Energy Policy in America

Floor Speech

Mr. CANNON. I would like to speak this evening about energy policy in America, and the sources of energy, and I expect to be joined here in this discussion with several other Members of Congress. Adrian Smith from Nebraska is going to be speaking to us, and I will yield to him very shortly about the Alaskan National Wildlife Reserve; John Peterson will be with us about natural gas and the need to develop that resource; Rob Bishop will join us I think shortly to talk about what it means in the human costs to not have the resources that we need. We expect to be joined by Phil Gingrey of Georgia and perhaps John Shimkus of Illinois as well.

Let me begin by just saying that the U.S. policy to use corn for ethanol and drive up the prices of grain worldwide and to not develop the resources that we have so richly in America are not morally neutral. They are profoundly wrong. So I hope that after some discussion about these issues tonight, our colleagues in Congress will begin to understand what the resources are and how we can use them.

Now I would like to yield to the gentleman from Nebraska (Mr. Smith), and when he is finished talking about the ANWR issue, I would like to put that in perspective by talking about what other resources we have and how that fits. But drilling in ANWR is profoundly important. If we had done that some years ago, we would absolutely not have prices over $100 a barrel for oil.

I yield to Mr. Smith.

Mr. SMITH of Nebraska. Thank you to the gentleman from Utah for yielding me time so that we can have a bit of a conversation on energy. I truly believe that our country is lacking a balanced policy. I think that our country is lacking a commonsense policy, which certainly leaves consumers out of the mix for what they need with food, with fuel for their vehicles, energy to heat their homes, energy to run a small business. The list goes on and on.

But as we do address and look to the future, I think that utilizing today's technology and even tomorrow's technology so that we can certainly use the resources afforded our country, we can do that in a very responsible manner, and that we would not have certain issues become symbols of I think an extreme agenda that are endorsed by I think a relatively small group of Americans.

In 1980, the Congress, and President Carter, I will add, created the nearly 20 million acre Arctic National Wildlife Refuge, but they set aside 1.5 million acres of ANWR's northern coastal plain for the purpose of future energy exploration and development. Let me repeat that. They set aside, this is Congress and President Carter in 1980, 1.5 million acres of ANWR's northern coastal plain for the purpose of future energy exploration and development. This parcel is known as the 1002 area, named after the section of the act that set it aside for its energy resources.

Energy exploration will be limited to just 2,000 acres of ANWR's 1002 area, an acreage limitation made possible by 21st century technology. This 2,000 acres, I will add, is equivalent to one-tenth of 1 percent of ANWR's total acreage.

According to the U.S. Energy Administration, the mean estimate of recoverable oil in ANWR is 10.4 billion barrels, all of which is now economically recoverable. That is more than the twice the proven oil reserves in all of Texas. That is almost half of the total U.S. proven reserves of 21 billion barrels. That represents a possible 50 percent increase in total U.S. proven reserves.

EIA also estimates daily ANWR would provide 1 million barrels per day for 30 years. Will that affect oil prices? Absolutely. Is that a government subsidy? No. I hope that we can get beyond the policies of just saying ``no'' to domestic sources of energy. This is equivalent to what the entire State of Texas produces daily. ANWR's 30 year, 1 million barrel per day supply, also equals 30 years of imports from Hugo Chavez of Venezuela.

Let's talk about the revenue. According to a recent CRS report, at today's prices of $125 per barrel, ANWR development would deliver $191.1 billion in corporate income tax and royalty revenue to the Federal Government. Let's talk about fiscal responsibility. Bonus bids alone would deliver close to $4 billion to the Federal Treasury.

Economically speaking, relating to jobs, ANWR energy production would create between 250,000 and 750,000 good jobs in America across the country. These are good, broad-based jobs in the energy sector that, in the end, help consumers. A study from the National Defense Council Foundation says that the figure could be as high as 1 million new jobs for Americans in all 50 States and the District of Columbia.

In terms of environmental protection, ANWR's leasing plan will be certainly environmentally sound. The Interior Department must administer the leasing program to result in no significant adverse effect on fish and wildlife, their habitat, subsistence resources or the environment. The leasing program will be subject to stringent regulations that at a minimum will require some of these details. Let me share them.

Meeting or exceeding environmental mitigation measures established in the prior environmental impact statement.

Limiting exploration generally to the period between November and May.

Imposing seasonal limits to protect breeding, spawning and wildlife migration patterns.

Using ice roads, airstrips and other low impact transportation methods while limiting air traffic to reduce disturbance to fish and wildlife.

Requiring pipelines and roads to be designed to minimize adverse effects on migratory caribou, other wildlife and surface water flow.

Protecting streams, springs, rivers, wetlands and riparian habitats from the effects of water used in drilling.

Treating and disposing of all waste products by use of a hazardous material tracking system and filing an annual report on waste management.

Educating crew members on environmental protection methods.

Complying with all applicable air and water quality standards and utilizing the best commercially available technology for the exploration and development, not only today, but in the future as well.

I could go on and on with many of these details that assure the responsible development, exploration and henceforth the development, but let me give some perspective to this briefly.

The size of the small wildlife refuges that currently exist barely measure as a fraction of ANWR's 19.6 million acres, yet the ecosystem and energy production in the refuges coexist without harm. Consider the size of these following National Wildlife Refuges supporting active oil and gas production, according to information provided by the U.S. Fish and Wildlife Service:

Hewitt Lake National Wildlife Refuge in Montana, total size, 1,680 acres; Hagerman National Wildlife Refuge, Oklahoma/Texas, 11,000 acres; Kirtland's Warbler National Wildlife Refuge in Michigan, 6,543 acres; Delta National Wildlife Refuge in Louisiana, 48,000 acres. We are talking about a good chunk there. San Bernard National Wildlife Refuge in Texas, 37,000 acres; Crosby Wetland Management District in North Dakota, 86,000 acres. But, my friends, ANWR in Alaska, the total size of the refuge is 19.6 million acres, and proposed development is 2,000 acres.

I would argue that what is best for consumers is a good, balanced energy policy that isn't just about petroleum. It is about many other sources. And the frustration from consumers in the Third District of Nebraska is getting higher and higher and higher, because they understand the economics of various sources of energy, whether it is biofuels that many people are speaking out against, or even nuclear power, nuclear energy that we know is friendly to the environment in terms of carbon emissions.

Hydropower, it was interesting to learn that New Zealand is one of the world's, I would say, most green countries in terms of energy. They are about 80 percent dependent on hydropower. And there is so much pushback here in America on the development of hydropower, consumers are getting frustrated. It is not just policymakers, but it is consumers as well, because they can do the math.

Clean coal technology, we have come so far with clean coal, and there is even greater promise in the future. Why would we want to sell ourselves short on that? Oil shale, that I know will be discussed here momentarily, certainly is a domestic source of energy. We heard earlier about some comments about becoming energy independent, oil independent, but yet there is so much pushback from developing our own resources in a very responsible manner.

Mr. CANNON. Would the gentleman be willing to answer a couple of questions?

Mr. SMITH of Nebraska. I will do my best.

Mr. CANNON. Thank you. They won't be hard. I might point out in Utah we had 76 billion tons of coal locked up by one monument that President Clinton made, the Grand Staircase-Escalante National Monument. That is the equivalent, the gentleman mentioned coal-to-liquid, that is the equivalent of 150 billion barrels of oil locked up in a monument.

But let me make sure I have these numbers right, because they are actually startling. The whole Alaska National Wildlife Reserve is 19.6 million, almost 20 million acres. That is bigger than most northeastern States.

Mr. SMITH of Nebraska. Even bigger than the Third District of Nebraska, which is huge. Well, not acres-wise, but it is a large area.

Mr. CANNON. The Third District of Utah is large as well that I represent, and that is about the size of that. And so we have about 1.5 million acres that were set aside by President Carter and the Congress when the refuge was established for oil development. Now we are talking about 2,000 acres of land to develop oil on. That is the proposal. That yields 10 billion barrels of oil.

Mr. SMITH of Nebraska. That is correct.

Mr. CANNON. That would mean, I think you said, about 1 million barrels of oil a day.

Mr. SMITH of Nebraska. Correct.

Mr. CANNON. What would happen to the $120, now pushing on or moving toward $130, per barrel of oil if we had 1 million additional barrels of oil production a day?

Mr. SMITH of Nebraska. Well, I can't make any promises, but certainly as it

does speak to economics, there is concern that so much of the price of oil per barrel today is based on speculation, that the mere announcement that we would be opening up some domestic sources of petroleum resources, we would be perhaps warning those folks in the speculative world that things may change a bit.

Mr. CANNON. Those speculators have virtually no downside. The upside is limited only by what they are willing to guess on in the future. So to bring that oil price down, I think we need to bring some new sources on or make it clear we are going to bring some new sources on. I think, like the gentleman, that would cause these prices to plummet.

Mr. SMITH of Nebraska. Absolutely. I think the numbers certainly speak for themselves.

Folks, in our economy, on the front lines of our economy, they can do the math. They are very frustrated with what is taking place right now. And while the Third District of Nebraska is a large place, I am not saying it is smaller than this subject area, but we even have opportunities with so many different sources of energy. Why would we want to take something off the table, when there are domestic supplies that with technology today and tomorrow we can do so much more?

But more than that, it strikes me as absolutely amazing that the local folks of these subject areas, specifically ANWR, are supportive of this development. I think you spoke earlier of some places in Utah that you pointed out that the locals support. If it were truly going to plunder the environment, as many would speculate and suggest, the local folks would be fighting against that.

Mr. CANNON. I think that is absolutely right. Reclaiming my time, I thank the gentleman. I would like to point out to him, I paid $3.59 for gas the last time I bought gas. That is obscene. It is obscene. If we had been thoughtful about ANWR, if we had acknowledged the desires of the people who live in ANWR, who care about the land in ANWR, we would be drilling there, having minimal effects, and producing a much, much lower price for gas. That is an obscenity that we ought to be rid of.

Mr. SMITH of Nebraska. I drive a diesel vehicle, and even though diesel is more efficient on a gallon-for-gallon basis, it is painful. I close with that.

Mr. CANNON. As you leave, I appreciate that. I drove to a new gas station the other day. I went to the pump and put my card in and got ready to pay for the gas, and as I did that, I reached over to get the gas hose and it said $4.39 a gallon. I was stunned. Then I looked. It was green and I realized that that pump had a diesel handle on it as well. The 15 or 20 percent better mileage you get doesn't cover the extra dollar that you pay, the 25 percent higher prices. So I sympathize with the gentleman.

But I would point out that oil shale is essentially diesel fuel and then can be used for that, and if we develop that, it should bring your prices down, Mr. Smith, significantly, and all the rest of the world's as well, which I think is the right thing to do.

Thank you very much for your time. We appreciate that.

We are now joined by Congressman Bishop from Utah, who agreed to join us despite the fact he is hosting a group of German members of the Bundestag. So I would like to turn some time over to him to talk about whatever he wishes, but probably the human costs of these horrible energy prices and policies that we have in America.

I yield to the gentleman.

[Time: 19:00]

Mr. BISHOP of Utah. I appreciate my good friend and colleague from Utah that clearly understands this particular issue.

I want to start by introducing you to a character in American history by the name of Elbridge Gerry. Elbridge Gerry is a former Vice President, Governor of Massachusetts, signed the Declaration of Independence. He is also one of three people who spent the entire time at the Constitutional convention and then refused to sign the document.

Now, we have had others; the gentleman up to my left who appear on the ceiling, one of the two Americans that we had in this icon of lawgivers in the history of the world. George Mason was one who stayed there and refused to sign the document. He had a specific reason, and that was it didn't have a bill of rights.

Elbridge Gerry did not have a specific reason. He had a litany of little ticky issues that he thought were wrong with the document. They are so small and so insignificant that I have yet to find a history book that actually lists the reasons for his refusal to sign this particular document. In fact, I had a teacher that one time told me that he had a personality that was the kind so prickly that if the Savior said that the millennium will start on Tuesday, he would say, I can't do that, I have a haircut; we have to wait until at least Thursday to do it. Now, that is what he did.

Despite the fact that he had a litany of problems with the document, the document itself turned out to be a pretty good document. As P.J. O'Rourke would say, the Constitution of the United States is 21 pages that is the operating manual for 300 million people, compared to the operating manual of the Toyota Camry which is four times as long and only seats five. The document worked.

Well, one of the problems and the reason I am introducing you to Elbridge Gerry is we have an Elbridge Gerry attitude towards energy policy. We all agree that we need to be energy secure and energy independent, and we agree we have to do that. But we can't have windmills off the coast of Massachusetts. We need to be energy secure, but we can't have a liquid natural gas port on the East Coast. We need to be energy secure, but we can't do any kind of offshore drilling even if it is 100 miles away and no one can see it because it might bother the tourists who can't see the drilling going on. We need to be energy secure, but we won't go up to the arctic in Alaska to an area set aside by the Carter administration for the simple purpose of producing energy, and we won't drill there, as the gentleman from Nebraska just recently explained.

We have this idea that we have all these ticky little reasons and details that we won't do this and we won't do that, and the end result is we miss the bigger focus and the bigger issue, and that is we need to be energy secure for our Nation and for the individuals of the Nation.

Our policy towards energy has always caused problems. It has caused problems for businesses, has for several years, and it is causing problems in the way people live their life. Because the issue is not our country's energy policy in the abstract; the issue is, how do people cook their food? How do people heat their homes? How do people create and hold on to a job? Because every time the price of energy increases, jobs are lost, incomes vanish, social programs suffer. Every individual in this Nation suffers with higher and increasing energy prices.

Rising utility bills are indeed one of the major causes of homelessness in this country. And that means, when energy increases in price and cost, the poor and those on fixed income, and there is about 43 million of them in the United States, are the first ones who are hurt and suffering. And how do our people react to this?

There is a couple in Maryland who have decided to take their kids out of weekend activities. So their daughter that was in dance and gymnastics, they no longer drive them to these activities. A Vermont church found itself recently in a $10,000 arrears simply because it didn't budget enough for its energy. In Maine, in Wisconsin, schools simply have lowered the temperatures in their classes. So, in a district in western Wisconsin the kids in the winter are now wearing fleeces and zip sweaters, to the fact that they even had a fashion show to show kids how to dress warmly as they are now coming to schools. Unfortunately, they held it on a day when it was snowed out, but that is still the fashion show they tried to do. In Louisiana, they no longer run their sprinklers on the ball field. In North Dakota, they are talking about a four-day school week. In Iowa, they have cancelled trips for choirs, athletics, and field trips for the junior high kids.

And schools simply don't have a way of handling this. You can't just put more money into the heating salary. Schools are on a very tight budget,with the majority of schools' budgeting coming from the cost of salaries, which simply means if energy prices increase, teacher salaries will decrease. They simply can't afford to do it in any other particular way.

We have a Chicago nurse who has cut out her cable television. She can't afford it anymore. Elderly people on fixed incomes especially feel trapped in their apartments because they do not have the flexibility to go anywhere. They can't afford to. We have an example of an elderly gentleman in St. Paul, Minnesota who now travels most of the time on his electric wheelchair because electricity comes with his rent and that is for free, and he can plug it in in the apartment and he doesn't have to buy gas to get around. Now, that is what is happening to real people.

It is happening to the country as well. In the military defense of this country, our costs in the last 3 years for energy for our military has risen from $3 billion a year to $7 billion a year.

Our increase in prices are putting our Nation at risk, are putting individuals in jeopardy, and we simply cannot afford to talk about it any longer. We cannot afford to have secret plans that we refuse to identify any longer. We simply have to do something. Because for every dollar spent on higher energy costs, it is a dollar you can't spent on luxuries like tuna casseroles; for our energy is the great social equalizer of this country and it is the one that creates economic opportunity in this country. Our energy should not be those who are rich in government or rich in society or rich economically, the elite that can afford this.

One of our Presidential candidates went in one day on three different jets, each of which spewed out 25,000 pounds of CO

2 per hour. Now, the average American spews out 15,000 pounds of CO

2 per year. And the solution to that was simple: Recognizing that they are now adding to the emissions in the atmosphere, they paid $11,000, and urged you to all buy mercury light bulbs made in China by coal-powered plants.

Another one of our good friends who makes a great deal of emphasis on the fact of global climate change and global warming lives in a house that consumes 20 times the amount of electricity that an average house does in this country. And his solution to that? Paying offsets that he uses his own company to pay the offsets.

We have a concept right here now of the elite who are not cutting back on their energy consumptions; they are simply paying for it with offsets in a similar way as medieval dukes used to pay for indulgences with the

church. And yet, while they are still living in comfort in the elite, what we have is a situation that is harming individuals, and especially individuals who are poor, on fixed incomes, and the elderly.

That is one of the reasons the Western Caucus will be introducing shortly a comprehensive energy bill, one that realizes that if we are going to solve this problem, not just talk about it but solve it, there are three principles that have to be introduced:

We must increase the production of energy in this country. And we are going to have multiple speakers who will be talking on that aspect. That won't work alone. We also have to increase our efforts of conservation. We cannot solve the problem of our energy future without conservation efforts. But, we cannot solve the problem of our energy independence and our energy security needs by conservation alone. It has to work with other principles. Because it is true, every gallon that we save, every watt of electricity that we do not use is a gallon that does not have to be imported, does not become emitted.

Yet, even by the strictest standards of conservation alone, we can account for only about one-half of the amount of oil that we import into this country every year. It would be hypocritical to rely on this. In fact, it would be, as the Ron Arnold book title says, our goal would be ``Freezing in the Dark.'' It has to be more than that.

In addition to that, though, there is a third element that has to be there that will be an essential part of this bill, which is innovation. If you go back to the turn of the century, Jules Verne could not have imagined what would have happened in the next 100 years. He could not have imagined going from radios to I-pods, and rockets, computers, going from antibiotics to organ transplants. Couldn't even have imagined bottled water. But that has been the reality of the past 100 years.

We have technological abilities that sometimes come slow and sometimes come as fast as new cell phone plans that will provide the ability to use these two concepts to reach the needs so that we can become energy secure. We have certain specific problems that need to be addressed in this process of innovation. We have not had a new refinery built since 1976. In 1980, we had 324 in this country; today, there are 148 that are operating. We can produce 17 million barrels of oil per day from our refinery capacity. Unfortunately, this country needs 21 million barrels of oil per day from our refinery capacity.

We have outdated processes and regulations that need to be put in place along with tax reform to encourage both conservation and production.

We use about 5 million miles of electricity distribution and 1 million miles of natural gas distribution lines. That is not enough. We need to be developing new corridors so that we can more easily transport energy from section to section.

One of the other areas we are looking at is also the workforce. There has been a 90 percent drop in the number of petroleum engineers and geoscience graduates since 1982. At that rate, by the year 2010 we will find a 38 percent shortage in this critical profession that we need to try and find our way to use the knowledge that we have to build and move us into the future. We need to come up with smart meters, point of sales generations. We need to use the technological abilities that we have to find solutions.

We need to use a system that has financial rewards and prizes to reach our technological goals, because we have found that voluntary innovation and experimentation are always preferable to bureaucratic or international intervention and regulation. Former efforts that failed were not driven by market forces, but they were driven into failure by self-serving governments. We need to combine all these three areas into one. But we cannot overlook the first and most important effort, which is simply production.

We in the West perhaps have a different attitude. To be honest, the West produces the energy the East consumes. So I think by all rights we have the ability to be a little bit holier than thou, both realistically as well as spiritually. But the issue is, we have the ability in this country to be energy secure. The stuff is here. There is more energy imprisoned in this country than most nations actually have, and all we have to do is simply be wise enough to realize we need to go at it, we need to develop it, we need to conserve it, and we need to be creative in the way we distribute it.

We can talk all day as some people do about profits that the companies are receiving, what we should do with those profits. At the end of that discussion, you have to realize it is a useless discussion, because you can talk all day about what we do with profits. Not one new barrel of oil is provided to anybody by that discussion. The only thing we need to do is start talking about going to where the energy is and developing it, conserving it, and being smarter in the way we do it. That means an attitude change. So our goal is to produce, to conserve, and be smarter in the way we do it. And by that method, that method, we will solve the problem.

This Nation needs more than anything else to not talk about the issues any longer, not have secret plans about the issues any longer, but simply to do it. We have the resources, we have the capability, we have the ability to provide for ourselves into the future. And it is almost criminal if we do not do that in a comprehensive and intellectual way.

I still have faith that this country can proceed into that future, and I hope America will join us in this effort to meet these criteria. And I applaud my good friend from Utah, who understands this issue instinctively, and his effort to bring this to the attention of the American people with a lot of different people who understand elements of this, and hopefully we can bring together a comprehensive plan for the future of this country so that we can have energy security and energy independence for our future.

Mr. CANNON. Would the gentleman be willing to enter into a colloquy?

We talked a little bit about innovation. I think that in the bill that we are proposing as the Western Caucus, we have some prizes in there for energy efficiency including what is under consideration, a prize for a motor or an engine or gasoline engine that would go say 100 miles per gallon. And the gentleman probably knows this, but the typical engine in America gets about 17 percent efficiency. In other words, you get about 17 percent of the energy out. The highest efficiency are diesel engines on long-haul trucks, which get about 35 percent; meaning 70, 65, or 83 percent is wasted in the process.

If innovation would support us in doubling the efficiency of engines, what would happen to the price of gasoline in America and diesel?

Mr. BISHOP of Utah. The gentleman is perfect, right on with this one. The problem we have is a simple concept of supply and demand. If the demand is great and the supply is not, the price goes up. And how do you simply get the price to come down? You increase the supply, whether by production increases or conservation increases or new technology increases. But, once again, spot on accurate.

If we don't do that, it's kids who are freezing in classrooms; it's elderly who are stuck in their homes by the fear of going anywhere because they can't afford to get back; it's poor people who will lose their jobs because we don't have enough energy to expand the market.

That's why we do this. We do this for people who are counting on us to have a wise, comprehensive policy.

And we've found also, if you ask, prizes are a wonderful way because people are so creative. People are innovative. And if we allow that spark of creativity and innovation to come forth, we can solve every problem that we face. And it doesn't have to be done by experts sitting in a room in Washington. People have the ability to do that, and they have the ability to do it better than probably we can.

Mr. CANNON. Heaven help us, from experts sitting in Washington who get paid to continue the problem instead of solve the problem.

Thank you, Mr. Bishop. Appreciate your time.

Let me just point out that production and conservation are both matters of innovation. We're going to talk tonight about new ways to innovate in production, and also in other areas of conservation.

A new motor would conserve a great deal, a new, more efficient motor would conserve a great deal of energy. And I think that if you doubled the efficiency of engines on the highway today, or if you had an engine that doubled the efficiency, the threat of that doubling of efficiency would almost immediately result in a plummeting of the price of oil overnight, without any additional production.

We're joined now by Congressman Peterson from Pennsylvania. And Mr. Peterson has been a great advocate of developing our natural gas resources with reasons why this is a critical part of what we're doing in the country. And I would yield to Mr. Peterson as much time as he may consume. And hopefully, at the end of your presentation, we can chat a little bit about what this means for America.

Mr. PETERSON of Pennsylvania. I want to thank the gentleman from Utah and thank him for his leadership in the Western Caucus. Even though I'm from Western Pennsylvania and Central Pennsylvania, I've been a proud member of the Western Caucus my tenure in Congress, and have enjoyed working on the many issues that the West is interested in.

$129 oil today. I remember a short time ago when it hit 80 and then it hit 90. I came down on the floor, thinking this Congress would start to react as if it was a crisis. Here we are today with $129. We've been over 120 for a week or so.

Do we have a bipartisan Senate/House task force formed to deal with energy? No. Not an issue.

Do we have a special committee in the Congress here in the House to deal with energy, maybe bipartisan or partisan? No.

Is anybody calling for a special session that we deal with energy?

No matter where I go, where I fly, what coffee shop I sit in, everybody's talking about energy prices. Why? Because a young lady said to me recently, Mr. Peterson, I make $320 a week. I'm raising two children as a single mom. I'm now paying $130 a month, no, $130 a week to drive to work.

In rural America people drive distances to work. They drive distances to school. They drive distances to shop. They drive distances to go to the doctor. There's no transits, there's no cheap way to travel.

She said, I'm spending $130 a week. I said, what are you spending to heat your home? She said, I'm spending $175 a month, year round, to heat my home with natural gas.

What this young lady doesn't know that, since she told me that, energy prices have risen considerably. That was a few weeks ago. And what she doesn't know, and most Americans don't know that natural gas prices to heat our homes are going up measurably this fall.

Last year, at this time, in the summertime, we put our natural gas in reserve, underground caverns because we can't produce enough during the winter heating season. Last year, at this time we were putting gas in the ground at $6.50 to 7, and that was a little bit higher than usual. Not a lot but a little bit.

Today we're putting $11 gas in the ground. And I talked to one of the experts at the Energy Department today, and he expects that figure to rise. If we would have a major storm in the gulf, which we have not had for 2 years, and we always lose some production in the gulf when that happens, we could have 14, $15 gas go in the ground. If that's true, home heating costs next winter, with natural gas, and that's 62 percent of Americans, will double.

Those who are heating with propane and home heating oil this year paid huge prices, and are going to pay much higher prices next year. Natural gas only went up about 10 percent. But that's going to change.

Folks, America has chosen, the leadership in America has chosen to not produce our own energy, to lock ours up. Now, we did pass a bill today called, interesting name, the Gas Price Relief Act for Consumers of 2008. Now, wouldn't you think that's going to do something with prices?

Well, here's what it does. It's trying to figure out a legal way for us to sue OPEC and other countries who we don't think's producing enough oil. If, you know, I think Saudi Arabia, I looked today, is 12 million barrel a day. And the President was just there, and the Speaker asked him to ask for more oil, and I think he asked for more oil.

A month or so ago, Vice President Cheney was over there, and the Speaker and others asked him to ask for more oil, and he asked for more oil.

But now we're going to pass a bill saying that if they don't produce enough oil, and if we think they're kind of conspiring and not producing as much as they could, we want some court to sue them in.

Well, it seems to me, we're a little bit vulnerable, because I want you to look at my chart here. Congress, for 27 years, has locked up the Outer Continental Shelf. That's offshore production of energy. Every country in the world produces out there, a major part of their energy, both oil and natural gas.

We've also locked up major parts of the Midwest. Up here in Alaska, we locked up the portion of ANWR that was set aside for energy production. That's why it was set aside. I think we heard in earlier testimony here that 2,000 acres out of millions would have been actually the footprint. And yet, this Congress said no.

Now, we've said no to Alaska. We've said no to the Midwest. The oil shale rock was recently locked up, not signed into law yet, but we passed a bill here with six plus votes, I think, to lock up the shale oil in three States in the West.

We heard earlier about the huge coal lock up with one Presidential order. Congress, and three Presidents, have locked up offshore production.

Now, we have the nerve to say that we're going to sue other countries because they're only producing 12 million barrels a day for us?

I think maybe we ought to pass the bill that Americans could sue Congress and the administration for not producing adequate energy. We have been negligent.

This Congress has the mind set that we're going to run this country with renewables. Now, I wish that was true. But let's look at the chart. The left of this chart is history. The right of this chart is the Energy Department's prediction. There's not much change.

Hydro, non-hydro renewables. This is wind, solar and geothermal and woody biomass. And the one that's increased the most is woody biomass because a million Americans are now heating their home with pellet stoves. That's sawdust made into pellets.

All the wood companies are drying their wood. If they dry their wood they're using wood waste now instead of fuel oil or diesel or natural gas because they can't afford that.

And many power plants are topping off their loads. To keep under air emission standards they may use 80 percent coal and 20 percent wood waste. And we now have some plants coming on-line generating with wood waste. So woody biomass, and now we're talking about cellulosic ethanol, which will also be another use for woody biomass. So that's been the only one that's growing.

Nuclear, we need, we have 45 to 50 plants that are now applying for new permits, and we need all of them to be completed by 2030 to stay equal.

Coal, it shows coal growing. I don't believe that's going to happen. We've had about 60 coal plants in the country that have been turned down by States because of the threat of climate change legislation, which will put a tax on energy.

When you hear people talking about carbon taxes and carbon trading, you need to realize that in every country that's went down that road, that will increase energy prices another 20 to 30 percent. Now, let's say it's 25. Well, at $4 gasoline, that means, with a carbon tax, gasoline would be $5 pretty quickly, without oil prices going up.

Now, they show natural gas flat here. I disagree with the Energy Department, because every one of those 60 coal plants that have been turned down will be a natural gas fired generation plant. Just 10, 12 years ago we produced 7 percent of our electricity with natural gas.

We're now at 23 percent and growing. And whenever you deal with carbon in any country, the only field you can shift to is natural gas. It's cleaner. No knocks, no socks, and a third of the CO

2. So it's the clean green gas.

Now, we should be using more of it. But if we're going to use more of it, we need to produce more of it and we need to be out on the Outer Continental Shelf. As we showed before, we need to get into the Midwest, we need to do the coal to liquids, coal to gas, as we heard others talking about earlier. We need to do all of those things, and those are all doable.

Folks, we need all the wind and solar we can get. And I'm for it. But if we double it in the next 5 years, we will be less than 1 percent of our energy use in this country. So it's not big numbers. We can't run the country on renewables.

We're not increasing hydro. Folks, we're really not increasing anything. We're sitting on our hands. We're a policy-less country, as far as energy is concerned.

The 2005 Energy Bill did a lot of good things. The reason we have 45 to 50 permits on nuclear is because it streamlined the process and we now have all those in the pipeline.

The unfortunate part, when we build these nuclear plants, the basins are going to come from Japan, that's the base because we don't have the ability to make them here anymore. And many of the components are going to come from Germany, which has a lot of capacity. And we've kind of lost our capacity.

Mr. CANNON. Would the gentleman yield?

Mr. PETERSON of Pennsylvania. Surely.

Mr. CANNON. You know, looking at that chart is actually a little disturbing, because unless we produce a great deal more natural gas, our current reserves being diminished, or diminishing, we have to import a lot of natural gas. So if we're not going to do coal power plants, if that chart, instead of widening for coal, shrinks for coal, then you have to widen natural gas, which means you're going to have to import a great deal of natural gas.

Mr. PETERSON of Pennsylvania. And that comes from Third World countries, dictatorships, the same type of countries that we're purchasing oil from.

But let me tell you, it's not that simple. LNG, and I'm not opposed to it, but when a tanker is loaded with LNG it becomes a commodity, and countries like Japan and Spain and other countries that have no natural gas, live by it. They will currently, are paying 14 to $15 per thousand for a tanker load, and we can't afford to pay that. We're paying 11 to put in the ground. We can't put 14 and $15 dollar gas in the ground, or we are automatically doubling natural gas heating prices for next year.

Now, natural gas is not just a heating fuel. We run our country with it. You know, we use--70 to 90 percent of the cost of fertilizer to grow corn to make ethanol is natural gas cost. That's what we use.

Petrochemical business, 55 percent of their cost is natural gas because they use it as an ingredient and as a fuel.

Polymers and plastics, 45 percent of the cost of that industry is natural gas because they use it as an ingredient, as a fuel. Almost everything we manufacture in America has natural gas in it as an ingredient, as a fuel.

Really, I've had people tell me it's such a wonderful substance, we never should burn it, we should use it as the chemical that it is to make products. But we know that's not going be the case.

We have lots of natural gas in America. Unfortunately, all the rich fields are locked up. Offshore is loaded. The Roan Plateau in the West is loaded. They've just found the new Marcella Shale in the Pennsylvania, New York, West Virginia area. It's going to take a while to develop it. But we have lots, but we are not producing enough of it to keep it affordable. And we are looking at a huge spike that's coming at us right now.

But LNG, we can only buy it in the off season. In the heating season, when we need it, we never can afford to pay for it because the other countries bid it up. And they have to pay the price because they don't have any other oil.

Mr. CANNON. So here we are, the Middle East of coal. We have more coal than we know what to do with. We've stopped using coal. We don't use coal to liquid. We don't use those things because we can't sequester the CO

2. That means, instead of expanding, coal declines. Coal declines. Natural gas goes up.

So now all of sudden you just listed all the things that we use natural gas in. And I add those things all to be an inflationary environment where, in particular, food prices go up, or continue to go up, having doubled, in some cases tripled over the last couple of years.

Mr. PETERSON of Pennsylvania. I was in a hardware store last month, and they had their coats on. And I said, what's going on? He said, in the spring and the fall season now we don't heat our store because people, working people are coming in to buy hardware and lumber, it's a lumber yard. And they said because it costs us 800 in the month in the spring and the fall season, now it's going to cost us a lot more than that in the winter, but we have to keep it warm in the winter. But in the spring months, when nothing will freeze, we shut our heat off. That saves us 800 a month. Those are two fall months and two spring months. That saves me $3,200 profits. So he said, we work with our coats on. Our customers come in with their coats on, they just leave them on and they don't complain. He said, that's how we do it now. We can't afford to heat our store.

These costs of natural gas, costs to heat schools this year are going to double. Costs to heat our hospitals are going to double. Almost everything that we use gas for will probably come close to doubling this year. It's going to be terribly inflationary, and it's going to make some businesses just noncompetitive.

Mr. CANNON. You and I have been talking about this issue for years now, and we've seen no increase, a modest increase in some drilling in the inter-mountain west, but very little new sources.

And what's happened to costs of gas, that is, natural gas, over the last 3 years?

Mr. PETERSON of Pennsylvania. Someone was talking the other day

here on the floor that we're drilling twice as many wells and we don't need to drill more. Well, we're drilling in old, tired fields. We're drilling the cracks and crevices that we haven't drilled before. You get out into some fertile territories, there's huge gas fields. Just huge. In fact, off the coast of Florida, there was a huge gas field that I think the lady from MS said it was called very sweet gas and it was tremendous volumes, and we actually bought the leases back so we wouldn't produce it. Yet 50 miles offshore, we have Cuba cutting deals with China, Norway, and Canada. They're going to produce gas 50 miles off the Florida coast, and we can't produce 100 miles off the coast. Does that make sense? I don't think so.

Mr. CANNON. I don't think so either, and I don't think the American people think so. And I think the American people are really fed up. You can't double or triple people's natural gas costs, their heating costs in their homes. You know, personally sometimes I drive in the wintertime even without a coat on. If I jumped out of my truck and went into that store, I'm not sure I would be comfortable, but that's one of the costs that we're imposing on people.

We cannot--the American people are not going to allow us to maintain these idiotic policies that lock up resources while people are actually going hungry in other parts of the world because we're using corn for ethanol and we are taking natural gas, and instead of turning it into fertilizer, we're bidding it off to the Japanese, the Chinese, and the Indians.

Mr. PETERSON of Pennsylvania. Well, the good news is within the next 3 to 4 weeks, we will be offering an amendment to the Interior bill that will open up on the offshore--let me put my sign back up, my chart back up here--in part of the gulf, east Atlantic, Pacific. Both oceans will all be open from 50 miles out for gas and oil.

Now the site distance is level. So if you're at your condo at the beach, when it gets past 11 miles, you won't know it's there. We're going to be 50 miles out. Now, I'd like to come in to 25 or 30 because there's a lot of energy in that section. But we're going to go 50 in hopes that a majority of Congress, House and Senate, will feel the heat from back home and we will open up production.

Canada, Great Britain, Ireland, Sweden, Norway, Australia, New Zealand, all of these very sensitive environmental countries, they all produce. Canada laughs at us. They actually produce in the Great Lakes. They produce in Lake Erie where I live and they sell us the gas. And I asked them the last time they were in, Do you slant drill to our part of the lake? And he smiled and he said, You bet.

Now, we don't allow drilling there either.

We could actually drill the Great Lakes from offshore. We wouldn't even have to get in the lakes. But since 1913, Canada has produced in the Great Lakes, and now they're selling us, because we get 15 percent of our natural gas from Canada. Our largest producer of oil outside of our own is Canada, and it's also the only major source we have of natural gas other than our own, and I think 2 percent LNG. I think 15 percent of our natural gas. Thank God Canada produces. They also produce right off of the Washington coast, right off the main coast. Right off within sight of us, they're producing energy with no negative results.

I hope in the next 3 or 4 weeks that Congress will feel the heat, understand this issue a little better. A lot of people in the country, a lot of people in Congress don't realize that natural gas is not a world price, and when we're putting $11 gas in the ground, that's the highest price for natural gas coming out of the ground anywhere in the world. In South America, it's a buck-something. In Russia, it's a buck something.

So our fertilizer, 50 percent of our fertilizer industry has went offshore now. Polymers and plastics are going offshore. Petrochemicals are going offshore. Those are the best blue-collar jobs left in America, and they need natural gas to produce.

Mr. CANNON. Those are the best blue-collar jobs in America and Democratic policies are driving them offshore.

Mr. PETERSON of Pennsylvania. And if carbon capture and CO

2, if you have those who believe that's such an evil force, that the CO

2 we breathe out is a poisonous gas, if we put carbon capture and CO

2 payments ahead of affordable available energy, America will be a Section 8 Nation. We won't compete with anybody in the industrialized world because our energy costs will prohibit it.

Mr. CANNON. You and I are on the Resources Committee together. We are going to have a vote on this issue, and every American is going to know because every talk show host and every newspaper is going to talk about this vote because this vote is about the cost of energy.

And included in that mark-up we are going to have a vote on ANWR, and we will have other votes that I think will be profoundly important.

It was in the mark-up a year ago that the Democrats, over our objections and over our votes, insisted that BLM not be allowed to go forward with its regulatory scheme for oil shale. We're now a year behind on that. It was in the appropriations bill last year. The Democrats put a provision that prohibited the use of any money that BLM had for processing permits on BLM property. Thank heaven that we have school trust lands that can be developed for oil shale. But without that, we would be in real trouble.

Mr. PETERSON of Pennsylvania. Well, maybe 30 years ago when oil was $10 a barrel and natural was $2 a thousand, it was smart to use theirs. But when it's $129 a barrel and $11 for natural gas, I think it's time to produce our own. Americans do not need to be sending all of our resources to these other countries.

Mr. CANNON. And you and I talked about the increase in price that went from $2 to $9 briefly and then it came back down a little bit, but we talked about how if we don't do this Outer Continental Shelf Development, if we don't do the inter-mountain west and other and gas resources, we'd be in the predicament that, lo and behold, we're in today.

We're talking about families doubling the price of heating their homes, businesses, doubling or tripling the price of heating their business because of failed policy.

We have energy. We need to develop it.

Mr. PETERSON of Pennsylvania. If your foreign competitor is melting steel or making a product with $1.25 natural gas, you have a huge disadvantage, and that's what's actually happening.

Mr. CANNON. That's right. You cannot compete.

Mr. PETERSON of Pennsylvania. Thanks for the time. In a couple, 3 weeks we will have the opportunity to fight to open up offshore production of oil and gas, and that alone I think will take some, if we could pass that, House and Senate, have the President sign it, I think that would take some of the excitement out of the oil market and oil and gas would settle down because everybody feels there's a lot of hype in there because the traders see it keep going up and they keep bidding it up to make money.

And so we have Wall Street, you know, 15 to 20 percent of our energy prices might be Wall Street making money. But if you take the risk out, you make sure that we have adequate supply opened up, that takes that away; and I think we could see a settling down of the markets, and we might see some measurable price decreases because if we don't, it's going to be a hot summer and it's going to be a long, cold winter for America.

Mr. CANNON. These traders are betting that Saudi Arabia and other OPEC countries won't act contrary to their own interests and allow the price to keep going on up, and that's why you get the speculative bill that we had today.

Mr. PETERSON of Pennsylvania. In fairness to those countries, they're producing more and more energy, and we have chosen not to produce very much of our own only in the whole entire fields. And yet we pass a bill so we think we can sue them because they're not producing enough? I find that interesting. The bill ought to be that the American public can sue us because we've locked up our resources and forced them to buy foreign expensive energy.

Mr. CANNON. I actually used to be a lawyer, and I can't imagine a legal theory upon which you sue a sovereign country. I can imagine a legal theory upon which you react to Congress, And you know what that is? Vote for someone else.

Mr. PETERSON of Pennsylvania. Well, that is something they all have. And I think, in my view, we need to be watching very closely as we elect a President, do they have a bona fide energy policy for America.

Mr. CANNON. Thank you, Mr. Peterson. We agree on that point. I think that for the first time in maybe our tenure in Congress, we're going to see a huge increase in the Natural Resources Committee markup of an energy bill to see if we're going to actually drill in ANWR, if we're going to drill in the Intercontinental Shelf and loosen up our drilling elsewhere around the country.

But that sort of begs the question, right now we're talking about various kinds of oil and gas. Let me put some context here.

In our conventional oil resources we have about 50 billion barrels that we know about. That includes 10 billion in ANWR. These are in the United States of America. We have some oil sands. Those are very difficult to develop in America. They're very different from the oil sands in Canada where each grain has a little molecule of water so the oil comes off the sand with just a little bit of heat.

We have about 100 million barrels of oil on the Outer Continental Shelf, and all of that adds up to about 200, 225 million barrels of oil that we have available to us today in the United States.

Think about that. 225 barrels of oil. We now have, and I'm going to pull up a chart here. We have in oil shale about 1.4, 1.3, let's see, that's ``trillion'' barrels of oil. I'm sorry. That's not ``billion'' barrels of oil, that's ``trillion'' barrels of oil in Colorado. In Utah, we have about 800 million barrels of oil and Wyoming about 500 million barrels of oil. Those are millions. We're not talking about a lousy 225 million barrels in all of our other resources. We're talking about 2.6 trillion barrels of oil that are available to America today in oil shale.

Now, let's pull up the map, if we can here. This is a map of Utah. Idaho is over in the corner, southeast Wyoming and northeast Colorado, and you can see the dark green are areas with more intense reserves of oil shale and that the lighter green are areas where you have not quite as dense oil shale. And these are the areas that have the oil that we were just talking about, 1.2 trillion barrels in Wyoming, 800 million barrels in Utah. These reserves are different, and the way to get them out, the way to get the oil out is going to differ between those.

Let's talk for just a moment about why we can be actually talking about producing oil out of shale today whereas it did not work in the past.

In the old days, and over here you see on the side it says ``past oil shale efforts,'' we used heat to convert kerogen. We broke the shale up and put it into a rotary kiln, and then heated it up. The problem is you needed enough heat in that rotary kiln to get the kerogen out, but at the same time, that was hot enough so that the rock melted into itself; and so you would have to shut the operation down occasionally and go in with sledge hammers, literally, and knock the rock out that had melted into itself.

Today you use chemistry and minimal heat to convert the kerogen to oil.

That's a profound difference, and there are about six different companies, four large companies and two small companies, that are using different kinds of technology to get with a smaller amount of heat to convert that kerogen to take it out of the shale. Kerogen, by the way, is a lot like diesel fuel and comes out of the system, very close to that. Needs to be cleaned up a little bit. It's like JP-8 diesel fuel.

In the old days, we mined this. We had a strip mine or room and pillar mining, and then we brought the shale to the surface to be processed. Today, the focus is on in situ recovery and conversion.

Back in the day, low-quality energy, intensive product, or low-quality energy, intensive product to refine; that is you had to put a lot of energy in it and it was hard to refine. And today you have high-quality value product with minimal cost to refine, and then we were focused on the resource back then, and now we're focused on balanced environmental, technical, and economically sustainable methods.

The fact is we've transformed the way we work technologically in the world today, and we can get these resources out of the ground much more cheaply.

Let's talk just for a moment about the reserves that we have--or what we use imported to the United States and the world's reserves.

The Saudi Arabians have about 264 billion barrels of reserves that we know about. Canada has about 179 million or billion barrels of oil, Iran has 138, Iraq, 115, and Kuwait 102. And the people that supply this oil are Mexico, and these are average barrels per day that we import.

So from Canada we import about 2.43 million barrels of oil, from Mexico 1.53, from Saudi Arabia 1.49, from Venezuela 1.36, and from Nigeria 1.13, and then we import a great deal more from other countries who export lesser amounts to us as we go.

These are not exactly the kind of people that we want to be relying on except with the exception of Canada perhaps and also to some degree Mexico, and that's improving.

And in the last couple minutes we have before we finish this, let me just say that this is complicated. The natural resources is complicated and the technology is complicated, but we've advanced dramatically in our knowledge and understanding of how to do that. We have now, today, for the first time in 30 years a commercial test going on here in eastern Utah of how to get oil shale out of--oil out of shale, and we think that test will be done about September 15, and the projection is we will be able to get oil out of shale for $30 a barrel.

Now consider this: Trillions of barrels of oil at about $30 a barrel. That's profound. I think that cost is going to actually go lower than $30 a barrel, and I'm about to introduce a bill that will allow the President to cut through the permitting processes and allow us to develop our oil shale at a reasonable time using reasonable understanding of the technology and the environmental impacts so that we can actually bring that shale to market, bring down the cost of oil, stop funding our enemies in Iran and Saudi Arabia and Venezuela, and start producing oil in America.

Source