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KEY ELEMENTS OF A NATIONAL ENERGY

POLICY

TUESDAY, OCTOBER 2, 1990

U.S. SENATE,

COMMITTEE ON ENERGY AND NATURAL RESOURCES,

Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m. in room SD366, Dirksen Senate Office Building, Hon. Jeff Bingaman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW MEXICO

Senator BINGAMAN. The hearing will come to order.

This is a hearing of the Senate Energy and Natural Resources Committee. The purpose of the hearing today is to receive testimony on what should be the key elements of a national energy policy that can address the Nation's dependence on imported oil.

A little over 2 weeks ago our committee received testimony from the Secretary and the Deputy Secretary of Energy concerning the implications of the Persian Gulf crisis for oil supply in the near term and what they referred to as the midterm.

At that hearing, Secretary Watkins unveiled what he referred to as the administration's medium-term energy measures. With respect to the national energy strategy, however, the Department testified that it would stick to its pre-crisis schedule. That schedule calls for the Department of Energy to present the President with options for a national energy strategy in December of this year, and the strategy itself is not scheduled to be presented to the Congress before April of next year.

I told Henson Moore at that hearing that the administration should try to catch the wave and move ahead with a strategy while there was some sense of immediacy or urgency attached to these energy issues, and I suggested the President ought to present the Congress with the legislation to implement a national energy strategy as part of his State of the Union address in January. I hope that that suggestion is taken to heart. I hope we can, in fact, see the administration's proposals in this area before April of next year.

Even members of the President's own party are chomping at the bit to get on with at least some aspects of an energy policy. Last week, the Republican members of the House Energy and Commerce Committee announced the outline that they had prepared for a Comprehensive Energy Self-Sufficiency Act. Not even they

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seem willing to wait another 6 months for the unveiling of an administration plan.

Today's hearing is a follow-up to the committee's September 13 hearing. The purpose of the hearing today is to identify options for addressing the Nation's crippling addiction to imported oil.

During the first 8.5 months of 1990 the United States imported over 45 percent of the crude oil and refined product that were supplied here for domestic use. On average, imports total over 7.8 million barrels per day.

In 1987 when the United States imported only 5.9 million barrels per day, the tab for oil imports accounted for one-third of the Nation's trade deficit. That was in a year when crude oil prices averaged $16.50 per barrel. I think we are all well aware of the impact that this increased price of oil is going to have on the trade deficit for this year and perhaps future years.

This is more than just a hearing about oil. It is also a hearing about alternatives to oil, for, clearly, the price and availability of oil in large part dictates the viability of alternative fuels in conservation. As one member of the committee put it at the September 13 hearing, the price of oil is the gold standard by which the value of other energy commodities is measured. Consequently, any examination of energy policy options must have as its starting point oil and oil import dependence.

The committee has invited a panel of four recognized energy experts to share with us their views on these questions.

Before we begin with the panel, let me call on my colleague, Senator Ford, for any opening statement he would like to make at this time.

STATEMENT OF HON. WENDELL FORD, U.S. SENATOR FROM

KENTUCKY

Senator FORD. Thank you, Mr. Chairman. This is kind of revisiting something that I visited at the beginning of 1976. It is ironic that people now are saying about the same thing today that they were saying back then.

The committee is holding this hearing to seek advice now in the decade of the 1990's on the development of a national energy policy. There will undoubtedly be more hearings to follow. This is only a beginning. The development of a national energy policy for the 1990's will be one of our biggest jobs, in my opinion, in the next Congress.

We have excellent witnesses today. I am very pleased that the four of you have agreed to come and chat with us today.

Now I understand the ground rule for the hearing this morning is to encourage plain speaking, just lay it out, not be bashful about it, do not try to be coy or use words that might not sound too bad. Just speak in four-letter words, and I particularly will understand it a lot better. This is an opportunity to give our committee the benefit of your experience with energy issues. We want your advice as to how we should go in developing what we hope finally will be a real national energy policy.

This committee bears much of the load in energy policy in the Senate. It is our experience that energy issues bring out some of

the toughest-and I underscore "toughest"-political choices that exist. Region is pitted against region, industry against industry. There are complex international problems that must be mixed with a complex domestic impact. There are strong popular prejudices that clash with economics. How you vote on these issues usually has little to do with your political party affiliation.

You will need to recognize some of these practical factors in devising an energy policy, but do not let the difficulties of the politics of energy defeat your good judgment. The politics of energy is our problem to worry about. What we need from you this morning is your best advice about what should be done for the good of the country-and I underscore the good of the country. That is why we have asked you here today.

We have had an energy policy now for about 10 years, and that is dependency on someone else. I was somewhat disappointed but it was not unexpected, when the House Republicans came forward with their energy policy and asked the Democrats where is yours. Well, President Nixon had an attempt at it and tried, President Ford tried, and President Carter tried. And they are the ones who cut the energy policy off at the knees. It was the moral equivalent to war. Now we are practically in a real war. If they were selling apples and oranges, it is my opinion we would not even be close to the Persian Gulf.

So, Mr. Chairman, I appreciate the opportunity this morning, and I will have some questions for the witnesses. I think we all want to arrive at the same place, and hopefully the energy strategy can come together sooner rather than later.

Senator BINGAMAN. Thank you very much.

Senator Akaka, did you have an opening statement?

STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR FROM

HAWAII

Senator AKAKA. Thank you very much, Mr. Chairman. 'I wanted to thank you for scheduling this hearing, and I also want to welcome our distinguished energy experts. If ever there was an issue, Mr. Chairman, that cries out for expert advice, that issue is our energy problem.

Concern about America's energy future is not new to me. Throughout my 14-year career in the House I fought an often lonely battle to halt the Federal Government's dwindling commitment to renewable energy. The only positive thing I can say about the current energy crisis is that it will force the Federal Government to wake up to the need for renewable energy resources that we have long neglected.

This is not the first time our country has faced a dramatic spike in energy prices because of the events in the Middle East, nor is it the second. We are entering the third significant economic disruption due to the absence of any coherent long-range plan for a more secure energy future.

We now recognize that low energy prices in recent years have only been a wolf in sheep's clothing, lulling Americans into complacency about their energy security.

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