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tv   Key Capitol Hill Hearings  CSPAN  December 31, 2014 6:00am-8:01am EST

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>> gasoline demand is down from its peak and is likely to decline even more as vehicle fleet becomes more efficient. in addition to this trend reversal, international oil production is less concentrated. opec's share of production is down from 53% to about 35%. the existence of all contracts on the futures markets development of benchmark crude oil pricing and the availability
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of basic data from eia created by congress in 1977 have all brought greater transparency to the oil markets. as described in my written statement, eia is actively pursuing a number of important initiatives related to the timeliness and detailed of oil market data. i'd like to thank you for the opportunity to testify here today, and hope to be able to answer your questions. thank you. >> thank you very much. and our next witness is mr. lucian pugliaresi, president of the energy policy research foundation, agile recognized for five minutes. >> thank you, mr. chairman. >> be sure to microphone on. >> next slide. what i'd like to do is sort of put all of this in context, and the first thing i think we have to talk about all of it is what is energy security? we describe it as a concentration, low-cost reserves and unstable parts of the world
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which tend to provide to risks to u.s. one, they can restrict output as far as higher prices that would prevail a more competitive environment, and two some these guys were caught up assist with more terrorism, even embargoes. also imposing price spike and large costs on the national economy. so one of the best ways to deal with this threat over this problem is to have a production platform in a stable part of the world which turns out to be north america. if you look at what's happened here in this slide you can see if you take u.s. and canada together which congressman barton to just spoke about, we have had a remarkable increase in production. it's important to look upon this through a north american lens because it is this north america lends that is so stable. and it is this rapid run up in
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production particularly if you include natural gas liquid that has made a remarkable change. next slide. now, you can see prices have come down but it don't think we quite understand what this means. the reduction in price, and i've testified your many times where members have said, well, you know, we know mr. pugliaresi we opened up anwr and will get more production that opec will cut production and the price will come down. the price has come down and this place decrease is an enormous benefit to the world economy. the world consuming centers are going to get a savings of approximately $123 trillion next year if these prices persist. the american driver spends about $3000 a year in gasoline, is going to get an $800 savings. this is an enormous boon in benefit to national economy to the world economy, and it's being delivered to us through
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these production gains were having in the stable north american platform. we want to preserve that platform. we want to make the distribution efficient. that's why we need keystone. we want to good regulations. we want to open up the federal lands a lot more. all this production is come from federal land. next slide. this shows you the permit activity for oil and gas drilling permits just 490 days prior to the december 1, 2014. we are a little concerned that these lower oil prices and we're getting some evidence permit activity is coming off. and i think that is a good reason to have this hearing. we need to look at our whole regulatory structure and say okay, what do we need to do to make it as efficient as possible? once again we want this platform. we wanted to perform as best as possible. we are concerned about this by mistake we met with some of the
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world best extraction technologies in houston the last couple of days. there's lots of exciting things going on up there. as long as women open system i think we will find ways to drive down these extraction costs. very interesting things happening. next slide. this is our estimate in sort of an $80 vibrant of what we think the u.s. it could do at least in the near-term. you see where producing a lot of light, sweet crude come and we are not sure how much this is going to be disturbed by these lower oil prices. probably see some reduction there but the outlook is still very positive. next slide. i want to leave you with a couple of things. one, if you look at the slide it's quite interesting. traditionally, provincial oil had a very modest decline rate and a pretty high recovery factor, 50% to even though we
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have this very high decline rate in these unconventional resources we have no, we have to keep drilling a recovery factor is quite small. small improvements in this recovery factor going to make a big difference. that's what the want to see this technology continue to progress. if you look at this whole north american success story get back to epca, keep in mind that we should have a lot of humility about how we proceed. with mandates on ethanol. we had six-month oil embargo and then 10 years of price control. we had a fuel use act which prevent the use of natural gas. so as we go forward one of the things i want the membership think that is is what are the benefits of an open system? william pratt the famous geologist said in her 30s, oil is first discovered in the mind of man. and i think we want to keep that
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intellectual capacity going in the u.s. thank you. >> thank you very much, at our next witness is dr. charles eppinger who was the senior fellow at the brookings institution. thank you for being with us, and you're recognized for five minutes. >> thank you, mr. chairman thank you, congressman rush, for inviting me to testify this morning on the origins of the crude oil export ban which i wanted was enacted nearly 40 years ago. given the profound changes that have occurred in unconventional accounts production that we've already heard about over last sutures i think it's import to look back and remind ourselves how our energy situation has evolved since 1975. in the years prior to the oapec oil embargo the chief issues dominating energy policy in the united states were debate over the future of nuclear power especially whether we should recycle the tone and develop a reactor. price controls on domestic oil
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and natural gas which i remind you were enacted by president nixon back in 1971 concern that inflation had reached a dangerous levels of 4.4%, and the various programs both older oil import program and a mandatory oil import program told them oil imports as a protection for our domestic industry. in reviewing this history, and this is a critical point what stands out is just as is the case today, most energy issues were discussed in isolation with one another. on the geopolitical front, the early '70s saw momentous changes in the middle east and north africa as king interest in libya was opposed by colonel gadhafi and in response to decline in real oil prices, the major oil-producing countries mounted a unified campaign against the petroleum countries to exert more of the economic grant from the oil production. under two major agreements
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negotiated in tehran in tripoli, between the national oil companies and opec the opec concern about inflation and a general sense that they were not being treated fairly by the international oil companies demanded a major increase in the price of their oil. after these two agreements can opec was able to introduce an escalation clause in contracts that he believed would protect their members from inflation. this proved not to be the case. but what helped opec was as mr. sieminski note from was the surging demand a worldwide not only in the united states, but in western europe and japan which allowed opec to every time a contract was up for renegotiation, demand further upward priced revisions. mr. chairman, it's worth noting the global market conditions in the early '70s could not have been more different than they are today as word from congressman burton. demand for oil throughout the induction was world of skyrocketing. in the united states domestic production to peak in 1970
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leading a cabinet task force to recommend a gradual elimination of the quotas under the mandatory oil import program. in retrospect given the change, circumstances confronting the u.s. is remarkable that this recommendation did not receive more salience from the congress, despite the fact that u.s. oil consumption was skyrocketing, domestic production was peaking, and oil imports were up to nearly 30% of u.s. consumption on the eve of the oil embargo. the u.s. could not have been more ill prepared for the embargo. in response, what one of the primary actions taken was enactment of complex regulatory procedures for and gas prices as well as an incredibly complex system of allocation control leading to gasoline lines in the districts and the surplus supplies in the potomac. unfortunately, these were so
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ill-conceived that they accentuated the impact of the crisis and exacerbated gasoline shortages causing long lines for angry motorists buying regulated volumes of the fuel. and are glad that congressman got 10 gallons because as a graduate student i only got five gallons in new england. in response to the crisis president nixon launched project independence designed to limit oil imports by 1980 when comprising a host of initiatives, including the energy policy and conservation act. under after the president was greater the authority to restrict exports of coal, petroleum products, natural gas, petrochemical feedstock's and supplies materials and equip an for the exploration and production, refining and transportation of energy. apco authorized the president to extend crude oil and natural gas export from such restrictions. we're doing so was deemed by the president to be in the national interest. as the active the only relates to crude oil the main
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exceptions have been made are predominately for shipments to our neighbors, canada and mexico in recognition of our historic trading relationships. other exceptions are noted in detail in my formal testament to today, a few modifications to epca studios allows unrestricted exports of all fuels except crude oil. and natural gas has to go through a cumbersome regulatory procedure but it is not banned. the only express band that remains today is on crude oil. en route in the history since sincerely 70 it is apparent whenever the us government has tried to fit a particular fuel absent market realities, and a bit unintended consequences which have been dealt a terrorist to use economy and to our national energy security. controls on natural gas prices led to the third of develop the alaska natural gas transportation system, creating massive natural gas shortages in my home territory in the industrial midwest in the winter of 77-78 with devastating
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economic impacts, some which remains to this day. abandoned using oil and gas international borders and power generation lead led to major switch away from gas and oil towards goal. is rushing towards coal has led to scores of aging coal facilities that now have to be replaced as part of our national environmental policy under international law and policy. mr. chairman, in conclusion it is evident is energy situation today is far different from what it was when epca was enacted. with crude oil production continued to rise coming with the detriment to use energy and economic policy to keep the ban on crude oil exports. keeping the ban at attempting benevolent policy to control globally traded commodity with hopes of u.s. oil boom will lead to energy independence is a fallacy, as the u.s. is part of the global market and must therefore participate in it. getting the van will generate paramount foreign policy benefits. it will increase u.s. gdp and
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brookings did major study on this issue that's on a website if anyone cares to look at it and it will reduce unemployment all of which will be foregone if the ban remains in place. thank you, mr. chairman. >> thank you. our next witness is deborah gordon who's the director at the carnegie endowment for international peace, angel recognized for five minutes. >> subcommittee chairman whitfield, ranking member rush, testing which most of the subcommittee, thank you for the opportunity to testify today about at gun in an era of oil transition to in my remarks i will set three key points. first, they need to understand the changing conditions influencing today's crude oil market. second of the for better information about the makeup and specifications of u.s. oils and lastly the need to do it in front of the consequences from an unconditional lifting of the export ban. the bottom line is that oil is changing. a more complex array of
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hydrocarbon resources we are placing -- replacing dementia of the public and private stakeholders the to understand the environmental impacts and had two different oils. the best way to position america for success in the energy of fun is to generate information is there to make wise decisions among many oil options. the truth is we know precious little about these new resources. the nation needs reliable, consistent detailed open source of data about compensation and operational elements of u.s. oils. significant information gaps have accompanied the nation's oil increase our production. although after was adopted in response to a set of -- and serve as a template for shortcomings today as america struggles to manage the economic to political and climate impacts of its new oil bounty. it will be important for policymakers to think comprehensively about the full range of crude oil issues to
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several epca epca provisions. careful review and consideration and possible updating. one white expanding oil data collection making this information publicly available to come increasing the heavy-duty vehicle efficiency standards for truck and marine vessels the movie oil and petrone products that we're trying to consume less of it on. and three revisiting oil accounting practices so the fcc is fully informed the oil that is unpalatable to u.s. markets. america's one of the first in line to win the unconventional oil lottery. but despite newfound energy resources at home to use existing increase in oil independent world. as such if u.s. policymakers enact an effective safeguard america would better position to chart the path that others can follow. to question the attention. first, to policymakers and the public have sufficient information about america's oil? unfortunately they do not.
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ironically, there is more detailed open source data about opec crude and the oils in the bakken permian and eagle ford. and seeking to obtain and verify these oil data we've encountered several obstacles from david institutions to withhold data to government -- to withhold data to government limitations on expanding oil reporting but i would be happy to elaborate on any of these issues. the overarching concern is that oil markets not function efficiently without transparent high quality information. question to, what i've environmental risk of these new uzbeks we're developing in the climate index that covers global oil with one another in terms of total greenhouse gas impact. together with stanford university and the university of calgary we are modeling the entire oil value chain from where the oil comes out of the ground through to the products are used. our findings based on 28 sample oils, global oils, are the oils
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greenhouse gas foot prints very. in other words, replacing a high greenhouse gas but with a lower one could almost half the impacts that greenhouse gases for every barrel of oil. several categories of higher emissions from oil. heavy oils, those used to value chain you up more bottom of the barrel products like petroleum coke, go substitute. water goes which are interesting like those in california san joaquin valley with extreme in his amount of energy to lift as much as 50 barrels of water for everyone barrel of oil that you produce. and extreme oils like those in the gulf of mexico better miles below the surface or those in alberta where carbon is naturally sequester. is one of the world's fastest-growing oil producers the u.s. has the opportunity and
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the responsibility to be a global leader in the energy sector. a balanced energy policy for more oil transparency must guide energy decision-making in ways that satisfy you as consumers come strengthen the american economy, protect the climate and enhance national and global security. enclosing a national discussion, one informed by reliable, open source data about the composition, quality and environmental profile of new oil will be key to making effective and sustainable decisions. thank you. >> thank you, ms. gordon. and thank all of you for your testimony. at this time of recognize myself for questions and then will give every other member the opportunity as well. just from a practical aspect here, anytime you start talking about crude oil most of the american people think about gasoline prices.
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that's why it's more volatile i think when you talk about exporting crude oil and certainly natural gas for something like that. do any of you have an opinion on, if you're at a rotary club, how you would explain that exporting additional crude oil would not necessarily raise gasoline prices? >> mr. chairman, it's always a challenge that usually at those rotary club functions i get asked why gasoline prices are so high. lately i haven't gotten that question. eia has tried to examine your question from the standpoint of how gasoline prices are set in u.s. markets and what gasoline prices relate to. and what we found in a study that we published just a short
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while ago was that, that these two benchmark crude to talk about, the one in use wti, west texas, and brand into international markets that gasoline prices historically tend to be much more closely related to brent crude oil prices and to the domestic benchmark. the second thing that we found was that u.s. gasoline prices tend to be more closely related to gasoline prices in markets like singapore and rotterdam in the global markets and to comparing, let's say, chicago prices with prices in the gulf coast. the conclusion that one would draw from that is that that gasoline prices, because we are exporting and importing so much
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gasoline, are really set in the global market. there's one market gasoline prices in u.s. tend to reflect the global market, and that that is exports of crude oil resulted in higher prices or west texas intermediate or crude that are benchmarked to that would not have much impact on gasoline prices. >> i'm glad you mentioned where already exporting gasoline anyway, so we are talking -- >> quite a bit actually. >> did you have a comment? >> yes, mr. chairman. how i would explain it, if you want to constrain volatility in the market if you want to constrain rising gasoline prices, you should promote a very stable and growing production of crude oil in north america. we have evidence this is having a big effect, and that's the answer. as adam said we are well
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integrated into the world oil market. the only thing, what we can do is have a stable growing production of crude oil outside of these more volatile areas. >> do you have a comment? >> if i could just add, try to think an easy way to look at this is since as mr. sieminski said, gasoline prices are predominantly set in the international market, if we have a sudden point of crude oil in that market analyst at we put more oil into the market adding to supply while demand stays relatively constant on the basis of kind of fundamental economics, more supply constant demand, prices -- prices should come down and refineries buying that oil around the world will in theory at least if they wished to be competitive well over there petroleum product prices, including gasoline and hopefully for new england, maybe home heating fuel. i think that's the way i find
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sometimes trying to explain it, seems to have some -- >> ms. gordon? >> i don't know that would it would be easy for consumers to understand this but because oils are so different from the oils we are so largely now the heavier oils, don't preferentially make more gasoline to they make more diesel. so the oils we are now looking to export, those do they are lighter oils can they go through refineries can they make more gasoline. so we might be getting ready to export the perfect will to make more gasoline in order to keep and refine the oil that makes more diesel. it's not a consumer issue than because our consuming public doesn't use diesel. they use gasoline. so it's just a little complicated here and the question was volatility. i think consumers are going to need to understand in the future possibly not explain high prices but volatile prices. volatility will really hurt america because we are equal in large part consumer and producer of oil and product.
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that if the markets become a volatile we are going to hurt more than anyone else. >> okay. my time has expired, and mr. rush, you are recognized for five minutes. >> i want to thank you mr. chairman. i share with the bailout some cautionary items. is gordon -- ms. gordon one type of impact when lifting the crude oil then have on climate change? on these precautions or conditions that congress should consider if we were to lift the ban on crude oil altogether? >> it's a great question, and around it is as my testimony stated can we just don't know
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enough about these light tight oils that are coming out of america. we do know is, like you said they are lighter oils. our refineries are sent to run much heavier crude which need more heat, more bottom of the product to the heavier oils are generally more greenhouse gas intensity with setting ourselves up to be a refiner of higher greenhouse gas oils as we export possibly if they're not cleared lower greenhouse gas oils to others which puts put a big burden on america to control what we're doing and we're handing off our oils exciting there are real questions from the climate perspective, what are these oils and what are we giving away? >> is there any other panelist who would like to comment on this? >> on any other panelist? let me ask a question? mr. ebinger, in your written testimony your lifting the ban on crude oil for most economic,
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employment trade and over all economic oil for the nation. what is your opinion on potential downsides to removing the ban because i don't believe there are sizable downside lifting the ban with the possible exception of what ms. gordon said that we don't know completely impact on greenhouse gases. in a major to that brookings recently did in association with the economic consulting firm, we have some very detailed the data in there on what we think will happen to employment, overall economic welfare for the nation and the numbers embrace centers almost constantly positive or can our study has been pretty much seconded, although maybe a couple cannot be forced them that have now been five or six major studies done by ifc done
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by the government that of all conclude the benefits far outweigh any potential costs. i guess i will leave it at that. >> do you have any comments for the designing -- for lifting the ban? >> i think whenever we go to a pre-trade alternative, which everybody here has a lot of training in economics but no one is going to be against free trade. i think it's a good thing. it's going to make a comment more efficient but the would be dislocations but i think some sectors of some segments of u.s. refining industry particularly if we have this high production scenario. we'll have we will find themselves in a less economically advantaged decision. however, we have a very complex
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and advanced refining sector in the united states. the capacity to refine the complex kinds of crude are there. i think, as we go go to lifting the ban on crude oil we want to look jimmy choo okay are we burdening the downstream sector with unnecessary regulation? what is osha regulations to? what is the permit doing? in other words you know also as congressman barney raised maybe we need to look at some kinds of adjustment in the jones act. it's very tough, i understand but there will be adjustments. but on balance the economy will be better off. i think the short-term in defined as we probably can handle what's going on right now. it's a more longer-term problem but i also think that probably immediate we should look very closely at the eagle ford problem in texas. >> let me just add that the
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reason u.s. is exporting gasoline from the gulf coast is that we have a surplus of just, domestic demand for gas has been declining as likely continue to go down as automobiles become more efficient. and in a sense what refiners are doing is exporting the surplus product so that they can more efficiently fill the demand for other products in the u.s. market that are more valuable. so the export of gasoline may actually be helping keep overall product prices for use consumers down. >> thank you mr. chairman. i yield back. >> at this time i recognize the gentleman from texas mr. barthold for five minutes. >> thank you. i'm looking around the dicier country. that's what we wanted opened mr. florist. is a new member of the committee. glad to have you.
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-- mr. florez. mr. mullin some oklahoma. glad to have him there. icy mr. barrow, he's a member is not going to be your next year. his state, the peach state. do we have about exports of peaches? yes or no? okay go with mr. mckinley up your who is a coal stated with a pen on the export of coal? ms. capps from california comes with a ban on the export of movies? don't think so. we have mr. pompeo, mr. terry from the corn state. to have a ban on the export of corn? no. [inaudible] [laughter] >> i was saving that for last. my point is that there in a free market economy like the united
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states. there are almost no commodities or products that we have a ban on. we are the free market nation in the world. now, as has been pointed out in the 1970s the opec cartel banned exports of crude oil to the united states. and we retaliate by creating a strategic petroleum reserve, and also requiring that no crude oil, with few exceptions, could be exported from the united states. that made some economic sense and some strategic sense in the 1970s, but this isn't the 1970s. now, the key question, or one of the key questions the chairman of the subpoenas already passed, you know, what would happen if
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we repeal the ban? what would happen to domestic gasoline prices? i haven't seen any study that said they would go up. and the reverse question would be, what would happen if we don't? what happens to domestic oil production in the near-term, midterm and the long-term if we keep the ban in place? now, a key issue there is the market for domestic crude oil u.s. refinery capacity, i think is around 12 million barrels a day, is that correct, mr. sieminski? >> if you add in all of the other things, domestic crude oil is getting close to 9 million barrels a day you could get up to 12 by adding in biofuels and -- >> no, i'm asking what the refinery capacity is. >> oh, over 16 million barrels a
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day spent over 16. >> yes, sir. >> i didn't think it was that i but my point was going to be if we don't have a market in the united states with a crude oil at our refineries, if you can't exported, you keep it in the ground. but if it's 16 million barrels, then we can increase domestic supply fairly significantly and we just freeze out or pushed out imports from overseas. wouldn't that be correct? >> you raise an interesting point, congressman. many people look at the growth in domestic production and the flatness and demand, and they envision a world where the u.s. is not importing any oil, but in fact, the u.s. they continue to import oil simply to refine it and are very efficient refinery system and sell those parts back in the global markets. >> mexico is finally freeing up their oil economy, and if they follow through with their
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constitutional change, you see a large number of u.s. producers and exploration going down to mexico, and i would assume that it would be additional oil in mexico that could come up to the united states in the next five to six years plus we got candidate. i know there are some issues on the bottom of the front with canadian heavy oil. i guess i only have 22 seconds. if i had to look at this panel commend you to vote yes or no on repealing the ban, i think i have three guesses and they may be. i'm going to ask ms. gordon, i didn't sense that the carnegie institute is totally opposed to repealing the ban. i think your concern is transparency and information for environmental or process, is that correct? >> yeah, i think we have a reprieve because demand has
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cooled off globally. does not allow place to put a lot of what not and that is time to do the due diligence that has happened with information so the better sense of what's going to happen with you change policy some day. i do think we're headed towards more open markets in general but you are a jew should add the oil market is one of the least efficient markets. there are so many reasons, barriers into compares to exit not enough information externalities. there's far more efficiency in peach markets abandoned oil markets. >> could ask one more question? is it possible for these lighter shade oil that are being produced in the eagle ford and up in north dakota to be exported as refined products? because they are so light and almost need no refining? >> they are really different from each other. the bakken oil is like nigerian crude. we backed out a lot of the june
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crude since we've been producing in the bakken. we are probably going to have implications for nigeria and the north sea because that's -- the eagle ford is unusual. it's much, much lighter. it needs to have the condensates stripped out of. so even with the light oil categories is a lot diversity we have a lot of information about. >> thank you, mr. chairman spent this time recommends that children from kentucky for five minutes. >> thank you very much, mr. chairman. but i think all the witnesses for the testimony and knowledge. i've learned a lot but i'm still not sure where i am on this issue. i'm curious can we talked about the potential downside and while everything looks wonderful right now with an abundance of oil and petroleum in the world and prices down that would seem to be mitigated against worrying about a crazy, but isn't it entirely possible that we could return to a 1970 situation?
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i was a staffer here in the '70s and remember those lines as well. would it not be useful to have at least some contingency measure of whether it's an international outbreak war, terrorism, whatever it may be done with some way to protect our domestic supply in case of an emergency? >> so i think because we're in this air of new oil and everything is changing, the risks are changing but we have the pure political risk on what elephant plays a on what elephant plays a part of the struggle produce oil and with operational and wanted to risks didn't have to contend with. we have new oils and new conditions and then we have huge growth in china in terms of demand that sporadic but it's not going to be red-hot consistently. it's a market, and so we do tend
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to talk with oil at a moment in time maybe because it's open every corner that it's as if this was a conditional that exist for all time but the rallies is it's a dynamic and we could easily return with risk different consumption patterns. even in america were selling a lot more suvs with no. we are reversing our demand but we're not necessarily bound to that. >> so there's no tnt given the volunteer -- volatility of the market if we eliminate the prohibition that we can have the kind impact on prices that we would expect, that prices will necessary be lower, we can't guarantee that. >> yes. in addition to what was said earlier room we will exceed the refining capacity we will retain imports of all because we want to put products on the market. that's what industry does. is one of the parts of industry. >> if i could add to answer your question, you know, most of the oil we consume in the united
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states is in the transportation sector. it seems to me rather than maintain the ban on crude oil exports, we would be much wiser to have an accelerated program to use our vast natural gas reserves to a greater degree in transportation. there've been numerous studies it would be a long-term effort but if we could replace the diesel fuel that we use in the 18 wheel trucks, some people say will be another 1.8 million barrels a day we could use to get within his natural gas in marine transportation on the great lakes and honor major rivers coastal trade, that's another major place we could say. and we have companies already experiment with using lng and railroad locomotive. so if we could reduce the use of oil and transport by relying on a vast natural gas and i think it would be a far more prudent policy bank intended to ban on crude oil export. >> one thing. if we go back and look at the
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history of epca and everything we did, if you want to go take one lesson out of that we need to policies which are robust against uncertainty. and every time we tried to guess what we think we know what the future looks like nuclear power is going to be too cheap to meter, or were going to ban the use of natural gas to power plant. we have a hard time getting this right, and nobody can we don't really know what the future looks like it will we do know is that we do much better when we have policies that allow a lot workplace and individuals to adjust to changing circumstances. want to put something in place here on capitol hill it's really hard to fix it, you know? those of us who go way back remember, we had dozens of small refiners to remember this? we had dozens of the small refiners which came out of the arcane regulations of price
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control. when it came time to be controlled crude oil prices unusually hard because we had this political establishment of small refiners all over the country. i think we have to keep in mind as we go forward that what real lessons of this renaissance, it was an open system. is all occurred on private land. the government to have the end of the government was really not trying to stop these guys. we didn't have to rely on federal land. as we go forward we ought to really think hard about what kinds of strategies are likely to be more productive. >> thank you, mr. chairman. my time is up. >> recognized in judgment from illinois mr. shimkus, for five minutes. >> thank you, mr. chairman. this is a tremendous panel integrator, so thank you chairman without. times, times and tons of questions some going to try to put them in some sense of order. but ms. gordon i appreciate your
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testimony, and after, the original epca, i didn't know i was reporting requirements for more transparency. and following up on what congressman barton said, they're probably is some truth to getting more information so that markets can operate more effectively and efficiently. psi pressure to those comments. because there's different type of crude oil, going to be the major front to my question, but we also no refiners have made major investments based upon a world they perceive sixers ago which has admittedly changed today. from heavy crude to light sweet and refined expansion to the other thing the southern part of the discussion or debate is transportation cost and long pipeline versus what could actually happen in the future with all these more localized resources available is that you
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could see closer interaction between these new fines, and local, more local refineries in a more localized system. mr. pugliaresi, i appreciated the statement because the need for a production platform and a stable part of the world i think is really, not just what it does on hedging the risk volatile risk of pricing kind of addressing my colleague from kentucky's question, but also internationally. i focus on eastern europe a lot of times, and i understand energy extortion come as what we would like to see for our allies in europe and even in europe i think the same would be true on crude oil exports. you have to have a stable
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platform to be able to do that hence the next kind of position. because even in the map they figure, you have these major bases but there's probably more that are going to develop like the southern illinois basin which now we've gone through the legislative process. so you the element basin, we still more deepwater applications. we've got and the debates that will always be there by the national petroleum reserve. we have keystone xl debate, and what i hear i think is that because i'm afraid we have this huge supply but we can't run government to set these parameters. we got to let the markets do it. the markets will then send the signal which of these oil basins are recoverable based upon the
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price of crude oil. somebody's been able to be now exploited because the cost of recovery is high. but then in the case where there is a new changed in world dynamics, and that cost might be available for continued expiration. did i make sense in any of that and also? >> right now is a rate going on between the lord violation and advancement of a and technology. some things are very near. if you look at a traditional hydraulic fracturing job across the u.s. 40% of those front jobs are very uneconomic in some ways. 40% of the preparations on a horizontal pipe or not working but there's technology developing out that will drastically improve the. so you could have a high cost safety which does look like doing to well right away. in a few years things to change.
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once again we want strategies which a robot's under uncertainty. we try to prescribe the future. we're going to be wrong. >> in your testimony you did state that increasing oil exports would help lower the prices at the pump. that was part of your written testimony. >> lower gasoline prices, yes or. >> the last thing want to ask people think we might do this starting to get talk from a lot of people, is there a difference because really except ms. gordon started separating heavy, sour and light sweet come is there a credible argument in separating the crude oil price and easing the ban on one but not easing the ban on the other? that will be my last question if some people want to weigh in on it. appreciated. >> i think the time is coming that we're going to have baskets of crude that are split much
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more on quality than on location. i think that these oils are quite different from each other and they beget very long-term investments that last generation. so the market needs this information. so whether it's regulation or not i think i did a separating oils into these baskets is somewhat going to be the wave of the future. >> the rest of your chicken, not going to answer the question? i yield back. >> is to recognize the gentleman from california for five minutes. >> thank you, mr. chairman. i want to thank each of our witnesses for your test would today at this hearing. i also want to take a moment since i believe our last hearing into session of congress to honor and acknowledge as i walked in and i realized i'm walking into the john dingell room the incredible, as i said --
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[inaudible] yes, i know. it is the john dingell room, our colleague who was former chairman under whose leadership i was first asked to be on the committee. and also my colleague from california, ranking member and my neighbor, mr. henry waxman, for the incredible service to the skin and/or nation. i know he stepped out by want to also bid farewell to our friend john barrow who i believe has added much value to this committee as well. these are people who will be missed. the oil market export market is complex. i picked that up from the hearing today. we need detailed accurate information, i believe to conduct a proper assessment of increasing exports. yet, ms. gordon in your testimony you say that accessing this information is difficult. in fact, you say we have more
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data which i find quite stunning, about opec crude oils than about some new american oil, crude oil. my question for you to elaborate a bit is on that. white is this information so difficult to access? >> their sony reasons it's not there. the first reason is a light tight oils are the newest kid on the block so to speak so they have been around as long. in the 20 test was we've modeled and we have venezuelan oil industry by getting information from venezuela. there's just there's uae to our oils from all over the world come in tunisia, but we don't have any oils that are from north dakota or texas, these light tight oils. one of the big problems is that in order to get information on oil, you do a chemical footprint of the oils, but everyone does it differently. so when they reported you can't compare oils to one another.
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so having more consistent reporting on information is one big problem but another one come having met with the dod is that apparently, and i think mr. sieminski to talk more about this, but apparently the energy department can't go to collect data on oil free. it turns out only be come and i was kind of flabbergasted when i learned this but only be says is a duplication of effort. and she submits data on oil. d.o.e. doesn't set reporting requirements will. although when you read epca there is room for this to happen but it just hasn't really evolved that way. so d.o.e. is actually only getting the information that industry wants to report out. these are new oils, less information reported out. a third one imagine one of our partners tried to purchase dated because there is a data that is owned by these big oil consultancies. and after negotiating for a matter of about a year, in the hundreds of thousands of
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dollars, they were told the data wasn't for sale because it's competitive. they don't want the academic sector to compete with the consulting sector. so there are a lot of concerns when it comes to oil data especially as the more oil is out there. >> you used that last sentence as a segue to another kind of topic that might be appropriate now. any discussion of export must also be considered in the context of our overall energy policy and the rails of climate change and you also touched on that. you have done an extensive analysis on the climate impacts of our nation's oil policies but in your testimony you discuss preliminary research on the climate impacts of various types of american crude or they could export if the current ban is lifted. my question given that transparency challenges that you just described, have you been able to complete his climate assessment with the data available to you? >> no. none of the 20 oils we been able
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to model arkham we have u.s. oils that have been around like gulf of mexico, but we don't have any of the new light tight oils so far in the 28 test was because data is just not available. >> i'm prepared to yield back but mr. chairman, this lack of transparent i believe is very concerning. not just for our assessment of oil export policy but for conducting proper oversight of the industry in general. if the industry is asking us to lift the export ban i believe they need to provide the information that is so clearly needed to properly assess the very policy that they're asking us to expand upon the i yield back. >> this time recognize the gentleman from pennsylvania for five minutes. >> thank you, mr. chairman. thank you for your testimony. i, too, remember the long lines in the '70s. but what wasn't said was after waiting for 45 minutes or an
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hour with your car idling, and the lines backed up on the highway, and some people just topping off and some people about to go into there were a lot of short tempers and it was a very bad situation, wasting a lot of oil. gasoline. were any statement made on how much waste and there was with those long lines back in the '70s transform? >> i don't think that eia did, but i think you're absolutely right, congressman pitts that the whole, the idea behind the program i think made some sense at the time, but the implication of it left a lot to be desired. a lot of the problems have to do with the availability of gasoline in different areas. it was based on use. as we get into the crisis, you
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didn't have enough people in the prior year were all out having vacations, outside of the cities, and that for all the gasoline went, but during the crisis they were all in lines in the cities so they could get the gasoline to go out on their family holiday. it was a bit of a mess. >> actually i worked on this when i was at the department of energy. you cannot imagine the small changes. people just think refinery takes crude oil and processes into ghastly but they're blending dozens of components. we were trying to control the prices of all of these, and every day there was enormous misallocation, shortages, the wrong kind of mixes because the market was completely surpassed by the government price control system. i mean i don't think you'll find anybody is looking at this program wants to defend -- me it was an unmitigated disaster.
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it's su our capacity to even adjust to the crisis. >> and in addition after waiting 45 is or an hour, the station many of them would run out of gas but you'd have to go home come back another day. the average family as we've heard can expect that several hundred dollars a year if prices stay where they are. administrator, how can we maximize these benefits and sustained over the long run? >> well, the benefits to household income is coming from the were oil prices. most of that coming in gasoline. the number of about $800 per household is right for $30 of decline, average prices last year that would be sustained for about a year. those numbers could even be a little bit higher than that depending on where oil prices settle out.
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that is going to have a pretty positive effect on the ability of households to spend, i think we will begin to see the positive impact of that on the economy. d.i.a., macroeconomists took a look at this and concluded that if we had this $30 decline sustained for a year, that could add as much as 1% to u.s. gdp is. >> if the ban were lifted, you know, what effect would it have on gasoline prices, and have would impact our refinery sector? doyou want to continue? >> gasoline prices, you know again if we stay at these levels, gasoline prices could be down almost 77 cents a gallon. that's again a huge plus with gasoline prices averaging that much lower than the prior year. obviously, there will be some
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losers in the production, producers will have lower income. this could have big effects on countries like venezuela and others that depend on oil revenues and that could lead to unrest there. is why i think the idea that policies, you know outcomes and forecast is one huge but if you lost that oil production from vendors was because of social unrest you could see prices come back up again. i think in general, when i think about policies coming eia is not a policy organization i think i can subscribe three components but what is in for the konica what does it mean for the environment, and what does it mean for national security, and you ask about national security issues but i would imagine a key thing in thinking about this is how to weigh those impacts from a policy standpoint.
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i think the strategic petroleum reserve is probably our key tool in security. >> times expired. >> recognize the gentleman from georgia for five minutes. [inaudible] >> thank you, mr. chairman. and i hope i get my own five minutes to thank my colleagues. i represent houston, texas, and we have five refineries in east harris county but also have all my service companies. obviously, halliburton, you name it, they could use in groups like that. i want to keep them working in the oil patch but also know that this is probably the best time in my history that we've seen the refinery margins where we are at. that's what i want to ask mr. sieminski, or admiral. typically the integrated oil companies that have refiners and production they have refined
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but that is not the profit center to most of the profits and is on the production side although we do have three of those refiners are also independent refiners are not integrated, or majors. have y'all done any research on the refining capacity? because i know they shut down refineries, small refiners in and around the country. there's some concern over the years that even though come and we weren't producing as much crude as we needed right now but also we were losing refining capacity. have y'all look at those numbers? >> we have a study underway on the ability of u.s. refineries to absorb this increase in a lighter oils that are being produced from a show for missions. and we will have that out i think sometime in the early part of next year i think the general feeling is, if you come back to the complexities of this if
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moving the export ban does have impacts on different sectors in the economy and independent refiners are very concerned about -- >> let me ask -- >> how they would come out in that analysis. >> what happened in the '90s is because we weren't producing lighter swede in the united states, most of our refiners were successful converted and the cost, i no one refiners about to put $5 billion. to convert to do the heavier crude. having all put any cost estimates on -- >> congressman, you are right in there. we should come up and brief you when we have this study done. we're going to have some estimates in the of what calls are associate with adding the equipment is needed to take care of this increase in lighter crudes and how fast those lighter crudes will be gone. what we do know is that over


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