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.
