country to successfully develop an energy policy either substantively or politically if it is only for conservation or only for production. The reality is our needs require us to take initiatives in both areas and, indeed, in renewable energy sources as well. I have placed on the table a number of proposals on conservation. Not to suggest a lack of commitment on my part to see us take production initiatives, but rather to make it clear that I believe that there must be as part of this package, a very heavy conservation, what I would call, cost effective conservation and efficiency component.

[The prepared statements of Messrs. Bruce, McMillen, Oxley, and Synar follow:]

PREPARED STATEMENT OF HON. TERRY L. BRUCE

Thank you Mr. Chairman for holding today's hearing and for your continuing leadership in improving the Nation's energy security. The decisions which will be made over the next several months in this subcommittee will have long-lasting impact on our Nation.

Coming from a district heavily dependent on the production of fuels-coal, oil, and ethanol-I have direct interests in promoting domestic energy security. The last Congress took significant steps toward improving our energy security through ethanol and natural gas requirements in the clean air bill, as well as through providing tax incentives for ethanol, solar, wind, and domestic oil production in budget reconciliation.

We also took some steps backward, however. The ability of our Nation's utilities to use domestically produced coal was severely hampered. Today, I am reintroducing legislation originally dropped in last year which will reinstate many of the tax relief measures for pollution control equipment which existed before tax reform. These measures would go a long way toward alleviating the financial problems caused by the Clean Air Act Amendments of 1990 in using coal. Seventeen of our colleagues have signed on as original cosponsors of this legislation.

As we go about producing a national energy security policy, I hope we will put primary emphasis on reducing the use of foreign fossil fuels. As we consider uncertain global warming concerns, I hope we will not rush to abandon this Nation's fossil fuel resources.

We must integrate these resources with a policy that emphasizes the use of renewable energy sources, conservation, and the development of technologies which will also help industrializing countries produce energy more efficiently. We should be careful, however, not to rush to produce new fossil fuel resources at the expense of the environment until we have done a great deal more to promote conservation in all sectors of our economy. We also need to develop a research policy for developing renewable fuels that utilizes the expertise of our university researchers, as well as the private sector.

There are a great number of common sense policies which must be adopted by this Congress. The low-cost oil policy of the Reagan administration did not just damage many of our Nation's oil-producing regions. It also undermined our national security. This cannot be allowed to happen again.

PREPARED Statement oF HON. C. THOMAS MCMILLEN

Mr. Chairman, I would like to thank you for holding this timely hearing. I am pleased to have the opportunity to serve as a member of this subcommittee and look forward to contributing to the formulation of a national energy policy.

I doubt that any one of us in this room has missed the irony that, as we being to plan a new energy strategy, the consequences of our old policies are painfully clear. And I do not refer only to the ongoing Gulf crisis, although it is the most dramatic manifestation. There are problems on other fronts as well.

Clearly, our environment is testament to the energy policies we have followed. The poor air quality found in our cities and the deterioration of the ozone layer are results of both the life-style Americans have grown accustomed to and the policy decisions forwarded by past administrations.

In addition, we are experiencing an economic crisis. Although not solely linked to energy policy, certainly fluctuations in oil prices caused by the instability in the Middle East have contributed to the recent economic downturn.

The purpose of this hearing is not to devise solutions to these "symptoms," but rather to examine options that will assist in creating a comprehensive strategy aimed at eradicating the underlying causes of these problems.

Only if the competing interests in this debate can agree upon common objectives can we then advance to the difficult task of finding the mechanisms to achieve our goals.

Let us have no illusions-there is no quick fix.

However, we are lucky in the sense that we do not have to reinvent the wheel. Research in alternative fuels, renewable energy sources, and conservation methods has been ongoing for a number of years (albeit in a relatively small scale). In addition, we know that there are real advantages to utilizing the marketplace, and we have also learned that there are limitations.

Our collective experience has brought us to this junction and now we must try and use that experience in a worthwhile way. At best, we can strike a balance between our very real energy needs and our equally important environmental and economic concerns. At worst, we must at least alleviate some of the more glaring problems evident in our current energy policy.

I would like ti finish up today by noting that this country has had a long history of conflicts that have, if not primarily, then at least tangentially, revolved around oil. If it is possible, I would like to make the Gulf crisis our last.

Our foremost concern in formulating a new energy policy must be finding a way to wean this country of its dependence on foreign oil. This dependency undermines our national security and our economy. If we do not seek to achieve this end then we will continue to place this country in jeopardy and, I believe, we will have failed to enact any real change.

I look forward to hearing the witnesses that are present today. I trust that they will provide us with some useful insights that will be helpful as we advance in formulating a new energy policy. Thank you Mr. Chairman.

PREPARED STATEMENT OF HON. MICHAEL G. OXLEY

I want to thank the chairman for calling this hearing-the first in a series on energy policy this year-and I look forward to discussing with our panel of witnesses their individual views on what our national energy goals should or should not be.

As a result of the Iraqi invasion of Kuwait and the continuing international struggle in the Middle East, we are once again in the position of having to ask ourselves "how secure are our sources of energy?"

While everyone has their own idea of how to ensure energy security, it is important that we first understand what our goals are and what policy options will best help us achieve those goals.

If our goal is to increase supply, we can look at increased domestic production of all our resources. If our goal is to decrease demand we have to look at energy efficiency and conservation.

Mr. Chairman, to address how America uses energy, how much it uses, and how we meet those demands, I believe we will need to consider all policy options. No one approach will achieve the goal of energy security.

To President Bush's credit, the administration began work on a "national energy strategy" over a year ago, well before the Iraqi invasion of Kuwait. Before we learned just how insecure our energy sources can be, President Bush said "our goal is to reduce reliance on insecure energy supplies."

Because U.S. energy consumption has increased dramatically in the last five years and domestic production has decreased by about 1 million barrels per day, we have become more dependent on foreign sources and more vulnerable to supply disruptions and rapid price increases.

The war reminded us of the need for renewed emphasis on energy policy and the President will advance the debate today when he releases his "national energy strategy". Now it is up to Congress to begin to seriously consider all policy options including conservation, expanded use of renewable energy, and incentives for increased production of oil, natural gas, and coal.

While energy policy, like most other policies, is a very parochial issue, I hope that we will have the political resolve to adopt a policy that will truly enhance our energy security. Hopefully, this hearing will be another step in that process.

Thank you.

PREPARED STATEMENT OF HON. MIKE SYNAR

I commend Chairman Sharp for calling this hearing on the development of a national energy policy.

The war in the Persian Gulf should convince us, once and for all, the Nation needs a long-term, comprehensive commitment to managing its energy resources and needs. It is a call to action. Not to panic. Not to wasteful crisis response programs, like the Synthetic Fuels Program, but to an enduring commitment to treating energy supply and demand as the critical element of our Nation's security and economic wellbeing that it is.

I would like to offer several simple goals that I believe that a national energy strategy should fulfill:

First, we must reduce our economic dependence on petroleum reserves in politically volatile and distant parts of the world.

Second, we must improve our own energy production capability by turning to enhanced oil recovery and advanced extraction technologies as well as the use of alternative fuels and new renewable energy technologies.

Third, we must make our homes, factories, buildings, vehicles, and businesses more energy efficient and competitive. And the Federal Government should set the example of how to increase energy efficiency rather than an example of how to be part of the problem.

Fourth, we must strengthen our ability to withstand disruptions in oil supplies by maintaining a strong strategic reserve and by strengthening our ties to energy producers here in our own hemisphere—especially Mexico, Venezuela, and Canada.

Fifth, we should direct scarce public and private dollars into areas where we can get the most for those dollars and embrace a “no regrets” policy where risks are kept to a minimum.

Sixth, we should adopt energy initiatives that result in environmental quality gains and not leave us with an increased environmental burden in the future.

Finally, let me say that where I come from, three strikes and you're out. We have had our three energy strikes and now we are paying the price in the Persian Gulf. It is time that we, as a Nation, started to plan for our energy needs and our economic future.

I look forward to working with Chairman Sharp and Chairman Dingell and the other members of our committee on this most important task.

Mr. SHARP. This morning we are going to begin by focusing on what our goals may or should be. The critical part of the debate that often seems to get left out is what it is we really want to accomplish, against which we can measure the things that we are doing. We are very pleased to have helping us today, and this is only the beginning of a set of hearings, the distinguished Dr. Daniel Yergin, currently a President of Cambridge Energy Research Associates, a long-term analyst of energy and the oil industry in particular.

Recently, he wrote and published the best selling book "The Prize," a history of the oil industry in this country and world wide. He was originally involved in a key study in the 1970's that helped to indicate to the country that there were enormous gains that we could make with energy efficiency that were economically sound. We are also pleased to have back with us Dr. John Gibbons, the Director of the Office of Technology Assessment, the Agency that the Congress established to help give us information on critically important technological developments. Dr. Gibbons and his colleagues have done considerable work on a number of energy issues for this committee and for other committees of the Congress.

We also welcome Mr. Charles Curtis, who is a former Chairman of the Federal Energy Regulatory Commission and a distinguished alumnus of the Energy and Commerce Committee staff who has dealt both in Congress and out of Congress with many of the issues before us.

I would like now to recognize our distinguished Republican colleague from California, Mr. Moorhead.

Mr. MOORHEAD. Thank you, Mr. Chairman. I want to, along with our chairman, welcome to the subcommittee members our witnesses for the first Energy and Power Subcommittee hearing of the 102d Congress. This hearing is dedicated to identifying national energy policy goals. Something Congress clearly should do in view of the Persian Gulf crisis, which has demonstrated once again how close our foreign policy is linked to our domestic energy needs.

Today is the day that the President will release his national energy strategy Report and accompanying legislative proposals. I want to take this opportunity to commend the President and Secretary Watkins for their leadership in this vital issue. I also want to state my strong conviction that Congress needs to get organized so that we, too, can put forth our version of a comprehensive energy strategy for this country.

The Republican Members of this committee engaged in just such an effort last year, introducing H.R. 5735, the Comprehensive Energy Self Sufficiency Act of 1990. I look forward to this committee on a bipartisan basis now moving forward to put forth its comprehensive energy bill.

Which brings me to my goals for a national energy strategy. I hope that any legislation that is worked out by this committee and that passes the Congress will emphasize both the supply and demand side options. The tendency will be, of course, to consider only conservation or only conservation and renewables because these are options that are relatively and politically easy.

These measures alone, however, will not make the country energy self sufficient. Our energy strategy needs to be balanced. It needs to emphasize both alternative and conventional fuels, both near-term and long-term options. It is in respect for this need, balance, that I think the President's national energy strategy would be most important because it will point the way to the a comprehensive energy plan for America. Thank you, Mr. Chairman.

Mr. SHARP. Thank you. We now welcome our distinguished panel of witnesses. Customarily we ask our witnesses to hold themselves to 5 minutes. But we are trying for a more thorough examination of this. So, we will take some more time, not adequate to the task I am sure. But we are very pleased to have with us Dr. Yergin. We will be happy to hear from you at this point.

STATEMENTS OF DANIEL YERGIN, PRESIDENT, CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.; JOHN H. GIBBONS, DIRECTOR, OFFICE OF TECHNOLOGY ASSESSMENT, U.S. CONGRESS; AND CHARLES B. BURTIS, PARTNER, VAN NESS, FELDMAN & CURTIS, WASHINGTON, DC

Mr. YERGIN. Thank you, Mr. Chairman. Mr. Chairman and members of the committee, I am very honored to be here to participate in this lead off hearing on the national energy strategy. This committee will have a very important role to play in terms of shaping that strategy. The chairman has wisely asked us to stand back and look at first principles in this hearing and try to address the why before we address the how.

Also, I have been charged to at least draw some lessons from "The Prize" that will be applicable to the considerations before you. These hearings are, as remarked, at a crucial time in terms of the national energy strategy, in terms of the Gulf war, and I think a question I am sure all of you have been asked in your own districts and around the country, do we have an energy policy? Should we have an energy policy? Those questions now have a seriousness and an edge that would not have been the case 8 months ago.

Yet, I think, as you all begin your consideration, you are reminded of statement of that great American philosopher, Casey Stengel, who said "it is deja vu all over again." That those of you who have been here, really, over the last 20 years, last 10 years will feel that you are going over ground that has been covered before. At least by my count, this is the eighth time in the last 20 years that we have been facing the question or grappling with the question of a national energy strategy or a national energy plan.

It has been 20 tumultuous years for our economy, for our society, for our position in the world, and the very substance of global power. Also, as one looks back over the last 20 years and looks at the considerations today, you see that there are three contradictory objectives or sometimes contradictory objectives that we all seem as Americans to want at the same time. That is, we want cheap energy. We want secure energy. We want clean energy.

I suspect that as you go through the consideration of the national energy strategy, those three objectives will be creating a continuing clash. Of course, the Gulf crisis has brought these issues to the fore in a way that they would not have been 8 months ago. There has been a constant questioning about what does this have to do with energy, with oil. În my own view, this is not about the price of gasoline, but it is really about the global balance of power and one very important aspect of the energy equation.

As for the historical context, at least as far as I can tell, it was not until the early 1970's that we as a country began to talk about energy policies. Before then we talked about specific policies of different energy sources. We have had many goals since then to reduce our oil imports, to make ourselves energy independent, to increase regulation, to decrease regulation, to get the Government more involved in the energy market, to get the Government out of the energy market, to protect the environment. The list goes on and on.

But I think, I am being a little ironic here, if we look at the last 5 years, we would say that if we came down to it our de facto energy policy has been to import more oil. We have done a very good job of that. Our imports increased from 4.1 to 7.2 million barrels a day over a 5-year period. That is about a 75-percent increase. Obviously, that is not a very satisfactory outcome for anybody, but that has been actually what is happening. It has been partly because of the growth in demand but also because we have had a very dramatic fall in U.S. oil output. It has fallen by about 2 million barrels a day since early 1986. To put that into context, that 2 million barrels a day is a sum greater than a Venezuela or a Kuwait was producing before the Gulf crisis began. It is as though with the fall in the U.S. oil production we lost a major oil exporting country. That is what its effect has been.