[Congressional Record (Bound Edition), Volume 147 (2001), Part 3]
[Senate]
[Pages 3847-3852]
[From the U.S. Government Publishing Office, www.gpo.gov]



                                 ENERGY

  Mr. MURKOWSKI. Mr. President, I call the attention of my colleagues 
to a release by OPEC on Friday where OPEC indicated it was cutting the 
production of oil approximately 1 million barrels a day, to 
approximately 24.2 million barrels a day. This follows a cut in 
February of 1.5 million barrels a day. I am sure many will not reflect 
on the significance of this action, but as we go into the summer 
season, the realization, again, that we are dependent on OPEC warrants 
a little consideration this afternoon.
  Many people forget that in 1973, when we had the Arab oil embargo and 
the Yom Kippur war, we were approximately 37 percent dependent on 
imported oil. Today we are 56 percent dependent on imported oil.
  It is not that there is necessarily a shortage of oil in the world, 
but because of our increased dependence on OPEC and their awareness 
that they are better off tightening up the supply and keeping the price 
high, we have seen a rather curious and significant effect associated 
with our dependence on OPEC and our economy.
  What has happened is the OPEC nations have decided it is better to 
curtail the supply and keep the price high than to continue to produce 
oil. As a consequence, we are seeing fourth quarter earnings of the 
Fortune 500 dramatically affected by the cost of energy, and 
particularly oil. It is estimated that in the last 18 months, one of 
the major contributors to a decline in our economy, and hence a decline 
in the stock market, is the cost of energy.
  We have seen OPEC operate over the years in a rather undisciplined 
fashion. That has changed dramatically. Today we see an organized OPEC, 
a group of countries that actually set a cartel in the sense of setting 
a price, something that would be inappropriate and subject to antitrust 
laws in the United States. They got together and decided they were 
going to maintain a floor and ceiling on the price of oil. That floor 
was going to be about $22, and the ceiling was going to be about $28. 
So each time the price begins to fall, OPEC reduces its supply. As a 
consequence, we are seeing oil prices now about $25 a barrel. About 18 
months ago, we were seeing oil prices at $10 a barrel.
  OPEC fears, obviously, any slowdown in economic growth that will lead 
to an oil glut, so they simply reduce the supply. Any reduction in 
world supply does affect our economy as well as the world's economy and 
makes higher prices for energy.
  There are those who suggest there might be another OPEC cut on the 
horizon that might be up to 2 million barrels per day if a continued 
slowdown in the economy actually prevails.
  What does this mean for the American consumer? The Energy Information 
Agency predicts that prices of gasoline this summer may run from $1.60 
to as high as $2.10 a gallon for the rest of this year. The reason for 
that, obviously, is supply and demand: our increasing demand and our 
increasing dependence on imports.
  I indicated we were looking at about 56 percent dependence on OPEC, 
but it gets worse. The Department of Energy has suggested that by the 
year 2004 to 2005--somewhere in that area--we will be close to 60 
percent dependent. In the year 2010, we will be somewhere in the area 
of 65 percent dependent.
  What we really have to do is begin to spotlight how we can decrease 
our dependence on imported energy supplies,

[[Page 3848]]

reduce reliance on foreign oil imports. That is rather amusing to me as 
we look at the facts associated with what is happening in our economy 
and the energy crisis that, for all practical purposes, with the 
exception of what is happening in California, we have chosen to ignore, 
in spite of the fact that last week the Wall Street Journal came out 
with an article indicating that the State of New York will have to 
increase its production generating capacity of energy somewhere in the 
range of 25 percent in the next year to avoid brownouts, blackouts, and 
shortages.
  It is a funny thing because unless the wheel really squeaks, we do 
not maintain any attention to take the necessary steps to avoid that. 
We just simply assume it will not happen or it probably will occur on 
somebody else's watch or somehow we will get through.
  Let me share with you what has changed. In 1988, U.S. consumption of 
oil was 13.2 million barrels a day. In January of this year, it was 
14.6 million barrels a day. Consumption has gone up dramatically--
roughly 1.3 million barrels a day.
  The offset to that is production. What is our production in the 
United States? Our production in 1988 was 8.1 million barrels, and it 
has dropped. In January, production in the U.S. was 5.9 million barrels 
a day. We are down over 2 million barrels of U.S. daily production. 
That equates, obviously, to a dependence on more imports.
  What are our imports? In 1989, they were 5.1 million barrels a day. 
In January of this year, they were 8.6 million barrels a day. So 
approximately 3.35 million barrels a day more is imported into this 
Nation than back in 1998. As I indicated, our foreign dependence in 
1998 was about 39 percent; today it is 59 percent. The price of crude 
oil in 1998 was $18 compared to $29, $27 today. Adjusted for inflation 
for the year 2001, that is $26 vis-a-vis $35 a day. That is what has 
changed.
  Let's talk a little bit about the national security interests of this 
country. I said many times on this floor it is rather ironic we should 
have a foreign policy that depends to a significant degree on imported 
oil from Iraq, our good friend Saddam Hussein. We fought a war in 1991. 
We lost 147 lives. We had 437 wounded, 23 taken prisoner. I don't want 
to even estimate the cost to the American taxpayer. That was a war over 
oil. Make no mistake about it. It was to ensure that Saddam Hussein did 
not invade Kuwait and go on into Saudi Arabia and control the world's 
supply of oil. We fought that war. We won that war.
  But what are we doing today? We are importing 750,000 barrels of oil 
from Iraq, our good friend Saddam Hussein. Isn't that ironic?
  Let me go a step further. It gets worse. We have flown 234,000 
individual sorties--airplane flights to enforce the no-fly zone over 
Iraq--since 1992. What are we doing? One could simplify the debate and 
suggest we are taking that 750,000 barrels of oil, putting it in our 
airplanes, and then bombing.
  Let's go a little further. What is he doing with the money we pay for 
that oil? He is taking care of his Republican Guards. No question about 
that. Then instead of taking care of the needs of his people, he is 
developing a missile delivery capability of biological and chemical 
capability. At whom is he aiming? One of our greatest allies--Israel. 
Maybe I am oversimplifying that, but if you boil it down, that is what 
it amounts to. Rather ironic. We just seem to shrug our shoulders and 
say that is the way it is.
  I will ask the question of our national security interests. At what 
point do we reach a degree of dependence on imports where we compromise 
our national security?
  There was a report prepared a few weeks ago by the Center for 
Strategic and International Studies. It took about 3 years to complete 
that report. It launched its strategic energy initiatives and began to 
examine at what point we began to compromise our national security. The 
bottom line is we are already there.
  Some of the highlights of this report deserve some examination. The 
report assesses the international energy supply and demand relationship 
likely to prevail in the first two decades of the 21st century--in 
other words, the next 20 years--and is identifying what effect it will 
have on global markets between 2000 and 2020 in that study. The energy 
outlook to 2020 is not very bright. It suggests during the next 20 
years, provided there is no extended global economic dislocation, 
energy demand is projected to expand more than 50 percent. Further, it 
states the growth will be unevenly distributed with demand increasing 
in the industrialized world by some 23 percent while more than doubling 
from a much lower base in the developed world, with Asia accounting for 
the bulk of the increase. It is not just the United States. We think 
the world revolves around us. There are developing nations; there is 
China.
  Further, it states that central to the geopolitics of energy is the 
fact that energy demand will be met in essentially the same way it was 
met at the end of the 20th century, fossil fuels--mainly oil--providing 
the bulk of global energy consumption, rising marginally from 86 
percent in 2000 to an 88-percent share in 2020.
  And oil will dominate global energy use. They identify from where the 
oil will come. The Persian Gulf will remain the key marginal supplier 
of oil to the world markets, with Saudi Arabia in an unchallenged lead, 
and if estimates are correct, the Persian Gulf will expand oil 
production during that time of 2000 to 2020. That is from where it will 
come.
  It further states that U.S. net imports will continue their steady 
growth. It further states that electricity will continue to be the most 
rapidly growing sector of energy demand in developing countries in 
Asia, central South Africa, and South America showing the greatest 
increase.
  Then it goes into the geopolitics--this is on what every member of 
this body should reflect--the continuing domestic fragility of key 
energy producing states. We will be relying on oil from unstable 
countries and regions throughout much of the century. By the year 2020, 
fully 50 percent of the estimated total global oil demand will be met 
from countries that pose a high risk of internal instability.
  Further, the growing fact of nonstate actors will be evident in three 
distinct areas: First, employing new information technologies, 
nongovernment organizations--NGOs will play a growing role in defining 
the ways energy is produced and consumed. Second, terrorist groups, 
with access to the same technologies, will be in a position to inflict 
greater operational damage on increasingly complex energy 
infrastructures. Radical activists will be in a position to disrupt 
operation infrastructures through cyberterrorism. The potential for 
armed conflict in energy-producing nations will remain high.
  I recommend each member review this CSIS report because it stresses 
the vulnerability of the United States to increasing dependence on 
energy.
  I conclude with one reference. A number of my colleagues are on a 
bill to put an area known as ANWR, in my State of Alaska, into a 
wilderness. We have a chart showing a map of the area in question. It 
is appropriate to recognize a few facts. They are often misstated. ANWR 
is 19 million acres. ANWR is not at risk because ANWR has already been 
foreclosed into a wilderness in this area, 8.5 million acres, and 9 
million acres is set off as a refuge and is an undisturbed area. There 
is a village, Katovik, with 227 people. There are people in it who live 
their lives there. We have a picture of the village. You can see the 
ocean, the radar, the village homes, the airport, and so forth. My 
point in bringing this up is to shatter the myth that somehow this is 
an unoccupied area.
  It is beyond my comprehension why some Members would object to our 
energy bill, which has ANWR in it as a relief, if you will, to reduce 
our dependence. I ask unanimous consent to speak for 5 more minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. MURKOWSKI. In conclusion, let me bring up the reality that we 
have an energy bill that is about 303 pages long. It covers increasing 
energy efficiency, alternate fuels, and increasing

[[Page 3849]]

our own domestic resources. It seems that all the interested parties, 
including the media, are concerned with one small portion, and that is 
the portion that suggests we reduce our dependence on imports and 
imported energy. That is one of the objectives in the bill--to reduce 
our imports of foreign energy to less than 50 percent by the year 2010.
  To get back to this area, because it is the area of dispute, we are 
looking at a lease-sale in this coastal plain. The reason that is the 
area is that it is estimated approximately 10 billion to 16 billion 
barrels of oil are mainly in this area. If it is within the estimate of 
16 billion barrels, it will be the largest oilfield found in the world 
in the last 40 years.
  Here is Prudhoe Bay, which has been 20 percent of America's 
production for the last 27 years, and the pipeline, 800 miles long, 
traverses this area. There are some in this body who want to put it 
into wilderness. Some are proposing they filibuster the bill. That is 
like fiddling while Rome burns.
  We have an energy crisis in this country. We are looking for relief. 
We have an area where we have identified a significant likelihood of a 
major discovery that would relieve our dependence on imported oil, and 
some Members want to put it into wilderness, some Members want to stop 
discussion of the bill, some Members want to filibuster. When will we 
learn from experience? The experience is, if you are looking for oil, 
you go where you are most likely to find it. The geologists tell us 
this is the place. The infrastructure and an 800-mile pipeline are 
already there. But the environmentalists say no. They don't have any 
scientific evidence to suggest it cannot be done, they simply say no 
because it gives them a cause, membership dollars, and so forth.
  People are concerned about the caribou. Here is a picture of the 
caribou. You have seen it before, Mr. President. They are wandering 
around Prudhoe Bay, they are not disturbed, they are very comfortable. 
These are real, Mr. President, they are not stuffed.
  I can show you another picture. This happens to be 3 bears going for 
a walk. They happen to be walking on a pipeline because it is easier 
than walking in the snow. There is a compatibility here. I am not 
suggesting there is not change, but I am suggesting we have the 
technology to do it safely.
  Here is a chart with the new technology. This came out of the New 
York Times science section. This shows how drilling occurs today, with 
3-D seismic. You can directionally drill and find these pockets of oil.
  Lastly, the technology of how it is done with the ice roads. We 
develop no gravel roads. We put down chipped ice. This is a platform in 
Prudhoe Bay area, but it is the same in the ANWR area. You can see 
cars--not cars, these are pickup trucks, traversing to supply this. 
When this is gone, what you will see in the 2\1/2\ months of summer is 
a picture looking like this. That is the technology. There is 
absolutely no scientific evidence to suggest we cannot do it safely.
  Finally, do we really care where our energy comes from? Virtually all 
the oil produced in Alaska is consumed in California, Washington, and 
Oregon. If it does not come from Alaska, they are going to get it. Do 
you know where it is going to come from? It is going to come in foreign 
ships, because every single drop of oil that moves from Alaska has to 
flow in a vessel owned by a U.S. company with U.S. crews, built in a 
U.S. shipyard, because that is what the Jones Act mandates regarding 
the movement of goods and services between two American ports.
  California should concern itself, and so should Washington, because 
otherwise that oil will be coming in in foreign vessels, owned by 
foreign companies that do not have the deep pockets of an Exxon-Valdez.
  I will be talking about this at other times, but I implore my 
colleagues to reflect on reality. We have some relief here if we have 
the gumption and commitment to recognize the scientific capability and 
technology that we now have to do it right.
  Mr. President, I ask unanimous consent the portion of the executive 
summary of the CSIS study on the vulnerability of this Nation to 
imported energy be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                           Executive Summary

       The Center for Strategic and International Studies (CSIS) 
     launched its Strategic Energy Initiative (SEI) in mid-1998 on 
     the premise that the benign global energy situation that had 
     prevailed since the late 1980s masked two dangers.
       First, it obscured significant geopolitical shifts both 
     ongoing and forthcoming that could affect future global 
     energy security, supply, and demand.
       Second, it led to complacency among policymakers and the 
     public about the need to incorporate long-term global energy 
     concerns into near-term foreign policy decisions.
       By midyear 2000 the state of the world oil market had 
     undergone considerable turbulence, marked by rapidly rising 
     oil prices as oil-exporting countries were benefiting from 
     staged reductions in production that had been initiated more 
     than two years earlier. The delicate balance between supply 
     and demand was demonstrated once again.
       Instead of dwelling on the oil market turbulence in 2000, 
     however, this report assesses the international energy 
     supply-and-demand relationships likely to prevail in the 
     first two decades of the twenty-first century, highlighting 
     the different ways that geopolitical developments could 
     affect global energy markets between 2000 and 2020. In light 
     of the world's future energy needs, this report series also 
     points out the contradictions inherent in certain of the 
     energy objectives and foreign policies pursued by the United 
     States and other Western governments. Finally, the report 
     offers policy considerations that, if implemented, could help 
     ensure that energy supplies are adequate to meet projected 
     worldwide demand, are not excessively vulnerable to major 
     interruptions, and are produced in ways that minimize damage 
     to the environment.
       It may appear that parts of this assessment are unduly 
     pessimistic, that positive factors have been overlooked. 
     These SEI assessments do stress prospects for instability and 
     for interference in energy supplies, but only to alert 
     policymakers about the fragility of reliable and timely 
     supplies.


                         energy outlook to 2020

       During the next 20 years, providing there is no extended 
     global economic dislocation, energy demand is projected to 
     expand more than 50 percent. This growth will be unevenly 
     distributed, with demand increasing in the industrialized 
     world by some 23 percent while more than doubling, from a 
     much lower base, in the developing world, with Asia 
     accounting for the bulk of this increase. At some point 
     during this period, the developing world will begin to 
     consume more energy than the developed world. Energy supply 
     will need to be expanded substantially to meet this demand 
     growth. Although the Persian Gulf will remain the key 
     marginal oil supplier, all producing countries must 
     contribute to supply to the extent they can.
       Central to the geopolitics of energy during 2000-2020 is 
     the fact that energy demand will be met in essentially the 
     same ways as it was met at the end of the twentieth century. 
     Fossil fuels will provide the bulk of global energy 
     consumption, rising marginally from an 86 percent share in 
     2000 to an 88 percent share in 2020. Although oil will 
     dominate global energy use and coal will retain its central 
     role in electricity generation, natural gas use will increase 
     noticeably. Indeed the relative contributions of oil and coal 
     to world energy consumption will actually decline whereas 
     only natural gas will demonstrate a growth in both absolute 
     and relative terms. Nuclear power will decline in both 
     relative and absolute terms; renewables, including 
     hydropower, and alternative energy sources, while growing in 
     absolute terms, will not capture a greater relative share of 
     the market.
       Development of oil and gas reserves is judged sufficient to 
     meet projected global demand well beyond this period. The 
     most noticeable trend during 2000-2020 will be the growing 
     mutual dependencies between energy suppliers and consumers. 
     Key aspects of this trend, which are set out below, may 
     appear rather obvious--and they are; how to respond in 
     today's changing environment is much less so.
       The Persian Gulf will remain the key marginal supplier of 
     oil to the world market, with Saudi Arabia in the 
     unchallenged lead. Indeed, if estimates of future demand are 
     reasonably correct, the Persian Gulf must expand oil 
     production by almost 80 percent during 2000-2020, achievable 
     perhaps if foreign investment is allowed to participate and 
     if Iran and Iraq are free of sanctions.
       While the Persian Gulf's share of world oil production 
     continues to expand, the share of North America and Europe, 
     the world's most stable regions, is projected to decline.
       The share of world oil production from the Soviet Union is 
     projected to increase from 9 percent to almost 12 percent. 
     But, as had been the case in earlier years, this oil will 
     follow the market, not attempt to lead it.

[[Page 3850]]

       The Caspian oil contribution to world supply will be 
     important at the margin but not pivotal.
       Asian dependence on Persian Gulf oil will rise 
     significantly, and the resulting necessity for longer tanker 
     journeys will put more oil at risk in the international sea 
     lanes.
       European dependence on Persian Gulf oil will remain 
     significant.
       The European need for natural gas will be covered by a 
     handful of suppliers, Russia being the most significant, 
     which underscores a worrisome dependency.
       U.S. net oil imports will continue their steady growth.
       Anticipated growth in the use of natural gas--in 
     considerable part engendered as a fuel for electric power 
     stations--raises a new series of geopolitical issues, leading 
     to new political alignments.
       Electricity will continue to be the most rapidly growing 
     sector of energy demand; developing economies in Asia and in 
     Central and South America will show the greatest increase in 
     consumption. The choice of primary fuel used to supply power 
     plants will have important effects on the environment.
       Technological change and improvements in energy efficiency 
     have made their mark on recent energy supply-and-demand 
     balances. Future energy supply and demand must reflect not 
     only a continuation of these successes but an acceleration 
     wherever possible.


            geopolitics and energy: a symbiotic relationship

                  How Might Geopolitics Affect Energy?

       Four main geopolitical trends are likely to influence 
     energy supply and demand during the years ahead.
       The continuing domestic fragility of key energy-producing 
     states. The world drew some portion of its energy supplies 
     from unstable countries and regions throughout much of the 
     twentieth century. By 2020, fully 50 percent of estimated 
     total global oil demand will be met from countries that pose 
     a high risk of internal instability. A crisis in one or more 
     of the world's key energy-producing countries is highly 
     likely at some point during 2000-2020.
       Globalization. Economic globalization will impose new 
     competitive and political pressures on many of the world's 
     leading energy producers and consumers. It will serve as a 
     spur for growth in global energy supply and demand. It could 
     also lead to serious swings in energy prices and demand 
     because country-specific or regional recessions or other 
     influencing events can now be transmitted quickly around the 
     world. In such a globalized world, energy producers and 
     consumers will become ever more sensitive to their mutual 
     interdependence.
       The growing impact of nonstate actors. This impact will be 
     evident in three distinct areas. First, adroitly employing 
     new information technologies, non-governmental organizations 
     (NGOs) will play a growing role in defining the ways that 
     energy is produced and consumed. Second, terrorist groups, 
     with access to the same technologies, will be in a position 
     to inflict great operational damage on increasingly complex 
     energy infrastructures. Third, radical activists will be in a 
     position to disrupt operational infrastructure through 
     cyberterrorism.
       Conflict and power politics. The potential for armed 
     conflict in energy-producing regions will remain high. Early 
     in the twenty-first century, as a result, a weakening of U.S. 
     alliance relationships in Europe, the Persian Gulf, or Asia 
     could have major impacts on global energy security. U.S. 
     concerns over the proliferation of weapons of mass 
     destruction (WMD) and the desire to promote democratization 
     and market liberalization around the world will also have a 
     significant effect on key energy exporters. The future 
     viability of the energy-producing states in the Caspian and 
     Central Asia will be shaped by the competing objectives or 
     interests of Russia, the United States, and adjacent regional 
     powers.

                  How Might Energy Affect Geopolitics?

       There are five main ways in which energy may affect 
     geopolitical outcomes:
       Swings in energy demand. A dramatic decline in global 
     energy consumption, brought on by economic recession, could 
     trigger instability in many of the world's major energy-
     exporting countries. Conversely, continued economic growth, 
     accompanied by rising energy demand, would place more power 
     in the hands of the exporters.
       Swings in energy supply. Just as demand is vulnerable to 
     sharp shifts up or down, so is supply. If discovery and 
     development of new reserves and the addition of producing 
     capacities match demand growth, an acceptable balance between 
     supply and demand can be maintained. But a number of factors 
     must be satisfied if supply growth is to be encouraged, 
     including an attractive host-country investment climate and 
     the opportunity for acceptable investment returns. At the 
     same time, political events and logistical interruptions can 
     interfere with supply.
       Competition for energy in Asia. As countries in Asia seek 
     to secure growing levels of energy imports, two geopolitical 
     risks emerge. First, historical enmities might boil over into 
     armed conflict for control of specific energy reserves in the 
     region. Second, the rising dependence of China on Persian 
     Gulf oil could well alter political relationships within and 
     outside the region. For example, China might seek to build 
     military ties with energy exporters in the Persian Gulf in 
     ways that would be of concern to the United States and its 
     allies.
       Energy and regional integration. Energy infrastructure 
     projects may serve to strengthen bilateral economic and 
     political ties in certain instances. In Asia, for example, 
     energy networks, along with trade liberalization, could serve 
     to reduce historical tensions and place Asian economic growth 
     on a firmer footing. Similar forces might come into play in 
     Europe, linking Russia to the European Union (EU); in South 
     Asia, drawing Bangladesh and India closer together; and in 
     the Far East, linking Russia and China.
       Energy and the environment. Environmental concerns will 
     have an increasingly important geopolitical bearing on energy 
     decisionmaking by governments, by producers, and by consumers 
     in the next decades. Should governments pursue aggressive 
     strategies for reducing carbon emissions, a new political 
     fault line could emerge between developed and developing 
     countries.


                policy contradictions and considerations

       The interplay of geopolitics and energy early in the 
     twenty-first century is at the root of an array of complex 
     policy challenges that governments around the world must now 
     confront. The three interlocking policy challenges are to 
     ensure that (1) in the long term, supplies will be adequate 
     to meet the world's energy needs; (2) in the short term, 
     those supplies are reliable and not subject to serious 
     interruptions; and (3) at all times, energy is produced and 
     consumed in environmentally acceptable ways.

                          Energy Availability

       U.S. policy today contains a fundamental contradiction. Oil 
     and gas exports from Iran, Iraq, and Libya--three nations 
     that have had sanctions imposed by the United States or 
     international organizations--are expected to play an 
     increasingly important role in meeting growing global demand, 
     especially to avoid increasing competition for energy with 
     and within Asia. Where the United States imposes unilateral 
     sanctions (Iran and Libya), investments will take place 
     without U.S. participation. Iraq, subjected to multilateral 
     sanctions, may be constrained from building in a timely way 
     the infrastructure necessary to meet the upward curve in 
     energy demand. If global oil demand estimated for 2020 is 
     reasonably correct and is to be satisfied, these three 
     exporters should by then be producing at their full potential 
     if other supplies have not been developed.
       History has demonstrated that unilateral sanctions seldom 
     are successful in persuading nations to alter their behavior. 
     Multilateral sanctions provide a broader front and a greater 
     guarantee of success. Multilateral sanctions test the ability 
     and willingness of enforcing nations to hold together for the 
     duration, however, while both multilateral and unilateral 
     sanctions are viewed as targets of opportunity for the 
     entrepreneurial trader.
       Western governments should avoid the indiscriminate use of 
     sanctions. The value of multilateral sanctions should be 
     weighed against the value of engagement and dialogue. When 
     the use of sanctions is deemed admissible in the support of 
     international interests, governments should adopt a graduated 
     approach and make every effort to ensure that the coverage of 
     the sanctions is as targeted as possible. This should include 
     a cost-benefit analysis of whether curtailing investment in, 
     or revenue from, energy production will genuinely dissuade 
     the target government from the specific behavior that 
     provoked the imposition of sanctions.
       Despite a limited success record, sanctions will continue 
     to be used as a tool of foreign policy--as a means of 
     rejecting the conduct of a particular nation--simply because 
     there are no acceptable alternative courses of action. The 
     world will have to live with the inherent limitations of the 
     sanctions.
       Policy consideration: Avoid the indiscriminate use of 
     sanctions. The value of multilateral sanctions should be 
     weighed against the value of engagement and dialogue. When 
     the use of sanctions is deemed admissible in the support of 
     international interests, ensure that the coverage of 
     sanctions is as targeted as possible. Unilateral sanctions 
     are not an effective policy tool.
       A similar contradiction exists in U.S. policy toward the 
     Caspian region and Central Asia, where the United States is 
     committed to reinforcing the newly independent states but 
     where contrasting U.S. policies toward Iran, Turkey, and 
     Russia are likely to influence, rightly or wrongly, the 
     construction of commercially viable pipelines for the export 
     of Caspian oil and gas. A policy approach that ties exports 
     primarily to one pipeline route--with the goal of avoiding 
     Iran and Russia as transit states--before the political and 
     economic viability of that route is known may undercut the 
     pace of energy development in the region, to the dismay of 
     both producing states and potential transit states.
       Oil and gas exports from the Caspian region and Central 
     Asia hold the prospect of becoming a valuable additional 
     source of energy supply. Even as the U.S. government works to 
     make feasible an East-West transportation corridor that 
     bypasses Russia and Iran, the United States should not 
     obstruct

[[Page 3851]]

     the development of alternative routes that would ultimately 
     offer exporters a diverse and economically attractive set of 
     options for transporting oil and gas to foreign markets, 
     especially those markets in Asia and the Far East.
       Policy consideration: Do not obstruct the development of 
     economic routes that would ultimately offer Caspian and 
     Central Asian exporters a diverse set of options for 
     transporting oil and gas to foreign markets.
       Beyond these contradictions, if Western governments are to 
     ensure adequacy of supply early in the twenty-first century, 
     policies must be framed toward encouraging energy-producing 
     countries to open their energy sectors to greater foreign 
     investment. This would include provisions for the enforcement 
     of contracts, guarantees for private property, anticorruption 
     measures, and stable fiscal regimes. Increased private 
     investment must occur as early as possible in exploration and 
     production facilities and in transportation infrastructure, 
     especially in Asia, if the world's energy supplies are to 
     reach markets in sufficient quantities during the 2010-2020 
     period.
       Policy consideration: Encourage energy-producing countries 
     to ensure that their energy sectors attract and support 
     greater foreign investment.
       Given the continuing importance of a small group of energy-
     producing and -exporting countries to the future health of 
     the global economy, it is vital that the United States and 
     other Western governments place diplomatic relations, trade 
     policies, and foreign assistance programs with each of these 
     countries at or near the top of policy priorities.
       It is in the self-interest of the United States and other 
     Western governments to support China--rapidly emerging as a 
     major oil importer--as it diversifies its sources of and 
     forms of imported energy and encourage China to not rely 
     excessively on the Persian Gulf. China is considering 
     development of an infrastructure to support oil and gas 
     imports from Russia and Central Asia and also for transit 
     onward to other countries in the Far East. Collaborative 
     cross-national energy infrastructure projects can play an 
     important role in lessening the risks of future conflict over 
     energy resources. However, such energy linkages may not 
     always be in the best political interests of the United 
     States.

                           Energy Reliability

       In the early decades of the twenty-first century, because 
     burgeoning energy demand must be met largely by a small 
     number of oil and gas suppliers and because supply routes are 
     lengthening, the risk posed by supply interruptions will be 
     greater than it was at the end of the twentieth century.
       Military conflict will remain a threat to most energy-
     producing regions, particularly in the Middle East where 
     almost two-thirds of the world's oil resources are located. 
     In addition, domestic turmoil within the key energy-producing 
     countries constitutes another threat to reliability of energy 
     supplies. At least 10 of the 14 top oil-exporting countries 
     run the risk of domestic instability in the near to middle 
     term.
       The United States should retain as far as possible its 
     ability to defend open access to energy supplies and 
     international sea lanes. At a time when the administration 
     faces myriad competing demands for military and peacekeeping 
     interventions, this mission should be considered a strategic 
     priority and may call for greater emphasis on, and increased 
     investment in, appropriate military capabilities.
       Policy consideration: The United States should retain as 
     far as possible its ability to defend open access to energy 
     supplies and international sea lanes.
       Some observers are concerned that the United States may 
     seek relief from its self-imposed responsibility as the 
     protector of the world's sea lanes, which are used for the 
     transport of fuels and are becoming more crowded. U.S. allies 
     in Europe and Asia should be prepared to shoulder a greater 
     share of the financial cost of protecting energy supply, 
     including sea-lane protection.
       Policy consideration: U.S. allies in Europe and Asia should 
     be prepared to shoulder a greater share of the financial cost 
     of protecting energy supply, including sea-lane protection.
       No protector comparable with the U.S. role on the high seas 
     exists for the increasingly important long-distance pipeline 
     infrastructure. At a government-to-government level, 
     international agreements to protect pipeline systems might 
     have a deterrent effect. Governments must also find ways to 
     work with the private sector to minimize the vulnerability of 
     all energy infrastructures to sabotage or terrorist attack. 
     Cyberterrorism may well pose the greatest threat during the 
     time period under review.
       Policy consideration: Governments must find ways to work 
     with the private sector to minimize the vulnerability of 
     energy infrastructure to sabotage or terrorist attack, 
     including cyberterrorism.
       The more feasible approach in the near to medium term to 
     mitigate the risks of gas-supply interruptions is to 
     encourage importing countries to promote diversity among 
     suppliers and delivery routes. European governments, 
     particularly in view of their high dependence on Russian gas, 
     should look closely at how security of gas supply might be 
     enhanced.
       To meet these challenges to reliable supply, importing 
     nations must engage in contingency planning. The practice of 
     holding government-financed strategic petroleum reserves is 
     one essential method of limiting the impact of supply 
     interruptions, provided that the stocks held are truly 
     reserved for the intended purpose and not for manipulating 
     domestic prices. Governments should maintain and, where 
     appropriate, expand government-financed and -controlled 
     strategic petroleum reserves. This could include extending 
     the International Energy Agency (IEA) emergency preparedness 
     program to nonmember countries that will become major oil 
     importers and supporting the concept of regional stabilizing 
     initiatives. For the foreseeable future, however, it would 
     appear to be impractical and prohibitively expensive to hold 
     strategic natural gas reserves.
       Policy consideration: Governments should maintain and, 
     where appropriate, expand government-financed and -controlled 
     strategic petroleum reserves, reserving their use for supply 
     interruptions.

                       Energy and the Environment

       Energy production and use have become linked to 
     environmental concerns. Air pollution, oil spills, and their 
     impact on habitats are among the many challenges confronting 
     government and the energy industry.
       However, the energy industry's primary source of 
     international friction may revolve around the issue of global 
     climate change, as amply demonstrated by the contentious 
     debate over the cost and benefits of the Kyoto Protocol.
       The United States is unlikely to ratify the Kyoto Protocol 
     in its present form. Clearly, global climate change can 
     potentially have major implications for the economies of the 
     world. Continued research and understanding of the facts are 
     imperative for progress on this issue.
       By 2020, energy consumption by the developing countries of 
     the world is expected to exceed energy consumption by the 
     developed countries. This may hold particular implications 
     for the environment. Technologies must be made available to 
     help ensure that, for developing countries, the burning of 
     fossil fuels releases minimal pollutants. Moreover, fuel 
     choices must be broadened to include cost-competitive nuclear 
     electric power.
       There will be no easy solutions. Clean-coal technology 
     stands beyond the economic reach of most developing 
     countries. Switching from coal to natural gas will take time 
     inasmuch as deliveries will be dependent on the availability 
     of costly long-distance natural gas pipelines and 
     liquefaction and regasification facilities for the export and 
     import of liquefied natural gas.
       Policy consideration: Economically and environmentally 
     sound technologies must be made available to help developing 
     countries meet increasing energy demands.
       Nuclear power is emissions free but poses its own set of 
     competing policy concerns, ranging from reactor safety to 
     waste disposal and nuclear weapons proliferation. Western 
     governments should assess the conditions under which nuclear 
     power could make a significant contribution to electricity 
     supply in the developing world by first assessing those 
     conditions under which nuclear power could make a continuing 
     contribution to their own supply.
       Developing country decisionmakers would have to ask 
     themselves, ``Is this the most sensible answer to our power 
     problems, and is this option reasonably affordable?'' Three 
     essential criteria for a fourth-generation nuclear power 
     reactor, suitable above all for use in developing countries, 
     would have to be met.
       Modular construction, with a generating capacity of 
     approximately 100 MW;
       Cost competitive compared with fossil-fuel generating 
     plants; and
       Proliferation resistant.
       Policy consideration: Western nations should assess the 
     conditions under which nuclear power could make a significant 
     contribution to electricity generation in the developing 
     world.
       A major challenge for the future is quite evident: how to 
     produce, transport, and burn fossil fuels in massive amounts 
     but in an environmentally friendly manner. Is that possible 
     only through technological breakthrough? Because in 
     democratic countries the regulation and deregulation process 
     can involve lengthy legislative and executive interaction and 
     a complex public vetting process, simply recommending that 
     policymakers eliminate those regulations that inhibit 
     bringing technological innovation to market is meaningless. 
     Instead, Organization for Economic Cooperation and 
     Development (OECD) governments should expand basic research 
     leading to more efficient fuel use and to viable alternative 
     fuels. At the same time, governments should fashion 
     regulatory processes and standards that favor the market 
     success of environmentally friendly innovative energy 
     technology.
       Countries should review the extent to which subsidies for 
     domestic energy sectors are inconsistent with their global 
     energy policies.
       Policy consideration: OECD governments should expand basic 
     research on energy technologies; concurrently, policymakers 
     should

[[Page 3852]]

     eliminate those environmental regulations that inhibit 
     bringing technological innovation to market. All governments 
     should review the extent to which domestic energy subsidies 
     are inconsistent with global energy policies.


                        THREE BROAD CONCLUSIONS

       Three broad conclusions can be drawn from this analysis of 
     geopolitics of energy into the twenty-first century.
       The United States, as the world's only superpower, must 
     accept its special responsibilities for preserving worldwide 
     energy supply.
       Developing an adequate and reliable energy supply to 
     realize the promise of a globalized twenty-first century will 
     require significant investments, and they must be made 
     immediately.
       Decisionmakers face the special challenge of balancing the 
     objectives of economic growth with concerns about the 
     environment. This challenge has multiple parts: finding ways 
     to increase security and reliability of supply; ensuring 
     greater transparency in energy commerce; and strengthening 
     the role of international institutions in matters of energy 
     and the environment.
       One of the ironies at the turn of the century is that, in 
     an age when the pace of technological change is almost 
     overwhelming, the world will remain dependent, during 2000-
     2020 at least, essentially on the same sources of energy--
     fossil fuels--that prevailed in the twentieth century. 
     Political risks attendant to energy availability are not 
     expected to abate, and the challenge for policymakers is how 
     to manage these risks.

                              What's New?

       The influence of nongovernmental organizations (NGOs) on 
     public and private energy- related policy decisions is 
     perceived to be expanding.
       Projected energy consumption in developing countries will 
     begin to exceed that of developed countries, a change that 
     will carry political, economic, and environmental 
     considerations.
       The spread of information technology and use of the 
     Internet dramatically change the way business is conducted, 
     and this change carries with it a new set of vulnerabilities.
       The prospects of cyberterrorist attacks on energy 
     infrastructure are very real; such attacks may be the 
     greatest threat to supply during the years under review.
       Global warming is attracting growing attention, and that 
     attention will likely shape debate on future energy policies; 
     it is hoped that debate will reflect sound science and 
     factual analysis.

                           Security of Supply

       If U.S. military power is committed to a limited but 
     extended protection effort in Northeast Asia, the capacity to 
     respond to a crisis like that of 1990 in the Persian Gulf 
     will be severely limited. The United States will need to 
     rebalance its security relations.

                         Policy Contradictions

       The greater need for oil in the future is at odds with 
     current sanctions on oil exporters Libya, Iraq, and Iran.
       The United States deals with energy policy in domestic 
     terms, not international terms; U.S. energy policy is 
     therefore at odds with globalization.

  The ACTING PRESIDENT pro tempore. Under the previous order, the time 
until 1 p.m. shall be under the control of the distinguished Senator 
from Wyoming.
  Mr. THOMAS. Mr. President, we have 5 minutes remaining in our time; 
is that correct?
  The ACTING PRESIDENT pro tempore. The Senator is correct.
  Mr. THOMAS. I thank the chairman of the Energy Committee, the Senator 
from Alaska, for the work he has done on the energy problem. Clearly, 
we have one; there is no question. The question is, How do we best 
resolve it?
  We are in desperate need of a national energy policy. We have not had 
one for a number of years. We need to have some direction with respect 
to domestic production--how much we want to let ourselves become 
dependent on OPEC and other such issues. It seems there are a number of 
issues about which the chairman has talked.
  We need to talk about diversity. We have all kinds of things we can 
go on: We can go on oil, on gas, on coal--which is one of our largest 
reserves. We need to make it more clean. Of course, we can do that. We 
can take another look at nuclear, look again at our storage problems. 
It is one of the cleanest sources we have. Hydro needs to be maintained 
and perhaps improved. We need to go to renewables, where we can use 
wind and sunlight and some of the other natural sources.
  I will always remember listening to someone back in Casper, WY, a 
number of years ago, saying we have never run out of a source of fuel; 
what we have done is found something that worked a little better. So we 
need to continue research to find ways to do that.
  We need to have access to public lands. That doesn't mean for a 
minute we are not going to take care of those public lands and preserve 
the resources and the environment. But we can do both. We have done 
that in Wyoming for a number of years. We have been very active in 
energy production, and at the same time we have been able to preserve 
the lands. That is not the choice, either preserve it or ruin it. That 
is not the choice we have.
  We also need to do some more research on clean coal, one of our best 
energy sources.
  I was just in Wyoming talking to some folks who indicated we need to 
find ways to get easements and move energy. If it is in the form of 
electricity, it has to be moved by wholesale transmission. We need a 
nationwide grid to do that, particularly if we are going to deregulate 
the transmission and the generation side, which we are planning to do.
  We have to have gas pipelines. California has become the great 
example. They wanted to have more power. Their demand increased and 
production went down. Then they said: We will deregulate. So they 
deregulated the wholesale cost and put a cap on resale cost. Those 
things clearly don't work.
  We have to have some incentives to produce--tax incentives, probably, 
for low-production wells.
  We need to eliminate the boom-and-bust factor so small towns are not 
living high one day and in debt the next.
  Finally, we need to take a look at conservation, of course. You and I 
need to decide how we can use less of that energy and still maintain 
our kind of economy and way of life.
  I again thank the chairman of the Energy Committee for all he is 
doing and urge him to continue so we can set the right direction for 
this country in order to have the energy we need and save our national 
resources as well. I am persuaded we can do both.
  I yield the floor and suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. McCONNELL. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Lincoln). Without objection, it is so 
ordered.

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