[Senate Hearing 114-382]
[From the U.S. Government Publishing Office]
S. Hrg. 114-382
CHALLENGES AND OPPORTUNITIES FOR SMALL
BUSINESSES ENGAGED IN ENERGY DEVELOPMENT AND ENERGY INTENSIVE
MANUFACTURING
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JULY 14, 2015
__________
Printed for the Committee on Small Business and Entrepreneurship
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED FOURTEENTH CONGRESS
----------
DAVID VITTER, Louisiana, Chairman
JEANNE SHAHEEN, New Hampshire, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
MARCO RUBIO, Florida BENJAMIN L. CARDIN, Maryland
RAND PAUL, Kentucky HEIDI HEITKAMP, North Dakota
TIM SCOTT, South Carolina EDWARD J. MARKEY, Massachusetts
DEB FISCHER, Nebraska CORY A. BOOKER, New Jersey
CORY GARDNER, Colorado CHRISTOPHER A. COONS, Delaware
JONI ERNST, Iowa MAZIE K. HIRONO, Hawaii
KELLY AYOTTE, New Hampshire GARY C. PETERS, Michigan
MICHAEL B. ENZI, Wyoming
Meredith West, Republican Staff Director
Robert Diznoff, Democratic Staff Director
C O N T E N T S
----------
Opening Statements
Page
Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana.. 1
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire.......... 6
Witnesses
Mr. Toby Mack, President & CEO, Energy Equipment and
Infrastructure Alliance, Washington, DC........................ 9
Dr. Neil Aspinwall, Chancellor, SOWELA Technical Community
College, Lake Charles, LA...................................... 16
Ms. Kateri Callahan, President, Alliance to Save Energy,
Washington, DC................................................. 22
Mr. Tyson Slocum, Director, Public Citizen Energy Program,
Washington, DC................................................. 29
Alphabetical Listing and Appendix Material Submitted
American Sustainable Business Council
Letter dated July 13, 2015................................... 84
Aspinwall, Neil
Testimony.................................................... 16
Prepared statement........................................... 19
Responses to questions Submitted by Senator Enzi............. 87
Callahan, Kateri
Testimony.................................................... 22
Prepared statement........................................... 24
Mack, Toby
Testimony.................................................... 9
Prepared statement........................................... 11
Responses to questions Submitted by Senator Enzi............. 88
Shaheen, Hon. Jeanne
Opening statement............................................ 6
FY14 Scorecard Summary by Prime Spend Subk and Plan Progress
Scores 2015................................................ 50
Slocum, Tyson
Testimony.................................................... 29
Prepared statement........................................... 31
Vitter, Hon. David
Opening statement............................................ 1
Letter Dated May 8, 2015, from the Small Business
Administration Office of Advocacy.......................... 3
Hearings on ``Non-Jurisdictional'' Issues under Democratic
Leadership................................................. 8
Report titled ``Macroeconomic Impacts of LNG Exports from the
United States''............................................ 55
Report titled ``Updated Macroeconomic Impacts of LNG Exports
from the United States''................................... 60
Report titled ``The 2015 Economic Report of the President''.. 61
Article titled ``Democrats Increasingly Backing Oil and Gas
Industry''................................................. 70
Report titled ``What They're Saying: Labor Groups Support LNG
Exports''.................................................. 75
CHALLENGES AND OPPORTUNITIES
FOR SMALL BUSINESSES ENGAGED
IN ENERGY DEVELOPMENT AND ENERGY INTENSIVE MANUFACTURING
----------
TUESDAY, JULY 14, 2015
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 2:35 p.m., in
Room 428A, Russell Senate Office Building, Hon. David Vitter,
Chairman of the Committee, presiding.
Present: Senators Vitter, Fischer, Gardner, Ernst, Enzi,
Shaheen, Markey, and Coons.
OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, AND A U.S.
SENATOR FROM LOUISIANA
Chairman Vitter. Good afternoon, everybody. I will call the
committee to order.
We are here for an important hearing entitled, ``Challenges
and Opportunities for Small Businesses Engaged in Energy
Development and Energy Intensive Manufacturing.'' This hearing
is particularly important and timely because of the
significance of the energy industry to our economy and how many
small businesses are involved.
Before the drop in the price of oil relatively recently,
energy jobs in America were the difference between our being in
recovery and actually remaining in a recession. Were it not for
those energy-related jobs, we would still be in a technical
recession. Thankfully, that is not the case because of these
significant jobs.
And, as I said, it is also important and why we are talking
about it in this Small Business Committee that many energy-
related businesses are small entities. To quantify that, I will
use my home state of Louisiana as an example. A majority of
Louisiana businesses in four of the five energy-defined sectors
had less than 20 workers. Specifically, businesses with fewer
than 20 employees made up about 77 percent of the oil and gas
extraction businesses, 71 percent of oil and gas operations
businesses, over 68 percent of oil and gas wells businesses,
and about 57 percent of oil and gas field machinery and
equipment-related businesses. These illustrate just how
important the industry and the sector is to small business.
The purpose of this hearing is to delve a little deeper
into opportunities and challenges that these small businesses
face in the energy sector. One of our witnesses, Toby Mack, is
President of the Energy Equipment and Infrastructure Alliance,
which represents the shale supply chain, and he will speak to
that phenomenon, including LNG exports.
The opportunities from this new era of American energy
abundance are tremendous, but there are also challenges. One
long-term challenge is that the demand for skilled workers is
outpacing their availability, and so the question becomes how
do we help train our workers to step into these high-skill,
high-demand jobs in the energy sector.
Part of the answer lies with our community and technical
colleges that are stepping up to provide tailored programs and
services for that training. Our second witness, Dr. Neil
Aspinwall, Chancellor of Southwest Louisiana Technical
Community College, will discuss some of these challenges and
opportunities in depth.
And, of course, there are other challenges, as well. I have
been very outspoken about the Obama Administration's energy and
environmental regulations, which are overly burdensome, in my
opinion, and really hold down a lot of great potential industry
sector job creation. This committee recently held a hearing to
examine how the EPA violated the Regulatory Flexibility Act by
certifying that its rule to redefine Waters of the United
States will not have a significant economic impact on a
substantial number of small entities. And in particular, if you
will remember, we heard testimony from the Small Business
Administration's Office of Advocacy and it was very clear on
that point.
Now, while EPA did not make as blatant of a mistake when it
came to its proposed federal implementation plan for regulating
carbon emissions, I think it clearly fell short there, as well.
EPA's efforts were so inadequate, in fact, that they earned a
rare letter of rebuke from the SBA's Office of Advocacy, which
I will insert into the record. If there is no objection, and
hearing none, we will insert that into the record.
[The letter follows:]
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Chairman Vitter. There are many other examples of the EPA's
refusal to responsibly consider small business impacts, and we
have talked about those on other occasions, as well.
For all of these reasons, and because of all aspects of
this hearing, I am working with others on a small business
energy bill and will be finalizing that in the coming days.
But, certainly, today's discussion will help shape that
legislative solution to reduce federal burdens for small
businesses specifically involved in the energy sector. I
believe that is important to fully maximize the job creation
potential of this important sector of our economy.
And now, I want to welcome and turn to Senator Shaheen, the
committee's Ranking Member.
OPENING STATEMENT OF HON. JEANNE SHAHEEN, RANKING MEMBER, A
U.S. SENATOR FROM NEW HAMPSHIRE
Senator Shaheen. Thank you very much, Chairman Vitter.
Welcome, everyone. Welcome to our witnesses. I look forward
to this opportunity to discuss the energy challenges that face
small businesses. I do have some concern that we may get into
some energy issues that are under the jurisdiction of the
Senate Energy and Natural Resources Committee, but nonetheless,
small businesses are facing critical cost issues because of
energy challenges, and so we should have a good discussion.
Having owned and operated a small business, like I am sure
all of us know, every cost counts and every cost has to be
managed as smartly as possible, and this is certainly true for
energy consumption. We are seeing in New Hampshire, where I am
from, that rising costs of energy are having a real impact on
the business environment.
Now, as I think about energy, I think about energy
efficiency, because it is the cheapest, fastest way to address
our nation's energy needs. I have joined with Senator Rob
Portman to advance major legislation to ramp up energy
efficiency in manufacturing, in buildings, and in the federal
government. I think this is a particularly important way to
address energy because it is something that we can all agree
on, regardless of what part of the country we are from or what
particular area of energy we support, whether it is fossil
fuels or solar and wind. Everybody benefits from energy
efficiency.
We had the opportunity to bring Shaheen-Portman to the
floor last year, but despite overwhelming support, it was not
able to advance because of disputes over an unrelated partisan
amendment. However, the President did sign into law a mini-
version of the bill earlier this year, which we think helps
provide significant efficiency savings.
Every small business, whether in manufacturing, in retail
services, or even agriculture, can benefit from energy
efficiency. But, of course, there is a problem, and that is
that small businesses, especially in energy-intensive sectors,
face unique challenges and barriers when it comes to addressing
their energy needs and increasing their energy efficiency. I
think the Small Business Administration can play an important
role, particularly when it comes to the financing that they
often need to be more energy efficient.
Today, I have introduced legislation that will ensure that
small businesses who want to undertake energy efficiency
projects can qualify for the 504 loan program. As members of
this committee, we know that the 504 program helps small
businesses purchase their own real estate or equipment. That
makes it easier for them to invest in expanding their
companies. By helping small businesses take full advantage of
energy efficiency, we reap a wide range of benefits, everything
from reducing costs, to enhancing competitiveness, to reducing
greenhouse gas emissions.
So, again, I want to welcome our witnesses, and I want to
take this opportunity to give a special welcome to Kateri
Callahan, who is President of the Alliance to Save Energy and
who I have had the great opportunity to work with now for
almost six years ago. For more than a decade as President of
the Alliance, Kateri has provided extraordinary national
leadership in the field of energy efficiency and I look forward
to her testimony today and to her continued efforts to help
businesses become more efficient.
Thank you, Mr. Chairman.
Chairman Vitter. Great. Thank you, to our Ranking Member.
Regarding the jurisdiction issue, let me just note that
this committee has always, on a bipartisan basis, had hearings
on a number of topics that were not within our narrow technical
jurisdiction, including certainly energy discussions and
hearings. And, just for instance, under Senators Landrieu and
Kerry, two previous Chairs, there were five energy discussions
like that, and I will just submit that list for the record.
[The information follows:]
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But, I know we will have a productive discussion.
Let me introduce our four witnesses and then they will
testify, in turn.
Toby Mack is President and CEO of the Energy Equipment and
Infrastructure Alliance based in Washington, D.C.
Dr. Neil Aspinwall is Chancellor of Southwest Louisiana
Technical Community College in Lake Charles, Louisiana.
Kateri Callahan is President of the Alliance to Save Energy
in Washington, D.C.
And Tyson Slocum is Director of the Energy Program at
Public Citizen.
Welcome to all of you, and we will be eager to hear from
all of you in turn, starting with Mr. Mack.
STATEMENT OF TOBY MACK, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
ENERGY EQUIPMENT AND INFRASTRUCTURE ALLIANCE
Mr. Mack. Thank you, Chairman Vitter and Ranking Member
Shaheen, for the opportunity to comment on the impact of energy
development on small business.
EEIA is an organization of companies, trade associations,
and labor unions that represent the businesses and workers of
the shale oil and gas supply chain. Policies that support
increased production will result in a great number of new,
high-paying jobs and strong growth in the supply chain,
especially for its small businesses.
Equipment, products, and services provided in support of
shale energy operations come from all 50 states. They are found
in 60 different industries in six major sectors. These are
depicted on the diagram included in my written statement, which
appears as this. They are, briefly, equipment and machinery,
construction, logistics, materials and supplies, information
technology, and professional services.
To illustrate the supply chain, I offer the example of a
piece of construction equipment used to prepare a production
site or build energy facilities such as pipelines, storage, or
an LNG processing plant. Consider what goes into making that
machine. There is raw steel, fabricated steel plate, and
forgings; the machine tools that cut, bend, machine, and weld
components; buckets, teeth, and attachments; a high-horsepower
engine and transmission; hydraulic cylinders and components;
steel sprockets and tracks or huge rubber ties; electronic
controls and components; plus hoses, valves, filters, gaskets,
lubricants, and fuel.
To obtain these components, the machine's manufacturer has
thousands of its own suppliers, and their suppliers have
suppliers, and so on down the line until you get to raw
material. The vast majority of these businesses are smaller
local and regional firms. They are all essential to building
the machine, and they are ultimately dependent on energy
production to create the demand for it and the jobs that go
with it.
Now, let us turn to the supply chain's economic and
employment dimensions. EEIA estimates that there are at least
120,000 energy supply chain businesses, more than 100,000 of
which are small. According to IHS, in 2015, the shale supply
chain workforce consists of 615,000 jobs, growing to 757,000 by
2025. Output in 2015 is $173 billion, growing to $206 billion
by 2025.
Energy supply chain workers earn, on average, $79,000 per
year, vs. $68,000 for all American workers. For every direct
job in energy production, three jobs are created in the supply
chain, and, in fact, six more are created in the communities
where workers live and shop.
Consider the new supply chain jobs created when additional
natural gas is produced for export. IHS reports that supply
chain industries will have 515,000 jobs supporting shale gas
production in 2015, growing to 655,000 jobs by 2020. EEIA
estimates that shale gas production at 44 billion cubic feet
per day in 2015, to reach almost 60 billion cubic feet per day
by 2020. This calculates to about 11,000 supply chain jobs for
each new BCF per day.
Recent approvals of applications to export LNG anticipate
that between now and 2020, capacity will reach about 10 BCF per
day, requiring that much additional natural gas production from
shale. Thus, we can look forward to over 100,000 new supply
chain jobs to be generated by LNG exports alone over the next
five years. That means $8 billion of additional annual income
to American workers which will be spent locally as these
workers consume, pay taxes in, and contribute to their local
communities.
Using the SBA estimate that half of American workers are
employed by small business, we project that over the forecast
job gains, small businesses will be responsible for creating at
least half of them.
Much of this job growth will be concentrated in skill areas
that require technical training, but not four-year or higher
degrees. Supply chain companies will be challenged to fill
positions in high-growth occupations, the need for which will
as much as double between 2012 and 2025. High-growth
occupations include truck drivers, construction laborers,
equipment mechanics, engine technicians, equipment operators,
machinists, welders, and many more.
The energy supply chain is truly national and not confined
to oil and natural gas producing areas. We see this effect by
looking at the geographic distribution of job gains that occur
when crude oil production grows. Of the top 15 states by job
gains if crude oil production were increased for export, 10 are
states in which little or no crude oil is produced. In fact,
Illinois, because of the prominence of equipment manufacturing,
ranks third behind Texas and California in supply chain jobs
gained.
In summary, exports of LNG, and, indeed, of all energy
products, including crude oil, will support additional domestic
energy production from our large and growing reserves for our
innovative and increasingly productive energy sector, supported
by the supply chain's small businesses. American shale energy
production renaissance has been the principal contributor to
our emergence from the deep recent recession. It has the
potential to spur substantially more job creation throughout
the country, and particularly with small business, if Congress
adopts policies that facilitate exports. Thank you.
[The prepared statement of Mr. Mack follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Thank you very much, Mr. Mack.
And now, we will hear from Dr. Neil Aspinwall. Doctor,
welcome.
STATEMENT OF NEIL ASPINWALL, CHANCELLOR, SOWELA TECHNICAL
COMMUNITY COLLEGE, LAKE CHARLES, LA
Dr. Aspinwall. Thank you, Mr. Chairman, members of the
committee.
Southwest Louisiana has been blessed with an abundance of
expansion activities related to the petrochemical, liquified
natural gas, LNG, and gas to liquids, GTL, industry. In fact,
there are currently 85-plus billion dollars in planned
industrial expansions directly related to LNG/GTL energy
sector, and approximately $30 billion in construction is
already underway.
These massive and historical expansions in the
petrochemical industry create the need for highly skilled
workers for the oil and gas industry. Southwest Louisiana
Technical Community College, or SOWELA, as it is known, is one
of the 13 institutions that comprise the Louisiana Community
and Technical College System, and we have been given the
opportunity and responsibility to provide the training programs
and services needed to produce the workforce necessary to help
construct these massive industrial expansions and operate the
new petrochemical plants once they begin production.
According to the Louisiana Workforce Commission, the annual
completers of workforce programs necessary to fill the
occupations of highest need for the industry sector expansion
in the region are: construction crafts field, 9,360 workers;
industrial production, 4,955 workers; welding, 4,810 workers.
Since 2012, SOWELA has begun to design, create, implement, and/
or expand training programs to help meet the demands of these
oil and gas industrial expansions.
Programs focusing on skilled crafts such as pipefitting,
millwright, welding, insulators, scaffolding, concrete forming,
machining, electrician, lab analysis, and non-destructive
testing have been added to the instructional program options at
the college. Enrollment and high-demand programs directly
related to the oil and gas industry, such as process technology
and industrial instrumentation, have literally doubled in the
past couple of years.
According to the Energy Sector Jobs to 2030, a global
analysis published by the Institute for Sustainable Futures in
2009, the 2020 global energy sector is expected to employ an
estimated 10.5 million workers. By 2030, global energy sector
jobs are expected to grow by an additional 800,000 workers,
totaling an estimated 11.3 million employees.
Therefore, SOWELA Technical Community College, whose
mission is to provide the skills and training needed to prepare
the workforce to help grow and sustain the regional, state, and
national economy, must be prepared with the programs, services,
and financial resources necessary to help produce this massive
workforce.
In order to get the students into the workforce quicker and
satisfy the hiring demands of industry, many higher education
institutions are beginning to offer programs in shorter
condensed formats. In fact, SOWELA created a compressed process
technology program to provide the opportunity for students to
earn an Associate of Applied Science degree in just 16 weeks.
The first FastTrack P-Tech cohort contained 18 students, all of
which already earned advanced degrees and were placed into the
workforce within six months after completion. This
substantiates the fact that these energy sector jobs are highly
sought after positions that have and will continue to attract
individuals to the region for better employment opportunities.
As the workforce needs for the oil and gas industry become
more acute, the petrochemical industry has requested and SOWELA
has implemented various short-term training programs, many less
than six months in length and ranging from 80 to 900 contact
hours. These programs have been developed in the craft areas,
such as machining, millwright, electrical, structural welding,
pipe welding, scaffolding, cement forming, and HVAC, and as an
example, an individual who enrolls in and successfully
completes the structural welding program can immediately be
hired at an hourly wage of at least $26. So, a time commitment
of six months and a program cost of approximately $2,200 can
provide the means for an individual to earn a middle class wage
with great benefits which helps strengthen the local, state,
and national economies.
However, this method of placing students into the workforce
quicker through condensed instructional delivery formats does
have a downside. Although shorter programs provide skill
training in predetermined critical competency areas and reduces
the number of contact hours or seat time a student needs to
spend in the classroom or lab. It is this reduction in contact
hours that prevents the programs from being eligible for
federal financial aid. According to the U.S. Department of
Education guidelines, these types of short-term condensed
workforce development programs are not eligible for federal
financial aid because they are not at least 600 clock hours and
15 weeks in length.
But, despite the ease at which these training programs can
be created and offered and the demand from industry, the
program costs still present an obstacle that prevents many of
our citizens from taking advantage of the training needed to
prepare them for the opportunities available through the
petrochemical industry expansions. Since 84 percent of
community college students work, and 60 percent work more than
20 hours per week, our students cannot afford to quit their
jobs and take advantage of skills training programs in which no
financial aid is available.
SOWELA, as well as other community colleges whose primary
mission is workforce development, struggles to find options to
help students cover the costs of enrolling in and completing
these condensed industry-specific training programs and
services. Fortunately, various private industries have stepped
forward to provide scholarships for students seeking entry into
these programs. Although greatly appreciated and highly sought
after, these private business and industry scholarships are not
the long-term solution to sustaining the training programs
necessary for building the oil and gas industry workforce.
A more permanent and guaranteed funding source needs to be
created so that the oil and gas industry and the energy sector
overall can continue to be competitive and help the national
economy grow and improve. Legislation on the federal level
could help provide the funding solution needed, and I hope this
committee will investigate all options for federal funding
assistance.
In closing, SOWELA and the Louisiana Community and
Technical College System have a golden opportunity to shape the
future of Louisiana and the nation as a whole by producing the
workforce needed to ensure that America continues to produce
the energy necessary to fuel an economy that will provide
financial and economic stability, vitality, and prosperity for
generations to come. Thank you.
[The prepared statement of Mr. Aspinwall follows:]
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Chairman Vitter. Thank you very much, Doctor.
And now, we welcome again Ms. Kateri Callahan. Welcome.
STATEMENT OF KATERI CALLAHAN, PRESIDENT, ALLIANCE TO SAVE
ENERGY
Ms. Callahan. Thank you, Mr. Chairman and Ranking Member
and members of the committee. I truly appreciate the
opportunity to testify to you today on the important role that
energy efficiency can play in making small businesses more
productive, more competitive, and greater jobs generators.
My organization, the Alliance to Save Energy, is a
nonprofit coalition of 140 different businesses across the
entire economy and institutions that are dedicated to advancing
energy efficiency. We were formed way back in 1997 by Senator
Chuck Percy, a Republican from Illinois, and Hubert Humphrey, a
Democrat from Minnesota, and we are honored to continue the
Alliance's history of bipartisan leadership.
I am particularly proud that three members of this
committee serve as honorary members of the Alliance. Jeanne
Shaheen is our first ever elected female Honorary Chair of the
Alliance. Senator Ed Markey is the longest-serving
Congressional member on our Board of Directors. And Chris Coons
is our newly elected First Vice Chair. But, I would also note
that we are fortunate to have Energy Committee Chair Lisa
Murkowski, Senator Portman, and Senator Collins providing
leadership from the other side of the aisle.
Energy efficiency is America's greatest energy resource.
Since the 1970s and our founding, we have doubled energy
productivity. That means we are getting twice as much GDP from
each unit of energy that we consume, and this translates into
real savings for America's businesses, whether they are big or
small.
But, Americans can do better. We still waste over half of
the energy that we consume. This means that the opportunity to
double our energy productivity once again lies before us, and
the rewards if we achieve that goal are enormous. We could
reduce our national energy bill by a full $527 billion while
creating 1.3 million jobs. And we could lower our energy
imports to represent only seven percent of our total
consumption.
And, no sector of the economy has more to gain from energy
efficiency than small business. As Senator Shaheen said, small
businesses, and most especially small manufacturers, energy use
is one of the top costs of doing business. Yet, small
businesses remain a largely untapped market, as she mentioned,
when it comes to energy efficiency, and there are two major
reasons why.
First is knowledge. Energy is not the core business of most
small enterprises, notwithstanding those that Mr. Mack talked
about, and laser-focused entrepreneurs often do not have the
information about technologies, programs, and incentives that
could help them to reduce their energy waste.
The other big problem is capital. Small businesses rarely
have investment dollars to spare, and the up-front costs for
energy efficiency upgrades often inhibit investment.
Fortunately, innovative companies, utilities, and
government agencies are finding ways to tackle these barriers.
The Small Business Direct Install programs are a great example
of how government and businesses are cooperating to eliminate
barriers and create real value. In New York, these SBDI
programs have improved the facilities of over 100,000 small
businesses, reducing their energy operating costs by more than
a billion, and that is money that is getting poured back into
the State of New York.
The programs are themselves being carried out by innovative
small businesses, like Lime Energy, EnerPath, SmartWatt, and
welding companies you have probably not heard of, but these
companies are job generators. Just in New York, these companies
have hired nearly 200 new employees and also have helped to
create thousands of indirect jobs.
Across the nation, state energy offices, the industrial
assessment centers, the Department of Energy, and small
businesses are joining together to create these successes. One
quick example is ECT Industries, which is a four-generation
family-owned business that took advantage of Wisconsin's Focus
on Energy Program. ECT put in efficient lighting that reduced
their energy intensity in lighting by 46 percent. The project
paid for itself in only eight months and they are saving over
$55,000 a year in avoided small business costs.
There are lessons that come from these successful programs
that can help in scaling up energy efficiency across the entire
small business sector. First, we need greater outreach to small
businesses to ensure that they know about the technology,
resources, and most of all, about the bottom-line benefits to
cutting energy waste.
Second, building relationships with business owners and
developing solutions that fit their specific needs is critical.
And, finally, leveraging existing resources, from tax
incentives to loan programs to technical assistance. The
federal government, through the Small Business Administration,
the Department of Energy, the Department of Agriculture, and
other agencies, has a significant role to play. For example,
the Small Business Administration's Section 504 program that
Senator Shaheen mentioned can be used as a very effective tool
for overcoming the first cost and financing issues surrounding
efficiency upgrades, and we look forward to working with the
Senator on that program.
In addition, she has legislation pending, S. 1054, the
Smart Manufacturing Leadership Act, that would direct the
Department of Energy to provide assistance to small and medium-
sized manufacturers in implementing smart manufacturing
programs that will make them more efficient, more energy
productive.
So, in closing, I want to thank the committee for allowing
me this opportunity to discuss the important role of energy
efficiency in increasing the competitiveness of our economy's
backbone, our small businesses and our entrepreneurs. Thank
you.
[The prepared statement of Ms. Callahan follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Thank you very much, Ms. Callahan.
And now, we will hear from Tyson Slocum. Welcome.
STATEMENT OF TYSON SLOCUM, ENERGY PROGRAM DIRECTOR, PUBLIC
CITIZEN
Mr. Slocum. Thank you very much, Chairman Vitter, Ranking
Member Shaheen, members of the committee. My name is Tyson
Slocum. I direct the Energy Program at Public Citizen. We are
one of America's largest consumer advocacy groups and we
receive most of our funding from individual contributions of
over 400,000 members across the United States, many of whom
either own their own small businesses or are employed at small
businesses.
So, we have been hearing a lot from certain representatives
of the natural gas industry that they are in a type of crisis,
that unless they are able to receive some form of legislative
or regulatory relief, primarily in the form of being able to
expedite natural gas exports, LNG exports, that unless they are
able to get this relief, there are going to be problems ahead.
But, when I look at the data, when I look at the numbers,
the natural gas industry has never been doing better, right.
This past winter, the natural gas industry broke all sorts of
records in terms of production. We have never produced more
natural gas every day than we did this winter, and kudos to the
men and women of the natural gas industry and all the small
businesses and large businesses associated. We are producing so
much natural gas that we just passed last year Russia to become
the largest natural gas producer on the planet.
So, I can understand why the natural gas industry wants to
be able to more easily sell natural gas abroad, because the
last time I checked, natural gas sells for under $3 here in the
United States, whereas it is double, triple, or even five times
higher than that in parts of Europe and Asia and elsewhere. So,
the natural gas industry and its associated small businesses
that provide important services to them, I can understand why
they would want to advocate for that.
But, when I look at there are more small businesses out
there that are very concerned about the prices they pay for
natural gas, and there is no question that if we ramp up
natural gas exports, we are going to see higher domestic prices
for American consumers and American businesses, and that is not
just Public Citizen saying that, that is the U.S. Energy
Information Administration that has come to that very clear
conclusion.
So, rather than accelerate the ability of the industry to
ramp up exports, I would like to see Congress and the executive
branch work to prioritize the protection of consumers and small
businesses that are sensitive to natural gas price increases,
and there are several things that Congress and the executive
branch can do in this regard.
One is, in 1975, Congress passed a law called the Energy
Policy and Conservation Act. That law did many things. One
thing it did is that it directed the President to ban the
export of crude oil and natural gas unless the President made a
public interest determination that it was in the public
interest to export that. We have got rules that the Department
of Commerce put together in its short supply regulations that
significantly limit the ability of the United States to export
domestically produced crude oil. The Department of Commerce
never put together rules on natural gas, probably because in
1975, no one was talking about exporting natural gas. So, I
think that is something that I think Congress ought to
communicate, and I know that some members, like Senator Markey,
have done just that.
I think that Congress ought to ensure that the public
interest determinations being made right now by the Department
of Energy about whether or not to export gas are more concrete,
meaning that we need to ensure that exports are not going to
result in higher prices for consumers. Like I said, there is no
question that allowing and expediting LNG exports is going to
boost elements of the natural gas production industry and
associated small businesses that assist them. But, there are a
lot more small businesses out there that would be harmed by the
increase in prices, and we need to make sure that a public
interest definition clearly states that prices cannot go up on
consumers as a result of exporting natural gas.
A third thing that Congress can do is revisit efforts back
in the 2005 Energy Policy Act that I was working on, along with
a bunch of others, where we called for governors of states
where LNG facilities are located to be able to have equal say,
along with FERC, about whether or not a permit for siting an
LNG facility is granted. I believe that states have a great
opportunity to hear from their constituents, just as FERC does,
and they ought to have a prominent role.
Thank you very much for your time, and I look forward to
any questions you may have.
[The prepared statement of Mr. Slocum follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Okay. Thank you very much.
I am going to reserve my time for later and invite Senator
Shaheen for questions.
Senator Shaheen. Thank you very much, Mr. Chairman.
The U.S. industrial sector uses about 30 percent of all
energy, and it is more energy than is used by any other sector
of our economy. As we think about how do we address the costs
of economy for small businesses, I wonder, Ms. Callahan, if you
could talk about some of the market barriers that exist to
deploying more energy efficiency in the manufacturing sector
and why we should think about policies that can help fix these
roadblocks.
Ms. Callahan. Thank you very much, Senator. One of the
things that is interesting about small business and small
manufacturing, the challenges are really twofold, and the first
challenge is that while they are huge consumers--they use about
50 percent, the small businesses, of that energy that is
consumed--but it is very diffuse and it is used in very, very
different ways. So, it makes it kind of a tough market to
tackle. So, that is a big challenge.
And then the second that is correlated to that is that
these businesses are focused largely on doing other things, and
so if they have spare capital or they have access to capital,
they are tempted to spend it in other ways, and so you need to
talk to small businesses in terms of, well, if you can save
$55,000 a year, how many cups of coffee would you have to
manufacture, or how many dresses would you have to sew and sell
in order to get that kind of bottom line profit.
So, it means that you have to get really personal with the
business owner, the man or the woman that is running the
business, and understand. So, we are at a point in time where
we are seeing that be able to happen through these programs
like SBDI, because the data analytics are getting there. The
people that are offering services are able to go in on an iPad
and show folks what kind of savings are going to be realized.
So, in order to get it more at scale, we have got to be
able to take it out of the five or six states that are doing
that kind of work and put it nationwide, and a key to it and
the data analytics, also, is getting standard offerings for
financial assistance. So, your program, the 504(b) program, the
Department of Agriculture's REAP loan program, those kind of
things are going to be essential, because we have got--banks
are lining up, but they are not willing to take the risk and
they do not have the data necessary to do the deals and the
deal flow. So, we have got to work on that.
Senator Shaheen. So, you talked a little bit in your
testimony about ways in which we can help small businesses get
access to some of the efficiency programs. Do you have any--
what has been the experience of the Alliance in what is the
best way to get the attention of small businesses and provide
that help?
Ms. Callahan. Again, I think that it is--unfortunately, it
has to be done at the local level and through local partners
and one-on-one. But, the role that government can play can be
in helping to make sure that information, tools, technical
assistance is provided, and we can train the trainers, if you
will. So, when you have the small business counselors in
states, when you have these manufacturing extension
partnerships, making sure that they understand how to talk to
folks about energy efficiency, what is available, what the
resources are that are already there, whether there are state
tax incentives or, hopefully again someday, federal tax
incentives, that will allow people to get the job done.
So, I do think there is a role for federal government, but
you have got to meet these folks where they live.
Senator Shaheen. Thank you.
Mr. Slocum, living in New England, we have some special
challenges with respect to access to gas, natural gas in
particular. Right now, we are experiencing real difficulties.
We have gone from 15 percent dependence on natural gas in New
Hampshire to almost 50 percent dependence, and getting the gas
there is challenging.
So, can you talk about what the projections are for the
impact on us in New England if we start exporting LNG. Will
that have an impact on the cost of gas, which is already very
high?
Mr. Slocum. Yes, absolutely. There are some exports to
Canada. You know, we export about a trillion and a half cubic
feet of gas, which is less than five percent of our total
annual production, mainly to Canada and Mexico, and there is a
significant amount of that coming out of the New England area
as well as other areas.
New England has a lot of special challenges. I do agree
that there are some infrastructure constraints. But, there are
also some power market regulatory problems in New England. For
example, last year, I, along with the Connecticut Attorney
General, helped to uncover a billion and a half dollar market
manipulation by a Cayman Islands private equity firm called
Energy Capital Partners that intentionally shut down a power
plant in order to game the New England ISO's capacity auction.
So, that was a billion and a half dollars in increased
cost, not because of problems of natural gas infrastructure
constraints, but because of incredibly poorly written market
rules. And, so, this is something we are currently involved in
litigation with the Federal Energy Regulatory Commission to get
them to actually do something about that issue. But, I think
that some big challenges with New England in the power market
lie with the ability to have a more transparent and accountable
independent system operator there.
Senator Shaheen. Well, I look forward to hearing some of
your ideas about the regulatory challenges, because, certainly,
I think we can benefit from that.
And, Mr. Chairman, if you would give me just a few more
seconds to point out that the SBA scorecard on how federal
agencies are doing in reaching their small business contracting
goals has just come out, and I note that one of the Departments
that has been way below its contracting goals and actually
received an F was the Department of Energy. And, so, I would
hope that all of us can try and work on that as we think about
how we encourage small businesses with their use of energy,
because, certainly, making sure that they get access to those
contracts is a very important piece of what we need to do.
Thank you all very much.
Chairman Vitter. Absolutely, and that will be made part of
the record.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T0337.005
Chairman Vitter. Now, Senator Enzi.
Senator Enzi. Thank you, Mr. Chairman, and thank you for
holding this timely hearing with a real discussion about how
the nation's small businesses are accomplishing things in the
energy sector, how they are stymied by some of the regulations,
and what can be done to make things more productive and more
efficient in a timely way.
I want to thank our distinguished panel, too, for taking
the time to come and share your expertise. I hope that you will
be open to written questions. I am the accountant on here and I
try to reserve my number questions for written questions. That
way, people do not go to sleep in the audience.
[Laughter.]
But, energy is one of the main drivers of our nation's
economy and it is a major driver of Wyoming's economy. We
produce 40 percent of the nation's coal, and let me just take a
moment to let that sink in. That is the sector that we are
trying to discourage from producing any low-cost energy.
In fact, in Colorado, there was just an attempt, and
Senator Gardner was here earlier, a company that got permitted
and has been producing coal successfully within their permit
for eight years was just told that they have to redo their
Environmental Impact Statement because they failed to take into
consideration the impact where the coal is burned. At the time
that you apply for a permit for a coal mine, you do not know
where the coal is going to be burned. You are hoping for
customers. You are planning on customers. You are counting on
customers. But, you do not know where they are going to be.
Now, the power plants themselves have to go through an
Environmental Impact Statement, and that is where the local
impacts of burning coal would be taken into consideration and
have to be ameliorated.
So, this looks like a major attempt to just shut down all
energy, and they picked on a small business to begin with,
which, of course, does not have the resources, probably, to
fight it. I am hoping that some of the bigger companies will
join into that.
But, I am in favor of all of the energy and all of the
energy efficiency and really believe that we are a country of
innovators. We can do anything. We can do it better. We have to
do it better. But, it cannot be better if it gets shut down.
On the Health, Education, Labor, and Pensions Committee, we
had a problem with an underground, now two underground mines in
West Virginia collapsing and taking some lives, and one of the
things we had discovered during that was that for quite a
while, the underground mining was going downhill, and when it
went downhill, nobody invented anything for underground mining,
let alone safety equipment. So, when the economy came back and
that was necessary and they started producing it again, they
did not have the latest equipment for being able to do it.
In Wyoming, General Electric wanted to do a big project to
have clean coal, and they postponed it because they said coal
is going to be done in. There is not going to be any coal
production. And, so, what use would it be if we found a better
way to burn coal. Fortunately, the University of Wyoming did
not buy into that. They have a solar project that will separate
hydrogen from water, burn it with coal, and make coal better.
We believe in solar and wind. Denver is the Mile High City.
You have got to go uphill to get to Wyoming. So, we are high
plains and the wind really blows. In fact, the wind turbines
there have to be designed so that when the winds get above 80
miles an hour, they turn into the wind and shut down.
Otherwise, the whole tower blows apart.
But, we are having trouble getting power lines to them. You
know, the power has to get to a customer before it is of any
use, and most of our state is federal land and they are not
interested in getting right-of-ways for power lines or
pipelines. Of course, that is probably part of the reason why
there is a problem getting natural gas to New England, getting
pipelines that would get it there.
So, I am hoping that out of this we can come up with some
solutions that will make all business improve and be better.
I have a question on the export policy. If the price goes
below the cost of producing natural gas, it will not be
produced. In fact, we are kind of at that situation right now.
There will not be more wells, and eventually, we will be back
in a situation of needing more and we will not have the talent,
so we will be relying on the community colleges to quickly
train people to do that, but it is hard to get somebody to go
into a sector where the jobs have decreased.
And, I see that I am going to run out of time before I can
ask the question, so I will submit the questions to you, and I
have another one on workforce training, too. I watched the
effect of OPEC, who can manipulate our prices without changing
their production at all, just rumoring their production. And
then after they have killed off all of the workers that have
the technical capability to do what we need to do, they raise
the price with the same rumors, no change in their production,
and they make a lot of money off of us.
I remember when we were saddled with the--we said some
comments about Saudi Arabia and they cut us off for a while,
and there are gas lines all over the United States and
everybody said, we need to have energy independence. Well, we
are on the verge of energy independence, but we are doing
everything we can to stifle it.
I yield. Thank you.
Chairman Vitter. Thank you very much, Senator.
Now, Senator Markey.
Senator Markey. Thank you, Mr. Chairman, very much.
The Department of Energy has determined that if even less
than half of all of the LNG that has been approved by the
Department of Energy to be exported gets exported, it could
lead to a 50 percent increase in the price of natural gas for
people in America. It is just supply and demand 101. The less
supply we have because we send it overseas, the higher the
prices are going to go here.
And, of course, if you are an oil company or a natural gas
company, you want to sell it. Mr. Slocum mentioned this. In
Europe, it is three or four times higher, the price you can
get. In Asia, it might be five times higher, the price you can
get. So, send it to China, they say.
But, the truth is that the less there is here, is the
higher the price is going to be for the utility industry, the
higher the price is going to be for consumers, the higher the
price is going to be for manufacturers here in the United
States. We have created 700,000 new manufacturing jobs in the
United States in the last four years, and there are more on the
way, but not if you increase by 50 percent the price of natural
gas. That is the feedstock.
And, so, Mr. Slocum, can you talk about that and what the
potential impact could be on the utility and manufacturing and
consumer sector in America.
Mr. Slocum. Absolutely, Senator Markey. There is no
question that if you accelerate or ramp up the rate of
exporting natural gas overseas, you are forcing U.S. consumers
in the power sector and the industrial sector and in the
household sector and in the commercial small business sector to
compete with foreign markets where the price of natural gas is
significantly higher than it is in the United States. And, so,
if you are in the oil and gas industry, you are going to,
understandably so, prioritize infrastructure investment to move
your fracked natural gas to LNG terminals for export rather
than, say, investing in additional pipeline capacity to serve
power plants in New England or elsewhere.
And, so, that is why the Energy Information Administration
concludes that if you significantly increase the rate of
natural gas exports, it is absolutely going to raise domestic
prices for American consumers.
Senator Markey. Now, the more that we use the natural gas
here in our manufacturing sector, the more likely that the
products that are created with it will be made here and will be
exported rather than letting the natural gas get into the hands
of the Europeans and the Chinese. Then they will sell the
finished product back to the United States. So, what is that
relationship, between low-priced natural gas as a feedstock
into the manufacturing sector of America and the wealth, the
jobs that are created here?
Mr. Slocum. Yes. I am a big believer that the dynamic
features of the U.S. economy are the value added and the role
of technology in adding to that value. And, simply exporting
raw materials--I understand that fracking has been an
unbelievable revolution of technology and industriousness by
American ingenuity, but at the end of the day, you are simply
exporting a raw material that there is robust demand for
domestically to use as a feedstock or to use as a more
environmentally and climate-friendly fuel in the power sector--
--
Senator Markey. So, Mr. Slocum, so a lot of the advocates
for exporting natural gas or exporting oil--even though we are
not energy independent, we are talking about exporting oil and
we are not energy independent. We are still importing five
million barrels of oil a day. How crazy is that, to export the
oil we have when we are still importing five million barrels a
day.
But, they keep saying, well, it is like any other product.
It would be like exporting a widget or a computer chip, that
oil and natural gas should be the same. But, we do not send
young men and women over to the Middle East to protect the
widget market or to protect the silicon chip market. We do it
because we want oil to come in from the Middle East.
Now, Mr. Slocum, if we just converted seven million big
trucks and buses over to natural gas vehicles, it would be the
equivalent of all of the oil which we still import on a daily
basis from the Persian Gulf. But, if we increase the price by
50 percent, you know for sure that is not going to happen. So,
would that not be a high objective that we should have, given
the headlines above the fold on Iran and Iraq and all the other
Middle Eastern countries on a daily basis?
Mr. Slocum. Absolutely. There is no question, even with the
record amounts of domestic production that the United States
has had in crude oil, we are still vulnerable to international
factors, because oil, unlike natural gas, is priced due to
global benchmarks and what is going on in the Middle East or
China. And, so, as a result, it would be beneficial, I believe,
for the U.S. economy, particularly in the transportation
sector, to see an increased use of natural gas. It has got
certain environmental benefits relative to petroleum products
as a transportation fuel. And the bottom line is making sure
that the transportation sector has access to affordable prices.
Senator Markey. Massachusetts consumers right now are
paying $2.76 a gallon for gasoline at the height of the summer
driving, which is down 95 percent from last summer, 95 percent
down. Now, what if we start exporting oil out of our country?
What would that mean for consumers in Massachusetts in terms of
an increase in the price of gasoline?
Mr. Slocum. Well, I actually testified before the House
Small Business Committee last month specifically around oil
exports, and again, there, the data is very clear that undoing
this 1975 virtual ban on exporting crude oil will result in
higher prices for American consumers.
Senator Markey. So, we finally get a surplus. We finally
have oil and gas here domestically, and the first thought of
the oil and gas industry is export it out of the country before
our consumers, our manufacturers, our utilities get the benefit
from it. It is just wrong. It is bad policy. It will help our
economy dramatically if we keep it here at a low price.
Thank you, Mr. Chairman.
Chairman Vitter. To balance the record, let me just hit a
few things. First of all, the Obama Administration's Department
of Energy has conducted two studies over the last few years
looking at potential price impacts of exporting LNG and those
studies have very different conclusions than what Senator
Markey was describing. So, we will make those part of the
record.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[The second study, titled ``Updated Macroeconomic Impacts
of LNG Exports from the United States'' can be found at http://
www.nera.com/publications/archive/2014/updated-macroeconomic-
impacts-of-lng-exports-from-the-united-sta.html.]
And, also, I would just note and make part of the record
significant bipartisan support for LNG exports. That includes
an Obama Administration review and its conclusions regarding
its benefits. That includes political support from Democrats
like House Minority Whip Steny Hoyer. And that certainly
includes labor union support from Laborers International Union,
AFL-CIO, United Association of Plumbers, Fitters, and HVAC
Techs, the Building Trades Council, and Insulators and Allied
Workers Local Union 24. We will submit that for the record.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Okay. Senator Fischer.
Senator Fischer. Thank you, Mr. Chairman.
I would like to thank all the panel members for being here
today. I appreciate your input on this.
Mr. Mack, as you probably know, Nebraska is very unique. We
are a 100 percent public power state, and as we look at the
clean power plan that is out there, we will be hit especially
hard. Nebraska utilities are going to face reliability issues
and small businesses are going to see price increases in their
electricity bill. Can you explain what impact the increases in
electricity rates would have on energy intensive small business
operations like manufacturing and agriculture, which are both
very, very important to my home state of Nebraska.
Mr. Mack. Thank you, Senator. The increase in the cost of
electricity that may be experienced because of a number of
different factors, I think, have to be put in context with the
dramatic decreases we have seen in electric power generation
costs over the last several years because of the remarkable
abundance of natural gas, particularly. If we look back five or
six years, natural gas was about, I think, $8 or $9 per million
BTU. Today, it is about $2.75.
And, so, to the extent that power generation is converted
to natural gas-fired appliance you are going to see a
significant benefit to the ratepayers, not just in Nebraska,
but to everywhere. So, I think the shale revolution and the
abundance that it has created has had a tremendously beneficial
impact to companies that depend, companies and people who
depend on cheap electricity.
Senator Fischer. As you look at the clean power plan,
however--are you familiar with that?
Mr. Mack. Somewhat. Not in great detail, but----
Senator Fischer. And as we look at those proposed
regulations, the impact they have, and as I said, especially on
a state like Nebraska, where we have 100 percent public power,
we have two-thirds of our electricity supplied by coal-fired
electric plants, coal from our neighbors in Wyoming, and to
retrofit those plants, it is going to be a cost, and it will be
a cost to the owners of those plants who are the citizens of
Nebraska. We are a public power state. We are going to see
costs to businesses in the products that they produce and the
services that they provide. That is going to be passed along to
consumers, as well. And then when you go home and you turn on
your light switch and you pay your electric bill in Nebraska,
you are going to be hit again.
What is the impact of that on families, when we have
regulations like that? What is the impact, and what kind of
decisions do you think we ought to be looking at when we make--
when we consider changes in policy?
Mr. Mack. Well, clearly, anything that raises costs of
electricity to the consumer are not a good thing for either the
consumer or business or the economy. So, I fully agree that if
you are in the mode that you are dependent on coal, and we
certainly think coal is an excellent and plentiful and
affordable fuel, that that is going to--that is certainly going
to have an impact on your state and your citizens. So, I
certainly sympathize with that and I--you know, it is outside
of our scope to advocate for some of those policies or against
some of those policies, but we certainly think that any
policies that increase the availability of all forms of energy
are going to ultimately have a favorable impact on all
citizens, all countries--all states, rather, and all companies.
Senator Fischer. Thank you, Mr. Mack. Thank you, Mr.
Chairman.
Chairman Vitter. Thank you.
I have been reserving my time. I am going to go ahead and
use it now, if that is okay with members, in part because Dr.
Aspinwall is going to have to leave for the airport before too
long and I wanted to get a chance to ask him a couple things.
Doctor, you see this booming part of our economy back home
and you see the enormous need it has created for skills
training in certain areas. You highlighted in your testimony
the fact that present federal law and federal policy, for
instance, regarding Pell Grants actually cuts off access to
tuition support to a lot of the most efficient and most
productive training programs on the ground now because the
programs are too short. I mean, essentially, they are too
efficient. They give people really good skills that lead
directly to a great job. They just do not take long enough for
federal bureaucrats' liking.
Can you expand on that? And, I assume that means you would
encourage us to re-look at those Pell Grant and other related
requirements.
Dr. Aspinwall. Yes. Thank you, Senator. I go back to some
of my written testimony. Many of the programs that we develop,
industry have, I would say, requested, that they have demanded
these. We are having such a strong expansion in such a short
period of time that we are having trouble supplying the
workforce, and the reason we are having trouble supplying the
workforce is we are trying to put them through our standard
diploma or degree programs that are set up for at least one
year to two years.
So, what they have requested us to do is condense those
programs and only use the competencies that they know they need
when they get on the job. But, when we do this, by being so
efficient and effective, then the federal guidelines from the
Department of Education do not allow for the use of federal aid
because they are not the correct number of seat hours or
contact hours and they do not meet a certain length as far as
weeks and guidelines.
So that--many of our students, as I said before, they work,
so if they are working--and 84 percent of community college
students work--they cannot quit their jobs and come out and
take advantage of those. So, we still rely on private
businesses and private industries to provide scholarships, but
that is not the long-term solution, because after a while, the
private industries and private business, we are all going to
them asking for money and those scholarships run out.
Chairman Vitter. Right.
Dr. Aspinwall. So--and again, as I said, some of these
programs, for instance, the welders, they can go through a 450-
hour program and start out at basically the lowest $26 per
hour. And before this energy expansion, our welders were making
$10, $11, $12 an hour. So, the more the need, the acute the
need gets, the higher the workforce rate gets and the higher
wages that these companies pay.
Chairman Vitter. Right. And, just to be clear, the jobs
that are associated with these accelerated focus programs, they
are not at the lower end of the spectrum. I mean, they are very
good paying and good benefit jobs, correct?
Dr. Aspinwall. Absolutely.
Chairman Vitter. Can you give us some flavor for what we
are talking about?
Dr. Aspinwall. Absolutely. Two of the highest demand jobs
are process technology and industrial instrumentation, and as I
said briefly in my written statements, we had to create a
program that puts students through an Associate of Applied
Science in just 16 weeks. That is how much we condensed that, a
two-year program down to 16 weeks. That is an eight-hour-a-day
program, but those individuals who go through that, they leave
that program at a minimum salary of around $85,000 a year. That
is a pretty good return on your investment for around $6,000
for training.
Chairman Vitter. Sure. Absolutely. Okay.
Mr. Slocum, a lot of your testimony is about the price of
energy related to, say, LNG exports and other export
opportunities. As I said a minute ago, I disagree with claims
that we are talking about huge, 50 percent, etc., or even
double-digit increases, and there are a lot of studies that go
to that point. But more broadly, would Public Citizen support
the same sort of rule you enunciated for other American
produced goods or stock? In other words, if banning exports
decreases the price to the American consumer, should we ban
those exports, because surely you can make an argument that
that would be the case in a wide variety of things, starting
with, say, food.
Mr. Slocum. Right. Very good question, Mr. Chairman. I
think that the unique history and role of energy commodities--
the 1975 Energy Policy and Conservation Act was passed in
direct response to acute physical shortages of energy
commodities, particularly petroleum products, that resulted in
punishing price increases that threw this country into very bad
economic times. And, so, I think that there is merit for the
unique nature of certain energy commodities. The inherent
volatility of----
Chairman Vitter. Can I ask you--I do not want to cut you
off----
Mr. Slocum. Yes, sir.
Chairman Vitter [continuing]. But my time is running out.
Surely, you would agree that our understanding of American
energy resources has been turned upside down since 1975.
Mr. Slocum. It has been, and it has been turned upside down
from just a few years ago.
Chairman Vitter. Right.
Mr. Slocum. I mentioned in my written testimony----
Chairman Vitter. So----
Mr. Slocum. Yes, sir.
Chairman Vitter [continuing]. What I am suggesting is,
surely, the premise that Congress used in 1975, I mean, that
has completely changed, right? That is out the window.
Mr. Slocum. For now, but there are a number of variables
that could happen that we cannot predict, disruptions in supply
and demand across the globe, disruptions here in the United
States. That is the thing about commodities, and particularly
with energy commodities. There is no economist that will be
able to credibly safely predict what the price of a given
commodity is going to be in the future because of all of these
unknown variables that go into affecting the price.
Chairman Vitter. Sort of like corn, maybe?
Mr. Slocum. I am an energy policy guy. I do not know as
much about agricultural markets----
Chairman Vitter. Should we ban those exports?
Mr. Slocum. If there is a Congressional or data-driven
determination that there are acute agricultural shortages that
threaten the American consumer and the American farmer, then I
do think we should contemplate that, but it is not my
understanding that that is the scenario today.
Chairman Vitter. Okay, well, it is not my understanding
that is the scenario with energy, thanks to abundant American
energy, either, but I understand.
Senator Coons.
Senator Coons. Thank you, Chairman Vitter. Thank you for
convening this hearing.
And thank you to the witnesses for your testimony today. It
is great to see you, and I appreciate your highlighting the
important role that energy costs, and in particular energy
efficiency, play in reducing the bottom line cost that small
businesses face.
In your testimony, several of you said that for most small
businesses, energy usage is their single largest business
expense. The problem is that many small businesses do not have
the expertise in-house to really analyze, understand, and
reduce their energy usage, nor do they have the resources or
capability to hire an outside energy resource expert. And,
these would be the types of challenges I think we could address
through the passage of the bipartisan Shaheen-Portman bill and
through other legislative means.
As some of you may know, in Delaware, we have a terrific
resource that helps small- and medium-sized manufacturers
reduce their energy costs. It is one of the sites of the DOE-
sponsored Industrial Assessment Centers. It is run by the
University of Delaware and is a terrific resource. I have had
the pleasure of touring some of the Delaware-based
manufacturers that they have helped and that have received one
of the more than 100 energy efficiency assessments that the IAC
has conducted since 2006. These make a big difference in a
manufacturing company's bottom line, reducing greenhouse gas
emissions, as well, and helping to train the next generation of
engineers and scientists in the field.
Just one quick example. Hirsh Industries, which
manufactures storage products--I think that is also called
filing cabinets--for the office and home, they do a great job
at it, but they saved $217,000 a year in energy costs through
the IAC review.
I would also just like to briefly mention, as Co-Chair of
the Manufacturing Jobs for America Initiative, I am pleased to
see support among a number of Senators who have introduced
bills related to energy efficiency and green tech and the
future of our manufacturing sector. I, in particular, would
like to call out Senator Shaheen's leadership on the bipartisan
Smart Manufacturing Leadership Act, and to highlight Senator
Hirono's Clean Technology Manufacturing and Export Assistance
Act, and Senator Merkley's Job Creation Through Energy
Efficient Manufacturing Act. I think it is great a number of
Senators have recognized the value of being proactive in energy
efficiency.
To Kateri Callahan, if I might, great to see you again.
Just tell me for a minute, if you would, about energy
efficiency programs at the federal level that also connect with
state and local resources like the Industrial Assessment
Centers or the Weatherization Assistance Program. How can we
make sure that more small and medium businesses are aware of
these resources, and what sort of long-term and compounding
benefit do you see them get from an investment in energy
efficiency of this type.
Ms. Callahan. Great. Thank you very much for the question.
I want to back up a little bit to the talk that so many have
engaged in on the volatility--potential volatility of price of
natural gas. One thing that has not been mentioned, and you can
take out the Alliance to Save Energy, maybe I should note, is
fuel neutral. We do not talk about it. We just want whatever
you use, to use it smarter.
One of the ways that small businesses, in particular, I
think, can insulate themselves from the volatility in the
marketplace is to become as efficient as possible. Consumers
and businesses do not care about the per kilowatt hour cost of
electricity. They care about what their bill is every month.
So, if they can make investments, lower those bills, become
more productive and more competitive, that is what is
important.
And, I think that the federal programs are connecting in a
lot of ways. The Department of Energy funds the State Energy
Offices, which do a lot of this work through either the Energy
or the Economic Development Offices. As I said earlier,
Senator, when you were not in the room, we really need the
federal government to work at the state and local level and
with partners and trade allies and organizations that are
working on the ground, because that is the best way to connect
with the small businesses, to meet them where they live, to
talk in the terms that they understand about building and
growing their businesses and generating jobs and adding to the
bottom line.
So, the Industrial Assessment Centers are great. You
mentioned Pennsylvania. My written example has an example in
Tennessee, working through the University of Tennessee in
Murfreesboro and a company that was able to compete better than
all of its competitors during the downturn in the recession
because of the energy audits that were done there and the
improvements made. Those are all across the landscape.
The Department of Agriculture, through its Renewable Energy
Assistance--or its Rural Energy Assistance Program and loan,
they are helping out, too.
I think one thing that really needs to happen at the
federal level is a convergence and a one-stop shop, if you
will, of all the different resources that are available. Folks
try to do that. The SBA has some of that, but more needs to be
done and we need a central location for small businesses to
come and get the help that they need.
Senator Coons. Well, thank you, Kateri, and I will just
mention, Senator Shaheen has just introduced a bill, the Small
Business Energy Efficiency Act, that would expand the eligible
functions for the SBA 504 loans to include energy efficiency
work studies, retrofits. I have joined as a cosponsor. I think
it is a great way to expand some of the reach of the SBA into
this field.
I have a bipartisan bill with Senator Moran, the Master
Limited Partnerships Parity Act, that would make accessible an
existing financing vehicle that is mostly used for pipelines in
oil and gas, but it would make it accessible for energy
efficiency investments, as well. I think we have got a lot of
work to do together to make sure that energy efficiency is part
of the menu of trying to reduce the total energy costs of
American manufacturing.
Thank you all for your appearance today and for your
testimony. Thank you, Mr. Chairman.
Chairman Vitter. Thank you very much.
Thank you all very much, and certainly this discussion will
inform in a very important way my work and others' work
regarding energy legislation affecting small businesses.
I know Senator Markey has additional questions. I am going
to invite everybody to submit those for the record, because,
unfortunately, I cannot stay, and at least one of our witnesses
cannot stay. But, certainly, everyone is invited to expand on
questions, and, of course, we will get appropriate answers for
the record.
Senator Markey. Mr. Chairman, could I just be recognized
for 30 seconds?
Chairman Vitter. Sure, 30 seconds.
Senator Markey. Thank you, Mr. Chairman.
I could envision a situation where the negotiation between
Iran and the United States and the other countries in the world
go sour, it is rejected in Congress, and one of the options is
to bomb Iran and its nuclear programs, and I could then
envision the price of oil going to $5 a gallon, $6 a gallon,
and I could see American oil here and natural gas here
protecting us against that, that we were not exporting.
And, as well, in terms of the economic studies, yes, there
are some studies that say that there are winners and losers,
but the winners are the oil and gas companies and the losers
are the manufacturers, the utilities and consumers and the
natural gas vehicle industry. So, maybe you can say that, whoa,
well, look at the tremendous job creation over here for oil and
gas, but look at all the losers that are left in their wake
because the price of natural gas has gone up so much.
So, I just wanted to kind of throw that in, and I will
submit my questions, Mr. Chairman. Thank you for the
opportunity.
Chairman Vitter. Okay. Well, I am sure this debate will
continue, I have no doubt, so I will look forward to it.
Thank you all very, very much, and the hearing is
adjourned.
[Whereupon, at 3:48 p.m., the committee was adjourned.]
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