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Stevens Comments On High Cost of Energy;
Encourages Drilling on Arctic Coastal Plain


March 05, 2005

Friday Senator Ted Stevens (R-Alaska) went to the floor of the United States Senate to comment on his concern over the high cost of energy and about the lack of development of U.S. domestic resources, particularly that of Alaska's Arctic coastal plain.

The following is the text of Senator Stevens' comment:

All of you have seen the news-yesterday oil prices reached $55 per barrel.  While some of us reacted with shock and amazement, the reality is that we knew this day would come.

We witness the impacts of these high energy prices every time we fill up our cars, pay our heating and electric bills.  These high prices are unsustainable, jeopardizing jobs and threatening the long term health of our economy.

The impact of high energy prices can be seen at all levels of our economy ­ high energy prices have produced job losses, trade deficits, and constraints on consumer spending and economic growth.

Demand for energy in the United States is outstripping supply, and Americans are feeling the impacts of Congress' failure to act to solve the problem.  Our people rely on our ability to stabilize energy prices and provide them with the energy resources that all of us need.  

The good news is that a worsening crisis is avoidable.  The United States has the natural resources to increase our energy supply, but inconsistent government policies discourage the exploration, development and use of our own energy resources.

Almost 30 percent of U.S. lands are owned by the federal government. That's 657 million acres - almost 4 times the size of Texas.  And under those lands lies 90% of our undiscovered oil and 40%of our undiscovered natural gas.  We need those public resources to meet our energy needs and secure our future. 

Since 1983, access to our federal lands has declined by 60 percent.

Over half of the federal lands that are designated as "multiple use" in other word, ones that oil and gas exploration could take place on are subject to highly restrictive land classifications or lease stipulations which effectively restrict energy exploration and development. 

The effect of these policies is clear.  In 1981, 91,533 oil and gas wells were drilled in the United States.  In 2003, that number had declined to 29,984 almost down to 25% of what we did some 20 years ago.  As a result crude oil production in the United States is at 50 year lows.

Permitting for oil and gas projects on federal lands that once took 18 months, and that was considered a long time, can now take over 10 years.  Let me repeat that.  In some instances it takes ten years to clear a permit to start exploring for oil on federal lands.  Those delays force companies to pursue projects overseas rather than develop U.S. resources.   And some people have commented on the fact that the U.S. oil industry is no longer seeking to support the concept of drilling on Alaska's arctic plain.  Well they have opportunities all over the world where they can proceed much more rapidly than they can in this country.  There is no question that they need find oil to meet our needs.  What industry is going to put up the money for ten years to explore and develop energy here at home when they can go abroad and do that in less than one year?

In a hearing before the House Subcommittee on Energy and Mineral Resources, Stephen Entin, a former staff economist with the Joint Economic Committee and president of the Institute for Research On the Economics of Taxation, argued that our current policies actually support OPEC, the Organization of Producing and Exporting Companies, and enhance its power. 

By locking up our lands, we have basically manipulated prices because we have restricted competition from American companies and OPEC reaps the benefits from an inequitable playing field.  As a matter of fact we encourage them to raise prices because our demand constantly increases and our domestic supply constantly decreases.  And we have outsourced jobs and energy security to unfriendly and unstable regimes. 

I have had some very personal talks with some of the members of the oil industry and they know that those unfriendly regimes, unstable regimes, but they have no alternative.  

For every $1 billion that we spend to develop petroleum domestically, we create 12,500 jobs.  That means that last year we lost over 1.3 million jobs by importing oil instead of producing it here - 1.3 million jobs!  That would mean that last year we lost more than 1.3 million jobs by importing oil rather than producing it here.  1.3 million jobs ­ and people wonder why our jobs are going abroad.  

When we withdraw lands from oil and gas exploration is not free.  Many people in this country believe there is an easy decision that doesn't cost anything.  It's an very expensive policy.  We're paying a huge price for locking up our lands and made them inaccessible when they are purportedly open by restrictive policies, very restrictive stipulations and policies, that take so long to comply with that no industry is going to put the money up and wait so long for the opportunity to see if there is oil and gas in those lands.  The American taxpayer is picking up the tab.

The American consumer is really severely punished by this policy.  Consumers are paying more for food, goods and energy bills.  According to Daniel Yergin, an economist from Cambridge Energy Associates, high energy and gasoline prices essentially act as a consumer tax leaving Americans with less disposable income for travel, home buying, restaurants, and retail establishments.  All of the things that we call our quality of life. 

Yesterday I received this estimate that, it is estimated that for every 1 cent increase at the pump, we see $1 billion lost in consumer spending.

Just look at the price of gasoline now.  The price of gasoline is at an all time high and it will not come down, it is going to continue to go up.  China, which only five years ago had only five percent of its population using energy, now 15 percent are using energy and even at that low rate of 15 percent of their people using oil and gas energy, they have now passed Japan in consumption annually of oil and gas.  They are second only to the United States now and only fifteen percent of their people are using oil and gas so far!  People blame a lot of things for these high prices, but the fact is that the world is starting to use oil and gas.  We are competing for the world's oil production and ignoring completely our capability our ability to produce here at home.  

Unless Congress acts to ensure greater domestic production of our oil resources, our energy security is jeopardized.  I am talking security now.  We have had one embargo since I have been here in the Senate in the 70's when we were totally embargoed by OPEC ­ they would not sell us oil.  At that time about 33 percent of our oil was coming in from the OPEC countries, today it is 60 percent!  60 percent.  An embargo today would destroy our economy.  

There are many people who advocate "quick fixes"  to use alternative sources.  And I believe that there must eventually be alternative sources to oil and gas in our economy.  But just relying in on them and saying we are going to do will never, never bring about any has lead us to the point that we no longer have the capability to meet our needs in the event of national security.  We believe that it is time now to review these policies.  And one of the key policies is of course an area in my state.

In 1980 we passed the Alaska Natural Interest Lands Conservation Act.  We passed the Act that withdrew over 100 million acres of Alaska's lands for national purposes.  One provision in that bill guaranteed the right to explore the Arctic plain.  A million and a half acres for oil and gas, probably known even then, known as the area most probable to produce oil and gas.  It is estimated to contain 10.4 billion barrels of oil. 

Just as a comparison, when we first drilled in Prudhoe Bay the estimate was it might contain one billion barrels of oil.  We have already produced 16 billion barrels of oil from Prudhoe Bay.  In other words this area now is considered capable of producing 10.4 billion barrels of oil is a significant, probably the last most significant, oil and gas area in the country.  We have worked now since 1981 to fulfill the promise made to us in the 1980 bill that that area could be explored.  

It is high time that we take action to reduce our dependence on foreign oil.  As I said, we rely upon on foreign oil, which we rely on for almost 60% of our energy needs.

The area of the Arctic plain, 1.5 million acres, guaranteed to be available for oil and gas exploration is there.  Allowing exploration and development of this area, now known as ANWR, although it is not part of the refuge until oil and gas development is over, that would improve our U.S. balance of trade, reduce the amount of money we spend abroad and improve our national security by having available the capability to produce that amount of oil.  

It is estimated that by 2025, the U.S. will spend approximately $200 billion on foreign oil and petroleum products.  By opening this area and when it produces we could save a considerable portion of that by producing our own oil and gas.

Development of the coastal plain will create tens of thousands of U.S. jobs and contribute greatly to the overall U.S. economy.

There is no question that we are in an energy crisis.  Any time we see $55 a barrel of oil, that is a crisis now.  Now, I cannot believe that the Congress wants to wait until the price goes up to around $80.  I believe it is going that high unless we develop our domestic resources and look to alternative supplies of energy right here at home.  


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