shocked by a sudden increase in gasoline prices and supply shortage that were brought on by the arab opec member states and the price of the gasoline rose from thirty eight cents in may of seventy three to fifty five in june of one thousand nine hundred and seventy four lines for refueling formed as supplies were constrained but america responded we largely moved away from the use of oil for electricity generation going from sixteen percent oil fired generation in seventy two to two five percent today we promoted energy efficiency and conservation and  most effectively in one thousand nine hundred and seventy five the congress passed and president ford signed a bill which doubled the fuel economy for the vehicle fleet in the united states from thirteen five miles per gallon to twenty seven  five miles per gallon a doubling of fuel economy for the vehicles we drive in america in ten years and what happened well the dependence on foreign oil in the united states dropped from forty six point five percent in of energy consumption as the fuel economy average for the american automotive fleet doubled in just ten years well today we are unfortunately faced with a similar crises because economy go backwards since one thousand nine hundred and eighty six from twenty seven back to twenty five miles per gallon even as the united states has pretty much lead the way in deploying the internet around the world cracked the human genome here in auto mechanics we have actually gone backwards for the last twenty years but with an increase from twenty seven percent to sixty percent our dependence upon imported oil if all we did in the united states was to improve our fuel economy average from twenty five miles per gallon to thirty five miles per gallon we would back out all of the oil that the united states imports from the persian gulf states just an increase in ten miles per gallon and we can do that as the price of gasoline now passes three dollars and experts a predicting are four dollars a gallon gasoline this becomes an even more serious issue because not only are we spending all this money to import the oil but the money which is then spent is used by many of these countries to finance the terrorism to finance the hate which is then redirected back at the united states of america it is the worst of all worlds for our country if you are family only one car making twenty thousand dollars a year three dollars a gallon gasoline consumes almost nine percent of the annual income of that family for a family making forty thousand dollars a year three dollars a gallon gasoline costs them four five percent of their annual budget so this issue becomes something that is very real for ordinary americans this is a lot of money increasingly opec is able to tip consumers upside down and shake money out of their pockets because we do not have a national policy which is effective  to protect the consumers in our country so this issue is something that is central to the american well being we have to increase the fuel economy of our cars and trucks we have to increase the amounts of renewable home grown biofuels we have to prevent gasoline price gouging during times of tight supply and high demand gasoline prices are at three dollars a gallon right now experts say that four dollars a gallon is right around the corner for the american consumer i look forward to gaining the perspective of our witnesses on this issue it  is an issue that effects our economy it effects our national security it effects the very ability of our country to be able to deal with issues both domestic and international and so i do not think there can be a more important subject i think that it is critical for us to understand that the time has now arrived for the congress and hopefully for the president to begin to do something about this outrageous high priced gasoline that consumers are forced to purchase and as a result make other choices that deprive their families of is not just about global warming energy independence is also in this panel's title and i am pleased that today we will be talking about america's dependence on foreign oil nowhere do americans feel our economy's reliance on foreign oil more than when filling up at the pump everyone who drives knows that the cost of gas has been rising while some of us have almost become use to gasoline price fluctuations most of us will never get used to the consequences of high gas prices some of the reasons for these fluctuations are straight from the economics one hundred and one textbook demand for oil is rising around the world and cartels like opec which enforce production controls are doing much to help keep costs down geo political uncertainty is also doing its part to keep the value of a barrel of oil high if american drivers are going to see gas prices drop we need to break our country's dependence on foreign oil but we also need to break washington's dependency on taxes and regulation lowering the cost of gas is about freeing drivers from regulations that keep prices high and about reducing dependency on crude oil gets to u s shores it must be processed into gasoline at domestic refineries today the u s has the ability to refine about seventeen million barrels of oil a day into gas unfortunately the average u s demand for gasoline is twenty one million barrels a day this gap is often met by importing gasoline that has been refined in other countries further expanding our reliance on foreign sources of energy the residents of my district which is the area surrounding milwaukee often experience the hidden fee cost by limited refinery capacity while the national average for gasoline was reasonably reported to be three dollars seven cents a gallon the milwaukee journal sentinel reported yesterday that my constituents are paying three dollars twenty eight cents a gallon and why so high scheduled maintenance a power failure and even a fire have reduced capacity at the refineries in indiana and minnesota that supply the milwaukee area mister felmy of api says the industry is working to increase refinery capacity and that's very good however i also note that it has been thirty years since a new gasoline refinery has been built in the united states an expensive and cumbersome permitting process has contributed to this trend republicans last year tried to streamline this process in a way that will continue to protect the environment but unfortunately we met too much opposition along the way as we hear from the panelists today higher gas prices are felt nearly every corner of the economy from farmers to small businesses to school bus operators mister michael mitternight says in his testimony that gas prices are wrecking havoc on america's small businesses mister mitternight also rightly notes that onerous government regulations hit small businesses very hard as congress looks for ways to address both global warming and energy independence issue i am worried that the cure may be worse than the cough the most recent report from the u n intergovernmental panel on climate change includes a proposal for tax of one hundred dollars for each ton of carbon dioxide released into the atmosphere the washington post reported last saturday that that proposal could result in drivers paying up a one dollar more for each gallon of gas they pump the testimony we will hear today shows that four dollars a gallon gas would be a blow to the economy fortunately mister mitternight also has many positive ideas on how to address these problems he says that any government energy problem must improvements and include international participation from countries like india and china i am pleased this panel is talking about energy independence let us hope that today's discussion helps us find way to free american drivers setting the context in terms of how we rose to the challenge thirty years ago when we were facing this issue the trends that you demonstrated in terms of failure for us to deal meaningfully with conservation there is a very real issue in terms of refinery capacity but it is not a case of tweaking streamlining regulatory matter i think the record will show that there has been a conscious effort to actually reduce the amount of refining capacity there has been more consolidation i look forward to being able to deal with some of the impacts that that has had in terms of the free market i know that there are other  require a balanced approach in terms of dealing with supply in terms of dealing with conservation making sure that a market that is becoming less and less perfect both nationally and internationally that we examine to see if there are ways that we can  provide the protections to make sure that the market does in fact work i appreciate the breadth of opinions that are being offered i had a chance to skim some of the testimony i think it is going to be very useful for us to have as part of the record and look forward to a conversation with people who are dealing with these consequences on an ongoing basis i know the people that i represent who are now looking at the third highest gasoline prices in the country this is not an idol gentlelady from california ms solis ms solis thank you mister chairman and i am delighted to be here this afternoon to hear what our witnesses have to say every time i go home and i go home just about every weekend here from washington to visit my district in los angeles the number one question that people tell me at any forum or any meeting is when is the gas price going to go down hilda i do not want to hear about anything else i want to know when the gas prices are going to go down when you have working families suffering right now with other economic constraints on them you hear about the price of gasoline nationally well let me tell you folks in california and los angeles for the last two years it has been above three dollars in fact in my district in east los angeles probably one of the poorest areas in the country we are experiencing levels of three dollars sixty nine cents a gallon and sometimes even upwards on the west side of town the higher income maybe four dollars and higher so we are talking about a real crunch on our pocketbook but are also talking about the cost of people who want to use public transportation we are seeing proposals right now in my district where the metropolitan transportation district would like to increase their fees almost eighty percent and the majority of those bus riders tend to be low income folks who do not have cars so they use alternative sources of transportation but again because the high cost of gasoline and what have you they are not going to be experiencing an increase from what is now at a one dollar twenty five cents to up to two dollars that is an eighty seven percent increase for the ridership and many of constituents use those buses to get around town to get to work to see the doctor and what have you i am equally concerned also about our schools and i know one of our witnesses will be talking about  traveling on school buses well i tend to represent one of the largest second largest school district in the county la unified school district this was a question that i raised last year during the energy debate how we dealing with the high cost of fuel and fuel efficiency in trying to make sure that our students get to school on time and get home on time and that they are safe and believe me there was not much discussion or concern at the time and yes i tend to agree with some of my colleagues here that costs that are being transferred onto the consumer are not transparent and what i am trying to get to is that refineries and what have you there is not a shortage of refineries there is a shortage of political will so i look forward to hearing from our in two thousand and five the republican majority in the house passed the gasoline for america security act the gas act helped bring greater quantities of fuel to the market by expanding domestic refining capacity and limiting the number of gasoline and diesel blend opening up the outer continental shelf to new energy exploration the house allowed for oil and natural gas exploration in an area holding eighty five percent of america's outer continental shelf energy much of which was untapped because of a twenty five year old ban on deep sea energy production furthermore if president clinton had not vetoed anwr legislation in one thousand nine hundred and ninety five the u s could be domestically producing one million barrels of oil from that area today having both these areas into play would allow the u s to have energy security through a more diverse supply i am submitting for the record a letter from the national school transportation association citing their support for past action on gas prices th and fifty four legislation from the th congress which would have streamlined the permitting process to allow for new or expanded domestic refineries to be built i too supported this legislation and was original sponsor this noteworthy legislation would have helped meet america's increasing demand for gasoline by increasing domestic refining capacity it is a shame that this legislation was not able to move past the senate thank you and i yield back the balance of my time chairman we all know that there are numerous factors impacting the price of a gallon of gasoline world conflict for example refinery capacity as has been mentioned here earlier weather changes such as katrina can all contribute to fluctuating gas prices however we are now experiencing prices that are higher in california than the post katrina gouge we are paying nearly three point five a gallon as my colleague from california mentioned with reports from some stations in the bay area just a nickel shor of four dollars a gallon this kind of price hike is very bad for commuters and business alike we all know that we are going to experience even higher prices as the summer wears on and vacationers head out clearly if our cars and trucks had better fuel efficiency lowering the demand for gasoline the price of gas would be lower the better the efficiency the lower the price moreover wasteful consumption of gasoline does contribute to global warming another very bad outcome so i am looking forward to hearing the testimony from today's witnesses and i hope we can highlight just how devastating high prices can be on our small businesses thank you mister chairman chairman markey the gentleman from california time has expired the chair recognizes the gentlelady from tennessee ms blackburn thank you mister chairman thank you for the hearing and i want to thank and welcome our witnesses we are looking forward to the testimony today in many places in the u s energy prices for electricity are increasing significantly you are hearing that from us today as we are out there with our constituents in responding to what they tell us it has effected many sectors of our economy and in my district we hear a lot about this from our small businesses and our logistic businesses in their work i believe that we can make america energy independent and free from all foreign interesting thing is we do have vast resources of oil gas and coal in our country that would meet our need for hundreds of years but there is a group of people that do not want us to tap into these resources now i had some interesting conversations with some from this group and when you ask them what they would recommend sometimes you will get an answer that sounds like returning to the stone age or having a substandard quality of life and shutting down our coal plants because there is a perceived threat of global warming and most often it does not include measures that incorporate conservation innovation deregulation exploration production or commercialism all steps i feel are necessary to get us to energy independence what americans want is reliable and affordable energy but they do not want to sacrifice their way of life because of somebody's political agenda that is based on what they consider to be a faulty and unproven science they want options that will allow them a continuance of a good quality of life and an available and affordable energy supply and they want to continue to benefit from a robust economy america would rather have us here in congress encourage the production of more energy right here in this country and not rely on foreign sources of oil that could increase prices with little notice mister chairman i thank you for the hearing today i look forward to the comments from our witness walking over to be on c span's journal this morning and ran across a car that gets one hundred and fifty miles a gallon runs forty miles on electricity when you plug it in and one day we are running ethanol and we ought to have optimism and use technology to solve this problem and i am glad this right there and that clock will move from green to yellow with one minute remaining and then to red if anyone is interested in just keeping track of the time which you committee my name is terry thomas i am president and ceo of the community bus services my company provides school bus service to twenty two school districts and seven zero students in northern ohio i am past president of the national school transportation association which represents private school bus contractors that operate one third of the nation's four hundred and seventy five thousand school buses i also serve on the governing committee of the american school bus council which is a coalition of public and private  manufacturers suppliers and state policymakers we represent the entire school bus industry and my remarks today are consistent with the entire school bus industry i appreciate the opportunity to share with you my concerns about the effect of energy dependence rising fuel costs on my family and i am the father of five children three of which ride the school bus everyday my business the school districts i serve and the entire school bus industry according to the latest statistics from the u s department of education fifty six percent of public school students in the united states depend on school bus to access their education twenty five million public school children every day on a fleet of vehicles that is two and a half times the size of all other forms of mass transportation that is transit buses intercity business commercial airlines and rail combined school buses are far safer statistically than any other mode of travel with an average of twenty fatalities a year compared to eight hundred fatalities a year for students traveling to school by any other means teenagers are forty four times safer if they ride the bus rather than riding with their friends but when faced with the need to cut service school districts are most likely to discontinue high school transportation thereby encouraging or even forcing teenagers to high risk driving school buses play an important role in mitigating traffic congestion replacing an average of fifty personal automobiles for every school bus on the road in addition one school bus uses significantly less fuel than fifty cars and suvs the federal government provides no funding source for routine home to school transportation or school activity transportation increasingly a larger burden falls on the local school districts to support school transportation and though it represents just four percent of the total school budget it is the first target hit when districts need to reduce expenditures from september two thousand and four to september two thousand and five the price of diesel fuel increased an average of fifty eight percent a one dollar a gallon though prices slipped back somewhat in two thousand and six they are on the rise again and in many areas have reached or exceeded the two thousand and five highs other transportation modes are better able to either absorb the costs or pass them on to the marketplace the school bus operators literally have nowhere to go school districts have had to find other ways to respond most of which now involve reduction of school bus service for example troy michigan eliminated sports and activity trips massachusetts districts are charging parents for school bus service ohio eliminated if you can believe this eighty thousand students from school transportation over the last two years tennessee and georgia closed schools for two days last year and kentucky went to four day weeks for some schools just as a result of the cost of the fuel for the school buses congestion pollution excessive fuel consumption inconvenience to parents and employers inconsistent attendance and interruptions in the educational progress all of these result from reductions in school bus service but the number one reason to ensure that school buses keep running is student safety we know congress is tackling this issue on many fronts and our industry has supported efforts to increase supply through more refinery capacity and reasonable exploration of oil and to protect consumers against price gouging additional steps that might help with fuel costs and congestion include the use of federal highway congestion mitigation funding for the purpose of new school buses and for a national public education campaign to encourage the greater use of school buses to cut down on the use of personal vehicles federal assistance to school districts to offset the ever increasing cost of fuel regardless of whether the districts operate it themselves or if they contract out for the service an investment tax credit or other incentives for bus manufacturers to encourage the production of energy efficient and alternative power vehicles managing tax credit for school bus companies to encourage purchase of a cleaner more energy efficient fleet and funding to assist federal mandates to meet safety environmental and security standards as fuel costs go up due to the increased cost of energy everyone feels the burden including parents who pay for gas to drive their school children already schools are seeing a difference sixty percent of the districts reported an increase of ridership due to fuel prices i want to thank the committee for this opportunity to provide some insight into our industry and share our concerns mister thomas very much our second witness mister michael mitternight is the owner of factory service agency incorporated a commercial air conditioning construction and service  louisiana he has been nominated as a finalist for the two thousand and seven small business advocate of the year after hurricane katrina he helped many new orleans area businesses recover and resume operations welcome in commercial air conditioning service and installation throughout southeast louisiana i am also a member of the national small business association which the chairman just mentioned i would like to thank you for inviting me to testify today about the impact of rising gasoline prices on small businesses particularly mine am very grateful that you are cognizant of the negative effect increasing gasoline prices are having on small business across the country and that you are seeking to address it whatever the cause the volatile increase in price of gasoline is wreaking havoc on america's small businesses the day to day operation of my small business i have as many as six service trucks and three management vehicles on the street at any one point in time in order to carry the load of tools and service equipment necessary to provide the service for the equipment upon which we work most of my service trucks are three quarter ton pickup trucks with a service body on the back obviously these trucks fall into the category of nonfuel efficient vehicles unfortunately there is no affordable alternative to this choice currently the cost of gasoline in the metropolitan new orleans area varies from two dollars eighty eight cents per gallon to two ninety three per gallon from a low of one ninety eight late last year this sudden and unpredictable fifty percent increase hits directly at the bottom line of my business and countless others in my industry one major problem is that many of my service and maintenance contracts are fixed cost contracts with billable rates established well in advance sometimes for a period of a year with no opportunity to recoup increased expenses although i routinely try to include an estimated escalation percentage in my pricing the actual cost of gasoline is impossible to project if i project too large an increase i will lose the contract if i project too small i will lose money direct impact on cash flow the life blood of any business is seen when you compare a weekly operating cost for fuel from three hundred and twenty five dollars in december of six to my current expense of five hundred and ten dollars a week this represents an increase of sixty percent in only five months a fellow contractor in my area provided me with the cost figures of his company showing an increase of one hundred and  thirteen percent in fuel costs between two and six how in the world does a small business owner like me supposed to cope with this sort of a volatile and devastating price increase how can i expect to formulate a viable business model with these sorts of wild price fluctuations how can i grow my business how can i add additional employees as summer months approach fuel costs continue to rise almost expidentially with the temperature unfortunately for my business the summer price surge occurs during a period of increased fuel consumption as a result of expanded service activity i dare say that these numbers are typical for most businesses regardless of their geographic location in fact seventy five percent of respondents doing an nsba survey last year reported their businesses had either been significantly or moderately effected by rising prices in order to maintain any level of profit in my operation i have no alternative but to pass the cost of rising gasoline prices onto my customers sometimes i could arbitrarily increase just put a fuel surcharge on but i cannot do that on fixed cost contracts and long term customers and i cannot arbitrarily raise hourly rates one unique problem that i face in the new orleans area the fact that many areas are still recovering is that the availability of service stations is a factor no long are there sources of fuel on every other corner my service technicians be properly routed to ensure that they have adequate gas supply for their day's routes as they make their rounds the immediate problem of removing flood waters from my property working to help family and employees return and recover reestablishing customer contact and establishing necessary financing when my accounts receivable became accounts inconceivable following the storm all seem to have been a foreteller of today's problem of upwarding spiraling fuel costs despite such persistence obstacles in the situation in new orleans has improved at least i no longer have to fill five gallon gas cans at a remote location and fuel my trucks by hand now my main concern seems to be what will the price be at the pump when my trucks roll out in the morning it is one thing to deal with such uncertainty and volatility in the midst of what is arguably the worst natural disaster in the nation's history it is another to have to deal with the day to day basis a year and a half after the event occurred new orleans area we are working to solve these problems the rising cost of gas is just  devastating problem that we are fighting but it is something that we are trying to deal with the nsba has several issues that they are supporting and ideas that they are behind i mentioned in my written testimony increasing and diversifying the domestic and ener production improving the efficiency standards which would help anyone studying utilization of hybrid vehicles especially those that run on alternative fuels but they need to be something that are capable of carrying service loads on major service trucks and most h now in his seventh year as the kansas farmers union president he serves on the boards of numerous other agricultural associations he has worked at kansas state university as a farm analyst we welcome you mister teske whenever you feel representing and speaking on behalf of kansas farmers union and national farmers union we really want to compliment this committee on the proactive approach that they are having to address in this very serious issue personally we operate a fifth generation farm in northeast kansas as the congressman said we are on the eastern edge of the flint hills in pottawatomie county kansas the operation is about two thousand acres about two thirds of that is native bluestem grass another five hundred acres of it is certified organic on that we raise commodities that we sell into the organic livestock industry mostly alfalfa hay red clover hay corn milo wheat soy beans that type of thing  in the past my wife and i operated a dairy farm there for many years my wife kathy was really glad to see the cows go agriculture has really been stagnant for quite a few years sustain a family to me there is something wrong when you have a farm operation that size and both spouses are working off the farm to feed the family so they can produce their share of the country's food supply virtually for free now on top of that we get into a situation like this where we have been blindsided by super high energy costs and it is a double whammy the former congressman f massachusetts john kennedy once said that the farmer is the only entity out there that buys everything retail and sells everything wholesale and there is a lot of truth in that you know everything that we put into the farm we buy in the marketplace and we have virtually no control over what we get from it and the new energy costs expenses that we are getting on we cannot automatically pass on so the buck stops here and it is with us and it has really been a bad situation and we are trying to deal with this at a time when oil companies are recording record profits a little hard to digest to put it in a little perspective into the farm situation i got some information from kansas state university farm management data in two thousand it took about one hundred and fifteen bucks to put in an acre of non irrigated crops in kansas out of that twenty six percent was energy related in two thousand and five it took one hundred and forty bucks and about thirty five percent is energy related that is over twenty bucks an acre that i got to figure out how to come up with to put it on a personal note i have some letters that i would like to include as support from a real bank and from a trucker i had a trucker  we did before is going to add six hundred bucks of trucking expense to that load somewhere between the three entities the trucker the dairyman and myself we got to figure out how to absorb that six hundred bucks to keep going the way we have been going and that does not work very well now on the positive side of things it looks to me like society is finally starting to address the issue of our environment and i think that is wonderful global warming to me is very real and i think it is the scariest thing that i am leaving for my children economies can be fixed governments can be fixed you mess up our world you kind of got a problem i think that we as a nation need to take responsibility and i have four quick steps that i wanted to put in number one and foremost is energy conservation we are a gluttony nation and we need to do something about it number two we need a  nationwide renewable portfolio standard especially addressing community wind would be my passion number three i think we need to address the food issues in our transportation system and food delivery we need to go back to more local food production and supply and distribution we are shipping our food all over the country and number four and the worst case scenario is we may have to look at rationing because we may have to separate the entertainment from the necessities reverse in the markey family my father was a milkman so we actually go back to the retail again going door to door with it having the company purchase it wholesale we will now move on to our next witness our next businesses in virginia beach virginia the pipeline industrial group performs new construction demolition design build emergency response mostly for the federal government we welcome you ms estes whenever you are ready please beg anyone here we all know that fuel costs going up have firm fixed price contracts which means we do not get economic adjustments and we eat it off the bottom line so as your costs keep going up or our costs keep going up our profit margins keep going down lapsed and we went into construction the government grew us in construction as of today we support one hundred and twenty people that includes wives and children we are a team we work together as a team together we overcome problems every single day we do whatever the government ask of us whether it have talked about rising gas prices and how they are effecting the small businesses like mine and the families and the community they support we cannot build in contingency to our proposals with the government any additional costs at all comes off our bottom line profits the rise in fuel costs effect nearly every aspect of my business in one way or another many direct costs it costs me more to run my business costs of materials copper steel they have escalated in price the cost in labor and my employees expect more money in order for them to even get to work i have to pay them more money and in order to keep them i have to get employees that do not have as much experience so that i can afford them and then i have to train them and i have to start all over again every time our economy shifts the small business shifts we are good people we work hard we want to do good for you we believe that there is technology available to you that we all hope that you would look at technology that is a little different than the normal i spent four days writing your speech that i cannot even remember i looked at every single thing on the internet i could possibly read and my poor brain got fried i did find one thing that i found was extremely interesting and it was called skytran runs off of solar energy it is not paid for by the government it is private industry whether it will work or not i cannot answer that i do not have your answers but i do know that there is technology here in the united states that does have your answers and instead of us relying on someone else to give our country what we need to exist why can we not rely on ourselves have and as a country girl i agree with that i am sorry we are out here earning a living we want to make the best for our employees we treat them with respect we give them the respect that they are out there working for us and as long as we keep that respect in life we all keep moving up when we take that respect away and when you start raising the cost consider the fact that these people are not eating lunch you may actually have enough money in your bank account to afford to go out to lunch but most employees do not they skip lunch they skip breakfast and they eat dinner i have a nursery in my office so i can keep my employees  i would like to ask you guys to look at how to make it if i can tell you in four days between running a business two businesses and two teenagers there is not much left of me but i do know that there are answers i know they are here i know the internet is a great source for them i have read more articles one says it is pro one says it is against i mean what is real does anyone truly know what is truly i agree with him global warming is real we are experiencing more storms in fact i have been invited by the government to go next week or the week after to a world global emergency summ we have john felmy doctor felmy is the chief economist of the american petroleum institute he is responsible for overseeing economic statistical and policy analysis of the american petroleum institute he has over twenty five years experience in energy economic and environmental analysis he received bachelor's and master's in economics from pennsylvania state university and a ph d in economics from the university of maryland welcome doctor felmy whenever you are ready please oil and natural gas industry including exploration and production refining marketing transportation as well as service companies that support our industry u s oil and gas companies understand the frustration that consumers are expressing about gasoline prices we recognize that these higher prices adversely impact individuals households businesses and potentially the economy our member companies are doing everything they can to meet the fuel needs of u s consumers as of today crude oil inventories have been and are eight point nine percent above the five year average at this time year to date gasoline production is eight point eight five million barrels per day the highest ever thanks to the industry's major investments in state of the art refining technologies our companies are able to squeeze more gasoline and diesel fuel from a barrel of crude oil compared to past years looking ahead we expect to bring the equivalent of an additional eight new refineries into operation by two thousand and eleven despite the industry's all out efforts we are still faced with a set of challenges that in combination have driven up gasoline prices most importantly crude oil prices have fluctuated significantly driven by lingering geo political tensions opec's continuing production controls and worldwide demand growth more than half the price of gasoline is attributable to crude oil oil companies do not set the price of crude it is bought and sold in international markets and the price paid for a barrel of crude reflects the market conditions of that day a second major factor is that gasoline demand in the u s reached a record high in the first quarter of this year the department of energy forecasts that demand will increase further in the summer driving season which begins this month moreover nearly half of u s gasoline is blended with ethanol so as demand has gone up ethanol prices and the cost of ethanol blended gasoline has risen as well in addition the annual switchover to summer blend gasoline required by epa has occurred and this warm weather gasoline is more expensive to produce the switchover requires a large supply drawdown to meet regulations unless gasoline is available to import because of spring refinery maintenance in europe an eighteen day french port workers strike in march led some european refiners to reduce production u s gasoline production this year is at all time record highs despite regularly scheduled refinery maintenance and several unexpected problems that have interrupted some refining operations the maintenance is a normal procedure though delayed in some cases by damages suffered from the catastrophic hurricanes in two thousand and five while maintenance curtails refining operations temporarily it helps to ensure the longtime viability of the refinery and protects the health and safety of our workers some are again accusing the industry of illegal activity our industry has been repeatedly investigated over the many congress i would caution that this legislation could have many unintended consequences that would not benefit consumers rising gasoline prices are a burden on u s consumers but they cannot be viewed in isolation from the u s energy situation solution to the energy challenge that we face is to increase and diversify sources of supply including alternatives reduced demand and expand infrastructure we have plentiful domestic oil and gas resources remaining to be discovered  only government policies stand in the way of increasing access to these resources facilitating refining capacity and pipeline expansions and increasing energy security america can meet its energy challenges just as it has met great challenges in the past but meaningful changes in energy policy will be required api stands ready to work with your committee and others in the congress and the administration to help bring about these changes that are so important for america's energy future with that i will thank  the committee and i will be happy to answer any questions you might have chairman markey thank you doctor felmy very much that completes the time for opening statements by the witnesses the chair will now turn and recognize himself for five minutes  with the issue of oil price gauging can i ask you some questions about that do you agree that president bush should have the authority to declare a temporary national emergency if there was a threatened or existing disruption of oil and petroleum supplies due to events such as a hurricane or a terrorist attack mister felmy i believe that  in the area of price gauging you have a number of possibilities that could be considered i have not seen the exact legislation to know the exact wording on how that could be declared and what else would go with it but we do have cases where governors have the ability to be able to declare emergencies for some situation such as that so it would be something that we would have to look at carefully chairman markey well you were quoted in yesterday's newspaper as saying that senator cantwell's legislation was unfortunate political rhetoric with no basis in facts so i think that today's answer is somewhat different in fact radically different from what you said yesterday let me ask another question do you agree not know what unconscionable means what we have seen in the past in terms of changes have been largely as a result of market forces at all levels of the supply chain i simply do not know what unconscionable means in terms of a definition can be usefully employed that would not cause potential problems in the marketplace that could again have unintended consequences chairman markey i think the other witnesses know what unconscionable would mean in terms of high energy prices i see  all four heads nodding do you agree doctor felmy that especially at a time when we might be in a national energy emergency that there should be an explicit statutory ban on manipulative practices in wholesale petroleum markets mister felmy i am not an attorney mister chairman so i cannot comment beyond just i believe the understanding of the law is that you already have many provisions in place to deal with manipulation under the regulatory authority of the commodities future trading commission and the federal trade commission chairman markey do you agree that it should be illegal to knowingly submit false information about wholesale petroleum  to the federal trade commission mister felmy i again mister chairman i am not an attorney but my understanding is that you already have those provisions in place you have had prosecutions to that effect for false submitting of data to various entities chairman markey let me ask the other witnesses quickly if each of you could tell us what it would mean to each of you briefly if the price of gasoline moved over four dollars a gallon very briefly mister thomas that the oil companies had received and created a fund for renewable energy and for energy conservation the white house opposes that that is half of the money that these oil companies made in three months  are trying to move the country in a different direction which this administration continues to fight us the time of the chair has expired we will turn and recognize the gentleman from wisconsin mister sensenbrenner mister sensenbrenner i thank the gentleman for giving me this time we live in a market economy and one of the laws that congress cannot repeal is the law of supply and demand so if we want the price of anything including petroleum to go down we have to either increase the supply or reduce the demand or a combination of the two i think probably the most telling immediate statistic that we have is that our refining  seventeen million barrels a day and the demand for gasoline is about twenty one million barrels a day can i ask all five witnesses if they think that we would get immediate price relief if we went on a crash program to increase our refining capacity so that we are able to have more product on the market starting with you doctor felmy mister felmy mister sensenbrenner i would agree that increase in capacity would allow more okay now another way to reduce demand is to raise the price in my opening statement i talked about the carbon tax that the u n is talking about  imposing of approximately one hundred dollars a ton which translates to about a dollar a gallon of gasoline according to last saturday's washington post what do you think would happen to your businesses if gallon increase because of the carbon tax that has been talked about mister teske you know i would not like that for the same reasons we said all along but at the same time if all the polluters had that same carbon tax on it i think we negative impacts on the economy api does not have a specific position on many of these global policies that are being discussed but we would certainly welcome the opportunity to talk about all of them  people around here including my dear friend the chair seemed to think that the magic wand is increasing cafe standards and i saw the chart that he had raised behind him during his opening statement i ask you because my time is running out doctor felmy when the cafe standards kicked in we had a period of double digit interest rates stagflation and then followed by a ranking member i have not done an analytical study but there is no question there were three broad factors that caused the reduction in demand cafe standards could have had an impact we also had high prices we had three dollars twenty two cents per gallon in one thousand nine hundred and eighty one in today's dollars for gasoline and finally economic activity slowed down and recession all had significant impacts mister sensenbrenner okay so it would be your considered judgment that it was not exclusively the raising of the cafe standards that blumenauer thank you and i mister chairman would like to thank you and the staff of assembling i think a very useful panel i thought the range of experience that was given in real life that are doing it most of the business community understand that there will be some carbon constraint you hinted at something would it make a difference to you or any of the panel members if there was some sort of carbon constraint in terms of what happened to it if it was used to be able to help give you the type of energy technology that you want if it was used to defray the high costs that some particularly lower income people were contending with if it was used to offset the costs for example in some cases of more energy efficient equipment or technology does that make a difference to you in terms of how this money is used are there ways that it could be used that it would take environmental responsibility my belief is that global warming is true and so where do we take those steps and so i was having this discussion with a close friend that i have a lot of respect in recently and we were talking about the current marketing structure and could we address increased fuel costs alone to reduce demand and both of us did not think that marketplace would allow that flow through to happen so the  flow and so about the only we are going to have to do it is with some type of federal government interaction and whether that is a carbon tax or something else i do not know what the proper structure for that is but i do not think the free marketplace that we legislation per se but we are looking at big concepts we do have a farm bill that is coming along that has lots of opportunities to deal with rural redevelopment to deal with there will be an energy title in it of american agriculture and help farmers do that and i wondered if you had any thoughts about what the farm bill might do to help in your situation with the energy question oops i realized i have less than a minute and that is not fair either i will follow up with you personally on that i just wanted to make one point we talked there has only been one refinery proposal to my knowledge in the last thirty years one in yuma since the early s it has received all of its environmental permits but could not get financing because nobody wanted to invest in it and the oil companies had lots of money it was not that they did not have money to invest it seems to me that there were bets made that they could make money without increasing refining capacity  by asking unanimous consent to put into the record a letter from arizona clean fuels yuma which goes into the issue raised by the gentleman from oregon just a moment ago arizona clean fuels yuma i believe is very close to having its financing the letter i ncludes with it a lengthy analysis of the delays in the construction project the gentlemen is correct i think that is the only effort to get a new refinery on line they detail at length the regulatory impediments to that and i add a dollar to the cost of fuel what that would do in terms of having an impact on you another idea that is floating out there and it has been proposed by a lot of thoughtful people and has been implemented in part in europe is the idea of a cap and trade program that is we would set a cap on carbon emissions and then you would buy and sell trading permits europe has implemented such a cap and trade system not by the way for mobile sources but for fixed courses of carbon and it has caused an increase in the cost of energy of between sixteen and twenty five percent let us assume it is half of that an increase of eight percent or ten percent each of you expressed concern about a carbon tax in terms of driving up the cost of fuel i assume your thoughts about an increase in cost felmy if implemented in the same technique as using a carbon tax then you would likely have the same impacts the issue with cap and trade is allowances and a whole host of much more complicating factors that can  distort the system significantly mister shadegg yes one of my concerns is that in europe it appears to have added cost without having achieved the environmental goal and that would be one of my concerns let me ask another concern because i am curious about this i personally favor  if you are going to impose a cost to for example reduce carbon emissions i would rather have it be a visible cost i have a little bit of concern that if it were in a cap and trade as opposed to a carbon tax it would be buried and people would not be able to see it i hope all understand what i am saying if there is going to be a cost to reduce carbon in our atmosphere would you rather it be clearly set out and visible so we know what that cost is or does that not matter and if it were buried in a cap and trade system that would be just as well with you mister felm thomas i had the impression that most school buses run on diesel but maybe i am wrong about that mister thomas you are correct mister shadegg okay and so your fleet would be diesel fleet and when we are talking generally gasoline prices you are talking about diesel net effect is that we believe that clean diesel has the best effect overall on both the supply for the fleet and not only the global impact the emissions impact but the availability to school district would you all agree that we need to keep a broad diversity in our fuels that is gasoline diesel biodiesel liquid to gas coal liquid to gas is a broad diversity something you think will help hold down  expensive is the government causing by either regulation or by prescription of a formula gasoline causing prices to go up at this particular time of year and with that i yield mister felmy the regulations require summer blend gasoline starting may st unless are in california and then it is march st april st may st so it is a much more complicated system you need cleaner burning gasoline that has less vaporative properties and that is more expensive to produce  natural gas industry claiming that they understand the frustrations of our consumers i tend to question that appreciation of your testimony and what i have read in your statement first you go to great length to defend the industry profits and criticize efforts to protect consumer gauging and you left out several details some of which i would like to mention in april of two thousand and four bloomberg new service reported that exxonmobil refining profit rose thirty nine percent and we heard earlier from our chairman regarding that they actually made a profit of one dollar billion conocophillips in their first quarter two thousand and four report stated that the u s refining margin increased almost thirty one percent and that most of their overall corporate earnings came from the refining side of the business and another report released in two thousand and five shortly before hurricane katrina hit showed that in august of two thousand and five refinery margins rose fifty four percent and that those profit margins were responsible for sixty percent of the increased cost of fuel at the pump other studies estimated that as much as two thirds of the increased cost of gas at the pump is a direct result of profit margins of refiners and immediately after hurricane katrina murphy oil a company with refineries impacted by the gulf coast lamented the fact that it had refineries off line because it is missing  out record margins and in your written testimony you also contend that congress can help by opening up areas which are off limits to new production however you leave out critical information about the lands which are available for leasing upon which there is no current production in two thousand and three the bureau of land management reported that eighty five percent of the oil and eighty eight percent of the proven gas on federal lands in colorado new mexico utah montana and wyoming were available for leasing and development of those areas which are currently available offshore only thirty five percent are currently in production it is disingenuous in my opinion to argue that your industry needs greater access when it is not currently producing in areas already available do you have a comment mister felmy there are several points you brought you congresswoman first in terms of access while you may have access for leasing there are a whole host of other restrictions that can prevent you from actually exploring but irrespective of that the ability to produce more oil and gas anywhere will increase supplies for whatever reason and potentially help consumers now in terms of the refinery situation this is a fundamental focus of markets at work refining margins go up they go down they were very low at the beginning of the year they increased subsequently from that but these are forces of supply and demand that effect the prices of crude oil the prices of natural gas and ultimately refining margins and i would also like to point out those are margins and not necessarily profits because the margins themselves are gross margins for which you then have to deduct all the costs and it is very difficult to see what happens in the first quarter for example if you also put it in context the oil industry in terms of earnings on the dollar made nine point one cents on a dollar comparing that to all of manufacturing for two thousand and six which is the only data we have available right now we do not have the first quarter you had taking out the car companies which of course they have had their struggles the average profit earnings margin for manufacturing industries was nine point five cents on a dollar so what we from louisiana where we have our fair share of offshore drilling going on there is a serious problem there is still lots of area to further development offshore but there are a lot of state regulations as well as federal regulations and as much as we for more than twenty one years i have also been a small business owner with my wife we are in the radio business so our transmitters run electricity not oil which is a good thing at least unless there is a power outage then they run on  gas so i am concerned about the economy obviously i understand ms estes what you are saying and mister mitternight and others about what it is like to make a payroll and take care of the people that work for you it is not easy and it is always challenged and especially when you have uncontrollable costs national energy portfolio standard right a requirement a mandate that says every power company has to have a certain percentage of renewal energy in their portfolio the percentage of which we might all argue about there are some who would have raised the question about additional costs in your business is that direction from the government a mandate on what your local supplier has to buy does that effect you if your price goes up ms estes yes it effects me it effects me walden can you move that mike a little closer that is why it cuts out on you ms estes sorry about that yes it effects me it not only effects me through my employees it effects me through the supplies through the materials pretty much everything do i believe that we need and in the energy policy act of two thousand and five which some of us on this committee were on the other committee that wrote that and it is now law that created the incentives for example that are driving the production of ethanol by putting a one dollar a gallon tax credit there that are giving fifty one cent a gallon credit for agrobiodiesel development and i assume those who are in agriculture have seen some benefit if you are on the growing end of it i will tell you the story about my cattle rancher it cost him one hundred thousand dollars a year mor incent the market to go rather than arbitrarily demand and mandate and drive your costs up and your costs that is my own personal preference but i do not know maybe felmy we talk about trying to be energy independent can you speak to the reserves that are in the united states in the lower forty eight and alaska of what that could do if we could access those reserves in terms of energy independence mister felmy in terms of undiscovered resources that if we could have access to them they could do a substantial amount toward reducing imports it is in excess i believe of a one hundred billion barrels of oil that could be available for developing that would go a long way to helping pump and it was like three point nine nine a gallon if my eyesight was right and they would sell me fifteen dollars worth because it is that kind of limited capacity but it got me to the next town where i could gas up fully for three dollars thirty five cents the point is though i talked to a group of cattlemen that were there and they are concerned about this price because what it takes to run their pickups and haul their horses and cows and all and they asked me about refinery capacity and so my colleagues have raised this issue as well and i am concerned thirds and that compares to other industries that are large consumer products industries which have more concentration of ownership than the refining industry so it does not look to me as though it is an overly concentrated and i firmly believe it is a highly competitive industry if it is highly competitive the profit margins are fairly significant even though the percentage i understand is nine percent but many industries nine percent is not a bad margin to have why is it we are not seeing more  investors build refineries i mean we are on the bubble i mean that is my sense after several years on these committees the big storm in louisiana that knocks out a couple of refineries or a fire here or a breakdown the prices go through the roof all of a sudden you know why are we not seeing more do i not have another minute to finish up here yes why are we not seeing more refineries being constructed mister felmy well in terms of new refineries i think congressman shadegg pointed out the difficulties of arizona clean fuels in terms of all the hurdles they have to face but the industry has expanded the refinery capacity the equivalent of a new refinery every year for the last ten years within the gates and their announcements indicate that you could see as i believe and my testimony said an additional equivalent of eight more refineries but it is a cyclical business the returns have not been good and ultimately if you want to invest say two dollars or three dollars billion in a new refinery you have to assure returns to your shareholders  of the feedstock an issue domestically to get it refined or do you have enough of the raw product coming in mister felmy well worldwide markets are fairly efficient so you are able to usually attract imported crude oil to be able to refine it were required to have a fleet of biodiesel buses or hybrids it is a ten or fifteen year  ic corporation has a hybrid out there that is being tested in several states and the results are dramatic there is a dramatic decrease in the emissions almost ninety percent and there is a  dramatic increase in its fuel efficiency the miles per gallon would get if the federal government would mandate that certainly the industry would respond and industry would just as they have responded you that there may be some difficulty in defining unconscionably excessive i think i could do it but you are in that industry could you give me economist i cannot do it what we have seen over repeated increases in prices whether it be hurricane katrina or rita or what we have experienced this year is markets at work and so i would be very concerned that if you were to put in an artificial definition however crafted that it could have the unintended consequence especially when combined with civil criminal penalties jail time and so on of traumatizing the market at a point where you actually need movements of supplies you need to be able to attract imports you need to be able to bring you need a demand restraint and so on i would just be very concerned that this could set us back to the price controls of the s which were an highest profits in the history of the planet and so you know i am not a bomb thrower you know i want to be able to sit down and have an intelligent discussion the public is not inclined to be that patient right now they are angry and so can you help me mister felmy well congressman we clearly know the frustrations of consumers i cannot comment on any individual company's compensation policies but if you look at the size of that in the context of a multi hundred billion dollar corporation it really is insignificant in the scheme of things mister cleaver that will not work i can tell you now that will not work  on blue ridge boulevard in kansas city so give me something else i mean these people are having difficulty earning thirteen dollars an hour or you know they are working all day and you start saying well that is not much money in the context of things felmy and congressman i understand that but one has to put it in proper context just as you need to put the overall earnings of the industry in proper context that they are consistent with the earnings as i mentioned earlier with but you know i was going to ask i guess mister felmy you know we have gas prices are high higher than usual people are going to experience that probably more so this summer and you know we and do you think katrina because of the geographical location we did not have much geographical diversity on our refineries in this country really a lot of them i guess forty percent or so are down in that area that was effected by katrina and rita did that have any was shutdown we had a real supply hit of all different dimensions at the same time you had increased demand leading into the labor day holiday so there is no question we took a hit from both supply and demand and what you saw markets respond as a result mmediately thereafter but the state attorney general and the state put a price cap so that no prices could be increased you know they froze prices where they were to try to protect people it was not necessarily a price problem as much as a fact in most cases some of the larger corporations the shell and those kind of places worked diligently to try to get a few isolated stations open to provide a supply and they were working with the emergency relief people also  suspicion or anything of any price fixing or gouging that has occurred in the united states of america mister felmy in terms of any type of illegal activity beyond the subjected price gauging no i mean i think there probably were a handful of instances say though we can say today in this hearing that there has never been evidence of any widespread price fixing or price gouging that has occurred in the united states of america through any of these companies with an organized effort to do that would that be safe to and i brought it about that thick and to go through that information it goes both ways for every article that says that there was there is an article that says they are wrong for every article that says there is there is an article that says it is something chairwoman thank you all for your testimony today and before i pose some additional questions on this refining capacity issue i do want to just clarify a few things my friend mister walden from oregon and i see eye to eye on a lot of things but i do want to sort of clarify what i viewed as important in the energy policy act of two thousand and five the incentives that mister walden referred to in terms of the dollar per gallon for  fifty one cent credit on ethanol those have been around for over twenty years these incentives it was the renewable fuel standard as a mandate that in my opinion caused the mix of incentives existing incentives and expanding those extending them in the energy policy act and the mandate creating the market imposing the competition that for years was not there and i think attributes perhaps mister teske to some of what we know the attitude is farm country because of our difficulty of getting a market for ethanol for a long time until we had that mandate and since we have had that mandate we have seen start up companies take off in the investment of new technologies to make the production process even more efficient not just for corn ethanol but increasingly cellulosic ethanol and the potential that has and that leads me to this refining capacity issue because we are focusing on refining capacity imports port of entry the refining capacity being concentrated in a certain geographic region of the country that it is not just increasing the supply of the product it is having a decentralized and geographically diverse distribution system and where the refining capacity would exist blows if geographically our refining capacity either for petroleum products or refining capacity in biorefineries throughout rural american would assist in insulating us from those types of price fluctuations mister felmy well it would likely help in terms of specific disasters such as hurricanes which are of course concentrated in the gulf of mexico there is however a trade off with costs that when you get to a highly dispersed level of production it can increase your distribution costs so there is somewhat of a trade off but certainly to the extent that you do not have all your capacity located in one area that is vulnerable to hurricanes that of course can help in terms of more supply sandlin but if highly dispersed and used more locally increased with flux fuel vehicles that type of infrastructure that would assist consumers as well correct mister felmy that would certainly lower the existing within the existing fences and so if you have a concentration there then of course it increases more of that capacity in a area and that is unfortunate but it is the only place we can locate the refineries right now  not think so much the mergers led to closures of refineries i think what you saw is divestiture of those refineries actually to a whole new class of independent refiners who have gotten much larger so for example refiners such as  much smaller it picked up assets from these divestitures and so the concentration impact has gone up since nineteen i guess the first date i have is ninety seven from around forty nine percent to about sixty  six roughly but that still does not put it out of line with other industries in terms of supplying consumers ms sandlin no it does not but some of us share the same concerns about other sectors and industries like the livestock industry and the concentration there when we do not have the kind of competition when you have that type of concentration develop and the impact that that ultimately has on prices for producers for consumers and on down the line i see my time is up so i will yield back any remaining who eighty one years old just sold his oil filled equipment business worked in it every day of his life up until recently down in southern mississippi i know metairie and i would imagine that you would probably agree with me that regulation is just choking the business down there and i imagine you also would support one stop regulation a one stop shop for working with all these regulatory state and federal agencies to get these refiner blackburn that would be helpful you know you said your employees would like to have a little bit of a raise to help offset some of those energy and fuel costs and i think most people in america would like to have that and i profit margin at the end of the year having been a small business person you enjoy those years when you do come out ahead mister felmy i know i am going to run out of time and we are getting ready to have votes in a few minutes there are others who want to ask questions am with my constituents in tennessee and we talk about the increase in transportation fuels the increase in electricity and all of these energy costs people turn around and they look at you and they say you ought to be able to do something about this the federal government has been piling on regulation for years and years and years federal government increases our taxes the gas tax goes up it is not going to the highway fund now they are sending  over to research global warming and they do not like that i would love to hear from you as an economist what three or four things you feel like we could do that would actually make a difference in the price at the pump and the price that people are paying for energy because i think that is part of the frustration you know we talk about things that need to happen short term mid term long term we talk about conservation efforts we talk about incentives and all of those things the energy act of five which has been referenced did a good bit of that and that is commendable but people want to know what we could do that would actually help make that change and i would love to hear from that and if i run out of time if you would submit it to me in writing mister felmy thank you congresswoman put simply we need to increase supply that means to increase supply of production of oil and gas in our own country which would both stimulate the economy lower our trade deficit and help economic activity we need to streamline regulations so that we can more expeditiously expand refinery capacity or perhaps build a new refinery and we need infrastructure to be put in place whether it be pipelines or power lines or ports or terminals or everything that goes to actually getting that fuel to consumers we are going to need more renewable energy we are going to need more emerging energy technology to be able to help and we are going to need more energy efficiency so things that would help consumers in terms of more efficient vehicles more efficient houses more efficient operations will reduce the demand that combined with increased supply can help  missed your opening statements i was booked in another committee at the same time funny how they do that the good news i wanted to point out from the latest ipcc report that the ranking member mentioned in his opening statement is that there are plenty of currently available and affordable technologies and policies that can reduce global warming pollution and oil imports as this committee is already discovering in hearings we have held and mister teske made clear when it comes to global warming the costs of  thomas you are probably familiar with this my home district one of the five counties i represent westchester county is running hybrid buses on their bus loops around the country and has there been any discussion that you have heard about results the problem is is that the cost of that vehicle is dramatically more than the cost of today's regular old clean diesel school bus so we have to do something about coming up with the up front cost to offset the capital expense in order to get the emission and the  right so i just wanted to comment also on a remark that was made from a member on the other end of the bench here about companies do what they do we cannot control that i think was quoteunquote the fact is that we do control that that we regulate airlines we regulate meat packing companies we recognize all kinds of you know when the public interest and health or national security are at stake we do sometimes decide that it is in our interest to regulate and  i just wanted to ask starting with doctor felmy i guess about the sort of rockets and feathers syndrome that when petroleum prices or gas prices at the pump go up they seem to go up fast and then they seem to drift down more slowly like a feather  then you see the guy on his ladder up that night changing the numbers and i have driven to events and come back later the same night and the price was ten cents higher i am just curious why it is also so fast to go up and so slow to come down mister felmy sometimes it does sometimes it does not in some cases in the past if you look you have had perfectly symmetrical rises and falls the public does not always recognize that though they tend to have a very visile response to the price increases but as they come down and economic studies have verified this you tend to have less shopping behavior less discipline on the market and so you sometimes see prices ultimately it really is a function of why did the prices go up if crude oil prices went up rapidly and gasoline prices followed and crude oil prices do not come rapidly then there is no reason to suggest why gasoline prices would because the cost of producing gasoline is most importantly tied to crude oil costs in terms of the individual gas station owner ninety five percent of the stations roughly are owned by independent businessmen who make their own decisions about what the price is they do that as a function of the market for the gasoline based on their local conditions and the costs of what they spend it along with a lot of other things that they take into account their decision about the price is not necessarily tied to what they paid for the gas in the pump generally we have heard from for example the dealer organizations that it is more of a replacement cost that is a challenge for them as an independent businessman if he sees the price going up dramatically gentleman's time has expired what we are going to do now is ask the witnesses if they will each give us the one minute they want us to remember about skyrocketing gasoline and oil prices and  small businesses to compete with have never seen anybody that has been short of fuel everyplace you go to buy gas they will sell it to you so i am puzzled i mean i do not quite understand the concept so my ideal world would be every farmer having his own w estes i agree the fact that the firm fixed price there is not much we can do about it what my concerns are and the one thing i will leave with you is the american public the effects that it is having on the lower class they cannot afford any all i can tell you is that your testimony was really excellent and especially the ordinary citizens that came here to washington i mean it is right out of central casting you really did a great great job we are committed to answering this question we have to change our behavior here in the united states we have seen a doubling of the price of gasoline over the last ten  years it is unsustainable if it goes to four dollars a gallon in other words the price of not doing something is much much higher than the price of doing something it has already gone up a buck and a half and it is heading toward two and a half bucks that it will have gone up over the last ten years so now we have to change direction we have to innovate we have to ensure that the automotive sector that every sector changes and that we take the revenues that we have been sending into the oil and gas industry and we begin to redirect them towards the renewable energies towards the innovative new technologies that can change the direction in this country that will be our task including our goal of passing legislation that outlaws price gauging by oil companies in this country and to do it this year we thank each of you for your testimony with that this hearing is a