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



 
              THE ENERGY POLICY AND CONSERVATION ACT 
              OF 1975: ARE WE POSITIONING AMERICA FOR 
              SUCCESS IN AN ERA OF ENERGY ABUNDANCE?

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           DECEMBER 11, 2014

                               __________

                           Serial No. 113-187
                           
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           



      Printed for the use of the Committee on Energy and Commerce

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky               FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois               BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania        ANNA G. ESHOO, California
GREG WALDEN, Oregon                  ELIOT L. ENGEL, New York
LEE TERRY, Nebraska                  GENE GREEN, Texas
MIKE ROGERS, Michigan                DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania             LOIS CAPPS, California
MICHAEL C. BURGESS, Texas            MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee          JANICE D. SCHAKOWSKY, Illinois
  Vice Chairman                      JIM MATHESON, Utah
PHIL GINGREY, Georgia                G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana             JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   DONNA M. CHRISTENSEN, Virgin 
GREGG HARPER, Mississippi            Islands
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BILL CASSIDY, Louisiana              JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky              JERRY McNERNEY, California
PETE OLSON, Texas                    BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
CORY GARDNER, Colorado               BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas                  PAUL TONKO, New York
ADAM KINZINGER, Illinois             JOHN A. YARMUTH, Kentucky
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina

                                 7_____

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
STEVE SCALISE, Louisiana             BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
RALPH M. HALL, Texas                 JERRY McNERNEY, California
JOHN SHIMKUS, Illinois               PAUL TONKO, New York
JOSEPH R. PITTS, Pennsylvania        JOHN A. YARMUTH, Kentucky
LEE TERRY, Nebraska                  ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas            GENE GREEN, Texas
ROBERT E. LATTA, Ohio                LOIS CAPPS, California
BILL CASSIDY, Louisiana              MICHAEL F. DOYLE, Pennsylvania
PETE OLSON, Texas                    JOHN BARROW, Georgia
DAVID B. McKINLEY, West Virginia     DORIS O. MATSUI, California
CORY GARDNER, Colorado               DONNA M. CHRISTENSEN, Virgin 
MIKE POMPEO, Kansas                      Islands
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN D. DINGELL, Michigan (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)    HENRY A. WAXMAN, California (ex 
                                         officio)

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     2
    Prepared statement...........................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     3
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   114
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, prepared statement......................................    79

                               Witnesses

Adam Sieminski, Administrator, Energy Information Administration, 
  Department of Energy...........................................     6
    Prepared statement...........................................     8
Lucian Pugliaresi, President, Energy Policy Research Foundation, 
  Inc............................................................    18
    Prepared statement...........................................    20
Charles K. Ebinger, Senior Fellow Energy Security Initiative, The 
  Brookings Institution..........................................    29
    Prepared statement...........................................    32
Deborah Gordon, Director, Energy and Climate Program, Carnegie 
  Endowment for International Peace..............................    50
    Prepared statement...........................................    52

                           Submitted Material

Report of the United Steelworkers, ``Crude Oil Exports--Lost 
  Jobs, Lost Growth,'' submitted by Mr. Rush.....................    95
Article of December 4, 2014, ``The Fracking Fallacy,'' by Mason 
  Inman, Nature, submitted by Mr. Rush...........................    98
Letter of December 10, 2014, from Louis Finkel, Executive Vice 
  President, Energy API, to Mr. Whitfield and Mr. Rush, submitted 
  by Mr. Whitfield...............................................   102
Letter of December 10, 2014, from Charles T. Drevna, President, 
  American Fuel & Petrochemical Manufacturers, to Mr. Whitfield 
  and Mr. Rush, submitted by Mr. Whitfield.......................   104
Letter of December 10, 2014, from Allen Schaeffer, Executive 
  Director, Diesel Technology Forum, to Mr. Whitfield and Mr. 
  Rush, submitted by Mr. Whitfield...............................   107
Letter of December 18, 2014, from Jay Hauck, Executive Director, 
  The CRUDE Coalition, to Mr. Whitfield and Mr. Rush, submitted 
  by Mr. Whitfield \1\
Executive summary, ``An Analysis of U.S. Light Tight Oil 
  Absorption Capacity,'' September 24, 2014, by Richard X. Thomas 
  and Kevin G. Waguespack, Baker & O'Brien, Inc., submitted by 
  Mr. Whitfield \1\
Report, ``Lifting the Crude Oil Export Ban: The Impact on U.S. 
  Manufacturing,'' October 2014, by Thomas J. Duesterberg, et 
  al., The Aspen Institute, submitted by Mr. Whitfield \1\

----------
\1\ The information has been retained in committee files and also is 
available at  http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=102781.
Policy brief, ``Changing Markets: Economic Opportunities from 
  Lifting the U.S. Ban on Crude Oil Exports,'' September 2014, by 
  Charles Ebinger and Heather L. Greenley, Brookings Energy 
  Security Inititative, submitted by Mr. Whitfield \1\
Analysis, ``What Drives U.S. Gasoline Prices?,'' October 2014, 
  Energy Information Administration, submitted by Mr. Whitfield 
  \1\
Report to the Ranking Member, Committee on Energy and Natural 
  Resources, U.S. Senate, ``Changing Crude Oil Markets: Allowing 
  Exports Could Reduce Consumer Fuel Prices, and the Size of the 
  Strategic Reserves Should Be Reexamined,'' September 2014, 
  Government Accountability Office, submitted by Mr. Whitfield 
  \1\
Report submitted to American Petroleum Institute, ``The Impacts 
  of U.S. Crude Oil Exports on Domestic Crude Production, GDP, 
  Employment, Trade, and Consumer Costs,'' March 31, 2014, ICF 
  International and EnSys Energy, submitted by Mr. Whitfield \1\
Press release of May 29, 2014, ``Lifting Export Restrictions on 
  U.S. Crude Oil Would Lower Gasoline Prices and Reduce U.S. 
  Petroleum Imports While Supporting Up to 964,000 Additional 
  Jobs, IHS Study Finds,'' IHS Inc., submitted by Mr. Whitfield 
  \1\
Issue brief, ``Crude Behavior: How Lifting the Export Ban Reduces 
  Gasoline Prices in the United States,'' February 2014 (revised 
  March 2014), by Stephen P.A. Brown, et al., Resources for the 
  Future, submitted by Mr. Whitfield \1\

----------
\1\ The information has been retained in committee files and also 
  is available at  http://docs.house.gov/Committee/Calendar/
  ByEvent.aspx?EventID=
  102781.


THE ENERGY POLICY AND CONSERVATION ACT OF 1975: ARE WE POSITIONING 
           AMERICA FOR SUCCESS IN AN ERA OF ENERGY ABUNDANCE?

                              ----------                              


                      THURSDAY, DECEMBER 11, 2014

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:30 a.m., in 
room 2123, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Shimkus, Pitts, 
Terry, Latta, Olson, McKinley, Gardner, Pompeo, Kinzinger, 
Griffith, Barton, Rush, McNerney, Tonko, Yarmuth, Engel, Green, 
Capps, and Barrow.
    Also present: Representatives Flores and Mullin.
    Staff present: Nick Abraham, Legislative Clerk; Charlotte 
Baker, Deputy Communications Director; Sean Bonyun, 
Communications Director; Leighton Brown, Press Assistant; 
Allison Busbee, Policy Coordinator, Energy and Power; Patrick 
Currier, Counsel, Energy and Power; Tom Hassenboehler, Chief 
Counsel, Energy and Power; Brandon Mooney, Professional Staff 
Member; Graham Pittman, Staff Assistant; Chris Sarley, Policy 
Coordinator, Environment and the Economy; Joe Banez, Democratic 
Policy Analyst; Peter Bodner, Democratic Counsel; Matt 
Connolly, Democratic Professional Staff Member; Michael Goo, 
Democratic Senior Counsel; and Caitlin Haberman, Democratic 
Professional Staff Member.
    Mr. Whitfield. I would like to call the hearing to order 
this morning. And before we get into the subject of the 
hearing, I would mention that this will be the last hearing of 
the 113th Congress for this subcommittee, and I did want to 
recognize a number of Members who are on the subcommittee and 
have been valuable Members of Congress for a number of years 
who will not be coming back.
    First, on our side of the aisle we have Ralph Hall of 
Texas. All of you know Ralph. And unfortunately, he was 
involved in a car accident right after the election and I think 
is still in the hospital.
    We have Lee Terry from the great State of Nebraska on the 
subcommittee. Dr. Bill Cassidy will be moving over to the U.S. 
Senate and Cory Gardner will be moving over to the U.S. Senate. 
But I just wanted to thank them for the many contributions that 
they have made and the great job they did representing their 
constituents.
    And then on the Democratic side, of course, the ranking 
member, Henry Waxman of California, served many years on this 
committee as chairman and as ranking member, will not be 
returning. Mr. John Dingell, who all of you know, chairman of 
this committee for many years. John Barrow of Georgia, and 
Donna Christensen of the Virgin Islands.
    So I just want to thank all of them for their many 
contributions. And with that, you can talk about them in your 
opening statement if you want to, Bobby. I think that is OK.
    But anyway, I will go on at this time and recognize myself 
for an opening statement.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    This morning's hearing we are going to be focused on the 
Energy Policy and Conservation Act of 1975. We are going to get 
a little history lesson. As many of you remember, that act 
established the price controls on domestic oil, also 
established the Strategic Petroleum Reserve, also established 
CAFE standards, and also set the prohibition on the export of 
crude oil.
    And as you know, Ronald Reagan eliminated the price 
controls when he became President. Certainly, Strategic 
Petroleum Reserve and the CAFE standards are still out there 
and have a great impact on our economy and our society.
    And the big question that we hear more and more about, 
though, is the wisdom of maintaining this prohibition on the 
export of crude oil. Of course, under the act, the President 
does have the authority to allow the export of crude oil, but 
Joe Barton and others have raised the issue about adopting 
legislation that would remove this prohibition. And just as we 
had extensive review of the impact of such a move on the export 
of natural gas, that is what we intend to do on this question 
of export of crude oil.
    So we are going to have a lot of hearings. We want to hear 
from all sides of the issue because there are a lot of 
different opinions about it. And that is why we are delighted 
to have our distinguished witnesses with us this morning to 
provide us with this historical perspective. And we will be 
having some more hearings about it, because as I said we want 
to be very thorough before we make a decision to go one way or 
the other.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    This morning's hearing will focus on the Energy Policy and 
Conservation Act of 1975 (EPCA). In particular, we will explore 
whether this very important but nearly 40-year-old statute is 
suited to deal with the Nation's changing energy landscape.
    In the years since EPCA was enacted, we have reviewed many 
of its key provisions to determine if they still made sense. 
Some, like the price controls on domestic oil, were deemed 
counterproductive and were dropped. Specifically, we learned 
that suppressing the price of American oil did nothing to lower 
the price at the pump and instead served to discourage domestic 
drilling. As a result, President Reagan eliminated these price 
controls, and we are all better off because of it.
    In contrast, other provisions in EPCA are still being 
implemented including the Strategic Petroleum Reserve and the 
Corporate Average Fuel Economy (CAFE) standards for cars and 
trucks.
    Among the provisions still in place are the restrictions on 
exports of crude oil. In retrospect, it is easy to understand 
why these restrictions were a part of the 1975 law. At the 
time, America was facing declining domestic oil output and 
increasing dependence on imports from nations hostile to our 
interests. And at the same time, the Nation's demand for 
gasoline was on the rise. Export restrictions were also 
necessary to avoid circumventing the price controls then in 
effect.
    So, despite the fact that America usually favors free 
trade, we decided to make an exception when it comes to oil. 
And almost 40 years later, this policy remains in place.
    But as we all know, the trends behind the oil export 
restrictions have dramatically reversed themselves in recent 
years. Thanks to advances in hydraulic fracturing and 
directional drilling, domestic oil production has been sharply 
rising, and the Energy Information Administration expects 
continued increases in the years ahead. Meanwhile, oil imports 
have declined from a peak of 60 percent to around 30 percent 
today, and EIA expects the net import share to decline to 21 
percent in 2015, all while gasoline usage has begun what many 
predict to be a long-term decline. Overall, most of the 
original justifications for the oil export restrictions are 
disappearing.
    In fact, America may soon be producing more oil than it can 
handle. It is important to note that not all oil is the same, 
and in fact there are distinctly different types. The largest 
increases in American production have been the lighter types of 
liquid hydrocarbons, which are not what most U.S. refineries 
are set up to process. This light oil is better suited to many 
foreign refineries, and for that reason there is a strong 
demand for American oil around the world.
    This morning's hearing lays the foundation for our 
discussion of oil exports with a thorough historical review of 
current law and its origins. There are a number of questions 
that need to be answered, but first we need a better 
understanding of how we arrived where we are today.
    As with our discussion of natural gas exports, we will 
conduct a thorough analysis and give all points of view the 
opportunity to be heard before we consider whether to take 
action.

    Mr. Whitfield. And with that, I yield back the balance of 
my time, and I recognize the gentleman from Illinois, Mr. Rush, 
for his opening statement.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman. I, too, want 
to thank and congratulate and commend those departing Members 
from this subcommittee. They were all very, very highly 
esteemed and contributed mightily to the work of the 
subcommittee and the work on the full committee, work of the 
Congress, and certainly to the benefit of all the citizens of 
our great Nation. And I just want to take my hat off to them 
and wish them good biddings and bright futures and many 
continued blessings as they move forward in their lives.
    I want to take particularly time out to allow me a 
statement to bid farewell to Mr. Waxman, who has been the 
former chairman on the full committee and been an extraordinary 
leader on environmental issues and other issues, and 
particularly as it relates to consumer protection and 
protection of the environment against the harsh realities that 
we are confronted with today, climate change and many, many 
others.
    And I want to also take a moment out of my opening 
statement to commend the one man who has probably affected my 
life more than any other legislator in my service in the 
Congress, and that is John Dingell. John Dingell has not only 
been a true friend of mine and worked with me, helped advise 
me, but John Dingell is the kind of legislator, I call him, and 
a lot of others call him, the Lion of the House. You can learn 
just by watching John Dingell. He doesn't have to be doing 
anything or saying anything especially to you. You just learn 
how he operates and watch him from afar, and you will learn 
more than most legislators learn in a lifetime just watching 
the example of John Dingell, and his impact on this committee 
and on this Congress will never fade.
    And so, Mr. Chairman, I want to thank all those departing 
members for their contribution.
    I want to thank you, Mr. Chairman, for holding this 
important hearing. As we enter into an era of the new American 
energy renaissance that we are experiencing, it is important to 
better understand all of the implications that are associated 
with exporting crude oil due to the recent surge in domestic 
production. I think it is entirely appropriate for this 
subcommittee to revisit the Energy Policy and Conservation Act 
of 1975, which restricts the export of domestically produced 
crude oil, as conditions today have shifted dramatically from 
the 1970s when the bill was first enacted.
    What is less clear, however, is how long this current 
increase in oil production will last and what type of impact 
will lifting the ban--permanently, I might add--have here on 
domestic consumers.
    Mr. Chairman, I come to this issue with truly an open mind, 
and I look forward to hearing from today's panel of experts. To 
be more specific, I am looking for answers regarding how 
exporting this important commodity would impact American 
families and the American economy in general in regards to 
domestic gas prices, consumers goods, manufacturing, and jobs.
    Mr. Chairman, I am going to close my mouth and open my mind 
now, and I want to thank you. I was going to yield my time to 
Mr. Green, who asked for it, but I will yield my time back, Mr. 
Chairman. Thank you so very much.
    Mr. Whitfield. Thank you very much.
    Is there anyone on our side of the aisle that--OK. Joe, you 
are recognized for 5 minutes. They hadn't instructed me who all 
was speaking today. So I am glad to recognize you for 5 
minutes.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Well, Mr. Chairman, if you need some of that 
time, I can give some of it back. I mean, I do want to talk for 
a couple of minutes.
    Well, thank you, Mr. Chairman. We have a number of Members 
on this committee that probably weren't alive when we passed 
the Energy Policy and Conservation Act of 1975. In that same 
time period, I believe in that act, we put into place a ban on 
the export of crude oil from the United States.
    Now, in the mid-1970s, Mr. Chairman, the OPEC oil cartel 
had had an oil embargo against the United States and Western 
Europe, and it devastated our economy. I can remember living in 
Crockett, Texas, and I could buy 10 gallons of gas on odd days. 
I could go to the gas station and buy 10 gallons of gas on odd 
days based on the last digit in my license plate. That was not 
fun. There were gas lines. There were plant closings. We were 
producing, I can't remember exactly, but we were probably 
producing 5 or 6 million barrels of oil a day, but we were 
consuming in the neighborhood of 15 to 16, I think.
    So putting a ban on crude oil exports at that time made 
some sense, to husband that resource as a strategic commodity. 
Well, what is the situation today, Mr. Chairman? The United 
States is the number one oil producer on a daily basis in the 
world. Today we will produce in the neighborhood of 9.5 million 
barrels of oil in the United States of America. If you combine 
the oil that we import from Canada and Mexico, our NAFTA 
partners, you can put another 2 million barrels a day, maybe 
even 3.
    Our consumption is down. Our production is up. We have a 
surplus on the world market today, Mr. Chairman, of 2 to 3 
million barrels a day. And the result is that instead of $110-
barrel oil, we have, I think yesterday, West Texas Intermediate 
closed at about $63 a barrel.
    That is a good thing for the American consumer, Mr. 
Chairman. It is a good thing that you are holding this hearing. 
And I would hope in the new Congress we take a look at the bill 
that I have introduced this week, H.R. 5814. It is a page-and-
a-half bill. It is very simple. It repeals the ban on crude oil 
exports, and it requires a study reported to this committee of 
what we do with the Strategic Petroleum Reserve.
    It is a different world today, Mr. Chairman, and when you 
are number one you use that status. If we allow our producers 
to export the crude oil that can't be consumed here in the 
United States or refined here in the United States, we put 
pressure on OPEC, we put pressure on Russia, we create jobs 
here at home, and we make sure that that world price which sets 
the crude oil price is based on real supply and demand, and 
that is a good thing for everybody.
    So I am extremely pleased that you are holding this 
hearing. I would ask you also to look at such anachronisms as 
the Renewable Fuel Standard, and I know how contentious this is 
on our Gulf Coast States. But I think we should also look at 
the Jones Act, and as I said earlier, the Strategic Petroleum 
Reserve.
    With that, Mr. Chairman, I still have about a minute, and I 
would be happy to yield to whoever you wish me to.
    Mr. Whitfield. Does anyone seek this additional minute?
    OK. The gentleman yields back. At this time, Mr. Yarmuth, 
do you or Ms. Capps want to make a comment? Ms. Capps? Mr. 
Barrow? We have already thanked you for your service, John, so 
thanks.
    Mr. Barrow. That would be John Barrow, the late.
    Mr. Whitfield. OK. Thank you.
    Well, that concludes the opening statement. And as I said, 
we have a distinguished panel of witnesses.
    And I am just going to introduce you as I introduce you to 
make your opening statement.
    So first opening statement will be by Adam Sieminski, who 
is certainly no stranger to this panel.
    And we welcome you back, Mr. Administrator, with the U.S. 
Energy Information Administration, and you are recognized for 5 
minutes for your opening statement.

STATEMENTS OF ADAM SIEMINSKI, ADMINISTRATOR, ENERGY INFORMATION 
   ADMINISTRATION, DEPARTMENT OF ENERGY; LUCIAN PUGLIARESI, 
PRESIDENT, ENERGY POLICY RESEARCH FOUNDATION, INC.; CHARLES K. 
    EBINGER, SENIOR FELLOW, ENERGY SECURITY INITIATIVE, THE 
BROOKINGS INSTITUTION; AND DEBORAH GORDON, DIRECTOR, ENERGY AND 
  CLIMATE PROGRAM, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE

                  STATEMENT OF ADAM SIEMINSKI

    Mr. Sieminski. Chairman Whitfield, Congressman Rush, 
members of the subcommittee, thank you for the opportunity to 
be here today to discuss the history of the U.S. ban on crude 
oil exports and to contrast the market conditions at the time 
of the ban with those today.
    The U.S. Energy Information Administration, EIA, is a 
statistical and analytical agency at the Department of Energy. 
By law, EIA's data, analyses, and forecasts are independent of 
approval by any other officer or employee of the U.S. 
Government, so the views expressed here should not be construed 
as representing those of the Department of Energy or any other 
Federal agency.
    At the time of the passage of the Energy Policy and 
Conservation Act in 1975, U.S. net imports of petroleum were 
rising rapidly due to declining domestic production while 
growth in consumption was rocketing up. U.S. net oil imports 
more than doubled between 1970 and 1978, from 3.2 to 8.6 
million barrels per day, driving imports as a share of total 
consumption from 22 percent to 47 percent.
    Internationally, when OPEC declared an oil embargo against 
the United States in 1973, 65 percent of rising U.S. crude oil 
imports were coming from OPEC countries. To protect consumers 
from price shocks, the U.S. policy response at the time was to 
limit the price for oil produced from U.S. wells existing in 
1972 while allowing new oil to sell at world market prices. 
Limiting exports prevented circumvention of these domestic 
price controls; however, the separation of new and old oil 
pricing did not really stem the production declines as oil 
production in the lower 48 States fell some 23 percent between 
1973 and 1980.G
    By 1981, it was clear that the policy wasn't working, and 
the price and allocation controls were removed. That is on 
figure 2 of my testimony. For nearly 3 decades after the 
removal of price controls, declining production, coupled with 
rising demand, pushed the U.S. towards ever-increasing imports 
until net imports as a share of total U.S. petroleum 
consumption peaked at 60 percent in 2005.
    Restrictions on crude oil exports remained in place, but 
limited modifications from time to time allowed exports to 
Canada, exports of production from Alaska that went through the 
Trans-Alaska Pipeline, and certain California heavy crude oil. 
Since 2008, however, these conditions have been reversed, 
partly as a result of the growth in domestic supply, and also 
as a result of swelling demand. U.S. domestic crude oil 
production has increased by 3.4 million barrels a day, some 68 
percent, to its highest level since 1986.
    Meanwhile, between 2008 and 2014--this year, we are 
estimating for the full year--total U.S. liquid fuel 
consumption fell from 19.5 million barrels a day to 18.9 
million barrels a day. The U.S. went from being the world's 
largest net importer to becoming a big net exporter of 
petroleum products. In 2014, net imports as a share of total 
U.S. petroleum consumption is now down to below 30 percent, 
close to 25.
    The dramatic production growth in the U.S. midcontinent and 
Canada has resulted in logistical constraints that are 
reflected in a wide variation of prices for domestically 
produced crudes. In 2008, benchmark crude, West Texas 
Intermediate, or WTI, sold for a premium of $2.73, a premium 
higher than Brent that comes from the North Sea.
    In 2014, through October, WTI has been trading at a 
discount of over $6 a barrel to Brent crude oil. EIA's latest 
short-term energy outlook forecasts recent trends in U.S. 
petroleum markets will continue into 2015 with domestic crude 
oil production averaging 9.4 million barrels a day, 10 percent 
above the 2014 level.
    Gasoline demand and net imports as a share of domestic 
consumption could be 21 percent as recent dramatic declines in 
crude prices may affect our outlook, but more so, I think, in 
the longer term rather than in the very short term.
    So petroleum market conditions today are very different 
than they were in the 1970s when the ban on crude oil exports 
was enacted. Key trends in U.S. oil markets have reversed. 
Then, demand was rising rapidly and production was falling. 
Now, production is rising rapidly and demand is falling. U.S. 
crude production may soon hit an all-time high, surpassing the 
previous record set in 1970. Gasoline demand is down from its 
peak and is likely to decline even more as the vehicle fleet 
becomes more efficient.
    In addition to this trend reversal, international oil 
production is less concentrated. OPEC's share of production is 
down from 53 percent in 1973 to about 35 percent today. The 
existence of oil contracts on the futures markets, the 
development of benchmark crude oil pricing, and the 
availability of basic data from EIA, created by Congress in 
1977, have all brought greater transparency to the oil markets.
    As described in my written statement, EIA is actively 
pursuing a number of important initiatives related to the 
timeliness and detail of oil market data.
    I would like to thank you for the opportunity to testify 
here today, and I hope to be able to answer your questions. 
Thank you.
    [The prepared statement of Mr. Sieminski follows:]            
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Thank you very much.
    And our next witness is Mr. Lou Pugliaresi, who is the 
president of the Energy Policy Research Foundation.
    And you are recognized for 5 minutes.

                 STATEMENT OF LUCIAN PUGLIARESI

    Mr. Pugliaresi. Thank you. Thank you, Mr. Chairman, and 
thank you, members.
    Mr. Whitfield. Be sure and turn your microphone on.
    Mr. Pugliaresi. Yes, I think we have some slides. The next 
slide. So what I would like to do is sort of put a little bit 
of this in context, and the first thing I think we ought to 
talk about a little bit is what is energy security.
    So we tend to think about energy security as a 
concentration of low-cost reserves in unstable parts of the 
world which tend to provide two risks to the U.S. One, they can 
restrict output and charge higher prices that would prevail in 
more competitive environments. And two, some of these guys 
could go out of business with more terrorism, even embargoes 
also imposing price spike and large costs on the national 
economy.
    So one of the best ways to deal with this threat or this 
problem is to have a production platform in a stable part of 
the world, which turns out to be North America. And if you look 
at what has happened here in this slide, you can see that, if 
you take the U.S. and Canada together, which Congressman Barton 
just spoke about, we have had a remarkable increase in 
production. And it is very important to look upon this through 
a North American lens because it is this North American lens 
that is so stable, and it is this rapid runup in production, 
particularly if you include natural gas liquids, that has made 
a remarkable change.
    Next slide.
    Now, you can see prices have come down, but I don't think 
we quite understand what this means. And I have testified here 
many times where Members have said, well, you know, we know, 
Mr. Pugliaresi, if we open up ANWR, if we do X or Y, we will 
get more production, but OPEC will just cut production, the 
price won't come down. Well, the price has come down, and this 
price decrease is an enormous benefit to the world economy. The 
world consuming centers are going to get a savings of 
approximately $1.3 trillion next year if these prices persist. 
The American driver who spends about $3,000 a year in gasoline 
is going to get an $800 savings. This is enormous boom and 
benefit to the national economy, to the world economy, and it 
is being delivered to us through these production gains we are 
having in this stable North American platform.
    And we want to preserve that platform. Right? We want to 
make the distribution of crude oil efficient. That is why we 
need Keystone. We want to have good regulations. We want to 
open up the Federal lands a lot more. You know, all this 
production we have seen has come from Federal lands.
    Next slide.
    This shows you the permit activity for oil and gas drilling 
permits just for 90 days prior to the--December 1st, 2014. Of 
course, we are a little concerned that these lower oil prices--
and we are getting some evidence that the permit activity is 
coming off.
    And I think that is a good reason to have this hearing. We 
need to look at our whole regulatory structure and see, ``OK. 
What do we--what do we need to do to make it as efficient as 
possible?''
    Because, once again, we want this platform, the upstream, 
the midstream, and the downstream--we want it to perform as 
best as possible, and we are concerned about this.
    But I must say we met with some of the world's best 
extraction technologists in Houston the last couple of days. 
There are a lot of exciting things going on out there. As long 
as we have an open system, I think we are going to find ways to 
drive down these extraction costs. I mean, there are very 
interesting things happening out there.
    Next slide.
    This is our estimate of--in a sort of $80 environment of 
what we think the U.S. could do, at least in the near term, by 
API gravity. You see we are producing a lot of light sweet 
crude, and we are not sure how much this is going to be 
disturbed by these lower oil price environment. Probably going 
to see some reduction there. But, you know, the outlook is 
still very positive.
    Next slide.
    I want to leave you with just a couple of things here. One, 
if you look at this slide, it is quite interesting. 
Traditionally, conventional oil had a very modest decline rate, 
maybe 5 percent, and a pretty high recovery factor, as much as 
50 percent.
    What I don't think we understand is that, even though we 
have this very high decline rate in these unconventional 
resources we have now, but we have to keep drilling, our 
recovery factor is quite small. Small improvements in this 
recovery factor are going to make a big difference. That is why 
we want--you know, we want to see this technology continue to 
progress.
    And, you know, if you look at this whole North American 
success story and we get back to EPCA, keep in mind that we 
should have a lot of humility about how we proceed. We want you 
to--we had mandates on ethanol. We had price--we had 6-month 
oil embargo, and then we had 10 years of price controls. We had 
a Fuel Use Act which prevented the use of natural gas.
    So as we go forward, I think one of the things I want the 
members to think about is: What are the benefits of an open 
system? You know, William Pratt, the famous--Wallace Pratt, the 
famous geologist, said in the 1930s, ``Oil is first discovered 
in the mind of man.'' And I think that we want to keep that 
intellectual capacity going here in the U.S.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Pugliaresi follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
            
    Mr. Whitfield. Thank you very much.
    And our next witness is Dr. Charles Ebinger, who is a 
senior fellow at the Brookings Institution. Thank you for being 
with us. And you are recognized for 5 minutes.

                STATEMENT OF CHARLES K. EBINGER

    Mr. Ebinger. Thank you, Mr. Chairman, and thank you, 
Congressman Rush, for inviting me to testify this morning on 
the origins of the crude oil export ban, which ironically was 
enacted nearly 40 years ago.
    Given the profound changes that have occurred in 
unconventional oil and gas production that we have already 
heard about over the last 6 years, I think it is important to 
look back and remind ourselves how our energy situation has 
evolved since 1975.
    In the years prior to the OPEC oil embargo, the chief 
issues dominating energy policy in the United States were 
debated over the future of nuclear power, especially whether we 
should recycle plutonium and develop the breeder reactor, price 
controls on domestic oil and natural gas, which, I remind you, 
were enacted by President Nixon back in 1971 out of concern 
that inflation had reached the dangerous levels of 4.4 percent, 
and various programs, both a voluntary oil import program and a 
mandatory oil import program, to hold down oil imports as a 
protection for our domestic industry.
    In reviewing this history--and this is a critical point--
what stands out is just as is the case today. Most energy 
issues were discussed in isolation from one another.
    On the geopolitical front, the early 1970s saw momentous 
changes in the Middle East and North Africa as King Idris in 
Libya was deposed by Colonel Gaddafi, and in response to a 
decline in real oil prices, the major oil-producing countries 
mounted a unified campaign against the petroleum companies to 
extract more of the economic rent from their oil production.
    Under two major agreements negotiated in Tehran and Tripoli 
between the international oil companies and OPEC, the OPEC, 
concerned about inflation and a general sense that they were 
not being treated fairly by the international oil companies, 
demanded a major increase in the price of their oil.
    After these two agreements, OPEC was able to introduce an 
escalation clause in its contracts that it believed would 
protect their members from inflation. This proved, however, not 
to be the case.
    But what helped OPEC was--as Mr. Sieminski noted, was the 
surge in demand worldwide not only in the United States, but in 
Western Europe and Japan, which allowed OPEC to, every time a 
contract was up for renegotiation, demand further upward price 
revisions.
    Mr. Chairman, it is worth noting that the global market 
conditions in the early 1970s could not have been more 
different than they are today, as we heard from Congressman 
Barton. Demand for oil throughout the industrialized world was 
skyrocketing.
    In the United States, domestic production had peaked in 
1970, leading a Cabinet task force to recommend the gradual 
elimination of the quotas under the mandatory oil import 
program.
    In retrospect, given the changed circumstances confronting 
the U.S., it is remarkable that this recommendation did not 
receive more salience from the Congress, despite the fact that 
U.S. oil consumption was skyrocketing, domestic production was 
peaking, and oil imports were up to nearly 30 percent of U.S. 
consumption on the eve of the oil embargo.
    The U.S. could not have been more ill-prepared for the 
embargo. In response, one of the primary actions taken was 
enactment of complex regulatory procedures for oil and gas 
prices as well as an incredibly complex system of allocation 
controls leading to gasoline lines in the districts and surplus 
supplies in Potomac.
    Unfortunately, they were so--these were so ill-conceived 
that they accentuated the impact of the crisis and exacerbated 
gasoline shortages, causing long lines for angry--angry 
motorists buying regulated volumes of fuel. And I am glad the 
Congressman got 10 gallons because, as a graduate student, I 
only got 5 gallons in New England.
    In response to the crisis, President Nixon launched Project 
Independence, designed to eliminate oil imports by 1980, when 
comprising a host of initiatives, including the Energy Policy 
and Conservation Act.
    Under EPCA, the President was granted the authority to 
restrict exports of coal, petroleum products, natural gas, 
petrochemical feedstocks, and supplies of materials and 
equipment for the exploration, production, refining, and 
transportation of energy.
    EPCA also authorized the President to exempt crude oil and 
natural gas exports from such restrictions where doing so was 
deemed by the President to be in the national interest.
    As the act today only relates to crude oil, the main 
exceptions that have been made are predominantly for shipments 
to our neighbors in Canada and Mexico in recognition of our 
historic trading relationships. Other exemptions to the ban are 
noted in detail in my formal testimony.
    Today, through modifications to EPCA, the U.S. allows 
unrestricted exports of all fuels except crude oil, and natural 
gas has to go through a cumbersome regulatory procedure, but it 
is not banned. The only expressed ban that remains today is on 
crude oil.
    In reviewing the history since the early 1970s, it is 
apparent that, whenever the U.S. Government has tried to favor 
a particular fuel, absent market realties, there have been 
unintended consequences which have been deleterious to the U.S. 
economy and to our natural energy security.
    Controls on natural gas prices led to the failure to 
develop the Alaska Natural Gas Transportation system, creating 
massive natural gas shortages in my home territory in the 
industrial midwest in the winter of 1977-1978 with devastating 
economic impact, some of which remains to this day.
    The ban on using oil and gas in industrial boilers and 
power generation led to a major switch away from gas and oil 
towards coal. This rush towards coal has led to scores of aging 
coal facilities that now have to be replaced as part of our 
national environmental policy and our international climate 
policy.
    Mr. Chairman, in conclusion, it is evident that the U.S. 
energy situation today is far different from what it was when 
EPCA was enacted. With crude oil production continuing to rise, 
it would be detrimental to U.S. energy and economic policy to 
keep the ban on crude oil exports.
    Keeping the ban and attempting to manipulate policy to 
control a globally traded commodities with hopes that the U.S. 
Oil boom will lead to energy independence is a fallacy as the 
U.S. is part of the global market and must, therefore, 
participate in it.
    Lifting the ban will generate paramount foreign policy 
benefits, it will increase U.S. GDP--and Brookings did a major 
study on this issue that is on our Web site, if anyone cares to 
look at it--and it will reduce unemployment, all of which will 
be foregone if the ban remains in place.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Ebinger follows:]
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    Mr. Whitfield. Thank you.
    And our next witness is Deborah Gordon, who is the Director 
at the Carnegie Endowment for International Peace.
    And you are recognized for 5 minutes.

                  STATEMENT OF DEBORAH GORDON

    Ms. Gordon. Subcommittee Chairman Whitfield, Ranking Member 
Rush, distinguished members of the subcommittee, thank you for 
the opportunity to testify today about EPCA in an era of oil 
transition.
    In my remarks, I will discuss three key points: First, the 
need to understand the changing conditions influencing today's 
crude oil market; second, the need for better information about 
the makeup and specifications of U.S. oils; and, lastly, the 
need to deal with the environmental consequences from an 
unconditional lifting of the oil export ban. I explore these 
issues in greater detail in my written testimony, which I 
submitted for the record.
    The bottom line is that oils are changing and a more 
complex array of hydrocarbon resource is replacing conventional 
oil. Public and private stakeholders need to understand the 
environmental impacts inherent to different oils. The best way 
to position America for success amid energy abundance is to 
generate information necessary to make wise decisions among 
many oil options.
    The truth is we know precious little about these new 
resources. The Nation needs reliable, consistent, detailed, 
open-source data about composition and operational elements of 
U.S. oils. Significant information gaps have accompanied the 
Nation's oil--increased oil production.
    Although EPCA was adopted in response to a set of--a 
specific set of oil supply problems, it can serve as a template 
for addressing some of the shortcomings that exist today as 
America struggles to manage the economic, geopolitical, and 
climate impacts of its new oil bounty.
    It will be important for policymakers to think 
comprehensively about the full range of current oil issues. 
Several EPCA provisions merit careful review and consideration 
and possible updating: One, widely expanding oil data 
collection, making this information publicly available; two, 
increasing the heavy-duty vehicle efficiency standards for 
trucks and marine vessels that move the oil and petroleum 
product that we are trying to consume less of at home; and, 
three, revisiting oil accounting practices so that the SEC is 
fully informed about oils that are on tap to bolster U.S. 
markets.
    America is one of the first in line to win the 
unconventional oil lottery, but despite newfound energy 
resources at home, the U.S. exists in an increasingly oil 
interdependent world. As such, if U.S. policymakers enact 
effective safeguards to minimize unintended consequences, 
America will be better positioned to chart a path that others 
can follow.
    Two questions require attention.
    First, do policymakers and the public have sufficient 
information about America's oil? Unfortunately, they do not. 
Ironically, there is more detailed open-source data about OPEC 
crudes than the oils in the Bakken, Permian, and Eagle Ford.
    In seeking to obtain and verify these needed oil data, we 
have encountered several obstacles, from data inconsistencies, 
to withheld data, to Government limitations on expanding oil 
reporting.
    I would be happy to elaborate on any of these issues. The 
overarching concern, however, is that oil markets cannot 
function efficiently without transparent high-quality 
information.
    Question 2. What are the environmental risks these new oils 
pose? The Carnegie Endowment is developing an oil-climate index 
that compares global oils with one another in terms of total 
greenhouse gas impacts. Together with Stanford University and 
the University of Calgary, we are modeling the entire oil value 
chain, from where the oil comes out of the ground through to 
how the products are used.
    Our preliminary findings, based on 28 sample oils, global 
oils, are that oils' greenhouse gas footprints vary by at least 
80 percent from one another. In other words, replacing a high 
greenhouse gas oil with a lower one could almost halve the 
impacts of greenhouse gases for every barrel of oil.
    There are several categories of higher emissions from oils. 
These include gassy oils, like the Bakken or Nigeria, where gas 
associated with oil is flared or burned instead of separated 
and sold; heavy oils, those that use more heat, steam, hydrogen 
through their value chains to yield more bottom-of-the-barrel 
products like petroleum coke, a coal substitute; watery oils, 
which are interesting, like those in California's San Joaquin 
Valley where it takes a tremendous amount of energy to lift as 
much as 50 barrels of water for every one barrel of oil that 
you produce; and extreme oils like those in the Gulf of Mexico 
that are miles below the surface or those in the boreal peat 
bogs in Alberta, where carbon is naturally sequestered.
    As one of the world's fastest-growing oil producers, the 
U.S. has the opportunity and the responsibility to be a global 
leader in the energy sector. A balanced energy policy informed 
by oil transparency must guide energy decisionmaking in ways 
that satisfy U.S. consumers, strengthen the American economy, 
protect the climate, and enhance national and global security.
    In closing, a national discussion, one informed by reliable 
open-source data about the composition, quality, and 
environmental profile of new oils will be key to making 
effective and sustainable decisions.
    Thank you.
    [The prepared statement of Ms. Gordon follows:]
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    Mr. Whitfield. Thank you, Ms. Gordon.
    And thank all of you for your testimony.
    At this time I will recognize myself for questions, and 
then we will give every other member the opportunity as well.
    Just from a practical aspect here, anytime you start 
talking about crude oil, most of the American people think 
about gasoline prices. That is why it is more volatile, I 
think, when you talk about exporting crude oil than certainly 
natural gas or something like that.
    Do any of you have an opinion on, if you were at a Rotary 
Club, how you would explain that exporting additional crude oil 
would not necessarily raise gasoline prices?
    Mr. Sieminski.
    Mr. Sieminski. Mr. Chairman, it is always a challenge. 
Usually, at those Rotary Club functions, I get asked why 
gasoline prices are so high. Lately I haven't gotten that 
question.
    Mr. Whitfield. Right.
    Mr. Sieminski. EIA has tried to examine your question from 
the standpoint of how gasoline prices are set in the U.S. 
markets and what gasoline prices relate to. And what we found 
in a study that we published just a short while ago was that 
these two benchmark crudes that I talked about, the one in the 
U.S., WTI, West Texas, and Brent in the international markets, 
that gasoline prices historically tend to be much more closely 
related to Brent crude oil prices than to the domestic 
benchmark.
    The second thing that we found was that U.S. gasoline 
prices tend to be more closely related to gasoline prices in 
markets like Singapore and Rotterdam in the global markets than 
to comparing, let's say, Chicago prices with prices in the Gulf 
Coast.
    The conclusion that one would draw from that is that 
gasoline prices, because we are exporting and importing so much 
gasoline, are really set in the global markets--gasoline prices 
in the U.S. tend to reflect that global market--and that, if 
exports of crude oil resulted in higher prices for West Texas 
Intermediate or crudes that are benchmarked to that, it would 
not have much impact on gasoline prices.
    Mr. Whitfield. And I am glad you mentioned we are already 
exporting gasoline anyway. So we are talking about----
    Mr. Sieminski. Quite a bit, actually.
    Mr. Whitfield. Quite a bit.
    Did you have a comment, Mr. Pugliaresi.
    Mr. Pugliaresi. I think, you know, how I would explain is 
that, if you want to constrain volatility in the market, if you 
want to constrain rising gasoline prices, you should promote a 
very stable and growing production of crude oil in North 
America.
    Mr. Whitfield. Right.
    Mr. Pugliaresi. We have evidence that this is having a big 
effect. And that is the answer. We are--as Adam said, we are 
well integrated into the world oil market. The only thing we 
can--well, what we can do is have a stable growing production 
of crude oil outside of these more volatile areas.
    Mr. Whitfield. Right.
    And do you have a comment, Dr. Ebinger?
    Mr. Ebinger. If I could just add, Mr. Chairman, I think an 
easy way to look at this is, since, as Mr. Sieminski said, 
gasoline prices are predominantly set in the international 
market, if we have a set volume of crude oil in that market and 
all of a sudden we put more oil into that market, adding to 
supply while demand stays relatively constant, on the basis of 
kind of fundamental economics--more supply, constant demand--
prices should come down and then refiners buying that oil 
around the world will--in theory at least, if they wish to be 
competitive, will lower their product--petroleum product 
prices, including gasoline, and, hopefully, for New England, 
home heating fuel. I think that is the way I find sometimes 
trying to explain it, seems to have some say in it.
    Mr. Whitfield. Ms. Gordon, do you have a comment?
    Ms. Gordon. Yes. I don't know that it would be easy for 
consumers to understand this. But because oils are so 
different, the oils that we are largely now set to refine, the 
heavier oils, don't preferentially make more gasoline. They 
make more diesel.
    So the oils that we are now looking to export, the light 
tight oils, those do. They are lighter oils. They go through 
hydroskimming refineries. They make more gasoline.
    So we might be getting ready to export the perfect oil to 
make more gasoline in order to keep and refine the oil that 
makes more diesel.
    It is not a consumer issue then because our consuming 
public doesn't use diesel. They use gasoline. So it gets a 
little bit complicated here.
    And the big question that Lou raised was volatility. I 
think that consumers are going to need to understand--in the 
future, possibly not be explained high prices, but volatile 
prices.
    And volatility will really hurt America because we are 
equal, in large parts, consumer and producer of oil and 
product, that, if the markets become very volatile, we are 
going the hurt more than anyone else.
    Mr. Whitfield. OK. Well, my time is expired.
    Mr. Rush, you are recognized for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman.
    I share the optimism of the panel, but there are some 
cautionary items or cautionary indications that I want to at 
least consider for the record.
    Ms. Gordon, what type of impact would lifting the crude oil 
ban have on climate change? Are these precautions or conditions 
that Congress should consider if we were to lift the ban on 
crude oil altogether?
    Ms. Gordon. It is a great question. And the reality is, as 
my testimony stated, we just don't know enough about these 
light tight oils that are coming out of America.
    What we do know is, like I said, they are lighter oils. Our 
refineries are set to run much heavier crudes. Those heavier 
crudes need much more heat. They produce more bottom-of-the-
barrel products. So the heavier oils are generally more 
greenhouse gas-intensive.
    So we are setting ourselves up to be a refiner of higher 
greenhouse gas oils as we export possibly, if they are not 
flared, lower greenhouse gas oils to others, which puts a 
bigger burden on America to control--in terms of global climate 
agreements, control what we are doing when we are handing off 
our oils.
    So I think that there are real questions from a climate 
perspective, what are these oils and what are we giving away.
    Mr. Rush. Is there any other panelists who would like to 
comment on this? Are there any other panelists that would like 
to comment on this?
    Well, let me ask you a question. Mr. Ebinger, in your 
written testimony, you stated that lifting the ban on crude oil 
exports would boost economic growth, wages, employment, trade, 
and, overall, the economic welfare of the Nation.
    What, in your opinion, are potential downsides to removing 
the ban?
    Mr. Ebinger. I don't believe, Congressman, that there are 
sizeable downsides to lifting the ban, with the possible 
exception of what Ms. Gordon said, that we don't know 
completely the impact on greenhouse gases.
    In a major study that Brookings recently did in association 
with the economic consulting firm NERA, we have some very 
detailed data in there on what we think will happen to 
employment, overall economic welfare for the Nation, and the 
numbers in various scenarios are almost constantly positive.
    And our study has been pretty much seconded or maybe a 
couple came out before us, but there have been now five or six 
major studies done by IFC, done by a whole--some by the 
Government, that have all concluded the benefits far outweigh 
any potential costs. So I guess I will leave it at that.
    Mr. Rush. Well, I want to ask the other three panelists: Do 
you have any comments regarding the economic impact on lifting 
the ban?
    Mr. Pugliaresi. So I think you want--whenever we go to a 
free trade alternative--which, you know, I think everybody here 
has a lot of training in economics. No one is going to be 
against free trade. We think it is a good thing and it is going 
to make the economy more efficient.
    But there will be dislocations. I think some sectors--some 
segments of the U.S. refining industry, particularly if we have 
this high production scenario, will have--you know, will find 
themselves in a less, you know, economically advantaged 
position.
    However, we have a very complex and advanced refining 
sector in the United States. The capacity to refine very 
complex kinds of crudes are there. I think we want to--you 
know, as we go--if we go to lifting the ban on crude oil, we 
want to look and make sure, ``OK. Are we burdening the 
downstream sector with kind of unnecessary regulations? What is 
RFS doing? What are ozone regulations doing? What is the permit 
doing?''
    In other words, you know, also, as Congressman Barton 
raised, maybe we need to look at some--some kinds of 
adjustments in the Jones Act. That is very tough. I understand. 
But, you know, there will be adjustments. But, on balance, the 
economy will be better off.
    I think, in the short term, the refining industry 
probably--you know, probably can handle what is going on right 
now. It is really a more longer term problem.
    But I also think that, you know, probably immediately we 
should look--look very closely at the condensate issue, which 
is starting to cause a lot of problems in Eagle Ford.
    Mr. Sieminski. Congressman Rush, let me just add that the 
reason that the U.S. is exporting gasoline from the Gulf Coast 
is that we really have a surplus of gasoline. Domestic demand 
for gasoline has been declining and is likely to continue to go 
down as autos become more efficient.
    And, in a sense, what refiners are doing is exporting the 
surplus product so that they can more efficiently fill the 
demand for other products in the U.S. market that are more 
valuable. So the export of gasoline may actually be helping 
keep overall product prices for U.S. consumers down.
    Mr. Rush. I want to thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. At this time I recognize the gentleman from 
Texas, Mr. Barton, for 5 minutes.
    Mr. Barton. Thank you.
    I am just looking around the dais here, Mr. Chairman.
    First of all, we want to welcome Mr. Flores. We see he is 
here. He is a new number of the committee. We are glad to have 
him here.
    We have got Mr. Bud Albright Bratta in the audience. He 
used to be a staffer in the committee. We are glad to have him 
here.
    Mr. Whitfield. We got Mr. Mullin, too, here.
    Mr. Barton. I didn't see him. From Oklahoma. Glad to have 
him here.
    I see Mr. Barrow over there. He is a member who is not 
going to be here next year. His State is the Peach State.
    Do we have a ban on exports of peaches? Yes or no?
    OK. We got Mr. McKinley up here, who is the Coal State.
    Do we have a ban on the export of coal? No.
    We got Ms. Capps from California.
    Do we have a ban on the export of movies? I don't think so.
    We have got Mr. Pompeo and Mr. Terry from the Corn States.
    Do we have a ban on the export of corn? No.
    Mr. Whitfield. We are exporting bourbon, too.
    Mr. Barton. I was saving that for last, Mr. Chairman.
    My point is that there are--in a free market economy like 
the United States, there are almost no commodities or products 
that we have a ban on. We are the free market nation in the 
world.
    Now, as has been pointed out, in the 1970s, the OPEC cartel 
banned exports of crude oil to the United States and we 
retaliated by creating the Strategic Petroleum Reserve and also 
requiring that no crude oil, with few exceptions, could be 
exported from the United States. That made some economic sense 
and some strategic sense in the 1970s, but this isn't the 
1970s.
    Now, the key question--or one of the key questions the 
chairman of the subcommittee has already asked, you know: What 
would happen if we repealed the ban? What would happen to 
domestic gasoline prices? I haven't seen any study that says 
they would go up.
    And, you know, the reverse question would be: What would 
happen if we don't? What happens to domestic oil production in 
the near term, in the mid term, in the long term if we keep the 
ban in place?
    Now, the key issue there is the market for domestic crude 
oil. U.S. refinery capacity, I think, is around 12 million 
barrels a day.
    Is that correct, Mr. Sieminski?
    Mr. Sieminski. If you add in all of the other things. 
Domestic crude oil is getting close to 9 million barrels a day, 
and you get to 12 by adding in biofuels and----
    Mr. Barton. No. I am asking what the refinery capacity is, 
the U.S.----
    Mr. Sieminski. Oh. Over 16 million barrels a day.
    Mr. Barton. It is over 16.
    Mr. Sieminski. Yes, sir.
    Mr. Barton. OK. I didn't think it was that high.
    My point was going to be, if we don't have a market in the 
United States for the crude oil at our refineries, if you can't 
export it, you keep it in the ground.
    But if it is 16 million barrels, then we can increase 
domestic supply fairly significantly and we just--we just 
freeze out or push out imports from overseas. Wouldn't that be 
correct?
    Mr. Sieminski. You raise an interesting point, Congressman.
    Many people look at the growth in domestic production and 
the flatness in demand and they envision a world where the U.S. 
is not importing any oil.
    But, in fact, the U.S. may continue to import oil simply to 
refine it in our very efficient refining system and sell those 
products back out into the global markets.
    Mr. Barton. Well, Mexico is finally freeing up their oil 
economy and, if they follow through with their constitutional 
change, you will see a large number of U.S. producers and 
explorer exploration going down to Mexico.
    And I would assume that there would be additional oil in 
Mexico that could come up to the United States in the next 5 to 
6 years. Plus, we have got Canada. And I know there are some 
issues on the environmental front with the Canadian heavy oil.
    I guess I only have 22 seconds. I didn't--if I had to look 
at this panel and you had to vote yes or no on repealing the 
ban, I think I have three yeses and a maybe.
    I am going to ask Ms. Gordon--I didn't sense that the 
Carnegie Institute is totally opposed to repealing the ban. I 
think your concern is transparency and information for 
environmental purposes. Is that correct?
    Ms. Gordon. Yes. I think we have a reprieve here because 
demand has really cooled off globally. So there is not much of 
a place to put a lot of oil right now.
    And that gives time to do the due diligence that has to 
happen with information so that we have a better sense of what 
is going to happen when we do change policy some day, because I 
do think we are headed toward more open markets, I mean, in 
general.
    But do remember, I just should add, the oil market is one 
of the least efficient markets. There are so many reasons: 
barriers to entry, barriers to exit, not enough information, 
externalities. There is far more efficiency in peach markets 
than in oil markets. So that is--it is a big question.
    Mr. Barton. Could I ask one more question?
    Is it possible for these lighter shale oils that are being 
produced in the Eagle Ford and up in North Dakota to be 
exported as refined products because they are so light and 
almost need no refining?
    Ms. Gordon. They are really different from each other. The 
Bakken oil is like Nigerian crude. In fact, we have backed out 
a lot of Nigerian crude since we have been producing in the 
Bakken.
    So if we export Bakken, we are probably going to have 
implications for Nigeria in the North Sea because that is what 
the oil is like.
    The Eagle Ford is really unusual. It is much, much lighter 
and it needs to have the condensates stripped out of it. So 
even with the light tight oil category, there is a lot of 
diversity here that we don't have a lot of information about.
    Mr. Barton. Thank you, Mr. Chairman.
    Mr. Whitfield. At this time I recognize the gentleman from 
Kentucky, Mr. Yarmuth, for 5 minutes.
    Mr. Yarmuth. Thank you very much, Mr. Chairman.
    I thank all the witnesses for their testimony and 
knowledge.
    I have learned a lot, but I am still not sure where I am on 
this issue. And I am curious. We talked about the potential 
downside. And while everything looks wonderful right now with 
an abundance of oil and petroleum in the world and prices down, 
that would seem to be--mitigate against worrying about a 
crisis.
    But isn't it entirely possible that we could return to a 
1970s situation? I was a staffer here in the 1970s and remember 
those lines as well.
    So would it not be useful to have at least some contingency 
measure if we--whether it is an international outbreak or a 
war, terrorism, whatever it may be, that we have some way to 
protect our domestic supply in case of an emergency as opposed 
to just saying we are not--we will worry about that when we get 
to it?
    Ms. Gordon?
    Ms. Gordon. So I think, because we are in this era of new 
oil and everything is changing, the risks are changing. We have 
the geopolitical risks, on the one hand, with many of the 
places abroad that have historically produced oil, and then we 
have operational and environmental risks here that we have to 
contend with.
    So we have new oils, new conditions, and then we have huge 
growth in China in terms of demand that is sporadic. It is not 
going to be, you know, red hot consistently. It is a market. 
And so we do tend to talk about oil at a moment in time, maybe 
because it is sold on every corner, that it is as if this is 
the condition that exists for all time.
    But the reality is it is very dynamic and we could easily 
return with risks, differential risks, different consumption 
patterns. Even in America, we are selling a lot more SUVs right 
now. They are up tremendously. I mean, we could--we are 
reversing our demand profile, as Adam said, but we are not 
necessarily bound to that.
    Mr. Yarmuth. So there is no guarantee, given the volatility 
of the market, that if we eliminate the prohibition, that we 
can have the kind of impact on prices that we would expect, 
that the prices will necessarily be lower. We can't guarantee 
that.
    Ms. Gordon. Yes. And in addition to what was said earlier 
where we will--because we have the huge--the largest refining 
capacity, we will maintain imports of oil even--you know, just 
because we want to put product on the market. That is what 
industry does here. It is one of the big parts of industry.
    Mr. Ebinger. I think, if I could just----
    Mr. Yarmuth. Sure.
    Mr. Ebinger. If I could just add--answer your question, you 
know, most of the oil we consume in the United States is in the 
transportation sector. And it seems to me that, rather than 
maintain the ban on crude oil exports, we would be much wiser 
to have an accelerated program to use our vast natural gas 
reserves to a greater degree in transportation.
    There have been numerous studies--you know, it would take a 
long--it would be a long-term effort, but if we could replace 
the diesel fuel that we use in our 18-wheel trucks, some people 
say that would be another 1.8 million barrels a day of oil we 
didn't use.
    If we can use natural gas in marine transportation on the 
Great Lakes and our major rivers, coastal trade, that is 
another major place we could save. And we have companies 
already experimenting with using LNG in railroad locomotives.
    So if we could reduce the use of oil in transport by 
relying on our vast natural gas, I think that would be a far 
more prudent policy than continuing the ban on crude oil 
exports.
    Mr. Pugliaresi. If I could just add one thing, you know, if 
we go back and look at the history of EPCA and everything we 
did, if you want to take one lesson out of that, we need 
policies which are robust against uncertainty.
    And every time we try to guess or we think we know what the 
future looks like, nuclear power is going to be too cheap to 
meter or we are going to ban the use of natural gas and power 
plants, we really have a hard time getting this right.
    And we don't really know what the future looks like, but 
what we do know is that we do much better when we have policies 
that allow a lot of--you know, a lot of the marketplace and 
individuals to adjust to changing circumstances.
    Because once we you put something in place here in Capitol 
Hill, it is really hard to fix it, you know. Those of us who go 
way back remember, you know, we had dozens of these small 
refiners. So people remember this? We had dozens of these small 
refineries which came of the arcane regulations of price 
controls. And when it came time to decontrol crude oil prices, 
it was really hard because we had a political establishment of 
small refiners all over the country. So I think we have to keep 
in mind as we go forward that what the real lessons of this 
renaissance is, it was an open system, right? This all occurred 
on private land.
    The heavy hand of the Government was really not trying to 
stop these guys. We didn't have to rely on Federal land. And so 
as we go forward, we ought to really think hard about what 
kinds of strategies are likely to be more productive.
    Mr. Yarmuth. Thank you, Mr. Chairman. My time is up. I 
yield back.
    Mr. Whitfield. At this time, I recognize the gentleman from 
Illinois, Mr. Shimkus, for 5 minutes.
    Ms. Shimkus. Thank you, Mr. Chairman. This is a tremendous 
panel and a great hearing, so thank you, Chairman, for that.
    I have tons and tons and tons of questions, so I want to 
try to put them in some sensible order.
    But, Ms. Gordon, I appreciate your testimony. EPCA, the 
original EPCA, I didn't know there was reporting requirements 
more transparency. And following up on what Congressman Barton 
said, there is probably some truth to getting more information 
so that markets can operate more effectively and efficiently, 
so I appreciate those comments. There are different types of 
crude oil, that is going to be the major front to my question.
    But we also know refiners have made major investments based 
upon a world they perceived 6 years ago, which has 
significantly changed today--from heavy crude to light sweet 
and the refinery expansions.
    I think the other thing that has not been a part of this 
discussion or debate is transportation costs and long pipeline 
versus what could actually happen in the future with all these 
more localized resources available is that you could see closer 
interaction between these new finds and more local refineries 
in a more localized system.
    Mr. Pugliaresi, I appreciated this statement because of the 
need for production platform in a stable part of the world, I 
think is really not just for what it does on hedging the risk--
the volatile risk of pricing, really kind of addressing my 
colleague from Kentucky's question. But also internationally, 
and I focus on Eastern Europe a lot of times, and I understand 
energy extortion. And so importation of LNG, which we have 
passed through the House that we would like to see for other 
allies in Europe and Eastern Europe, I think would be true on 
crude oil exports. But you have to have a stable platform to be 
able to do that; hence the next kind of position.
    Because even in the map, the figure that you have in your 
testimony, figure 3, you have these major basins, but there are 
probably more are going to develop, like the southern Illinois 
basin, which now we have gone through the legislative process. 
But you have the online basin, we still have more Deepwater 
applications. We have got Anwar debate that will always be 
there. We have the National Petroleum Reserve. We have the 
Atlantic Coast exploration. We have Keystone XL debate.
    What I hear I think is that--because I am afraid we have 
this huge supply, but we can't rely on Government to set these 
parameters. We have got to let the markets do it. The markets 
will then send a signal of which of these oil basins are 
recoverable based upon the pricing of a barrel of crude oil.
    Some of these may not be able to be now exploited because 
the cost of recovery is high. But then in the case where there 
is a new change in world dynamics, then that cost might be 
available for continued exploration. Do I make sense in any of 
that analysis?
    Mr. Pugliaresi. Let me say, right now, there is a race 
going on between the lower valuations and the advances in well 
productivity and technology. As I said, we are seeing some 
things, they are out there a few years. Some things are very 
near in which--if you look at a traditional hydraulic 
fracturing job, across the U.S., 40 percent of the frack jobs 
are very uneconomic in some ways. Or they are 40 percent of the 
preparation on a horizontal pipe are not working. But there are 
technologies developing now that are going to drastically 
improve that.
    So you can have a high-cost basis, which doesn't look like 
it is doing too well right away, but in a few years, things 
could change. Once again, we want strategies which are robust 
under uncertainty. If we try to prescribe the future, we are 
going to be wrong.
    Ms. Shimkus. Dr. Ebinger, in your testimony, you did state 
that increasing oil exports will help lower the prices at the 
pump, that was part of your written testimony.
    Mr. Ebinger. Lower gasoline prices, yes, sir.
    Ms. Shimkus. And then the last thing I want to ask, because 
it has been raised--we are now having people think we might do 
this. We are starting to get talked to by a lot of people. Is 
there a difference, because really, except Ms. Gordon may--
start separating heavy, sour and light sweet, is there a 
difference, is there a credible argument in separating the 
crude oil price and easing the ban on one, but not easing the 
ban on the other? That will be my last question if some people 
want to weigh in on it.
    Ms. Gordon. I just will add that I think the time is coming 
that we are going to have baskets of crude that are split much 
more on quality than on location. I think that these oils are 
quite different from each other, and they get very long-term 
investments that last generations. So the market needs this 
information. So whether regulations follow or not, I think that 
the idea of separating oils into these baskets, which is 
somewhat done but not largely in the market right now, is 
probably a wave of the future.
    Ms. Shimkus. The rest of you are chicken and not going to 
answer that question?
    I yield back.
    Mr. Whitfield. This time I recognize the gentlelady from 
California, Ms. Capps, for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman.
    I want to thank each of our witnesses for your testimony 
today at this hearing.
    I also want to take a moment since it is I believe our last 
hearing in this session of Congress to honor and acknowledge--
as I walked in the room, I realized I am walking into the John 
Dingell room. The incredible service that--it is the John 
Dingell room, our colleague, former chairman and under whose 
leadership I was first asked to be on the committee. And also 
my colleague from California, ranking member and my neighbor, 
Mr. Henry Waxman, for their incredible service to this 
committee and to our Nation.
    I know he stepped out, but I want to also bid farewell to 
our friend John Barrow from the Peach State, who I believe has 
added much value to this committee, as well. These are people 
who will be missed.
    The oil export market is complex. I picked that up from the 
hearing today. We need detailed, accurate information, I 
believe, to conduct a proper assessment of increasing exports.
    Yet, Ms. Gordon, in your testimony, you say that accessing 
this information is difficult. In fact, you said we actually 
have more data, which I find quite stunning, about OPEC crude 
oils than about some new American oils, crude oils.
    My question for you to elaborate a bit is on that. Why is 
this information so difficult to access?
    Ms. Gordon. There are so many reasons why the information 
is not there. The first reason is that the light tight oils are 
the newest kid on the block so to speak. They just haven't been 
around as long. In the 20 test oils that we have modeled in the 
oil-climate index, we have Venezuelan oils. And you think about 
getting information from Venezuela. There is UAE. There are 
oils from all over the world, Indonesia, but we don't have any 
oils that are from North Dakota or Texas, these light tight 
oils.
    There are--one of the big problems is that in order to get 
information on oil, you do an assay, which is a chemical 
footprint of the oil. But everyone does assays differently, so 
when assays are reported, you can't compare oils to one 
another. So having more consistent reporting on information is 
one big problem.
    Another one, having met with DOE, is that apparently--and I 
think Mr. Sieminski could talk more about this--apparently, the 
Energy Department can't really collect data on oil freely. It 
turns out OMB--and I was kind of flabbergasted when I learned 
this--but OMB says this is duplication of effort. Industry 
submits data on oil. DOE doesn't set reporting requirements for 
oil.
    Although, when you read EPCA, there is room for this to 
happen. It just hasn't really evolved that way. So DOE is 
actually only getting the information that industry wants to 
report out. These are new oils; there is less information 
reported out.
    The third one I will mention, one of our partners tried to 
purchase data. There is data that is owned by these big oil 
consultancies, and after negotiating for a matter about a year 
and hundreds of thousands of dollars, they were told the data 
wasn't for sale because it is competitive. They don't want the 
academic sector to compete with the consulting sector. So there 
a lot of concerns when it comes to oil data, especially as now 
more oils are out there.
    Mrs. Capps. I want to use that last sentence as a segue to 
another kind of topic that might be appropriate now. Any 
discussion of oil exports must also be considered in the 
context of our overall energy policy and the realities of 
climate change. And you also touched on that.
    You have done an extensive analysis on the climate impacts 
of our Nation's oil policies. In your testimony, you discussed 
preliminary research on the climate impacts of various types of 
American crude oils that could be exported if the current ban 
is lifted.
    Now my question, given the transparency challenges that you 
just described, have you been able to complete this climate 
assessment with the data available to you?
    Ms. Gordon. No, none of the 28 oils that we have been able 
to model are--we have U.S. Oils that have been around like Gulf 
of Mexico, Mars, but we don't have Arlex and North Slope, but 
we don't have any of the new light tight oils so far in the 28 
test oils because data is just not available.
    Mrs. Capps. I am prepared to yield back, but Mr. Chairman, 
this lack of transparency I believe is very concerning not just 
for our assessment of oil export policy but for conducting 
proper oversight of the industry in general. If the industry is 
asking us to lift the export ban, I believe they need to 
provide the information that is so clearly needed to properly 
assess the very policy that they asking us to expand upon. I 
yield back.
    Mr. Whitfield. The gentlelady yields back.
    At this time, I recognize the gentleman from Pennsylvania, 
Mr. Pitts for 5 minutes.
    Mr. Pitts. Thank you, Mr. Chairman.
    Thank you for your testimony. I, too, remember the long 
lines in the 70s. What wasn't said is that after waiting for 45 
minutes or an hour with your car idling, and the lines backed 
up on the highway, and some people just topping off, and some 
people about to go empty, there were a lot of short tempers. 
And it was a very bad situation, wasting a lot of oil and 
gasoline.
    Were any studies ever made on how much waste there was with 
those long lines back in the '70s? Mr. Sieminski.
    Mr. Sieminski. I don't think that EIA did, but I think you 
are absolutely right, Congressman Pitts, that the whole idea 
behind the program I think made some sense at the time, but the 
implementation of it left a lot to be desired. A lot of the 
problems had to do with the availability of gasoline in 
different areas. It was based on the year-ago use. People in 
the prior year were all out having vacations outside of the 
cities, and that is where all the gasoline went. But during the 
crisis, they were all in lines in the cities. And so they 
couldn't get the gasoline to go out on their family holiday. It 
was a bit of a mess.
    Mr. Pugliaresi. So, actually, I worked on this program a 
bit when I was with the Department of Energy. You cannot 
imagine the small changes, you know, people just think a 
refinery takes crude oil and processes it into gasoline, but 
they are blending dozens of components. And we were trying to 
control the prices of all of these. And every day, there was 
enormous misallocation shortages, the wrong kind of mixes, 
because the market was completely surpassed by the Government 
price control system. I mean, I don't think you can find 
anybody who has looked at this program that wants to defend it. 
It was an unmitigated disaster. It substantially delayed our 
capacity to even adjust to the crisis.
    Mr. Pitts. In addition, after waiting for 45 minutes to an 
hour, the station, many of them would run out of gas, you would 
have to go home and come back on another day.
    The average family as we heard can expect to save several 
hundred dollars a year if prices stay where they are. 
Administrator Sieminski, how can we maximize these benefits and 
sustain them over the long run?
    Mr. Sieminski. The benefit to household income is coming 
from lower oil prices, most of that coming in gasoline, the 
number of about $800 per household is right for a $30 decline 
that is from average prices last year that would be sustained 
for about a year. Those numbers could even be a little bit 
higher than that, depending upon where oil prices settle out.
    That is going to have a pretty positive affect on the 
ability of households to spend. And I think we will begin to 
see the positive impact of that on the economy. EIA 
macroeconomists took a look at this. If we had this $30 decline 
sustained for a year, it could add as much as 1 percent to U.S. 
GDP.
    Mr. Pitts. If the ban were lifted, what effect would it 
have on gasoline prices? And how would it impact our refinery 
sector? Do you want to continue?
    Mr. Sieminski. Well, gasoline prices, again, if we stay at 
these levels, gasoline prices could be down almost 77 cents a 
gallon. That is, again, a huge plus with gasoline prices 
averaging that much lower than the prior year. Obviously, there 
will be some losers in the production. Producers are going to 
have lower income. This could have big effects on countries 
like Venezuela and others. It depends on oil revenues. That 
could lead to unrest there. This is why I think the idea that 
policies, that outcomes, and forecasts are uncertain is really 
huge. If you lost that oil production from Venezuela because of 
social unrest there, you could see prices come back up again.
    In general, when I think, Mr. Yarmuth, about policies, EIA 
is not a policy organization, but I think I could describe the 
three components of energy policy. It is, What does it mean for 
the economy? What does it mean for the environment? And what 
does it mean for national security? And you were asking about 
national security issues. I would imagine that a key thing in 
thinking about this is how to weigh those impacts from a policy 
standpoint. I think the Strategic Petroleum Reserve is probably 
our key tool in security.
    Mr. Pitts. My time is expired. Thank you.
    Mr. Whitfield. At this time, I recognize the gentleman from 
Georgia, Mr. Barrow, for 5 minutes.
    Mr. Barrow. No questions, thank you.
    I would like to yield time to Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    I hope I get my own 5 minutes. I thank my colleague.
    I represent Houston, Texas, and we have five refineries in 
East Harris County, but also, I have all my service companies, 
obviously, Halliburton, you name it, Baker Hughes and groups 
like that.
    I want to keep them working in the oil patch, but I also 
know that this is probably the best time in my history that we 
have seen the refinery margins where we are at. That is why I 
wanted to ask Mr. Sieminski--or Administrator--typically, the 
integrated oil companies that have refiners and production, 
they have refining, but that is not their profit center. Most 
of the profit center is the production side. Although we do 
have three of those refineries are also independent refiners 
that are not integrated or majors.
    Have you seen--have you all done any research on the 
refining capacity, because I know the shutdown of refineries, 
smaller refineries around the country, there was some concern 
over the years that even though--and we weren't producing as 
much crude as we needed right now, but also we were losing 
refining capacity. Have you all looked at those numbers?
    Mr. Sieminski. We have a study underway on the ability of 
U.S. refineries to absorb this increase in the lighter oils 
that are being produced from the shale formations. And we will 
have that out I think some time in the early part of next year. 
I think the general feeling is and if you come back to the 
complexity to this, there are--removing the export ban does 
have impacts on different sectors in the economy, and the 
independent refiners are very concerned about how they would 
come out in that analysis.
    Mr. Green. And what happened in the 1990s is because we 
weren't producing lighter sweet in the United States, most of 
our refiners who were successful converted, and it cost I know 
at one refinery about $2.5 billion to convert to do the heavier 
crude.
    Have you all put any cost estimates on----
    Mr. Sieminski. Congressman, you are right in there, we 
should come up and brief you when we have this study done. We 
are going to have some estimates in there of what the costs are 
associated with adding the equipment that is needed to take 
care of this increase in lighter crudes and how fast those 
light crudes will be growing.
    What we do know is that over the past--if you look back 
over the last decade, billions of dollars were invested in 
upgrading refineries in Texas, Louisiana, and elsewhere on the 
Gulf Coast to process heavy crude oil, and now we have a 
surplus of light crudes and so it has created problems.
    Mr. Green. I think the concern--that surplus of light crude 
because they are typically the shale plays in those wells are 
very short-lived; although they are much cheaper to drill than 
the earlier ones. There are some issues with are we going have 
to reinvest for those refineries another $2.5 billion to handle 
heavier to lighter crude.
    Mr. Sieminski. There are upgrading and new construction 
projects underway right now to allow the refiners to handle 
that, and a lot of those are taking place in your district.
    Mr. Green. Has EIA looked at the issues, because in the 
past, we typically used whatever we refined in our country. But 
now we are producing so much more that it is actually we are 
having those downstream jobs that are exports. Back in Houston, 
we are exporting just tons in the last few years of low sulfur 
diesel. Because of the heavier crude, we get more diesel. But 
the low sulfur diesel actually is improving the environment in 
the countries we are sending it to, in Latin America 
particularly where our customers are and, of course, Europe, 
but Latin America predominantly.
    Have you all looked at some of those issues. And I am going 
to ask if that has been looked at by our environmental 
community? Has EIA done that?
    Mr. Sieminski. That is going to be part of our study.
    Mr. Green. OK, I look forward to the study.
    Ms. Gordon, has there been any qualification of that, even 
though we are doing heavier crude and are producing a lot more 
diesel that we don't use in our country, but it is also low 
sulfur because that helped in the countries that are buying 
that from us now, compared to the diesel that may be coming 
from other parts of the world?
    Ms. Gordon. Yes, certainly taking the sulfur out will be 
fantastic for health and for the environment. But a bigger 
question with the heavier oils is petroleum coke and what 
happens with the very bottom of the barrels. So when you put 
coking capacity into these refineries, you basically remove the 
middle of the barrel and you end up with a lot more gasoline 
and diesel, which is good for profit, and then a lot more of a 
solid substance, called petroleum coke. And we are also 
exporting that.
    I think we have increased out of Texas, we have increased--
the U.S. has increased its petroleum coke exports to China like 
seventyfold in the last several years. It is a coal substitute, 
and it is worse than coal in terms of emissions. So it kind of 
cuts both ways.
    Mr. Green. Mr. Chairman, I know I am over my time. But I 
would like to talk about petroleum coke when I get to my time.
    Mr. Whitfield. This time right now the gentleman from Ohio, 
Mr. Latta, for 5 minutes.
    Mr. Latta. Thank you, Mr. Chairman.
    Again, as has already been stated, thanks to our panelists 
for being here today. It has been really informational. I 
really appreciate your time.
    If I could just kind of hit a few points. As we have been 
sitting here, I checked when we started committee that West 
Texas was selling at $60.70 when we started. It is down to 
$60.51. And Brent was at $64.23, and it dropped to $64 in the 
last few minutes.
    I think the discussion we are having here is very 
informational, because also I think it was in the Wall Street 
Journal this morning, it was the headline in one of the 
sections of the paper about the decreasing costs of oil from 
West Texas and what that is doing here in this country to a lot 
of our producers, especially out west. Of course, in Ohio and 
also in Pennsylvania with our Utica Marcellus Shale that we are 
developing in our States, especially for me in Ohio, it is 
really interesting and also your concern because if the price 
drops, you want to make sure that we can keep that production 
up and also keep people out there producing.
    Administrator, if I could just go to your testimony. I 
really found it interesting, because, on page 5, you state that 
the U.S. crude imports declined by 2.4 million barrels per day, 
or 25 percent, the lowest since 1995. And the percentage of 
U.S. crude demand supplied by imports has fallen by 67 to 47 
percent, the lowest level since 1992.
    In the testimony, you all have been talking about today, 
especially about the oil coming in and the refining, how much 
when that oil comes in that we have imported goes back out as 
an export, just as a curiosity--or a product? Administrator, 
would you like to take that? And then anybody else like to 
answer the question?
    Mr. Sieminski. The U.S. has net product exports of about 2 
million barrels a day. So the gross amount of imports and 
exports are different than that. We are exporting it. We are 
now kind of getting up to close to 4 million barrels a day of 
exports, but we are also importing, especially gasoline into 
the east and west coast. So when you net it out, it ends up 
being about 2 million barrels a day.
    Back to Congressman Green's comments, a lot of that 
exported product is coming from the Gulf Coast region of the 
U.S. It is going to countries in Latin America and Europe. The 
gasoline--one of the better exports that we have is gasoline 
and the reason for that is we just don't need it here in the 
U.S., and it is needed in places in Latin America.
    Mr. Latta. Thank you.
    And if I could turn to Mr. Pugliaresi--I hope I pronounced 
your name properly--as we look across what has happened and we 
have seen the increase here, are there any regulatory or market 
barriers preventing our refiners out there right now from doing 
anything else to adapt to these new surges that we are having?
    Mr. Pugliaresi. Well, I do think the refining industry is a 
lot of our downstream processing sectors do face a pretty 
formidable regulatory environment. They also face fuel 
constraints in like the renewable fuel standard. I think--it is 
not that ethanol, for example, is a bad thing. We think ethanol 
is very useful to the American transportation field sector. It 
is the mandates that give you all these problems, because as 
demand shifts radically or the supply side shifts radically, 
the refiners are unable to adjust in a cost-effective way.
    So I think as we go forward with this, and look at crude 
exports, we don't want to unnecessarily harm these high-value-
added downstream processing centers. They add a lot to the 
economy as well. So we are not in favor of protection, but we 
are in favor taking a hard look at the trade adjustments you 
need to do when you move into an export mode.
    Mr. Latta. Thank you very much.
    Again, I thank our panelists.
    And, Mr. Chairman, I yield back.
    Mr. Whitfield. At this time I recognize the gentleman from 
California, Mr. McNerney, for 5 minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    Suppose that the U.S. becomes a reliable and consistent 
exporter of natural gas and crude oil. How much impact will our 
natural gas exports have on the geopolitical issues relative to 
how much impact our diplomatic and military policies have on 
those geopolitical issues? Does anyone care to take that?
    Ms. Gordon. I could just say that because these oils within 
relative bounds kind of trade as like types of oil, as I have 
been talking about, you do have to look at the geopolitics and 
the kinds of oil that we would be exporting.
    So the light tight oil, as I mentioned earlier, has backed 
Nigerian imports out of the U.S. As we produce more of that 
oil, we are importing now no oil from Nigeria. We are importing 
oil, but it is just not from Nigeria. Well, that has a 
geopolitical impact, say, on Nigeria.
    I think even though oil is not being used at all as a 
weapon, it ends up being something that can counteract the 
peacekeeping and the other efforts that we have in these very 
fragile nations around the world. Venezuela was mentioned.
    Mr. McNerney. I am thinking in particular of Russia and Mr. 
Putin. Will our exports have more impact on his behavior than 
our military or diplomatic activities?
    Ms. Gordon. It is a really good question, but I do think 
that Russia is reeling from the price of oil. It is not our 
exports that are really changing what is going on in Russia 
right now. It is $60 a barrel oil that is changing what is 
going on in Russia now, which is a much bigger demand question. 
That is not about our exports.
    Mr. Ebinger. If I could weigh in on that. The problem we 
have is twofold. We have had a lot of very, you know, I think 
impassioned proposals to do something to help Ukraine with the 
Russian crisis and other geopolitical events. But the reality 
is, of course, that our oil and gas are owned by private 
companies, and they are likely to ship the oil or gas--oil if 
we allowed it--to where the market gives them the greatest 
profit.
    Right now, although it is changing before us as I speak, it 
has always been assumed that the market for LNG primarily would 
be in the Far East, because the premiums there have been much 
higher than those in Europe. Although, now we have LNG prices 
crashing in Asia down to very low levels where it is even 
questionable whether we can deliver LNG into some of those 
markets competitively. By the time we actually have LNG people 
ready to go, outside contracts have already been signed.
    Geopolitically, I think the issue of exports is extremely 
important. Our allies in Korea and Japan and Taiwan are very 
desirous to have energy from the United States because they see 
an increasing bellicose China, threatening sea lanes on which 
all of their energy imports come from, not only oil and gas but 
also coal. So they are delighted. And I think it does improve 
our diplomatic status to the extent that we send energy there, 
but again, these are going to be commercial choices made by the 
companies that own that oil and gas.
    Mr. McNerney. It is clearly a complicated question.
    Mr. Ebinger. It is very complicated.
    Mr. McNerney. Well, whoever can answer this, how much do 
you see oil exports increase--how do you see oil exports 
increasing over time if we were to repeal the Energy Policy and 
Conservation Act? Do we see a large bump, or do we see a slow 
increase? How do we see that playing out?
    Mr. Sieminski. Well, we do tend to look at those in our 
annual energy outlooks, which we do every year. We will have 
that one out we hope some time in late February or March. The 
answer to that I think probably lies more towards the lower end 
rather than the upper end. The reason I say that is that the 
kind of oil that we have in surplus here is light sweet crude. 
The market for that is not unlimited, so the question is how 
much of that could be put out on to the global markets before 
you have saturated the global markets? Something on the order 
of a million or a million and a half barrels a day might be the 
number that would be exported.
    Mr. McNerney. Thank you, Mr. Chairman.
    I yield back.
    Mr. Whitfield. At this time, I recognize the gentleman from 
West Virginia, Mr. McKinley, for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    And I thank you for the panel. This is very interesting at 
the end of session. This would have been more interesting 
perhaps a little earlier, because some of the subjects we have 
gotten into have been particularly beneficial.
    I have a series of questions. After waiting an hour and a 
half, my question was just asked by my predecessor, because I 
wanted to get at the geopolitical aspect of it. I think you 
have answered it in some respects. Perhaps we need to get into 
that a little bit deeper. One of the questions I would ask you 
is, who is asking for this ban to be lifted?
    Mr. Sieminski. Well, the first groups are producers that 
have wanted to see the ban removed or those who are producing 
the lightest of the crude oil, because that is being discounted 
the most, and the attractiveness of exporting that into the 
global markets is high. And so we have seen that coming from 
some of the independent producers in Texas.
    Mr. McKinley. I am also curious before I get to my last--I 
have got three or four questions here, but one would be is back 
towards the tail end of the Bush administration, gas was 
selling at $1.85 a gallon. Then we went up to $3.50, $3.85, 
almost $4 for regular. Is there an impact here? What caused 
that? Why did it go from--doubled in price?
    Mr. Sieminski. Say that again, Congressman.
    Mr. McKinley. When gasoline prices were $1.85 under the 
Bush administration, what happened to take them up to double?
    Mr. Sieminski. The biggest thing--the overwhelmingly most 
important factor in gasoline pricing is what the price of crude 
oil is in the global markets. The next biggest thing after that 
is probably the different levels of taxation in different 
States.
    Mr. McKinley. That hasn't changed much; taxes haven't 
changed much.
    Mr. Sieminski. The crude oil prices go up and down.
    Mr. McKinley. The crude is down now--what--$63 or something 
like this, OPEC?
    Mr. Sieminski. Yes.
    Mr. McKinley. Where was it?
    Mr. Sieminski. It had been on average up over $100 a 
barrel.
    Mr. McKinley. I understand, but I haven't seen the price 
get back to $1.85 yet. What is it going to take to get to 
$1.85?
    Mr. Sieminski. Well, it might have been $1.85 when prices 
were a lot lower, and when we had $40 oil----
    Mr. McKinley. That is what your answer is, we need crude to 
get to about $40.
    Mr. Ebinger. There is one other issue that I think is 
controversial, but I think if you look at it, you will find 
that the mandates for biofuels being mixed with gasoline, we 
have seen ethanol prices go up very high in some of those 
markets. That has been a major contributor to the price of 
gasoline.
    Mr. McKinley. My last question, I have less than 2 minutes. 
I have a small boutique refinery in West Virginia, Ergon. It 
fills a niche in the marketplace. What could be the impact if 
the export ban were lifted, what would be the impact on Ergon? 
22,000 barrels a day.
    Mr. Sieminski. In your area, probably very little.
    Mr. McKinley. Because?
    Mr. Sieminski. Those refiners out in the mid-continent 
where they have access to discounted WTI, benchmark crude, 
would see their costs go up.
    Mr. McKinley. I think they are starting to tap into the 
Utica Shale gas now--well, shale gas and then the Utica is what 
is providing the petroleum, the crude that they are going to be 
able to tap into. So you are thinking Ergon would be not 
affected?
    Mr. Sieminski. In your State, sir.
    Mr. McKinley. Well, they ship all over the country.
    Mr. Sieminski. Right, but the question is what would the 
cost of feed stocks into the refinery in West Virginia be, and 
I would suspect that it won't change very much.
    Mr. McKinley. Thank you very much.
    I yield back the balance of my time.
    Mr. Whitfield. At this time, I recognize the gentleman from 
Texas, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    Let me get back to some of the issues.
    Well, first, Mr. Chairman, I would ask unanimous consent to 
place a statement into the record.
    Mr. Whitfield. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Green. And I think it is no doubt that, in fact, the 
CBO report that was just released talked about a policy shift 
in exporting crude would pinch refiners' profit margins but 
also harm foreign oil producers.
    But let me go down the list about we are exporting oil now, 
but it fits the definition of a condensate, that there actually 
is a mechanism where you get that lighter sweet out of the 
ground, you run it through what I would call a very limited 
refining process, but it fits the definition that we can export 
right now. How does EIA classify lease condensate, is that 
exporting?
    Mr. Sieminski. Mr. Green, there are at least four big ways 
of trying to define condensate. The way EIA has historically 
done this is literally based on the location. If it is produced 
on an oil lease and is mixed back into the crude oil stream, we 
counted it as lease condensate and measured it in barrels.
    Mr. Green. Is that the same definition as the Department of 
Commerce for export?
    Mr. Sieminski. The Department of Commerce is looking at it 
from a different standpoint. And reportedly, the Commerce 
Department is now through letters to the individuals who asked 
for a ruling on it, allowing processed condensate. So. if you 
take this very light crude oil, process it through a 
distillation tower, it would qualify as a product, and products 
under U.S. law right now can be exported.
    Mr. Green. OK. Would it help to have a uniform definition 
for Government agencies, particularly if lawmakers wanted to 
craft better regulation or legislation, to have one definition 
for condensate?
    Mr. Sieminski. At EIA, we have been trying to understand 
the different definitions. And I suspect that a one-size-fits-
all might not actually work perfectly. At EIA, for example, we 
would want to make sure that we are able to count this process 
condensate so that we don't double count how much of the 
material is in the system. And that is a complication of the 
existing rules.
    Mr. Green. Does EIA track exports of condensate production 
now--or production and exports, do you track any of that 
production?
    Mr. Sieminski. The export data is provided to EIA by the 
Customs people, so we do not have that. We do our own survey of 
imports. Interestingly, you think about all of the history that 
has been brought up here today. We wanted to do our own survey 
of imports, because that was what was really big and that was 
what was supposed to grow, and we don't have a survey of 
exports.
    Mr. Green. How readily available is that information?
    Mr. Sieminski. That information actually is available from 
the Customs people, and we have been working with them on 
speeding up EIA's ability to get that data.
    Mr. Green. Dr. Ebinger, I know your testimony in your 
briefing book ``Big Bets and Black Swans'' in early 2014, you 
authored a section to lift the ban on U.S. oil exports. You 
state that unrestricted exports, in combination with increased 
investment in infrastructure, are expected to generate income, 
jobs, and taxes through the production change.
    Do you think domestic transportation of oil is a major 
factor facing our energy sector? A good example, limitations of 
pipelines.
    Mr. Ebinger. Yes, sir, I do. I think the fact that we have 
not built some major pipelines, Keystone being one of them, has 
certainly led to a more dangerous transportation system, by 
rail particularly, but also by truck and barge. A more 
expensive transportation system than would be needed if we 
built some pipelines.
    So I think if as a Nation we are going to accept 
unconventional oil and gas drilling, which I certainly do, then 
we need to build the intended infrastructure as cost-
effectively as possible to get that to market.
    Mr. Green. Mr. Chairman, thank you.
    Mr. Whitfield. At this time, I recognize the gentleman from 
Kansas, Mr. Pompeo, for 5 minutes.
    Mr. Pompeo. I thank you, Mr. Chairman.
    I did a little work in the run up to this hearing to see 
which of you had predicted $63 oil on December 11th, 2014. None 
of you did. You should know you should count yourself among the 
many. I couldn't find anyone who did. I saw a few traders who 
make a claim that they were in the market and the right place; 
they were on the short side and got to the right spot. And I 
mention that only because as I hear you talking about more data 
and more information in the hands of Government and all that, I 
think if we unleash markets, glorious things will happen.
    So I have heard multiple things today. I have heard folks 
talk about an export ban lifting, which seems right to me as a 
good direction. I have heard folks talk about the Jones Act. We 
have imposed enormous costs on our refiners with their 
renewable fuel standards, and we have seen a Government agency 
totally incapable of dealing with the transition of what 
happened in the marketplace there. Can't get a set of rules out 
to deal and tell folks what to build, I mean, based on some 
prediction that Congress set, some levels Congress set. As we 
all as policymakers think about how we are going to handle 
this, we should not be at all certain that $63 is here for 
tomorrow, let alone for 2 months or 3 months. No one mentioned 
the greenhouse gas rules that are about to hit. America--no one 
mentioned CAFE standards that have had such a dramatic impact 
on our transportation and the uses for them.
    You mentioned natural gas transportation, Mr. Ebinger, you 
said, Gosh, if we could get there--I don't know what is 
standing between us and then. I couldn't tell you--natural gas 
prices are at prices that you think, gosh, folks would go and 
want to invest. But the truth is you have markets operating in 
a state of uncertainty trying to get to the right outcome. We 
should not have a hubris to think that we have any possibility 
of getting in front of that place.
    As you think about this export ban, I think it is 
incredibly important that we don't lift an export ban in base 
because, gosh, today we have certain oil prices that are 
sitting in the low 60s range. I think we made a mistake putting 
it in place in the 1970s. I think that is the kind of thing 
that policymakers should all consider.
    I want to ask you, Mr. Sieminski, you did a report a month 
ago on what impacts gasoline prices. The Saudis changed the 
world here in the last quarter. Does that change how you think 
about the study that you put out in any material way?
    Mr. Sieminski. No, I believe that that study would probably 
be still valid in terms of trying to understand what it is that 
relates the price of gasoline in the U.S. to the global markets 
for either crude oil or gasoline. Mr. Pompeo, I think that your 
comment about, did EIA predict $63 oil, no we didn't. I would 
like to say in my defense that we----
    Mr. Pompeo. No defense required.
    Mr. Sieminski [continuing]. That we talk--every month, we 
publish something that is actually worth thinking about for 
everybody here. We use the options market for crude oil to work 
backwards to what the confidence interval is on forecasts for 
crude oil prices, and 6 months ago, that confidence interval 
got down to the low 60s.
    So we have hit the bottom of the 95 percent confidence 
range. And for the committee here today, I just looked at some 
numbers. For West Texas Intermediate, the 95 percent confidence 
range--you know, will it fall in there?--for April of the 
coming year is $50 to the low side and about $90 to the high 
side. And that is telling you that the people who are in those 
markets, they are not really sure, either.
    Mr. Pompeo. Yes, yes. Folks with real capital at risk. I 
will ask anyone who may want to answer this, I have read lots 
of articles just recently--they are pop news more than anything 
else--about whether OPEC still exists. It is still the same 
force that when I was a little bit younger could impact markets 
in material ways. We talked about how these markets have 
changed. Does anybody care--today want to say today that OPEC 
is dead?
    Mr. Pugliaresi. I think market power by some big producers 
waxes and wanes, but if you have enough production outside of 
these other low-cost, high-volume producers, their market power 
gets reduced, and that is what you are seeing now. The 
distribution of crude oil outside of these few players, which 
North America is a big force today, is undermining the capacity 
of other folks to constrain output and charge higher prices. 
That is just the reality of it. That is the one--that is a huge 
benefit of this North American platform, that is why we ought 
to pay attention to how it performs. Make sure we have a 
regulatory environment that doesn't hurt it.
    Mr. Pompeo. Thank you.
    My time has expired. Thank you, Mr. Chairman.
    Mr. Whitfield. At this time, I recognize the gentleman New 
York, Mr. Engel, for 5 minutes.
    Mr. Engel. Thank you very much, Mr. Chairman.
    You know, last week, I moved my office. We hadn't moved in 
10 years, and so we were throwing out all kinds of things. And 
there was this huge chart which said, ``The World According to 
Oil.'' And it either shrank or increased the map of different 
countries based on the powerhouse of oil. And it is interesting 
because that was probably about 15 to 20 years old. The United 
States was very, very tiny. Saudi Arabia and Venezuela were 
very, very big. I couldn't help but thinking that, if we did 
that map today, how different it would be. And I think that is 
a good thing.
    Mr. McNerney asked about the geopolitical impact of it. And 
as the ranking member of the Foreign Affairs Committee, which I 
am, I care very much about the geopolitical aspects of it.
    I like the idea of countering Mr. Putin. European countries 
are reluctant to stand up to him, because they need his oil. 
They could buy our oil. They might actually develop a backbone. 
So I have looked at this in a totally different approach than I 
looked at before. But everything, of course, is still a 
balancing act. I care about the environment. We want to make 
sure that we can continue to export and increase the export, 
but I think it is a balance.
    So I want to say, Dr. Ebinger, I read the findings in your 
report, which finds that lifting the ban on crude oil would 
boost U.S. economic growth and put downward pressure on world 
oil prices. Larry Summers also called for lifting the ban.
    Let me ask a few questions to anyone who cares to answer: 
Department of Commerce has granted licenses during the past 
year to a few oil companies to export a relatively small amount 
of an ultralight crude--as Mr. Green mentioned, it is 
condensate. I believe condensate comes from shale plays. So, 
please, correct me if I am wrong. And so, therefore, increased 
production of condensate would mean more fracking, would it 
not?
    Mr. Ebinger. Yes, sir, it would.
    Mr. Engel. It would. Among the companies exporting 
condensate are Pioneer Natural Resources and Enterprise 
Products Partners. Which shale plays are they getting their 
condensate from, do we know?
    Mr. Sieminski. The Eagle Ford, Texas.
    Mr. Engel. OK. And where did it go? Are there existing 
refineries in friendly parts of the world that would take and 
refine this additional crude?
    Mr. Pugliaresi. I can answer. I think most of the shipments 
went into the Far East, probably Korea, maybe the Singapore 
market. I don't actually have the--the Department of Commerce 
has a much different policy towards handling data than EIA. 
This is considered proprietary information so I don't think it 
is publicly available yet.
    Ms. Gordon. I would just add, it is petrochemical feedstock 
that condensates largely so it is going to--it is not going to 
refining. It is going to making petrochemicals so the Far East 
makes sense.
    Mr. Engel. Thank you. I am asking these questions because, 
obviously, in addition to economics, there are environmental 
conditions, and geopolitical factors that merit consideration 
and I really think the whole thing--I think there is a balance. 
But I do think that this is something that we should look at 
very seriously. It makes sense to me, again, because I think 
the United States obviously being a world power has to be 
concerned with the geopolitics of it. I know that when we are 
trying to get some of our allies in Europe, Germany and some of 
the other countries to stand up to Putin and his aggression to 
Ukraine, there was some reluctance there because they rely on 
Russia for their energy resources. I can't help but thinking if 
they relied on us or if we were available, we could exert more 
pressure. And I think that would be an important policy goal of 
the United States. Again, I think it has to be balanced with 
environmental concerns and other concerns as well.
    Thank you all. Thank you, Mr. Chairman.
    Mr. Whitfield. The gentleman yields back.
    At this time, I recognize the gentleman from Nebraska, Mr. 
Terry, for 5 minutes.
    Mr. Terry. Thank you. So one of the reasons I ran for 
Congress 16 years ago was the high level of reliance on foreign 
fuel to full our economy and wanted to change that. So I am 
pleased to see that we are down to 33 percent. We are only 33 
percent of our fuel needs of oil is imported now. So, in a 
geopolitical sense, why do we still have 33 percent import of 
oil into our country? And I will start with Mr. Sieminski.
    Mr. Sieminski. Mr. Terry, what we are talking about mostly 
here today is oil, but within a year and a half, the U.S. is 
likely to be a net exporter of natural gas. We are already a 
net exporter of coal. We don't really import very much 
electricity. A little bit of that comes from Quebec, and 
Canada, and from Saskatchewan. So, on the oil side, we are a 
net exporter of oil products. The only thing that we are still 
importing is crude oil. Those numbers----
    Mr. Terry. Right.
    Mr. Sieminski [continuing]. Will come down. But if you say, 
well, do you want that to go to zero, the answer would be, 
well, not necessarily because----
    Mr. Terry. Well, that's the ultimate question, is can we 
and should we----
    Mr. Sieminski [continuing]. Those refineries import oil and 
sell product.
    Mr. Terry. And particularly Venezuelan oil bothers me, but 
do we have a geopolitical responsibility to allow some 
importation of Venezuelan oil?
    Mr. Sieminski. I will stay away from the policy decision of 
what we would want to do with Venezuela or not. But I would say 
that Venezuela is at the top of EIA's list of what could go 
wrong in the global markets. It could push prices up. You have 
got Iranian sanctions issues. You have the ISIS problems in 
Iraq. Maybe OPEC will at some point decide to reduce 
production. You can have difficulties in Russia even.
    There are lots of things that could make prices go up. 
Prices could come down, too. What really triggered prices 
coming down I believe over the course of the last few months 
was the combination of the unexpected recovery of oil 
production in Libya, at the same time that the economy in China 
was slowing down and demand forecasts began to recede.
    And in that background of increasing U.S. oil production, 
the combination of all of those things, I think, was just was a 
tipping point and changed everybody's mind about what the 
future looked like.
    Mr. Terry. Mr. Pugliaresi.
    Mr. Pugliaresi. I guess one of the things I would encourage 
the members to is to look at this through North American lens. 
When you put Canada in the mix----
    Mr. Terry. Absolutely.
    Mr. Pugliaresi [continuing]. We really don't like the self-
sufficiency approach to thinking about energy security. We 
really say, look, we want this platform to be productive, U.S., 
Canada, large continental lands.
    Mr. Terry. And Mexico. Let's think of it as North American 
independence.
    Mr. Pugliaresi. There may be efficient solutions for the 
platform which allows both exports and imports, because 
refining configurations are all different kinds. We have a lot 
of very capital invested in processing heavy crude. And so that 
heavy crude ought to come from Canada and get processed where--
that is where it is most valuable.
    Mr. Terry. And that makes sense to me. So, in our refining 
capacity in the United States--I will follow up on your comment 
here, do--are we ready to be able to expand or do we need to 
expand refining capabilities in the United States if we are 
going to have a mix of more sweet and then the heavier crude 
from Canada? Who wants to go with that one?
    Mr. Sieminski. Well, it is difficult to convince refiners 
to expand capacity when the demand here in the U.S. is going 
down. Typically refineries are built closer to where consumers 
are. But we have got a terrific advantage in both technology 
and low natural gas prices--natural gas is used as the refinery 
fuel--that make our refineries the best in the world. And 
taking advantage of those situations I think is what the 
refiners are doing exporting products into the global market.
    Mr. Terry. Ms. Gordon.
    Ms. Gordon. Yes, I would just say that in terms of the--as 
I said earlier, the global production has become very--it is 
not site specific anymore. It is happening all over. But this 
is also going to happen in refining. The country that added 
more refining capacity to the world market than any other last 
year was Saudi Arabia. So we are seeing China adding refining 
capacity, Saudi Arabia adding refining capacity. And demand, as 
we have just said, is really in the developing world. So to 
move that demand closer, refine products closer to people that 
will consume--we are talking Latin America, the Middle East, 
Africa--that is where future demand growth is, throughout Asia. 
So the whole market is really shifting somewhat. I don't think 
you can really draw a circle around North America very easily 
in this market.
    Mr. Terry. Although I want to.
    Ms. Gordon. I know.
    Mr. Terry. Thank you.
    Mr. Whitfield. At this time I recognize the gentleman from 
New York, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    In a number of the hearings I have attended, I have noticed 
that where the subject is an environmental public health or 
consumer regulatory issue, there are a number of questions 
about the estimates of the cost and benefits of the policy in 
question, and that is fine.
    Those questions explore the assumptions made in the 
analyses, the relative uncertainty or certainty of the 
estimates, and how sensitive the results are to changes in the 
assumptions, initial conditions, or data that go into the 
model.
    Frankly, this is a major focus of most of our conversations 
about the projections on climate change, with much emphasis on 
the uncertainties and what we don't know and little emphasis on 
all the things that we have learned and the generally robust 
conclusions of climate models.
    Economic forecasts don't receive the same scrutiny and, 
frankly, they often miss very significant changes. We have 
spilled blood and treasure over this commodity. As we all know, 
it still plays a major role in fueling our economy. We need to 
understand fully the implications before we make this change.
    I note in Administrator Sieminski's testimony, when he 
provides the results of the EIA's latest short-term energy 
outlook, that he includes the disclaimer, ``Of course, the 
recent dramatic declines in crude prices may affect our outlook 
in the coming months.''
    So I would like to better understand how robust these 
benefits--benefit estimates provided in the studies refer to 
are likely to be.
    Dr. Ebinger paints a very positive picture resulting from 
lifting the crude oil export ban, reporting a gain in GDP over 
the next 25 years of $600 billion or--billion to 1.8 trillion. 
That range is dependent upon which EIA scenario is used. These 
are model results based on other model results, EIA's model 
results.
    What are the assumptions, I would ask the panel, about the 
world price of oil in the underlying EIA scenarios? And how 
would changes in that world price impact those given estimates?
    Honorable Sieminski, if you could, please.
    Mr. Sieminski. Congressman, we will be looking at this and 
will have a lot more to say, I think, when we publish the 
annual energy outlook early next year. I think what I could say 
is that lower oil prices, if they were to remain, will slow 
down this growth in U.S. oil production. I mean, that is 
supply-and-demand pricing.
    The other possible effect it could have is to make it less 
profitable for companies to export natural gas in the form of 
LNG from the United States, and the reason for that is exports 
of LNG from the U.S. generally are predicated on selling into a 
market where that gas in Europe or Asia is priced at an oil 
equivalent. And with lower oil prices, the spread or 
profitability of exporting U.S. LNG into the global markets 
would be reduced. And so that might change those dynamics a 
little bit.
    So there are going to be a lot of places, you know, in our 
forecast, I think, where building in a possibility that lower 
prices could stay for a while would have an impact, and we will 
have plenty to say about that in the coming months.
    Mr. Tonko. Thank you.
    Ms. Gordon, do you have anything to add to that?
    Mr. Ebinger. If I could add, sir, if we look at past 
situations where we have had precipitous price declines, I 
think you can look internationally and say that the price 
declines at some point become the engines of renewed growth 
because the Chinas and Indias and Brazils of the world, all of 
a sudden, if they start seeing $50 oil, they start saying, 
``Let's rejuvenate some of our economies and rev up projects 
that didn't make sense at $100 oil.''
    And remember that--I think it was in 1998--that the price 
of oil fell, I think, from 117, 118, something like that, down 
to $38 in 7 months, but it came rapidly back up. I believe, if 
I remember correctly, at least into the 70s and then worked its 
way up to where it was before the current price drop.
    So, you know, low oil prices for those countries that are 
huge oil importers and fast-growing populations we have talked 
about in Asia--low oil prices are a boom, and, at some point, 
it will rejuvenate the Chinese and Indian economies and bring, 
hopefully, the rest of the world along with it as demand for 
good and services, once again, intensify.
    Mr. Tonko. Mr. Chair, I yield back. My time is up.
    Mr. Whitfield. The time is up.
    At this time recognize the gentleman from Virginia, Mr. 
Griffith, for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. I appreciate that. 
Petroleum coke. I always love coming to these hearings and 
listening because I learn all kinds of things.
    Ms. Gordon, tell me about petroleum coke. And you said 
earlier in your testimony that it was worse than coal. I am 
assuming that means from a pollution standpoint.
    Can you explain that to me, please.
    Ms. Gordon. So petroleum coke is the bottom of the barrel. 
It is when you wring all of the liquids out of the heavy oil. 
It comes out of every refining process, but in very small 
amounts.
    But with heavy oils, you have a lot of these high-carbon 
bottom-of-the-barrel. And so, when you put in coking capacity 
that actually cleaves these molecules, you get more liquids 
out, which is good, but then you get more solid out of your 
refinery.
    Petroleum coke is a solid fuel. If it is a very, very high-
quality petroleum coke, which doesn't come out of refineries, 
it goes into steel and glass and ceramic manufacture.
    If it is low-quality coke, high in sulfur, high in heavy 
metals--this is what comes out of the oil production process--
that goes into power production and steam, and then you are 
basically burning coal.
    It has about 10 percent higher greenhouse gas emissions 
than coal and higher nickel, vanadium, sulfur, than some of the 
worst coals, and it runs a bit counter to coal.
    So when coal is priced high, as it had been recently and 
before we were exporting a lot of our coal, China was wanting 
the petroleum coke because it was an economic benefit for them 
to burn coke instead of coal. Now prices of coal are low. And 
so coke is a little bit out of favor.
    And, if you remember, there was a news release last year 
about--it was in Detroit. There was a pile of petroleum coke 
that got a lot of attention in the press. It is very--it is 
black. It is voluminous. They are spreading in Alberta.
    It has spread for miles because they haven't--it is 
landlocked. They can't really export it. So it ends up being a 
problem. They are going to want to send us the heavy oil so 
that we export the petroleum coke because we are closer to 
ports of call.
    Mr. Griffith. OK. Now, let me go back on your testimony 
just a little bit in there.
    You said that it is now cheaper or more expensive than----
    Ms. Gordon. Than coal.
    Mr. Griffith [continuing]. The coal product.
    Ms. Gordon. Coal prices have come down. So petcoke is 
more--it is really priced to sell. It is very hard to get data 
on petcoke, actually. It is not traded. It is traded, you know, 
in the trade--with traders. It is very person to person, 
company to company.
    But because it is a byproduct of refining and no one really 
wants to make this petcoke, it builds up and you have to get 
rid of it. So, of course, you know, refiners want to get a lot 
of money for it. But, if they can't, they still have to put it 
into the market. So the price is relatively volatile.
    Mr. Griffith. OK. So from an environmental standpoint, we 
would be better off exporting low-sulfur coal from the United 
States, say, Central Appalachia, that I happen to represent and 
Mr. McKinley represents, than we would be flooding the market 
in China with this petcoke. Am I correct?
    Ms. Gordon. Petcoke's worse.
    Mr. Griffith. I appreciate that very much.
    Pipelines were brought up earlier, about whether or not we 
should be building them and the safety of bringing the oil.
    And I think I understood from the comments--just from the 
tenor of the comments that the consensus or the general 
understanding was that the oil is going to find a way to the 
United States coming out of Canada whether it is by pipeline or 
by truck or by train. Is that a fair assessment?
    And each one of you can answer that.
    Mr. Pugliaresi. Yes. I think it will. The question is cost. 
Right. The reason the pipelines--I mean, there is a real value 
to rail. There is a lot of optionality where the markets are 
not settled. But, you know, when capital gets deployed, it is 
quite interesting.
    If you want to build a major transloading facility--rail 
transloading facility, you just get a local permit. You don't 
have a NEPA review. If you want to build a pipeline, you are 
going to cross Federal land or you are going to do some action 
that is going to trigger a NEPA review.
    So we have a regulatory program that is somewhat 
unbalanced. You can put a rail facility and move things out 
pretty quickly. You want to build a pipeline, you have got a 
mountain of paperwork and intervenors before you.
    Mr. Griffith. Yes. I appreciate that.
    I was--there was one of these questions that I don't think 
has been asked in relationship to the international situation, 
and that deals with the U.S. recently won a trade case against 
China over their export ban on rare earth.
    How does that case then appear, at least from a public 
perception standpoint, when we are banning the export of our 
oil products?
    And does that weaken the President's hand in these 
discussions with other countries about exporting rare earth and 
the U.S.'s position on oil?
    Anybody want to take that one?
    Mr. Ebinger. It has been raised by a number of people, at 
least in the think tank community, as an issue. And I know a 
number of international trade lawyers that think it is quite 
possible that someone might bring an action against the United 
States for the continued ban on crude oil exports on the same 
premise, that it is an unfair barrier to trade.
    Mr. Griffith. All right.
    Ms. Gordon. I would just add that, because China's oil 
tends to be heavier, their refining capacity isn't really well-
suited to our light tight oil. And because we can export 
product--a lot of product and there is no ban on that, 
substantively----
    Mr. Griffith. You do not see China bringing an action, but 
in the think tank world, at least, there is some concern that 
somebody else might bring an action.
    Mr. Ebinger. It may not be China, but it may be someone 
else.
    Mr. Griffith. May be someone else. I appreciate that.
    And my time is up. And I yield back, Mr. Chairman.
    Mr. Whitfield. Thank you, Mr. Griffith.
    That concludes the questions.
    And did you want to ask some additional questions, Mr. 
Green?
    Mr. Green. Mr. Chairman, I would just like to follow up 
with Ms. Gordon on the----
    Mr. Whitfield. I will recognize you for 5 minutes.
    Mr. Green. Oh. Well, thank you.
    The Energy Policy and Conservation Act of 1975 you 
discussed, importantly, EPCA also addressed vehicle standards, 
energy efficiency, conservation, and created a Strategic 
Petroleum Reserve.
    If the next Congress addresses the export issue, should 
there be an effort to address the other sections like the 
Strategic Petroleum Reserve?
    Ms. Gordon. I think we are in a transition when it comes to 
oil, and that has been very obvious. And so oil policy, energy 
policy, is going to be an important new chapter that follows 
that.
    Mr. Green. OK. Well, most of that Strategic Petroleum 
Reserve actually is just east of where I live in southeast 
Texas, and it is important.
    But, again, if we are producing what we are--although we 
are still not producing enough oil for our own consumption 
mainly because of the types of oil we have.
    And, like I said earlier, the refineries that I have 
represented over the years have been retooled to do the heavier 
crude, and it would take, you know, billions of dollars to go 
back to do the lighter sweet. And just like--I mean, it is an 
investment decision if that happens.
    In your testimony, you discuss environmental risk and that, 
stated earlier, you have seen conflicting climate articles 
discussing U.S. refined products, exports.
    Is the U.S. refined product better or worse than the 
product currently consumed in other parts of the world? Do we 
produce gasoline or diesel better than India or China, for 
example? And I know we compete with Europe on the product, too.
    Ms. Gordon. Well, from a climate perspective, it is carbon. 
It would be similar. From an air quality perspective, it 
depends on the refining specifications.
    And they are, you know, lower in Europe than the 
specifications might be lower in Asia. But from a climate 
perspective, I don't think there is a difference between our 
products and theirs.
    Mr. Green. And I know that, if there is a ton of carbon 
going up in China, that is the same as a ton of carbon going up 
in east Harris County. And that is why some of us would like to 
see some kind of national agreement so we don't compete with 
one hand behind our back.
    As the U.S. produces more light sweet crude and exports 
condensate, the ultralow-sulfur diesel. And I mentioned it 
earlier, but I just want--that is benefiting some of our 
trading partners in Latin America, particularly, and, I assume, 
Europe because we have low-sulfur diesel. And I know it went--
the refining industry went through some problems through it. So 
they are actually doing very well in exporting it.
    Does that help the climate, at least the pollution issues 
in other countries?
    Ms. Gordon. Not climate, but air pollution.
    Mr. Green. Not climate, but air pollution.
    Ms. Gordon. Yes. Sulfates that are in the air. So it would 
be much more of a respiratory issue and not climate.
    Mr. Green. Well, that is probably more immediate than rise 
in the sea level and things like that. So--but it does have a 
benefit for those countries.
    Now, let me talk about petroleum coke for the last minute.
    The highest point in my district is either a landfill or 
the tons of petroleum coke, and it is shipped out.
    And in the 2005 energy bill where we set up loan guarantees 
through Department of Energy for a number of things, including 
wind and solar--and my colleague Joe Barton is not here--we put 
in there for research and what we could utilize petroleum coke 
for other than just shipping it to China and India to burn, 
which, again, puts carbon in the air, but also the local.
    Is--is there any support for trying to use something 
alternative?
    I got involved with coal ash because it was used for 
roadbeds. Is there anything else we could use for--petroleum 
coke for? Because it is--we can't burn it here because it is so 
bad.
    Ms. Gordon. Exactly.
    You know, it is a matter of taking the bottom of the barrel 
where there is no economics left and putting more money into 
it.
    There are definitely things you could do with that 
petroleum coke, the fuel-grade petroleum coke. You could take 
heavy metals and the sulfur out and make it actually a 
beneficial industrial byproduct, but it is going to cost money 
to do that.
    Mr. Green. Yes. So it is not economical.
    Ms. Gordon. It is not economical.
    Mr. Green. It is much cheaper to put it on----
    Ms. Gordon. Not if no one will take it.
    Mr. Green [continuing]. A ship and send it to someone else 
to burn it?
    Ms. Gordon. Uh-huh.
    Mr. Green. OK.
    Mr. Pugliaresi. You know, Mr. Green, I am only going to say 
one thing about the SPR, the Strategic Petroleum Reserve.
    I think it is important to remember this is a strategic 
asset. We are still connected to the world oil market. We might 
have to change the way we distribute the SPR because of the 
huge flow of crude oil into the Gulf Coast, but I don't think--
I think we should--you know, and I am sure we are going to 
study this carefully.
    But, you know, things can change in the world. We are not 
going to get rid of the 82nd Airborne and we are not--and I 
think we ought to look at the SPR that way. The world could 
change and we may need that. Even if we are relatively 
independent, a price spike in the world oil market for some 
catastrophe somewhere could do a lot of damage to the American 
economy. We will want that asset at that time.
    Mr. Green. And that is correct.
    And where I come from, the goal of that was to buy that oil 
and put it in that when it was low. And then when we release it 
because--when oil goes up because of embargo or whatever else 
it does.
    But Mr. Chairman, you have been more than kind today. Thank 
you.
    Mr. Whitfield. I also want to mention Bill Flores is here, 
a member from Texas who was recently elected chairman of the 
Republican Study Group. He is going to be a member of the 
Energy and Commerce Committee in the 114th Congress and a 
member of this subcommittee.
    And since, Bill, you sat there so patiently for all these 
hours, do you want to ask a few questions before we get out of 
here?
    Mr. Flores. Well, I think that I just heard the voting 
buzzer go off. So I will, first of all, thank you for 
recognizing me and thank you for allowing me to have the time. 
I will keep my comments short.
    One of you--well, more than one of you on the panel talked 
about the cumbersomeness of having Federal policy trying to 
interfere with free markets. And I think that is something that 
we on this side of the room need to always remember, that 
anytime that we try to violate the laws of economics, it is 
like violating the laws of physics.
    And you can think about gravity as an example. The more you 
violate the laws of gravity, the harder the impact at the end. 
And that was one of the first things that my economics 
instructor taught me back when I was in college.
    And so I think that we on our side, again, need to be 
constantly reminded that the free market works best when it 
lets the--when the Federal Government doesn't have too heavy a 
hand.
    There was some conversation here about the transparency 
related to the oil markets, and I would vigorously disagree 
with those comments because of this.
    If you say there is no transparency, that means that the 
buyers and sellers that are out there taking this oil and 
refining it know nothing about it, and that is not the case.
    That oil is being moved around. It is being trans--I mean, 
it is being bought and sold and refined and put into finished 
product and being sold to an end user and being consumed.
    And so to say that there is no transparency in the market 
is just false because buyers and sellers are out there. They 
are happy with the level of information that they have.
    If they weren't, then there would be no trading. There 
would be no commerce in those products. And so I would not like 
the panel to get too affixed to those comments because they 
just are not true.
    And, with that, I yield back, Mr. Chairman. And thank you.
    I hope everybody has happy holidays and Merry Christmas.
    Mr. Rush. Mr. Chairman, I would really ask for unanimous 
consent to allow Ms. Gordon to respond to that because----
    Mr. Whitfield. Without objection, go ahead.
    Ms. Gordon. There is certainly some transparency in the 
market. I mean, it is working. But I think the best example of 
why there isn't enough information in the market is the 
explosiveness of the rail cars taking Bakken oil.
    The market really didn't know the composition of that oil, 
and the equipment wasn't really designed to deal with that oil.
    So I think that we are seeing physical manifestations of 
the fact that there isn't enough transparency in this market.
    Mr. Whitfield. Did you want to ask for unanimous consent?
    Mr. Rush. Mr. Chairman, I also want to ask for unanimous 
consent that this report from the--ostensibly, from the United 
Steelworkers--that it be included into the record.
    And, also, I have here an article from a Mr. Mason Inman 
entitled, ``The Fracking Fallacy.'' I would like for that to be 
included into the record.
    Mr. Whitfield. These will be included in the record.
    [The information follows:]
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    Mr. Whitfield. And then, also, I would like to put into the 
record letters from the American Petroleum Institute, the 
American Fuel and Petrochemical Manufacturers, and the Diesel 
Technology Forum. Without objection.
    [The information follows:]
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    Mr. Whitfield. So that concludes today's hearing.
    I want to thank you once again for your testimony and for 
your patience and responding to our questions.
    And we are going to have more hearings on this when we 
reconvene for the 114th Congress. And the record will remain 
open for 10 days for additional materials.
    So that concludes this.
    Mr. Rush. Mr. Chairman, I want you to join with me in 
wishing everybody happy holidays.
    Mr. Whitfield. You think we should?
    Mr. Rush. I think we should.
    Mr. Whitfield. Merry Christmas. Happy holidays. And enjoy 
the break.
    That concludes today's hearing.
    [Whereupon, at 11:50 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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