[Senate Hearing 117-435]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 117-435

                 THE CAUSES, OUTLOOK, AND IMPLICATIONS
                     OF DOMESTIC AND INTERNATIONAL
                          ENERGY PRICE TRENDS

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                       TUESDAY, NOVEMBER 16, 2021

                               __________

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                       Printed for the use of the
               Committee on Energy and Natural Resources             
             

        Available via the World Wide Web: http://www.govinfo.gov
        
                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
46-202                    WASHINGTON : 2022                     
          
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon                    JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
MARTIN HEINRICH, New Mexico          STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii              LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine            JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada       JAMES LANKFORD, Oklahoma
MARK KELLY, Arizona                  BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado       CINDY HYDE-SMITH, Mississippi
                                     ROGER MARSHALL, Kansas

                      Renae Black, Staff Director
                      Sam E. Fowler, Chief Counsel
                Nicole Buell, Professional Staff Member
             Richard M. Russell, Republican Staff Director
              Matthew H. Leggett, Republican Chief Counsel
      Justin Memmott, Republican Deputy Staff Director for Energy
                     Darla Ripchensky, Chief Clerk
                           
                           C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West 
  Virginia.......................................................     1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from 
  Wyoming........................................................     3

                               WITNESSES

Nalley, Stephen, Acting Administrator, U.S. Energy Information 
  Administration.................................................     6
Gould, Tim, Chief Energy Economist, International Energy Agency..    17
Bryce, Robert, Author, Journalist, Podcaster, and Film Producer..    24

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

American Exploration and Production Council:
    Letter for the Record........................................   127
Barrasso, Hon. John:
    Opening Statement............................................     3
    Chart depicting USEIA National Average Gas Prices............     4
    Chart entitled ``Notable Cancellations in Recent Years of 
      Eastern Natural Gas Pipeline Projects,'' sources: the 
      Global Energy Institute, U.S. Chamber of Commerce; 
      Conservation Law Foundation................................    44
    Business Wire article entitled ``IHS Markit: Banning Exports 
      of US Crude Oil Would Likely Raise Gasoline Prices, Not 
      Lower Them'' dated 11/16/2021..............................    91
Bryce, Robert:
    Opening Statement............................................    24
    Written Testimony............................................    26
    Responses to Questions for the Record........................   124
Gould, Tim:
    Opening Statement............................................    17
    Written Testimony............................................    19
    Responses to Questions for the Record........................   114
Heinrich, Hon. Martin:
    Chart entitled ``Levelized cost of energy: Cost per megawatt-
      hour'' from data in Lazard's Levelized Cost of Energy 
      Version 14.0...............................................    47
Industrial Energy Consumers of America:
    Letter for the Record........................................    61
King, Jr., Hon. Angus S.:
    Forbes article entitled ``Revisiting the Blame for High Gas 
      Prices'' by Robert Rapier dated 9/26/2021..................    52
    Chart entitled ``Monthly U.S. liquefied natural gas exports 
      by destination region (Jan 2018-May 2021)''................    59
Manchin III, Hon. Joe:
    Opening Statement............................................     1
Montana Petroleum Association, Inc.:
    Letter for the Record........................................    70
Nalley, Stephen:
    Opening Statement............................................     6
    Written Testimony............................................     9
    Responses to Questions for the Record........................   100

 
                        THE CAUSES, OUTLOOK, AND
                      IMPLICATIONS OF DOMESTIC AND
                   INTERNATIONAL ENERGY PRICE TRENDS

                              ----------                              


                       TUESDAY, NOVEMBER 16, 2021

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin 
III, Chairman of the Committee, presiding.

          OPENING STATEMENT OF HON. JOE MANCHIN III, 
                U.S. SENATOR FROM WEST VIRGINIA

    The Chairman. The Committee is meeting today to hold both a 
business meeting to vote on two nominations and a hearing on 
energy price trends. The purpose of the business meeting is to 
vote on two nominations that were on the agenda of our November 
2 business meeting but were postponed because not all of the 
Senators we needed for the vote were present. The two 
nominations are Ms. Laura Daniel-Davis, to be an Assistant 
Secretary of the Interior for Land and Minerals Management and 
Ms. Sara Bronin, to be the Chair of the Advisory Council on 
Historic Preservation. Since we still do not have all of the 
Senators we need, I propose to recess the business meeting, 
subject to the Call of the Chair.
    We will then proceed to the hearing and reconvene the 
business meeting to consider the two nominations on Thursday 
morning at 10:00 as part of the legislative business meeting 
already scheduled for that time. We will consider the two 
nominations on today's agenda along with the bills on 
Thursday's legislative agenda.
    Is there any objection to proceeding in that fashion?
    [No response.]
    The Chairman. If not, that will be in order.
    Now I will turn to the hearing that brings us together 
today. The topic of this hearing is very timely with the rising 
energy prices. They are rising on all commodities in the 
American market. We are seeing right now across the country and 
around the globe prices that are rapidly rising for gasoline, 
diesel, heating oil, natural gas, electricity, and even coal 
and everything else in between whether it be food and 
appliances and cars and clothing. We are not on those subjects, 
so we are not in charge of that.
    This is in the stark contrast of the prices that bottomed 
out during the pandemic as economies around the globe slowed. 
But now, as our economies are rebounding, we are seeing soaring 
gasoline prices and heating bills are expected to go up to 10, 
20, and 30 or even 40 percent in the coming months, according 
to the Energy Information Administration's Winter Outlook. This 
is impacting all of our constituents. In fact, the consumer 
price index for energy has increased by 30 percent over the 
last 12 months. Affordable, reliable, and dependable energy is 
part of what made us a superpower, and it is critical that we 
maintain that and keep these prices under control. 
Internationally, the worst crunch is in Europe and Asia. This 
fall, we have seen the demand for natural gas, coal and crude 
oil surge across global markets leading to high electricity 
prices in Europe and Asia. This has led to curbs on electricity 
use in China, protests in Spain, and bankruptcies of some small 
power companies and shuttering of power-intensive factories in 
the UK. In China, it has been recently reported that coal 
production was rapidly expanded in an attempt to meet 
electricity needs with a new slogan of ``guarantee the 
supply''. The energy supply crunch and high prices are of 
concern since global economies are increasingly dependent on 
our U.S. supplies--primarily natural gas--and we are not as 
insulated from global prices as we once were. We have seen our 
natural gas prices increased over $5 per million BTU, their 
highest level in seven years. That is a fraction of what they 
are paying in Europe, but it is still a big increase for us in 
the U.S.
    I understand that there are a number of factors 
contributing to the situation, but a primary cause in the 
demand is generated from a rapidly recovering economy that is 
outpacing primary energy production, especially with respect to 
natural gas. I hope we will have ample discussion on how long 
we can expect this imbalance to last and what policies are key 
to ensuring that we do not see energy prices as high as those 
in Europe and Asia. The recent price trends show how global 
energy markets are becoming increasingly interconnected, 
correlating domestic prices with global demand to a higher 
degree than we have seen in the past. Fuels for dispatchable 
power in Europe and Asia have been in high demand, resulting in 
record exports of U.S. coal and natural gas. In particular, 
high natural gas prices of over $30 per million BTU in Europe 
have made it a lucrative market for U.S. producers. Our LNG 
exports in October increased to about 9.8 billion cubic feet 
per day--about nine percent of domestic production, and it is 
expected that exports are said to increase even further this 
winter.
    U.S. coal exports to serve Asian markets--in particular, 
China--have followed a similar trend and I can tell you, the 
coal market in West Virginia has never been hotter. They cannot 
produce enough coal for the demand in the world. U.S. coal 
exports in the second quarter of this year jumped to 20.6 
million tons, a more than 50 percent increase from the same 
time frame last year. These record numbers are positive for 
American producers and for our economy but come with negative 
implications for the global climate and for consumers paying 
higher prices to stay warm this winter.
    Another huge concern is the 60 percent increase from last 
year that American consumers are paying at the pump for 
gasoline. Each one of us hears about it every day. Crude oil 
prices, which are the main driver of gasoline prices, have 
rebounded significantly following their collapse in the midst 
of the pandemic from ^$36 per barrel in April of last year to 
over $80. Oil producers ramped down their operations following 
the collapse in oil prices and production levels still aren't 
matching rebounding demand. Domestic refiners continue to be 
dependent on imported heavy crude oil, keeping our prices 
linked to organizations like OPEC, who do not always have our 
best interests in mind. This raises reliability and 
geopolitical concerns and underscores the need for pipelines 
that can bring crude oil and related products to our domestic 
refiners from all allies like Canada.
    In closing, I think this Committee has a responsibility to 
tackle these complex issues that will inform the solutions we 
produce to promote energy security, independence, ensure energy 
affordability and reliability for customers, while also 
achieving our decarbonization goals. I look forward to hearing 
from each of you on the outlook of energy markets and prices 
that we will use to inform our policy decisions going forward.
    With that, I am going to turn it over to Senator Barrasso 
for his opening statement.

               STATEMENT OF HON. JOHN BARRASSO, 
                   U.S. SENATOR FROM WYOMING

    Senator Barrasso. Thanks so much, Mr. Chairman. Thank you 
for holding today's very important hearing. It comes at a 
critically important time for our nation. American families are 
facing the highest inflation rate in over 30 years.
    This is the Wall Street Journal, last Thursday, ``Inflation 
Rate of 6.2 Percent Marks a 31-Year High.'' So not to be 
outdone by the Wall Street Journal, the New York Times, today, 
``Who's to Blame for Rising Prices?'' President Joe Biden. 
Right there, the New York Times today is saying it. That means 
Americans, through no fault of their own, have significantly 
less spending power than they did last year. It also means that 
American families must work harder to stretch the value of 
their dollar. While inflation hurts all of us, it hits low-, 
middle-, and fixed-income Americans the hardest. Americans are 
also facing significantly higher energy prices. Since January, 
the average price of a gallon of gasoline has increased by over 
$1. Here is the chart.
    [The chart referred to follows:]
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Barrasso. Since January, since President Biden took 
office, gasoline prices are up over $1 a gallon. That is about 
43 percent higher since the President took office. In addition, 
Americans are expected to have dramatically higher bills to pay 
to heat and power their homes this winter. According to the 
Department of Energy, American families, depending on where 
they live, will pay between 22 and 94 percent more for natural 
gas, for propane, and for home heating oil this winter. Higher 
energy prices hurt low-, middle- and fixed-income Americans the 
most.
    In response to this, President Biden and House Democrats 
threaten to make inflation even worse. President Biden and 
House Democrats want to ram through partisan legislation that 
is estimated to cost over $4 trillion. It is almost as much in 
today's dollars that the U.S. spent in World War II, and it is 
the exact opposite of what Congress should be doing to fight 
inflation. To make matters worse, the House Democrats' bill 
will increase energy prices. It will impose a natural gas tax 
on American families. Almost half of all American households 
heat their homes with natural gas. And at a time of 
skyrocketing energy prices, House Democrats want to make it 
even more expensive for families to heat their homes. It is 
outrageous. The House Democrats' bill will also effectively end 
new oil, natural gas, and coal production on Federal lands and 
waters. This bill surrenders American hard-won energy 
independence and it makes our country dependent on the OPEC 
cartel and Russia.
    Mark my words, Mr. Chairman, this winter we will see photos 
of Russian oil tankers in Boston Harbor delivering to the 
United States. The people of America will pay dearly for the 
energy that we are not producing in the United States, because 
what Joe Biden did in Glasgow was beg OPEC Plus which is plus 
Russia to sell more energy and produce more oil for the United 
States to buy. This is going to bring Europe's energy shortages 
to the United States. And as you talked about in your opening 
remarks, it is going to make it worse for us. Historically, 
Americans have benefited from some of the lowest energy prices 
in the industrialized world. In 2020, households in Europe and 
Japan paid between 85 and 215 percent more for electricity than 
families in the United States. For natural gas, households in 
Europe paid between 49 and 177 percent more than families in 
the United States. If the House Democrats get their way, many 
American families will have to decide whether they can pay 
their utility bills or put food on the table. One or the other, 
heat or eat. People will have to decide where their money goes.
    American businesses have also benefited from some of the 
lowest energy prices in the industrialized world. European 
businesses paid as much as 160 percent more for electricity 
than businesses in the United States. The same year, European 
businesses paid much more for natural gas than businesses in 
the United States. If House Democrats get their way, America's 
competitive advantage will end. Not all Americans are going to 
suffer, though, under the House Democrats' legislation. This 
bill gives wealthy residents of New York, New Jersey, 
Connecticut, California, and Maryland tens of thousands of 
dollars in new tax breaks. It also gives couples earning a half 
million dollars a year up to $12,500 to purchase an $80,000 
luxury electric vehicle. Now $4,500 of this $12,500 of this tax 
break is only available for electric vehicles made at unionized 
factories. Union-made vehicles are no better for the 
environment than vehicles made in other factories. This is a 
direct gift and payoff to union bosses.
    For the vast majority of Americans, the House Democrats' 
bill means more inflation, higher energy costs, and fewer jobs. 
It is why this reckless tax and spending bill must be defeated.
    Thank you, Mr. Chairman, for holding this very important 
hearing.
    The Chairman. Thank you, Senator.
    Now I would like to turn to our panel of witnesses who will 
help shed some light on this situation and inform what we 
should be considering as we head into the winter months. 
Today's panel includes experts that bring domestic as well as 
global perspectives.
    We have with us Mr. Stephen Nalley, Acting Administrator of 
the U.S. Energy Information Administration (EIA). It is good to 
have you here. Mr. Tim Gould, Chief Energy Economist of the 
International Energy Agency (IEA), who is joining us from 
Paris. Thank you, Mr. Gould. And Mr. Robert Bryce, author, 
journalist, podcaster, and film producer.
    I want to thank you all for joining us today, and we are 
going to start with Mr. Nalley for his opening remarks.
    Mr. Nalley.

STATEMENT OF STEPHEN NALLEY, ACTING ADMINISTRATOR, U.S. ENERGY 
                   INFORMATION ADMINISTRATION

    Mr. Nalley. Good morning Chairman Manchin, Ranking Member 
Barrasso, and members of the Committee. I appreciate the 
opportunity to testify today about the U.S. Energy Information 
Administration's assessment of energy prices and how they 
reflect current world and domestic energy conditions.
    When I last spoke to the Committee in June 2020, the United 
States faced a very different energy situation. For example, 
last month, the price of Brent International benchmark for 
crude oil averaged over twice what it had been in June 2020. 
The U.S. retail gasoline prices average more than $1 per gallon 
higher and wholesale natural gas prices at Henry Hub were more 
than three times their June 2020 average. Now, looking ahead 
toward winter, we forecast that heating bills for U.S. 
residents are likely to increase for all heating fuels and they 
could increase even more if we have a colder than expected 
winter. Although these price increases are a direct result of 
the fact that global economies have begun recovering from the 
severe pandemic-related economic contraction, serious 
challenges remain before we will see a full recovery in the 
energy sector. I would like to spend just a few minutes 
reviewing these issues with a focus on crude oil, petroleum, 
and natural gas, addressing them from an international and 
domestic perspective.
    World consumption of petroleum is recovering faster than 
production, which is resulting in steady draws on global oil 
inventories and upward pressure on prices. We expect global oil 
prices to remain near current levels for the rest of this year, 
but to drop by about $10 per barrel next year as production 
increases in the United States, OPEC, and other countries. As 
world economies recover, we expect global oil consumption to 
increase by 5.5 percent this year and eventually catch up to 
the 2019 level in 2022. Global oil production on the other hand 
is growing more slowly than consumption. We expect world oil 
production to increase by less than two percent this year, 
still almost five percent below the 2019 level before the 
pandemic. We forecast that world oil production will grow 
significantly next year and will exceed the 2019 level by the 
end of 2022.
    In the United States, consumption of crude oil and other 
liquids is quickly returning to pre-pandemic levels and we 
expect that overall domestic oil consumption will return to the 
2019 level by the end of 2022. We expect crude oil production 
to actually decrease slightly this year despite growing 
consumption due to causes such as the Hurricane Ida impact on 
Gulf of Mexico production and the fact that drilling for oil 
remains at fairly low historical levels. We forecast that U.S. 
production will grow significantly in 2022, but still not quite 
reach the record level of 2019. This month, U.S. gasoline and 
diesel pump prices are the highest we have seen since mid-2014, 
driven primarily by high crude oil prices. As oil prices begin 
to decrease, we expect that the gasoline price will drop to 
closer to $3 per gallon at the end of this year and to continue 
to gradually decline throughout 2022. Diesel prices should 
follow a similar trend.
    Natural gas markets are working through a similar return to 
pre-pandemic conditions. We expect that prices will remain at 
current levels through the winter and then begin dropping in 
2022. Anxiety about cold winter weather is likely to be the 
major contributing factor to high and volatile wholesale 
natural gas prices throughout the winter. Tight Asian and 
European natural gas markets are resulting in the maximum 
possible U.S. LNG exports. International LNG prices are close 
to record highs in Northern Asia and Europe and we forecast 
that U.S. LNG exports will increase 50 percent in 2021 and that 
they will continue to increase throughout the winter months, 
effectively filling LNG capacity. U.S. consumption of natural 
gas set an annual record in 2019 just before the pandemic. We 
see essentially flat natural gas consumption in 2020 and 2021, 
as reduced use for natural gas for electric power generation 
offsets steady growth in residential, commercial, and 
industrial use.
    U.S. gas inventories began the summer at low levels but 
ended October only three percent below the previous five-year 
average, which was a favorable development going into the 
winter. U.S. natural gas production decreased slightly in 2020 
after reaching record levels in 2019. We expect to see 
production growth by more than two percent this year and 
another four percent in 2022. Both would establish annual 
records. We forecast that 36 percent of electricity in the 
United States will be generated using natural gas during 2021--
down from its peak of 39 percent in 2020. Of course, higher 
natural gas prices will directly influence wholesale 
electricity prices. Though we have seen a shift in the United 
States from natural gas to coal for electric generation, it was 
not as pronounced as we had expected based upon past market 
behavior.
    It is worth noting that the winter weather could play a 
significant role in regional issues, energy prices, and energy 
use. New England and Southern California, for example, could 
face regional natural gas delivery challenges and associated 
effects on other fuels and electricity. As you can see, there 
are many moving parts in both the domestic and international 
markets. Much of what I have presented here today comes from 
our short-term energy outlook which was the November outlook 
and it is updated each month to represent our latest thinking 
about current energy issues.
    Chairman Manchin, Ranking Member Barrasso and members of 
the Committee, thank you for the opportunity to present this 
information. This concludes my testimony.
    [The prepared statement of Mr. Nalley follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, sir.
    Now we are going to go to Mr. Gould for his opening 
statement.

 STATEMENT OF TIM GOULD, CHIEF ENERGY ECONOMIST, INTERNATIONAL 
                         ENERGY AGENCY

    Mr. Gould. Thank you very much, Chairman Manchin, Ranking 
Member Barrasso, distinguished members of the Committee. I very 
much appreciate the chance to provide a perspective from the 
International Energy Agency on these important issues. I'd like 
to start with some sincere thanks to you, Senator Manchin, for 
your participation in the IEA's Global Commission on People-
Centered Clean Energy Transitions. Your thoughts and ideas on 
preserving and creating new opportunities for coal miner 
communities and coal communities were very valuable to us in 
our findings and recommendations that we released a few weeks 
ago.
    Today's energy prices, as you say, present an important 
reminder of the importance of energy security and affordability 
as the world seeks to accelerate clean energy transitions. This 
remains a central focus for the work of the International 
Energy Agency and we look forward very much to continuing our 
close collaboration with the United States and other members of 
the IEA family to this end. In these brief opening remarks, 
just three points from my written testimony. The first is to 
say there are multiple courses of the recent run-up in energy 
prices which have affected different commodities in different 
ways. The main factor, as you have said, the rapid economic 
recovery from the downturn caused by the pandemic. There have 
also been various weather-related events, including droughts in 
Brazil, lower-than-average wind generation in Europe, and 
various planned and unplanned outages to supply. At the IEA, we 
do not consider that climate policies or clean energy 
transitions have played a significant role. Some analysts 
looking at today's oil and gas markets also see signs of what 
you might call artificial tightness in markets. If you look at 
the example of the low levels of gas storage stored in 
Gazprom's storage facilities in Europe, you can see why some 
might hold that view.
    My second point relates to our outlook. Our overall 
assessment is that the world remains in a period of economic 
recovery, which is resulting in some unsustainable patterns of 
energy use, but some of the recent extreme pressures on prices 
may be lessening. And the very rapid rebound in energy demand 
in the first half of the year is slowing. It has been tempered 
further by the effects of higher prices and economic 
uncertainties and by the continuing shadow in many countries of 
the public health crisis caused by COVID-19.
    However, my final point relates to some risks that we see 
for the future, the risk of further turbulence ahead in global 
energy markets. In our new IEA World Energy Outlook, we say 
this quite bluntly. The world is not investing enough to meet 
its future needs in a sustainable and orderly way. Investment 
in oil and gas has come down quite sharply in recent years as a 
result of two price falls in 2014-2015 and again last year. But 
worldwide investment in clean energy transitions has not risen 
fast enough to pick up the slack and to put us on a safer and 
cleaner pathway. So stepping up investment in a wide range of 
clean energy technologies and infrastructure is essential in 
our view if we are to meet tomorrow's energy demand while also 
bringing down emissions. This will bring enormous opportunities 
for growth and employment for countries that are well-
positioned in this new energy economy, and we consider that the 
United States is exceptionally well-positioned, both because of 
its industrial potential but also the huge scientific 
innovation that the United States brings to the picture. So 
there are these enormous opportunities for growth in 
employment. However, our message today is that this 
acceleration in energy transitions needs to happen quickly or 
we see a looming risk of renewed volatility in the coming 
years.
    Mr. Chairman, thank you for the opportunity to make these 
opening remarks. Of course I look forward very much to 
answering any questions that you might have or the 
distinguished members of the Committee. Thank you very much 
again.
    [The prepared statement of Mr. Gould follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, Mr. Gould.
    Now we are going to hear from Mr. Bryce.

 STATEMENT OF ROBERT BRYCE, AUTHOR, JOURNALIST, PODCASTER, AND 
                         FILM PRODUCER

    Mr. Bryce. Good morning. Thank you, Mr. Chairman. I am 
grateful for the opportunity to testify again before this 
Committee.
    Respectfully, legislators and policymakers in Washington 
need a big dose of energy realism. And they need an even bigger 
dose of energy humanism. The causes and implications of soaring 
global energy prices are clear. Europe provides a case study 
for what not to do. Millions of Europeans are facing the 
prospect of a cold winter without enough affordable energy to 
heat their homes. Fertilizer plants and steel mills are closing 
because of high energy prices. Europe's price hikes are being 
caused by underinvestment in hydrocarbons due to aggressive 
decarbonization and ESG policies.
    Second, they are being caused by overinvestment in weather-
dependent renewables, which has left the continent vulnerable 
to wind droughts. Just yesterday in Britain, spot prices for 
electricity exceeded $4,000 per megawatt-hour due to low wind 
speeds. Third, Europe is prematurely shuttering its coal and 
nuclear plants. And finally, it is relying too heavily on 
imported energy and, in particular, Russian natural gas. The 
implications of Europe's price spikes include soaring 
inflation, deindustrialization, and increased burdens on 
consumers, especially the working poor. The knock-on effects 
could last for months or even years. Fertilizer made from 
hydrocarbons is the food of food. Numerous fertilizer plants in 
Europe and around the world are shutting down because of high 
natural gas prices. This will mean less food production and 
therefore higher food prices which will lead to additional 
inflation.
    The United States must not emulate Europe's disastrous 
energy blueprint. We need energy realism. Energy is the 
economy. Energy nourishes human potential. Hydrocarbons now 
provide 82 percent of our total energy and 62, or about 60, 
percent of our electricity supplies. The U.S. today gets 18 
times more energy from hydrocarbons as it does from wind and 
solar combined. The myriad claims being made by climate 
activists, politicians, and elite academics that we can run our 
economy solely on wind and solar and a few drops of hydropower 
have no basis in physics, math, or history. Furthermore, 
wherever renewables have been ramped up, as in Europe, energy 
prices have soared. Senators, look at California, where 
electricity prices are absolutely exploding. That in a state 
with the highest poverty rate and the largest Latino population 
in America. Wood Mackenzie estimates that converting our grid 
to renewables could cost $4.5 trillion or roughly $35,000 for 
every family in America. How could such a staggering cost 
result in the just energy transition that we hear so much 
about?
    Energy realism: Since 2015, more than 300 communities 
across the country from Maine to Hawaii have rejected wind 
projects. Over the past six months alone, large, massive solar 
projects in Nevada, Pennsylvania, and Montana have been 
rejected by local communities. More realism: Trying to convert 
our energy and power systems to renewables will make the U.S. 
reliant on China for critical minerals like neodymium, 
dysprosium, and cobalt. Why is this okay? Relying on renewables 
would also require building hundreds of thousands of miles of 
new high-voltage transmission lines. But the November 2nd 
referendum in Maine showed very clearly, again, that rural 
Americans do not want high-voltage transmission lines slashing 
through their neighborhoods. Garroting America's hydrocarbon 
sector by killing pipelines, banning natural gas, halting 
drilling on federal lands, electrifying everything, and never-
ending tax breaks for big wind and big solar will not solve 
global climate change. Instead, those moves will turbocharge 
inflation, imperil our energy security, and impose regressive 
taxes on the poor and the working class.
    Our economy runs on hydrocarbons and that will be true for 
decades to come. Staking our economy as Europe has done on 
weather-dependent renewables amounts to unilateral energy 
disarmament that will hurt us and benefit Russia, China, and 
OPEC. Who will stand up for rural America and against the 
landscape-destroying sprawl of wind and solar? Who will speak 
against the federally subsidized slaughter of our birds and 
bats by the wind industry? Expensive energy is the enemy of the 
poor. Who in this Senate will stand up for them? Who in 
Congress will stand up for the affordability, reliability, and 
resilience of our electric grid, which is being undermined by 
this senseless rush to renewables and the premature retirement 
of our nuclear reactors? Where are the pro-nuclear, pro-energy 
realists? Where, I must ask you, are the energy humanists?
    Thank you.
    [The prepared statement of Mr. Bryce follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, Mr. Bryce.
    Now we will start with our questions, and I will begin with 
Mr. Nalley. I am interested in the impact increasing U.S. LNG 
has on the natural gas prices in the U.S. I think it is 
critically important to remain energy independent. We have 
spoken about that and we talked about that and we had an 
unbelievable find as a result of horizontal drilling in the 
Marcellus and Utica Shales in my home area of West Virginia. It 
is an ocean of gas. We found so much more oil and things that 
we are able to produce. That development made us energy 
independent for the first time.
    So I am curious to learn from EIA if the data is changing 
and whether high LNG export prices, because the attraction of 
the high prices, have caused us to export more natural gas to 
the detriment of the American consumer. Are we going to pay a 
higher price here so that companies that we allow to export 
their products can make a higher profit overseas?
    Mr. Nalley. It's a great question. Of course, a lot of 
attention on LNG exports and natural gas in the U.S.
    The Chairman. You can also put that for oil too because we 
allowed oil exports too, but I think there is a provision in 
both of the bills that allows the President to put a halt on 
exports if it is going to damage the consumer market here in 
America or raise prices.
    Mr. Nalley. The U.S. has an enormous resource base of 
natural gas and there are, you know, tight connections between 
the U.S. and the international market. We do show continued 
exports at record levels--a maximum level of 50 percent this 
year and 17 percent projected next year with new LNG capacity 
coming online. Right now we see that the fundamentals in the 
U.S. market are probably still primarily at play to, you know, 
what's going on with the U.S. prices, but clearly, the high 
prices in Europe and Asia are affecting----
    The Chairman. They are attractive. I understand. I 
understand the market.
    Mr. Nalley. Right.
    The Chairman. I am just saying do you believe it is making 
the prices in America spike because we are allowing more 
exports to leave our country and not protecting the American 
consumer? I have seen the coal markets. I cannot believe what I 
am seeing today. I have never seen it. But also, you know, in 
the natural gas markets and gasoline prices at the pump.
    Mr. Nalley. Clearly, there's a connection there that we're 
seeing higher prices. We are undertaking a study. We've modeled 
this, the relationship in the past in 2012 and 2014, and we 
currently have a study underway that we hope to have finished 
in the spring, looking at these relationships so we better 
understand the long-term implications.
    The Chairman. Mr. Bryce, do you have any comments on that?
    Mr. Bryce. Well, certainly, sir. When you add more demand 
for domestic supply of anything, whether it's corn or soybeans 
or LNG, you're going to see higher prices.
    The Chairman. Would you recommend that we would curtail our 
exports to take care of the American consumer?
    Mr. Bryce. No sir.
    The Chairman. Do you think the American consumer is getting 
gouged by the higher percentage of export?
    Mr. Bryce. I believe in free markets and free trade, sir.
    The Chairman. Okay.
    Mr. Bryce. I mean, if we're going to limit sales of our oil 
or our gas are we going to do the same for corn or soybeans or 
pork bellies? I mean, where does that stop?
    The Chairman. Gotcha.
    Mr. Gould, can you give me, from the international level, 
give it to me.
    Mr. Gould. I would concur with what's just been said. The 
U.S. has been a major beneficiary of open international 
markets, and I continue to believe that over the medium- and 
long-term that would be the case.
    The Chairman. So all three of you are saying that the 
export policies that we have had help stabilize the 
international market and do not put extra burden on the 
American consumer. Or do you recognize that we are putting an 
extra burden on the American consumer?
    Mr. Bryce. My response, sir, was we live in a global 
marketplace.
    The Chairman. Gotcha.
    Mr. Bryce. And that U.S. LNG exports are helping reduce 
carbon emissions in other countries, and I think that's a good 
thing.
    The Chairman. Okay.
    Mr. Nalley.
    Mr. Nalley. No, I mean, clearly, the prices are higher 
right now than they have been for a long time. So it's clearly 
putting pressure on residents, industry, as well at home with 
the higher prices. We see that. So clearly, it's putting a 
burden on U.S. businesses and homeowners.
    The Chairman. Mr. Gould, if you can tell me on an 
international basis, do you see any countries that you think 
are really doing a great job as far as their portfolio of 
energy and how they produce energy and how they distribute 
energy to stabilize and keep it reliable, dependable, 
affordable, and reliable? Which country do you think is doing 
the best job?
    Mr. Gould. I think there's some interesting analysis that 
was released yesterday of which countries in Europe--I 
completely agree that Europe has been at the center of this 
storm, but there was interesting analysis done of which 
countries in Europe have seen the highest increase in 
electricity prices in recent months and which countries had 
lesser increases in electricity prices. And interestingly, the 
countries that had the lowest increase in electricity prices 
over the last few months, it was looking in particular at 
September, were countries that had invested heavily in 
renewables in the Nordic states of Europe. The other country 
that saw a lower-than-average rise in electricity prices was 
Poland and that's despite the carbon prices and this was due to 
the relatively high share of coal.
    The countries, by contrast, that saw the highest increase 
in gas prices and the highest increase in electricity prices 
were those that had a large share of natural gas in the 
electricity mix and also is those that are relatively poorly 
interconnected with their neighbors. So I think that gives 
important clues as to the policy measures that have been 
successful, at least in Europe, in recent months.
    The Chairman. Thank you all very much.
    Now I will turn to Senator Barrasso.
    Senator Barrasso. Thanks.
    Mr. Bryce, you mentioned a need for energy realism. Could 
you share with the Committee here Europe's problems, right now 
a growing problem, to me, of energy poverty and energy 
insecurity?
    Mr. Bryce. Certainly. What we're seeing now with natural 
gas prices in Britain, they are about five times what they are 
here in the U.S. on the wholesale market. What we saw was a 
warning just a few weeks ago from one of the largest trade 
unions in Europe, estimating that about three million of their 
members will be in energy poverty this winter, that they will 
not be able to pay their utility bills to stay warm this 
winter. So I think time will tell, but the prospects of a cold 
winter and potentially mortality--people dying from the cold 
this winter in Europe is a very real possibility.
    Senator Barrasso. So what should this Administration, what 
should this Congress learn from Europe's energy crisis?
    Mr. Bryce. Do not do what Europe is doing.
    Senator Barrasso. So should Congress pass legislation 
imposing even additional new taxes and fees on oil and natural 
gas produced here in the United States which is now being 
proposed in the House of Representatives?
    Mr. Bryce. Sir, I've thought about this a lot in the last 
few days and in my latest book I write about the history of 
electricity in the United States. And it's remarkable to come 
to Capitol Hill and remember that 86 years ago Senator Burton 
Wheeler from Montana and Senator George Norris from Nebraska, 
along with Representative Sam Rayburn from Texas, pushed 
through the Public Utility Holding Company Act of 1935 and the 
Rural Electrification Act of 1936. They did it because they 
were concerned about high energy prices throughout the U.S. and 
particularly for rural Americans. And to see today the 
Democratic Party pushing for higher energy prices, I just don't 
understand it, sir.
    Senator Barrasso. I am going to have a question for all 
three of the witnesses today. President Biden recently 
nominated, to be the Controller of the Currency, Saule Omarova. 
This is one of the nation's most powerful banking regulators. 
In February, while President Biden was in office, Ms. Omarova 
gave a presentation where she discussed small players in oil, 
natural gas, and the coal industry. During her presentation she 
said, ``We want them . . . '' (the small players in oil, 
natural gas, and coal) `` . . . to go bankrupt if we want to 
tackle climate change.'' That is her statement. It is not mine. 
She has now been nominated to be the Controller of the 
Currency.
    Do any of you believe it is in the best interest of the 
United States if these small oil, gas, and coal producers go 
bankrupt? Raise your hands if any of you do. Any of you think 
they ought to go bankrupt?
    Okay, so none of the witnesses today agree with the nominee 
of the President to be Controller of the Currency that these 
companies should all go bankrupt. It is remarkable that anybody 
would agree with such a statement and certainly it is 
surprising that President Biden continues to support this 
nominee.
    Mr. Bryce, I want to ask about New England and the 
pipelines. We have already seen the referendum in Maine where 
people voted against the transmission lines. And it was 
hydropower coming from Canada to the United States. So it was 
renewable energy and they still blocked it, as you had 
mentioned. One of the worst-hit areas of the nation right now 
in terms of higher natural gas prices for this winter is New 
England. The people are already paying very high natural gas 
prices because of issues. The cruel irony is that New England 
is not far from some of our nation's cheapest natural gas--
Pennsylvania, West Virginia. But for years environmental 
activists and Democrats who do not really want to focus on 
energy realism, they have successfully killed new pipelines 
which would have shipped natural gas to the Northeast.
    [The information referred to follows:]
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    Senator Barrasso. Now, is it fair to say that if 
politicians had not blocked new natural gas pipelines to the 
people of New England that they would be better off today?
    Mr. Bryce. Absolutely, sir. And it's not just on home 
heating. It's also involving electricity. What I saw in New 
England has repeatedly said is that the availability of natural 
gas has resulted in less reliability for the electricity grid 
in ISO New England. So I think this is clearly a problem and 
that it is one that's been ongoing for years. And I would point 
particularly to the State of New York under Governor Cuomo 
repeatedly blocking pipelines across New York State that could 
have taken natural gas north.
    Senator Barrasso. So is it fair to say that the problem, 
really, with New England is insufficient pipeline capacity, not 
LNG exports from other locations, the reason that the people in 
New England pay much more for natural gas?
    Mr. Bryce. I think that's a fair statement, and I think 
that it's all about supply and demand. If there's not 
sufficient supply, prices go up.
    Senator Barrasso. Last week in Glasgow, Scotland, John 
Kerry, U.S. Special Presidential Envoy for Climate, stated, and 
this is to you, Mr. Bryce. ``By 2030,'' he said, ``In the 
United States, we won't have coal. We will not have coal 
plants.'' You know, EIA's most recent annual energy outlook 
predicts that the United States is still going to use coal to 
generate electricity in 2030, as will the rest of the world.
    Mr. Bryce, what will be the impact to electric reliability 
if the United States shuts down all of its coal plants?
    Mr. Bryce. Well, sir, I can't answer that, but I live in 
Texas. I live in Austin and I was blacked out for 45 hours in 
February. And in looking at the postmortem of the ERCOT 
blackouts, it's clear that the power plants that had onsite 
fuel were the ones that delivered electricity most reliably. So 
I understand the urge for decarbonization, but I'm for 
affordable, reliable, and resilient electric grid and reducing 
or eliminating coal in our electricity system, I think, will 
lead to higher prices and a less resilient system and that's a 
bad thing for consumers.
    Senator Barrasso. Thank you. Thank you, Mr. Chairman.
    The Chairman. Senator Heinrich.
    Senator Heinrich. Mr. Bryce, since you're from Texas, I 
want to ask you a little bit about Texas and specifically, the 
current interconnection applications for the ERCOT grid.
    Mr. Bryce. Sure.
    Senator Heinrich. I was looking at those and I noticed that 
right now it seems there are about 100 gigawatts of solar 
projects seeking interconnection, about 42 gigawatts of battery 
storage, over 22 gigawatts of wind. So if you look at the 
entirety of the queue in Texas, about 93 percent of it is 
solar, wind, and battery storage. You mentioned, sort of, an 
upwelling of, I don't know, an uprising against wind and solar. 
So why is Texas hell-bent on becoming the biggest solar and 
renewables market in the U.S.?
    Mr. Bryce. The answer, sir, is very clear: excessive 
subsidies for solar and wind. I reported in Forbes a few months 
ago, the subsidy via the investment tax credit----
    Senator Heinrich. Okay.
    Mr. Bryce [continuing]. For solar is 250 times what is 
given to nuclear and it's 160 times greater for wind as it is 
for nuclear. The Texas market and the investment in the Texas 
market is being driven by subsidies, full stop.
    Senator Heinrich. I think we can all agree that there are 
massive subsidies throughout the energy markets. There are 
subsidies for oil and gas. There are certainly subsidies with 
respect to insurance for nuclear. And there are subsidies for 
renewables.
    But let's look at, real quick, just at the levelized costs 
because I think what's happening in Texas is more an indication 
of where price trends have gone over time. So if you look at 
electric generation today and you take all the subsidies out, 
you just look at the levelized cost, you see how incredibly 
expensive nuclear has become. You see how expensive coal is 
today. You see how expensive natural gas, particularly peaker 
plants, and even combined-cycle natural gas plants have become 
more expensive than wind and solar on a levelized basis. So I 
think what we are seeing in Texas is a reflection of the free 
market and the fact that people do want cheap energy and they 
want reliable energy and Texas has moved in the direction they 
have because of these costs in particular. You know, when you 
have nuclear at a price that is over three times what you can 
get for wind and solar generation, you are going to see 
migration in the market.
    [The information referred to follows:]
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    Senator Heinrich. Mr. Gould, I want to ask you, obviously 
we are seeing, you know, escalating prices in volatile 
commodities, gasoline, diesel, natural gas. You talk a little 
bit about the role of heat pumps in cushioning customers away 
from some of those price shocks. But more broadly, isn't it 
electrification and, specifically, electrification reliant on 
low-cost sources like we have seen in those Nordic countries 
that is cushioning some Europeans and not others?
    Mr. Gould. I would concur with that, certainly with the 
part to say that as a result of policy support, a sort of 
virtuous circle of policy support and deployment, key renewable 
technologies in the power sector are now the least-cost options 
for new generation. That is why they are now the preferred 
source of technologies for new investment. And that plays 
through into this notion of cleaner electrification of parts of 
the economy, notably for mobility and for heating in some 
instances.
    In our view, some analysis we did in the World Energy 
Outlook shows that if you are able to make the upfront 
investments in more efficient appliances and in electrification 
of mobility and electrification, in some cases, of heat, that 
is a very effective strategy for cushioning the effects of 
commodity price shocks on consumers.
    Senator Heinrich. So Mr. Gould, walk us through just a 
couple of examples. If you look at Europe, obviously, some of 
these countries have gotten it right and some have gotten it 
wrong. What should we learn from the countries that have done a 
better job and what should we avoid in some of the countries 
that have seen the most extreme price shocks?
    Mr. Gould. I think part of the change that's taking place 
in Europe is away from a system that is heavily dependent on 
operational costs, on fuel costs, more toward a system that is 
reliant on technologies that may have higher up-front costs, 
but then have much lower operating expenditures. And the 
further you move down that road, the less vulnerable you are to 
fluctuations in the prices of those fuels. And I would point, 
indeed, to some of the Nordic countries who seemed to have 
weathered the price storm better than others in Europe, as good 
examples of what can be achieved.
    Senator Heinrich. Thank you.
    The Chairman. Now we have Senator Lankford.
    Senator Lankford. Mr. Chairman, thank you.
    This hearing is dealing with the price that we have seen 
increases on in gas and natural gas and other fuel sources. 
Coal has skyrocketed in price. In fact, I would say, under this 
President, the coal industry has done much better under this 
President based on the dramatic price increase for coal that is 
actually happening under this Administration, the amount of 
exports and things that are actually happening.
    So my question is on the cost. I know that, Mr. Nalley, you 
talked specifically about increased consumption worldwide and 
how the production is not keeping up. Typically, in our market 
system, if consumption increases, production starts 
accelerating as well. Why is American production not increasing 
at the rate to be able to keep up with American consumption as 
well? With the prices like $80 on West Texas Intermediate and 
$5 a unit for natural gas, you would think that the production 
would have continued to accelerate. Why is it not accelerating?
    Mr. Nalley. Just to clarify, you mean on crude oil, 
correct?
    Senator Lankford. That is correct.
    Mr. Nalley. Well, I think it's a great question. We are 
pretty early in the recovery, but we're about 93 percent of 
where we were in oil production relative to 2019. I think one 
of the major contributing factors is the economic downturn. A 
lot of those P and E company investors were hit pretty hard 
financially. I think they are trying to reposition themselves 
for the long-term.
    There's been a lot of written speculation about, sort of, 
why they are not coming back into the market quite as quickly.
    Senator Lankford. Is the access to capital the same now for 
companies that deal with fossil fuels as it was in 2019 or is 
it harder for them to get access to capital now for investment?
    Mr. Nalley. I don't think it's harder necessarily, to my 
knowledge, I think it's just that they're trying to rebalance 
their bank balance sheets, pay off some debt and then, you 
know, they've got some investment they've got to make in 
equipment and rigs to bring them back online. I think we are 
starting to see some increase in production in the Permian in 
particular. We do forecast that production in the U.S. will dip 
a little bit this year, down one percent and it will increase 
in 2022, but in the U.S., we will not get back to the 2019 
level next year.
    Senator Lankford. There's been some conversation from the 
Administration about releasing oil from the Strategic Petroleum 
Reserve. What affect would that have on prices in America? 
Short-term and long-term? For at the pump? What would consumers 
feel?
    Mr. Nalley. Well, we've done some analysis in the past. 
We've done some analysis recently. I think a release of SPRO, 
it can be complicated. We have to know some specifics about how 
much or when and what the market conditions were, when it would 
occur and so forth. Our analysis generally shows that it's 
pretty short-lived, a couple months and that typically, the 
other dynamics in the market would overtake any decrease in 
price. But ultimately, the amount of impact would be relatively 
short-lived. It would depend on how much was released.
    Senator Lankford. Senator Barrasso brought up a quote from 
John Kerry, who is the Special Envoy for Climate for President 
Biden, in a statement that he made to Bloomberg, in that 
interview, and what he said in this, ``by 2030, the United 
States, we won't have coal. We will not have coal plants.'' 
Your administration at your agency is trying to be able to look 
for the future of energy and try to provide energy in the 
United States. By 2031, do you expect us to not have coal 
plants in America?
    Mr. Nalley. No. We show, if we look at our AEO 2020--last 
year's AEO that we put out--we show coal reducing about one 
percent per year out through 2050. I think in 2050, we show it 
being roughly 75 percent of what it is currently.
    Senator Lankford. There was some conversation earlier about 
the export of natural gas. So I was interested by that dialogue 
that if we just cut off the export of natural gas then will 
that solve price issues in the United States? Looking at the 
total market and the investment that is happening, you have 
different pipelines, you have different companies that are 
coming into place, you have drilling operations that are going 
after natural gas to provide to the domestic market or the 
international market. The infrastructure itself is being built 
up to be able to provide for the international market. If all 
of that investment went away, that we weren't investing for the 
international market and for the domestic market, what would 
happen to domestic prices?
    Mr. Nalley. Well, if you stopped exporting LNG, we'd 
certainly put a surplus in, or extra supply in the U.S. market. 
Prices would drop in the U.S. market. I think internationally 
they would skyrocket and I think lower prices in the U.S. would 
probably discourage more production.
    Senator Lankford. I think that would discourage more 
investment in the future. I think it should have less capital 
going into developing for the future. My perception of the 
markets are, as we are developing more and more facilities to 
be able to export, we are also developing more and more access 
here. If that went away with an extremely low price that we 
have seen in natural gas for years now, none of that investment 
would have occurred and we would not be well-positioned to be 
able to continue to provide for our own needs.
    Mr. Nalley. I think that's correct.
    Senator Lankford. Okay.
    Mr. Chairman.
    The Chairman. Senator King.
    Senator King. Thank you, Mr. Chairman. A very interesting 
and important hearing. I appreciate it.
    Before I begin my questioning, I want to acknowledge the 
young lady sitting behind me, Caroline Colan, who has been my 
staff member on this Committee for a number of years, who is 
abandoning--oh, I'm sorry--leaving me----
    [Laughter.]
    Senator King [continuing]. For the Energy Office of the 
Governor of Maine. This will be her last hearing, and I wanted 
to acknowledge Caroline's good work.
    The Chairman. Raise your hand.
    Senator King. Caroline, raise your hand.
    The Chairman. Which one is Caroline?
    Senator King. There you go. Thank you.
    A couple of issues. Mr. Nalley, gasoline prices follow oil 
prices, isn't that correct?
    Mr. Nalley. Yes sir.
    Senator King. And oil prices have basically tripled per 
barrel. Last time I looked, in September 2020, it was $25 a 
barrel. Now, it is close to $80.
    Mr. Nalley. Mid-$80's, yes.
    Senator King. Correct.
    So that means gasoline prices are going to increase. That 
is just the reality. Why has oil gone up so much?
    Mr. Nalley. Well, I think it's coming out of the pandemic.
    Senator King. It is the recovery, right? Increased demand.
    Mr. Nalley. Yes.
    Senator King. There is one law that this Congress cannot 
repeal--the law of supply and demand.
    Mr. Nalley. Demand is outpacing production.
    Senator King. And therefore, gasoline prices are up. I 
would like to introduce for the record a recent article from 
Forbes about the blame for gas prices. I once woke up on a 
beautiful Maine morning and said to my wife, ``I brought us 
this beautiful day.'' This was when I was Governor. And my wife 
said, ``What are you talking about?'' And I said, ``Well, I get 
blamed for things that aren't my fault. I may as well take 
credit for them every now and then.''
    [Laughter.]
    Senator King. I think often politicians, and particularly 
presidents, get blamed for gas prices which, in fact, fluctuate 
substantially as we know based upon oil prices and fluctuations 
in the market, rarely from executive action. So I would like to 
submit this article.
    The Chairman. Without objection.
    Senator King. It goes into it in some detail.
    [Forbes article regarding the blame for gas prices 
follows:]
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    Senator King. Second is natural gas. I am really worried 
about exports. I have been making this argument for five years, 
and I have a chart that indicates what is going on.
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    Senator King. Remember, I talked about the law of supply 
and demand. So this is exports. And if you take it back, this 
starts with 2018. If you take it back about another five years, 
they were zero. And now, as you see, we are up to 10 billion 
cubic feet a day, which is about 10 or 11 percent of current 
U.S. production. So it has gone from zero to 10 or 11 percent 
that is going to export, as the Chairman says, it is because of 
high prices. That is where the gas is going to go.
    My problem is the projection, and we have plants that have 
been approved to take this number to 20 percent and even 
higher. Our friend Mr. Bryce is an advocate of the free market. 
There is no question, Mr. Bryce, that an increase of 20 percent 
in demand for a commodity that, at least at this present time, 
seems to be growing fairly slowly, is going to increase prices, 
right?
    Mr. Bryce. I think so, yes.
    Senator King. Okay, no question about that. We are 
exporting our principal advantage in the world economy. We are 
literally subsidizing Chinese manufacturing by sending them our 
natural gas.
    The other item I want to submit for the record is a letter 
received just yesterday by Industrial Energy Consumers of 
America, which are big corporations, big companies employing 
1.8 million people with $1 trillion worth of sales.
    [Letter from Industrial Energy Consumers of America 
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Senator King. If exports were limited to a surplus, then it 
would not affect domestic prices, but it has to be affecting 
domestic prices and it is getting serious now. But it is going 
to be a real problem in three or four or five years because we 
are on track to export 20, 30, 40 percent of our natural gas. 
And that is going to be a disaster for an advantage that we 
have now. All the testimony has been how low our prices are 
compared to the rest of the world. Why would we want to screw 
that up? And that is what is happening to our manufacturers.
    Senator Barrasso is right to our electric consumers, we are 
squandering an advantage right now because of uncontrolled 
exports of natural gas. Now what I am going to be proposing is 
legislation, not to limit it, not to control it, not to cut it 
off, but to at least have the Department of Energy do a study 
when they are going to approve an export license as to what the 
affect will be on domestic prices. To me, that is just common 
sense. We do not do that now. In fact, there is a presumption 
in favor that is in the national interest, that is the phrase, 
the `national interest' in the Gas Act to approve these 
applications. I think that is crazy. And that is exactly what 
we are doing, and what my legislation will do is simply say, 
``We want you to do a study of what the impact will be on 
domestic prices.'' And if we say, oh, that is okay, we can live 
with that, that is one thing, but right now, we do not even do 
that kind of analysis or if we do, it is after the fact and 
slowly.
    Mr. Chairman, I think this is a really important hearing 
and this natural gas export is--we are racing blindly into a 
future and cutting off our most significant economic advantage 
vis-a-vis the rest of the world, particularly China.
    Thank you.
    The Chairman. I agree wholeheartedly.
    With that, we will have Senator Daines.
    Senator Daines. Chairman, thank you and I appreciate you 
having this hearing. It is a good discussion.
    We are moving into winter in Montana.
    Senator Murkowski. We are already there.
    Senator Daines. Alaska moved there several months ago. 
Thanks, Lisa.
    [Laughter.]
    Senator Daines. And we are expecting to see higher energy 
prices as well as higher heating bills. Not only are gasoline 
and diesel prices at the highest they have been since 2014, 
Montanans can expect to be paying more to heat their homes this 
winter as well.
    According to the Energy Information Administration, 
Montanans who heat their homes with natural gas are expected to 
pay almost 24 percent more this winter than last winter. This 
trend is only going to get worse if we pass this reckless tax 
and spending bill that the House and Senate have been 
contemplating. We need to look no further than the energy 
crisis happening in Europe to see where this Administration 
wants to take the United States. Europe is the movie trailer 
for the United States if we continue down the path of 
destroying traditional, made-in-America energy.
    According to the International Energy Agency, Europe's 
natural gas prices--and this was in the written testimony by 
the witness--are 39 times higher than they were in 2020. Why? 
Because Europe moved too fast away from coal and nuclear and 
they put all their eggs in one basket. So when the wind stopped 
blowing, when they were forced to rely on Russia and others for 
natural gas, they started to see prices soar. If President 
Biden gets his way, and the Democrats pass the reckless tax and 
spend bill, the United States will be headed toward the same 
kind of position, the same kind of future. This reckless tax 
and spend bill slaps Montana businesses with new fees, taxes, 
and regulations that will drive energy prices up. It is also 
going to kill jobs.
    Mr. Chairman, with unanimous consent, I would like to place 
into the record a letter I received from the Montana Petroleum 
Association that states clearly if the methane fee and the tax 
and spend bill get signed into law, it will kill jobs, increase 
energy prices, and force some small Montana businesses to shut 
down wells and hurt local revenue.
    The Chairman. Without objection.
    [Letter from the Montana Petroleum Association follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Daines. The impacts of these proposals are real for 
Montana and will only add to the pain that Montana families are 
feeling because of this Administration-induced inflation and 
these anti-energy policies.
    What is not being talked about enough too is the chilling 
effect this anti-American energy philosophy is having on the 
capital markets as well to continue to invest, long-term, in 
oil, natural gas, in coal production and this is all part of 
the equation and the economics here because of the policies of 
this Administration.
    Mr. Bryce, the Democrats' tax and spend bill includes 
dozens of provisions that will harm domestic oil and gas 
production, including higher royalties, a new methane fee, and 
more. Do you believe that these provisions result in higher 
energy costs and less domestic energy production?
    Mr. Bryce. I think there's no doubt, sir, that if you 
constrain domestic supply, domestic production, you're going to 
have to rely more on foreign markets. I'm 61 years old. For 
nearly my entire life, Congress and policymakers on Capitol 
Hill have been talking about the perils of imported energy and 
so I find it incredible over the last few months to hear this 
Administration appealing to OPEC. I mean, it's almost like I 
read it in the Onion.
    Senator Daines. Furthermore, look at what is going on with 
Russian oil at the moment. You know, our oil imports from 
Russia have doubled over the course of the last year. We now 
import so much Russian oil, they are now the second largest 
importer of oil to the United States. We import more oil from 
Canada, but Russia is number two and it has doubled. If you do 
the quick math, we are importing about 850,000 barrels a day of 
Russian oil. That's equivalent to what the Keystone pipeline 
would have produced and moved through my state of Montana, 
including 100,000 barrels of Montana and North Dakota crude.
    So you can see this mass balance of what is happening at 
the moment. You shut down pipelines. You have to make up this 
difference. Now, including the pipelines not built yet, but you 
start, you play for the future here, long-term and we are only 
creating more dependencies on adversaries like Venezuela, 
Russia, as well as the Middle East for our oil. I would rather 
get more from Alaska, from my colleague here that sits to my 
left.
    Mr. Bryce, today I am introducing the Supporting Made in 
America Renewable and Traditional Energy Act. We call it the 
SMART Energy Act. This bill bolsters U.S. oil and gas as well 
as renewable energy production on public lands and public 
waters. I strongly believe the U.S. needs to ensure an all-of-
the-above energy portfolio. I do not think you see a single 
person here on the Republican side who is opposed to renewable 
energy. We just want to see a balanced portfolio so we do not 
end up where Europe has ended up at the moment. We cannot go 
back to the days of overdependence on foreign countries for our 
energy. Do you agree the U.S. should increase made-in-America 
energy including renewable and traditional energy sources?
    Mr. Bryce. I believe so, sir. This is something that has 
been a thesis that policymakers on Capitol Hill have been 
talking about since 1973. The International Energy Agency was 
formed after the oil crisis of 1973 focused on energy security. 
So absolutely, I think that I will say, well, I will add that 
what I have seen in Texas, and I know Senator Heinrich has left 
the dais, this idea of levelized cost of energy does not 
include the dispatchability of renewables. And I do live in 
Texas. I'm from Oklahoma and proudly so, but when the ERCOT 
grid was on the brink of failure, wind and solar were nowhere 
to be found despite $66 billion spent on renewables in Texas in 
the years before the blackouts.
    So I am for renewable energy. I have solar panels on the 
roof of my house. But we have to be careful about the stability 
and integrity of our electric grid, first and foremost.
    Senator Daines. Yes, thank you. I just hope we take a look 
at what is going on in Europe right now and do not make the 
mistakes that Europe has made. Thank you, Mr. Chairman, I 
appreciate it.
    The Chairman. Thank you, Senator.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Mr. Chairman. Thank you to 
the panelists for being here today.
    Mr. Nalley, let me start with you. I am from Nevada. I was 
fortunate to be home this past week driving around the state 
and along with many Nevadans filling up my gas tank and saw 
firsthand how Nevadans are paying at the pump right now and how 
much it is costing. Since 2015, Congress has enacted eight 
laws, including the newly signed Infrastructure Investment and 
Jobs Act that have mandated over 350 million barrels of crude 
oil from the Strategic Petroleum Reserve. Additionally, 
Congress has required the Department of Energy to sell 
approximately 1.5 billion barrels of crude oil to pay for SPR 
modernization programs.
    Mr. Nalley, can you speak to some of the immediate relief 
that tapping the Strategic Petroleum Reserve would provide to 
all Americans right now?
    Mr. Nalley. As you said, the SPRO is a really important 
resource of the United States. Based on past analysis we've 
done, our assessment of the current situation is that it would 
provide temporary relief of what's available. As you just 
articulated, there are limits to what can be released in a 
short-term situation. We did some recent analysis where 
somewhere between 15 million barrels to 48 million barrels for 
a short period of time would bring down the price of crude oil 
by about $2 per barrel, about five to ten cents per gallon at 
the pump.
    Senator Cortez Masto. So is it reasonable to think that we 
need some short-term and long-term relief right now?
    Mr. Nalley. As you know, EIA is really a policy-neutral 
organization. I don't want to get into what the policy----
    Senator Cortez Masto. I appreciate that, and I think that 
is what I am asking the Administration to look at. I know just 
$6 billion in sales from the SPR was included as a pay-for in 
the bipartisan infrastructure package. This will provide some 
relief to so many that are seeing these high gas prices that we 
are talking about right now, along with the long-term 
implications and hopefully, long-term solutions coming 
together. We can look to address this.
    Mr. Nalley, are you able to provide an overview of some of 
the emergency tools that the Department of Energy and the 
Administration have to address extreme problems with the 
nation's energy supply?
    Mr. Nalley. My staff could get back with your staff with 
that information.
    Senator Cortez Masto. I would appreciate that. Thank you.
    Let me just say this, as we have touched on today, the 
economic costs of climate change are widespread and difficult 
to predict making its effects especially dangerous for energy 
price trends, as we have talked about. Mr. Nalley, you ended 
your written testimony by referencing regional weather events, 
including the prolonged drought in the Western U.S. and how 
this is impacting short-term generation and fuel sources. Can 
you elaborate on the impacts that extreme weather and climate 
change are having on domestic and international energy markets?
    Mr. Nalley. I don't know that I can offer you a whole lot, 
but there certainly have been situations with hurricanes. 
Hurricane Ida, for example, that came through the Gulf of 
Mexico and knocked production offline for an extended period of 
time. And the Texas freeze that happened. There are certainly 
events throughout the country that are inevitable that happen, 
that cause energy disruption and price impact.
    Senator Cortez Masto. Mr. Gould, would you agree with that? 
And then would you also elaborate--I believe it was in either 
your written testimony or the answers to some of the 
conversations we are having here that in some other countries 
that had renewable energies, the energy prices were lower. Is 
that a correct statement and can you elaborate on that a little 
bit?
    Mr. Gould. So first to say that we certainly agree that the 
incidence of extreme weather events is rising and that's 
something that needs to be very much on the radar screen of 
energy policymakers and also energy market analysts. This year 
we've had droughts in Brazil that caused Brazil to take a lot 
more LNG from international markets. That's been one of the 
factors that has increased market tightness this year. So on 
that first point.
    And the second point regarding the analysis that was 
released yesterday by the Agency of European Energy Regulators 
and it looked at which countries in Europe have seen the 
largest increase in electricity prices in recent months, 
looking in particular at the month of September. And it found 
that the countries that had the largest increase were those 
with the highest share of natural gas generation and also the 
most limited interconnections with other countries. The 
countries that had the smallest increase in electricity prices 
were those primarily in the Nordic countries that have invested 
heavily in renewables. I think I mentioned also that one of the 
other countries that hasn't seen such a large increase in 
prices was Poland, and that's to do with the relatively large 
share there of coal-fired generation.
    Senator Cortez Masto. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Hyde-Smith.
    Senator Hyde-Smith. Thank you, Mr. Chairman.
    We are certainly dealing with an energy crisis here, and it 
is a result of failed energy policy. There is no question 
whatsoever, as we all know, the assault on American energy came 
on day one of the Biden Administration with the cancellation of 
the Keystone pipeline and moratorium on new oil and gas leases 
which significantly affected my state. The first lease sale in 
the Gulf of Mexico in a year is expected to take place 
tomorrow--only prompted by a Federal Court Order is the reason 
it is taking place tomorrow. Still, there is the hesitancy by 
the Administration to schedule future lease sales as required 
by law under the 2017 through 2022 five-year program. 
Additionally, since the Administration is waiting on its 
infamous comprehensive review, no preparations for sales beyond 
2022 have even been discussed.
    The last time the issue of the comprehensive review was 
brought up this Committee was told by several witnesses that it 
would have it by summer of 2021, which has come and gone. We 
still have no clear answer as to when this review will finally 
come to light. We are only a few weeks away from 2022 with no 
preparations for future lease sales.
    Mr. Bryce, how will this Administration's lack of 
preparedness for 2022 offshore lease sales affect energy 
prices?
    Mr. Bryce. Well, ma'am, I can't predict that, but what I 
can say is that if you're not going to lease on federal lands 
and federal waters, you'll have less drilling in the United 
States and that will mean more reliance on foreign sources 
because what Mr. Nalley has clearly said and in reading the IEA 
testimony, oil demand is snapping back very, very strongly all 
over the world and for all the remarks about clean energy and 
clean energy economies, zero carbon, the world still runs--in 
America, in particular--it still runs on propane, natural gas, 
diesel fuel, jet fuel, and fuel oil and that's not going to 
change for decades to come. So I'm for domestic hydrocarbon 
production.
    Senator Hyde-Smith. Previous studies have shown that 
banning oil exports could lead to higher gasoline prices. Do 
you agree with this?
    Mr. Bryce. I can't speak to that, ma'am.
    Senator Hyde-Smith. The second question: Looking to the 
role that U.S. liquefied natural gas, or LNG, plays right now 
in global markets, what consequences or repercussions could 
result from preventing U.S. LNG exporters from meeting their 
contractual obligations?
    Mr. Bryce. Well, I haven't thought about this before, 
ma'am, but I think the first one would be litigation by those 
exporters suing the government for being forced to abrogate 
their contracts. These are legal contracts. These are legal 
businesses operating in America and they should be able to 
fulfill their contracts. But I think, you know, again, this 
idea that we would limit exports of natural gas or crude, well 
then, what else are we going to limit? Is it going to be 
airplanes or corn or soybeans, farm products, any of the other 
things that the U.S. exports? So I think American producers of 
any commodity have a right to sell it to the markets that make 
the most sense for them.
    Senator Hyde-Smith. Could this potentially damage the 
United States' reputation of being a reliable energy supplier 
to our allies and to our trading partners that we have these 
contracts with?
    Mr. Bryce. I think that's a fair argument. And I think 
from, you know, in talking with some people that I know who are 
in the drilling sector, particularly in the Gulf of Mexico, 
they are assessing their contracts and realizing they have as 
much political risk now in the United States as some of them do 
in Mexico, which is a remarkable statement.
    Senator Hyde-Smith. Which would definitely compound the 
problem we are already dealing with. I think my time is running 
out.
    Thank you, Mr. Bryce.
    Mr. Bryce. Thank you, Senator.
    The Chairman. Thank you, Senator.
    Senator Hickenlooper.
    Senator Hickenlooper. Thank you, Mr. Chair. As Senator King 
mentioned, I think this is a really useful and productive panel 
and session.
    I want to get back to a little bit of discussion again 
about why has price gone up so much. Mr. Nalley, maybe you can, 
I mean, basically that reserve calculations, both in this 
country and globally, have not changed significantly except for 
some minor disruptions I am aware of, the lifting costs have 
not changed that much. Is it some function of during the 
pandemic shutdown that the supply chains basically got 
somehow--that their dormancy made them less sufficient, less 
resilient? Is that fair to say?
    Mr. Nalley. I'm sorry, I'm not quite sure----
    Senator Hickenlooper. I find it perplexing to see why we 
have seen such large swings in the price of crude oil when 
reserves, lifting costs, all the basic calculations that 
generally go toward price of most of our products in the world 
seem to indicate that we are still in a commodity that is, that 
where price is often dictated by producers that are not 
dependent on maintaining a certain price for a certain period 
of time. Some are, but many are not.
    Mr. Nalley. I think the biggest swing in price is just 
simply because the demand came back quicker than production. 
That's really driven up the price substantially and we forecast 
that demand will reach the pre-pandemic level in 2022, but 
production won't catch up. We see world oil balancing in later 
in 2022. But until the production catches up with the demand, 
that's why we see elevated prices.
    Senator Hickenlooper. Right. I guess my question is really 
why is that, why is it taking so long for production to catch 
up? Why is there not more resiliency in the system? And how 
could we build more resiliency in the system? That is the 
question I want to get to.
    Mr. Nalley. Well, we were showing that global production 
will come back in 2022 and most of it is coming from about 40 
percent, 50 percent from OPEC. There will be an increase from 
Canada. U.S. production is falling. I think it comes back to 25 
percent of the growth in 2022. We don't see U.S. production 
catching back up with the pre-pandemic level during 2022. I 
think because it was such an economic downturn, prices, you 
know, such a sharp shift in the beginning of the pandemic, so 
much of the production was shut down. It takes a while for that 
to come back online.
    Senator Hickenlooper. It takes a while. The general 
responses I do not find satisfying just in the sense that it 
does not seem like there is that much involved in the shutdown. 
I understand that shutting in a well doesn't happen in a matter 
of minutes, but I do think there is a way to design more 
resiliency.
    Mr. Gould, a lot of political hay has been made of 
President Biden's pushing OPEC to increase oil production in 
light of our nation's climate goals. In my view, I think there 
is a world view that incorporates both, and I guess I would 
want to ask you two questions. One is what are some of the 
policies governments can use to help keep both energy prices 
and greenhouse gas quantities low in the long run? Do you 
understand what I am asking?
    Mr. Gould. Yes, certainly. Just one point to make is that 
as we see the markets today there are 5.8 million barrels a day 
of spare capacity being held by the OPEC Plus countries and 
that's not including the potential capacity from Iran. So there 
is a reserve of potential production there which is not yet 
coming to the market. I would say, however, that I think we're 
slightly more polished than the EIA on this in terms of the 
increase in U.S. production over the next year. We have U.S. 
production increasing by some one million barrels a day in 2022 
from existing fields coming back and bringing U.S. production 
back to pre-pandemic levels.
    But in terms of the longer-term policies that can help in 
this regard, clearly, there's a lot that can be done on the 
demand side and there is still an untapped reserve of 
efficiency measures that could certainly help in curbing growth 
or even bringing down liquids demand or oil demand around the 
world. And there are alternative fuels, there are alternative 
technologies, particularly in the passenger transport sphere 
that can also be very valuable as the U.S. and other countries 
are indeed showing. So that combination of electrification, 
efficiency--they're very powerful weapons in the hands of 
policymakers to reduce some of the vulnerabilities that we see 
today.
    Senator Hickenlooper. Great. Thank you very much. I have 
more questions that I will submit to you all in writing, but 
Mr. Bryce, I have, at some point I will chase you guys down 
just because I think you have so much of the information that 
we need in our decision-making over the next months.
    Mr. Chair.
    The Chairman. Thank you, Senator.
    Senator Marshall.
    Senator Marshall. Thank you, Mr. Chairman. It is always 
great when we have these hearings and people on both sides of 
this dais agree on something. And I think that everybody in 
this room agrees that lowering the supply of energy increases 
the price. Lowering the supply of energy increases the price. 
So the question is then why is the supply of energy decreasing, 
right? That should be the question we are talking about. Why is 
the supply of energy decreasing across this nation?
    As I talk to people back home--I grew up in one of the 
richest oil counties in the world, supplying the largest amount 
of oil in World War I from Butler County, Kansas. Where I grew 
up now is agriculture and oil, oil and agriculture. This is an 
industry I follow every day. I am inundated with people that 
have been in this business for 30, 40, 60 years and cannot get 
financing now. Good, stable businesses. And you know why? It is 
the ESG rules, right?
    Mr. Nalley, would you agree with me that if people are 
struggling to get financing to drill new wells that it is going 
to decrease the supply of energy?
    Mr. Nalley. Well, yes, I would agree that if there's less 
drilling, there's less supply, yes.
    Senator Marshall. If there is less financing it is hard to 
drill.
    Would you agree with me that stopping drilling on federal 
lands or stopping drilling in waters on the ocean, that if we 
make it harder for that to happen because of federal policy, 
that would decrease the supply of oil and natural gas?
    Mr. Nalley. Yes.
    Senator Marshall. Okay.
    And then, would you agree with me if there were less 
pipelines available to ship gas, natural gas, or oil from 
Canada or from Alaska to the mainland, that that would decrease 
the supply of energy?
    Mr. Nalley. Yes.
    Senator Marshall. Yes. And you would agree with me that the 
policies of this White House have made all of those instances 
true. That what I just said, the policies, more ESG making it 
harder to get financing, stopping drilling on federal lands, 
shutting down pipelines would decrease the supply of energy?
    Rhetorical question. The answer is, of course, yes. Okay.
    Mr. Bryce, you have a unique resume here. I want to talk 
about the social injustice of increased energy costs--how it 
disproportionately impacts senior citizens on fixed incomes as 
well as that single mom. One of the stories I would share with 
you as an obstetrician, a woman would have 10 to 12 visits to 
my office in rural Kansas. And when the price of gasoline got 
above $3 per gallon, magically, they wanted to start spacing 
out their visits. Why? Because they were driving 30, 60, 90, 
120, 150 miles to see me, and they could not afford the 
gasoline. This in an inequity issue. The ultimate equity issue 
is energy costs, right?
    If you are paying high prices for your utilities, paying 
high prices for gasoline, it is a social injustice. Why does 
this White House want to increase the cost of gasoline at the 
pump? Why does this White House want to increase utility costs 
for hard working Americans? Is this a social injustice? Those 
are my questions. And why do you think the White House wants to 
drive these prices up?
    Mr. Bryce. Well, sir, I can only speculate. But what I do 
know is that when you look across the country and particularly 
at California and other places where this electrify-everything 
push is underway, you're forcing, you're imposing regressive 
taxation on the working class, on people who don't live, as 
Jennifer Hernandez says, in the keyboard economy, the people 
who have to drive to work. They have to be there. The people 
who pump the gas, who pour the coffee, who serve the food. 
Those are the people who are going to be hit the hardest. As 
you point out, in rural America, those are also going to be the 
people who are hit hard.
    One other point, if I could, on the electrify-everything 
push, earlier, in January, in the Federal Register, the 
Department of Energy published data showing that the cost of 
electricity on a per BTU basis is four times that of natural 
gas. So this push to electrify everything that is underway in 
California is just a form of regressive taxation by prohibiting 
the use of natural gas in homes and businesses and forcing 
consumers to use electricity instead. You're effectively 
forcing a high-cost energy form onto them and removing a lower-
cost form of energy. I think it's bad policy, and I'm not a 
partisan--I'm not a Republican, I'm not a Democrat--I'm 
disgusted, Senator.
    [Laughter.]
    Senator Marshall. Yes.
    Mr. Bryce. But when you look at what the Democrats are 
pushing, it is almost all regressive policy when it comes to 
energy.
    Senator Marshall. Yes, that dose of humanism, of realism. 
These are real people with real jobs who are now paying high 
energy costs, and it is going to impact them. They will not 
have enough money to feed their children, because the gasoline 
prices are higher as well. Thank you so much for your time--all 
the witnesses. I yield back.
    Mr. Bryce. Thank you, sir.
    The Chairman. Senator Kelly.
    Senator Kelly. Thank you, Mr. Chairman.
    I have a similar question for Mr. Nalley. First of all, 
thank you and thank you to the EIA for, thank you for your 
testimony on rising energy prices. I want to focus also on 
gasoline prices. This is affecting real people in my state who 
have real jobs, as Senator Marshall mentioned. AAA has ranked 
Arizona as one of the top ten most expensive retail gas markets 
in the nation. As of today, the average price of regular, 
unleaded gasoline in Arizona is $3.69. Yesterday, it was $3.62. 
It went up seven cents in 24 hours. This is more expensive than 
the national average of yesterday--$3.41 per gallon.
    Energy analysts say the main reason is that crude oil 
consumption is exceeding global production, which was disrupted 
last year. We all know that. Although domestic oil consumption 
is returning to pre-pandemic levels, global production has not 
caught up. Whatever the explanation, the impact it is having is 
that hard working families in my state who commute to work and 
drop their kids off at school every day are seeing their costs 
go up and they need some relief.
    Mr. Nalley, in your testimony the EIA predicts crude oil 
prices currently at $81 a barrel will drop about $10 per barrel 
next year as global production increases. So when will this 
drop in oil prices translate into lower gasoline prices for 
Arizonans?
    Mr. Nalley. Typically, there's about a 30-day lag once you 
see the drop in crude oil prices. It is about 30 days before 
you actually see that in gasoline markets.
    Senator Kelly. And as a percentage decrease, do they tend 
to be about the same?
    Mr. Nalley. The cost of gasoline at the pump is roughly 50 
percent of its price of crude oil.
    Senator Kelly. So if we see, let's say, a 12 percent 
decrease in the price of crude oil, would you expect a 12 
percent decrease in the price of gasoline?
    Mr. Nalley. I think, roughly, yes. I'd probably have to 
pull out a calculator, but I think that's about right.
    Senator Kelly. My state receives most of its gasoline from 
refineries in California and Texas. If you remember last 
February, Texas had the polar blast. It knocked out refineries 
and increased gasoline prices. Do you feel that Texas is better 
prepared this winter than they were last winter for this kind 
of event?
    Mr. Nalley. I think what Texas experienced is pretty 
unusual, pretty rare, but I believe Texas has put some new 
rules and regulations in place to protect against that.
    Senator Kelly. Do you feel those new rules and regulations 
have resulted in change in their refinery infrastructure?
    Mr. Nalley. I think we'd have to get back to you on that. I 
don't know that I have enough information to answer your 
question today.
    Senator Kelly. Alright, I would appreciate that.
    And finally, can EIA project how gasoline prices might be 
impacted if refineries are knocked offline again this winter? 
Do you do any analysis, try to make any prediction if we see 
what we saw last February in Texas?
    Mr. Nalley. Can we do it if an event occurs? Sure, yes, we 
can take a look and always try to figure out what the impact 
would be in that situation. In terms of a regular, ongoing 
product that we put out, no, there's no such thing, but if it 
was such a situation like the Colonial pipeline situation, for 
example, where we were able to do some real-time analysis and 
try to figure out what the impact was there.
    Senator Kelly. I would appreciate it if you do have the 
opportunity to do that analysis, if you do, if you could get 
back to my staff.
    Mr. Nalley. Absolutely.
    Senator Kelly. Thank you, Mr. Nalley.
    I yield back the remaining time.
    The Chairman. Senator Cassidy.
    Senator Cassidy. Thank you, Mr. Chairman.
    Now, obviously, the purpose of this is to come up with wise 
public policy. Thank you very much for your testimony. And the 
thought occurs to me that it is not just abstract. Mr. Bryce, 
you make an incredibly good point that lower-income Americans, 
Britons, Germans, you name it, are the ones bearing the price 
for decisions made by some that somehow think they know what's 
better for that person as opposed to their basic pocketbook. I 
will also point out that we are, if you will, in a counterpoint 
when we discuss energy policy with both foreign policy as well 
as environmental policy--specifically greenhouse gas emissions.
    So with that, it is kind of a set up, and I will point out 
that the environmental left has wished to have higher energy 
costs in an effort to transition to a lower fossil-fuel future 
and the irony, of course, is now the left wishes to retain our 
exports, in effect, the same effect as if we had increased 
drilling because they wished to offset the stated goal of their 
policy. Now there's a lot of craziness here. It is just crazy.
    Mr. Gould, first with you. Mr. Gould, I think you are 
conflating when you say the Nordic countries have invested more 
in renewables and therefore have more stable electrical prices. 
I think what you really mean is that they are using hydropower 
and that hydropower, yes, is renewable. It is not what we 
typically think of in our conversations of wind or solar. It is 
hydropower. Is that a correct interpretation of what you're 
saying?
    Mr. Gould. The Nordic countries have invested heavily in 
hydropower alongside other renewables, yes.
    Senator Cassidy. Yes. And the hydropower is what is giving 
them the stable prices and the lower prices than elsewhere 
because we have already spoken of the wind drought. In fact, I 
was trying to look but no one has done a relationship. Perhaps 
one of you will--that one of the reasons that England is paying 
such a high price for gas is that they had bet on North Sea 
winds always blowing. There has been a wind drought. Wind was 
34 percent of their electrons, then they went through a six-
month period of getting none. They had not invested in storage 
for natural gas. And so, paradoxically or maybe not, there is a 
direct relationship between betting on renewables and paying a 
heck of a lot more for natural gas.
    Now this is short-sighted policy that is both bad for the 
consumer, but it is also bad for international/global 
greenhouse gas emissions because now they and others are 
burning more coal. So I would point out that when we think 
about our policies, we actually have to think about them second 
and third degree, not just congratulate us on things which 
sound good when we first pass it.
    Mr. Bryce, when Senator Heinrich talked about the levelized 
price of renewables, he did not include the cost of the backup 
peaker plants or other fossil-fuel generation required because, 
obviously, you cannot store electrons from wind and from solar. 
If you include that cost of the required backup, baseload, 
natural gas, whatever, peaker plants, within the cost of the 
renewable, what would be the cost of that renewable relative to 
natural gas?
    Mr. Bryce. Well, sir, I don't have those numbers at hand. 
What I do know is that whatever renewable capacity is added, it 
doesn't mean you can retire all of the thermal generation that 
is needed during peak times of peak demand. And Senator 
Heinrich didn't allow me to respond to it, but that was clearly 
the case in Texas, where when the grid was on the verge of 
collapse, and it was, as Bill Magnus, former CEO of ERCOT said 
on February 25th, it was within four or five minutes of total 
collapse.
    So if you think about that and you think about a grid that 
is heavily reliant on renewables that cannot deliver power when 
power is dear and 25 million Texans in the ERCOT market could 
have been put into darkness, we wouldn't have had 700 people 
die, sir. It would have been in the tens of thousands.
    Senator Cassidy. So let me ask you this, Mr. Bryce. I said 
this is a counterpoint argument, both with global greenhouse 
gas emissions but also with national security. You pointed out 
that the supply chains for the batteries required for 
renewables to store their electrons come out of China, either 
they are mined by Chinese companies or they are processed in 
China, often using coal as a feedstock for the energy required. 
What does this do to our national security to be dependent upon 
China for our batteries as opposed to having the alternative, 
which is using natural gas, et cetera.
    Mr. Bryce. Senator, it's not just the batteries. It's the 
neodymium, the other rare Earth elements that are considered 
the green elements, the lanthanides. China has a 90 percent 
share of that market, globally. I'd point you to the report 
that the IEA did in May on this which laid this case out very 
clearly and in Mr. Gould's testimony, his written testimony, he 
pointed to this critical minerals issue. So the idea that we're 
going to make a quick transition away from hydrocarbons to 
alternative technologies hinges on a massive increase in 
mining, and it's not just of rare Earth elements, it's 
manganese, zinc, copper, cobalt, an enormous array of minerals. 
And the question is, well, where are we going to mine them?
    And this, and the Senate, I know this Committee has had 
hearings on increasing mining in the U.S., but my guess is the 
Sierra Club is not going to be pushing for a lot of that 
mining.
    Senator Cassidy. I thank you. I yield back and I will point 
out that at this hearing is a counterpoint to both greenhouse 
gas emissions, environmental policy, as well as foreign policy 
and national security. It is a great hearing. Let me say that. 
But I think maybe another to interweave those two, because if 
we look at energy as an isolated issue, we are going to end up 
far worse in both global greenhouse gas emissions and in terms 
of our national security.
    Thank you, Mr. Chairman.
    The Chairman. Good recommendation, Senator.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    Well said, my friend from Louisiana. I think that really 
sums it up and the nexus here. You just cannot separate this 
out. I think we are all trying to find easy answers. How many 
people here at this hearing today have asked you, what are the 
tools that we can be using? We want a quick fix. And our 
reality is that the fix comes when you have control over the 
resource, when you can ramp up your production rather than 
going tin cup in hand to another country or to the OPEC nations 
and say, ``Pretty please. We do not like the prices that we are 
paying, can you guys do more?''
    There are no easy fixes. I listened with interest to the 
discussion about the Strategic Petroleum Reserve. When I was 
sitting up there as Chairman or Ranking Member, I fought to 
defend the resources that are in the SPR, not using them as a 
piggy bank to bail us out when we do not like the high prices 
and whoever is in the White House needs to have a little 
political relief. It is not about political relief. But I also 
know that there is no easy button on the SPR either. We have 
already put in place numerous sales to get resources and 
revenues for things that are totally unrelated to the price of 
oil and we know that those particular sales are in off years. 
So for us to say, ``well, we are just going to go sell some 
more oil from the SPRO.'' If anybody thinks that is an easy fix 
to today's price at the pump--my friend from Arizona mentions 
that gas at the pump in Arizona is $3.69. I was home this 
weekend and I was looking for it and could not find it for less 
than $3.80 and it was somewhere between $3.80 and $3.90 back 
home and that was in Anchorage. In the community that my folks 
live in down in Southeastern, they are paying about $4 or 
$4.20, I think it is.
    This is real and it is impacting every aspect of people's 
lives and it is about really a level of equity and fairness to 
individuals. And these pressures are hard, but we cannot 
deceive people into thinking that there is some easy button out 
there that we just have not pushed yet because we are waiting 
for the right political leverage. This is about our ability to 
produce.
    Mr. Bryce, I really love what you said there at the end in 
response to Senator Cassidy about our reality with moving 
toward renewables. I am a huge advocate of doing more with 
renewables, but you have to have the base to start with and 
that base is the minerals that we will need. So we have to be 
talking about how we are going to incent and put into place 
those mechanisms.
    I wanted to raise this issue to Mr. Nalley and Mr. Gould 
because I think, Mr. Bryce, you were asked this question by 
another member here and you said that that is not your 
bailiwick here, but this is relating to crude exports. I worked 
very hard some years back to lift the ban on domestic crude oil 
exports and it looks like the Biden Administration has kind of 
walked back some of that as an idea, but they were exploring 
the possibility of restricting domestic crude oil as part of an 
attempt to counter these rising prices. But if you go back, and 
you look at the 2015 EIA report at the time, it actually 
indicates that the reverse is true, that fewer export 
restrictions would likely have either no overall impact on 
domestic prices or perhaps would drive those prices down.
    I guess the question that I would like to have Mr. Nalley 
and Mr. Gould respond to is how would more restrictive oil 
export policies impact our domestic prices? So if you can begin 
first, Mr. Nalley.
    Mr. Nalley. Sure, well, it's always a great question about 
importing and exporting of crude oil. As a basis, the U.S. 
refineries are built to work on the heavier crudes that come 
out. It's imported and the crude oil out of the United States 
is lighter. It's the export. So it's an international market 
and we're very dependent upon the international market. So if 
we cut our crude oil exports, we're still going to have 
tremendous amount of imports to meet the U.S. needs.
    Senator Murkowski. People do not understand that so much of 
this is related to the refining capacity that we have 
domestically.
    Mr. Gould, can you respond as well? Thank you.
    Mr. Gould. I would concur with the remarks just made by my 
colleague from the EIA. The U.S. flows of crude and refined 
products to and from international markets are complex. They're 
to do with different refinery configurations and different 
grades that are required in different parts of the system. 
There's an easy way to try and simplify this debate, but in 
practice these flows are quite complicated.
    Senator Murkowski. Thank you.
    Again, Mr. Chairman, no easy button here. Thank you.
    The Chairman. No easy button at all.
    Senator Murkowski. Good hearing.
    The Chairman. Senator Lee.
    Senator Lee. Thanks so much, Mr. Chairman, and thanks to 
both of you for being here--all of you, I should say.
    Mr. Bryce, I would like to start with you if that is 
alright. Now in your testimony you indicated that there are 
four factors that have been contributing to massive energy 
shortages and energy price spikes across Europe. First, you 
pointed to underinvestment. Now, domestically we have seen some 
investors, some financiers, rather like Black Rock, divesting 
from companies that generate more than 25 percent of their 
revenues from thermal coal production. I have also heard of 
companies pressuring or threatening others who happen to 
determine that they do not want to divest from fossil fuels. Do 
you think this trend has had a direct impact or will have a 
direct impact on American energy security?
    Mr. Bryce. I think it already has, sir. I have been talking 
to people that I know who are in the energy sector. There's a 
shortage of capital available to drillers and some of this is 
due to the fact, frankly, that the drilling in the EMP sector 
burned through about $300 billion and just simply lost it and 
consumers benefited from that destruction of capital, but now 
drillers are facing much more restrictive loan agreements and 
they're having to live within their cash-flow. But my point, 
more specifically in my written testimony, was on the 
underinvestment in hydrocarbon exploration and production in 
Europe and the lack of production out of the North Sea and then 
the Dutch also curtailing production from the Groningen Field.
    Senator Lee. Right.
    You have indicated that overreliance within Europe on 
imported energy has contributed to this energy insecurity in 
your----
    Mr. Bryce. Yes, sir.
    Senator Lee. And at the same time, the Biden Administration 
seems to be proposing to increase royalty rates with the help 
of a number of Members of Congress in the Democratic Party and 
to tax coal and gas power companies. Now coupled with the oil 
and gas leasing moratorium imposed by the Biden Administration 
from the very outset of its Administration, it seems like a lot 
for the energy industry to face. But more than the energy 
industry, we are concerned about their customers, about the 
people who rely on those things. Do these kinds of actions have 
a direct impact on the ability or the willingness of companies 
to invest in domestic energy production?
    Mr. Bryce. Absolutely, and I think it's moreover, sir, the 
area where this is the most dangerous is in electric generation 
and the fragilization of our electric grid and what Meredith 
Angwin calls the `Fatal Trifecta'--too much dependence on 
renewables, too much dependence on imports and too much 
dependence on natural gas. It directly threatens the viability 
and resilience of our electric grid, and this is the mother 
network. It is the most important energy network in our 
country, and it's getting scant attention from Washington.
    Senator Lee. You have also stated that overinvestment on 
intermittent sources was driving up prices, as in California 
where some consumers are projected to pay three times the 
national average for electricity. Do you think that the 
enactment of the Democrats' clean energy performance program, 
also described as the muscle behind President Biden's climate 
agenda, would likewise have a tendency to drive up energy costs 
throughout the United States?
    Mr. Bryce. There's no question about that, sir. I published 
a piece in Forbes a few weeks ago on the CEPP. Not only would 
it reduce the resilience, affordability, and reliability of the 
electric grid, it would be a handout of epic proportions to the 
solar and wind business. So in many cases they would be getting 
far more in federal subsidies than they would be getting in the 
wholesale market for their power they produce.
    Senator Lee. For the same reasons then, would it be a fair 
assumption that simultaneous overreliance on intermittent 
energy sources that occurs at the same time as underinvestment 
in reliable sources, something that could result in Americans 
experiencing rolling power outages. Is that the sort of thing 
that could happen as a result of this?
    Mr. Bryce. Sir, I've experienced it firsthand. I 
experienced it February 15th at 2:00 a.m. My lights went out 
for 45 hours.
    If I can just add one other quick point. To me, the idea 
that we would make our electric grid more reliant at a time 
when, due to climate change, we're expecting more extreme 
weather, to make our energy and power systems more dependent on 
the weather makes no sense at all.
    Senator Lee. And in some cases, it could threaten the lives 
of people. In other words, it can be more than just an 
inconvenience. For some, it could mean the difference between 
life and death.
    Mr. Bryce. 700 people died in the blackouts in Texas, sir.
    Senator Lee. Thank you.
    The Chairman. I cannot believe I am going to say this. 
Senator Hoeven.
    [Laughter.]
    Senator Hoeven. Thank you, Mr. Chairman.
    Mr. Nalley, your testimony mentions that natural gas prices 
in the U.S. have tripled as of last month and that areas like 
New England are at risk of higher price spikes due to limited 
pipeline capacity. Would more robust pipeline infrastructure 
result in lower prices and less dependence on foreign imports?
    Mr. Nalley. New England does face a certain set of 
challenges because of the limited pipeline capacity. So yes, it 
is subject to higher prices.
    Senator Hoeven. So would more robust pipeline 
infrastructure result in lower prices and less dependence on 
foreign imports?
    Mr. Nalley. Yes.
    Senator Hoeven. Okay.
    The House Reconciliation bill imposes a new fee on methane 
emissions, which I am sure concerns our Chairman, as well as 
myself, which is--it is just a tax on natural gas. The bill 
also increases fees and royalty rates for U.S. producers 
operating on federal lands. Is it fair to assume that these 
proposals will lead to lower U.S. production and increase our 
reliance on energy from less stable parts of the world?
    Mr. Nalley. So any pending legislation, I, you know, being 
a policy-neutral organization, we wouldn't want to comment on 
that.
    Senator Hoeven. In general, theoretically, would higher 
taxes and increased fees and royalties cause the price of a 
commodity to go up?
    Mr. Nalley. Yes.
    Senator Hoeven. Thank you.
    Crude oil pricing: In 2015 we passed a bipartisan effort to 
lift the decades-old ban on U.S. crude exports which has helped 
to grow our energy resources. Would you agree that lifting the 
ban on U.S. crude exports has helped counter the influence of 
our global energy competitors, like Russia and OPEC?
    Mr. Nalley. We would have to get back to you on that.
    Senator Hoeven. Okay.
    Pipelines: Line 3. We are an ag state. North Dakota is an 
ag state and we are very concerned about increased fuel prices 
across the board, but certainly how they impact our farmers, 
you know, being a large ag producing state. Recently, the Line 
3 pipeline that crosses North Dakota was restored to full 
capacity, replacing an existing pipeline originally built in 
the 1960's. Do you see a need for further capacity expansions 
to transport crude oil into and throughout the United States as 
well as natural gas?
    Mr. Nalley. Pipeline capacity is an issue. It affects 
regional areas where gas and where oil can flow easily. So yes.
    Senator Hoeven. Okay.
    And if Line 3 had not been replaced and its design capacity 
restored, what would have happened to fuel prices? What would 
have been the impact on rail traffic, particularly for farmers 
dependent on rail capacity to move their product to market as 
well?
    Mr. Nalley. I would have to look at this particular 
situation. I don't know off the top of my head today.
    Senator Hoeven. Mr. Gould, in your testimony, you noted 
that global demand for three major traditional fuels: natural 
gas, oil, and coal have all increased in response to the 
economic recovery from the COVID-19 pandemic. You also 
mentioned occurrences of fuel switching from natural gas to 
coal in response to record high gas prices. Are efforts to 
curtail new fossil fuel production exacerbating the challenges 
of ensuring we have sufficient energy supplies to meet consumer 
demand?
    Mr. Gould. I think there's been a halving in investment in 
oil and gas upstream since 2014 and, as all of the 
distinguished members of the Committee are aware, there has not 
been anything close to a halving in consumption over that 
period. So we've had a dramatic fall in investment over the 
last seven years in the upstream. The reasons for that, though, 
are primarily due to the falls in the oil price in 2014, 2015, 
and again last year, which cut revenues, which led companies to 
cut back heavily on their upstream production. So I certainly 
agree that we've seen a very significant fall in investment in 
recent times. I think the primary responsibility for that lies 
in the market dynamics that I've described.
    Senator Hoeven. Because coal continues to be a cost-
effective, dependable fuel source, does the IEA continue to 
agree that carbon capture technologies are indispensable to 
meeting both our energy needs and climate goals?
    Mr. Gould. Yes, we do modeling of different climate 
scenarios. We require to have carbon capture utilization and 
storage as a very important technology in these decarbonization 
scenarios--in these energy transition scenarios. One of the 
reasons for that is in the power sector, but there are also 
important applications for this technology in industry, also in 
the production of hydrogen and also potentially in direct air 
capture technologies as well.
    Senator Hoeven. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. We are going to be wrapping it up here 
because I have to go vote, but Senator Barrasso is going to ask 
a question. I am going to ask one very quick question, then I 
am going to leave, but I want to thank all three of you. It has 
been a great meeting. And we are probably going to have you 
back, okay?
    Mr. Gould, if I could ask you this: I think the position of 
the IEA has always been that the best thing we can do for 
climate right now is to rapidly develop carbon capture 
sequestration and utilization as a valued waste product. We 
could help the climate more by realizing there is going to be 
more fossil that is going to be continued and relied on. I say 
that because 10 years ago China had 1,799 coal-fired plants and 
now they have 2,991 coal-fired plants, and they are building, I 
think, another 450 more. They will be at 3,451 coal-fired 
plants. India had 525 10 years ago. They have 852 now, and they 
are building another 100. They will have 952. The United States 
had 589 10 years ago. We are down to 504. The rest of the world 
had 966 coal-fired plants and now they have 2,255 coal-fired 
plants. We are the only nation that has reduced our reliance on 
coal energy and the environmentalists in this country would 
make you believe we are basically polluting the whole world's 
climate, which is crazy.
    Is there any collaboration between the U.S., China, and 
India to find and unlock that box on carbon capture 
sequestration and utilization to make it more cost-effective so 
there is a value-added product rather than just basically 
liquefying CO2 from clear-stream carbon to 
pressurizing it and putting it in the ground? And if there is 
nothing that comes back with value, the cost is prohibitive. We 
know that.
    Are you seeing any type of collaboration or is it something 
that you all, from the IEA, could initiate and inspire us to 
come together on that we should agree? We are not going to stop 
these countries from using fossil. They are going to follow 
America--they haven't. We have gone down. They have all 
doubled, tripled their consumption. Just in megawatts, China 10 
years ago had 200,000 megawatts, and today they have 1,046,000 
megawatts. India had 61,580, and today they have 233,000. We 
had 327,000 megawatts 10 years ago, and we are down to 232,000. 
Again, we are the only nation that has decreased and nobody has 
followed. Nobody has followed us.
    So all I am asking is, somebody has to do something and 
spur this on. And I think IEA, leading that charge and 
challenging us to finally come together and agree with China, 
with India, and all the other coal, you know, fossil-dependent 
countries, to find a solution for carbon capture.
    Any comment on that?
    Mr. Gould. I am sorry, I certainly strongly agree with the 
sentiment and that any attempt to deal with the climate 
challenge has to not just deal with the flow of existing--flow 
of new projects into the system and as we are all aware, the 
number of new coal plants being built has fallen very 
substantially in recent years and it is likely to fall again 
because finance is drying up and indeed, the Chinese President 
has said that China will no longer finance coal plants abroad.
    But that still leaves, as you rightly say, more than 2,000 
gigawatts of existing coal-fired capacity. And if that coal-
fired capacity continues to operate unabated according to its 
normal operating lifetime, that is half of the remaining carbon 
budget for a 1.5-degree stabilization just disappearing just on 
that one item. So it is essential that we find solutions and I 
completely agree that the U in CCUS, the utilization part is 
one with--which is an increasing focus for many organizations 
around the world. There are yet to be any large-scale 
applications there that would seem to offer a large-scale 
solution, but it is an area where we will be very happy to take 
up the baton as well. Alongside work, also, in making plants 
operate more flexibly so that they can accompany the rise in 
renewables and also, the potential to co-fire them with low-
carbon fuels, including ammonia.
    So that's the sort of portfolio of solutions alongside, of 
course, retirements in some cases that would allow us to deal 
with the emissions from that existing stock of coal-fired 
plants.
    The Chairman. Well, sir, but we have seen what has come out 
of the COP26, just recently with India's pushback, with China's 
pushback. They are not retreating. And the bottom line is, if 
you are going to shame other countries or they are trying to 
shame well, I am just saying this, I have always believed that 
you cannot eliminate your way to a cleaner climate. You can 
definitely innovate with technology. And for some reason, it is 
being professed around the world that we have to eliminate, 
eliminate, eliminate. It is not happening, sir. It has not 
happened in the past. It is not going to happen in the future. 
We have to innovate. And someone's got to bring all of us 
together, and we are hoping that you will be part of that mix.
    Mr. Gould. With great pleasure, thank you very much.
    The Chairman. Thank you, sir.
    Mr. Gould. And I completely agree on the importance of 
innovation for the technologies that we don't yet have in 
market readiness, and I think that the U.S. is very well-placed 
to lead the innovation of that as well.
    The Chairman. Thank you very much.
    Senator Barrasso.
    Senator Barrasso [presiding]. Thanks, Mr. Chairman.
    Following up on your eliminate versus innovate. Mr. Bryce, 
for years Democrats in Congress and the environmental activists 
have lobbied the banks to deny loans to oil and gas producers. 
On day one of the Administration, President Biden joined their 
efforts. He restricted oil and gas permitting. He ended oil and 
gas leases on federal lands and waters, and we are now reaping 
the consequences of these policies. Will restricting loans to 
American oil and gas producers solve the issue of climate 
change?
    Mr. Bryce. No sir, it won't. It will reduce exploration of 
production in the United States and therefore, potentially, 
lead to higher prices and certainly more imported oil.
    Senator Barrasso. So will choking off access to our 
nation's oil and gas resources solve climate change?
    Mr. Bryce. No sir.
    Senator Barrasso. And would you please discuss the economic 
consequences of trying to end oil and gas production here in 
the United States?
    Mr. Bryce. Well, I'm a native of Tulsa, which, for about 20 
minutes was known as the oil capital of the world. I think that 
title is now clearly Houston, Texas, but if we kill the 
domestic oil and gas industry, many of which are small 
producers, that with a few individuals running what are known 
as stripper wells, it not only reduces overall crude and gas 
production in the U.S., it will result in higher unemployment 
and for many towns and small towns in Oklahoma, Texas, 
Louisiana, New Mexico, it could be a devastating blow.
    So there's no free lunch, sir.
    Senator Barrasso. I do want to put something into the 
record. Today, the Business Wire published an article titled, 
``Banning Exports of U.S. Crude Oil Would Likely Raise Gasoline 
Prices, Not Lower Them.'' It was according to Kurt Barrow, who 
is Vice President of IHS Markit who said, ``Without the ability 
to export U.S. crude, you enter a situation where there is a 
tighter global market.'' It goes on to say, ``This would lead 
to supply chain and processing inefficiencies and possibly even 
higher gasoline prices as a direct result of the export ban.''
    I ask unanimous consent to enter this article into the 
record and I see no objection at this point.
    [Laughter.]
    [Business Wire article follows:]
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    Mr. Bryce. Sir, if I could build on Mr. Nalley's point that 
part of that is the mismatch between domestic crude quality and 
the crudes that are suited for American refineries and I think 
he made that point well.
    Senator Barrasso. For all witnesses, I am going to ask you 
to raise your hand. On day one of the Administration, President 
Biden killed the Keystone XL pipeline. No surprise there. He 
made a lot of press about it. He very proudly did that. The 
Keystone XL pipeline would have brought oil from Canada to the 
Midwest and the Gulf Coast and now President Biden is 
considering shutting down the Line 5 pipeline, which currently 
ships oil from Canada to Michigan. Meanwhile, the 
Administration has repeatedly begged the OPEC cartel and Russia 
to produce more oil.
    Do any of you believe it is in the best interest of the 
United States to import more oil from OPEC and Russia and less 
from Canada?
    Nobody. Let the record reflect, no one has raised their 
hand.
    Mr. Gould, I just had a couple of final questions before we 
end, if you could? The European Union does rely on Russia for 
about half of its natural gas supply. The number is expected to 
grow once the Nord Stream II pipeline begins shipping natural 
gas. Do you agree that U.S. liquefied natural gas provides our 
allies, especially those in Europe, a critically important 
alternative to Russian natural gas?
    Mr. Gould. Yes, I do believe that.
    Senator Barrasso. And will you discuss just some of the 
benefits that U.S. liquefied natural gas provides Europe?
    Mr. Gould. I think it provides optionality and optionality 
is incredibly important when you are negotiating with existing 
suppliers, when you go into those negotiations knowing that you 
have the possibility to seek alternative sources of supply if 
those negotiations don't work out. I think, together with the 
integration of the European gas market, that's been a very 
important force in helping the competitive and open European 
gas market emerging in recent years.
    Senator Barrasso. And would you agree that U.S. liquefied 
natural gas exports then have helped America's allies and 
trading partners truly reduce their greenhouse gas emissions?
    Mr. Gould. I think in many cases you'll see that increased 
gas use in recent years has displaced more carbon-intensive 
fuels. You've seen that in Europe, you've seen that in some 
other countries around the world, and of course, you've seen it 
in the United States of America.
    Senator Barrasso. Well, thank you all for being here. I am 
very, very grateful. This is going to conclude the morning's 
hearing.
    Members have until the close of business tomorrow to submit 
additional questions for the record. The hearing is adjourned.
    I appreciate all of your efforts and under the previous 
order the business meeting stands in recess. We will reconvene 
on Thursday morning at 10:00 a.m., when we will also consider 
both the two nominations of this morning's agenda and the bills 
on the legislative agenda.
    Thank you all very, very much.
    [Whereupon, at 12:06 p.m., the hearing was adjourned.]

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