[Senate Hearing 114-553]
[From the U.S. Government Publishing Office]
S. Hrg. 114-553
HOW SMALL BUSINESSES ARE SUPPORTING AMERICA'S ENERGY RENAISSANCE
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MARCH 23, 2015
__________
Printed for the Committee on Small Business and Entrepreneurship
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Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED FOURTEENTH CONGRESS
----------
DAVID VITTER, Louisiana, Chairman
BENJAMIN L. CARDIN, Maryland, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
MARCO RUBIO, Florida JEANNE SHAHEEN, New Hampshire
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
Zak Baig, Republican Staff Director
Ann Jacobs, Democratic Staff Director
C O N T E N T S
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Opening Statements
Page
Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana.. 1
Boustany, Charles W., a U.S. Representative from Louisiana....... 2
Witnesses
Harder, Dr. Natalie J., Chancellor, South Louisiana Community
College........................................................ 12
Pellerin, Joshua A., President & CEO, Pellerin Energy Group LLC.. 17
Fenstermaker, Bill, Chairman & CEO, Fenstermaker and Associates.. 22
Alphabetical Listing and Appendix Material Submitted
Boustany, Charles W.
Testimony.................................................... 2
Fenstermaker, Bill
Testimony.................................................... 22
Prepared statement........................................... 24
Harder, Dr. Natalie J.
Testimony.................................................... 12
Prepared statement........................................... 15
Pellerin, Joshua A.
Testimony.................................................... 17
Prepared statement........................................... 19
Vitter, Hon. David
Opening statement............................................ 1
Prepared statement........................................... 32
HOW SMALL BUSINESSES ARE SUPPORTING AMERICA'S ENERGY RENAISSANCE
----------
MONDAY, MARCH 23, 2015
United States Senate,
Committee on Small Business
and Entrepreneurship,
Lafayette, LA.
The Committee met, pursuant to notice, at 8:31 a.m., in
Lafayette City Hall, 705 W. University Avenue, Hon. David
Vitter, Chairman of the Committee, presiding.
Present: Senator Vitter.
Also Present: Representative Boustany.
OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, AND A U.S.
SENATOR FROM LOUISIANA
Chairman Vitter. Welcome to everybody, and thanks for being
here.
Why don't we all get started in the right frame of mind and
the right frame of heart by standing for a prayer, and please
remain standing for the Pledge of Allegiance to the flag right
after the prayer.
But first we'll be led in prayer by Pastor Steve Stone with
First Baptist Church.
Pastor.
Pastor Stone. Let us pray. Father, we begin this Monday
morning, the beginning of the new week, with renewed hope and
faith and trust. It's not always easy to come by, so we rely on
Your strength for that. We are reminded of the words of the
psalmist, ``From whist cometh our help,'' and the echoing
reply, ``Our help comes from the Lord.'' Be ever mindful of
that today.
We would be prayerful today for many things, but today we
petition You for freedom. We pray for the release of those who
have been unfairly and unjustly imprisoned because of their
faith in Almighty God. We pray that justice would flow in these
matters.
For the purposes that bring us here today, we pray that You
would give us wisdom and insight into the matters that are
talked about today.
We are always mindful of our folks in the military, men and
women who have left their spouses and children and parents and
serve us, and we've been recently reminded that they're not
always in danger in a foreign land but in training here in
these United States. Watch over them.
Ultimately we pray, oh God, for Your will to be done on
Earth even as it is in heaven. Amen.
Chairman Vitter. Amen.
Thank you, and remain standing for the Pledge of Allegiance
to the flag. We will be led in the Pledge by our Police Chief
here in Lafayette, Jim Craft.
Chief.
[Pledge of Allegiance.]
Thank you, Chief.
Please be seated.
I also want to recognize Dee Stanley, the Chief
Administrative Officer of the City of Parish, and Chad Sonnier
with the Lafayette Fire Department.
[Applause.]
Welcome again. This is sort of a combination town hall
meeting and field hearing of the Senate Committee on Small
Business and Entrepreneurship, and our main topic today is how
small businesses are supporting America's energy renaissance.
I am really so happy to be joined by our congressman here,
Congressman Charles Boustany, for this important town hall and
field hearing.
Let me go over exactly how this is going to work, and then
I'll throw it over to Charles for some opening comments.
So after our initial opening comments--and I'll have some
after Charles about the topic that our witnesses are going to
speak on, small businesses' role in the energy industry and
growing the energy economy--after those opening statements,
we'll go to your comments and questions. And if you haven't
already, we're passing out a form.
Where is my staff?
We're passing out a form. If you haven't already, jot down
your comment or question, your topic, and hand it over to us,
and we'll try to get through as many comments and questions as
possible. Hopefully, most of them are on topic. We want to
mostly talk about the energy economy, growing energy jobs as a
part of our economic growth in general in Louisiana, but we'll
certainly take other topics as well.
Then, after about 30 to 40 minutes of that, we'll introduce
our key panelists today. We have three great witnesses who know
a lot about the energy economy and the tie-in with small
business. They will each present testimony of about 5 minutes,
and then following their testimony Charles and I will question
them and have a discussion with them on the topic. So that's
how this morning will proceed.
Charles, do you have any opening thoughts?
STATEMENT OF REPRESENTATIVE CHARLES W. BOUSTANY, JR., A U.S.
REPRESENTATIVE FROM LOUISIANA
Representative Boustany. Well, thank you, David. Thanks for
your leadership of the Small Business Committee in the Senate,
the committee that deals with small business and
entrepreneurship, something we know a lot about in Louisiana
given that our state has led, especially in the energy sector.
I think this is just a very valuable forum for the two of us to
hear from all of you directly, but also to hear from some very
important witnesses, the panelists here who know what's going
on from a Louisiana perspective.
So I'm just truly honored to be here with you, to share the
stage with you, and to try to answer questions.
Chairman Vitter. Right. Thanks, Charles.
Let me make a few opening comments about our topic.
Chairman Vitter. I became chair of the Senate Committee on
Small Business and Entrepreneurship in January. So the first
thing I wanted to do was really bring the committee and our
committee activities to the real world, including Louisiana. So
that's why we're having a committee event here in Louisiana.
It's certainly not going to be our only one, as well.
Again, today's discussion is focusing on the changes going
on particularly in this part of the state and to the west of
here as a result of capital investments in the region,
particularly in our energy economy, and how we can take up that
opportunity to grow jobs through small business.
The first slide up here shows that throughout the abysmal
economic recovery nationally--and that's been held back by a
lot of Federal policies--our domestic energy industry has
actually continued to create jobs and new revenues, the
majority of which can actually be attributed to small firms and
contractors. So small business is at the heart of this economic
renaissance.
This next slide shows that it's estimated that nearly 1
million Americans work directly in the oil and gas industry,
with about 10 million jobs associated more broadly with that
industry.
Now, in order to better coordinate the efforts that allow
small businesses to support our energy industry, I think it's
imperative that there is an open line of communication between
these regional business leaders and folks at the Federal level.
Slide 3 shows that Louisiana will receive roughly $80
billion in new and expanding development over the next few
years. These are some of the Louisiana projects on tap just in
this part of the state and to the west of here. Just in this
part of the state and to the west, it totals $63 billion.
Statewide, it totals over $80 billion.
But the economic growth in this region is not without its
own set of challenges. At the current rate, Louisiana can't
meet our workforce development needs, our needs to train up
skilled workers. So that's a real problem, and the next slide
goes to that point.
So right now, unfortunately, our jobs are outpacing
training. That's sort of a good problem to have, but it's still
a challenge, it's still a problem. So we need to meet those
workforce development needs.
Beyond those challenges are regulatory challenges, and
that's usually being put on the state by the Federal Government
by over-regulation at the Federal level, and this is a direct
result of President Obama's leadership and over-regulation
through Federal agencies like the EPA.
What businesses need to thrive is a strong but restrained
regulatory system that doesn't impede their growth. A 2010
Small Business Administration study found that Federal
regulations cost American businesses $1.75 trillion annually,
and that clearly adversely affects small businesses, and the
smaller they are, the more that regulatory burden is. So we
need to ensure that our regulatory environment doesn't
interfere with this important part of our economy.
So those are some of the things that we're going to be
talking about today.
With that, let's get to your comments and questions, as I
promised, and we'll have sort of the town hall meeting portion
of this morning's portion of our discussion, and then in a
little bit I'll introduce our witnesses.
Let's start with your comments and questions. If you
haven't already, if you need a form to fill out, just raise
your hand. We'll get those to you, and just pass them up to me.
When I come to you, if you could stand up so we can have a
good discussion.
Leland Jans--where is Leland?--asking about Common Core.
Why don't you elaborate, sir?
Mr. Jans. Well, I really don't know much about Common Core,
and I don't understand what all the fuss is. The governor was
going to start supporting it. Now he doesn't support it. What
all are the questions about Common Core?
Chairman Vitter. Yes. Well, that's a big topic. I'm running
for governor now, so I'll take that since it's a state-based
issue.
You know, I think there are several different concerns with
Common Core. One of my top concerns is that it really cedes
state control and authority to national elites and, to some
extent, to the Federal Government, and I'm completely opposed
to that.
I strongly support rigor, standards, and accountability. We
absolutely need all of that in public education. But I think we
need that in a Louisiana-based system.
So in running for governor, what I've said is that I would
lead us out of Common Core but in a strong, rigorous,
demanding, Louisiana-based system that doesn't cede that
control and authority to either national elites or the Federal
Government.
Mr. Jans. I don't know about the control part, but doesn't
that put everybody on the same educational basis?
Chairman Vitter. You're talking about what? Doesn't what
put us----
Mr. Jans. Doesn't Common Core put us on the same track
here?
Chairman Vitter. Well, that's certainly one of the
arguments in favor of it, okay? This way you can compare your
students with those around the country. That is useful to do,
and we can still do that with choosing the right testing.
First of all, Common Core is not universal to 50 states,
and the Common Core standardized tests are not universal to 50
states. In fact, there will be far more students nationally who
aren't under those particular standardized tests than who are.
So I still think we can get an objective benchmark about how
we're doing compared to other students around the country by
choosing a standardized test, but it doesn't have to be within
the Common Core framework. But undoubtedly, the testing we'll
choose is going to be used in at least a handful of other
states.
Mr. Jans. I believe that the people that opt out
[inaudible] of Common Core, right?
Chairman Vitter. Correct.
Mr. Jans. And if people are able to opt out, I don't
understand why [inaudible].
Chairman Vitter. Right. Well, I mean, that's a controversy
going on now. I mean, they basically opt out by just not going
to school that day, and the big question is whether that's
going to be counted as a zero in the grading school systems or
not.
Thank you.
Mike Thibodeaux? Where is Mike?
Mr. Thibodeaux. I'm Mike Thibodeaux.
Chairman Vitter. Yes, sir. You're talking about draft
reports and studies paid for with public monies and right to
know. Why don't you elaborate? I'm not sure exactly what you're
asking about.
Mr. Thibodeaux. Public studies are done that the public
pays for, the information [inaudible].
Chairman Vitter. Absolutely.
Mr. Thibodeaux. We have a right to know.
Chairman Vitter. Absolutely.
Mr. Thibodeaux. We have a right to see what did this person
do. My particular complaint is that the study in particular
[inaudible] that say that the Federal tax credit that you get
for all energy producers [inaudible], but it's not. It's a
reduction. So if you're going to skew that 30 percent Federal
tax credit so it's an expense, then your whole study is wrong.
So what I want to know is can you have it? When you ask for
it, they say it's proprietary. How can you have proprietary
information if [inaudible]?
Chairman Vitter. Yes, I thought that study was public, but
I'll be happy to look into that. Certainly, if public funds are
used, the result of the use of those public funds should be
public.
Charles, do you have anything?
Representative Boustany. I agree with that, and I also
agree that if public funds are used, all conflicts of interest
need to be put on the table in a very transparent way so people
know affiliations of those who are doing these studies.
So, yes, absolutely. My understanding is that most of the
time when there are Federal funds going for something like
this, there are requirements for it to be very, very open and
transparent. I don't know the particulars in this case with
that particular institute, but I'd be happy to look into it as
well.
Chairman Vitter. Mike, before you leave, if you could give
me and my staff your contact information and the name of the
report you're focused on, we'll specifically look into that and
try to get a copy. But certainly, I agree with your premise.
Mr. Thibodeaux. I have a copy, and I read it.
Chairman Vitter. Okay.
Mr. Thibodeaux. And when I read it, that's where I saw that
the 30 percent Federal tax credit and the reduction is used as
a [inaudible]. It's not a [inaudible]. It's a reduction of
cost.
Chairman Vitter. Right. Well----
Mr. Thibodeaux. So the whole report basis is skewed.
Chairman Vitter. Yes. I didn't read the report. I'm not
sure exactly what you're referring to. What they're probably
calling it is an expenditure of tax dollars--in other words,
foregoing revenue that the government would otherwise get. So
they're probably putting it in that category of foregoing
revenue. But I'll be happy to look at that and maybe be better
able to respond.
Mr. Thibodeaux. Thank you.
Chairman Vitter. Okay.
Tony Depa? Where is Tony?
Mr. Depa. Yes, sir.
Chairman Vitter. Asking about our thoughts on the
Affordable Care Act?
Mr. Depa. Yes, sir.
Chairman Vitter. Okay.
Mr. Depa. Nice to see you, Congressman Boustany.
Tony Depa from Lafayette. Again, just full disclosure, the
Congressman [inaudible.]
I worked for the President's reelection campaign in 2012,
so I went to battle in four battleground states for about six
or seven months for this Administration's platform, most
importantly or one of my big ones is the Affordable Care Act.
Obviously, we know that there's something that we hear in
Louisiana called the Gender Gap. So I guess the question to
both of you, if you wouldn't mind commenting, is just what do
you think? I mean, it's been the law for five years. It's very
well documented how Republicans in Congress have tried to shut
it down. So you can comment on that or where you see it going
in the future.
Chairman Vitter. Yes. Well, full disclosure. For me, I
worked against the President's re-election very hard in 2012.
[Applause.]
And I strongly opposed ObamaCare, and I still strongly
oppose it because I think it's creating more problems than it's
solving. I think it's made cost increases, which were a big,
big problem with the American health care system. I think it's
making those worse, actually, versus better.
Mr. Depa. There are probably people in this room that don't
know the difference between ObamaCare and the Affordable Care
Act.
Chairman Vitter. Well, there is no difference. I'm
referring to the same thing.
Mr. Depa. A lot of people don't know that.
Chairman Vitter. Yes. Well, I mean, the Affordable Care Act
is the----
Mr. Depa. I'm here to educate as well.
Chairman Vitter. The Affordable Care Act is the Washington
term. I don't use it because I think it's an Alice in
Wonderland term, and it's not affordable, it's pushing costs
up. So I prefer to call it ObamaCare.
I think we need an alternative to that, and I've supported
specific alternatives, targeted reforms that would go after not
re-making 20 percent of our economy from start to finish but go
after specific reforms to make health care more affordable, and
I'd be happy to talk about----
Mr. Depa. Does that include repealing it or not?
Chairman Vitter. Yes. I voted several times to repeal it,
and I'm still working to repeal it.
Mr. Depa. It works.
Chairman Vitter. Charles.
Representative Boustany. I spent 30 years with health care,
and so when this debate was raging back in 2009 and 2010, I was
in the middle of it. I warned our colleagues on the other side
of the aisle, the Democratic side of the aisle, that what they
were proposing was going to run up costs, restrict options
within the insurance arena by forcing consolidation, and it was
going to wreak havoc on the provider side, and we're seeing a
lot of that now.
The trend lines are not good. We're driving individual
physicians out of private practice because their cost structure
is unsustainable. We're forcing hospital consolidation and
potential closures in rural hospitals. We have a situation now
where you've seen consolidation and fewer choices among
insurance companies, a more monopolistic type of behavior, and
this is problematic.
Costs are going up. I've traveled around our district and
I've run into small business owners who saw a 40 percent hike,
40 percent hike in their premiums over and above last year.
This is problematic.
We can do better, and I fought alongside David against this
because I saw the trends that were going to come out of it.
So we'll see what happens going forward. I think that the
Supreme Court case may, in fact--it's called King v. Burwell.
Remember that. You'll hear a lot about it as it comes up. That
may be the undoing of some of these faulty foundations that
we've seen with ObamaCare.
Chairman Vitter. Just two more comments. I want to
underscore what Charles said. There is a major Supreme Court
case that should be decided in June. That will have a lot to do
with how we move forward as a country.
Secondly, I'm sure Charles and I agree with every
Republican that we work with, that we do need reforms. The old
health care system wasn't perfect. It had a lot of problems and
issues. We believe in targeted reforms, things that go after
the real issues, like there is certainly an issue of folks with
preexisting conditions. We need to fix that. There is certainly
a cost issue. So how do we make it more affordable?
So we're in favor of several targeted reforms that would go
after those very specific issues rather than sort of a very,
very broad, 2,800-page bill.
Mr. Depa. I appreciate that.
One more thing, and then I'll stop talking.
You were talking about costs, how much it costs. Not once
have either of you talked about, well, do single mothers
deserve health care. Do the poor people in Lafayette and in the
State, do they deserve health care. So you guys are sitting
there telling me how much everything is going to cost, but you
all don't seem to give two rats about the poor people in our
State. That's what I'm hearing. I know that the people who are
here aren't hearing that, but that's what I'm hearing, that it
costs this, it costs this, the President sucks, and you guys--
again, I know I disagree fundamentally with pretty much
everyone in this room, but still I'm trying. The Congressman
told me I need to try to reach across the aisle. That's what
I'm trying to do. I'm here this morning.
Representative Boustany. If you look back at many of the
speeches and comments I've made publicly, I've always talked
about how important it is to preserve the doctor-patient
relationship, make a doctor-patient relationship for every
single American that's affordable and meets a high quality of
care, including single mothers and those who cannot afford
insurance today.
The Republican side of the aisle coming out of the Ways and
Means Committee, where I serve, we were only given 15 minutes
total to debate an alternative back in 2009-2010, that
timeframe, when we went to the House floor. I was given 45
seconds to describe our plan. That's why you didn't hear about
it, but I'll tell you what it did.
It actually, according to the Congressional Budget Office,
lowered premium costs so that everybody could afford it, and it
created pathways for single mothers and those who currently
cannot afford insurance or have preexisting conditions. We set
all of that up, and the Congressional Budget Office said that,
in contrast to the Affordable Care Act or ObamaCare, ours would
actually bring down costs.
Now, you didn't hear about it because we had 15 minutes of
debate and, of course, we had to fight the bully pulpit. We
have ideas. We have solutions to address exactly your concerns.
Chairman Vitter. And just a final thought. The reason I do
focus a lot on cost is I think that's the biggest reason for
lack of access. And if costs continue to skyrocket, guess what?
More and more Americans will not have adequate access.
So I think it's indicative, quite frankly, of where you're
coming from, where the President is coming from, to throw cost
out the window like it's some irrelevant factor. That's at the
heart of our access problem, and if we don't make health care
more affordable, it's not going to be more available. If the
cost curve keeps going up like that, it means there is going to
be a big access problem for those with that problem now and for
an increasing number of folks who previously could afford
something and now can't. So it's directly related to access is
what I would say.
Mr. Depa. It's kind of relying on saying you believe that
we should take care of everyone in our country or you believe
that I take care of my family and friends and everyone else is
kind of on their own. I mean, I feel like that's----
Chairman Vitter. I don't know anybody who feels the latter
way, but I do tell you how I feel with regard to health care
reform. I think the first rule of health care reform is if you
think health care is expensive now, just wait until it's free,
and that's sort of the experiment we're operating under, and
costs and expense are going through the roof as a result, and
access is not significantly improving.
Let's go to Dorothy Knight. Where is Dorothy? Asking about
developing a world-class workforce through job training and the
community college system. Why don't you elaborate, Dorothy?
Ms. Knight. Sure. I was just reading your little flyer
here, and you've pointed out that you want to--``It's vital we
develop a world-class workforce to fill those good-paying jobs
in Louisiana [inaudible].''
I happen to be involved with the local community college
[inaudible], and currently we're moving away from the blue-
collar type of job training, [inaudible] welding, for other
types of hands-on [inaudible], and they're moving into what I
would consider--nursing is good, but secretarial or business or
that sort of thing. It's not going to fill the needs that our
State is going to have [inaudible], and I just wondered what
you were doing about it. That's one issue.
The other issue is that we want Louisiana citizens
[inaudible]. How are you going to address immigration issues? I
don't expect you to address all the issues [inaudible], but
certainly Louisiana expects you to do something to protect its
citizens and giving them the opportunity.
Chairman Vitter. Absolutely. Well, in terms of the tech
system, I think that has to be absolutely at the center of
preparing our young people for good-paying jobs that are coming
our way. So the first thing we need to do is make sure they are
offering courses and training based on the jobs that are here
and that need to be filled. There shouldn't be a gap. But those
course decisions shouldn't be made in some ivory tower. They
should be made by constantly consulting industry and business
and seeing what's here and what folks need people trained up
in.
In this part of the State and to the west of here, that's
in a lot of skills related to petrochemical and oil and gas. So
that needs to be front and center in terms of our vo-tech
system, particularly in this part of the State.
A second big component I would focus on is reintroducing
some element of that sort of skills training in K-12,
particularly high school, to make sure high school students
understand the opportunities, the great opportunities available
to them if they have the right skill sets that don't
necessarily require a four-year degree.
So at least they need to be made aware of that track,
because in America college should be available to everybody
regardless of background or income or race, but college isn't
for everybody. A lot of folks may want to go into that sort of
skills training track, particularly when if they have the right
skill sets they can come out as a 21-year-old and be earning
$55,000 a year; in four years, develop in their job, be earning
$95,000 a year. That's a good life and a good living in
Louisiana.
Representative Boustany. Wanted to show you on that slide
one of the things Louisiana is facing as a State, the need and
demand for the [inaudible] skill sets. I'm so glad to hear what
you just said, because I think David [inaudible]. He said we
have to start job skill training [inaudible]. Pick a skill when
you're in middle school, start learning the basics, carry it on
into high school, and when you graduate, if you don't go to
college, you've got a leg up. You're ready to go. If you do go
to college, you've got a way to help pay for it because you've
[inaudible].
If you don't need all that help and you're fortunate enough
to have parents who can pay for all that, then you don't end up
like me where you don't have a skill around the house. My wife
constantly complains that I can't fix anything around the
house. I wish I had a skill like that, do a little [inaudible].
So I think starting early--and this is something, this is
[inaudible], these students [inaudible] high school and be
ready to go to community college, refine those skills and make
a lot of money [inaudible].
Ms. Knight. Can I just bring two things to your attention?
Chairman Vitter. Sure.
Ms. Knight. One is, one of the reasons why the colleges and
even high schools would shift away from this technical training
that needs to happen into kind of a soft educational area is
because even though 30 or 40 students are sitting in one
classroom with desks and chairs, that's the full extent of your
investment into the infrastructure necessary to educate them on
something like this.
But in order to do so [inaudible] testing or for any of the
other hard skills, a higher level of investment [inaudible]
towards the community college [inaudible] in leadership
positions will take that into consideration in higher education
to encourage that investment into infrastructure in the
schools, including I love the idea of high schools and junior
high schools teaching those skills because I've got lifetime
work even though [inaudible] my business degree and [inaudible]
I still [inaudible] a lot of different things.
Our world today allows people to learn history or art or
music or any of those other things on their own time
[inaudible]. But those skills have to be learned early
[inaudible].
Chairman Vitter. Well, you make a great point, and that is
a factor. But for that to dominate and to decide what community
colleges focus on is the cart before the horse. Again, we
really need to tie everything into what the job market is
looking for and how we're going to best prepare these young
people for these jobs.
Okay, Curtis Hollinger. Where is Curtis?
Mr. Hollinger. Yes, sir. What is your vision for tort
reform in Louisiana, particularly related to the American
energy renaissance?
Chairman Vitter. Well, Curtis, I am very focused on that. I
think in general, the business climate in Louisiana, including
in the energy sector, is the best it's been in my lifetime. I'm
53. I think it's the best it's been in my lifetime. But the one
big exception to that rule, in my opinion, is the litigation
climate, which by every measure is really negative and keeps
good jobs and good businesses out of Louisiana, including in
the energy sector. I'll give you one example.
I had a meeting in Houston five months ago with Jeff
Hildebrand. He's head of a big energy company called Hilcorp,
which is actually the biggest payer of oil- and gas-related
taxes to the State of Louisiana, because it's the biggest
producer on State land and State water. And he said, David, we
have operations all over, all over the country, many parts of
the world, and we take our responsibilities very seriously for
safety, for a clean environment, but we still have 75 lawsuits
filed against us, and 70 are in Louisiana.
It's a horrible litigation environment. It's a horrible
threat to us, and we're not expanding anything in Louisiana
specifically because of that. And so that is a big issue that
holds us back, I think, including in the energy sector.
Mr. Hollinger. Can you describe [inaudible]?
Chairman Vitter. Yes. Well, I'll give you one concrete
example in the energy sector, since we're talking about that
today, called legacy lawsuits. That is when land owners find
any contamination on their land from prior oil and gas
development. Nobody is arguing that whoever is responsible for
that should fully clean it up. But what happens instead,
because of the nature of our State laws and our court system,
is that everybody who ever had anything to do with development
on that property for 60 years or more, everybody is sued,
number one, no matter what their involvement or non-involvement
was.
Number two, there is no cap on damages. So damages can be
as high as the plaintiff lawyer expert says they should be.
There's no cap related to anything, including the fair market
value of the land.
And then number three, there's no rule that those damages
have to be used to clean up the land. So that's crazy. It leads
to a cottage industry of lawsuits rather than a system that
actually gets any legitimate problems cleaned up. So that would
be an example of what I'm talking about.
Representative Boustany. David just described the standard
appropriately. We all know Louisianans care about our
environment, and I think good energy policy, good environmental
policy, good economic policy go hand in hand [inaudible].
But I had a similar experience. I was in Houston just a few
weeks ago. A gentleman by the name of Gary Luquette, who is
from the [inaudible] area, just took over as CEO of Frank's
International [inaudible]. Well, their headquarters now for
global work is in Houston. Gary told me point blank--we were
talking about all the things going on in the energy sector,
going on around the world. He said, let me tell you what the
biggest threat to Louisiana is. [Inaudible] investments in
there, you got mobile trends, price down [inaudible], layoffs.
He said the biggest threat is these legacy lawsuits. You're
going to drive the industry that helped create Louisiana out of
Louisiana.
David described beautifully all the problems with the
system as it's set up. That's why we've got to change the
[inaudible].
Chairman Vitter. Let's take one more question. Then we're
going to go to our expert witnesses.
Anita Johnson? Where is Anita? Yes, ma'am.
Ms. Johnson. Is there any legislation coming up regarding
adverse regulations like the EPA?
Chairman Vitter. Why don't you elaborate, Anita?
Ms. Johnson. Well, I just hear and read so much about how
the Congress [inaudible] and every regulation that they make up
increases the cost of [inaudible] and they wind up having to
lay off people [inaudible]. And a lot of the regulations they
make are not necessary.
Chairman Vitter. Right, right. Well, first of all, let me
agree with your statement. I agree with that. I happen to be on
the Senate committee that deals with everything related to EPA,
so I'm constantly working to push back on those sorts of
regulations.
In fact, there are three brand-new sets of regulations that
they're working on that they're pushing forward that I think
fall into the category you're describing where costs and burden
goes through the roof. So costs to small business goes through
the roof, and any positive impact in terms of health and safety
is minimal, at best. So that's the new ozone standard, that's
the greenhouse gas regulation, and that's a set of regulations
that would dramatically expand the jurisdiction of the Clean
Water Act.
So in each of these cases, Charles and I both are working
on ways to push back and try to block that sort of over-
regulation.
Charles.
Representative Boustany. Yes, I agree with David there. We
have worked on those specific issues. This is one of the
[inaudible] we have right now at the Federal level where you
have Federal agencies that are really not very accountable to
each and every one of us. They make rules, and Congress ought
to be doing that, put sunshine there on what's going on, full
transparency and disclosure.
We've been blind sided by those rules out there, and they
make no sense, very little consultation about what the impact
will be, and the House keeps trying to pass legislation--we
have passed legislation in the House a few times that would
basically say that any new rule put out there that would have a
significant impact on the economy has to go back to the House
and Senate for a vote and approved before it can be enacted,
and we're still working on that project. I'm hopeful now with a
more favorable Senate that we'll be able to move this through
and put it on the President's desk. I'm not optimistic he would
sign something like that, but this is the fight we're having
with the Executive Branch.
It's not just this Administration. This problem goes all
the way back to Franklin Delano Roosevelt when he did this kind
of thing. But we've got to get back to a balance, a
constitutional balance, [inaudible] laws [inaudible] in the way
Congress intended. That's the way our Constitution is supposed
to work.
Chairman Vitter. And I certainly agree with that
legislation. I'm a leading co-author of it in the Senate. That
would help right the balance. Instead of Congress having to
affirmatively block all of these huge costly regulations, if
they're above a certain amount in terms of economic impact,
Congress should have to affirmatively pass off on them. I think
that would immediately right the ship if we can get that into
law.
Okay, thank you all very much. We're now going to move on
to the next part of the morning, which is hearing from our
expert witnesses on our main topic today, how small businesses
are supporting America's energy renaissance.
I'll introduce each of them in turn, and then they'll each
present testimony for about 5 minutes, following which we'll
have a discussion with them on the topic.
First we have Dr. Natalie Harder, Ph.D. Dr. Harder is
Chancellor of South Louisiana Community College, and she took
over those responsibilities in 2011. Previously, she also
served as Interim Director of the Acadiana Technical College.
So she has a long history and set of experiences in the
community and technical college system.
Dr. Harder, welcome, and please kick us off.
STATEMENT OF NATALIE J. HARDER, PH.D., CHANCELLOR, SOUTH
LOUISIANA COMMUNITY COLLEGE
Dr. Harder. Great. Thank you, and I so appreciate the
opportunity to testify this morning.
Small businesses and their entrepreneurs are needed in our
globally competitive environment now more than ever. Small
businesses are the companies which are able to be nimble in an
ever-changing environment, but which also work hard to keep
their workers employed through turbulent times. The
understanding of their employees as more than just inputs is
what makes energy's small businesses the anchors of regional
economies like Acadiana.
Small businesses often provide niche services that large
industries cannot manage well, particularly small companies
located in areas like Acadiana where specialization in the
energy industry is paramount. As our region is ``all energy all
day,'' advances in technology, resources and training from our
small companies make them and their clients better situated for
competing on a global stage.
The importance of these small companies to the local
community cannot be overstated and is often overlooked. Just
last week I was with the Louisiana Gulf Coast Oil Exposition to
announce its endowment of a faculty position for our oil and
gas programs. In thanking LAGCOE's treasurer, Greg Stutes, for
the support of his company, Completion Specialists, Mr. Stutes
talked about how his company gives back 10 percent of its
profits to local charities each year. Ten percent, every year,
year after year. So not only is that company employing local
individuals, they are supporting organizations important to our
regional infrastructure.
Acadiana thrives on small businesses contributing to the
local economy and energy renaissance as they bring growth and
innovation to the region in which the businesses are
established. Many of these companies rely on graduates from
community colleges like South Louisiana Community College to be
competitive and to grow. One example of this growth and
innovation is Map Oil Tools in New Iberia. Map Oil Tools is a
small business of entrepreneurs which actively supports the
energy sector in Acadiana.
Map Oil Tools is helping to stimulate economic growth with
new products and solutions, and in providing employment
opportunities. South Louisiana Community College is working
with Map Oil Tools to provide down hole technicians with our
new down hole technician program. This partnership will support
and grow a company based right here in Acadiana but which
serves an international audience with local employees.
South Louisiana Community College works with other small
businesses to provide an educated workforce so that these
companies can continue to play an important role in the local
economy. These companies include, but aren't limited to,
Aerion, which provides completion services and equipment
rentals for the oil and gas industry; Weatherford, that
specializes in innovative evaluation techniques; and also
Knight Oil Tools, which has been a leading innovator for the
energy industry from its headquarters in Acadiana. All of these
companies employ graduates from Louisiana colleges, including
South Louisiana Community College.
For all Acadiana oil and gas companies, a strong local
workforce is the key to their success, and in turn, those
employees fuel our regional economy. Critical to developing
this workforce is the return of year-round Pell Grants,
restoration of full ability to benefit Pell and allowing the
use of Pell for short-term and non-credit programs. With
funding Pell in these ways, we allow more graduates and
community college programs like welding, machine tool
technology, oil and gas production, down hole tool technology,
process technology, diesel technology, and heavy equipment
operations.
Remember that Pell primarily funds low-income and often
first-generation college students. With only 600,000 of the 2.3
million adults eligible to work in Louisiana holding a college
degree or credential--let me say that again, 2.3 million adults
eligible to work in this State, and less than 30 percent of
them have any college degree or credential--Pell is important.
Louisiana is in greater need than other states for Pell
funding to move 70 percent of its working population to
maximize their own capabilities as they help meet our workforce
needs in oil and gas. By funding Pell Grants appropriately, the
companies I mentioned are just a few of the many small energy-
based companies which can continue to competitively employ
thousands of individuals trained in our region, but which can
also grow with a well-trained workforce.
We need to continue to support these companies to maintain
a strong economic fabric in the Acadiana region. Thank you.
[The prepared statement of Dr. Harder follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Thank you very much, Dr. Harder.
Next we'll hear from Joshua A. Pellerin, President and
Chief Executive Officer of Pellerin Energy Group LLC. That
group is made up of Pellerin Water Solutions, Energy Rentals
and Chemicals, so obviously all related to the energy industry
here in South Louisiana, and those companies are located in
Broussard, Louisiana.
Joshua, thank you for being with us.
STATEMENT OF JOSHUA A. PELLERIN, PRESIDENT & CEO, PELLERIN
ENERGY GROUP LLC
Mr. Pellerin. Chairman Vitter, thank you for the
introduction, and thank you for having me here today to testify
and participate in this very important hearing discussing ways
to help in the coordination of Federal efforts that would allow
small businesses to better support the U.S. energy industry.
My name is Joshua Pellerin. I am the President and CEO of
Pellerin Energy Group based in Lafayette, Louisiana. Pellerin
Energy Group through its various subsidiaries provides
integrated services and optimal solutions to the oil and gas
industry.
We must not forget the important role oil and gas producers
have in supporting the small business supply chain and
impacting our energy security. Large and small companies work
together to meet America's energy demand. According to the
recent Census data, there are over 46,000 small businesses
supporting the production of oil and natural gas in the United
States that directly employ over 300,000 workers. Every day,
they provide a vital aspect to the generation of America's
energy.
Energy-related jobs pay the kind of wages and salaries, in
my view, and I know it's shared by many here, that allow
families to invest in homes, in their education, and in their
futures. If Congress can take the steps to increase domestic
energy production, we not only increase America's energy
independence, but we also create the kinds of jobs that will
grow the middle class and have a major impact on reducing
income inequality in our country, which is a goal I believe we
all share.
The major oil and gas companies find investments in the
United States to be attractive for several reasons. The U.S. is
a stable country. It is a country with fair and well-
established laws and tax regulations that make drilling,
development, and production for oil and gas in the U.S.
economically attractive. The U.S. has been blessed that oil and
gas has been found here in abundance and collects revenues
averaging $85 million a day in taxes, rents, royalties, and
bonuses.
While our tax laws are and have been used to incentivize
direct investments of capital throughout the history of our
country, I would argue that they are not giveaways, and
changing existing tax laws and regulations for the oil and gas
industry at this time would have a very detrimental effect. The
economic ripple would adversely impact the job growth revenues
of many small businesses in our domestic supply chain and those
that depend on a secure energy supply.
In short, changes to the tax code in cost recovery would
unintentionally hit the brakes on America's energy and
manufacturing renaissance and have a devastating effect on
jobs, the economy, and revenue to the government.
Our economic engine is fueled by entrepreneurial drive,
individual ambition, creativity, and broad economic
participation. Principally this means promoting accessibility
in every sense of the word in every field of endeavor,
geographically, affinity, and focus.
There is a strong global demand for small U.S. companies to
export their products outside the U.S. We must enable export
growth by reducing barriers to small business exports,
simplifying trade, and facilitating small business engagement
with global markets. Exporting will support economic growth and
job creation by expanding our access to the fastest growing and
most dynamic regions on the planet. Small businesses that
export to foreign markets grow faster, create more jobs, and
pay higher wages.
There are 28 million U.S. small businesses, and
approximately 300,000 U.S. small businesses export. Of the
businesses that export, only about 40 percent export to more
than one country. Ninety-eight percent of U.S. businesses that
export are small businesses, and small businesses have
accounted for nearly two-thirds of net new private-sector jobs
in recent decades.
We must provide our minorities, women, and small business
owners with the entrepreneurial support and opportunities they
rightfully deserve. All Americans deserve to be given an equal
opportunity to pursue the American Dream.
According to the latest data from the U.S. Census Bureau,
the number of people in the United States who are classified as
ethnic and racial minorities has exceeded 100 million. Today,
one in every three U.S. residents is classified as a minority.
Additionally, there are now over 4 million minority-owned
businesses across the country, accounting for over $591 billion
in annual revenues.
For the past two decades, women-owned businesses have been
the fastest growing segment in the U.S. economy, growing at
twice the rate of all other businesses, with 10.1 million
women-owned businesses employing 13 million Americans and
generating $1.9 trillion in annual revenues in 2008 alone.
Women entrepreneurs drive our nation's economy by starting
1,600 new businesses in America every single day. We need to
make sure that our daughters have the same chance to pursue
their dreams as our sons and urge businesses and the government
to do more to hire women and achieve gender equality.
We must encourage small businesses to explore their
technological potential and provide the incentive to profit
from its commercialization. By including qualified small
businesses in the nation's research and development arena,
high-tech innovation is stimulated and the United States gains
entrepreneurial spirit.
The men and women who serve our nation in the military
deserve more than just our respect; they deserve our
assistance. With more than 3.3 million veteran-owned small
businesses in America, veterans play a critical role in
strengthening and expanding our economy. It is imperative that
the Committee continues to find innovative ways to further help
our nation's heroes.
Once again, thank you for this opportunity to testify, and
God bless the United States of America.
[The prepared statement of Mr. Pellerin follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Thank you very much, Josh.
And last but certainly not least is Bill Fenstermaker. Bill
is Chairman and CEO of C.H. Fenstermaker and Associates, a
leading firm that provides surveying and other services to a
host of Louisiana businesses, including in the energy sector.
Bill is a member of the Greater Lafayette Chamber of Commerce.
He is Chairman of the IberiaBank Corporation and Vice President
of ULL's Board of Trustees for Membership.
Bill, thanks for joining us.
STATEMENT OF BILL FENSTERMAKER, CHAIRMAN & CEO, FENSTERMAKER
AND ASSOCIATES
Mr. Fenstermaker. Thank you, Senator Vitter. My comments
today would be related to energy and the effects of low energy
prices on South Louisiana.
Louisiana oil and gas and Lafayette are synonymous. The
people who live here are hard-working and are called upon to
support oil and gas activities not only in this region but
throughout the world. This is why Lafayette is the center of
the service industry that supports the central Gulf of Mexico.
In Lafayette, in our MSA, 26 percent of all earnings and
approximately 11 percent of all employment comes through the
energy business. Lafayette alone has over 17,000 people who
work in the energy sector.
Due to low oil and natural gas prices, times are pretty
tough now. Most of our service industries have recently
announced layoffs. Energy producers in Lafayette and Houston
have announced that they are cutting operating budgets,
sometimes as much as half and even more. Most have learned from
the 1980's and are positioning themselves to withstand the
storm caused by low commodity prices. Obviously, banks are much
more circumspect when it comes to lending to anyone that has
oil and gas exposure.
From a banking perspective, serving as Chairman of
IberiaBank Corporation--we bank a number of energy companies--a
recent earning conference call was dominated by questions about
energy exposures, which triggered a follow-up presentation in
New York City where over 100 analysts attended and listened to
our energy exposures today. Questions about these exposures are
not only relegated to the analysts but also to banking
regulators who stress-test all of our risk, with a big focus on
energy.
One bright spot has been the large number of LNG and
natural gas to liquids projects being located in South
Louisiana. But slumping oil prices have clouded their future,
not only here but globally. These cost-intensive projects are
now being threatened by the volatile market, making the
prospect of U.S. energy independence in doubt.
Certainly not helping are long application turnaround times
by the Department of Energy and FERC, which negatively affect
the economy of South Louisiana and the U.S. economy. These
delays make it extremely difficult to meet current global
demands for LNG and lets other nations to regain advantages in
supplying the energy needs that many countries demand.
I offer three things that could possibly help America. One
is to end the 40-year-old executive order that prevents
exporting oil overseas. This would significantly reduce the
massive layoffs which are coming and continue our march in the
United States for energy independence.
Second, we do need to speed up the permits for all oil and
gas activities, but specifically export of LNG.
And third, we need to allow the export of LNG to all
countries, not just some, and that would help our economy
dramatically.
Hopefully we don't squander these opportunities, and I
thank you for allowing me to say those things today.
[The prepared statement of Mr. Fenstermaker follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chairman Vitter. Thank you all very much for your
testimony. You're really the heart of this program in terms of
the Small Business Committee field hearing. We appreciate your
being here.
As we move on to questions and conversations, I'm going to
turn to Charles for those first. But I do want to recognize two
folks who have joined us in the audience.
State Senator Elbert Guillory. Senator, thank you for being
here and for your leadership.
[Applause.]
And also former mayor of Lafayette, Dudley Lastrapes.
Mayor, thank you for being here.
[Applause.]
Charles, why don't you kick off questions and discussion?
Representative Boustany. Well, thank you, Chairman Vitter.
Thank you for convening this very, very important hearing.
I think the three of you really encapsulated the
opportunities and the challenges that we're facing here, and
it's sort of a snapshot of what I think the rest of the country
is seeing.
Coming out of the recession, Louisiana sort of took a lead.
Our economy bounced back quicker, and part of it--the two
drivers nationally, and I think also in Louisiana, where the
shale gas revolution and all the things that happened as a
result that we benefited from, and exports, which also proved
to be an early driver.
Josh, you pointed out the opportunities that small firms
could have as part of the global supply chain in the energy
sector, and I believe our suppliers and service companies could
benefit from having new market access, for instance, with the
Trans-Pacific Partnership that we're negotiating, and the new
European agreement.
There's intense interest around the world in what's
happened with the shale revolution here in Louisiana and the
United States and what our companies offer. So could you
elaborate a little bit more on this opportunity out there, even
though we're facing some challenges and head winds today with
low oil prices, new market conditions, OPEC's decision? How
would new market access help small service companies like
yourself?
Mr. Pellerin. Well, I'll give you an example, Congressman
Boustany. Just last week I was in Mexico City with the
development of the Transboundary Hydrocarbon Agreement between
the U.S. and Mexico, and it involves Canada as well. As you
know, Mexico has had a hydrocarbon reform. Due to the low oil
prices, that market isn't as attractive as it was maybe a year
ago, but just by being able to go into that area and have
relationships established with the focal points and key
stakeholders within the various government entities, as well as
the oil and gas companies, allows us to build, engineer, and
manufacture equipment here in the United States and export that
equipment to Mexico without having to actually have a presence,
a location in the area.
So by having that in place and by having the reform, that
helps us, because if the Gulf of Mexico is not as busy, then
certainly we can go into other areas such as Mexico, Saudi
Arabia, any other part of the world that we had a trade
agreement with.
Representative Boustany. Thank you.
And, Bill, you brought up some very, very interesting
points about the opportunities and challenges and the fact that
even with low oil prices, which is creating great difficulty,
some serious head winds for a lot of our companies here, the
low price of gas has opened up export opportunities around the
world to countries like Japan that are energy starved. So it's
sort of been a mixed picture.
From your position in banking--you get to see the big
picture, and also the Lafayette-focused picture as well--you
mentioned three things. Permits, which I fully agree with.
We've got to streamline the permitting process. You mentioned
the issue of allowing exports to all countries, and I think
that's important, and I'm glad to hear you say that crude
exports are something we need to consider in addition to
expediting LNG exports.
Could you elaborate a little further on some of that and
what opportunities those approaches would offer our small
businesses here in this area and our entrepreneurs?
Mr. Fenstermaker. Well, I think all of us have been looking
at the supply chain. When you look at that, it's not really a
pretty picture, but it's a great picture for America because we
have been producing oil in record amounts, and we have been
producing natural gas in most of the shale formations
throughout the country.
Right now we still have the situation of maybe pipeline
infrastructure that needs to be built to be able to move the
product from here to there, which right now gives us a little
breathing time to be able to implement some of that, but maybe
not the capital to do that because of the regulations and
because of some of the stress testing that the people that
would put forth those dollars are faced with.
So right now, for instance, if you look at the Marcellus, a
very rich natural gas play, they will be exporting or sending a
lot of natural gas down to South Louisiana, because pipelines
can go both ways. We also have the Haynesville which, as we all
know, has been very good for our North Louisiana friends and
also for the country. And then you have West Texas, where it's
mostly oil.
All of those things are very good and bode well for
America. But with low energy prices, it's stopping. All of that
is going to come to a complete halt. So we have to figure ways
right now to be able to stimulate the industry and keep it
moving forward, and the things that I mentioned about exporting
make a lot of sense because the laws that regulate that were
written back when we thought we had a tremendous energy
shortage, and now we have a tremendous energy surplus. So that
would help balance trade. It would also help a lot the jobs in
America that have been missing for so many years.
Representative Boustany. I appreciate that.
And finally, Natalie, you're right in the thick of things
when it comes to the workforce demands that we need to meet.
Senator Vitter laid out some pretty stark numbers out there
about the mismatch between projected demand and supply.
I know you and I have talked personally about the Pell
Grant flexibilities that would help this situation. Talk a
little bit more about the outreach to the business community in
trying to match up skill sets with what you're doing to meet
those demands, and then how are you measuring. Are you
following these students after they get out into the workforce
and getting some feedback as to whether you matched up and what
improvements need to be made?
Dr. Harder. Yes. Thank you for the question. We certainly
work with business and industry on a day-to-day basis to assess
whether or not our programs are meeting their workforce needs.
A clear example of that is we took about seven programs a year
ago and condensed them into one-year programs, three-semester
programs in welding, machine tool, industrial electronics and
such, to specifically try to address the skills gap.
The challenge of that becomes students are not eligible for
Pell in the summer. So even though business is working and
wants to hire individuals, these students then become
financially stressed because they have no more dollars to
attend college in the summer.
Those programs are intensive. They're in class every day.
So it's often hard for them to work enough hours in the spring
and fall to save up for the summer.
I will tell you, Congressman, in those technical programs,
it's 100 percent placement. We have a very close working
relationship with industry, and it's 100 percent placement and
how can you graduate more is what we hear.
Representative Boustany. Thank you.
Thank you, David.
Chairman Vitter. Great.
As we go on, I also want to recognize a small business of
the week. On our Senate Committee on Small Business and
Entrepreneurship, we recognize a leading small business every
week, and one recent business that was recognized was The
Learning Train, and we do have Keri and Matt Hebert with us
from the Learning Train.
Thank you all for being an important part of the economy.
Thank you all for being here.
[Applause.]
Let me ask Bill and Josh. I ask this of everyone in the
industry, and nobody has a crystal ball, but obviously price is
a big factor in this part of the economy right now. If you had
to pick a price of a barrel of oil, guess at what that would be
one year from today, give us your guess.
Mr. Fenstermaker. Josh knows that answer.
[Laughter.]
Mr. Pellerin. I'll take a methodical approach, right? So,
based on everything that I've read, we're looking at about, I
guess, 24 months of the downturn before we see a recovery in
the price of oil. I think 12 months from now we should be
somewhere within $75 to $80 a barrel, is what we hope. That's a
bit aggressive. I think full recovery, 24 months from what all
the analysis and everything I've read. I think that that would
be in the range.
Chairman Vitter. Okay. And Bill.
Mr. Fenstermaker. The experts tell me that $65 might be the
price at the end of this year, and they say ``might'' because
they don't know. I'm asked from time to time, too much, because
I'm not an expert on pricing, so I have to go with them and
hope it's much higher than that. But I'm factoring in all the
different seminars and different things I've heard. Probably
$60 to $65 a barrel at the end of this year, and a year later
would be $75, maybe.
Chairman Vitter. Right. And, Bill, you mentioned lifting
the export ban on crude oil. If that were done tomorrow, do you
think that would have a positive impact on price and this
sector of our economy?
Mr. Fenstermaker. Tremendous impact. Right now, if you just
look at the supply curves and you look at the amount of oil
that's coming on the market, and you look at the shortages
throughout the world of oil and the growth maybe of all the
economies throughout the world, Louisiana would benefit
handsomely, and small businesses would benefit handsomely if we
could export oil and natural gas to everywhere.
Chairman Vitter. Josh, let me ask you. You're a great
example of a Louisiana small business in this sector. In your
very real-world experience, what are some of the biggest
obstacles that any layer of government, any government agency
or entity, puts in your way that is a particular problem for
your business?
Mr. Pellerin. Well, one of the businesses that we're
involved in is the environmental component, which has produced
water treatment. We are constantly looking at ways to bring to
the market best available technology that would not necessarily
create more regulation but would just better a process that's
already been established and put in place.
We're not in drilling, so we're not on the permit side of
it, but we're directly affected by the red tape of getting
permits, right? So the more wells that are drilled, the more
platforms that are installed, the more equipment we get to
sell. So we are affected, I guess, in an indirect way.
But I think, as Mr. Fenstermaker stated, if we could have a
permitting process that was streamlined and was very efficient
and allowed the oil and gas companies to be able to get these
permits and move forward with the drilling, then that would be
something that would make it more attractive for them and less
bureaucracy involved.
Chairman Vitter. Okay.
And, Dr. Harder, in our town hall meeting discussion, you
heard some comments about maybe there being some bias in the
community college system based on the cost of doing one type of
program versus another, because clearly more equipment-
intensive training programs like welding are just much more
expensive to put on.
Do you think there is any element of that sort of bias in
the system? And if there is to any extent, great or small, how
do we counteract it?
Dr. Harder. Well, I would like to address the fact that one
day we would like to make a profit. I don't know that we've
ever ascribed ourselves to that.
[Laughter.]
But it is true that clearly a technical program is much
more cost-intensive than what one would consider a Humanities
or general education section. But the way that we have
addressed that is by partnering with business and industry,
whether it's through the donation, for example, of welding rods
to our welding programs, or computers to our Information
Technology programs. We have really been aggressive over the
last two, two-and-a-half years to bring our partners into the
mix.
An additional challenge, though, that we see is the ability
to find faculty, quite frankly, not necessarily anything that
the Federal Government or Congress could help us with, but it's
just purely the ability to attract individuals from the private
sector to the State salary schedule.
Chairman Vitter. Right, right. Absolutely.
And then another related issue we've been talking about is
how you reach out to the private sector to determine exactly
what skill set training programs are needed, and you touched on
this a bit. Exactly how do you do that on a regular basis to
get that feedback to help drive your curriculum?
Dr. Harder. Well, certainly we meet with advisory
committees which are made up of private-sector members at least
twice a year. But a great example and a recent example is that
we will start an oil and gas production program this fall. The
advisory committee includes many small businesses, as well as
folks like Halliburton and Baker Hughes that have literally
crafted the curriculum with us to make sure that those
individuals have exactly the skills and the training they need
to be hired as soon as their program is finished.
Chairman Vitter. Right. And then a final thought about
workforce training. We also talked about the sort of high
school tie-in. Now, there is more focus there than just a few
years ago. There is a state program, Jump Start, that's trying
to bring more skills training to the high school level as a
prelude to some of those kids going for community college or
skills training opportunities.
How do you see that working in your geographic footprint in
terms of your partnership with high schools, and what more do
we need to be doing?
Dr. Harder. Well, we do plenty of that through our dual
enrollment efforts, where students are high schools students,
but then they take college-level courses that both meet the
high school requirement but also help lead them to an IBC, an
industry-based certification. Obviously, welding is a good
example of that, machine tool, some CNA programs and things
like that.
But we do dual enrollment all day, every day, and the
beauty of it is it allows the high school to determine whether
or not they want to have the sunk cost of those programs
specifically on their high school campus, or they merely want
to shuttle their students over to us and take advantage of the
infrastructure that we already have. So we do that in many
different ways.
We're also in the process of creating a high school that
will allow a student to graduate with a technical Associate's
degree in something like welding or machine tool. We have an
Early College Academy now where students graduate with an
Associate's degree, and the day they graduate from high school,
which means whether they choose to work after that Associate's
degree or go on to their four-year degree, they're in the
workforce at least two years earlier, and we're looking to
replicate that but with a technical model.
Chairman Vitter. Okay. Great.
Charles, do you have any final wrap-up questions?
Representative Boustany. Yes, just a final wrap-up, and we
were talking about the oil pricing. I know we have a split
between WTI and Brent, and it's about $9.00 as of today, Brent
being higher. If we were to export, many have said that we
would start to see equilibration. That spread would shrink,
which means pricing for U.S.-produced oil would probably go up,
helping our small businesses.
But one of the other things that I think, Bill, you
referenced was the infrastructure limitation, because even if
we were to export oil today--the pressure would be to narrow
that spread in pricing and help get better price stability--we
still have a logjam at Cushing. We still have pipelines that
need to be constructed. Being in the engineering sector, could
you comment briefly on that?
Mr. Fenstermaker. Well, of course, all that takes time and
capital, and right now, to be able to put capital on a massive
spending program such as pipelines, which are not cheap to
build, and to deal with the permitting time it takes to get
through the malaise of different regulations required for
permitting a pipeline, the question becomes is the capital
there to allow people to do it.
Now, right now it is catch-up time, and we do have a lot of
plans right now and a lot of different companies to be able to
build a certain pipeline infrastructure. But it's imperative
that we do that, because if these export bans are lifted,
you're talking about an equalization of price, an equalization
of access of oil throughout the country is there. We do need to
somehow stimulate that ability and add certainty to the
process. Certainty is a big thing in the energy business, and
that's something we don't have right now.
Representative Boustany. And I appreciate that.
Senator Vitter, Chairman Vitter, thank you. This has been a
really informative hearing. I appreciate it.
I'm going to have to leave. I have to catch a flight, but I
appreciate you including me in this. Thank you.
Chairman Vitter. Absolutely, Charles. Thank you.
Representative Boustany. I thank our panelists.
Chairman Vitter. We're going to wrap up in general, so
let's all thank our panelists for being with us today, part of
the program.
[Applause.]
Charles, thanks for your participation, and thanks to all
of you for coming out.
I certainly want to remain in touch on an ongoing basis. We
have some handouts that include all my contact information. So
please keep that handy so you can be in touch on an ongoing
basis.
But thanks to everybody very, very much. Appreciate it.
[Whereupon, at 9:43 a.m., the hearing was adjourned.]
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