good morning this is the select committee on energy independence and global warming we welcome you all to this very important hearing with the secretary of bodman less than three months ago when asked by reporters about predictions that gas prices would rise to four dollars per gallon president bush admitted that he had not heard those forecasts well for millions of consumers in new york and california chicago all across america four dollars gas is now a reality gas prices have now reached a record nationwide average of three dollars eighty one cents per gallon up more than one hundred and sixty percent since president bush took office increasing on average by thirty four cents a gallon each year of the bush administration the price of oil has also skyrocketed a few years ago people scoffed at the prospect of one hundred dollars oil but american consumers have now seen an increase of one hundred dollars per barrel in the price of oil since president bush took office the incredible escalation of gas and oil prices is not an accident it is the reality of more than seven years of this administration pushing an energy policy solely focused on fossil fuels one of the bush administration's first major actions was to convene the secret cheney energy task force comprised of cabinet level and other senior administration officials meeting in closed door sessions with big oil and other industries not surprisingly the recommendations from this clandestine group focused on more oil and gas drilling on january twenty nine two thousand and one the day of the first meeting of the cheney energy task force the price of oil was thirty two dollars per barrel the bush administration and the republican congress then passed an energy bill in two thousand and five that gave billions of dollars in tax breaks and subsidies to the oil coal nuclear and gas industries on august eight two thousand and five when president bush signed the republican energy bill into law the price of oil was sixty four dollars per barrel and over the last seven years the bush administration has offered big oil the rights to drill on more than two hundred and sixty eight million acres of public land offshore oil companies now own the drilling rights to more land than they know what to do with in fact big oil currently holds more than thirty million acres both onshore and offshore that aren't even being used but last week on may seventeen as the price of oil stood at one hundred and twenty six dollars per barrel president bush once again echoed the tired refrain we have heard for the last seven years that we must increase our domestic oil exploration the price of oil is now one hundred and thirty five dollars per barrel after seven years of filling our tanks with record high gas and filling the calendar with new records for the price of oil it is time to stop giving gifts to big oil in the last sixteen months since the democrats took control of the congress we have passed legislation not only to provide consumers with immediate relief at the pump but also to reduce our oil dependence in the long term last year the democratic congress passed an energy bill that by two thousand and thirty will reduce our consumption of oil by nearly three million barrels per day last week the democratic congress passed legislation that required the department of energy to stop purchasing oil at record prices to fill the strategic petroleum reserve but the bush administration can and must do more to help american families right now in a fire you are supposed to stop drop and roll and when it comes to using the strategic petroleum reserve to help the consumers in an energy emergency the president should stop swap and sell the president must deploy must sell the oil from the petroleum reserve which has a proven track record of success in bringing down prices putting more oil into the global marketplace is the step which will send a signal that we are serious about reducing the price of oil globally the administration has no problem deploying our national guard reserves to iraq but it continues to refuse to deploy our oil reserves to help consumers this summer this weekend is the start of the summer driving season but the bush administration refuses to take any action that would stop driving up oil and gas prices american families are begging for help from high energy prices and it is time for this administration to finally heed that call that completes your discussion and it seems to me that in our three branches of government the congress has got some responsibility too and with gas prices rising through the roof signs that energy costs will rise even higher now is the time for leadership the democrats today are calling for leadership from the administration but it is congress's job to set policy to make important policy changes and to make sure that those changes will result in lower fuel and electricity costs so far the democratic leadership has not taken that job seriously especially when it comes to gas prices instead of solutions to the nation's high energy prices the house leadership has given the american people the pelosi premium since taking control of congress in january two thousand and seven gas prices have risen more than one dollar fifty cents a gallon in wisconsin under speaker nancy pelo watch despite her promise of a commonsense plan to lower gas prices there has been a lot of talk from the democratic leadership about windmills and solar panels but those technologies are better suited for reducing greenhouse gas emissions not energy prices a recent report from secretary bodman's own energy information administration shows that while solar power receives government subsidies totaling about twenty four dollars per hour and wind power receives about twenty three dollars in subsidies coal power receives just forty four cents and natural gas just gets a quarter while there are benefits to wind and solar power coal and natural gas are the best options for expanding electricity production at reasonable cost i think the american people's number one priority for congress is lowering fuel and electricity costs and republicans are committed to doing that when it comes to gasoline democrats have focused on fuel standards and ethanol higher fuel standards do have the potential to help lower fuel demand in the long run but the american people need help now ethanol has caused more harm than good as both food and gas prices continue to rise that is why i am supporting legislation that will repeal the subsidies and tariffs for ethanol and end this boondoggle which i think using a democrat term can best be described as corporate welfare and while democrats will blame energy costs on the president the facts are clear in the period between january two thousand and one and january two thousand and seven before the democrats assumed leadership in congress gas prices rose eighty four cents a gallon which is a hearing the cries of the american people and are putting forth our own plans which are truly common sense we will expand production of american oil and gas and do so in an environmentally safe way there are billions of barrels of untapped oil that can be recovered without harming the environment nearly eighty five percent of the offshore oil and gas fuels are untapped because congress has placed them off limits additionally we must expand the refining capacity in the united states if we are going to continue to meet the surging demand for gasoline the house republicans broad plan will also encourage the expansion of nuclear power which is a technology that stands to greatly improve u s energy independence and greenhouse gas reductions house republicans will also push for greater energy efficiency by supporting conservation tax incentives to americans who make their homes cars and businesses more energy efficient and despite their costs house republicans also know there are great benefits to solar wind hydroelectric and other sources of renewable energy and will continue to support further development of these technologies the primary difference between republicans and democrats on the issue is that house republicans explore all the options that are on the table while the democrats want to pick winners and losers that plan hasn't worked in the past and it won't work now house republicans are also pushing a plan that can help get energy costs under control these are the kinds of policies that the democratic leadership should be supporting too but sadly this kind of leadership is lacking in this th congress and for the sake of all americans republican and democrat that is a shame i yield back t about a so called pelosi premium when in fact what we are seeing is a culmination of the policies that have been put in place a compliant congress doing what the republican administration has wanted to do over the course of the last six years and i particularly am interested in this canard that somehow we have got to open up some of the most pristine and delicate areas like the arctic wildlife refuge when there are already of the forty two million acres of american land currently leased by oil and gas companies only about twelve million are currently drilled to produce oil and gas now according to the federal government's own surveys eighty two percent of the gas in the outer continental shelf and seventy nine percent of the oil is available for leasing and this is before the republican congress opened more space in the gulf of mexico for drilling in two thousand and six the fundamental problem here is that the united states with two percent of the world's oil reserves and using twenty five percent of the world's oil cannot continue to waste more oil than any country in the world and we are not going to drill our way out of this problem i think having a comprehensive energy approach as we have been looking at on this committee is part of it i look forward to exploring with the secretary as we move forward some of the trade offs here in terms of declining resource we are going to have to be able to be more efficient and give the american consumers more choices not simply broaden the field for the oil companies that aren't already using the total amount that has been given to wide divide in views on this issue i am very pleased that my colleagues on the other side of the aisle pushed to open the strategic petroleum reserve and to not add additional oil to the reserve at the  moment and even hopefully to press to release some oil from that reserve i am also supportive of legislation that would say we should take we should be replacing some of the heavy for light oil that we are putting into the reserve but i think it is very important to understand why that is so critical although the strategic petroleum reserve represents only ten of one percent some experts have pointed out that somewhere between twenty percent and forty percent of the current cost of gasoline could be driven by speculation and the argument goes that if we were to open the spro or stop putting oil in it that might send a price signal to the speculators and they might stop speculating the important part for that discussion is that it demonstrates that those who advocate that we don't put any more oil into the spro right now understand that there is a link between supply and price because their argument is look by putting oil into the spro we are reducing the supply for public consumption and that is driving up cost and increasing speculation if there is a link between supply and price then we have to examine the policies of this congress i have been a member now for going on fourteen years and over that fourteen years we have had vote after vote after vote after vote after vote on the issue of either increasing domestic supply or cutting off domestic supply either opening further areas for exploration and production or restricting further areas for exploration and protection and in vote after vote after vote we have decided to not increase domestic production we have decided to limit areas for exploration just i believe two years ago there was legislation contemplated to expand production off the outer continental shelf the idea was to give the states a voice in that issue and to place the drilling rigs at least fifty miles offshore where they couldn't be seen and we not only didn't pass it for oil we didn't enact it for natural gas just a few months ago last summer the majority party imposed a moratorium on oil shale there is a fact here and that is this congress has created this crisis by restricting supply everybody agrees that in the long term we have to pursue alternatives i would simply say that in the short term we cannot continue to restrict supply in the outer continental shelf in the inner mountain west  and ceos and some really exciting american businesses that are developing really truly alternative energy sources and there was some talk about this issue that people thought this was such a silly debate back washington d c about whether or not we could reduce gas prices by opening up some of the areas that we currently use for our pristine areas like the arctic and folks pointed out that it was really a kind of a silly debate because the fact of the matter is is somehow our dinosaurs got planted under somebody else's sand and i am not blaming the bush administration for that the fact of the matter is the oil is just not there to have any appreciable impact on world oil prices and no matter what we do a barrel of oil is a worldwide market that is determined by worldwide supply and demand we use twenty five percent of the world's oil we have less than three percent of the world's oil supply mister bodman in his testimony talks about if we opened up every spigot in yellowstone in the arctic and mount ranier national park we could maybe increase our domestic oil supplies by twenty percent that is a worldwide  percent increase of worldwide oil supplies that will have virtually no impact on oil worldwide barrel of oil prices and the fact of the matter is we could drill on the national mall and the oil price about thirty five thirty six years old now here is a guy we ought to be listening to he signed a contract to totally electrify all the cars in israel and soon denmark this is what we should be thinking about we have got to get off of chairman i appreciate the hearing mister secretary thank you for joining us this morning it is so interesting to sit here and think what the american people must think as they are listening to these opening statements one of the things that we hear from constituents they think that congress doesn't have and the leadership in the congress doesn't have an energy plan they are looking at what has happened in the past two years to a barrel of crude when it has gone from fifty five dollars to one hundred and thirty dollars a barrel  as someone had mentioned earlier the price of that barrel and when i was preparing for the hearing mister chairman we went back and looked and the price on a barrel when president bush took office was thirty dollars a barrel it v very little until two thousand and four when we saw growth in the india and china economies and then it really did not start to accelerate until early two thousand seven and the acceleration has been from that fifty five dollars mark to one hundred and thirty dollars and that has been in less than two years so i do think that is noteworthy now when we were doing the energy and five one of the items we discussed was getting that bill had taken a six year period of time to come to agreement and there have been many times that this side of  we had pressure from the democrat side of the aisle to not address those capacity and supply issues and what we know is that our constituents and the american people want to see this issue solved to address the price at the pump today we are going to have to talk about supply capacity about energy exploration about energy independence and begin to look at what we do in the short term the mid range and the long term on these issues americans want american solutions we are the most innovative people we certainly can figure this one out we know that there are barriers that have been placed in front of extraction in front of exploration mister chairman we need to remove those barriers get the price down at the pump and have a long term putting together the master plan for their energy strategy that is in its current eighth year you know i didn't realize she was in on those meetings but perhaps i am wrong our colleagues who used to be known as the grand old party are giving new meaning to gop primarily inasmuch as they have become to mean gas oil and petroleum and protecting those interests at all costs you have to suspend your belief because i think our colleagues over here have been a little bit unfair they do have a policy an energy policy and thomas friedman has talked about it frequently it is called leave no mo ah behind because what we end up doing is by the moneys that we are sending overseas that work their ways through the madrassas and into the hands of the very people that are assaulting and killing our men and women over in the middle east and meanwhile as gas prices continue to go up because of policies that were made behind closed doors with no oversight and review with speculators that are running unbridled and over the counter with an invisible market where they are able to jack the price up minimally ten to forty percent so that people in my district who get their social security check have to sign it over to the oil dealer to pay for the heating of their homes this was the work of nancy pelosi i am told this is the work  that hasn't had a policy and people on the other side of this aisle who continue to block initiatives that would otherwise lead to our independence and nonreliance on the middle east for foreign oil and embrace the alternatives that we know will provide a greener environment the jobs that we need and get away from this path that we have followed as you know you can hear our frustration and i guess my concern again is in your testimony you believed that we could do more here we can actually cultivate more energy resources by drilling and opening up previous leases along our coast and what have you well that is a no starter for many of us so how can we really talk candidly and really talk about exploring renewable energies and investment in home resources here in the united states yesterday most of my colleagues i think on the dais here supported you know renewing credits tax credits so we can invest in solar energy and renewable energy we need to do more and i just am waiting to see what incentives and what innovative ideas that your office and through your leadership can provide every day that we go home to our districts every weekend at least that gas prices keep inching up in my district now in los angeles it has been over well over four dollars for the last three weeks if not a month and that doesn't even explain the other costs that are being applied to consumers when they go to the grocery store because all the  diesel fuel also has gone up dramatically it hits very hard upon our low income working class blue collar communities that right now we seem to be ignoring and i am standing up for that little guy and that little woman out there that trying to make it to school to take her children or to make it to her part time job that really has no voice at this table and i am hoping that there is something realistically that we can do other than just holding our hands up and saying well gee we can't get the oil corporations to do anything about it and oh my god we pay so much in taxes well jesus when you talk to the regular joe or mary on the street they are saying the same thing and our frustration is very very real this economy we don't have support by the american public the direction is wrong and one area of it hits home very clearly and that is in our pocketbook when we go home to our districts whether it is in california whether it is in new york miami florida or in texas so i my district the entire state of south dakota from end to end whether it is our vast fields of corn and soybeans on the eastern side of the state wind across every part of the state and the great forests of the black hills in the west south dakota embodies the idea that we need a diversified approach to our national energy policy and in particular we need to take advantage as ms solis is saying of new opportunities for renewable energy so as we strive to meet our national energy needs we must continue to recognize i think that rural america  has much to offer and rural states should be at the center of the solution as our national energy policy shifts and adjusts in ways that can enhance our national and economic security promote innovation and conservation and ultimately ease the strain on the budget families and businesses with the passage of the original renewable fuels standard in two thousand and five and the aggressive increase included in last year's energy bill we have already taken some initial key steps in the right direction as we seek to take advantage of the contribution of agricultural producers in rural states to reduce our dependence on foreign oil and the overall carbon emissions through an increase in the production of biofuels wind and other types of renewable energy i respectfully disagree with the ranking member the gentleman wisconsin on the impact of ethanol ethanol has kept gas prices from going even further upwards of fifteen percent higher than they are today and the price of corn to make ethanol has very little to do with the increase in food prices when compared to other factors like the cost of energy and the processing and transportation of food so i look forward to your testimony on these and other issues and in particular infrastructures for the transmission of wind energy thank you for being here and i yield back the chairman the gentlelady's time has expired it is difficult to refute our current administration's poor record on environmental protection and renewable energy promotion for example the administration has consistently lobbied for drilling in the arctic national wildlife refuge as if the oil there contains gold plated gas which would solve our growing greed for has also continued to support the oil and gas industry in terms of subsidies alcoholics anonymous does not encourage its participants to visit more bars as a means of reducing their dependence on alcohol likewise the solution for our energy crisis is not more drilling for this reason congress is attempting to change the course of american energy policy by passing meaningful and effective legislation just this week the house passed h r six thousand and forty nine the energy and tax extenders act of two thousand and eight if it becomes law this important bill will extend expiring tax provisions for renewable energy production and energy conservation the progressive pelosi policy has promoted renewable sources of energy  efficiency and conservation but we must have support from the current administration if we are to be truly successful and i hope mister secretary that you can offer some insight into the policies promoted by this gentleman from new york state mister hall mister hall thank you mister chairman mister secretary thank you for being here america is clearly at an energy crossroads and one look at oil costs or conversations with families in my district or others around the country who are being forced to sacrifice in order to keep on the lights and the heat and the fuel in their vehicles is all the evidence one would need to come to that conclusion it is our job in congress to look at how we got here and what our government is doing to solve the crisis am disappointed when one looks back over the last seven years it is apparent the administration has pursued what i see as sort of a lose lose lose policy where we are shipping more and more of our dollars to unstable countries in unstable parts of the world where they are used as one of the other members mentioned to fund in part to fund madrassas or arming of these governments who we may have disagreements with about human rights or other foreign relations issues and then borrowing that money because we are running a deficit at the same time and a balance of trade deficit we are basically borrowing the money from other countries and finding ourselves losing our sovereignty so it is a lose lose lose policy and i would like to see us move to win win win policy where we are developing the new technologies that provide jobs here and keep our dollars here in this country and at the same time get us our sovereignty back this is not an ideological  statement it is an empirical one looking at oil prices that are breaking daily records hitting one hundred and thirty five dollars per barrel overnight gas prices have more than doubled since two thousand and one in new york they are over four dollars a gallon until recently the administration shown resistance to providing short term relief through timely use of the spr and i am glad that the administration has chosen to agree with congress on this issue and halt deliveries to the spr to provide some relief on the demand side  however the long term solutions to our energy crisis remain somehow inexplicably tied to a drill first ask questions later mentality while private investment is driving renewables by wind and solar to grow by leaps and bounds are somehow being told that we really need to keep trying to bring them along and at the same time throw more money at the oil industry as the energy act of two thousand and five did with subsidies that have been trying to take back tax breaks to an industry that is already claiming record profits and also throwing more money down the nuclear rabbit hole dozens of years and billions of dollars in taxpayer instance so the question is not whether we pick winners and losers but whether we pick the right ones the path we need to follow is one that has been advocated by this congress focuses on green domestic innovative solutions that will reduce our reliance on old forms of energy and drive gentleman's time has expired the chair recognizes the gentleman from california mister mcnerney mister mcnerney thank you mister chairman and thank you secretary bodman for agreeing to come to talk to us today in this committee we are taking a broad look at all our options to reduce our dependence on imported oil we have seen the benefits of pursuing renewable energies and the startling savings that are available through energy efficiency measures i am concerned that despite the administration's rhetoric the only action that we have seen is a push for more domestic drilling including going to the length of preventing my state of california from requiring our vehicles in california to have more fuel efficiency you know i had a constituent literally yell at me in my face last weekend because he was so humiliated to see the president go hat in hand to middle eastern countries to beg for oil i agree with that sentiment  and i implore this administration to take real steps toward attaining energy independence by allowing states to lead the way mister bodman thanks again for coming let's stop the rhetoric and start working together to find solutions and i look forward to your testimony thank you the chairman the gentleman's time has expired all time for opening statements from the committee members has expired and we turn to our witness the honorable samuel bodman who is the secretary of the department of energy secretary bodman has led the department of energy since february of two thousand and five he also served in the administration as deputy secretary of the treasury and the department of commerce he was also the ceo of fidelity a all for providing me the opportunity to speak with you about america's energy and environmental challenges these are very serious issues in my judgment they are deserving of serious consideration which in my judgment begins with the recognition that distinct energy challenges and unique constraints are creating a new global energy reality our response to this new reality is based on the fundamental premise that energy insecurity poses an unacceptable risk to the united states's national security and our economy implicit in the new energy reality is the recognition that energy issues must be assessed and addressed in a global construct today coal produced in south america is used to generate electricity in europe oil drawn from africa is used to power cars in asia liquefied natural gas from trinidad powers homes and businesses in the united states america can no longer consider its energy security as largely a domestic issue to illustrate what i am talking about consider this new reality's three underlying causes one an extraordinary surge in global energy demand two resource limitations coupled with increasing geopolitical instability and three the likelihood that some type of carbon constraints are an eventual part of the world's energy future the challenges that these underlying causes present are considerable and the administration in my view has been quite vigorous in its efforts to address them this administration has since two thousand and one spent more than twenty two dollars billion to research to develop and to promote alternative energy sources and to reduce energy demand in two thousand and six the president  proposed the advanced energy initiative as a comprehensive plan to change the way that we power our homes our businesses and our automobiles the department of energy is moving ahead with a loan guarantee program that will assist in the development and commercialization of clean alternative energies by systems that are providing up to forty two dollars billion in loan guarantees these initiatives coupled with our other efforts have led us to an approach which i believe can be distilled into four principal areas of focus one the development of energy from a more diverse set of sources such as oil and advanced biofuels coupled with efforts to expand production on traditional forms of energy into areas such as the arctic national wildlife refuge and the outer continental shelf development and deployment of innovative technologies such as those pursued by the department's vehicles technologies and building technologies programs these programs provide producers and consumers with ways to substantially increase energy efficiency at all levels of economic activity three the development and deployment of low carbon or no carbon energy technology such as carbon capture and storage wind solar and clean safe nuclear power and four the development and deployment of an expanded u s energy infrastructure to include additional refineries expedited siting for pipelines and improvements to the electrical grid in order to handle the need for increased capacity safely and securely any one of these areas that i named of those four requires considerable commitment together they represent an opportunity for this nation to excel and to lead i continue to be confident that we are laying the groundwork necessary for investment and innovation to occur the results are not going to be immediate but our efforts eventually will come together to increase america's energy security and to provide economic relief to the u s taxpayer in addition they will provide environmental relief by changing the impact of our energy consumption and altering the ways in which we produce energy to that end between two thousand and one and two thousand and eight this administration has invested more than forty five dollars billion toward activities related to climate change science and technology in april of this year the president set a new national goal for stopping the growth of u s greenhouse gas emissions by the year two thousand and twenty five but that reduction in emissions will take place only so long as the necessary technology continues to advance which is an important mission for this department it will require the cooperation of the world's major economies an effort that the president proposed and is leading and the cooperation of congress state and local governments businesses entrepreneurs investors as well as academia in my judgment there is considerable reason for optimism having spent many years in the nation's financial sector i can honestly say that for the f irst time in history we are seeing the venture capital community putting sizable amounts of money into entrepreneurial companies in the alternative energy business one recent industry report showed that the so called clean tech sector which includes renewable energy and efficiency technologies experienced record venture capital investment levels of two dollars twenty cents billion in the year two thousand and seven up from just five hundred dollars million in the year two thousand and five that by almost any measure is quite remarkable in terms of its growth mister chairman each of us  in my view has a part to play in increasing america's energy security developing new technologies is not enough implementing new policies is not enough and it is not enough to simply devise new incentive schemes or to open new areas for production all of these can and should contribute to increased u s energy security and they must be done in concert with one another they must be pursued with an understanding of the facts of the new energy reality our economic and national security future is largely dependent upon our energy future mister chairman at this time i would like to conclude my remarks by asking that my written testimony be a copy of which i think has already been provided that that be entered into the record and i would be happy to respond to any questions th questions mister secretary we know that swapping and releasing oil from the strategic petroleum reserve has a proven historical track record of  by eighteen percent and when president bush deployed it after hurricane katrina there was a reduction of nine point one percent why is president bush into the open marketplace that will have obviously looking at the historical record a depressing effect upon the price of oil secretary bodman look the goal mister chairman is to provide security for this country that is what the purpose of the spro is and the spro is there it is meant to deal with matters where we have the physical delay interruption of the flow barrels of oil stored that are ready to be deployed that will have the same effect if president bush was willing to use it right now because of the speculation in the oil marketplace that nothing is going to happen why won't you recommend to president bush that he deploy the strategic petroleum reserve given the historical successful record secretary bodman i don't know how to be clearer with you sir first of all there was in two thousand and five i don't know about the other cases but there certainly was an interruption of supply that was caused by the hurricanes and that we had requests for the availability of oil and we responded barrels per day per year so that each year as you moved along it increased by roughly a million barrels a day until you got to the year two thousand and four in the year two thousand and four we had almost an increase of three million barrels a day of consumption in the year two thousand and five two thousand and six and two thousand and seven we have had flat production there has been no change in the global production of oil over that period of time and the facts are that in the year two thousand and four we sopped up all the additional all the available spare capacity in the system and that has been the issue that is the issue today and it is clear to me that when you look at very little spare capacity in the system and you look at the ability of price to reflect the increase in demand if you have a one percent increase in demand my economics friends tell me you have about a twenty fold increase in price so that for every one percent increase in demand i have got a twenty percent increase in price it is easy to see that we have got that kind of situation going on at the current time  against opec to tell them we are not going to stand on the sidelines and that we are going to actively send more oil into the marketplace that over the next ten years you might have a plan to  petroleum reserve a proven weapon of success against opec you are not going to deploy notwithstanding saudi arabia turning a deaf ear to president bush's request last friday  pockets ford just announced that they are going to cut fifteen percent production in the manufacture of vehicles this year airlines are declaring that they are on the verge of bankruptcy the american people are under assault from the skyrocketing price of oil and the strategic petroleum reserve is the one weapon in the short run we have to stop this bubble from continuing to ravage the american economy and the american people and we must use it now secretary bodman i disagree with you sir  that we ought to have everything on the table and we hear an awful lot of ranting about big oil and a lot of that ranting is deserved but i also think that big corn has got an oar in this equation as well because of the protection against cheap ethanol coming into the market that is produced outside this country i would just very strongly urge the administration to put out a full court press to reduce the tar and maybe at least with the ten percent of the petroleum that we get at the pump we can reduce the cost of that which will bring down the total cost i thank the gentleman and yield back the balance of my time the chairman the gentleman's time has expired the think we are all trying to adjust to you have been clear in your testimony in prior comments that we are dealing with a global energy market that is being affected by things that are happening around the globe and that there is no one source it is all sort of blended together and you just finished saying that results won't be immediate that there  certain lag time that is going to be required as these things work their way through the system and adjustments are made in production and what not i am curious if you have a perspective on what that lag time is percentage of oil that we import for the first time in some years it has declined and i think that is an indicator that if the non opec producers continue to do what they are intending to do that we will see a success there nuclear power i would expect that we would see nuclear power and the licensing of and  cents in two thousand and five you said that ninety five percent of the administration's energy policy had been implemented and now we are looking at two dollars seven cents a gallon for gasoline then we have the energy policy act in august of two thousand and five which the president claimed was going to make a big difference for every american a year later there was a big celebration in the department of energy celebrating the first anniversary of the passage of that i am trying to get a sense now we have had the administration in control since two thousand and one you had a congress that in the main was very much in agreement with the administration compliant giving you what you wanted and much of it was implemented and it has been now six seven years secretary bodman right mister blumenauer are the four dollars a gallon prices that we are seeing had an administration that has gotten virtually everything it has wanted from congress it has been in place and i grant you that it takes a year or two or three to work its way out shouldn't we be seeing the results are we seeing the results  we are starting to see the results yes as i indicated the percentage of oil that we are importing has started to turn that the american public is fed up with the high prices i recognize that i am acutely aware of that i hear about it every day and it is something that you and i have in common i am sure but it is also something that i think  we are looking to decades we have been thirty years without appropriate research having been done on renewable energy on solar energy on wind energy and  this takes a long time to accomplish and so it is something that is years away in my judgment mister blumenauer thank you very much just for your records  times that you expected the world to be operating in a carbon constrained economy at some point in the future and i want to ask is that something you believe should happen do you believe that we should be taking on and they are now going to improve some of the stakes we have an american system that we know works we have a system that has been proposed in the senate i believe it has passed the committee over there and we have a proposal many of us on this dais are supporting here for a cap and trade system to me it is real clear that absent that we won't be able to achieve the carbon constraint that you indicate is necessary the last time you were here i asked if you had spoken to the president about the cap and trade system and you indicated you had not could you tell us what the administration plans are if we send you a cap and trade bill this year whether the president will sign it and if you can describe the cap and trade system that the president will sign we are most anxious to  leadership from the white house secretary bodman the president laid out issues related to greenhouse gas control that he would be prepared to support reasonable and achievable goals that encouraged the investment in new technology that worked on nuclear power that encouraged the use of coal that all nations need to be included in the program and that we remove trade barriers as i recall it those were his five or six different points and he has laid that out i will tell you sir that  i have now been in this administration seven years and i have spent a lot of my time at commerce and then at treasury and now at energy negotiating with the chinese over  their exchange rates and we have made this much progress and i would tell you that i think it is a mistake for the president to unilaterally declare what he is prepared to do prior destiny of leading the world in these matters and taking a back seat and refusing to act until china agrees and i think that is a huge mistake for several reasons number one we didn't wait for china to develop democracy before we acted we are  the world's leader we are the world's largest polluter and we have got both the moral obligation to act but more importantly an economic opportunity here i mean i met people yesterday in my office that are signing solar thermal contracts for fy the whole state of israel but those people can't get the help of the white house to send a signal to the markets that they need to invest in these new companies because there is going to be a price on carbon it is very very disappointing and  i just have to tell you that when the world looks back at all of our terms here i just wish you could spend the next few months figuring out how to achieve a constraint on carbon in the u s economy that can drive investment into these new technologies i think we are missing a huge opportunity here i am very disappointed in your position you can comment secretary bodman well i would just say that that particular company that you mentioned to my knowledge they have gotten a lot of investment and that they are pretty well fixed inslee but the venture capital community i met with twelve of them here in an office in fact in this building two weeks ago and said look until as long as the fossil fuel guys can put their pollution in the sky for free in unlimited amounts we are not going to get this job done you letting the guys it is like putting their garbage in a dump truck back it up to the city hall parking lot and dump it all for free as long as the fossil fuel guys can do that we are not going to get the quantum leap we need so we lead the world and become last year the results of a study co sponsored by your department were released supporting the possibility of mid range ethanol blends such as e twenty or e thirty that can enhance fuel economy for some non flex fuel vehicles in an update last month from the department on its intermediate ethanol blends testing it recognizes the urgent need for continued and expanded testing based on the new rfs and the anticipated saturation of the e ten market the update reports of the department will have at least one hundred and sixty test vehicles on line this month and i am glad to see it is also evaluating the effects of higher ethanol blends on smaller engines such as pressure washers so two questions when do you expect definitive results on the effect of intermediate ethanol blends on most engine families and has the department considered evaluating higher ethanol blends over e twenty secretary bodman to my knowledge we have not considered to take your second question  of the ethanol industry the concern is that with the concentration of the production of ethanol only in the midwest that we will not encourage the nationwide a your department released its twenty percent report earlier this month concluding that wind energy could contribute as much as twenty percent of the nation's electricity by two thousand and thirty while significantly reducing the carbon footprint and assistant secretary andrew carson was quoted as saying that this can happen for less than half a cent a kilowatt hour so what do you think are the key steps congress must take this year and next to make this possible and what do you think is key to facilitating the siting of a new transmission infrastructure given that the report also states that transmission must be categorized with the interstate highway system secretary bodman well i think the issue related to transmission is something that we would encourage i think we have enough tools to encourage that we have the so called electricity office of i think it is energy reliability and electricity delivery and that office headed by kevin  kolevar is i just had a session with them the night before last with an advisory committee that represents those from all over america dealing with this question so i think we have  enough incentives that currently exist for private investment alone to move forward with the building of the transmission capacity secretary bodman i think so based on my discussions with the participants in th saying or suggesting that saudi arabia agreed to increase production to three hundred thousand barrels a day as a result of the request from president bush secretary bodman i do not know i don't know that i haven't been have responded to the request by the president by saying that the price of oil is impacted more by the weakened u s dollar than anything else do you agree with  whenever you have a situation where we know that demand is increasing demand from china demand from india and even a small increase from here that when you have a situation like that you can cleaver it seems to me that the market is madly searching for any excuse to raise the price of oil license with the nuclear regulatory commission perhaps you as secretary of energy might make a statement or you know the president in his position of bully pulpit can make a statement that it is patriotic not just wise in terms of climate and the economy but patriotic to drive in the most fuel efficient manner possible drive the most fuel efficient vehicle buy the most fuel efficient vehicle possible try to use as little energy as you  low head hydro sites in i believe all the states but in particular those states that have changes in elevation that lend themselves to it in new york the idaho laboratory's web site shows four thousand some low head hydroelectric sites small dams and waterfalls that are currently not being used for hydro generation and estimates that greater than one thousand two hundred megawatts of power could be harvested by putting turbines where water is already falling and wiring that into the grid something that would have a short term effect i would guess a serious effort a top priority effort to harness this unused hydro power which by the way would hire mechanic grid would in fact hire a lot of people besides generating a lot of power i just wanted to throw that out as something secretary bodman i agree with all that mister hall so maybe we could work with the administration to try to make that happen i don't know i am sure there are liability issues with some of these dams that are orphan has explored the potential to make massive improvements in efficiency and greenhouse gas emissions by making buildings more efficient secretary bodman right mister hall i actually commend my friend from california and his state's efforts to reduce electrical consumption while the rest of the country has had this curve going upward california has sort of wiggled around and kept constant mostly constant for the last twenty years because they have had stricter standards than the other states have had and i think we should be emulating them rather boosting efficiency and cutting their energy costs and by the way employing a lot of people weatherization hires tradespeople to put in storm doors storm windows insulation et cetera so what is the deal the rationale for eliminating funding for this program secretary bodman it is simple i was the one that made the engineering organization that is what we know how to do we are experts at that we are very good at it in all these national labs two thirds of all the employees of the energy department work in the national laboratory and they are very good at this the  issue therefore gets to be what kind of return do we get for our money we make as best we now know the number i was given is that we have a twenty for one return on investments in close by saying that thirty five years ago my next door neighbor in the hudson valley a vietnam veteran and entrepreneurial soul named jan ashwood was lighting balloons full of hydrogen in his backyard and calling up the press and trying to get them to come and see it he was making renewable combined with water could use hydrogen as a storage device for energy and it seems to me that siting such a facility to both store hydrogen which we now know how to handle much better than we did when the and generation facility that produces no waste except water when you burn the hydrogen than it would be to site a new nuclear plant and in fact you are looking for the same site you are looking for a place away from population on a body of water so  bodman the answer to that question is we have been through over the last thirty five years a real dip in the fact that oil all of a sudden went from the outlandish price of thirty dollars to thirty five dollars which it justification for such a low level of funding for such an important part of our nation's energy supply secretary bodman to my knowledge a lot of the work that has been done has already been accomplished in order to  create electricity from wind that is one answer and two there continues to be a very substantial commitment in both massachusetts where mister markey is from and in texas research where it needs to be done that is what we are good at that is what we do is research research and development we don't fund new mister mcnerney to go from one or two percent of our nation's energy to twenty percent is a huge jump i mean that is as much more or maybe more than nuclear is producing so i suggest that additional research is going to be needed to meet that level of demand or that level of production my second question would be  you agree that there are tremendous gains to be made with energy efficiency secretary bodman yes i do mister mcnerney then would you agree to work within the administration to allow states to lead the nation in efficiency legislation even though it may exceed federal standards especially referring to vehicle efficiency secretary bodman i can't commit to that because i don't understand all the details of it i would be happy to study that particular question mister mcnerney well what i am asking is would you advocate that because california massachusetts and other states have had trouble getting the administration to allow that sort of legislation to go forward and honestly if you don't agree to that then by association the administration stands in opposition to the most i believe the most effective tool we have to lowering gas prices in the long run administration's energy policies secretary bodman that's correct mister mcnerney but on the white house web site it shows that you have said that over the past four years we have implemented ninety five percent of those recommendations one hundred recommendations that are made so that indicates in my mind that the administration's policies are flawed because they have been implemented to a large degree and the success in terms of keeping gas prices low for whatever method by increasing efficiency or by increasing supply haven't been as successful do you have a response to that secretary bodman well i think the response is that we clearly have a long term research program  there is going to be a series of roll calls in a few more minutes and i think what might be advisable is if we can continue to question the secretary until that time has arrived so the chair will recognize himself for another round of questions mister secretary last friday the president was in saudi arabia and at that time he and secretary rice reached an agreement in a memorandum of understanding reactors and fuel services arrangements for the kingdom of saudi arabia promoting the establishment of arrangements that would allow future civilian light water nuclear reactors deployed in the king of saudi arabia with access to reliable nuclear fuel supplies and services now i don't understand mister secretary three years ago vice president cheney said  that and i quote here is what he said talking about iran's deeply questionable nuclear program he said iran is already sitting on an awful lot of oil and gas no one can figure why they need nuclear as well to generate energy so if that is true for iran why are we in the united states introducing yet more nuclear technology into the middle east when we know that has been a source for much of the friction that exists in that region because ultimately any country can pull out of the nuclear proliferation regime hold on to the uranium hold on to the plutonium and have a nuclear presume that the president has a good deal of confidence in the king and in the leadership of saudi arabia it is also true that it is going on in the united arab emirates where they have expressed a lot of interest in almost every day of the year secretary bodman right the chairman why aren't we having a saudi solar cooperation agreement with the united states why would we introduce more dangerous nuclear materials into that region when solar energy should be the basis of our partnership with a country that says it wants to diversify from oil and gas although mister cheney would say if iran has plenty of oil for seventy five million people saudi arabia has twice as much for a third of the population why would we introduce more nuclear power does that make any sense given the volatility of that region  the ability to have solar become the future for saudi arabia if they want to end their oil and gas era secretary bodman i can't answer that mister chairman i don't know i wasn't there the chairman you know i know this sounds  i'm incredulous i can't believe that the president's secretary of energy doesn't have a view or have knowledge about the nuclear agreement that the united states is implementing with the saudi arabians given the fact that it is your agency that is touting new research in solar new research in renewable energy resources that you seem to be out of the loop in terms of then what is the energy policy for what our agreement should be around the world  i just find that hard to believe it seems as though the secretary of state can use nuclear power plants as a short term diplomatic tool for her use knowing that solar energy is a better alternative for saudi arabia for sure and that our long history with transfer of nuclear materials into these middle eastern countries almost inevitably results in the compromise of that instead we are sending them more nuclear power plants the same way that the world sent iraq and iran and north korea nuclear power plants that ultimately turned from energy sources into weapons programs we know the tension that exists between the saudis and the iranians we know that they are trepidatious about the nuclear weapons program in iran i don't understand why we would be fueling this tension in the middle east by providing the beginnings of a program where we will send nuclear materials to saudi arabia under the guise of an energy exchange when my real fear here is that the bush administration twelve months a year blistering hot why wouldn't this administration be suspicious that they are asking for nuclear rather than solar power exchange in order to meet their long term  personally believe that saudi arabia needs nuclear power plants secretary bodman i believe that it is wise for them to diversify their sources of energy away from oil and gas yes the chairman you know here is the problem mister secretary and i don't think the bush administration is ever going to understand this that every nuclear power plant is a generator of electricity yes it is but with a by product of nuclear materials that can be used for a nuclear bomb program and that is what is going on in saudi arabia secretary bodman that is your opinion sir the chairman i know it is my opinion but all middle eastern history points in that direction and the bush administration should be touting the dramatic breakthroughs that have been made in solar energy over the last couple of years and encouraging the saudis to move in that direction given their geographic location the desert nature of their population and the leadership role that we can play in partnership with them in pointing the world in that direction and away from this nuclear fuel cycle which is ultimately going to come back and haunt the world once again let me turn and recognize the gentleman from oregon thank you the vice president famously said in two thousand and one that conservation may be a sign of personal virtue but it not a basis a sufficient basis for a sound comprehensive energy policy is that still the administration's view that conservation is a personal virtue and is not a cornerstone  recommendations of mister cheney's national energy policy  and again our understanding is that the assertion was that much of those recommendations were in fact implemented  which as my colleague mentioned a moment ago you were quoted as saying on the white house web site yet according to the gao the department of energy has missed thirty four of the thirty four congressionally mandated deadlines for setting new efficiency standards for appliances and electrical equipment why was meeting those efficiency standards such a low priority of the department of energy that they missed thirty four out of thirty four secretary bodman i can't answer that i can tell you that one of the things that i have focused on during my three plus years of work in that department had been management and has been the issue of trying to run things better and we have i think have that around and have that entire program now in better shape it is still going to be a number of years before we get caught up but we now have it on a program that i think makes sense to write an appliance standard is a much more difficult task than it appears to be on the surface and it takes time you have got to then get agreement of both the manufacturing community and the regulatory community and others that are involved well that is your choice to get the agreement of the manufacturing community i mean the administration stepped in and stopped some of the stronger standards that were already under way by the clinton administration that no i don't so hard to get agreement that these would be things that would be pretty high priority for you to know secretary bodman i don't happen to know about air conditioning standards i don't happen to well what are your priorities for efficiency i mean air conditioning i think is number one or number two in every area of the country secretary bodman furnaces they are very important in the south they are less important in the north are several fortune five hundred companies that have been urging your administration to embrace a cap and trade system they believe it is necessary both from an environmental and an economic standpoint and the people i am listening to are the people in these cutting edge companies who are developing advanced solar photovoltaics enhanced geothermal wave power solar thermal plants a whole host of new technology the electrification of the automobile what they tell me is that we are missing an economic opportunity by not adopting a cap and trade system and what they tell me is that we are in a race we are in a race against germany denmark spain to see who is going to be developing these technologies to sell to china and india india when i was there they have four hundred million people that don't have access to a light bulb they are going to want electricity the question is who is going to provide them the clean energy technologies to do that is it going to us or is it going to be spain or germany and right now we are losing out to those countries because they have policies that drive investment into these clean energy technologies that is what the clear energy ceos and the investment community is telling me why do they get this and this administration not get this as seeing this as an economic opportunity for us and why we should lead the world why do they understand that and your administration does not understand that secretary bodman i don't know how to answer it any president has i think wisely developed a program for getting the largest i think it is the largest seventeen or eighteen economies the major economies of the world to get them together to make an agreement on what the approach what the world's goal ought to be and what each country's goal ought to be and he will be prepared to commit to that at that point in time and the meeting that is supposed to occur i think in early july and if there is successful if we are successful in getting a response from the other countries this country will respond accordingly  clearly we all have a stake in this and everybody needs to act at some point but there is two major flaws with that number one if we had adopted the bush administration model of democracy we would still be trying to reach a global goal of everybody becoming a democracy before we just went ahead and did it in one thousand seven hundred and seventy six because we decided to lead the world and i think that is the policy of america that we ought to be leading the world but secondly and just as more importantly this strategy if you call it that of the administration is we don't do anything until bangladesh signs onto an agreement this is a huge huge economic failure because we are not going to develop the clean energy technologies to sell to the world if we wait for the entire world to get on board i look at this as losing an economic opportunity while we wait for the rest of the world and i just don't know why the administration cannot understand that of what it is to lose economic woman who was all excited about buying a flex fuel vehicle and she asked my staff where can i get some flex fuel and we had to tell her there were only a couple of pumps in new york state even though there are more than two hundred thousand vehicles i believe sold by ford and g companies to continue to not provide that kind of blend in fact when the oil executives the top ceos of the top five companies came before this committee i asked them in my brief questions now that you have made the biggest profit in the history of the world of any corporation of the world would you commit to putting at least one biofuels pump at every station that you own not franchise stations but stations that you actually own and every one of them said no and i said why and they said we don't know if efficiency weatherization may be far below the level of interest of a lot of people who work at the department of energy but we have a situation where last week i checked on the internet ethanol was selling for one dollar ninety seven cents it has gone up a little bit this week but it is still ethanol projects are in danger of not being built because they are seen as weakening in the market what can we do or what can your department do to make sure that the infrastructure exists to bring that fuel to market because that would have after some discussion with the commander of the post and his staff have decided to put in a five thousand gallon e tank underground and to sell that fuel to flex fuel vehicles in their motor pool and at the commissary where the faculty in the west point community buy fuel and the more we can do to especially have these large facilities that move large quantities like school bus fleets that might be able to burn a positions which are created by president bush and vice president cheney and we recognize the difficulty of the position which you are placed in here because those positions are indefens e again in conclusion on the issue of deploying the strategic petroleum reserve beginning this memorial day weekend you are arguing that there is no natural disaster president bush argues that there is no international crisis in the middle east and therefore the conditions do not exist that would require the deployment of the strategic petroleum reserve i could not disagree more i think we are in an economic crisis right now it is largely fueled by high oil prices that are affecting consumers affecting business all across our country you are right it is not a natural disaster created oil spike it is a bush administration thirty five dollars a barrel during the seven years that president bush and vice president cheney have been implementing their secret energy plan and that secret energy plan is one that has not included the robust investment in renewable energy resources wind and solar the administration is still opposing the extension of the wind and solar energy tax breaks and even as we hit the memorial day weekend the bush administration is still refusing to sell oil from our strategic petroleum reserve as a way of sending a signal to the marketplace that we are not going to stand on the sidelines we are going to actively intervene to protect consumers and businesses and i understand your position you are in a difficult one as the secretary of energy when the president and vice president are committed to ending their administration as they began it without a real energy policy