select committee on energy independence and global warming is called to order and we thank everyone for being here every day the news is filled with the stories of how fou dollars a gallon gasoline hurts working people in this country every day we hear of some new societal impact some new economic problem some new forecast of even higher prices yet to come the skyrocketing price of gas at the pump hits consumers all over the country and high oil prices also send a shock wave through our economy that hurts businesses and threatens to inflate prices most experts do not believe that these prices will come down anytime soon we are here today to discuss solutions to this latest energy crisis because seventy percent of oil goes into transportation any solutions to the oil crisis  focus on the transportation sector the bush administration argues that we can drill our way out of this crisis this is wrong forty five percent of the world's oil is located in iraq iran and saudi arabia and almost two thirds of known oil reserves are in the middle east the united states is home to less than three percent of the world's oil reserves but we consume twenty five percent of the world's oil sixty percent of the oil we use every day comes from overseas at an annual cost of hundreds of billions of dollars much of which ends up in the hands of countries hostile to our interests even if we open the arctic national wildlife refuge and the pacific coastlines to drilling today the energy department reports that the first drops of oil would not hit consumers gas tanks for ten years peak production would not occur until two thousand and thirty and even then there would be no significant impact on prices at the pump america's strength lies not in the size of its oil reserves but in our superior technological might our biggest single step we have taken to curb our oil dependence is to raise the fuel economy standards of our automotive fleet when cafe was first passed in the mid s in response to the first oil crisis imported oil fell as a percentage of total consumption in the united states from forty congress passed the first mandated increase in fuel economy standards since one thousand nine hundred and seventy five requiring that the fleet of cars and light trucks average at least thirty five miles per gallon by tw this will save at least two point five million barrels of oil per day by the year two thousand and thirty when our entire fleet will have turned over it will save consumers billions of dollars in gasoline they will not have to buy today the department of transportation charged with implementing the energy bill will discuss its proposal to increase the fleet fuel economy average to thirty one point six miles per gallon by two thousand and fifteen a major flaw in its analysis is that it uses outdated energy information agency assumptions about gas prices that simply defy reality at a time when gasoline prices are soaring well above four dollars per gallon almost one dollar more than when we passed the energy bill just in december nhtsa and the energy information agency that is the department of transportation and the department of energy midrange forecast for gasoline prices that range from two dollars forty two cents a gallon in two thousand and sixteen to two dollars fifty one cents a gallon in two thousand and thirty when compared to today's prices at the pump these numbers are nothing short of absurd especially absurd in terms of what we should be planning for as a country technologically in terms of the vehicles which we drive buried at the back of its very long technical analysis nhtsa documents the results of using achieve a much higher fleetwide fuel economy of nearly thirty five miles per gallon by two thousand and fifteen on june th guy caruso administrator of the energy information agency told this committee that he agreed that nhtsa should use eia's high gas price scenario in setting its final fuel economy standards i agree and have been joined by dozens of my colleagues sending a letter encouraging the department of transportation to do so i look forward to hearing the department's views on this and other aspects of its proposal we are also fortunate today to have with us some participants in the next generation of automotive technology development making cars and light trucks use less oil is important but ultimately to address our energy security and global warming challenges we will need to develop vehicles that use no oil at all our second panel of witnesses will show us one way of getting opening comments have inspired me so much that rather than reading off the prepared statement that the staff has prepared for me to say i am going to ask unanimous consent to put in it the record and i will respond to dollars a gallon gasoline today because we have deliberately not exploited our domestic resources and while i am the first to say that we can't drill our way out of high gas prices locking up all of our domestic resources and not wanting to drill practically anywhere where it is economically feasible has contributed to the high gas prices and while it will probably take ten to twenty years for us to fully benefit from drilling in the outer continental shelf and other places and we started that ten or twenty years ago maybe we wouldn't be about in the pickle that we are in today and our constituents and consumers are having to suffer the cost of the high gas prices now overlaying all of this is the increase in the cafe standards that the chairman is very proud of listening to what he said today when cafe was first passed in one thousand nine hundred and seventy five we saw a huge decrease in the percentage of imported oil well what has happened is that we passed cafe the percentage of imported oil has gone up and meantime the majority party two or three times has passed legislation that actually repeals the domestic production tax credit for developing domestic resources which means it is cheaper for oil companies to buy more oil overseas now the result of all of this is starting to show up in lost jobs and lost good paying jobs the major employer in jamesville wisconsin is general motors they make suvs there they are highly skilled highly paid members of the united auto workers that will be losing their jobs between now and two thousand and ten because gm has decided that the market is not going to support having a full fledged production facility for suv vehicles which are made in jamesville wisconsin all of these people are going to lose their jobs and they are going to lose their jobs because of the short sightedness of the people who say we can't drill we ought to increase taxes on domestic production of oil we ought to raise cafe standards so that these types of vehicles cannot meet them and effectively are legislating themselves out of the market this is the type of attitude where people go around saying congress knows best and we know what is good for you rather than you know what is good for yourself in deciding how you are going to spend your dollars now i guess i am particularly disturbed given what has happened in wisconsin we have big gm plant closing and a lot of uaw members being thrown out of work with all due respect to my colleague from nashville misess blackburn that we invite somebody from nissan here to talk about this n a japanese company and it seems to me if we want to keep production in the united states and we want those profits to be patriated in the united states rather than being sent to a foreign country we ought to be working with general motors and chrysler and with ford to developing solutions rather than providing a forum for a representative of a japanese company now there are all kinds of solutions that are on the table of one of the solutions that we have been discussing in this committee is cap and tax and that is what it is because it will be a tax on fossil fuel energy production whether it is electricity whether it is gasoline or whether it is natural gas there have been several economic studies that the lieberman warner and the markey bills which impose a cap and tax regime will increase the cost of gasoline by one hundred and fifty percent plus or minus that is a ten dollars a gallon cost for gas and that is assuming that there is no inflation that will take place over the period of time that the study runs if we all think our constituents are having a bad time at four dollars a gallon gas imagine the consequences of ten dollars a gallon gas because raising the price of gas is a regre way of raising money whether it is through cap and tax or whether it is through market economics so the solution that is being proposed on the other side is unacceptable it is one that will really dislocate the american economy and particularly poor people who have to commute to go to and from work these are bad solutions and no wonder the united auto workers and the united mine workers have come out against both the lieberman warner bill and the markey bill which will effectively put their businesses and their workers who are mostly democratic voters i might add out of jobs and out of business so let us start using market economics rather than having hearings complaining about four dollars gas because what is being proposed on the other side is going to raise that one hundred and fifty percent i yield back recognize himself for five minutes i think the discussion we are having is obviously healthy with the pickle we are in and i think there are two fundamental different routes that we are discussing one is a route where we remain addicted exclusively to oil for our transportation purposes and we do not use the scientific technological advances for efficiency in making them efficient that is a status quo route and it is one largely advocated by many of my colleagues across the aisle the alternative route is to be one that looks to give americans alternatives to oil so that we can once and for all break the addiction to oil that we suffer from and the monopoly we have from the oil and gas industry when we pull up to the pump and while we are doing that we use the new scientific technologies to make our cars that do run on oil which they are going to do for decades because that is the dominant fuel force and will be for a decade or two that we use cars that are more efficient that is the fundamental two tracks that we were on i want to suggest the second track is the preferred one for two reasons one if you look at what can actually deliver for the american people we know one thing cannot deliver and we know one thing that can deliver we know one thing that cannot deliver which is relying exclusively on domestic drilling the reason we know that is that the dinosaurs for reasons that escape all of us decided to go die under somebody else's sand the oil is not here there are more dinosaur theme parks as a percentage of theme parks in the world than there are oil reserves in our domestic country relative to world oil reserves now this isn't a theory or a hypothesis or democratic communist thought it is a simple fact of geology we have twenty five percent of the world's usage and we have three percent or less of all the reserves if you drill this is according to george bush's administration if you drill in yellowstone mount rainier and the south lawn of the white house you will not increase world oil reserves by more than one percent and it will take you a decade to do it that route is doomed to failure to have any significant restraint on oil prices any significant increase in our oil independence or any reduction of global warming gases there is another route that is capable of success the first is to do the obvious things which are to manufacture cars that use existing oil drivetrains they are more efficient i talked to jimmy carter a couple years ago about this and he pointed out something that i thought was kind of interesting talk about lost opportunities if we had simply continued the rate of south lawn of the white house we would still be addicted to saudi arabia oil today but if we had simply had cafe standards during that period of time we would have been free from saudi arabia oil today  that is number one the second and more importantly and we will hear some testimony from shai agassi and others here today about the possibilities and i believe probabilities that within the next decade or two americans will be freed from the addiction to oil with a new technologies anybody want to know this and question me go up to watertown massachusetts and talk to the a one hundred and twenty three battery company that i did that is going to provide the battery for the chevrolet volt if anybody doesn't think chevrolet is serious about that read the article in the atlantic monthly if anybody doesn't think there is advanced biofuels that are possible on this go talk to the venture capitalists who just put fifty dollars million in the sapphire energy company to produce gasoline atsm certified gasoline from algae without feeding it any sugar whatsoever simply using photosynthesis so we simply suggest on this side that when president bush said two years ago in a stunning statement for a texas oilman he said we are addicted to oil it was good for him to say that it was not so hot when last week he came out and said and my fellow citizens since we are addicted to oil let us get more addicted let us go back and ask the pusher for just one more needle and that is going to solve our problem we think bolder on this side of this aisle we think a bolder vision that ought to break this monopoly and give americans a choice when we do that prices are going to come down and we are going to be more secure and have a chance to beat global warming that is the future we ought to have i yield back misess miller  chairman i am delighted to be at this hearing as we talk about how we implement the fuel economy standards or examine the recently proposed cafe standards proposed by nhtsa i certainly look forward to hearing from our panel in fact i principally sought a seat on this committee because i wanted to be a very strong advocate for the domestic auto industry obviously in full disclosure being from michigan i think we should take a moment to consider the entire history of this cornerstone industry and really what it has meant for our nation as well in fact during world war ii southeast michigan was known as the arsenal of democracy because we had the manufacturing capability that literally built the armaments that led the world to peace i believe keep our nation free there were two years during that time when the domestic autos didn't even build cars because they were so busy building airplanes jeeps tanks we were fully engaged in the war effort protecting freedom liberty and democracy in fact the domestic auto industry i believe absolutely helped to create in fact did create the middle class in states like mine in michigan and others as well and then after let us not forget the domestic autos immediately offered zero interest financing which kept plants running and people kept buying cars and our citizens were employed so that our national economy did not implode as the terrorists had hoped and yet in spite of this very proud history of the domestic auto industry it seems sometimes to us in michigan and other areas that hosted domestic autos that many in this congress seem to be focused on bankrupting the domestic auto industry and losing american jobs now of course congress has passed and the president has signed what amounts to an eighty dollars billion mandate on the domestic autos that is eighty five dollars billion now that is mandated in this industry in an industry that is absolutely literally struggling to survive right now this is money that has to be spent by the big three over the next from foreign sources and now that number is closer to sixty percent so i am not sure that anyone could really say with a straight face that congress has helped here and for the past thirty years critics of the domestic auto industry have put forth cafe as the simple solution to limit america's demand for foreign sources of oil i think all cafe has really done is put on the brakes on innovation because we agree that we have to get off of oil but we should be i think as a government  a nation incentivizing the domestic auto industry rather than mandates that cost literally hundreds of billions of dollars to comply with i think we should be encouraging them to invest in new technology such as the lithium ion battery and other rather than mandating expenditures on very old and antiquated technology and i think it is stifling american innovation and as has been mentioned we will be hearing from a japanese company i think it is of note that the japanese government strategies instead we expect are our industry to shoulder all of that on itself while we continue to mandate as i say for very old technology again i thank the chairman for calling the hearing i certainly look forward to hearing from all the witnesses  waiting time involved in fact i understand from the literature before us that the average time a prius spends on the lot is seventeen hours right now they sell as quick as they can make them some of the problem here is unfortunately that the ceos and executives of the auto industries didn't talk to their workers i know that by talking to the workers myself and had they done so they might have known not to concentrate so much on big heavy vehicles where the profit margin was maybe a little bit bigger and advertise such ridiculous things as driving an suv up to the top of a mountain and playing frisbee across to another mountaintop and then showing that this four wheeler  could do that and advertising power to this day to this day power and speed when i have watched tv and see the advertising that is going on it is starting to change but i think that you can't judge the recent cafe standard increase that was signed into law that we passed and was signed into law just last december and it is not supposed to fully take effect until two thousand and twenty you certainly can't blame that for the gas prices of today i think what you can blame is the lack of doing anything like that for the last thirty two years sometimes government needs to act to try to help the national interest when market forces or corporate interests don't do so when they diverge from the natural interest think the same goes with oil the ranking member was talking about the need to open up land for drilling well we have got sixty eight million acres of land mostly public land that is open on national lands onshore offshore leased already by the oil companies environmental studies done ready for a drill bit to go into the ground and they are not doing it well why at the same time asking us to open up more land and open up the arctic preserve and so on  would prefer to see those sixty eight million acres drilled on but i suspect the reason that they are not being drilled on is because the oil is worth more left in the ground so once again it may be necessary for the government to do something like they use it or lose it proposal which i think we blackburn misess blackburn thank you mister chairman what a feisty discussion we are having through our opening statements today i want to thank you for the hearing i want to welcome all of our witnesses we are delighted that you are here and we are looking forward to hearing from you as we work on the issue of gas prices and the auto industry and i want to particularly introduce a member of the second panel mister thormann who is from nissan north america and is one of my constituents and is one of our very proud tennessee companies we are delighted that he is here we also know and i hope he going to talk a little bit today about the innovation that is being done on electric cars and good work that is being done by american engineers who are located in my district who are finding answers to clinton vetoed drilling in anwr and vice president gore decided that the epa needed to have even more ability to restrict american supply and focus on those items from the past today let us put our attention on what american innovators are doing to solve this problem and some of the work that is taking place with electric vehicles and i hope that my colleagues will join me and say if we are going to do this if this is going to be an option then it behooves congress to take a serious look with how we improve the electric power grid in this nation are we going to consider nuclear which works well in my area what are we going to see happen in other areas this is not a time for bickering it is a time for action we are going to have a panel before us who can help address this i hope that we will welcome them that we will listen attentively and that we will put our focus on solving this problem and i yield back inslee thank you we will start with our witnesses tyler duvall is assistant secretary for transportation policy and acting under secretary for policy at the united states department of transportation he has been working in the development of transportation policy has held the title appreciate the opportunity to appear before you to discuss the department's proposal to substantially increase fuel economy standards to my right is steve kratzke who is one of the leading experts on fuel economy in the united states a technical expert and available for in the weeds questioning  to eight point five billion gallons of gasoline in two thousand and seventeen alone and reduce consumption by five percent through the leadership of many of you on this committee congress opened the way last december to further increases in those standards including in the car standards when it enacted the energy information and security act that legislation provided the framework for the first meaningful increases in fuel economy standards in decades the proposed standards would increase fuel economy four point five percent per year over the five year period endi fifteen this rate substantially exceeds not only the three point three percent needed on average to meet the thirty five mile per gallon minimum established by congress last year but also the four percent per year increase called for in the president's two thousand and ten proposal we estimate in carbon dioxide emissions estimated at five hundred and twenty one million metric tons over the life of the affected vehicles in addition to the rulemaking the department delivered to epa about an hour ago a draft environmental impact statement we expect that that statement will be published will carefully analyze all of the comments and expect to issue a final decision this year less than one year after the enactment of the eisa this will be an accomplishment in which we can all take credit and pride and i will be pleased to answer any questions on the rulemaking not estimate in the rulemaking proposal percentage of electrified vehicles obviously the product plans that were submitted to us by the auto manufacturers included a percentage of hybrid vehicles i am not sure steve if we made that information public  that gets one hundred and fifty miles per gallon because it is a plug in hybrid electric car these are not hypothetical vehicles they are real vehicles you can buy one today from various vendors in the united states chevrolet certainly intend to have one on the road by two thousand and ten or two thousand and eleven is it your understanding that you simply in your decisionmaking let the automakers tell you how many electric vehicles are going to be on the road or don't you think it is the federal government's  obligation under this bill to say look we have this technology available our obligation is to figure out what is maximally achievable what is feasible it is clearly feasible to do this why are we not setting a goal for of technologies including hybrid technologies which is i think the most expensive technology that could be applied but there is a whole range and suite of technologies lower costs than hybrids that get applied basically directly to the automobiles through the model we take the product plans that are isfactory to me it is our job to decide what is maximally feasible not the producers we have been following their lead frankly for thirty years and we have fallen way behind the world in technology as a result we have this known technology we know it is technologically feasible we know it is economically feasible it is just a question of how fast to get it to market now when i voted for that bill i was of the understanding that the federal government uncle sam protecting consumers would start making some decisions if we have a technically feasible electrical vehicle why should we not expect our federal agency to be assessing what percentage can be part of the fleet by what certain date using the best available evidence i have no objection receiving evidence from  the geniuses and there are geniuses in this industry but isn't it our job or don't you think it should be our job to be a little more aggressive in that regard mister duvall the way the rule is structured we do not mandate specific technologies what we do is apply forecast for two thousand and fifteen mister inslee we hope to do some things to bring it down with our anti excessive speculation bills we passed today that really appears to be and i think that most of my constituents paying four point one five at the pump kind obviously there is an internal inconsistency to argue on the one hand that speculation is driving up prices but that long run prices should be significantly lower we are dealing obviously in an extremely volatile oil price environment currently this is a long term policy however  have taken comment on that exact question in the rulemaking however and if we receive substantial comments and if eia updates its oil price forecast we will obviously take that into consideration mister inslee i would like to provide you a comment right now if i may it is ridiculous to assume the price  four two a gallon in the year two thousand and fifteen number one number two i believe it is uncle sam's responsibility to use a reasonable gas price and if you use a reasonable gas price plug in full electric vehicles congresswoman we are we think obviously there were significant structural problems with the model for doing fuel economy requirements in previous years and we believe we corrected that in two thousand and six with the light truck standard using an attribute based system we greatly appreciated that the congress recognized the merits of that approach which treats all manufacturers equally and recognizes consumers have diverse preferences and also recognizes the safety risks associated with a flat standard that will provide incentives for  auto manufacturers not to deploy technologies but simply to make lighter vehicles which are more of a safety hazard we believe the current approach proposed in the last rulemaking which builds on the two thousand and six model was a substantial improvement and remedied many of the failures i just talked about miller if i understood what you just said you are looking to apply uniformity across the industry with a new cafe standards with the modeling that you are using right now mister duvall it is a size based standard so we take the product plans provided to us by the manufacturers apply that into a model which produces a curve on the left hand side of the curve is a smaller footprint vehicle on the right hand of the curve is a larger footprint vehicle for the larger footprint vehicle obviously the corresponding fuel economy requirements are different  basically the rule's intent is to recognize the reverse product mix that our car makers have across the globe not just in the u s and to really drive technologies across the board i think the previous approach you are talking about really did not drive technologies efficiently and had a potentially serious safety impact if pursued aggressively misess miller i am looking forward to hearing from the next panel particularly the fellow from nissan and i appreciate the american jobs that they provide but it has been said am not going to characterize it as a loophole there is a special provision obviously that impacts nissan related to the combination of those fleets yes misess miller now how did that happen and do you believe that that is fair mister duvall i am not sure how it happened i was not up here obviously when the bill was written and as far as fairness obviously the law it was signed by the president and passed by the congress and we are going to implement it misess miller well i think it is good for them that they were able to get that but i think it would have been fair to have everybody in the notice of rulemaking that you sent out in april your proposed standards as we looked at it are essentially resulting in the increase i believe of the cafe standards about seventeen percent and you heard me say in my opening statement we thought domestic autos and that is not a number that came out of my office it is some of the fellows from the domestic autos have been saying that do you think the seventeen percent is somewhere in the ballpark and what about the eighty five dollars billion mandate when you are doing your model do you view as far as total cost we estimate basically across the board not with respect to u s companies or non u s companies a forty six dollars seventy cents billion impact which is among the most expensive rulemakings ever completed in the federal government's history is an extremely aggressive proposal we are very cognizant of the impacts of this proposal on the industry the benefits of the proposal from a societal perspective do exceed those basically in a benefit cost ratio of about one point five one six so from a societal perspective the rulemaking makes a lot of sense but we are extremely aware of the impacts on various manufacturers i think the attribute based system as i indicated previously is an extremely important element of the fairness of this proposal and the distribution of cost is far more fair and efficient frankly from an economics perspective than would have been done under a flat standard increase misess miller i appreciate that my final question would be have you interpolated how much the special  foreign companies i also have to say that as somebody who never got any subsidies or incentives or grants from the government to start a small business and try to produce a product that the public will buy in my case it happened to be music it certainly is a long shot and it was my judgment or lack thereof that made some records that i made successful and some records that i made dogs that sold only a few copies and disappeared into the cut out bins rather quickly so they are all downloads now they are not records anyway my point is because the demand has moved in that direction so i would suggest that perhaps better management would have foreseen that coming it is the kind of thing that it is hard to hear when it is your district and your company  or how many billions or millions of dollars it would have cost to tool up for hybrids for fuel efficient cars ten years ago or twenty years ago and not be in the situation now of having to have it legislated but when president kennedy his challenge to us as a country to go to the moon he didn't have nasa run a feasibility study on that goal he just set an example of government setting a seemingly impossible mark and challenging the country to meet it which is what we need to do here for our family budgets for economy and for our national security i thank you for your testimony i wanted to ask in predicting feasibility technological feasibility is nhtsa attempting to factor in the potential market impact of plug in hybrids like the chevy volt or other models that may be available or other batteries that may be on the verge of coming into play including some that i am aware of that are orders said to the then chairman the structure of the rule basically takes the cost of all these technologies and the technologies you have cited are obviously extremely expensive technologies but produce potentially enormous benefits if they can be commercialized successfully and inputs those into a model which basically says that at some point it is not cost beneficial to society to apply a technology whose costs produce fewer amounts of fuel savings in basically dollar terms so at some point it doesn't make sense to impose costs on manufacturers if the fuel savings that are produced from those cost requirements do not produce obviously benefits equivalent to the cost so it is a marginal cost and marginal benefit analysis now as these technologies develop over the coming years and as we absorb additional product plans which is what we will do here soon very soon actually for the next round of product plans it is important to note that the product plans we utilized for this nprm were two thousand and seven product plans  compatible vehicles and there are a couple hundred thousand of them on the roads in my state of new york however there are only a few stations that carry e and none in my district west point has just agreed to put in  opinion on whether something should be done and perhaps something needs to be legislated or a rule made so that these alternative or biofuel mixes can be made available since the cars are being sold ostensibly for that purpose mister duvall congressman actually the administration the president pushed extremely hard in the energy bill to not only increase the fuel economy requirements under our nprm but also for an alternative energy mandate that we will see huge increase in ethanol powered vehicles in the united states so we had the push on the production side through the mandate included in the december act and then on our side we have a huge push of technology requirements and obviously incentives through the those americans working in the auto industry and in my district we talked about nissan and we also have some wonderful folks at the saturn gm plant that is in spring hill we have some great innovators that are with bodine that are working with toyota so the auto industry is very important to tennessee so let us talk about trade for just a minute and are we going to see with our next generation vehicles do you anticipate are we going to see any trade barriers with our electric vehicles and particularly in the environmental and climate change area this has been one of our huge strategies in international negotiations to try to get other countries to reduce tariffs on environmentally friendly technologies we had had some success but i would expect that to will be a significant part of our u s fleet why don't you talk for a minute about the costs and then the improvements that are going to be needed for charging batteries what we are going have the burden on the grid simply say that clearly the current battery technologies have not been sufficient to obviously allow the significant penetration of plug in hybrids there are some signs obviously that that is changing and certainly as the marketplace gets more competitive we would  mechanism to ensure the stability of the electricity grid but i would not want to go further in my testimony to opine on that misess blackburn all right and then how long do you think it is going to be what year do you expect to see these electric vehicles coming as the chairman noted we are still some period away i think from a meaningful percentage of the auto fleet in the united states shifting to that the key thing at this point in time as i said is battery reliability and durability as well as cost a hopefully the private sector as was noted is starting to invest heavily in this that is a great leading indicator in the optimism of the private sector for these technologies so i guess cautious optimism would be the way i would assess that misess blackburn i will tell you visiting with the innovators that are in my district working on the battery technologies and some of the different engineering applications for next generation vehicles i think it behooves us in congress to pay attention to what is going to happen with the power grid how we are going to handle our electric generation sources and to start to give a little bit more forethought if you will than has been seen over the past thirty years as we look at fossil fuel and the application of that to the transportation fuels market i will yield the balance of my time th first of all i do want to commend you and your staff at nhtsa for taking a comprehensive approach to implementing the fuel economy provision of the energy bill and making many solid updates to the model you used to calculate the standards but let me ask you the first question do you think that it is reasonable to really predict that it is going to average two dollars forty two cents a gallon leaders and most accurate forecasters they have been wrong on the upside and wrong on the downside in previous years there is little question obviously given current fuel prices that we are in a very volatile environment right now the proposal is a long term proposal if i knew what oil prices would be in two thousand and fifteen i would probably be in a different job than i am in now we have a lot of uncertainty we use the best information we have i will say a number of other experts who are predicting extremely high oil prices in the short term have also predicted significant declines in those prices in the longer term i know several analysts on wall street had predicted you know one hundred and fifty dollars two hundred dollars the chairman i appreciate that see here is the thing you have the job you are responsible you personally are respons for preparing our country for the oil and transportation status of our country five and ten years from now so it is on your shoulders  because you are the responsible person the question is do you think it is prudent for our country as a plan to assume that the price of gasoline is going to be two dollars forty president bush and vice president cheney do you believe that president bush and vice president cheney actually believe that two dollars forty two cents a gallon is what the of oil prices in the world and in the face of extreme uncertainty about future oil prices that obviously oil markets themselves have been proven to be incorrect the chairman you have a high price scenario as well that is a high price scenario for the american people you are supposed to protect the american people from becoming excessively dependent upon imported oil that is your principal responsibility do you think we should plan for two dollars forty two cents in planning the mileage for vehicles to be driven in independence committee and you are telling me you do not have a view on whether we should be planning for two dollars forty two cents a gallon for gasoline or three dollars fourteen cents for gasoline in terms of what we tell the auto industry to build in as  the vehicles in the years ahead and so you are at a critical point here because the next panel is going to be talking about electric vehicles and other new technologies now i personally believe that the american people will embrace them if we put in place the kind of rulemaking that will incentivize all the auto manufacturers to move in that direction but you are the one and president bush is the one who has to make the decision as to whether or not we are going to be basing it upon a realistic not call the experts at the department of energy dreamers i believe they know what they are doing and are among the leading in the world in this area they are consistent with other forecasts with respect to this the department of energy in fact is on the high side of other forecasts  not deviating substantially either from long term market projections or the chairman mister caruso from the energy information agency said in testimony before our committee just two weeks ago that we are on the higher side of that price path right now if you would ask me today what i would use i would use the higher price says mister caruso from the department of energy so if the department of energy is saying to you at the department of transportation i would use the higher price what w you going to place upon that as opposed to some testimony you might get from the oil industry or the gas industry or the automotive industry how much are you going to rely upon your own department of energy or is it just going to be ignored by president bush by vice president cheney as every other warning has been ignored over the last decade in terms of what our planning should be by the way i didn't even toss in there that the suv marketplace has collapsed so all of this planning was based upon a faulty premise even though we were going up a percent and a half every single year in imported oil in our country we have gone up from forty six percent in one thousand nine hundred and ninety five to sixty one percent today in imported oil so it just seems to me that there is an inexorable increase the amount of oil we are importing and as a result an inexorable decline in the control we have over the price because it is more and more set by the countries that have two thirds of the oil in the world opec and that we should plan for that as a national security  reason so you see this testimony now by your department of energy so again he felt free to be able to say i would go on the higher side mister duvall mister chairman we are in an open rulemaking and the comments made by the department of energy anybody at the department of energy will be taken into account and given significant weight in the decision process i will say simultaneously you have numerous members and other commentators who are also arguing that the high prices are driven by speculation now i don't know what the price of oil will be in two thousand and fifteen we rely on experts to do that but i can assure you it is an internally inconsistent argument to on the one hand claim that speculation is driving high oil prices that fundamentally should be lower and on the person responsible for it plan for a higher price and if we get a lower price everybody will be happy driving around with lower priced gasoline but let's at least be in control right now we are on our hands and knees watching the president and vice president go over and begging the saudi arabians to please produce more oil what a sad state of affairs for our country when president kennedy was faced with that from khrushchev with sputnik floating around in outer space he told  same way president kennedy assumed the russians would control the skies but we are going to do something about it why don't we announce that it will be thirty five miles per gallon because we are going to assume the worst and then if the best turns out then we have an extra bonus for america because we have the technology and plus we have the lower energy price why don't we think that way rather than this mess that the bush administration has allowed us to get in because we put seventy percent of the oil we consume in gasoline tanks so if we keep assuming that where we put seventy percent of the oil gasoline tank drop general motors just announced another nineteen thousand jobs are taking the buyout ford the same way mister mulally at ford motor just announced last week that we have moved permanently off the suv and onto the smaller vehicle model so all of this is happening okay and the losses have already been absorbed and there is more to go but we are down to a very small handful of jobs left in america and people making automobiles i think general motors is down to fifty or sixty thousand people making automobiles so starbucks has one hundred and twenty five thousand people making latte and general motors has this it is all a sad story and to say we are not  set the standards higher because we are going to lose jobs well that is why we have lost jobs we have lost jobs because there has been an assumption that the price of oil was going to stay at these unrealistically low levels and people and meanwhile we were driving deeper and deeper and protecting their jobs tell the workers in all these auto factories you are protecting their jobs by using the mid and the low estimates for what the price of oil is going to be you didn't protect anybody we have already lost a million jobs or more in america because of the wrong estimates okay the only way we are going to get the new job is if we create the new technologies and that has not happened yet so that is your responsibility and it is about time that we had an administration maybe this will be the going away present that the administration gives to the american people that there is really a man on the moon plan here that there will be a commitment that is made to this that actually can be looked back at as a legacy that we technologically challenged the saudi relationship is now with these volatile middle eastern countries to sell us oil and it seems to me that if the president and secretary of state had looked up into the sky they would have seen a broiling sun on the desert and said no we will sell you solar technology we with you in a new technological revolution but we are not going to be selling you nuclear technology you have the most oil the most gas the most solar and by the way i remember peter o'toole as being kind of windblown in some of those scenes of lawrence of arabia a lot of wind there too we shouldn't be sending nuclear power we shouldn't be sending all these nuclear materials into the middle east it makes no sense whatsoever that is how sad our state of affairs is so rather than have that occur year after year again i say to you as the department of transportation this is a geopolitical it is a defense it is an energy it is economic it is environmental but it is a moral issue as well that we finally stand up and say we are going to challenge opec that we are technologically going to take them on we have yet to make that announcement and that would be the john f kennedy moment with khrushchev for the bush administration and if they don't do it then they will have missed th i concur with your remarks about the sale of or transfer of nuclear materials and technology to saudi arabia which as we remember is in a part of the world where other countries have taken supposedly peaceful nuclear programs and diverted materials to a bomb program iran being the one that we are talking about most recently but every case of a country  from the nonnuclear to the nuclear club it seems to be they started out with a peaceful nuclear weapons program and diverted it and in this case it would be the sunni bomb to counteract what they see coming as the shia bomb in iran and i think it naive for the secretary of energy to state as he did before this panel well the president trusts the king and that is why he is not as worried about it as you are mister chairman but anyway i had another there any significant technological obstacles to setting up the kind of battery switching that some witnesses have described that israel for instance has a company that is involved in developing a car that will run on electricity and rather than charging the battery they will just exchange it pull into a gas station take the battery out and put another one in and hook the wires up and away you go in a few seconds as opposed to however long it takes to fill a tank or to charge a battery what are the obstacles technologically what will be the most effective way policy matter clearly the regulation we are pursuing here one of the key purposes i think contrary to the chairman's comments is to really drive the technology this is the most aggressive rulemaking that has ever been done by our department the costs as  said are enormous but one of the benefits of this proposal will be to drive technology in a technology neutral way and i think one of the key policies that we need to be careful about at the federal level is that we are cherry picking various technological outcomes  the history of energy policy and transportation policy has been the government has done a fairly mediocre job let's just say of picking technology winners and what you want to do is create the right market incentives for the private sector and venture capitalists to come in and develop these technologies and push breakthroughs as a regulatory matter this is a regulation as i said that imposes huge costs in a mandate but it is done under a construct that recognizes manufacturer flexibility to deploy technologies in a neutral way or a cost beneficial way for them we have a very diverse car industry i don't think it is well understood how diversified this industry is right now so we need to be very careful about specific technology mandates but as far as the current technological impediments  thank you mister congressman the battery is the single item that is the expensive and desirable thing on these vehicles the older battery systems had very limited range and so they had very limited appeal to people one approach for getting around that could be the approach you suggested where you have a battery station every fifteen miles but in the u s the people who are now developing batteries are aiming for a range of about one hundred miles so that people can commute roughly fifty miles to do it because that represents where we live and where we work now israel that is what they are aiming at also mister kratzke yes so those really are the things that we are looking at right now if we can get to one hundred miles as the range then we don't really need the refilling stations everywhere if you get a battery that does that then trading it out you are giving up a very expensive thing and you are imposing either a large cost or you need some sort of bond to make sure you get the battery back mister hall a deposit mister kratzke it is an approach but for the most part in the subsidiary high motion are making an upgrade as many of you probably know for prius and they are so busy making them because there is so much demand it doubles the effect of mileage of the prius that they have postponed making the one for my car  a good choice without knowing that in advance but i would really like to be able to upgrade it and the city of chicago has a fleet i understand of ford escape hybrids that they are converting to plug in hybrids so somebody is developing in the united states since the same rocket technologies that enabled these achievements could also be applied to building nuclear missiles that could be launched against the united states losing the space race with the soviets was clearly unacceptable president kennedy responded to this challenge by calling on the nation to send a man to the moon and return safely to earth before one thousand nine hundred and seventy he said and i quote we choose to go to the moon in this decade and to do other things not because they are easy but because they are hard because that goal will serve to organize and measure the best of our energies and skills because that challenge is one that we are willing to accept one that we are unwilling to postpone and one that we intend to win how hard was this going to be president kennedy said it would require us to send to the moon two hundred and forty thousand miles away from the control station in houston a giant rocket more than three hundred feet tall the length of a football field made of new metal alloys some of which have not yet been invented capable of withstanding heat and stresses several times more than have ever been experienced fitted together with a precision better than the finest watch carrying all the equipment needed for propulsion guidance control communications food and survival on an untried mission to an unknown celestial body and then to return it safely to earth reentering the atmosphere at speeds of over twenty five thousand miles per miles per hour causing heat about half that of the temperature of the sun he concluded by saying to do all this and to do it right and to do it first before this decade is out then we must be bold eight years later  became the first man to stand on the surface of the moon today we have another great political and technological challenge it is the challenge posed by our addiction to imported oil and the danger of global warming in order to make ourselves energy independent and stop producing the greenhouse gases that threaten to heat up our planet we must take on these challenges challenges that are hard but which will organize and measure the best of our skills and our energies but we are not talking about putting a man on the moon we are talking about new batteries we are not talking about rocket science we are talking about auto mechanics we can do this and we can do it in a way that sends a very strong technological signal to opec and to the rest of the world that we do not intend to be dominated politically and economically by powers halfway around the world that is sadly where we are today that is where president bush and condoleezza rice were four weeks ago when the saudi arabians said they will send us a little more oil if we start selling them nuclear power plants it is not a position that any american can be proud of your department sir has the responsibility for setting the challenge ahead do not use the lowest standards use the highest america will respond we know that we are in a crisis and we want a way out but we need to hear the words from the highest level and i think our industries will respond and the american people will as well so we thank you for testifying here today with us after your rulemaking is completed we expect you to come back here and we will talk to you now if the other witnesses can come up and sit at the table i would appreciate  oversees all finance legal and business operations he also serves as the chief financial officer and senior vice president of nissan europe we welcome you sir whenever you are ready please thank you good afternoon mister chairman and members of the committee i thank you for this opportunity to appear today to present nissan's views on gasoline prices and fuel economy and how it relates to energy independence and global warming at nissan we have a culture of establishing very challenging yet achievable goals mister chairman i believe you would understand that culture well you have asked me to address three significant and complex issues and to do so in five minutes so here i go in our most recent business plan that we announced last april we put forward three commitments that we want to achieve by two thousand and twelve one of them is to lead the automotive industry in zero emission vehicles worldwide central to that commitment is our investment in the electric vehicle if ever there was an industry where the word globalization was meaningful that would be the automotive industry growth in car sales is occurring in virtually every country across all continen this is a new and recent development the desire for mobility is universal in the united states there are eight hundred cars per one zero inhabitants six hundred in western europe and japan but the same ratio in china and india reveals fewer than fifty vehicles per one zero people at nissan we have recognized the need to find a solution to cope with this apparent contradiction between the predicted global growth in car sales and energy independence and global warming chairman i believe you have recognized these trends and see the issues before us are global coping with global warming and energy independence goes well beyond what a single company can do it is together by collectively pooling ideas and investments from the private and public sectors that actionable meaningful solutions will emerge nissan's views led us to intensify our research and development we invested in technologies that would improve the efficiency of the combustion engine in all its forms our engineers are optimistic and while some innovations are significant they are not sufficient to meet the rapidly evolving needs of our customers in the united states in the face of rapidly escalating energy prices consumers are shifting abruptly from trucks to crossovers from large cars to small cars from v engines to v and now four cylinder engines fuel efficiency is at the top of consumers concerns higher fuel prices coupled with environmental concerns means consumers are more willing to consider new forms of powering vehicles this means an interest in diesel engines flex fuels and biodiesels but at nissan we believe that a more radical change  breakthrough technology like the electric car is needed electric vehicles will not only have zero tailpipe emissions but they will also offer more flexibility in determining the source of energy to power them today oil is the major source of energy to power a car with electric cars the electricity needed to charge the batteries can come from multiple sources including in the best of all worlds renewable ones such as the wind the sun or water clean coal furnaces and nuclear power will also be effective in combating co electric vehicles have always been limited by their battery as its size driving range cost and charge time made electric vehicles unacceptable to consumers nissan has been working on lithium ion batteries since one thousand nine hundred and ninety two and we have created a separate company which will be responsible for the manufacture and sale of batteries we are satisfied with our advances and believe that we have the technical visibility today to bring these vehicles to market in short order we will bring to the market in the united states a fully electric automobile before the end of two thousand and ten but first the number of vehicles will be relatively small but we plan to have a truly mass market vehicle available in the united states by two thousand and twelve these electric vehicles will be cars that consumers will be happy to drive they will have a range that will get them comfortably to work and back home with all the comfort and features that they are used to today they will handle highway speeds and permit drivers to comfortably merge into highway traffic the acceleration will surprise many and make the vehicles fun to drive as the market grows different types and sizes of vehicles will be launched nissan looks forward to working with congress regulators and government agencies in making this technological breakthrough a reality the electric vehicle will transform the value chain of our industry as we know it today in partnership with private industry public policy will need to address the new infrastructure requirements and we will need to work together in adapting the rules that govern the use of automobiles to this new reality agassi he is the founder and ceo of project better place a company working directly with governments and the finance community the automotive manufacturers and technology companies to develop saleable and sustainable personal transportation systems we welcome you sir whenever you are ready please mister chairman thank you for your leadership on this critical issue for inviting me to testify in front of you today and i request my full written statement to be made part of the hearing record the chairman without objection so ordered mister agassi the electrification of the automobile is inevitable i didn't say that neither did my friend here from nissan it is bob lutz of gm and in reality on january twenty one two thousand and eight it happened in israel we had for the first time the ceo of renaultnissan standing up and saying we will make electric cars we will make them fun to we will make them in high volume enough for the entire country to switch we had project better place stand up and declare that we will put a network ahead of time of charging infrastructure across the entire country that network of infrastructure will include five hundred thousand charge spots that will be put in parking lots at work at downtown before the first car shows up it will include swap stations that enable us to swap batteries as we go through the freeways and it will include scheduling software that enables us to charge these cars without needing to bring down the grid every time everybody connects to the grid we also had a policy by government that decided to push this switch this change from oil to oil independence within less than a decade a president who stood up and said we will get off oil within this decade and a policy that was put in place to actually make that happen faster than ten years the electric car has a secret the secret is you have to separate between the battery and the car if you want to make consumers adopt it faster the battery is not part of the cost of the car the battery is a consumable that is equivalent to crude oil if you separate between the car and the battery and you put the infrastructure in place to charge you open a menu  of sources to generate the electricity the energy required for that car the battery is a consumable plus the electricity for the car gets you to a price of six cents per mile that is cheaper than the price you called absurd right now by the administration it actually is relatively around the range of about one dollar fifty cents a gallon if you build it in the right way you build a service company that sits in between almost like a mobile company think of verizon or sprint for cars that company can actually provide both the infrastructure and the cars and as a mobile company what we sell effectively is miles that company can also provide rebates for the car and as i happens in israel and happens in other countries the rebate structure makes the electric car so affordable that we can actually offer these cars for free to the consumer when you offer free cars with zero emission with zero oil to consumers they usually go for that the question is how much do you need to put in the ground in order to make that infrastructure happen and how fast can it happen and the reality of the numbers is that it costs you about five hundred dollars per car to put that infrastructure in the ground in a sense if we wanted to do this in the u s that is one hundred  billion of infrastructure the equivalency of two months of oil imports would get us off the addiction two months of oil imports most of which would actually go as jobs eighty dollars billion will go as jobs in installing the infrastructure in the ground jobs we cannot outsource outside this country how fast can we do this is a question of policy in the country denmark which is another country that adopted this model had put a policy that sets the price of a car gasoline based cars at one hundred and eighty percent tax to get off in that case every year we wait costs us five hundred dollars billion of oil imports and three hundred dollars billion of the wrong cars coming onto our streets that is eight hundred dollars billion is the cost of prolonging the decision of shifting generation solar wind wave would actually get us off oil forever the cost of one year of oil would get us off oil forever all government has to do is let business do what it needs to do go back one hundred years and let us do what edison and westinghouse did when they built the electric grid in this country cut away the red tape put in the incentives to actually accelerate this plan and probably call detroit again the congresswoman from michigan who is not here with us right now said it correctly we owe and forty two the president called them up and said please stop making cars and start making tanks maybe it is time the president called detroit again and said stop making tanks please make the right cars if we did it and we put the right investment in place and we opened up for businesses like project better place and others to put this infrastructure in the ground we could get the american public to drive on electricity and save our country from oil thank you the chairman thank you mister agassi  fuel and ninety four percent of fuel consumed was oil in order to offset the risks associated with this delicate situation numerous programs were started as a result we are now in a of heavy car registration tax we also have a comparatively high gasoline cost also as a result of taxation both owning and driving a conventional car are therefore blessings you have to share to a high degree with the rest of society on the other hand we are in a situation where electric vehicles are enjoying a quite beneficial tax treatment and finally all of th wind is not always blowing so we have also estimated that even if all the electrical charging of cars were sourced from coal fired power plants net co emissions will still decline by half because electric an additional benefit will come from the fact that most charging will take place at night when wind power is in excess supply this means that denmark will be able to use wind energy that otherwise would have to be exported to neighboring countries typically at relatively low prices finally we have made calculations on what this would mean for the individual driver based on conservative estimates of the anticipated cost results are that consumers who migrate from gas to electric cars can expect to enjoy substantial savings this is in terms of total cost of both owning and driving a car and it comes without sacrifice of convenience and without sacrifice of driving experience in summary we see this project as one with very big upside potential and very little downside risks both from a consumer and from a public perspective and both from  witness is mister jeffrey holmstead he heads the environmental strategy section at bracewell and giuliani he was the head of the epa office of air and radiation from two thousand and one to two giuliani but today i am not appearing on behalf of my firm or any of the law firm's clients i am here in my personal capacity as a former epa official who has spent almost twenty years working on climate change and air quality issues i feel kind of like i am on the wrong panel i am not a technology expert but i do know a fair amount about regulatory policy and regulatory programs and i want to make just a few observations about that as you well know last year congress passed an energy bill that will require a substantial increase in fuel economy for motor vehicles an increase of at least forty percent by two thousand and twenty nhtsa estimates that during the first five years that this lies in place it will save approximately fifty five billion gallons of fuel and reduce greenhouse gas emissions by over five hundred million metric tons not surprisingly there is a significant upfront cost that must be paid to achieve these improvements important to note that buyers will more than recover these costs through greater fuel savings but even so they will have to pay more upfront when they want to purchase a new car or light truck this is the price that must be paid to achieve greater energy security and reductions in greenhouse gas gases as you are all aware the new cafe program was extensively debated in congress and the final product passed with large bipartisan majorities in both houses this law represents a careful balancing of regional and ideological differences for example the cafe law was carefully drafted to ensure that safety would not be jeopardized by mandating an attribute based system this law also ensures that other economic factors such as job loss consumer choice and market demand would also be considered in designing and implementing a new fuel economy standard as i understand it compromise agreements were also reached to protect union jobs in the manufacturing sector and to extend the flex fuel credit until model year two thousand and nineteen notwithstanding the extensive debate in congress and the compromises reached between many competing interests in order to secure passage of the new cafe program there are now a number of advocacy groups who argue that congress did not intend the new cafe program to be the final word on fuel economy in their view provisions added to the clean air act back in the s actually require a much more aggressive fuel economy program than the one that congress designed and adopted last year i as someone who has spent more than five years at epa have enormous respect for epa officials in their ability to develop effective regulatory programs but it seems odd to me that congress would debate a contentious national policy issue like fuel economy for many years reach a compromise on an approach that garners broad support and then expect epa to immediately develop a completely separate program which makes that compromise entirely irrelevant supporters of the view that epa in california should be setting policy in this area argue that cafe is about fuel economy and that the clean air act is about emissions but congress certainly understood at least by two thousand and seven that when it comes to co emissions they are exactly the same thing as i think you know nhtsa is responsible for implementing the cafe program and how does nhtsa determine whether car companies are meeting the program's fuel economy requirements well they do it by having epa measure the co emissions that come out of those cars as a matter of basic science there is no difference between fuel economy and co emissions you can control co emissions by regulating fuel economy or you can control fuel economy by regulating co emissions but no one should pretend that they can be viewed as two different things i would think that most members of congress would find it troubling to have epa or california or both establish their own regimes for regulating fuel economy because neither epa nor california is required to conform their programs to the cafe system that was so carefully designed by congress for example california is clearly under no legal stricture to adopt an attribute based system as congress commanded nhtsa to do and under the clean air act epa does not have to balance the competing interests of fuel economy safety and jobs considering the costs of the new cafe law i think it is legitimate to ask if it is wise to have epa also regulate fuel economy or in some states have california rules compete with federal rules it just doesn't make any sense to have two separate federal agencies epa governed under two separate statutes the energy policy and conservation act and the clean air act regulating the exact same activity fuel economy or co emissions which are the same things it makes even less sense when you add a separate california program which may then be adopted by any other state that chooses to follow it rather than following either epa or nhtsa this afternoon i simply would like to urge the members of this committee to be sure that congress sets clear am not qualified to predict fuel economy and i think what you have to do is depend on people who are the experts in this area so if that is what eia says the price is expected to be then i don't know that nhtsa really has any  is not anything that is actually likely to happen since the president isn't going to sign it so what i am saying is given all of the things that have happened doesn't it make sense to plan for the worst and mister agassi you are working in israel they seem to be planning for the worst in israel that is planning for a world in which oil is used as a weapon against israel and against the rest of the world so what is their response in terms of planning going forward into the future mister agassi well the assumption in israel is that given the right infrastructure given the right pricing the consumer will actually make the choice to go with no oil and so i think they are planning for the best in that sense that all of us given the opportunity to disconnect from oil and connect to electricity we will choose to do the right thing i think the american consumer will do the same the chairman well that is not an assumption however that has been made inside the bush administration they don't plan for the worst but they also taking your comment in quotes they also don't plan for the best  they don't plan for the american people to respond to the challenge in the same way that president kennedy expected the american people to respond to the challenge of the soviets in outer space with this nuclear capacity attached to it so i think provide for all of the electricity for the vehicles in his country and by the way last year in the united states we actually installed five thousand four hundred new megawatts of wind in the united states now what would five thousand four hundred megawatts of wind mean in your country mister holm in terms of your automotive industry can you extrapolate that for the united states of america what would you think might be possible here in our country looking at what mister holm is talking about looking at what the israelis are planning what could happen in the united states if your install capacity that would drive that car for the next six years without a single molecule of co coming into the atmosphere and without a single drop of oil coming into our system in effect if you took the u s and you put two hundred  of generation in any source in any mix over the next let's say ten years the two hundred gigawatt being two hundred zero megawatts we would get every car in the u s going forever and we could do that at a cost of about five hundred billion spread over the next ten years of which eighty percent is labor that stays in america so we can replace oil imports with jobs at a scope of about one year of oil imports we could get off  now right now president bush is threatening a veto of a bill that would extend the wind and solar and other renewable tax breaks that generate electricity in our legislation that would have established a minimal goal for new renewable electricity generation by two thousand and twenty in our country could you comment upon that mister agassi in terms of long term planning and where do you think we should be going in terms of  nonpolluting electricity being used by nonpolluting automobiles that the american people could rely upon mister agassi i think one of the critical issues that people have to remember is putting cars on the grid putting cars on the road that have batteries in them creates a different economic model for renewable generation cars park twenty two hours in a day they drive two hours in a day when they are parked the batteries are available to absorb electricity that comes from renewable sources  if you have a lot of cars if you have two hundred million batteries parked most of the day you can take a lot of electricity that come from renewable sources especially wind wind is a great example because wind blows mostly at night so the perfect appliance that matches to wind generation is a car because a car is parked mostly at night if you put the two together and you actually replace oil with wind that is the only way to replace oil with wind we talk a lot about taking oil out of the equation and putting renewable sources if we put the electric wire that connects the two we won't be able to get there the chairman when i was a boy i worked my way through boston college driving an ice cream truck so i would get the truck in the morning fill it up with popsicle fudgesicles but then when i got home at night i had to plug it into the side of the house so that i would be using the electricity overnight to keep all of my fudgesicles and popsicles very very cold so i could sell them all day long now that is essentially what the american people will be asked to do and maybe you mister thormann can talk about how much less expensive it is to use electricity overnight trying to as you recharge your battery either for ice cream or to drive the vehicle rather than in the middle of the day that is a concept a lot of people don't quite understand how it is less expensive if you use it when most people are not in fact using  show that it would be a factor of one to seven so it would be seven times cheaper to take electricity from the grid at night when people sleep than in the daytime when mister holmstead how it would be affected if the demand for nighttime goes up would those numbers out today without any changes to transmission no changes to the grid and effectively no changes to generation we could drive eighty six percent of the cars in america on zero change zero infrastructure investment the grid in america is actually designed probably about one hundred and fifty to one hundred and seventy million electric cars in america now you would then be using coal what we are proposing is that as you make that change you also make the change to clean generation because you are effectively removing the usage of one hundred and forty dollar resources are not the places where we have transmission infrastructure mister agassi we have twenty million cars in california we can put solar plants in the mojave desert and you will lose less than three percent in transmission of those electrons from the desert to every major metropolitan area in california that is ten percent of  both of them in some places as one of the congresswomen here mentioned they have nuclear a nuclear plant to put it in perspective can drive three point five million cars if you already built that nuclear plant so france as an example could actually turn off every single car to electrons and not need to add any single source of generation and drive all their cars on their nuclear plant infrastructure today what they have today the chairman so mister agassi thank you so much we had  mr holmstead has already stipulated he is not a technologist so a lot of this depends upon kind of the game changing aspect of technology so if we get the regulation correct then everything else changes you know in a very dramatic way so at and t in the year one thousand nine hundred and eighty predicted we would have one million people using cell phones in the united states in the year two thousand t was off by a lot because they missed a whole bunch of other decisions that got made from one thousand nine hundred and eighty on that changed everything and they were right some people would probably not walk around with something that weighed four pounds agassi is saying is that if you move to wind and solar let's just say for the sake of discussion that the five thousand four hundred megawatts that we installed in two thousand and seven in the nascent part of this industry by the way mister holm two thousand five hundred new megawatts of wind in texas in two thousand and seven that would power every vehicle all two million vehicles in denmark just what was installed in one state in one year go to our first panelist again the department of transportation and president bush have to make a decision by two thousand and sixteen on what kind of standards we can establish for the vehicles that we drive and if we want to use that decision  enhance our technological superiority break our dependence upon imported oil and create more jobs in our country now if we factor in that one hundred thousand new megawatts of wind will be constructed in our country  most of it not used overnight give us a little vision of what might be possible in terms of the miles per gallon standard established for the average of the vehicles in our country that year mister agassi one of the factors i would plug in maybe instead of focusing on the number before the miles per we focus on the gallon if we get off the gallon we get to infinity which might have actually the reason the nissan called their high end brand infiniti we need to get to a point  on infinity miles per gallon because we are not using any gallons whatsoever i think the assumption that we need to put in place is that oil is not going to become cheaper it is not going to become more abundant i don't see any new sources showing up the sources that are showing up will take a long time before we drill into them i think the reality of the number is pretty fixed in front of us right now given that number we are looking at four dollars to five dollars per gallon right now and we are seeing that electricity including all costs all loaded costs are at one dollar one dollar fifty cents that means unless we suddenly find oil that we can bring out of the ground at ten dollars a gallon electricity is here to stay that trend line has happened this is like trying to fight the internet by sending letters faster it is not going to happen we are going to electrons and in the transition we are sort of going between the world of physical atoms like sending letters around to the world of sending e mails we had this very short period in which we turn molecules into electrons and called it fax and turned it back into molecules at the other end that is the hybrid model we had a hybrid model and it is a short period of time in which hybrid models survived but then when you get to full electrons nobody comes back from full mainly to light up houses and then edison and westinghouse put lights made out of electrons in every house and kerosene was useless and oil became useless and we effectively had a period of time in which oil was pouring into rivers and nobody would put it in barrels because barrels were more expensive than oil we have to go back to that model today if we stop using oil for cars oil will become useless again the price will go down below ten dollars a barrel the world will be safer we will be independent in the same way we didn't have to go out and kill those whales anymore for their oil let them out there swimming along don't need their oil and wouldn't that be a great day wouldn't it be a wonderful day if the united states could say to saudi arabia we don't need your by the electric vehicle hybrid cars will not allow you to do that and if we put an electric car at the end of the renewable source of energy that we just talked about we achieve that goal so you have an economic factor you oil independence and so our car our proposition is that you kill two birds with one stone we get off of the oil and the dependency of a single source of energy and at the same time you accomplish the second once we create that this automotive technology is moving along the batteries will follow the vehicles will be put together the system can be put in place in order to accomplish this goal back in  able to move over two hundred megahertz of spectrum for a third fourth fifth and sixth license in every community in the united states now those third fourth fifth and sixth licenses could not be bid on by the first two licensees that were analog the big and ninety six again something on the telecommunication subcommittee we were able to create a dynamic where not one home in america at that point had broadband technology not one home in america so we had to change the policies so that we could create a brand new telecom world so that if we moved from this old again analog world to a broadband world once we passed the one thousand nine hundred and ninety six telecommunications act by two thousand two thousand and one we were in a world of googles of amazons of thousands of companies who no one ever heard of before because broadband is going into all these people's homes and we become a you world that no one would have ever envisioned ten years ago because now the technology is unleashed not that it hadn't already been invented you know the broadband had already been invented as the dsl in the laboratories of the bell laboratories fifteen twenty years before so here we have to get this policy right because it will turn all the economists thinking on their head because all they can use is the old models but if you put the technologists in charge and you say to them you know ah now the conditions are there where i can deploy my new technology and sell it to consumers then things change more rapidly than anyone would have ever thought we have seen it happen over and over and over again with technology in american society so mister agassi could you just tell us a little bit about what the israelis said when they made their announcement about breaking their dependence upon oil and why they did it mister agassi the policy they set was extremely simple it was so simplistic everybody could get it they basically set a deferential tax on buying a new car they said a gasoline car will cost seventy two percent more than the cost of making it and the electric car will cost ten percent tax and then they said if we see a lot of people switching to the electric car we will shift both prices up but we will keep it always sixty percent delta until two thousand and nineteen so they created a visibility of ten years out and are basically telling people the more people will shift to electric the more expensive it will get but gasoline will also get expensive then they said we will create standards and force you better place to abide by open standards so that you can't block people from coming into this market you can't block everybody to buy just one type of car from one maker open standards using plugs that are made standards by the iso organization then they basically said we are going to put regulations so that there is competition in the market just like you said we are going to make it so that you are competing and then they told me in the back room we hope you are very very successful because we are going to tax you the more successful you are the more we are going to tax you well first we want you to be successful now i think we need to do the same thing here you said it absolutely correctly this is like the mobile industry  and basically come up and say we want to put this infrastructure in the ground the auction will give you a build or lose type of agreement just as you said before if you don't build this network up front we are going to take away your rights to build a network in that region give it to number two and then make that happen within a very short time span if we don't have the wire connecting the grid to the parking lot nobody will be able to plug and so put these wires in by companies that are running very very fast much faster than government organizations would run auction it off and then tell them when you start to make profit we are going to tax you the chairman now again tell us why the israelis said that they wanted to do this what is the reason mister agassi well in israel it is pretty obvious israel is a transportation island surrounded by countries that have oil israel has no oil israel knows viscerally that getting off oil it is not a question of when but how fast can you do it so when you talk to the president of israel president peres his only question is do you think you can really do and is there anything else in the world that could be more important now from their perspective it is a topic that touches on geopolitical security environment budget israel pays seven dollars billion a year to so we sent president bush to ask for more oil and the next month we sent secretary paulson to bring the money back and to buy some u s companies with it so we are in kind of a situation today where we have to figure out in israel they figured out they want to get off oil as quickly as possible i think in the u s we have to figure out the same model the chairman we are in a situation not quite like israel israel has almost no oil and has to import it all in the united states we have  two percent of the world's oil reserves but we consume twenty five percent of the world's oil on a daily basis mister agassi right the chairman that is not quite as bad as israel but it is pretty bad in terms of our long term prospects you can't ever find twenty five percent of the world's oil on two percent of the world's oil reserves that is just a mathematical and geological impossibility now many people including the white house are now saying let's drill drill drill our way to energy independence but again it doesn't add up you can never get up to that twenty five percent of the oil in the world in terms of the percentage that we need in order to say we are energy independent  so what you are proposing here is something that we are either going to have to do sooner or we will wind up doing later anyway because it is just a finite amount of resources that we have in america and there is no geologist that says all chairman to be able to create this independence mister agassi there is one more interesting point here and that is if we know that it is inevitable that we are going to get off oil and get on to the electric car we need to look at whether we want to be leaders  followers in this market and if we follow that means the entire supply chain including the batteries will probably not happen in the u s now all things remaining equal as they are right now that migrate either to europe where gasoline is priced at nine dollars a gallon or to china and japan where the expertise in building the batteries are right now that is where most of these batteries are made right now and so if we wait and not stimulate this industry we are actually going to find ourselves off addiction to oil from one country and on addiction to lithium ion batteries from a different country i think we are in an interesting period where if we did the right things in the u s and stimulated this industry so the incentives drive the factories to boston where a one hundred and twenty three is and other companies around this nation we may find ourselves off the addiction completely and not getting addicted to some other substance that we can't bring in from this country i could not agree with you more you know the bush administration will testify before us and they will say that we have the capacity to produce rockets that can be shot at m in the morning on a moment's notice because a russian incoming missile is coming towards the united states and going ten thousand miles an hour and in three minutes reach hit and destroy the incoming soviet missile in order to protect the united states of america they say we can do that technologically then if you turn to the very same people and say do you think we can invent a way that we increase the fuel economy standard of the vehicles that we drive they say oh that is not rocket science that is auto mechanics we can't do that that is almost too simple for them to try to figure out because they don't attach the same level of urgency to it but the reality is that the constant increase in our addiction to oil undermines our national security and undermines our defense posture just as surely as the deployment of soviet nuclear weapons the problem is that we are sinking deeper and deeper into the hole mister thormann what do you think is a reasonable goal for nissan in terms of the production of electric vehicles in the years ahead without divulging any proprietary information mandates that we have in california and a number of states to have a certain number of zero emission vehicles in two thousand and ten in two thousand and twelve we will mass market them which means that we have to come with  object a vehicle and a series of vehicles that will meet several different needs and different requirements and different driving circumstances so the adoption depending on the speed at which consumers adopt these  question i have sort of given everything we have heard is given the economic case for this why do you need a government mandate if you can do electric cars at roughly equivalent to a buck fifty a gallon mandates it came about because of market demands the chairman no no no not at all not at all it came about because amongst other things i was completely frustrated with the fact that the two incumbent companies were moving so slowly the price was so high the technology was so clunky that we needed a new policy the only way to do it is to allow the third fourth fifth and sixth companies that is mister thormann mister agassi mister holm whomever everyone is not at and t everyone who is not the big company to come in and start to innovate and once that innovation happened then you had the big change the same thing is true with narrow band versus broadband if you have only got verizon and  set of market conditions once that happens you can get out of the way the innovation will happen but as long as the whole thing is controlled by a couple of companies they are never going to change because the inexora investment of time and career are already made in the old idea is a very hard thing to dislodge so what you have to get are the new players on the field and the only way that happens is if policymakers find a way to create the aperture whereby the smaller are out there and they are able to thrive so without our help that as policymakers you are not going to see massive wind and solar electricity development across the country that really makes w  we accept that i accept the fact that exxon i accept the fact that chevron are the big auto manufacturers that is not their job it is our job to set the national plan so to have a national plan to back out all the oil or cut the greenhouse gases by eighty percent that is our job sitting here we are the board of directors for america so we have to set that plan then we say to the private sector go and do it and here is the new playing field and it is wide open to you and it is going to after thirty two years on in congress that has been my experience if you want the technological change if you want to move from the black rotary dial phone era that lasted eighty years you have to break up at and t because they will sell you a black rotary dial phone and only costs ninety bucks because it wouldn't go into the phone jack right well what happened once you changed the laws well black rotary dial phone just went away in about three or four years everyone moved on to the new technologies but it took the government to do it  tell nissan or general motors or ford or anyone else exactly what they have to do after this but once we make it possible for this to happen once we create a new policy then i have every confidence it will happen in fact my own opinion is this is the last revolution that we had the telecommunications revolution we finally broke up at and t and unleashed that revolution that was sitting there with young people and technologists all across america and across the planet this is the same kind of revolution that will be unleashed we will create millions of jobs we are going to revolutionize the prize of energy the sources from which it comes it is all out there ready to be unleashed but we need to put the new policies on the books and then we just have to get out of the way but the overarching goal has to be to say to opec we are looking at you in a rearview mirror this is too unhealthy for our country to have aircraft carriers floating around over in the middle east to protect the flow of oil coming into our country it is a very unseemly for our country to be in that situation so it is a national security context too maybe think of it that way i am going to give each one of you to a minute and a half to summarize what you participate and my thought is and this conversation has been very interesting is we need to make sure that there is an availability for all of these technologies to compete on a level playing field i do think we need to do it in a way that was done before which is to remove regulatory barriers to innovation as opposed to having additional government mandates  i would simply reflect a little bit on the fact that what we have been talking about this afternoon is nothing about new inventions it is about meeting together existing technologies a new way in order to to put it all together with the right policy i think that we're here in project better place we are available to your committee we stand ready to work with you and determine the right policies there has been a lot of talk about ending our addiction to oil i opportunity not as an end of detroit but actually as an opportunity to grow detroit and bring more jobs back to america and i think we can ensure this would be the project of our generation the one that we will remember forever as the one that put america back on a leading track as technologists and the industry there is going to be a huge transition that takes place over the next ten years my father always said it is better to start out where you are going to be forced to wind up anyway it is a better place to be we are heading there it inevitable this happened in denmark it is happening in israel and it is better for us to be the leaders by the way i think the world wants us to be the leader not the lagger they want american technology they want us to give that leadership and  hopefully we can do this in a way that creates those additional millions of jobs here in america that are creating these products exporting them around the planet rather than importing them and having the jobs be overseas i