subcommittee will come to water this morning we're continuing our focus on the appropriate congressional response to climate change with the first and what will be a series of hearings on the transportation sector our subject today is the proposal by the administration for statutory authority to raise the corporate average fuel economy standards for passenger cars above the current standard of twenty seven point five miles per gallon the administration's proposal but also for the first time and power in the to establish different fuel  standards for different classes of passenger cars and for the first time establish fuel economy credit trading among auto manufacturers in the administration's view as expressed by the president in his state of the union address these far reaching cafe changes would serve to reduce fuel consumption by the motoring public and also address the challenge of climate change the administration's proposal has now been submitted to the committee as draft legislation it raises fundamental questions which we will explore with our witnesses this morning one obvious question is whether different fuel economy standards for different classes of passenger cars might create a perverse incentive for manufacturers to build more of the larger less fuel efficient vehicles and correspondingly fewer of the smaller more efficient cars the draft asks for authority to distinguish categories of passenger cars for fuel economy purposes based on attributes but the term attributes is not defined characteristics of cars that affect fuel economy can vary widely and so we're asking today what the word attribute means can the administration create greater definition of what it intends through the use of the word attributes t draft a bill proposes a trading system for fuel economy credits presumably akin to the trading system that is now in place for sulfur dioxide emissions but there are major differences between electric utilities that largely do not compete with each other and a very highly competitive automobile industry where depending on the circumstances manufacturers might prefer to pay penalties for cathay noncompliance rather that and to purchase credits for fuel economy from a competitor that would involve giving revenue to the competitor and we must ask whether there is any analysis showing that tradable fuel economy credits would actually save fuel i'm also interested in the administration's view of how its cafe proposal for passenger cars would fit within a framework of greenhouse gas controlled later this year subcommittee will process control program legislation to address the climate change challenge i'm interested in the views of the witnesses about whether the cafe changes that are now before us would compliment that effort whether other kinds of cafe changes would better achieve greenhouse gas reductions or whether at entirely different approach would be preferable for the transportation sector component of greenhouse gas program controls i really don't anticipate that the witnesses will have complete answers to these climate change questions today but i am outlining these questions in order to demonstrate our concern that we must view the cathy proposal with them that larger context so i want to say welcome to the witnesses this morning we appreciate your being with us and sharing your views and before we turn to your statements we will welcome opening statements by other members of the subcommittee pursuant to the rules of the committee any member who waves an opening statement will then have three minutes added to the time allotted to that member in order to ask questions this morning i want to say a word of welcome to the ranking member of our subcommittee and we are honored in the subcommittee to have as our ranking member denny hastert from illinois the former speaker of the house of representatives denny formed i think tremendously well in his role as speaker and i believe has the distinction of being the longest standing republican speaker of the house of representatives in american history and that  and say how honored we have to have him serving in this position and how much i personally look forward to working with him as we embark on the work of the one hundred tenth congress and so denny with those words of welcome we would be glad to have your opening statement thank you mr chairman thank you for your kindness mr chairman i appreciate you holding this important hearing cafe's back before this committee this time is an administration proposal part of the president's twenty ten initiative with the goal of reducing u s gasoline usage by twenty percent in the next ten years while the goals of this proposal propose are a lot of all we need more information as to how the details would work the hearing a vibe that reducing gasoline consumption in part by strengthening cafe standards addresses america's need for energy security it must be part of our deliberations on energy and environmental policy the cafe bill that passed this committee last year like today's ministration bill would have given the department of transportation transportation authority to establish a fuel economy standards for passenger cars on a model size by model size basis this approach to greater fuel efficiency is certainly is timely as ever the administration suggested four percent increase in fuel efficiency is controversial cost to automakers the tech knowledge he's involved the questions regarding the market and consumer choice all require careful examination the examination that this committee gave the question last year yield a bill w excellent balance my view had we enacted it the cafe reform process would already be well underway and we would have begun enjoying the fuel savings is much sooner so now we have some catching up to do in the process we'll make certain that whatever we do safety is not compromised sound science and economics will guide fuel economy standards and the regulatory process will be open and fair we cannot honor these values if we merely ratchet up the current passenger car fleet standard set into law that twenty seven point five miles the gallon arbitrary statutory increases do not take careful account of economic impact job loss technological advance or consumer choice the key is the size of a standard embodied by both the administration bill before us and our bill last year automakers now face a fleet average standard a standard based on vehicle dimensions will improve safety by eliminating the incentive for manufacturers to downsize vehicles and by increasing incentives for technological improvements that will lower mpg and will make part passenger cars safer i welcome our well our witnesses today and look forward to their testimony thank you mr chairman i thank the gentleman that i now recognize the chairman of the full committee the gentleman from michigan mr dingell for five minutes this german good morning and good morning everybody i want to thank you for holding today's hearing as a part of this committee's broad examination into climate change i want to commend you for the very vigorous and energy sick and thoughtful way in which you're conducting the business of the subcommittee also want to welcome back our good friend mr hastert and hope that his health is good and a sour look forward to working with him in the future as we have in the past the corporate average fuel economy program originated in this committee it was response to the first or a crisis in the one nine hundred seventy s its primary objective was to reduce the nation's consumption of imported oil by improving the fuel economy of light duty cars and trucks the program has been remarkably successful but there have been some shortcomings you economy today is double that of thirty years ago in part but only in part because of cafe the program's flaw is that it regulates what automakers are able to sell not what they are technologically capable of producing the consumer ultimately determines the average fuel economy of an automakers fleet with what he or she actually buys and that of course is in good part bottom go on individual choice the program is also designed to address challenges very different from those we face today in a world that has changed dramatically the some of the questions now before us first is the existing system of regulating fuel economy the most effective way to address the nation's reliance on petroleum second faced with conclusive evidence that the globe is warming is the cafe the best way to constrain greenhouse gas emissions from trucks and cars third what if any alternatives merit our support i note that when congress first require require the department transportation to set fuel economy standards the science of global warming was in his infancy we now know that greenhouse gas emissions are warming the earth with potentially significant consequences to the environment as motor vehicle use increases around the world so the need to address the corresponding increase of greenhouse gas emissions fortunately many vehicle and fuel technologies not envisioned thirty years ago are now available and now viable in the marketplace consumers all across the country can purchase hybrid electric cars are one that runs on bio fuels we're close also to developing the next generation of batteries to making plug in hybrid and electric vehicles available for purchase in the next few years more without considering the nature of fuel or the level of greenhouse gas and method may not be adequate such a program may discourage use of fuels that displace betroth them and emit fewer greenhouse gases but would happen which happen to contain less than petroleum energy security and global warming are real problems concerned confronting the nation in the world solutions must count for technological advancements and their place in the global market finally leave us notes a competitive  what is a brutal global automobile market and the disparate impact on american jobs that poses might have these are difficult questions but there are questions that we will strive to answer although i'm concerned with some aspects of will i welcome its ideas and look forward to working cooperatively with you and the other members of the subcommittee on these important matters the old debate is no longer sufficient we should clearly identify the programs and the problems that we seek to bring forward and decide consider comprehensive legislation that accounts for the new economic political and scientific realities of our job i thank subcommittee he couldn't have come back on the committee at a better time given the sensitivity and the importance of some of the issues that the subcommittee and full committee are going to be addressing this year last year  the full committee reported a cafe bill on a party line vote twenty eight to twenty six all the republicans voted for it all the democrats voted against it it's not the identical bill that the administration has put forward this year this trucks building on the successful reform of the light truck rule i think it's important in this congress that we do give such authority to the secretary of transportation or  issues is the our various cap and trade proposals to control c o two and other greenhouse gases now one of the largest emitters if not the largest   everybody's trades and everybody's emissions should be included in the policy debate so that we get the most cost effective and the most common sense top proposal if we're going to go down that road and again i'm not saying that we should go down that road so i'm very excited to have this hearing today i have a g m assembly plant in my district in arlington texas just generically interesting to me it's an issue that is district specific to me and i'm going to follow it very well and again i supported the bill in the last congress that passed this committee but it didn't go to the floor to give the secretary explicit authority to set standards for cars like it has for trucks so i'm not opposed to some change in cafe but as we move down that road it should be done very  question period that is correct but i would like to pass the gentleman from maryland i think that's a first mr chairman concerning on the democratic side the gentleman i didn't give  up unfortunately for the witness the gentleman from maryland  thank you mr chairman as you know it's a pleasure to be back on this committee and i'm very proud to be a member of the subcommittee when the cafe program was started over thirty years ago the challenge was to insulate ourselves from middle east oil shocks who would have guessed that a new generation of law makers and some oldies would confront the same challenge today the security of our nation's energy supply is fragile to the extreme one need only watch the nightly news to witness the peril of our oil dependent economy our transportation sector is a liability for our planet to the pew center on global climate change recently reported that the u s transportation sector alone emits more c o two than the entire economy of any other country besides china and china has four times as many people as we do in the twenty first century new technologies will revolutionize the way our economy runs but not overnight in the short term energy efficiency is a mu transportation accounts for nearly a third of our energy of our nation's energy consumption and that's why cafe is so important we need a long term plan decades from now cars and trucks on the road assuming we have roads must be far more efficient than the heart of day but the technologies will not invent themselves with a coherent and consistent federal policy initiatives which are strictly and fairly enforced we can drive new technology to end dependence on foreign oil and to slow climate change that's a win win and it doesn't have to cost us jobs done right savings from fuel cost in investment technology will pay dividends in jobs and in economic growth and upton for three minutes well thank you mr chairman i too want to welcome speaker hastert back to the subcommittee i'm sure that it comes as no surprise to anyone here that i am intensely interested in the automobile industry because of its base in the state of michigan and mid west in fact a co chair of the congressional auto caucus with my good friend dale kildee one of the concerns i have though is that when we talk about transportation and the use of fuel and production of emissions we immediately focus on cars and light trucks ignoring the fact that approximately forty percent of the fuel consumption emissions come from other transportation such as heavy trucks rail air even ships we're going to talk about global climate change it doesn't make sense to not talk about the entire transportation industry in addition i think we need to seriously look at the impact of this particular proposal to the automotive economy and while i think the reform of cafe system could be productive to make sure that we're using the right numbers in criteria for the program i also believe that the proposed four percent rate of increase in the standard is not reasonable without huge costs on such a short timeline have seen some estimated numbers on how much the president's proposal could cost both the auto industry as well as the consumers and i think those numbers are staggering we're talking about an estimated one hundred billion dollars in costs for manufacturers one hundred billion dollars and for the consumer possible price increases of up to two thousand dollars per vehicle it is imperative that as this committee addresses climate change that we do so not at the expense of the auto industry we must take a reason practical approach examine all facets of our economy including the transportation sector the u s auto industry is a loyal partner they can play truly a valuable role in pursuing a viable solution but if we are reckless in our efforts the consequences will be grave for i don't manufacturing and manufacturing in general across the country and i yield back my time  for the past year car standards with a modern flexible approach already adopted for non passenger or automobile standards and chairman dingell is right in the the old debate on cathay standards is no longer sufficient based on a lot of things that were brought up in the current discussions we all do agree that there are variables that are important to us safety sound science and economics that will guide feel like economy standards and a regulatory process that is open and fair i think many of us would agree that the market demand ultimately could drive the need for higher cafe standards and i said this numerous times and the committee process what moves a consumer faster than the high cost of gasoline and we've just seen it over the past six months where gas prices were high there by was rushing to hybrids gas prices dropped off hybrid sales decline gas prices are going back up guess what hybrids are going to be back in again and that's a lot faster and whatever we could do here at the in the public policy arena increasing fuel economy standards in passenger cars would be an added incentive for consumers in a world of high gases and foreign dependency and potentially even a reduction in greenhouse gases you know i hate this discussion about how much we drive in this country when i was stationed in west germany i could drive across the entire country of west germany in two and a half hours i can get to park to my district in two and a half hours to make a comparison about how much we drive compared to how much europeans drive is a red herring it is a terrible comparison based upon the size of the country and again my colleague mr rogers bringing up the whole greenhouse gas debate you know  the election wasn't decided on global warming but is now the cause do sure of the new majority and so if the cause is your it has to be part of this debate and it has to be part of this debate and as mr upton said jurisdiction we're not very good at reclaiming jurisdiction and i think this debate could be the arena by which we start doing that the other thing that's critical is looking at the hydrogen economy and new technology renewable fuels coal to liquids and the like and science has to be a determining factor on the next generation of fuels which is the hydrogen economy thank you mr chairman my time's expired tara thanks the gentleman the gentle gentleman pennsylvania mr doyle for thirty minutes thank you mr chairman mr chairman there are two things that i believe are uncontested facts when it comes to the question of breaking our reliance on foreign oil the first is that american innovation is the only way to break the stranglehold and the second is that american innovation needs a strong federal funding commitment if it's going to achieve the lofty goals the president has declared unfortunately the president's budget continues his trend of identifying a problem but not funding the solution his twenty in ten proposal declares that new technology coupled with higher production of alternative fuels will reduce our gasoline consumption by fifteen percent while more flexibility under the current law will give him the final five percent yet he brings no new funding to the table to achieve this at a time when we spend more money in iraq in three months than we spend on the entire department of energy for the year i find it insulting to every member of this committee that he just continues to shift funds and stead of providing the seed money that american innovators need it's time to call a spade a spade so we can move past the shell game proposals and move to create the framework under which american innovation can flourish mr chairman this policy is like we've seen year after year all flash no cash it's time for this how to put our money where his mouth is and i yield back tara thanks the gentleman and recognizes the gentleman from texas mr burges for three minutes thank mr chairman and thank you for holding this hearing i haven't been shy in the past about making my position on that i believe are best to decrease the consumption of gasoline at least over the short term is to increase the number of hybrid cars on the road i've owned a hybrid for now nearly three years and i've logged a lot of miles across north texas during that time and although i bought the car because of the concerns about air quality in our non attachment area when the gas prices got so high i looked positively brilliant for making that purchase but we're here today to talk about cafe standards hard to think about cafe standards without visualizing a yugo i've got some serious reservations about the whole cafe system it forces manufacturers to make cars that no one wants that's not good for the long term viability of our auto manufacturers and it does nothing to reduce energy consumption and it certainly cripples innovation it is consumer demand and consumer choice that will ultimately determine the fuel economy of the vehicles that are actually on america's highways until consumers realize that there's a direct correlation between energy prices dependence on foreign oil and their s u v s or other big gas consumers will simply not see a change in consumer habits today there are many more hybrids on the road than there were a year ago which is more than there were on the road five years ago the market has recognized this increase in demand and now there are more even more models available to choose from including for us down in texas our official car of texas the hybrid s u v the tax incentives for the purchase of hydrogen hybrid or turn alternative fuel vehicles in the energy bill help to encourage the purchase of more of these fuel efficient cars but the primary driver be in this trans is consumer demand i would like to see this committee examine market based alternatives to the cafe system but as long as we're functioning within that system i believe that the bush administration's vehicle class approach makes some sense although i do have reservations about the workability of the credit trading proposal i would like to this proposal is very similar to the legislation we considered in this committee during the hundred ninth congress under the leadership of then chairman now ranking member joe barton and i look forward to hearing from our witnesses today on the proposal you're back carol thanks the gentleman and recognizes for three minutes the gentleman from wisconsin is baldwin thank you mr chairman the tide has clearly begun to turn in our country and we are thinking about how we as americans can be more energy independent we are becoming more conscious of the energy impact of each of what each one of us makes and we are just beginning to think about and discuss questions like what our nation would look like in a post petroleum era an economy these conversations about our immediate and more distant future are important to have well role will hydrogen cellulosic ethanol and carbon sequestration play in reducing our greenhouse gas emissions and in helping us to meet our future energy needs what investments in research need to be made so that the technology is available to make our country more energy independent the discussions about our future energy supply are important and necessary at this time but we can also not lose sight of the steps that we can take in the here and now to lessen our energy use we can ensure that  appliances are the most energy efficient possible the products operating in standby mode are not wasting enormous amounts of energy and that our cars and trucks operate with the best mpg ratio possible unfortunately this is where i believe we have failed the american consumers we have not required that manufacturers take the most energy efficient and technology technologically advanced products available we have set standards to fall far below the levels that we are capable of achieving quite frankly i think we've taken the easy way out last year the department of transportation did just this in my opinion we reformed the light truck cafe program with rules that fall short if we are going to meet our most pressing energy needs this rule completely excluded pickup trucks from increased fuel economy standards and it only increased the fuel economy of s u v s and vans by a mere one point eight miles per gallon over a four year period they are minimal changes to say the least and the technology exists for us to do far better now the department of transportation wants the authority to set  standards for passenger cars the proposal will grant nitsa authority similar to what it has for light trucks but there's nothing in this proposal that requires that such to make significant meaningful steps that will truly make a difference in our steel economy standards in fact there is nothing here before us to require nets to act at all so i'm skeptical of the administration's motives in seeking the authority of their desire to act and have their interest in making real change change that can be made now rather than waiting for years to see whether research or technology will put us i hope that our witnesses  concerns today and i'm very much looking forward to hearing your testimony thank you thank you the gentleman from oregon mr walden for three minutes thank you mr chairman i'll keep my remarks short but i'm going to looking forward to this hearing as somebody who represents a district that covers nearly seventy thousand square miles you can imagine my constituents spend a lot of time on the road and they want to be able to drive vehicles that get the best mileage possible while ensuring their safety and their ability to haul things that way a lot like horses and cattle and so somewhere in this process i hope we can continue to move forward on fuel efficiency in america's fleet but do so in a way that provides them the horsepower they need the safety they require i've been pleased with some of the initiatives from the administration and a lot of the work out of this committee where we've invested in new technologies that we know are going to be out there for us in the long term that can't be achieved  like hydrogen fuel cell vehicles there's a company in my district that's been on the forefront of hydrogen fuel cell technology development and i've met with them several times and in fact jim cotton ten came out and i toured him around that facility at one point very impressive what america's professional engineers and scientists are doing to move us forward in new energy efficient ways we need a long term look i think what this committee did and what this administration proposed to provide put incentives in place to encourage people to buy hybrid vehicles makes a lot of sense and is having a dramatic effect in the marketplace but even with those incentives we don't see an overwhelming consumer movement to them even though the percentages are coming up so i look on cafe standards i look forward to this question on both short term and long term efforts we can continue to undertake to improve efficiency to make america more energy independent to develop new resources that reduce pollutants  and and make america a better place so i appreciate your initiatives and i think you'll see a lot out of this committee as we have in the past so thank you mr chairman i appreciate the time terry thanks the gentleman on recognizes the vice chairman of the subcommittee the gentleman from north carolina mr butter field mr chairman i want to thank you for convening this important hearing today you told us at the beginning of one hundred tenth congress that you were serious about creating good energy policy in this country and i thank you very much for this hearing today  there is no question mr chairman that i am a supporter of increasing overall fuel economy and passenger vehicles and light trucks as part of a larger solution to our nation's growing emissions problem i talk with members of this committee from time to time and other members of the house and persons from the industry as well and i believe that there is an intelligent bipartisan way that we can resolve this issue i do not believe that the bill we w discuss here today is the best way or the smartest way to go forward i've been surprised by the administration's approach to crafting this proposal quite frankly this is a serious matter that requires bipartisan serious  planning but by all estimates that i've heard from the industry and from colleagues and and agencies and our government there has been no recent analysis of whether the systems in this legislation will work or if industry will have any impetus to abide by them frankly i've seen no recent analysis that indicates that this approach will have any significant impact whatsoever and so i thank you mr chairman for this hearing i'm going to do very little talking i will let mr markey and others do that but i'm going to do a lot of listening today back chair thanks the gentleman and recognizes the gentleman from arizona mr shadegg for three minutes chairman and i appreciate your holding this hearing i will keep my remarks brief let me simply say that i believe it is important to learn lessons from what we've done in the past and i think those lessons indicate that whenever congress gets down into the detail of setting specific standards we discover that we make a mistake when we have set broad general standards or when we give experts the discretion to set standards such as  the cafe standards it seems to me we will enable the system to be flexible enough to work if you look at our experience in the past when we've said specifically you must use certain specific oxygenates we've created problems on the other hand if we say here's what you must do to clean the air we succeed so i believe it is a mistake for the united states congress at the specific cafe standard i believe that is better delegated to expertise that other  at the government agencies involved and not to have the congress prescribe it and so i hope that's the direction in which we move they can evaluate all the different factors and they can move quite frankly more quickly than we can i believe that typically when the congress tries to set standards it cannot move quickly enough to match the science so i would urge us not to have the united states congress specify a specific mileage standard on the cafe but rather to leave that authority where it can be adjusted most rapidly the second point i want to make is that i believe it's a grave error for us and i disagree with the bush administration on this issue to quintuple or otherwise dramatically increase the ethanol mandate i think we already see a serious problem with the an ethanol mandate that has been put in place i met  yesterday i'm sorry yes day before yesterday in arizona with executives in the food industry in arizona and they are telling me that because of the existing ethanol mandate the price of corn has doubled almost doubled across the country driving up food prices  and that unless we change agriculture policy which might be a good idea to allow more corn and other crops to go into production the ethanol mandate is going to drive up the cost of food in this country quite dramatically and if that will have the greatest impact upon the poorest americans i think you can already see that in the crisis in mexico where the government of mexico is faced a revolt by the people because of the increase in the cost of corn and it's a ripple effect through the mexican economy and quite frankly in the food supply in mexico so i would prefer to see us let the market decide what is the proper mix for alternative fuels if in fact ethanol is the best alternative fuel efficient point so be it but let the market dictate that earlier this year earlier last year i tried to suspend the excessive tariffs on imported ethanol because i believe that simply drove up the cost of gasoline at a time when gasoline in america was well over three dollars a gallon  believe that we need to pursue alternative forms of energy but having the congress artificially decide which is the correct policy to do that and that is in fact corn or ethanol based on corn as opposed to perhaps ethanol based on other cellulose products or alternatives to ethanol again gets the congress in the wrong position and has ripple effects including increasing the cost for example of food to america's forest and i don't think that's  good public policy so i look forward to hearing the witnesses testimony and appreciate you're holding hearings gerri thanks the gentleman and recognizes the gentleman from washington state mr inslee for three minutes i just want to dedicate my comments to my mom who spent summers revegetating alpine meadows up on the beautiful flanks of mount rainier and she loves those meadows and those matters nettles are going to disappear by the time a great great grandchildren are around if we don't do something about global warming because the tre lines rising which squeezes out the meadows and they're drying up because of concerns about water in the summer in washington state and i think in her memory we need to do something to dramatically reduce the carbon emissions from our transportation fleet and i think we need to start talking about a proposed petroleum future for a significant part of our fleet and unfortunately i don't believe the existing cafe system does that i would submit that if we are going to succeed in taming the beast of global warming which i believe we will succeed in doing we are going to have to structure incentives to the industry and policies that are fit for the post petroleum age and that means that we have to find a way to move to a system that is carbon emissions per mile not just miles per gallon in the world of cellulosic ethanol and in the world of plug in vehicles in the world of fuel cell vehicles mileage miles per gallon is an artifact of a previous century in a sense and i do believe we need we should raise cafe standards to find a way to do that with our existing fleet but we have to leap frog this discussion we have to leapfrog our transportation future into a post petroleum situation there is no way on this green earth to cut our emissions eighty percent which we and our kids are beast if we're driving cars based on petroleum so we're going to have to find a way and an incentive package to incentive phys actions in the industry to move off of petroleum to other fuel sources now the good news is these are very close to commercialization we had the g m volt here a preproduction car everything stock on it except the batteries in a one to three battery companies got lithium ion batteries are po need to think a lot bigger than we're thinking here on getting into these leapfrog technologies and really revamping the system thank you sarah thanks the gentleman that recognizes the gentleman from oklahoma at each think collectively and have a global approach to energy policy that we can make sure we do the right things and make sure that jobs are still there that we don't hurt certain people certain sectors of the economy and i think that's imperative as we go forward we can't debate a lot of discussion and we make sure that we make we protect the economy as well and we don't put ourselves at a disadvantage in the global economy chair thanks the gentleman and recognizes the gentleman from louisiana mr molon so the the chair recognizes the gentleman from arkansas mr ross for three minutes waves the chair recognizes the gentleman from texas mr gonzalez for three minutes the gentleman waves well that completes the opening statements and the chair now is pleased to welcome our two witnesses this morning and i first like to express appreciation for your patience while we express our views on this very timely subject today we are joined by the honorable nicole mason the administrator of the national highway traffic safety administration an agency within the u s department of transportation  regulates the safety and fuel economy of motor vehicles and i'm pleased the administrator is here to assist the committee in its review of both cafe standards and also climate change the honorable edward lazear was sworn in as chairman of the council of economic advisors on february twenty seventh two thousand and six so yesterday marked his one year anniversary as chairman and we extend congratulations to him for completing his first year of service he is on leave of absence from stanford university and has written or edited nine books and published more than one hundred papers the committee welcomes his expertise on economics and policy as it reviews the administration's transportation proposals both of your prepared statements will be made a part of the record and we would welcome your oral summaries of approximately five minutes and ms mason will be pleased to begin with you good morning thank you mr chairman i am going to try to summarize to speak more broadly about the president's two thousand and ten proposal so i will keep my remarks to the draft legislation that we provided to this committee a few weeks ago the bush administration already has a history of reforming and improving fuel economy standards consider our record on light trucks which compromise half of the vehicles sold today has this committee knows members may recall that this administration has raised the cafe standards for light trucks for seven consecutive years from two thousand and five to two thousand and eleven our two thousand and six like truck rule will not only save a record amount of fuel it regulated for the first time some of the heaviest light trucks however we believe the method by which these accomplishments were achieved is probably the most important in its two thousand to study on cathay the national academy of sciences found that while the cafe program did fulfill it original goals it contained flaws that were preventing the program from living up to its full potential for example one of the nasa criticisms was that the program concentrated most of the regulatory requirements on a few full line manufacturers this resulted in some manufacturers already above the standard not being required to make any further improvements in fuel efficiency this means we are continuing to lose potential fuel efficiency in the fleet next the nest estimated that cafe had probably cost between thirteen hundred and twenty six hundred lives in one year alone one thousand nine hundred three because the standards were structured in a way that enabled automakers to meet much of their compliance obligations by downsizing their vehicle and it's a carefully considered a nasty and methodically developed a new structure for light truck cafe standards that address these criticisms this new system which we call reform cafe is based on requiring automakers to improve fuel economy not by down saving downsizing but by adding fuel saving technologies basing cafe on adding fuel saving technologies has a number of benefits first by setting fuel economy targets for every size vehicle instead of having one flat standard every model of vehicle will potentially have to improve fuel economy reform cafe ensures that all a cold small medium or large may become more fuel efficient second under reform cafe there's no longer an incentive for automakers to improve their fleet by downsizing by removing this incentive we can raise the cafe standards without decreasing safety third since reform cafe demands greater fuel efficiency from every model of vehicle affected every automaker will share the regulatory burden for improving fuel economy not just a few and finally the administration's bill draft bill contains a voluntary cafe credit a trading provision which could help alleviate regulatory costs for manufacturers mr chairman the president has stated his desire to raise the fuel economy standard we are pleased to have a part in his twenty in ten proposal we believe that having experts develop the standard using sound science and data in an open and reviewable rule making process is the most responsible way to determine a new cafe standards if congress authorizes the secretary reform cafe for passenger cars we will immediately begin working on a rule making to boost passenger car fuel economy and if the administration's draft legislation is enacted soon cars rolling off the assembly line for the twenty ten model year will have to meet higher cafe standards mr chairman given mrs successful experience with setting the fuel economy standards for light trucks we believe we have demonstrated our capability to set good morning mr chairman members of the committee thank you for giving me the opportunity to here to discuss the president's plan to enhance energy security the president's plan has four pillars the first two pillars focus directly on the president's goal of reducing the use of gasoline in the united states by twenty percent in ten years first the president has called for an increase in the supply of renewable and alternative fuels by setting a mandatory alternative fuel standard to require thirty five billion gallons of renewable and alternative fuels in tw seventeen which is nearly five times the current requirements for two thousand and twelve approximately three quarters of the targeted reduction in gasoline with come through the use of the alternative fuel standard second the president believes that we should reduce our demand for fuel by reforming and modernizing the corporate average fuel economy standards for cars changes cafe standards account for the remaining quarter the saving necessary to meet the president's goal potentially saving another eight and a half billion gallons by twenty seventeen third the president has proposed proposed additional funding for energy innovation and technology including bio energy research and loan guarantees for cellulosic ethanol plants forth the president proposed doubling the capacity of the strategic petroleum reserve to enhance our ability to deal with severe supply disruptions caused by natural disasters or terrorist attacks or the supply chain the president believes that both steps are warranted improving our energy security is a goal in which we can all agree to do this he has outlined a variety of measures that will diversify our energy supply and increase energy efficiency the twenty in ten plan was designed with these goals in mind additionally the plan undertakes to accomplish these goals in an environmentally sensitive way most important the president has made clear that we must accomplish these goals without damaging the american economy this is foremost in his mind especially because the market unfettered by government is the most effective driver of innovation that strengthens any energy security change isn't prices create the incentive necessary for scientists farmers industrial leaders and entrepreneurs to find a means to diversify our fuel supply and increase efficiency as such the president's policies that he has proposed while bold are not draconian the proposals build on existing programs in the form reforms allow for american companies to comply with the targets in ways that will not compromise their ability to compete internationally two principles are important in evaluating these proposals tech not technology neutrality and flexibility the president's alternative fuel proposal builds on existing renewable fuel standards to clear virtually all alternative gasoline alternative to gasoline rather than just renewable fuels additionally there is flexibility imbedded in both the alternative fuel standard and the cafe proposals so that significant distortions to the economy can be avoided the proposed alternative fuel standard includes two safety valves one through administrative discretion one automatic that would limit the economic costs furthermore there is discretion given to the secretary of transportation who can alter cafe targets in ways that are compatible with preserving safety technological developments and cost benefit analysis these provisions prevent a system of automatic pilot from taking it down  existing tax sorry the existing credit framework by allowing credits to be traded granting manufacturers additional flexibility and lowering their cost finally as my colleague in the cole nathan explained in her testimony the president call for an attribute based cafe system for cars would help address both safety and distributional concerns by remaining open to new tech talk technologies in ensuring flexibility the policies proposed by the president have the virtue that they cau minimal economic disruption yield the promise of moving us toward a world where the goal i welcome your questions i want to say thank you to both of our witnesses for joining us this morning and sharing that information  proposal that has been sent to the committee now in draft legislation form breaks new ground and a couple of important ways first of all that for the first time would authorize the establishment of fuel economy standards for different classes of passenger vehicles rather than passenger vehicles as a single category and secondly it would die for the first time establish a tradable fuel economy credit and i have several questions i'd like to propound about both of those proposed changes with regard to different fuel economy standards for different classes of passenger cars some have suggested that if such a program were put into place incentive for manufacturers might be to create larger less fuel efficient vehicles and perhaps fewer of the smaller more efficient vehicles with the result that you really wouldn't be achieving overall fuel savings mason would you care to respond to that yes thank you mr chairman we have heard the concern regarding upsizing that when you set a class by class an attribute based system you have targets for vehicles of a particular class size or weight is generally an attribute that most closely correlates with fuel efficiency and that there could be an incentive some belief for manufacturers to look at the targets for the higher larger vehicles and just decide that's all they're going to make and i think i would respond to that in two ways for yes there is no incentive under reform cafe to make large or medium or small we deliberately preserve consumer choice by requiring technology improvements in all the inclines us so that manufacturers can decide to make the products that they believe people want to buy if you're going to be required to have say a two hundred dollar change in an engine a technology improvement it's going to be two hundred dollars for that engine notwithstanding what vehicle you might put that engine in so there is no incentive that we see to upsize the vehicles and i guess the other point i would just make is one of practical markets we saw what happened last summer gas prices went up after hurricane katrina the market the large vehicles plummeted almost overnight there was a new thirty percent drop and so i i don't think that it's in any manufacturer's best interest to decide that they're only going to make vehicles based on a particular cafe standard we've never seen that historically that's not why people buy their vehicles so we don't anticipate that is a real problem you also have in in your legislation this phrase attributes and apparently after abuse would be related to various characteristics of the automobile that would relate to feel economy give me some indication of what you mean by attributes that that phrase is not defined it could be virtually anything you know how large the  rack is or how how heavy the mirror is i mean i think some added definition would be extremely important if in fact this proposal were to move forward and we didn't hear that complaint before mr chairman and  we agree when we say attribute we're using the national academy of sciences study in a natural you basis to ms one that most correlates with fuel efficiency so size well wait we would be pleased to work with you in this committee and if you think it would help patronage of presumably this is based on what has been a very successful experience in this country with two trading which this committee originated as a part of the one nine hundred ninety clean air amendments that program really has worked very well but that's within the electric utility industry these utilities as a matter of general matter do not compete with each other they're serving a certificated area and each has its own and so there's probably not a lot of reluctance for competitive reasons for them to trade credits that may account for the success of the program but the automotive industry is highly competitive and some have suggested tradable credits would not work as well within a competitive industry where those doing the trading are competitors each with the other what is your response to that thank you mr chairman i would say that the motivation behind this is based more on what i would think of as basic economic rationale than it is on comparison with any particular program per se what we know is that giving people options is a good thing tends to increase flexibility and reduce the cost of compliance with any particular program i  think what the president is most concerned about is that he'd like to move the energy agenda forward he thinks energy security is important but at the same time is cognizant of the fact that we don't want to punish our automobile industry and wants to do that in a way most compatible with minimizing economic costs we believe that giving companies the option to trade credits is one that is a good thing it's good for the companies and it's also good for the workers within those companies now obviously they don't have to exercise that option they have the alternative option under this plan to simply pay a fee paid to exercise their right to go to the safety valve and do that instead of  trading and in fact if the tradable credits were to rise in price up to that point in fact many would exercise that alternative so we believe that this is just an additional are an alternative to reduce the cost of compliance ok thank you i have some additional questions and we will have a second round of questions for our witnesses i'll defer those until later and i'm pleased to recognize the gentleman from illinois for his questions thanks  the use of the eighty five is growing and we've certainly seen some manufacturers make pledges that they will be doubling the amount of eighty five vehicles on the road when we calculate a cafe standard we take the tests that are done a takes the vehicles and then they run the test and that is where credit is applied for flex fuel vehicles under current law it's point nine used to be one point two was the most you could get for credit for flex fuel vehicles so e p a does take that into account when they do the test and then when the numbers are applied to this and we make the determinations about whether you were over or under the standard and whether or that underwriter laboratories who have to test the pumps for liability reasons for people who distribute that the fuel are grabbing their feet and that getting those tests done so even though you have maybe twice as many flex fuel vehicles out there if billeted for independents for instance grocery stores others to buy the pumps to disperse the fuels they can't do it and so you have a literally a glitch in the  system you know arm services use that eighty five lot of other entities eighty five but yet when you have to sell it commercially they're not they can't do it and this might be something that you want to look into have urged the expedition manufactured between two thousand and two eleven what kind of fuel savings do you look at or for gas that you might have in increasing past your car fuel economy  basing our standard on the president's goal that he has that eight point five billion gallons of fuel saved in twenty seventeen and the way that we get to that number is a goal of a four  to be eliminated why does your proposal contain such a provision we believe that the way we set up the proposal right now guarantees the most flexibility and is consistent with neutrality in what we mean by neutrality is that we make sure that we don't favor any one particular kind of technology over another now the one thing that we are doing as my colleague has pointed out is we do believe that attribute based systems are important in terms of guaranteeing safety but we also want to ensure the consumer choices is protected and that would be the main motivation i would say thank you and  with a yes or no it would be very much appreciated the reform white truck rule is not available for manufacturers and job bob in your two thousand and eight do we have any appreciation of how the cafe system the new one will work on light trucks and how it will perform we do yes we do have an idea of any studies been performed on this we've done our own analyses i don't know that there's a study other than the national i mean how would studied how a similar system might work on passenger cars we have but i acknowledge it's based on old age it's based on old data yes or the best that we have with several years old now what effect a similar system if applied to passenger cars would have on overall fuel consumption in the united states i don't know if studied with you the right word again we have some rough analyses but would you submit a submit to us first of all the studies and second of all what information you have with regard to how this would affect fuel consumption in the united states place now has this is studied how the new structure would work with the existing requirement that manufacturers satisfy cafe for both foreign and domestic granted this new authority we didn't propose any changes to the two fleet room so i'm sorry we have not proposed any changes to the two fleet rule all right now dr who is our has the administration conducted administration conducted an independent analysis that demonstrates how it would reduce overall fuel consumption in the united states not specifically so then we don't really know what it would do to reduce fuel  consumption right we don't know we have a target and our target would be implemented by the department of transportation so we have a target but we don't know how we're going to get there well we know we know the method that we would use the issue is congress this is something that we're going to be seeing over the next year or so and we're certainly going to be considering it now are your very able predecessor brisker mancuso endorsed both the carbon and a gas tax in the wall street journal on october twenty eighth two thousand and six as he had been astray should continue or considered supporting tax on carbon or gasoline we don't believe that a direct gasoline tax is the way to go we believe that michigan mr upton is recognized for five minutes of thank you i was wondering if my colleague from the great state of michigan was going to change the old saying a wing and a prayer to a wheel and a prayer based on it was questions  some i have a question as relates to your testimony you said on page two third since reform cafe demands create fuel efficiency from every model of vehicle affected every auto will share that regulatory burden for improving fuel economy not just a few and what brings that to my attention is the fact that as we've heard from our manufacturers and particularly as it related to g they estimated at the peak from the time period twenty ten to twenty seventeen the cost for them would be about forty billion dollars and at the same time the estimated impact on two of their key competitors toyota and honda is estimated to be eight point four billion and four billion respectively and i just want to know how that fits with your statement that they would all be affected surely that would be the case but at least on the surface it doesn't seem like it would be anywhere close administration raises it under reform everyone will be required to make some improvements there may be some that have to make more than others well in this case it looks like it's a neighborhood of perhaps as much as ten times as much  again were based on almost five year old data we do think those are the think the g m analysis but in the last truck cafe rules issued by the administration you found that the maximum feasible increase in the light truck cafe standards for a wait till eleven model years would be an average of about two percent a year and i think at the time the further the ministration for the noted that increasing the rate any further than the two percent would impose costs that exceed benefits i'm just wondering if that was true about a year ago why have you doubled the two percent to four percent thank you congressman and might know who suggested that you do that but again four percent of the goal posts help it's a target i don't know that we'll get there but we will certainly try to the president has made clear that this is a priority for him and you're correct we did get to two percent under light trucks we are looking the other question that i had for is it's a understand that you all last week issued a request for a product plan information right from the automakers from two thousand and ten to twenty seventeen and my question is if you didn't have such information on hand when you may this proposal how is it that you ended up coming up with the numbers that you did but two points the other point i was going to make congressman is that we are proposing a rule making on the four percent issue from twenty ten to twenty seventeen it would be a longer rulemaking and it would be further out a decade out which is part of the reason why we thought we could still have net benefits of four percent we did ask for product plans because of course without the best available data we are making rough estimates we absolutely acknowledge that she was you would you want to comment on any of those questions i think my colleague handled it well unless you want to follow up with anything specific i'm happy to answer your question but i thought she handled it well thank you well again we all do care about fuel economy i mean the market for a new vehicle and one of the questions that i did ask was if you fuel economy does it have any it does have an impact on on every purchaser i think that's out there and i guess one of the things that that i would like to see as we see these improvements come like we do need some reforms there's no question about that they need to be appropriate ones i just don't want to necessarily see all of the costs total be worn perhaps by the manufacturers at a disparity of perhaps as much as a ten fold between some of them and look forward to working with the chairman and  concerned about the notion of cost benefit analysis and exactly how would it work and forgive me if you have covered this our earlier but i would like you to explain to me exactly how you're going to analyze cost and i know this is kind of traditional indicators you use it the industry provides lost jobs in this sort of thing but there also is an element of benefit that i think is somewhat difficult to define but very important which is the quality of the impact of reducing global warming and if we don't have a real way to incorporate the hard to define values and benefits into this cost benefit analysis it seems to me that we're basically going to be operating off of kind of the old school marvel and not adapting to the  concern so could you talk a bit about how this cost benefit analysis is going to be conducted in the first instance and secondarily how you will include the society the broad societal benefits into the benefits out of the equation thank you congressman we are not proposing to jettison any of the restrictions that we have in current statute we're asking for similar authority which does require a cost benefit analysis  under the cost benefit analysis for example for the light truck will we look at the cost of the technologies that we're applying it's a cost to the manufacturers for the technologies that they have to put on their vehicles to improve the fuel efficiency the benefit side as you said it's more tricky the vast majority of the benefits in our analysis is the benefits from gallons of gasoline saved we can quantify that there are other recs for nowadays we look at benefits from the reduction of pollutants knox and sachs and p o c lead but the majority of the benefits does come from the gallons of gasoline that we are saving there are other benefits to increasing the cafe standards a reduction of c o two emissions for sample is one we have heard from some that we should have quantified that we can quantify it we just can't it which has been the challenge so that we can say seventy three million reductions from the three million metric tons of c o two the question is how do you apply a value to that and so in the end applying a value to some of these more challenging concepts  you said hard to define clean air better environment energy independence it's it would be i don't think would be something that we would be able to value specifically in this rule there are benefits well thank you that i must acknowledge that's kind of troubling because that's the whole point of why we're here and there without those kinds of values being taken into consideration and identified we might end up as i called old school but maybe somewhat the status quo the other question i want to ask you is whether speaking of status quo whether we might find ourselves in the situation in which we got no appreciable increase in fuel efficiency based on this cost benefit analysis which is to say if you conclude that the new technologies would be too costly to implement on a particular model or group of models or group classes or whatever that you would then take no action or recommends only the slightest change i believe that's possible and perhaps even likely would you agree or disagree with that well i would disagree congressman that we will see nothing i think we we feel fairly confident even looking at some of the older data that we can see an increase in fuel efficiency for manufacturers the reason we asked for the flexibility and the reason we didn't write four percent into our draft legislation was so that we could do a full cost benefit analysis so we could look at what as technologically feasible and economically practicable considering the need for the nation to conserve energy we can look at the effect of other federal motor vehicle standards on a rule making all things we're required to the statute and make a determination about the best increase we could get we do believe we will get an increase in committee we will ra akin to cap and trade it is a trading program there wouldn't be a cap in the same sense that you'd see with the sulfur trading program for example we would actually encourage manufacturers who are at or a little above the fuel efficiency levels to do even more because we believe that would provide an incentive in the marketplace for them to do better they would have credits that they might be able to sell to other lng mathematics for cash is that which is that what's going right now we would not be we did not propose to set the price for a credit we proposed to allow financial investors to be included in the market as was noted earlier it's a very small market the manufacturers all know each other and the reason that we included in financial investors was so would presumably let's just say merrill lynch would go to a buyer and say hey if you're interested we've collected credits from could be a variety of people could be over a period of years would you be interested now that it's completely voluntary we put it out there as an option for flexibility for the manufacturers they have the option of meeting the cafe standards if they fail to meet the cafe standards and declined to and are not able to purchase credits to offset the v s for the statutory we have would have to have you given any consideration to increasing the fees as an incentive we have statutory authority to go up to ten dollars we didn't propose that it wasn't an issue that we addressed we were looking at fuel savings in shoes as you find it or the fiesta something we'd be happy to discuss i think the fee structure definitely needs to be considered because that's in for gold to making this process work we this is an important debate in this country still is pride predominantly a fossil fuel generated economy and as much as we may not like it that's a reality so our effects on the use of fossil fuels will have a dramatic effect in in the economy the question is what we do now and how do we bridge to the next generation which a lot of us believe will be a hydrogen economy and how do we do that in a way in which we are not so disruptive of the economy that we never can know for the capital expenditures to get to the hydrogen economy so  modern ice cafe and then sixteen and a half by an r f s alternative fuel definition is that correct it's no i'm sorry it's a it's it's the eight and a half is one quarter of  and i one we increase taxes on fossil fuels we did not put the tax revenue generated to kota liquid technologies that wasn't a lot of them and on the floor we just had a science bill on the floor motion to recommit said let's have some of this technology go to kota liquid technologies that was defeated on the floor i have a real skepticism that this new democrat majority really is understanding the importance of fossil and in this country so in this provision and getting to meet the goals which we have laid out or you have laid out we have this thirty five billion gallons and you we use the terminology alternative fuels could you give me the definition that alternative fuels use we want to make that as broad as possible and again i think the reason for that is basic economic principles which is that we don't want to pick the winners we want the market to pick the winners so we want to allow for alternative fuels hydrogen  coal to liquid as you mentioned bio diesel there are a number of alternatives and frankly we simply don't know where the technology is going to take us over the next few years and we don't want to try to steer in a particular direction and i applaud that because i i too agree that's kind of where we have to go when the energy bill that we passed we had some point five billion down renewable fuel standard it was not definitive it's primarily been met by ethanol production but of course also being  so for my friends who are afraid that this is just a big ethanol push that's not correct expression really if my friends on the other side would start opening up the public policy vaden coal to liquid applications and coal to liquids debate and it's my understanding that the alternative language here would include not only coal to liquid but again would help us bridge to the hydrogen economy and different i have twenty two feeling still stations in my district you can go from chicago to kansas city now on all you any five it is moving in the right direction the automobile industry will eventually work on an engine that i have the same compression ratio so you'll get the same but when you're averaging twenty cents less a gallon the the miles per gallon drop off is almost almost a wash so i'll end chairman my district is home to the north american headquarters of toyota and honda which build a few cars in this country i think everyone's noticed and have robust r and d facilities and have i think course i'm totally unbiased been pushing technology because they have produced vehicles that have hybrid in various forms of clean engines even without being required to do so and i just want to commend them for their forward leaning approach and to say that i think we all can benefit  from things that they have done but also things that we can do to set higher standards so that everybody knows that in the future the way we have produced car engines and the fuel efficiency of cars has to change i would observe that this is been a kind of soft and fuzzy hearing but i think there are tough questions that need to be asked and so in that spirit let me just sort of waddle in as a friend of mine in this audience pointed out to me before the hearing started nyssa has authority right now to set higher cafe standards is that true yes so i'm not recommending this but if you wanted to do you could say by x date instead of the current cafe standards we have which was set in one thousand nine hundred seventy five i think everyone gets that that was quite a long while ago before half in this audience were born instead of that standard we could double that standard by a date certain is that right yes the agency believes we have the authority to raise it just don't have the authority to reform the program reform the program as well would you agree with that yes ok completely and we have to take a look at all the loopholes in the way we've treated different categories of vehicles differently do we not yes that's an open issue all right but while i think these goals in after abuse and a bunch of kind of soft words or are useful when we'll nets or we'll nets set a higher cafe standard if we can have reform authority we can have a rule making out by we would have to have it out from all your twenty ten by next april first so the end of next march through be very challenging but we could do it if we get the well i think the times we live in are very allan jane and i don't think we are the best body to set an arbitrary standard i have held that if you for many years i think you are much better equipped but i think the time for boldness is here and we've heard discussion on both sides about new forms of engines and all kinds of things that are out there i surely agree with statements that have been made that we shouldn't you know pick winners and losers but if we don't have bold tough standards out there we're not going to drive change that right we recover from that's why we're proposing a far bigger reform forty three group would you have any comment on this you know i agree completely i think the president's goal is to pose bold standards and to do it in the way that economically responsible so i think we agree completely with well let me second the point about economic responsibility i think this can be a win win would you agree with that if we do this right but we have to do it in my view boldly couldn't this be a win win because it creates huge opportunities for innovation and they require human beings well trained human beings to to execute here governor schwarzenegger who was here yesterday and who recently signed an executive order mandating a low carbon fuel standard on almost out of time and he his point is that rather than setting economy fuel  fuel economy standards for automakers this approach requires a maximum a minimum ten percent reduction in car in the carbon footprint of transportation fuels by two thousand and twenty and shift some of the burden from automakers to fuel producers my time is up but do you see comment we believe that the president's proposed president's proposal is a step in that direction in fact we believe that if these proposals are implemented we will be successful in in slowing and perhaps stopping the growth in carbon emissions and analysts view was something having to do with their tax policy taxes on profits which was a rumor not substantiated the problem with that explanation is there is no obvious reason why that would then trigger the events in other countries in fact could even go the other way so we don't we don't really know what happens i guess let me just say one thing first of all that the chinese market responded today by making up about half the gains in our market is now up by about ninety nine points so it looks like whatever happened yesterday was anomalous these kinds of things are not unusual and we just kind of write it off to one day's activity we don't think of it as reflecting anything about the fundamentals of the economy which i believe are quite strong you still believe the fundamentals are strong absolutely the best evidence of that is the labor market the old journalist in me i've got the head of the white house kelly of economic advisers biggest story in the world is the economy and dance around it ok thank you ms nation if congress were to pass this bill today there's a technology exist increasing fuel economy to it to a level greater than it is now and if so how much greater i mean this is a debate i get in and in this building and back home is how far can you go without reducing the safety standards what's technologically possible and what's the cost of that to consumers  president has said congressman this is a heavy technology that we do believe the technology exists and i would know that the automotive manufacturing industries spends billions on r and d when we say apply technologies we do think there are fuel efficiencies to be gained still from the good old internal combustion engine and improvements to the transmission aerodynamic drag in those things but we would to reach a goal of four percent diesel we're going to have a diesel supply issue in this country we try to mimic europe because we don't necessarily have access to that that diesel right now is that accurate what kind of supply issues we face well we have the requirements but we do think that we are in a in a position to the manufacturers in a position to make diesels that need our requirements and that we can get the fuel out there there are many more is there refinery capacity go for that much diesel if we make the kind of shift you're talking about  yes well i shouldn't definitively answer that we certainly have to look at it we're not talking about a market penetration of fifty percent but what you see in europe it would still be ten or twelve or fifteen we do think we have what's the market penetration right now of these flex fuel vehicles and what we've done in terms of ethanol usage to you know i don't know off the top of my head what percentage it's not huge but it's no it's trying to finish them off and and mr lazear and can you talk to that i mean i want to be careful what we're doing because we i don't think most of us understood the unintended consequences we're now finding ourselves in in the i recall sure sector there is no doubt that when we increase the demand for a particular factor for other uses that's going to put pressure on prices it does put upward pressure on prices that stimulates other actions of course as well so we find different ways of producing corn more efficient corn and that's her about we do believe that the technology will help us on that front that said we that was one of the reasons that we think it's extremely important to have safety valves built into this  program one the things that the safety valve does particularly in the alternative fuels mandate think you know what that would do is that would limit the amount by which corn prices could go up because if ethanol prices get very very high you have an alternative you can to use the safety valve and that limits the damage and that's that's an important component of this plan because again we focus very heavily on thinking about the economic consequences of this as we went through the strategy very good thank you thank  forty five percent of our oil in one nine hundred ninety five to importing sixty percent of our oil in two thousand and six during that period we had a republican controlled congress and from two thousand and one through two thousand and seven now the bush administration has not improved the fuel economy standards for automobiles in our country twelve years and we have gone from forty five twenty thousand men and women that is imminent we have seen a corresponding surge in oil importation probably over seas at the same time three hundred billion dollars worth of oil a year we import into our country much of it going into the hands of those who are actually funding al qaida funding terrorists plus an additional one hundred billion dollars our military to fight a war in iraq so for twelve years the republicans have stuck any improvement in fuel economy standards and it is a national security disgrace that has made our country so much more vulnerable than we should have been that is in my opinion the overarching issue of our time and it is also an environmental scandal because of the dramatically increased greenhouse gases that we're sending out into the atmosphere that is causing some vendors additional and financial and health problems for our planet so we're looking to you mr mason and we're looking to you with the lazear to help us to do something about this problem miss mason the president has called for a four percent increase in cafe standards but there's nothing in the bush bill that i can find that actually mandates a poor percent increase where is the four percent increase in the legislation which president bush and vice president cheney have sent to president and vice president are deliberately once again misleading the american people about his goals in this critical national security area there's no not saying in president bush's bill that gives us any guarantee that there is going to be a four percent increase it is a national security candle we cannot ask one hundred fifty thousand that these soldiers and marines have to keep going back over and over and over again a mandate upon them well where's the mandate in his legislation on the automotive manufacturing industry on the appliances industry that w meet minimum security national security standards there's no mandate on us on the man you're fat on us here at home he's saying it's just going to be discretionary that is a improves the the fuel economy by forty percent without compromising safety at all is that not true absolutely would still have to meet all of our safety standards but it does meet all your safety standards is that correct yes or ok so if if we're then looking at these issues where why should we have any confidence in you the national academy of sciences has already said in two thousand until you c improve it four percent a year it's five years later and they said using existing technologies in two thousand and two and that did not include hybrids why can't the president just say the words we said in misstates i trust ok thank you why won't the president make the same kind of statement the same kind of mandate given the national security crisis that our country is in on  dependency can you tell me that this nation yes congressman markey last year when we discussed this issue there was a great reluctance in the for lack of a better way to terminate the trust the message that that's it was putting forward  were looking for numbers or percentage increases and so i don't think we could make a bigger commitment on behalf of the administration than having no you are looking the same as you well look and i say well looking for flexibility to do less than four percent that's what you're asking the congress to give you you're asking for flexibility to do last less not more you're not saying you could bike to five percent or six percent you're saying we like to three percent we might do two percent that's what i'm hearing you when the president's saying i'm hearing economics i'm not hearing national security i'm not hearing national crisis i'm hearing we might do less it's not in the bill it's just rhetoric and it's kind of rhetoric for twelve in the united states it's about a thousand dollars a car so if you buy a big chrysler that gets twenty mpg you pay an extra thousand dollars but that's not the majority of cars at all but if you bought a an s u policy makes no sense given the national security crisis facing our country there are a number of ways to motivate consumers to choose more efficient cars one is taxes you mentioned the other is market prices much to my mind most of the action that we see in the market is primarily driven by gasoline prices so if we look over time at the pattern of consumption that seems to follow gasoline prices probably more closely than anything else so you don't think this gas guzzler tax works at all oh no no no i didn't say that at all no taxes surely work all i said it doesn't drive because it is it is a factor in driving people to less efficient as you vs because the automobile yes you did your market and your time is up and i'm going to be recognizing the ranking member of the full committee mr barton for giving ok thank you thank you it's a terrible thing when you don't answer a question like a congressm wants an answer i mean it's just we oughta make that unconstitutionally you know giving the answer he wants not the answer you think he's correct in that way we can all go have lunch and not have indigestion laughter  now mr markey just in his usual entertaining style has given both his monologue and asks questions i used to enjoy them when i knew i had the votes are not quite as enjoyable now that he may have the votes we'll see but i think to be fair we need to point out that he has never voted for in war he has never voted for extended drilling in the o c s he didn't vote yes on the passed his committee his amendment to increase cafe has failed every time in this committee that has come up for a vote and every time on the house floor to a little bit disingenuous for my good friend to be sitting here you know tongue lashing these two distinguished witnesses when he has certainly not been a part of any solution efforts that have become lall now we can disagree but i have had extended private discussions with my good friend about trying to get a cafe increase in exchange for anwar so you get a production and conservation so far he said no on that so i think it's a little unfair to insinuate that it's all the fault of the two witnesses or the bush administration that we haven't done anything has his conclusion is correct cafe's not gone oh that's a correct conclusion but it's not because good people on both sides of the issue haven't tried in some way to find a consensus solution i want to put that on the record my first question i guess it would be to the economic advisor do you know what percent of greenhouse gases emitted by humans in the united states is is because of tailpipe emissions as opposed to stationary source emissions twenty thirty thirty is the number that thirty percent percent are ok so on the larger question that chairman boucher was asking if we consider a cap and trade system for stationary sources should we consider a cap and trade system for mobile sources of greenhouse gas emissions in the united  states i guess there's two ways to answer that first we have proposed a tradable credit system we haven't not proposed a cap and trade in cafe legislation just on c o two emissions as earlier we've had difficulty with even monetizing c o two emissions we can tell you the reduction but to monetize that value is very challenging and we haven't seen any consensus in the scientific data i'm not an advocate of a cap and trade system so i'm just saying that those that are if thirty percent of our human emissions in the united states are tailpipe are mobile source emissions and we're going to do cap and trade i would think that thirty percent of the problem ah to be thirty percent of the solution and my hunch is that the proponents of cap and trade don't want to look at mobil sources with the same scrutiny that they want to look at it stationary sources in the energy policy act of nineteen two thousand and five section seven seventy three has a study of the feasibility and effects of reducing the use if you in automobiles basically see if there's not some alternative to the current cafe system can can you tell me miss nason if that study was conducted in the if it was what the results are of it if you need to have and we can provide you with that information so you have done the study yes ok and you can give us the results do you happen to know off the top of your staff said what the results of that study are how you use that study to come up with your proposal for the reform cafe thank you congressman the national academy of sciences looked at a riot of options for reforming the cafe program and one of their findings was that an attribute based system and when we say attribute we mean size or weight was a way to reform the program to still gain fuel efficiency in making improvements in raising the cafe standards without sacrificing safety one of the concerns the national academy of sciences raised is that the least expensive way for many factor to meet higher cafe standards would be to simply downsize to make smaller and more smaller vehicles which exacerbates the problem we have right now between compatibility of large and small so when we looked at that study we want to make sure that as we reform the proposal we don't sacrifice safety which is something nasa was very strong on but we still gain fuel efficiencies from all of the manufacturers whether they are below or below an arbitrary number so we think reform with an increased regency is the most responsible way to go it is it though it's also my understanding that in that study it was determined that existing technologies and it assumes a gas price for around a dollar fifty that there was opportunity for substantial savings over a ten year timeframe did you incorporate that into your proposals i've heard this this four percent number bandies out that that was four percent told i think the national academy had a far more aggressive projected capability for fuel savings how do you respond to what the national academy said there and i was technology of five years ago right  apologize it's a very aggressive goal let me ask you in your testimony talk about your reform cafe proposal and you want to do it by and you said in the previous cafe effort it was a lot of that was accomplished by downsizing of vehicles or saving technologies are out there thank you congressman we use the list that the national academy of sciences looked at and we had technologies until cost and benefit it's hard level are you going to going forward but how are you going to do this if you set these rules for twenty ten or whatever up to twenty seventeen i mean is it possible that the technology will outpace i want to know how your how how you're going to assemble what the world of possible technologies are and how you're going to come up with setting the standards accordingly and the foll up question which i'll just throw in right now is let's say you do it now the rule making and then three years later new technologies come out are you going to reopen the rule or how are you going to accommodate technological change over time those are excellent questions and we're struggling with some of those national for example to direct injection engines and so we would start with changes to the internal combustion engine based on the manufacturer's product and what we would be required to do under reform is to find a technologically feasible way for manufacture to get to but say we can reach four percent a four percent annual increase now manufacture may look at our list and say we don't want to go with five speed or sixty transmission we don't want to use the technologies that you're applying we want to go straight to hybrids or diesel that would be their alternative one of our basic tenants is that we are technology neutral we allow the manufacturers we create a path to show that it's feasible but we allow them to decide whether or not they want to take their own path to the point of your second question is you're correct when nasa looking at this list the far end of technologies hybridization and diesel is a nation and we obviously i think there were one or two vehicles in the market at the time right that were that were hybrids and so we've seen an increase obviously in those technologies one of the things we are doing right now is working with the national academy of sciences to update the list because we do need to go beyond hybrids and diesel and to consider some of the the research that manufacturers are doing they're going to be getting ahead of us so we do need to update the list we agree with you so i think you're in a bind when you say you want to be technologically neutral  we all think that letting the marketplace decide is a good bias to have and yet you're going to be making decisions based on your understanding of what technologies are when you go out and set the standards so by definition you are picking available technology at least from your perspective at least through your rulemaking bargain we choose we have to demonstrate by statute that it's technologically feasible but a manufacturer does not in any way have to use any of our technology they can determine that they can get to four percent through a different path and there's nothing in our rule making that would prohibit them from using their own technologies and looking at their own product plans and deciding we want to make a heavy investment into diesel for example even if we don't propose a greater penetration in the fleet of diesel as they should they could in individual manufacture could we could get to a point in twenty seventeen or maybe beyond where we will need to update the technology less which is why we're starting that work right now with now but we do think there are significant gains that we can make both with improvements to engines then transmissions right now and adding acknowledging that we would be adding higher and better fuel efficiency but more costly technologies like diesels ation hybridization and you have comes up and you can say wait a minute whatever rulemaking we did we said this is our fuel economy standards attribute base or however we set out what are some have as a way to meet we can suddenly do a lot better if you have the flexibility going to change with them well it would depend on congress giving us the flexibility the reform program the way we'd like to reform cafe but yes when the light trucks were but we believe that we can continually allow for different technologies to be used in the marketplace and that's a very important basic tenet of our proposal one last question and it's going to move just a little bit off of cafe because cafe were talks about new vehicles coming on the market but i read it last week the same thing i read probably ten or fifteen years ago which said it's the ten fifty roll the temper sent of the vehicles on the road account for fifty percent of the emissions that are exist in our country from from vehicles and i heard that fifteen years ago about i heard it last week again is that true and if we want to talk about carbon emissions one notch we're looking no skin off your topical cathy that should be you know if you've been looking at that issue is that still true or a certain small percentage of all the vehicles on the road create a disproportionate impact in terms of carbon emissions in our atmosphere thank you congressman one of the things that we've received some criticism for for example in our light truck rule is that we made estimates about percentage of vehicles that were still thirty or thirty five years later and people were critical that we were allowing the eclipse to stay on the road for thirty years we have to make those estimates  maybe two percent would be our number of vehicles on the road but there are people who keep their cars and trucks for a long long time and we do have to account for that in our rule making so  that is something that we are aware of and we do try to take into account even as we're asking for an increase in higher fuel efficiency we do have to take into account that there are people who keep their vehicles for decades than would change i'm sure you want to just making out with a carburetor for example that would save a lot of mileage you look at that but one thing i can i have four kids and one thing i'm concerned about a safety and i think you can achieve some of these efficiencies through  technology that wouldn't change the weight or structure of the car but i think there does come a point where you do have to change manufacturers would the structure of the car but wait and you know if you've done an analysis on how many lives would be lost even these a fuel efficiency standards yes thank you congressman we have actually a very clear analysis through the national academy of sciences under cafe current cafe structure of the un reform structure as i noted in my opening testimony up to twenty three hundred lives would be lost as was their estimate between six hundred and twenty three in one thousand nine hundred three they looked at that one year alone because the least expensive way to meet cafe standards is to downsize the vehicle so that doesn't necessarily mean that small vehicles aren't safe and large vehicles are safe and just exacerbates the problem that we currently have between compatibility of large and small that is something we are very concerned about and we looked very carefully at those provisions in the national academy of sciences study when we proposed our reform cafe structure because we do not want to have any negative impact on safety and the safety penalty that is the nast term not mine the safety penalty is something that we want to look at and we have looked at very carefully which is why when we talk about reforming cafe we talk about two separate pieces changing the program and increasing the stringency we want to make sure that we look at both carefully so that we do not have any negative impact on safety do you analyze any type of a crash test or anything like that you do those yes ok every day and let's say they are achieving a certain level you take that car and you have a crash test and you see exactly the impact that and all that that would get to attention kill people yes we would not permit a manufacturer to make a change to a vehicle that makes it much more fuel efficient so then doesn't pass all of the federal motor vehicle safety standards any vehicle that is being sold on the road needs to pass all of our safety requirements in addition to being more fuel efficient that's why we have noted that a four percent annual increase would be very challenging for manufacturers because they still have all of the other standards that they're required to meet but that is our goal what percentage do you think they can achieve in the short term without jeopardizing any safety well we think are for example when we looked at the private plans from several years ago for the light truck what we had a two percent and over and annual increase we actually think that can be higher but as was noted earlier we have requested the product plans from the manufacturers we look at their confidential product plans we don't share this with other manufacturers we don't share with the public to determine where they are making their investments and to make sure that there is no potential impact on safety thank  it mars the enthusiasm in the knowledge that you bring to your job i want to touch on i guess some fundamentals that i i think i have an understanding of them and maybe they're pretty well established where we go in the future because you're building on these particular fundamentals and the first one is the classification of the opals what we're discussing today are passenger vehicles but the very definition of them may not read may be more of a fiction than anything else my understanding that underly trucks come s u v s crossovers and minivan do you know what percentage of americans today actually use what type of deal to carry passengers yes good morning congressman thank you it's nearly half it's almost an even split for the way we classify between light trucks and passenger cars and back cathay was first created it was twenty percent less than twenty percent were in light trucks nearly all americans were well policy may have driven manufacturers a certain way and i mean i think that's really the obvious thing because if you don't have a stringent kept the standards and also let me ask you do you have different emission standards depending on the classification of the vehicle that's a lot of everything that comes under light truck as opposed to passenger view are they  vehicles that are not subject to a stringent standards whether it be cafe standards or emissions would you agree oh well i mean incentives for manufacturers to build them  for manufacturers to be when you say that's more of an incentive i think and this is all history i mean you were in or you weren't around as i heard a minute ago about unfortunately i was not just around i had been around for a while but what i'm saying is right now as you speak with your address and you're a passenger vehicles which is really half of the equation maybe an increasing numbers are on that other part of the equation like trucks the president's attempting to achieve on alternative gas mileage savings all of it do you do it with the subject we discuss today passenger vehicles or more accurately do you do it under the category of what we refer to as like trucks absolutely congressman we still think there are tremendous gains to be made in light truck category as well it's part of our proposal and we're not going to change  classification are we i mean we're not going to suddenly and so what i'm saying is and when we talk about cost benefit i really see this debate and we need to be very cognizant of it and i know that i have some dear friends that would say we need to leapfrog and there may be a real danger in leap frogging because when i look at what might be at stake in the future of the domestic automakers and that has serious consequences it doesn't mean that we don't strive to improve and have a realistic target date but the question before us is if we don't move prudently do you believe that it is possible if we fast forward without considering the impact and consequences of policy that a major manufacturing base for the united states could well be jeopardized absolutely something we would want to avoid congressman which is why we put the draft legislation and we are engaging in this conversation with you about the best way to do it the other thing is we've had this discussion before because i know you're depending on studies by other agencies and then if he's such the national academy of science and such but you also depend on the a right and you depend on the e p a to establish the manner and method of the testing to establish cafe standards and to arrive at these numbers and last time we had this discussion you to conduct this test to arrive at your twenty six twenty seven or whatever the representation is on the sticker there is that they drive a vehicle for two miles or forty eight miles an hour something to that effect are you familiar with the present test what is the status of any revision yes congressman and last time we talked e p a had not completed their revision of the test it is something that i know they had not just groups like the national academy of sciences but consumers were writing in to say they were not getting the numbers as you say the fuel efficiency that they had seen on the sticker during actual driving conditions e p a has completed that rule making i believe december and they did make several important changes which we supported that will help consumers get accurate information but you know it's amazing i mean we're looking at it from from the viewpoint of consumer but use the administrator depending on these particular numbers and the administration facing all sorts of assumptions on gas that is being established by a test is not accurately reflect what a vehicle gets in gas mileage i mean that's my whole point is we may have set a foundation by having the two categories has always been a fiction and not realistic but we have to live with it but surely we can have a test that actually gives you numbers i would you will predicate policy targets in goals that are supposed to be attainable but they're not going to be attainable it realistically we're not getting that kind of gas mileage out there and you might say you know that's important for the consumer i'd say that we're we are predicating policy on fiction again and unless you and i congressman are right go  to say how realistic are these numbers should we be basing any policy assumptions on it and someone just handed you something and i take it that they might have something of interest there it's or is it not i guess it must say when are we going to launch and i think to be in a few minutes i'm not going to doctor is it lazy or how do you print let's say you're ok and i really don't have any any any questions for you because i'm afraid you'll give me one of those look at ways that you could encourage individual consumers to get their older and less efficient cars off the road for example resell tax credit that would encourage car owners with the older car less efficient car to be able to trade  get a resale tax credit and then purchase a more efficient vehicle to do i look at that individual based approach i would say we look at individual based approaches but not the specific one that you're talking about in some  sense trading old cars for new cars comes about in large part as a reflection of the price mechanism of things become expensive gasoline becomes expensive and you have an old car that's a real gas guzzler you might move in the direction of a new car simply to save money that would come about indirectly but the kind of direct approach that you're talking about is not something that that i looked at personally and current current standards are based on a split seat split fleet analysis and assessments to do look at how you could do that on a unified basis again we thought about the the different attributes and you can think of the splits fleet in some sense of being like a big view on which we base this we believe that the department of transportation is better able to handle this in a much more sensible and gradual way by using the standards that we have right now and that was that under reform the change cafe structure in the passenger car is not we don't have the authority to do that so we left that issue there would be something i think we might be interested in discussing at some point but we we thought it was important to give the manufacturers the opportunity to adjust to new cafe under light truck and hopefully new cafe under passenger car for some period of years and then we could have further conversations it's wise domestic production and jobs is would there be any advantage to moving to a unified there the issue again is how is this implemented how are the attributes how are the attributes used and how do they cut across different companies and different kinds of vehicles and obviously it'll affect them in different ways depending on how it actually is implemented but there's no obvious you know kind of if we go this way you're going to get more jobs and if you go that way i don't think there's an automatic connection there and the last question is just one of overall context as we look at different initiatives that would look at both our fuel efficiency in fuel security for the energy security of the long term and the climate change issues the c o two emissions from the automotive automobiles nationally how does that top of my head we just i just talked to one of my colleagues about this recently jim collison he's our administration's expert on that and i just don't recall the exact number but it's very significant would it be over would be a greater amount in the automobile contribution i think it's about the same number is there with you ok here we got it ok forty percent is energy thirty percent transportation twenty percent industry in ten percent is the household repeat that one more it's forty percent is from energy production thirty percent is from transportation twenty percent is from industry and ten percent is from the households obviously those are approximate numbers since we're given year round attendance and you have this and this is my last question mr chairman and do you have the the breakdown between manmade greenhouse emissions c o two emissions versus naturally occurring i don't have that with me again i would i would have check those numbers that's sort of outside my lane to be honest with you and i could get that for you but i don't have that on the top of my hand thank you mr chairman and just to clarify congressman that thirty percent is all transportation so it's about sixty percent i believe of the thirty percent would be cars and my trucks thank you thank you very busy day even when you work five days a week let me ask a question and i apologize if it's already been covered but on the twenty and can pay for that i  as far as for promoting a biofuels as a source for american energy we believe that the biofuels are certainly one of the areas that in which we're going to see a lot of development particularly  future the president's put a significant amount of money into research on on that and we expect to see more of that coming over the next couple of years and we hope you'll support that we think it is a promising area as you know the president believes that cellulosic ethanol and biodiesel are probably going to be the things that we see in the most in the nearest future but again the policy does not want to select one over another the basic approach behind the policy is to allow the market to decide what is the most efficient way with the most efficient direction in which to go and you know we're happy to see anything develop as long as it's consistent with the president's policies of making us more secure in terms of our energy so you know if you had suggestions specifics on that we would welcome them i think you know we've been thinking about and we put out some proposals ourselves but we don't have  monopoly on this and if you had specific ideas we welcome hearing them well under the when we passed our our energy bill a couple of years ago the tax tax credit or our tax relief or one dollar a gallon on biofuels made from virgin stock if you will about fuel that was recycled colonel sanders was only credited at fifty cents a gallon just seems to me to make sense to include that those biofuels that are developed from what otherwise would be something that would go in clog our our sewers and our landfills or our water treatment plants and i just know they've done a little bit of that of course maybe a great deal of that in my district and it's been pretty well received by the restaurants and companies that would have grease to recycle or frying oil to  recycle again i just think that's an opportunity that we might be missing that perhaps we should we should embellish now i am a fan of the hybrid vehicle believe safe i haven't had to replace a battery yet so i might feel differently than i got it again to deal with issues of air quality but then when gas prices went up so high it gave me a feeling of moral superiority to be driving a hybrid and i like that do you think the standards that we're talking about the administration is talking about putting creates the number of hybrids that are currently offered by american manufacturers because that's been one of the problems as the technology has has largely come to us from overseas and it it would hit i think it would benefit the country that these were hybrids offered by american manufacturers so if you have any evidence of recent trans and and how we might anticipate this impacting the the american market thank you congress and we have seen obviously an increase rolling penetration of the fleet overall not just from overseas manufacturers but from u s based manufacturers and others an increase in hybridization offering alternative not just cars but light truck hybrid vehicles and i guess the best way to answer is we could see an increase the basic tenets of our proposal is to try to remain technology neutral so that if there is a manufacturer who believes that diesel is a nation for example clean diesel is a better way to go they can choose that path and we're not limiting them so we wouldn't be requiring hybridization under the rule making but we certainly knowledge that at four percent year over year we would expect to see greater penetration in the fleet of hybrids and diesel as the as the president noted it's a heavy technology that but we think the technology's there just one last question on the the the trading of the credits if you really believe th motor company is going to go to honda and say we want to buy some of your credits from you really because it's going to sell them to ford i mean is this is anybody explored this is a market based strategy we have explored that we do believe that the most effective way to do this is to run it through a third party so you wouldn't necessarily see ford going to honda to buy credits what they would do is they would go to a market and credits would trade not only in the spot market but also in futures you can buy and sell and bank credit so we we believe that's probably the best way to implement the policy we also believe that to the extent that the credit price goes up firms will also occasionally opt to use the safety valve and we think that's a very important feature of the program it is essential that you have a safety valve where firms can simply pay a fee and pay it directly to the government to avoid having to bring in technologies that would be too costly and too disruptive and  that's part of the program i think that's an important part of the program i would agree with said we reference you bill in my opening statement i've never driven a yugo but i have driven a geo metro on texas freeways and that does not fall into the category of highway safety thank you the time of the gentleman has expired i'm going to ask unanimous consent we insert in the record the copy of the wall street journal article that was referenced by chairman john cole and in the course of his questions and without objection that we're we're expecting record of votes very shortly on the floor and it's about an hour's worth of votes on hold so well why don't we do this i want to be agreeable our witnesses the been here for a long time let's let's can we do three minutes of questioning next one whatever all right let's let's do that i'm going to waive any further questions even though i have some in the interest of time i think mr hastert is inclined to do the same st well let's do this will recognize the gentleman from massachusetts for three minutes and then if mr burgess wants to be recognized we'll recognize him for three minutes so now you can see the light at the end of the tunnel here states only has three percent of the oil reserves in the world we cannot drill out we cannot drill our way out of this problem two thirds of the oil reserves are in the middle east that is not biggest national security problem and  revolutionize technologically our relationship with imported oil and other energy sources and i think every time he says that he clearly is demonstrating that he's missing the point about how much oil we have as reserves this was our i'd like to move back to you that we impose on an automobile if we're going to get this character tax code correctly don't you think that we should have the same tax on the same type of vehicle if it is going to be something that is economically coherent in terms of achieving a national public policy goal i i don't believe that bringing in additional taxes is the best way to go right now i think the most efficient loophole so that a hummer is covered or should we just exempt hummers and big gas guzzling vehicles which way is which way would you go the way i would go is the way that the president proposed right now which is to take that the current proposal which has built into it standards for cafe not to do anything ok i got it in the present one thing let me ask you another question if if we pass legislation that that has a four percent standard over the next ten years but it's actually backed out two million barrels of oil a day and we went down to only twenty six percent oil dependence and if the president thinks that it's a national security issue i would urge him not to veto a bill that did something that was actually more modest haven't purchased a vehicle that is subject to the gas guzzler tax i've never been a big fan of that on this credit that we're talking about or the proposal we're talking about from the administration to the new attribute based standards the currently mandated average of twenty seven point five miles per gallon would that be preserved we did not propose that as a backstop congressman we have heard from some who have concerns that we need to have some sort of a backstop and legislation into the frank we couldn't find a way to write it without undoing some of the reform of the issue with twenty seven point five in some manufacturers are below it and some are above it so we didn't want to make you something that everyone was above the current twenty seven point five but having said that we understand that there is a concern among many that we need to have some marker somewhere and we'd be happy to five if we're able to meet a four percent annual increase and we would go well past twenty seven point five so that has a floor really there's no danger of piercing that or or penetrating that danger t concern that we have with doing it is it makes the assumption right now that all manufacturers are above that cafe challenges are different for different manufacturers for example small two seater sports car ha much greater challenge so specialty manufacturers may have greater cafe challenges than others which is why we want to be careful about where we would put a backstop but we would be open to ideas thank you very much mr burgess and on behalf of the subcommittee let me thank both witnesses for joining us here today and ms mason i want to thank you in particular because i understand you have leverage itis and this has been something of a struggle for you today that throughout the month of march and and so since there is no further business to come before the subcommittee today this hearing stands adjourned thank you very much