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



 
                   AMERICA'S ENERGY REVOLUTION: A NEW

                    PATH TO JOBS AND ECONOMIC GROWTH
=======================================================================



                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, JUNE 26, 2013

                               __________

                            Serial No. 113-7

                               __________

           Printed for the use of the Committee on the Budget


                       Available on the Internet:

                       www.gpo.gov/fdsys/browse/
            committee.action?chamber=house&committee=budget




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                        COMMITTEE ON THE BUDGET

                     PAUL RYAN, Wisconsin, Chairman
TOM PRICE, Georgia                   CHRIS VAN HOLLEN, Maryland,
SCOTT GARRETT, New Jersey              Ranking Minority Member
JOHN CAMPBELL, California            ALLYSON Y. SCHWARTZ, Pennsylvania
KEN CALVERT, California              JOHN A. YARMUTH, Kentucky
TOM COLE, Oklahoma                   BILL PASCRELL, Jr., New Jersey
TOM McCLINTOCK, California           TIM RYAN, Ohio
JAMES LANKFORD, Oklahoma             GWEN MOORE, Wisconsin
DIANE BLACK, Tennessee               KATHY CASTOR, Florida
REID J. RIBBLE, Wisconsin            JIM McDERMOTT, Washington
BILL FLORES, Texas                   BARBARA LEE, California
TODD ROKITA, Indiana                 DAVID N. CICILLINE, Rhode Island
ROB WOODALL, Georgia                 HAKEEM S. JEFFRIES, New York
MARSHA BLACKBURN, Tennessee          MARK POCAN, Wisconsin
ALAN NUNNELEE, Mississippi           MICHELLE LUJAN GRISHAM, New Mexico
E. SCOTT RIGELL, Virginia            JARED HUFFMAN, California
VICKY HARTZLER, Missouri             TONY CARDENAS, California
JACKIE WALORSKI, Indiana             EARL BLUMENAUER, Oregon
LUKE MESSER, Indiana                 KURT SCHRADER, Oregon
TOM RICE, South Carolina
ROGER WILLIAMS, Texas
SEAN P. DUFFY, Wisconsin

                           Professional Staff

                     Austin Smythe, Staff Director
                Thomas S. Kahn, Minority Staff Director
                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, June 26, 2013....................     1

    Hon. Paul Ryan, Chairman, Committee on the Budget............     1
        Prepared statement of....................................     3
    Hon. Chris Van Hollen, ranking minority member, Committee on 
      the Budget.................................................     4
        Prepared statement of....................................     6
        Additional submissions:
            Letter, dated June 20, 2013, CBO cost estimate on 
              H.R. 2231: Offshore Energy and Jobs Act............    53
            Follow-up letter, dated July 11, 2013, from Mr. Weiss    56
    John W. Larson, vice president, Economics and Country Risk, 
      IHS........................................................     7
        Prepared statement of....................................     8
    Daniel J. Weiss, senior fellow, Center for American Progress.    11
        Prepared statement, Internet address to..................    13
    Martin J. Durbin, president and CEO, America's Natural Gas 
      Alliance...................................................    13
        Prepared statement of....................................    15
    Hon. David N. Cicilline, a Representative in Congress from 
      the State of Rhode Island, prepared statement of...........    52


  AMERICA'S ENERGY REVOLUTION: A NEW PATH TO JOBS AND ECONOMIC GROWTH

                              ----------                              


                        WEDNESDAY, JUNE 26, 2013

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in room 
210, Cannon House Office Building, Hon. Paul Ryan, [chairman of 
the Committee] presiding.
    Present: Representatives Ryan, Price, Garrett, McClintock, 
Lankford, Black, Flores, Rokita, Woodall, Blackburn, Walorski, 
Rice, Williams, Van Hollen, Schwartz, Pascrell, Ryan of Ohio, 
McDermott, Cicilline, Lujan Grisham, Huffman, Blumenauer, 
Schrader.
    Chairman Ryan. Good morning, everyone. The hearing will 
come to order. Before we turn to our hearing, I would first 
like to recognize a very special person who has meant a lot to 
this Committee over the last 12 years. I would like to 
recognize Marsha Douglas, who will be retiring at the end of 
this week. Marsha served both sides of the aisle as our chief 
administrator for the past 12 years. And while Chris and I do 
not agree on everything; it is true. We do not agree on 
everything. We do agree on Marsha Douglas. Marsha, you have 
been such a phenomenal asset to this committee. Your 
institutional knowledge will be sorely missed. And on behalf of 
the entire committee, I want to wish you and your husband all 
the best in your upcoming retirement. Thank you, Marsha, 
appreciate it.
    Chris?
    Mr. Van Hollen. Thank you, Mr. Chairman. And I just want to 
underscore what the Chairman said, that we are united on some 
things, and that is in our support for and respect for Marsha 
Douglas. And as you said, Mr. Chairman, she has done a great 
job helping members of this Committee on both sides of the 
aisle and our staff, and has been a professional throughout. 
And we really wish you the very best in your retirement. 
Congratulations.
    Mr. Pascrell. Mr. Chairman? Mr. Chairman, if I may.
    Chairman Ryan. Sure.
    Mr. Pascrell. Mr. Chairman, Marsha is a reflection about 
the staff. And while we are talking about staff, Mr. Chairman, 
I implore you, I implore you and the Ranking Member to do 
everything you can. These staff members have not had a raise in 
over three years. And I do not think it is inappropriate or out 
of order to bring it up.
    Chairman Ryan. It is, actually.
    Mr. Pascrell. No, let me continue.
    Chairman Ryan. No, sorry. We are going to start with the 
hearing. I thought you were going to talk about Marsha.
    Mr. Pascrell. Just a point.
    Chairman Ryan. No, the gentleman is not recognized to get 
into other issues. Thank you for your kind comments on Marsha.
    Mr. Pascrell. Oh, this is very much the issue, Mr. 
Chairman.
    Chairman Ryan. Gentleman is out of order. That was off to a 
good start.
    Good morning, everybody. I want to thank our witnesses. I 
want to thank Marty Durban, John Larson, and Dan Weiss for 
coming with us today. We are happy to have you, and we look 
forward to your testimony. This is a very important topic.
    Now, energy is not really a big part of the federal budget. 
It is a huge part of the family budget. We feel the pinch every 
time we fill up our gas tank, every time we pay our heating 
bills. Fact is, energy is critical to our economy. And we 
cannot get out of this fiscal mess unless we have economic 
growth. And energy production fuels economic growth. It creates 
jobs, it increases wages, and it shrinks the deficit without 
raising taxes on anyone.
    Energy production is one of the best tools we have to grow 
the economy and to pay down the debt. So today, we are going to 
learn more about it. The change has been swift. Thanks to new 
technology, we can tap resources long thought out of reach, and 
we can do it in an environmentally-responsible way. We can 
drill sideways and not just downward. We can break free 
deposits locked in hard, dense shale. And as a result, one 
study says our oil and natural gas reserves are over one-third 
larger than previously thought. We are already seeing the 
benefits. We are importing less oil, we are exporting more 
natural gas, and, most importantly, we are putting more people 
at work in America.
    Take North Dakota. The Bakken shale has been home to an 
economic boom. Employment in the area has grown by over a 
third. The average pay has risen by over 50 percent to more 
than $50,000, and all working families are benefitting, not 
just those in the energy sector. North Dakota is creating more 
jobs and better-paying jobs in fields like construction, 
transportation, and food services. One McDonald's is offering 
new hires a $300 signing bonus. And the surge of production is 
lowering our energy prices. It is a boon for families, 
especially the poor.
    The news from North Dakota is very encouraging. I wish I 
could say the news from Washington was the same. While 
production on state and private lands is up since 2009, 
production on federal lands is down. Now it is true that 
production is higher than it was in the last year of the Bush 
administration. But let's take a very close look at these 
numbers. In 2008, production on federal lands was rising. We 
were ramping up production, as we had been for years. Then, in 
2009, President Obama took office, and he hit the brakes. He 
started taking federal lands offline and slowly decreasing 
their output. By 2011, his policies began to take effect.
    Ever since then, production on federal lands has been 
falling. The private sector is moving full steam ahead, but the 
president, he is keeping his feet firmly on the brakes. It is 
not just an accident. Just yesterday, the president announced 
yet another attempt to limit energy production. In fact, one of 
his advisors recently called for a, quote, ``war on coal,'' end 
quote. The way the president seems to see it, we can do better 
only if some of us do worse. While, if you ask me, the 
president's proposal is a solution in search of a problem.
    This Administration seems intent on picking winners and 
losers in the energy sector. It wants to subsidize its favorite 
industries, and it wants to regulate others out of existence. 
But we should support working families' livelihoods. We should 
not obstruct them. And there are some concrete steps that we 
can take. Number one: We should open more federal lands to 
production. Number two: We should shorten the wait time for 
drilling permits. Number three: We should speed up the approval 
of a process for natural gas exports. Number four: We should 
resist the calls to impose punitive taxes on energy production. 
If we take these steps, we can help lower energy costs for 
working families. We can expand paychecks. We can reduce our 
reliance on foreign oil. Think of what that would do for our 
foreign policy challenges. And, finally, we can make a serious 
dent in the deficit. That is what matters here in the budget 
committee.
    Mr. Larson's company, IHS, has estimated that shale, oil, 
and gas production will increase government revenues at all 
levels, local, state, and federal, hear this, by $2.5 trillion 
between 2012 and 2035. Think about that.
    I am especially interested in hearing your thoughts on how 
energy production will help the federal budget in particular. 
This is an historic opportunity. It presents a basic choice. Do 
we let the energy revolution take its course, or do we cut it 
short?
    We have it right in front of us. It could do wonders for 
our economy, wonders for families. The fact is we can grow the 
economy right now, without raising anyone's taxes, without 
increasing spending, without writing new regulations, if we 
just let working families do their job and get these jobs. That 
is the course we should take. With that, I would like to 
recognize the ranking minority member, Mr. Van Hollen, for any 
comments you might have.
    [The prepared statement of Chairman Ryan follows:]

Prepared Statement of Hon. Paul Ryan, Chairman, Committee on the Budget

    Good morning, everybody. To start, I want to thank our witnesses: 
Marty Durbin, John Larson, and Dan Weiss. We're happy to have you. And 
we look forward to your testimony.
    Energy isn't a big part of the federal budget. But it's a huge part 
of the family budget. We feel the pinch every time we fill up a tank of 
gas. The fact is, energy is critical to our economy. We can't get out 
of this fiscal mess without economic growth. And energy production 
fuels economic growth. It creates jobs. It increases wages. And it 
shrinks the deficit--without raising taxes on anyone. Energy production 
is one of the best tools we have to grow the economy--and to pay down 
the debt. So today, we're going to learn more about it.
    The change has been swift. Thanks to new technology, we can tap 
resources long thought out of reach. And we can do it in an 
environmentally responsible way. We can drill sideways--not just 
downward. And we can break free deposits locked in hard, dense shale. 
As a result, one study says our oil and natural-gas reserves are over 
one-third larger than previously thought. We're already seeing the 
benefits: We're importing less oil. We're exporting more natural gas. 
And most importantly, we're putting more people to work.
    Take North Dakota. The Bakken Shale has been home to an economic 
boom. Employment in the area has grown by over a third. The average pay 
has risen by over 50 percent--to more than $50,000. And all working 
families are benefiting--not just those in the energy sector. North 
Dakota is creating more jobs--and better-paying jobs--in fields like 
construction, transportation, and food services. One McDonald's is 
offering new hires a $300 signing bonus. And the surge in production is 
lowering energy prices. It's a boon for all families, especially the 
poor.
    The news from North Dakota is very encouraging. I wish I could say 
the same for Washington. While production on state and private lands is 
up since 2009, production on federal lands is down. Now, it's true that 
production is higher than it was in the last year of the Bush 
administration. But let's take a close look at the numbers.
    In 2008, production on federal lands was rising. We were ramping up 
production--as we had been for years. Then, in 2009, President Obama 
took office--and he hit the brakes. He started taking federal lands 
offline--and slowly decreasing their output. By 2011, his policies 
began to take effect. Ever since then, production on federal lands has 
been falling. The private sector is moving full-steam ahead. But the 
President is keeping his feet firmly on the brakes.
    It's not an accident. Just yesterday, the President announced yet 
another attempt to limit energy production. In fact, one of his 
advisers recently called for a, quote, ``war on coal.'' The way the 
President sees it, we can do better only if some of us do worse. Well, 
if you ask me, the President's proposal is a solution in search of a 
problem. This administration seems intent on picking winners and 
losers. It wants to subsidize its favored industries--and regulate 
others out of existence. But we should support working families' 
livelihoods. We shouldn't obstruct them.
    And there are some concrete steps we should take. Number one, we 
should open more federal lands to production. Number two, we should 
shorten the wait time for drilling permits. Number three, we should 
speed up the approval process for natural-gas exports. And number four, 
we should resist calls to impose punitive taxes on energy companies. If 
we take these steps, we can help lower energy costs for working 
families. We can reduce our reliance on foreign oil.
    And finally, we can make a serious dent in the deficit. Mr. 
Larson's company, IHS, has estimated that shale-oil and gas production 
will increase government revenue at all levels--local, state, and 
federal--by $2.5 trillion between 2012 and 2035. I'm especially 
interested to hear your thoughts on how energy production will help the 
federal budget in particular.
    This is a historic opportunity. And it presents a basic choice: Do 
we let the energy revolution take its course? Or do we cut it short? 
The fact is, we can grow the economy--right now--without raising 
anyone's taxes, without increasing spending, without writing new 
regulations--if we just let working families do their job. That's the 
course we should take.
    With that, I recognize the ranking member, Mr. Van Hollen, for his 
opening remarks.

    Mr. Van Hollen. Thank you, Mr. Chairman. I want to join the 
Chairman in welcoming all of our witnesses today to talk about 
this very important issue of our energy future, and its impact 
on the economy and job growth. I should say at the outset that 
the most immediate measure that this Committee and this House 
could take right now to eliminate the drag on the economy is to 
replace the sequester. And we have tried now eight times to get 
a vote to do just that. The Congressional Budget Office 
predicted that, as a result of the sequester, we will see 
750,000 fewer American jobs by the end of this calendar year. 
That is a self-inflicted wound. It should be unacceptable to 
all of us. We should go to conference, as the law says, and 
start resolving those issues right now.
    Now the future of energy production in this country is a 
huge opportunity, and that is why the president has put forward 
his all-of-the-above energy strategy to focus on all homegrown 
American energy sources. So let's look at the facts. U.S. oil 
production is at its highest level since 1992. The Energy 
Information Administration has shown that the annual oil 
production from federal lands and waters has been higher every 
year under President Obama than the last year of the previous 
administration. And we are seeing a revolution in this country 
of natural gas production. Federally-supported technology and 
the ingenuity of the technology community has helped our 
businesses drill more effectively and extract more natural gas. 
In just seven years, U.S. natural gas production has increased 
27 percent.
    We have seen the first two nuclear reactors in a generation 
approved in February 2012. And as a result of federal and state 
policies, and the ingenuity of the private sector, we have seen 
a dramatic jump in the production of renewable energy. In just 
the last four years, we have doubled the amount of electricity 
generated from the wind and the sun. The Bureau of Labor 
Statistics estimates that in 2011, there were 3.4 million clean 
energy jobs, an increase of 158,000 from the year before. Those 
are jobs manufacturing wind turbines, installing solar panels, 
and other jobs in that sector.
    Now many of our Republican colleagues say they want to have 
an all-of-the-above energy strategy, but what they are really 
calling for, in most instances, is a fossil-fuels-only 
approach. And that was reflected in the fact that their 
presidential candidate in the last election opposed federal 
incentives for the production of wind energy. A lot of 
governors from a lot of those states, like the governor of Iowa 
and others, said it was important for jobs in their states. But 
the position taken at the federal level by many of our 
colleagues is no to federal investments in clean energy policy.
    And, in fact, if you look at the budget of our Republican 
colleagues, they are slashing by 50 percent important national 
investments in clean energy technologies. That is not an all-
of-the-above energy strategy; that is a status quo energy 
strategy. And it is incredibly short-sighted for two reasons. 
One is it totally ignores the costs of doing nothing when it 
comes to global climate change. We know there are huge costs 
attached to that. Just ask the insurance companies. We see a 
greater frequency and intensity of major weather events, 
whether they are droughts, whether they are forest fires as a 
result of the droughts, whether they are floods; a whole series 
of events that have a price. And so doing nothing in that area 
has a cost.
    Secondly, our major economic competitors, countries like 
China, countries like Germany, recognize the importance of 
investing in clean energy technologies as an important market 
globally for the future. And right now, the Chinese are 
investing more in that sector than we are.
    I believe, as do hundreds of American businesses who 
recently signed a statement saying that the United States 
should rise to the occasion and challenge that dealing with 
global climate change is, at the same time, a huge economic and 
jobs opportunity for the United States. And we should not shy 
away from that challenge. And that is why we should, Mr. 
Chairman, adopt what is truly an all-of-the-above energy 
strategy to develop responsibly homegrown energy sources, and, 
at the same time, make better use of the energy we have by 
taking steps to prevent wasteful practices. And by doing that, 
we can make sure that the energy we do produce goes further, 
and, at the same time, increase jobs and save consumers a lot 
of money.
    So, Mr. Chairman, I hope we will, going forward, change at 
least what has been the pattern in this House of 
Representatives, and truly focus on all those energy sources, 
not simply a one-dimensional fossil fuel strategy. Thank you.
    [The prepared statement of Mr. Van Hollen follows:]

      Prepared Statement of Hon. Chris Van Hollen, Ranking Member,
                        Committee on the Budget

    Thank you, Mr. Chairman.
    And I want to join the Chairman in welcoming all of our witnesses 
today to talk about this very important issue of our energy future and 
its impact on the economy and job growth.
    I should say at the outset that the most immediate measure that 
this Committee, and that this House, could take right now to eliminate 
the drag on the economy is to replace the sequester. And we have tried 
now eight times to get a vote to do just that. The Congressional Budget 
Office predicted that, as a result of the sequester, we will see 
750,000 fewer American jobs by the end of this calendar year. That's a 
self-inflicted wound that should be unacceptable to all of us. We 
should go to conference as the law says, and we start resolving those 
issues right now.
    Now, the future of energy production in this country is a huge 
opportunity. And that is why the President has put forward his all-of-
the-above energy strategy, to focus on all homegrown American energy 
sources. So, let's look at the facts: U.S. oil production is at its 
highest level since 1992; the Energy Information Administration has 
shown that the annual oil production from federal lands and waters has 
been higher every year under President Obama than in the last year 
under the previous administration; and we are seeing a revolution in 
this country of natural gas production. Federally supported technology 
and the ingenuity of the technology community has helped our businesses 
drill more effectively and extract more natural gas. In just seven 
years, U.S. natural gas production has increased 27 percent.
    We have seen the first two nuclear reactors in a generation 
approved in February 2012. And as a result of federal and state 
policies and the ingenuity of the private sector, we have seen a 
dramatic jump in the production of renewable energy. In just the last 
four years, we have doubled the amount of electricity generated from 
the wind and the sun. The Bureau of Labor Statistics estimates that in 
2011 there were 3.4 million clean energy jobs--an increase of 158,000 
from the year before. Those are jobs manufacturing wind turbines, 
installing solar panels, and other jobs in that sector.
    Now, many of our Republican colleagues say that they want to have 
an all-of-the-above energy strategy, but what they are really calling 
for, in most instances, is a fossil fuels-only approach. And that was 
reflected in the fact that their presidential candidate in the last 
election opposed federal incentives for the production of wind energy. 
A lot of governors from a lot of those states, like the governor of 
Iowa and others, said that it was important for jobs in their states. 
But the position taken at the federal level by many of our colleagues 
is no to federal investments in clean energy policy. And in fact, if 
you look at the budget of our Republican colleagues, they are slashing 
by 50 percent important national investments in clean energy 
technologies. That is not an all-of-the-above energy strategy--that is 
a status quo energy strategy.
    And it is incredibly shortsighted for two reasons. One is it 
totally ignores the costs of doing nothing when it comes to global 
climate change--we know there are huge costs attached to that. Just ask 
the insurance companies. We see a greater frequency and intensity of 
major weather events, whether they're droughts, whether they're forest 
fires as a result of the droughts, whether they're floods--a whole 
series of events that have a price. And so doing nothing in that area 
has a cost.
    Secondly, our major economic competitors--countries like China, 
countries like Germany--recognize the importance of investing in clean 
energy technologies as an important market globally for the future. And 
right now, the Chinese are investing more in that sector than we are.
    I believe, as do hundreds of American businesses who recently 
signed a statement saying that the United States should rise to the 
occasion and challenge, that dealing with global challenge is at the 
same time a huge economic and jobs opportunity for the United States. 
And we should not shy away from that challenge.
    And that is why we should, Mr. Chairman, adopt what is truly an 
all-of-the-above energy strategy to develop responsibly homegrown 
energy sources, and at the same time make better use of the energy that 
we have by taking steps to prevent wasteful practices. And by doing 
that, we can make sure that the energy that we do produce goes further, 
and, at the same time, increase jobs and save consumers a lot of money.
    So, Mr. Chairman, I hope we will, going forward, change at least 
what has been the pattern in this House of Representatives and truly 
focus on all of those energy sources, not simply a one-dimension fossil 
fuel strategy.
    Thank you.

    Chairman Ryan. Thank you. We will proceed in the order in 
which we see. We will go with Mr. Larson, Mr. Weiss, and Mr. 
Durbin. I would ask each of you, if you do not mind, to 
summarize your testimony in five minutes so we can get to the 
questions, and your full testimony will be included in the 
records. So, Mr. Larson, the floor is yours.

  STATEMENT OF JOHN W. LARSON, VICE PRESIDENT, ECONOMICS AND 
                       COUNTRY RISK, IHS

    Mr. Larson. Thank you, Chairman Ryan, Ranking Member Van 
Hollen, and distinguished members of the Committee on the 
Budget. It is an honor to speak with you today. I think as an 
economist, this is one of the areas when I talk about what is 
going on in the broader U.S. economy, that we really get to get 
excited about the opportunities that are out there today. The 
United States is clearly in the midst of an unconventional 
revolution of oil and gas that is fundamentally changing our 
energy position in the world. It is improving global 
competitiveness for the United States, and it is helping to 
stimulate a manufacturing renaissance.
    Since 2009, our company, IHS, has engaged in several 
studies to better understand the economic contributions 
associated with this revolution. And we will be releasing a 
further study in July that looks at the specific implications 
for the manufacturing sector. However, the impacts that we have 
quantified so far are impressive. At a national level, this 
unconventional exploration and development activities supports 
1.7 million jobs in 2012. And by the end of the decade, that 
will grow to 3 million jobs.
    In the process, it is also generating significant 
government revenues. Nearly $62 billion in total government 
revenues are for federal, state, and local in 2012. That will 
grow to $111 billion in annual revenues by the end of the 
decade. And as Chairman Ryan, you pointed out, that will 
accumulate from 2012 to 2035 to $2.5 trillion in government, 
federal, state, and local revenues.
    There are also significant implications for states as well. 
In fact, nearly 1.1 million jobs and $19 billion in state and 
local taxes can be found in the 21 states represented by the 
members of this very Committee. And states do not necessarily 
have to have a play within their geographic boundaries to enjoy 
these economic opportunities. The benefit is recognized through 
a very long supply chain that supports this unconventional 
activity. In fact, nearly 30 percent of the jobs identified in 
our study were in states with no appreciable unconventional 
activity.
    For example, in Wisconsin, an important supplier of sand 
and machinery to the unconventional industry, Wisconsin, in 
2012, enjoyed 20,000 jobs and $330 million in state and local 
taxes due to this unconventional activity. Similarly, in 
Maryland, a state with long supply chains that also support 
this activity, there were 12,000 jobs and more than $240 
million in taxes and revenue. And lastly, in New York, a state 
which currently bans unconventional activity, these supply 
chains supported 44,000 jobs and $1 billion in state and local 
taxes, particularly in areas like real estate, finance, and 
insurance.
    Equally impressive for the larger macroeconomic effects 
attributed to the savings brought about by lower natural gas 
prices and corresponding electricity prices. In our study, we 
identified how these lower natural gas prices will increase 
industrial production 2.7 percent by 2015, and 4.7 percent by 
2035, as manufacturing industries that are energy-intensive 
take advantage of our comparative advantage.
    And these have real pocketbook effects on average American 
families, as they enjoy these lower prices, which cascade 
through the economy, resulting in savings to consumers in 
annual disposable income, which will be up $1,000 by 2015, with 
approximately 121 million American households; the savings of 
$1,000 per average household equates to $121 billion in 
aggregate savings to those households.
    Where does this mean for manufacturing specifically? Well, 
there are several factors that are contributing to the shift in 
the delicate balance in favor of onshoring and fueling the 
resurgence of manufacturing. First, the global wage rate for 
many offshoring locations have significantly outpaced U.S. wage 
increases and narrowed the gap, making the United States more 
competitive on a per-hour basis. Second, in an increasingly-
advanced manufacturing world, technology is shifting the 
balance away from the importance of low-cost labor and towards 
high-skilled work forces, which the U.S. enjoys a comparative 
advantage in. And third, a rapidly evolving energy landscape is 
fundamentally shifting traditional economics around supply 
chains.
    Higher oil prices, which have tripled in the last decade, 
have significantly increased transportation costs, making 
offshoring less attractive. In the U.S., unconventional 
revolution is creating significant competitive advantages for 
energy-intensive industries, and industries that reply upon 
natural gas derivatives and feedstocks. And as a result, 
companies are now committing or planning to commit to hundreds 
of billions of dollars in new investments in this country, both 
domestic and foreign direct investment.
    Although this unconventional revolution has already had a 
major impact, fundamentally transforming U.S. energy supply and 
contributing to the growth in government revenues, 
manufacturing, and the wider economy, its significance will 
continue to grow as it continues to unfold. These hearings 
provide a timely opportunity for assessing that impact and 
significance in its many dimensions. And I am pleased to 
respond to the Committee's questions. Thank you.
    [The prepared statement of Mr. Larson follows:]

         Prepared Statement of John W. Larson, Vice President,
                  Economics and Country Risk, IHS \1\

    Chairman Ryan, Ranking Member Van Hollen and distinguished members 
of the Committee on the Budget, it is an honor to speak with you today 
about America's new opportunity--the economic growth and employment 
being fueled by our country's unconventional energy revolution.
---------------------------------------------------------------------------
    \1\ John Larson is the Vice President and global leader for 
customized analytic and economic solutions within IHS Economics & 
Country Risk Group.
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    The United States is in the midst of an unconventional revolution 
in oil and gas that, it becomes increasingly apparent, goes beyond 
energy itself. Since 2009, our company has engaged in several studies 
to better understand and accurately quantify the dramatic economic 
contributions associated with this unconventional revolution. Today, 
the exploration and production industry driving this unconventional 
revolution supports 1.7 million jobs across a vast supply chain--a 
considerable accomplishment given the relative newness of the 
technology. That number could rise to 3 million by 2020. In 2012, this 
revolution added $62 billion to federal and state government revenues, 
a number that we project could rise to about $111 billion by 2020.\2\ 
What is now becoming clear is that the lower costs of energy brought 
about by this abundant growth in energy supply is helping to stimulate 
a manufacturing renaissance and improve the competitive position of the 
United States in the global economy and further stimulating job 
creation in the United States.
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    \2\ IHS, America's New Energy Future: the Unconventional Oil and 
Gas Revolution and the United States Economy, vol. 1 National Economic 
Contributions (October 2012) and vol. 2, State Economic Contributions 
(December 2012).
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           where did the unconventional revolution come from?
    The unconventional revolution has unfolded rapidly. As recently as 
just a half-decade ago it was widely assumed that a permanent era of 
energy shortage was at hand. The country, it seemed, was on a path to 
spending several hundreds of billions of dollars more every year on 
imports to meet oil and natural gas demand. How different things look 
today.
    US crude oil output, after a nearly 40 year decline, has increased 
dramatically--by 46 percent since 2008.\3\ Net petroleum imports have 
fallen from 60 percent of total consumption in 2005 to 36 percent in 
the first four months of 2013. The decline is due, in part, to 
moderating energy demand during the slow recovery in the wake of the 
Great Recession. Greater fuel efficiency in autos and a slowing of the 
growth in total vehicle miles will continue to constrain the growth of 
demand. However, the decline in imports has also been achieved through 
significant supply side changes resulting from that dramatic increase 
in U.S. oil production. The largest element of this increase in 
production comes from what has become the newest major advance in 
energy development: tight oil. In fact, oil imports in 2012 would have 
cost the United States around $70 billion more and increased our trade 
deficit a little over 13 percent were it not for the increase in 
production capacity brought about by tight oil since 2008.
---------------------------------------------------------------------------
    \3\ Energy Information Administration, Monthly Energy Review (May 
2013).
---------------------------------------------------------------------------
    With respect to natural gas, in just seven years, US natural gas 
production has risen from 51 billion cubic feet (bcf) per day to 66 bcf 
per day--a 27 percent increase. This rapid rise was driven primarily by 
shale gas production. In 2000, shale gas accounted for just 2 percent 
of total natural gas production. Today, shale gas accounts for nearly 
44 percent of total natural gas production. This rapid rise in 
unconventional production has also enhanced US energy security. Five 
years ago, due to constrained production, the United States seemed 
locked into importing increasing amounts of liquefied natural gas (LNG) 
and was heading towards spending as much as $100 billion dollars 
annually on future imports. Now, these newly unlocked resources ensure 
that the United States will need, at most, minimal LNG imports to 
balance supply with demand. Instead of debates over US imports, there 
is the prospect of exporting some of the domestic surplus, as well as 
the potential for using natural gas in some classes of vehicles.
     what is the economic impact of the unconventional oil and gas 
                              revolution?
    While various states had begun to home in on the economic 
development aspects of shale gas and tight oil, it was only in last 
several years that its significance for the national economy started to 
come into focus. We have undertaken a series of studies to assess the 
economic impact of the unconventional revolution. The first two--
released late last year--examined the national and state-by-state 
impacts.\4\ We are now extending that study to assess the impact on 
manufacturing--which will be released in July, 2013.\5\
---------------------------------------------------------------------------
    \4\ IHS, America's New Energy Future: the Unconventional Oil and 
Gas Revolution and the United States Economy, vol. 1 National Economic 
Contributions (October 2012) and vol. 2, State Economic Contributions 
(December 2012).
    \5\ IHS, America's New Energy Future: the Unconventional Oil and 
Gas Revolution and the Manufacturing Renaissance, vol. 3 (July 2013)
---------------------------------------------------------------------------
    So far, this unconventional revolution is supporting 1.7 million 
jobs--direct, indirect, and induced. Looking towards the future, the 
industry will continue to contribute to strong job growth bringing the 
total to 3 million workers by the end of this decade. At a time of 
great concern about the federal budget, it is also important to note 
the important revenue implications associated with this energy 
revolution. Total revenues flowing to governments from unconventional 
activity amounted to $62 billion last year and will rise to $111 
billion by 2020. This does not include revenue from traditional oil and 
gas activity. By 2035, unconventional activity is expected to have 
generated nearly $2.5 trillion in cumulative government revenues since 
2012.
    It is also notable that, owing to the long supply chains, the job 
impacts are being felt across the United States, including in states 
without significant shale gas or tight oil activity.\6\ That is to say, 
when it comes to unconventional activity, a state does not need to have 
a major unconventional play within its geographic boundaries to benefit 
economically from the activity. In fact, nearly 30 percent of all jobs 
associated with the unconventional energy revolution are found in 
states with no appreciable unconventional activity. For example:
---------------------------------------------------------------------------
    \6\ Producing states are defined as those that are part of the 20 
largest unconventional oil and natural gas producing plays in the US 
Lower 48, such as the Bakken and Marcellus Shale plays. Non-Producing 
states are not part of the 20 largest unconventional oil and natural 
gas producing plays in the US Lower 48 and are not part of an emerging 
oil or natural gas play in the 2012 to 2035 forecast horizon. These 
states may be part of plays that are currently producing oil and/or 
natural gas, but nevertheless are classified as non-producing states, 
because current production is relatively small and the prospect for 
future unconventional production is unknown.
---------------------------------------------------------------------------
     Wisconsin is an important supplier of the special sands 
required in unconventional extraction using hydraulic fracturing 
techniques. Machinery manufacturers in the state also provide 
significant oil and gas field machinery to the unconventional activity 
around the country. As a result, in 2012 Wisconsin's economic activity 
associated with unconventional production directly and indirectly 
supported nearly 20,000 jobs and generated $330 million in state and 
local taxes.
     In Maryland, the 2012 economic activity associated with 
unconventional activity indirectly supported nearly 12,000 jobs while 
generating more than $240 million in taxes for state and local 
governments.
     In New York, a state that currently bans unconventional 
activity, 44,000 jobs along with $1 billion in state and local taxes 
can be attributed to activities supporting the supply-chain associated 
with shale gas and tight oil in other states across the country in 
2012.
    A key reason for the profound economic impact of the unconventional 
activity is the fact that it combines a capital-intensive industry with 
a broad domestic supply chain. The United States is a leader in all 
aspects of the unconventional industry, which means that most of its 
suppliers are domestically-based, and that means a larger portion of 
the dollars spent are supporting domestic jobs in trucking, steel 
fabrication, aggregates, heavy equipment manufacturing, hotels, 
housing, and restaurants, among others.
    But there is now an even bigger positive impact for our economy 
that is beginning to be recognized. In addition to these specific 
contributions to the economy, there are larger macroeconomic effects 
attributed to the savings brought about by lower natural gas prices and 
corresponding electricity prices. In our study, The Economic and 
Employment Contributions of Shale Gas in the United States, we 
identified the following two important macro-economic implications 
stemming from lower natural gas prices:
     For U.S. based industries, the abundance of affordable 
natural gas means lower input and feedstock prices. As a result, 
industrial production--the measure of output from manufacturing, 
mining, and utility industries--will increase 2.7 percent by 2015 and 
4.7 percent by 2035.
     For households, these lower prices cascade through the 
economy, resulting in a $926 increase in annual average disposable 
income between 2012 and 2015. By 2035, annual average disposable income 
per household will have increased by more than $2,000.
                       manufacturing renaissance?
    The impact on manufacturing is notable. Several factors are 
shifting the economics in favor of on-shoring and fueling the 
resurgence of manufacturing in the US. First, global labor wage rates 
for many off-shoring locations have significantly outpaced US wage 
increase, narrowing the wage gap. Second, in an increasingly advanced 
manufacturing world, technology is shifting the balance away from the 
importance of low cost labor toward higher skilled workforces. Third, a 
rapidly evolving energy landscape is fundamentally shifting the 
traditional economics around supply chains as:
    (1) higher oil prices, which have tripled in the last decade, are 
altering transportation costs and compelling companies to site 
manufacturing locations closer to end markets making off-shoring less 
attractive;
    (2) the unconventional revolution in the US, which has ushered in a 
new era of affordable and abundant domestic natural gas, is creating 
significant competitive advantages for both energy intensive industries 
and industries that rely upon natural gas derivatives as critical 
feedstock to production.
    As a result, companies are now committing or planning investments 
that in total appear to range into hundreds of billions of dollars.\7\ 
The US chemical industry is particularly well positioned to capitalize 
on the benefits of this unconventional revolution. This industry is 
highly energy intensive using energy inputs, mainly natural gas and 
natural gas liquids, as both the major fuel source and feedstock. The 
US chemical industry's feedstock prices are now among the lowest in the 
world. As a result, the US is gaining a decisive competitive advantage 
in the cost of producing basic petrochemicals like ethylene, ammonia, 
methanol, and their downstream derivative products.
---------------------------------------------------------------------------
    \7\ American Chemistry Council, Shale Gas, Competitiveness, and New 
U.S. Chemical Industry Investment--An Analysis of Announced Projects 
(May 2013)
---------------------------------------------------------------------------
    A large number of chemical companies, for instance, have announced 
plans to build or expand facilities in North America with capital 
expenditures totaling close to $100 billion.\8\ Will all be built? Time 
will tell. But what is striking is that, just five years ago, these 
companies would have scoffed if they had been told that they would be 
investing back into the United States. The investments are coming both 
from US based companies, which are ``on-shoring'' in response to lower 
energy costs, and from foreign companies. Examples include:
---------------------------------------------------------------------------
    \8\ IHS, Energy and the New Global Industrial Landscape: a Tectonic 
Shift? (January 2013), p. 2.
---------------------------------------------------------------------------
     General Electric which has announced more than a dozen new 
manufacturing plants or expansions of existing facility including: (1) 
a locomotive plant in Texas; (2) an aircraft engine composites factory 
in Mississippi; and (3) appliance and lighting facilities in Alabama, 
Kentucky, and Ohio.
     Caterpillar, which is investing $120 million in a new 
Victoria, TX, plant to make excavator machines--these devices will 
replace excavators formerly manufactured at a Caterpillar facility in 
Japan and shipped to the US.
     Ford, which announced plans to bring back approximately 
2,200 parts production jobs to the United States.
                               conclusion
    Altogether, the unconventional oil and gas revolution has already 
had major impact in multiple dimensions--beginning with U.S. energy 
supply and costs and now extending to government revenues, 
manufacturing, and the wider economy. Its significance will continue to 
grow as it continues to unfold. These hearings provide a very timely 
opportunity for assessing that impact and significance in its many 
dimensions, and I am pleased to respond to the committee's questions.

    Chairman Ryan. Thank you. Right in time, too. Mr. Weiss.

          STATEMENT OF DANIEL J. WEISS, SENIOR FELLOW,
                  CENTER FOR AMERICAN PROGRESS

    Mr. Weiss. Chairman Ryan, Ranking Member Van Hollen, and 
distinguished members of the Committee, thank you for the 
opportunity to testify today.
    The subject of today's hearing is America's Energy 
Revolution: A New Path to Jobs and Economic Growth. To most 
Americans, the energy revolution has three main components. 
First, responsibly develop the energy resources of today while 
using them more efficiently. Second, invest in the new, cleaner 
energy technologies of tomorrow, and funding them with ending 
tax breaks for big oil companies. Third, reduce the public 
health and extreme weather threats posed by toxic and carbon 
pollution generated by the production and combustion of coal, 
oil, and natural gas.
    I will briefly review the Obama Administration's all-the-
above strategy that meets these three goals. First, responsibly 
develop the resources of today. As the Chairman noted, U.S. oil 
production is at its highest since 1992. Oil production for 
federal lands and waters is higher three of the last four years 
under Obama than under the last three years of his predecessor. 
And the Congressional Budget Office says that 70 percent of the 
oil and gas on federal lands is already open for development. 
This oil production increases boosted direct oil and gas 
employment by 155,000 people, or 11 percent, over the last four 
years.
    Because of the increase in domestic production, last year, 
the United States imported only 40 percent of its oil, compared 
to 57 percent in 2008. And coal mining jobs grew by 6 percent 
between 2008 and 2012, according to the Labor Department. And 
we are using these resources more efficiently. When the new 
fuel economy standards are fully implemented in 2025, we will 
use 2 million fewer barrels of oil per day, and drivers will 
save the equivalent of $1 per gallon of gasoline. Under the 
Recovery Act, we weatherized one million low-income homes to 
make them more efficient, which will save each family $400 on 
their utility bills every year.
    Second, we need to invest in clean energy technologies that 
create jobs, and we could fund this by closing special oil tax 
breaks. As previously noted, the governors of Iowa, Oklahoma, 
and Kansas have supported federal investments in wind energy, 
which has led to growth in that field. Renewable electricity 
generation has doubled over the last four years, and there are 
200,000 employees in the wind and solar industry. The Labor 
Department recently determined that in 2011, 3.4 million jobs 
were associated with the production of green goods and 
services. And we can pay for additional clean energy 
investments by the elimination of tax breaks for big oil. The 
five biggest oil companies made $250 billion in profits in the 
last two years, and as of the end of 2012, had $70 billion in 
cash reserves. They do not need their share of $40 billion in 
tax breaks for big oil companies.
    Third, we need to protect public health from pollution and 
extreme weather. The pollution reductions from the mercury air 
toxics standards for coal-fired power plants will save 11,000 
lives annually, and prevent hundreds of thousands of asthma 
attacks and hospitalizations.
    Yesterday, President Obama announced his plan to reduce 
carbon pollution from power plants by enforcing the Clean Air 
Act. Power plants are the largest uncontrolled domestic source 
of climate pollution. These reductions are essential to meet 
our obligation to the next generation to reduce the threats to 
public health and avoid the future growth of destructive 
extreme weather.
    President Obama has successfully pursued an all-of-the-
above energy strategy by increasing oil production, reducing 
oil imports and use, and protecting public health from 
pollution. In contrast, the House of Representatives has only 
supported one element of an all-of-the-above strategy: the 
expansion of oil and gas production. For instance, just last 
week the House Appropriations Subcommittee on Energy and Water 
proposed to cut investments in clean energy in half, and reduce 
investment in breakthrough clean energy technology research 
investments by 80 percent in its FY 2014 spending bill. And as 
Mr. Van Hollen noted, the budget sequester has hindered oil 
production for public lands due to funding cuts at the 
Department of Interior that have slowed lease approval.
    The House of Representatives has ignored oil use 
reductions, slashed investments for new clean energy 
technologies, and would eviscerate public health protection 
from pollution. This is an oil-above-all strategy that would 
benefit big oil companies at the expense of everyone else. 
Hopefully, the House of Representatives will join President 
Obama in supporting a true all-of-the-above energy strategy.
    Thank you, and I look forward to your questions.
    [The statement of Mr. Weiss may be accessed at the 
following Internet address:]

      http://www.americanprogress.org/wp-content/uploads/2013/07/
                          Weiss_Testimony.pdf

    Chairman Ryan. Thank you. And it cannot be said that we do 
not encourage a wide range of views here. Mr. Durbin.
    Mr. Van Hollen. For the record, it is because you let us 
pick a witness.

 STATEMENT OF MARTIN J. DURBIN, PRESIDENT AND CHIEF EXECUTIVE 
            OFFICER, AMERICA'S NATURAL GAS ALLIANCE

    Mr. Durbin. Chairman Ryan, Ranking Member Van Hollen, and 
members of the Committee, thank you for the opportunity to 
appear before you today. I am Marty Durbin, president and CEO 
of America's Natural Gas Alliance. ANGA represents North 
America's largest independent natural gas exploration and 
production companies.
    We work with industry, government, and customer 
stakeholders to ensure the continued availability and increased 
use of our natural gas resources for a cleaner and more secure 
energy future. I appreciate the opportunity to join this 
conversation on how domestic energy production is 
revolutionizing the path of jobs and economic growth for our 
country.
    Just as natural gas is today a foundation fuel in terms of 
our energy use, so is the natural gas industry a foundational 
engine of U.S. job creation and economic growth. Mr. Larson's 
already laid out the economic contributions from employment to 
capital investment to government revenue. These contributions 
are made possible by technological innovations led by hydraulic 
fracturing and horizontal drilling that allow our nation to 
safely and responsibly access vast domestic reserves of shale 
gas that typically lie a mile or more below the earth's 
surface.
    Our natural gas resources exist in such abundance that the 
U.S. has transitioned in just a handful of years from being a 
net importer of natural gas to now being the world's largest 
producer of this clean energy source. And there is now broad 
consensus that the U.S. has enough natural gas to meet our 
nation's growing energy needs for generations to come.
    Unique among our nation's energy choices, natural gas is 
used in every sector of our economy, from electric power 
generation and industrial feedstocks to residential and 
commercial uses and transportation.
    With market forces driving this dynamic, natural gas is 
delivering substantial contributions to core national 
priorities. Among the highlights, this industry contributes 
$113 billion annually to federal, state, and local government 
budgets, funding critical government priorities. It supports 3 
million American jobs. It is projected to help create nearly a 
million additional jobs in the U.S. manufacturing sector alone 
by 2025. It is primarily responsible for a reduction in U.S. 
power sector carbon emissions to levels not seen since 1994. 
And along with rising domestic oil production, natural gas is 
helping lead our nation to energy self-sufficiency and 
strengthen our energy security.
    This impressive performance is made possible not only by 
the abundant supplies of natural gas, but also by policies that 
encourage safer, responsible development with appropriate 
state-led oversight of this clean, low-cost American energy 
source. To maximize these benefits to our nation, government 
should exercise caution in imposing unnecessary costs on an 
American industry that is providing so much economic value. 
Given the extraordinary contributions that American natural gas 
is making to our nation, we must ensure that federal policy 
allows this incredible record of success to continue.
    Two areas of significant potential impact are tax policy 
and export policy. Natural gas development is a highly capital-
intensive industry. Like all other capital-intensive 
industries, cost recovery is critical to its success. Cost 
recovery is not a handout, a loophole, or a subsidy. So, for 
example, erasing the intangible drilling cost deduction would 
have a significant negative impact in both the short term, 
primarily on U.S. manufacturing and industrial consumers who 
rely on affordable natural gas to remain competitive, and the 
long term, where it is projected that such a move would 
actually decrease government revenue significantly beyond a 10-
year time horizon.
    Export policy presents another opportunity to signal to the 
marketplace that the U.S. government is disciplined and 
consistent, both in its support of natural gas and the 
principles of free trade. The Department of Energy's approval 
of the Freeport, Texas LNG export terminal is a positive sign. 
Timely approval of the remaining export permit applications is 
needed to continue this progress, improve the U.S. trade 
balance, and make significant headway toward the bold national 
objective of doubling U.S. exports during this decade.
    Natural gas is one of the bright spots in our economy. Free 
trade principles, technology advances, and fair tax policies 
will allow us to continue the success story.
    So, thank you, again, for the opportunity to appear before 
you. Our industry is proud of the contributions we make for our 
nation, and we stand ready to work with this Committee, the 
Congress, and the Administration to ensure a path forward that 
allows natural gas to continue as a foundation of U.S. job 
creation and economic growth for decades to come. Thank you.
    [The prepared statement of Mr. Durbin follows:]

       Prepared Statement of Martin J. Durbin, President and CEO,
                     America's Natural Gas Alliance

    Chairman Ryan, Ranking Member Van Hollen and members of the 
committee, thank you for the opportunity to testify on behalf of 
America's Natural Gas Alliance (ANGA) and its member companies.
    My name is Marty Durbin. I am President and CEO of America's 
Natural Gas Alliance, which represents North America's largest 
independent natural gas exploration and production companies. Our 
mission is to promote the growing demand for and use of our nation's 
vast domestic natural gas resources. In pursuing this mission, ANGA 
works with industry, government and customer stakeholders to ensure the 
continued availability and increased use of our natural gas resources 
for a cleaner and more secure energy future.
    I appreciate the opportunity to join this timely discussion on how 
the nation's vast domestic energy resources are revolutionizing not 
only the energy game, but also the path to jobs and economic growth for 
our country as a whole.
                                summary
    Just as natural gas is a foundation fuel in terms of our energy 
use, so is the natural gas industry a foundational engine of U.S. job 
creation and economic recovery. The industry contributes $113 billion 
annually in government revenues, supports 3 million American jobs and 
contributes $440 billion each year to the nation's economy.\1\
    This contribution is made possible by technological innovations, 
led by hydraulic fracturing with horizontal drilling, that are allowing 
our nation to safely and responsibly access vast domestic reserves of 
shale gas that lie typically a mile or more below the earth's surface. 
Our natural gas resources exist in such abundance that the United 
States has transitioned in just a handful of years from being a net 
importer\2\ of natural gas to the world's largest producer of this 
clean energy source.\3\
    There is now a broad consensus that the U.S. has enough natural gas 
to meet our nation's growing energy needs for generations to come. This 
abundance has made possible stable, affordable prices for natural gas 
consumers. Unlike any other fuel, natural gas is used in every part of 
our economy--electricity generation, residential and commercial uses, 
manufacturing feedstock and energy needs, as well as transportation 
fuel--allowing natural gas to deliver value throughout the fabric of 
our entire economy.
    America's newfound abundance of natural gas has fundamentally 
transformed the outlook not only for our economy, but also for our 
nation's energy security. Market forces are helping deliver substantial 
contributions not only to the U.S. Treasury but also to core national 
priorities. Among the highlights, natural gas:
     Contributes $113 billion annually to federal, state and 
local government budgets;
     Supports 3 million American jobs;
     Is projected to help create nearly 1 million U.S. 
manufacturing jobs by 2025;\4\
     Is primarily responsible for a reduction in U.S. power 
sector carbon emissions to levels not seen since 1994;\5\
     Along with rising domestic oil production, is delivering 
profound strides in the nation's energy self-sufficiency and security; 
and
     Is delivering $926 in annual savings to the average U.S. 
household--savings in both electricity and home heating costs. And, 
this figure is expected to grow to more than $2,000 per year by 
2035.\6\
    This impressive performance is made possible not only by the 
abundant supplies of natural gas, but also by policies that encourage 
safe and responsible development with appropriate state-led oversight 
of this clean, low-cost American energy source.
    To maximize these benefits to our nation, government should 
exercise caution in imposing unnecessary costs on an American industry 
that is providing so much economic value. To do so would have a 
negative ripple effect through our economy and diminish the 
contributions our natural gas industry can make not only to government 
revenues but also to the U.S. economic recovery as a whole.
     domestic energy development a rare bright spot in u.s. economy
    Shale energy, including both domestic natural gas and oil 
development, has been one of the brightest spots in our economy over 
the past five years.
    The growth we've seen and the opportunity ahead come from the 
development of so-called ``unconventional'' natural gas resources, 
chief among them shale gas. Shale gas was 35% of natural gas production 
in 2011, and it's predicted to reach 52% by 2040.\7\
    To offer a sense of the magnitude of this opportunity: In 2011, 
total capital expenditures for the natural gas industry as a whole 
reached $109 billion.\8\ In 2025, that figure will rise to $123 
billion--for shale and other ``unconventional'' natural gas resources 
alone.
    This is an economic stimulus that will provide significant 
additional revenues to government at all levels.
    In addition, roughly half of all natural gas-related jobs today are 
powered by shale resources. More than 800,000 additional jobs will be 
created by 2025--again by shale and other unconventional natural gas 
resources alone.\9\ It should be further noted that the high quality of 
jobs created through shale gas is reflected in above-average pay--with 
direct jobs spread across 31 shale gas-producing states paying $23-plus 
per hour.

       U.S. EMPLOYMENT--UNCONVENTIONAL NATURAL GAS (2010-2025)\10\
------------------------------------------------------------------------
                                 2010       2015       2020       2025
------------------------------------------------------------------------
Direct......................    237,968    333,776    403,472    400,958
Indirect....................    327,000    479,488    593,817    598,497
Induced.....................    443,693    650,185    797,485    812,499
                             -------------------------------------------
      Total.................  1,008,661  1,463,449  1,794,774  1,811,954
------------------------------------------------------------------------

    In addition to those employed directly in the natural gas industry, 
indirect employment tallies those who work in related industries in the 
natural gas supply chain. Induced jobs represent jobs created by the 
spending of the first two categories. These are conservative figures 
that do not take into account the many unrelated American industries 
that are flourishing in an environment of low-cost natural gas. These 
include the estimated one million manufacturing jobs that are forecast 
to be created through 2025 because abundant, affordable natural gas is 
making American workers and U.S. companies more competitive in the 
global marketplace.
  natural gas contributes $113 billion annually in government revenues
    In 2011, natural gas contributed nearly $113 billion in government 
revenues. In addition to $53 billion to the U.S. Treasury, this 
included $58 billion in contributions to state and local budgets\11\--
helping fund schools, law enforcement, hospitals and other local 
priorities. For this reason, you see governors across the political 
spectrum, from red states and blue states alike, enacting laws and 
regulations that encourage responsible energy development in their 
states. Additionally, the government--like all natural gas consumers--
has enjoyed substantial savings from reduced operating costs associated 
with low-cost natural gas.
    Here is the 2011 breakdown of government revenues from the total 
natural gas industry:\12\
     Federal Taxes: $53 billion
     State and Local Taxes: $58 billion
     Federal Royalty Payments: $2 billion
     Total: $113 billion
    Similar to the employment and capital expenditure projections, 
shale gas will drive future growth in government revenue contributions 
at all levels of government. In fact, federal, state and local 
government revenues from shale and other unconventional gas production 
will almost double from 2010 to 2025.\13\

                         GOVERNMENT REVENUES--UNCONVENTIONAL NATURAL GAS (2010-2025)\14\
                                                  [$ Billions]
----------------------------------------------------------------------------------------------------------------
                                                                     2010        2015        2020        2025
----------------------------------------------------------------------------------------------------------------
Federal Taxes...................................................       16.5        24.2        29.7        30.3
    Corporate Taxes (federal)...................................        3.7         5.5         6.7         7.0
    Personal Taxes (federal)....................................       12.8        18.7        23.0        23.3
Federal Royalty Payments........................................        0.9         1.2         1.2         1.5
State and Local Taxes...........................................       16.4        23.9        28.8        31.1
    Corporate Taxes (state & local).............................       10.5        15.6        19.0        19.7
    Personal Taxes (state & local)..............................        2.2         3.2         3.9         4.0
    Severance Taxes (state & local).............................        2.6         3.6         4.1         5.0
    Ad Valorem Taxes (state & local)............................        1.1         1.6         1.8         2.3
                                                                 -----------------------------------------------
      Total Government Revenue..................................       33.8        49.3        59.8        62.9
----------------------------------------------------------------------------------------------------------------

      american natural gas abundance key to u.s. economic recovery
    In setting sound fiscal policy, it is imperative to consider not 
just industry jobs, investment and government revenue, but also the far 
more broad and positive impact that abundant, affordable natural gas is 
having throughout our economy. Unique among our nation's energy 
choices, natural gas is used in every sector of our economy, through 
its prominent roles in electricity generation, industrial and 
manufacturing fuel uses (generally referred to as ``feedstock''), 
residential and commercial uses and as a transportation fuel.
    Natural gas accounts for more than 25% of our total energy use in 
the United States. The fact that domestic dry gas production has 
increased 20% since 2008,\15\ and wellheadprices have been reduced by 
roughly half since 2008 has had a profound effect on the 
competitiveness of a wide variety of American industries.
                         electricity generation
     Natural gas accounts for 24% of our electricity generation 
as of 2012;\16\
     Electricity users on average have saved 8% since 2008 
thanks to reliable, abundant and affordable supplies of natural 
gas;\17\ and
     Natural gas' cleaner profile across a broad array of 
emissions is allowing utilities throughout the country to more cost-
effectively achieve environmental goals.
                        manufacturing feedstock
     Natural gas accounts for 26% of energy used in the 
industrial sector, including feedstocks;\18\ and
     More than $110 billion of new or expanded manufacturing 
projects have been announced through 2018 with low natural gas prices 
cited as the reason for the additional capacity.\19\ This is a 
manufacturing renaissance including chemicals, plastics, fertilizer, 
steel, aluminum, tires and more.
                      residential/commercial uses
     Natural gas accounts for 64% of energy used in 
heating;\20\
     Natural gas consumers have saved more than 30% in heating 
costs since 2008.
    This includes savings related to space and water heating, as well 
as appliances, such as stoves and gas dryers, and these savings free up 
cash flow to spend elsewhere.\21\
                             transportation
     Natural gas comprises 0.1% of energy used in 
transportation. However, its use in this sector is expected to grow 
significantly over the next decade;\22\
     Natural gas is the lowest cost transportation fuel 
available on the market today.
    Between 2010 and 2012, the average price of compressed natural gas 
was $1.20 less than the gasoline gallon equivalent;\23\
     For this reason, leading U.S. companies from Waste 
Management to AT&T to UPS are converting their vehicles to run on 
affordable, American natural gas;
     Additionally, one in five city transit buses now run on 
natural gas, with one in three new transit bus purchases being CNG 
vehicles;\24\
     Up to 30% of the nation's trucking fleet may run on 
natural gas by 2020;\25\
     And, just yesterday, ANGA unveiled four demonstration 
dual-fuel passenger vehicles. They run on both gasoline and natural 
gas. Their purpose is to show the potential range of consumer choices--
from luxury SUV to muscle car to commuter vehicles--that have the 
performance American consumers expect, while adding the fuel efficiency 
and significant cost savings that natural gas has to offer.
           strong national interest in constructive policies
    Given the extraordinary contributions that American natural gas is 
making to our nation, we must ensure that federal policy allows this 
incredible record of success to continue. Two areas of significant 
potential impact are tax policy and export policy.
    Natural gas development is a highly capital-intensive industry, and 
like all other capital-intensive industries, cost recovery is critical 
to the industry's success; it is not a handout, a loophole or a 
subsidy. Erasing the Intangible Drilling Costs deduction would have a 
significant negative impact in both the short term--primarily on U.S. 
manufacturing and industrial consumers who rely on affordable natural 
gas to remain competitive--and the long-term, where it is projected 
that government revenue would decrease significantly beyond a 10-year 
time horizon.
    Export policy is another opportunity for the government to signal 
to the marketplace that U.S. policy is disciplined both in support of 
natural gas and in support of the principle of free trade. The 
Department of Energy's approval of the Freeport, TX, LNG export 
terminal is a positive sign. Timely approval of the remaining export 
permit applications is needed to continue this progress, improve the 
U.S. trade balance and make significant headway toward the bold 
national objective of doubling U.S. exports during this decade. Without 
affordable and abundant natural gas, this topic would not even be part 
of our nation's dialogue. Free trade principles, technology advancement 
and fair tax policies will allow us to continue this success story.
                               conclusion
    Natural gas is one of the bright spots in our economy, and it's 
important that we pull in a consistent and constructive direction to 
continue this progress. ANGA's member companies are part of an industry 
that contributes $113 billion per year to federal, state and local 
government. Equally important, our industry supports 3 million American 
jobs.\26\ Natural gas also is making strides in the nation's energy 
security, and it is a primary reason that U.S. energy sector carbon 
emissions are at 20-year lows. We believe that allowing markets to 
continue to deliver this huge stimulus to communities across the nation 
is an essential component in our ongoing economic recovery--and will 
ensure an appropriate balance that both delivers ample revenues to 
government and ensures natural gas can continue to be a foundation of 
U.S. job creation and economic growth for decades to come.
                                endnotes
    \1\ ``The Contributions of the Natural Gas Industry to the US 
National and State Economies'' ANGA/IHS, 2012.
    \2\ AEO 2005 vs. AEO 2012.
    \3\ ``Annual Energy Outlook'', EIA, 2013.
    \4\ ``Shale Gas: A Renaissance in US Manufacturing?. National 
Association of Manufacturers and PriceWaterhouseCoopers, 2011.
    \5\ EIA June 2012 Monthly Energy Review.
    \6\ ``Economic and Employment Contributions of Shale Gas in the 
United States.'' IHS, 2011.
    \7\ EIA Annual Energy Outlook: 2013 Early Release.
    \8\ ``The Contributions of the Natural Gas Industry to the US 
National and State Economies,'' ANGA/IHS 2011.
    \9\ ``The Economic and Employment Contributions of Unconventional 
Gas Development in State Economies,'' ANGA/IHS, 2012.
    \10\ ``The Economic and Employment Contributions of Unconventional 
Gas Development in State Economies,'' ANGA/IHS, 2012.
    \11\ ``The Contributions of the Natural Gas Industry to the US 
National and State Economies,'' ANGA/IHS, 2011.
    \12\ ``The Contributions of the Natural Gas Industry to the US 
National and State Economies,'' ANGA/IHS, 2011. Note: This study covers 
the natural gas industry as a whole (onshore and offshore, conventional 
and unconventional resources.
    \13\ ``The Economic and Employment Contributions of Unconventional 
Gas Development in State Economies,'' ANGA/IHS, 2012.
    \14\ ``The Economic and Employment Contributions of Unconventional 
Gas Development in State Economies,'' ANGA/IHS, 2012. Note: This is a 
tally of government revenues associated solely with unconventional 
natural gas development. As such, these figures represent a subset of 
overall natural gas industry government revenue contributions, which 
totaled approximately $113 billion in 2011.
    \15\ ``Annual Energy Outlook,'' EIA, 2013 & ``Annual Energy 
Review,'' 2012.
    \16\ ``Annual Energy Outlook,'' EIA, 2013.
    \17\ ``Annual Energy Outlook,'' EIA, 2013 & ``Annual Energy 
Review,'' 2012.
    \18\ ``Annual Energy Outlook,'' EIA, 2013.
    \19\ Company announcements, 2011 through May, 2013.
    \20\ EIA, ``Annual Energy Outlook,'' 2013 & ``Annual Energy 
Review,'' 2012.
    \21\ EIA, ``Annual Energy Outlook,'' 2013 & ``Annual Energy 
Review,'' 2012.
    \22\ EIA ``Annual Energy Outlook,'' 2013.
    \23\ Compiled data from ``Clean Cities Alternatives Fuels Price 
Reports'', June 2010 to July 2012.
    \24\ ``Transit on the Cutting Edge of Clean Technology,'' American 
Public Transportation Association, September, 2012.
    \25\ ``Energy 2020: Independence Day,'' Citigroup, 2013.
    \26\ ``The Contributions of the Natural Gas Industry to the US 
National and State Economies,'' ANGA/IHS, 2011.

    Chairman Ryan. Thank you. Since you just finished last, Mr. 
Durbin, I want to ask you a couple questions about natural gas 
and about permitting. In 2012, the average application to 
permit to drill on federal lands was processed in 228 days; 
4,256 total permits were looked at, approved, in that year. By 
comparison, in 2007, we had 196-day average turnaround for 
permits, and 7,124 total permits. So that means the BLM, the 
Bureau of Land Management, is taking 16 percent longer to do 60 
percent of the work.
    By contrast, states have a different track record. Their 
processing times are far, far faster: North Dakota, 10 days; 
Ohio, an average of 14 days; Colorado, an average of 27 days. 
So we have got 10- to 27-day turnaround on permits in these 
states, and 228-day average turnaround in the federal 
government. What is the difference? What is the justification 
or the reason, in your estimation, for the huge difference in 
turning these permits around? And more importantly, what is the 
range of estimates on what we now think we have on federal 
lands versus, say, where we were in just 2007?
    Mr. Durbin. Well, thanks for question, Mr. Chairman. And I 
think there is no question that the, you know, permitting 
timelines are one of the significant factors in providing 
certainty for the industry. And I think that one of the 
distinctions you can make here is that in the states where we 
are operating, in many cases, you have got a regulatory 
structure in place that has traditionally regulated oil and 
gas, you know, production. So, frankly, I mean, that is a good 
story. Then, you know, out at the state level, they have got 
the appropriate expertise, and they know their, you know, they 
know their state geology and hydrology and all the rest, and 
are able to, you know, to be, frankly, just to be more 
efficient in approving of the permits.
    You know, we are not seeing that at the federal level, and 
certainly that is an area where we would like to continue to 
working with the Administration, with BLM, to find how can we 
find ways of making that process more efficient. We are clearly 
seeing more of the production move to where the permitting is 
easier.
    Chairman Ryan. And so that is basically the question, then. 
So there are only so many rigs that are going to be available, 
only so much drilling that will occur. And so if it is a 10-day 
turnaround in some state, and a 228-day turnaround in the 
federal government, is the federal government not basically 
missing out on those kinds of revenues that we would get 
through royalties and leases, because the path of less 
resistance, the easier way to go, the natural place to deploy 
your capital and your rigs is on private lands, say, North 
Dakota, versus BLM land because it is fewer and it is longer. 
And so then we are basically forgoing a lot of revenue that 
could come to the government. Our last transportation bill 
said, ``Put those resources, those federal revenues that come 
from oil leases and royalties, into the Highway Trust Fund to 
help us with infrastructure.''
    So are we basically making a choice here, maybe not 
intentionally, through the regulatory process to forgo that 
revenue for the federal government and push this drilling into 
the private area?
    Mr. Durbin. I think there is no question that a speedier, 
more certain process at the federal level would result in 
greater production on those lands.
    Chairman Ryan. Mr. Larson, your firm is very well-known for 
its econometric models. It is widely cited, used quite a bit. I 
was really moved by these numbers. I come from Wisconsin. We do 
not have shale, so where I come from, people do not realize 
that there may be a benefit, other than lower gas and oil 
prices, people do not realize that there is an actual direct 
benefit. You said there were 20,000 jobs in my state connected 
to this? Thirty percent of the jobs created in your model are 
from areas in the economy that are not directly related or not 
from states that have this. Can you elaborate on that?
    Mr. Larson. Yeah, basically what we do is we look at the 
very supply chains that support the upstream exploration and 
production activity, and so obviously, as you are going out and 
doing these exploration and production activities, you need to 
acquire a pipe-fitting machinery, power generators, sand, 
aggregate gravel cement casing, and so there is this vast 
supply chain across this country. The beautiful thing is, as 
Mr. Durbin alluded to, is this is a homegrown technology, and 
so what it means, when you look at sort of how the dollars flow 
through our economy, those dollars are being spent domestically 
on the providers of this technology here.
    And so when we looked at our models, we found that the 
supply chains reached far into all these other states. And so 
even though you do not have a geographic play in your boundary, 
you do get to tap into that supply chain, and, as I indicated, 
20,000 jobs in your state, and about $330 million in tax 
revenues, by virtue of some of the leading areas, like sand, 
and aggregate, and machinery within your state in particular.
    Chairman Ryan. So your model says 1.7 million jobs tied to 
this industry in 2012 going up to 3 million by the end of this 
decade?
    Mr. Larson. That is correct, yes.
    Chairman Ryan. So I want to get a sense of the revenue. So 
this is where we kind of come in here in the Budget Committee, 
which is, we have sort of old methodologies and old revenue 
numbers with respect to what we could actually bring into the 
federal government to help us with our deficit and debt 
reduction. You mentioned $2.5 trillion in revenue between 2012 
and 2035. Can you break that down? I know that is all levels of 
government. Do you have a breakdown between state and local and 
federal?
    Mr. Larson. Yes, so what you are going to see is just 
roughly a split of about 50/50, so you are going to see that 
split roughly in half. One of the primary drivers of the source 
of revenue is corporate, and then personal income tax, and so 
that is where most of the revenue happens to be coming from, 
but you can basically split that number into about 50/50 
between the federal, and then the state and local. I do not 
have the disaggregation between the states, though, and the 
local.
    Chairman Ryan. Okay, right, so about 1.25 trillion to the 
feds through expanded use.
    Mr. Larson. That is correct, roughly. That is correct.
    Chairman Ryan. Give me a sense of how this helps the 
average family. Give me a sense of, you mentioned $1,000, walk 
us through how this works for the average family, and what I am 
most concerned about is how does this affect low-income 
individuals who live on total disposable income, who do not 
have savings, who are living on complete disposable income? How 
does this help them? How is this, this breakthrough boon, not 
just for the industries involved, or not just for governments, 
but how does it help the average consumer, particularly low-
income people?
    Mr. Larson. Sure, a couple of examples. First, when you 
think about energy, it is in inelastic demand. It is something 
we have to have. So when you look at your disposable income, 
you do not pick and choose how much you allocate to energy. You 
really have to have energy; it is just a necessity, and so 
there is a fairly high demand for it there. When you look at 
that $1,000, those savings are recognized to families of all 
incomes by virtue of the fact that we have lower energy prices 
flowing through this. So it could be direct consumption, so 
individuals who heat their homes through natural gas, or cook 
through natural gas, or things of that nature; less direct 
through power gen, which we have seen prices come down as a 
result of this unconventional revolution, or the supply chain 
of the material that is produced through these activities.
    So you think about the petrochemical industry, which now 
has a lot cheaper feedstock and derivative that goes into all 
these goods and services we consume; those savings are passed 
on to consumers as well. So you see this downward pressure on 
the price of goods in the broader economy by virtue of this. So 
there is one example.
    The other example I point to is, the supply chain I talked 
about, the reason that we see these jobs spread across the 
country, expands into jobs that many people do not think of 
touching immediately the energy industry. And so you pick a 
state like North Dakota, an example that you used, Chairman 
Ryan. Individuals in North Dakota are enjoying what we call the 
induced effects of the earnings of those who are directly 
employed in this exploration and production, or in the supply 
chain, their income, they go out and they spend to live in that 
economy, and they are employing people who are waiters, 
waitresses, small businesses, and so there is a broad reach to 
all individuals in American society from this.
    Chairman Ryan. Yeah, so one of the things that we are 
particularly sensitive, where I come from, in my state, we have 
more jobs per capita tied to manufacturing than any other state 
in the country. I think Indiana, I think we have some Hoosiers 
here, I think Indiana has more manufacturing total, but in the 
Midwest, we basically make things. And one of the problems we 
have seen over, say, since the mid-'90s on, is a lot of 
manufacturing going overseas, for labor and other reasons, tax 
policy. But we are witnessing a sort of resurgence of our 
manufacturing industry. We are seeing some of our manufacturing 
coming back, and among the reasons they seem to cite is more 
stable natural gas, more stable input prices. So that, to me, 
says that there is not only a win-win, but a win-win-win, in 
the fact that this can help us bring back the resurgence of our 
manufacturing sector.
    I just want to ask you one quick question about natural gas 
and jobs, Mr. Durbin. You said that through shale gas 
production the pay for these jobs averages around $23 an hour. 
That is, you know, about three times the minimum wage. Is that 
typical for these kinds of jobs, and what kinds of jobs are you 
talking about when you mention this?
    Mr. Durbin. It is an average, but it is typical. I mean, 
you can look at anything, you were mentioning in North Dakota, 
and that may be an outlier, but even there you can, with a high 
school diploma and you have a CDL license, you can be making 
$90,000 a year in North Dakota. But that is, again, even 
acknowledging that may be an outlier, throughout the industry 
the average numbers, the oil and natural gas industry, 
especially in the upstream side, does pay above average wages. 
And they are jobs that are not only good jobs coming into the 
company, opportunities to move up, but jobs available for 
almost every educational level.
    So, again, it is an opportunity that, from an employment 
standpoint, that is very broad, now across the country. The oil 
patch is now all over the country. So we have got the 
opportunity here to grow employment in this sector, very good-
paying jobs, opportunities for advancement, almost any 
education level.
    Chairman Ryan. Thank you. Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Mr. Chairman. And as the 
Chairman pointed out, the development of natural gas in the 
country has improved our competitive position. You do see more 
manufacturers moving back to the United States to take 
advantage of that, and that is all good news.
    I would point out that as of right now, 83 percent of the 
government lands, federal lands that are being leased, are not 
being produced. In other words, they are not being productive. 
People are not drilling for oil and gas on those lands. The 
Republican bill that is coming to the floor of the House this 
week would essentially open up all of our outer continental 
shelf to drilling for oil and gas, without having learned any 
of the lessons from the big oil spill in the Gulf, and, as I 
pointed out, that is at a time when we have already got lots of 
federal lands that have been leased that are not being produced 
at all.
    Now, and I would also say that despite the fact that that 
Republican bill would essentially open up all the outer 
continental shelf, according to the Congressional Budget 
Office, and I would like to submit this for the record, Mr. 
Chairman, the 10-year savings from that, 10 years is $1.5 
billion in terms of the federal government. Well, obviously, 
every cent counts, but that is not a dramatic increase. In 
contrast, we have proposed that we eliminate the subsidies for 
the big four integrated oil and gas companies as part of our 
sequester replacement bill, and use some of those funds to 
reduce the deficit but also to invest in some of these cleaner 
technologies of the future that have been demonstrated to also 
generate and create jobs.
    And I would just point out, Mr. Chairman, that President 
Bush said, when he was in office, and I am quoting, ``I will 
tell you with $55 oil, $55 a barrel of oil, we do not need 
incentives to the oil and gas companies to explore. There are 
plenty of incentives.'' That was at $55 per barrel; we are now 
at $105 per barrel. And in the Committee that is supposed to 
make tough choices on behalf of the American public, I would 
think that we would decide to get rid of those taxpayer 
subsidies and put them to a higher purpose, and yet, at this 
very moment, I believe, over in the Appropriations Committee, 
as a result of the budget that passed this Republican House, 
they are dramatically cutting our investment in cutting-edge 
research in clean technologies, an 81 percent cut, as Mr. Weiss 
pointed out, in the account that funds cutting-edge 
technologies in clean energy. An over 50 percent cut in the 
energy and efficiency investments, and that is compared to last 
year.
    So that just seems to me counterproductive at a time when 
our major economic competitors are moving forward in this 
important space. And Mr. Weiss, I would ask you if you could, 
just to talk about what Germany is doing, what China is doing, 
and the risk to the United States of falling behind in this 
important area of energy production.
    Mr. Weiss. Thank you, Mr. Van Hollen. Many of our economic 
competitors are investing heavily in their domestic clean 
energy industries. In 2011, for the first time since President 
Bush left office, the United States actually invested more in 
clean energy than China, but China was back ahead of us again 
in 2012. In Germany, they are one of the leading countries for 
the production of solar energy and solar equipment, even though 
Germany has less sunshine than any state in the union except 
for Alaska. In fact, Germany, last year, had 20 percent of its 
electricity generated by renewable energy; of course, so did 
Iowa. And so it is happening, but we need to keep investing in 
those technologies to create jobs.
    Mr. Van Hollen. One of the things we have done in this 
country as a matter of public policy is to try to encourage the 
development of fledgling industries, and then when they become 
more mature industries, they are more on their own in the free 
market, as it should be. Could you talk about the mismatch in 
terms of our public investment through various incentives? 
Between oil and gas, which I think everybody would agree is a 
mature industry; I do not think anybody can suggest that the 
big four integrated oil companies are going to do less if they 
do not have the benefit of these big taxpayer subsidies. In 
fact, their executives, just a few years back, testified to 
such. But the cost of not investing in these other areas, and 
the negative impact, we will see if we cut, for example, the 
ARPA-E budget, which is the advanced research budget at the 
Department of Energy, by 81 percent, as the Republican budget 
would have us do.
    Mr. Weiss. Yes, in fact, 35 years ago there was concerns 
about a natural gas shortage in the United States, so the 
Department of Energy, working with private gas companies, 
worked together to develop the horizontal drilling and advanced 
fracking technology that we are now using for the shale gas 
revolution; that was due to public-private partnership led by 
federal investment. The Nuclear Energy Institute recently did a 
study and found that over the last 60 years, we have invested 
$7 in the oil and gas industry for every $1 that we have 
invested, through subsidies and other supports, tax breaks and 
the like, $7 for oil and gas, $1 for renewable energy.
    And it seems to me as you noted, that since oil and gas is 
a very mature industry where the five largest integrated 
companies have $70 billion in cash reserves where they spend 
one-third of their profits buying back their own stock, they do 
not need the $2.5 billion a year they get from the taxpayers in 
order to continue to become successful companies. In addition, 
it is important to note that those same companies are producing 
less oil now than they did six years ago even though they are 
making more money, and that is because through nothing of their 
own doing, oil prices have risen and gasoline prices have 
risen, so they can make more money producing less oil. They do 
not need these $2.5 billion a year from us.
    Mr. Van Hollen. Thank you, Mr. Weiss. Mr. Durbin, I mean, 
your organization, and, again, I think that natural gas 
development has been good for American competitiveness; you are 
not opposed are you to investing in clean energy technologies, 
I mean, in that kind of research, are you?
    Mr. Durbin. No, certainly not. We are not opposed to 
investing in clean energy technology. In fact, one of the facts 
of the matter is, if not for natural gas, you will not have 
solar and wind power out there. Because when the sun is not 
shining and the wind is not blowing, you know, we are providing 
that backup power. So you do not have one without the other.
    But you have also got to look at the scale, and if we want 
to power this economy going forward, we are simply not going to 
be able to do it with solar and wind. And even as the president 
pointed out yesterday, you know, since 1994, we have seen 
natural gas production increase greatly, which, principally, 
through market force has now driven economic growth, created 
jobs, lowered emissions to the same level we had in 1994, while 
lowering family energy bills and putting us in a position to 
play a global role in energy policy, which helps us on a trade 
standpoint.
    Mr. Van Hollen. I agree with what you just said, and, as 
you said, the president indicated yesterday he thought there 
was a very important role for natural gas as part of an all-of-
the-above energy strategy. The reason I ask you the question is 
because you look at the budget that is moving through this 
House, you see dramatic cuts in the kind of investment in clean 
energy technology. And I would just ask you if you are familiar 
with the Department of Energy's SunShot initiative, which, as I 
understand it, is designed to make sure a natural gas-fired 
power plant can burn 20 percent less fuel using concentrated 
sunshine. It seems to be a great example of the mix of solar 
and natural gas. Are you familiar with that project?
    Mr. Durbin. I am not familiar with it.
    Mr. Van Hollen. Mr. Weiss, if you could just respond?
    Mr. Weiss. Yes, one thing that is important to note is, the 
program that is developing advanced storage for electricity 
technology is the ARPA-E program that you mentioned just a 
minute ago that is going to face an 80 percent budget cut under 
the Appropriations bill, and that program, by the way, was 
signed into law by President George W. Bush back in 2007.
    Mr. Van Hollen. Thank you, Mr. Weiss. Thank you, Mr. 
Chairman. I thank all the witnesses.
    Chairman Ryan. Mr. McClintock.
    Mr. McClintock. Thank you, Mr. Chairman. Mr. Larson, we 
just heard the Administration's energy policy described as 
``all of the above.'' Would you describe that as ``all of the 
above''?
    Mr. Larson. Well, I think there is a role for all the 
energy sources to play.
    Mr. McClintock. No, no, that is not what I asked. Is this 
Administration approaching the most plentiful resources that we 
have available, oil, gas, and coal, as an all-of-the-above 
strategy?
    Mr. Larson. I would just say that all these resources that 
we currently have, the endowment we have, would have to be 
considered as opportunities.
    Mr. McClintock. Mr. Durbin, would you describe these as an 
all-of-the-above strategy?
    Mr. Durbin. Well, my concern, clearly, there are laid-out 
roles for many different types of energy. Again, my concern is 
that we have got all of these benefits coming from domestic 
production, but then we see policies that may undermine our 
ability to continue that progress, both through tax proposals 
and other.
    Mr. McClintock. It is not only not promoting an all-of-the-
above strategy, it is actually obstructing an all-of-the-above 
strategy. Is that fair to say?
    Mr. Durbin. I do not know if I would go that far, but I 
think there certainly are concerns of being able to develop our 
policies going forward.
    Mr. McClintock. We are told that we need to ``invest,'' in 
quotes, heavily in wind and solar because these are new 
fledgling industries, but was solar photovoltaic cells not 
first invented by French physicist Edmund Becquerel in 1839, 
Mr. Larson?
    Mr. Larson. Yes, solar has been around for a while, that is 
correct.
    Mr. McClintock. And in nearly 175 years of scientific 
advancement, research development, and god knows how much in 
public subsidies, have we yet invented a more expensive way of 
producing electricity?
    Mr. Larson. As an economist I cannot comment on that. I 
just do not know the answer to that.
    Mr. McClintock. Well, let me ask you this. Well, Mr. Durbin 
you alluded to this, not only is solar much more expensive than 
conventional sources, and wind much more expensive, and so we 
pay a great deal more for them just to begin with; on top of 
that, they are intermittent sources. Now we operate on an 
integrated grid, meaning that the amount of electricity put on 
the grid has to constantly match the amount of energy being 
drawn, or the grid simply collapses. Is that correct?
    Mr. Durbin. Correct.
    Mr. McClintock. And because solar photovoltaic does not 
work very well in cloudy conditions, for example, if a cloud 
passes over a solar array, its energy production immediately 
drops to zero. Does that not mean that we have to back up every 
watt of this intermittent electricity with a watt of reliable 
electricity by spinning turbines 24/7, ready to produce 
electricity at a moment's notice, so we are paying twice for 
that electricity at once, inflated prices for solar and wind to 
begin with?
    Mr. Durbin. That is correct.
    Mr. McClintock. And secondly, on top of that, we have got 
to keep conventional turbine generators moving constantly, 
ready to back up that unreliable power at a moment's notice. So 
we are paying twice for that power, is that correct?
    Mr. Durbin. Correct.
    Mr. McClintock. But then on top of that, we also have 
transmission problems; because of the nature of solar and wind 
electricity, we cannot transport them long distances over 
conventional lines. Do we not have to then construct high-
voltage direct current lines to move this electricity over any 
kind of significant distance?
    Mr. Durbin. Yes.
    Mr. McClintock. So we are paying, then, for a third time a 
brand new transmission system for the sole purpose of carrying 
this extremely expensive and unreliable power from where it is 
produced to where it is consumed. Is that correct?
    Mr. Durbin. That is correct.
    Mr. McClintock. Does it make much sense to you for the 
federal government to be obstructing the vast amounts of 
conventional energy that we have right within our own borders, 
while, at the same time, lavishing public funds on unreliable 
and extremely expensive forms of electricity generation that 
have been around for, in the case of solar, for 175 years, and 
have not yet proven themselves after all that time?
    Mr. Durbin. Clearly demonstrates the need to find a balance 
here, where these other energy sources may make sense, in niche 
applications, or, you know, in particular regions around the 
country. But again, just to be able to provide the energy 
needed by such an enormous economy, and that we now have the 
opportunity with natural gas, domestic natural gas, to provide 
that cleanly.
    Mr. McClintock. Consumers are watching their electricity 
prices skyrocket specifically because of these policies, and it 
is about time that they were fully informed what is causing 
that pain every time their utility bill arrives in the mailbox, 
and it is precisely these policies supported and promoted by 
this Administration and its adherence in this Congress. I yield 
back.
    Chairman Ryan. Thank you. Ms. Schwartz.
    Ms. Schwartz. Thank you very much, and I appreciate this 
hearing. As you can imagine, being from Pennsylvania, I am 
keenly interested in natural gas and the role it will play and 
can play in moving our economy, and offering us a cheaper 
energy source, and also in, well, in growing jobs. I certainly 
have been to visit one of the drilling sites in Pennsylvania, 
up in northeastern Pennsylvania, and got to see, actually, 
people working on the drilling rigs, and climbed up myself, got 
on one of those asbestos jumpsuits that you have to wear to do 
that. I will say there were jobs created and impressive skilled 
workers. None of them happen to be Pennsylvanians; that is a 
concern to us. They were all from, actually, this happened to 
be a Canadian company, on that drilling rig. So that is an 
issue for these homegrown jobs for us.
    But I certainly, in contrast to the previous speaker, I do 
believe very strongly, as do I think many Pennsylvanians and 
many Americans, that it is important to reduce carbon emissions 
and to have a diversity of energy sources. I think that it is 
extremely important to us; we might not actually be doing the 
drilling as it was pointed out, of natural gas, without an 
interest in new sources of energy and an ability to go get it. 
So that gas was there for a long time, we just did not have a 
financially-feasible technology to go and drill it.
    I think that Mr. Durbin might want to speak to that, but 
the fact is that we are moving in a very important direction in 
terms of energy efficiency and renewable standards that are 
growing a marketplace for cleaner technologies; that wind, and 
solar, and hydro, and biofuels all have great potential to be a 
part of our portfolio of energy sources. I think all of you, at 
least two of you would agree to that. There is no question.
    But it is not mutually exclusive. Natural gas is important, 
it is a cleaner fossil fuel, and that is important to us, and 
it does have the opportunity, should we have distribution 
lines, being able to get to businesses, and homes, and transit, 
I mean, being able to convert some of our homes and businesses, 
and I suppose having distribution lines matters quite a bit. 
Not all of that is done yet, by any means, and I imagine you 
would be interested in that. And I will say that the technology 
and the growth in the way we do the drilling, and also 
distribution and use of natural gas is something I hope we 
continue to invest in and grow as well.
    But as I say all that, as we do need this mix of a cleaner 
fossil fuel and these renewables, there is a major concern on 
the part of Pennsylvanians and most Americans, that we should 
do this right, that the development has to be done right; that 
we need to be able to assure Pennsylvanians, we are in the 
thick of this, that our health will not be impacted, that their 
health will not be impacted, that our water will not be 
contaminated, and that we will be able to say that. It is one 
of the reasons that I have signed on to the FRAC Act, which 
requires disclosure of chemicals and transparency about what is 
in the water and what comes out of the water that is used to 
get this natural gas. There are issues raised about air 
quality, due to methane emissions, and, of course, the issue of 
deforestation.
    So my question really is, as we move forward to capture 
this very important natural gas, and to use it to drive the 
economy, and lower prices, and grow jobs in Pennsylvania and 
across the country, how do we assure, how can we be assured, 
and I think this is a question for Mr. Durbin, that all 
producers of natural gas are acting responsibly, that the 
regulations reflect our best science, that enforcement and 
monitoring natural gas extraction, and distribution, and use 
are truly safe. And I think we are at a point where we cannot 
yet say that, and I really wanted to offer you the opportunity 
to share, I hope, in this mission to do this responsibly, and 
do this drilling responsibly, and use natural gas responsibly.
    Mr. Durbin. Sure, if I could respond. The good news is, the 
industry agrees completely, we have to do this right. And the 
fact is, they are. No activity is zero risk, but I think 
Pennsylvania is a perfect example of where things are going 
right. Former Governor Rendell, I think, did a spectacular job 
of setting up a regulatory structure so that the production 
that takes place in that state is done and is regulated well at 
the local level. You have got experts on the ground. They made 
changes to the existing regulatory structure to help address 
specific concerns that came up through development in the state 
of Pennsylvania. The Pennsylvania regulators continue to look 
closely, all along the way, with regard to whether it was water 
contamination, they have changed regulations there, and the 
industry has complied.
    Ms. Schwartz. So we are moving forward being able to say we 
are going to learn from experience, we are going to be able to 
change those regulations, and, of course, monitor them as well. 
And you agree with all of that?
    Mr. Durbin. Exactly. That is exactly how it has been done 
and how it will be done going forward. Now your point before 
about employment as well, again, Pennsylvania is also an 
incredible example of the number of jobs that have been created 
there. And I would say, I will not dispute that you were on a 
site where you may not have seen some Pennsylvanians. But 
having worked very closely with the building trades in 
Pennsylvania, Frank Sirianni is the head of the Building Trades 
Council in Pennsylvania, I think he will tell you, in fact, his 
words to me were, they hope that if New York eventually gets 
rid of the moratorium, that his brothers and sisters in New 
York start complaining about how many Pennsylvanians are coming 
to New York.
    Ms. Schwartz. I look forward to working with you in the 
future.
    Chairman Ryan. Thank you. Ms. Black.
    Mrs. Black. Thank you, Mr. Chairman, and I appreciate you, 
Mr. Chairman, having this discussion that is so important as we 
look at jobs and the kind of jobs that can be created and the 
spur of the economy by the energy industry.
    I want to go back Mr. Durbin to what the Chairman began his 
questioning, and that relates to the process of getting the 
approvals, and the amount of time that it takes for a state 
versus the amount of time it takes for the federal government. 
As the Chairman says, an average of 30 days, process 
permitting, in a state, and with the federal government, it is 
about 228 days. We know that states are doing permitting 
processes on their own lands, on their state lands, and, 
obviously, they have federal land there. States have done a 
very good job in this permitting; they have been good stewards 
of the environment, and they have shown that they are efficient 
and timely in doing so.
    My question for you is, would it not make sense to, since 
the states, given their track record, very good track record on 
the environmental issues and their efficiency, would it not 
make sense to give them the ability to be able to do the 
permitting of the federal land that is within their state?
    Mr. Durbin. Well, again, as we talked about before, this 
clearly cries out for greater attention to figure out why there 
is such a huge discrepancy between the timing from the state 
level and the federal level. And I do think that there is got 
to be, at the very least, much closer coordination between the 
federal regulators and the state regulators. There is just no 
reason for such an enormous discrepancy in the timelines for 
getting a permit approval. So just as we see, because there are 
other environmental statutes that are implemented at the state 
level, again, there are lessons to be learned here, and I think 
this is an area of great opportunity to have that conversation 
going on between the states, the federal agencies, and the 
industry.
    Mrs. Black. Well, I hear you say that there are lessons to 
be learned, and that we need to continue to look at it, but do 
you see any downside on allowing states being given the 
authority through the federal government to make sure that 
everything the state is doing is in coordination with the 
state? Do you see any problems?
    Mr. Durbin. No, I do not see a downside because, again, we 
work very closely with the states, and do feel that they do a 
very good job.
    Mr. Weiss. Ms. Black, may I address that?
    Mrs. Black. Yes, you may.
    Mr. Weiss. Thank you. First, I would like to interject, I 
know that the Chairman is very data-driven, and I try to be as 
well. I would like to interject some data from the 
Congressional Research Service on the very question of delays 
which CRS found, the delays have been cut almost in half 
between 2006 and 2011 for permitting. Secondly, CRS concluded 
that you cannot compare permitting on state and private lands 
with federal lands because the laws are different. Federal 
lands are designed for multiple use, which not only includes 
resource development, but also hunting, fishing, hiking, 
recreation, et cetera. And so therefore, the federal government 
has to look at more criteria than the states do because they 
only look at, many states, at one thing, which is research 
development. Thank you.
    Mrs. Black. Well, I thank you, Mr. Weiss. I am not an 
expert in this area by any means, but my reading on this topic 
does show that, given the fact that the states have done such a 
good job in the environmental, and, certainly, your point is 
well taken that there are lands and specific things on those 
lands, but if there were a council or some way that there could 
be an approval by the state under their processing with the 
federal government, it seems to me that we would move things 
along a lot faster, and therefore have more jobs, which, 
obviously, in the economy, this is very important to us. I 
yield back.
    Chairman Ryan. Thank you. Mr. Pascrell.
    Mr. Pascrell. Thank you, Mr. Chairman. Mr. Chairman, your 
party is bringing two bills to the floor this week, which would 
once again seek to recklessly expand offshore drilling: H.R. 
1613, the Outer Continental Shelf Transboundary Hydrocarbon 
Agreements Authorization Act; H.R. 2231, the Offshore Energy 
and Jobs Act. Contrary to what many of my colleagues would have 
us believe, the president has pursued an all-of-the-above 
energy plan, which has included a vast expansion of oil and gas 
production. I share his belief that we need to make use of all 
the resources available to us while we transition to renewable 
sources of clean energy. We must make sure that all of our 
energy production is conducted in a very specific manner, which 
does not pose undue threats to our environment and our health 
from oil spills to climate change.
    In my home state of New Jersey, we have a vibrant tourism 
industry centered at our shore, as well as a thriving 
commercial and recreation fisheries. Currently, we are still 
working to recover from Hurricane Sandy, which brought 
tremendous devastation. The people of New Jersey know that we 
cannot bring deep-water drilling for oil and gas to our shores. 
The risk of a catastrophic oil spill shutting down portions of 
our beaches is just too great. Thousands and thousands of New 
Jerseyans rely on healthy shore and environment for their 
livelihoods, far outweighing the benefits of offshore drilling, 
which produces more profits for Wall Street than community 
jobs.
    Mr. Weiss, the Offshore Energy and Jobs Act, H.R. 2231, 
includes language which would force the Secretary of the 
Interior to conduct Lease Sale 220. This parcel of sea off the 
coast of Virginia is less than 100 miles from the Jersey Shore. 
Unilaterally opening up the Atlantic Ocean for drilling creates 
unacceptable risks for communities up and down our coast, and 
yet we are talking about trying to get the most out of this, 
the most benefit for everybody, and the Administration's 
policy, and I have certainly not been an advocate on many of 
the Administration's proposals for energy or the environment, 
but they have committed to ensuring that American taxpayers 
receive a fair return from the sale of public resources.
    As drafted, the revenue-sharing provisions in H.R. 2231 
would ultimately reduce the net return to taxpayers in the 
first place from development of the federal resources leased 
under this bill, 2231. Consistent with the president's budget, 
the Administration looks forward to working with the Congress, 
they have said this, they have written this, to improve the 
return to taxpayers from federal energy development through 
royalty reforms--you heard the Ranking Member speak of that 
before--incentives to diligent development, which we are doing 
to some degree. Talk about obstructionism. Talk about 
restrictions. We narrowed the incentives to diligent 
development of oil and gas rather than expanding them, and the 
improvements to revenue collection processes, which are not 
found, by the way, in 2231.
    Now, Mr. Weiss, with nearly 83 percent of the technically 
recoverable offshore oil reserves in the United States already 
available for leasing, correct me if I am wrong on the number, 
83 percent, adequate opportunities for energy development 
already exist. It is a hoax. You are listening to a hoax. That 
is what we are dealing with.
    Eighty-three percent of that specific area is available. 
Does it make sense to push open new areas of our oceans to oil 
and gas exploration when we can invest in finding alternatives 
for the future? How do you respond to that?
    Mr. Weiss. Thank you, Mr. Pascrell. Not only is the vast 
majority of the offshore oil already open for leasing, but, in 
fact, according to the Department of Interior, 70 percent of 
the offshore acres that are already under lease are inactive. 
In other words, oil companies are sitting on the leases.
    Mr. Pascrell. And why are they doing that?
    Mr. Weiss. The reason for that is once they have a lease, 
the value of the oil that is in that lease can accrue to their 
valuation of their company, which helps increase their stock 
price even if they do not develop it.
    Mr. Pascrell. Does that have anything to do with the cost 
of the product and the final analysis?
    Mr. Weiss. I am not sure how they calculate it, but 
certainly, as oil prices go up, the value of that oil goes up, 
and so, in fact, we have got lots of resources that are already 
open, lots of resources under lease that are not being 
developed, and that is where we ought to focus, rather than on 
these other areas that have not yet been developed that have 
economic value to keeping them for fisheries, and tourism, and 
whatnot. Thank you.
    Chairman Ryan. Thank you. Mr. Flores.
    Mr. Flores. Thank you, Mr. Chairman. I think it is fitting 
that this hearing is being held today, which is the fourth 
anniversary that the House of Representatives passed Cap and 
Trade. That was the single act in 2010 that caused me to think 
about running for Congress because I did not want to see our 
country, particularly our government here in Washington, send 
10 million to 20 million jobs to other countries.
    So I am an accountant by training so I would like to look 
at the sources and uses of funds when you talk about taking 
taxes from one group, and then turning around and making 
investments in another group. So let's go through the details 
here real quick.
    Mr. Larson, you are an economist, correct? Okay. So let's 
assume that we raise taxes on American energy. What is the 
impact on American paychecks? Are they going to be higher or 
lower?
    Mr. Larson. Yeah, in general, you will see costs of taxes 
passed onto the consumers because of the inelastic demand.
    Mr. Flores. And what is the impact on American jobs?
    Mr. Larson. It is going to depend on how it impacts what we 
will call the economically recoverable reserve base, and the 
economics of that activity, and so if that tax increases the 
cost or breakeven point on those economic resources, it would 
reduce resource discovery and production.
    Mr. Flores. And that would reduce our GDP. Presumably, then 
deficits would go up. Family energy costs would go up. What is 
the impact of higher energy taxes on American manufacturing 
jobs?
    Mr. Larson. Well, it is a global economy, and as I 
mentioned in my statement, you know, there is a delicate 
balance of a lot of different factors that contribute to 
manufacturing in this country. You look at global wage rates, 
you look at transportation costs, you look at our energy cost 
domestically; all of those factors are in a balance of making 
decisions to invest or not.
    Mr. Flores. Right. Let me give you another personal 
example. In Jewett, Texas, Nucor Steel has a great operation 
where they recycle steel and make it into a usable product 
again. Because of the boom in natural gas drilling and the 
supply of natural gas, their cost per ton is down a dollar. 
That makes them more competitive on the international stage. 
Also means more great manufacturing jobs, not only in my 
district, but in Texas, but in this country.
    So let's talk about the uses of all this tax money that the 
other side talks about in their all-of-the-above energy 
solutions. They want to make investments. Let's go through the 
status of some of the investments. How many jobs were created 
by the $1.9 billion that was lost in Solyndra, Beacon Power, 
Evergreen Solar, Spectra, Rod-Fisk [spelled phonetically], 
Geronimo, WaterBound, Abound Solar, ECOtality, MXenergy, and 
Schneider Electric? How many jobs do we still have from that 
investment?
    Mr. Larson. Our company did not investigate, do a study on 
that, so I do not know.
    Mr. Weiss. Mr. Flores, I happen to know the number.
    Mr. Flores. I will get to that in a minute.
    Mr. Weiss. Okay. Thank you.
    Mr. Flores. Let me give you the job metrics that came from 
the DOE study. It said that the Department of Energy has spent 
$11 million per green job created since 2009. They spent $26 
billion of taxpayer money, and created 2,298 jobs. Mr. Larson, 
how long can we survive as an economy spending $11 million to 
create a job?
    Mr. Larson. Obviously, you want to be efficient in your 
creation of jobs. That is important.
    Mr. Flores. Okay. That is good. So that gets us kind of to 
what the overall arching theme is: Who is better at making 
investments in different things? I mean, you heard the other 
side virtually saying the federal government should take full 
credit for fracking. I agree that there was some basic research 
dollars invested in fracking, but who took it to the next 
stage? It was private industry that took it. It was private 
industry that took it.
    So, you know, the U.S. government can invest in basic 
research, it can invest in applied research, it can invest in 
venture capital, and also in private equity types of 
investments. But where is it that the federal government does 
the best, Mr. Larson?
    Mr. Larson. In terms of?
    Mr. Flores. Spending the dollars. It is in basic research.
    Mr. Larson. Yeah, that is correct.
    Mr. Flores. I mean, we have already seen what it has tried 
to do in applied research. We have tried to see what it did in 
venture capital with Solyndra and its brothers and sisters. The 
reason this is important to me is that I am the largest 
producer of residential solar power in Brazos County, Texas. I 
did it because I could afford it. I did it because I am a 
little bit kind of a geek on that type of stuff. And I can tell 
you that because what it costs, net of any benefits that were 
received, it will never, ever pay out for me.
    So the question is, why would Congress decide that it can 
be so smart that it wants to impose those costs on every 
ratepayer in the country? Why would it want to impose those 
costs on the taxpayers of this country? And the question is, it 
should not, and I am going to stop it. Thank you. I yield back.
    Chairman Ryan. Mr. McDermott.
    Mr. McDermott. Thank you, Mr. Chairman. I started politics 
in the last energy rush. It was called nuclear energy. I was in 
the '70s in the state of Washington where the boom and bust of 
the Washington public power system left its mark. We are now in 
an energy rush here, and it is not surprising to hear the same 
oil and gas refrains. We have been giving them breaks since 
1913, and if it were not for the harmful health and 
environmental effects of these fuels, it would make sense. But 
we know what CO2 is doing, and the president has rightly 
proposed an all-above strategy.
    Now, I would not advocate that we stop all drilling or 
abandon coal, but we have to mitigate the damage. I have 
proposed two bills that address these: a sensible carbon tax at 
the well head, or at the mine mouth; and a coal bill that would 
address the environmental and health costs of transporting coal 
all across the country to ship to the Chinese. But as we 
explore our options for America's energy future, I hope 
partisanship will not stand in the way and blind us to the 
president's message, and would be willing to look at all the 
options. We cannot let tradition or worse, special interests, 
dictate our interests.
    Solar energy, we have heard it kicked around here, I am 
sorry Mr. McClintock left, and my friend is still sitting here, 
but is very much in our future. It is the cleanest and most 
abundant renewable energy source available. We put a slide up 
and if you look at those columns, the top part, the light blue 
part is the part of solar energy. That is the production, and 
it is growing. In the last few years, you have had exponential 
growth installed capacity by the colleague, and 2013 is on 
track to have another record year.


    Now, right now, we have enough solar capacity to power more 
than 1.3 million average houses in this country. At the same 
time, costs are falling. The average price of solar panel has 
dropped 60 percent since 2011, and, not surprisingly, this 
growing industry is good economics. And you will see the second 
slide, in 2012, the solar industry poured more than 119,000 
workers in the United States. That is up from 13 percent in 
2011.


    I also want to put another slide up there, and that one is 
for solar reserve. I heard this business about when the sun 
don't shine, there ain't no electricity from solar. That is not 
true. That is a myth.


    We are proving it right in Tonopah, Nevada, which is very 
close to Mr. McClintock's district. Again, I am sorry he is not 
here. They are producing on-demand stored solar energy. At this 
plant, they have 600 workers on the ground, and have created 
4,300 indirect and direct induced jobs. They generate more than 
$73 million in local and state taxes in their first 20 years of 
operation, and all in all, they will generate over $750 million 
in private capital investments in Nevada. If growing the jobs 
is not enough then let's take the world seriously here.
    Consider the next slide. China has invested $34 billion in 
government-backed financing for solar manufacturing, as 
compared to our $1.3. If you go to Beijing, on some days, you 
cannot drive your car because the air is so bad; they know what 
is happening, and they are reacting to it, and in the United 
States, we are sitting here sort of saying, well, we have got 
this natural gas thing, and it is great. Let's go for it. But 
it still produces CO2, folks. It is not clean energy. It is not 
sustainable. It is not going to stop the growth of CO2 in the 
atmosphere.


    Now, I have a question, and I suppose, Mr. Durbin, it is 
really directed to you. Will you guarantee to Ms. Schwartz and 
I that there is no foreseeable detrimental health effects in 
the fracking process?
    Mr. Durbin. Mr. McDermott, I do not think any energy source 
can make that guarantee for you. What I can guarantee for you 
is that the industry has committed doing it safely and 
responsibly, and working with the governments at the state 
level and the federal level to make sure it is well-regulated.
    Mr. McDermott. You do not want to work with this federal 
government. This Congress has tried to repeal EPA about two 
dozen times because they do not want to the federal looking at 
the world. And the fact is, you are trying to move down to the 
states where you know you can manipulate.
    Mr. Durbin. That is just not fair, Mr. McDermott. We have 
got federal laws that we have to follow for all of our 
production, okay. So, now, we do believe that the regulation is 
best done at the state level, but that does not mean there is 
no federal regulation. We have still got all kinds of federal 
laws that we have adhere to for every one of the wells that we 
drill.
    Mr. McDermott. Thank you, Mr. Chairman. We could have 
another discussion on this.
    Chairman Ryan. Yes. Thank you for your question. Mr. 
Williams.
    Mr. Williams. Yeah, Mr. Durbin. Thank you for being here. 
Appreciate what you are doing. I am from Texas. Barnett Shale, 
Eagle Ford, Cline are all normal names to us back home. I have 
seen what the industry can do as far as creating jobs and more 
taxpayers.
    I, like so many of the people here, believe in all-of-the-
above approach, an all-American approach. The difference is I 
believe the federal government has no role in it. I believe the 
private sector will decide where we need to be the next 25, 50, 
100 years, and I offer you to continue to work on that so we do 
not have the Solyndras of the world fighting the fossil fuel 
questions.
    I guess my question would be to you, Mr. Weiss. You know a 
lot about the industry. Have you ever been in the industry? 
Have you ever been in the private sector? Have you ever been on 
a rig?
    Mr. Weiss. Yes, I have been in the private sector. No, I 
have not been on a rig, but my family, like yours, is in the 
auto business. I have a father-in-law and brother-in-law who 
are both auto dealers.
    Mr. Williams. Well, you and I are probably going to agree 
on a lot of things then.
    Mr. Weiss. I hope so.
    Mr. Williams. You talked about the CAFE standards. Well, 
the CAFE standards, if they go to where this Administration 
wants them to go, will they create jobs or lose jobs?
    Mr. Weiss. They will create jobs, according to studies that 
have been done.
    Mr. Williams. So people continue to buy more expensive 
vehicles because of this?
    Mr. Weiss. People will actually save money on their 
vehicles, $8,000 over the life of a car, in lower gasoline 
purchases.
    Mr. Williams. That is fine. Another question is you have 
talked about big oil. What should big oil make? You are 
concerned about the cash they have in the bank and their 
profits. What do you think big oil should make?
    Mr. Weiss. I think every company in the United States ought 
to be entitled to a fair profit. But the big five oil companies 
in the last two years have made $250 billion in profits. They 
are sitting on $70 billion in cash reserves. They do not need 
$2.5 billion a year from taxpayers in special tax breaks.
    Mr. Williams. You talked about they need to pay more taxes. 
So you think their cash should go to the government rather than 
R&D, research and development, and that will create more jobs?
    Mr. Weiss. They are not investing in R&D, sir, for the most 
part. They are investing some, a small amount, but a third of 
their profits go to buying back their own stock.
    Mr. Williams. Let me tell you. This is America. Profit is a 
good word. Okay.
    Mr. Weiss. It is. But they do not need tax breaks on top of 
the huge profits, sir.
    Mr. Williams. The next question I have is why, since you 
are in the car business, why are electrical cars not selling 
versus gas-powered vehicles, and why has the government had to 
put so much subsidies to get them off the car dealers' lots? 
Why is that?
    Mr. Weiss. Well, first of all, the sales of the plug-in 
hybrid Chevy Volt and the all-electric Nissan Leaf have 
outstripped the sales of the Prius and Insight, which were the 
first hybrid cars in America.
    Mr. Williams. That is like saying 100 percent of nothing is 
nothing.
    Mr. Weiss. Well, now, there is over a million of those cars 
on the road now. It is a startup technology that takes time.
    Mr. Williams. But why is there government subsidy?
    Mr. Weiss. Because there is a social benefit to our nation 
of using less oil.
    Mr. Williams. Now, the next thing I want to ask you is, 
Apple makes more than big oil. What should their taxes be, and 
what should their cash in the bank be?
    Mr. Weiss. I am not familiar at all with the finances of 
Apple, so I will let others address that.
    Mr. Williams. Well, it is public. It is public, so maybe 
you can research that and get back with me.
    Mr. Weiss. I will be happy to.
    Mr. Williams. Living in Texas, I am unaware of any jobs 
created by wind, solar, bio, et cetera compared to oil and gas. 
How do the jobs created by those energy sources create to what 
we are creating in oil and gas?
    Mr. Weiss. Well, first, I do not have the state-by-state 
numbers. Texas does get over 10 percent of its electricity from 
wind. It is important to note that the 1.6 million oil and gas 
jobs nationwide, according to Bureau of Labor Statistics, half 
of those jobs are people working in service stations.
    Mr. Williams. But there is more people generated by oil and 
gas than the others, I think you would agree with me there.
    Mr. Weiss. Right now, there is. But, remember, half of the 
1.6 million are people working in service stations.
    Mr. Williams. All right. Another question. Should the 
Keystone Pipeline be approved, and add 42,000 new jobs and 
create more taxpayers to help reduce the deficit?
    Mr. Weiss. According to the State Department, Keystone 
Pipeline will create 35 permanent jobs, less than the roster on 
a football team, and only 3,500 temporary jobs.
    Mr. Williams. Thirty-five permanent jobs?
    Mr. Weiss. Thirty-five permanent jobs, according to the 
State Department. That is less than the roster of a football 
team.
    Mr. Williams. I see. Well, should the pipeline be built? 
That was my question.
    Mr. Weiss. I believe that it is all risk and no reward for 
the American public, as you know, Mr. Williams.
    Mr. Williams. No, I heard you. Without the success of the 
energy industry, what would you think our economy would look 
like?
    Mr. Weiss. The energy industry is incredibly important. But 
remember, there are costs to how we do business right now that 
are not being paid for: in healthcare costs, in premature 
deaths, in extreme weather events of a kind that hit Mr. 
Pascrell's district last year.
    Mr. Williams. Well, okay, you know, do you think bio, wind, 
and solar could pay $15 at McDonald's? Do you think it could 
create five-figure salaries to drive trucks? Do you think it 
could help build roads and give charitable contributions to the 
economy?
    Mr. Weiss. Absolutely.
    Mr. Williams. When?
    Mr. Weiss. They are already doing it now. But they are new 
industries. They are growing. It is like oil and gas a hundred 
years ago.
    Mr. Williams. I hope your family keeps selling. I yield 
back.
    Mr. Weiss. Thank you very much.
    Chairman Ryan. I just want to correct the record. There are 
53 people on a football team in the NFL, all right?
    Who is next? Mr. Cicilline.
    Mr. Cicilline. Thank you, Mr. Chairman. Mr. Chairman, I ask 
unanimous consent that my opening statement be included as part 
of the record.
    Chairman Ryan. Yes.
    Mr. Cicilline. Thank you.
    I think the witnesses for being here, and if I can put some 
of your testimony into a budget context, since this is the 
Budget Committee. Some of the testimony today argues that 
further domestic development of fossil fuels would generate 
dramatic increase in government revenues and reduce the 
deficit. For example, in his testimony today, Mr. Larson 
projected that federal and state government revenues could 
increase to about $111 billion by 2020 with a pro-development 
strategy. But it seems to me that this projection fails to net 
out the costs associated with this strategy.
    The National Academy of Science has estimated total non-
climate change-related damages associated with energy 
consumption from fossil fuels, and more than $120 billion 
annually, mostly derived from health and wellness issues caused 
by air pollution. In addition, the federal government spends 
billions of dollars to ensure against risks associated with 
climate change, invest in mitigation, and provide disaster 
assistance to industries affected by carbon pollution-related 
damages. In the last year, we have also lost revenues from 
industries like agriculture, fisheries, and tourism in regions 
that have been devastated by the effects of climate change.
    So, I am wondering, Mr. Larson, if your forecast takes into 
account these very real costs associated with fossil fuel 
production, along with the potential increases in government 
revenues?
    Mr. Larson. Thank you for the question. So, first, let me 
just characterize the nature of our study was not pro-growth; 
it was on the current status quo of the current regulations as 
they stand today, so it was basically the development that we 
have currently seen today.
    Mr. Cicilline. But my question is, in the calculation, do 
you take into account the costs associated with this strategy?
    Mr. Larson. We include in the calculations the regulatory 
costs associated with the underlying activity that is required 
to ensure that activity is done in a responsible fashion.
    Mr. Cicilline. That is not my question. I am not talking 
about the regulatory costs; I am talking about the impact that 
we know from places like the National Science Academy, the cost 
on health, on public health.
    Mr. Larson. So, yes. Those are externalities. Those are not 
included in this. But let me just say, the number you cited the 
tax revenues; that did not include the GDP impacts, or the 
other contributions from the industry.
    Mr. Cicilline. So, Mr. Weiss, in your estimation, if we 
include healthcare costs, these externalities, the economic 
damages, and the other externalities that I have just 
described, would increasing our reliance on oil and gas expand 
or reduce the federal budget deficit in the long term?
    Mr. Weiss. Well, I would have to look at the numbers, but I 
think that, certainly, externalities need to be included. 
Interestingly enough, not including externalities, right now, 
wind and solar power are cost-competitive with new coal-fired 
or natural gas power. So the reason why there is a disparity is 
that the coal plants, which are very costly in terms of health 
damages, are 45 years old on average. They paid for their land. 
They paid for their facility. All they are paying for is their 
fuel and their labor, and so that is why there is this 
disparity in cost. But for new power, it is equal, not even 
including externalities. Thank you.
    Mr. Cicilline. Thank you. Now, staying within the budget 
context, I would like to talk for a moment about some of the 
benefits that we already provide the oil and gas industry. For 
example, at the first quarter of 2013, the big five oil 
companies are on pace to earn a combined $120.8 billion in 
profits. And as my colleague said, I do not have any problem 
with people making profits, but according to the Joint 
Committee on Taxation, these same five companies pocket $2.4 in 
tax breaks every year. And I know, Mr. Durbin, many of your 
members are smaller companies. Would you say that this subsidy 
to the most profitable oil companies is the most effective use 
of the taxpayer resources in order to promote your industry and 
your members?
    Mr. Durbin. I am glad you asked the question because there 
are no subsidies. That word keeps being used, but the companies 
involved, whether it is the big five, the big four, or everyone 
else here.
    Mr. Cicilline. I called them tax breaks.
    Mr. Durbin. Well, you also used the word subsidies.
    Chairman Ryan. Let the gentleman answer your question.
    Mr. Durbin. Either way, these are provisions in the tax 
code that are available to all taxpayers, all average 
businesses. Even some of the legislation introduced earlier 
this year, you have time to offset sequester, you know, cuts by 
taking it out of some of the oil and gas industry. In each 
case, you look at where they went into the tax code, and 
whether it was Section 199, LIFO accounting, or the duel-
capacity provisions, those are available to average taxpayers, 
average businesses, so it points out the fact that these are 
not special breaks for the oil and gas industry. These are 
widely available, and in the case of our member companies that 
are doing the natural gas production, the cost recovery is what 
is so critical to maintaining our ability to keep reinvesting 
in this country, creating those jobs, bringing cleaner energy.
    Mr. Cicilline. Well, I would like to close, Mr. Chairman, 
by saying the Budget Committee is responsible for examining the 
impact of energy policy, and it would have on a wide range of 
issues, and before we focus exclusively on expanding the fossil 
fuel industry, we should evaluate the real cost of carbon 
pollution, wasteful tax subsidies, and unused public land.
    Chairman Ryan. Gentleman's time has expired. Mr. Lankford.
    Mr. Lankford. Thank you. I need to just mention a couple 
things. It is the benefit of being here through a lot of the 
questions.
    The thought of the Keystone Pipeline creating 35 jobs or 
35,000 temporary jobs does not connect with the people in 
Seminole County where the southern part of the Keystone 
Pipeline is already under construction in my district. And I 
can take you to the restaurants, to the little Western wear 
store, to one business after another that is seen incredible 
impact of that, and the thought that you are going to have a 
2,500-mile pipeline overseen by 35 people managed on the line, 
cutting trees, dealing with all the issues you have to do on 
managing the line, inspecting it, running the pig through; that 
you can do that with 35 people begs reality. And so there are 
issues that are there in the middle of all this. Also, the 
comment about the fact that energy companies are not doing a 
lot of R&D, they are doing a miniscule amount; Mr. Durbin, for 
the energy companies, how much R&D are they doing?
    Mr. Durbin. I do not have a specific number for you, but 
the oil and natural gas industry, for capital expenditures here 
in the U.S., larger than any other industry out there.
    Mr. Lankford. Right. The last number that I saw is that the 
private oil and gas companies are doing 10 times the R&D on 
renewable fuels than what the federal government is, yet the 
federal government is the one that is always standing up saying 
they are doing all the research on it, but the majority of that 
research is actually being done by energy companies.
    And also, this ongoing conversation that is happened today 
that is a comparison of ``we do not get enough government 
revenue in this'' overlooks the reality that the American 
people's revenue is what we are after. This sense that we 
cannot get enough federal tax dollars in from this, and so we 
should not do this, I think we should first look and say, the 
people in our districts all across America, will they benefit 
from this? Is energy less expensive for them? Will this help 
them afford gas? Will this help them afford groceries? Is this 
better for them and for their children long term? Those are 
questions that have to be answered as we go through this.
    I am also astounded by the amount of conversation that has 
happened through the course of the day today that I want to be 
able to come back on. In 1979, Jimmy Carter, in his famous 
malaise speech, said we have got to get our nation off of oil 
and get to more coal usage. And so he made this big shift to 
saying we have got to use more coal. We have got to get off 
natural gas because we are running out of natural gas, so we 
can do that. He also, during that speech, promised that by the 
year 2000, with the policies that were set in place, by the 
year 2000, 20 percent of America's electricity would come from 
solar power. Mr. Larson, do you happen to know the percentage 
of America, of our energy, that comes from solar power at this 
point?
    Mr. Larson. No, I do not have that number off the top of my 
head.
    Mr. Lankford. Mr. Weiss?
    Mr. Weiss. It is a little bit less than 1 percent, but 
remember, those policies were extinguished in 1981 with the 
next administration. So it is unfair to hold his speech to that 
standard.
    Mr. Lankford. Well, I would be glad to be able to extend 
out his policies and to be able to show you all the details on 
that. It is not the issue of the policies; it is the 
technology. So to say if we had dumped more federal dollars in 
in 1981 that this technology would have come from the private 
sector, we are in the same boat right now. We are in a 
situation where I am not opposed to the use of all different 
types of fuels.
    Mr. Weiss. Well, Iowa gets 20 percent of its electricity 
from wind.
    Mr. Lankford. That would be great. How many acres would it 
take of solar and wind to get 20 percent of New York City's 
power from solar and wind?
    Mr. Weiss. I have not looked at that, but, you know, we 
have got to also have transmission. That is important, too.
    Mr. Lankford. Mr. Durbin, do you know how many acres it 
would take to be able to do 20 percent of New York City?
    Mr. Durbin. I do not know the number.
    Mr. Lankford. Do you know how many acres it takes of solar 
or wind to be able to offset one natural gas power plant in the 
small scale?
    Mr. Durbin. It is significant, and that is the issue.
    Mr. Lankford. It is about 20,000 acres. About 20,000 acres 
are needed to be able to replace one small natural gas power 
plant, and if you put a wind or a solar facility for gathering 
electricity, you also have to do a natural gas facility, or a 
coal facility, or something else. So you are not really 
replacing, you are just adding to it. You just took 20,000 
acres of American land offline to do that. So this 
consideration of, you know, what do we do, one or the other? 
You also have to take in the reality of what do you do for land 
usage in the days ahead. How many acres do you really want to 
take offline on this?
    Let me ask you a question as well. Mr. Durbin, what is your 
thought about exporting of natural gas?
    Mr. Durbin. Well, I think it is a great question, and the 
fact that we now have such an abundance of natural gas here is 
the only reason we can even have the discussion about whether 
or not we should be exporting LNG. And I think there is no 
question we should be exporting LNG. As I mentioned in my 
testimony, it is a good sign that DOE has now approved two 
permits for export facilities. Our preference is, you know, 
approve all of them that meet the criteria. Now let the market 
figure it out how many are going to be built. And let's provide 
this as another outlet to help us with balance of trade and 
creating jobs here, both for the facilities themselves, for the 
production, provides greater certainty to the producers 
themselves. So I think we stand in a very strong position to 
be, you know, a global natural gas, you know, provider, 
especially to our allies.
    Mr. Lankford. Thank you. I yield back.
    Chairman Ryan. Thank you. Mr. Huffman?
    Mr. Huffman. Thank you, Mr. Chairman. I have waited around 
here not because I have any searing probative questions of the 
witnesses, but rather to express a little bit of dismay as a 
freshman member of Congress and of this Committee. The 
testimony that we have heard, the statements that we have heard 
today are very familiar to me. In fact, it is deja vu over and 
over and over again because I am also a member of the Natural 
Resources Committee, and we have seen this theater in hearing 
after hearing in that committee, where witnesses from the oil 
and gas industry are brought in, and in the face of all sorts 
of irrefutable fact, they talk about how there are all these 
problems with this Administration's energy policy that are 
holding back growth.
    When we actually look at the fact, and hear from people 
like CRS that have used the right baselines and benchmarks, we 
know irrefutably that production is up, that times, frankly, in 
this industry have never been better. Profits are up. We are on 
the verge of becoming an energy net exporter for the first time 
in a generation because of the policies that we have had in 
place under this Administration. And yet we continue to have 
these pep rallies for the oil and gas industry while real 
problems are simply, for some reason, off the table. We do not 
even have a conference committee so we can move forward and try 
to negotiate a federal budget, but we are here to have a pep 
rally for the oil and gas industry who is experiencing record 
profits.
    We have got student loan interest rates about to double in 
less than a week, but we are not talking about that, and the 
overhang of that rising student loan indebtedness on our 
economy. We are talking about something that has the public 
leases that might be made available would have a tangential, at 
best, effect on our economy because we already have all sorts 
of public leases that are not even being used under the 
policies of this Administration. We are not talking about any 
number of things like the sequester and the people that are 
actually suffering. We are here to talk about folks who are 
experiencing record profits.
    So I guess I just want to express dismay as a member of 
Congress who would like to see this body solving problems 
instead of rehashing these type of pep rallies for highly-
profitable industries that we have seen in the Natural 
Resources Committee. We will go on this week to have a similar 
experience with a bill to expand oil and gas drilling off our 
coast and in the Arctic that has no chance of becoming law, and 
in the face of all that theater, there are real problems that 
we need to be solving, we need to be working together.
    And I just want to express my hope that the next time we 
come together, we might be able to talk about something like 
the budget. We might be able to have conferees that can 
actually go to work on getting things done. We might be able to 
talk about solutions to the student loan indebtedness problem, 
or maybe even the real costs that some of our failed energy 
policies are foisting on the federal government, such as the 
fact that we are experiencing more severe weather incidents 
that have costs of greater than a billion dollars than ever 
before, and the federal share of picking up the tab for that is 
rising very dramatically. We do not ever seem to talk about 
things like that.
    So I would invite any of the witnesses who perhaps want to 
speak about the cost of a failed climate policy and an energy 
policy that has swung too far in the direction of carbon 
emissions and fossil fuels.
    Mr. Weiss. Thank you, Mr. Huffman. In the last two years, 
the United States has experienced 25 extreme weather events 
that each caused at least $1 billion worth of damages for a 
total price tag of $188 billion, and that also includes 1,100 
fatalities. During this time, the federal government spent $136 
billion in disaster relief and recovery. Meanwhile, we spent 
only $22 billion, or about $1 for every six for recovery, to 
help make communities more secure from future extreme weather 
events. So it has a huge impact both on our economy and on the 
federal budget.
    Mr. Huffman. Thank you. I yield back.
    Chairman Ryan. Thank you. Mr. Rokita?
    Mr. Rokita. I thank the Chairman. I thank the witnesses for 
coming today. It has been very educational. I appreciate it. 
One of the programs that I have started in my office is called 
Red Tape Rollback, and it is my commitment to focus on what I 
see as the second Constitutional duty of Congress, equally 
important to passing laws, and that is to oversight the 
executive branch, and particularly in terms of regulations. So 
this Red Tape Rollback program allows me to account to my 
voters and taxpayers for what we are doing in that regard.
    And one company in particular comes to mind during this 
discussion. It is called Buzzi Unicem USA. It is in 
Greencastle, Indiana, and they are a cement plant. And they 
burn probably 100,000 tons of coal per year, and in doing so, 
create something called fly ash. Now fly ash is valuable. They 
reuse it. Yet the EPA has recently started hearings to regulate 
fly ash. You know, if the regulation is carried out, this would 
cause this company to have to ship this fly ash out, which is 
inherently less safe than if they burned it and reused it 
safely within the plant.
    So this is expensive. It costs jobs, it makes electricity 
more expensive. So to Mr. Durbin and Mr. Larson, I would ask, 
and I know at least one of you is an expert in natural gas, but 
what other regulations are out there that come to mind that are 
hurting jobs and costing more, making this cost more for 
energy? Mr. Durbin?
    Mr. Durbin. Well, Mr. Rokita, not to cite specific 
regulations.
    Mr. Rokita. No, I would like you to, if you know of any.
    Mr. Durbin. Well, but, and I will have to play a little bit 
of the new person card, having just started at ANGA in the last 
two months, but, again, our members are directly involved in 
the productions, in the exploration of productions, you know, 
both on public lands and private lands. So, you know, clearly, 
they have been very focused on BLM rules with regard to the 
hydraulic fracturing that are still, you know, being proposed, 
and as we have talked about, you know, earlier, just some of 
the permitting opportunities for us to streamline that 
permitting process. So, I mean, that is where I would put it.
    Mr. Rokita. Okay. And then, now, your testimony does talk 
about that, but would you mind getting more specific with me as 
you get more comfortable with the job, and reply in writing so 
I can work on some of these?
    Mr. Durbin. I'd be happy to. Sure.
    Mr. Rokita. Thank you. Mr. Larson, do you have anything to 
add?
    Mr. Larson. No, I think as our study looked at, we 
basically looked at sort of the processes that they have 
currently have unfolded, and we feel that with the current 
regulatory system that is in place, you know, the opportunities 
that we see now are being managed responsibly and can unfold in 
that path. So I could not point to any specific regulations at 
this time that I feel would need to change.
    Mr. Rokita. Mr. Larson, sticking with you, as you may know, 
the recent city report estimated that increased energy 
production and the associated benefits will increase real GDP 
from 2 to 3.3 percent by 2020, above what would have otherwise 
been the case over the same period. Familiar?
    Mr. Larson. Yes.
    Mr. Rokita. Do you have any estimates on how increased 
production will affect GDP?
    Mr. Larson. Yes, our estimates are in a similar range, so 
we are seeing a similar impact to GDP. You know, the 
interesting thing will be really looking at how the trade will 
unflow, and how much that will impact GDP. Obviously, GDP net 
trade and imports are a key component of that GDP number, so as 
we looked at it, we sort of looked at a very similar number by 
2020, and a lot of that will be driven by both the domestic 
manufacturing resurgence and our trade positions that we will 
enjoy.
    Mr. Rokita. Okay, I appreciate it. I yield back.
    Chairman Ryan. Mr. Woodall?
    Mr. Woodall. Thank you, Mr. Chairman. I appreciate it. Mr. 
Weiss, it was actually your testimony earlier that brought me 
back to the hearing today, and I appreciate it.
    Mr. Weiss. I am glad to hear.
    Mr. Woodall. If you are wondering if you had an impact 
today, you absolutely did on me. A couple of things. I noticed 
in your testimony that you said between 2008 and 2012, non-
hydrorenewable energy resources doubled in that period of time.
    Mr. Weiss. Correct.
    Mr. Woodall. My recollection is that our hydro resources, 
though, dwarf all of those other renewables combined.
    Mr. Weiss. Yes. Right now renewables are, I think, slightly 
more than 4 or 5 percent of our total electricity generation. 
Hydro, I believe, is about 8 or 9 percent of our electricity 
generation.
    Mr. Woodall. And do you know how much our hydrogeneration 
capability grew over that same period of time?
    Mr. Weiss. I am not under oath, so I will say I believe it 
was static, but I would have to check.
    Chairman Ryan. We can swear you in if you'd like.
    Mr. Weiss. I am sorry? No, that is okay.
    Chairman Ryan. All right.
    Mr. Woodall. I believe it was static also.
    Mr. Weiss. Yes. Although the president, you know, 
yesterday, I believe, in his plan proposed to increase 
hydroelectric generation from existing dams.
    Mr. Woodall. From existing dams?
    Mr. Weiss. That is correct.
    Mr. Woodall. I think one of my great frustrations, I am, 
you know, a conservative Republican from the deep south. Nobody 
plays outside more than I do, and I am not embarrassed to talk 
to folks about environmental protection issues because, again, 
no one is more interested in protecting the Chattahoochee 
National Recreation Area than those of us who live and play 
along the Chattahoochee National Recreation Area. Again, my 
recollection is we are a net energy importer today, still 
bringing in oil from around the globe. Thinking about our 
collective concern about climate change, are you aware of any 
nation from who we are importing oil that does a better job of 
environmental protection than we do here in the States?
    Mr. Weiss. Well, I do not believe so, because the three 
biggest importers are Canada, Mexico, and Saudi Arabia, and I 
believe that we have a better regime in many ways, although 
Canada has stricter power plant rules, and I believe they are 
phasing out their coal-fired power plants in Canada. So I would 
have to say Canada does in some areas.
    Mr. Woodall. So when it comes to where we are going to 
develop new exploration, if we care about protecting the earth 
together, it seems to make sense that we would do more 
exploration, more production here, North America, the U.S. and 
Canada, so that we would be less dependent on folks that we 
know do not do it in as an environmentally-sensitive way as we 
do, but when I read through the testimony, I do not see your 
support for doing those things, again, that we can agree we do 
better than anybody else does.
    What I found in two and a half years in Congress is we tend 
to focus on those things that divide us. I have always said, 
``Get me to energy independence, and I will talk about whatever 
mix of energy you want to do, but until we get to energy 
independence, I know I am importing it from people who care 
less about the planet than I do.'' Why can we not get together 
on doing that production here that we know will do it in an 
environmentally-sensitive way up until we get to that energy 
independence threshold?
    Mr. Weiss. You know, I totally agree with you, Mr. Woodall, 
and, in fact, I think we ought to be able to agree that, let's 
develop our oil resources in the Gulf of Mexico in places that 
are already open where 70 percent of the leases that are held 
by oil companies are not being developed. Well, let's have, as 
Mr. Markey has proposed, a ``use it or lose it'' policy. Let's 
have them either, you know, they get the leases, you know, do 
their exploration to see if there are resources there, have 
them develop them. If not, they lose the leases.
    Mr. Woodall. And tell me about that. Again, for folks who 
agree on the need to protect the planet, why is it more 
desirable to encourage BP to develop in this currently 
undeveloped lease lot than to develop in this as yet unleased 
lot? If it is going to be new development in either case, why 
would we not leave it to oil and gas professionals to develop 
in whatever the areas there are where they believe those fields 
will be most productive?
    Mr. Weiss. Well, the good news is, it is like really 
setting in the banks, it is because that is where the oil is. 
You know, the Department of Energy said the vast amount, I 
believe it is about three-quarters, a little bit less, of our 
offshore oil resources are already open for development, and 
companies already have leases on them, but they are not 
developing them. Let's get them to develop them, or give back 
the leases so somebody else can.
    Mr. Woodall. But allowing them to lease more areas for more 
development disadvantages the environment how?
    Mr. Weiss. Because places, like in the bill that is going 
to be considered on the floor of the House, is going to open up 
development into very economically-sensitive areas, and areas, 
for example, off the coast of Virginia where we also have a 
national security interest in being able to make sure that our 
ships from the Norfolk Naval Yard are able to do their military 
exercises and whatnot. So let's focus where the development 
already is.
    Chairman Ryan. Ms. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I thought it was 
interesting. Mr. Huffman talked about having a pep rally. I 
think that some of us need to be having a pep rally for the 
American worker, and for American jobs, and for American energy 
independence around this place. I do not understand this 
negative attitude that some people bring to these Committee 
hearings. Good Lord, have mercy.
    As vice chair of the Energy and Commerce Committee, I look 
at the issues you are dealing with, and I have a couple of 
specific questions I want to get answered and on the books. But 
Mr. Weiss, I am going to come to you. Mr. Markey is supporting 
the use it or lose it policy. You know, a lot of people could 
not activate into those leases because of lawsuits. Would you 
favor doing away with environmentalists being able to throw 
these lawsuits on those that are trying to do exploration work 
that have these leases?
    Mr. Weiss. Absolutely not, because these are waters that 
belong to all Americans, not just those who lease for the 
resources underneath it.
    Mrs. Blackburn. Resources do belong to all Americans. You 
are exactly right. So what ties up the hands of so many of 
these oil companies is the fact that you have got these 
environmentalists who go out here, and they sue, sue, sue, sue, 
sue to get what they want, to slow progress, and to cause the 
expenditures of hundreds of thousands of dollars in fighting 
these lawsuits over years and years and years. So, therefore, 
it is not something that could be done in an expedient or an 
affordable manner.
    Mr. Durbin, has energy production increased on federal land 
under this Administration or not?
    Mr. Durbin. Well, again, as the Chairman pointed out in his 
opening statement, we have seen production go down on federal 
lands during this Administration.
    Mrs. Blackburn. Okay, I think that it has gone down by 
about 6 percent; in natural gas production, it has declined 
about 21 percent. Is that correct?
    Mr. Durbin [affirmative].
    Mrs. Blackburn. Okay. Mr. Weiss, did you have something you 
wanted to add?
    Mr. Weiss. Yes, if you do not mind. Thank you. That is not 
correct. According to the Energy Information Administration, 
oil and gas production from offshore and public lands is higher 
in all four years of this Administration.
    Mrs. Blackburn. That was not my question. It was federal 
land production.
    Mr. Weiss. That is what I said. Federal lands and waters.
    Mrs. Blackburn. Federal lands.
    Mr. Weiss. Oh, federal lands only? It has also been higher 
than the previous administration. I would be happy to submit 
this for the record if you would like.
    Mrs. Blackburn. I think that you should submit it to the 
record because what we have is that it has declined 6 percent, 
and that natural gas has declined 21 percent. And then let's 
talk about private land, what the production has done on 
private land under these policies.
    Mr. Durbin. Well, again, as we discussed earlier in the 
hearing, I think that, you know, we have seen private and state 
land production increase significantly, and that is, again, not 
only the resource being there, but the certainty of the 
regulatory process and the streamlined permitting that allows 
the industry to, you know, to get in and produce these lands.
    Mrs. Blackburn. Okay, thank you.
    Mr. Larson. It is up 36 percent on non-federal lands.
    Mrs. Blackburn. On non-federal lands?
    Mr. Larson. That is correct.
    Mrs. Blackburn. Mr. Larson, one of the things that we hear 
at Energy and Commerce in the Commerce Manufacturing and Trade 
Committee is people who are offshore in manufacturing or have 
had to offshore would like to bring that back on shore. They 
are concerned about IP protections or lack thereof in certain 
components of the world, and they would love to come back with 
that. So talk to me a little bit about natural gas prices and 
the impact that that is having on domestic manufacturing, what 
you are seeing there.
    Mr. Larson. Yes. So domestic natural gas prices, basically, 
you could look at them as roughly a third, on average, of our 
global competitors, and so it is creating a strong resurgence 
in manufacturing, and as you point out, there are a lot of 
different reasons right now behind this. I would characterize 
what is going on domestically with our natural gas prices as a 
necessary but not sufficient component to onshoring. It is 
something that if you look at the various components of a 
desire to protect IP, desire to shorten supply chains, a desire 
to have production near end markets so that you can speed your 
research and development, and you look at sort of tax 
regulations and other factors as well as energy, all of those 
combined have sort of developed in a way now that with this 
energy opportunity and lower costs, it is really contributing 
this now breakeven point where you are seeing onshoring return. 
And we do see a significant increase in the industrial 
production, particularly in those energy-intensive industries, 
the chemicals, the petrochemicals, the downstreams. And so 
those will really be the forerunners of this manufacturing 
renaissance in this country.
    Mrs. Blackburn. Thank you. Mr. Chairman, I yield back.
    Chairman Ryan. Thank you. Dr. Price. Oh, yeah, that is 
right. Ms. Walorski.
    Mrs. Walorski. Thank you, Mr. Chairman. Thank you, 
gentlemen, for your remarks today. My question kind of goes 
back to what the Chairman was asking when we were talking about 
manufacturing jobs in places in the Midwest. I am from Indiana, 
and coal plants in Indiana are the heart of Indiana's economy; 
provides almost 90 percent of Indiana's electricity. Almost 30 
percent of Indiana's GDP is from manufacturing. This is 
dependent upon coal-fire/electric generation. So when we talk 
about jobs in the state of Indiana, we are right smack dab in 
that situation. I am talking about coal, primarily coal.
    So based upon what the president talked about yesterday, 
what technology is there that is in place today to allow coal 
plants to keep operating while meeting new emission standards 
that will be mandated by the president's new energy proposal? 
Anybody? Go ahead.
    Mr. Weiss. Well, first, I just want to say that my wife is 
an alumni of Indiana University.
    Mrs. Walorski. All right, she is a Hoosier.
    Mr. Weiss. She is a Hoosier and I am a Wolverine, so 
sometimes we battle during basketball season.
    Mrs. Walorski. That is great conversation.
    Mr. Weiss. But in any event, the technologies that exist 
today that could help companies reduce their emissions is 
energy efficiency because some utilities, like Duke Energy, are 
helping their customers use less electricity, which, in fact, 
reduces emissions. So that is existing technologies today that 
could help them reduce their carbon pollution.
    In addition, we have, in the past, supported investments in 
carbon capture and storage technology that would help companies 
burn coal 85 to 90 percent cleaner, but, unfortunately, they 
are very expensive. You know, the Waxman-Markey Bill that 
passed four years ago today, as someone pointed out, would have 
included billions of dollars to help subsidize the development 
and commercialization of carbon capture and storage technology 
for big coal plants, but, unfortunately, because that did not 
become law, there has been really no money besides what was in 
the Recovery Act that has helped subsidized that.
    Mrs. Walorski. Let me ask you this. In the state of 
Indiana, we have coal gasification. And coal gasification, at 
the time, was state of the art, breakthrough technology, and 
still, we use it today. Do you see coal gasification being able 
to pass the test of the new emissions in the Obama plan?
    Mr. Weiss. Well, the Obama plan basically does not exist 
yet. What he did yesterday was say, ``We are going to start to 
develop that plan.'' But yes, coal gasification can have a 
role. In addition, there is a technology called co-firing, 
where you take some biomass, twigs, leaves, and all of that 
stuff, and add it to your coal, and that will also reduce 
emissions. So yes, there is an array of technologies. One other 
technology that exists that will help reduce emissions is 
investments in solar and wind electricity because that is 
another technology that exists today. It is cost-competitive 
right now compared to new coal or natural gas plants, and it 
will also help reduce emissions.
    Mrs. Walorski. Well, my concern still, though, is jobs 
because these are gigantic; when you are speaking of these 
costs, these are gigantic costs. And when we talk about these 
kinds of costs in a place like Indiana, we are talking about 
huge jobs and a huge degradation in jobs. We are also talking 
about, we have one of the lowest utility rates in the nation, 
which has helped us become, really, the fifth state in this 
entire nation on job creation.
    So my concern is back to this issue of overregulation. In a 
state that is a manufacturing state, in a place where you are 
driven by coal, how in the world does a state like ours survive 
with an overreaching hand into regulation? Because, I mean, 
from anybody's perspective, have not we seen, and have not we 
seen from what you guys have studied, that overregulation 
continues to decrease jobs in places like manufacturing?
    Mr. Weiss. Actually, it has not. The Bureau of Labor 
Statistics looks at this every quarter, and the last quarter 
that they have data for found that for the 400,000 new 
unemployment claims that were filed, I believe 726, or less 
than two-tenths of 1 percent, were due to government regulation 
of any sort: environmental, health.
    Mrs. Walorski. Sorry to interrupt, but I would say those 
two-tenths of 1 percent have been streaming into my office, and 
they are all from the state of Indiana, because I have heard 
all of them. Mr. Durbin?
    Mr. Durbin. Well, again, I am obviously here on behalf of 
the natural gas industry and have nothing to say against the 
coal-powered plants, and I understand and acknowledge the need 
for us to have a diverse fuel portfolio for power generation. 
But I will say that, you know, natural gas does provide another 
opportunity here to have not only an abundant, affordable fuel 
source that is going to be able to provide, you know, the power 
for all of that manufacturing in Indiana, but also with reduced 
emissions.
    Mrs. Walorski. Yeah, I appreciate it. Mr. Larson?
    Mr. Larson. I think we have not looked at the proposals 
around the coal, obviously, but I think there are two important 
points I would just illuminate on. The first is, obviously, any 
time you take capital and retire it, there is a loss to society 
from the early retirement of capital that has to be quantified 
and evaluated. That is the first.
    The second thing is there is clearly a value in power 
generation diversity, and when you look the ability to commit 
to different fuel switching as hedges against price shocks is a 
very important component of our power gen capability that we 
have inherited today, and it is an important thing to evaluate 
in any policy that would change that diversity.
    Mrs. Walorski. Thank you. Thank you, Mr. Chairman.
    Chairman Ryan. Thank you. Dr. Price.
    Mr. Price. Thank you, Mr. Chairman, and I want to thank you 
for holding this hearing. I think it is hugely important. This 
nation has been blessed with remarkable resources, and the fact 
that policymakers, some policymakers in this town, do not want 
to utilize those in a responsible, environmentally-sensitive 
way to the benefit of all citizens is really astounding.
    Our friends on the other side talk about them having an 
all-of-the-above energy plan, and the president having an all 
of the above energy plan, and that may be technically accurate. 
The problem is it is none of the below. Nothing do they desire 
below the ground, and so the challenges that we have got can be 
met with the remarkable resources that we have, but we are not 
being able to utilize them.
    I think it was Mr. Rokita who asked you, Mr. Weiss, about 
why, maybe it was Mr. Woodall, why not open up new offshore 
leases, and he says, ``Well, the reason that the current leases 
ought to be utilized because that is where the oil is.'' Mr. 
Weiss, do you have any idea how much production, energy 
production, oil production, was in South Dakota 15 years ago?
    Mr. Weiss. No, but I do know that 20 percent of their 
electricity now is from wind energy.
    Mr. Price. That was not the question. That is all right, 
though.
    Mr. Weiss. Well, you asked me about energy production in 
South Dakota, and that wind energy electricity did not exist.
    Mr. Price. Mr. Weiss.
    Mr. Weiss. Sorry. Sorry. Go ahead.
    Mr. Price. The jobs that have been created in South Dakota, 
the remarkable ability of that state to turn around its 
economy, it has been phenomenal, phenomenal with the use of 
resources. The fact of the matter is we did not know 15 years 
ago what kind of energy resources there were in South Dakota, 
in North Dakota. And the fact is that we do not know what is 
off the shore either. But there are people who do, and they say 
that there are great opportunities there to be able to utilize 
the remarkable resources that are offshore in an 
environmentally-sensitive way, in a positive way, to not only 
bring about energy production, but to create jobs and to 
improve the economy.
    Can you pull up the slide, because I want to talk very 
briefly about the Keystone Pipeline because I think the number 
of jobs that it would create and the amount of revenue that it 
would bring in to the federal government is remarkable. These 
are current pipelines in the United States, oil pipelines 
underground. Mr. Weiss, do you know which one is the Keystone 
Pipeline?


    Mr. Weiss. Well, it is hard to see because my eyes are 
getting bad, but I believe it would show the southern leg from 
Cushing, Oklahoma down to the Gulf Coast, which is under 
construction. The northern leg is not under construction, so it 
ought not be on that.
    Mr. Price. The fact of the matter is that Keystone does not 
show up there.
    Mr. Weiss. Right, that is what I said.
    Mr. Price. Yeah, because it had not been built yet. But the 
important point of this slide is that look at the number of 
pipelines that are under land right now. We have got an 
opportunity to gain significant increase in job creations, 
significant increase in the ability to refine North American 
fuel, and we are letting it stand by the wayside, not because, 
not because there is an environmental problem. There is a 
political problem. In fact, Keystone was accepted all the way 
up every single chain of the policy side in this Administration 
until it got to the political question, and then they said, 
``No, we cannot do that.'' And the nation understands that. The 
nation understands that this Administration is blocking job 
creation and blocking energy production in this country for 
political reasons; not policy reasons, political reasons.
    Mr. Larson, I am amazed by those who do not talk about the 
economics of this situation as well, right now with offshore 
energy production being significantly limited. And there is a 
recent study that, I believe by Wood Mackenzie, that says that 
the policies that promote domestic development of oil and 
natural gas including access to offshore federal areas that 
have been kept off-limits could create 1 million new jobs and 
generate $127 billion in revenue to the federal government. You 
talked about GDP. Would you touch on the revenue creation for 
the federal government if we were to open up these areas?
    Mr. Larson. We have not looked at all these offshore 
potentials. I will say that we did a study that looked at the 
Gulf of Mexico in particular, and found just the Gulf of Mexico 
in what is currently under development down there, it is 
contributing about 560,000 jobs and $70 billion a year in 
annual revenue. So, you know, that just gives you an idea of 
the scale of what the offshore opportunity looks like from an 
economic context, but we have not looked at the other areas 
that are under question for opening up.
    Mr. Price. And the economic benefit to the United States of 
increasing domestic energy production, fossil fuels, as long as 
it is done in an environmentally-sensitive way is real, 
correct?
    Mr. Larson. It is. I mean, so you can look at where we 
were, the roughly 1.8 million barrels in unconventional oil 
that we could develop last year, probably about $70 billion in 
offset for imported oil. So that drops right down to your 
bottom line of your GDP, and, obviously, it is allowing us to 
meet domestic demand and fuel domestic jobs to meet that 
demand.
    Mr. Price. Thanks, Mr. Chairman. Makes sense for workers, 
makes sense for the government.
    Chairman Ryan. Thank you. This is very helpful. I 
appreciate the numbers we have been presented to the Committee. 
It is very illustrative of what the potential is. We need some 
more perspective like this because the CBO has been a little 
low on the numbers, from what we can tell. I appreciate the 
perspective from the industry, and I appreciate the perspective 
from your community as well, Mr. Weiss. So thank you very much, 
everybody, for this hearing. Hearing is adjourned.
    Mr. Weiss. Thank you for having me.
    [The prepared statement of Mr. Cicilline follows:]

  Prepared Statement of Hon. David N. Cicilline, a Representative in 
                Congress From the State of Rhode Island

    Thank you Mr. Chairman. First, I want to thank our witnesses for 
being here today to discuss a wide range of topics related to our 
nation's energy policy.
    If I can, I'd like to put some of your testimony into a budget 
context. Some of the testimony today argues that further domestic 
development of fossil fuels would generate dramatic increases in 
government revenues and reduce the deficit. For example, in his 
testimony, Mr. Larson projected that federal and state government 
revenues could increase to about $111 billion by 2020 with a ``pro-
development strategy''.
    On the surface, this looks like a potential way we could shrink our 
nation's budget deficit. But I wonder if this projection is really 
taking into account the billions of dollars in costs associated with 
carbon pollution and the already tremendous subsidies we provide to 
fossil fuel companies both through our tax code and access to our 
public lands.
    After all, the Budget Committee is responsible for examining the 
impact any energy policy would have on a wide range of costs, across 
the federal government.
    First, it may be useful to discuss some of those hidden, external 
costs that result from a singular focus on increasing fossil fuel 
production. For example, in 2010, the National Academy of Sciences 
estimated total non-climate change related damages associated with 
energy consumption at more than $120 billion in one year. And this is 
non-climate change related, meaning it is mostly the result of health 
and wellness costs.
    We know air pollution leads to higher rates of mortality and 
respiratory problems. As a result, the federal government oftentimes 
picks up the tab for hospital admissions, increased expenditures on 
medications and many other health costs associated with carbon 
pollution.
    In addition, the economic damages associated with fossil fuel 
emissions and the resulting changes in our climate are far-reaching. 
Carbon pollution has imposed real costs on many natural industries, 
including our nation's fisheries and agricultural economy.
    Damages from climate change also impact our tourism economy and the 
resilience of businesses. Just ask local businesses on the Jersey Shore 
still recovering from Hurricane Sandy or folks affected by the BP Oil 
Spill in the Gulf of Mexico. Let's not forget that the federal 
government spends billions of dollars to insure against these risks, 
invest in mitigation and provide assistance to industries affected by 
climate change related damages.
    These are the real costs associated with a fossil fuel development 
strategy. And it comes on top of the $120 billion in health care and 
other non-climate change related costs.
    Any honest budget projection should account for these real, 
tangible costs. The numbers demonstrate that it may be worse for the 
bottom-line than you seem to imply.
    In addition, a constant, singular focus in Congress on expanding 
our fossil fuel capabilities has led to some real waste. For example, 
after the first quarter of 2013 the big five oil companies are on pace 
to earn a combined $120.8 billion in profits. And yet, according to the 
Joint Committee on Taxation, these same five companies pocket $2.4 
billion in tax breaks every year.
    In addition, last year the Department of Interior issued a report 
assessing how many federal lands leased for oil and gas development 
remain idle. The amount of waste is staggering. Out of 36 million acres 
leased offshore, only about 10 million acres are active meaning 72% of 
these acres are fully idle. Onshore, an additional 20.8 million acres, 
or 56% of leased acres, are not active. Moreover, approximately 7,000 
approved permits have not yet been drilled. These lands are an 
important, tangible asset.
    In the end, focusing so intensely on promoting additional 
development of fossil fuels has prevented us from diligently monitoring 
the investments both in terms of land and tax subsidies that we are 
providing the oil and gas industry. And it is preventing us from truly 
evaluating the costs associated with carbon pollution.
    I hope, today, we can assess the budgetary impact of further oil 
and gas production thoughtfully, honestly, and with a real 
understanding of the math and facts on the ground. If we do that, I 
think we will all come to the conclusion this is a bad deal.

    [Additional submissions of Mr. Van Hollen follow:]

                                                     June 20, 2013.
               congressional budget office cost estimate

                H.R. 2231: Offshore Energy and Jobs Act

As ordered reported by the House Committee on Natural Resources on June 
        12, 2013
                                summary
    H.R. 2231 would revise existing laws and policies regarding the 
development of oil and gas resources on the Outer Continental Shelf 
(OCS). It would direct the Department of the Interior (DOI) to adopt a 
new leasing plan for the 2015-2020 period, require auctions of leases 
in certain areas in the Atlantic and Pacific OCS, and reduce the 
department's discretion regarding which regions would be included in 
future lease sales. Under this bill, some of the offsetting receipts 
from leases issued in newly available areas would be spent, without 
further appropriation, to make payments to states. Finally, H.R. 2231 
would direct DOI to collect fees from certain firms that operate in the 
OCS and to implement various administrative reforms.
    CBO estimates that enacting H.R. 2231 would reduce net direct 
spending by $1.5 billion over the 2014-2023 period. Pay-as-you-go 
procedures apply because enacting the legislation would reduce direct 
spending. In addition, CBO estimates that implementing the bill would 
cost $40 million over the 2013-2018 period, assuming appropriation of 
the necessary amounts. Enacting this bill would not affect revenues.
    H.R. 2231 contains no intergovernmental or private-sector mandates 
as defined in the Unfunded Mandates Reform Act (UMRA) and would impose 
no costs on state, local, or tribal governments.
                estimated cost to the federal government
    The estimated budgetary impact of H.R. 2231 is shown in the 
following table. The costs of this legislation fall within budget 
functions 950 (undistributed offsetting receipts) and 300 (natural 
resources and the environment).

                                    [By Fiscal Year, in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                                            2014     2015     2016     2017     2018   2014-2018
----------------------------------------------------------------------------------------------------------------
                                          CHANGES IN DIRECT SPENDING\a\

Estimated Budget Authority..............................      -55      -70      -90     -265     -190       -670
Estimated Outlays.......................................      -55      -70      -90     -265     -190       -670

                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level...........................        5       15       15        5        3         43
Estimated Outlays.......................................        1       14       15        7        3         40
----------------------------------------------------------------------------------------------------------------
a. CBO estimates that enacting H.R. 2231 would reduce direct spending by $1,515 million over the 2014-2023
  period.

                           basis of estimate
    For this estimate, CBO assumes that H.R. 2231 will be enacted near 
the beginning of fiscal year 2014 and that the necessary amounts will 
be appropriated for each fiscal year.
    Direct Spending. CBO estimates that enacting H.R. 2231 would reduce 
net direct spending by $1.5 billion 2014-2023 period. That estimate 
reflects the budgetary effects of provisions that would change the 
terms and procedures governing the OCS leasing program, authorize 
direct spending for payments to states, and require firms to pay annual 
fees for federal inspections of their operations in the OCS.
    Payments for OCS leases and the proceeds from inspection fees would 
be recorded in the budget as offsetting receipts, which are treated as 
a reduction in direct spending. Because oil and gas production usually 
occurs several years after a lease is issued, CBO expects that most of 
the estimated increase in offsetting receipts over the next 10 years 
would result from bonus bids and rental payments. Most royalty 
collections associated with those leases would occur in later years. 
Such estimates are subject to considerable uncertainty, however, 
because the legislation would affect leasing activity in areas that 
have not been available for oil and gas development for more than 25 
years.\1\
---------------------------------------------------------------------------
    \1\ For more information about factors affecting OCS leasing 
activity, see Congressional Budget Office, Potential Budgetary Effects 
of Immediately Opening Most Federal Lands to Oil and Gas Leasing, 
August 2012. http://go.usa.gov/bQwH
---------------------------------------------------------------------------
    OCS Leasing Activity. H.R. 2231 would revise DOI's current leasing 
plan for the OCS and limit the department's future discretion in 
determining where and when auctions for access to those leases should 
occur. CBO estimates that implementing those changes would increase 
gross offsetting receipts by $1.2 billion over the 2014-2023 period 
above the amounts expected under current law.
    Under current law, most OCS leasing decisions are made 
administratively--in consultation with industry and states--for five-
year planning periods. H.R. 2231 would reduce that administrative 
discretion by requiring DOI to auction leases for at least half of the 
available acreage in areas that the government estimates to contain 
certain quantities of oil or gas resources. In addition, the department 
would have to conduct three specific lease sales within two years of 
enactment: one off the coast of Virginia, one off the coast of South 
Carolina, and another for leases in the Santa Barbara and Ventura 
basins in the California OCS that could be developed by using existing 
offshore facilities or from onshore drilling sites. Finally, DOI would 
be required to adopt a new leasing plan for the 2015-2020 period that 
would replace the current leasing plan for the 2012-2017 period.
    Leasing in the Atlantic and Pacific OCS. Enacting H.R. 2231 would 
primarily affect leasing activity in the Atlantic and Pacific OCS. CBO 
estimates that implementing the bill would increase gross offsetting 
receipts from leasing in those areas by about $1.0 billion over the 
next 10 years relative to our most recent baseline estimate of receipts 
under current law. This estimate of receipts attributable to the 
legislation reflects CBO's expectation that such leasing would generate 
proceeds of about $1.8 billion over fiscal years 2014 through 2023 
under the bill.\2\ However, CBO expects a portion of that amount--$0.8 
billion--will be collected under current law. CBO's baseline estimate 
is less than the amount we estimate from enacting H.R. 2231 for two 
reasons. First, the current leasing plan for the 2012-2017 period does 
not include any auctions in the Atlantic and Pacific OCS. Second, the 
probability of such leasing occurring after 2017 under current law is 
uncertain because federal and state administrative policies toward 
leasing change over time.
---------------------------------------------------------------------------
    \2\ CBO's estimate of the receipts from leasing in the Atlantic and 
Pacific OCS are roughly proportional to the bonus bids that CBO expects 
will be collected over a comparable period of time for regions in the 
Central and Western Gulf of Mexico and the Beaufort and Chukchi Seas in 
Alaska, which are available to be leased under current law and policy. 
The estimate also assumes that the pace of leasing would be consistent 
with past trends for areas with undiscovered resources that are 
geologically dispersed over large areas. Finally, based on the 
conclusions of a 2011 report sponsored by the American Petroleum 
Institute, CBO assumes that the amounts paid by bidders per barrel of 
oil equivalent (BOE) for resources in the Atlantic and Pacific would be 
about half the amounts expected to be paid for resources in the Arctic 
National Wildlife Refuge or the Eastern Gulf of Mexico.
---------------------------------------------------------------------------
    Leasing in Other OCS Regions. H.R. 2231 also would affect leasing 
in areas that are temporarily unavailable because of statutory or 
Presidential restrictions. The Gulf of Mexico Energy Security Act of 
2006, for example, prohibits leasing of about 4.4 million acres in the 
eastern and central Gulf of Mexico until June 30, 2022. In addition, 
the Bristol Bay area in the North Aleutian Basin in Alaska was 
withdrawn from consideration through 2017 by the President. CBO 
estimates that requiring auctions after such restrictions expire would 
increase gross offsetting receipts by about $0.2 billion over the 2018-
2023 period. Most of that increase is estimated to result from 
additional leasing activity in the Gulf of Mexico in fiscal year 2023.
    CBO estimates that enacting H.R. 2231 would have no effect on 
proceeds from areas that are included in the current leasing plan for 
the 2012-2017 period because DOI routinely auctions more than half of 
the available acreage in those areas. Those areas include the central 
and western Gulf of Mexico and the Beaufort Sea, Chukchi Sea, and Cook 
Inlet in the Alaska OCS.
    Receipt Sharing. H.R. 2231 would authorize certain payments to 
states affected by OCS activities in areas that would be made available 
for leasing by this bill and that are outside the central and western 
planning areas in the Gulf of Mexico. Under H.R. 2231, the percentage 
of lease payments paid to states would depend on the location and 
timing of the lease sales. For example, Virginia, South Carolina, and 
California would receive 37.5 percent of the gross proceeds from the 
three auctions specified in the bill. Elsewhere, states would receive a 
12.5 percent share of the gross proceeds from eligible leases issued 
under the five-year plan that would take effect in 2015; 25 percent 
from leases issued under the subsequent five-year plan; and 37.5 
percent from leases issued thereafter.
    CBO estimates that the receipt-sharing provisions in H.R. 2231 
would increase direct spending by $0.3 billion over the 2014-2023 
period. That estimate reflects CBO's expectation that such payments 
would be limited to leases issued in areas that are not included in 
DOI's current leasing plan for 2012-2017, such as the Atlantic and 
Pacific OCS. Under this bill, funds would be disbursed to states the 
year after receipts are collected.
    Inspection Fees. H.R. 2231 would direct DOI to collect annual fees 
to cover the cost of inspecting OCS facilities and drilling operations, 
subject to certain conditions. The bill would specify the amounts due 
for various types of activities and would allow DOI to adjust those 
fees for inflation in future years. Amounts collected under the bill 
would be deposited in a new fund in the U.S. Treasury and would be 
available to DOI if appropriated in annual appropriation acts. DOI's 
authority to collect the fees would expire at the end of fiscal year 
2022.
    Based on information from DOI, CBO estimates that collecting the 
inspection fees in H.R. 2231 would increase offsetting receipts by 
about $0.6 billion over the 2014-2022 period, after adjusting for 
inflation. The appropriation act for fiscal year 2013 authorized DOI to 
assess and collect similar inspection fees, but that authority expires 
at the end of this fiscal year. For this estimate, CBO assumes that the 
inspection fees authorized by H.R. 2231 would take effect in fiscal 
year 2014 and extend through fiscal year 2022.
    Spending Subject to Appropriation. CBO estimates that implementing 
H.R. 2231 would cost about $40 million over the 2014-2018 period, 
assuming appropriation of the necessary amounts. Based on spending 
patterns for similar activities, CBO estimates that DOI would spend 
about $32 million over the 2014-2018 period to develop a new five-year 
plan and complete the environmental, geologic, and economic assessments 
associated with conducting lease sales in new areas.
    In addition, H.R. 2231 would establish two new executive positions 
at DOI, an Under Secretary and an Assistant Secretary, who would 
oversee the development of mineral resources on federal lands. The bill 
also would require the agency to administer drug tests for certain 
employees who do work related to DOI energy programs. Based on 
information regarding the salaries for executive positions and support 
staff within the federal government and the cost of providing drug 
tests at other federal agencies, CBO estimates that implementing those 
provisions would cost about $1 million a year over the 2014-2018 
period.
    Other provisions would codify organizational changes that were 
implemented by DOI in 2012, subject to certain modifications. Although 
the duties of the bureaus created by the bill would be similar to those 
established under current law, H.R. 2231 would assign different names 
to two of the three entities. Based on information from DOI on the cost 
of the previous reorganization, CBO estimates that implementing those 
name changes would cost a total of about $3 million over the next five 
years because the agencies' websites, regulations, and administrative 
personnel materials would need to be formally modified.
    Finally, CBO estimates that implementing H.R. 2231 would have no 
significant effect on the discretionary cost of inspecting OCS 
operations over the 2014-2018 period but would change the budgetary 
treatment of certain inspection fees. In recent years, the authority 
for DOI to collect fees for OCS inspections was provided in annual 
appropriation acts, and the proceeds were netted against the 
discretionary appropriation. Under H.R. 2231, the proceeds from such 
fees would be treated as a reduction in direct spending until the fee 
provisions in the bill expire at end of 2022.
                      pay-as-you-go considerations
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting direct 
spending or revenues. The net changes in outlays that are subject to 
those pay-as-you-go procedures are shown in the following table.

                                                   CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2231
                                   [As ordered reported by the House Committee on Natural Resources on June 12, 2013]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            By fiscal year, in millions of dollars
                                     -------------------------------------------------------------------------------------------------------------------
                                       2013   2014    2015    2016     2017     2018     2019     2020     2021     2022     2023   2013-2018  2013-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact......      0     -55     -70     -90     -265     -190     -155     -155     -155     -140     -240       -670     -1,515
--------------------------------------------------------------------------------------------------------------------------------------------------------

              intergovernmental and private-sector impact
    H.R. 2231 contains no intergovernmental or private-sector mandates 
as defined in UMRA and would impose no costs on state, local, or tribal 
governments.
                         estimate prepared by:
Federal Costs: Kathleen Gramp (OCS leasing activities); Jeff LaFave 
        (DOI reorganization)
Impact on State, Local, and Tribal Governments: Melissa Merrill
Impact on the Private Sector: Amy Petz
                         estimate approved by:
Theresa Gullo
Deputy Assistant Director for Budget Analysis

                                                     July 11, 2013.
Hon. Chris Van Hollen, Ranking Member,
House Committee on the Budget, 210 Cannon House Office Building 
        Washington, DC 20515.
    Dear Ranking Member Van Hollen: Thank you very much for the 
opportunity to testify at the Budget Committee hearing on ``America's 
Energy Revolution: A New Path to Jobs and Economic Growth'' on June 
26th. I was honored to be included in this important discussion, and I 
thought that the hearing was very productive.
    Several committee members raised questions about domestic oil and 
gas production from federal lands and waters. I would like to submit 
the following information for the hearing record that addresses these 
questions.
    The Energy Information Administration report ``Sales of Fossil 
Fuels Produced from Federal and Indian Lands, FY 2003 through FY 2012'' 
determined that oil production from federal lands and waters has been 
higher during every year of the Obama administration compared to 2008, 
the last year of the Bush administration.\1\ The average annual oil 
production from federal areas is also higher under President Obama 
compared to President Bush. EIA reports that from 2009-2012 oil 
production from federal lands and waters averaged 648.8 million barrels 
per year compared to an annual average of 623.5 million barrels from 
2003-2008--a four percent increase during the current administration.
---------------------------------------------------------------------------
    \1\ Energy Information Administration, ``Sales of Fossil Fuels 
Produced from Federal and Indian Lands, FY 2003 through FY 2012,'' 
(2013), available at http://www.eia.gov/analysis/requests/federallands/
pdf/eia-federallandsales.pdf.

   CRUDE OIL PRODUCTION FROM FEDERAL LANDS AND WATERS, FY 2003-FY 2012
------------------------------------------------------------------------
                               Crude oil & lease condensate (millions of
            Year                               barrels)
------------------------------------------------------------------------
2003........................                                        679
2004........................                                        670
2005........................                                        638
2006........................                                        571
2007........................                                        618
2008........................                                        565
2009........................                                        647
2010........................                                        723
2011........................                                        629
2012........................                                        596
------------------------------------------------------------------------
Source: Energy Information Administration\2\

    Although natural gas production on federal lands has been lower 
under President Obama compared to President Bush, it is because newly 
available shale gas resources are largely on state and private lands.
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    \2\ Ibid.
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    In 2012, Adam Sieminski, the administrator of the Energy 
Information Administration, testified before the House Energy and 
Commerce Committee that:
    Because the shale resource basins are largely outside of the 
Federal lands, so too is shale production. In this case, the geology is 
working in favor of non-Federal landowners.\3\
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    \3\ Adam Sieminski, Testimony before the Subcommittee on Energy and 
Power of the Committee on Energy and Commerce, August 2, 2012, 
available at http://www.eia.gov/pressroom/testimonies/sieminski--
08022012.pdf.
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    Additionally, an assertion was made during the hearing that the 
process for approving oil and gas permits on federal lands has become 
longer. A 2013 Congressional Research Service analysis ``U.S. Crude Oil 
and Natural Gas Production in Federal and Non-Federal Areas'' examined 
this concern. CRS determined that the process has significantly 
improved under the current administration.
    In 2006 it took the BLM [Bureau of Land Management] an average of 
127 days to process an APD [application for drill permit], while in 
2011 it took BLM 71 days. In 2006, the industry took an average of 91 
days to complete an APD, but in 2011, industry took 236 days.
    Some critics of this lengthy timeframe highlight the relatively 
speedy process for permit processing on private lands. However, crude 
oil development on federal lands takes place in a wholly different 
regulatory framework than that of oil development on private lands. * * 
* a private versus federal permitting regime does not lend itself to an 
`apples-to-apples' comparison.\4\
    If you have any questions about this information or my testimony, 
please contact me. Thank you again for the opportunity to present our 
views before the House Budget Committee.
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    \4\ Marc Humphries, ``U.S. Crude Oil and Natural Gas Production in 
Federal and Non-federal Areas,'' (Congressional Research Service, 
2013), available at http://energycommerce.house.gov/sites/
republicans.energycommerce.house.gov/files/20130228CRSreport.pdf.
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            Sincerely,
                                           Daniel J. Weiss,
                    Senior Fellow and Director of Climate Strategy.

cc: Chairman Paul Ryan; Hon. Honorable Marsha Blackburn

    [Whereupon, at 12:09 p.m., the committee adjourned subject 
to the call of the Chair.]

                                  
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