[Congressional Record Volume 154, Number 85 (Thursday, May 22, 2008)]
[Senate]
[Pages S4758-S4761]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENERGY SUPPLY
Mr. STEVENS. Madam President, this morning when I read the Wall
Street Journal, I was interested in this article: ``Energy Watchdog
Warns of Oil Production Crunch.'' This is the IEA, the International
Energy Agency, that makes estimates and keeps the world informed on the
status of energy supplies. The conclusion in this article is that the
demand for energy throughout the world continues to rise, but the
supply is flat.
I think there is no question that this is a problem this country
faces, the problem of supply. Too often people in the Senate are
unwilling to talk about the problem of supply. As a matter of fact, in
1995, President Clinton vetoed a bill that would have opened a very
small portion, about 2,000 acres, of the ANWR coastal plain, which is a
million and a half acres set aside for oil exploration. It would have
opened it to oil and gas development. That was shortsighted, a mistake,
and it has had a devastating effect on Americans.
As this article in the Wall Street Journal points out, it predicts
global demand for oil of 116 million barrels per day by 2030. Today the
world's demand is only 87 million barrels a day, and we are paying $135
for each of those barrels. As the demand continues to rise--and we know
it will--so will the cost. It will become higher and higher. This is
what I have been trying to say now for 20 years in the Senate. We
should be able to produce more of America's oil, and we import today 67
percent of our oil.
During the oil embargo in the 1970s, we imported about 34 percent. We
are almost totally dependent now on oil from offshore. American oil is
not available to this country. The alarming fact is, the military is
the largest consumer of oil in the country. It uses about 4.8 billion
gallons of oil per year. The problem really is, if we had an embargo
today, we could not sustain our military, let alone our essential
infrastructure. Our economy could not survive another embargo.
We need to realize we can produce American energy to meet our needs.
If we produce it over a period of years, the price will be stabilized.
The interesting thing is, on May 1--right here on the Senate floor--the
senior Senator from New York called drilling in the Arctic National
Wildlife Refuge ``plain wrong.'' He said it was an ``old saw.'' He said
the field's probable 1 million barrels a day would reduce gas prices
``only a penny a gallon.''
Then, on May 11, the Senator from New York, Mr. Schumer, said:
There is one way to get the price of oil down and it's two
words--Saudi Arabia. If they were to increase 800,000 barrels
per day, the price would come down probably 35 to 50 cents a
gallon. That's a lot.
Now, why would 800,000 barrels of Saudi oil reduce gas prices 50
cents a gallon and 1 million barrels of American-produced oil from our
State reduce the price at the pump only a penny?
As a matter of fact, the Senator from New York said this extra supply
from Saudi Arabia would probably reduce the price of a gallon of gas by
62 cents before it was all over. Imagine that: 800,000 barrels of oil
from Saudi Arabia could bring down the price of a gallon of gasoline by
62 cents. There is an absolute inconsistency with what the Senator from
New York has told the Senate. I find that appalling on a thing such as
the oil supply now, in view of the price of gasoline for Americans at
the pump. They are paying the price because of President Clinton. They
are paying the price because of stubborn opposition to develop the
resources in my State.
Now, they tell us that drilling in the arctic could harm the Arctic
Wildlife Refuge. It will not. As a matter of fact, the land we are
going to develop was set aside in the act of 1980, a million and a half
acres in the Arctic Plain, so it could be explored. It will not be part
of the Arctic Wildlife Refuge until the exploration and development of
that area is over.
I think there is no question we have to find a way to have the
Members of this body make up their minds: What is the problem America
faces today? It is supply. Our demand is increasing, like the rest of
the world, but we do not have an American supply of oil. Off our
shores, and in the deep water off Alaska, there is a bountiful supply
of oil. We have two-thirds of the Continental Shelf of the United
States, and there is only one well on that two-thirds of the
Continental Shelf.
If you look over to the other side of the Bering Straits in Russia--
Russia, which was a net importer of oil just 20 years ago, now is a net
exporter of oil. Why? Because they developed the OCS off their shores.
They now have a strong economy in Russia. Why? Because they do not
export petrodollars anymore. They use money in their own country to
finance development in their own country.
We have to make up our minds whether we are going to face blind
opposition, incorrect, and uninformed opposition, or whether we are
going to take the actions needed to develop American oil to meet
American demand, and whether we are going to use the deep water off our
shores to produce oil as does the rest of the world.
Norway produces oil off their shores. Britain produces oil off their
shores. As a matter of fact, we produce oil off our southern shore, but
we are prevented from producing oil off our northern shore. It is
absolutely inconsistent and irrational what we are facing.
Our pipeline, at its peak, was transporting 2.1 million barrels of
oil to the west coast of the United States. Today, it is producing
about 700,000 barrels a day. It is two-thirds empty, in effect. It
would not need a new pipeline to carry the oil that would be produced
in ANWR. It is there. It could carry more than 1 million barrels a day
easily. Yet it has been opposed. It has been opposed for over 20 years,
by the same irrational people who come to the floor and say: Oh, oh,
Saudi Arabia, produce more oil. Produce 800,000 barrels of oil a day,
and we can probably expect gas prices at the pump to come down 62
cents. But if you bring 1 million barrels of oil down from Alaska, it
is only going to affect the price by a penny.
I have to tell you, we have to have smarter energy solutions. I hope
the time will come when we have a rational debate on this floor. I am
reminded of that rational debate when we finally approved the
legislation that brought about the construction of the Alaska oil
pipeline in the 1970s. We waited 4 years for that pipeline to start
because of stubborn opposition from the extreme environmentalists. It
was finally overcome. That opposition was overcome by an act that was
started right here on the floor of the Senate, which closed the courts
of the United States to any further litigation over building that
pipeline.
We were just following the oil embargo. America realized we had to
have more American oil. There was no filibuster on this floor. The vote
was 49 to 49, and that tie was broken by the then-Vice President.
Now, what has happened? Why should every time we bring up ANWR we
have a filibuster? Why can't we bring to the American continent the
resources of the continent that happen to be in our State?
Mr. INHOFE. Madam President, will the Senator yield for a question?
Mr. STEVENS. Madam President, I am happy to yield to my friend.
Mr. INHOFE. Madam President, I say to the Senator, I do not want to
disrupt your line of thinking because I agree so much with you. But
every time I hear people talking about ANWR, and I hear people talking
about stopping any drilling or exploration in ANWR, it occurs to me,
here you are, the senior Senator from Alaska. You have been here for a
long time, and I have gone with you up to the area in which you
[[Page S4759]]
are talking about drilling. I have heard people compare that to a
postage stamp in a football field or something like that. It is a tiny
area up there.
The question I have is twofold. First of all, why is it that as near
as I can determine, people who live there all want to explore and
resolve this problem we have in this country by drilling and exploring
in ANWR? Who are we down here to tell them up in Alaska what is best
for them? That would be the No. 1 question.
Then, the second thing is, what I have observed, I say to the senior
Senator from Alaska, who has been here longer than I have, is that
every time this has come up--I came from the House to the Senate back
in 1995--now, on October 27, 1995, we voted 52 to 47, right down party
lines, to go ahead and start exploring in ANWR. All the Republicans
supported it. All the Democrats opposed it. Then, again, on November
17, 1995, the same thing happened: We voted to explore, the Democrats
voted against it.
Then, after all that work was done, the President--then-President
Clinton--on December 6, 1995, vetoed the bills that had this authority
we had given them to drill. Then the same thing--I could go on and on--
but in 2005, the same thing happened. The Senate voted on an amendment
to the budget resolution to strike the expansion of exploration in
ANWR. It failed by a vote of 49 to 51, right down party lines.
I guess the second question I would ask the Senator is, why is making
us self-sufficient a partisan issue? Why do the Democrats oppose it and
the Republicans support it?
Mr. STEVENS. I have to tell the Senator, that is comparatively new in
terms of my time in the Senate. When I first arrived here, there was
bipartisan support for producing American oil. We had a coalition with
Republicans and Democrats, and we worked with the administration,
whether it was Republican or Democrat, to find a way to bring more oil
on line, oil produced by Americans and consumed by Americans.
When the opposition started on a political basis, we were then
importing about 20 percent of our oil. As the opposition has continued,
as I said, we now import 67 percent. That money, which would have been
spent in this country producing millions of jobs, and putting people
into permanent jobs, long-term jobs, is going to all these countries
throughout the world because we do not have that investment. We have
now what we call petrodollars, and we have to send our exports overseas
to bring that money back.
This chart shows that 1 million barrels of imported oil cost the
American economy 20,000 jobs, and we are importing 14 million barrels a
day now.
So I tell the Senator, it is a recent phenomenon comparatively, and
it is partisan. It started with President Clinton.
Mr. INHOFE. Well, Madam President, I will only respond to say that is
my observation. I have not been here as long as the Senator has, but
every year since I have been here, we have had this vote, and the
people up there want us to drill, to explore, to produce.
I remember the argument against the Alaska pipeline. They said: Oh,
it is going to destroy the caribou. What it has done, if you go up
there, as I have been with you at any time during the summer months,
the warm months, the only shade the caribou can find is the pipeline.
You see them all out there. It has actually had the effect of
increasing the breed.
But anyway, I keep thinking, if we had followed through with what we
are talking about doing back in the middle 1990s, we would now be
producing our own energy, producing our own oil, and we would not have
these high prices at the pumps.
Mr. STEVENS. I thank the Senator very much.
I will close on this statement.
Madam President, I ask unanimous consent that the article from the
Wall Street Journal be printed in the Record. I would hope that the
Senate would pay attention to it.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From The Wall Street Journal, May 22, 2008]
Energy Watchdog Warns of Oil-Production Crunch
(By Neil King Jr. and Peter Fritsch)
The world's premier energy monitor is preparing a sharp
downward revision of its oil-supply forecast, a shift that
reflects deepening pessimism over whether oil companies can
keep abreast of booming demand.
The Paris-based International Energy Agency is in the
middle of its first attempt to comprehensively assess the
condition of the world's top 400 oil fields. Its findings
won't be released until November, but the bottom line is
already clear: Future crude supplies could be far tighter
than previously thought.
A pessimistic supply outlook from the IEA could further
rattle an oil market that already has seen crude prices
rocket over $130 a barrel, double what they were a year ago.
U.S. benchmark crude broke a record for the fourth day in a
row, rising 3.3% Wednesday to close at $133.17 a barrel on
the New York Mercantile Exchange.
For several years, the IEA has predicted that supplies of
crude and other liquid fuels will arc gently upward to keep
pace with rising demand, topping 116 million barrels a day by
2030, up from around 87 million barrels a day currently. Now,
the agency is worried that aging oil fields and diminished
investment mean that companies could struggle to surpass 100
million barrels a day over the next two decades.
The decision to rigorously survey supply--instead of just
demand, as in the past--reflects an increasing fear within
the agency and elsewhere that oil-producing regions aren't on
track to meet future needs.
``The oil investments required may be much, much higher
than what people assume,'' said Fatih Birol, the IEA's chief
economist and the leader of the study, in an interview with
The Wall Street Journal. ``This is a dangerous situation.''
The agency's forecasts are widely followed by the industry,
Wall Street and the big oil-consuming countries that fund its
work.
The IEA monitors energy markets for the world's 26 most-
advanced economies, including the U.S., Japan and all of
Europe. It acts as a counterweight in the market to the views
of the Organization of Petroleum Exporting Countries. The
IEA's endorsement of a crimped supply scenario likely will be
interpreted by the cartel as yet another call to pump more
oil--a call it will have a difficult time answering. Last
week, the Saudis gave President Bush a lukewarm response to
his plea for more oil, saying they were already adding
300,000 barrels a day to the market, an announcement that did
nothing to cool prices.
At the same time, the IEA's conclusions likely will be
seized on by advocates of expanded drilling in prohibited
areas like the U.S. outer continental shelf or the Alaska
National Wildlife Refuge.
The IEA, employing a team of 25 analysts, is trying to shed
light on some of the industry's best-kept secrets by
assessing the health of major fields scattered from Venezuela
and Mexico to Saudi Arabia, Kuwait and Iraq. The fields
supply over two-thirds of daily world production.
The findings won't be definitive. Big producers including
Venezuela, Iran and China aren't cooperating, and others like
Saudi Arabia typically treat the detailed production data of
individual fields as closely guarded state secrets, so it's
not clear how specific their contributions will be. To try to
compensate, the IEA will use computer modeling to make
estimates. It will also collect information gathered by IHS
Inc., a major data and analysis provider based in Colorado,
as well as the U.S. Geologic Survey, a smattering of oil and
oil-service companies, and national petroleum councils.
supply-side gloom
But the direction of the IEA's work echoes the gathering
supply-side gloom articulated by some Big Oil executives in
recent months. A growing number of people in the industry are
endorsing a version of the ``peak-oil'' theory: that oil
production will plateau in coming years, as suppliers fail to
replace depleted fields with enough fresh ones to boost
overall output. All of that has prompted numerous upward
revisions to long-term oil-price forecasts on Wall Street.
Goldman Sachs grabbed headlines recently with a forecast
saying that oil could top $140 a barrel this summer and could
average $200 a barrel next year. Prices that high would add
to the inflationary pressures weighing on the world economy
and to the woes of fuel-sensitive industries such as airlines
and autos.
The IEA's study marks a big change in the agency's efforts
to peer into the future. In the past, the IEA focused mainly
on assessing future demand, and then looked at how much non-
OPEC countries were likely to produce to meet that demand.
Any gap, it was assumed, would then be met by big
OPEC producers such as Saudi Arabia, Iran or Kuwait.
But the IEA's pessimism over future supplies has been
building for some time. Last summer, the agency warned that
OPEC's spare capacity could shrink ``to minimal levels by
2012.'' In November, it said its analysis of projects known
to be in the works suggested that the world could face a
shortfall by 2015 of as much as 12.5 million barrels a day,
unless there was a sharp drop in expected demand. The current
IEA work aims to tally the range of investments and projects
under way to boost production from the fields in question to
get a clearer sense of what to expect in production flows.
``This is very important, because the IEA is treated as the
world's only serious independent guardian of energy data and
forecasts,'' says Edward Morse, chief energy
[[Page S4760]]
economist at Lehman Brothers. Examining the state of the
world's big oil fields could prod their owners into
unaccustomed transparency, he says.
Some critics of the IEA, while praising its new study, say
a revision in the agency's long-term forecasting is long
overdue. The agency has failed to anticipate many of the big
energy developments in recent years, such as the surge in
Chinese demand in 2004 and this year's skyrocketing prices.
``The IEA is always conflicted by political pressures,'' says
Chris Skrebowski, a London-based oil analyst who keeps his
own database on big petroleum projects and is pessimistic
about supply. ``In this case I think they want to make as
incontrovertible as possible the fact that we are facing a
real crunch.''
U.S. Forecasts
The U.S. Energy Department's own forecasting shop, the
Energy Information Administration, has long stuck to the same
demand-driven methodology as the IEA, assuming that supply
will keep up with the world's growing hunger for oil. But the
U.S. agency also has embarked on its own supply study, which
it hopes to complete this summer. Like the IEA, its
preliminary findings are somewhat gloomy: They suggest daily
output of conventional crude oil alone, now about 73 million
barrels, will plateau at 84 million barrels, and that it will
take a significant uptick in production of nonconventional
fuels such as ethanol to push global fuel supplies over 100
million barrels a day by 2030.
``We are optimistic in terms of resource availability, but
wary about whether the investments get made in the right
places and at a pace that will bring on supply to meet
demand,'' says Guy Caruso, the U.S. agency's administrator.
In Paris, analysts at IEA also fret that a lack of
investment in many OPEC countries, combined with a diminished
incentive to ramp up output, casts serious doubt over how
much the cartel will expand its production in the future. The
big OPEC producers have been raking in record profits,
creating a disincentive in many countries to sink more
billions into increased oil production.
Meanwhile, politics and other forces are delaying projects
that could bring more oil on-stream. Continued fighting in
Iraq has stymied efforts to revive aging fields, while
international sanctions on Iran have kept investments there
from moving forward. Rebel attacks in Nigeria and political
turmoil in Venezuela have cut into both countries' output.
Big non-OPEC producers such as Mexico and Russia, which have
either barred or sidelined international operators, are
seeing production slump. The U.S., with a legal moratorium
barring exploration in 85% of its offshore waters, is
struggling to keep its output steady.
The IEA study will try to answer one question that bedevils
those trying to forecast future prices and the supply-demand
balance: How rapidly are the world's top fields declining?
The rates at which their production dwindles over time are a
much-debated barometer of the health of the world's oil
patch.
Depletion Rate
A study released earlier this year by the Cambridge Energy
Research Associates, a consulting firm and unit of IHS,
concluded that the depletion rate of the world's 811 biggest
fields is around 4.5% a year. At that rate, oil companies
have to make huge investments just to keep overall production
steady. Others say the depletion rate could be higher.
``We are of the opinion that the public isn't aware of the
role of the decline rate of existing fields in the energy
supply balance, and that this rate will accelerate in the
future,'' says the IEA's Mr. Birol.
Some analysts, however, contend that scarcity isn't the
issue--only access to reserves and investment in tapping
them. ``We know there is plenty of oil and gas resource in
the world,'' says Pete Stark, vice president for industry
relations at IHS. He says the difficulties of supply aren't
buried in oil fields, but are ``above ground.''
Mr. Morse at Lehman Brothers notes that there are plenty of
questions about supply yet to be answered. ``However
confident the IEA may be about the data it has, they know
nothing about the resources we've yet to discover in the deep
waters or in the arctic,'' he says.
Mr. STEVENS. Madam President, I do thank the Chair for her patience.
Let me do one last thing.
(The remarks of Mr. Stevens pertaining to the submission of S. Res.
575 are printed in today's Record under ``Submitted Resolutions.'')
Mr. STEVENS. I thank the Chair for her patience and yield the floor.
The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
Mr. INHOFE. Madam President, first of all, let me thank the Senator
from Alaska. This is a frustration I have felt for so long: that it is
not just that right down party lines we are not able to produce in
ANWR, but also it goes offshore. We have tried, on the Republican side,
to do something about increasing the supply--by drilling in Alaska, by
going at the tar sands, and I am sure the Senator from Colorado will
talk a little bit about shale out in the western part of his State and
in my State of Oklahoma, trying to give tax incentives for the
production at marginal wells, which are wells that produce under 15
barrels of oil a day.
I can give a statistic that I do not have to back up because it has
never been refuted. If we had all the marginal wells flowing today that
have been shut down in the last 10 years, it would amount to more than
we are currently importing from Saudi Arabia.
So I think it is very arrogant, when you have two hard-working
Senators and one Member of the House from Alaska who want very much to
do what 100 percent of the people want to do in Alaska; that is, to
improve their economy by producing cheap oil for us domestically so we
can bring down the price of gas, when they will not allow us to do it.
Let me make one comment. I am going to be joined by the Senator from
Colorado. I want to touch upon one other area.
If we had been and would be successful in being able to drill more
oil domestically so we can bring down the price of gas, no matter how
much we produced, it can't go into the gas tank until it has been
refined. So refining capacity is something that is very critical in
this country. Again, right down party lines, they have prevented us
from having that refinery capacity.
Three different times I had on the floor a bill called the Gas Price
Act. All it was was a bill to start building refineries in America. It
has been 30 years; 1976 was the last refinery we had in America. What
we need to do is start building refineries. Well, with the BRAC
process--and for those of you who come from States that don't have any
military operations, you may not know what this is, but the BRAC
process is the Base Realignment and Closure Commission. That is where
you go through an independent entity to determine which of the military
installations should be shut down. Of course, when you shut down a
military installation, it is economically devastating to the adjoining
communities.
With the Gas Price Act, what we have done is provide that if you have
been shut down as a military installation, we could provide assistance
through the Economic Development Administration for cities--if they are
so inclined--to make applications so that they can turn these closed
bases into refineries.
I thought when we developed this thing that it wouldn't be a problem
at all because no one should be against it. Everyone knows we have to
increase our refining capacity. We offered amendments on this bill to
streamline the process.
Also, if people changed their minds in communities, they would be
able to stop this from taking place. States have a significant, if not
dominant, role in permitting existing or new refineries. Yet States
face particularly technical and financial constraints when faced with
these extremely complex facilities. So my Gas Price Act requires the
administrator to coordinate and concurrently review all permits with
the relevant State agencies to permit refineries. This program does not
waive or modify any environmental law and consequently should not have
had anyone in opposition to it.
Now, we brought it twice to the floor--three times to the floor and
twice we had votes--and right down party lines, every Democrat voted
against the Gas Price Act. All we wanted to do, along with the local
governments and local communities, was to build refineries so that we
could refine what will hopefully be someday an increase in capacity so
we will not be reliant upon foreign countries for our ability to run
this machine called America, but we would be able to produce our own
energy.
I think it is important that every time we talk about increasing
production, which we just have to do, we also have to talk about the
refining capacity. We are all ready to go, I say to my good friend from
Colorado, with the Gas Price Act if we are able to move in that
direction.
I believe that over the Memorial Day recess, when everybody is out
there driving and people are much more sensitive to the price of gas,
they are going to look back and say: You know, maybe the Republicans
were right all of those years; maybe we should be increasing our
supply, as the Senator from Alaska put it, of gasoline and oil produced
in America.
[[Page S4761]]
I yield the floor.
The PRESIDING OFFICER. The Senator from Colorado is recognized.
Mr. ALLARD. Madam President, I wish to thank the Senator from
Oklahoma on this particular issue. I also wish to thank the last
speaker, Ted Stevens of Alaska, for his leadership in making sure we
have adequate energy for the American people. Right now, we are falling
short. The reason for that is this Congress. It is not business where
we should assert blame; it is not the stock markets we have heard
blamed on this floor, or the futures market. It is simply because
Congress has been tying up these reserves and not providing the
incentives we need to move ahead with oil refineries and to make
supplies available on the market.
This is a supply-and-demand issue. The demand in this country is
exceeding the supply. If we want to become less dependent on foreign
oil, we need to do more than what we have done historically.
(The remarks of Mr. Allard pertaining to the introduction of S. 3062
are printed in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
Mr. ALLARD. Madam President, I yield the floor.
The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
Mr. INHOFE. Madam President, first of all, I agree wholeheartedly
with the comments and the legislative ideas my friend from Colorado
has. Again, it is a great frustration that we have tried so hard for so
many years to expand our supply here in this country. Hopefully, now,
one of the benefits we will get from the high price of fuel is the
recognition that we have to start producing our own energy in this
country. That is what we should be doing.
Hopefully, after this holiday, when we get back, enough people will
have spent enough money driving around and there will be enough
political pressure that we can get people to agree to start drilling in
ANWR, drilling offshore, drilling in the shale area, and experimenting
in some of these areas where we could become totally self-sufficient in
America.
____________________