[Congressional Record (Bound Edition), Volume 154 (2008), Part 8]
[Senate]
[Pages 10412-10415]
[From the U.S. 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 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

[[Page 10413]]

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.

[[Page 10414]]

       ``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 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

[[Page 10415]]

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.
  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.

                          ____________________