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S. Hrg. 110–1023 

ENERGY SECURITY: AN AMERICAN IMPERATIVE 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JULY 22, 2008 

Available via http://www.gpoaccess.gov/congress/index.html 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire 

MICHAEL L. ALEXANDER, Staff Director 

DAVID MCINTOSH, Legislative Assistant, Office of Senator Lieberman 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

AMY B. CARROLL, Minority Professional Staff Member 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk and GPO Detailee 

LAURA W. KILBRIDE, Hearing Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Lieberman ........................................................................................... 1 

Senator Collins ................................................................................................. 2 

Senator Voinovich ............................................................................................. 11 

Senator Domenici ............................................................................................. 13 

WITNESSES 

TUESDAY, JULY 22, 2008 

T. Boone Pickens, Founder and Chief Executive Officer, BP Capital Management ...................................................................................................................... 4 

Gal Luft, Ph.D., Executive Director, Institute for the Analysis of Global Security, and Co-Founder, Set America Free Coalition ............................................ 25 

Geoffrey Anderson, President and Chief Executive Officer, Smart Growth 

America ................................................................................................................. 28 

Habib J. Dagher, Ph.D., Director, Advanced Structures and Composites Laboratory, University of Maine ............................................................................... 31 

ALPHABETICAL LIST OF WITNESSES

Anderson, Geoffrey: 

Testimony .......................................................................................................... 28 

Prepared statement .......................................................................................... 64 

Dagher, Habib J., Ph.D.: 

Testimony .......................................................................................................... 31 

Prepared statement .......................................................................................... 71 

Luft, Gal, Ph.D.: 

Testimony .......................................................................................................... 25 

Prepared statement .......................................................................................... 58 

Pickens, T. Boone: 

Testimony .......................................................................................................... 4 

Prepared statement with attachments ........................................................... 41 

APPENDIX 

Deutsche Bank’s Report titled ‘‘From Shale to Shining Shale,’’ submitted 

by Mr. Pickens ...................................................................................................... 125 

(1) 

ENERGY SECURITY: AN AMERICAN 

IMPERATIVE 

TUESDAY, JULY 22, 2008 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 9:35 a.m., in room 

SD–106, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, Chairman of the Committee, presiding. 

Present: Senators Lieberman, Carper, Collins, Voinovich, and 

Domenici. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. The hearing will come to order. Thank 

you very much for being here. Good morning and welcome to this 

hearing, which is entitled ‘‘Energy Security: An American Imperative.’’ 

The high price of gasoline today is literally wounding American 

families, businesses, and farmers, and it is causing the American 

economy to stagger. It threatens to impose terrible hardship this 

winter on families in places like New England that rely heavily on 

home heating oil. 

The near total dependence of our economy, the energy sector of 

it—and particularly the transportation sector—on oil is weakening 

our Nation’s position in the world while enriching and strengthening a lot of countries in the rest of the world, many of them volatile and some of them just plain hostile to the United States of 

America. 

For well over a generation, America’s leaders have seen this 

growing dependence on foreign oil but essentially sat back and 

watched passively as trillions of dollars of our American, hardearned wealth has been used to buy that oil and thereby go to 

countries abroad. And during that more than a generation, America’s leaders have done little or nothing about that problem. Apparently, it took $4-a-gallon gasoline to wake up the American people 

and their leaders here in Washington, to make all of us angry and 

anxious enough to get serious about breaking our national dependency on foreign oil. 

And at this moment of crisis and opportunity in America, T. 

Boone Pickens comes on to the national stage with a classically 

American message of honesty, determination, and can-do optimism. 

He said some things in that advertisement on television that I 

think are going to be long remembered and that have aroused a lot 

2 

of Americans, who, like him, are sick of talk and want some action. 

I, for one, as a Senator who has been here for a while, have been 

very pleased with what T. Boone Pickens has done. And he is not 

just talk. He has offered us a plan—the Pickens Plan—which has 

been described, accurately, I believe, as a sweeping and innovative 

action program to loosen the grip that oil has on America. 

The Pickens Plan has attracted attention, in part, because the 

author of the strategy to cut our reliance on oil is himself a legendary oil man. It has also attracted attention because T. Boone 

Pickens has invested a large amount of his own money to educate 

the public about the crisis and his proposed response to it. But, 

most important, I think, the plan has attracted attention because 

it is bold. 

I am very pleased to have Mr. Pickens here as a witness today. 

Frankly, I am pleased because I hope his boldness will infect a lot 

of other people here in Washington with the power to do something 

about it so that we will be motivated to come together, forget our 

political differences, and do what is right for our country by getting 

something big done to break our dependence on foreign oil. 

We have taken incremental steps over the years, and I have supported them. But the fact is they are woefully inadequate to the 

crisis that America faces. I, for one, am spoiling for some bold T. 

Boone Pickens-type action, and I know I am not alone. 

We have a second panel that will testify today—three witnesses 

who, like Mr. Pickens, are well positioned to recommend strong 

steps that can enhance U.S. energy security and lift an economic 

burden from American families, farmers, and businesses. 

Immediately after this hearing, Senator Collins and I are going 

to join Senators Brownback and Salazar in taking one such bipartisan step. We are going to introduce a bill called the Open Fuel 

Standard Act. One of our witnesses, Dr. Luft, has helped craft that 

bill, and I would not be surprised if he discusses it this morning. 

For me, this morning’s hearing provides an important opportunity 

to listen, learn, and then, together, act. 

Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. 

First, let me thank you for holding this hearing this morning. 

You and I have worked on a lot of important issues together, and 

I believe that our undertaking this hearing is one of the most important, for the fact is that our Nation faces an energy crisis. 

The soaring price of oil is causing great harm to our economy, 

from the major industries that move our Nation to the small businesses that are the backbone of our communities. As I travel 

throughout Maine, I hear time and again of the hardship the skyrocketing cost of gasoline and home heating oil is causing families. 

Although it is still summer, Mainers are deeply worried about 

how they will stay warm this winter. One woman told me that 

every month, half of her Social Security check goes to meeting the 

budget plan for her home heating oil. She is literally choosing between keeping warm and eating well, a choice that no American 

should ever have to make. 

3 

Beyond the impact on countless families struggling with high 

costs, our growing dependence on foreign oil is a threat to our national and economic security. One of our witnesses, Mr. Pickens, 

has vividly illustrated our ever-increasing dependence on foreign 

sources of oil in the Middle East and Venezuela. We are impoverishing ourselves while enriching regimes that are in many cases 

hostile to America. Ending our dependence on foreign oil and securing our own energy future is an American imperative. 

Our Nation must embrace a comprehensive strategy to reduce, 

and ultimately eliminate, our reliance on Middle East oil. We must 

expand and diversify American energy resources, and while doing 

so, improve our environment. 

To understand how we can meet the challenge of energy security, 

we can look back a half-century ago to another time when our Nation faced a great test. On October 4, 1957, America was in shock. 

We were stunned by an object the size of a beach ball, weighing 

just 184 pounds. That object was the Soviet satellite called ‘‘Sputnik.’’ 

We responded not by giving up, but with our own satellite 

launches and later an energetic commitment to land a man on the 

Moon. A strong partnership of government, research institutions, 

universities, and the private sector formed to support a bold new 

initiative in scientific advancement. And, as a result, in 1969, an 

American flag flew on the Moon. 

The most remarkable aspect of that story is not that America 

met a challenge by developing superior technology, but that we embarked on that journey confident that the American spirit and 

know-how would triumph. 

By contrast, our Nation missed an enormous opportunity on another October day 35 years ago. On October 17, 1973, the Organization of Arab Petroleum Exporting Countries, the predecessor of 

the Organization of Petroleum Exporting Countries (OPEC), hit the 

United States with an oil embargo. 

The immediate results were soaring gasoline prices, fuel shortages, lines at filling stations, and an economic recession. 

Unfortunately, after the immediate crisis passed, the long-term 

result was a steady increase in oil imports and a dependence that 

worsens each day. The 1973 embargo was a wake-up call that we 

failed to heed. The current crisis is a fire alarm that we must not 

ignore. 

Meeting this challenge requires the skills and commitment that 

we see in our line-up of witnesses today—the entrepreneurial spirit 

of the private sector, an understanding of the specific economic and 

environmental issues at stake, and a commitment to the research 

and development of new technologies in all regions of our country. 

It also requires action by government. From establishing a 

timeline for energy security to undertaking critical investments to 

stimulate research in alternatives to expanding the production and 

conservation tax credits, government has a critical role to play. 

Above all, we must follow through. Let me give my colleagues 

one example of the lack of resolve that has been all too common 

for all too long. 

The easternmost city in the United States is Eastport, Maine. 

Visit this pretty little city, and you will find the remnants of a tidal 

4 

1The prepared statement of Mr. Pickens appears in the Appendix on page 41. 

power project initiated in the 1930s by President Franklin Roosevelt, who grew up observing the incredible tidal range there from 

his family’s summer home on Campobello Island, across the bay in 

New Brunswick. Causeways to impound the water to turn the generators were built, as was housing for thousands of construction 

workers. Then, after just 2 years of preliminary work, Congress 

pulled the plug and canceled the project. 

Why? Because Congress decided that it would be cheaper and 

easier to rely on conventional, fossil fuel generation closer to the 

population centers of southern New England. The challenges of 

building a transmission system to connect this rural region of 

Maine to the cities were deemed not worth the effort. Federal and 

State authorities failed to cooperate. The project was abandoned. 

The technology of generators to tap tidal power has advanced 

greatly since the 1930s. Regrettably, the need for government to be 

more farsighted has not. 

I have called for American energy independence by the year 

2020, the same 12-year time frame that elapsed between Sputnik 

and Apollo 11. Some experts believe that such a goal is too ambitious, but I know that no goal is ever reached without first being 

set. Just as the America of a half-century ago boldly stated its intentions to reach the moon, we must now declare our intention to 

achieve energy independence and energy security. 

Today, we will hear four proposals for improving America’s energy security. I welcome Mr. Pickens to his first appearance on 

Capitol Hill since he unveiled his comprehensive plan to bolster 

America’s energy security. Dr. Luft and Mr. Anderson will discuss 

transportation and community planning. And I am particularly 

pleased to welcome an engineering professor with whom I have 

worked closely, Dr. Habib Dagher of the University of Maine. I 

know that the Committee will be very interested in his presentation on harnessing the power of winds offshore and geothermal 

energy underground. Our witnesses will provide invaluable perspective on how we can progress toward a goal that is truly the 

new American imperative. 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thank you, Senator Collins, for that excellent statement and, if I may say so, for your own bold plan and 

proposal. 

Mr. Pickens, thanks very much for being here. Thanks for this 

extraordinary act of leadership, I would say patriotism. The Committee looks forward to hearing your testimony now. 

TESTIMONY OF T. BOONE PICKENS,1 FOUNDER AND CHIEF 

EXECUTIVE OFFICER, BP CAPITAL MANAGEMENT 

Mr. PICKENS. Chairman Lieberman, Ranking Member Collins, 

and Members of the Committee, thank you for having me here 

today. We are more fragile today from a national security standpoint than we have been since World War II. The danger stems 

from our overwhelming $700 billion dependency on foreign oil annually. 

5 

1The Deutsche Bank report referenced by Mr. Pickens appears in the Appendix on page 125. 

In 1945, we were exporting oil to our allies. By 1970, we were 

importing 24 percent of our oil. By the 1980s, it was 37 percent. 

And in 1991, during the Gulf War, it was 42 percent. Today, we 

are approaching 70 percent. 

Much of our dependency is on oil from countries that are not 

friendly, and some would even like to see us fail as a democracy 

and as the leader of the free world. I am convinced we are paying 

for both sides of the Iraq war. We are giving them tools to accomplish their mission without ever having to do anything but sell us 

oil. 

This is more than a disturbing trend line. It is a recipe for national disaster. It has gone on for 40 years now. This is a crisis 

that cannot be left to the next generation to solve, and it is a 

shame if we do not do something about it. And we can, without 

bringing our economy and way of life to a halt. 

I have been traveling the country with a simple message. Our 

country is in a deep hole, and it is time to stop digging. I have a 

plan to do just that. The response from the American people has 

been overwhelmingly positive, and I have talked to a lot of people. 

The Pickens Plan starts with harnessing wind and building solar 

capabilities. We are blessed with some of the best wind and solar 

resources in the world. The Department of Energy estimates that 

we can produce 22 percent of our country’s electrical energy needs 

just by utilizing the wind resources in the Great Plains. And, actually, if you wanted to go beyond 22 percent, you could go to 40, 60, 

80, whatever you want. That resource is unlimited. The plan substitutes electricity generated by natural gas-fired plants with windgenerated electricity. Natural gas-fired is 22 percent; the wind is 

going to replace that 22 percent. 

The natural gas freed up is directed to transportation needs of 

the country. The natural gas is cheaper, cleaner than gasoline, and 

its supply is plentiful. And, most of all, it is American. 

The Deutsche Bank today released a 50-page report,1 which is 

called ‘‘From Shale to Shining Shale.’’ What they are telling us is 

that there is a huge amount of shale gas available to us in the 

United States. Don’t confuse this with the oil shale that is on the 

western slope of the Rocky Mountains. It is not the same geological 

situation. 

The result would be a reduction of our dependency on imported 

oil by 38 percent. This plan is based on proven, existing technologies. It is simple, and it is doable. It provides a significant 

bridge—‘‘bridge’’ underlined—to the future that gives us time to develop the next generation of alternative fuels, including electric or 

hydrogen vehicles. It results in revitalizing much of rural America; 

$1 trillion of private investment would go into the Great Plains of 

this country. Instead of enriching other nations, we would actually 

recover our rural areas. It can be accomplished with private investment, but it cannot be achieved unless our national government 

clears the way for action. 

Government should move immediately to build the east-west 

transmission corridor to ensure wind power gets to market. This 

would include transmission rights-of-way. I envision this could be 

6 

like in the Eisenhower Administration when they declared an 

emergency and built the interstate highway system. The way I recall it—and I have been around for a long time, so I should be able 

to recall it—there was an emergency because of the Cold War, and 

it was a way to move, if we had to move rapidly, our military. 

But I also feel that this is an emergency, too, and believe maybe 

that could be the approach as it has to be done quickly because we 

are pressed by not only the 70 percent we are dependent on foreign 

oil, but the $700 billion a year that we are pouring out. And I am 

convinced that $700 billion is a minimum number because I think 

the price of oil is going to go up. I would project out for 10 years 

it is going to cost us—if we continue on the same route that we are 

on now, we will have bought $10 trillion worth of oil from foreign 

producers. Government must extend for at least 10 years the production tax credits (PTCs). The cost pales in comparison to the cost 

of foreign oil. 

Let me quickly address what I call the five Pickens principles 

that should be used to assess any of the energy plans brought before you. 

First, the plan has to slash our dependence on foreign oil by at 

least 30 percent in 10 years. 

Second, the plan needs to rely on 100 percent North American 

resources. 

Third, the plan needs to utilize existing and proven alternatives 

to foreign oil. 

Fourth, the plan needs to call on private enterprise to execute 

quickly. 

Finally, the plan requires the Federal Government to clear the 

path for implementation. 

We have walked into a trap, and we have got to get out of it. 

We are the ones that put ourselves there. Nobody else. I am not 

pointing the finger at anybody. It is not going to help. But we have 

to work together and solve this national security crisis together. 

Thank you. 

Chairman LIEBERMAN. Thank you, sir. That was an excellent beginning. 

We will do 6-minute rounds so we can get as many Senators involved as possible. 

Focus in, if you will, on exactly what you would like to see the 

Federal Government do to play its part in the implementation of 

the Pickens Plan. In other words, what are the kinds of tax credits, 

for instance, that you would like to see us adopt? 

Mr. PICKENS. OK, let me identify—I will answer all questions. 

You know that. But I would like to comment that our problem and 

the reason why we have not done the things that we should have 

done to protect ourselves is because of cheap oil. And we sat here 

and really said, ‘‘Send us the oil. Never mind the price.’’ 

Chairman LIEBERMAN. Right. 

Mr. PICKENS. Then the price went vertical, and when it did, everybody said, ‘‘I can’t stand it. I didn’t know I was signing up for 

this.’’ 

And so here we are, and we can expect that price to remain 

vertical. It will maybe plateau and go again, but I promise you, the 

people that have the oil are going to get the best price they can 

7 

for it. I do not care what they say. I do not believe them. I do not 

believe when they say we want to stabilize prices. When Russia, 

the largest producer with Saudi Arabia, both about 9 million barrels a day, are having meetings to stabilize the price, I do not think 

that is what they are talking about. 

Chairman LIEBERMAN. I think you are right. 

Mr. PICKENS. And here we are, we are the odd man out in the 

deal. 

The PTCs for 200,000 megawatts of power, the PTCs for that would be $15 billion a year, and that would start it moving. Now, 

I know you are struggling with the PTCs now, and it expires in December, and you extend it one year at a time. To stabilize the opportunity, to cause the money to come into it, you should give a 10- 

year extension of the PTCs. But when you look at $700 billion 

going out of the country every year for the purchase of oil, a $15 

billion PTCs is somewhat insignificant. 

Chairman LIEBERMAN. Right. 

Mr. PICKENS. I am not saying throw money away. You know that. But the $700 billion is so overpowering. But, anyway, 10 

years with the PTCs—— 

Chairman LIEBERMAN. Would you change it at all from the way 

it is structured now to incentivize, for instance, wind and solar? 

Mr. PICKENS. I am sorry. I cannot answer that. I am not that familiar with what the—— 

Chairman LIEBERMAN. Good enough. So you are saying lock in 

the production tax credit for a 10-year period so people can count 

on it. 

Mr. PICKENS. Yes. 

Chairman LIEBERMAN. And be prepared to put in $15 billion into 

that a year. 

Mr. PICKENS. Right. And what will happen, I believe—and I have 

heard this, too, from some of the manufacturing companies that 

would like to be involved in developing some of this. They say if 

we could have PTCs for 10 years, we can move into the area, and 

we can develop this. 

Now, let me give you an example. I am doing the largest wind 

farm in the world at Pampa, Texas. It is 4,000 megawatts. That is 

about the equivalent of two and a half nuclear plants. We will have 

manufacturing there. We had an economic study, and it would create 1,500 jobs for that area. And it amounts to $380 million a year 

in economic benefit to that. 

And you can just see, I mean, the model town for this is Sweetwater, Texas. The town’s population was 12,000, and it went below 

10,000. Now it is above 12,000. Over 20 percent of the jobs there 

are related to wind energy. And you can see, I mean, it is a model 

that—it is not something that we studied and believed would happen. We know it will happen. 

Chairman LIEBERMAN. In other words, it is real. 

Mr. PICKENS. It is real. 

Chairman LIEBERMAN. Some people are still coming around to 

the point that they think wind energy, and even solar, is a little 

bit flaky or a vision. But I have never associated the word ‘‘flaky’’ 

with you, now that I think about it. [Laughter.] 

But we know it works. 

8 

1The posters referenced by Mr. Pickens appear in the Appendix on page 53. 

Mr. PICKENS. We know it works. And, if you look at the most 

wind energy per size of country, it is Germany. And Germany does 

not even have good wind. We have fabulous wind. I would like to 

ask you to look at the map on the right.1

Chairman LIEBERMAN. Yes. We have copies of that up here. 

Mr. PICKENS. Yes, you have it in front of you there. 

Chairman LIEBERMAN. Yes, we do. 

Mr. PICKENS. But that is a fabulous resource for this country, 

and you have it all along the coast, too. I mean, that is available 

if the people want it. 

Now, I do not want it mandated that we have to develop for 

wind. I am telling you, the people in that central part of the United 

States call me. I have leased 300,000 acres to put wind turbines 

on. 

The other day we were in Sweetwater, Texas, and we were with 

an ABC crew. And the ABC people were asking questions, and they 

said to one of the locals there in Sweetwater, ‘‘Are people unhappy 

with the development of the wind turbines?’’ He said, ‘‘No. The only 

people here that are unhappy are the ones that don’t have the turbines.’’ 

Chairman LIEBERMAN. Got it. 

Mr. PICKENS. They want them because it is income to them, and 

they need the income. 

Chairman LIEBERMAN. Last week, former Vice President Gore 

made a proposal, another bold plan, which is to try to get America 

to produce within 10 years 100 percent of its electricity from renewables. Is that doable, do you think? 

Mr. PICKENS. I do not know. Mr. Gore and I talked the other 

day—his concern is global warming. 

Chairman LIEBERMAN. Right. 

Mr. PICKENS. And global warming for me is page 2. Page 1 for 

me is national security because of the 70 percent that we are importing. And also the $700 billion that is flowing out of the country. 

And I told Mr. Gore, I said, ‘‘Al, I will get to page 2 after I clean 

up page 1.’’ So mine is a different approach. And he said, ‘‘Well, 

you are for outer continental shelf (OCS) drilling.’’ I said, ‘‘I am for 

everything that is American. Everything.’’ Am I opposed to the 

electric car? Absolutely not. Plug-in electric, let’s do it. 

Chairman LIEBERMAN. Flex fuel? Anything that works. 

Mr. PICKENS. Anything that is American. I only have one enemy, 

and that is foreign oil. That is what I want to get rid of. And if 

you look at it, my plan will reduce our dependency on foreign oil 

by 38 percent. And it was not designed this way. It just happened 

to be. It is a coincidence, maybe. But we have plenty of natural gas 

to do what we need to do, and if we could use natural gas for transportation fuel as a bridge fuel to hydrogen, electric, or whatever, 

by 2050 we have to be off of hydrocarbons. We will still have hydrocarbons in the country, I hope, but that will not be our primary 

transportation fuel. But if you look at our imports, 38 percent of 

our imports come from the Mideast and Africa, the two most unstable areas. 

Chairman LIEBERMAN. Interesting. 

9 

Mr. PICKENS. We can replace 38 percent of the transportation 

fuel with natural gas. 

Chairman LIEBERMAN. Excellent. My time is up. Thank you. Senator Collins. 

Senator COLLINS. Thank you. 

Mr. Pickens, your plan focuses on land-based windmills in the 

Midwest, and it has the advantage of helping to supply the electricity needs of a lot of the populated areas of the Midwest. I am 

obviously not from the Midwest. I am from New England, which 

has a huge reliance on natural gas for electricity. It is about double 

the national average, and that is something that I agree we need 

to change. 

What do you think that we should do in the Northeast, and New 

England in particular, to help reduce our reliance on imported oil? 

Eighty percent of the households in my State of Maine use heating 

oil, so this is truly a crisis in our State. Do you have any suggestions for broadening your plan to help the coastal areas of our 

country? 

Mr. PICKENS. I will use a broad brush sometimes, OK? And if it 

is too much, well, pin me down. But heating oil—that is foreign. 

Assume it is foreign because we are importing almost 70 percent. 

Some of it may come domestic, but, anyway, that is foreign. Get 

that over to natural gas, is what we should do, and the Northeast 

should get off of heating oil. 

As far as your using natural gas for power generation, don’t 

worry about it. Keep doing it. What will happen is the power generation, the natural gas will move out of that sector as it moves 

into transportation fuel. So we do not have to shut down all of our 

natural gas power generation. It will just happen naturally. But 

what we have to do is we have to mandate the use. For instance, 

all government vehicles purchased in the future would be natural 

gas. That will send a message to General Motors, Ford, Chrysler, 

and all the others—I never recognize any manufacturers in the 

United States except those. Pardon me for that, but that comes 

with age. I just know three car manufacturers. I say that and I 

own a Honda GX natural gas car because I cannot get an American 

natural gas car. 

But GM makes 19 vehicles in the world today for natural gas. 

None are made in the United States. They are made in South 

America and Europe. So I know they know how to make them. So 

if the government mandated that all vehicles at some point would 

go to natural gas on new cars, they would get them. They would 

make them, and it would be a revitalization of the auto manufacturers in the United States. And God knows they need it, too. They 

need the help. They need all of it. 

This has great economic benefits for rural America, car manufacturers, and all kinds of different areas that we could help our economy with it. But it will happen if the leadership will say let’s do 

this. Then let it unfold, and it will take place. Private industry will 

build the grid if you will give private industry the corridors that 

they can build in. That is what you have to do for us. 

And if the government wants to build the grid, that is good, too. 

But I think we should start to look at the future for energy for 

America, and that is that we have a national grid, that we can put 

10 

this together and get the foreign oil dependency out of the way. We 

can do it. We have not been tasked, the American people have not 

been tasked to do what has to be done. 

For instance, people told me at breakfast this morning, ‘‘Well, 

wind is only 40 percent of the time.’’ That is OK. Use the 40 percent. Baseload it with something, peak it with something. I am not 

an authority on power generation. That is not my field. I am a geologist. I know about the oil business. But I do know that we have 

not been charged with the responsibility to do it. Go do it, and everybody in this country will join together. The people will follow if 

we have the leadership, that’s what it takes. And you are going to 

have to tell them that—explain to them first. They don’t know. I 

promise you, the American people do not understand what we are 

up against. I know that from polling. I know it because I have been 

in the field; I have talked to people; I have looked at the focus 

groups. I have done everything. I think I am prepared to respond, 

and I know I would have never committed the $58 million to telling 

this story had I not felt like the people did not understand. 

I will tell you what they do understand. They know it is something very bad about energy. They do not think they are being told 

the truth about energy. And it is confusing to them. I think when 

we come out of this, by the time we get—I want to elevate this into 

the presidential debate, and it is not there yet. OK. Elevate it 

there. By the time we get the elections over, whoever wins, the 

American people are going to demand they know the truth about 

energy, they know what they are up against, and they will respond. 

We will see the energy use go down dramatically when they see 

what it is going to cost. They can see that it does not have anything to do with Exxon or Chevron or anybody else running up the 

price. It does not have anything to do with some speculator on Wall 

Street. That is not what we are faced with. We are faced with 85 

million barrels a day of production in the world, and we are using 

25 percent of it, with 4 percent of the population, and we only have 

3 percent of the reserves. In the United States, we have nothing 

to do with the price of oil. We only have 3 percent of the reserves. 

And so you tell me that a guy in China is buying a barrel of oil 

for $140 that he thinks it is somebody’s fault in the United States. 

He does not think that. He understands. They know what it is. It 

is a global price for oil. You look at Brent crude, sold on the London 

exchange every day, and it is very close to West Texas Intermediate (WTI) crude. 

So, anyway, I have drifted off the question, but I really do get 

somewhat carried away with this subject. 

Senator COLLINS. Just a quick follow-up, if I may, Mr. Chairman. 

Chairman LIEBERMAN. Go ahead. 

Senator COLLINS. When we look at your map, in addition to the 

wind corridor up through the Midwest, from Texas to the Canadian 

border, the other areas that have a lot of wind are offshore, for example, offshore of Maine’s coast, the Great Lakes region. Do you 

see potential in offshore wind to also be part of the answer? 

Mr. PICKENS. Sure. I see everything American is good—offshore 

wind, central part of the country wind, electric car. Everything 

American is good. I am for that. Offshore, OCS drilling, Arctic NaVerDate Nov 24 2008 10:20 Apr 09, 2010 Jkt 044578 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 P:\DOCS\44578.TXT SAFFAIRS PsN: PAT
11 

tional Wildlife Rescue (ANWR) drilling, yes, all of it. I want to see 

all of it. I want to get off of foreign oil. Yes, all that. 

If I could put up the map of the world there, and you have that 

in front of you, I believe. 

Senator COLLINS. Yes. 

Chairman LIEBERMAN. Yes, we do. 

Mr. PICKENS. But here, if you will notice, the United States has 

the best wind energy in the world. Now, you can see some areas 

over in Europe and around different places, but on landmass alone, 

we have the best wind energy. And we are going to use it. There 

is no question we are going to use it. And it can be melded with 

baseload peak and wind. Solar comes into play. Solar and wind 

work very well together. But we have not been pushed against— 

we are against the wall now, but we have not been charged with 

getting ourselves straightened out in America. And the reason is 

because the oil is so cheap. That is it. We sat around and just kind 

of lazied it, and here we are. 

Senator COLLINS. Thank you. 

Chairman LIEBERMAN. Thank you, Senator Collins. Senator 

Voinovich. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. Thank you, Mr. Chairman. 

What you have had to say is music to my ear. I have been on 

this Committee now 10 years, and we have had an environmental 

policy—you are talking about cheap oil, but we have had an environmental policy around here that ignores our national security, 

our economy, our energy needs, and the chickens have come home 

to roost. And now we are trying to figure out how we are going to 

get out from under this. 

Many of us feel that we ought to go after every drop of oil that 

is available to us, can be taken out environmentally. Many of us 

also believe that we need to have an Apollo type program as we 

did—President Kennedy said we were going to put a man on the 

moon in 10 years, and by golly, we did. There is no reason why we 

cannot figure out how we can get off of our appetite for oil. 

But one of the things that I never gave any consideration to, Mr. 

Pickens, was natural gas, and the reason—I have looked at renewables, plug-ins, hybrids, you name it. But I did not look at natural 

gas for the simple reason that the cost of the natural gas in this 

country has skyrocketed to the point where in my city of Cleveland, 

Ohio, my State, we were paying about $3 a Mcf back in 2000; now 

we are paying about $10 a Mcf, and the people in the gas association here in Washington say we may go up to $14 or $15 a Mcf. 

And part of the reason why, as you know, we went to natural gas 

is we made it easy for energy companies to use natural gas because 

it was cleaner and did not have as much emissions as, say, coal or 

something else. 

So I would like you to respond to the issue of how can we do this 

when natural gas has skyrocketed, and I think you probably know 

that in 1998 and 1999, we were exporting about $19 billion worth 

of chemicals. Today, we are a net exporter, and the reason why is 

because natural gas is a feedstock of the chemical industry, urea. 

So that is one question. 

12 

The other one is the issue of wind in that currently wind produces about 1.5 percent of our energy in this country. I think renewables are about—let’s see, about 9 percent, most of it is hydroelectric. How can you ramp that up over a quick period of time? 

And, second of all, as you know, down in Texas you have had some 

times when the wind just kind of stopped and you have had some 

reliability problems. And if you are going to use wind, you know 

that if you are going to have reliability, you are going to have to 

back up that wind with some ordinary baseload energy generation. 

So those two questions. How do we do this with the high cost of 

natural gas as it is? And, second of all, the whole issue of the reliability of wind in terms of a baseload provider of energy in this 

country. 

Mr. PICKENS. Senator, on the expense of it, one Mcf of natural 

gas equals 8 gallons of gasoline in energy. OK. They will do the 

same job, one Mcf and 8 gallons. Today, natural gas is selling for 

$12 per Mcf. If you had 8 gallons of gasoline at $4, it would be $32. 

So natural gas is the cheapest of the fuels now. Natural gas is selling at 40 percent of heating oil. In the winter, heating oil and natural gas trade at parity. In the summer, not so, and we are in the 

summer now. So natural gas—I almost hate to tell you this—is 

cheap compared to the other fuels. When you look at oil at $140 

per barrel, natural gas, at $12 or $15 per Mcf, is cheap. 

Senator VOINOVICH. Where do we get the natural gas? In other 

words, what we have done in a way is we have increased the demand for natural gas, but the supply of natural gas is down and, 

therefore, the price is up. And how do you reconcile that in terms 

of what you are talking about? 

Mr. PICKENS. Supply is up. We are up year over year. We have 

increased the reserves of natural gas in the United States. We have 

doubled them in 5 years. 

Senator VOINOVICH. How come, then, we are going to be paying 

$15 an Mcf in Ohio for natural gas? And I think around the country they are predicting—they are coming to Congress right now and 

asking for more Low Income Home Energy Assistance Program 

(LIHEAP) money because of the fact that the natural gas costs are 

going to be skyrocketing. 

Mr. PICKENS. It is because your energy costs are higher, is what 

it is. I mean, it is not a case that somebody is gouging you. Natural 

gas is selling at 40 percent of the cost of heating oil. Heating oil, 

you can call it foreign. So you are being—I mean, it is all swinging 

off of the price of oil, is where you are coming from. And when natural gas gets cheap enough that it will do a job that coal—I mean, 

it can compete with coal at times, it will get that cheap. It did a 

year ago. We were down to $6. Now it is up to $12. If not, it is 

$10. But it has been up to $12 this summer. 

But you are dealing with a market. I am going to send you this 

report that came out today on how we have developed in this country. In 5 years, we have doubled our gas reserves. This is huge. 

And as a geologist, if you had told me this would have happened 

10 years ago, I would have not given you one chance in 10,000. 

Senator DOMENICI. What is it you have, Mr. Pickens? What is it 

you are going to give us? 

13 

Mr. PICKENS. Oh, I am going to send you this report from 

Deutschebank today. It is called ‘‘From Shale to Shining Shale.’’ 

Senator DOMENICI. OK. 

Mr. PICKENS. It is about the technology and how much gas has 

been discovered in the United States and how much we can have 

in the future. But this is nothing more than a bridge to the next 

fuel because when you get to 2050, we are pretty well maxed out 

on hydrocarbons as a transportation fuel. And 70 percent of the oil 

is used for transportation. When a barrel of oil comes to the United 

States today, it will be moved to a refinery, refined, then go into 

marketing, then go into our cars, and in 4 months it is gone. It is 

gone. We burn it up. It is out of here. And so we have to get a hold 

of this situation and realize that we cannot control—one thing, 

though, that I will say, we have plenty of natural gas to do what 

I am talking about, and we can do it for 20 or 30 years. 

Senator VOINOVICH. If the price is way up and it seems that the 

supply must not be up, as much up in terms of the demand, you 

are telling us that we have the natural gas available, we just have 

to go after it. Is that what you are saying? 

Mr. PICKENS. Sure. We have to develop the natural—— 

Senator VOINOVICH. And you can’t do this program without going 

after more natural gas in this country? 

Mr. PICKENS. But don’t get the idea that you are going to have 

natural gas cheap. All energy is more expensive. The cheapest that 

you are going to find is wind and solar. The rest of them are going 

to be expensive. 

Chairman LIEBERMAN. Thanks, Senator Voinovich. 

Senator Domenici, welcome. I know that Mr. Pickens knows, but 

Senator Domenici was the long-time chair of the Energy Committee 

and is now the Ranking Member. We are glad to have you here this 

morning. 

OPENING STATEMENT OF SENATOR DOMENICI 

Senator DOMENICI. Thank you. Mr. Chairman, he knows me from 

a lot longer ago than you know me. 

Mr. PICKENS. Senator Domenici and I have had business for 40 

years. 

Senator DOMENICI. And I am most amazed to see him at his age 

take this new business venture, and I am very pleased with the expertise that you are applying to it. 

I want to suggest a couple of things. You are so right that we 

must get the people to understand; that the United States is sending so much of our resources to foreign countries just to acquire 

crude oil; that it should be doubtful in the minds of intelligent people as to whether America can continue this kind of exportation of 

our assets, of our resources to foreign countries for 5 or 10 years. 

I actually do not believe we can. I believe we will become poorer 

and poorer and poorer as we send $500 to $700 billion a year overseas for crude oil. We are in a real mess. 

Some people tell me what you are for, and they confuse me, and 

so I want to ask you so we will get it here on the record. We have 

a bill coming up on the floor of the U.S. Senate that is supposed 

to create an energy debate. Even though it is the end of the year, 

14 

we are supposed to have some time to discuss some of our energy 

woes and do something positive about them. 

You are not against us opening more of the offshore assets of the 

United States where there are 85 percent that are locked up in a 

moratorium of one type or another and you cannot drill even if you 

wanted to. Are you on the side of those who say lift those and start 

drilling in an appropriate—— 

Mr. PICKENS. I am saying do everything you can do to get off of 

foreign oil, is what I am saying. 

Senator DOMENICI. And that is one. 

Mr. PICKENS. That is one. It is not going to do it. 

Senator DOMENICI. Oh, no. Of course not. 

Mr. PICKENS. It is not big enough. You do not have enough reserves in the offshore to do it. It will just be a piece of our problem. 

Senator DOMENICI. Right. 

Mr. PICKENS. And that is it. 

Senator DOMENICI. From the standpoint of the United States and 

paying what we are paying for oil, if we can get a reserve that is 

anywhere from 14 to 30 billion barrels, that is a pretty good addition to the world availability of oil that we are going to be committing to the pool if we take off those moratoria and say it is available. 

Mr. PICKENS. If you did 13 billion, added 13 billion, you would 

add another Prudhoe Bay. Prudhoe Bay was the largest field ever 

found in the United States. If you added 13 billion, you would 

add—our reserves today are about 20 billion. So you would have 60 

percent more than what we have now. 

Senator DOMENICI. It is commonly understood that without even 

using modern techniques for evaluating the asset value resource— 

because we have not applied modern techniques. We have not 

wanted to spend money, if you would believe it, to do a seismic 

evaluation of these assets because for 27 years we have locked 

them up with moratoria. That is a nice way to treat an American 

asset for 27 years, lock it up and then say we do not know what 

it is worth because we have not inventoried it. 

Mr. PICKENS. Let’s look at what we are talking about in the east 

and west coast, not ANWR. 

Senator DOMENICI. Yes. 

Mr. PICKENS. The U.S. Geological Survey (USGS), I think, says 

you have 85 billion barrels. Now, know that is an in-place figure. 

That is not a recoverable all figure. 

Senator DOMENICI. Correct. 

Mr. PICKENS. When they talk about the 90 billion off the coast 

of Brazil, that is an in-place figure again, not a recoverable. And 

I have seen some that have compared those two, that the Brazilians have 90 billion barrels, and we have about the same. Their 90 

billion is not a proven number, and it is thrown around pretty 

loosely. But go to the facts and the biggest basin that we have 

where we have recovered the most oil in America is the Gulf of 

Mexico. So look at South Louisiana, Gulf of Mexico, and what have 

you recovered there? You have recovered 40 billion barrels, and it 

is by far the preferred place to look for oil instead of off the west 

coast or the east cost of the United States. 

15 

Senator DOMENICI. Twenty-five percent of America’s oil comes 

from just where you said. 

Mr. PICKENS. That is right. And so it is—I am not a big believer—I think you are going to get a rude awakening as to value 

of the east and west coast when it is opened up and when it is put 

up for sale. When those tracts are put up for sale, I think you are 

going to be surprised at the price you get for the tracts. 

Senator DOMENICI. We will see. But, in any event, it is certainly 

worth it for the United States, for our people to understand that 

this is an asset of theirs and we ought to see what we have got 

and see how we can use it. And I just want to make sure that—— 

Mr. PICKENS. I agree. 

Senator DOMENICI [continuing]. You said that was so. 

Let me talk a minute with you about turbines that run the wind 

generation. I understand that the United States does not manufacture these turbines. Is that correct? 

Mr. PICKENS. No. I bought them from GE, $2 billion worth of 

them, to do a thousand megawatts on our first step of our 4,000- 

megawatt project. And they are manufactured in the United States 

by General Electric. 

Senator DOMENICI. It is generally understood by those of us who 

have been briefed that most of the turbine production is in Germany, not in the United States. Now, maybe GE produces—— 

Mr. PICKENS. Well, Siemens is in Germany and Vesta is in the 

Netherlands, and Mitsubishi is in the game, too. But we can get 

all that business into the United States. 

Senator DOMENICI. That is the point. 

Mr. PICKENS. Yes. We can get it all here. 

Senator DOMENICI. If, in fact, we are on a stable path of multiple-year use, we can get them to move here. 

Mr. PICKENS. If they know that we are committed to doing it, is 

where we are coming from. 

Senator DOMENICI. It seems to me it is kind of strange that all 

of a sudden we have come back to natural gas in cars. About 10 

years ago, we were pretty much hitting hard on let’s get gas in 

fleets, let’s have police fleets, let’s have bus fleets. And then we 

sort of let it all pale off. And now there is a big push to get natural 

gas automobiles. Am I correct? 

Mr. PICKENS. Yes, you are. And, actually, it was further back 

than 10 years ago. I was in Albuquerque, and because of the air 

quality there, they were interested in natural gas to replace gasoline and diesel. That was about 15 years ago. 

Senator DOMENICI. All right. 

Mr. PICKENS. And Las Vegas has the same problem. And, of 

course, Los Angeles does. But if you look at the largest bus fleet 

in the world today, it is in Beijing—all natural gas. I was there in 

July of last year, and they have over 4,000 buses. The second largest bus fleet is Los Angeles MTA. And when you look at the Port 

of Los Angeles, which is switching over now from 22,000 18-wheelers, it is switching over to natural gas. And I think the first 

tranche was 8,000 18-wheelers there. 

But look at what happened last week, Senator. Gazprom announced they are building natural gas fueling stations all over Europe. 

16 

Senator DOMENICI. Yes. 

Mr. PICKENS. They are switching over, too. But here we are, we 

still drift. There are 8 million natural gas vehicles in the world 

today—8 million—and that has gone from 5 to 8 million in 2 years. 

Senator DOMENICI. And where are we? 

Mr. PICKENS. One hundred and forty-two thousand. 

Senator DOMENICI. Right. 

Mr. PICKENS. Out of 8 million. We have done absolutely nothing. 

Senator DOMENICI. Well, we are not promoting it. We have not 

yet decided that—your testimony here today, where you say there 

is an abundance of natural gas, we as a Nation have not yet decided that is true because we have had such pressure from the 

chemical industry and others that use it as feedstock to make it 

available to them so they can keep jobs here, that we have not focused on automobile engines to be fed by natural gas. 

I believe we are on the track right now, with electric automobiles, if we could add a bigger incentive for natural gas cars and 

trucks—if we could get that going, it seems to me that we would 

have taken a giant stride in the right direction toward minimizing 

our use of crude oil from overseas because automobiles and transportation drive our dependence. 

Mr. PICKENS. If you take 22 percent of our power generation and 

make it with wind and take the 22 percent of natural gas that is 

doing power generation to transportation fuel, you will reduce our 

dependency by 38 percent. And what you will do is you will bring 

down the price of gasoline. I promise you that you will do that. And 

we will do it with our own fuel. It will not be some other—now, 

one thing—and Senator Voinovich mentioned that he is concerned 

about the price of natural gas. 

Senator DOMENICI. Yes. 

Mr. PICKENS. But what happens is that we are not protecting the 

chemical industry with cheap anything. It is not our job to provide 

it cheap to the chemical industry. I mean, they are going to have 

to compete globally. Well, you think natural gas is cheap in Europe? Natural gas is $18. If you want a load of liquified natural gas 

(LNG) spot on the market day, you will pay $18 for it. And so we 

are in a global market, and the price of energy can be graded every 

day all around the world. 

Senator DOMENICI. Well, the report that you are going to give us 

on natural gas is coupled with some new reports that are saying 

that we have new finds of natural gas that you did not even dream 

of when you were a gas man. They are all over the country, and 

it is shale gas, and it is 5,000 to 6,000 feet deep, and it is in States 

like Ohio, States where we never did develop any natural gas, we 

are developing it. But that has not reached us yet in terms of information. 

Mr. PICKENS. Let me say that the largest gas field in the United 

States, believe it or not—I can see it out the window of my office. 

If somebody had told me in the Fort Worth basin that Barnett 

shale would become the largest gas field in America, I would have 

bet you $100,000 to a cup of coffee and figured I would start drinking the coffee right away. [Laughter.] 

But what you have is the largest gas field, and that happened 

in 5 years. Now, the Hainesville, which is in northern Louisiana 

17 

and East Texas, the Hainesville is five to six times the size of the 

Barnett. And then you have the Marcellus in Appalachia, and it is 

twice as large as the Barnett. And, you go to Fayetteville, you go 

to Woodford, you go to these different shale basins, there are 21 of 

them now, and the technology was developed by us—not me, but 

America. We did it here. We developed the technology to extract 

natural gas in large quantities. But on the price of that, though the 

cost to develop that, you are talking about $7 an Mcf. Everything 

is more expensive, is what it is. The big frac jobs go into that, but 

we have that resource here. 

I almost think it is divine intervention to have the gas show up 

at such a critical time for this country, and to be able to use it as 

a bridge to the next fuel in the next 20 or 30 years. 

Chairman LIEBERMAN. Thanks, Senator Domenici. 

Senator DOMENICI. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. How do you take your coffee? [Laughter.] 

We will do a second round of 6 minutes. 

I want to come to the price effect here. You mentioned it briefly 

in response to one of Senator Domenici’s questions, and I understand if we implemented the Pickens Plan and we moved to wind 

and solar and natural gas, moved over and took over part of the 

transportation sector, that we would achieve for America and for 

our economy a significant reduction in the transfer of our wealth 

abroad. That is a major accomplishment. 

But let me come back to the consumer side of it because in a 

way, what has finally, as I said in my opening statement, sounded 

the alarm, Paul Revere-like, for the American people and even 

their leaders in Washington is that the price of gasoline has gone 

over $4 a gallon. I know it is hard to say this with any certainty, 

but if the Pickens Plan were implemented totally, in 10 years what 

do you imagine the effect—I am not asking you for an exact penny 

prediction here, but what would be the effect on the price of both 

electricity and energy to power our transportation sector? Do you 

think it would, generally speaking, go down a little, a lot, go up, 

stay the same? 

Mr. PICKENS. We are 10 years out now? 

Chairman LIEBERMAN. Yes. 

Mr. PICKENS. There is no question that if I am right on the peak 

oil at 85 million barrels, in 10 years we are going to have less than 

85 million barrels available to the world. Now, the question is: 

What is the demand? 

Chairman LIEBERMAN. Right. 

Mr. PICKENS. I have to think in 10 years the demand for oil— 

because the price now is going up. In 10 years, you are going to 

have $300 a barrel oil. Maybe higher, I don’t know. But this is really—it is a tough question to look out 10 years on this one. But I 

can tell you this: In 10 years, if we continue to drift like we are 

drifting, you are going to be importing 80 percent of your oil. And 

I promise you, it will be over $300 a barrel. 

Chairman LIEBERMAN. I am just imagining the movement on the 

commodity exchanges right now in response to what you just said. 

Mr. PICKENS. Imagine the pain that you are going to—— 

Chairman LIEBERMAN. Yes, but I presume that what you are saying is, if we adopted your plan, the prices, generally speaking, for 

18 

the consumer of electricity and transportation would be less than 

they would be if we do nothing. 

Mr. PICKENS. They would be less if we do nothing? 

Chairman LIEBERMAN. Than if we do nothing. 

Mr. PICKENS. If we do nothing—— 

Chairman LIEBERMAN. Go with the status quo. 

Mr. PICKENS [continuing]. It is going to be over the top. 

Chairman LIEBERMAN. Right. 

Mr. PICKENS. Say you go with my plan and we do get on wind 

and we end up with, say, 400,000 megawatts in the central part 

of the country—let’s talk about everything now. You have revitalized rural America at this point. You have helped the economy at 

this point. Now, what is the cost of your energy? I am guessing in 

10 years you are going to be a long way down the track to an electric vehicle. But, remember, an electric vehicle does not do heavy 

duty. So you are going to have to continue to use natural gas will 

do heavy duty. 

Chairman LIEBERMAN. Heavy duty, you mean the longer trips? 

Mr. PICKENS. No. I am talking about 18-wheelers. 

Chairman LIEBERMAN. Bigger vehicles, got you. 

Mr. PICKENS. Heavy-duty vehicles. 

Chairman LIEBERMAN. Right. 

Mr. PICKENS. So you have to look at the whole thing. I think that 

your power costs in 10 years, you could—I am not sure you could 

get them down. You could get them stabilized maybe. But at that 

point—and you mentioned that there was only 1.5 percent on wind 

now. 

Chairman LIEBERMAN. Right. 

Mr. PICKENS. And that people are skeptical, you are not going to 

get too much on there. And then it is intermittent. But all these 

things are going to be solved. You are going to be able to store electricity. That is not too far in the future that we can store it. So 

I would say cheaper. 

Chairman LIEBERMAN. Cheaper is good enough. It certainly is 

going to be a lot cheaper than it would otherwise be if we stuck 

with the status quo. 

Mr. PICKENS. If you stick with the status quo—it will be much 

cheaper than that. 

Chairman LIEBERMAN. Much cheaper. 

Mr. PICKENS. Yes. 

Chairman LIEBERMAN. Let me draw a few observations from 

what you have said this morning. The first point is an obvious one, 

but around here it is worth saying the obvious. You gave an example of what happens to a barrel of oil after a few months. We import it, it is refined, and it is gone. And then we have to go out 

and find another barrel. 

The great thing—I know you know this; that is why you are recommending it—about wind and solar is that they are always there, 

the good Lord willing. So it is literally a renewable source. You 

have already put the whole thing on a different plane. 

The other thing I want to say is that I appreciate the extent to 

which you have sketched a larger time horizon here. The Pickens 

Plan, as you have described it generally publicly so far, is a 10-year 

plan. Fair enough. And it is bold. And during that time, you have 

19 

said develop any energy you possibly can here in North America, 

stop importing oil. But you have now taken at least me this morning to a longer time horizon and a higher vision, and you have basically said that we need bridges to take us out to 2050 and maybe 

beyond because we are moving to a time when we are going to have 

just about a non-hydrocarbon-based energy system. It is going to be 

all the renewables, electric, biofuel, and all the rest. 

Am I hearing you right? Because I think that is an important vision, and maybe it will be helpful to some people, for instance, 

right now who are concerned about offshore drilling. That is one 

way to have a bridge to somewhere better for our economy and our 

environment, getting to page 2. 

Mr. PICKENS. Well, oil is the key to the conversation here as I 

see it, and oil is—we had produced 1 trillion barrels of oil at the 

turn of the century. It is kind of interesting because if you look at 

King Hubbert’s extension, peak oil, and what would happen, the 

guy was great, in my estimation. I am a disciple. I don’t think 

there are 2 trillion barrels of oil as I see it right now. Now, then 

you say take the oil shale on the western slope and you take this 

and that and everything. You can add up a bunch of stuff. When 

you add it up, it is going to be very expensive oil. But in looking 

at conventional oil—I live and you live and everybody in this room 

lives in the hydrocarbon era, and that era started with the automobile in 1900. Half of the oil that I see out there had been produced by the year 2000. 

Now, we have another trillion barrels, and you say, well, that is 

another hundred years. No. You started slow, ramped up, and now 

the next trillion is going to go out of the system here within the 

next 50 years. 

So you are going to be forced to abandon the hydrocarbon era. 

Can you imagine researchers 500 years out that come back and 

look at us? They are going to say, ‘‘That was a strange crowd. They 

lived on oil as a fuel.’’ And that is not going to even be used at that 

point. Oil will be used and oil will still be around, but it will be 

used for other purposes and will be very special and very expensive; that is the way it is going to turn out. 

But, yes, we are going to have to make it to the next fuel. But 

what is going to happen, if I am right on what I am trying to do, 

I am going to awaken the American people, and they are going to 

see what they are up against. When they walk out of a room, they 

will turn off the lights. They do not do that now. 

Chairman LIEBERMAN. That all helps, doesn’t it? 

Mr. PICKENS. It helps. Every bit of it helps. I grew up in a home 

with a very frugal grandmother, and she said, ‘‘Sonny, if you don’t 

turn the lights out, you are going to get the bill next month.’’ And 

I turned off the lights. It made sense to me. Why not? If I am going 

to leave them on, I should pay for it. 

So as it unfolds, we are going to become much more sensitive to 

energy in this country, and that is good. We are going to conserve. 

That is a big item. We are going to use different light bulbs. All 

these things count. Every bit of it counts. And so, as you unfold 

with this in mind, but if everybody understands, it is a lot easier 

to accomplish. 

20 

Chairman LIEBERMAN. Well, you have helped everybody understand. Incidentally, I had a very similar grandmother. [Laughter.] 

Mr. PICKENS. Everybody must have. 

Chairman LIEBERMAN. We are getting back to Grandma’s wisdom 

now. 

Mr. PICKENS. Yes. 

Chairman LIEBERMAN. Thank you. Senator Collins. 

Senator COLLINS. Thank you. 

Mr. Pickens, you have made a very important point this morning 

when you stated that the cost of implementing your plan pales by 

comparison to continuing to export $700 billion year after year 

after year, in some cases to countries that do not wish us well. But 

do you have an estimate of what your plan would cost for achieving 

20 percent of our electricity from wind? 

Mr. PICKENS. I think I can give you a number. Let me see. You 

can go from my 4,000 megawatts to get to the number, and 4,000 

megawatts ramped up to 200,000 megawatts, which would be 20 

percent, would cost—it would cost about $500 billion. 

Now, you say, well, wait a minute, that does not include the— 

let me have that other map that was up there. 

Senator COLLINS. Does that include the transmission line? 

Mr. PICKENS. It does not, but I am going to give you that number 

right here. If you can see the green lines on there, that is the Department of Energy’s grid. And that grid, I believe they projected 

$70 to $100 billion. So now you are talking about a production tax 

credit of $15 billion; you are talking about the cost of the 200,000 

megawatts is $500 billion; and you are talking about a grid of $100 

billion. It is interesting. You are starting to approach 1 year’s supply of oil that you are buying. But don’t get the idea this replaces 

that oil. It does not. It will only replace 38 percent. 

So it is a beautiful payout if that was it, and we would all love 

it if you said, ‘‘OK, Boone, do it,’’ and I come back in here in 3 

years, and you said, ‘‘Did you do it?’’ So we got it. We did it, and 

it is appreciated so much, you opening corridors. We did do it, and 

we have reduced it by 38 percent. That would be beautiful. 

I am not sure I am that good, but I have confidence, and I know 

it has to be done. 

Senator COLLINS. And you have talked about the importance of 

the production tax credit. It seems to me that it is critical that 

Congress stop letting the production tax credit expire. There is too 

much uncertainty about when it is going to be extended. Do we 

need a long-term commitment to the production tax credit to bring 

your plan about? 

Mr. PICKENS. That would, I think, solve the PTCs. Yes, the long 

term would help. It would bring the manufacturers in because they 

would see you are committed, and it would bring in the money to 

develop. I have kind of broken new ground here, which I have credit doing that several times. Sometimes it did not make people very 

happy, but, anyway, I have gone out and committed to the 4,000 

megawatts, and Shell Oil Company has done 3,000 megawatts. 

They are building a hundred miles southwest of me. So this is unfolding. And I think the biggest producer of wind energy now is 

Warren Buffett with his operation in the Midwest. 

21 

So, I mean, people believe in this. They know it will work. And 

if you do give an extension of the production tax credit, I think it 

would just accelerate the whole thing. 

Senator COLLINS. And just to clarify the cost issue, obviously the 

production tax credit is critical for this investment to take place. 

But you are largely talking about private investment, correct? 

Mr. PICKENS. I am talking about private investment. But if the 

government wanted to build a grid, I mean, do it. But if they don’t 

want to do it, I think the money is there to do it privately. And 

so it is kind of like either do it or get out of the way, but give us 

the corridors to put it in, and it will be done. 

You could put this on a very fast track if you wanted it to be on, 

and we have got to do it. There is no question we have got to do 

it. Are we going to do it fast, or is it going to be done over a long 

period of time? 

Senator COLLINS. You were just talking with Senator Lieberman, 

quoting your grandmother on turning off the lights. How much of 

the solution also should encompass energy conservation? 

Mr. PICKENS. Oh, it has got to be on page 1, of course. We have 

got to conserve. There is no question about that. We have been 

very wasteful. But in our defense, we had cheap oil. We had cheap 

oil. And as long as we had cheap oil—I don’t know whether you 

have seen this guy—I think it is Jim Kunstler. But his last name 

is Kunstler, and it is not the guy that was the lawyer back years 

ago that was in the Chicago 7 or whatever it was. It is not that 

guy. But it is another person. I went over to Southern Methodist 

University (SMU) and heard him the other night. He is worth 

hearing. He is a generalist, but he tells us where we made the mistakes. We did not develop our rail system. 

You look at the world today, we go places and we want to ride 

on a 200-mile-an-hour train. We have to go to a foreign country to 

do that. We don’t have that. Why don’t we have it? Because we had 

cheap oil. It didn’t make sense for us to. It was expensive. We were 

going to subsidize it. And, it just didn’t make sense for us. And he 

has got—we built too far away from our work. He says you are 

going to move to your work now because of the cost of energy. And 

it was really interesting because this was 2 years ago and the guy 

nailed it. I listened to what he had to say. I watched what has happened, and he was right on. 

Senator COLLINS. Thank you. 

Chairman LIEBERMAN. Thanks, Senator Collins. Senator Voinovich. 

Senator VOINOVICH. Well, things have changed. We are in a global marketplace, and there are a lot of people who want what we 

have, and so we are paying more for it. 

We do rely on foreign oil too much, about 60 percent of our oil 

coming from overseas. But one of the things—and maybe you are 

aware of this—is that we do send that money overseas, but some 

of the same countries that we are buying oil from are also investing 

in our debt. As a matter of fact, since 2001, 70 percent of the new 

debt has been picked up by China, Japan, and the OPEC nations. 

And I don’t know about you, but I am worried about being at the 

mercy of people for our oil, and then before you know it, we are 

22 

at their mercy in terms of our debt. And if they try to put the 

squeeze on us, we are in pretty bad shape. 

Mr. PICKENS. I agree. 

Senator VOINOVICH. I went to some war games at the National 

Defense University, and they talked about the vulnerability that 

we have. And some folks out at Stanford said that in the next 10 

years there is a 80-percent chance that the cut-off of oil will bring 

our economy to its knees. So we have a certain urgency that we 

have right now to get on with this. 

Mr. Pickens, from a public policy point of view, as I mentioned 

to you, I did not have natural gas in the alternatives to oil. I had 

biofuels, ethanol, we have got to get cellulosic, electric hybrids, we 

are working on the batteries, fuel cells—we need hydrogen for the 

fuel cells—and natural gas. And some have contended that in 

terms of where we should put our money is in the area of electric 

hybrids for the simple reason that you do not need to build an infrastructure for them. In other words, if you go to natural gas, you 

have got to have places where people can get it. If you go to fuel 

cells, you have got to go someplace where you can get the hydrogen. And if we go to the plug-ins, you just go home at night and 

plug it into your electric socket. 

What is your attitude towards that in terms of the infrastructure 

necessary to get us to that alternative so we do not have to rely 

so much on foreign oil? 

Mr. PICKENS. This is the way I envision natural gas as a transportation fuel. We have 142,000 natural gas vehicles. There are 8 

million in the world today. And you mandate the government 

fleets. Other fleets are mandated also to do the same thing. You 

have the Port of Los Angeles going to it very quickly now. All that 

can be done without—you don’t have to subsidize that. That can be 

done between user and seller on that. 

As far as your plugging in at home, of course, I think—listen, I 

am not knocking anything that happens in America. But the electric vehicle is not going to have very much range. But natural gas, 

you can plug in at home, too. In fact, my car, my Honda GX, I can 

plug in and my cost of fuel is $1.50 a gallon. I just buy the natural 

gas right off of my gas line that fuels my home and heats my home 

and cooks my food. So it is the same natural gas. I just have a 

small compressor. It is called a ‘‘fill’’ and it fills my car. 

So these things I think are minor. One that is pretty interesting 

is Aubrey McClendon, CEO of Chesapeake Energy, and they are 

the biggest, I think, natural gas producer now in the United States. 

And Aubrey says, look, don’t tax the oil companies, windfall profits 

tax, but also tell them that we will sidestep the tax, but you build 

the stations and take 25,000 filling stations and put an island for 

natural gas in it. Four hundred thousand dollars is what it costs, 

so $400,000 times 25,000 stations is $10 billion. And 25,000 stations, that will pretty well do it. But everything you—— 

Senator VOINOVICH. You think that they would be more likely to 

do that. We have tried to encourage these depots for ethanol, for 

example, and there are a few more of them, but not a whole lot. 

We have got all these E85 cars out there that can’t go someplace 

and get it. So you are thinking that you are going to be able to get 

23 

the infrastructure to support natural gas a lot better than you 

would for ethanol? 

Mr. PICKENS. Well, the point on that is ethanol is a light-duty 

fuel. Ethanol cannot work for heavy duty. But natural gas can. So 

I am approaching it from natural gas would be heavy duty, first 

and all, but when it comes to a passenger car, let it be up to the 

individual on a passenger car. If they want natural gas, if they 

want electric, if they want E80—whatever they want, they have. 

Don’t mandate anything for them. Let them do it. They will the 

cheapest way is what will probably happen. But just let that unfold 

however it goes. But mandate to the fleets that they have got to 

go to natural gas and American fuel. The movement of goods in 

America, back to the same number again, 38 percent—38 percent 

of the fuel used in America is used to move goods. And that is with 

trucks. So you have 38 percent comes from the wrong foreign countries. You have got 38 percent we get with natural gas, and that 

moves the goods. 

I think it works. If you said, can you assure me that it does, I 

know some part of it does. Enough of it does that we will be helped. 

Senator VOINOVICH. I have a theory—and I don’t know whether 

it is a good one or not, but I believe that if this Congress, hopefully 

working with the next President or maybe even before that, would 

make it clear to the world that we are going after every drop of 

oil that is available to us, that we are going to do everything we 

can, as I just mentioned, to have some type of a pilot project that 

we are going to become less reliant on oil, and that includes your 

proposal and a bunch of other proposals, that would send a real 

message throughout the world that the United States finally is 

dead serious about dealing with our energy and oil problem, and 

that would have some impact on the price of oil that we are paying 

for right now and in the future. 

Mr. PICKENS. I was in the Middle East last year, and they don’t 

understand why we don’t develop our resources, and they don’t understand why we keep telling them to produce more. I mean, it is 

a little bit confusing, the message that we send. 

But think with me just a second. Let’s say that had we developed 

ANWR 20 years ago and it went on production 10 years ago, it 

would have been halfway depleted now. So one thing about it, what 

we have not done we still have. And so I think that is interesting. 

Had we done it 20 years ago, the oil price would have been $15 a 

barrel. Today it is close to $150 a barrel. So the asset that we have 

not developed is worth 10 times as much as it was 20 years ago. 

So that is pretty sobering, too, and I said I am ready to open it 

up, get everything we can. I think we would look a lot better to the 

world to develop our own resources than to say we are off limits 

but you are not. I think that is a hard sell, and it is not received 

well in the Middle East. 

So, again, I know you are finishing up on me here. I think maybe 

you have some timer. But what we have got to do is we have got 

to do everything American. Whatever it is, we have got to do it and 

get off the foreign oil. 

Chairman LIEBERMAN. Thank you. Mr. Pickens, that is a good 

note to end on. I really thank you for being here. You have been 

not only educational but I think motivational, which is what we 

24 

1The prepared statement of Mr. Luft appears in the Appendix on page 58. 

need to do. You are effectively putting a lifetime of experience in 

this field to work for your country in some ways that I suppose 

have surprised people. But you are not approaching it as an oil 

man—maybe in some ways you are because of that experience. You 

know the reality of the fact that we only have a limited amount 

of oil potential left in the world. Your recommendations are—actually, though they are visionary in one sense, they seem to me to 

be very practical in another sense and very balanced. And I not 

only thank you for this service to our country, but I hope you will 

stick with it. Knowing you, I know you will stick with it because 

I think in the end you have touched not only the nerve of a problem here, but also, if I may continue the anatomical metaphor, you 

have touched an American muscle, which is the muscle that when 

we see a problem, we have the ability, if we will it, to solve the 

problem to our benefit. That is the spirit you bring to the table, 

and may it reach the highest levels of our government and enable 

us to get something done really soon. Thank you. 

Mr. PICKENS. I appreciate very much your time and your interest 

in what I have to say. But know this: I am first an American and 

second an oil man. 

Chairman LIEBERMAN. Amen. And you know what? If everybody 

up here on Capitol Hill and elsewhere in Washington and in our 

government approaches it that way, I am first an American and everything else I am—Democrat, Republican, whatever else I am—is 

behind that because this problem is an American problem, and we 

can together devise an American solution. That is the road that you 

have shown us here this morning. 

Mr. PICKENS. And, I have announced I am nonpartisan in this 

race. This issue is way above Democrat or Republican, and we need 

to approach it that way. I think we will approach it that way. I 

want to get it in this debate, and I want the American people to 

know. 

Chairman LIEBERMAN. Thank you, sir. God bless you and good 

luck. 

Mr. PICKENS. Thank you. 

Chairman LIEBERMAN. We will now call the second panel of witnesses: Dr. Gal Luft, Geoffrey Anderson, and Dr. Habib Dagher. 

Gentlemen, welcome to the table, and thank you for being here. 

That is a tough act to follow, but you have all been active and leaders in this area. As I said at the outset, I think you each have 

made some proposals that are bold as well and can inform what we 

hope to do here in Washington. So we welcome you. We thank you 

for being here. And, Dr. Luft, please proceed with your testimony. 

TESTIMONY OF GAL LUFT, PH.D.,1 EXECUTIVE DIRECTOR, INSTITUTE FOR THE ANALYSIS OF GLOBAL SECURITY, AND 

CO-FOUNDER, SET AMERICA FREE COALITION 

Mr. LUFT. Thank you, Mr. Chairman, Senator Collins, and Senator Voinovich. I was not planning on responding to the Pickens 

Plan, but I am afraid that in light of what I have heard today, I 

would like to make some comments on the plan because I think 

25 

that there are some serious mischaracterizations that we heard 

here today. 

The most important one is that when we talk about national security, we need to realize that 63 percent of the world’s natural gas 

reserves are in the hands of Russia, Iran, Qatar, Saudi Arabia, and 

United Arab Emirates. These countries are now in the process of 

developing and discussing the establishment of a natural gas cartel. So shifting our transportation sector from oil to natural gas is 

like jumping from the frying pan into the fire. This is a spectacularly bad idea for us to shift our transportation sector from one resource that we do not have to another that we do not have. And 

we only have 3 percent of the world reserves of natural gas. The 

situation is very similar to our situation with regards to oil. So we 

do not want to give at this point in time a gift to Iran. 

Second, one good thing that happened after the 1973 embargo is 

that we weaned the power sector from oil. We no longer produce 

electricity from oil, unless you live in Hawaii; and, therefore, solar, 

wind, nuclear, all these sources of energy have nothing to do with 

our oil dependence. Unless we have serious deployment of electric 

cars, these sources of energy are irrelevant. 

Now, Mr. Pickens says that we take 20 percent of our natural 

gas and replace it with wind. I am sorry, but our energy system 

is not a Lego. You do not take one cube and replace it with another. If we increase wind production, which is an excellent idea— 

excellent idea, we should do it—nothing guarantees that it will displace natural gas. It could displace coal. It could displace solar. It 

could displace geothermal. How do you control what the wind will 

displace. 

Just food for thought, and I want to move into the things I really 

want to talk about and start by agreeing with Mr. Pickens that we 

have a serious problem. Just to remind the Committee that 10 

years ago, Osama bin Laden predicted that oil would be $144 a 

barrel. Everybody laughed at him. Oil was only $12 a barrel at the 

time. He was right, and as a result, we are exporting hundreds of 

billions of dollars. This is the first year that we actually are going 

to pay foreign countries more than we pay our own military to protect us. 

So in order to understand what should be the road to energy security, we must first understand why we are where we are. There 

are many reasons why we have the oil crisis now. Of course, strong 

demand in developing Asia, speculation, geological decline, geopolitical risk, all of them have contributed their share. But, in my 

view, by far the main culprit is OPEC’s reluctance to ramp up production. This cartel owns 78 percent of the world’s proven reserves, 

and it produces about 40 percent of its oil production. 

If you refer to page 2 of my testimony, you will see that in 1973, 

OPEC produced 30 million barrels of oil every day. Today, OPEC 

produces 32 million barrels of oil every day. In other words, OPEC 

today produces almost as much oil as it did 35 years ago. Even 

though the world economy almost doubled, non-OPEC production 

almost doubled, OPEC included last year two new members—Angola and Ecuador—and they still produce almost the same amount 

of oil as they did 35 years ago. This is a scandalous practice, and 

26 

we are stepping on our toes not telling OPEC that they are the 

main culprit behind everything that is happening now. 

Clearly, it is not in OPEC’s interest to provide relief to the struggling global economy. The cartel enjoys a vertical monopoly of the 

world vehicle fuel supply, and it is currently at the receiving end 

of the biggest transfer of wealth in human history. 

Our energy security problem stems from the fact that our transportation sector is dominated by petroleum. And while being in a 

hole, we continue to dig. We put on the road annually 16 million 

new cars, almost all of them gasoline only, each with an average 

street life of 16.8 years. A Senator elected in 2008 will witness the 

introduction of 102 million gasoline-only cars during his or her 6- 

year term. 

The source of our predicament is that we have a cartel married 

to a monopoly, and if we want to solve our energy security problem, 

we must break both the cartel and oil’s monopoly in the transportation sector. This means that neither efforts to expand petroleum 

supply nor those to crimp petroleum demand through increased 

Corporate Average Economy Fuel (CAFE) standards will be enough 

to reduce America’s strategic vulnerability. Such non-transformational policies at best buy us a few more years of complacency, while ensuring a much worse dependence down the road 

when America’s conventional oil reserves are even more depleted. 

To those who believe that increased domestic drilling is the solution, I propose to take a look at page 4 of my testimony, where you 

see OPEC’s graph that clearly shows that when we drill more, they 

drill less. That is the history of the past 35 years. 

Rather than focusing on solutions that perpetuate the petroleum 

standard, we should invest in transformational policies that aim to 

diminish the strategic importance of oil by breaking its monopoly 

in transportation. We should do to oil what was once done to salt. 

Throughout history, salt was used to preserve food, enabling armies to march across continents. Those who owned the precious 

mineral acquired wealth and international prestige. Those who did 

not had to either pay for it or fight for it, just like with oil today. 

Salt-rich domains like Orissa, Tortuga, Boavista, and Turk Island 

enjoyed great strategic importance equivalent to that enjoyed today 

by city states like Dubai and Abu Dhabi. All this ended with the 

invention of canning and refrigeration. Salt is no longer a strategic 

commodity shaping global trends. It is just another commodity. 

The first thing we must do is to turn oil into salt and to ensure 

that the cars rolling onto America’s roads are platforms on which 

fuels can compete. For the cost of $100 extra, automakers can 

make virtually any car a flex-fuel vehicle, capable of running on 

any combination of gasoline and a variety of alcohols such as ethanol and methanol, made from a variety of feedstocks. 

Now, we are all familiar with ethanol, and everybody has an 

opinion about it. But I would like to talk here about another alcohol that China is actually deploying at the moment, and that is 

methanol. Methanol today is China’s alternative fuel of choice. Several provinces in China are already blending their gasoline with 

methanol, and scores of methanol plants are currently under construction there. The Chinese auto industry has already begun producing flex-fuel models that can run on methanol. Methanol packs 

27 

less energy per gallon and is more corrosive than ethanol. But it 

is cheaper and far easier to produce in bulk. While ethanol can be 

made only from agricultural products and biomass, such as corn 

and sugar cane, methanol can be made from agricultural waste, 

coal, industrial garbage, natural gas, and even carbon dioxide. Yes, 

in my view, this is perhaps the most promising way of dealing with 

our carbon dioxide problem, is turning it into methanol. 

Electricity is key to the solution. As I said before, we do not 

produce electricity from oil, but if we shift to electricity as a transportation fuel through massive deployment of electric cars and 

plug-in hybrids, that will make a huge difference. A plug-in hybrid 

car does about 100 miles per gallon of gasoline. If this plug-in hybrid is also a flex-fuel car, you add the $100 feature, and you get 

500 miles per gallon of gasoline. Not 500 miles per gallon, but 500 

miles per gallon of gasoline. A nationwide deployment of flex-fuel 

cars, plug-in hybrids, and other alternative fuels can take place 

within two decades. But such a transformation will not occur by 

itself. 

On the grounds of national security, Congress should take swift 

action to require that new vehicles sold in the United States are 

flex-fuel vehicles through an Open Fuel Standard. Such an Open 

Fuel Standard would level the playing field and promote free competition among diverse energy suppliers. I am delighted that shortly after this hearing, Open Fuel Standard legislation will be introduced by a bipartisan group of Senators, which includes both the 

Chairman and the Ranking Member. This is an important piece of 

legislation and, in my view, the best way, the best mechanism to 

break OPEC’s monopoly in the transportation sector. By making 

America a flex-fuel vehicle market, we will effectively make flexfuel the international standard as all foreign automakers would be 

impelled to convert their lines over as well. 

Around the world gasoline would be forced to compete at the 

pump against alcohol fuels made from any number of sources, including not only commercial crops like corn and sugar, but also biomass, coal, natural gas, and recycled urban trash. 

I realize that many are opposed to any government interference 

in the market, even if it only means adding $100 to the cost of a 

new car. Indeed, in a perfect world, government would not have to 

do things like that and intervene in the energy market, but in a 

time of war, the United States is taking an unacceptable risk by 

leaving the problem to be solved by the invisible hand. Choosing 

not to embrace an Open Fuel Standard is choosing to preserve oil’s 

monopoly in the transportation sector and, with it, OPEC’s growing 

stranglehold over the global economy and in essence guaranteeing 

continuous economic and strategic decline. 

Chairman LIEBERMAN. Thanks, Dr. Luft. A lot for us to think 

about and do. 

Geoffrey Anderson is President and Chief Executive Officer of 

Smart Growth America. It is good to see you again. We welcome 

your testimony now. 

28 

1The prepared statement of Mr. Anderson appears in the Appendix on page 64. 

TESTIMONY OF GEOFFREY ANDERSON,1 PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, SMART GROWTH AMERICA 

Mr. ANDERSON. Thank you, Mr. Chairman, Senator Collins, and 

Senator Voinovich, for having a hearing on such an important 

topic. 

I think a lot of the focus to this point has rightly been on the 

transportation sector and on what we can do with respect to supply. But I think we need to think about this charge in a broader 

sense, and it is really about reducing dependence on oil, reducing 

climate emissions, ensuring that we actually help consumers to 

save money at the pump, and helping the economy at the same 

time. And so I think when we start to think about that, we also 

need to think about the demand side and some of the conservation 

things that T. Boone Pickens began to talk about. And that is 

where Smart Growth comes in. 

I think the real opportunity out there right now is to allow people to drive less and to be able to do more. And we can do that by 

essentially building more walkable and more complete communities. A lot of the growth in oil use has been as a result of spreadout, driveable landscapes that really do not give you any options 

besides driving. And there is a real move now to create more 

walkable communities where homes are closer to jobs, shops are 

closer to work, and all of these things can be reached either on foot, 

by bike, with transit, or by shorter car trips. 

I want to talk a little bit about a project called Atlantic Station 

because I think it does a lot to illustrate what we are talking about 

here, and the potential. It is a $4 billion redevelopment of a 

brownfield site in midtown Atlanta, basically done entirely for economic reasons. The developer wanted to make money. He thought 

there was a market out there and put in basically 10 million 

square feet of commercial, retail, office, 3,000 to 5,000 units of 

housing very close to transit, all in a walkable neighborhood. When 

the EPA calculated what the emissions impacts would be, the calculations were that residents would drive approximately 27 miles 

a day compared to the average Atlantan who drives around 34 

miles. Recent studies of that neighborhood, in fact, show that people are now driving about 9 miles per day just because their car 

trips are shorter, the places they want to go are in closer proximity 

to the places they live, and it also obviously has climate implications as well. 

The total savings on a yearly basis run in the neighborhood of 

around 50 million miles of travel every year just from that development compared to what the driving characteristics would have 

been in the event that it was built in a more normal Atlanta pattern. 

If you look at what that might translate into over a period of 

time or over a larger scale, we can expect—and this is from a publication done by the Urban Land Institute called ‘‘Growing Cooler’’— 

that each increment of more compact, walkable development leads 

to about a 20- to 40-percent reduction in vehicle miles of travel. If 

you project that out over the time frame to 2030, if you shift a significant share of new growth to compact patterns, you can actually 

29 

save 85 million metric tons of carbon dioxide in 2030. It is equal 

to about a 28-percent increase in CAFE standards and roughly half 

the savings of the Senate’s 35-mile-per-gallon CAFE bill. So it can 

be significant. The cost savings were calculated in the $24 billion range for con- sumers in the year 2030 or cumulative savings of around $250 billion. And by 2050, you could expect a 7 to 10 percent total reduction in carbon dioxide emissions accompanying driving and oil consumption really as a result of shifting some portion of our new 

growth over the smarter development patterns. 

A Natural Resources Defense Council (NRDC) analysis looked at 

just what would happen if you looked at a 10-percent shift of new 

growth to more walkable patterns and found that you could save 

around 4.95 billion gallons of gasoline, 118 million barrels of oil, 

and roughly $220 billion worth of household expenses. That was, 

of course, calculated in 2004, so I think the household expense 

number would be a little higher today. 

If those savings are available at scale, what is the likelihood of 

getting there, and does the market want to go there? And what our 

research indicates and research from others in the real estate field 

indicates is that about a third of the market is interested in having 

more walkable communities, more compact communities. The fact 

is that for the last 50 years, we have essentially built drive-only 

communities, so the two-thirds of the market that really is interested in that product is well provided for. An analysis by Chris 

Nelson at Metropolitan Institute at Virginia Tech indicates that, in 

fact, from the perspective of market supply, we probably already 

have the demand met that will occur in 2025 for large-lot singlefamily houses. The unmet demand is really in the area of smaller 

single-family houses on smaller lots, condominiums, apartments, 

and so forth. And there are a couple trends driving this. One is 

what they call in Minnesota—or at least that is where I heard it— 

the ‘‘silver tsunami,’’ the changing demographics where households 

are very different than they were even 20 or 30 years ago. 

In 1960, roughly half of American households had children. In 

2025, that is expected to be around 28 percent, with around 28 percent of households being single individuals. So the market is definitely changing, and that is why some of the market demands are 

changing and why the supply is so out of balance right now with 

the demand and the projected demand. 

It is true also in the retail sector that commercial products are 

changing as well. We have seen a vast drop-off in the big-box mall 

out in the middle of a parking lot, and a great increase of basically 

walkable, more town-center-style retail. So the market is really 

moving in this direction, and there is a big opportunity for the Federal Government to basically enable some of this. It is important 

for two reasons. One, with the market moving in this direction, I 

think there is opportunity for the private sector to really take advantage of that market demand and build the communities that 

will help consumers to be able to drive less and accomplish their 

daily needs. But it is often the hardest thing to do from a market 

perspective. The Atlantic Station development took years and years 

to get through regulatory barriers, to get through brownfield barriers, to address market institutional barriers of finance. And so 

30 

1The prepared statement of Mr. Dagher appears in the Appendix on page 71. 

from the development perspective, it is often the hardest product 

to build. It is zoning regulations at the local level. It is how we 

fund infrastructure at the State and national level, and a variety 

of other things. 

So the Federal Government has the opportunity essentially now 

to promote what the market is asking for in a way that will help 

to reduce the vehicle miles of travel that result from those developments. And I think there are a couple of actions that have been 

helpful in the past. The brownfields law, the clean-up programs, 

and the tax incentives for brownfields redevelopment have had a 

big impact, and I think a lot more could be done there. The historic 

preservation tax credits help to drive development to more infield 

locations where the market demand wants to move. The investments in transit, biking, and walking facilities are important public 

sector investments where the private sector responds to those by 

building communities that match those kinds of investments. 

In terms of the existing Federal legislation right now, I think obviously the climate legislation included some measures for funding 

transit and walkable communities, but I think that can be greatly 

increased. The new transportation bill that the Congress will be 

visiting probably in 2009 or 2010 is going to have real opportunities to invest in world-class transit, pedestrian, and bicycle infrastructure to make better connections between land use and to 

incentivize the building of more walkable neighborhoods that give 

people choices about how they get around, give them the opportunity to avoid high gas prices, and the opportunity to reinvest in 

our existing communities and infrastructure, and then to connect 

those communities, many of which are connected by short plane 

flights or by long-distance auto commutes, instead connecting them 

by rail and maintaining the economic synergies that currently exist 

between those places. 

I will wrap up there, and thank you for the opportunity to speak 

with you today. 

Chairman LIEBERMAN. Thanks very much, Mr. Anderson. Very 

interesting testimony, and I look forward to asking you a few questions. 

Dr. Dagher, it is a pleasure to have you here. Dr. Dagher is a 

professor of civil and structural engineering at the University of 

Maine, which we on this Committee know as one of America’s great 

public universities, and director of the university’s Advanced Structures and Composites Laboratory. 

We thank you for being here and invite your testimony now. 

TESTIMONY OF HABIB J. DAGHER, PH.D.,1 DIRECTOR, ADVANCED STRUCTURES AND COMPOSITES LABORATORY, UNIVERSITY OF MAINE 

Mr. DAGHER. Thank you, Chairman Lieberman and Ranking 

Member Collins. Thanks for inviting me, Senator Collins, to be 

here today. 

I would like to start this testimony by acknowledging the inspiring role as a system architect, my colleague, George Hart, as well 

31 

as Matt Simmons, who is well known for alerting our country to 

peak oil and peak oil issues. 

You have heard about the financial, geopolitical, and security dimensions of our energy crisis. I would like to put a human face on 

this crisis. Maine will likely be the first State to experience a heating state of emergency. I say that with confidence because we are 

living it right now, and Senator Collins has been very concerned 

about our future. 

Some statistics about Maine. Eighty percent of Maine families 

use heating oil to heat our homes, and heating oil costs are tracking those of crude. Next winter’s heating oil costs will be $5 a gallon if you try to lock it today. That means the average Maine family will pay $5,000 a year just to heat their home next winter. In 

2020, if we do not do anything, if we do not do the Pickens Plan 

or any other plan, those numbers will be $10,000 a year just to 

heat our homes. 

If you look at Chart 4 in the testimony, it shows you in red how 

much of the Maine family budget actually goes to energy. Ten 

years ago, less than 5 percent of the Maine family budget went to 

energy. Today, close to 25 percent, a quarter of the Maine family 

budget, goes to paying for energy. That is transportation, that is 

heating, that is electrical power. In 10 years, if we do not make any 

changes, about half of the Maine family budget would go to energy. 

Clearly, this is not sustainable. The State of Maine pays close to 

$5 billion a year in energy costs, and we only have a little over a 

million people. 

So what is the solution? You have heard about T. Boone Pickens’ 

wonderful plan, but we sit in the corner of the country, and we are 

not very close to the wind belt that runs up and down from Kansas 

to Texas. So what do we do? And we have actually been working 

very hard on solutions for our State. 

If you look at page 4 of the testimony, according to the National 

Renewable Energy Lab (NREL), the offshore wind potential, the 

offshore wind energy, the energy that blows over the oceans, if you 

wish, is a tremendous natural resource, a resource we did not really understand until recently. The offshore wind is about equal to 

the U.S. electric production today. 

If you look at other ocean energy resources, we have heard about 

tidal energy. Tidal energy and wave energy are actually a fraction, 

a very small fraction of the offshore wind resource. 

If you take a look at the second sketch on the right-hand side, 

it shows another very powerful point about the offshore wind resource. It sits very close where the need is. If you look at the U.S. 

population densities shown in dark red, and if you look at the offshore wind resource, it is where the people are. So we don’t need 

to build a large transportation infrastructure to get the wind energy to the people where they need it. That is one major advantage 

of that resource. 

Maine, of course, has a tremendous offshore wind resource. The 

Gulf of Maine has been called the Saudi Arabia of wind in many 

ways. There is over 100 gigawatts of wind power in the Gulf of 

Maine. That is about 10 percent of the total U.S. electric power 

production. 

32 

So how do we go get it? One major advantage of that resource, 

it is also a seasonal resource. It is actually high when we need it. 

We need to heat ourselves in the State of Maine and in the Northeast, and the heating costs are our biggest issues. But in the wintertime, the wind blows twice as fast as it does in the summertime, 

and the power generated from the wind is the cube of the wind 

speed. So in the wintertime, per month, we can generate 8 times 

as much power as we do in the summertime. You can think of wind 

off the coast of Maine as a seasonal crop right now that can help 

us heat the State of Maine. 

I would like to talk more about what we are proposing for the 

Gulf of Maine and how it fits in with T. Boone Pickens’ vision. Actually, it fits in very well with his vision. If you look at the lefthand drawing here that we have, Mr. Pickens essentially is talking 

about the U.S. wind corridor you see up and down from Kansas 

down to Texas. That is a wonderful resource that can generate 200 

to 400 gigawatts, depending on how much of it you think you could 

use. We are talking about adding three more wind regions to the 

Pickens Plan, and the three wind regions are the Atlantic Ocean 

wind region that can generate between 120 and 240 gigawatts, and 

then we have the Pacific Ocean wind corridor that can generate 75 

to 150 gigawatts, and then the Great Lakes corridor that generates 

110 to 220 gigawatts. So rather than go to 20 percent, as Mr. Pickens is saying, maybe we can go to 40 percent with this additional 

resource, and it is very close to where people actually need it. 

The other major advantage of having this distributed corridor is 

the fact that the geography allows averaging of the uncertainty of 

the winds and the intermittency of the winds, so you have less 

intermittency as the weather moves from the west to the east. 

There is always some bad weather somewhere. You are always 

going to pick up some wind. And that reduces the uncertainty, if 

you wish, in the wind profiles. 

But it is more than just generating wind. It is how to use the 

wind, how to actually take that wind and make the best use out 

of that electricity. We are proposing very efficient ways to store and 

utilize this electricity that have profound effects on efficiencies. We 

are talking about efficiencies on the order of two to four that could 

be achieved by using essentially heat pumps—heat pumps, whether 

they are ground loop heat pumps—as you know, the temperature 

below the Earth, 10 feet below the Earth stays close to 45 degrees 

Fahrenheit. It is a wonderful place to go get some calories and 

bring them into the house. You do not have to generate those calories. They are there. And that is what we are trying to do here. 

We are trying to use the electricity we generate from wind and 

bring it into the house, shift it into the house, rather than generate 

it using electricity. And that can get you, depending on the time 

of the year and the temperature outside two to four times the benefits. 

Another major advantage is storage. If you look at plug-in electric vehicles—we have all been talking about them, but one thing 

we have not talked about is that the majority of our energy usage 

actually is in transportation. Fifty percent of the energy budget for 

the family in Maine is in transportation; 40 percent is in heating. 

So if we can cut that transportation part out by using electric plugVerDate Nov 24 2008 10:20 Apr 09, 2010 Jkt 044578 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 P:\DOCS\44578.TXT SAFFAIRS PsN: PAT
33 

in vehicles, and use them as a distributed battery that can store 

energy at night—when you go at night and you plug in your car, 

the wind can be high, it can be low, you can still charge your car. 

And then you can use it the next day. So it is a wonderful distributed battery that could be used to even out the intermittency of the 

wind. 

Are we the only ones who are doing this? Well, if we look across 

the Atlantic, unfortunately the Europeans are way ahead of us. 

Again, they have been scratching their heads long before we have. 

They have been paying $7, $8 a gallon long before we have. So they 

are looking at solutions. 

In Europe, there are plans by 2030 to generate 150 gigawatts of 

offshore wind capacity for Europe—150 gigawatts, that is number 

16 on the chart. They are calling wind energy and offshore wind 

the ‘‘Third Industrial Revolution.’’ They have created over 300,000 

jobs in Europe in wind and wind-related businesses. We can do the 

same. We can do the same by driving in the direction of renewables 

as well. 

What is it going to take to go offshore? And if you look at going 

offshore, it is almost like the reverse Darwinian motion here. We 

are actually going from land with wind technology over to offshore. 

And what is it going to require? It is going to require developing 

floating platforms because the Continental Shelf in the United 

States drops off very quickly. Ninety percent of that wonderful 

wind resource sits far offshore and in deep water. So we need to 

develop these tension-leg platform type solutions, and you can see 

some of these structures on page 6. 

So we need a research and developement (R&D) program to be 

able to transfer some of that technology from Europe to the United 

States and also transfer decades of deepwater offshore drilling experience into the wind energy market. We have a detailed $100 million R&D plan that we are proposing 

that is in your sheets, but I would like to summarize here very 

quickly. Offshore wind is a wonderful U.S. natural resource. It sits 

closer to where people need it. If you look at where the population 

centers are, it is very close to them. We do not need to build large 

transmissions to get to those locations. 

We need your support to create a national Offshore Wind Energy 

Initiative, a Manhattan Project for offshore wind energy that can 

double the Pickens Plan. We are ready to lead that in the State of 

Maine because, you know what? We are in the eye of the heating 

hurricane. That is where Maine is right now. We are prepared to 

lead the Nation already if a national program is created. 

The other thing we would like your help on is to develop the financial incentives, the PTCs, make sure those stay in place, and 

also develop a policy framework to allow the offshore wind developments to take place. Thank you very much. 

Chairman LIEBERMAN. Thanks very much, Dr. Dagher. That was 

actually very exciting testimony. I appreciate it very much. 

We will do a 6-minute round. There is a vote that has gone off 

on the Senate floor. I think Senator Collins will go first and then 

hopefully be back before long, and then we will go from there. 

Dr. Luft, let me take advantage of your presence here to just ask 

you to say a bit more about the Open Fuel Standard Act—which 

34 

Senator Collins and I, with Senator Brownback and Senator Salazar, are going to announce the introduction of at noon today—and 

explain specifically how its provisions would promote the fuel diversity that you and I and others believe is necessary to break the 

stranglehold that oil has on our economy. 

Mr. LUFT. Basically what the bill does, it requires that 50 percent of new cars sold—not produced, sold—in the United States 

must be flex fuel by 2012. That is the first benchmark. And the 50- 

percent figure actually comes from the auto industry itself. In multiple meetings of the Big Three with both congressional leadership 

and the President, they themselves said that they are willing to 

make 50 percent of new cars flex fuel by 2012. So the bill basically 

takes their numbers and codifies it, makes it into a law. 

It has a second benchmark of 80 percent by 2015, but the important thing is that we have the 50-percent commitment today and 

that the fuel flexibility is not only for ethanol, but we have also 

methanol and other alcohols that can play a role in the transportation sector, and today they are excluded. 

Now, let me explain. An E85 car, the one that is made today by 

Detroit, can only run on ethanol. It cannot run on methanol because methanol is slightly more corrosive. If the cars are what we 

call GEM flex fuel—gasoline, ethanol, methanol—that includes all 

of the alcohols, and that means that you have much more fuel 

choice, and also you can introduce other feedstocks that can go into 

alcohol production, like coal, natural gas, garbage, and carbon dioxide, as I said before. So you have a much more scalable solution, 

and that is a good way to introduce fuel choice in the transportation sector because today we do not have choice. It is gasoline, 

gasoline, and gasoline. That is all that plays. 

We also believe that within 3 years of the introduction of the 

Open Fuel Standard, we will have almost 50 million flex-fuel cars 

on the road. At this point it makes perfect sense for the distribution system to follow because today gas station owners don’t want 

to convert their pumps because there are not enough cars on the 

road. But once every fourth or fifth car on the road is a flex-fuel 

and we have continuously high oil prices, it makes perfect sense for 

them to do it. 

Chairman LIEBERMAN. Where does electricity fit in then, electricity-driven cars? 

Mr. LUFT. On the electricity front, the energy bill that was 

passed in 2007 had some terrific provisions for plug-in hybrids. The 

only thing that is missing now are the tax incentives, and that is 

part of the tax package that hopefully will be resolved one way or 

another. But I think that we have made significant progress on 

electrification of transportation, and now what we need to do is to 

deal with the liquid fuel market by introducing this Open Fuel 

Standard. 

Chairman LIEBERMAN. Just for the record, can a car be both flexfuel and have the option of being powered by a battery? 

Mr. LUFT. It should. Once you have a plug-in hybrid car, making it also flex-fuel just means adding $100 to the car. All you need is 

a different fuel line of corrosion-resistant materials that enable the 

car to run also on alcohols. It is not one or the other. It should be 

both. 

35 

Chairman LIEBERMAN. Should our aim be to get to 100 percent 

by a date certain? 

Mr. LUFT. Well, I think that it would be nice if we had 100 percent. I think 100 percent could be difficult. But I think if we have 

the 50 percent going to 80 percent, then you certainly create a market, and that will move the whole system forward. 

Chairman LIEBERMAN. OK. Dr. Dagher, you mentioned that Europe is ahead of us in the development of offshore wind energy. Tell 

the Committee a little bit more about how you would characterize 

the maturity of offshore wind here in the United States. How much 

electricity is now being produced by offshore wind? 

Mr. DAGHER. In the U.S.—— 

Chairman LIEBERMAN. Yes, that is what I meant. 

Mr. DAGHER [continuing]. At this particular time, there is no production of electricity. 

Chairman LIEBERMAN. Really it is zero. 

Mr. DAGHER. It is zero at this point. 

Chairman LIEBERMAN. So the notorious wind farm off of Nantucket, was it, that never—nothing has happened there. 

Mr. DAGHER. Certainly it has not materialized yet. There are 

hopes that it would materialize. 

Senator CARPER. Would the Chairman yield? 

Chairman LIEBERMAN. Please. 

Senator CARPER. Twelve miles off the coast of Rehoboth Beach, 

Delaware, the wind farm is coming. 

Chairman LIEBERMAN. It is coming? 

Senator CARPER. Yes, we have worked it out. 

Chairman LIEBERMAN. Really? 

Senator CARPER. And we are inviting Maryland and maybe New 

Jersey to consider joining us. 

Chairman LIEBERMAN. That is great. 

Senator CARPER. We are excited. 

Chairman LIEBERMAN. Thank you, Senator Carper. Good news. 

Mr. DAGHER. Yes. 

Chairman LIEBERMAN. What is the state of the technology? In 

other words, is there a lot of R&D that still has to be done to make 

this work, particularly further offshore? 

Mr. DAGHER. That is correct. If you look at further offshore right 

now, there are no commercial installations of further offshore wind 

energy, even though 90 percent, if you wish, of the U.S. offshore 

wind energy is in deep water. So, yes, there are major R&D efforts 

needed. There are currently a number of companies worldwide that 

are pursuing the effort. StatoilHydro has recently invested $80 million in their first demonstration structure. 

What needs to be done? There needs to be a public-private effort, 

government and industry working together to go in that direction. 

However, we believe in the next 5 years to 7 years, if the R&D dollars are in place, we should be able to go deep offshore. 

Chairman LIEBERMAN. Thanks. My time is up, and also my time 

will be up over there if I do not move. So I am going to temporarily 

recess the hearing. Don’t go very far because I expect Senator Collins will come back, and she will begin again and then I will return. 

Thank you. 

36 

[Recess.] 

Senator COLLINS [presiding]. The Committee will come back to 

order. In the Chairman’s absence, I am going to proceed with his 

permission to my questioning, and, Dr. Dagher, we will start with 

you. 

First let me say to the entire panel that your testimony is very 

helpful to us. When I look at all the testimony we have heard 

today, I cannot help but think that all of the above are part of the 

answer, that it is not just one piece. We have to have a very comprehensive approach. 

Dr. Dagher, as you know, it has been difficult to do siting of wind 

energy, both on land and in the case of Massachusetts, offshore as 

well. Therefore, I want to clarify a point about the plan that you 

have presented. 

As I understand it, these turbines would not be visible from the 

shore. Is that accurate? 

Mr. DAGHER. That is accurate, Senator Collins, yes. 

Senator COLLINS. So how far offshore are you talking about locating these turbines? 

Mr. DAGHER. We are looking at 20-miles-plus offshore, which because of the curvature of the Earth, would make these invisible, 

and specifically to address the issues that you have been concerned 

about is how do we get over the Nantucket problem. It is really 

what we call ‘‘out of sight, out of mind’’ turbines, in many ways. 

A lot of people do not want to look at these turbines from their 

land onshore, and by getting them out where they are 20 miles off, 

we avoid some of these issues. But also we pick up the wonderful 

wind resource that happens to be at that distance. 

Senator COLLINS. I am very excited about T. Boone Pickens’ plan, 

but I do not think it is the whole answer. It seems to me that the 

plan that you have outlined using offshore wind and geothermal 

are really complementary to his plan. Is that your assessment? 

Mr. DAGHER. That is correct, Senator Collins, yes. T. Boone Pickens’ plan utilizes the wind corridor from the Dakotas down to 

Texas to generate anywhere from 200 to 400 gigawatts, depending 

on how much you want to generate. But that leaves us out, if you 

wish, on the east coast and on the west coast unless we build very 

expensive transmission systems. The majority of the U.S. population, actually close to 28 States, utilize more than 70 percent of 

the Earth’s electricity around the coasts of the United States. So 

the major demand for electricity is around the perimeter of the 

country. 

Senator COLLINS. So, actually, your plan helps to provide increased access to renewable electricity closer to the population centers. The Pickens Plan goes through the very center of the United 

States, but as I understand it, electricity loses—there are line 

losses the further away from the source of electricity. Is that accurate? 

Mr. DAGHER. That is accurate. 

Senator COLLINS. You are the engineer here. 

Mr. DAGHER. That is correct. Yes, there are line losses that take 

place, and, of course, there are transmission costs as well that go 

along with that. And building transmission lines in heavily populated areas is very expensive as well from a permitting viewpoint 

37 

and so forth. And if you look at the population centers on the east 

coast, for example, the Midatlantic States and up in the New England area, it would be very costly to build transmission lines in 

those areas. Therefore, siting some of this renewable resource offshore allows us to get directly to where the population centers are 

and avoid the congestion. 

Senator COLLINS. Thank you. 

Dr. Luft, I want to go to your point about the transportation sector because, clearly, converting cars has to be an essential component of our energy security policy. And I would be interested in 

your concerns about Mr. Pickens’ plan to use natural gas. What 

would you think of the Federal Government having a mandate on 

itself to say that the Federal fleet has to be comprised of flex-fuel 

cars, plug-in hybrids, as well as natural gas-fueled cars by a certain date? Let me tell you why I am asking you this question. 

Mr. Pickens made the point that in the United States we have 

only a very small percentage of our vehicles using natural gas. 

Well, you could go beyond natural gas and say we have a very 

small percentage of our vehicles that are not dependent on gasoline 

more broadly. If the Federal Government helped to lead the way, 

would it help spur the infrastructure that we need to fuel these alternative vehicles? And would it help encourage manufacturers to 

also meet this demand? 

Mr. LUFT. Well, first of all, the Federal Government has already 

committed itself years ago, and the problem today is with compliance rather than commitment. So let’s first of all focus on compliance of rules and regulations that have already been introduced 

years ago and make sure that Federal agencies are actually in full 

compliance. 

I think that there are certain limitations to certain Federal agencies realistically that need access to the fuel if they do not have infrastructure, which is why I think the lowest-hanging fruit is the 

flex-fuel because a flex-fuel mandate only adds a small feature to 

the car. It is very cheap. It should be, across the board, not only 

added to the Federal fleet but to every car sold in America. 

Quite frankly, one of the reasons, I think, that methanol should 

be in the picture, if Mr. Pickens is so interested in natural gas, you 

should know that almost all of our methanol today is produced 

from natural gas. So that is a good way to use indirectly natural 

gas in flex-fuel cars by using methanol, which can be made from 

other things but also from natural gas. And that is, again, this 

$100 feature that makes the car capable of running on those fuels. 

That is the very low-hanging fruit, and thank you for being part 

of it. 

Senator COLLINS. In your testimony, you had a wonderful comparison that the Federal Government is subsidizing converter 

boxes so that people do not lose the signal on their television sets 

come next year when the conversion to digital takes place. It is 

ironic that we do not do more to help people convert their automobiles to flex-fuels when an investment of just $100 per vehicle 

could make such a difference in the energy consumption of our 

country. You did not use that analogy in your oral presentation 

today, so I just wanted to bring it up for the record since, arguably, 

helping to reduce our dependence on foreign oil is more important 

38 

than helping to ensure that people can still watch television—or 

some would argue, anyway. So I thought that was a good point. 

Mr. Anderson, your emphasis on community planning and the 

design of our housing and our downtowns is very interesting, and 

I also think it is part of the solution. However, if you come from 

a large rural State like mine, it seems somewhat less relevant than 

it would to a more congested urban area. 

What can a large rural State learn from your findings? 

Mr. ANDERSON. I think actually there is a lot of application. Before this position, I was at the Environmental Protection Agency 

actually running the Smart Growth Program there, and a lot of the 

technical assistance we did there was in more rural locations—Laconia, New Hampshire; Pamlico, North Carolina; Cheyenne, Wyoming; Victor and Driggs, Idaho. A lot of small towns really are 

looking at how they are growing and asking the question—I mean, 

in many ways it is the suburban and rural areas that are most vulnerable to rising gas prices because of the lack of options from 

being able to drive. And the most significant change we have seen, 

I think, in the short term has been increases in transit ridership. 

We are seeing transit at 50-year high. We have seen actual drops 

in vehicle miles of travel over the last year. So people are changing 

their behavior, and it is happening in the places you would expect, 

with a lot of transportation choices and a lot of public transportation. But it is also happening in smaller towns and rural areas. 

And the kinds of transit options, the kinds of public transportation 

options you would want to look at for smaller rural towns and 

areas are different, but they are out there, and the models exist for 

systems that would be applicable to those places. 

And so I think also looking at not only the work trip but the nonwork trip, there tends to be a great deal of focus on the energy and 

the oil and the gas associated with getting to and from work. But 

when you look at the trip profile, that tends to be, depending on 

how you want to count, only 25 to 35 percent of all the trips a 

household takes. 

So just making more complete communities where kids can walk 

to school, where schools are the centers of the community, where 

you can do some of your daily errands with a short car trip rather 

than a long one can make a big difference. If you look, for instance, 

back in 1960, about 50 percent of kids walked to school. That number is now down to about 11 percent. So just the basic way that 

we are building and shaping our communities is, in fact, locking us 

into one transportation option and essentially locking in oil dependence in the transportation sector. 

Senator COLLINS. Thank you. 

Dr. Dagher, you made a very interesting point that your plan 

could not only help to reduce our dependence of foreign oil and 

bring some stability and lower prices to the citizens of our State 

who are really struggling with the high cost of heating oil, but it 

also could be an economic benefit. Could you talk a bit more for the 

Committee about the possibility of what some have been referring 

to as ‘‘green jobs’’? 

Mr. DAGHER. Yes, indeed. You are absolutely correct, Senator 

Collins. By solving the heating crisis that we have in the State of 

Maine and the energy crisis, we can also create a lot of renewable 

39 

energy jobs. Now, Europe is a perfect example here. We do not 

need to really look into the future. We just need to look across the 

Atlantic. 

Europe has created over 300,000 jobs over the last 10 years in 

wind and wind-related energies because 70 percent of all wind turbines in the world are now produced in Europe. We can do the 

same. But they have put together a policy system that allows industry to invest. They have the tax credits in place; they are very 

stable. So putting together the policy framework that would allow 

for these renewables to move forward is critical. 

Numbers, in terms of how many jobs are created per gigawatt installed, vary quite a bit, but those numbers are anywhere from 

1,000 jobs to 5,000 jobs per gigawatt of wind energy installed. 

Senator COLLINS. Those jobs would be welcome indeed. 

Senator Lieberman, before you came in, I started my questioning 

by saying that I think we need all elements of the plans that we 

have heard today, and that, in fact, T. Boone Pickens’ plan for wind 

energy in the middle of the country fits in very well with Dr. 

Dagher’s plan to tap offshore wind, which in turn we also need to 

supplement by Dr. Luft’s proposals for the transportation sector 

and Mr. Anderson’s suggestion for better planning of communities. 

This is going to take the ingenuity and the innovation of everyone to achieve the goal of energy security for this country, and I 

for one am very appreciative of the testimony we have heard today. 

I told them if this were a multiple choice test, I would be checking 

‘‘all of the above.’’ And I just want to thank you, Mr. Chairman, 

for holding this very important hearing today. 

Chairman LIEBERMAN [presiding]. Thanks very much, Senator 

Collins. Thanks for your inspiration which brought the hearing 

about. And I agree with you, this is not a problem that will be 

solved with a single bullet. I was impressed by that in T. Boone 

Pickens’ testimony. He may have some favorites here, as you commented on, in terms of natural gas, but I thought in the end he 

was open to the various ways in which we would deal with this, 

if I may say so, so long as they were American—in other words, 

as long as they broke our dependence on foreign oil and created 

bridges to the zero hydrocarbon future. And then the three of you 

have really presented us with a series of, I think, very visionary 

but also practical options, which I appreciate. 

I do not have any further questions. 

Senator COLLINS. I just have one final comment for Dr. Dagher, 

and that is, give us a sense of how far away we are in your view 

from the technology that would make your plan feasible from an 

economic standpoint. 

Mr. DAGHER. We are looking at about 5 to 7 years from becoming 

a reality in the United States. I would also like along the same 

lines to really recognize before we go my dear colleague, Dr. George 

Hart, who is sitting here. If you don’t mind, George, stand up. Dr. 

Hart is really at the heart of developing all of these concepts, so 

thank you, Dr. Hart. 

Senator COLLINS. Thank you. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Collins, and we thank 

our witnesses. 

40 

We are going to leave the record of the hearing open for 15 days 

if Members of the Committee want to submit questions to you in 

writing or if you would like to add to your testimony in any way. 

But we thank you very much for the work you are doing and for 

the testimony that you offered today. 

The hearing is adjourned. 

[Whereupon, at 12:06 p.m., the Committee was adjourned.] 

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