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44–802 2008

S. HRG. 110– 

OIL BUBBLE OR NEW REALITY: HOW WILL SKYROCKETING OIL PRICES AFFECT THE U.S. 

ECONOMY? 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JUNE 25, 2008 

Printed for the use of the Joint Economic Committee 

( 


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JOINT ECONOMIC COMMITTEE 

[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress] 

SENATE HOUSE OF REPRESENTATIVES 

CHARLES E. SCHUMER, New York, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

SAM BROWNBACK, Kansas 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

ROBERT F. BENNETT, Utah 

CAROLYN B. MALONEY, New York, Vice Chair 

MAURICE D. HINCHEY, New York 

BARON P. HILL, Indiana 

LORETTA SANCHEZ, California 

ELIJAH E. CUMMINGS, Texas 

LLOYD DOGGETT, Texas 

JIM SAXTON, New Jersey, Ranking Minority 

KEVIN BRADY, Texas 

PHIL ENGLISH, Pennsylvania 

RON PAUL, TEXAS, Texas 

MICHAEL LASKAWY, Executive Director 

CHRISTOPHER J. FRENZE, Republican Staff Director 


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C O N T E N T S 

Page 

OPENING STATEMENT OF MEMBERS

Statement of Hon. Charles E. Schumer, Chairman, a U.S. Senator from 

New York .............................................................................................................. 1 

Statement of Hon. Kevin Brady, a U.S. Representative from Texas .................. 4 

Statement of Hon. Carolyn B. Maloney, Vice Chair, a U.S. Representative 

from New York ..................................................................................................... 6 

Statement of Hon. Sam Brownback, a U.S. Senator from Kansas ...................... 7 

Statement of Hon. Amy Klobuchar, a U.S. Senator from Minnesota .................. 9 

Statement of Hon. Robert F. Bennett, a U.S. Senator from Utah ....................... 10 

WITNESSES

Statement of Dr. Daniel Yergin, Co-founder and Chairman of Cambridge 

Energy Research Associates, Washington, DC .................................................. 13 

Statement of Dr. Frederick Joutz, Professor of Economics, George Washington 

University, Washington, DC ............................................................................... 16 

Statement of Mr. John ‘‘Skip’’ Laitner, Director, Economic Analysis, American 

Council for an Energy-Efficient Economy (ACEEE), Washington, DC ............ 18 

SUBMISSIONS FOR THE RECORD

Chart entitled ‘‘Americans Are Spending Double on Gasoline Now Than They 

Spent in 2001 ....................................................................................................... 40 

Prepared statement of Senator Charles E. Schumer, Chairman ......................... 41 

Prepared statement of Representative Carolyn B. Maloney, Vice Chair ............ 44 

Prepared statement of Senator Sam Brownback .................................................. 46 

Prepared statement of Dr. Daniel Yergin .............................................................. 49 

Prepared statement of Dr. Frederick Joutz ........................................................... 64 

Chart entitled ‘‘Crude Oil’s Share of GDP Has Doubled’’ .................................... 86 

Prepared statement of Mr. John ‘‘Skip’’ Laitner ................................................... 87 


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OIL BUBBLE OR NEW REALITY: HOW WILL 

SKYROCKETING OIL PRICES AFFECT THE 

U.S. ECONOMY? 

WEDNESDAY, JUNE 25, 2008 

CONGRESS OF THE UNITED STATES, 

JOINT ECONOMIC COMMITTEE, 

Washington, DC. 

The committee met at 9:30 a.m. in room 106 of the Dirksen Senate Office Building, The Honorable Charles E. Schumer, Chairman, 

presiding. 

Senators present: Klobuchar, Brownback, and Bennett. 

Representatives present: Maloney, Cummings and Brady. 

Staff present: Christina Baumgardner, Heather Boushey, Tamara Fucile, Nan Gibson, Colleen Healy, Aaron Kabaker, Michael 

Laskawy, Ted Boll, Chris Frenze, Jim Gilroy, Rachel Greszler, Jeff 

Schlagenhauf and Jeff Wrase. 

OPENING STATEMENT OF HON. CHARLES E. SCHUMER, 

CHAIRMAN, A U.S. SENATOR FROM NEW YORK 

Chairman Schumer. The hearing will come to order. I want to 

thank everybody for being here. I apologize for being a bit late. 

Today, we’re talking about the skyrocketing price of oil, and we 

want to explore whether the high price of oil is a bubble or a permanent, painful reality, or some of both; how it will affect our economy and what we can do to reduce prices and break our dependence on foreign oil. 

We know that gas prices and the high price of oil and oil products is the number one issue in America. Everywhere we go—Legion halls, parades, weddings—this is one of the very first things 

that people bring up. 

I wouldn’t even say ‘‘one of the very first things;’’ this is the very 

first thing almost everyone brings up. It’s no wonder that Congress 

has held about 40 hearings on oil and energy policy this year, 11 

this month alone. 

Now, we’re all looking to find answers to some pressing and important questions, so we can shape the right economic and energy 

policies, going forward. I’m hopeful we’ll have some luck answering 

those questions today from our very distinguished panel, including 

Dr. Dan Yergin, a Pulitzer Prize-winning author of ‘‘The Prize,’’ 

and one of the world’s foremost experts on oil and energy. 

We eagerly look forward to hearing from him, and from Dr. Frederick Joutz and Skip Laitner, shortly, and I thank all three of you 

for coming and for going out of your way to be here. 


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I think that everyone would like to believe that high oil prices 

are a bubble; that you burst the bubble and the price will come 

down and stay down. We all hope that’s the case, but it may not 

be so. 

Many would like to believe that there’s a silver bullet that could 

pop the bubble, but if there’s an oil bubble or prices temporarily 

decline and we put off doing the necessary things we have to do, 

like conservation or investing more in alternative fuels incentives, 

we’ll be even further behind than we are now, from breaking our 

foreign oil dependence. 

One thing is clear: Demand is on the rise, especially in rapidlydeveloping large countries like China and India, and, in this global 

economy, they can compete for oil that’s produced here or overseas 

as well as anybody else, and the high price wins. 

I heard the other day, that there will be as many new cars in 

the developing world as there are total cars in the U.S. over the 

next ten to 15 years. In other words, if every Chinese, Indian, Brazilian who never had a car buys one, that will be equal to the number of cars we now drive here. 

In fact, the Energy Information Administration is projecting that 

oil prices will have increased by almost 70 percent from 2007 to 

2008, gasoline will have increased by 35 percent, and diesel prices 

will have increased by 50 percent. 

The question everyone asks is, if demand has not gone up by 70 

percent, why do prices go up by 70 percent, and that’s the question 

we want to answer here, because that leads to the belief that there 

is a bubble. 

I also think it’s interesting that the big oil companies and OPEC 

are blaming speculators for out-of-control prices, when they may be 

much more of the cause. They’re sort of diverting attention. 

It isn’t as cut and dry, at least to me. Speculation may be exacerbating the demand problem, but if we guess wrong on the cause, 

we’re going to put off the right solutions. 

There are some things that can be done to curtail the impact of 

speculation, like raising margin requirements and strengthening 

regulations, and I believe some of these may do some good. I’m for 

them. 

But they may not solve the problem in the long run, particularly 

if we think these are the only things that should be done. The reality is that we need to look beyond quick fixes that will do little 

for consumers as they pay record prices at the pump. 

Now, we have some charts up here. Many consumers are experiencing stagnant wages, sending a much bigger slice of their paychecks into their gas tanks. 

Americans are spending twice as much on gasoline today than 

they spent in 2001. Across the nation, families are being shaken 

down for about five percent of their take-home pay, just to pay the 

gas man. 

Here is the chart that shows the percentage of disposable income 

that a family pays. It’s doubled. 

[The chart entitled ‘‘Americans Are Spending Double on Gasoline 

Now Than They Spent in 2001’’ appears in the Submissions for the 

Record on page 40.] 


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Low- and middle-income families are particularly hard hit. The recent data from 2006, when gas prices were only $2.50 a gallon, 

shows that the lowest 20 percent income level, spent ten percent 

of their paychecks on gasoline, and that’s a scary figure for people 

who are trying to scrape by every day and have to take their cars 

to work, oftentimes. 

For all the talk about how American families have benefitted 

from the President’s tax cuts and for all the emphasis that Senator 

McCain is placing on making those tax cuts permanent, the simple, 

undeniable—you can look it up—no-spin truth is that the average 

American family is paying far more in higher gasoline prices this 

year, than they received in the Bush tax cuts. 

So a lot of Americans are wondering what Washington can do to 

bring down oil prices and reduce our dependence on oil. 

First, let me tell you what Washington didn’t do: With seven 

years under the belt of this Administration, the White House has 

taken zero proactive steps to reduce our dependence on foreign 

oil—zero. 

If it wasn’t for the recent Democratic Congress passing long overdue modest increases in fuel efficiency standards for cars, President Bush would have left the White House with a spotless record, 

committing no sins against big oil or OPEC. 

Now, with almost 70 percent of the oil we consume, going into 

our gas tanks, it’s a crime against our future, that since 1995, so 

many here in the Congress, and, of course, in the White House, opposed increasing fuel economy standards for so long. Even now, in the midst of $140 a barrel oil and $4 gasoline 

prices, the only solution some of my friends on the other side of the 

aisle are familiar with, is drilling in the Arctic Refuge. By 2018, 

ten years from now, ANWR might produce enough oil—and this is 

not my estimate; this is the Department of Energy—to decrease gas 

prices by one to four cents a gallon in 2018. 

The only short-term way to increase supplies right now, leads directly to the sands of Saudi Arabia. As we see here, OPEC is producing well under its capacity, despite record oil prices. 

Saudi Arabia is about the only country that has extra capacity 

right now. It’s the 800-pound gorilla of oil production, and even 

after modestly increasing production this weekend, they still have 

excess capacity. 

Most experts believe they could produce another million barrels 

of oil, which would have an immediate impact on price. Today, 

Saudi Arabia is still producing this year, below its 2005 production 

level, and that’s not because of lack of maintenance or wells running dry, as it is in, say, Russia or Venezuela or Mexico. 

But, having said that, in the long term, we must address the demand side of the oil equation. That is the only answer, in my judgment. 

One good thing that came out of the oil shock in the ’70s, was 

the push for dramatic energy conservation. Jimmy Carter is not regarded as a very successful President, but a lot of the things he did 

had positive effects on oil prices for a decade or more later. 

Why don’t we do more of it now? It would reduce prices at the 

pump and be the easiest thing to accomplish legislatively. And we’ll 

hear about this from Mr. Laitner, but California—people forget 


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this—California made herculean efforts under Governor Jerry 

Brown, over 20 years ago, during his Administration, to reduce consumption. 

They put into effect all kinds of conservation measures—for 

buildings, utilities, appliances—and now California, the car capital 

of the country, is well below the national average in energy use and 

consumption. 

As one environmentalist said, alternative fuels are the sizzle, but 

conservation is the steak. Even as someone who supported targeted 

drilling in the East Gulf—I was one of the few Democrats who 

voted for it. I said, let’s drill in the East Gulf. I didn’t see much 

environmental damage, and we should do more drilling in the East 

Gulf. 

That’s closest to the refineries; it probably has the greatest 

known capacity of untapped oil and gas. 

You still can’t drill your way out of the problem. If you don’t do 

conservation, if you don’t do alternative energy, and you don’t tell 

the big oil companies they can no longer run energy policy in 

America, we won’t succeed, plain and simple. 

So there are two main things, in my mind, that set our nation 

way off track on energy prices: First, because there were low 

prices—and that is good—we were complacent. We didn’t prepare 

for the future as the handwriting was on the wall. 

Second is the power of the oil, utility, and car companies, which 

for years and years and years, prevented us from enacting real alternative energy programs. 

So there are a lot of questions. I’m sure that not all of my colleagues will agree with everything or even most of what I’ve said, 

but I think we ought to have a debate on this very important issue, 

and look at the causes, before we look at how we’re going to solve 

the problems. 

So, with that, let me call on Congressman Brady for his opening 

statement. 

[The prepared statement of the Honorable Charles E. Schumer 

follows appears in the Submissions for the Record on page 41.] 

OPENING STATEMENT OF HON. KEVIN BRADY, A U.S. 

REPRESENTATIVE FROM TEXAS 

Mr. Brady. Thank you, Mr. Chairman. It’s a pleasure to join in 

welcoming the panel of distinguished witnesses before us today. 

The topic, not just of current oil prices, but future oil prices and 

gas prices, is a concern of all Americans, and they want Congress 

to take action now to address this problem. 

Earlier this year, Congress took great pride in announcing and 

passing legislation providing economic stimulus checks to America, 

but data released last week, shows that the historic rise in gas 

prices, has wiped out the economic impact of those stimulus checks. 

Average families in America are paying $535 more this year than 

last, so those $600 rebate checks, economic stimulus checks, are 

not going to buy a family’s computer or new washer and dryer, but 

is being poured down our gas tanks and having an effect, unfortunately, on our economy. 


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As witnesses will testify about today, higher oil and gas prices 

are largely due to the fact that global demand is rising faster than 

global supply. 

In recent years, rapid economic growth in China, India, and elsewhere, have raised living standards, but also resulted in rising demand for oil, gas, and other commodities. Gasoline price controls 

and subsidies in many countries, have also contributed to demand 

pressures. 

Meanwhile, supply is growing at a much slower pace, and we’re 

not producing as much as we need. Instead, we’re relying on unstable countries to fuel America. 

For example, recent instability in Nigeria, has led to a drop in 

production there, and other producers have tightened their supplies, as well. We can no longer afford to rely on unstable countries 

for our energy needs. 

And while Congress is eager to place the blame elsewhere, 

whether it’s OPEC or big oil or big autos, the fact of the matter 

is, we ought to take a square look in the mirror. We need more 

American-made energy, and this Congress has resisted it. We need 

more supply. 

Three decades ago, during Jimmy Carter’s energy crisis, this 

country imported just one-third of energy and produced the rest 

ourselves. Today, it is almost exactly the opposite; we import twothirds of our energy and take responsibility for only one-third. 

Our goal should be to take responsibility for two-thirds once 

again. It seems to me, reading Dr. Yergin’s testimony, where he 

talks about the either/or phenomenon, this Congress has been 

eager to offer a false choice to the American public: Either renewable energy or traditional energy. 

The truth of the matter is, for us to have both stable energy 

prices and to transition to a more balanced portfolio, we need both. 

This Congress is committed to conservation through fuel standard increases. We’ve committed to renewable energies by extending 

the Republican tax credits on wind, solar, hybrids, and a number 

of other alternative sources. 

What we’ve refused to do, is commit to creating more traditional 

energy here in America. We must thoughtfully explore the potential of our own resources, open up closed areas to exploration and 

development. 

Beneath America’s land and seas, lie an estimated 100 billion 

barrels of oil and 650 trillion cubic feet of natural gas. Unfortunately, this Congress has failed to act in an effective and meaningful manner to open up those thoughtful resources. 

Democrat leaders have offered no solutions, only gimmicks, from 

suing OPEC to windfall profits taxes, to the latest use-it-or-lose-it 

approach, which has been universally derided by every geologic scientist in the country. 

I hope that we can work together to craft responsible energy solutions that America needs and wants; more American-made energy supply, more renewables, more conservation, so we can again 

take more control of our own daily energy needs. 

With that, I would yield back. 


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OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE 

CHAIR, A U.S. REPRESENTATIVE FROM NEW YORK 

Vice Chair Maloney [presiding]. I’m Congresswoman Maloney, 

and I, first of all, would like to welcome all of the panelists. We 

look forward to your testimony, and I would like to thank Chairman Schumer for his very timely and important hearing. 

Just a few months ago, it was shocking to see oil rise above $100 

a barrel. Now it’s trading at record highs above $138 per barrel, 

double the price it was last year. 

Consumers are feeling the pinch in their pocketbooks, and 

whether it’s paying over $4 a gallon at the pump, or seeing higher 

grocery bills as a result of rising fuel costs, the question on the 

minds of all Americans, is, are high oil and gas prices here to stay? 

Many energy analysts believe that a large part of the recent rise 

in oil prices, has been caused by increased demand by developing 

countries such as China and India. 

Oil prices are expected to rise alongside the expansion of these 

countries over the long term. In the short term, the economic downturn here in the United States and the weak dollar, have also contributed to rising oil prices. 

The Federal Reserve has lowered its target rate to two percent, 

which has led to a fall in the Dollar relative to other currencies. 

Instead of seeking the safe haven of U.S. Treasury Bills, investors 

have been looking to commodities, including oil, as a hedge against 

inflation, thereby driving up the prices. 

As our witness, Daniel Yergin, puts it, oil has become ‘‘the new 

gold.’’ Financial markets and oil markets have become intertwined 

as never before, as the amount of non-commercial trading of oil has 

increased. 

Congress must scrutinize how much of the run-up in oil prices 

is due to speculative manipulation. One potential way to deter 

speculators from driving up the prices, is in several bills before 

Congress. 

It would prohibit anyone without the ability to actually accept 

delivery of crude oil, from buying it as a futures contract. There are 

others for disclosure and increasing the margin requirements. 

Americans are paying a hefty price for the Bush Administration’s 

failure to pursue a sensible energy strategy over the past seven 

years. Meeting the energy needs of our nation, will soon require 

achieving greater efficiency, conservation, and investing more in renewable fuels. 

We cannot drill our way out of this problem, as the Administration would have us believe. The U.S. has less than two percent of 

the world’s oil supply, but we currently use 24 percent. 

Drilling in the Arctic National Wildlife Refuge would not yield oil 

for ten years, and at its peak production in 22 years, it would only 

save consumers about two cents a gallon on gas. 

Oil companies already have 68 million acres of federal oil reserves leased for development, and the House will soon take up legislation, H.R. 6251, that will require oil companies to use those 

leases or lose them. 

We are building on steps that the Democratic-led Congress has 

already taken to lower oil prices and reduce our dependency on oil, 


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by expanding tax incentives for renewable energy and creating 

green jobs to spur American innovation and business investment. 

The energy bill signed into law in December, included provisions 

to combat oil market manipulation and increase vehicle fuel efficiency to 35 miles per gallon in 2020, the first Congressional increase in more than three decades for fuel efficiency. 

This Spring, we suspended the Strategic Petroleum Reserve, 

which will put more oil on the market and help drive down gasoline prices. We have overridden the President’s veto of the new 

Farm Bill, which makes an historic commitment to more affordable, homegrown, American biofuels and increases Commodity Futures Trading Commission authority to detect and prevent manipulation of energy prices. 

Congress continues the fight to bring down the price of gas and 

make America more energy independent. Our nation’s continued 

prosperity depends on meeting the challenge of our energy needs 

and bringing relief to American families. 

Again, Mr. Chairman, we thank you for holding this hearing and 

we look forward to the testimony. 

[The prepared statement of the Honorable Carolyn B. Maloney 

appears in the Submission for the Record on page 44.] 

Chairman Schumer [presiding]. Thank you, Vice Chair 

Maloney. Senator Brownback. 

OPENING STATEMENT OF HON. SAM BROWNBACK, A U.S. 

SENATOR FROM KANSAS 

Senator Brownback. Thank you very much, Mr. Chairman. It’s 

always a pleasure to join you, even if your statements sometimes 

can be a bit one-sided. I guess that’s why we have two sides up 

here. 

I am reminded that on the price-setting equation that I learned 

in basic economics, that there are two factors that go into price. I 

don’t think they changed this formula much over all the research 

over all the years. This one seems to be pretty well set. 

You have a supply curve and you have a demand curve, and 

where those intersect at a point called price, and that those are the 

two pieces to setting the fundamental price. If the panel disagrees 

with that, I hope, later on, that you’ll correct me and correct the 

economics for the world. 

But you have two pieces to this. I think, clearly, what you have 

to do to work on both sides of the equation. You’ve got to work on 

the supply side of the equation and you’ve got to work on the demand side of the equation, if you’re going to be able to try to bring 

price down. You want less demand, you want more supply, if you 

are to be able to bring that price point down. 

We can work, I guess, against fundamental economics; we can 

try to jimmy-rig something, but at the end of the day, this is what’s 

going to happen globally. 

We’ve been pretty good, the United States has, on demand side. 

If you look at our gasoline growth curve, it’s been fairly flat, pretty 

stable. It’s gone up a little bit, not a lot. 

You look at the world demand for gasoline, and it’s skyrocketed. 

We all know that; we all know that we can control a certain piece 


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of the demand side of the equation within our own country, or have 

at least impact on that, but we can’t on the world situation. 

We also know we can have more impact on our supply here at 

home and that those two pieces go together. Now, the Democrat response, and they’ve had one, windfall profits tax, more regulation, 

no nuclear energy, those go at driving price up. They don’t get you 

more supply in the system. 

I guess they could reduce demand by increasing the price, artificially, with more taxes, and that could get at your demand in the 

U.S. It doesn’t get at your global demand point at all, on global 

prices, because we can’t put those taxes on global—people around 

the world. 

That’s not going to get the issue there. Nothing done on production. We’ve certainly done a lot of expansion on ethanol production, 

on biofuels. I don’t know anybody that’s opposed to—I guess some 

people are opposed to expansion of biofuels. 

We’re certainly looking at cellulosic ethanol. We’re getting long, 

strong support for that. Hopefully, on biodiesel, we’ll be able to go 

forward. 

Wind, we’re going to be able to go forward. We all support that. 

At the end of the day, you still have a gasoline-based system at 

the present time and into the near future, and you’re going to need 

more oil production and more oil supply. And if you’re saying we’re 

going to hold out of production, major tracts that have the highest 

potential for production, that’s going to reduce your overall supply 

equation in this country. 

I want to read a quick quote here that was said by a gentleman 

I think most people are familiar with. It says: ‘‘America must get 

to work producing more energy. The Republican program for solving economic problems, is based on growth and productivity. Large 

amounts of oil and natural gas lay beneath our land and off our 

shores, untouched, because the present Congressional majority— 

saying that in parentheses—seems to believe that the American 

people would rather see more regulation, more taxes, and more 

controls, than more energy. It must not be thwarted by a tiny minority opposed to economic growth, which often finds friendly ears 

in regulatory agencies for its obstructionist campaigns. Make no 

mistakes, we will not permit the safety of our people or environmental heritage, to be jeopardized, but we are going to reaffirm 

that the economic prosperity of our people, is a fundamental part 

of our environment.’’ 

Now, I’d like to take credit for that original thought, but it’s 

paraphrased slightly, spoken 28 years ago by Ronald Reagan when 

he accepted the nomination to be the Republican nominee for President, when he was nominated that year. 

We have got to work on the supply side of this. We’ve got places 

we can agree on, a number of these issues, but until you get at that 

fundamental of supply as my colleague to the right, Senator Bennett noted, when his dad was a Senator, they started talking about 

the oil shale region in Utah and its availability, and more oil there 

than in Saudi Arabia, and yet it has been held out of production. 

It has not been allowed to be explored. It is past time, and we 

can do it in an environmentally sensitive fashion. We need to do 

that; we need more flex-fuel vehicles. We’re going to have a biparVerDate Mar 15 2010 11:25 Apr 28, 2010 Jkt 044802 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\ANGELA\44802.XXX 44802

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tisan bill to require that half of our fleet be in vehicles sold that 

have flex-fuel chips. 

But we’ve got to get at both sides of this equation. We’ll work 

with you on the demand side. We agree on most of that. The supply 

side is one we cannot ignore; we must address it. Thank you, Mr. 

Chairman. 

[The prepared statement of the Honorable Sam Brownback appears in the Submission for the Record on page 46.] 

Chairman Schumer. Senator Klobuchar. 

OPENING STATEMENT OF AMY KLOBUCHAR, A U.S. SENATOR 

FROM MINNESOTA 

Senator Klobuchar. Thank you very much, Mr. Chairman. 

Thank you for holding this hearing, thank you to our witnesses. 

I was home this weekend in Minnesota, and probably half the 

people, when they brought up an issue, it was about gas prices. I 

think that out on the prairie lands and in the Midwest, where people have longer ways to drive, there’s not as much public transportation, it hits people harder. 

There are a lot of people not going up to their cabins, not going 

up to the lakes and other places, just because they simply can’t afford to fill their car up with gas. 

I would agree with what’s been said, that in the long term, that 

the long-term solution is a combination of things. We are right next 

door to North Dakota, we know there’s some more domestic drilling 

we can do, but the bottom line, is, we just have three percent of 

the world’s oil reserves and that we’re going to have to look for 

other alternatives. 

We’re very excited about biofuels in the Midwest. We know we 

need to go beyond corn ethanol to cellulosic prairie grass, to 

switchgrass, to LG to whatever else, and we actually believe that 

this can be done, because we’ve seen how it’s revitalized the rural 

areas of our state. 

But what I’m most curious about today, is this topic of speculation. I think there’s a lot of reasons you might have seen this immediate jacking up of prices and this short-term issue. 

Some of it, of course, is the demand that we’ve talked about with 

China, but the demand in the United States has gone down. Some 

of it is the weak Dollar, and this idea that I think people have 

talked about, with people pushing their money into commodities, 

not just oil, but also food and taking it out of things like hedge 

funds. 

But even all of that, I believe, doesn’t really account for this price 

differential. We had the CEOs of some of the major oil companies 

testify before Congress a few months ago, and say that oil shouldn’t 

be trading at over $100 a barrel; that it should be trading somewhere around $55 to $60 a barrel. 

So the question that I want you to think about, as our witnesses, 

is, if that’s true, do all of these things with just the people pushing 

their money in and the weak Dollar, account for that vast price differential? 

We had a top-ranked energy analyst who called the oil markets, 

the world’s largest gambling hall. It’s said it’s open 24/7, it’s totally 


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unregulated, and this is like a highway with no cops and no speed 

limit, and everybody’s going 120 miles per hour. 

So I’m not one to think this is all about speculation, but when 

you’ve seen this frenzy of unregulated market speculation, and you 

think and you think about these people who are spending their 

hard-earned money on gas, if you think you can do something 

about it, that doesn’t hurt in the long term, that’s going to make 

some difference in the short term, you want to take action. 

And, obviously, the things that we’ve been looking at, is building 

on the work that was done in the Farm Bill, which partially closed 

the Enron loophole, to see if there’s more needed to be done with 

the so-called London loophole, with trying to do something about 

regulating some of the overseas offshore trading that’s being done, 

to look at what we can do about the margin requirements, which 

we know are very low for oil, when you compare them to other 

stocks and things like that; to look at the regulatory powers that 

we can give to these agencies. 

We had a joint Agriculture Appropriations hearing on this with 

the acting Chairman, and we kept asking, what other tools do you 

need? Clearly, they need more cops on the beat. There’s been a 

huge reduction in their budget, and in the number of people looking at these markets, but the issue other than that, is, I believe, 

just looking at this as a former prosecutor, that you want to have 

the tools. 

Maybe you won’t use them, but if you’ve got a situation where 

you used to have the burden on those that you regulate, and now 

you have the burden, as the agency, to try to prove things, that’s 

harder to prove them. 

So, I think that, looking at what tools we can give to these agencies, to better look at price gauging and better look at market manipulation, is a good thing to do, because any prosecutor will tell 

you that laws are good, but if you don’t have the cops on the beat 

that are looking for the violations and you don’t have the prosecutors to get the work done, it’s not really going to make a difference. 

So, the way I look at this, it’s not all about speculation, but I believe that this has been a major factor in some of the short-term 

jacking up of prices, and I’d like to hear what the three of you have 

to say about that, and also about some of the ideas that we’ve been 

talking about, to resolve it. Thank you very much. 

Chairman Schumer. Thank you, Senator Klobuchar. Our last 

opening statement, even if new people come in, is going to be Senator Bennett. 

OPENING STATEMENT OF ROBERT F. BENNETT, A U.S. 

SENATOR FROM UTAH 

Senator Bennett. Thank you very much, Mr. Chairman. The 

advantage of going last, is that you get to make notes and respond 

to some of the things that have been said. 

I agree absolutely with your statement when you said that some 

of us would not agree with you. 

[Laughter.] 

Senator Bennett. You made reference to ANWR and said it will 

take ten years, and to quote that great economist, Jay Leno, that’s 

what the Democrats were saying ten years ago when they refused 


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to agree to open ANWR. The Congress passed authorization for 

ANWR, President Clinton vetoed it, and if, indeed, we had proceeded at the time Congress passed it, we would now be receiving 

from ANWR, a million barrels a day. 

There’s a disconnect between the statement that a million barrels a day, if it were brought onboard by the Saudis right now, 

would solve a lot of our problems and the statement that if we had 

drilled in ANWR, we would only have a few cents. 

If a million barrels a day from Saudi Arabia would solve our 

problems, or at least alleviate them, a million barrels a day from 

ANWR would do it. 

And I just want to make this one quick comment: I’ve been to 

Alaska, I’ve seen ANWR. I’ve also seen the Naval Petroleum Reserve, which is at the top of Alaska. 

There’s more wildlife in the Petroleum Reserve, than there is in 

the Wildlife Refuge, and there’s more oil in the Wildlife Refuge, 

than there is in the Petroleum Reserve. It shows that labels— 

maybe the thing we ought to do, is just switch the labels, so we 

call the Wildlife Refuge, the Petroleum Reserve and the Petroleum 

Reserve, the Wildlife Refuge, and then we’d feel better about drilling up there. 

There are comments about big oil runs the policy in America. 

The fact is, we do not have an American oil market, we have a 

world oil market, and investor-owned companies like ExxonMobil 

and Chevron, constitute six percent of the world’s oil companies. 

The other 94 percent are controlled by governments. 

The largest oil company, of course, is Saudi Arabia; the second 

one is Iran, then you have Russia, you have Venezuela, and investor-owned oil companies are the only ones who use their profits to 

prospect for new oil. 

The others use their profits, in the case of Hugo Chavez, in order 

to make trouble in South America. Use it or lose it, with respect 

to drilling on public lands and leases, I would point out to everyone, coming from a public lands state where the Federal Government owns two-thirds of the state, a lease on public land now expires in ten years and reverts back to the Government, if oil is not 

found and is not being produced there. Use it or lose it, is the 

present law. 

The reason there are so many leases that are not producing oil, 

is because the oil isn’t there. You get the lease, not by making any 

seismic tests; you get the lease by looking at it, physically. 

Yeah, you’re allowed to fly over it with a helicopter, and then you 

make a bet and say, I think there may be some oil there. You get 

the lease. That only gives you the privilege of paying rent to the 

Federal Government on those lands while you explore them. 

So, you think there’s some oil there, you lease it, you pay rent 

on it, you do the seismic testing, and if you discover from the seismic testing, that your original guess was wrong, you still pay the 

rent, and, naturally, you don’t produce any oil. 

And if you do not produce oil within ten years, you turn the lease 

back to the Federal Government. Use it or lose it is a strawman, 

because it’s already the law. 


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Oil shale, it is true that they started talking about oil shale as 

long ago as when my father was in the Senate. There are several 

problems with it, some of them technical, most of them financial. 

But this Congress has established a moratorium on even filling 

out the forms that would let you start on oil shale. There is more 

oil in eastern Utah, western Colorado, and southern Wyoming, 

than there is in Saudi Arabia, by a very large margin, and 100 percent of that oil shale, is off limits for anyone, under the moratorium currently in place. 

There is oil shale activity going on in the State of Utah, and 

there are test wells—test procedures that look as if they will start 

producing in fairly significant test amounts this year. 

Why is that going forward? Because those test activities are on 

state lands, rather than federal lands, and the State of Utah is allowing them to go forward. It’s time the Federal Government allowed them to go forward, because, repeating again, more oil in 

Utah, Colorado, and Wyoming, than there is in Saudi Arabia. 

Those who say, oh, it’s environmentally difficult, because it takes 

a lot of water, it takes a tiny fraction of the amount of water to 

produce a barrel of oil from oil shale, as it does to produce a barrel 

of oil from ethanol. 

Chairman Schumer. Thank you, Senator Bennett. I think I’ll 

take the prerogative of the Chair and just mention two quick 

points, before we get to our witnesses: 

One, the difference between Saudi Arabia and Alaska, is that the 

Saudi Arabian oil is available now and the Alaskan oil won’t be 

available until ten years from now. 

We can all go back and say, you didn’t do drilling, you didn’t do 

automobile raising of mileage standards. Nobody’s blameless here, 

no matter what your perspective is, and a lot of mistakes were 

made in the past. What do you do now? 

One other point: I despise Chavez and the head of Iran. 

ExxonMobil, last year, spent 60 percent of its profits buying back 

its stock. That will not produce one type of new energy, whether 

it’s alternative energy, when the head of ExxonMobil told us he 

didn’t believe in alternative energy, or oil and gas. 

With that, I’m using the prerogative of the Chair to get in the 

last word. I don’t do that much, but I couldn’t resist it. [Laughter.] 

Do you want to say something? You can get the last word, Senator Bennett. 

Senator Bennett. Not at all, Mr. Chairman. We can go discuss 

this privately. 

Chairman Schumer. Okay, good. 

[Laughter.] 

Senator Bennett. We won’t take the time of the witnesses. 

Chairman Schumer. Thank you. Okay, let me introduce our 

witnesses. I think this dialogue is a good dialogue, and all I would 

say, is, I do hope—I don’t think the answer is either exclusive demand-side or exclusive supply-side, and I would hope we could 

come together with some compromise. 

Ten years ago, I went to Senator Murkowski and suggested that 

if he could get ten Republicans to raise the car standards, I could 

get ten Democrats to vote for Alaskan oil, and it couldn’t get done. 


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Anyway, let me introduce Daniel Yergin. Daniel Yergin is Chairman of Cambridge Energy Research Associates, one of the world’s 

leading energy consulting and research firms. 

He’s the author of numerous books on energy and economics, including ‘‘The Prize,’’ for which he was awarded the Pulitzer Prize. 

He chaired the U.S. Department of Energy’s Task Force on Strategic Energy Research and Development and was the recipient of 

the United States Energy Award for Lifelong Achievements. 

He’s a member of the Board of the United States Energy Association; a member of the U.S. National Petroleum Council, and regarded as one of the foremost voices on energy issues. 

Frederick Joutz is Professor in the Department of Economics at 

George Washington University, and Director of Research Programs 

on Forecasting. Dr. Joutz has served as a consultant and technical 

expert to several Federal Government agencies and private corporations, including doing extensive work consulting for the Office 

of Energy Markets and End Use at the U.S. Energy Information 

Administration. 

And Skip Laitner is Director of Economic Analysis for the American Council for an Energy-Efficient Economy. Prior to joining 

ACEEE, he spent almost ten years as a Senior Economist for Technology Policy for the U.S. Environmental Protection Agency. He’s 

been working in the energy policy arena for more than 35 years. 

Gentlemen, your entire statements will be read into the record. 

Proceed as you wish, and thank all for coming. 

STATEMENT OF DR. DANIEL YERGIN, CO-FOUNDER AND 

CHAIRMAN OF CAMBRIDGE ENERGY RESEARCH ASSOCIATES, WASHINGTON, D.C. 

Mr. Yergin. Chairman Schumer, Vice Chair Maloney, Congressman Brady, Ranking Members, distinguished members of the Joint 

Economic Committee, it’s an honor to appear before this Committee, and I certainly want to congratulate the Committee on its 

wisdom in undertaking and encouraging this searching examination while policies are being considered and before they are being 

framed. 

We are at a break point in world oil. The pressure on markets, 

the impact on consumers and on the economy, the shifts at hand, 

tell us that a break point is at hand. 

Markets do not go up forever. We’re already seeing a response. 

Gasoline demand in 2007, probably reached its peak in the United 

States, and is now begun to decline. 

Secondly, I think, as Chairman Schumer said, the steak, a big 

piece of steak, is energy efficiency. It’s the subject that drew me 

into energy research in the first place. 

We’ve doubled our energy efficiency over the last 30 years. I 

think it’s a reasonable goal to double it again. I think it’s possible, 

and I think Skip may address this, that we could reduce our gasoline demand by 700,000 to 900,000 barrels a day, with really no 

discomfort to consumers at all, by a small package of almost behavioral changes. 

The third thing I want to address, is the oil shock, and we really 

are in an oil shock, and you’ve already addressed how painful it is 

for consumers and businesses. The specter of ‘‘stagflation’’ is once 


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again in front of us with low growth, high inflation. We’ve discussed how oil prices have gone up. 

In such circumstances, the tendency is to try and find a single 

explanation, but for something this big, there is not a single explanation. I think we can divide it into the traditional fundamentals 

and the new fundamentals. 

The traditional fundamentals have been addressed, particularly 

the growth in demand. Between 1998 and 2002, world demand 

grew by four million barrels a day. Over the next five years, it grew 

by eight million barrels a day. That’s the kind of pressure that we 

have on the demand side. 

There’s been a slow response in terms of supply. Why? 

One is the issue of access around the world; secondly, is uncertainty about investment, fiscal, and regulatory regimes; thirdly— 

and I’m going to address this—the shortage of people and equipment, is a very big part of the picture. 

A second of the traditional fundamentals, is geopolitics. It’s already been addressed by Congressman Brady, about Nigeria, as 

one example. Forty percent of Nigerian production is currently out. 

Last week, more oil was lost in Nigeria, than the entire increase 

from Saudi Arabia, and I could go down a long list of that. 

So it’s a tight market and it’s a crisis-prone market. It’s more 

vulnerable to the impact of disruptions. 

I want to add that the dangers and uncertainties related to 

Iran’s nuclear program are also a distinctive feature of today’s oil 

market, and, clearly, there is an Iranian risk factor in the price of 

oil today. 

What about the new fundamentals? The first one is a doubling 

of costs in the last four years. It costs twice as much to develop a 

new oil field or gas field, as it did four years ago. There’s a shortage of people, equipment, skills, there’s the rising cost of commodities like steel, and all of this leads to delay, postponement, cancellation, and so we’re seeing a slower response in terms of supply, 

than would otherwise have been expected. 

Then we come to the controversial question of oil as the new 

gold, and oil as the storehouse of value these days, reflects broad 

global economic trends and imbalances. Also, it’s increasingly seen 

as an asset class by investors. 

This is a development that has only really emerged in the last 

few years. We know the role of the financial markets is controversial, and no word these days is more controversial than ‘‘speculator.’’ 

‘‘Speculator’’ has a technical meaning; it means the people on the 

other side of the trades of independent gas producers, airlines, or 

farmers, in hedging their risks. 

Then there’s the colloquial meaning, which ranges from manipulator to risk-taker, to those who collectively get caught up in irrational exuberance and help generate bubbles. 

I think it’s too limited to focus on that in terms of the financial 

markets. They are playing an increasingly important role in price 

formation, responding to, accentuating, and exaggerating supply 

and demand, geopolitics, and other trends, and there’s clearly the 

need for greater transparency in these markets, and I think that’s 


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the first step, before new controls, is actually to understand—make 

sure we understand how these markets work. 

What we observe, is that the people who are called financial investors or speculators are in fact in it for many different reasons: 

Some to trade, some to hedge against inflation, conflict in the Middle East, a permanent shortage, and I think there is a shortage 

psychology today in the financial markets that’s widespread and 

has grown as the prices have gone up, partly based on current market conditions, and partly based on expectations of what’s ahead. 

And as we see in other markets, this becomes self-reinforcing, at 

least until the markets turn. 

The U.S. credit crisis, the weakening of the dollar, has been addressed as an important point. As the dollar has weakened, as interest rates have gone down, oil prices and other commodities have 

gone up. 

There’s a painful irony here: The crisis that started in the 

subprime market in the United States has traveled around the 

world and through the medium of a weaker dollar has come back 

home to Americans in terms of higher prices at the pump. 

Just in terms of policy, one, I think we need—we have to get beyond the ‘‘either/or.’’ We need a broad approach, an ecumenical approach, a portfolio strategy that recognizes both the importance of 

demand side, of alternatives, renewables, and also the reality that 

over 60 percent of our energy today comes from oil and gas, and 

that we have to pay attention to the environmentally sound provision of that. 

I would say focusing on that question of investment, timely investment, there is a shortfall in investment, and that has to be 

stepped up in order to play a vigorous game of catch-up with the 

growing world economy. 

The role of markets: I think if we compare the self-inflicted gas 

lines of the 1970s, with the relatively smooth reaction to the hurricanes in 2005, a very important lesson about how markets can respond, that we should keep in mind. 

The members of the Committee have talked about the U.S. and 

global markets. So often, as I listen to the discussion, it seems to 

me that we’re really rather inward in how we look at it. 

Our oil imports are twice what they were in the ’70s; our share 

of the world market is less; the balance is changing the market; national oil companies control over 80 percent of world oil reserves. 

The five super-majors account for less than 15 percent of total 

world oil production. China and India are now significant players. 

The list goes on. 

The realities of the global markets and America’s integration into 

them emphasize the need for a cooperative, multifaceted approach 

to relations, both with producers and other consumers, and that 

puts a premium on how we manage, how we think through, and 

how we structure our relations with other countries. 

My last point is about expectations. A lot of what I think is going 

on in the financial markets, is not only looking at the short term— 

Nigeria, Iran—but particularly an expectation of short supplies, 

three, five years down the road. 

Those expectations feed back into price, and these general expectations of very tight supplies, are based upon the assumption that 


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the global market cannot generate the responses that are warranted in terms of demand and efficiency and conservation, in 

terms of new supplies and timely investment, in terms of renewables, new technologies, and alternatives. 

Meanwhile, developments of great importance, like these immense discoveries in the offshore of Brazil or downward shifts in 

demand that are occurring, these are currently discounted. A major 

contribution to alleviating today’s oil shock would be to create an 

environment based upon realistic assessments that change expectations. 

One way to do that is to ensure that timely investment is really 

and convincingly underway. 

In conclusion, the answer here, as you all have already said, is 

not ‘‘either/or.’’ We need that broad portfolio approach of new supplies, renewables, efficiency, all developed with appropriate environmental and climate change considerations in mind. 

Such an approach would be a great contribution, not only to relieving the pain and pressure that the American people are feeling 

at the pump, and the difficulties that are faced by American businesses, small and large alike, as you all have addressed this morning, it would also be a fundamental contribution to the future prosperity of our nation and to the global economy, of which we are so 

centrally part. Thank you. 

[The prepared statement of Dr. Daniel Yergin appears in the 

Submissions for the Record on page 49.] 

Chairman Schumer. Thank you, Dr. Yergin. Dr. Joutz. 

STATEMENT OF DR. FREDERICK JOUTZ, PROFESSOR OF ECONOMICS, GEORGE WASHINGTON UNIVERSITY, WASHINGTON, 

D.C. 

Mr. Joutz. Mr. Chairman, Ranking Member and distinguished 

members of the Joint Economic Committee, I would like to thank 

you for holding this hearing and for inviting me to testify on the 

impact of oil prices on the U.S. Economy. 

The impact of rising oil prices on the economy, is an important 

issue, but one that has only recently gathered the same attention 

that was paid to it during the oil price shocks of the 1970s. 

Although large increases in oil prices, by themselves, do not lead 

to recessions, large increases in oil prices have been associated 

with and contributed to episodes of falling incomes, higher unemployment rates, and rising inflation. 

What’s the likely impact of the recent increase in oil prices? I put 

together a very simple model, and I estimate that the recent runup in prices, could lead to a cumulative decline in U.S. GDP growth 

of six to seven percent over the next two and a half years. 

These results are due to the increasing share of incomes spent 

on oil, and this is consistent with one of the charts you have, showing crude oil’s share of GDP has doubled. In fact, it’s approaching 

the levels that it reached in early 1980. 

The increase in the share of income spent on oil and the future 

course of oil prices, affects both consumers and businesses in the 

United States. It creates uncertainty about income and employment prospects for consumers, and about long-term profits for businesses. 


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When consumers’ confidence is low, as it is today, and they’re 

worried about how much money they are really making or will 

make in the next few years, they postpone purchases of big-ticket 

items like durable goods, automobiles, and light trucks. 

Businesses make similar plans to postpone or cut their investment, spending decisions, and upgrade their existing machines and 

structures. 

In addition, they are less inclined to hire new workers and maintain the hours of their existing workforce. These changes in spending on the part of consumers and businesses, are the reasons driving the expected decline in GDP. 

Further, increases in oil prices, are putting upward pressure on 

inflation. From 2006 to the present, inflation has risen by about 1.2 

percent. 

A substantial number of jobs have been lost, as well. Since December of 2007, when employment was slightly over 138 million 

people, there’s been a decline of over 200,000 jobs in the United 

States, and we’ve seen that in just the last two months, a big uptick in the unemployment rate. 

I would like to contrast the most recent episodes of oil price 

changes to earlier oil price shocks that the U.S. economy had endured. During the two oil price shocks in the 1970s and early 

1980s, GDP fell by 13.3 percent and 11.8 percent, respectively. 

At the same time, inflation rose by 4.9 percent and 4 percent, 

thus the term, ‘‘stagflation.’’ In contrast, during the two oil price 

shocks in the late ’90s and early 2000s, there was a much smaller 

decline in GDP growth, and, in fact, GDP actually increased during 

the second of those two oil price shocks between 2002 and 2005. 

At the same time, inflation increased marginally, while in 2002 

through 2005, inflation fell in the United States. 

The behavior of the economy during these two recent oil shocks, 

led many economists to believe that the United States had become 

immune to changes in oil prices. 

However, the evidence and my results, seem to indicate that is 

not the case. This change in response back to one like we had in 

the 1970s, of higher oil prices, should not come as a surprise. 

First of all, there’s been an enormous real price increase, a tripling of oil prices, in a very short period of time. 

As I discussed above, the share of income spent on oil and also 

other energy sources, has risen to much higher levels than what 

has been seen during the earlier episodes in the 1990s and the beginning of the 2000s. 

Second, this oil price increase has followed on and coincided with 

a severe financial crisis. The Federal Reserve has used expansionary monetary policy to prevent the financial crisis from crippling the economy. 

One aspect of that policy, has been a rise in the inflationary expectations. 

Finally, I would like to conclude by stating that the effect of oil 

price changes on the economy, is not symmetric. Even if oil prices 

fall, while the downward pressure on GDP will ease off, historical 

evidence suggests that we will not see a corresponding economic 

boom. 


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Thank you very much for the opportunity to testify, and I’d be 

happy to answer questions. 

[The prepared statement of Dr. Frederick Joutz appears in the 

Submission for the Record on page 64.] 

[Chart entitled, ‘‘Crude Oil’s Share of GDP Has Doubled,’’ appears in the Submissions for the Record on page 86.] 

Chairman Schumer. Thank you, Dr. Joutz. Mr. Laitner. 

STATEMENT OF JOHN ‘‘SKIP’’ LAITNER, DIRECTOR, ECONOMIC 

ANALYSIS, AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT 

ECONOMY (ACEEE), WASHINGTON, D.C. 

Mr. Laitner. Thank you and good morning, Chairman Schumer, 

Vice Chair Maloney, distinguished members of the Committee, and 

Committee staff. 

I’m now celebrating almost four decades of work in this thing we 

call the energy policy arena, and there have certainly been some 

disappointments along the way. 

At the same time, however, I’ve never been more confident in 

telling you and this Committee, that the United States has never 

been better positioned to move on to a path of what we might call 

sustainable energy production and consumption, one that promotes 

both productivity and economic prosperity. 

The underpinning of this opportunity, is the huge potential for 

cost-effective investments in energy efficiency through all sectors of 

the economy. 

When we put kilowatt hours of electricity, tons of coal, therms 

of natural gas, on a comparable footing of oil equivalents, the efficiency potential through the year 2030, is on the order of 45 to 50 

billion barrels of oil equivalent, should we choose to develop it and 

pursue it. 

This is about two and a half times bigger than what some have 

suggested might be available from offshore drilling, and it is about 

five and a half times bigger than what we will get from the improved CAFE standards enacted by Congress last December. 

The good news is that if we were to invoke the spirit of Leonardo 

da Vinci’s motto, saepe videiri, ‘‘to know how to see,’’ interpreted, 

if we know how to see and pursue the development of that 45 to 

50 billion barrels of efficiency, that would generate a significant 

downward pressure on oil prices and increase both the resilience 

and the robustness of the American economy, again, if we choose 

to develop it. 

As my colleague, Dan Yergin, would perhaps suggest, we might 

think of energy efficiency as the next great prize. 

In all of this, the market responds to direction and information. 

Policy solutions will play a pivotal role in strengthening the continued development, dissemination, widespread adoption of energy-efficient technologies. 

In that regard, ACEEE recommends a set of ten policy actions 

that might be undertaken by this Congress to immediately provide 

that market signal, and, more critically, to change the direction of 

energy usage through increased energy efficiency. 

Our proposals include the immediate passage of a joint resolution 

to reaffirm the energy efficiency resource and directing federal 


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agencies to develop that resource at all levels within their current 

budget and mandates. 

They also include an emergency supplemental transit appropriation, the creation of what we call a ‘‘crusher credit’’ to retire older 

and inefficient cars and trucks, and the launch of a national telecommuting videoconferencing initiative to reduce unnecessary travel. 

Although Senator McCain appears to have anticipated some of 

the testimony here today, we should also provide an array of incentives that parallel the automotive X Prize and the Freedom Prize, 

all designed to stimulate new innovations of energy productivity. 

Now, the full set of ten proposals offered here, is intended to accomplish two specific objectives. The first is provide an immediate 

catalyst, by launching an effort over the next few months, that we 

think can save oil in a hurry, a small amount, but sufficient to provide some certainty into the marketplace. If undertaken with sufficient robustness, these initial proposals might generate, as already 

suggested, an immediate downward pressure on oil prices, to the 

benefits of consumers and businesses. 

The second is to begin the process of fundamentally restructuring 

our transportation infrastructure, a step that will be necessary, if 

we are to change the energy use path that our transportation system is currently on. 

Many of these suggestions lay the groundwork for a shift in the 

larger transportation policy, an opportunity afforded the next Congress by next year’s reauthorization of the Transportation Bill. 

And by way of concluding and underscoring the critical importance of the energy efficiency resource, let me share the results of 

a quick experiment and an analogy. First, the experiment: 

I confess I’ve not done all my homework. I have read Dan’s book, 

‘‘The Prize.’’ I have not yet read the ‘‘Commanding Heights.’’ However, I just ordered it, and it’s now here in this room, and I did 

it on my Amazon Kindle. It’s an e-book. 

I was able to order it and have it accessed here in this room 

within one minute, and I saved $5 in doing it, so I’ve now contributed to the royalties of at least one of the panel here. 

[Laughter.] 

The point is that there are many ways to think about moving 

and transporting goods. It is, in fact, easier to move and transport 

electrons than to move and transport people and goods. 

We have, through the information communication technologies 

industry, an amazing capacity to deliver greater efficiency gains, 

again, should we choose to develop it. That is one example of many 

that we can rely on and begin to tap, should we choose to see it 

and choose to develop it. 

By way of my analogy, let me draw from the world of baseball. 

Pitcher Nolan Ryan was something of a hero of mine. He won, I 

think, something like 324 games over his career, which included a 

stint with the President’s own former team, the Texas Rangers. 

But let me ask how many games would the so-called ‘‘Ryan Express’’ have won, had he taken the field without his catcher or 

without his infield? 

In a very similar way, if we are to design and implement an energy policy that sustains our economy in a highly prosperous manVerDate Mar 15 2010 11:25 Apr 28, 2010 Jkt 044802 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\ANGELA\44802.XXX 44802

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ner, we should be funding and fielding a complete team effort, and 

that includes the full development of the energy efficiency resource. 

I thank you for the opportunity to speak, and I also will be happy 

to answer questions. 

[The prepared statement of Mr. John ‘‘Skip’’ Laitner appears in 

the Submissions for the Record on page 87.] 

Chairman Schumer. Thank you. I want to thank all three of 

our witnesses for really excellent testimony that tries to deal with 

this issue. 

We’re going to limit questions to five minutes and try to do two 

rounds, so people can have a second chance. 

First, to Dr. Yergin, I was surprised that in your testimony you 

really emphasized the psychological effect and sort of bad things 

seem to be prominent and good things seem to be downplayed. 

Now, that would sort of not necessarily indicate, but augment the 

view that non-market forces, non-immediate economic market 

forces, are having some effect on this price. 

You know that the U.S. Energy Information Administration is 

predicting that while oil prices may remain high in the short term, 

prices should drop off to the $75 range in the future. Do you agree 

with that prediction? 

A friend of mine says that one thing that will bite in here, is the 

fact that we’re using less gasoline, and, sooner or later, people are 

going to realize that, and in a huge country like ours, where so 

much of our oil is gasoline, that that will have an effect. 

So, do you agree with the United States Energy Administration’s 

prediction? 

Mr. Yergin. We found that the best way to think about—we 

once did a study called ‘‘The Perils of Prophecy,’’ about oil price 

forecasting, and that so much of what happens to oil prices are affected by other things, such as what happens to GDP, what happens to global politics, and so forth. 

I think, though, in our base case, we would think that, as we see 

the kind of things that have been described here, like greater efficiency, market response, supplies with delay in coming on, that 

would set the stage for prices to come down from where they are. 

I think that right now, I’m really struck by this kind of pessimism about future supply and focus on what’s going wrong. I just 

find that a very important part of the psychology of the markets 

right now. 

I saw your response when I mentioned that other things like the 

demand response are not getting the attention. When that happens, then I think the markets can change. 

Chairman Schumer. And let me then ask you this: Because 

there is so much talk, the issue du jour here in Congress, is speculation, and if you just sort of stop the speculation, that the price 

would come down. 

That’s a little different than what you’re saying. You’re talking 

more about markets and the way they function, and, I guess, speculators are a result of that, as opposed to a cause of that, is how 

some people put it. 

So, do you think that if we did some things in speculation, limiting speculation, either raising margin requirements—some talk 

about that, or at least giving the CFTC power to do that—or saying 


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that the speculator or the buyer must want the product for some 

eventual use, as opposed to just holding it as an investment—that’s 

pretty severe, but Senator Lieberman is talking about that—do you 

think either of those would have—what kind of effect would those 

have on price, if any? 

Mr. Yergin. I think that, obviously, the tool of shifting margin 

requirements seems to be a reasonable tool that regulators should 

have, as they do in other markets. Knowledge of what’s happening 

in over-the-counter markets, all of those things, are the starting 

point. 

I think that the notion that you should legislate asset allocation 

on the part of investors, our 401(k) plans or whoever, you know, 

whoever it may be, I think that’s a pretty slippery slope to get into 

that. If you limit liquidity, how then does the airline whose back 

is against the wall—our airlines are spending, I think, $60 billion 

this year on jet fuel—we know the bad shape they’re in. 

But if they can’t hedge, they would be in even worse shape. So 

I think that removing the liquidity from the market would not be 

a wise thing to do. 

There are some things that make great sense to do. Senator 

Klobuchar raised the question that there needs to be trust about 

the markets, and the first way you’d get that is by transparency 

and better information. 

I think you do that before you rush in and start making a lot of 

changes. 

Chairman Schumer. The proposal that some of us are part of 

here, that our side of the aisle has put forward, is more information, giving the CFTC the ability to investigate, and then letting 

them change the margin requirements, without setting a number. 

That seems to be something that you think might be a positive 

move. 

Mr. Yergin. That’s a reasonable thing, and I believe the CFTC 

is going to report in September on the state of the markets. These 

markets have changed rapidly, developed rapidly, and the first step 

is to really more fully understand them. 

Chairman Schumer. Thank you. Congressman Brady. We’re 

going to have a second round. 

Mr. Brady. Thank you, Mr. Chairman. I appreciate all the testimony today. 

I want to focus on Dr. Yergin’s comment that global supplies will 

be in short supply over the next three to five years, that we need 

to change the expectations, that timely investments need to be confident in the marketplace. 

Given that while the Chairman likes to beat ExxonMobil like it 

were the Brittany Spears of the media, the industry data shows 

that, as you said, costs are doubling. Most energy companies are 

reinvesting more than they profit. 

The cost of an offshore lease, average cost, is between $20 million 

and $60 million, the cost of a deepwater lease in the Gulf of Mexico, is between a quarter of a billion dollars and three-quarters of 

a billion dollars to explore these. The costs are remarkable. 

This Congress has said investments in renewable energy are important, even though they may not produce cellulosic ethanol for a 

decade. Well we may not reach the hydrogen goal for two decades. 


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Aren’t timely investments in the oil and gas on United States 

lands and offshore, aren’t those equally important, timely investments for this country to make? 

Mr. Yergin. Thank you. First let me clarify. I was not saying 

that we necessarily believe that five years from now that markets 

are going to be very tight, but that is kind of, as you can see, that 

is what the prices are telling us. 

I mean, if we have the kind of slowing of the world economy that 

has been described, the delay in new supplies coming on, we do not 

have a crisis involving Iran, then we could see a market five years 

from now that could look quite different than it looks today. But 

that is certainly the expectation right now. And there is such a 

focus in the market on one particular country, China, and the 

growth of Chinese demand, that that tends I find to often be the 

end of all arguments and discussions. 

Yes, I think that—that is why I said it is not an ‘‘either/or’’ thing, 

and that as a country over 60 percent of our energy comes from oil 

and gas, and there are environmentally sound ways of addressing 

the investment question there, too. That is part of the picture. 

For instance, we made a huge bet as a country on natural gas 

for electric power. We are going to be using a lot more natural gas 

and electric power. Are we going to import that natural gas from 

other countries? 

We are spending almost $600 billion now to import oil from 

around the world. Or are we going to produce some part of that 

extra gas that we are going to use? I think that is a very immediate question we face as a country. 

Mr. Brady. Thank you. I think it is important to understand 

that when looking at both renewables, which we need to do more 

of, but are very long term and traditional energy which is a proven 

source, and we know we can produce again, though it will take 

some time, I think is equally important. 

Let me ask the panel—— 

Mr. Yergin. Could I just add one thing? 

Mr. Brady. Yes. 

Mr. Yergin. That is, we focus on oil. But as the carbon regime 

comes into place into this country there is going to be an extra premium on natural gas. 

Mr. Brady. Sure. 

Mr. Yergin. So we really have to think about our natural gas 

supplies, as well as our oil supplies. 

Mr. Brady. Absolutely. Thank you. 

For the panel, there is a new proposal called ‘‘Use It Or Lose It’’ 

where the premise is there’s 68 million acres in America that is 

currently for lease, and there is a vast resource of oil and gas underneath it, but energy companies just refuse to drill it. 

Not withstanding the fact that the independent American Association of Petroleum Geologists basically just dismiss the whole 

premise here in a letter this week in the fact that independents 

drill, explore the balance of I think 70 percent of the natural gas, 

more than two-thirds of the oil here in America. 

With your expertise as a panel, of those 68 million acres can you 

identify any of those acres that have vast resources, and that an 

oil company refuses to explore? 


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Mr. Yergin. You know there’s a famous U.S. wildcatter at the 

end of the 19th Century who discovered the biggest oil field in 

Texas, and somebody once said to him: Is there oil at such-andsuch a place where he was drilling? 

And his answer was: Well, actually only Dr. Drill knows for sure. 

We have had an immense advance in technology over the last 10 

or 20 years in terms of identifying resources, but still the reason 

it is called ‘‘exploration’’ is because you do not know. 

And of course companies go out with different viewpoints. They 

read the geology differently. And then they have to prioritize in 

terms of where do you put your money. And as I think you suggested, you can drill an exploration well in the Gulf of Mexico that 

could be $120 million and it could turn out you are wrong. 

So I think it is a question of people taking that acreage—Senator 

Bennett described how the process works—and then you prioritize, 

and of course you go after your best prospects first. 

You also have to deal with the fact that your costs are four 

times—or twice what they were four years ago as you try and figure out what to do. 

Mr. Brady. Right. Thank you. Any other comments? 

Mr. Laitner. Yes, if I might offer one comment, I think it is an 

interesting question but we need to take one step back and look at 

the entire energy market, the production system, at all points in 

the production process. 

We are flat-out 24/7 in something akin to an energy straitjacket. 

We can’t get the right number of trained workers on the rigs. We 

can’t find the right kind of quality piping any longer. We can’t find 

the right number of railroad locomotives to haul coal in a timely 

way. We can’t get tires out to excavation equipment to mine the 

coal. Even renewables and combined heat and power technologies 

are 18 months on back order. At every point in the production process the system is constrained. 

Even if we drill more oil, there’s no guarantee we’re going to be 

able to deliver it, and refine it, and make it available in a timely 

way. 

I talked to some of my colleagues in the oil industry and they 

told me, flat out, they are a little bit worried about their ability to 

even deliver oil should they be able to produce it. You can only 

push it through the pipeline 6 miles an hour, and not much faster. 

So if the demand goes up, we are in trouble. 

The point I am saying is there is a great need for an investment 

in this Nation’s energy infrastructure. If we are going to have to 

spend a good bit of money anyway, we should step back and think 

what we can do to provide that slack in the market, and that slack 

I think includes the need to stimulate oil saving in a hurry and 

greater efficiency to provide the slack that the market can then readjust and the prices can similarly readjust. 

Mr. Brady. At some point I hope we will move away from the 

gimmicks and move toward what I think is the balanced portfolio 

approach all of you are proposing today. Thank you, Mr. Chairman. 

Chairman Schumer. Senator Klobuchar. 

Senator Klobuchar. Thank you very much, Mr. Chairman. 


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Mr. Laitner, I was captivated by your testimony about the positive position we could be in if we made some good policy decisions 

in terms of energy efficiency. 

I will say I think the country, the people itself, have moved on 

beyond Jimmy Carter getting on with the sweater and looking 

glum on TV. I just see a real interest in this issue in our State, 

because I see it beyond an environmental issue; that it is a way 

for them to save money if we give them the tools so that they can 

make those decisions, whether it is the types of cars or trucks that 

they purchase, if they have more of a choice so they can make that 

decision, or a little technology that they can put on their washer 

and dryer to figure out when to run it. 

I always think back to when Kennedy said he wanted to put a 

man on the Moon. It was a question of resources, but it was also 

leadership. And out of that leadership came everything from the 

CAT scan, to infrared technology, to those little chocolate space 

sticks that my family would take on camping trips in the 1970s. 

I was reading your testimony where you talked about even these 

GPS monitors, how you could use the technology so people would 

know how to avoid congested routes, which I thought was fun as 

I love going with those GPS monitors and having my husband be 

told ‘‘take a U-turn, take a U-turn, you’ve gone the wrong way.’’ 

[Laughter.] 

Senator Klobuchar. But anyway, I think that there are all 

kinds of possibilities here. My question is: Do you agree that if we 

could take some of these—you know, we have limited budgets here, 

and a lot of us wanted to take some of these oil giveaways, the $17 

billion to Exxon and these other companies—by the way, Congressman, I don’t think that Britney Spears got $17 billion—but to take 

these investments in these resources and put them into what 

you’re talking about, into the hybrids, and the electric cars, and the 

investment, that we could move this change quicker? 

Mr. Laitner. Yes, Senator Klobuchar, a good question. I absolutely agree. 

Let me give you one of many examples—I could go on. Not too 

long ago I took a trip to Stockholm, Sweden, but I did that by walking two blocks down from my office here in Washington, D.C. 

I had an absolutely fabulous meeting. It was a form of video conferencing. And in your profession you may recall that now increasingly they are taking affidavits and witness testimony long distance by video conferencing. 

This happened to be a legal firm earning secondary income by allowing video conferencing. We had absolutely quality image, quality sound, and I saved I estimated something like 3700 pounds of 

carbon dioxide emissions that I did not use because I was doing air 

travel to Stockholm, Sweden. 

One of the initiatives we are calling for is a greater understanding of both telecommunication, or teleworking, telecommuting, video conferencing, which can lay the foundation for I 

think some substantial energy savings in the short term, to be 

sure. 

But more generally, if we take a step back and understand the 

levels of efficiency, we are still no more efficient in terms of our 

electricity production than we were in 1960. 


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Now imagine, had Intel introduced its micro chip in 1971 and 

stayed at that same level of transistors per chip where we would 

be as an economy. We have some huge opportunities at all points 

in the production process, the refinement process, and the use process to encourage efficiency, if we will take a step back. 

But I think your point is critical in that leadership is absolutely 

required, which is why we tried to frame our ten proposals addressing the transportation perspective initially in a step-by-step sequence so that we can inspire confidence in the market. 

If we first announce what we are going to do, and then we reinforce that by taking actions, I think that will do a lot to stimulate 

and inspire the confidence that will reduce the tendency to the 

price levels we’re seeing today. 

Senator Klobuchar. Thank you. Dr. Yergin, now you talked 

about the demand going down. Did you mean worldwide, or just in 

our country, for oil? 

Mr. Yergin. I was just talking about U.S. gasoline demand. Also 

you’re seeing it in Europe. Obviously if you look at China, if you 

look at India, they are on a very different curve in terms of their 

demand. 

Senator Klobuchar. How about worldwide demand, then? Is 

that going up? 

Mr. Yergin. Worldwide demand was growing at about a millionand-a-half barrels a day. We think this year it will grow by about 

900,000 barrels a day. So the rate of growth is slowing, and that 

is significant, and that is of course a response to price. 

Senator Klobuchar. And so, still going back—so the rate of 

growth is slowing, but this year is the year we see the gas prices 

going up 30-some percent, and the diesel prices up 66 percent, 

crude oil up 98 percent. 

How much do you think that this migration of investment—I 

won’t use the word ‘‘speculation’’—the migration of investment 

from subprimes and other things into this market has affected 

things? 

Mr. Yergin. Well I think it is very hard to quantify. I think it 

is part of it, and we particularly saw it if you start looking back 

at July when the subprime crisis began. You certainly start to see 

in oil and other commodities those prices going up substantially 

telling you there’s a shift in investment. 

So is it $20? Is it $30 of the price that reflects the impact of the 

investment market and the kind of growing pessimism? 

You see the Iranians make a statement, a bellicose statement, 

and you see the price of oil go up $5 or $7, and they made an extra 

$85 million that week, too. 

Senator Klobuchar. Do you think those statements, when they 

make the statements, but do you think that investors sort of use 

that as an excuse to then jack up the prices? 

Mr. Yergin. It’s people get nervous, and it’s not only investors 

but it may also be people, airlines or others, who have to worry 

about supplies hedging it. 

So I think it is kind of a reinforcing process. I think if we saw 

demand—but the other side of it is, supply is also growing rather 

slowly this year. So the two things are coming together in this pessimism. 


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At some point these other factors of demand, the kind of things 

that Skip is talking about and that have been described by Dr. 

Joutz in terms of the economy, those are the factors that have not 

yet been factored into the market, but that is when the market will 

have its top in turn. 

Senator Klobuchar. So part of this would be just—I do not 

want to paraphrase what you’re saying—but you believe in using 

a cautious approach with speculation in terms of getting transparency and giving the agencies the tools, and acknowledging that 

this might be part of the short-term problem? 

Mr. Yergin. Yes. 

Senator Klobuchar. But the longer term of doing some of the 

things he is talking about could actually affect the price, because 

people will see that we are going another route? 

Mr. Yergin. Yes. I’ll tell you, I think something—it is not in the 

power of this Congress—but if there was a way to do something 

about the Nigerian Delta region, that would be a real contribution 

to helping reduce the prices that Americans are paying at the 

pump. 

In the new book that I am writing—Skip called it the ‘‘Next 

Great Prize’’—the new book, I was going to write one chapter on 

energy efficiency. I ended up writing three chapters because there 

is so much going on, and as he suggests in his testimony we have 

so many tools today that we just did not have even 5, or 10, or 15 

years ago. 

What I see in this country, I can remember when energy efficiency was in that ‘‘either/or’’ category. Now what I can see is it 

is something that everybody across the spectrum says this can 

make a major contribution, and this is a major element in the solution. 

Senator Klobuchar. Thank you very much. 

Chairman Schumer. Thank you, Senator Klobuchar. Just to 

underscore, the proposal that we have, our Caucus, on speculation, 

which is CFTC looking at the facts and maybe changing the margin 

requirement without setting one, is right consonant with what Dr. 

Yergin has said. 

There are other proposals that go beyond that. 

Senator Bennett. 

Senator Bennett. Thank you very much, Mr. Chairman, and 

thank you all on the panel. This has been very illuminating and 

very helpful. 

Dr. Yergin, you have been helpful to this Committee over the 

years and it is good to see you again. Let me focus, because I think 

you have put your finger on it, on the issue of expectations. 

I have learned the one thing the market hates more than anything else is uncertainty. Whenever there is a sense of uncertainty, 

the price of whatever it is the market is trading in will go up, or 

down. 

If there is uncertainty about a company, the stock will fall even 

below legitimate projections of what the company will really do, but 

if there is uncertainty that they will be able to meet those goals 

the price will fall. 

And here there is uncertainty that the efficiency will kick in, 

that the supply will be there—whether it is oil shale, or whatever 


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it is that we have been talking about—the Nigerians? Oh, there’s 

uncertainty. The Iranians? There’s uncertainty. And we flee from 

uncertainty, and in this case the price goes up. 

So as I look at it, I say what can we do to increase the sense 

of certainty that in the three- to five-year period that Dr. Joutz is 

talking about, or two- to three-year period even, that we are on the 

way toward solution. 

You talk about Brazil being discounted, and Iran being exaggerated, if I can put words in your mouth, you put those two together, 

here’s a major new find and people are discounting it, and here is 

an existing producer that has a crazy president and everybody is 

going nuts over the consequences of that. 

If we could reverse that and say: Well, Iran is going to have another election. Iran is going to do something a little bit more stable. 

And Brazil is going to really come on. That could have a significant 

impact simply because it changes the expectations. But in the 

framework I have created here, creates a sense of certainty. 

So that is a different kind of approach than, gee, let’s change the 

CAFE standards, or let’s build more natural gas ports so we can 

bring in more liquid—a comprehensive approach to this whole 

thing. 

Now, Mr. Laitner, I resonate completely with what you are saying about the lack of people and facilities. We have oil piling up 

in Utah because we do not have the refinery capacity to bring it 

on line. And most of the refinery in Utah is dedicated to refine Canadian oil that’s coming out of tar sands, and the tar sands are 

closely related to the shale oil thing that I’m talking about because 

the technology is somewhat similar. 

React to that. And give me your thoughts about what immediate 

things we could do to create a greater sense of certainty with respect to the future that might help calm down the markets. 

Mr. Yergin. In my testimony I mentioned one thing that the 

U.S. Government did during the 1990s which did not get a lot of 

attention but was very important. That was the support it gave to 

the Baku-Tbilisi-Ceyhan Pipeline from Azerbaijan to Turkey. 

Without U.S. Government support and involvement, that would 

not have happened. That is now putting 700,000 barrels a day into 

the Mediterranean, a major contribution to energy security, and in 

a sense the U.S. Government gave support, a sense of certainty to 

it, and this very uncertain thing happened. 

Now that does not happen overnight, but that is an example of 

where on an international stage we played a very important role. 

Indeed is there a role that the U.S. can play with other countries 

to help stabilize the Delta in Nigeria? That could be very important. So I think our diplomacy is actually part of our energy policy 

in a way that they do not normally get connected. 

To go back to the relationship with Brazil, it takes on an increasing importance from an energy dimension. What we heard in the 

last week or ten days about Iran, the reason that has such an impact is it is not only of course about Iran but there is that chronic 

question that 40 percent of the world’s traded oil flows through the 

Strait of Hormuz, and whenever tension gets high there is a focus 

on that. 


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As I was writing this testimony and thinking about the issues 

about speculation and the financial markets, this issue of expectations, as you suggest, really came to loom very high. 

Stability in the investment environment, whether you are talking 

about oil and gas, whether you are talking about wind, whether 

you are talking about—across the range, if you have uncertainty it 

not only affects prices, it affects investment and the path of investment. 

I think a couple of other things to focus in on: 

One is focusing on this kind of question that Skip described and 

I talked about, the shortages of people and equipment, we have to 

grapple with that. There is an educational issue about assuring the 

next generations of expertise. 

So I wanted to highlight what will change the expectations, including if people start to become more confident about what is happening in education. I have to say, though, Dr. Juntz’s comments 

about the economy—I do not think we have heard it expressed as 

clearly as he has what the risks are to our economy. That highlights the need to address the issues you are talking about in terms 

of creating a stable environment expectations, not changing the 

rules, because that is what is going to make things happen sooner 

rather than later. 

Senator Bennett. Thank you, very much. 

Chairman Schumer. Okay, we will go to a second round here. 

This is for all three panelists, but particularly Mr. Laitner first. 

There is no silver bullet, but if there is one cost-efficient way to 

deal with this that we have not dealt with since the 1970s it is efficiency, in my judgment. I think it is the easiest, and it has the 

greatest bang for the buck. 

I mentioned in my testimony the success California has. People 

do not realize that if you took away cars, California’s efficient percapita use of energy would be similar to many countries in Europe. 

And even with cars they are more efficient than most states. 

Why is it that efficiency, which should not create the kind of political hackles that some of the other things do, why has it gotten 

so little attention, play, in the United States thus far? And I would 

ask Mr. Laitner, and then the two other panelists to comment 

briefly. 

Mr. Laitner. Chairman Schumer, that is an excellent question. 

We just put out a report last month on what we term ‘‘The invisible 

efficiency investment boom.’’ 

Since 1970 we have in effect doubled our efficiency over time in 

ways that have been responding to smart investment, but it is the 

efficiency we do not see as we use our goods and services. 

In other words, efficiency is the energy we do not use in providing travel, or providing entertainment, or food on the table. And 

because of that hidden nature, that secondary attribute, it is not 

something that jumps out that you can count and you can reliably 

turn to for immediate impact on the market. 

So the critical need is to make that efficiency much more visible. 

Chairman Schumer. Has efficiency slowed? I mean, we know 

that there was a dramatic increase in efficiency after the oil shocks 

of the late 1970s. Has our, if you will, rate of efficiency slowed 

down? 


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Mr. Laitner. Yes. Let me just give you a quick sense of the history. 

Up till 1973 we were very anemic in our ability to improve efficiency. But as you suggest, 1973 to 1986 we improved our efficiency 

better than about 2.6 percent a year as an economy. 

Then it flattened out, less than 1 percent a year over the next 

decade. Then something interesting happened. One of the new fundamentals that Dan is talking about I think has to do with 

broadband information communication technologies. 

In 1995 Moore’s Law began to have an economic consequence. 

We began to see that in the rapid drop in prices for semiconductors, in computers, even in software. That led to what we are now 

seeing as the Internet economy in various ways. It led to my ability 

to download Dan’s book through Amazon-Kindle. I did not have to 

travel anywhere. It is not in paper at all. It is a dematerialized 

thing, easily available. I saved money doing it. 

That is among the things that are contributing to the new tools 

that Dan was talking about. So that we did see a process of capital 

deepening in the United States up to about the year 2000–2002 

that led to an uptake in efficiency again. But now more recently, 

beginning with the uncertainties in the market and what we are 

here today feeling very seriously, that process has slowed. 

So we are no longer investing quite like we are even in the computer industry. There is hesitation to make those investments in 

that smart technology. The capacity is there if the will is there. 

And if we had that leadership, I think it can again return. 

Chairman Schumer. Right. And that is market forces working 

in technology, which generally are efficiency-producing things, but 

here in the government if we were to adopt the standards that 

California did on a national basis—buildings, appliances, utilities— 

that would have a dramatic effect, I would assume? 

Mr. Laitner. That would have a dramatic effect, and that is one 

of the reasons we laid out the 10 policies we have recommended to 

be taken a look at. And that would include exactly that point. 

Chairman Schumer. Yes. I have tried in the energy bills to get 

us to do that, and just nobody even cares about it very much. 

And, Dr. Yergin, I would make a point here and hear what you 

have to say, it may have something to do with just the psychological effects you are talking about. People are not paying attention to efficiency, even though it is happening, and even though it 

could happen relatively easily, and they pay attention to ANWR 

where there is huge contention and that it is unlikely to happen. 

Do you think a greater focus on what efficiency can do, just that 

in itself might help a little bit? 

Mr. Yergin. Yes. It is something I have thought about for a long 

time. As Skip was talking, as you were asking the question, I was 

thinking: If we wanted to put out a book about energy, we could 

have a dramatic photograph of windmills, and offshore platforms—— 

Chairman Schumer. Right. 

Mr. Yergin [continuing]. A power plant, but how do you put a 

photograph of energy efficiency on the cover? 

Chairman Schumer. Yes. 


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Mr. Yergin. It is, as you said it is the invisible one, and yet 

when you look at how much we have saved as a country compared 

to where we were in the 1970s, you see this is an immense resource. 

So you say: How do you get there? 

Well it is the advance of technology itself. You get it through regulation, information, exhortation, price, tax; all of those things do 

it. 

You know in 1998 was the lowest gasoline price we had ever had 

in the history of our country, and that of course is a time when you 

had the great SUV boom because it didn’t make sense to worry 

about gasoline prices. 

Chairman Schumer. Right. 

Mr. Yergin. Now you see how quickly everybody is playing kind 

of catch-up with this new regime of prices. So I think it really 

needs kind of a multi-faceted approach to keep it front and center. 

It seems to me that it has—I don’t know if you find it in your 

discussions on the Hill; do you find greater resonance now than say 

two years ago on this subject? 

Chairman Schumer. Some, but not enough to get us moving 

here. I mean, one of the things I was thinking of talking about was, 

well, I am not wild about this offshore drilling, but at least if you 

are going to try to do that you ought to do it combined with some 

demand reduction and serious efficiency. 

As I said, ten years ago I proposed—my friend Senator Bennett 

is gone, but I mean some of us are trying to be two-sided on this, 

demand and supply. Now how much of demand should be fossil 

fuels, and how much demand should be alternatives we can debate, 

but even putting that aside as I said I proposed to Senator Murkowski, get me 10 votes for automobile efficiency and I think I 

could get you 10 votes for Alaska. In those days Alaska was less 

contentious. 

And I talked to some of the environmental groups and not all but 

some of them said, you know, I would hold my nose but if you could 

do that, or not do that, I would rather do it. 

So I think, you know, we do have to come up with sort of the 

grand compromise here where Democrats sort of hold their nose a 

little bit and figure out ways to increase supply. As I mentioned, 

I supported—there was a handful of Democrats supporting drilling 

in the East Gulf, and Republicans do far more, even though they 

may think it’s not just the market, to encourage efficiency, and we 

might have the work of a grand compromise. 

Frankly, I do not think this Administration can pull it off. It is 

too late, and they have not shown it, but either President Obama 

or President McCain might be able to do that. 

Mr. Yergin. Well I think that grand compromise is what our $14 

trillion economy requires to assure that it has the proper energy 

foundation for the future. 

Chairman Schumer. Right. Let me, since we are in the second 

round, I will go a little—my time is up, but I will go a little longer 

with Congressman Brady’s permission—Dr. Joutz, tell us about the 

dollar and the fall of the dollar and how much effect that has had 

on our increased oil prices? 


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And again I would be happy to have either Dr. Yergin—well, Dr. 

Yergin in particular; it is not Mr. Laitner’s area of expertise—comment on that. 

Mr. Joutz. First, I think one thing that is important to mention 

is that the world oil market uses the U.S. dollar as its benchmark 

price. And as the dollar moves, that affects their revenues, and it 

affects their revenues for also importing goods from the United 

States and other countries. 

When the value of the dollar is appreciating, their real revenues 

increase and their real imports increase. However, when the dollar 

depreciates, as it has been doing since about 2002, we have had on 

a trade-weighted basis about a 20 to 25 percent decline in the 

value of the dollar. 

That means two things. First, the revenues that oil exporting 

countries have received purchased less than they did before. 

On the other side of the coin, the one that is more important to 

us from the American consumers and firms standpoint, as the dollar has depreciated and the price of a barrel of oil has increased, 

we’ve been paying the full price effect of these much higher oil 

prices. 

So when it has risen from $25 to $30 a barrel in the mid-1990s 

to $40, and today $138, or $135, we are paying the full freight on 

that. And part of that is due to the value of the dollar declining 

against other currencies. 

Now—— 

Chairman Schumer. If you had to put a percentage—I know 

that is hard to do—— 

Mr. Joutz. I think it is about, I want to say about 25 percent. 

Chairman Schumer. Of the increase? 

Mr. Joutz. Overall, I think I could say—— 

Chairman Schumer. Pretty significant. 

Mr. Joutz. It is pretty significant. But there is another sort of 

double-edged sword here. 

As the value of the dollar has decreased, yes, we have been paying more for oil. As Dan mentioned, I think this year it is going 

to be about $600 billion of importing oil. As the value of the dollar 

has decreased, U.S. manufacturing firms, U.S. service companies, 

have become much more competitive around the globe. 

And what we have seen over the last two to three years is we 

have seen the export sector in the United States has been rising. 

And American firms that previously were competing against foreign firms are now more competitive domestically. 

So the movements in the dollar make some of us better off, and 

in other ways worse off. 

Chairman Schumer. Do you have anything to say on that, 

Dr.Yergin? 

Mr. Yergin. Yes. In the testimony I cite the Dallas Federal Reserve which attributes between 2003 and 2007 about a third of the 

price, increase in the rise in the price of oil, to the dollar’s decline. 

And we think that if you start looking from July 2007 you certainly 

see with the dollar and other commodities they start to go up as 

the dollar goes down. In other words, this is part of the global impact of the credit crisis. 


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At the same time, you know just this week we saw in terms of 

stagflation the doubling that the Chinese are going to pay for iron 

ore prices which tells you that the demand for all commodities 

prices are high. And although we focus on the downturn here, everywhere else you go in the world there is this preoccupation with 

inflation. 

Chairman Schumer. Right. One other—this is a question for 

Dr. Yergin. So you look for—everyone demands a short-term solution. You know, let’s snap our fingers and get something done. Very 

hard. Very hard to do. Maybe the best one is the one you mentioned, sort of a psychological talking up the good side, and talking 

down the bad side a little bit. 

But it seems to me something I have thought, the one place 

where there is a more ready supply is the Saudis. They have increased supply a couple of hundred thousand barrels, I think 

300,000 and then 200,000, but they still have by most estimates I 

would guess a million more barrels a day that they could produce. 

Is there anything that would induce them to do so? Is there anything we can do to get them to do so? Or do you feel that it will 

not make a difference, or they just will not do it? 

Mr. Yergin. Part of the issue is the quality of the oil that they 

have available is not the one that there is a demand for. There isn’t 

a physical shortage. 

That would also leave the world with zero—let’s say they produced it all. It would leave us with zero spare capacity, which 

would be a very precarious position in terms of any kind of a crisis. 

The other thing that I focus on—and this is in Skip’s area—I 

really do think that we could very quickly, without influencing any 

of our standards of living, bring down our gasoline consumption by 

6-, 7-, 800,000 barrels a day, with some very minor changes in our 

behavior. 

This is always put over there under that category called ‘‘tips,’’ 

but if you say it is not ‘‘tips’’ it is a strategy. So I actually see conservation as part of our strategic resources—— 

Chairman Schumer. The kinds of things Mr. Laitner laid out 

in his ten points. 

Mr. Yergin. Yes. And it is just, you know, it bugs me that they 

are always regarded as just ‘‘tips’’ when you can put them together, 

and that can have an impact. Because changes in demand can help 

change the outlook. 

Chairman Schumer. Congressman Brady is being very kind. I 

had a few other questions I wanted to touch on. 

The oil workers that you mentioned, that we have a shortage of 

just people and equipment, classic market economics would say 

that is going to solve itself rather soon because there is a greater 

demand for oil, and it has not happened yet. 

Could you please tell us a little about what you think of why it 

has happened? And will it solve itself? And is there anything we 

can do about it? 

Mr. Yergin. Yes. What happened is that you had a 20-year contraction in the oil and gas industry. You had two price collapses, 

two episodes of $10 a barrel. 


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So just as the industry finishes its contraction and downsizing, 

that is when demand explodes with China and India and so forth, 

and that is why we are playing a game of catch up. 

Petroleum engineering departments closed down. People stopped 

enrolling. So I do think that will fix. But it will not fix overnight 

because it takes 5, 10 years to get an engineer up to appropriate 

standards and experience. 

You need a—but, you know, four years ago you could have rented 

a deep-water drill skip for $125,000 a day. Today it would cost you 

$650,000 a day. Those ships are going to get built, but there again 

it does not happen overnight. But I think it will—those incentives 

three, four years from now will see an industry that will be more 

equipped to meet the needs. 

It will be a much more internationalized industry. We will see 

more Chinese and Indian engineers. 

Chairman Schumer. Anything we can do to hasten that? 

Mr. Yergin. I would like to give that a little thought. I think on 

the educational side that might specifically look at the education 

of energy technologists and would be something that would be well 

worth—that would be one thing well worth examining. 

Chairman Schumer. Well thank you. 

Congressman Brady has been very patient as I have gone over 

my time by a significant amount. 

Mr. Brady. No, this is an important topic. And besides, you have 

the gavel so I think that works well that way. 

[Laughter.] 

Mr. Brady. I agree, coming from an energy producing state, we 

do have a shortage of energy workers today, and an aging energy 

working population. It is a real concern today. In Southeast Texas 

we have three major expansions of refineries desperately seeking 

about 15,000 workers both to construct and ultimately to maintain 

those refineries, and it is an issue. 

Energy efficiency. I am pleased that we are talking about this. 

America is making progress on energy efficiency. The Ways and 

Means Committee held a hearing, oh, 24 months ago where we basically sat through three days and listened to testimony that shows 

that we could make virtually everything we touch each day at 

home or at work more energy efficient. There are remarkable potentials there. And to accelerate that really is the key. 

I think part of the challenge is to recognize in rural communities 

like 10 of my counties where people are forced to drive a long way 

to work. They are forced to drive a long way to the hospital. They 

are forced to drive a long way to school. They are making cutbacks 

and changes in their behavior today, but it is simply not enough 

to offset the dramatic increase in energy. 

I think that may be why the recent Bloomberg poll from yesterday showed that while the American public supports more energy 

efficiency and supports investments in renewables, that 68 percent 

of Americans believe we ought to be exploring more here in America. 

In fact, 60 percent of Democrats in the country believe we should 

be exploring more here in the United States. And it has been frustrating I think that we have not had, or been allowed to vote even 


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once on any bill that would create more production and supply here 

in America. 

So, Senator, I and others would welcome any potential grand 

compromise on efficiency and production, because I think it is long 

overdue. 

Let me ask you this: One of the frustrations—one of the reasons 

I think we have trouble with drilling in our deep ocean exploration 

is that Congress has allowed former Presidents and current Presidents with ratification in Congress has allowed states to basically 

lock off federal waters off their shores. 

I understand that states ought to have control over the three 

miles of state waters, but beyond that those are federal waters, resources that are owned by the American public, and I think should 

be reclaimed for the American public as we have this debate about 

a national energy policy. 

We can’t have a national energy policy if states control the resources that in fact the U.S. owns. 

My question to the panel is: As we go about looking at making 

timely investments, not just in renewables but in traditional energy as well, is there a reason why the national—why Congress 

should not reclaim authority over federal waters throughout this 

country? 

[Pause.] 

Mr. Brady. Don’t all talk at once on this one. 

Mr. Laitner. I might open a few comments with the note that 

the states indeed are in many ways responding much more agilely 

than the Federal Government at this point with regard to a number of different energy initiatives. 

Certainly California is leading the way. New York is doing some 

really—— 

Mr. Brady. On the production side? 

Mr. Laitner. Well even on the production side. For example I 

am thinking of more efficient supply like combined heat and power 

technologies, or waste energy type generation technologies. 

Mr. Brady. But as it relates to oil and gas? 

Mr. Laitner. That I agree, there is a stasis there. 

So the point being that the states are eager to do something—— 

Mr. Brady. Sure. 

Mr. Laitner [continuing]. And they need to be let loose. At the 

same time, the issues are so paramount that we as a Nation are 

risking more by not acting at all; that it may be time to rethink 

what it might require to both develop new sources and to promote 

efficiencies. 

So I would be put in the category of what Chairman Schumer 

had called ‘‘the nose-holder.’’ I can imagine that not acting is going 

to cost us more environmentally and cost us more financially than 

coming together with some form of compromise that might allow 

some offshore drilling to occur. 

Mr. Brady. Well we have, for example, off Florida, 100 miles off 

Florida, on the tiny sliver of Section 181 that we are allowed to explore, and we have a small 2-acre platform there, the independents 

have, a $2 billion investment, that produces 10 percent of all the 

natural gas in the Gulf, 2 percent of all the natural gas in America. 


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You can barely find it. If you and I flew over it for a week, it 

is so small and environmentally well planned out, it just seems to 

me some proposals say let’s extend state waters even farther out 

and give states more control perhaps to 12 miles or beyond, but 

then you can’t even see an oil rig 6 miles from a coast. The curvature of the earth doesn’t allow it. 

But the point being, perhaps the compromise is to extend those 

waters under state control farther out so there is that reassurance 

for states, but then to reclaim beyond that and find some thoughtful ways that we can lease what are tremendous resources for us, 

and which can be done a very environmentally friendly way. 

Mr. Laitner. I think we are in such a straitjacket that we need 

to put all resources on the table, but make sure that they are all 

evaluated at the same level of analysis in terms of full costs and 

full benefits, and then make some decisions about what is the mix 

of resource that should be developed, given our investment capability. Given our need to maintain a robust economy, how should 

we move forward? 

So that might mean, for example, that if there were some mechanism as you described, it might be one part oil drilling and two 

parts further efficiency gain. We would be better off economically 

and environmentally than allowing nothing to happen at this point. 

Mr. Brady. Right. 

Mr. Laitner. I would need to think about that more, but in 

order to break open the discussion that needs to be put on the 

table. 

Mr. Brady. That is the kind of thinking we need. 

Mr. Yergin. Right. I think that—I don’t know and am very interested to understand more clearly the jurisdictional issues between the states and the Federal Government, between 3 and 

12—— 

Mr. Brady. Sure. 

Mr. Yergin [continuing]. And farther out. I would rather not call 

it ‘‘the nose-holder.’’ I would rather call it the ‘‘Grand Bargain. I 

think that as part of addressing conservation and new technologies, 

that offshore is clearly part of that. 

I think we should recognize that the same advance in tools that 

make possible the kind of advances in efficiency that today drilling 

offshore is a very different industry than it was 20 or 30 years ago. 

It is space age, it’s extraordinary in terms of its capabilities and 

its abilities to do thing right. 

We see countries like Norway, which is the greenest country on 

earth in terms of policies, have found a way to address the offshore. 

And about a third of the world’s oil today comes from the offshore. 

So it is an important resource. 

What you describe in terms of our natural gas needs next winter, 

that is going to be something. We are now focused on gasoline. 

Next winter we will be focused on natural gas, and that is part of 

the picture. 

I just wanted to add one other thing to Chairman Schumer’s 

question about how quickly. There is still this people deficit issue 

that is a big issue. I was just thinking as part of the National Petroleum Council study last year that found that 55 percent of the 


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petrol professionals, as you’ll call them, engineers and scientists, 

are within 10 years of retirement. 

So there really is a missing generation in terms of energy technology in our country. 

Mr. Brady. And I think, too—and I will close with this, Mr. 

Chairman—I think one of the reasons we are seeing perhaps a discouragement of new energy workers is that some of our policies 

here in Washington I think tend to discourage that investment of 

human capital. 

For example, two years ago Congress, worried about the outsourcing of manufacturing jobs, passed legislation that creates a 

lower manufacturing tax if you produce, invest, create jobs here in 

America; a higher one if you do that overseas. 

Unfortunately, this Congress has continued to pursue tax 

changes that would single out one industry, energy, to basically 

say, no, you do not qualify for that tax credit any more. In fact, we 

are going to—when you invest in American workers, in American 

production, in American exploration, we will actually raise your 

taxes to do that. 

I cannot imagine that we are going to lower gas prices or make 

more timely investments by actually discouraging companies from 

exploring, and producing, and creating jobs here in America. That 

may be part of the problem we are having attracting and recruiting 

not just engineers, researchers, Hispanic workers, union workers, 

skilled welders, it’s a broad range, 2 million energy workers today. 

I think we need to do more of that, not less. 

I yield back, Mr. Chairman. 

Chairman Schumer. Thank you. 

Congressman Cummings had four hearings today, so he is a little 

bit late. We said we would close at 11:30, but we are going to make 

a little exception with the okay of the witnesses so that Congressman Cummings can ask his full round of questions. 

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

Mr. Laitner, you state in your written testimony that increased 

energy efficiency has played a significant supporting role in the 

growth of our economy. 

Essentially you argue that increases in energy efficiency have resulted in a lower per capita energy use in 2008 compared to the 

trends that could have been expected in 1970 had the energy efficiency increases not occurred. 

Can you comment on how much of the increase in energy efficiency resulted from specific government policies, and how much 

resulted from technology improvements that industry chose to 

bring about without prompting from the government? 

Mr. Laitner. A very interesting question and, not to be a middle-of-the-roader on it, I think it has been both. There has been 

some amazing innovations on the industrial side. We tend to think 

of industry as a user of energy, when in fact in many ways they 

are the source of the innovations that we are all putting to work. 

Work I have been doing recently with the likes of Dell Computer, 

Intel, and others, Verizon, a number of firms like that, I am quite 

stunned at the level of innovation that they are putting into this 

effort. 


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Part of it is market driven; they are trying to be competitive, but 

clearly a source of innovation. And I would have to say it is probably on the order of maybe half of the efficiency gains, if you want 

me to put it in that rough measure, has been because of industrial 

innovation. 

But the other half has come from a combination of price to an 

extent, but more critically government policies. And Chairman 

Schumer has raised the issue of California, what they have done. 

They have enacted a variety of standards. They have funded a 

number of programs. They have provided a great deal of information, technical assistance, and incentives to move more aggressively 

with respect to increased efficiency. 

And at the federal level we have seen everything from a very 

successful, voluntary Energy Star Program that I think is a resource that needs to be deployed more fully, and recognized more 

credibly than has been, but also other things like standards for appliances and consumer products. 

So that there has been a mix. There has not been a single silver 

bullet to be sure, but it has been a very dynamic mix. The issue 

then becomes how to enrich and build on that resource to really extend the full potential that can be there should we make that decision. 

Mr. Cummings. It is interesting. As you were talking I was just 

thinking that yesterday I met with some bond counsel and they 

were saying that there is a lot of new bond work coming up, municipal bond type work, whereby the companies are going in and 

showing municipalities how they can save, and they make arrangements—the savings are so great with regard to energy, the savings 

are so great that in many instances they have been able to cut energy consumption in half. 

Baltimore and a number of other places are looking into doing 

more of that. That is just a very interesting thing, to think that 

you can cut that much use of energy. And when you multiply that 

throughout the country, you are talking about quite a bit. 

As a member of the Transportation and Infrastructure Committee, I read with great interest your comments on our Nation’s 

transportation infrastructure. 

Unfortunately, many of these measures such as co-funding local 

land-use planning and developing policies to expand alternative 

modes of freight transportation are geared more towards the longterm. 

Are there measures that you would recommend that could be implemented more immediately? 

Mr. Laitner. Yes. One of the measures I have already referenced 

earlier is the movement towards a telecommuting and video conferencing capability at the Federal Government and at the municipal 

level, but within industry. 

One of the reasons in fact I am no longer at the Environmental 

Protection Agency is because my management did not like me telecommuting. I could be with my daughter’s riding lessons and talking to people in Russia, and she insisted I had to be in the office 

because that’s where you forced me to be. It was Congress that set 

up that, and I had to adhere to that. 


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So extending the ability of telecommuting and video conferencing 

at all levels I think can go a significant way to reduce transportation requirements. I mentioned earlier I took a trip to Stockholm 

just a couple of months ago by walking down the street in a very 

high-quality participation in a video conference with 20 of my colleagues in Stockholm and me here in D.C. I saved almost 4000 

pounds of carbon dioxide by not traveling that distance. It saved 

me two days of time and cost me $200 to get the job done. 

I think we would be surprised at the extent of what we could do 

with information communication technologies to leverage greater 

efficiencies in freight, in logistics, personal travel, entertainment, 

and just general worker productivity. 

Mr. Cummings. I recently talked to some newcomers to Baltimore. Baltimore is changing drastically, and a number of them said 

that they came to the City from the country because of gas prices. 

And it was just more convenient. 

I look at what is happening in Washington and other places and 

I guess it is much easier to live where you work and so that if you 

are not commuting an hour, an hour and ten minutes one way, 

that is quite a bit of savings. I had not thought about it from that 

perspective. 

I think that what will happen is a lot of your urban areas will 

probably continue to grow much faster than they normally would 

have, and I think this gas situation has caused a number of people 

to do that, to move into the more urban areas. Would you agree? 

Mr. Laitner. I would absolutely agree. And if I might comment 

on your suggestion about communities more generally, as a source 

of effective action, to the extent that we think about greater energy 

productivity as a form of economic development, communities can 

become a critical deployment resource to get the job done. 

I with a number of other architects have put in a bid for the City 

of Elgin, outside of Chicago, to help them redesign much of their 

economic activity with that precise goal in mind, to deliver quality 

investment in ways that build on the information broadband infrastructure, but in ways that also allow greater productivity from 

transportation and from entertainment and their own personal 

working capabilities. I think it is a critical opportunity. 

Mr. Cummings. Thank you, Mr. Chairman. 

Chairman Schumer. Well I want to thank all our panelists, 

and particularly our witnesses. I think it was very instructive. 

Two points. First, it was good to hear that Dr. Yergin, who is one 

of our great experts here, believes that prices may well come down 

over a period of time. That is good news, and maybe that will help 

the psychological problems that we are talking about. 

And second, I was heartened to see on both sides of the aisle 

here, as well as on the panel, at least the little seedling of perhaps 

a grand compromise. Because I do think we need it, and I would 

certainly be one who would be very much eager to pursue that in 

terms of energy. 

So with that, let me again thank everybody. This was a very productive hearing, and we are adjourned. 

[Whereupon, at 11:34 a.m., Wednesday, June 25, 2008, the hearing was adjourned.] 


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cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 94 here 44802A.043
88 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 95 here 44802A.044
89 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 96 here 44802A.045
90 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 97 here 44802A.046
91 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 98 here 44802A.047
92 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 99 here 44802A.048
93 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 100 here 44802A.049
94 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 101 here 44802A.050
95 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 102 here 44802A.051
96 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 103 here 44802A.052
97 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 104 here 44802A.053
98 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 105 here 44802A.054
99 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 106 here 44802A.055
100 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 107 here 44802A.056
101 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 108 here 44802A.057
102 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 109 here 44802A.058
103 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 110 here 44802A.059
104 


cprice-sewell on DSK89S0YB1PROD with HEARINGInsert offset folio 111 here 44802A.060