[Congressional Record Volume 146, Number 117 (Wednesday, September 27, 2000)]
[Senate]
[Pages S9331-S9333]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NATURAL GAS
Mr. MURKOWSKI. Mr. President, it is my intention this morning to talk
about natural gas and alert the American people to the crisis we have
before us relative to this very important source of clean energy.
Over the last several days, I have talked about our energy policy,
the fact that, to a large degree, our energy policy is determined by
environmental groups, environmental pressures, and the Environmental
Protection Agency, as opposed to a balance which suggests, indeed, we
need to face the realization that we need all our energy sources coming
together to meet the crisis we have today, as we find ourselves 58-
percent dependent on imported oil.
I will also speak on the dangers of Iraq and the realization that we
are now 750,000-barrels-a-day dependent on Iraqi oil. The interesting
thing is that Iraq has a production of nearly 2.5 million barrels a
day, a kind of leverage on the world's supply of oil. What I mean is
that the capacity of the world to produce oil and the demand of the
world to use that oil is very close. We are somewhere in the area of
roughly 1 million barrels a day of excess capacity over demand. With
Iraq producing better than 2 million barrels a day, one can clearly see
the leverage Iraq has should they choose to reduce production.
I have also talked about the Strategic Petroleum Reserve and the
merits of pulling down 30 million barrels, which sounds like a
significant relief, if indeed we can turn that into heating oil, but
the reality is that we are going to get 3 to 4 million barrels out of
that 30 million barrels in heating oil which amounts to a 2- or 3-day
supply.
I do not want to mislead anybody. It is simply my attempt to alert
the
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American people; there is no panacea. We are going to need all our
sources of oil. To blame big oil on profiteering is really
shortsighted, and the American people are too smart to believe some of
the rhetoric out there.
Just look at where we were a year ago with the price of oil at $10 a
barrel. Were the oil companies so benevolent then or was it supply and
demand? Of course.
Who sets the price of oil? We had a hearing yesterday. Secretary
Richardson was there. I think we all agreed that the price of oil,
without question, is being set by those who supply oil, who have an
abundance of oil, and that is primarily OPEC, Saudi Arabia, Venezuela,
and Mexico. They have it for sale, and the price currently is somewhere
in the area of $33 to $34. Last week, we had an all-time high in over
10 years of about $37.86.
Tomorrow I am going to talk about ANWR. I know something about ANWR.
That is the narrow area in the coastal plain of Alaska. It is that
small area that has been set aside out of the whole area of ANWR. Few
people really understand the merits and the magnitude of the land mass
and what we have done with it by congressional action.
There are 19 million acres up there. That is about the size of the
State of South Carolina. We have taken 8.5 million acres and put them
in a permanent wilderness. We have taken another 9 million acres and
put them in a refuge, leaving 1.5 million acres of the so-called 1002
area to the determination of Congress as to whether or not we can open
it up safely. Industry says, if the oil is there in the abundance it
would have to be, the footprint would be about 2,000 acres. So I think
we ought to keep this discussion in perspective.
I am pleased to say, one of the Presidential candidates supports
opening it, recognizing that we have the technology, we can do it
correctly, we can make the footprint small. If the oil is there, we
could very well produce another million barrels a day. We have the
pipeline capacity. One can certainly imagine what kind of message that
would send to OPEC. You would see the price of oil drop dramatically.
Also, as we look at the Strategic Petroleum Reserve, it certainly makes
sense to know whether we have one sitting up in the arctic area
adjacent to Prudhoe Bay.
Today, I am going to talk about the natural gas crisis in America
because that crisis is here today. To give you some idea, yesterday we
were quoting gas prices for delivery in October at $5.34 per 1,000
cubic feet. How does that compare with 9 months ago? Nine months ago,
it was $2.16 per thousand cubic feet. What is it for November of this
year? The November figures are out. It is $5.45 for delivery in
November.
The significance of that can probably be reflected on who uses gas.
The American public out there knows who uses gas. Fifty percent of our
homes in this country rely on natural gas for heating. Natural gas
provides 15 percent of our Nation's electrical power, and it is
growing.
The reality is, we are not going to have any new supply in place
before this winter. The reality is, the administration isn't going to
be able to go into a strategic natural gas reserve, because there isn't
any.
So what are we going to do? The projections are very clear. We are
using about 22 trillion cubic feet of gas now. It is estimated we will
be somewhere between 32 and 34 trillion cubic feet by the year 2010.
This is going to be primarily the result of the utility industry in
this country--an industry we take for granted because the lights
usually work. We are an electronic society. We depend on computers, e-
mail. This power has to come from somewhere. You have your air-
conditioners, your heating. The demand is up.
It is going to cost the industry somewhere in the area of $1.5
billion to put in more infrastructure. We are concerned about pipeline
safety. As more gas is utilized, we are putting more pressure on our
pipelines. This is a multiplier of demand, of price increases. The
reason so much pressure is on natural gas is we do not have a policy on
oil. Our policy is to import more oil. Before the 1973 Arab Oil
Embargo, after which we created SPR, we were 37-percent dependent on
imported oil. To give you some idea of where we are going in that
regard, today we are 58-percent dependent on imported oil.
The administration has always favored clean gas as the alternative.
But now we are using our gas reserves faster than we are finding new
reserves. When you are in business, and you are selling your inventory
faster than you are replacing it, you have a problem. This is an alert
to the American people and, hopefully, my colleagues because we are
facing a train wreck. It is coming. The signs are here. The
administration has yet to address what they are going to do about it.
Certainly releasing the crude oil in SPR isn't going to help the gas
situation because the demand is there. The reason the demand is there
is quite simple. I have indicated oil is not the answer, simply because
we become more dependent on imports.
So let's move to hydro. What do they want to do? They want to take
down hydroelectric dams. The tradeoff of that, of course, is putting
the barge traffic on the highways.
Coal: We have an abundance of coal. We have clean coal technology.
But you have not seen a new coal plant built in this country in the
last several years. I think the last one was back in the mid-1990s. You
can't get permits.
Nuclear: Twenty percent of our power comes from nuclear energy. Have
we built a new plant in this last decade or the last two decades? No
one in their right mind would build a nuclear plant because the
Government will not fulfill its contractual commitments to take the
waste that it agreed to do and the ratepayers have been paying for the
last two decades.
So everywhere we look--everywhere we look--we are check-mated. We
can't find an alternative source other than gas. That is why American
consumers should care.
According to the Energy Information Administration, Midwestern
families will spend as much as 40 percent more on heating this winter
because of higher natural gas prices; that is, expecting a typical
winter. A real cold spike could cause some real problems. I am not
suggesting you go out and sharpen your saw or put gasoline in your
chain saw, but it isn't a bad idea. I know that is being done in the
Northeast Corridor.
So we have an increased demand, no new supply, and this adds up to
higher gas prices for the American people this winter, make no mistake
about it.
What has the administration done about it? As I have said, it used to
be that natural gas was kind of a seasonal fuel, stored underground in
the summer, drawn down for winter use. But we now have a large summer
demand for natural gas because more and more electric powerplants rely
on natural gas. Here is the figure: Over 96 percent of all the new
plants will be gas fired. If they all come on line, we simply do not
have the gas supply.
Again, permits are obtainable for gas, unlike coal and fossil fuel.
We can't get enough natural gas from existing wells to fuel these new
powerplants if they all go on line. I had one CEO of a major oil and
gas company tell me: We are virtually out of natural gas. We can no
longer store gas in the summer. Our winter stocks are low. With a cold
winter, prices are going to go up. Reserves are not adequate to buffer
surges in consumer demand.
As I have stated, even if this winter is normal, we will still face
natural gas prices--we know it already--they are going to be over 50
percent higher than last year--$2.16--and I indicated earlier they are
currently $5.45 for November delivery. The simple reason is, the demand
is strong and supply is not keeping pace. The market responds with
what? Higher prices. It is supply and demand.
The administration touts natural gas as its ``bridge to the energy
future'': Our cleanest fossil fuel, fewer emissions; efficient end use;
no need to depend on imports. Yet as they express this and encourage
you to use gas, their actions simply do not match the rhetoric. Rather
than encourage new supplies, they stifle supplies.
Proof: This administration has placed Federal lands off limits to new
natural gas exploration and production. They have taken the Rocky
Mountain overthrust belt--that is Wyoming, Colorado, Montana--these
States have a tremendous capability for producing oil and gas. Well
more
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than 50 percent--about 56 percent--of the public land in those areas,
the overthrust belt, have been taken off from any exploration or
development for oil and gas.
Now the Forest Service comes along with a roadless policy to lock up
40 million acres of national forest, eliminating any exploration for
oil and gas. We have a moratorium on OCS leasing and drilling until
2012.
The Vice President would even cancel existing leases. He made a
statement in Rye, NH, on October 21, 1999:
I will make sure that there is no new oil leasing off the
coasts of California and Florida. And then I will go much
further: I will do everything in my power to make sure that
there is no new drilling off these sensitive areas--even in
areas already leased by previous administrations.
I do not know what that means to you, Mr. President, but it means to
me that he is not going to support OCS activities of any consequence,
and he is even going to attempt to cancel and negate some of the
existing leases.
Where is it going to come from? He conveniently ducks that issue. Al
Gore claims to have invented the Internet, but he refuses to provide
natural gas that is needed to provide electricity to power it.
We use more electricity today. We are an energy consuming country--e-
mails, electronics, computers. Even if we had access to more natural
gas, regulation after regulation inhibits construction of new pipelines
to get gas to the consumer.
The Northeast Corridor: There have been nothing but delays--3 years
of delay. The Federal Energy Regulatory Commission, FERC, that
regulates and has to approve it, has been sitting on it. This would
have given the Northeast Corridor a clean source of fuel. Most of this
is Canadian gas. It has taken forever.
This administration wants you to use more natural gas, but at the
same time they make sure you can't get it. That sounds like a recipe
for higher prices, if you ask me, higher home electric costs, heating
costs. Then what happens to the problem? It is going to get worse. The
demand is expected to grow from 22 trillion cubic feet to over 35
trillion cubic feet by the year 2010. Without new exploration and new
production, natural gas prices are going to go even higher. We are
going to pay more to heat our homes, run our businesses.
When higher heating bills arrive this winter, we will want to thank
the President and Vice President Gore for causing a natural gas crisis
in America, one that was predictable, one that we knew was coming.
We have been asleep. The train wreck is coming. The solution is
obvious: increase domestic supply of gas. Increased domestic supply
will obviously lower prices, reduce volatility, and ensure a safe and
secure energy supply.
I am all for alternative energy. I am all for conservation. But the
reality is, transportation does not move on hot air. Members of this
body don't go home on an airplane that flies on hot air. It flies on
fuel. Our homes are not heated by hot air from Washington. They are
heated by natural gas, 50 percent of all homes. That is 56 million
homes in this country.
We found 36 trillion cubic feet of natural gas in the Prudhoe Bay oil
field while searching for oil. We never looked for gas. Now there is a
possibility the economics will favor bringing that gas down from Alaska
for distribution in the lower 48 States, but don't think it is going to
be cheap gas. You have to amortize the cost of a pipeline that is going
to run some 1,600 miles down through Alaska, follow the Alcan Highway,
going through Canada and into the Canadian prebuilt system for
distribution into the U.S.
The fact is, we have proven gas, but the market has never been able
to sustain the cost. At this range, the feasibility of that project is
very costly. The most important thing we can do, however, is to
increase access to proven natural gas that is likely to be found on
Federal lands. We need to depend on all sources of energy--oil, gas,
clean coal, hydro, and nuclear--and we need to conserve.
That is why Senator Lott and others have introduced the National
Energy Security Act of 2000, S. 2557. Briefly, it would increase the
domestic gas supply by allowing frontier royalty relief; improving
Federal gas lease management; providing tax incentives for production;
and assuring price certainty for small producers. It would require the
administration to develop a comprehensive strategy to ensure that
natural gas remains affordable and available to American consumers. It
would allow new exploration for natural gas in America's Arctic as well
as the Rocky Mountain States and along the OCS areas.
As I have indicated, we have substantial potential for new reserves,
but if you don't have access to the areas, you might as well leave it
in the ground because it will never be developed. We want to remove the
disincentives for utilities to use natural gas, protect consumers
against seasonal price spikes, especially with regard to Northeast
heating oil use, and increase funding for energy efficiency and
weatherization assistance to reduce winter heating bills.
A noted economist, Daniel Yergin, stated that this current energy
``shock'' could turn into a world crisis--that is paraphrasing the
exposure that we have today. You can ask Tony Blair from Great Britain
about the price of energy that is threatening his Government. Unless we
take the kinds of actions outlined in this policy plan of the
Republicans that we have submitted before this body, as represented in
the legislation, S. 2557, the National Energy Security Act, we very
well will face a current energy shock that could turn into a world
crisis. Just look at the stock market this morning; it is pretty shaky.
There is probably more to come because of the uncertainty over where
we are with regard to energy and the spiraling costs. It is referenced
in a taxi ride to Capitol Hill; there is a surcharge. It is referenced
in your airplane ticket now. You can't figure out the airplane tickets
anyway; they are so confusing whether you fly on Thursday, Friday, or
Sunday, or before a.m. or p.m. It is in there, all your truckers, all
your delivery systems. Everybody is now facing the reality that energy
costs are higher. It is going to have an effect.
Finally, thanks to the failed energy policies of Clinton-Gore, we are
going to pay more for gas this winter. We must increase domestic supply
of natural gas to meet demand. This administration continues to make
new exploration and production not just difficult but almost
impossible. We pay the price.
This GOP energy plan encourages short-term efforts to minimize spike
hikes this winter and increase supply in the long term.
Tomorrow, I hope to talk a little bit about where the oil and gas is
likely to be found.
The PRESIDING OFFICER. The Senator from Iowa.
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