Testimony of Robert D. Hormats

Vice Chairman, Goldman Sachs (International)

THE GLOBAL OIL BALANCE AND ITS IMPLICATIONS FOR U.S. ECONOMIC AND
NATIONAL SECURITY

Committee on Energy & Natural Resources

United States Senate

January 10, 2007

Mr. Chairman and Members of the Committee:

Thank you for your kind invitation to testify on the critically
important subject of the economic and national security implications of
America's oil dependence.

I speak to you today as a citizen concerned about our nation's
increasing dependence on potentially unstable supplies of foreign oil.
This dependence creates profound economic, political and security
vulnerabilities. Also, a portion of the large amounts of petro-dollars
accumulated by a number of suppliers is used in ways that threaten
American interests.

By way of background, I was economic advisor to Dr. Henry Kissinger on
the National Security Council staff in the mid 1970s when this country
experienced its first energy crisis after the 1973 Yom Kippur War, and
participated in his Middle Eastern shuttle diplomacy during the period
that followed. At that time, I had high hopes that the Arab oil embargo,
the sharp increase in the price of oil, and the long-lines at gas
stations would produce a bipartisan consensus on energy policy and jolt
our nation into a bold and effective effort to reduce oil dependence and
future vulnerability. Indeed, some progress was made. The Energy Policy
Conservation Act of 1975, championed by our late President Gerald R.
Ford, launched a number of bold initiatives to achieve this goal. And
the country did accomplish significant improvements in the efficiency of
oil use through compulsory mileage standards for automobiles and because
U.S. industry and power plants shifted dramatically away from using oil
as a fuel.

But when prices fell later in the decade, a sense of complacency set in.
Then we were hit by another crisis that caused oil prices to spike at
the end of the 1970s; that was triggered by the fall of the Shah of Iran
and the Iranian Revolution. Complacency set in once again after that
crisis receded and prices fell. Another oil crisis occurred in 1990 when
Iraq invaded Kuwait, after which the sense of urgency about dramatic
alterations in energy policy and use faded again. Decade after decade
our dependence on foreign oil has risen. In the mid-1970s, 35% of this
nation's oil consumption was supplied by imports. Now, three decades
later, it is 60%.

After 9/11, again at the beginning of the current Iraq War in 2003, and
again during the large price run-up in and the summer of 2006 the
country had excellent opportunities and powerful incentives to confront
energy vulnerabilities with a bold policy response. The 2005 Energy
Policy Act contained a number of positive features --- but these
measures were not commensurate with the seriousness or the urgency of
the energy challenge this country faces.

American dependence on potentially vulnerable oil supplies continues to
grow, with little prospect that it will change --- despite the fact that
we are engaged in a War on Terrorism in which oil imports by the U.S.
and other nations provide funds to nations hostile to the U.S. and
countries friendly to us. *It is often said that "9/11 changed
everything!" Sadly, in the area of energy policy it hasn\'t changed very
much. American oil vulnerability continues unabated.*

There are several national economic and security consequences of this
situation:

-   If the situation in Iraq continues to deteriorate and other oil
    producing nations become more involved, the risks increase to oil
    supplies not only from disruptions in Iraq but also from greater
    tensions between the Sunni nations on the western side of the
    Persian Gulf and the Shiites on the eastern side, with oil
    facilities and shipments becoming increasingly vulnerable. Moreover,
    added western pressures on Iran over its nuclear program could lead
    to oil disruptions or threats thereof;

-   The American economy remains highly vulnerable to supply disruptions
    in oil exporting nations; these could result from acts or terrorism,
    political instability, efforts to use oil as leverage, or natural
    calamities;

-   High oil prices resulting from strong demand from countries such as
    the U.S. and other major importers give countries such as Iran and
    Venezuela added resources to take actions inimical to American
    interests;

-   Oil-dependent friends and allies feel more vulnerable to the
    pressures and potential use of oil leverage from supplying countries
    and therefore are reluctant to side with the U.S. on key issues
    affecting those suppliers;

-   Oil-related tensions and competition are likely to intensify---as
    countries such as China seek to lock up scarce supplies or make
    political deals to solidify long-term supply relationships, or
    suppliers such as Russian and Iran use oil as leverage to extract
    political concessions from consumers.

My concerns about this untenable and dangerous situation led me---
together with a group of other concerned citizens---to join the Energy
Security Leadership Council in an effort to press for greater and more
resolute national action on this matter---and for an end to the
divisive, highly polarized debate that has stymied genuine progress on
many fundamental issues. The Council, a project of Securing America's
Future Energy (SAFE), is a nonpartisan group of business executives and
retired military leaders. It recently unveiled a report entitled
"Recommendations to the Nation on Reducing U.S. Oil Dependence." (I will
discuss a few of these later in my testimony, along with a number of
recommendations that I believe can also contribute to progress in this
area.) The members of the Council believe that America's energy security
is in a perilous state. Along with my fellow Council members, I am
convinced that America's leaders must move quickly and steadfastly to
confront our high level of oil dependence as a profound national
security challenge.

### ENERGY INTERDEPENDENCE 

Calls for "energy independence" offer a false promise to the American
people. They also suggest a sort of xenophobia that implies that the
U.S. can or should attempt to solve its energy problems with little
regard for those of other nations. In fact, oil is a fungible global
commodity, which means that events affecting supply or demand anywhere
will affect oil consumers everywhere. A country's exposure to world oil
prices or oil price shocks is a function of the amount and types of oil
it consumes; the ratio of "domestic" to "imported" oil is only a portion
of the problem. Even if the U.S. could substitute domestic energy for
all foreign oil---a goal the Council believes to be
impossible---American economic prosperity would still be linked to the
health of a global economy dependent on international oil flows. So as
we work to enhance our own energy security we should also be
strengthening international cooperation with oil producers and consumers
to improve global energy security, efficiency, and environmentally
responsible production and usage.

It is also important to make a distinction between dependence and
vulnerability. There are numerous suppliers of oil that are very
reliable and that use the funds earned in a constructive fashion. There
are others whose facilities are vulnerable to disruption and that use
funds in ways inimical to U.S. interests. But a large portion of the
world's oil comes from this in the second category, posing a series of
economic, political and security risks.

### KEY RECOMMENDATIONS 

The Council recommends a goal of cutting U.S. oil intensity --- the
amount of oil it takes to produce a given amount of GDP---in half by
2030. There is a favorable precedent for this objective. Since the
mid-1970s, the U.S. has managed to trim oil intensity by 50%, chiefly by
raising the fuel efficiency of passenger cars, virtually eliminating oil
as a fuel for electric power generation, and expanding less
energy-demanding sectors of the economy, particularly in the area of
services. As a consequence, the U.S. now uses half the amount of oil to
produce a dollar of GDP, in real terms, as it did just thirty years ago.
Unfortunately, however, progress in this area has slowed in the last ten
years.

One key goal must be to make America's prosperity less dependent on a
commodity the production level of which responds only very slowly to
changes in price. Combine this price inelastic supply with 1) the
vulnerability of oil supplies to various types of disruption, 2) the
fact that some countries see oil as a political as well as an economic
commodity, and 3) the fact that much of the world's production is in the
hands of state owned oil companies, many of which use oil revenue for
political or social ends rather than reinvest it in new production
capacity, and you have the recipe for severe energy-related economic
disorder.

As a result of the halving of U.S. oil intensity since the mid-1970s,
the high oil prices experienced in the summer of 2006 represented a
smaller relative cost to the economy than in the past. Further
reductions in oil intensity would provide a measure of insurance against
some of the effects of sudden future oil price shocks or sustained high
oil prices. In addition, by boosting the production of alternative
sources of energy to displace oil, we can create more production
capacity at home, keep more of our money in this country, create a great
number of new, high quality jobs in industries that manufacture and
utilize new environmentally responsible energy production and
conservation technologies, and develop new export products that can be
sold to an energy hungry and environmentally conscious world.

### The Global Energy Challenge

The global economy is in the midst of a period of extraordinary growth
that promises to transform the lives of billions of people, bringing
comforts and luxuries to regions where humankind has long struggled for
subsistence. Creativity and the drive for a better life are the engines
of this tremendous surge in output, living standards and productivity
--- but like all engines they require energy to function.

By 2020, world energy demand is forecast to jump by 50% over 2000
levels, with most of the increase coming in developing countries. The
safe and affordable delivery of all this energy is by no means assured.
Even if resources turn out to be sufficient in the aggregate, their
distribution will not map closely to the topography of demand. The
resultant uncertainty of supply and upward pricing pressure will
exacerbate international tensions stemming from non-energy issues.

Oil provides only 40% of global energy, but, as the premier
transportation fuel, it has emerged as the touchstone of the world's
energy outlook. On both economic and psychological grounds, oil price
spikes threaten the prosperity of many nations, including many of the
poorest on this planet. They also sow the seeds of tension between
exporting and importing nations, among consuming nations, and among
different groups within countries. Indeed, since so much oil is used for
personal transportation, oil prices have an enormous impact on the
pocketbooks of virtually every American family. Correspondingly, policy
efforts that impact oil's cost and availability must take into account
the interests of the average American family and quickly become major
political issues.

### America's Clear and Present Dangers

For much of the last century, surplus domestic oil production reduced
U.S. vulnerability to oil disruptions elsewhere in the world. But
America's oil production is now dwarfed by current consumption. Thus,
while the U.S. remains the third largest oil producer in the world,
domestic production can satisfy barely 40% of its requirements.

The U.S. generates 28% of the world's goods and services while consuming
roughly a quarter of its oil production. This may seem like a balanced,
even favorable energy equation, but closer inspection reveals a
different story. Despite considerable progress toward more efficient
energy use, America requires substantially more oil to create a dollar
of Gross Domestic Product (GDP) than is the case in most other developed
countries. Some of this differential in "oil intensity" can be
attributed to our nation's vast size, the dispersion of our population,
and less reliance on public transportation. Global military obligations,
which are inextricably linked to our commitment to secure the flow of
oil for the benefit of all nations, further increase American
consumption. But even with these extenuating factors, there can be
little doubt that the U.S. can and must use energy far more efficiently.

America's long-term supply and demand balance is no more encouraging.
U.S. oil demand is expected to grow 24% over the next two decades, and
even if new discoveries raise its current 3% share of global oil
reserves, our nation will almost certainly still require substantial
amounts of petroleum imports. Import dependence will also define energy
security for our key allies and most of the world's manufacturing
nations. Unfortunately, the developed nations that consume most of the
world's oil are not in a good position to produce the fuels they need.

A large portion of the world's oil reserves are owned by state-owned or
controlled oil companies in non-O.E.C.D. countries. It is worth
underscoring this point --- especially because when oil prices were
rising last summer there were many accusations, misguided in my view,
that this was a conspiracy among the big oil majors, when in fact the
*six largest state oil companies have ten times the reserves of the top
six privately owned companies*. Some of these state companies are highly
efficient and well run, but others are highly politicized and are not
able to utilize their profits to increase production or modernize
capacity. Because of the large state company role in the world's oil
markets, there is not a "free market" for oil. As a result, a
substantial portion of production is politically influenced and
production decisions and practices are frequently economically
suboptimal.

With each passing year, the global oil trends now at work---rising
consumption, reduced spare production capacity, politicized spending
decisions, and potentially high levels of instability in key exporting
countries---all increase the likelihood of an energy crisis. The odds in
favor of a crisis are further heightened by the rise of terrorist
movements bent on targeting critical elements of the world's vulnerable
oil production, processing, and delivery infrastructure.

Given today's precarious balance between oil supply and demand, taking
even a small amount of oil off the market could cause prices to rise
dramatically. In *Oil Shockwave*, a cabinet-level oil crisis simulation
conducted in 2005 by SAFE and the National Commission on Energy Policy
(NCEP), a 4% global shortfall in daily oil supply---only 3.5 million
barrels in a 84 million barrel daily market---resulted in a 177%
increase in the price of oil, to over \$150 per barrel. The simulation
was played out by men and women who have served in the highest ranks of
the U.S. government; Robert M. Gates, our current Secretary of Defense,
for example, filled the role of National Security Advisor. The
hypothetical scenarios put before the participants were designed to
simulate a decline in world oil production due to regional instability
and to terrorism. The incidents were completely plausible, and some,
such as unrest in Nigeria, have subsequently come to pass. But there was
little these skilled officials could do to stop a gut-wrenching increase
in the price of oil. Indeed, one of the major lessons of the simulation
was that the Strategic Petroleum Reserve (SPR), the emergency supply of
federally owned crude oil, offers only very limited protection against a
major supply disruption. Emergency reserves cannot sustain the United
States through a prolonged crisis, and it will be extremely difficult to
reach political consensus on when it is appropriate to begin using them.

Even under normal conditions, oil dependence has severe economic
consequences. In 2005, direct outlays for imported oil accounted for a
third of the country's \$800 billion current account deficit. In 2006
prices, these outlays have gone still higher. By diverting funds away
from domestic consumption and investment, oil imports put a drag on U.S.
economic growth and undercut the nation's long-term competitive
position. Oil dependence also adds billions to our defense expenditures
by making overseas protection of oil supplies a high strategic priority.

### China 

Before I turn to a discussion of recommendations, I want to touch upon
the rise of China and how that impacts U.S. energy security. Some
observers have insisted that clashes between the U.S. and China over
energy are inevitable. Chinese companies are buying oil properties and
concluding long-term supply contracts around the world. A few of China's
deals are in countries such as Venezuela, Iran and Sudan, with which the
U.S. has strained or no relations. Also, China's surge in oil demand was
seen, incorrectly, by some as a reason for higher prices last summer.
And China's increased coal production concerns U.S. environmentalists.

But the fact is that the U.S. and China have many common interests in
the energy area and thus many reasons to cooperate. Consider these
facts:

-   The U.S. is the world's biggest oil importer. China is the world's
    fastest growing oil importer. High prices and supply instability
    harm both nations. Price increases in the summer of 2006 primarily
    reflected the lingering affects of sluggish world investment in
    production and refining in the previous decade, and market
    perception of high political risk that could disrupt oil deliveries,
    which both nations have an interest in correcting.

-   Chinese, like Americans, are concerned about their environment.
    China faces colossal and urgent environmental problems, as anyone
    who has visited Beijing during the winter has experienced first
    hand. U.S. companies have great expertise in clean energy technology
    that could help.

-   The U.S. and China have a similar interest in open sea lanes for
    oil.

-   Both nations also desire a secure business and legal environment for
    their energy investments in emerging economies as well as stable and
    growing supplies from world exporters.

When I look at China and the U.S., I see two nations that have an
enormous interest in cooperation in pursuit of energy security. Several
areas are ripe for a common effort.

-   A Joint Business-Government Commission on Clean Coal Technology;
    this could help China develop and utilize its massive amounts of
    coal in an environmentally responsible way and boost U.S. exports of
    technology and equipment in this area.

-   Joint research on alternative fuels, which should also include
    experts from Japan, would draw on the best talent in these three
    countries. This could lead to breakthroughs in, or broader
    dissemination of, non-carbon based production and use technologies.

-   Strengthen U.S.-China cooperation in the context of the
    International Energy Agency.

-   Consultation with one another, and with other regional nations, to
    maintain open sea lanes; that could reassure China that the U.S.
    will not use its naval power to leverage China on oil.

-   Strengthen established regional groups that include China, the U.S.,
    and other Pacific nations to address environmental and energy supply
    issues.

Helping China to increase domestic energy output using state-of-the-art,
environmentally responsible, technologies would slow the growth of its
oil import dependence, reduce imbalances in global markets, dampen
global price pressures, and contain the process of global warming. And
cooperation on these broad energy issues can strengthen broader
U.S.--China ties. The alternative---frequent energy
confrontations---benefits neither country.

### There Are No Silver-Bullet Solutions

Success in improving the nation's energy security posture will demand
significant public and private investment---supported by meaningful tax
and other non-tax incentives like loan guarantees---over a sustained
period. Because of the volatility of markets and the strategic role of
oil, a considerable amount of government support is needed to provide
the necessary incentives through a supportive and reliable regulatory,
and tax environment if we are able i) to reduce America's oil
vulnerability; ii) strengthen this nation's capacity to produce oil and
alternative sources of energy; and iii) utilize energy more efficiently
and in an environmentally responsible way. The U.S. is capable of major
breakthroughs if all elements of our society work together.

The good news is that we Americans have it within our power and our
technological and financial capacity to take meaningful steps to reduce
oil dependence and increase energy security using both proven methods
and technologies and our ingenuity and entrepreneurial capacity to
develop new breakthroughs.

-   *Improving efficiency*: In the view of the Council, the most
    important thing the U.S. can do to lessen its oil dependence in the
    near and medium-term is to utilize oil considerably more
    efficiently. With the goal of once again halving oil intensity ---
    as in the 1980s and 1990s --- in the space of two decades, Americans
    can do much to protect the economy against the effects of oil shocks
    that can be unleashed by forces beyond our control. Improved vehicle
    fuel efficiency is the single most important avenue for further
    cutting the nation's oil intensity.

-   *We must face the hard fact that in the U.S. oil is primarily a
    transportation fuel; unless we can dramatically curb the use of oil
    in our cars and trucks, we will be unable to reduce our oil
    dependence.* Currently the direction is not positive; through 2030
    oil usage by SUVs and light duty trucks is expected to surge by
    roughly 77%. The transportation sector accounts for nearly 70% of
    all the oil the country uses; and oil fuels almost 97% of all
    transportation. With most of the vehicles on the nation's roads
    operating at efficiency levels far below what is achievable with
    currently available technologies, there is a clear opportunity to
    realize sizable fuel economy gains without overall loss of safety or
    functional utility. We propose empowering the National Highway
    Traffic Safety Administration (NHTSA) to mandate annual fuel
    efficiency increases of 4% while allowing for these increases to be
    postponed or constrained if economic, technical, or safety
    impediments are demonstrated.

-   *Increasing stable supply.* As a second means of improving America's
    oil risk profile, the Council recommends efforts to increase the
    production of oil in stable regions of the world, including in the
    U.S., Canada, and Mexico. We must move beyond the drill/don't drill
    debate for this simple reason: by facilitating the discovery and
    recovery of conventional oil resources, in conjunction with stricter
    environmental standards, American investment and the capabilities of
    this nation's formidable oil experts and oil service companies can
    ease the tight supply conditions that unsettle oil prices and lessen
    the probability that even modest supply shortfalls will trigger an
    international oil crisis. By the same token, a robust nuclear power
    program also makes great sense.

-   *Supplies abroad*. Just as significantly, by working to ensure the
    rule of law, sanctity of contracts, and stable investment climates
    abroad, America can help to lower the likelihood of future
    disruptions. There a great many potential projects that can enable
    the world to diversify the sourcing of oil away from its present
    growing concentration on the Middle East. By utilizing groups such
    as the International Energy Forum --- a ministerial dialogue among
    major energy producers and consumers established in 2003 --- the
    conditions for increased investment in such projects can be
    enhanced.

-   *Developing alternatives*. Third, America can lead the way in
    expanding the availability of alternatives to petroleum-based fuels.
    Diversifying our transportation fuel supply must be a key part of
    any comprehensive effort to improve U.S. energy security. Without an
    expanded supply of alternatives, conventional petroleum will
    continue to power nearly all of our motor transport. Such reliance
    on a single non-substitutable input creates profound economic
    dangers. To date, through the help of federal policies such as the
    Renewable Fuels Standard, the phase-out of MBTE as an additive, and
    tax incentives, corn-based ethanol has developed as one of the most
    successful domestic alternative transportation fuels. Production in
    the United States rose from 1.4 billion gallons a year in 1995 to
    about 4 billion in 2005.

> Although this growth rate is impressive, it is merely a drop in the
> bucket when compared to this nation's annual gasoline consumption of
> 140 billion gallons; it is equivalent in terms of energy content to
> only 2% of our gasoline demand. At a maximum, corn-based ethanol may
> be able to displace 10% of our gasoline use before corn demand
> outstrips supply. Consequently if we want to have a significant impact
> on reducing our consumption of petroleum-based fuels, the federal
> government must encourage the development and commercialization not
> only of dedicated energy producing crops such as corn and sugar, but
> also of other potentially large-volume bio-fuels like cellulosic
> ethanol (which are low cost, do not compete with the food chain, and
> provide another revenue stream for farmers) that is generated from
> forest residue and agricultural waste such as wheat straw , switch
> grass, and corn stover. Technologies like cellulosic ethanol are
> poised to dramatically raise bio-fuels production by shifting
> acreage-to output ratios.
>
> However, to transform this promise into reality, existing federal
> policies, like the federal loan guarantee program for innovative
> technologies must be fully funded and implemented; and new policies,
> which encourage and support investment in commercial facilities and
> related transportation infrastructure must be readily adopted.
>
> There are two specific policy changes that I believe would enhance the
> development and commercialization of renewable energy.
>
> The first is for *Congress and the Administration to take a longer
> term perspective in the way tax incentives are structured.* For
> example, with respect to the production tax credit (PTC) for renewable
> energy sources like wind and geothermal, the credit is available to
> projects that are placed in service before January 1, 2009.
> Historically this credit has been renewed only for short periods of
> time and often after great uncertainty and delay. This on-again,
> off-again process has added significant uncertainty to such projects
> and increased their costs. Therefore a longer-term extension of the
> PTC, say for five years would help to avoid such problems.
>
> The second is to *alter the structure of tax incentives to encourage
> investment from additional categories of investors, including small
> investors, by enabling them to benefit from tax incentives ---thereby
> increasing the availability and lowering the cost of capital for these
> projects.* For example, the way the law is now written retail
> investors and taxpayers paying the alternative minimum tax cannot use
> the production tax credit for investment in wind projects; allowing
> the use of master limited partnerships for these types of projects
> would broaden the group of investors who could help to finance them.
>
> It is worth noting that many of the new technologies being developed
> involve high technical risk, significant costs, and regulatory
> uncertainties --- and that costs of demonstration projects to show
> that these technologies can be deployed on a commercial scale as well
> as those associated with their commercial development are
> significantly greater than the initial R&D costs. Therefore,
> maximizing the range of investors supplying capital, providing
> reliable incentives, and creating and funding policies that reduce the
> significant financial risks associated with these projects are
> critical to advancing the process of proving and commercializing
> innovative energy alternatives.

-   *Managing risks*: In the Council's view, we must manage risk within
    the interdependent global oil economy. In our dangerous world,
    threats are one commodity not in short supply. America contributes
    far more than any other nation to protecting this global
    infrastructure, and the time has come for other nations to expand
    their own efforts. All nations have an interest in the stability of
    the global oil infrastructure, and a variety of international
    efforts could help to ensure the smooth flow of oil. New
    multilateral accords should play a role, but there are also
    opportunities for expanded reliance on existing organizations such
    as the Gulf Coordination Council, NATO, or ASEAN. A common interest
    in "oil security maintenance" in partnership with producing nations
    offers real potential to improve regional security in areas of
    rising geopolitical competition by creating frameworks for pragmatic
    international cooperation. Where appropriate, the U.S. should
    provide exporting countries with diplomatic support as well as with
    counter-terrorism training and other military aid.

I urge you to review the Council's detailed recommendations, which are
contained in our published report. We will be glad to provide any
further clarifications you may require.

### The Capabilities of the American People

Last week, the nation mourned the passing of our 38^th^ President,
Gerald R. Ford --- for whom I had the great privilege of working.
President Ford left a legacy of honesty, integrity and decisiveness.
These aspects of his leadership were particularly evident in his
handling of energy security. In his 1975 State of the Union address,
President Ford recognized the energy dangers threatening the country. He
expressed a "very deep belief in America's capabilities," --- its
innovative capacity and technological skills---to overcome its growing
dependence on imported oil. He also rallied support for fuel efficiency
standards. I share President Ford's optimism in the capacity of
Americans to respond to the challenge of growing energy dependence, and
his belief that Americans will rally around tougher energy measures, if
they are given strong leadership.

America has a long history of pulling together in the face of national
security challenges. I am currently completing a book entitled *The
Price of Liberty: How America Pays for its Wars*. In all the major
national security challenges of the twentieth century, Americans
demonstrated a remarkable willingness to make patriotic wartime
sacrifices. During World War I and World War II, American's not only
paid dramatically higher taxes but also participated in massive bond
drives to mobilize billions of dollars to support out troops.
Roosevelt's Secretary of the Treasury Henry Morgenthau, when asked about
the significance of such drives, said that they were launched not only
to raise massive amounts of funds, but also to respond to people who
asked "What can I do to help." Today, the answer to this question lies
not in buying more bonds but in buying less gasoline.

Since 9/11 there have been no major bond drives as in past wars ---and
only limited steps to reduce our dependence on oil. The time has come to
recognize that energy security is central to the national security
challenges of twenty-first century, and to present the American people
with the unvarnished truth regarding how oil affects the struggle in
which we are engaged. We must meet the threats we face in the same
spirit as our parents and grandparents during past wars---with
far-sighted patriotism and willingness to compromise narrow partisan,
ideological, philosophical and economic positions in the long-tern
national interest.

There are enormous dangers in facing the challenges of a post-9/11 world
with a pre-9/11 approach to energy that relies so heavily on oil from
some of the most vulnerable areas of the world and sustains price levels
that benefit countries such as Iran and Venezuela that seek to undermine
our interests and threaten our friends. American leaders and the
American people have rallied the country in past wars; the challenge is
to do so again,

I thank you again for this opportunity to testify.