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THE ENERGY POLICY AND CONSERVATION ACT 

OF 1975: ARE WE POSITIONING AMERICA FOR 

SUCCESS IN AN ERA OF ENERGY ABUNDANCE? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

DECEMBER 11, 2014 

Serial No. 113–187 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

STEVE SCALISE, Louisiana 

Vice Chairman 

RALPH M. HALL, Texas 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

ROBERT E. LATTA, Ohio 

BILL CASSIDY, Louisiana 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN D. DINGELL, Michigan (ex officio) 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 2 

Prepared statement .......................................................................................... 2 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 3 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 4 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 114 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 79 

WITNESSES

Adam Sieminski, Administrator, Energy Information Administration, Department of Energy ..................................................................................................... 6 

Prepared statement .......................................................................................... 8 

Lucian Pugliaresi, President, Energy Policy Research Foundation, Inc. ............ 18 

Prepared statement .......................................................................................... 20 

Charles K. Ebinger, Senior Fellow Energy Security Initiative, The Brookings 

Institution ............................................................................................................. 29 

Prepared statement .......................................................................................... 32 

Deborah Gordon, Director, Energy and Climate Program, Carnegie Endowment for International Peace .............................................................................. 50 

Prepared statement .......................................................................................... 52 

SUBMITTED MATERIAL

Report of the United Steelworkers, ‘‘Crude Oil Exports—Lost Jobs, Lost 

Growth,’’ submitted by Mr. Rush ........................................................................ 95 

Article of December 4, 2014, ‘‘The Fracking Fallacy,’’ by Mason Inman, Nature, submitted by Mr. Rush ............................................................................... 98 

Letter of December 10, 2014, from Louis Finkel, Executive Vice President, 

Energy API, to Mr. Whitfield and Mr. Rush, submitted by Mr. Whitfield ..... 102 

Letter of December 10, 2014, from Charles T. Drevna, President, American 

Fuel & Petrochemical Manufacturers, to Mr. Whitfield and Mr. Rush, submitted by Mr. Whitfield ....................................................................................... 104 

Letter of December 10, 2014, from Allen Schaeffer, Executive Director, Diesel 

Technology Forum, to Mr. Whitfield and Mr. Rush, submitted by Mr. 

Whitfield ............................................................................................................... 107 

Letter of December 18, 2014, from Jay Hauck, Executive Director, The 

CRUDE Coalition, to Mr. Whitfield and Mr. Rush, submitted by Mr. 

Whitfield 1

Executive summary, ‘‘An Analysis of U.S. Light Tight Oil Absorption Capacity,’’ September 24, 2014, by Richard X. Thomas and Kevin G. Waguespack, 

Baker & O’Brien, Inc., submitted by Mr. Whitfield 1

Report, ‘‘Lifting the Crude Oil Export Ban: The Impact on U.S. Manufacturing,’’ October 2014, by Thomas J. Duesterberg, et al., The Aspen Institute, submitted by Mr. Whitfield 1

1The information has been retained in committee files and also is available at http:// 

docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=102781. 

Page

IV 

Policy brief, ‘‘Changing Markets: Economic Opportunities from Lifting the 

U.S. Ban on Crude Oil Exports,’’ September 2014, by Charles Ebinger 

and Heather L. Greenley, Brookings Energy Security Inititative, submitted 

by Mr. Whitfield 1

Analysis, ‘‘What Drives U.S. Gasoline Prices?,’’ October 2014, Energy Information Administration, submitted by Mr. Whitfield 1

Report to the Ranking Member, Committee on Energy and Natural Resources, U.S. Senate, ‘‘Changing Crude Oil Markets: Allowing Exports 

Could Reduce Consumer Fuel Prices, and the Size of the Strategic Reserves 

Should Be Reexamined,’’ September 2014, Government Accountability Office, submitted by Mr. Whitfield 1

Report submitted to American Petroleum Institute, ‘‘The Impacts of U.S. 

Crude Oil Exports on Domestic Crude Production, GDP, Employment, 

Trade, and Consumer Costs,’’ March 31, 2014, ICF International and EnSys 

Energy, submitted by Mr. Whitfield 1

Press release of May 29, 2014, ‘‘Lifting Export Restrictions on U.S. Crude 

Oil Would Lower Gasoline Prices and Reduce U.S. Petroleum Imports While 

Supporting Up to 964,000 Additional Jobs, IHS Study Finds,’’ IHS Inc., 

submitted by Mr. Whitfield 1

Issue brief, ‘‘Crude Behavior: How Lifting the Export Ban Reduces Gasoline 

Prices in the United States,’’ February 2014 (revised March 2014), by 

Stephen P.A. Brown, et al., Resources for the Future, submitted by Mr. 

Whitfield 1

1The information has been retained in committee files and also is available 

at http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID= 

102781. 

(1) 

THE ENERGY POLICY AND CONSERVATION 

ACT OF 1975: ARE WE POSITIONING AMERICA FOR SUCCESS IN AN ERA OF ENERGY 

ABUNDANCE? 

THURSDAY, DECEMBER 11, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:30 a.m., in room 

2123, Rayburn House Office Building, Hon. Ed Whitfield (chairman 

of the subcommittee) presiding. 

Members present: Representatives Whitfield, Shimkus, Pitts, 

Terry, Latta, Olson, McKinley, Gardner, Pompeo, Kinzinger, Griffith, Barton, Rush, McNerney, Tonko, Yarmuth, Engel, Green, 

Capps, and Barrow. 

Also present: Representatives Flores and Mullin. 

Staff present: Nick Abraham, Legislative Clerk; Charlotte Baker, 

Deputy Communications Director; Sean Bonyun, Communications 

Director; Leighton Brown, Press Assistant; Allison Busbee, Policy 

Coordinator, Energy and Power; Patrick Currier, Counsel, Energy 

and Power; Tom Hassenboehler, Chief Counsel, Energy and Power; 

Brandon Mooney, Professional Staff Member; Graham Pittman, 

Staff Assistant; Chris Sarley, Policy Coordinator, Environment and 

the Economy; Joe Banez, Democratic Policy Analyst; Peter Bodner, 

Democratic Counsel; Matt Connolly, Democratic Professional Staff 

Member; Michael Goo, Democratic Senior Counsel; and Caitlin 

Haberman, Democratic Professional Staff Member. 

Mr. WHITFIELD. I would like to call the hearing to order this 

morning. And before we get into the subject of the hearing, I would 

mention that this will be the last hearing of the 113th Congress for 

this subcommittee, and I did want to recognize a number of Members who are on the subcommittee and have been valuable Members of Congress for a number of years who will not be coming 

back. 

First, on our side of the aisle we have Ralph Hall of Texas. All 

of you know Ralph. And unfortunately, he was involved in a car accident right after the election and I think is still in the hospital. 

We have Lee Terry from the great State of Nebraska on the subcommittee. Dr. Bill Cassidy will be moving over to the U.S. Senate 

and Cory Gardner will be moving over to the U.S. Senate. But I 

just wanted to thank them for the many contributions that they 

2 

have made and the great job they did representing their constituents. 

And then on the Democratic side, of course, the ranking member, 

Henry Waxman of California, served many years on this committee 

as chairman and as ranking member, will not be returning. Mr. 

John Dingell, who all of you know, chairman of this committee for 

many years. John Barrow of Georgia, and Donna Christensen of 

the Virgin Islands. 

So I just want to thank all of them for their many contributions. 

And with that, you can talk about them in your opening statement 

if you want to, Bobby. I think that is OK. 

But anyway, I will go on at this time and recognize myself for 

an opening statement. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

This morning’s hearing we are going to be focused on the Energy 

Policy and Conservation Act of 1975. We are going to get a little 

history lesson. As many of you remember, that act established the 

price controls on domestic oil, also established the Strategic Petroleum Reserve, also established CAFE standards, and also set the 

prohibition on the export of crude oil. 

And as you know, Ronald Reagan eliminated the price controls 

when he became President. Certainly, Strategic Petroleum Reserve 

and the CAFE standards are still out there and have a great impact on our economy and our society. 

And the big question that we hear more and more about, though, 

is the wisdom of maintaining this prohibition on the export of 

crude oil. Of course, under the act, the President does have the authority to allow the export of crude oil, but Joe Barton and others 

have raised the issue about adopting legislation that would remove 

this prohibition. And just as we had extensive review of the impact 

of such a move on the export of natural gas, that is what we intend 

to do on this question of export of crude oil. 

So we are going to have a lot of hearings. We want to hear from 

all sides of the issue because there are a lot of different opinions 

about it. And that is why we are delighted to have our distinguished witnesses with us this morning to provide us with this historical perspective. And we will be having some more hearings 

about it, because as I said we want to be very thorough before we 

make a decision to go one way or the other. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

This morning’s hearing will focus on the Energy Policy and Conservation Act of 

1975 (EPCA). In particular, we will explore whether this very important but nearly 

40-year-old statute is suited to deal with the Nation’s changing energy landscape. 

In the years since EPCA was enacted, we have reviewed many of its key provisions to determine if they still made sense. Some, like the price controls on domestic 

oil, were deemed counterproductive and were dropped. Specifically, we learned that 

suppressing the price of American oil did nothing to lower the price at the pump 

and instead served to discourage domestic drilling. As a result, President Reagan 

eliminated these price controls, and we are all better off because of it. 

3 

In contrast, other provisions in EPCA are still being implemented including the 

Strategic Petroleum Reserve and the Corporate Average Fuel Economy (CAFE) 

standards for cars and trucks. 

Among the provisions still in place are the restrictions on exports of crude oil. In 

retrospect, it is easy to understand why these restrictions were a part of the 1975 

law. At the time, America was facing declining domestic oil output and increasing 

dependence on imports from nations hostile to our interests. And at the same time, 

the Nation’s demand for gasoline was on the rise. Export restrictions were also necessary to avoid circumventing the price controls then in effect. 

So, despite the fact that America usually favors free trade, we decided to make 

an exception when it comes to oil. And almost 40 years later, this policy remains 

in place. 

But as we all know, the trends behind the oil export restrictions have dramatically reversed themselves in recent years. Thanks to advances in hydraulic fracturing and directional drilling, domestic oil production has been sharply rising, and 

the Energy Information Administration expects continued increases in the years 

ahead. Meanwhile, oil imports have declined from a peak of 60 percent to around 

30 percent today, and EIA expects the net import share to decline to 21 percent in 

2015, all while gasoline usage has begun what many predict to be a long-term decline. Overall, most of the original justifications for the oil export restrictions are 

disappearing. 

In fact, America may soon be producing more oil than it can handle. It is important to note that not all oil is the same, and in fact there are distinctly different 

types. The largest increases in American production have been the lighter types of 

liquid hydrocarbons, which are not what most U.S. refineries are set up to process. 

This light oil is better suited to many foreign refineries, and for that reason there 

is a strong demand for American oil around the world. 

This morning’s hearing lays the foundation for our discussion of oil exports with 

a thorough historical review of current law and its origins. There are a number of 

questions that need to be answered, but first we need a better understanding of how 

we arrived where we are today. 

As with our discussion of natural gas exports, we will conduct a thorough analysis 

and give all points of view the opportunity to be heard before we consider whether 

to take action. 

Mr. WHITFIELD. And with that, I yield back the balance of my 

time, and I recognize the gentleman from Illinois, Mr. Rush, for his 

opening statement. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman. I, too, want to 

thank and congratulate and commend those departing Members 

from this subcommittee. They were all very, very highly esteemed 

and contributed mightily to the work of the subcommittee and the 

work on the full committee, work of the Congress, and certainly to 

the benefit of all the citizens of our great Nation. And I just want 

to take my hat off to them and wish them good biddings and bright 

futures and many continued blessings as they move forward in 

their lives. 

I want to take particularly time out to allow me a statement to 

bid farewell to Mr. Waxman, who has been the former chairman 

on the full committee and been an extraordinary leader on environmental issues and other issues, and particularly as it relates to 

consumer protection and protection of the environment against the 

harsh realities that we are confronted with today, climate change 

and many, many others. 

And I want to also take a moment out of my opening statement 

to commend the one man who has probably affected my life more 

than any other legislator in my service in the Congress, and that 

is John Dingell. John Dingell has not only been a true friend of 

4 

mine and worked with me, helped advise me, but John Dingell is 

the kind of legislator, I call him, and a lot of others call him, the 

Lion of the House. You can learn just by watching John Dingell. 

He doesn’t have to be doing anything or saying anything especially 

to you. You just learn how he operates and watch him from afar, 

and you will learn more than most legislators learn in a lifetime 

just watching the example of John Dingell, and his impact on this 

committee and on this Congress will never fade. 

And so, Mr. Chairman, I want to thank all those departing members for their contribution. 

I want to thank you, Mr. Chairman, for holding this important 

hearing. As we enter into an era of the new American energy renaissance that we are experiencing, it is important to better understand all of the implications that are associated with exporting 

crude oil due to the recent surge in domestic production. I think 

it is entirely appropriate for this subcommittee to revisit the Energy Policy and Conservation Act of 1975, which restricts the export of domestically produced crude oil, as conditions today have 

shifted dramatically from the 1970s when the bill was first enacted. 

What is less clear, however, is how long this current increase in 

oil production will last and what type of impact will lifting the 

ban—permanently, I might add—have here on domestic consumers. 

Mr. Chairman, I come to this issue with truly an open mind, and 

I look forward to hearing from today’s panel of experts. To be more 

specific, I am looking for answers regarding how exporting this important commodity would impact American families and the American economy in general in regards to domestic gas prices, consumers goods, manufacturing, and jobs. 

Mr. Chairman, I am going to close my mouth and open my mind 

now, and I want to thank you. I was going to yield my time to Mr. 

Green, who asked for it, but I will yield my time back, Mr. Chairman. Thank you so very much. 

Mr. WHITFIELD. Thank you very much. 

Is there anyone on our side of the aisle that—OK. Joe, you are 

recognized for 5 minutes. They hadn’t instructed me who all was 

speaking today. So I am glad to recognize you for 5 minutes. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Well, Mr. Chairman, if you need some of that time, 

I can give some of it back. I mean, I do want to talk for a couple 

of minutes. 

Well, thank you, Mr. Chairman. We have a number of Members 

on this committee that probably weren’t alive when we passed the 

Energy Policy and Conservation Act of 1975. In that same time period, I believe in that act, we put into place a ban on the export 

of crude oil from the United States. 

Now, in the mid-1970s, Mr. Chairman, the OPEC oil cartel had 

had an oil embargo against the United States and Western Europe, 

and it devastated our economy. I can remember living in Crockett, 

Texas, and I could buy 10 gallons of gas on odd days. I could go 

to the gas station and buy 10 gallons of gas on odd days based on 

the last digit in my license plate. That was not fun. There were gas 

5 

lines. There were plant closings. We were producing, I can’t remember exactly, but we were probably producing 5 or 6 million 

barrels of oil a day, but we were consuming in the neighborhood 

of 15 to 16, I think. 

So putting a ban on crude oil exports at that time made some 

sense, to husband that resource as a strategic commodity. Well, 

what is the situation today, Mr. Chairman? The United States is 

the number one oil producer on a daily basis in the world. Today 

we will produce in the neighborhood of 9.5 million barrels of oil in 

the United States of America. If you combine the oil that we import 

from Canada and Mexico, our NAFTA partners, you can put another 2 million barrels a day, maybe even 3. 

Our consumption is down. Our production is up. We have a surplus on the world market today, Mr. Chairman, of 2 to 3 million 

barrels a day. And the result is that instead of $110-barrel oil, we 

have, I think yesterday, West Texas Intermediate closed at about 

$63 a barrel. 

That is a good thing for the American consumer, Mr. Chairman. 

It is a good thing that you are holding this hearing. And I would 

hope in the new Congress we take a look at the bill that I have 

introduced this week, H.R. 5814. It is a page-and-a-half bill. It is 

very simple. It repeals the ban on crude oil exports, and it requires 

a study reported to this committee of what we do with the Strategic Petroleum Reserve. 

It is a different world today, Mr. Chairman, and when you are 

number one you use that status. If we allow our producers to export the crude oil that can’t be consumed here in the United States 

or refined here in the United States, we put pressure on OPEC, we 

put pressure on Russia, we create jobs here at home, and we make 

sure that that world price which sets the crude oil price is based 

on real supply and demand, and that is a good thing for everybody. 

So I am extremely pleased that you are holding this hearing. I 

would ask you also to look at such anachronisms as the Renewable 

Fuel Standard, and I know how contentious this is on our Gulf 

Coast States. But I think we should also look at the Jones Act, and 

as I said earlier, the Strategic Petroleum Reserve. 

With that, Mr. Chairman, I still have about a minute, and I 

would be happy to yield to whoever you wish me to. 

Mr. WHITFIELD. Does anyone seek this additional minute? 

OK. The gentleman yields back. At this time, Mr. Yarmuth, do 

you or Ms. Capps want to make a comment? Ms. Capps? Mr. Barrow? We have already thanked you for your service, John, so 

thanks. 

Mr. BARROW. That would be John Barrow, the late. 

Mr. WHITFIELD. OK. Thank you. 

Well, that concludes the opening statement. And as I said, we 

have a distinguished panel of witnesses. 

And I am just going to introduce you as I introduce you to make 

your opening statement. 

So first opening statement will be by Adam Sieminski, who is 

certainly no stranger to this panel. 

And we welcome you back, Mr. Administrator, with the U.S. Energy Information Administration, and you are recognized for 5 minutes for your opening statement. 

6 

STATEMENTS OF ADAM SIEMINSKI, ADMINISTRATOR, ENERGY 

INFORMATION ADMINISTRATION, DEPARTMENT OF ENERGY; LUCIAN PUGLIARESI, PRESIDENT, ENERGY POLICY 

RESEARCH FOUNDATION, INC.; CHARLES K. EBINGER, SENIOR FELLOW, ENERGY SECURITY INITIATIVE, THE BROOKINGS INSTITUTION; AND DEBORAH GORDON, DIRECTOR, ENERGY AND CLIMATE PROGRAM, CARNEGIE ENDOWMENT 

FOR INTERNATIONAL PEACE 

STATEMENT OF ADAM SIEMINSKI 

Mr. SIEMINSKI. Chairman Whitfield, Congressman Rush, members of the subcommittee, thank you for the opportunity to be here 

today to discuss the history of the U.S. ban on crude oil exports 

and to contrast the market conditions at the time of the ban with 

those today. 

The U.S. Energy Information Administration, EIA, is a statistical 

and analytical agency at the Department of Energy. By law, EIA’s 

data, analyses, and forecasts are independent of approval by any 

other officer or employee of the U.S. Government, so the views expressed here should not be construed as representing those of the 

Department of Energy or any other Federal agency. 

At the time of the passage of the Energy Policy and Conservation 

Act in 1975, U.S. net imports of petroleum were rising rapidly due 

to declining domestic production while growth in consumption was 

rocketing up. U.S. net oil imports more than doubled between 1970 

and 1978, from 3.2 to 8.6 million barrels per day, driving imports 

as a share of total consumption from 22 percent to 47 percent. 

Internationally, when OPEC declared an oil embargo against the 

United States in 1973, 65 percent of rising U.S. crude oil imports 

were coming from OPEC countries. To protect consumers from 

price shocks, the U.S. policy response at the time was to limit the 

price for oil produced from U.S. wells existing in 1972 while allowing new oil to sell at world market prices. Limiting exports prevented circumvention of these domestic price controls; however, the 

separation of new and old oil pricing did not really stem the production declines as oil production in the lower 48 States fell some 

23 percent between 1973 and 1980.G 

By 1981, it was clear that the policy wasn’t working, and the 

price and allocation controls were removed. That is on figure 2 of 

my testimony. For nearly 3 decades after the removal of price controls, declining production, coupled with rising demand, pushed the 

U.S. towards ever-increasing imports until net imports as a share 

of total U.S. petroleum consumption peaked at 60 percent in 2005. 

Restrictions on crude oil exports remained in place, but limited 

modifications from time to time allowed exports to Canada, exports 

of production from Alaska that went through the Trans-Alaska 

Pipeline, and certain California heavy crude oil. Since 2008, however, these conditions have been reversed, partly as a result of the 

growth in domestic supply, and also as a result of swelling demand. 

U.S. domestic crude oil production has increased by 3.4 million barrels a day, some 68 percent, to its highest level since 1986. 

Meanwhile, between 2008 and 2014—this year, we are estimating for the full year—total U.S. liquid fuel consumption fell 

from 19.5 million barrels a day to 18.9 million barrels a day. The 

7 

U.S. went from being the world’s largest net importer to becoming 

a big net exporter of petroleum products. In 2014, net imports as 

a share of total U.S. petroleum consumption is now down to below 

30 percent, close to 25. 

The dramatic production growth in the U.S. midcontinent and 

Canada has resulted in logistical constraints that are reflected in 

a wide variation of prices for domestically produced crudes. In 

2008, benchmark crude, West Texas Intermediate, or WTI, sold for 

a premium of $2.73, a premium higher than Brent that comes from 

the North Sea. 

In 2014, through October, WTI has been trading at a discount of 

over $6 a barrel to Brent crude oil. EIA’s latest short-term energy 

outlook forecasts recent trends in U.S. petroleum markets will continue into 2015 with domestic crude oil production averaging 9.4 

million barrels a day, 10 percent above the 2014 level. 

Gasoline demand and net imports as a share of domestic consumption could be 21 percent as recent dramatic declines in crude 

prices may affect our outlook, but more so, I think, in the longer 

term rather than in the very short term. 

So petroleum market conditions today are very different than 

they were in the 1970s when the ban on crude oil exports was enacted. Key trends in U.S. oil markets have reversed. Then, demand 

was rising rapidly and production was falling. Now, production is 

rising rapidly and demand is falling. U.S. crude production may 

soon hit an all-time high, surpassing the previous record set in 

1970. Gasoline demand is down from its peak and is likely to decline even more as the vehicle fleet becomes more efficient. 

In addition to this trend reversal, international oil production is 

less concentrated. OPEC’s share of production is down from 53 percent in 1973 to about 35 percent today. The existence of oil contracts on the futures markets, the development of benchmark crude 

oil pricing, and the availability of basic data from EIA, created by 

Congress in 1977, have all brought greater transparency to the oil 

markets. 

As described in my written statement, EIA is actively pursuing 

a number of important initiatives related to the timeliness and detail of oil market data. 

I would like to thank you for the opportunity to testify here 

today, and I hope to be able to answer your questions. Thank you. 

[The prepared statement of Mr. Sieminski follows:] 

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Mr. WHITFIELD. Thank you very much. 

And our next witness is Mr. Lou Pugliaresi, who is the president 

of the Energy Policy Research Foundation. 

And you are recognized for 5 minutes. 

STATEMENT OF LUCIAN PUGLIARESI 

Mr. PUGLIARESI. Thank you. Thank you, Mr. Chairman, and 

thank you, members. 

Mr. WHITFIELD. Be sure and turn your microphone on. 

Mr. PUGLIARESI. Yes, I think we have some slides. The next 

slide. So what I would like to do is sort of put a little bit of this 

in context, and the first thing I think we ought to talk about a little bit is what is energy security. 

So we tend to think about energy security as a concentration of 

low-cost reserves in unstable parts of the world which tend to provide two risks to the U.S. One, they can restrict output and charge 

higher prices that would prevail in more competitive environments. 

And two, some of these guys could go out of business with more 

terrorism, even embargoes also imposing price spike and large 

costs on the national economy. 

So one of the best ways to deal with this threat or this problem 

is to have a production platform in a stable part of the world, 

which turns out to be North America. And if you look at what has 

happened here in this slide, you can see that, if you take the U.S. 

and Canada together, which Congressman Barton just spoke about, 

we have had a remarkable increase in production. And it is very 

important to look upon this through a North American lens because it is this North American lens that is so stable, and it is this 

rapid runup in production, particularly if you include natural gas 

liquids, that has made a remarkable change. 

Next slide. 

Now, you can see prices have come down, but I don’t think we 

quite understand what this means. And I have testified here many 

times where Members have said, well, you know, we know, Mr. 

Pugliaresi, if we open up ANWR, if we do X or Y, we will get more 

production, but OPEC will just cut production, the price won’t come 

down. Well, the price has come down, and this price decrease is an 

enormous benefit to the world economy. The world consuming centers are going to get a savings of approximately $1.3 trillion next 

year if these prices persist. The American driver who spends about 

$3,000 a year in gasoline is going to get an $800 savings. This is 

enormous boom and benefit to the national economy, to the world 

economy, and it is being delivered to us through these production 

gains we are having in this stable North American platform. 

And we want to preserve that platform. Right? We want to make 

the distribution of crude oil efficient. That is why we need Keystone. We want to have good regulations. We want to open up the 

Federal lands a lot more. You know, all this production we have 

seen has come from Federal lands. 

Next slide. 

This shows you the permit activity for oil and gas drilling permits just for 90 days prior to the—December 1st, 2014. Of course, 

we are a little concerned that these lower oil prices—and we are 

getting some evidence that the permit activity is coming off. 

19 

And I think that is a good reason to have this hearing. We need 

to look at our whole regulatory structure and see, ‘‘OK. What do 

we—what do we need to do to make it as efficient as possible?’’ 

Because, once again, we want this platform, the upstream, the 

midstream, and the downstream—we want it to perform as best as 

possible, and we are concerned about this. 

But I must say we met with some of the world’s best extraction 

technologists in Houston the last couple of days. There are a lot of 

exciting things going on out there. As long as we have an open system, I think we are going to find ways to drive down these extraction costs. I mean, there are very interesting things happening out 

there. 

Next slide. 

This is our estimate of—in a sort of $80 environment of what we 

think the U.S. could do, at least in the near term, by API gravity. 

You see we are producing a lot of light sweet crude, and we are 

not sure how much this is going to be disturbed by these lower oil 

price environment. Probably going to see some reduction there. 

But, you know, the outlook is still very positive. 

Next slide. 

I want to leave you with just a couple of things here. One, if you 

look at this slide, it is quite interesting. Traditionally, conventional 

oil had a very modest decline rate, maybe 5 percent, and a pretty 

high recovery factor, as much as 50 percent. 

What I don’t think we understand is that, even though we have 

this very high decline rate in these unconventional resources we 

have now, but we have to keep drilling, our recovery factor is quite 

small. Small improvements in this recovery factor are going to 

make a big difference. That is why we want—you know, we want 

to see this technology continue to progress. 

And, you know, if you look at this whole North American success 

story and we get back to EPCA, keep in mind that we should have 

a lot of humility about how we proceed. We want you to—we had 

mandates on ethanol. We had price—we had 6-month oil embargo, 

and then we had 10 years of price controls. We had a Fuel Use Act 

which prevented the use of natural gas. 

So as we go forward, I think one of the things I want the members to think about is: What are the benefits of an open system? 

You know, William Pratt, the famous—Wallace Pratt, the famous 

geologist, said in the 1930s, ‘‘Oil is first discovered in the mind of 

man.’’ And I think that we want to keep that intellectual capacity 

going here in the U.S. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Pugliaresi follows:] 

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Mr. WHITFIELD. Thank you very much. 

And our next witness is Dr. Charles Ebinger, who is a senior fellow at the Brookings Institution. Thank you for being with us. And 

you are recognized for 5 minutes. 

STATEMENT OF CHARLES K. EBINGER 

Mr. EBINGER. Thank you, Mr. Chairman, and thank you, Congressman Rush, for inviting me to testify this morning on the origins of the crude oil export ban, which ironically was enacted nearly 40 years ago. 

Given the profound changes that have occurred in unconventional oil and gas production that we have already heard about 

over the last 6 years, I think it is important to look back and remind ourselves how our energy situation has evolved since 1975. 

In the years prior to the OPEC oil embargo, the chief issues 

dominating energy policy in the United States were debated over 

the future of nuclear power, especially whether we should recycle 

plutonium and develop the breeder reactor, price controls on domestic oil and natural gas, which, I remind you, were enacted by 

President Nixon back in 1971 out of concern that inflation had 

reached the dangerous levels of 4.4 percent, and various programs, 

both a voluntary oil import program and a mandatory oil import 

program, to hold down oil imports as a protection for our domestic 

industry. 

In reviewing this history—and this is a critical point—what 

stands out is just as is the case today. Most energy issues were discussed in isolation from one another. 

On the geopolitical front, the early 1970s saw momentous 

changes in the Middle East and North Africa as King Idris in Libya 

was deposed by Colonel Gaddafi, and in response to a decline in 

real oil prices, the major oil-producing countries mounted a unified 

campaign against the petroleum companies to extract more of the 

economic rent from their oil production. 

Under two major agreements negotiated in Tehran and Tripoli 

between the international oil companies and OPEC, the OPEC, 

concerned about inflation and a general sense that they were not 

being treated fairly by the international oil companies, demanded 

a major increase in the price of their oil. 

After these two agreements, OPEC was able to introduce an escalation clause in its contracts that it believed would protect their 

members from inflation. This proved, however, not to be the case. 

But what helped OPEC was—as Mr. Sieminski noted, was the 

surge in demand worldwide not only in the United States, but in 

Western Europe and Japan, which allowed OPEC to, every time a 

contract was up for renegotiation, demand further upward price revisions. 

Mr. Chairman, it is worth noting that the global market conditions in the early 1970s could not have been more different than 

they are today, as we heard from Congressman Barton. Demand for 

oil throughout the industrialized world was skyrocketing. 

In the United States, domestic production had peaked in 1970, 

leading a Cabinet task force to recommend the gradual elimination 

of the quotas under the mandatory oil import program. 

30 

In retrospect, given the changed circumstances confronting the 

U.S., it is remarkable that this recommendation did not receive 

more salience from the Congress, despite the fact that U.S. oil consumption was skyrocketing, domestic production was peaking, and 

oil imports were up to nearly 30 percent of U.S. consumption on 

the eve of the oil embargo. 

The U.S. could not have been more ill-prepared for the embargo. 

In response, one of the primary actions taken was enactment of 

complex regulatory procedures for oil and gas prices as well as an 

incredibly complex system of allocation controls leading to gasoline 

lines in the districts and surplus supplies in Potomac. 

Unfortunately, they were so—these were so ill-conceived that 

they accentuated the impact of the crisis and exacerbated gasoline 

shortages, causing long lines for angry—angry motorists buying 

regulated volumes of fuel. And I am glad the Congressman got 10 

gallons because, as a graduate student, I only got 5 gallons in New 

England. 

In response to the crisis, President Nixon launched Project Independence, designed to eliminate oil imports by 1980, when comprising a host of initiatives, including the Energy Policy and Conservation Act. 

Under EPCA, the President was granted the authority to restrict 

exports of coal, petroleum products, natural gas, petrochemical 

feedstocks, and supplies of materials and equipment for the exploration, production, refining, and transportation of energy. 

EPCA also authorized the President to exempt crude oil and natural gas exports from such restrictions where doing so was deemed 

by the President to be in the national interest. 

As the act today only relates to crude oil, the main exceptions 

that have been made are predominantly for shipments to our 

neighbors in Canada and Mexico in recognition of our historic trading relationships. Other exemptions to the ban are noted in detail 

in my formal testimony. 

Today, through modifications to EPCA, the U.S. allows unrestricted exports of all fuels except crude oil, and natural gas has 

to go through a cumbersome regulatory procedure, but it is not 

banned. The only expressed ban that remains today is on crude oil. 

In reviewing the history since the early 1970s, it is apparent 

that, whenever the U.S. Government has tried to favor a particular 

fuel, absent market realties, there have been unintended consequences which have been deleterious to the U.S. economy and to 

our natural energy security. 

Controls on natural gas prices led to the failure to develop the 

Alaska Natural Gas Transportation system, creating massive natural gas shortages in my home territory in the industrial midwest 

in the winter of 1977–1978 with devastating economic impact, some 

of which remains to this day. 

The ban on using oil and gas in industrial boilers and power generation led to a major switch away from gas and oil towards coal. 

This rush towards coal has led to scores of aging coal facilities that 

now have to be replaced as part of our national environmental policy and our international climate policy. 

Mr. Chairman, in conclusion, it is evident that the U.S. energy 

situation today is far different from what it was when EPCA was 

31 

enacted. With crude oil production continuing to rise, it would be 

detrimental to U.S. energy and economic policy to keep the ban on 

crude oil exports. 

Keeping the ban and attempting to manipulate policy to control 

a globally traded commodities with hopes that the U.S. Oil boom 

will lead to energy independence is a fallacy as the U.S. is part of 

the global market and must, therefore, participate in it. 

Lifting the ban will generate paramount foreign policy benefits, 

it will increase U.S. GDP—and Brookings did a major study on this 

issue that is on our Web site, if anyone cares to look at it—and it 

will reduce unemployment, all of which will be foregone if the ban 

remains in place. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Ebinger follows:] 

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Mr. WHITFIELD. Thank you. 

And our next witness is Deborah Gordon, who is the Director at 

the Carnegie Endowment for International Peace. 

And you are recognized for 5 minutes. 

STATEMENT OF DEBORAH GORDON 

Ms. GORDON. Subcommittee Chairman Whitfield, Ranking Member Rush, distinguished members of the subcommittee, thank you 

for the opportunity to testify today about EPCA in an era of oil 

transition. 

In my remarks, I will discuss three key points: First, the need 

to understand the changing conditions influencing today’s crude oil 

market; second, the need for better information about the makeup 

and specifications of U.S. oils; and, lastly, the need to deal with the 

environmental consequences from an unconditional lifting of the oil 

export ban. I explore these issues in greater detail in my written 

testimony, which I submitted for the record. 

The bottom line is that oils are changing and a more complex 

array of hydrocarbon resource is replacing conventional oil. Public 

and private stakeholders need to understand the environmental 

impacts inherent to different oils. The best way to position America 

for success amid energy abundance is to generate information necessary to make wise decisions among many oil options. 

The truth is we know precious little about these new resources. 

The Nation needs reliable, consistent, detailed, open-source data 

about composition and operational elements of U.S. oils. Significant 

information gaps have accompanied the Nation’s oil—increased oil 

production. 

Although EPCA was adopted in response to a set of—a specific 

set of oil supply problems, it can serve as a template for addressing 

some of the shortcomings that exist today as America struggles to 

manage the economic, geopolitical, and climate impacts of its new 

oil bounty. 

It will be important for policymakers to think comprehensively 

about the full range of current oil issues. Several EPCA provisions 

merit careful review and consideration and possible updating: One, 

widely expanding oil data collection, making this information publicly available; two, increasing the heavy-duty vehicle efficiency 

standards for trucks and marine vessels that move the oil and petroleum product that we are trying to consume less of at home; 

and, three, revisiting oil accounting practices so that the SEC is 

fully informed about oils that are on tap to bolster U.S. markets. 

America is one of the first in line to win the unconventional oil 

lottery, but despite newfound energy resources at home, the U.S. 

exists in an increasingly oil interdependent world. As such, if U.S. 

policymakers enact effective safeguards to minimize unintended 

consequences, America will be better positioned to chart a path 

that others can follow. 

Two questions require attention. 

First, do policymakers and the public have sufficient information 

about America’s oil? Unfortunately, they do not. Ironically, there is 

more detailed open-source data about OPEC crudes than the oils 

in the Bakken, Permian, and Eagle Ford. 

51 

In seeking to obtain and verify these needed oil data, we have 

encountered several obstacles, from data inconsistencies, to withheld data, to Government limitations on expanding oil reporting. 

I would be happy to elaborate on any of these issues. The overarching concern, however, is that oil markets cannot function efficiently without transparent high-quality information. 

Question 2. What are the environmental risks these new oils 

pose? The Carnegie Endowment is developing an oil-climate index 

that compares global oils with one another in terms of total greenhouse gas impacts. Together with Stanford University and the University of Calgary, we are modeling the entire oil value chain, from 

where the oil comes out of the ground through to how the products 

are used. 

Our preliminary findings, based on 28 sample oils, global oils, 

are that oils’ greenhouse gas footprints vary by at least 80 percent 

from one another. In other words, replacing a high greenhouse gas 

oil with a lower one could almost halve the impacts of greenhouse 

gases for every barrel of oil. 

There are several categories of higher emissions from oils. These 

include gassy oils, like the Bakken or Nigeria, where gas associated 

with oil is flared or burned instead of separated and sold; heavy 

oils, those that use more heat, steam, hydrogen through their value 

chains to yield more bottom-of-the-barrel products like petroleum 

coke, a coal substitute; watery oils, which are interesting, like 

those in California’s San Joaquin Valley where it takes a tremendous amount of energy to lift as much as 50 barrels of water for 

every one barrel of oil that you produce; and extreme oils like those 

in the Gulf of Mexico that are miles below the surface or those in 

the boreal peat bogs in Alberta, where carbon is naturally sequestered. 

As one of the world’s fastest-growing oil producers, the U.S. has 

the opportunity and the responsibility to be a global leader in the 

energy sector. A balanced energy policy informed by oil transparency must guide energy decisionmaking in ways that satisfy 

U.S. consumers, strengthen the American economy, protect the climate, and enhance national and global security. 

In closing, a national discussion, one informed by reliable opensource data about the composition, quality, and environmental profile of new oils will be key to making effective and sustainable decisions. 

Thank you. 

[The prepared statement of Ms. Gordon follows:] 

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Mr. WHITFIELD. Thank you, Ms. Gordon. 

And thank all of you for your testimony. 

At this time I will recognize myself for questions, and then we 

will give every other member the opportunity as well. 

Just from a practical aspect here, anytime you start talking 

about crude oil, most of the American people think about gasoline 

prices. That is why it is more volatile, I think, when you talk about 

exporting crude oil than certainly natural gas or something like 

that. 

Do any of you have an opinion on, if you were at a Rotary Club, 

how you would explain that exporting additional crude oil would 

not necessarily raise gasoline prices? 

Mr. Sieminski. 

Mr. SIEMINSKI. Mr. Chairman, it is always a challenge. Usually, 

at those Rotary Club functions, I get asked why gasoline prices are 

so high. Lately I haven’t gotten that question. 

Mr. WHITFIELD. Right. 

Mr. SIEMINSKI. EIA has tried to examine your question from the 

standpoint of how gasoline prices are set in the U.S. markets and 

what gasoline prices relate to. And what we found in a study that 

we published just a short while ago was that these two benchmark 

crudes that I talked about, the one in the U.S., WTI, West Texas, 

and Brent in the international markets, that gasoline prices historically tend to be much more closely related to Brent crude oil 

prices than to the domestic benchmark. 

The second thing that we found was that U.S. gasoline prices 

tend to be more closely related to gasoline prices in markets like 

Singapore and Rotterdam in the global markets than to comparing, 

let’s say, Chicago prices with prices in the Gulf Coast. 

The conclusion that one would draw from that is that gasoline 

prices, because we are exporting and importing so much gasoline, 

are really set in the global markets—gasoline prices in the U.S. 

tend to reflect that global market—and that, if exports of crude oil 

resulted in higher prices for West Texas Intermediate or crudes 

that are benchmarked to that, it would not have much impact on 

gasoline prices. 

Mr. WHITFIELD. And I am glad you mentioned we are already exporting gasoline anyway. So we are talking about—— 

Mr. SIEMINSKI. Quite a bit, actually. 

Mr. WHITFIELD. Quite a bit. 

Did you have a comment, Mr. Pugliaresi. 

Mr. PUGLIARESI. I think, you know, how I would explain is that, 

if you want to constrain volatility in the market, if you want to constrain rising gasoline prices, you should promote a very stable and 

growing production of crude oil in North America. 

Mr. WHITFIELD. Right. 

Mr. PUGLIARESI. We have evidence that this is having a big effect. And that is the answer. We are—as Adam said, we are well 

integrated into the world oil market. The only thing we can—well, 

what we can do is have a stable growing production of crude oil 

outside of these more volatile areas. 

Mr. WHITFIELD. Right. 

And do you have a comment, Dr. Ebinger? 

62 

Mr. EBINGER. If I could just add, Mr. Chairman, I think an easy 

way to look at this is, since, as Mr. Sieminski said, gasoline prices 

are predominantly set in the international market, if we have a set 

volume of crude oil in that market and all of a sudden we put more 

oil into that market, adding to supply while demand stays relatively constant, on the basis of kind of fundamental economics— 

more supply, constant demand—prices should come down and then 

refiners buying that oil around the world will—in theory at least, 

if they wish to be competitive, will lower their product—petroleum 

product prices, including gasoline, and, hopefully, for New England, 

home heating fuel. I think that is the way I find sometimes trying 

to explain it, seems to have some say in it. 

Mr. WHITFIELD. Ms. Gordon, do you have a comment? 

Ms. GORDON. Yes. I don’t know that it would be easy for consumers to understand this. But because oils are so different, the 

oils that we are largely now set to refine, the heavier oils, don’t 

preferentially make more gasoline. They make more diesel. 

So the oils that we are now looking to export, the light tight oils, 

those do. They are lighter oils. They go through hydroskimming refineries. They make more gasoline. 

So we might be getting ready to export the perfect oil to make 

more gasoline in order to keep and refine the oil that makes more 

diesel. 

It is not a consumer issue then because our consuming public 

doesn’t use diesel. They use gasoline. So it gets a little bit complicated here. 

And the big question that Lou raised was volatility. I think that 

consumers are going to need to understand—in the future, possibly 

not be explained high prices, but volatile prices. 

And volatility will really hurt America because we are equal, in 

large parts, consumer and producer of oil and product, that, if the 

markets become very volatile, we are going the hurt more than 

anyone else. 

Mr. WHITFIELD. OK. Well, my time is expired. 

Mr. Rush, you are recognized for 5 minutes. 

Mr. RUSH. I want to thank you, Mr. Chairman. 

I share the optimism of the panel, but there are some cautionary 

items or cautionary indications that I want to at least consider for 

the record. 

Ms. Gordon, what type of impact would lifting the crude oil ban 

have on climate change? Are these precautions or conditions that 

Congress should consider if we were to lift the ban on crude oil altogether? 

Ms. GORDON. It is a great question. And the reality is, as my testimony stated, we just don’t know enough about these light tight 

oils that are coming out of America. 

What we do know is, like I said, they are lighter oils. Our refineries are set to run much heavier crudes. Those heavier crudes 

need much more heat. They produce more bottom-of-the-barrel 

products. So the heavier oils are generally more greenhouse gas-intensive. 

So we are setting ourselves up to be a refiner of higher greenhouse gas oils as we export possibly, if they are not flared, lower 

greenhouse gas oils to others, which puts a bigger burden on AmerVerDate Mar 15 2010 14:09 May 14, 2015 Jkt 037690 PO 00000 Frm 00066 Fmt 6633 Sfmt 6633 F:\113-187 EPC ACT 1975\113-187 EPC ACT 1975 WORKING WAYNE
63 

ica to control—in terms of global climate agreements, control what 

we are doing when we are handing off our oils. 

So I think that there are real questions from a climate perspective, what are these oils and what are we giving away. 

Mr. RUSH. Is there any other panelists who would like to comment on this? Are there any other panelists that would like to comment on this? 

Well, let me ask you a question. Mr. Ebinger, in your written testimony, you stated that lifting the ban on crude oil exports would 

boost economic growth, wages, employment, trade, and, overall, the 

economic welfare of the Nation. 

What, in your opinion, are potential downsides to removing the 

ban? 

Mr. EBINGER. I don’t believe, Congressman, that there are sizeable downsides to lifting the ban, with the possible exception of 

what Ms. Gordon said, that we don’t know completely the impact 

on greenhouse gases. 

In a major study that Brookings recently did in association with 

the economic consulting firm NERA, we have some very detailed 

data in there on what we think will happen to employment, overall 

economic welfare for the Nation, and the numbers in various scenarios are almost constantly positive. 

And our study has been pretty much seconded or maybe a couple 

came out before us, but there have been now five or six major studies done by IFC, done by a whole—some by the Government, that 

have all concluded the benefits far outweigh any potential costs. So 

I guess I will leave it at that. 

Mr. RUSH. Well, I want to ask the other three panelists: Do you 

have any comments regarding the economic impact on lifting the 

ban? 

Mr. PUGLIARESI. So I think you want—whenever we go to a free 

trade alternative—which, you know, I think everybody here has a 

lot of training in economics. No one is going to be against free 

trade. We think it is a good thing and it is going to make the economy more efficient. 

But there will be dislocations. I think some sectors—some segments of the U.S. refining industry, particularly if we have this 

high production scenario, will have—you know, will find themselves in a less, you know, economically advantaged position. 

However, we have a very complex and advanced refining sector 

in the United States. The capacity to refine very complex kinds of 

crudes are there. I think we want to—you know, as we go—if we 

go to lifting the ban on crude oil, we want to look and make sure, 

‘‘OK. Are we burdening the downstream sector with kind of unnecessary regulations? What is RFS doing? What are ozone regulations 

doing? What is the permit doing?’’ 

In other words, you know, also, as Congressman Barton raised, 

maybe we need to look at some—some kinds of adjustments in the 

Jones Act. That is very tough. I understand. But, you know, there 

will be adjustments. But, on balance, the economy will be better 

off. 

I think, in the short term, the refining industry probably—you 

know, probably can handle what is going on right now. It is really 

a more longer term problem. 

64 

But I also think that, you know, probably immediately we should 

look—look very closely at the condensate issue, which is starting 

to cause a lot of problems in Eagle Ford. 

Mr. SIEMINSKI. Congressman Rush, let me just add that the reason that the U.S. is exporting gasoline from the Gulf Coast is that 

we really have a surplus of gasoline. Domestic demand for gasoline 

has been declining and is likely to continue to go down as autos 

become more efficient. 

And, in a sense, what refiners are doing is exporting the surplus 

product so that they can more efficiently fill the demand for other 

products in the U.S. market that are more valuable. So the export 

of gasoline may actually be helping keep overall product prices for 

U.S. consumers down. 

Mr. RUSH. I want to thank you, Mr. Chairman. I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Texas, Mr. Barton, for 5 minutes. 

Mr. BARTON. Thank you. 

I am just looking around the dais here, Mr. Chairman. 

First of all, we want to welcome Mr. Flores. We see he is here. 

He is a new number of the committee. We are glad to have him 

here. 

We have got Mr. Bud Albright Bratta in the audience. He used 

to be a staffer in the committee. We are glad to have him here. 

Mr. WHITFIELD. We got Mr. Mullin, too, here. 

Mr. BARTON. I didn’t see him. From Oklahoma. Glad to have him 

here. 

I see Mr. Barrow over there. He is a member who is not going 

to be here next year. His State is the Peach State. 

Do we have a ban on exports of peaches? Yes or no? 

OK. We got Mr. McKinley up here, who is the Coal State. 

Do we have a ban on the export of coal? No. 

We got Ms. Capps from California. 

Do we have a ban on the export of movies? I don’t think so. 

We have got Mr. Pompeo and Mr. Terry from the Corn States. 

Do we have a ban on the export of corn? No. 

Mr. WHITFIELD. We are exporting bourbon, too. 

Mr. BARTON. I was saving that for last, Mr. Chairman. 

My point is that there are—in a free market economy like the 

United States, there are almost no commodities or products that 

we have a ban on. We are the free market nation in the world. 

Now, as has been pointed out, in the 1970s, the OPEC cartel 

banned exports of crude oil to the United States and we retaliated 

by creating the Strategic Petroleum Reserve and also requiring 

that no crude oil, with few exceptions, could be exported from the 

United States. That made some economic sense and some strategic 

sense in the 1970s, but this isn’t the 1970s. 

Now, the key question—or one of the key questions the chairman 

of the subcommittee has already asked, you know: What would 

happen if we repealed the ban? What would happen to domestic 

gasoline prices? I haven’t seen any study that says they would go 

up. 

And, you know, the reverse question would be: What would happen if we don’t? What happens to domestic oil production in the 

65 

near term, in the mid term, in the long term if we keep the ban 

in place? 

Now, the key issue there is the market for domestic crude oil. 

U.S. refinery capacity, I think, is around 12 million barrels a day. 

Is that correct, Mr. Sieminski? 

Mr. SIEMINSKI. If you add in all of the other things. Domestic 

crude oil is getting close to 9 million barrels a day, and you get to 

12 by adding in biofuels and—— 

Mr. BARTON. No. I am asking what the refinery capacity is, the 

U.S.—— 

Mr. SIEMINSKI. Oh. Over 16 million barrels a day. 

Mr. BARTON. It is over 16. 

Mr. SIEMINSKI. Yes, sir. 

Mr. BARTON. OK. I didn’t think it was that high. 

My point was going to be, if we don’t have a market in the 

United States for the crude oil at our refineries, if you can’t export 

it, you keep it in the ground. 

But if it is 16 million barrels, then we can increase domestic supply fairly significantly and we just—we just freeze out or push out 

imports from overseas. Wouldn’t that be correct? 

Mr. SIEMINSKI. You raise an interesting point, Congressman. 

Many people look at the growth in domestic production and the 

flatness in demand and they envision a world where the U.S. is not 

importing any oil. 

But, in fact, the U.S. may continue to import oil simply to refine 

it in our very efficient refining system and sell those products back 

out into the global markets. 

Mr. BARTON. Well, Mexico is finally freeing up their oil economy 

and, if they follow through with their constitutional change, you 

will see a large number of U.S. producers and explorer exploration 

going down to Mexico. 

And I would assume that there would be additional oil in Mexico 

that could come up to the United States in the next 5 to 6 years. 

Plus, we have got Canada. And I know there are some issues on 

the environmental front with the Canadian heavy oil. 

I guess I only have 22 seconds. I didn’t—if I had to look at this 

panel and you had to vote yes or no on repealing the ban, I think 

I have three yeses and a maybe. 

I am going to ask Ms. Gordon—I didn’t sense that the Carnegie 

Institute is totally opposed to repealing the ban. I think your concern is transparency and information for environmental purposes. 

Is that correct? 

Ms. GORDON. Yes. I think we have a reprieve here because demand has really cooled off globally. So there is not much of a place 

to put a lot of oil right now. 

And that gives time to do the due diligence that has to happen 

with information so that we have a better sense of what is going 

to happen when we do change policy some day, because I do think 

we are headed toward more open markets, I mean, in general. 

But do remember, I just should add, the oil market is one of the 

least efficient markets. There are so many reasons: barriers to 

entry, barriers to exit, not enough information, externalities. There 

is far more efficiency in peach markets than in oil markets. So that 

is—it is a big question. 

66 

Mr. BARTON. Could I ask one more question? 

Is it possible for these lighter shale oils that are being produced 

in the Eagle Ford and up in North Dakota to be exported as refined 

products because they are so light and almost need no refining? 

Ms. GORDON. They are really different from each other. The 

Bakken oil is like Nigerian crude. In fact, we have backed out a 

lot of Nigerian crude since we have been producing in the Bakken. 

So if we export Bakken, we are probably going to have implications for Nigeria in the North Sea because that is what the oil is 

like. 

The Eagle Ford is really unusual. It is much, much lighter and 

it needs to have the condensates stripped out of it. So even with 

the light tight oil category, there is a lot of diversity here that we 

don’t have a lot of information about. 

Mr. BARTON. Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

Kentucky, Mr. Yarmuth, for 5 minutes. 

Mr. YARMUTH. Thank you very much, Mr. Chairman. 

I thank all the witnesses for their testimony and knowledge. 

I have learned a lot, but I am still not sure where I am on this 

issue. And I am curious. We talked about the potential downside. 

And while everything looks wonderful right now with an abundance of oil and petroleum in the world and prices down, that 

would seem to be—mitigate against worrying about a crisis. 

But isn’t it entirely possible that we could return to a 1970s situation? I was a staffer here in the 1970s and remember those lines 

as well. 

So would it not be useful to have at least some contingency 

measure if we—whether it is an international outbreak or a war, 

terrorism, whatever it may be, that we have some way to protect 

our domestic supply in case of an emergency as opposed to just saying we are not—we will worry about that when we get to it? 

Ms. Gordon? 

Ms. GORDON. So I think, because we are in this era of new oil 

and everything is changing, the risks are changing. We have the 

geopolitical risks, on the one hand, with many of the places abroad 

that have historically produced oil, and then we have operational 

and environmental risks here that we have to contend with. 

So we have new oils, new conditions, and then we have huge 

growth in China in terms of demand that is sporadic. It is not 

going to be, you know, red hot consistently. It is a market. And so 

we do tend to talk about oil at a moment in time, maybe because 

it is sold on every corner, that it is as if this is the condition that 

exists for all time. 

But the reality is it is very dynamic and we could easily return 

with risks, differential risks, different consumption patterns. Even 

in America, we are selling a lot more SUVs right now. They are 

up tremendously. I mean, we could—we are reversing our demand 

profile, as Adam said, but we are not necessarily bound to that. 

Mr. YARMUTH. So there is no guarantee, given the volatility of 

the market, that if we eliminate the prohibition, that we can have 

the kind of impact on prices that we would expect, that the prices 

will necessarily be lower. We can’t guarantee that. 

67 

Ms. GORDON. Yes. And in addition to what was said earlier 

where we will—because we have the huge—the largest refining capacity, we will maintain imports of oil even—you know, just because we want to put product on the market. That is what industry 

does here. It is one of the big parts of industry. 

Mr. EBINGER. I think, if I could just—— 

Mr. YARMUTH. Sure. 

Mr. EBINGER. If I could just add—answer your question, you 

know, most of the oil we consume in the United States is in the 

transportation sector. And it seems to me that, rather than maintain the ban on crude oil exports, we would be much wiser to have 

an accelerated program to use our vast natural gas reserves to a 

greater degree in transportation. 

There have been numerous studies—you know, it would take a 

long—it would be a long-term effort, but if we could replace the diesel fuel that we use in our 18-wheel trucks, some people say that 

would be another 1.8 million barrels a day of oil we didn’t use. 

If we can use natural gas in marine transportation on the Great 

Lakes and our major rivers, coastal trade, that is another major 

place we could save. And we have companies already experimenting with using LNG in railroad locomotives. 

So if we could reduce the use of oil in transport by relying on our 

vast natural gas, I think that would be a far more prudent policy 

than continuing the ban on crude oil exports. 

Mr. PUGLIARESI. If I could just add one thing, you know, if we 

go back and look at the history of EPCA and everything we did, 

if you want to take one lesson out of that, we need policies which 

are robust against uncertainty. 

And every time we try to guess or we think we know what the 

future looks like, nuclear power is going to be too cheap to meter 

or we are going to ban the use of natural gas and power plants, 

we really have a hard time getting this right. 

And we don’t really know what the future looks like, but what 

we do know is that we do much better when we have policies that 

allow a lot of—you know, a lot of the marketplace and individuals 

to adjust to changing circumstances. 

Because once we you put something in place here in Capitol Hill, 

it is really hard to fix it, you know. Those of us who go way back 

remember, you know, we had dozens of these small refiners. So 

people remember this? We had dozens of these small refineries 

which came of the arcane regulations of price controls. And when 

it came time to decontrol crude oil prices, it was really hard because we had a political establishment of small refiners all over the 

country. So I think we have to keep in mind as we go forward that 

what the real lessons of this renaissance is, it was an open system, 

right? This all occurred on private land. 

The heavy hand of the Government was really not trying to stop 

these guys. We didn’t have to rely on Federal land. And so as we 

go forward, we ought to really think hard about what kinds of 

strategies are likely to be more productive. 

Mr. YARMUTH. Thank you, Mr. Chairman. My time is up. I yield 

back. 

Mr. WHITFIELD. At this time, I recognize the gentleman from Illinois, Mr. Shimkus, for 5 minutes. 

68 

Ms. SHIMKUS. Thank you, Mr. Chairman. This is a tremendous 

panel and a great hearing, so thank you, Chairman, for that. 

I have tons and tons and tons of questions, so I want to try to 

put them in some sensible order. 

But, Ms. Gordon, I appreciate your testimony. EPCA, the original 

EPCA, I didn’t know there was reporting requirements more transparency. And following up on what Congressman Barton said, there 

is probably some truth to getting more information so that markets 

can operate more effectively and efficiently, so I appreciate those 

comments. There are different types of crude oil, that is going to 

be the major front to my question. 

But we also know refiners have made major investments based 

upon a world they perceived 6 years ago, which has significantly 

changed today—from heavy crude to light sweet and the refinery 

expansions. 

I think the other thing that has not been a part of this discussion 

or debate is transportation costs and long pipeline versus what 

could actually happen in the future with all these more localized 

resources available is that you could see closer interaction between 

these new finds and more local refineries in a more localized system. 

Mr. Pugliaresi, I appreciated this statement because of the need 

for production platform in a stable part of the world, I think is 

really not just for what it does on hedging the risk—the volatile 

risk of pricing, really kind of addressing my colleague from Kentucky’s question. But also internationally, and I focus on Eastern 

Europe a lot of times, and I understand energy extortion. And so 

importation of LNG, which we have passed through the House that 

we would like to see for other allies in Europe and Eastern Europe, 

I think would be true on crude oil exports. But you have to have 

a stable platform to be able to do that; hence the next kind of position. 

Because even in the map, the figure that you have in your testimony, figure 3, you have these major basins, but there are probably 

more are going to develop, like the southern Illinois basin, which 

now we have gone through the legislative process. But you have 

the online basin, we still have more Deepwater applications. We 

have got Anwar debate that will always be there. We have the National Petroleum Reserve. We have the Atlantic Coast exploration. 

We have Keystone XL debate. 

What I hear I think is that—because I am afraid we have this 

huge supply, but we can’t rely on Government to set these parameters. We have got to let the markets do it. The markets will then 

send a signal of which of these oil basins are recoverable based 

upon the pricing of a barrel of crude oil. 

Some of these may not be able to be now exploited because the 

cost of recovery is high. But then in the case where there is a new 

change in world dynamics, then that cost might be available for 

continued exploration. Do I make sense in any of that analysis? 

Mr. PUGLIARESI. Let me say, right now, there is a race going on 

between the lower valuations and the advances in well productivity 

and technology. As I said, we are seeing some things, they are out 

there a few years. Some things are very near in which—if you look 

at a traditional hydraulic fracturing job, across the U.S., 40 percent 

69 

of the frack jobs are very uneconomic in some ways. Or they are 

40 percent of the preparation on a horizontal pipe are not working. 

But there are technologies developing now that are going to drastically improve that. 

So you can have a high-cost basis, which doesn’t look like it is 

doing too well right away, but in a few years, things could change. 

Once again, we want strategies which are robust under uncertainty. If we try to prescribe the future, we are going to be wrong. 

Ms. SHIMKUS. Dr. Ebinger, in your testimony, you did state that 

increasing oil exports will help lower the prices at the pump, that 

was part of your written testimony. 

Mr. EBINGER. Lower gasoline prices, yes, sir. 

Ms. SHIMKUS. And then the last thing I want to ask, because it 

has been raised—we are now having people think we might do this. 

We are starting to get talked to by a lot of people. Is there a difference, because really, except Ms. Gordon may—start separating 

heavy, sour and light sweet, is there a difference, is there a credible argument in separating the crude oil price and easing the ban 

on one, but not easing the ban on the other? That will be my last 

question if some people want to weigh in on it. 

Ms. GORDON. I just will add that I think the time is coming that 

we are going to have baskets of crude that are split much more on 

quality than on location. I think that these oils are quite different 

from each other, and they get very long-term investments that last 

generations. So the market needs this information. So whether regulations follow or not, I think that the idea of separating oils into 

these baskets, which is somewhat done but not largely in the market right now, is probably a wave of the future. 

Ms. SHIMKUS. The rest of you are chicken and not going to answer that question? 

I yield back. 

Mr. WHITFIELD. This time I recognize the gentlelady from California, Ms. Capps, for 5 minutes. 

Mrs. CAPPS. Thank you, Mr. Chairman. 

I want to thank each of our witnesses for your testimony today 

at this hearing. 

I also want to take a moment since it is I believe our last hearing 

in this session of Congress to honor and acknowledge—as I walked 

in the room, I realized I am walking into the John Dingell room. 

The incredible service that—it is the John Dingell room, our colleague, former chairman and under whose leadership I was first 

asked to be on the committee. And also my colleague from California, ranking member and my neighbor, Mr. Henry Waxman, for 

their incredible service to this committee and to our Nation. 

I know he stepped out, but I want to also bid farewell to our 

friend John Barrow from the Peach State, who I believe has added 

much value to this committee, as well. These are people who will 

be missed. 

The oil export market is complex. I picked that up from the hearing today. We need detailed, accurate information, I believe, to conduct a proper assessment of increasing exports. 

Yet, Ms. Gordon, in your testimony, you say that accessing this 

information is difficult. In fact, you said we actually have more 

70 

data, which I find quite stunning, about OPEC crude oils than 

about some new American oils, crude oils. 

My question for you to elaborate a bit is on that. Why is this information so difficult to access? 

Ms. GORDON. There are so many reasons why the information is 

not there. The first reason is that the light tight oils are the newest 

kid on the block so to speak. They just haven’t been around as 

long. In the 20 test oils that we have modeled in the oil-climate 

index, we have Venezuelan oils. And you think about getting information from Venezuela. There is UAE. There are oils from all over 

the world, Indonesia, but we don’t have any oils that are from 

North Dakota or Texas, these light tight oils. 

There are—one of the big problems is that in order to get information on oil, you do an assay, which is a chemical footprint of the 

oil. But everyone does assays differently, so when assays are reported, you can’t compare oils to one another. So having more consistent reporting on information is one big problem. 

Another one, having met with DOE, is that apparently—and I 

think Mr. Sieminski could talk more about this—apparently, the 

Energy Department can’t really collect data on oil freely. It turns 

out OMB—and I was kind of flabbergasted when I learned this— 

but OMB says this is duplication of effort. Industry submits data 

on oil. DOE doesn’t set reporting requirements for oil. 

Although, when you read EPCA, there is room for this to happen. 

It just hasn’t really evolved that way. So DOE is actually only getting the information that industry wants to report out. These are 

new oils; there is less information reported out. 

The third one I will mention, one of our partners tried to purchase data. There is data that is owned by these big oil 

consultancies, and after negotiating for a matter about a year and 

hundreds of thousands of dollars, they were told the data wasn’t 

for sale because it is competitive. They don’t want the academic 

sector to compete with the consulting sector. So there a lot of concerns when it comes to oil data, especially as now more oils are out 

there. 

Mrs. CAPPS. I want to use that last sentence as a segue to another kind of topic that might be appropriate now. Any discussion 

of oil exports must also be considered in the context of our overall 

energy policy and the realities of climate change. And you also 

touched on that. 

You have done an extensive analysis on the climate impacts of 

our Nation’s oil policies. In your testimony, you discussed preliminary research on the climate impacts of various types of American 

crude oils that could be exported if the current ban is lifted. 

Now my question, given the transparency challenges that you 

just described, have you been able to complete this climate assessment with the data available to you? 

Ms. GORDON. No, none of the 28 oils that we have been able to 

model are—we have U.S. Oils that have been around like Gulf of 

Mexico, Mars, but we don’t have Arlex and North Slope, but we 

don’t have any of the new light tight oils so far in the 28 test oils 

because data is just not available. 

Mrs. CAPPS. I am prepared to yield back, but Mr. Chairman, this 

lack of transparency I believe is very concerning not just for our 

71 

assessment of oil export policy but for conducting proper oversight 

of the industry in general. If the industry is asking us to lift the 

export ban, I believe they need to provide the information that is 

so clearly needed to properly assess the very policy that they asking us to expand upon. I yield back. 

Mr. WHITFIELD. The gentlelady yields back. 

At this time, I recognize the gentleman from Pennsylvania, Mr. 

Pitts for 5 minutes. 

Mr. PITTS. Thank you, Mr. Chairman. 

Thank you for your testimony. I, too, remember the long lines in 

the 70s. What wasn’t said is that after waiting for 45 minutes or 

an hour with your car idling, and the lines backed up on the highway, and some people just topping off, and some people about to 

go empty, there were a lot of short tempers. And it was a very bad 

situation, wasting a lot of oil and gasoline. 

Were any studies ever made on how much waste there was with 

those long lines back in the ’70s? Mr. Sieminski. 

Mr. SIEMINSKI. I don’t think that EIA did, but I think you are 

absolutely right, Congressman Pitts, that the whole idea behind 

the program I think made some sense at the time, but the implementation of it left a lot to be desired. A lot of the problems had 

to do with the availability of gasoline in different areas. It was 

based on the year-ago use. People in the prior year were all out 

having vacations outside of the cities, and that is where all the gasoline went. But during the crisis, they were all in lines in the cities. And so they couldn’t get the gasoline to go out on their family 

holiday. It was a bit of a mess. 

Mr. PUGLIARESI. So, actually, I worked on this program a bit 

when I was with the Department of Energy. You cannot imagine 

the small changes, you know, people just think a refinery takes 

crude oil and processes it into gasoline, but they are blending dozens of components. And we were trying to control the prices of all 

of these. And every day, there was enormous misallocation shortages, the wrong kind of mixes, because the market was completely 

surpassed by the Government price control system. I mean, I don’t 

think you can find anybody who has looked at this program that 

wants to defend it. It was an unmitigated disaster. It substantially 

delayed our capacity to even adjust to the crisis. 

Mr. PITTS. In addition, after waiting for 45 minutes to an hour, 

the station, many of them would run out of gas, you would have 

to go home and come back on another day. 

The average family as we heard can expect to save several hundred dollars a year if prices stay where they are. Administrator 

Sieminski, how can we maximize these benefits and sustain them 

over the long run? 

Mr. SIEMINSKI. The benefit to household income is coming from 

lower oil prices, most of that coming in gasoline, the number of 

about $800 per household is right for a $30 decline that is from average prices last year that would be sustained for about a year. 

Those numbers could even be a little bit higher than that, depending upon where oil prices settle out. 

That is going to have a pretty positive affect on the ability of 

households to spend. And I think we will begin to see the positive 

impact of that on the economy. EIA macroeconomists took a look 

72 

at this. If we had this $30 decline sustained for a year, it could add 

as much as 1 percent to U.S. GDP. 

Mr. PITTS. If the ban were lifted, what effect would it have on 

gasoline prices? And how would it impact our refinery sector? Do 

you want to continue? 

Mr. SIEMINSKI. Well, gasoline prices, again, if we stay at these 

levels, gasoline prices could be down almost 77 cents a gallon. That 

is, again, a huge plus with gasoline prices averaging that much 

lower than the prior year. Obviously, there will be some losers in 

the production. Producers are going to have lower income. This 

could have big effects on countries like Venezuela and others. It depends on oil revenues. That could lead to unrest there. This is why 

I think the idea that policies, that outcomes, and forecasts are uncertain is really huge. If you lost that oil production from Venezuela because of social unrest there, you could see prices come 

back up again. 

In general, when I think, Mr. Yarmuth, about policies, EIA is not 

a policy organization, but I think I could describe the three components of energy policy. It is, What does it mean for the economy? 

What does it mean for the environment? And what does it mean 

for national security? And you were asking about national security 

issues. I would imagine that a key thing in thinking about this is 

how to weigh those impacts from a policy standpoint. I think the 

Strategic Petroleum Reserve is probably our key tool in security. 

Mr. PITTS. My time is expired. Thank you. 

Mr. WHITFIELD. At this time, I recognize the gentleman from 

Georgia, Mr. Barrow, for 5 minutes. 

Mr. BARROW. No questions, thank you. 

I would like to yield time to Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

I hope I get my own 5 minutes. I thank my colleague. 

I represent Houston, Texas, and we have five refineries in East 

Harris County, but also, I have all my service companies, obviously, Halliburton, you name it, Baker Hughes and groups like 

that. 

I want to keep them working in the oil patch, but I also know 

that this is probably the best time in my history that we have seen 

the refinery margins where we are at. That is why I wanted to ask 

Mr. Sieminski—or Administrator—typically, the integrated oil companies that have refiners and production, they have refining, but 

that is not their profit center. Most of the profit center is the production side. Although we do have three of those refineries are also 

independent refiners that are not integrated or majors. 

Have you seen—have you all done any research on the refining 

capacity, because I know the shutdown of refineries, smaller refineries around the country, there was some concern over the years 

that even though—and we weren’t producing as much crude as we 

needed right now, but also we were losing refining capacity. Have 

you all looked at those numbers? 

Mr. SIEMINSKI. We have a study underway on the ability of U.S. 

refineries to absorb this increase in the lighter oils that are being 

produced from the shale formations. And we will have that out I 

think some time in the early part of next year. I think the general 

feeling is and if you come back to the complexity to this, there 

73 

are—removing the export ban does have impacts on different sectors in the economy, and the independent refiners are very concerned about how they would come out in that analysis. 

Mr. GREEN. And what happened in the 1990s is because we 

weren’t producing lighter sweet in the United States, most of our 

refiners who were successful converted, and it cost I know at one 

refinery about $2.5 billion to convert to do the heavier crude. 

Have you all put any cost estimates on—— 

Mr. SIEMINSKI. Congressman, you are right in there, we should 

come up and brief you when we have this study done. We are going 

to have some estimates in there of what the costs are associated 

with adding the equipment that is needed to take care of this increase in lighter crudes and how fast those light crudes will be 

growing. 

What we do know is that over the past—if you look back over 

the last decade, billions of dollars were invested in upgrading refineries in Texas, Louisiana, and elsewhere on the Gulf Coast to process heavy crude oil, and now we have a surplus of light crudes and 

so it has created problems. 

Mr. GREEN. I think the concern—that surplus of light crude because they are typically the shale plays in those wells are very 

short-lived; although they are much cheaper to drill than the earlier ones. There are some issues with are we going have to reinvest 

for those refineries another $2.5 billion to handle heavier to lighter 

crude. 

Mr. SIEMINSKI. There are upgrading and new construction 

projects underway right now to allow the refiners to handle that, 

and a lot of those are taking place in your district. 

Mr. GREEN. Has EIA looked at the issues, because in the past, 

we typically used whatever we refined in our country. But now we 

are producing so much more that it is actually we are having those 

downstream jobs that are exports. Back in Houston, we are exporting just tons in the last few years of low sulfur diesel. Because of 

the heavier crude, we get more diesel. But the low sulfur diesel actually is improving the environment in the countries we are sending it to, in Latin America particularly where our customers are 

and, of course, Europe, but Latin America predominantly. 

Have you all looked at some of those issues. And I am going to 

ask if that has been looked at by our environmental community? 

Has EIA done that? 

Mr. SIEMINSKI. That is going to be part of our study. 

Mr. GREEN. OK, I look forward to the study. 

Ms. Gordon, has there been any qualification of that, even 

though we are doing heavier crude and are producing a lot more 

diesel that we don’t use in our country, but it is also low sulfur because that helped in the countries that are buying that from us 

now, compared to the diesel that may be coming from other parts 

of the world? 

Ms. GORDON. Yes, certainly taking the sulfur out will be fantastic 

for health and for the environment. But a bigger question with the 

heavier oils is petroleum coke and what happens with the very bottom of the barrels. So when you put coking capacity into these refineries, you basically remove the middle of the barrel and you end 

up with a lot more gasoline and diesel, which is good for profit, and 

74 

then a lot more of a solid substance, called petroleum coke. And we 

are also exporting that. 

I think we have increased out of Texas, we have increased—the 

U.S. has increased its petroleum coke exports to China like 

seventyfold in the last several years. It is a coal substitute, and it 

is worse than coal in terms of emissions. So it kind of cuts both 

ways. 

Mr. GREEN. Mr. Chairman, I know I am over my time. But I 

would like to talk about petroleum coke when I get to my time. 

Mr. WHITFIELD. This time right now the gentleman from Ohio, 

Mr. Latta, for 5 minutes. 

Mr. LATTA. Thank you, Mr. Chairman. 

Again, as has already been stated, thanks to our panelists for 

being here today. It has been really informational. I really appreciate your time. 

If I could just kind of hit a few points. As we have been sitting 

here, I checked when we started committee that West Texas was 

selling at $60.70 when we started. It is down to $60.51. And Brent 

was at $64.23, and it dropped to $64 in the last few minutes. 

I think the discussion we are having here is very informational, 

because also I think it was in the Wall Street Journal this morning, it was the headline in one of the sections of the paper about 

the decreasing costs of oil from West Texas and what that is doing 

here in this country to a lot of our producers, especially out west. 

Of course, in Ohio and also in Pennsylvania with our Utica 

Marcellus Shale that we are developing in our States, especially for 

me in Ohio, it is really interesting and also your concern because 

if the price drops, you want to make sure that we can keep that 

production up and also keep people out there producing. 

Administrator, if I could just go to your testimony. I really found 

it interesting, because, on page 5, you state that the U.S. crude imports declined by 2.4 million barrels per day, or 25 percent, the 

lowest since 1995. And the percentage of U.S. crude demand supplied by imports has fallen by 67 to 47 percent, the lowest level 

since 1992. 

In the testimony, you all have been talking about today, especially about the oil coming in and the refining, how much when 

that oil comes in that we have imported goes back out as an export, 

just as a curiosity—or a product? Administrator, would you like to 

take that? And then anybody else like to answer the question? 

Mr. SIEMINSKI. The U.S. has net product exports of about 2 million barrels a day. So the gross amount of imports and exports are 

different than that. We are exporting it. We are now kind of getting 

up to close to 4 million barrels a day of exports, but we are also 

importing, especially gasoline into the east and west coast. So 

when you net it out, it ends up being about 2 million barrels a day. 

Back to Congressman Green’s comments, a lot of that exported 

product is coming from the Gulf Coast region of the U.S. It is going 

to countries in Latin America and Europe. The gasoline—one of the 

better exports that we have is gasoline and the reason for that is 

we just don’t need it here in the U.S., and it is needed in places 

in Latin America. 

Mr. LATTA. Thank you. 

75 

And if I could turn to Mr. Pugliaresi—I hope I pronounced your 

name properly—as we look across what has happened and we have 

seen the increase here, are there any regulatory or market barriers 

preventing our refiners out there right now from doing anything 

else to adapt to these new surges that we are having? 

Mr. PUGLIARESI. Well, I do think the refining industry is a lot of 

our downstream processing sectors do face a pretty formidable regulatory environment. They also face fuel constraints in like the renewable fuel standard. I think—it is not that ethanol, for example, 

is a bad thing. We think ethanol is very useful to the American 

transportation field sector. It is the mandates that give you all 

these problems, because as demand shifts radically or the supply 

side shifts radically, the refiners are unable to adjust in a cost-effective way. 

So I think as we go forward with this, and look at crude exports, 

we don’t want to unnecessarily harm these high-value-added downstream processing centers. They add a lot to the economy as well. 

So we are not in favor of protection, but we are in favor taking a 

hard look at the trade adjustments you need to do when you move 

into an export mode. 

Mr. LATTA. Thank you very much. 

Again, I thank our panelists. 

And, Mr. Chairman, I yield back. 

Mr. WHITFIELD. At this time I recognize the gentleman from 

California, Mr. McNerney, for 5 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Suppose that the U.S. becomes a reliable and consistent exporter 

of natural gas and crude oil. How much impact will our natural gas 

exports have on the geopolitical issues relative to how much impact 

our diplomatic and military policies have on those geopolitical 

issues? Does anyone care to take that? 

Ms. GORDON. I could just say that because these oils within relative bounds kind of trade as like types of oil, as I have been talking about, you do have to look at the geopolitics and the kinds of 

oil that we would be exporting. 

So the light tight oil, as I mentioned earlier, has backed Nigerian 

imports out of the U.S. As we produce more of that oil, we are importing now no oil from Nigeria. We are importing oil, but it is just 

not from Nigeria. Well, that has a geopolitical impact, say, on Nigeria. 

I think even though oil is not being used at all as a weapon, it 

ends up being something that can counteract the peacekeeping and 

the other efforts that we have in these very fragile nations around 

the world. Venezuela was mentioned. 

Mr. MCNERNEY. I am thinking in particular of Russia and Mr. 

Putin. Will our exports have more impact on his behavior than our 

military or diplomatic activities? 

Ms. GORDON. It is a really good question, but I do think that 

Russia is reeling from the price of oil. It is not our exports that are 

really changing what is going on in Russia right now. It is $60 a 

barrel oil that is changing what is going on in Russia now, which 

is a much bigger demand question. That is not about our exports. 

Mr. EBINGER. If I could weigh in on that. The problem we have 

is twofold. We have had a lot of very, you know, I think impasVerDate Mar 15 2010 14:09 May 14, 2015 Jkt 037690 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 F:\113-187 EPC ACT 1975\113-187 EPC ACT 1975 WORKING WAYNE
76 

sioned proposals to do something to help Ukraine with the Russian 

crisis and other geopolitical events. But the reality is, of course, 

that our oil and gas are owned by private companies, and they are 

likely to ship the oil or gas—oil if we allowed it—to where the market gives them the greatest profit. 

Right now, although it is changing before us as I speak, it has 

always been assumed that the market for LNG primarily would be 

in the Far East, because the premiums there have been much higher than those in Europe. Although, now we have LNG prices crashing in Asia down to very low levels where it is even questionable 

whether we can deliver LNG into some of those markets competitively. By the time we actually have LNG people ready to go, outside contracts have already been signed. 

Geopolitically, I think the issue of exports is extremely important. Our allies in Korea and Japan and Taiwan are very desirous 

to have energy from the United States because they see an increasing bellicose China, threatening sea lanes on which all of their energy imports come from, not only oil and gas but also coal. So they 

are delighted. And I think it does improve our diplomatic status to 

the extent that we send energy there, but again, these are going 

to be commercial choices made by the companies that own that oil 

and gas. 

Mr. MCNERNEY. It is clearly a complicated question. 

Mr. EBINGER. It is very complicated. 

Mr. MCNERNEY. Well, whoever can answer this, how much do 

you see oil exports increase—how do you see oil exports increasing 

over time if we were to repeal the Energy Policy and Conservation 

Act? Do we see a large bump, or do we see a slow increase? How 

do we see that playing out? 

Mr. SIEMINSKI. Well, we do tend to look at those in our annual 

energy outlooks, which we do every year. We will have that one out 

we hope some time in late February or March. The answer to that 

I think probably lies more towards the lower end rather than the 

upper end. The reason I say that is that the kind of oil that we 

have in surplus here is light sweet crude. The market for that is 

not unlimited, so the question is how much of that could be put out 

on to the global markets before you have saturated the global markets? Something on the order of a million or a million and a half 

barrels a day might be the number that would be exported. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

I yield back. 

Mr. WHITFIELD. At this time, I recognize the gentleman from 

West Virginia, Mr. McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

And I thank you for the panel. This is very interesting at the end 

of session. This would have been more interesting perhaps a little 

earlier, because some of the subjects we have gotten into have been 

particularly beneficial. 

I have a series of questions. After waiting an hour and a half, 

my question was just asked by my predecessor, because I wanted 

to get at the geopolitical aspect of it. I think you have answered 

it in some respects. Perhaps we need to get into that a little bit 

deeper. One of the questions I would ask you is, who is asking for 

this ban to be lifted? 

77 

Mr. SIEMINSKI. Well, the first groups are producers that have 

wanted to see the ban removed or those who are producing the 

lightest of the crude oil, because that is being discounted the most, 

and the attractiveness of exporting that into the global markets is 

high. And so we have seen that coming from some of the independent producers in Texas. 

Mr. MCKINLEY. I am also curious before I get to my last—I have 

got three or four questions here, but one would be is back towards 

the tail end of the Bush administration, gas was selling at $1.85 

a gallon. Then we went up to $3.50, $3.85, almost $4 for regular. 

Is there an impact here? What caused that? Why did it go from— 

doubled in price? 

Mr. SIEMINSKI. Say that again, Congressman. 

Mr. MCKINLEY. When gasoline prices were $1.85 under the Bush 

administration, what happened to take them up to double? 

Mr. SIEMINSKI. The biggest thing—the overwhelmingly most important factor in gasoline pricing is what the price of crude oil is 

in the global markets. The next biggest thing after that is probably 

the different levels of taxation in different States. 

Mr. MCKINLEY. That hasn’t changed much; taxes haven’t 

changed much. 

Mr. SIEMINSKI. The crude oil prices go up and down. 

Mr. MCKINLEY. The crude is down now—what—$63 or something 

like this, OPEC? 

Mr. SIEMINSKI. Yes. 

Mr. MCKINLEY. Where was it? 

Mr. SIEMINSKI. It had been on average up over $100 a barrel. 

Mr. MCKINLEY. I understand, but I haven’t seen the price get back to $1.85 yet. What is it going to take to get to $1.85? 

Mr. SIEMINSKI. Well, it might have been $1.85 when prices were 

a lot lower, and when we had $40 oil—— 

Mr. MCKINLEY. That is what your answer is, we need crude to 

get to about $40. 

Mr. EBINGER. There is one other issue that I think is controversial, but I think if you look at it, you will find that the mandates 

for biofuels being mixed with gasoline, we have seen ethanol prices 

go up very high in some of those markets. That has been a major 

contributor to the price of gasoline. 

Mr. MCKINLEY. My last question, I have less than 2 minutes. I 

have a small boutique refinery in West Virginia, Ergon. It fills a 

niche in the marketplace. What could be the impact if the export 

ban were lifted, what would be the impact on Ergon? 22,000 barrels a day. 

Mr. SIEMINSKI. In your area, probably very little. 

Mr. MCKINLEY. Because? 

Mr. SIEMINSKI. Those refiners out in the mid-continent where 

they have access to discounted WTI, benchmark crude, would see 

their costs go up. 

Mr. MCKINLEY. I think they are starting to tap into the Utica 

Shale gas now—well, shale gas and then the Utica is what is providing the petroleum, the crude that they are going to be able to 

tap into. So you are thinking Ergon would be not affected? 

Mr. SIEMINSKI. In your State, sir. 

Mr. MCKINLEY. Well, they ship all over the country. 

78 

Mr. SIEMINSKI. Right, but the question is what would the cost of 

feed stocks into the refinery in West Virginia be, and I would suspect that it won’t change very much. 

Mr. MCKINLEY. Thank you very much. 

I yield back the balance of my time. 

Mr. WHITFIELD. At this time, I recognize the gentleman from 

Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

Let me get back to some of the issues. 

Well, first, Mr. Chairman, I would ask unanimous consent to 

place a statement into the record. 

Mr. WHITFIELD. Without objection. 

[The information follows:] 

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94435.047
80 


94435.048
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94435.049
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Mr. GREEN. And I think it is no doubt that, in fact, the CBO report that was just released talked about a policy shift in exporting 

crude would pinch refiners’ profit margins but also harm foreign oil 

producers. 

But let me go down the list about we are exporting oil now, but 

it fits the definition of a condensate, that there actually is a mechanism where you get that lighter sweet out of the ground, you run 

it through what I would call a very limited refining process, but it 

fits the definition that we can export right now. How does EIA classify lease condensate, is that exporting? 

Mr. SIEMINSKI. Mr. Green, there are at least four big ways of trying to define condensate. The way EIA has historically done this 

is literally based on the location. If it is produced on an oil lease 

and is mixed back into the crude oil stream, we counted it as lease 

condensate and measured it in barrels. 

Mr. GREEN. Is that the same definition as the Department of 

Commerce for export? 

Mr. SIEMINSKI. The Department of Commerce is looking at it 

from a different standpoint. And reportedly, the Commerce Department is now through letters to the individuals who asked for a ruling on it, allowing processed condensate. So. if you take this very 

light crude oil, process it through a distillation tower, it would 

qualify as a product, and products under U.S. law right now can 

be exported. 

Mr. GREEN. OK. Would it help to have a uniform definition for 

Government agencies, particularly if lawmakers wanted to craft 

better regulation or legislation, to have one definition for condensate? 

Mr. SIEMINSKI. At EIA, we have been trying to understand the 

different definitions. And I suspect that a one-size-fits-all might not 

actually work perfectly. At EIA, for example, we would want to 

make sure that we are able to count this process condensate so 

that we don’t double count how much of the material is in the system. And that is a complication of the existing rules. 

Mr. GREEN. Does EIA track exports of condensate production 

now—or production and exports, do you track any of that production? 

Mr. SIEMINSKI. The export data is provided to EIA by the Customs people, so we do not have that. We do our own survey of imports. Interestingly, you think about all of the history that has 

been brought up here today. We wanted to do our own survey of 

imports, because that was what was really big and that was what 

was supposed to grow, and we don’t have a survey of exports. 

Mr. GREEN. How readily available is that information? 

Mr. SIEMINSKI. That information actually is available from the 

Customs people, and we have been working with them on speeding 

up EIA’s ability to get that data. 

Mr. GREEN. Dr. Ebinger, I know your testimony in your briefing 

book ‘‘Big Bets and Black Swans’’ in early 2014, you authored a 

section to lift the ban on U.S. oil exports. You state that unrestricted exports, in combination with increased investment in infrastructure, are expected to generate income, jobs, and taxes through 

the production change. 

83 

Do you think domestic transportation of oil is a major factor facing our energy sector? A good example, limitations of pipelines. 

Mr. EBINGER. Yes, sir, I do. I think the fact that we have not 

built some major pipelines, Keystone being one of them, has certainly led to a more dangerous transportation system, by rail particularly, but also by truck and barge. A more expensive transportation system than would be needed if we built some pipelines. 

So I think if as a Nation we are going to accept unconventional 

oil and gas drilling, which I certainly do, then we need to build the 

intended infrastructure as cost-effectively as possible to get that to 

market. 

Mr. GREEN. Mr. Chairman, thank you. 

Mr. WHITFIELD. At this time, I recognize the gentleman from 

Kansas, Mr. Pompeo, for 5 minutes. 

Mr. POMPEO. I thank you, Mr. Chairman. 

I did a little work in the run up to this hearing to see which of 

you had predicted $63 oil on December 11th, 2014. None of you did. 

You should know you should count yourself among the many. I 

couldn’t find anyone who did. I saw a few traders who make a 

claim that they were in the market and the right place; they were 

on the short side and got to the right spot. And I mention that only 

because as I hear you talking about more data and more information in the hands of Government and all that, I think if we unleash 

markets, glorious things will happen. 

So I have heard multiple things today. I have heard folks talk 

about an export ban lifting, which seems right to me as a good direction. I have heard folks talk about the Jones Act. We have imposed enormous costs on our refiners with their renewable fuel 

standards, and we have seen a Government agency totally incapable of dealing with the transition of what happened in the marketplace there. Can’t get a set of rules out to deal and tell folks what 

to build, I mean, based on some prediction that Congress set, some 

levels Congress set. As we all as policymakers think about how we 

are going to handle this, we should not be at all certain that $63 

is here for tomorrow, let alone for 2 months or 3 months. No one 

mentioned the greenhouse gas rules that are about to hit. America—no one mentioned CAFE standards that have had such a dramatic impact on our transportation and the uses for them. 

You mentioned natural gas transportation, Mr. Ebinger, you 

said, Gosh, if we could get there—I don’t know what is standing 

between us and then. I couldn’t tell you—natural gas prices are at 

prices that you think, gosh, folks would go and want to invest. But 

the truth is you have markets operating in a state of uncertainty 

trying to get to the right outcome. We should not have a hubris to 

think that we have any possibility of getting in front of that place. 

As you think about this export ban, I think it is incredibly important that we don’t lift an export ban in base because, gosh, today 

we have certain oil prices that are sitting in the low 60s range. I 

think we made a mistake putting it in place in the 1970s. I think 

that is the kind of thing that policymakers should all consider. 

I want to ask you, Mr. Sieminski, you did a report a month ago 

on what impacts gasoline prices. The Saudis changed the world 

here in the last quarter. Does that change how you think about the 

study that you put out in any material way? 

84 

Mr. SIEMINSKI. No, I believe that that study would probably be 

still valid in terms of trying to understand what it is that relates 

the price of gasoline in the U.S. to the global markets for either 

crude oil or gasoline. Mr. Pompeo, I think that your comment 

about, did EIA predict $63 oil, no we didn’t. I would like to say in 

my defense that we—— 

Mr. POMPEO. No defense required. 

Mr. SIEMINSKI [continuing]. That we talk—every month, we publish something that is actually worth thinking about for everybody 

here. We use the options market for crude oil to work backwards 

to what the confidence interval is on forecasts for crude oil prices, 

and 6 months ago, that confidence interval got down to the low 60s. 

So we have hit the bottom of the 95 percent confidence range. 

And for the committee here today, I just looked at some numbers. 

For West Texas Intermediate, the 95 percent confidence range— 

you know, will it fall in there?—for April of the coming year is $50 

to the low side and about $90 to the high side. And that is telling 

you that the people who are in those markets, they are not really 

sure, either. 

Mr. POMPEO. Yes, yes. Folks with real capital at risk. I will ask 

anyone who may want to answer this, I have read lots of articles 

just recently—they are pop news more than anything else—about 

whether OPEC still exists. It is still the same force that when I 

was a little bit younger could impact markets in material ways. We 

talked about how these markets have changed. Does anybody 

care—today want to say today that OPEC is dead? 

Mr. PUGLIARESI. I think market power by some big producers 

waxes and wanes, but if you have enough production outside of 

these other low-cost, high-volume producers, their market power 

gets reduced, and that is what you are seeing now. The distribution 

of crude oil outside of these few players, which North America is 

a big force today, is undermining the capacity of other folks to constrain output and charge higher prices. That is just the reality of 

it. That is the one—that is a huge benefit of this North American 

platform, that is why we ought to pay attention to how it performs. 

Make sure we have a regulatory environment that doesn’t hurt it. 

Mr. POMPEO. Thank you. 

My time has expired. Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time, I recognize the gentleman New 

York, Mr. Engel, for 5 minutes. 

Mr. ENGEL. Thank you very much, Mr. Chairman. 

You know, last week, I moved my office. We hadn’t moved in 10 

years, and so we were throwing out all kinds of things. And there 

was this huge chart which said, ‘‘The World According to Oil.’’ And 

it either shrank or increased the map of different countries based 

on the powerhouse of oil. And it is interesting because that was 

probably about 15 to 20 years old. The United States was very, 

very tiny. Saudi Arabia and Venezuela were very, very big. I 

couldn’t help but thinking that, if we did that map today, how different it would be. And I think that is a good thing. 

Mr. McNerney asked about the geopolitical impact of it. And as 

the ranking member of the Foreign Affairs Committee, which I am, 

I care very much about the geopolitical aspects of it. 

85 

I like the idea of countering Mr. Putin. European countries are 

reluctant to stand up to him, because they need his oil. They could 

buy our oil. They might actually develop a backbone. So I have 

looked at this in a totally different approach than I looked at before. But everything, of course, is still a balancing act. I care about 

the environment. We want to make sure that we can continue to 

export and increase the export, but I think it is a balance. 

So I want to say, Dr. Ebinger, I read the findings in your report, 

which finds that lifting the ban on crude oil would boost U.S. economic growth and put downward pressure on world oil prices. 

Larry Summers also called for lifting the ban. 

Let me ask a few questions to anyone who cares to answer: Department of Commerce has granted licenses during the past year 

to a few oil companies to export a relatively small amount of an 

ultralight crude—as Mr. Green mentioned, it is condensate. I believe condensate comes from shale plays. So, please, correct me if 

I am wrong. And so, therefore, increased production of condensate 

would mean more fracking, would it not? 

Mr. EBINGER. Yes, sir, it would. 

Mr. ENGEL. It would. Among the companies exporting condensate 

are Pioneer Natural Resources and Enterprise Products Partners. 

Which shale plays are they getting their condensate from, do we 

know? 

Mr. SIEMINSKI. The Eagle Ford, Texas. 

Mr. ENGEL. OK. And where did it go? Are there existing refineries in friendly parts of the world that would take and refine this 

additional crude? 

Mr. PUGLIARESI. I can answer. I think most of the shipments 

went into the Far East, probably Korea, maybe the Singapore market. I don’t actually have the—the Department of Commerce has a 

much different policy towards handling data than EIA. This is considered proprietary information so I don’t think it is publicly available yet. 

Ms. GORDON. I would just add, it is petrochemical feedstock that 

condensates largely so it is going to—it is not going to refining. It 

is going to making petrochemicals so the Far East makes sense. 

Mr. ENGEL. Thank you. I am asking these questions because, obviously, in addition to economics, there are environmental conditions, and geopolitical factors that merit consideration and I really 

think the whole thing—I think there is a balance. But I do think 

that this is something that we should look at very seriously. It 

makes sense to me, again, because I think the United States obviously being a world power has to be concerned with the geopolitics 

of it. I know that when we are trying to get some of our allies in 

Europe, Germany and some of the other countries to stand up to 

Putin and his aggression to Ukraine, there was some reluctance 

there because they rely on Russia for their energy resources. I can’t 

help but thinking if they relied on us or if we were available, we 

could exert more pressure. And I think that would be an important 

policy goal of the United States. Again, I think it has to be balanced with environmental concerns and other concerns as well. 

Thank you all. Thank you, Mr. Chairman. 

Mr. WHITFIELD. The gentleman yields back. 

86 

At this time, I recognize the gentleman from Nebraska, Mr. 

Terry, for 5 minutes. 

Mr. TERRY. Thank you. So one of the reasons I ran for Congress 

16 years ago was the high level of reliance on foreign fuel to full 

our economy and wanted to change that. So I am pleased to see 

that we are down to 33 percent. We are only 33 percent of our fuel 

needs of oil is imported now. So, in a geopolitical sense, why do we 

still have 33 percent import of oil into our country? And I will start 

with Mr. Sieminski. 

Mr. SIEMINSKI. Mr. Terry, what we are talking about mostly here 

today is oil, but within a year and a half, the U.S. is likely to be 

a net exporter of natural gas. We are already a net exporter of coal. 

We don’t really import very much electricity. A little bit of that 

comes from Quebec, and Canada, and from Saskatchewan. So, on 

the oil side, we are a net exporter of oil products. The only thing 

that we are still importing is crude oil. Those numbers—— 

Mr. TERRY. Right. 

Mr. SIEMINSKI [continuing]. Will come down. But if you say, well, 

do you want that to go to zero, the answer would be, well, not necessarily because—— 

Mr. TERRY. Well, that’s the ultimate question, is can we and 

should we—— 

Mr. SIEMINSKI [continuing]. Those refineries import oil and sell 

product. 

Mr. TERRY. And particularly Venezuelan oil bothers me, but do 

we have a geopolitical responsibility to allow some importation of 

Venezuelan oil? 

Mr. SIEMINSKI. I will stay away from the policy decision of what 

we would want to do with Venezuela or not. But I would say that 

Venezuela is at the top of EIA’s list of what could go wrong in the 

global markets. It could push prices up. You have got Iranian sanctions issues. You have the ISIS problems in Iraq. Maybe OPEC will 

at some point decide to reduce production. You can have difficulties 

in Russia even. 

There are lots of things that could make prices go up. Prices 

could come down, too. What really triggered prices coming down I 

believe over the course of the last few months was the combination 

of the unexpected recovery of oil production in Libya, at the same 

time that the economy in China was slowing down and demand 

forecasts began to recede. 

And in that background of increasing U.S. oil production, the 

combination of all of those things, I think, was just was a tipping 

point and changed everybody’s mind about what the future looked 

like. 

Mr. TERRY. Mr. Pugliaresi. 

Mr. PUGLIARESI. I guess one of the things I would encourage the 

members to is to look at this through North American lens. When 

you put Canada in the mix—— 

Mr. TERRY. Absolutely. 

Mr. PUGLIARESI [continuing]. We really don’t like the self-sufficiency approach to thinking about energy security. We really say, 

look, we want this platform to be productive, U.S., Canada, large 

continental lands. 

87 

Mr. TERRY. And Mexico. Let’s think of it as North American 

independence. 

Mr. PUGLIARESI. There may be efficient solutions for the platform 

which allows both exports and imports, because refining configurations are all different kinds. We have a lot of very capital invested 

in processing heavy crude. And so that heavy crude ought to come 

from Canada and get processed where—that is where it is most 

valuable. 

Mr. TERRY. And that makes sense to me. So, in our refining capacity in the United States—I will follow up on your comment 

here, do—are we ready to be able to expand or do we need to expand refining capabilities in the United States if we are going to 

have a mix of more sweet and then the heavier crude from Canada? Who wants to go with that one? 

Mr. SIEMINSKI. Well, it is difficult to convince refiners to expand 

capacity when the demand here in the U.S. is going down. Typically refineries are built closer to where consumers are. But we 

have got a terrific advantage in both technology and low natural 

gas prices—natural gas is used as the refinery fuel—that make our 

refineries the best in the world. And taking advantage of those situations I think is what the refiners are doing exporting products 

into the global market. 

Mr. TERRY. Ms. Gordon. 

Ms. GORDON. Yes, I would just say that in terms of the—as I said 

earlier, the global production has become very—it is not site specific anymore. It is happening all over. But this is also going to 

happen in refining. The country that added more refining capacity 

to the world market than any other last year was Saudi Arabia. So 

we are seeing China adding refining capacity, Saudi Arabia adding 

refining capacity. And demand, as we have just said, is really in 

the developing world. So to move that demand closer, refine products closer to people that will consume—we are talking Latin 

America, the Middle East, Africa—that is where future demand 

growth is, throughout Asia. So the whole market is really shifting 

somewhat. I don’t think you can really draw a circle around North 

America very easily in this market. 

Mr. TERRY. Although I want to. 

Ms. GORDON. I know. 

Mr. TERRY. Thank you. 

Mr. WHITFIELD. At this time I recognize the gentleman from New 

York, Mr. Tonko, for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

In a number of the hearings I have attended, I have noticed that 

where the subject is an environmental public health or consumer 

regulatory issue, there are a number of questions about the estimates of the cost and benefits of the policy in question, and that 

is fine. 

Those questions explore the assumptions made in the analyses, 

the relative uncertainty or certainty of the estimates, and how sensitive the results are to changes in the assumptions, initial conditions, or data that go into the model. 

Frankly, this is a major focus of most of our conversations about 

the projections on climate change, with much emphasis on the uncertainties and what we don’t know and little emphasis on all the 

88 

things that we have learned and the generally robust conclusions 

of climate models. 

Economic forecasts don’t receive the same scrutiny and, frankly, 

they often miss very significant changes. We have spilled blood and 

treasure over this commodity. As we all know, it still plays a major 

role in fueling our economy. We need to understand fully the implications before we make this change. 

I note in Administrator Sieminski’s testimony, when he provides 

the results of the EIA’s latest short-term energy outlook, that he 

includes the disclaimer, ‘‘Of course, the recent dramatic declines in 

crude prices may affect our outlook in the coming months.’’ 

So I would like to better understand how robust these benefits— 

benefit estimates provided in the studies refer to are likely to be. 

Dr. Ebinger paints a very positive picture resulting from lifting 

the crude oil export ban, reporting a gain in GDP over the next 25 

years of $600 billion or—billion to 1.8 trillion. That range is dependent upon which EIA scenario is used. These are model results 

based on other model results, EIA’s model results. 

What are the assumptions, I would ask the panel, about the 

world price of oil in the underlying EIA scenarios? And how would 

changes in that world price impact those given estimates? 

Honorable Sieminski, if you could, please. 

Mr. SIEMINSKI. Congressman, we will be looking at this and will 

have a lot more to say, I think, when we publish the annual energy 

outlook early next year. I think what I could say is that lower oil 

prices, if they were to remain, will slow down this growth in U.S. 

oil production. I mean, that is supply-and-demand pricing. 

The other possible effect it could have is to make it less profitable for companies to export natural gas in the form of LNG from 

the United States, and the reason for that is exports of LNG from 

the U.S. generally are predicated on selling into a market where 

that gas in Europe or Asia is priced at an oil equivalent. And with 

lower oil prices, the spread or profitability of exporting U.S. LNG 

into the global markets would be reduced. And so that might 

change those dynamics a little bit. 

So there are going to be a lot of places, you know, in our forecast, 

I think, where building in a possibility that lower prices could stay 

for a while would have an impact, and we will have plenty to say 

about that in the coming months. 

Mr. TONKO. Thank you. 

Ms. Gordon, do you have anything to add to that? 

Mr. EBINGER. If I could add, sir, if we look at past situations 

where we have had precipitous price declines, I think you can look 

internationally and say that the price declines at some point become the engines of renewed growth because the Chinas and Indias 

and Brazils of the world, all of a sudden, if they start seeing $50 

oil, they start saying, ‘‘Let’s rejuvenate some of our economies and 

rev up projects that didn’t make sense at $100 oil.’’ 

And remember that—I think it was in 1998—that the price of oil 

fell, I think, from 117, 118, something like that, down to $38 in 7 

months, but it came rapidly back up. I believe, if I remember correctly, at least into the 70s and then worked its way up to where 

it was before the current price drop. 

89 

So, you know, low oil prices for those countries that are huge oil 

importers and fast-growing populations we have talked about in 

Asia—low oil prices are a boom, and, at some point, it will rejuvenate the Chinese and Indian economies and bring, hopefully, the 

rest of the world along with it as demand for good and services, 

once again, intensify. 

Mr. TONKO. Mr. Chair, I yield back. My time is up. 

Mr. WHITFIELD. The time is up. 

At this time recognize the gentleman from Virginia, Mr. Griffith, 

for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I appreciate that. Petroleum coke. I always love coming to these hearings and listening 

because I learn all kinds of things. 

Ms. Gordon, tell me about petroleum coke. And you said earlier 

in your testimony that it was worse than coal. I am assuming that 

means from a pollution standpoint. 

Can you explain that to me, please. 

Ms. GORDON. So petroleum coke is the bottom of the barrel. It 

is when you wring all of the liquids out of the heavy oil. It comes 

out of every refining process, but in very small amounts. 

But with heavy oils, you have a lot of these high-carbon bottomof-the-barrel. And so, when you put in coking capacity that actually 

cleaves these molecules, you get more liquids out, which is good, 

but then you get more solid out of your refinery. 

Petroleum coke is a solid fuel. If it is a very, very high-quality 

petroleum coke, which doesn’t come out of refineries, it goes into 

steel and glass and ceramic manufacture. 

If it is low-quality coke, high in sulfur, high in heavy metals— 

this is what comes out of the oil production process—that goes into 

power production and steam, and then you are basically burning 

coal. 

It has about 10 percent higher greenhouse gas emissions than 

coal and higher nickel, vanadium, sulfur, than some of the worst 

coals, and it runs a bit counter to coal. 

So when coal is priced high, as it had been recently and before 

we were exporting a lot of our coal, China was wanting the petroleum coke because it was an economic benefit for them to burn 

coke instead of coal. Now prices of coal are low. And so coke is a 

little bit out of favor. 

And, if you remember, there was a news release last year 

about—it was in Detroit. There was a pile of petroleum coke that 

got a lot of attention in the press. It is very—it is black. It is voluminous. They are spreading in Alberta. 

It has spread for miles because they haven’t—it is landlocked. 

They can’t really export it. So it ends up being a problem. They are 

going to want to send us the heavy oil so that we export the petroleum coke because we are closer to ports of call. 

Mr. GRIFFITH. OK. Now, let me go back on your testimony just 

a little bit in there. 

You said that it is now cheaper or more expensive than—— 

Ms. GORDON. Than coal. 

Mr. GRIFFITH [continuing]. The coal product. 

Ms. GORDON. Coal prices have come down. So petcoke is more— 

it is really priced to sell. It is very hard to get data on petcoke, acVerDate Mar 15 2010 14:09 May 14, 2015 Jkt 037690 PO 00000 Frm 00093 Fmt 6633 Sfmt 6633 F:\113-187 EPC ACT 1975\113-187 EPC ACT 1975 WORKING WAYNE
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tually. It is not traded. It is traded, you know, in the trade—with 

traders. It is very person to person, company to company. 

But because it is a byproduct of refining and no one really wants 

to make this petcoke, it builds up and you have to get rid of it. So, 

of course, you know, refiners want to get a lot of money for it. But, 

if they can’t, they still have to put it into the market. So the price 

is relatively volatile. 

Mr. GRIFFITH. OK. So from an environmental standpoint, we 

would be better off exporting low-sulfur coal from the United 

States, say, Central Appalachia, that I happen to represent and 

Mr. McKinley represents, than we would be flooding the market in 

China with this petcoke. Am I correct? 

Ms. GORDON. Petcoke’s worse. 

Mr. GRIFFITH. I appreciate that very much. 

Pipelines were brought up earlier, about whether or not we 

should be building them and the safety of bringing the oil. 

And I think I understood from the comments—just from the 

tenor of the comments that the consensus or the general understanding was that the oil is going to find a way to the United 

States coming out of Canada whether it is by pipeline or by truck 

or by train. Is that a fair assessment? 

And each one of you can answer that. 

Mr. PUGLIARESI. Yes. I think it will. The question is cost. Right. 

The reason the pipelines—I mean, there is a real value to rail. 

There is a lot of optionality where the markets are not settled. But, 

you know, when capital gets deployed, it is quite interesting. 

If you want to build a major transloading facility—rail 

transloading facility, you just get a local permit. You don’t have a 

NEPA review. If you want to build a pipeline, you are going to 

cross Federal land or you are going to do some action that is going 

to trigger a NEPA review. 

So we have a regulatory program that is somewhat unbalanced. 

You can put a rail facility and move things out pretty quickly. You 

want to build a pipeline, you have got a mountain of paperwork 

and intervenors before you. 

Mr. GRIFFITH. Yes. I appreciate that. 

I was—there was one of these questions that I don’t think has 

been asked in relationship to the international situation, and that 

deals with the U.S. recently won a trade case against China over 

their export ban on rare earth. 

How does that case then appear, at least from a public perception standpoint, when we are banning the export of our oil products? 

And does that weaken the President’s hand in these discussions 

with other countries about exporting rare earth and the U.S.’s position on oil? 

Anybody want to take that one? 

Mr. EBINGER. It has been raised by a number of people, at least 

in the think tank community, as an issue. And I know a number 

of international trade lawyers that think it is quite possible that 

someone might bring an action against the United States for the 

continued ban on crude oil exports on the same premise, that it is 

an unfair barrier to trade. 

Mr. GRIFFITH. All right. 

91 

Ms. GORDON. I would just add that, because China’s oil tends to 

be heavier, their refining capacity isn’t really well-suited to our 

light tight oil. And because we can export product—a lot of product 

and there is no ban on that, substantively—— 

Mr. GRIFFITH. You do not see China bringing an action, but in 

the think tank world, at least, there is some concern that somebody 

else might bring an action. 

Mr. EBINGER. It may not be China, but it may be someone else. 

Mr. GRIFFITH. May be someone else. I appreciate that. 

And my time is up. And I yield back, Mr. Chairman. 

Mr. WHITFIELD. Thank you, Mr. Griffith. 

That concludes the questions. 

And did you want to ask some additional questions, Mr. Green? 

Mr. GREEN. Mr. Chairman, I would just like to follow up with 

Ms. Gordon on the—— 

Mr. WHITFIELD. I will recognize you for 5 minutes. 

Mr. GREEN. Oh. Well, thank you. 

The Energy Policy and Conservation Act of 1975 you discussed, 

importantly, EPCA also addressed vehicle standards, energy efficiency, conservation, and created a Strategic Petroleum Reserve. 

If the next Congress addresses the export issue, should there be 

an effort to address the other sections like the Strategic Petroleum 

Reserve? 

Ms. GORDON. I think we are in a transition when it comes to oil, 

and that has been very obvious. And so oil policy, energy policy, is 

going to be an important new chapter that follows that. 

Mr. GREEN. OK. Well, most of that Strategic Petroleum Reserve 

actually is just east of where I live in southeast Texas, and it is 

important. 

But, again, if we are producing what we are—although we are 

still not producing enough oil for our own consumption mainly because of the types of oil we have. 

And, like I said earlier, the refineries that I have represented 

over the years have been retooled to do the heavier crude, and it 

would take, you know, billions of dollars to go back to do the lighter sweet. And just like—I mean, it is an investment decision if that 

happens. 

In your testimony, you discuss environmental risk and that, stated earlier, you have seen conflicting climate articles discussing U.S. 

refined products, exports. 

Is the U.S. refined product better or worse than the product currently consumed in other parts of the world? Do we produce gasoline or diesel better than India or China, for example? And I know 

we compete with Europe on the product, too. 

Ms. GORDON. Well, from a climate perspective, it is carbon. It 

would be similar. From an air quality perspective, it depends on 

the refining specifications. 

And they are, you know, lower in Europe than the specifications 

might be lower in Asia. But from a climate perspective, I don’t 

think there is a difference between our products and theirs. 

Mr. GREEN. And I know that, if there is a ton of carbon going 

up in China, that is the same as a ton of carbon going up in east 

Harris County. And that is why some of us would like to see some 

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kind of national agreement so we don’t compete with one hand behind our back. 

As the U.S. produces more light sweet crude and exports condensate, the ultralow-sulfur diesel. And I mentioned it earlier, but I 

just want—that is benefiting some of our trading partners in Latin 

America, particularly, and, I assume, Europe because we have lowsulfur diesel. And I know it went—the refining industry went 

through some problems through it. So they are actually doing very 

well in exporting it. 

Does that help the climate, at least the pollution issues in other 

countries? 

Ms. GORDON. Not climate, but air pollution. 

Mr. GREEN. Not climate, but air pollution. 

Ms. GORDON. Yes. Sulfates that are in the air. So it would be 

much more of a respiratory issue and not climate. 

Mr. GREEN. Well, that is probably more immediate than rise in 

the sea level and things like that. So—but it does have a benefit 

for those countries. 

Now, let me talk about petroleum coke for the last minute. 

The highest point in my district is either a landfill or the tons 

of petroleum coke, and it is shipped out. 

And in the 2005 energy bill where we set up loan guarantees 

through Department of Energy for a number of things, including 

wind and solar—and my colleague Joe Barton is not here—we put 

in there for research and what we could utilize petroleum coke for 

other than just shipping it to China and India to burn, which, 

again, puts carbon in the air, but also the local. 

Is—is there any support for trying to use something alternative? 

I got involved with coal ash because it was used for roadbeds. Is 

there anything else we could use for—petroleum coke for? Because 

it is—we can’t burn it here because it is so bad. 

Ms. GORDON. Exactly. 

You know, it is a matter of taking the bottom of the barrel where 

there is no economics left and putting more money into it. 

There are definitely things you could do with that petroleum 

coke, the fuel-grade petroleum coke. You could take heavy metals 

and the sulfur out and make it actually a beneficial industrial byproduct, but it is going to cost money to do that. 

Mr. GREEN. Yes. So it is not economical. 

Ms. GORDON. It is not economical. 

Mr. GREEN. It is much cheaper to put it on—— 

Ms. GORDON. Not if no one will take it. 

Mr. GREEN [continuing]. A ship and send it to someone else to 

burn it? 

Ms. GORDON. Uh-huh. 

Mr. GREEN. OK. 

Mr. PUGLIARESI. You know, Mr. Green, I am only going to say 

one thing about the SPR, the Strategic Petroleum Reserve. 

I think it is important to remember this is a strategic asset. We 

are still connected to the world oil market. We might have to 

change the way we distribute the SPR because of the huge flow of 

crude oil into the Gulf Coast, but I don’t think—I think we 

should—you know, and I am sure we are going to study this carefully. 

93 

But, you know, things can change in the world. We are not going 

to get rid of the 82nd Airborne and we are not—and I think we 

ought to look at the SPR that way. The world could change and we 

may need that. Even if we are relatively independent, a price spike 

in the world oil market for some catastrophe somewhere could do 

a lot of damage to the American economy. We will want that asset 

at that time. 

Mr. GREEN. And that is correct. 

And where I come from, the goal of that was to buy that oil and 

put it in that when it was low. And then when we release it because—when oil goes up because of embargo or whatever else it 

does. 

But Mr. Chairman, you have been more than kind today. Thank 

you. 

Mr. WHITFIELD. I also want to mention Bill Flores is here, a 

member from Texas who was recently elected chairman of the Republican Study Group. He is going to be a member of the Energy 

and Commerce Committee in the 114th Congress and a member of 

this subcommittee. 

And since, Bill, you sat there so patiently for all these hours, do 

you want to ask a few questions before we get out of here? 

Mr. FLORES. Well, I think that I just heard the voting buzzer go 

off. So I will, first of all, thank you for recognizing me and thank 

you for allowing me to have the time. I will keep my comments 

short. 

One of you—well, more than one of you on the panel talked 

about the cumbersomeness of having Federal policy trying to interfere with free markets. And I think that is something that we on 

this side of the room need to always remember, that anytime that 

we try to violate the laws of economics, it is like violating the laws 

of physics. 

And you can think about gravity as an example. The more you 

violate the laws of gravity, the harder the impact at the end. And 

that was one of the first things that my economics instructor 

taught me back when I was in college. 

And so I think that we on our side, again, need to be constantly 

reminded that the free market works best when it lets the—when 

the Federal Government doesn’t have too heavy a hand. 

There was some conversation here about the transparency related to the oil markets, and I would vigorously disagree with those 

comments because of this. 

If you say there is no transparency, that means that the buyers 

and sellers that are out there taking this oil and refining it know 

nothing about it, and that is not the case. 

That oil is being moved around. It is being trans—I mean, it is 

being bought and sold and refined and put into finished product 

and being sold to an end user and being consumed. 

And so to say that there is no transparency in the market is just 

false because buyers and sellers are out there. They are happy with 

the level of information that they have. 

If they weren’t, then there would be no trading. There would be 

no commerce in those products. And so I would not like the panel 

to get too affixed to those comments because they just are not true. 

And, with that, I yield back, Mr. Chairman. And thank you. 

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I hope everybody has happy holidays and Merry Christmas. 

Mr. RUSH. Mr. Chairman, I would really ask for unanimous consent to allow Ms. Gordon to respond to that because—— 

Mr. WHITFIELD. Without objection, go ahead. 

Ms. GORDON. There is certainly some transparency in the market. I mean, it is working. But I think the best example of why 

there isn’t enough information in the market is the explosiveness 

of the rail cars taking Bakken oil. 

The market really didn’t know the composition of that oil, and 

the equipment wasn’t really designed to deal with that oil. 

So I think that we are seeing physical manifestations of the fact 

that there isn’t enough transparency in this market. 

Mr. WHITFIELD. Did you want to ask for unanimous consent? 

Mr. RUSH. Mr. Chairman, I also want to ask for unanimous consent that this report from the—ostensibly, from the United Steelworkers—that it be included into the record. 

And, also, I have here an article from a Mr. Mason Inman entitled, ‘‘The Fracking Fallacy.’’ I would like for that to be included 

into the record. 

Mr. WHITFIELD. These will be included in the record. 

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Mr. WHITFIELD. And then, also, I would like to put into the 

record letters from the American Petroleum Institute, the American Fuel and Petrochemical Manufacturers, and the Diesel Technology Forum. Without objection. 

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Mr. WHITFIELD. So that concludes today’s hearing. 

I want to thank you once again for your testimony and for your 

patience and responding to our questions. 

And we are going to have more hearings on this when we reconvene for the 114th Congress. And the record will remain open for 

10 days for additional materials. 

So that concludes this. 

Mr. RUSH. Mr. Chairman, I want you to join with me in wishing 

everybody happy holidays. 

Mr. WHITFIELD. You think we should? 

Mr. RUSH. I think we should. 

Mr. WHITFIELD. Merry Christmas. Happy holidays. And enjoy the 

break. 

That concludes today’s hearing. 

[Whereupon, at 11:50 a.m., the subcommittee was adjourned.] 

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