    [House Hearing, 113 Congress]
    [From the U.S. Government Publishing Office]

     THE EFFECTS OF RISING ENERGY COSTS ON AMERICAN FAMILIES AND EMPLOYERS

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

                                    HEARING

                                   before the

                         SUBCOMMITTEE ON ENERGY POLICY,

                          HEALTH CARE AND ENTITLEMENTS

                                     of the

                             COMMITTEE ON OVERSIGHT

                             AND GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               FEBRUARY 14, 2013

                                   __________

                                Serial No. 113-8

                                   __________

    Printed for the use of the Committee on Oversight and Government Reform

             Available via the World Wide Web: http://www.fdsys.gov
                          http://www.house.gov/reform

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                  COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     DARRELL E. ISSA, California, Chairman
    JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland,
    MICHAEL R. TURNER, Ohio                  Ranking Minority Member
    JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
    PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of
    JIM JORDAN, Ohio                         Columbia
    JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
    TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
    JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
    JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
    PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
    PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
    SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT,
    TREY GOWDY, South Carolina               Pennsylvania
    BLAKE FARENTHOLD, Texas              MARK POCAN, Wisconsin
    DOC HASTINGS, Washington             TAMMY DUCKWORTH, Illinois
    CYNTHIA M. LUMMIS, Wyoming           PETER WELCH, Vermont
    ROB WOODALL, Georgia                 DANNY K. DAVIS, Illinois
    THOMAS MASSIE, Kentucky              TONY CARDENAS, California
    DOUG COLLINS, Georgia                STEVEN A. HORSFORD, Nevada
    MARK MEADOWS, North Carolina         MICHELLE LUJAN GRISHAM, New Mexico
    KERRY L. BENTIVOLIO, Michigan        VACANCY
    RON DeSANTIS, Florida

                       Lawrence J. Brady, Staff Director
                    John D. Cuaderes, Deputy Staff Director
                         Robert Borden, General Counsel
                           Linda A. Good, Chief Clerk
                     David Rapallo, Minority Staff Director

          Subcommittee on Energy Policy, Health Care and Entitlements

                       JAMES LANKFORD, Oklahoma, Chairman
    PATRICK T. McHENRY, North Carolina   JACKIE SPEIER, California, Ranking
    JIM JORDAN, Ohio                         Minority Member
    JASON CHAFFETZ, Utah                 ELEANOR HOLMES NORTON, District of
    TIM WALBERG, Michigan                    Columbia
    PATRICK MEEHAN, Pennsylvania         JIM COOPER, Tennessee
    SCOTT DesJARLAIS, Tennessee          MATTHEW CARTWRIGHT, Pennsylvania
    BLAKE FARENTHOLD, Texas              TAMMY DUCKWORTH, Illinois
    DOC HASTINGS, Washington             DANNY K. DAVIS, Illinois
    ROB WOODALL, Georgia                 TONY CARDENAS, California
    THOMAS MASSIE, Kentucky              STEVEN A. HORSFORD, Nevada
                                         MICHELLE LUJAN GRISHAM, New Mexico

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on February 14, 2013................................     1

                                   WITNESSES

    Mr. George E. Hand, General Manager, Canadian Valley Electric
      Cooperative
        Oral Statement...............................................     5
        Written Statement............................................     8
    Ms. Paula M. Camody, President, National Association of State
      Utility Consumer Advocates
        Oral Statement...............................................    14
        Written Statement............................................    16
    Mr. Eugene M. Trisko, Attorney at Law and Energy Economist
        Oral Statement...............................................    26
        Written Statement............................................    28
    Mr. Daniel J. Weiss, Senior Fellow, Center for American Progress
      Action Fund
        Oral Statement...............................................    47
        Written Statement............................................    49
    Mr. Daniel Simmons, Director of Regulatory and State Affairs,
      Institute for Energy Research
        Oral Statement...............................................    75
        Written Statement............................................    77

                                    APPENDIX

    The Honorable Jackie Speier, a Member of Congress from the State
      of California, Opening Statement...............................   109
    The Honorable Matt Cartwright, a Member of Congress from the
      State of Pennsylvania, Opening Statement.......................   111
    The Honorable Elijah E. Cummings, a Member of Congress from the
      State of Maryland, Opening Statement...........................   112
    U.S. Total Crude Oil Production 2004-2011........................   114
    The National Association of State Utility Consumer Advocates
      Resolution.....................................................  118&
    American Coalition for Clean Coal Electricity, Energy Cost
      Impacts on American Families, 2001-2013........................   120
    Committee on Oversight and Government Reform Staff Report, The
      Department of Energy's Weatherization Program: Taxpayer Money
      Spent, Taxpayer Money Lost.....................................   134
    Annual Motor Gasoline Regular Grade Retail Price.................   182

     THE EFFECTS OF RISING ENERGY COSTS ON AMERICAN FAMILIES AND EMPLOYERS

                                  ----------

                          Thursday, February 14, 2013

                      House of Representatives,
        Subcommittee on Energy Policy, Health Care and
                                          Entitlements,
                  Committee on Oversight and Government Reform,
                                                       Washington, D.C.
        The subcommittee met, pursuant to call, at 1:04 p.m., in
    Room 2154, Rayburn House Office Building, Hon. James Lankford
    [chairman of the subcommittee] presiding.
        Present: Representatives Lankford, Jordan, Walberg,
    DesJarlais, Farenthold, Massie, Speier, Norton, Cartwright and
    Horsford.
        Also present: Representative DeSantis.
        Staff Present: Lawrence J. Brady, Staff Director; Joseph A.
    Brazauskas, Counsel; Caitlin Carroll, Deputy Press Secretary;
    Sharon Casey, Senior Assistant Clerk; Brian Daner, Counsel;
    Ryan M. Hambleton, Professional Staff Member; Christopher
    Hixon, Deputy Chief Counsel, Oversight; Mark D. Marin, Director
    of Oversight; Jaron Bourke, Minority Director of
    Administration; Nicholas Kamau, Minority Counsel; Adam Koshkin,
    Minority Research Assistant; Jason Powell, Senior Counsel; and
    Rory Sheehan, Minority New Media Press Secretary.
        Mr. Lankford. I would like begin this hearing by stating
    the Oversight Committee mission statement. We exist to secure
    two fundamental principles. First, Americans have a right to
    know that the money Washington takes from them is well spent.
    And, second, Americans deserve an efficient, effective
    government that works for them.
        Our duty on the Oversight and Government Reform Committee
    is to protect these rights. Our solemn responsibility is to
    hold government accountable to taxpayers, because taxpayers
    have a right to know what they get from their government. We
    will work tirelessly with--in partnership with citizen
    watchdogs to deliver the facts to the American people and bring
    genuine reform to the Federal bureaucracy. This is the mission
    of the Oversight and Government Reform Committee.
        This is also the first meeting of this particular
    Subcommittee on Energy, Healthcare and Entitlements. It is my
    joy to get a chance to introduce as well the ranking member
    that will be serving with me, Jackie Speier from California.
    Looking forward.
        This committee as well is focused on trying to identify
    ways that we can help the American consumer, the taxpayers to
    have their money protected and also have a government that is
    efficient. When the government spends $3.7 trillion, there will
    be areas of waste and inefficiencies. We want to help identify
    some of those, and we can work in a bipartisan way to be able
    to accomplish that. But this is also a moment that we look at
    the policies and the ways that we do things specifically to
    work to protect the American consumer, which is what this
    particular hearing is focused on.
        Our Nation and our economy runs on energy. Costs of energy
    rises and falls based on the cost of fuel and capital costs.
    But the American consumer has a sense that they are being
    squeezed. This hearing will work to address the changing costs
    of energy and the direction of energy production in America.
        According to recent polling, energy costs are the most
    important financial issue facing American families today. The
    Gallup poll from last month shows that 79 percent of Americans
    said that the price of energy, including the price of gasoline,
    is hurting their finances. More specifically, the prices of
    electricity and gasoline are so high, they are impacting
    American families' finances more than food, taxes, or even
    health care, according to that poll. Gasoline prices account
    for the largest single increase in consumer energy costs over
    the past decade. Average U.S. Family will spend an estimated
    $3,730 a year on gasoline in 2013, compared to 1,680 a year
    just 10 years ago.
        Since 2001, the energy cost impacts on American families
    have been steadily increasing and are now at their highest
    levels in over 10 years. On average, about 60 million
    households, or about half of the households in America,
    American families, now pay 20 percent of their income towards
    energy costs. The poorest Americans, those making less than
    24,000 a year, are often forced to make choices between food,
    medicine, or Edison. In fact, those who earn less than 10,000 a
    year will pay an estimated average of 77 percent of their
    income towards energy.
        Businesses, and especially small businesses, are also
    experiencing in the adverse impacts of higher energy costs.
    According to the U.S. Energy Information Administration,
    manufacturers spend on average $136 billion a year on energy,
    and commercial buildings spend a $108 billion a year. Small
    businesses are more susceptible to negative impacts on rising
    energy costs.
        Energy-intensive industries are building-block industries
    because they produce the components that are used for the rest
    of the industrial manufacturing and construction sectors. These
    industries see energy as a percentage of costs sometimes as
    high as 85 percent.
        With the rise in horizontal drilling technology, hydraulic
    fracking, and other advanced recovery methods, it has vastly
    increased the potential for recoverable domestic oil and
    natural gas in places like North Dakota and Pennsylvania and
    others. However, efficient use and production in North American
    petroleum are facing cumbersome obstacles from the Federal
    Government. These range from restrictive policies on oil
    production on Federal lands to the continued rejection of more
    pipeline infrastructures, such as the Keystone XL. State
    regulatory primacy is also being challenged in all aspects of
    energy production. These hindrances harm the ability of
    families and businesses to cheaply access vast resources of
    energy. The EPA-mandated framework for the sale of differently
    blended versions of fuel across the United States, which means
    that gas supplies often can't be shipped between cities even in
    the same State.
        The U.S. also has an opportunity to rejuvenate the once-
    vibrant nuclear industry, as well as a very advanced wind
    industry that continues to increase. For the first time in
    decades, new nuclear plants are under construction. Further new
    technologies, such as small modular reactors, offer tremendous
    opportunities in the global market. This opportunity will be
    lost if political and regulatory uncertainty impede domestic
    development and innovation in that industry.
        America has vast domestic energy resources. In order to
    achieve affordable energy, Americans should have access to this
    energy through all sources, coal, oil, gas, nuclear, and all of
    our renewables. However, the costs of these energy resources to
    families and businesses must always be taken into account when
    providing subsidies to promote some and promulgating
    regulations which sometimes limit others. Today it is right for
    us to just take a closer look at the costs and the
    opportunities for America's energy.
        I'd now like to recognize the distinguished ranking member,
    the gentlelady from California, Ms. Speier for opening
    statement.
        Ms. Speier. Mr. Chairman, thank you. And let me say how--
    how much I'm looking forward to working with you on this
    subcommittee this year. And while we come from different parts
    of the country, the issues that we will address will affect
    every single American, as this hearing does today. So I truly
    look forward to our coordinated efforts on behalf of the
    American people.
        You know, no matter who controls the White House, oversight
    of the executive branch is fundamentally a responsibility of
    Congress. Holding the bureaucracy, its contractors, and the
    corporations accountable isn't a partisan issue, it's a
    congressional duty.
        The title of today's hearing is ``The Effects of Rising
    Energy Costs on American Families and Employers.'' In this
    economy it's imperative that we in Congress do more to help
    families recover from the recession as they pay off these
    bills. What are we doing, for example, to raise the minimum
    wage in this country? What are we doing to create more jobs for
    the middle class and ensure that hard work leads to decent
    livings? To be sure, we must investigate the high price
    consumers and small businesses are paying on their energy
    bills. Are regulations the sole factor causing prices to rise,
    or are record-breaking profits of the oil companies part of the
    cause?
        Here is a chart we were hoping to have up for you. But it
    shows that the five oil companies in 2011 made $41 billion, an
    increase of 31 percent; $31 billion, an increase of 54 percent;
    $26 billion, an increase of 114 percent; $27 billion, a 42
    percent increase; and $12 billion, a 9 percent increase.
        One thing is certain: The American people do not have to
    choose between economic growth and environmental protection. We
    can do both responsibly. The good news is that the United
    States is already making great strides towards energy
    independence. Under the Obama administration, domestic oil
    production has reached its highest level in 11 years. And, in
    fact, this chart shows how far we have come in a very short
    period of time in oil production.
        U.S. total crude oil production averaged 6.4 million
    barrels per day in 2012, an increase of .8 million barrels per
    day from the previous year. The largest single increase in
    domestic annual production since 19--no, excuse me, since 1859.
    Furthermore, domestic natural gas production reached a record
    28.6 trillion cubic feet in 2011, marking the highest level of
    natural gas production in this country in more than 30 years.
    At the same time, we've made investments in renewable energy by
    providing loan guarantees to build the Nation's first
    commercial-scale cellulosic ethanol plant in Kansas, the
    world's largest wind farm in Oregon, and the world's largest
    solar plant in California, among many other cutting-edge
    projects.
        An energy company in my district said it best: Congress
    shouldn't pick winners and losers. We should support all of the
    above. All of these gains have been achieved while maintaining
    strong protections for public health and the environment. We
    have doubled the distance our cars can travel on a gallon of
    gas, reduced CO2 emissions from power plants, and weatherized
    homes to make them safer and more efficient.
        The benefits of our environmental policies, meanwhile, have
    far exceeded the costs of regulatory compliance. But as the
    President made clear in his State of the Union Address, we must
    also confront the reality of climate change. In 2011, the
    United States endured more than 14 extreme weather disasters,
    each costing over a billion dollars. There were another 11 such
    disasters in 2012, and the GAO that just finished his
    presentation here earlier today talked about climate change and
    how we have got to factor it into our crop insurance and flood
    insurance, as many of the private insurers in this country
    already do.
        According to NOAA, the combined 25 disasters from 2011 to
    2012 are estimated to cost $188 billion in total. The record
    drought of 2012 is estimated to cost $12 billion, and
    Superstorm Sandy is estimated to cost $71 billion. Responding
    to these extreme weather events will produce a measurable drag
    on our economy, and the timing for American families could
    hardly be worse. Paying the bills is strain enough, let alone
    after the crops are wiped out by searing drought or houses left
    flooded after a superstorm.
        In conclusion, Mr. Chairman, I don't believe in the false
    dichotomy that energy and environmental innovation precludes
    economic growth. In the face of climate change, seizing the
    opportunities before us in clean energy is critical not just to
    preserve a livable planet for our children and grandchildren,
    but to prevent Americans from bearing the real economic
    consequences of inaction.
        With that, I'd like to thank our panel of witnesses for
    being here today, and I look forward to your testimony.
        And, once again, thank you, Mr. Chairman.
        Mr. Lankford. Thank you.
        Members will have 7 days to submit their opening statements
    for the record.
        We'll now recognize our panel today.
        Mr. George Hand is the general manager of the Canadian
    Valley Electric Cooperative, a fellow Oklahoman with me, and
    we're glad that you're here.
        Ms. Paula Carmody is the president of the National
    Association of State Utility Consumer Advocates. From Maryland;
    is that correct?
        Ms. Carmody. Yes.
        Mr. Lankford. Okay. Glad that you're here.
        Mr. Eugene Trisko is an attorney and energy economist.
        Mr. Daniel Weiss is the Senior Fellow at the Center for
    American Progress Action Fund.
        And Mr. Daniel Simmons is the director of regulatory and
    State affairs for the Institute for Energy Research.
        Thank you all to be here. Pursuant to committee rules, all
    witnesses need to be sworn in before they testify. So if you'd
    please stand and raise your right hand, and be prepared to take
    the oath.
        Do you solemnly swear or affirm that the testimony you're
    about to give will be the truth, the whole truth, and nothing
    but the truth so help you God?
        [witnesses answer in the affirmative.]
        Thank you. Let the record reflect the witnesses answered in
    the affirmative.
        You may be seated.
        In order to allow time for discussion, and we will have
    Members that will come in and out at different points to be
    able to ask questions, and so you'll see that movement as it
    goes through, we have included a very handy clock right in
    front of you. That clock is really a series of lights there,
    green, yellow, and red, which I think is pretty standard
    practice on it. The yellow will come on when you have 1 minute
    left, and then the red will come on when it's time to stop. You
    could wind up as soon as possible on that. There are bonus
    points for finishing before 5 minutes because we'd like to be
    able to have time for questions as well.
        So to allow time for that, I'd like to go ahead and begin.
        Mr. Hand, you are first up. And I'd be honored to be able
    to receive your testimony now.

                           WITNESS STATEMENTS

                      STATEMENT OF GEORGE E. HAND

        Mr. Hand. Chairman Lankford, members of the subcommittee, I
    want to thank you for this opportunity to be heard and appear
    before you today. My name is George Hand. I consider myself
    fortunate and blessed. I was born in Oklahoma and lived there
    all my life. I'm the general manager of Canadian Valley
    Electric Cooperative, headquartered north of Seminole,
    Oklahoma, and I've served in that capacity for 28 years.
        At Canadian Valley Electric Cooperative our purpose is
    simple and straightforward: To provide electric utility service
    to our customers at the lowest possible cost, consistent with
    sound business practice. This mission guides us daily, and we
    have not strayed. We believe that if we can be successful in
    our mission, it will give the customers we serve the best
    opportunity for a better life and the businesses that look to
    us for electric power energy the greatest opportunity to be
    successful, grow, prosper, and provide jobs.
        Profit is not our purpose. Our purpose is to help others
    prosper and profit. Most of the territory we serve would not be
    considered desirable or even feasible service territory to a
    for-profit electric utility. Our power supplier, Western
    Farmers, which we are a part owner, has a diversified electric-
    generation resource mix comprised of coal, natural gas, wind,
    hydro, and purchased power. About 30 percent of the energy last
    year was produced with coal, about 6 percent from wind, about
    15 percent from our own natural gas plants, and then the
    balance, purchased power, which was a mixture of coal and
    natural gas and some additional wind.
        Electric utilities understand the desirability of a
    diversified electric-generating fleet. This helps control price
    volatility and, to a degree, enhances reliability. Diversity is
    also a hedge against the current flavor of government
    regulation.
        Today, in Oklahoma, we have several large coal-fired
    generating plants. All of these coal plants in Oklahoma were
    built in the 1970s because the Federal Government mandated that
    no more natural gas-fired electric generating plants be built,
    and, further, that the existing gas plants would have to shut
    down in the future.
        In response to what was the law of the land, the Fuel Use
    Act, electric utilities in Oklahoma and elsewhere began
    building large coal-fired generators to replace these banned
    gas-fired generators.
        The law was clear. By the early 1980s, expensive excess
    generating capacity was everywhere, and about that time we
    discovered that maybe the country was not running out of
    natural gas. Congress relaxed the pressure to shut down the
    existing natural gas-fired generating plants. Later Congress,
    in the face of reality, removed the prohibition on building new
    natural gas-fired plants.
        But the damage to customers, business, and the economy had
    been done. Electric rates to consumers and businesses doubled
    as utilities had to service the debt on these new unneeded
    generating plants. The cost burden of this mistake on customers
    and business lasted for the better part of two decades, until
    the economy grew enough to be able to utilize this additional
    generation.
        We must realize that regulation have a cumulative cost, and
    eventually the consumer will rebel or just give up. We should
    be especially concerned when we have a government bureaucracy
    that can generate new regulations faster than the electric
    utility industry can build new generating plants, and much
    faster than the consumer and the economy can absorb the cost.
        The impact on people. What comes first, food, shelter,
    medicine, electricity, doing without? At Canadian Valley, we
    have people who call our office wanting to know how much their
    next electric bill is going to be so they will know how much
    they have to spend at the grocery store.
        Growing pressures on the electric utility industry will
    continue to put upward costs--pressure on costs, additional
    environmental regulations governing air, water, and disposal of
    ash, as well as continued increases in fuel prices. More
    mandates from the Environmental Protection Agency on air
    emissions, water quality, coal ash storage, and handling
    threaten to significantly increase the cost of producing
    electricity.
        The EPA has proposed carbon emission standards, which
    forces roughly 50 percent reduction in CO2 emissions from new
    coal plants. The rule could impact existing coal-fired plants
    if they undergo significant modification. Coal has historically
    been our lowest-cost fuel to meet the growing electrical
    economy. Now the risk of present and future regulations have
    effectively taken our Nation's most abundant, least-cost energy
    resource off the table for future requirements. These potential
    threats create too great a capital risk for electric utilities
    to continue building new coal-fired plants.
        I thank you for this opportunity.
        Mr. Lankford. Mr. Hand, thank you very much.
        [Prepared statement of Mr. Hand follows:]

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        Mr. Lankford. Ms. Carmody, we will receive your testimony.

                     STATEMENT OF PAULA M. CARMODY

        Ms. Carmody. Chairman Lankford, Ranking Member Speier, and
    members of the subcommittee,thank you for inviting me today to
    testify about the impact of rising energy costs on American
    families. I am Paula Carmody. I am in the People's Counsel for
    the State of Maryland. I head an independent State agency that
    represents the interests of residential utility customers.
        I am testifying today in my capacity as president of the
    National Association of State Utility Consumer Advocates, or
    NASUCA. NASUCA is an organization of agencies designated by
    State law to represent consumer interests before State utility
    regulatory agencies. We advocate for policies and programs that
    provide safe, reliable, and affordable energy services for our
    consumers in our respective States.
        Consumers have experienced changes and energy prices and
    therefore energy bills over the past decade, even as most
    incomes have remained stagnant or declined in real terms. One
    positive note recently has been the drop in wholesale and
    retail prices for natural gas. This has provided welcome relief
    to families relying on natural gas to heat their homes and
    water. We can reasonably expect that these natural gas prices
    will remain relatively stable over the next few years. This is
    good news for gas consumers, even as issues related to
    environmental impacts of hydraulic fracking and LNG exportation
    continue to be addressed by policymakers.
        The decrease in natural gas prices also has had an impact
    on electricity prices in many States as natural gas-fired
    generating resources have become more competitively priced in
    comparison to other resources. The overall reduction in energy
    demand, a result of the economic slowdown and the impact of
    energy-efficiency programs, also has affected electricity
    prices. In Maryland, the decrease in wholesale electricity
    prices has been reflected in lower annual electricity bills for
    residential customers. For example, the average annual
    electricity bill for residential customers of Baltimore Gas and
    Electric Company, our largest combined gas and electric company
    in the State, was about $1,900 in 2009. In 2012, this bill was
    estimated to be about $1,600.
        While the focus of hearing today is on the impact of rising
    energy prices, it may be useful to think in terms of the
    affordability of energy bills for our consumers. But what is
    the affordable energy bill? In general, we tend to consider for
    our households an affordable bill is one that can be regularly
    paid on a full and timely basis without substantial household
    hardship.
        NASUCA has expressed particular concern for those low-
    income and vulnerable customers whose bills are not affordable.
    They pay far more of their household income towards energy
    bills than the average customer, and are at greater risk for
    falling behind in utility bill payments and losing service.
    This concern is reflected in our association's resolution
    supporting full Federal funding for the Low Income Home Energy
    Assistance Program, or LIHEAP, which has helped households with
    heating bill assistance since 1981.
        NASUCA also has a long tradition of support for the
    adoption of cost-effective energy-efficiency programs for all
    consumers as a way of conserving valuable energy resources,
    reducing demand, and reducing customers' utility bills. Energy-
    efficiency programs can produce benefits by directly reducing
    energy usage for individual customers. They can positively
    impact energy bills by reducing market clearing prices in
    regions with restructured electric utilities. They could also
    help to avoid construction of more costly generating facilities
    for vertically integrated utilities, and thereby mitigate
    potential bill increases.
        Low-income customers often live in housing in poor
    condition and with faulty heating equipment. To ensure that
    low-income families can benefit from reducing their energy
    usage and, therefore, their bills, NASUCA also supports
    federally funded weatherization programs for low-income
    consumers, such at the Weatherization Assistance Program, to
    reduce energy usage.
        NASUCA members frequently address issues involving resource
    planning or generating facilities in their respective States
    and regions, whether their regulated utilities are vertically
    integrated or purchase electricity supply in wholesale markets.
    In either circumstance, the type and proportion of different
    resources used to generate supply have varying impacts on the
    retail prices paid by consumers in those States.
        NASUCA has long noted the importance of long-term planning
    and resource diversity. In a 1990 resolution, NASUCA recognized
    that it was in the interests of consumers to factor potential
    future costs of reducing greenhouse gas emissions into
    generation resource planning. However, given the potential for
    cost impacts on consumers in the near term, NASUCA also urged
    policymakers to keep these cost impacts in mind when adopting
    policies or mechanisms to reduce greenhouse gas emissions or to
    address other environmental concerns.
        NASUCA has not taken a position on the merits of any of the
    existing or proposed EPA regulations that are at issue these
    days; however, NASUCA recently adopted a resolution urging the
    EPA to establish compliance timelines that provide sufficient
    time to consider appropriate least-cost responses so as to
    avoid rate shock to our electricity customers.
        NASUCA continues to advocate and support policies and
    programs designed to provide affordable energy to our
    consumers, while maintaining safety and reliability. As part of
    that advocacy, we have supported energy efficiency programs,
    low-income weatherization programs, adequate funding for direct
    energy assistance, and the implementation of policies to
    support the development of diverse energy resources. In
    supporting these type of policies and initiatives, NASUCA has
    also emphasized the need to address cost impacts on consumers
    in the decisionmaking in order to minimize the impacts on our
    consumers throughout the United States.
        Again, thank you for the opportunity to testify here today.
        Mr. Lankford. Thank you.
        [Prepared statement of Ms. Carmody follows:]
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        Mr. Lankford. Mr. Trisko.

                     STATEMENT OF EUGENE M. TRISKO

        Mr. Trisko. Thank you, Chairman Lankford, Ranking Member
    Speier, members of the subcommittee.
        My name is Eugene Trisko. I'm here to present the findings
    of a study of the impacts of rising energy costs on American
    families. I've conducted this study periodically since the year
    2000 for the American Coalition for Clean Coal Electricity. The
    latest version is attached to my testimony.
        The report analyzes consumer energy cost increases since
    2001, and examines the pattern of energy expenditures among
    four income levels. Energy costs for gasoline and residential
    utilities are summarized in nominal dollars by household income
    category for U.S. households in 2001, 2005, and 2013, using
    data from EIA, CBO and the U.S. Bureau of the Census. Energy
    expenditures as a percentage of nominal after-tax income are
    estimated for the effects of Federal and State income taxes and
    Federal Social Security and Medicare insurance payments.
        The report's findings in sum are: Lower-income families are
    more vulnerable to energy costs than higher-income families,
    because energy represents a larger portion of their household
    budgets.
        Energy is consuming one-fifth or more of the household
    incomes of lower- and middle-income families, reducing the
    amount of income that can be spent on food, housing, health
    care, and other necessities.
        Approximately one-half of U.S. households have average
    pretax annual incomes below $50,000. Measured in constant
    dollars, our median, median household income of about $50,000
    is nearly 9 percent below the median household income peak of
    some $53,000 in 1999.
        Family incomes are not keeping pace with the rising cost of
    energy. In 2001, U.S. households with gross annual incomes
    below $50,000 spent an average of 12 percent of their average
    after-tax income of $21,600 on residential and transportation
    energy. In 2013, these households are projected to spend an
    average of 20 percent of their average after-tax income of
    $22,600 on energy. These percentage findings would not change
    if the current dollar values I've cited for household income
    and energy expenditures were adjusted for the 30 percent rate
    of inflation since 2001.
        Residential electricity has maintained relatively low price
    increases compared with residential natural gas and gasoline.
    Virtually all of the residential electricity price increases
    over the past two decades have occurred since 2000. Between
    2001 and 2013, residential electric prices are projected to
    increase in nominal dollars by 40 percent to a national average
    of 12 cents per kilowatt hour, above the 30 percent change in
    the CPI from 2001 to 2012. These increases are due in part to
    additional costs associated with meeting U.S. EPA clean air and
    other environmental standards, as mentioned by witness Hand.
        Higher gasoline prices account for three-fourths of the
    increased cost of energy since 2001. Consumers feel this pain
    every time they stop at the gas pump. Average U.S. household
    expenditures for gasoline will more than double in nominal
    dollars from 2001 to 2013. In comparison, residential energy
    costs for utilities will increase on average by 46 percent,
    compared with the CPI increase of about 30 percent.
        Fixed-income seniors are a growing proportion of the U.S.
    Population and are among the most vulnerable to energy cost
    increases due to their relatively low average incomes. In 2011,
    the median gross income of 27 million households with a
    principal householder age 65 or older was $33,000, one-third
    below the national median household income of $50,000.
        These findings are discussed in more detail in the report.
    I am happy to answer any questions from the subcommittee, and
    will graciously accept any bonus points the chairman wishes to
    confer.
        Mr. Lankford. They are given.
        [Prepared statement of Mr. Trisko follows:]
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        Mr. Lankford. Mr. Weiss.

                      STATEMENT OF DANIEL J. WEISS

        Mr. Weiss. Thank you very much, Chairman Lankford, Ranking
    Member Speier, and members of the subcommittee. I am honored to
    be at the subcommittee's first hearing. It's like going to the
    first Oklahoma Thunder's basketball game.
        When considering the energy prices, there are three
    important considerations. First, fossil fuel prices do not
    include the costs of their side effects, such as air pollution
    and the associated costs for premature deaths or asthma
    attacks. Second, the Obama administration has adopted important
    policies to reduce energy costs for middle- and low-income
    families. And, third, expanding domestic oil production in
    protected lands and waters owned by all taxpayers will not
    lower gasoline prices.
        First, fossil-fuel-generated energy has real external
    costs. When assessing the effects on rising energy costs, it's
    essential that this evaluation also include the external costs
    of fossil fuel use and who pays them. For instance, mercury and
    toxic air pollution from power plants threaten children, senior
    citizens, and the infirm with brain impairment, respiratory
    illnesses, and even early death. Reducing these pollutants will
    return $3 to $9 in health benefits for every $1 in cleanup
    costs.
        Coal-fired power plants produce one-third of all the
    climate pollution in the U.S., and Climate change has real
    costs to our economy. For instance, the National Journal just
    reported that the drought will reduce the Mississippi River
    barge traffic, resulting in, quote, ``losses of about $7
    billion through the end of January,'' unquote.
        As Ranking Member Speier mentioned, the National Oceanic
    and Atmospheric Administration reported that in 2011 and 2012,
    there were 25 floods, droughts, storms, heat waves and
    wildfires that each caused at least $1 billion in damages.
    Together these severe events caused 1,100 fatalities and up to
    $188 billion in total damages. Pollution reduction requirements
    internalize some of the costs from pollution so that the costs
    are paid for by the fuel users rather than by everyone else.
        Second, the Obama administration has adopted important
    policies to reduce energy costs. As Ranking Member Speier
    mentioned, doubling the fuel economy of passenger vehicles by
    2025 will reduce gasoline purchases by $8,000 over the life of
    a 2025 car. It's been estimated that this will be like getting
    $1 off the price of a gallon of gasoline.
        The Department of Energy set efficiency standards for
    nearly 40 different appliances, including washing machines and
    refrigerators, that together will, quote, ``save consumers
    nearly $350 billion on their energy bills through 2030,''
    unquote.
        As mentioned by the previous witnesses, the Weatherization
    Assistance Program weatherized its 1 millionth low-income home
    in 2012. The Department of Energy estimates that this saves
    each family up to $400 a year on heating and cooling costs.
        I agree with Mr. Trisko and Ms. Carmody that those
    concerned about the impact of energy prices on lower-income
    households should restore the recent funding cuts in the
    Weatherization and Low Income Home Energy Assistance Programs.
    Eliminating special tax breaks for the Big Five oil companies
    can provide $2.4 billion annually in offsets.
        Last, expanding domestic oil production into protected
    Federal lands and waters will not lower gasoline prices. Oil
    prices are set on a world market that's not really affected by
    domestic production, and the price is set by a cartel. Two-
    thirds of the gasoline price is based on the oil price;
    therefore, higher U.S. oil production has little impact on
    gasoline prices here.
        As Ranking Member Speier noted, the U.S. is already
    producing the most oil it has in 15 years. The Energy
    Information Administration reports that Federal lands and
    waters produced 13 percent more oil in the first 3 years of the
    Obama administration compared to the last 3 years of the Bush
    administration. That's 2 billion barrels under Obama versus 1.8
    billion barrels Under Bush.
        The Associated Press tested whether more U.S. Drilling
    would lower gasoline prices. After analyzing 36 years of
    monthly U.S. oil production and gasoline price data, AP found,
    quote, ``no statistical correlation between how much oil comes
    out of U.S. wells and the price at the pump,'' unquote.
        High oil and gasoline prices do benefit the Big Five oil
    companies: BP, Chevron, ConocoPhillips, Exxon Mobil, and Shell.
    They made a combined profit of $255 billion over the last 2
    years.
        To protect American families and business from high energy
    prices, we must do a few things: First, reduce the costly
    pollution costs by fossil fuel use, which has a real cost to
    our economy. Continue to improve the energy efficiency of
    vehicles, appliances, and buildings. Fully fund the
    Weatherization and LIHEAP programs. And last, eliminate
    unnecessary tax breaks for the Big Five oil companies that are
    already swimming in profits.
        Thanks again for the opportunity to be at your inaugural
    hearing.
        Mr. Lankford. Thank you.
        [Prepared statement of Mr. Weiss follows:]
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        Mr. Lankford. Mr. Simmons.

                     STATEMENT OF DANIEL R. SIMMONS

        Mr. Simmons. Mr. Chairman, Ranking Member Speier, and
    members of the subcommittee, thank you for the opportunity to
    talk today about the impacts of rising energy prices on
    American families, and particularly about oil prices.
        It's easy to take affordable, reliable energy for granted,
    but we should not do that. Having a plentiful supply of
    affordable, reliable energy is the result of deliberate policy
    choices, and these policy choices matter for many of the
    reasons that Mr. Trisko talked about.
        Energy prices are frequently unavoidable costs for family
    and businesses, and they are--and high energy prices are
    disproportionately felt by middle- and low-income families.
    Families that make over $50,000 a year spend 9 percent of their
    income on energy, but families that make less than 30 percent
    spend nearly--well, spend three times that portion, or 27
    percent of their income, on energy costs. And this is the
    fundamental disconnect with President Obama's energy policies.
    During the State of the Union, he talked about wanting to
    strengthen the middle class, and yet his policies intentionally
    increased the price of energy.
        So why have we had high oil prices over the past few years?
    The reason for that is that oil is a globally traded commodity,
    and with global supply and demand for--because of the global
    supply and demand for petroleum products, increased global--
    global demand, particularly from Asia, is driving price
    increases, especially combined with unrest in the Middle East
    and with OPEC intentionally limiting supply.
        In the U.S. over the past couple weeks, we have all noticed
    prices have increased, gasoline prices have increased. The
    reason for that is a decline in U.S. refinery production and
    seasonal maintenance. Refineries have spent over $128 billion
    in regulatory compliance since the 1990s. These high refinery
    costs have reduced the amount of spare capacity and refining
    diversity. Over that time, 66 refineries have closed, and as a
    result, when a refinery closes for maintenance and repairs,
    gasoline prices increase.
        So what can we do about high oil prices? One is to increase
    North American oil production. Robust oil production in North
    America does two, two critical things. First of all, it
    increases the global oil supply; and, second, it increases
    global spare oil capacity. When we have more spare capacity, it
    lessens the impact of unrest in the Middle East, such as when--
    during the Libya civil war when Libya's oil production went
    offline, and it lessens the global dependence on Middle Eastern
    oil. That leads to lower global oil prices overall.
        In 2011, the United States experienced the largest 1-year
    increase in oil production in our history. These large
    increases, however, occurred almost exclusively on private and
    State lands. President Obama likes to take credit for this.
    That credit is--is completely wrong.
        According to CRS, 96 percent of the increase of oil
    production between fiscal year 2007 and 2012 came from private
    and State lands. This rapid increase is the result of hydraulic
    fracturing and directional drilling on private and State lands
    combined with rational regulation from the States. Because this
    is--and that is the difference between the State regulators
    and--and the Federal regulators.
        Some say that hydraulic fracturing is dangerous or
    controversial, but let's just look at the record. It's been
    used for over 60 years in more than 1.2 million wells, and even
    EPA Administrator Lisa Jackson says there isn't a single
    confirmed case of groundwater contamination from hydraulic
    fracturing.
        And Federal lands have even more energy potential. We know
    there's more than 1.4 trillion barrels of oil shale and shale
    oil. But--for example, but the Federal Government leases less
    than 2 percent of offshore areas and less than 6 percent of
    onshore areas for energy production.
        If the Federal Government were serious about lowering oil
    prices, they would do two things. First of all, they would
    follow the States' example on leasing and regulation of oil
    development, and they would help export the States' exemplary
    policies around the world.
        For example, it takes 307 days for the Federal Government
    to process a permit to drill on Federal lands, but it only
    takes the State of Colorado 27 days and North Dakota 10 days.
    While the President in the State of the Union said that he
    would, quote, ``keep cutting red tape and speeding up new oil
    and gas permits,'' close quote, the reality is quite the
    opposite. The amount--since 2005, the amount of time that it
    takes the Federal Government to process a permit to drill has
    nearly doubled.
        There are vast oil and natural gas resources in the United
    States and Canada. Even more oil resources are available if the
    Federal Government and other countries around the world were to
    follow the lead of States like North Dakota, Texas, and
    Pennsylvania with their regulation and benefits from hydraulic
    fracturing. So far the only place in the world they have seen
    the transformative power of hydraulic fracturing to
    dramatically increase oil and natural gas production is on
    private and State lands. Rational regulation on Federal lands
    and around the world would lead to greater energy produced--
    production and lower prices.
        Thanks for the opportunity to testify, and I'd be happy to
    answer any of your questions.
        Mr. Lankford. Mr. Simmons, thank you.
        [Prepared statement of Mr. Simmons follows:]
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        Mr. Lankford. Thank you, all of you. All of you, as you
    know, your written testimony will be made part of the permanent
    record as well, because I know that is in addition to what you
    did in your oral testimony.
        I'd like to also submit with unanimous consent some of the
    other documents to go into the record, the two different charts
    that Mrs. Speier submitted during her oral testimony.
        Also, Ms. Carmody had referenced a resolution from her
    organization. I would like to make that part of the permanent
    record as well.
        The report that was done on Energy Cost Impacts on American
    Families that Mr. Trisko referenced in his testimony, make that
    part of the record as well.
        And then there have been several comments about the
    weatherization program. This committee actually last session
    did a pretty extensive study on the weatherization program. And
    I hate to say some serious problems. There are many of the
    programs that we have that are very efficient. That one proved
    to not be very efficient in the distribution of funds from DOE
    actually down to homes. So I'd like to be able to put that
    report as well into the permanent record as well.
        Without any objection, all that will be submitted.
        Let me begin our questioning time, and we'll take 5 minutes
    for questioning and then begin to move back and forth on that
    for those of you that have not done questioning before on it.
        Mr. Hand, let me begin with you on this. You talked about
    diversification of fuel, and talked about some history as well,
    when natural gas was then prohibited by the Federal Government,
    and so the industry went to coal and is now shifting back to
    natural gas again. I look forward to the day that 30 or 40
    years from now that we have this same conversation again about
    coal and begin to shift back again and to see what happens on
    that.
        What is the lifetime of a power-generating facility? What's
    the typical life expectancy for them?
        You need to get your microphone turned on there. Sorry.
        Mr. Hand. We've talked about that many times in our board
    rooms and especially because it--we look to see what the
    depreciation costs are. The coal plants can be updated. We
    believe that 50 years on a coal plant is a reasonable lifetime
    for it to be--technology is something that--at times gas is an
    area where technology may have caused the--to shorten that to--
    as far as a base-load generation on the older gas plants
    because of the combined cycles and the lower amount of fuel
    that it--natural gas it takes to create that kilowatt hour.
        Mr. Lankford. So whatever means it may be, let's say if the
    plant was built in the 1990s, and it was expected to be a coal
    plant for a 50-year time period on that, pushing them down and
    pushing them out is very difficult to do, obviously, with
    capital costs. And then also you're planning a decade ahead of
    time for construction of new production. So that becomes a--a
    significant burden in the past.
        Can anyone begin to define now as far as a breakout for me
    of the cost of, let's say, electricity, of where it would break
    out, the cost that's actually delivered to the consumer, what
    part of that is the fuel, what part of that would be regulatory
    costs, what part of that would be the delivery costs of that?
    Anyone give an estimation?
        Mr. Hand. I have some costs that we actually experienced
    through Western Farmers, what their costs were. That would not
    be the same for every utility, but I can give their numbers for
    last year.
        Mr. Lankford. Okay. Do you have those at hand, or do you
    want to submit those?
        Either way. I have them here.
        Go ahead. List some of those out.
        Mr. Hand. The coal was 2.6 cents. The combined using,
    combined cycle natural gas, this was at a lower gas cost than
    today, but during 2012 was 2.5 cents. This--the simple cycle
    was 3.2 cents for natural gas. Combustion turbine, 3 cents. We
    did purchase some hydro, which had an all-in cost of about 1
    cent. Our purchased wind, which was about 12--almost 13
    percent, was an average cost of 3.9 cents, which we would
    consider that all as a fuel cost.
        Then we had other purchased power, which we--in the 2.7
    cent range for the fuel portion of the kilowatt hour.
        Mr. Lankford. Okay. And a typical kilowatt hour purchase is
    how much, so the actual charge to the consumer? The charge to
    the consumer is how much for a kilowatt hour?
        Mr. Hand. For just the fuel component?
        Mr. Lankford. Just the total cost to them. They are paying
    how much?
        Mr. Hand. Just to the--for the generation of the kilowatt
    hour, not including distribution cost----
        Mr. Lankford. I'm talking about how much the consumer pays.
        Mr. Hand. How much the consumer pays?
        Mr. Lankford. Yes, sir.
        Mr. Hand. A residential consumer on our system with an all-
    in cost would be around 9-1/2 cents.
        Mr. Lankford. Okay.
        Mr. Hand. I don't have that number exactly in front of me.
        Mr. Lankford. All right. Thank you for that.
        Mr. Simmons, you made several--several comments about
    gasoline itself and about increasing supply on Federal lands.
    You also referenced the President during his State of the Union
    made a very strong comment about increasing production on
    Federal lands and decreasing the regulatory environment. You
    made a comparison between State and Federal regulations.
        What do you experience right now or are seeing in the
    reduction of oil and natural gas as far as the--the pressure
    towards Federal regulations versus State primacy and State
    regulations?
        Mr. Simmons. Well, especially in the area of hydraulic
    fracturing, the Federal--hydraulic fracturing is regulated by
    the States because it deals with groundwater. It always has
    been regulated by the States. And the Federal Government, now
    the Bureau of Land Management wants to regulate it on Federal
    lands. That will definitely increase costs. And according to
    one study, it would cost over $250,000 per well for the Federal
    Government to do that.
        And the Federal--the hydraulic fracturing is the critical
    technology. So far it has not been regulated by the Federal
    Government, and that's one of the reasons that we're seeing
    dramatic increases of oil and natural gas production.
        Mr. Lankford. Okay. Thank you.
        Ms. Speier.
        Ms. Speier. Thank you, Mr. Chairman. And thank you all for
    your testimony.
        I'm trying to find some consensus here. And we're talking
    about the high costs of energy for families and employers. And
    three of you, Ms. Carmody, Mr. Trisko, and Mr. Weiss, all spoke
    about the LIHEAP program. So let's see if we can get some
    consensus here on LIHEAP.
        It was a $5.1 billion program. It has since been cut. I
    don't know to what extent it's been cut. If we're really trying
    to help the low-income people in this country not spend 20
    percent of their income on energy, LIHEAP is part of the
    solution; is it not?
        Ms. Carmody. Yes. Ranking Member Speier, from our point of
    view, NASUCA has consistently for any number of years supported
    full funding of LIHEAP. In my testimony I did mention the $5.1
    billion cost figure and the fact that it's down to, I believe,
    around 3.4 billion at this time. This is not sufficient from
    our purposes or for our low-income consumers to provide
    adequate funding.
        One of the things that we have noted in the State of
    Maryland, certainly over the past 4 to 5 years, are a few
    things. One, of course, is the significant increase in the
    number of applicants for energy assistance; that is, that they
    meet the income guidelines. Because of reductions in State
    funding and private donations, there are actually lower dollars
    available to supplement LIHEAP from the State level. So what
    this means is that the average benefit that our customers in
    Maryland are getting between LIHEAP and State contributions is
    running around what it was in 2002 and far less than it was in
    2008. So we do support full funding, and NASUCA's on record as
    doing that.
        Ms. Speier. Thank you.
        Mr. Trisko?
        Mr. Trisko. Thank you, Ranking Member Speier.
        My paper submitted for the record notes that LIHEAP's
    current funding level, about 3.4- or $3.5 billion, is
    equivalent to 6 percent of the total residential energy bills
    that I've calculated for the year 2013 for the income category
    of gross income $30,000 or less.
        Ms. Speier. So only 6 percent of those making $30,000 or
    less actually access it.
        Mr. Trisko. Only 16 percent.
        Ms. Speier. Sixteen.
        Mr. Trisko. Pardon me. The 6 percent number is $3-\1/2\
    dollars represents 6 percent of the total energy bills,
    residential energy bills, for households with gross incomes of
    $30,000 or less. In other words, it only scratches the surface.
    But also bear in mind that the participation rate in the LIHEAP
    program is only 16 percent; that is, only 16 percent of those
    households that qualify for LIHEAP assistance actually apply
    for and receive it. So there's a serious lack of participation
    in the program in addition to an apparent lack of adequate
    funding. And it's my understanding generally that all of the
    major energy associations support adequate funding----
        Ms. Speier. All right.
        Mr. Trisko. --for LIHEAP.
        Ms. Speier. Thank you.
        Mr. Weiss, do you have anything to add to that? Or I'm
    going to ask you another question.
        Mr. Weiss. Just very briefly that I would observe that the
    $1.6 billion funding cut for LIHEAP is less than the $2.4
    billion a year that the Big Five oil companies received in
    special tax breaks, according to the Congress' Joint Committee
    on Taxation.
        Ms. Speier. Okay. Thank you for that comparison.
        Let me ask a question of all of you: How many of you
    believe in climate change? Let's just go down the line. Mr.
    Hand?
        Mr. Hand. Yeah.
        Ms. Speier. It's not a trick question, yes or no.
        Mr. Hand. To say that I don't believe that climate ever
    changes would be to deny history. I believe history as far as
    far as full climate change.
        Do I--am I convinced that man is the----
        Ms. Speier. All right. Thank you. You're not certain man
    is.
        I'm running out of time. I just want to make sure everyone
    gets the question answered, and then I have a question for Mr.
    Weiss. And I don't think I'm going to be able to ask it.
        Go ahead.
        Ms. Carmody. Yes. I would just note that in 2007, a NASUCA
    resolution did indicate that there was a growing scientific
    consensus on the need to reduce emissions of greenhouse gases,
    and did cite a number of reports and studies on climate change.
    And I will decline to offer my personal views since I'm here on
    behalf of----
        Ms. Speier. All right. Thank you.
        Mr. Trisko.
        Mr. Trisko. Ranking Member Speier, I am in an even more
    difficult position. And I would speak on my own behalf. I have
    attended for the past 20 years every United Nations
    International Framework Convention on Climate Change meeting,
    and it is abundantly clear that unilateral actions by the
    United States on CO2 reductions would have no meaningful
        impact on future concentrations of global CO2. Further, any
    actions----
        Ms. Speier. All right, Mr. Trisko, my time has expired.
        Mr. Weiss.
        Mr. Weiss. Yes. There is an overwhelming scientific
    consensus that climate change is real, it's here, and it is
    caused by human activity burning fossil fuels.
        Mr. Lankford. Mr. Simmons.
        Mr. Simmons. Yes, I believe in climate change.
        Ms. Speier. Mr. Chairman, I regret that I'm going to have
    to leave temporarily to participate in a press conference that
    is bipartisan in nature. So I will return as soon as possible.
        Mr. Lankford. Thank you.
        Mr. Walberg.
        Mr. Walberg. Thank you, Mr. Chairman. And thank you to the
    panel for being here.
        Mr. Trisko, appreciate the fact that you're a man of
    numbers and statistics.
        The President stated in his State of the Union Address we
    produce more natural gas than ever before; nearly everyone's
    energy bill is lower because of it.
        Do you believe that nearly everyone's energy bill is lower
    once EPA's regulations go into effect?
        Mr. Trisko. Congressman, I believe that one of the most
    telling statistics noted in my testimony, in the submitted
    testimony, is that EPA's current MATS rule, the Mercury and Air
    Toxic Standard rule that Mr. Weiss referred to, has an
    estimated annualized cost by EPA of some $9.6 billion annually.
    And that compares to EPA's estimate of the annual costs of all
    prior Clean Air Act regulations on the utility sector of $6.6
    billion.
        Mr. Walberg. All prior.
        Mr. Trisko. All prior. So this one regulation alone exceeds
    the costs of all prior Clean Air Act regulations.
        And we are basically now confronting a chain of future
    regulations, including potential regulations on water intake,
    on coal ash, and whatever is determined with respect to
    existing source emissions of CO2, that could potentially dwarf
    the cost of that 9.6 billion.
        So looking forward, the expectation in terms of impacts on
    electric bills is for increases both in current and real
    dollars.
        Mr. Walberg. How much----
        Mr. Weiss. Mr. Chairman.
        Mr. Walberg. Let me continue on here.
        How much can Americans expect their electricity bills to
    increase in the next couple of years, based upon those figures?
        Mr. Trisko. I believe that it's--the EIA publishes a series
    of projections in their long-term energy outlook in which they
    take into account the EPA regulations. I don't know the average
    annual rate of increase offhand. Mr. Weiss does.
        Mr. Weiss. May I answer?
        Mr. Chairman--sorry, Mr. Walberg, the Energy Information
    Administration projects that electricity costs will remain
    essentially flat over the coming 10 years.
        Mr. Walberg. Well, it will be interesting to see it
    essentially flat. I'd be delighted, but hearing the figures
    about this eclipses all previous regulations, I'd find that
    hard to believe. But thank you.
        Ms. Carmody, can you please go into some detail on NASUCA's
    June 2012 resolution on EPA regulations and also what prompted
    it?
        Ms. Carmody. Yes. Thank you, Mr. Walberg.
        As I mentioned previously, we've got members from over 40
    States in the United States, and as you can imagine, they come
    from every region of the country, you know, certainly, the
    Midwest the Northeast, West, Southeast. And the individual
    members and States have different perspectives. The resolution
    that came out in June of 2002, and this is the one that
    recommended, you know, or urged the EPA to certainly factor in
    cost impacts in terms of looking at compliance deadlines, this
    was a result of a--lots of discussion and an attempt to reach
    consensus of agencies with different perspectives on a broad
    point of view to protect consumers basically across the
    country. And we were not able certainly to reach agreement on
    the EPA regulations themselves because of varying points of
    view.
        But we all recognized as individual State agencies that
    deadlines or compliance deadlines, if they are too rapid, can
    impose certain rate shocks and abrupt cost impacts on
    consumers, particularly in certain States. And that was the
    impetus for passing the resolution to urge that these factors
    be taken into account as we're moving forward with
    environmental regulations.
        Mr. Walberg. Thank you.
        Mr. Hand, I notice in your testimony you have troubles with
    the lesser prairie chicken and the costs that could come from
    that. I've got troubles in my district with the Eastern fox
    snake and siting of the new--new proposed Fermi nuclear plant.
        But let's move over to Utility MACT. Will regulations like
    Utility MACT increase the costs of electricity that you provide
    to your customers, and what implications does that specifically
    have in rural areas?
        Mr. Hand. Yes, that will, because it will require
    additional capital investments that have to be paid for. And
    one of the things I'd address about--I'm glad you asked me
    about rural areas. We serve our roughly 90 percent resident--
    farm residential with about 40 percent of that group retired.
    Many are homes that are not the most energy efficient. And
    approximately half of the homes being built in our area today
    are mobile home manufactured housing that do not have the same
    potential to be energy efficient. We're very concerned about
    the people that are there today and the ones that are coming,
    because many of these homes are there because that's all the
    people could afford to put there, and their electric bills we
    see many times in the hot months and cold months far exceed
    their house payments.
        Mr. Walberg. Thank you. Thank you, Mr. Chairman. I mean,
    these, as recognized in rural America, are lower-income and
    middle-class families that we are talking about here and the
    impact of these regulatory costs.
        Mr. Lankford. Ms. Carmody, before we move on, I want to be
    able to check one thing in your reference. You reference a 2002
    report on that. Did you mean the 2012?
        Ms. Carmody. If I said 2002--I think I have to recall
    what--we do have a 2012 resolution. And that was the one that I
    just discussed with the compliance deadlines. If I said 2002,
    my apologies. I need to correct it to 2012.
        Mr. Lankford. That is great. A decade in Federal time is no
    time at all. I just wanted to make sure your record was clear
    on that. Thank you.
        I want to be able to recognize for 5 minutes a new member
    of the panel Mr. Horsford. You are welcome to be able to do
    questioning for 5 minutes. Thanks for being here.
        Mr. Horsford. Thank you very much, Mr. Chairman. It is my
    pleasure. And this is a very important discussion today, as it
    affects all of us as consumers, both residential as well as
    businesses.
        And I would like to ask each of you quickly to just touch
    on energy production from a renewable energy standpoint. I am
    from Nevada. Over 80 percent of our land is controlled by BLM.
    And we have an abundance of wind, solar, geothermal resources,
    and can be a net exporter of energy. And I am of the view that
    we need all of our energy resources to be considered on the
    table in a fair and equitable manner. So I would like to ask
    you to just touch on briefly renewable energy production as
    part of the equation here.
        Mr. Hand. I would be glad to. And I would just say in
    Oklahoma, the Western Farmers, our power supplier, we were the
    first utility in Oklahoma to embrace the large wind farm, sign
    the first contract with them, and bring it into our system. We
    have continually added to that at every opportunity.
        We have had some concern over how much we can bring in just
    to manage the system and keep it stable, but it has been more
    than we thought. And we consider it, as I said earlier, a
    hedge.
        Again, now, there are costs, such as the transmission to
    move it, that kind of gets blended in and don't get charged to
    that. But we believe that is part of coming forward with a
    balanced energy program.
        The mention of the lesser prairie chicken not only affects
    us and the ability to build transmission lines to move this
    power, it is going to affect the ability to build the wind
    generators where they are needed.
        Mr. Horsford. Thank you.
        Ms. Carmody. Thank you. I am here, and I stated earlier
    before you entered the room, in my official capacity on behalf
    of the National Association of State Utility Consumer
    Advocates. So I did want to make a distinction between that,
    that I am speaking on the association's behalf.
        In the resolutions that I referred to in my written
    testimony and orally today, those resolutions do contain
    support for the inclusion of different and diverse energy
    resources in long-term planning, generation planning. And in
    those resolutions we do identify renewable resources as part of
    that diverse portfolio.
        Mr. Horsford. Okay. Let me just break in so that I don't
    take up all the time.
        On the question, though, of the Federal land, Mr. Simmons,
    I know you touched on it, Mr. Weiss, I don't know if you have
    any additional comments. So the focus was more on natural gas.
    But what about Federal land use for renewable energy
    development? Again, I have one county in my rural part of my
    district where over 90 percent of that county is controlled by
    the BLM, and, therefore, they cannot enter into local
    agreements for development for renewable energy without a lot
    of BLM involvement. So what's your perspective on that, Mr.
    Weiss?
        Mr. Weiss. Well, first, under the current administration,
    they met a goal of siting 10,000 megawatts of renewable
    electricity on Federal lands. Second, there is vast potential
    on Federal lands for additional renewable electricity. We
    actually did an analysis on it, and I would be happy to submit
    it for the record. And third is that one of the things that the
    current administration did is they sped up the paperwork
    process for getting approval of wind or solar facilities on
    Federal lands.
        Mr. Simmons. If I may, obviously renewables have positive
    and negatives, as all sorts of energies. With renewables it is
    frequently the cost. And in the case of the Federal lands, it
    is so difficult to do any type of activity, any type of energy
    production on Federal lands, that even when it comes to solar
    or wind that the administration would like to expedite on
    Federal lands, it is still very difficult and time consuming.
        One thing that would--I think would definitely be a
    positive for all sorts of energy is to streamline the process
    for all types of energy, and that way, you know, we can be able
    to use the Federal lands in a more multiuse method.
        Mr. Horsford. Mr. Chairman, I agree with the need for us to
    look at streamlining the process. I know the Interior, under
    the leadership of Secretary Salazar, has done yeoman's work and
    made tremendous progress, but there is much more that can be
    done. And on behalf of a State that is controlled by more than
    80 percent by the BLM, we need to have this discussion in ways
    that really produce some solutions for local governments and
    States that want to have more control over the development of
    our resources.
        Mr. Lankford. I would completely agree on that. People
    asked me about the State of the Union Address and where I found
    common ground with the President, and he listed and articulated
    very clearly he wanted to be able to speed up the regulatory
    process and the speed of that for Federal lands for both oil
    and gas and renewables. And we would welcome that and work in
    any way we can with the administration for that. So thank you
    for your testimony.
        Mr. DesJarlais.
        Mr. DesJarlais. Thank you, Mr. Chairman.
        Mr. Simmons, oil refineries on the east coast and the Gulf
    of Mexico have had difficulties with expeditiously getting oil
    to their facilities. What would more pipelines like the
    Keystone XL mean for gasoline prices?
        Mr. Simmons. Well, the problem with the refineries on the
    east coast is that for years they have been dependent on Brent
    crude, oil that is transported from--essentially from the North
    Sea, and traditionally that has been cheaper oil. And for the
    last few years, it has been much more expensive. In fact, for a
    while a couple years ago, it was--the refined products were
    actually cheaper than the cost of the oil itself.
        What more pipelines to those facilities means is that you
    can move the cheap, low-cost oil that's being produced in the
    Bakken and in other parts of the country, or all the way from--
    all the way from the oil sands in Canada to those refineries,
    giving them access to low-cost energy--low-cost oil supplies.
    And here is the price difference. Brent crude is currently $110
    a barrel. The cost per barrel for the oil coming out of the oil
    sands is about $50 to $55 a barrel. So when you can buy a
    barrel of oil for $55, or, you know, it will obviously cost
    more after pipelining costs, but you are still able to make
    money compared with buying from Brent Sea crude. And that is
    why the pipelines matter, is to move it to where there is spare
    refining capacity.
        Mr. DesJarlais. Do you think it is realistic, then, that we
    can build more reliable and efficient transmission systems even
    to the east coast? Obviously, the Keystone would be an asset, I
    think you would agree. Can we build pipelines to the east coast
    as well?
        Mr. Simmons. Oh, sure. Sure. What matters is reliable
    supply, that it makes sense to make those multimillion-dollar
    and multibillion-dollar investments.
        Mr. DesJarlais. Thank you.
        Mr. Hand, many people say that since the United States now
    has a lot of natural gas that we do not need to use coal
    anymore. Is this accurate?
        Mr. Hand. Me working in an area where we have to deal with
    the price of electricity every day, and have been doing that
    for a long time, I remember when the price of natural gas after
    Katrina went to nearly $15, and the price of electricity
    followed it very rapidly. I have seen many changes with
    favoring oil. I believe that it is important that we have a
    diversified supply of energy. But we know that we have an
    abundant amount of coal in the ground that is available, and I
    don't believe we should ever ignore that valuable resource.
        Mr. DesJarlais. Now, you serve rural and underserved areas.
    If we were to limit the co-op from burning coal, how will the
    underserved rural areas receive their electricity?
        Mr. Hand. When you say limit, that concerns me greatly,
    because as I regularly read even in Oklahoma, we have had one
    major utility negotiate a settlement, I don't know how far it
    has gone, with the EPA to shut down a coal plant. I continue to
    see that across the country, where more coal plants are being
    shut down. Today we don't have the capacity to be able to
    supply all the needs with those plants, and you don't bring
    them online tomorrow.
        Mr. DesJarlais. So regulations are seriously preventing or
    limiting your ability now, and that would get much worse. In
    other words, it's the regulations right now that are a major
    hindrance for you and your ability to provide services?
        Mr. Hand. Today we are only beginning to see the costs of
    some of the control technologies that we are having to put in.
    The CO2 issue and how strict it is on existing plants could be
    a matter of rationing in our area.
        Mr. DesJarlais. Are there even--I guess that would bring me
    to my next question. Are there any other sources of electricity
    even available in some of your areas if you didn't have coal?
        Mr. Hand. Well, they would rapid--I don't believe there is
    that much capacity, especially with today's transmission
    system, to be able to move it in. Today much money is being
    spent in the area of transmission to better move power, but
    today we have become so dependent--and not so much more than
    other States, I don't mean to claim that--as the part of our
    capacity that comes from coal-fired generation. It would be an
    extreme hardship.
        Mr. DesJarlais. Okay. Thank you, Mr. Chairman. I am going
    to try to get just a few bonus points, so I yield back.
        Mr. Lankford. Thank you, Mr. DesJarlais.
        Ms. Norton.
        Ms. Norton. Thank you, Mr. Chairman.
        In this very room this morning the GAO reported on its--or
    testified here on its, quote, ``annual high risk report.'' And,
    you know, normally we are looking at things like Medicaid or
    Medicare, and, of course, all of those things are always there.
    Number one on its list was climate change. So here we had a
    government agency known for its objectivity which not only
    spoke about the increasing evidence of climate change, but went
    further and spoke of what I can only call shocking exposure of
    the Federal Government, leave aside all the rest of us, because
    of the amount of land the government owns, because the
    government, of course, must give assistance all over the
    country, and because of the unpredictability of what had been
    rare, which has now become routine, extreme climate episodes.
        Now, I noticed on page 3 of your testimony, Mr. Weiss, you
    speak about higher gasoline prices due to Middle East unrest
    and speculation, and then you go into some of the unrest in the
    Middle East. I am interested in the speculation. It's going to
    be very hard to come to grips with the unpredictability of
    climate change and what the Federal Government ends up having
    to do. But analysts for some time have told us that
    notwithstanding what's happened in the Middle East in the
    recent year or so, that speculation accounts for as much as a
    third, or almost a third, of the price of gasoline. Is there
    anything that a free-market government can do in light of that
    kind of inflation that is absolutely useless and hard to
    justify?
        Mr. Weiss. Thank you, Ms. Norton.
        A couple years ago the head of Exxon Mobil testified to the
    Senate Finance Committee that the price of speculation, which
    are people investing in oil futures who do not plan to take
    physical possession of the oil, so they are different than end
    users such as an airline who actually has to buy the physical
    oil, that speculation was responsible for anywhere from $20 to
    $40 a barrel of the price of oil, and at that time the price of
    oil was about $100 a barrel.
        In fact, last year McClatchy did an analysis that found
    that two-thirds of the trades in the oil futures back in the
    winter of 2012, when we were having unrest in the Middle East
    and Libya, was due to speculators who were making two-thirds of
    the trade, end users were one-third of the trade.
        Fortunately, the Commodity Futures Trading Commission has
    new authority under the Dodd-Frank law to be able to limit the
    ability of speculators to drive up prices based on the fear
    that the price is going to keep rising. They have not really
    been put into place yet, but they are being implemented now by
    the CFTC. So hopefully that will limit the ability somewhat of
    speculators to drive up the price, which makes the end users
    like the airlines and other industries have to pay more for
    their oil.
        Ms. Norton. Not to mention you and me.
        Since there is much we can't control, the increasing
    evidence of gas prices going up when we least expect it has, of
    course, led to much concern about what you've just described. I
    can only hope that--and I don't know how they do it--but
    however they control this speculation will help us, it seems to
    me, at least in the long run on that portion of the issues with
    gas prices that comes from inflated speculation.
        Yes, Mr. Weiss?
        Mr. Weiss. One initiative the President announced on
    Tuesday night was the Energy Security Trust, which would be
    funded by oil and gas royalties paid to the Federal Government
    for oil owned by all Americans that they then take off of our
    lands. And that money would be invested in alternatives to oil,
    like electric vehicles and recharging stations and natural gas
    trucks.
        And one of the ways to help protect people from gasoline
    and oil price volatility is to give them other options of other
    fuels, whether it's electricity, natural gas, or investment in
    public transit. That will make people less subject to the
    volatility that comes from gasoline.
        Ms. Norton. Thank you very much, Mr. Weiss.
        Mr. Lankford. Thank you.
        Mr. Farenthold.
        Mr. Farenthold. Thank you.
        And I would like to actually follow up on that for a second
    with Mr. Weiss. We talk about the increased income that is
    potential to the Federal Government for the exploitation of the
    oil and gas and other natural resources under public land, but
    we see time and time again the regulatory burdens make it next
    to impossible to do that.
        Now, ignoring for a fact that we spent that money two or
    three times already with the programs the President was
    outlining--I think there has been talk about spending that
    money to repair our aging transportation infrastructure, be it
    fixing roads, bridges, or, you know, even going so far as to do
    high-speed rail--what is--what do you see as the holdup here,
    and how do we fix it? I will let Mr. Weiss and Mr. Simmons both
    take about 30 seconds at that one, if you please.
        Mr. Weiss. Thank you, sir.
        Well, in fact, as I mentioned earlier, oil production on
    Federal lands under the first 3 years of Obama were about 13
    percent higher than oil production on Federal lands and waters
    under the last 3 years of President Bush.
        Mr. Farenthold. Compared to a substantially higher number
    on private land.
        Mr. Weiss. Pardon?
        Mr. Farenthold. A substantially higher increase on private
    land.
        Mr. Weiss. Understood. But it's still increasing on public
    land as well.
        Second, just lack week the Department of Interior put up
    for auction another 37 million acres of leases.
        Mr. Farenthold. I am from Texas, I understand the oil and
    gas industry. We have a lot of--it's no problem getting the
    lease; it is getting the permit to drill that's the problem and
    the permit to do the operations. You have operators whose
    leases--have to beg for extensions of their leases because they
    can't get the permits.
        Mr. Weiss. Can I add one quick thing?
        Mr. Farenthold. Quickly.
        Mr. Weiss. One way to speed that process is to provide more
    resources to the people who are to review the permits over at
    the Department of Interior and make sure they have the bodies
    they need to do the work.
        Mr. Farenthold. Or additionally get rid of some of the
    regulations.
        Mr. Simmons.
        Mr. Simmons. Well, yes. Instead of--follow much more of the
    States model. The model from the Texas Railroad Commission, for
    example, is a much better model about if we're actually serious
    about increasing oil production and natural gas production on
    Federal lands.
        And, you know, Mr. Weiss mentioned that oil production in
    the last 3 years of the Obama administration were higher than
    the Bush administration, and the question is why? Well, it has
    to do--those were all--80 percent of the production, of the oil
    production, on Federal lands comes from offshore. Almost all of
    that is deepwater offshore that where a lease was issued during
    the Clinton administration and the Bush administration,
    unfortunately. And sadly, that is--I mean, that's why we had an
    increase, not because of unfortunately----
        Mr. Farenthold. And I don't mean to rush you and cut you
    short. I have a lot of questions, because this is an issue I'm
    passionate amount.
        I'd like to go to Mr. Hand for a second. I was intrigued,
    as I was preparing for your questioning, reading your
    testimony. You talk about how as you grew up, your energy was a
    wood-burning stove, and how despite the fact you work for an
    electric company, your mom still doesn't like to turn on the
    air conditioning because the electricity is so expensive.
        And this is something that I see is a real problem is we've
    gotten the low-hanging fruit on people lowering their energy
    costs. I mean, we've been doing it since the Carter
    administration. Take gasoline, for example. It's almost doubled
    in price since President Obama. There's not a lot of ways you
    can cut your gasoline consumption. You cut out your unnecessary
    trips, but there are very few unnecessary trips now. People
    don't have the time or the money to go on vacation. You go to
    work, you go to school, you go to the doctor's office. There's
    no real way to cut it. Really it's just turning off the air
    conditioning, getting very uncomfortable.
        So I guess my question is what are we missing for how do
    people lower their energy costs through what they can do? Or do
    we just need to force the price down through, you know, more
    production and lower cost?
        Mr. Hand. One of the things that--a number I heard earlier,
    which I'm sure is right, which I had some of this in my
    testimony, I had to dig it out, but that only 16 percent of the
    eligible customers were availing themselves of the LIHEAP
    program.
        Mr. Farenthold. So existing programs. There are some ways
    to----
        Mr. Hand. No, I am not going that direction. I'm saying we
    still have a lot of people who will themselves still don't just
    automatically sign up. Now, some people get pushed into it, and
    it becomes a way of life for them. But we still have the
    majority who are within that 84 percent who want to take care
    of themselves, and they do it by reducing their use.
        Mr. Farenthold. I'm sorry, I have less than a minute. I
    want to get one more question in to you, and that has to do
    with wind. You indicated that your cost of purchasing wind is
    in line with the fuel costs that you use for gas and other. But
    isn't that held substantially lower by the production tax
    credit, and without that tax credit, wind would not be
    competitive just on a free-market basis?
        Mr. Hand. That is exactly right. I think it is 2.2 cents
    that comes into----
        Mr. Farenthold. So almost double the price of the wind
    energy.
        Mr. Hand. And another point of the cost of wind, and,
    again, I am not--wind is good for--wind production is good for
    Oklahoma.
        Mr. Farenthold. I've got a ton of wind farms in the
    district I represent.
        Mr. Hand. But that cost doesn't have assigned the
    additional transmission costs that are being imposed to bring
    that wind into the mix.
        Mr. Farenthold. I don't want to go over my time. I
    appreciate your answering my questions, and thank you very
    much.
        Mr. Lankford. Thank you.
        And I am going to yield to Mr. Massie in just a moment, but
    Mr. Hand brings up a point there about 16 percent of the people
    that are eligible for LIHEAP don't use it. And that has come up
    several places. And that's because people in Oklahoma are like
    many places in the country, they don't want to take Federal
    assistance when they don't have to. They would rather work
    hard, save, be efficient than use Federal assistance because
    they want to earn it on their own. It's still a unique American
    characteristic, and is very much so in Oklahoma as well.
        Mr. Massie.
        Mr. Massie. This question is for Mr. Hand. I am from
    Kentucky, and I was recently informed by a CEO of a power
    company in Kentucky that they built a state-of-the-art clean-
    coal facility, within the past 2 years it's come online; but
    that currently, even though this thing was eligible for tax
    credits 2 years ago, it would be illegal to build today. But it
    was so state-of-the-art, it qualified for these tax credits.
        Is it true that the New Source Performance Standards
    effectively keep us from building another coal plant today? And
    if that's not true, what is the technology that exists, if any
    of the other members are aware of it? And what would that add
    to the cost per kilowatt hour? Mr. Hand first.
        Mr. Hand. I don't know that I can fully answer your
    question. About 3 years or 4, in that time frame, but in the
    early 2000s, there were three new coal plants proposed in
    Oklahoma. None of them have been built. And they were canceled
    before the New Source Review. I assume that's talking about the
    50 percent reduction in CO2. I'm not aware of any technology
    that does that today. I don't believe the sequestration is even
    greatly accepted as a possibility.
        Mr. Massie. Any of the other Members like to comment?
        Witnesses?
        Thank you.
        Mr. Trisko. Congressman Massie, yes, happy to respond. The
    proposed EPA greenhouse gas New Source Performance Standard
    applicable to coal and natural gas combined cycle plants is
    based on an emission rate limit of 1,000 pounds of CO2 per
    megawatt hour. That is a rate that can be met by natural gas
    combined cycle plants, but not by coal plants without the use
    of carbon capture and storage technology. That technology has
    not been commercially demonstrated in this country, according
    to the interagency task force report on CCS technology.
        Now, with reference to the incremental costs of CCS, EPA's
    estimate in this rulemaking is that the application of CCS
    technology to a new coal plant would increase the cost of power
    produced by the plant by 80 percent. I think it is, therefore,
    on its face clear that such a plant could not be commercially
    viable in today's market; in other words, could not be
    financed, could not be permitted, could not be operated.
        Mr. Massie. Yes, Mr. Weiss.
        Mr. Weiss. Thank you, Mr. Massie.
        I would just observe that after the Senate failed to pass a
    comprehensive climate energy legislation in 2010, which
    included that bill as well as the one that passed the House,
    the American Clean Energy and Security Act, both included
    significant subsidies to help coal plants build the very first
    commercial-scale carbon capture and storage technology.
    Because, as with any technology, it is very expensive when you
    first start it, so let's get some experience. Copious
    subsidies, billions of dollars. But after that bill failed,
    some of the larger utilities, for example, I believe, Southern
    Company, had pilot carbon capture and storage projects going at
    power plants, and they shut them down because they knew they
    weren't going to have to do any cleanup.
        So what you would need to do to be able to address this in
    the way that you just described is to create a system that
    requires cleanup, but also provides revenue in the way that the
    American Clean Energy and Security Act does to help them build
    the first CCS facilities.
        Mr. Massie. So whether it was--the burden was placed on the
    consumer or the taxpayer, you're saying it would cost billions
    of dollars to develop this technology.
        Mr. Weiss. Yes. But there is also, as we were talking about
    earlier, substantial economic costs for leaving climate
    pollution unchecked: extreme weather, health, smog, tropical
    diseases. Those also have real costs for our economy.
        Mr. Massie. Thank you very much. I yield back my time, Mr.
    Chairman.
        Mr. Lankford. Thank you.
        Let me do a quick round of questions on a couple things,
    because I'm trying to sum up some of the things that we've
    dealt with today.
        There seems to be two different perspectives on how do we
    get to the cost of energy to the consumer and the affordability
    of that. One seems to be trying to find a way to increase
    affordability by continuing to increase subsidies for some so
    that those who can't afford it continue to get Federal
    subsidies to be able to offset the rising costs. The other one
    is to try to determine why does it cost so much, and why are
    the costs going up, and to deal with that for everyone.
        Now, those divergent, different opinions that say we
    continue to allow costs to rise on everyone and then just
    subsidize more heavily a smaller amount, I think it would make
    more sense to try to find what can we do to solve the problem
    of rising energy costs and be able to determine how to fix that
    for everyone. Does that make sense? The issues that we deal
    with on it are how do we get to those things? And I understand
    there is a diverse perspective of both infrastructure, of
    trying to get fuel to market, of trying to make sure it's clean
    and efficient, trying to deal with health issues that we have
    as a Nation. I get all that. But I think our best course of
    action would be to say, how do we make this more affordable for
    everyone?
        And I think it goes back to something Mr. Hand mentioned an
    hour ago, and that is the diversification of fuel. When the
    cost of one goes up, you supplement it with another one. And
    when the other one goes down in cost, you begin to offset that.
    If we ever push to getting to one type of fuel, or a couple
    types of fuel, we are in trouble, I think, as a Nation. So a
    diverse fuel package seems to be essential in this process, and
    trying to find that correct formula on that.
        There were a couple things that came out as well that I
    heard. One was dealing with the last 3 or 4 years of oil and
    gas production.
        Now, Mr. Simmons, you had mentioned as well the permitting
    issue. And I think we can't leave that unchecked. A typical
    permit takes about how long on Federal lands to acquire that
    permit?
        Mr. Simmons. I don't know the total time for the permit. It
    is not too long for the first permit for the lease, but then
    you have to do a NEPA analysis.
        Mr. Lankford. Right. I understand. But before you start,
    though, when you actually poke a hole in the ground and get
    going, how long does that take?
        Mr. Simmons. It's years. But I would have to get back to
    you on that.
        Mr. Lankford. So are we talking 4, 5, 6, 7 years?
        Mr. Simmons. It could be.
        Mr. Lankford. Mr. Weiss, how long do you think it is?
        Mr. Weiss. I believe, and I know I'm under oath so I'm
    saying I believe, that the permit time has been collapsed
    dramatically under the current administration down to about 150
    days. It takes about 5 to 7 years from the time an acre
    offshore is leased.
        Mr. Lankford. What about onshore?
        Mr. Weiss. Much less. I don't know the time. But offshore
    takes 5 to 7 years because these are very complicated----
        Mr. Lankford. Right. I understand. Those are complicated
    and became more complicated when BP made some errors that they
    have now admitted to and complicated it even more. Onshore it
    is several years in the process. So it's interesting to note
    that the Federal land increase of oil production in the first 3
    years of the Obama administration is not due to permits that
    were started during the Obama administration. Those are permits
    that were started in a previous administration and then now
    we're facing production.
        The better question long term will be how much production
    of oil and gas is there on Federal lands in the last 3 years of
    the Obama administration--that will be the most telling part of
    the administration's opinion about it-- and in the first 3
    years of the next administration, whoever they may be.
        Mr. Weiss as well, oil and gas production in the United
    States, up or down in the last 5 years?
        Mr. Weiss. It is up. It the highest it has been since, I
    believe, 1996.
        Mr. Lankford. CO2 emissions up or down in the United States
    in the last 5 years?
        Mr. Weiss. CO2 emissions are down for three reasons. One is
    the new fuel economy standards means that people are emitting
    less carbon from their cars. Second, the switch from coal to
    natural gas for electricity generation.
        Mr. Lankford. Replacing that because of cost. It's cheaper
    now.
        Mr. Weiss. Yes, because of cost.
        And third is increased energy efficiency. Demand for
    electricity is basically flat even though our economy is
    growing steadily.
        Mr. Lankford. Terrific. Has our Nation met the Kyoto
    Protocol? Though we didn't sign off on it, have we met the
    standards of the Kyoto Protocol?
        Mr. Weiss. I couldn't tell you that, but we are halfway to
    meeting the goal that President Obama articulated in 2009 of a
    17 percent CO2 reduction below 2005 levels by 2020. We're at
    about a 9 percent reduction right now.
        Mr. Lankford. The understanding of this is there is a sense
    of we have all these increased storms, we have all these
    increased things, we are meeting the Kyoto Protocol. We've
    dramatically reduced carbon emissions not because of the
    mandates in cap-and-trade, but because of price. Natural gas
    has come online. It has become easy to be able to get access
    to, or easier. I say it's been easy; I'm not the one actually
    drilling a horizontal well and trying to hit something as big
    as a suitcase 4 miles away with a drill bit. So I can say easy
    for me on that. But the challenges that we face as a Nation are
    being solved by the technology, not by a government mandate as
    much.
        Mr. Weiss?
        Mr. Weiss. Mr. Chairman, the fuel economy standards were
    due to a mandate worked out with the auto companies, but it was
    possible under a law passed under President George W. Bush, the
    Energy Independence and Security Act, which did mandate an
    increase in fuel economy standards.
        Mr. Lankford. Sure. No, I understand. I was talking
    specifically about coal versus natural gas. Yeah. That's
    correct.
        And then the issue of speculation that you mentioned
    earlier. You mentioned the cost of speculation, which I agree,
    there is speculation that is going on that becomes a serious
    issue. If we are North American energy independent, and we are
    not speculating on what happens in the Middle East, and we're
    dealing with more west Texas intermediate crude than we are
    Brent and other prices on it, because what's happening is from
    Canada, the United States, and Mexico, how does that affect
    speculation on the market for us?
        Mr. Weiss. Well, the State Department looked at that
    question with regards to the Keystone XL pipeline and concluded
    that building the pipeline would have no impact on the amount
    of oil that we consume here or on its price or the price of its
    products.
        Mr. Lankford. Not on consumption. I'm talking about--
    because the Keystone doesn't get us to independence. The
    Keystone basically does the equivalent of removing our
    dependence on Venezuela. So the amount that would come in from
    Canada----
        Mr. Weiss. Actually, even less than that.
        Mr. Lankford. Right. The amount that comes in from Canada,
    which Canada seems to be a pretty good trading partner since
    the whole War of 1812----
        Mr. Weiss. They are our number one----
        Mr. Lankford. Yeah, since the War of 1812 was settled, we
    seem to get along pretty well with Canada since then.
        Mr. Weiss. And they were British back then, too.
        Mr. Lankford. I know. That's what I'm saying. So since that
    time period, they have been a very reliable trading partner for
    us, and great relationship, much more so than Venezuela. So we
    have not only the issue of price, but we also have the issue of
    long-term relationships between us and Venezuela versus us and
    Canada. That possibility of bringing fuel in there brings us
    one step closer--let's say 15 years from now, due to increased
    production, we're able to achieve North American independence,
    where it's Canada, Mexico, and the United States only for oil
    and gas. How does that affect price? That is not the State
    Department report. Mr. Trisko, you have a response to that I'm
    seeing?
        Mr. Trisko. Mr. Chairman, I would like to add that in
    addition, moving in the direction of an all-domestic energy
    supply would also tremendously--would greatly reduce, if not
    eliminate, this country's national security vulnerabilities
    with respect to its imports. And in terms of the costs
    associated with maintaining that defense structure in the
    Middle East and elsewhere in the world, those benefits alone
    would justify moving in the direction of a domestic energy
    supply.
        And I note that in that regard I concur totally with your
    opening remarks in this line of questioning, which suggested
    that an ``all of the above'' approach is what we need. What we
    do not need in order to effectuate this goal of a domestic
    self-sufficiency is a policy that precludes the construction of
    state-of-the-art coal plants, which represent the largest
    single fossil energy reserve on the planet.
        Mr. Lankford. Right. Right.
        Ms. Norton.
        Ms. Norton. Thank you very much.
        Now, we have information that I'm going to say startled me
    that in 2011, the United States--when you speak of we could get
    this all-domestic oil supply--in 2011, the country exported
    more gasoline and diesel and oil-based fuels than it imported.
    This apparently was the first time that we were a net exporter
    since 1949.
        Now, oil is traded on an international market. So I don't
    understand this notion that somehow we could be an island unto
    itself, and that will take care of oil prices. Mr. Weiss,
    perhaps you could speak to that.
        Mr. Weiss. Yes, you're right. In fact, the export of
    refined product, diesel and gasoline predominantly, has
    continued to increase since 2011. As you know, U.S. law
    prohibits, for the most part, exports of crude oil, because
    that's seen as a--it's related to our energy and economic
    security. I would observe that, you know, one of the things
    that the chairman talked about was price volatility. One of the
    reasons why we have--we're so tied to--we're so harmed by price
    volatility for gasoline is because it's basically the only
    transportation fuel that we have. We do have a diverse set of
    fuels for electricity, not for transportation. That's why we
    need to invest a lot more in developing these alternatives to
    oil to use for transportation.
        Ms. Norton. Such as?
        Mr. Weiss. Such as electric-powered vehicles, natural gas
    buses and trucks, and, of course, public transit, which we have
    a great system here in your city.
        But it's important to note that--Mr. Lankford, you were
    talking about government subsidies--in fact, every new and even
    mature energy technology that we have had in this country in
    the last 100 years has received heavy government subsidies. For
    example, the oil and gas industry has received $80 in subsidies
    going back to 1919 for every $1 that the renewables industry
    has received. And so I think it's a smart strategic move to
    invest in research and development and deployment of some of
    these technologies that can get us less hooked on gasoline as a
    transportation fuel.
        Ms. Norton. Yes, Mr. Simmons.
        Mr. Simmons. I don't think anyone is saying that if the
    United States--if we were an island to ourselves in terms of
    oil production, if we produce all this oil domestically, that
    we will be 100 percent insulated from global oil--from global
    oil markets. I mean, oil, as has been stated, is a globally
    traded commodity, but what producing more oil at home does is
    it makes us more resilient, and it also reduces the global
    spare capacity.
        One of the problems, and this was particularly a problem
    during the Libya crisis, was that there was very little global
    spare capacity. If somewhere else besides Libya had stopped
    producing oil, prices would have spiked even more. By having
    the United States and other very stable countries like Canada
    producing more oil, it means that there's much less of a risk
    when these, you know, geopolitical situations happen.
        Ms. Norton. Yeah. Everybody wants us to be less dependent
    on foreign oil. So I think we can all agree on that. On the
    price, on the price, I'm not sure it would make any difference.
        Yes, Mr. Weiss?
        Mr. Weiss. Representative Norton, you're absolutely right.
    As long as the oil price is tied to the world market, which is
    controlled by a cartel, the OPEC cartel provides 40 percent of
    the world's oil, it is going to be hard for us to produce our
    way to lower prices. Look at where we are right now. We're
    producing the most oil in 15 years, yet gasoline prices are
    high. Why? Because the world oil price is high. The Washington
    Post just reported a couple days ago that since 2011, the world
    has increased 2 million barrels of oil a day in terms of
    production, half of that is from the U.S., but yet oil prices
    remain high. Why? Because there's also been growing demand. So
    as long as it is a worldwide market and a worldwide price
    controlled by a cartel, it's going to be hard to do that.
        Gasoline is a bit of a different story. It is much more of
    a local and regional price because of refining measures, the
    kinds of things that Mr. Simmons was discussing.
        Ms. Norton. Thank you very much, Mr. Chairman.
        Mr. Lankford. Would the gentlelady yield?
        Ms. Norton. I'd be glad to yield.
        Mr. Lankford. It's the two of us left, so we can field
    whatever questions we would like from here.
        But it is interesting to me that oil production
    specifically, when we get into this, we're now at a spot it
    wasn't that long ago 60 percent of the oil that we were using
    in the United States was imported. Now 60 percent of the oil
    that we're using in the United States is from the United States
    on that. And we're pushing over 80 percent of the oil that
    we're using in the United States is from North America only.
    And so we're only 20 percent away from being North American
    energy independent, which I think is the first step towards
    being American energy independent.
        The last forecast I saw from the energy statistics showed
    that just 32 percent--in just 10 years, 32 percent of the oil
    we're expecting to be from the United States only, as far as
    the imports coming from outside the United States. So it's a
    very significant jump that is happening right now based on the
    current technology and what's happening.
        Mr. Weiss, I did have to smile at one of your statistics
    about the tax treatments between oil and gas and all the
    renewables and going back to 1919 to compare those. I don't
    remember a lot of solar subsidies that were occurring in the
    1920s. So I would encourage you to take that statistic and
    bring it a little more up to date on it.
        I do remember as a high school student paying attention to
    what was happening during the administrations there, and even
    as a middle school student, and seeing the solar panels that
    were on the White House at that point. I have no opposition to
    solar and to wind and every other technology, but comparing
    some of the subsidies that are the start-up subsidies--and I
    get that--for some of these renewables to some of the tax
    treatments that are normal business treatments for oil and gas
    is a little bit of a jump in between. And if you look at the
    top five energy companies in the world versus the top five
    technology companies in the world, the top five technology
    companies make more and have greater--like the 199s--greater
    subsidies, if you would want to call them that, as far as tax
    treatment.
        So, there is a fairness system to make sure that we keep
    all the stats and everything all clean and consistent on that.
        So, Ms. Norton, I want to close up unless you have any
    other final comment. I do appreciate the witnesses coming. I
    appreciate all the time that you spent not only getting here,
    but in your written statements, which were extensive. And I
    appreciate the research and the insight in that. And I look
    forward to getting a chance to hear if you have any other
    additional follow-up comments. Feel free to submit those for
    the record.
        Mr. Lankford. With that, this hearing is concluded.
        [Whereupon, at 2:45 p.m., the subcommittee was adjourned.]
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