before, we do
not produce electricity from oil, but if we shift to
electricity as a transportation fuel through massive deployment
of electric cars and plug-in hybrids, that will make a huge
difference. A plug-in hybrid car does about 100 miles per
gallon of gasoline. If this plug-in hybrid is also a flex-fuel
car, you add the $100 feature, and you get 500 miles per gallon
of gasoline. Not 500 miles per gallon, but 500 miles per gallon
of gasoline. A nationwide deployment of flex-fuel cars, plug-in
hybrids, and other alternative fuels can take place within two
decades. But such a transformation will not occur by itself.
On the grounds of national security, Congress should take
swift action to require that new vehicles sold in the United
States are flex-fuel vehicles through an Open Fuel Standard.
Such an Open Fuel Standard would level the playing field and
promote free competition among diverse energy suppliers. I am
delighted that shortly after this hearing, Open Fuel Standard
legislation will be introduced by a bipartisan group of
Senators, which includes both the Chairman and the Ranking
Member. This is an important piece of legislation and, in my
view, the best way, the best mechanism to break OPEC's monopoly
in the transportation sector. By making America a flex-fuel
vehicle market, we will effectively make flex-fuel the
international standard as all foreign automakers would be
impelled to convert their lines over as well.
Around the world gasoline would be forced to compete at the
pump against alcohol fuels made from any number of sources,
including not only commercial crops like corn and sugar, but
also biomass, coal, natural gas, and recycled urban trash.
I realize that many are opposed to any government
interference in the market, even if it only means adding $100
to the cost of a new car. Indeed, in a perfect world,
government would not have to do things like that and intervene
in the energy market, but in a time of war, the United States
is taking an unacceptable risk by leaving the problem to be
solved by the invisible hand. Choosing not to embrace an Open
Fuel Standard is choosing to preserve oil's monopoly in the
transportation sector and, with it, OPEC's growing stranglehold
over the global economy and in essence guaranteeing continuous
economic and strategic decline.
Chairman Lieberman. Thanks, Dr. Luft. A lot for us to think
about and do.
Geoffrey Anderson is President and Chief Executive Officer
of Smart Growth America. It is good to see you again. We
welcome your testimony now.
TESTIMONY OF GEOFFREY ANDERSON,\1\ PRESIDENT AND CHIEF
EXECUTIVE OFFICER, SMART GROWTH AMERICA
Mr. Anderson. Thank you, Mr. Chairman, Senator Collins, and
Senator Voinovich, for having a hearing on such an important
topic.
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\1\ The prepared statement of Mr. Anderson appears in the Appendix
on page 64.
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I think a lot of the focus to this point has rightly been
on the transportation sector and on what we can do with respect
to supply. But I think we need to think about this charge in a
broader sense, and it is really about reducing dependence on
oil, reducing climate emissions, ensuring that we actually help
consumers to save money at the pump, and helping the economy at
the same time. And so I think when we start to think about
that, we also need to think about the demand side and some of
the conservation things that T. Boone Pickens began to talk
about. And that is where Smart Growth comes in.
I think the real opportunity out there right now is to
allow people to drive less and to be able to do more. And we
can do that by essentially building more walkable and more
complete communities. A lot of the growth in oil use has been
as a result of spread-out, driveable landscapes that really do
not give you any options besides driving. And there is a real
move now to create more walkable communities where homes are
closer to jobs, shops are closer to work, and all of these
things can be reached either on foot, by bike, with transit, or
by shorter car trips.
I want to talk a little bit about a project called Atlantic
Station because I think it does a lot to illustrate what we are
talking about here, and the potential. It is a $4 billion
redevelopment of a brownfield site in midtown Atlanta,
basically done entirely for economic reasons. The developer
wanted to make money. He thought there was a market out there
and put in basically 10 million square feet of commercial,
retail, office, 3,000 to 5,000 units of housing very close to
transit, all in a walkable neighborhood. When the EPA
calculated what the emissions impacts would be, the
calculations were that residents would drive approximately 27
miles a day compared to the average Atlantan who drives around
34 miles. Recent studies of that neighborhood, in fact, show
that people are now driving about 9 miles per day just because
their car trips are shorter, the places they want to go are in
closer proximity to the places they live, and it also obviously
has climate implications as well.
The total savings on a yearly basis run in the neighborhood
of around 50 million miles of travel every year just from that
development compared to what the driving characteristics would
have been in the event that it was built in a more normal
Atlanta pattern.
If you look at what that might translate into over a period
of time or over a larger scale, we can expect--and this is from
a publication done by the Urban Land Institute called ``Growing
Cooler''--that each increment of more compact, walkable
development leads to about a 20- to 40-percent reduction in
vehicle miles of travel. If you project that out over the time
frame to 2030, if you shift a significant share of new growth
to compact patterns, you can actually save 85 million metric
tons of carbon dioxide in 2030. It is equal to about a 28-
percent increase in CAFE standards and roughly half the savings
of the Senate's 35-mile-per-gallon CAFE bill. So it can be
significant.
The cost savings were calculated in the $24 billion range
for consumers in the year 2030 or cumulative savings of around
$250 billion. And by 2050, you could expect a 7 to 10 percent
total reduction in carbon dioxide emissions accompanying
driving and oil consumption really as a result of shifting some
portion of our new growth over the smarter development
patterns.
A Natural Resources Defense Council (NRDC) analysis looked
at just what would happen if you looked at a 10-percent shift
of new growth to more walkable patterns and found that you
could save around 4.95 billion gallons of gasoline, 118 million
barrels of oil, and roughly $220 billion worth of household
expenses. That was, of course, calculated in 2004, so I think
the household expense number would be a little higher today.
If those savings are available at scale, what is the
likelihood of getting there, and does the market want to go
there? And what our research indicates and research from others
in the real estate field indicates is that about a third of the
market is interested in having more walkable communities, more
compact communities. The fact is that for the last 50 years, we
have essentially built drive-only communities, so the two-
thirds of the market that really is interested in that product
is well provided for. An analysis by Chris Nelson at
Metropolitan Institute at Virginia Tech indicates that, in
fact, from the perspective of market supply, we probably
already have the demand met that will occur in 2025 for large-
lot single-family houses. The unmet demand is really in the
area of smaller single-family houses on smaller lots,
condominiums, apartments, and so forth. And there are a couple
trends driving this. One is what they call in Minnesota--or at
least that is where I heard it--the ``silver tsunami,'' the
changing demographics where households are very different than
they were even 20 or 30 years ago.
In 1960, roughly half of American households had children.
In 2025, that is expected to be around 28 percent, with around
28 percent of households being single individuals. So the
market is definitely changing, and that is why some of the
market demands are changing and why the supply is so out of
balance right now with the demand and the projected demand.
It is true also in the retail sector that commercial
products are changing as well. We have seen a vast drop-off in
the big-box mall out in the middle of a parking lot, and a
great increase of basically walkable, more town-center-style
retail. So the market is really moving in this direction, and
there is a big opportunity for the Federal Government to
basically enable some of this. It is important for two reasons.
One, with the market moving in this direction, I think there is
opportunity for the private sector to really take advantage of
that market demand and build the communities that will help
consumers to be able to drive less and accomplish their daily
needs. But it is often the hardest thing to do from a market
perspective. The Atlantic Station development took years and
years to get through regulatory barriers, to get through
brownfield barriers, to address market institutional barriers
of finance. And so from the development perspective, it is
often the hardest product to build. It is zoning regulations at
the local level. It is how we fund infrastructure at the State
and national level, and a variety of other things.
So the Federal Government has the opportunity essentially
now to promote what the market is asking for in a way that will
help to reduce the vehicle miles of travel that result from
those developments. And I think there are a couple of actions
that have been helpful in the past. The brownfields law, the
clean-up programs, and the tax incentives for brownfields
redevelopment have had a big impact, and I think a lot more
could be done there. The historic preservation tax credits help
to drive development to more infield locations where the market
demand wants to move. The investments in transit, biking, and
walking facilities are important public sector investments
where the private sector responds to those by building
communities that match those kinds of investments.
In terms of the existing Federal legislation right now, I
think obviously the climate legislation included some measures
for funding transit and walkable communities, but I think that
can be greatly increased. The new transportation bill that the
Congress will be visiting probably in 2009 or 2010 is going to
have real opportunities to invest in world-class transit,
pedestrian, and bicycle infrastructure to make better
connections between land use and to incentivize the building of
more walkable neighborhoods that give people choices about how
they get around, give them the opportunity to avoid high gas
prices, and the opportunity to reinvest in our existing
communities and infrastructure, and then to connect those
communities, many of which are connected by short plane flights
or by long-distance auto commutes, instead connecting them by
rail and maintaining the economic synergies that currently
exist between those places.
I will wrap up there, and thank you for the opportunity to
speak with you today.
Chairman Lieberman. Thanks very much, Mr. Anderson. Very
interesting testimony, and I look forward to asking you a few
questions.
Dr. Dagher, it is a pleasure to have you here. Dr. Dagher
is a professor of civil and structural engineering at the
University of Maine, which we on this Committee know as one of
America's great public universities, and director of the
university's Advanced Structures and Composites Laboratory.
We thank you for being here and invite your testimony now.
TESTIMONY OF HABIB J. DAGHER, PH.D.,\1\ DIRECTOR, ADVANCED
STRUCTURES AND COMPOSITES LABORATORY, UNIVERSITY OF MAINE
Mr. Dagher. Thank you, Chairman Lieberman and Ranking
Member Collins. Thanks for inviting me, Senator Collins, to be
here today.
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\1\ The prepared statement of Mr. Dagher appears in the Appendix on
page 71.
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I would like to start this testimony by acknowledging the
inspiring role as a system architect, my colleague, George
Hart, as well as Matt Simmons, who is well known for alerting
our country to peak oil and peak oil issues.
You have heard about the financial, geopolitical, and
security dimensions of our energy crisis. I would like to put a
human face on this crisis. Maine will likely be the first State
to experience a heating state of emergency. I say that with
confidence because we are living it right now, and Senator
Collins has been very concerned about our future.
Some statistics about Maine. Eighty percent of Maine
families use heating oil to heat our homes, and heating oil
costs are tracking those of crude. Next winter's heating oil
costs will be $5 a gallon if you try to lock it today. That
means the average Maine family will pay $5,000 a year just to
heat their home next winter. In 2020, if we do not do anything,
if we do not do the Pickens Plan or any other plan, those
numbers will be $10,000 a year just to heat our homes.
If you look at Chart 4 in the testimony, it shows you in
red how much of the Maine family budget actually goes to
energy. Ten years ago, less than 5 percent of the Maine family
budget went to energy. Today, close to 25 percent, a quarter of
the Maine family budget, goes to paying for energy. That is
transportation, that is heating, that is electrical power. In
10 years, if we do not make any changes, about half of the
Maine family budget would go to energy. Clearly, this is not
sustainable. The State of Maine pays close to $5 billion a year
in energy costs, and we only have a little over a million
people.
So what is the solution? You have heard about T. Boone
Pickens' wonderful plan, but we sit in the corner of the
country, and we are not very close to the wind belt that runs
up and down from Kansas to Texas. So what do we do? And we have
actually been working very hard on solutions for our State.
If you look at page 4 of the testimony, according to the
National Renewable Energy Lab (NREL), the offshore wind
potential, the offshore wind energy, the energy that blows over
the oceans, if you wish, is a tremendous natural resource, a
resource we did not really understand until recently. The
offshore wind is about equal to the U.S. electric production
today.
If you look at other ocean energy resources, we have heard
about tidal energy. Tidal energy and wave energy are actually a
fraction, a very small fraction of the offshore wind resource.
If you take a look at the second sketch on the right-hand
side, it shows another very powerful point about the offshore
wind resource. It sits very close where the need is. If you
look at the U.S. population densities shown in dark red, and if
you look at the offshore wind resource, it is where the people
are. So we don't need to build a large transportation
infrastructure to get the wind energy to the people where they
need it. That is one major advantage of that resource.
Maine, of course, has a tremendous offshore wind resource.
The Gulf of Maine has been called the Saudi Arabia of wind in
many ways. There is over 100 gigawatts of wind power in the
Gulf of Maine. That is about 10 percent of the total U.S.
electric power production.
So how do we go get it? One major advantage of that
resource, it is also a seasonal resource. It is actually high
when we need it. We need to heat ourselves in the State of
Maine and in the Northeast, and the heating costs are our
biggest issues. But in the wintertime, the wind blows twice as
fast as it does in the summertime, and the power generated from
the wind is the cube of the wind speed. So in the wintertime,
per month, we can generate 8 times as much power as we do in
the summertime. You can think of wind off the coast of Maine as
a seasonal crop right now that can help us heat the State of
Maine.
I would like to talk more about what we are proposing for
the Gulf of Maine and how it fits in with T. Boone Pickens'
vision. Actually, it fits in very well with his vision. If you
look at the left-hand drawing here that we have, Mr. Pickens
essentially is talking about the U.S. wind corridor you see up
and down from Kansas down to Texas. That is a wonderful
resource that can generate 200 to 400 gigawatts, depending on
how much of it you think you could use. We are talking about
adding three more wind regions to the Pickens Plan, and the
three wind regions are the Atlantic Ocean wind region that can
generate between 120 and 240 gigawatts, and then we have the
Pacific Ocean wind corridor that can generate 75 to 150
gigawatts, and then the Great Lakes corridor that generates 110
to 220 gigawatts. So rather than go to 20 percent, as Mr.
Pickens is saying, maybe we can go to 40 percent with this
additional resource, and it is very close to where people
actually need it.
The other major advantage of having this distributed
corridor is the fact that the geography allows averaging of the
uncertainty of the winds and the intermittency of the winds, so
you have less intermittency as the weather moves from the west
to the east. There is always some bad weather somewhere. You
are always going to pick up some wind. And that reduces the
uncertainty, if you wish, in the wind profiles.
But it is more than just generating wind. It is how to use
the wind, how to actually take that wind and make the best use
out of that electricity. We are proposing very efficient ways
to store and utilize this electricity that have profound
effects on efficiencies. We are talking about efficiencies on
the order of two to four that could be achieved by using
essentially heat pumps--heat pumps, whether they are ground
loop heat pumps--as you know, the temperature below the Earth,
10 feet below the Earth stays close to 45 degrees Fahrenheit.
It is a wonderful place to go get some calories and bring them
into the house. You do not have to generate those calories.
They are there. And that is what we are trying to do here. We
are trying to use the electricity we generate from wind and
bring it into the house, shift it into the house, rather than
generate it using electricity. And that can get you, depending
on the time of the year and the temperature outside two to four
times the benefits.
Another major advantage is storage. If you look at plug-in
electric vehicles--we have all been talking about them, but one
thing we have not talked about is that the majority of our
energy usage actually is in transportation. Fifty percent of
the energy budget for the family in Maine is in transportation;
40 percent is in heating. So if we can cut that transportation
part out by using electric plug-in vehicles, and use them as a
distributed battery that can store energy at night--when you go
at night and you plug in your car, the wind can be high, it can
be low, you can still charge your car. And then you can use it
the next day. So it is a wonderful distributed battery that
could be used to even out the intermittency of the wind.
Are we the only ones who are doing this? Well, if we look
across the Atlantic, unfortunately the Europeans are way ahead
of us. Again, they have been scratching their heads long before
we have. They have been paying $7, $8 a gallon long before we
have. So they are looking at solutions.
In Europe, there are plans by 2030 to generate 150
gigawatts of offshore wind capacity for Europe--150 gigawatts,
that is number 16 on the chart. They are calling wind energy
and offshore wind the ``Third Industrial Revolution.'' They
have created over 300,000 jobs in Europe in wind and wind-
related businesses. We can do the same. We can do the same by
driving in the direction of renewables as well.
What is it going to take to go offshore? And if you look at
going offshore, it is almost like the reverse Darwinian motion
here. We are actually going from land with wind technology over
to offshore. And what is it going to require? It is going to
require developing floating platforms because the Continental
Shelf in the United States drops off very quickly. Ninety
percent of that wonderful wind resource sits far offshore and
in deep water. So we need to develop these tension-leg platform
type solutions, and you can see some of these structures on
page 6.
So we need a research and developement (R&D) program to be
able to transfer some of that technology from Europe to the
United States and also transfer decades of deepwater offshore
drilling experience into the wind energy market.
We have a detailed $100 million R&D plan that we are
proposing that is in your sheets, but I would like to summarize
here very quickly. Offshore wind is a wonderful U.S. natural
resource. It sits closer to where people need it. If you look
at where the population centers are, it is very close to them.
We do not need to build large transmissions to get to those
locations.
We need your support to create a national Offshore Wind
Energy Initiative, a Manhattan Project for offshore wind energy
that can double the Pickens Plan. We are ready to lead that in
the State of Maine because, you know what? We are in the eye of
the heating hurricane. That is where Maine is right now. We are
prepared to lead the Nation already if a national program is
created.
The other thing we would like your help on is to develop
the financial incentives, the PTCs, make sure those stay in
place, and also develop a policy framework to allow the
offshore wind developments to take place. Thank you very much.
Chairman Lieberman. Thanks very much, Dr. Dagher. That was
actually very exciting testimony. I appreciate it very much.
We will do a 6-minute round. There is a vote that has gone
off on the Senate floor. I think Senator Collins will go first
and then hopefully be back before long, and then we will go
from there.
Dr. Luft, let me take advantage of your presence here to
just ask you to say a bit more about the Open Fuel Standard
Act--which Senator Collins and I, with Senator Brownback and
Senator Salazar, are going to announce the introduction of at
noon today--and explain specifically how its provisions would
promote the fuel diversity that you and I and others believe is
necessary to break the stranglehold that oil has on our
economy.
Mr. Luft. Basically what the bill does, it requires that 50
percent of new cars sold--not produced, sold--in the United
States must be flex fuel by 2012. That is the first benchmark.
And the 50-percent figure actually comes from the auto industry
itself. In multiple meetings of the Big Three with both
congressional leadership and the President, they themselves
said that they are willing to make 50 percent of new cars flex
fuel by 2012. So the bill basically takes their numbers and
codifies it, makes it into a law.
It has a second benchmark of 80 percent by 2015, but the
important thing is that we have the 50-percent commitment today
and that the fuel flexibility is not only for ethanol, but we
have also methanol and other alcohols that can play a role in
the transportation sector, and today they are excluded.
Now, let me explain. An E85 car, the one that is made today
by Detroit, can only run on ethanol. It cannot run on methanol
because methanol is slightly more corrosive. If the cars are
what we call GEM flex fuel--gasoline, ethanol, methanol--that
includes all of the alcohols, and that means that you have much
more fuel choice, and also you can introduce other feedstocks
that can go into alcohol production, like coal, natural gas,
garbage, and carbon dioxide, as I said before. So you have a
much more scalable solution, and that is a good way to
introduce fuel choice in the transportation sector because
today we do not have choice. It is gasoline, gasoline, and
gasoline. That is all that plays.
We also believe that within 3 years of the introduction of
the Open Fuel Standard, we will have almost 50 million flex-
fuel cars on the road. At this point it makes perfect sense for
the distribution system to follow because today gas station
owners don't want to convert their pumps because there are not
enough cars on the road. But once every fourth or fifth car on
the road is a flex-fuel and we have continuously high oil
prices, it makes perfect sense for them to do it.
Chairman Lieberman. Where does electricity fit in then,
electricity-driven cars?
Mr. Luft. On the electricity front, the energy bill that
was passed in 2007 had some terrific provisions for plug-in
hybrids. The only thing that is missing now are the tax
incentives, and that is part of the tax package that hopefully
will be resolved one way or another. But I think that we have
made significant progress on electrification of transportation,
and now what we need to do is to deal with the liquid fuel
market by introducing this Open Fuel Standard.
Chairman Lieberman. Just for the record, can a car be both
flex-fuel and have the option of being powered by a battery?
Mr. Luft. It should. Once you have a plug-in hybrid car,
making it also flex-fuel just means adding $100 to the car. All
you need is a different fuel line of corrosion-resistant
materials that enable the car to run also on alcohols. It is
not one or the other. It should be both.
Chairman Lieberman. Should our aim be to get to 100 percent
by a date certain?
Mr. Luft. Well, I think that it would be nice if we had 100
percent. I think 100 percent could be difficult. But I think if
we have the 50 percent going to 80 percent, then you certainly
create a market, and that will move the whole system forward.
Chairman Lieberman. OK. Dr. Dagher, you mentioned that
Europe is ahead of us in the development of offshore wind
energy. Tell the Committee a little bit more about how you
would characterize the maturity of offshore wind here in the
United States. How much electricity is now being produced by
offshore wind?
Mr. Dagher. In the U.S.----
Chairman Lieberman. Yes, that is what I meant.
Mr. Dagher [continuing]. At this particular time, there is
no production of electricity.
Chairman Lieberman. Really it is zero.
Mr. Dagher. It is zero at this point.
Chairman Lieberman. So the notorious wind farm off of
Nantucket, was it, that never--nothing has happened there.
Mr. Dagher. Certainly it has not materialized yet. There
are hopes that it would materialize.
Senator Carper. Would the Chairman yield?
Chairman Lieberman. Please.
Senator Carper. Twelve miles off the coast of Rehoboth
Beach, Delaware, the wind farm is coming.
Chairman Lieberman. It is coming?
Senator Carper. Yes, we have worked it out.
Chairman Lieberman. Really?
Senator Carper. And we are inviting Maryland and maybe New
Jersey to consider joining us.
Chairman Lieberman. That is great.
Senator Carper. We are excited.
Chairman Lieberman. Thank you, Senator Carper. Good news.
Mr. Dagher. Yes.
Chairman Lieberman. What is the state of the technology? In
other words, is there a lot of R&D that still has to be done to
make this work, particularly further offshore?
Mr. Dagher. That is correct. If you look at further
offshore right now, there are no commercial installations of
further offshore wind energy, even though 90 percent, if you
wish, of the U.S. offshore wind energy is in deep water. So,
yes, there are major R&D efforts needed. There are currently a
number of companies worldwide that are pursuing the effort.
StatoilHydro has recently invested $80 million in their first
demonstration structure.
What needs to be done? There needs to be a public-private
effort, government and industry working together to go in that
direction. However, we believe in the next 5 years to 7 years,
if the R&D dollars are in place, we should be able to go deep
offshore.
Chairman Lieberman. Thanks. My time is up, and also my time
will be up over there if I do not move. So I am going to
temporarily recess the hearing. Don't go very far because I
expect Senator Collins will come back, and she will begin again
and then I will return.
Thank you.
[Recess.]
Senator Collins [presiding]. The Committee will come back
to order. In the Chairman's absence, I am going to proceed with
his permission to my questioning, and, Dr. Dagher, we will
start with you.
First let me say to the entire panel that your testimony is
very helpful to us. When I look at all the testimony we have
heard today, I cannot help but think that all of the above are
part of the answer, that it is not just one piece. We have to
have a very comprehensive approach.
Dr. Dagher, as you know, it has been difficult to do siting
of wind energy, both on land and in the case of Massachusetts,
offshore as well. Therefore, I want to clarify a point about
the plan that you have presented.
As I understand it, these turbines would not be visible
from the shore. Is that accurate?
Mr. Dagher. That is accurate, Senator Collins, yes.
Senator Collins. So how far offshore are you talking about
locating these turbines?
Mr. Dagher. We are looking at 20-miles-plus offshore, which
because of the curvature of the Earth, would make these
invisible, and specifically to address the issues that you have
been concerned about is how do we get over the Nantucket
problem. It is really what we call ``out of sight, out of
mind'' turbines, in many ways. A lot of people do not want to
look at these turbines from their land onshore, and by getting
them out where they are 20 miles off, we avoid some of these
issues. But also we pick up the wonderful wind resource that
happens to be at that distance.
Senator Collins. I am very excited about T. Boone Pickens'
plan, but I do not think it is the whole answer. It seems to me
that the plan that you have outlined using offshore wind and
geothermal are really complementary to his plan. Is that your
assessment?
Mr. Dagher. That is correct, Senator Collins, yes. T. Boone
Pickens' plan utilizes the wind corridor from the Dakotas down
to Texas to generate anywhere from 200 to 400 gigawatts,
depending on how much you want to generate. But that leaves us
out, if you wish, on the east coast and on the west coast
unless we build very expensive transmission systems. The
majority of the U.S. population, actually close to 28 States,
utilize more than 70 percent of the Earth's electricity around
the coasts of the United States. So the major demand for
electricity is around the perimeter of the country.
Senator Collins. So, actually, your plan helps to provide
increased access to renewable electricity closer to the
population centers. The Pickens Plan goes through the very
center of the United States, but as I understand it,
electricity loses--there are line losses the further away from
the source of electricity. Is that accurate?
Mr. Dagher. That is accurate.
Senator Collins. You are the engineer here.
Mr. Dagher. That is correct. Yes, there are line losses
that take place, and, of course, there are transmission costs
as well that go along with that. And building transmission
lines in heavily populated areas is very expensive as well from
a permitting viewpoint and so forth. And if you look at the
population centers on the east coast, for example, the
Midatlantic States and up in the New England area, it would be
very costly to build transmission lines in those areas.
Therefore, siting some of this renewable resource offshore
allows us to get directly to where the population centers are
and avoid the congestion.
Senator Collins. Thank you.
Dr. Luft, I want to go to your point about the
transportation sector because, clearly, converting cars has to
be an essential component of our energy security policy. And I
would be interested in your concerns about Mr. Pickens' plan to
use natural gas. What would you think of the Federal Government
having a mandate on itself to say that the Federal fleet has to
be comprised of flex-fuel cars, plug-in hybrids, as well as
natural gas-fueled cars by a certain date? Let me tell you why
I am asking you this question.
Mr. Pickens made the point that in the United States we
have only a very small percentage of our vehicles using natural
gas. Well, you could go beyond natural gas and say we have a
very small percentage of our vehicles that are not dependent on
gasoline more broadly. If the Federal Government helped to lead
the way, would it help spur the infrastructure that we need to
fuel these alternative vehicles? And would it help encourage
manufacturers to also meet this demand?
Mr. Luft. Well, first of all, the Federal Government has
already committed itself years ago, and the problem today is
with compliance rather than commitment. So let's first of all
focus on compliance of rules and regulations that have already
been introduced years ago and make sure that Federal agencies
are actually in full compliance.
I think that there are certain limitations to certain
Federal agencies realistically that need access to the fuel if
they do not have infrastructure, which is why I think the
lowest-hanging fruit is the flex-fuel because a flex-fuel
mandate only adds a small feature to the car. It is very cheap.
It should be, across the board, not only added to the Federal
fleet but to every car sold in America.
Quite frankly, one of the reasons, I think, that methanol
should be in the picture, if Mr. Pickens is so interested in
natural gas, you should know that almost all of our methanol
today is produced from natural gas. So that is a good way to
use indirectly natural gas in flex-fuel cars by using methanol,
which can be made from other things but also from natural gas.
And that is, again, this $100 feature that makes the car
capable of running on those fuels. That is the very low-hanging
fruit, and thank you for being part of it.
Senator Collins. In your testimony, you had a wonderful
comparison that the Federal Government is subsidizing converter
boxes so that people do not lose the signal on their television
sets come next year when the conversion to digital takes place.
It is ironic that we do not do more to help people convert
their automobiles to flex-fuels when an investment of just $100
per vehicle could make such a difference in the energy
consumption of our country. You did not use that analogy in
your oral presentation today, so I just wanted to bring it up
for the record since, arguably, helping to reduce our
dependence on foreign oil is more important than helping to
ensure that people can still watch television--or some would
argue, anyway. So I thought that was a good point.
Mr. Anderson, your emphasis on community planning and the
design of our housing and our downtowns is very interesting,
and I also think it is part of the solution. However, if you
come from a large rural State like mine, it seems somewhat less
relevant than it would to a more congested urban area.
What can a large rural State learn from your findings?
Mr. Anderson. I think actually there is a lot of
application. Before this position, I was at the Environmental
Protection Agency actually running the Smart Growth Program
there, and a lot of the technical assistance we did there was
in more rural locations--Laconia, New Hampshire; Pamlico, North
Carolina; Cheyenne, Wyoming; Victor and Driggs, Idaho. A lot of
small towns really are looking at how they are growing and
asking the question--I mean, in many ways it is the suburban
and rural areas that are most vulnerable to rising gas prices
because of the lack of options from being able to drive. And
the most significant change we have seen, I think, in the short
term has been increases in transit ridership. We are seeing
transit at 50-year high. We have seen actual drops in vehicle
miles of travel over the last year. So people are changing
their behavior, and it is happening in the places you would
expect, with a lot of transportation choices and a lot of
public transportation. But it is also happening in smaller
towns and rural areas. And the kinds of transit options, the
kinds of public transportation options you would want to look
at for smaller rural towns and areas are different, but they
are out there, and the models exist for systems that would be
applicable to those places.
And so I think also looking at not only the work trip but
the non-work trip, there tends to be a great deal of focus on
the energy and the oil and the gas associated with getting to
and from work. But when you look at the trip profile, that
tends to be, depending on how you want to count, only 25 to 35
percent of all the trips a household takes.
So just making more complete communities where kids can
walk to school, where schools are the centers of the community,
where you can do some of your daily errands with a short car
trip rather than a long one can make a big difference. If you
look, for instance, back in 1960, about 50 percent of kids
walked to school. That number is now down to about 11 percent.
So just the basic way that we are building and shaping our
communities is, in fact, locking us into one transportation
option and essentially locking in oil dependence in the
transportation sector.
Senator Collins. Thank you.
Dr. Dagher, you made a very interesting point that your
plan could not only help to reduce our dependence of foreign
oil and bring some stability and lower prices to the citizens
of our State who are really struggling with the high cost of
heating oil, but it also could be an economic benefit. Could
you talk a bit more for the Committee about the possibility of
what some have been referring to as ``green jobs''?
Mr. Dagher. Yes, indeed. You are absolutely correct,
Senator Collins. By solving the heating crisis that we have in
the State of Maine and the energy crisis, we can also create a
lot of renewable energy jobs. Now, Europe is a perfect example
here. We do not need to really look into the future. We just
need to look across the Atlantic.
Europe has created over 300,000 jobs over the last 10 years
in wind and wind-related energies because 70 percent of all
wind turbines in the world are now produced in Europe. We can
do the same. But they have put together a policy system that
allows industry to invest. They have the tax credits in place;
they are very stable. So putting together the policy framework
that would allow for these renewables to move forward is
critical.
Numbers, in terms of how many jobs are created per gigawatt
installed, vary quite a bit, but those numbers are anywhere
from 1,000 jobs to 5,000 jobs per gigawatt of wind energy
installed.
Senator Collins. Those jobs would be welcome indeed.
Senator Lieberman, before you came in, I started my
questioning by saying that I think we need all elements of the
plans that we have heard today, and that, in fact, T. Boone
Pickens' plan for wind energy in the middle of the country fits
in very well with Dr. Dagher's plan to tap offshore wind, which
in turn we also need to supplement by Dr. Luft's proposals for
the transportation sector and Mr. Anderson's suggestion for
better planning of communities.
This is going to take the ingenuity and the innovation of
everyone to achieve the goal of energy security for this
country, and I for one am very appreciative of the testimony we
have heard today. I told them if this were a multiple choice
test, I would be checking ``all of the above.'' And I just want
to thank you, Mr. Chairman, for holding this very important
hearing today.
Chairman Lieberman [presiding]. Thanks very much, Senator
Collins. Thanks for your inspiration which brought the hearing
about. And I agree with you, this is not a problem that will be
solved with a single bullet. I was impressed by that in T.
Boone Pickens' testimony. He may have some favorites here, as
you commented on, in terms of natural gas, but I thought in the
end he was open to the various ways in which we would deal with
this, if I may say so, so long as they were American--in other
words, as long as they broke our dependence on foreign oil and
created bridges to the zero hydrocarbon future. And then the
three of you have really presented us with a series of, I
think, very visionary but also practical options, which I
appreciate.
I do not have any further questions.
Senator Collins. I just have one final comment for Dr.
Dagher, and that is, give us a sense of how far away we are in
your view from the technology that would make your plan
feasible from an economic standpoint.
Mr. Dagher. We are looking at about 5 to 7 years from
becoming a reality in the United States. I would also like
along the same lines to really recognize before we go my dear
colleague, Dr. George Hart, who is sitting here. If you don't
mind, George, stand up. Dr. Hart is really at the heart of
developing all of these concepts, so thank you, Dr. Hart.
Senator Collins. Thank you. Thank you, Mr. Chairman.
Chairman Lieberman. Thanks, Senator Collins, and we thank
our witnesses.
We are going to leave the record of the hearing open for 15
days if Members of the Committee want to submit questions to
you in writing or if you would like to add to your testimony in
any way. But we thank you very much for the work you are doing
and for the testimony that you offered today.
The hearing is adjourned.
[Whereupon, at 12:06 p.m., the Committee was adjourned.]
A P P E N D I X
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