[Congressional Record Volume 153, Number 114 (Tuesday, July 17, 2007)]
[House]
[Pages H7961-H7968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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ENERGY SECURITY
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 18, 2007, the gentleman from Nebraska (Mr. Terry) is recognized
for 60 minutes as the designee of the minority leader.
Mr. TERRY. Mr. Speaker, I am here tonight to talk about energy
security. We have talked about energy independence, and I think that is
a subset of energy security.
We have to look at the world in total, and we have to realize that we
need to secure our own energy sources if we are going to secure the
future of our country. Even as I look at probably the most immediate
issue, the war with terrorists, their actions against us, but if we
take that and look at the world in total, when I see the lowest common
denominator, it's energy. It is a fight or a battle for energy.
Those who are going to be able to power themselves without relying on
others will not only have more options and purer choices in foreign
policy
[[Page H7962]]
matters, but the reality is in this new emerging global economy, those
that cannot be economically hijacked by foreign countries are going to
be the winners. I want to make sure that we have a policy in place that
recognizes the need for independence so that we can secure our future.
Now this means that we have to do some things. I don't know how many
of you out there remember high school economics. I remember Mr. Croft's
lessons at Northwest High School, and basic supply and demand.
When we look at resolving our energy issues, and, by the way, a
barrel of oil hit over $75 today, we have to look at both sides of the
equation. That's what we tried to do in 2005, the energy bill that was
signed by the President. We tried to increase the amount of supply of
energy and, at the same time, looking at how to conserve or reduce the
demand for energy in our country.
Now, overlaying this discussion about energy, supply and demand, is a
new discussion amongst us about global warming. This is driving our
discussions on energy today. I fear that we have become, how do I say
this, but so spooked by global warming that we are willing to go to the
extreme and hurt ourselves.
And I really believe that part of my role and the role of the
minority party here is maybe to swing back to a more practical level as
we talk about energy and global warming.
Now, what a lot of people don't know when we talk about global
warming or the CO2 emissions, that is the gas that is
depleting our ozone, the vast majority of that is created naturally,
not by humans. Yes, human activity that I am going to talk about in a
minute does contribute to that.
Now, as I understand, the major contributor and the most significant
contributor to CO2 emissions is livestock. So, of course,
some have joined hands with PETA to make sure that we eliminate all the
cattle, pigs, chickens, and we should just become vegetarians.
The next is humans. Not by our activity of burning coal and the coal-
generated electrical plant, but just ourselves and our existence, our
exhaling. And, therefore, we should have mandated policies to control
population, i.e., abortion, and reduce the number of people on Earth.
That is one of the policies out there.
Now, the discussion that we are going to have here in the House in
the next 2 weeks is going to be on what energy policies do we implement
here to lower CO2 emissions and become energy independent.
Well, the reality of it is, the policies that we are going to hear from
the majority party will help to some small degree on the demand side
and absolutely drive up or put more pressures, increased pressures, on
supply, because they are going to eliminate some of our sources that we
use for energy, make it more difficult and more costly to use and,
therefore, create bigger demand. What happens when there is bigger
demand? Prices go up.
So any of you out there that want to turn on a light, use your
computer, heat or cool your homes, drive to work, under the policies
that we are looking at adopting in this House over the next couple
weeks, expect to pay more.
Now, this is why I think it is becoming so important here. I want to
get back to our supply-and-demand lesson here. In this chart, the
United States, because of our economic engine, our ingenuity, our
intellectual properties that are being put into action, we are the
largest consuming Nation. Now, look down here, we also rank number one
in oil importation. We have to import to drive our economy, literally
drive our economy, about 65 percent of our energy needs. Now, that is
12 billion barrels that we have to import.
When I think of energy, I have to separate it into two different
issues. One is driving. About two-thirds of the oil that we import goes
to refining into gasoline, to use in jet fuel and trucks to move goods
from one place to another, as well as cars to get us to the grocery
store, to get us back to work. If we are going to become independent,
we have to look at a full array of fuels that we can generate here.
That means biofuels to some extent. That means that we adopt policies
on hybrid type of cars or other experimental cars that are out there.
And, by the way, that does lower emissions. But remember, car emissions
are pretty far down the list of what actually contributes to
CO2 emissions and the ozone. We can then look at a lot of
other technologies. I am a proponent of hydrogen, for example.
Now, let's look at the other side of generating electricity that
powers our economy and is part of the equation. Most of our electrical
generation, about 52 percent nationally, is from coal. In the policies
adopted by various committees of this House and that are going to be
brought to the floor in some capacity either in the next 2 weeks or
maybe even September, they make it much more difficult to use coal. I
mentioned, 52 percent of the electricity in this Nation is generated
from coal. In my district, it is over 70 percent. It is the cheapest
way to generate electricity. It is plentiful. We have something like a
500-year supply of coal to generate electricity in this country.
So I feel that instead of doing what the majority party wants to do
and shut down coal-fired plants, crippling our ability to generate
electricity; and, by the way, nuclear is bad, too. Remember that, no
nuclear power? Let's make it as difficult. Let's not find ways to deal
with the waste. And so if we shut down coal, make it more costly at
least to do it, no nuclear, that means you have one area to really rely
on in generating electricity, and that is natural gas. Oh, and by the
way, our policies don't allow for any more domestic supply of natural
gas and oil, so we are going to shift everything to natural gas to
generate. We barely allow it to be imported. We can't drill any more
for it within our own 48 continental United States or offshore any more
than we are doing today.
I don't understand this energy policy that is going to be brought to
us. It seems to me to be a negative energy policy. In fact, I think the
only energy that is involved in this bill is perhaps if we burn the
darn thing we could generate some power. But, as was just mentioned to
me, that would result in CO2 emission, so we can't even do
that.
Mr. Speaker and the American public, we need to become more engaged
in this. We are on a path to cripple our economy. China is adding at
least one new power plant a week based on coal. They have no problems
using coal. I saw a statistic that was 2 years old, so it is probably
much more significant now, but the Chinese were adding 120,000 cars per
day. That is not even talking about India, whose economy is expanding
at near double digits as well, and they are adding power in their cars.
The competition is extreme for oil. We need to recognize that. We
need to expand it. That doesn't mean that we shut down our domestic
fossil fuels. That means we add to it so that we become independent and
secure our Nation's future.
At this time, I yield to my friend from Texas.
Mr. CONAWAY. I thank my friend from Nebraska hosting this hour
tonight. We listened earlier tonight to one of our colleagues from Ohio
who recited some of the same statistics that you and I work off of, and
that is, most reputable projections of energy usage in this country by
2025 and 2030 shows that, no matter what, even the rosiest predictions
show that we still will be importing millions of barrels of crude oil
and refined products every single day. And I don't know of any of us
who thinks that America is better off by importing crude oil and
refined products. Most of us would agree that that is a bad thing. Our
balance of payments is out of whack.
As you mentioned earlier, our foreign policy options are different.
Our risks and threats to this country are exacerbated by that
dependence. And then you begin to talk about the solutions. We agree on
those facts. It is kind of looking at the glass half full or half
empty. The amount of water in the glass is the same; it is just how do
we look at it. And the proposals that she began to tout and promote
seem to cost American taxpayers an awful lot of money. They also seem
to involve some sort of price-control scheme that would not allow the
natural market forces to work and operate as we begin to export these
ideas.
We will hear, as you said, over the next 2 weeks a lot of policies,
and I think we ought to look at those polices through a lens that has
four pieces. One lens would say does this policy help or hurt domestic
production of crude oil and natural gas.
[[Page H7963]]
I am a CPA by trade and I operate pretty often just by straight
logic, and the logic is that if we increase domestic production of
crude oil and natural gas, it means we are less dependent on foreign
sources of crude oil and natural gas. I have yet to have anybody refute
that argument in any way that makes sense. So, promoting production of
crude oil and natural gas I think is a positive. So as you look at
their policies, challenge them.
If their policy continues to close off areas of domestic production
and domestic exploration like ANWR, like the Inner Continental Shelf,
then that policy does not make sense for America today. And many of the
policies they have in place or want to continue in place have that
result.
If their policies retard or restrict the construction of new
refineries in this country, the ability to process our domestic crude
into refined products, gasoline, jet fuels and other kind of things,
and force us to import refined products, it seems to me that that is a
policy we ought to challenge.
We in the minority spend a lot of time being against stuff, and I
guess that is pretty much our role, but part of that is to be
responsible devil's advocates. And if a policy curtails domestic
production of crude oil and natural gas, that seems to be on its face
something that you and I can challenge pretty easily.
The second lens would be does it increase our reliance on foreign
sources of crude oil. And in this category, it would be things like
does it promote or inhibit personal responsibility for conservation.
Republicans get beat up about not being wanting to conserve and
wanting to use less fuel, but at the heart of that is the personal
responsibility to use a little less gasoline than you used last week.
The idea is that if all of us would use just 1 gallon of gasoline next
week, if we did that, you would see an immediate increase of
inventories. You would see a drop in the prices because the folks
holding those inventories are wanting to sell them and sell them at a
profit.
So policies that either encourage personal responsibility for
conservation or discourage personal responsibility for conservation, I
think we have got to be for and against. If it encourages that and
those policies come forward in the next couple of weeks, I think we
ought to back those policies and help us do a better job making good
choices ourselves, goofy little thing like keeping the tires in our car
aired up properly, taking all the extra weight out of the trunk. Doing
those kinds of things, you would probably pick up 3, 4, 5 percent
efficiencies in the use of gasoline and see a dramatic impact. Just
using less, that helps reduce our imported refined products. So
policies that they bring forward that increase our reliance on foreign
sources of crude oil and natural gas, I think we have to challenge
those.
The third would be does it encourage private investment in all
sources of domestic energy, and that includes oil and natural gas. It
includes coal, nuclear, wind and solar, and all those kinds of things
that are out there.
Mr. TERRY. Your vision would include wind energy, solar energy?
Mr. CONAWAY. Yes. Let me say this: Even if the occasional turbine
helped a bird commit suicide, yes, I would encourage wind turbines.
Mr. TERRY. So in one of the bills in one of our committees, it
specifically makes it a criminal act to have a turbine that would
contribute to the death of a migrating bird. Does that help or hinder
the rollout of that alternative energy?
Mr. CONAWAY. Well, that folds into this exact policy, because things
of uncertain public policies contribute to a decrease in private
investment solutions.
Mr. TERRY. You mean, if an investor might go to jail because a bird
flies into a turbine under one of the bills that may come to this floor
in the next couple of weeks, that would hinder investment?
Mr. CONAWAY. You would think it would.
Uncertainties about tax policies. How is a particular investment
taxed and treated under our code over an extended period of time or
changes in that policy contribute to a reduction in the private
investment in these various sources. Other government initiatives, like
things like the government picking winners and losers in a particular
area as opposed to looking to the market to do that, to give incentives
to the markets to create the most efficient kinds of policies that are
in place. But, nevertheless, anything that comes in front of this body
that retards or discourages or puts in question the private investment
into all domestic sources of energy, I think we have to challenge
those, and respectfully.
And the fourth lens I would look at is what does this do to the
consumers. At the end of the day, you and I and the people who pay the
light bills when we turn the switch on, who buy the gasoline at the
pump have to pay those costs.
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And if we do things as a part of these policy initiatives that come
forward over the next couple of weeks that arbitrarily and capriciously
increase costs to consumers, then we need to challenge those. There has
to be a pay the fiddler at some point in time. I mean, we have to pay
for whatever sources of energy that we've had. We've enjoyed low
gasoline prices for a long, long time, and we're coming to the end of
those lower prices just because crude oil and natural gas are finite
resources.
You've already mentioned the increase in demand from around the world
that we're in competition with those. And it's not likely that we'll
see a significant decrease in the price of gasoline.
On the one hand, high gasoline prices help us to look at doing things
a different way. They help make other alternatives more viable for the
consumer, because at the end of the day, the consumer across this
country has to be willing to pay the cost for whatever it is you're
talking about. You can't subsidize. You can't use government programs
to overcome lack of a consumer participation.
So any of these now policies that cause cost to consumers to go up
arbitrarily and too quickly I think we have to challenge.
Let me make one final point that you talked about, and that is
converting either coal or nuclear plants to natural gas fired plants.
Natural gas does not transport across oceans well. We've got to liquefy
it. We've got to put it into tankers. We've got to have facilities for
regasification and all those kinds things, and so importing natural gas
is very difficult in comparison to how easy it is to import crude oil.
So as we increase on natural gas, our local domestic cost for natural
gas will go up. They're already the highest cost for natural gas in the
world and because we are relying on it so much.
The other point is that if all 38 nuclear permits that are currently
in some form of approval are approved and those plants are built in the
next 20 years, nuclear power will still represent only 20 percent of
our demand. So if we're going to have nuclear that's going to actually
help lessen the load on natural gas, then we've got to have a nuclear
plant increase from where just the current system, the current new
plants and new facilities and existing plants are in process.
So as we look at these policies that come at us over the next couple
of weeks, let's use common sense. Let's look at things that can be
rolled out in a scope that makes sense. It's one thing to be able to do
something on a very tiny, microscopic scale. But unless you can convert
that into a significant portion of the demand or the supply of energy,
whether it's electricity or gasoline or other sorts, other forms of
energy that we use day in and day out, then you're barking up a tree
and you're not helping the circumstance.
So we've got some work to do, being in the minority, over the next
couple of weeks to help point out the areas where we think these
policies that are coming forward fail the American consumer.
Mr. TERRY. I appreciate your comments and putting more meat onto the
bones here. And I'll mention that in my district, again, it's about 70
percent, almost 70 percent coal. We do have nuclear. We use natural gas
only as a peaking, which is basically this time of year. It was 99
degrees at home today, and I'll guarantee you Omaha Public Power is
running their peaking plant during the day so that people can run their
air conditioners. And there's a lot of things that we could do on the
conservation side, as you said, and we need to push those.
[[Page H7964]]
But at the same time, we seem to be adopting policies that restrict
the supply. And I think even though the policies that are going to be
proposed here don't necessarily further restrict than already have been
natural gas, what they do is move more energy, or force more energy to
electrical generation by natural gas without doing anything to increase
the supply of that natural gas.
And the gentleman from Pennsylvania has come to the floor many times.
He is one of the leaders in the House in discussion of what we need to
do to increase supplies of natural gas, and how ridiculous it is that
our prices in the United States are probably five times more than
anywhere else in the rest of the world.
So I yield to my friend from Pennsylvania (Mr. Peterson).
Mr. PETERSON of Pennsylvania. I want to thank my friend from Nebraska
for his leadership here tonight and for his sharing time with us.
I personally believe that energy is the Number 1 issue facing
America's economic future. I don't think, I think that available,
affordable energy is a greater threat to the American economy than
terrorism is. That's my personal view.
Before we talk about natural gas, I want to look at what we're using.
Now, these are 2004 figures, but they've changed very little. It takes
the Energy Department several years to compile them. These are the
figures that we made the last chart out of a few months ago.
Currently 40 percent of our energy is petroleum. Just about 22.9 or
23 percent is natural gas, and a similar figure is coal. Now that's 86
percent.
Then you get down here to nuclear, 8.2, and now you're up to 94
percent. So renewables are those figures on the left. And the largest,
which surprises a lot of people, is biomass, which was 2.8,
hydroelectric, 2.7, geothermal, 0.3, solar, 0.06, and wind, 0.01. Now,
I think we need to look at that.
And then we look at the next chart, which is the Energy Department's
estimates. Now, these are the people that deal with us every day. In 13
years, in 2020, these figures don't change much, according to their
statistics. Now, I hope they're wrong because the energy bills that are
coming at us do not deal with petroleum, do not deal with natural gas,
certainly do not deal with coal and do not deal with nuclear, which
provides 94 percent. And I don't believe they deal with hydroelectric.
That's another 3 percent. And so we have about 4 percent that's in
play.
And I think what we have to be concerned about, if we focus on that 4
percent, woody biomass, solar, wind, geothermal and hydrogen, can we
take care of the needs of this country, because when you don't have
emphasis on these, and you don't continue to drill new wells, and you
don't continue to promote coal to liquids or coal to gas to furnish our
mass amounts of energy needs, then these volumes go down, and that's
where we've been at as a country.
We've had a policy not to produce American energy, oil, gas or coal.
We are gaining 2 percent foreign dependence every year, so we're at 64
percent. We've been gaining. Since I have been in Congress it's been 2
percent a year, every year. And that's a trend that nobody thinks is
appropriate or positive for America because it's foreign, unstable,
often unfriendly countries with unstable governments.
Some new statistics that I'll just add to this that are a little
concerning; 80-some percent of the oil and gas in the world is owned by
countries that do not have democracies, unstable countries. They own
the energy of the world. In fact, Exxon, our largest oil company, is
14th in the world in ownership of energy. There are 13 countries that
own, starting with Saudi Arabia and Russia and Iran and Iraq, and you
can tell that's not exactly our friends, on down the road, all of those
types of countries that own the energy of the world, and we are totally
dependent.
Now, I'm pleased that the House and the Senate are both going to be
dealing with an energy bill, but I think it's important that we have
some energy production in those bills.
Now, the natural gas issue is one that has, I think, is really
driving us economically in the wrong direction. We use 20 some percent
of our natural gas now to make electricity. The gentleman from Nebraska
just mentioned that his State doesn't do that, but the country does
that. The States of California and Florida, the big users of energy in
this country, consume huge amounts of electricity produced by natural
gas, and that's an increasing figure daily.
About 12 or 13 years ago we took away the moratorium. It used to be
just used for peaking plants in the morning and the evening because
people felt natural gas was to precious to use to make electricity.
Natural gas is the feedstock for hydrogen, which the Representative
from Nebraska talked about is one of our future fuels. We currently
make it out of natural gas. Ethanol, the big push on ethanol consumes
huge amounts of natural gas in the production of ethanol, so we don't
make ethanol without consuming huge amounts of natural gas. The same
with biodiesel. It's the feedstock.
Now, here's where the rubber meets the road in America. Natural gas
is an ingredient in almost everything that's manufactured, or it's used
in large amounts to heat, treat and bend products.
Petrochemicals, all the petrochemical companies, 55 percent of their
cost of producing their chemicals because they use natural gas as an
ingredient, they use it as a fuel is natural gas.
Polymers and plastics, 45 to 50 percent of their cost is natural gas
because they use it as an ingredient and they use it as a fuel.
Fertilizer, from 50 to 70 percent of the cost of making fertilizer to
grow the corn to make the ethanol is made by natural gas. In the last 2
years, 50 percent of our fertilizer production has gone offshore.
Petrochemicals, polymers and plastics are moving offshore. Why?
Because America has the highest natural gas prices in the world, and
have had for 6 years. That was not true 6 years ago. South America, a
buck and a quarter. Our average retail price last year was between 12
and $13. Like I said, we have consistently, for 6 years, had the very
highest natural gas prices in the world.
To show you, Dow Chemical uses huge amounts of natural gas. In 2002,
they spent $8 billion to buy natural gas. In 2006, they spent $22
billion, and of course those numbers just keep rising.
If we don't deal with the natural gas issue, America will not compete
as a nation, because we use natural gas in producing almost all of our
products, whether it's melting steel, melting aluminum.
Mr. TERRY. Will the gentleman yield on that?
Mr. PETERSON of Pennsylvania. Certainly.
Mr. TERRY. Dow Chemical has thousands of employees. They're just one
of many petrochemicals that rely on natural gas. If the price of
natural gas remains high or goes higher, where do they go? I yield back
to you.
Mr. PETERSON of Pennsylvania. They just committed $32 billion to
build new plants in Saudi Arabia, Kuwait and Libya.
Mr. TERRY. And all of those jobs go to those countries now.
Mr. PETERSON of Pennsylvania. That's right.
Mr. TERRY. Because of our natural gas policy.
Mr. PETERSON of Pennsylvania. There's about 100 chemical plants in
the world under construction, none in the United States. And that's a
tragedy because those are some of the best working man jobs. When you
bend steel, when you bend aluminum, when you heat treat products, when
you dry grain, you use natural gas. I mean, natural gas heats 60
percent of our homes, heats about 70 percent of our businesses.
Now, if natural gas was affordable, it would be the natural next fuel
for vehicles, because we could fuel, if it was affordable, we could
fuel a third of our auto fleet and that would be much quicker than
CAFE. And I'm not opposed to CAFE. But it would be much quicker than
all the things they're talking about because it could displace 2.5
million barrels a day, just for short haul vehicles who don't go long
distances. One of the problems with natural gas as a vehicle fuel is
distance because you can't store, you can't have a big enough gas tank
to run long distances on a tank of natural gas.
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But we have, on the Outer Continental Shelf, that's from 3 miles to
200 miles offshore, every country in the world produces both gas and
oil there. Now, they may have 20-mile distance out or 30-mile distance
out. But they produce, after you pass 11 to 12-mile it's out of sight.
And countries around the world, when I tell them we don't produce
there, just look at us and they say, why? Norway, Sweden, Great
Britain, Canada, New Zealand, Australia, all environmentally sensitive
countries, they all produce there. We're the only known modern society
that does not produce oil and gas.
Now, I have a proposal that opens it up for gas because we have not
been able to pass it. I would support oil, but natural gas is more
important to us because how it fuels our industry, how it heats our
schools, how it heats our homes, how it heats our hospitals, how it
plays such a role in our economy, how it's an ingredient in so many of
our products, in fertilizers and petrochemicals and plastics. So we
need natural gas.
So I put the priority, and we have a bill that says the first 20
miles remains locked up. The second 25 miles State option, State
control, and the next 50 miles is open unless the States pass a bill to
lock it up. They can do that. The second hundred miles is just open.
That's the bill that I have proposed. And I think it's vital to the
future of this country, because if we opened up the Outer Continental
Shelf on the East and West Coast and the rest of the gulf we would have
ample supply of natural gas for many, many years.
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Now, we need to produce other kinds of fuel. I mean, what I think a
lot of people are not aware of is there is an energy shortage in the
world. In fact, right now OPEC controls the price. I believe the price
ends the day at somewhere between $75, $76 for oil. Gas is about 7
bucks, which is the cheapest it has been, but this is the slowest time
of year in the use of gas. This is gas that is going into storage that
you add a couple, 3 bucks to, and then there are distribution costs,
and it comes back out on a next year's average price. And this year the
price of gas is higher than last year so far in storage.
So we are going to have a 25 to 30 percent increase in gas prices,
and it appears we are going to have, because here we are with not one
storm in the gulf, which always disrupts supply. Right at the moment,
we don't have a large sending country in trouble with their government.
So things are kind of calm, and we have $75 oil, and we are at the high
usage time, right in the mid-summer. So now all we have to do is have a
storm or two in the gulf, like we did 2 years ago, and have a country
have some sort of disturbance or a government overthrown, and we have
$85 or $90 oil, and we know what that is going to do to the American
economy. In fact, I am not sure we are really sure what $3 gasoline,
which is prevalent today, is going to do to the economy long term
because we have had spikes for short periods of time. But now, in my
view, $3 is the base price, and it is going up from there. It is just a
matter of how much it goes up.
I think what is important for Americans and Members of Congress to
understand is that we have to really get serious about energy policy
for this country. I am for wind and I am for solar and I am for
geothermal and I was part of the Hydrogen Caucus when I first came. I
am for all of those.
But they are tiny fractions when you look at the amounts they
produce. And we also know that wind has its opponents and solar has
just had trouble getting off the ground. I mean, it just has trouble
growing. I read an article today that said ethanol, the new fuel, we
spent $5.1 billion last year, subsidizing that by paying the tax on it.
So it doesn't come free. And it seems foolish to me that we as a
country now want to buy our natural gas from foreign countries and
bring it in ships and be once again dependent.
I have had that argument with a lot of leaders in the last few years
that LNG could be part of the solution, but it is not the solution. And
that has turned out true because countries like Spain and Japan outbid
us because they will pay more for a tanker load of natural gas than we
can afford to. So we don't often get it because it becomes a commodity
once a ship is loaded. But I want to get across to Members of Congress
and to the American people is that we want to be for the clean and
green fuels, but I think natural gas is one of those.
Natural gas is one of the cleanest fuels we have. And if we had ample
supply of it, we could be expanding the use of it, not just detracting
the use of it. It could be our bridge until we figure out how to make
cellulosic ethanol, until we figure out how to get hydrogen vehicles,
until we figure out how to charge our cars up at night with electric
and have batteries that will last and all these things we are working
on, we need a bridge to get to them because what is going to happen if
we allow ourselves to have $100 oil from foreign countries, unstable
governments, who are totally going to own this country?
The major balance of payment, and I will just show you that in
conclusion, is the last chart here. This is one on manufacturing
decline as natural gas prices have risen. But here is the one on the
balance of payment. The major portion of the balance of payment, a huge
portion, is energy prices. And as energy prices go up and we continue
to import, that figure is going to grow. We could almost cut our
balance of payment in half if we stopped importing energy.
Now, we are not going to be able to do that but we could move a long
ways. But we need cola liquids. We need to develop the hydrogens and
the winds and solars and all of those. We need to do more nuclear. We
need all of those because China is increasing their energy usage 15 to
20 percent a year, and they are just drying up the marketplace. They
are just sucking it dry because they are, and many other countries, are
developing a strong energy portfolio; so they have energy. The United
States has done little to secure its economic future with clean, green,
affordable energy.
And I hope when we finally pass bills here that we have some energy
in them that will secure our economic future with clean, green,
affordable energy and specifically natural gas.
Mr. TERRY. I really appreciate your tutorial there. What is our
supply in the United States of natural gas? We had the gentlewoman from
Ohio that was down here that was talking about petroleum and how
limited we may be at our peak here within the next 30 years. How about
natural gas?
Mr. PETERSON of Pennsylvania. We have anywhere from a 50- to 100-year
supply. There are huge amounts in the Midwest, but the Outer
Continental Shelf has actually not been measured. But we had old
seismographic 40 years ago. Actually this Congress has prevented, and I
see the Senate right now is preventing, seismographic from being done
in the portion of the gulf that has not been produced.
Mr. TERRY. You mean we won't even be able to measure how much?
Mr. PETERSON of Pennsylvania. Not only do we prohibit usage but we
prohibit the measurement.
Now, there was a lot of drilling off the coast of Florida a few years
ago. We bought those leases back. That was very fertile gas. There is
very fertile gas up in Georgia, the Carolinas, Virginia, New Jersey.
The east coast is loaded with gas, and it is very rich, and it is where
the population is. And when you produce in the ocean, it is out of
sight. It is beyond the site line. The habitat for fisheries improve.
They love to be around the rigs. They love to be around the platforms.
And, of course, the underground piping comes in the ground under the
water. It is not even seen. It is clean, green fuel. And they talk
about it harming a beach. I don't know how gas harms a beach. I have
never seen dirty natural gas. It's clean. It doesn't stain anything. It
isn't colorful. It's just a gas. So it has been somewhat amazing. We
have lots of natural gas.
Mr. TERRY. So just what we know, 50 to 100 years, and, by the way, I
understand one of our largest pockets of natural gas that is in Wyoming
was made into a Federal monument or a park, making it federally illegal
to even drill there. So that is what happens when we find new pockets.
We rule them off limits. That just astounds me that we have got that
much. And when we are talking about securing our future, wanting to
become independent, the other side and us are worried about global
warming. And
[[Page H7966]]
this is a clean fuel. You have stressed it. It is a clean fuel, which
is why the policies that we are seeing are moving electrical
generations towards natural gas. It makes no sense to me that we won't
increase supply at the same time.
Mr. PETERSON of Pennsylvania. When we started down that road, natural
gas was less than $2 a thousand. And it has hit as high as $14 and $15
in peak periods. But Daniel Yergen, who wrote the book ``The Prize,''
spoke in the Senate shortly after that process started, and I happened
to be there with Steve Largent. And he said if we don't open up supply,
we are going to make natural gases so high that Americans will struggle
to heat their homes, struggle to run their businesses, struggle to heat
their hospitals. We are not going to make products in this country much
longer that consume a lot of natural gas.
I predict if we don't deal with the natural gas issue, simple things
like glass and bricks will be made in Trinidad, where gas is about a
buck a thousand. That is not very far from here. Trinidad is in
northern South America, probably a boat, a ship, a day away. It
wouldn't take long to get to the east coast with a ship of bricks and
glass. And that is a tragedy if we start importing those kinds of
things that the American working man has made.
This is about jobs for working people. It is about the economy for
the working people of this country. Energy punishes the poor and the
middle class. The rich will go right along. The rich environmentalists
who are against will live right on. They won't change their life-style.
They will live in their huge homes and fancy cars and they will do
their thing because money is not a problem. But the middle-class
working people will not have a middle-class job anymore. They will have
a poor man's job. And the poverty rate in this country will skyrocket.
Mr. TERRY. We talked about jobs, that we are losing our
manufacturing, our middle class. And what a lot of people don't
understand is it is our energy policy that is driving those jobs
offshore. Yes, there are some that are offshoring, taking maybe
telephone answering jobs over to India. But our policies are driving a
lot of our good manufacturing jobs away.
Mr. PETERSON of Pennsylvania. Some of the best jobs in America are
producing energy. When you buy Luke Oil gasoline down here, that is
produced in Russia, and only the person selling it makes money in
America.
Mr. Pearce can tell you how many people make money because he knows
that business in the production of energy. He will give you some great
information.
Mr. TERRY. Then let's bring him up.
At this time, Mr. Speaker, I would like to yield to my friend from
New Mexico.
Mr. PEARCE. Mr. Speaker, I thank the gentleman for his discussion on
energy security.
And for my discussion tonight, I would like to begin at the same
point that my friend from Ohio from the other side of the aisle began.
She was quoting accurately an oil industry study which says that supply
cannot keep up with demand, that prices are going to be high, that
supply is going to be tight, and that is for the foreseeable future
through the next decades.
Now, the response that we had in the Energy Policy Act of 2005 was
literally to, number one, recognize that it is not possible to convert
overnight; so we had incentives there for the very hard-to-get oil and
gas. That is the deep, the very deep, ultra-deep, and then offshore.
Now, the offshore platforms are extraordinarily expensive. They maybe
look something like this. Our friends from Louisiana would recognize
many of these, and California. These units cost over $1 billion to $1.5
billion. We don't invest in them easily, but they produce a tremendous
amount of energy. It is the belief of those who are concerned about the
energy business, concerned about the fact that prices are high, that
supply is low, they really only have two choices if prices are high and
supply is tight. You can lower demand, which Americans have not seen to
want to do, or you can increase supply.
So these units here, we had great incentives for those, and we felt
like that would bridge us during the years to where consumers would
begin to consume differently.
But I would ask our average listener, how many people do you know who
actually put biodiesel in their car or their truck? How many are using
any fuel other than straight gasoline? We have got some of it augmented
by ethanol. But how many cars really do significantly reduce the
consumption?
If the answer is not many, then you would be concerned about the time
to convert. And we have had testimony in our Resources Committee where
both sides of the aisle say we are probably on a 20- to 40-year
conversion that you and your family probably will not drive a different
car for 20 to 40 years that has a different power source than what it
has got right now. So we either recognize the truth in the matter and
we encourage supply while we are converting to those renewables, and
the Energy Policy Act of 2005 had great stimulation. I think the
difference, though, is that when we are confronted, as business-
supporting conservatives, with the idea that the oil industry study
says the supply is limited, it cannot keep up with demand, that we
probably should increase supply.
Our friends on the other side of the aisle, and I would quote, said
that we are going to reinvent our economy in the first decade of this
century.
Now, it is not possible to reinvent an economy in 2\1/2\ years
because we are already at year 6\1/2\. It is just not possible to
reinvent an economy in 2\1/2\ years, and that becomes the great
disconnect on the discussion.
I would like to spend the rest of my time talking about the energy
suggestions that our current majority has. We have recently marked up
H.R. 2337. We have recently passed that out of the Resources Committee.
And I will tell you that we need to make one point perfectly clear,
that H.R. 2337, the Rahall energy bill, which is intended to be a piece
of the package that is brought to this floor, will cost Americans jobs.
It will increase the cost of natural gas and gasoline. And it is going
to stunt the growth of the alternative and renewable energy industry.
{time} 2230
H.R. 2337 is called the Energy Policy Reform and Revitalization Act.
It could be called the ``American Job Outsourcing Act,'' it could be
the ``Chinese Full Employment Act,'' or it could be the ``Funding
Mechanism for Hugo Chavez,'' but to declare that it is the ``Energy
Industry of America Revitalization'' is intended to be a stretch of the
facts.
During congressional hearings in Congress, we've heard a lot of
testimony from witnesses talking about the impact of our actions on the
cost of energy. So I would refer to another chart which simply talks
about the cost of our energy is going to be increasing dramatically. We
have received this testimony that the cost of energy probably will go
up to a 23 percent increase in some areas, 29 percent on the California
coast, 32 percent in the Texas region, 21 percent in the South, and in
the Southeast, 19 percent; 20 percent in New York. So you see
significant energy increases because of the increasing consumption of
natural gas.
One witness, Paul Cicio, testified that America has lost 3 million
manufacturing jobs to overseas competition due to this kind of energy
increases. It is an important point because we need good jobs in
America. High-tech industries and high-tech manufacturing are the
future of our economy, yet they're tremendously energy dependent. You
can't put a server farm in Washington or San Jose unless you have the
energy to power it. You can, however, put it in Beijing because the
Chinese are committed, like one of my friends said, building 544 coal-
powered plants over the next 10 years to ensure they have enough cheap
power. Cheap power is the key to keep their economy moving forward.
At the hearing we talked about, a couple of months ago, how Dow
Chemical was going to build a $22 billion facility in Saudi Arabia
because of the price of energy here in the U.S. And yet, what we're
doing is restricting our access to energy here in the U.S. while we're
not restricting the overseas, ensuring that we're going to import more
energy, ensuring that jobs are going to continue moving to those cheap
sources of energy.
American prices are simply too high, and we're doing nothing about
it. And
[[Page H7967]]
the renewables, though they have promised, the renewables are far, far
into the future, decades into the future, where they begin to affect
us.
We can see that energy prices are already high and headed higher. The
projections show that they're going to be 20 to 30 percent increases,
which drive these billion dollar projects overseas.
I would comment that the Dow Chemical plants in both China and Saudi
Arabia are going to take 10,000 jobs, those are 10,000 jobs which would
be in the hundred thousand dollars range if they're here in America,
and yet because of the low energy prices overseas compared to here,
we're going to export those jobs. And it simply does not make sense.
Since 2000, our offshore gas production has dropped 40 percent. Our
next chart will show that production decrease. It's very difficult to
see, the yellow line is on the top, moves along here. And we see the
energy decreasing as it moves across the chart.
We would recognize that onshore gas is actually a flat stable line,
but the offshore is decreasing rapidly. And yet the Outer Continental
Shelf, where we have great potential large, large resources, we're
restricting access to those areas. Meanwhile, in the Rocky Mountains,
where we restrict access there, those are fields which already have
been drilled, so it's not as if they're pristine. We just are limiting
our access to our own resources, which then compounds the problem that
Ms. Kaptur started out with initially. Prices are high, supply is
tight. And we're seeing that supply gets tighter, and we're going to
then increase the price.
Another thing that H.R. 2337, the Rahall energy bill, is doing is
limiting shale completely. We're restricting the regulatory framework
that was supposed to be out already and saying that it won't come
forward. And without regulation, the industry is simply going to die.
Now, that's important because in the long term, the 20 to 50 year term,
shale causes America to be the Saudi Arabia of energy. If we consider
just oil, Saudi Arabia has the dominant amount of energy in the world.
But when we consider shale, the U.S. then becomes the dominant energy
producer, and yet we're killing that industry completely.
We're in the shape that we're in today because of our decisions over
the past 30 years. We chose not to build new refineries. We have chosen
not to have nuclear energy. We have chosen not to drill more in this
country, but instead, to restrict access on Federal lands, and so we
simply have a problem of tight supplies and high prices. And those are
going to continue for the foreseeable future.
Now, what does 2337 do regarding renewable energy? We hear our
friends on the other side of the aisle talk about the need for
renewables, but this bill begins to hurt the renewables. It begins to
restrict the renewable energy development, also. It just doesn't make
sense.
But we heard from four Democratic witnesses at one hearing that coal
cannot be a part of America's energy future if we're to combat global
warming, but according to the bill H.R. 2337, it's about the only
energy source left because of restricting oil and gas in 2337. We also
give deep restrictions onto the wind industry so that the Wind Energy
Association came out opposed to the bill saying it cripples our
industry.
The bill places new costs and restrictions on the solar industry,
requiring new labor provisions, per acre fees, and purchasing
restrictions. So this bill harms domestic oil and gas production,
reducing domestic production, increasing our reliance on foreign oil,
but it also begins to limit our development of the alternative energy
sources, but even worse, the most restrictive thing for alternatives is
that there were corridors that were implemented in the Energy Policy
Act of 2005. Those corridors recognize that places where renewables are
created are not where the population is generally. New Mexico is one of
the few States that would be self-sufficient on wind, yet we can't
consume all of the wind energy that we would produce there. And so
there were corridors that were lined up to take the renewables from
where they're produced maybe in New Mexico to Los Angeles or New York,
wherever, and yet those energy corridors receive a death blow in this
bill, H.R. 2337, which again is passed out on pretty well party lines
and is coming to the floor of the House as a part of Ms. Pelosi's
energy package. And yet you have to ask, where is the energy in the
bill? Because I see where the limitations on oil and gas are; I see
where the limitations on shale are; I see where the limitations on wind
and solar are. Exactly where is the energy production going to come
from?
I guess with the carbon sequestration that is in the bill, to the
dismay of our friends on the other side of the aisle, it's going to
ensure that coal is our only source of fuel for the future. But they're
also trying to limit its use.
Finally, regarding royalties. This bill attempts to capture royalties
owed to the American Federal Government. Like the chairman, I strongly
believe that American taxpayers should receive the royalties that are
due. Nevertheless, we differ when it comes to the method of collection.
I support a Royalty in Kind program where we simply declare the
number of barrels produced. We can meter that, it's very easy. We don't
have to calculate the price because the price changes every day. And so
the take to the Federal Government changes every day if we're
contemplating dollars, but Royalty in Kind is very simple, but it also
puts a lot of accountants out of business, puts a lot of tax lawyers
out of business. And so we could call the provisions here where we kill
the Royalty in Kind program in 2337, the ``Tax Lawyer Full Employment
Act.'' Because that's what it's going to do, it's going to put people
in the courts saying, now exactly what was the price on November 7 of
2001 when you sold that gas? It would be so much easier just to take
the meter reading, take the government's percent, and put it into the
government's coffers.
In our legislative hearing on this bill, leading Members on the other
side of the aisle chastised our royalty regime saying it parallels
countries whose corrupt governments are blowing up the rigs. That was a
quote. Then they're moving to this country to exploit our low rates.
But how ironic is that? You wish for the U.S. to set an example for the
world on climate change, but want to follow the lead of Venezuela and
Nigeria on royalties.
I support increasing production that will bring good, safe jobs and
energy to America. I support efforts to keep the ``American take'' as a
portion of energy development to a reasonable level that ensures
companies have the money to provide safe working conditions, keep their
facilities up to date, and reinvest in development and exploration.
Finally, we had comments all through the time that the royalties
received by the U.S. Government are so much lower than Russia, so much
lower than Venezuela. Yet I would like to share a final chart with you
that shows some of the problems.
This picture is in Russia. And I will guarantee you that you will see
no oil field in America like this. The opponents on the other side of
the aisle of the level of royalties that we take currently simply want
to make a moral equivalency between the kind of government and
regulations that allow this, and the government and regulations in this
country which have produced one of the strongest energy economies in
the world, which have produced the most dramatic economy of American
exceptionalism in the world, and yet they're trying to unravel that and
undo that.
I would hope that we all would look at the energy suggestions from
our friends on the other side of the aisle, that we would carefully
evaluate the fact that the supply cannot keep up with the demand, that
prices are going to be high, and the supply is going to continue to be
tight unless we do something about it.
I thank the gentleman for yielding tonight and appreciate the
discussion on both what we've done in the past, and what we're looking
for in the future according to 2337.
Mr. TERRY. Well, I thank you for your input.
I just fear that the policies that we're looking at to adopt in this
Nation are going to jeopardize our security, jeopardize our future. We
need to look at a balance.
I appreciate you being here, and all of the others that came to
speak.
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