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87–336PDF 2014

THE GEOPOLITICAL POTENTIAL OF THE

U.S. ENERGY BOOM

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

SECOND SESSION

MARCH 26, 2014

Serial No. 113–153

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ADAM KINZINGER, Illinois 

MO BROOKS, Alabama 

TOM COTTON, Arkansas 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

STEVE STOCKMAN, Texas 

RON DESANTIS, Florida 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

LUKE MESSER, Indiana 

ELIOT L. ENGEL, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

JUAN VARGAS, California 

BRADLEY S. SCHNEIDER, Illinois 

JOSEPH P. KENNEDY III, Massachusetts 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

Admiral Dennis C. Blair, USN, Retired, member, Energy Security Leadership 

Council, Securing America’s Future Energy ...................................................... 6

Mr. Harold Hamm, chairman, Domestic Energy Producers Alliance .................. 18

Ms. Elizabeth Rosenberg, senior fellow and director, Energy, Environment 

and Security Program, Center for a New American Security .......................... 25

Michael Levi, Ph.D., David M. Rubenstein senior fellow and director, Program 

on Energy Security and Climate Change, Council on Foreign Relations ........ 33

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Admiral Dennis C. Blair, USN, Retired: Prepared statement ............................. 8

Mr. Harold Hamm: Prepared statement ................................................................ 20

Ms. Elizabeth Rosenberg: Prepared statement ..................................................... 27

Michael Levi, Ph.D.: Prepared statement .............................................................. 35

APPENDIX 

Hearing notice .......................................................................................................... 60

Hearing minutes ...................................................................................................... 61

The Honorable Jeff Duncan, a Representative in Congress from the State 

of South Carolina: Material submitted for the record ....................................... 63

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Statement and material submitted for the 

record .................................................................................................................... 65

(1)

THE GEOPOLITICAL POTENTIAL OF THE

U.S. ENERGY BOOM 

WEDNESDAY, MARCH 26, 2014

HOUSE OF REPRESENTATIVES,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 10:08 a.m., in room 

2172 Rayburn House Office Building, Hon. Edward Royce (chairman of the committee) presiding. 

Chairman ROYCE. We’re going to call the hearing to order here 

and ask for all the members to take their seats. This is the Geopolitical Potential of the U.S. Energy Boom. 

Simply put, increasing U.S. energy production would boost our 

national security. It would also boost our economic security. Reducing our reliance on energy imports from the OPEC Cartel would 

make the United States less vulnerable to political and security-related disruptions that we face from time to time with respect to our 

energy supply. Increasing our energy exports would advance our 

geopolitical interests including by undermining the coercive leverage through energy that the President of Russia and others have 

used. 

Indeed, Russia’s annexation of the Crimean Peninsula was made 

easier by its energy grip over Ukraine. Russia’s state-controlled gas 

company, Gazprom, threatened to cut off supplies to Ukraine earlier this month. This is something that Russia has done in Eastern 

Europe in 2006 and in 2009. They turned off the valves to Ukraine. 

Gazprom is now threatening to double the price Ukraine pays for 

natural gas. Now, remember these aren’t market forces at work 

there. This is a monopoly that the Russian Government has created, and this is the dependency that we see in Eastern Europe. 

Now, this could obviously cripple Ukraine’s already weak economy 

which we’re trying to help. 

America’s newly developing energy supplies could make a difference zapping President Putin’s strength while bolstering 

Ukraine and many other European countries. Over the past 3 years 

just seven of the applications to export natural gas have been approved by the Department of Energy, while 23 are still pending. 

This is government at a glacial pace. But while the United States 

recently became the world’s largest producer of natural gas, Russia 

is still the biggest exporter of gas. That is because while Putin is 

freely selling oil and gas around the world, we impose major impediments to exporting our energy. How much of this is Russia’s 

economy? Well, 70 percent of their exports, 52 percent of what goes 

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to pay for the budget in Russia of the military and the government 

is from their natural gas and oil exports. So, this is a lost opportunity. 

I’m going to quote the chairman of the Joint Chiefs of Staff, General Martin Dempsey. I think he’s got this right when he said earlier this month before our colleagues in the Appropriations Committee. ‘‘An energy independent and net exporter of energy as a nation has the potential to change the security environment around 

the world.’’ He’s not quite grammatical but we agree with his 

premise. ‘‘Notably in Europe and in the Middle East. And so, as we 

look at our strategies for the future, I think we’ve got to pay more 

and particular attention to energy as an instrument of national 

power.’’

Recent innovations in energy exploration mean that U.S. production of natural gas is projected to rise 44 percent by 2040. This increased energy production has boosted manufacturing creating 

thousands of American jobs. It has the potential of creating thousands more, but instead of exporting natural gas companies are 

forced to flare the glut created by this bureaucracy. President 

Obama could move quickly to remove the obstacles placed on American energy exports. 

Since the President has chosen not to use his authority to permit 

natural gas exports, Congress can do the job for him by passing 

legislation to increase the number of countries that would receive 

accelerated approval of natural gas exports. The Domestic Prosperity and Global Freedom Act in the Energy and Commerce Committee would extend expedited approval of natural gas exports to 

all 159 World Trade Organization countries. 

The President should also stop blocking the long-delayed Keystone XL Pipeline which would create an estimated 20,000 jobs, direct jobs, and enhance our energy security and partnership with 

Canada, one of our close allies, also one of our most reliable allies. 

This is an opportunity not to be missed, an opportunity to reduce 

our vulnerability to political decisions and events in unfriendly and 

unstable countries. Yet, Secretary Kerry is conducting yet another 

review further delaying Keystone. 

We should end our self-imposed sanctions on energy exports. 

America leads the world with its dynamic and innovative energy 

sector. Let’s allow it to benefit the U.S. economy and our security 

interests worldwide. 

I will now turn to the ranking member for his statement, Mr. 

Eliot Engel of New York. 

Mr. ENGEL. Thank you very much, Mr. Chairman, for holding 

this very timely hearing. This is a very important hearing. 

Events in Ukraine over the past few weeks have brought discussions about the future of American energy, and specifically whether 

or not the United States should export natural gas into the headlines and onto the opinion pages. The Washington Post had such 

an article this morning. 

Over the past decade, Russia has used its gas resources as a 

weapon to settle political disputes and Ukraine has often been on 

the receiving end of these attacks. Just days into the current crisis, 

Gazprom announced that the prices it charged Ukraine would go 

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up 37 percent the following month, and in 2009 Russia completely 

cut off Ukraine’s gas flows leaving millions of people in the cold. 

The significant increase in U.S. natural gas production in recent 

years has generated new interest in U.S. exports. To date, the Department of Energy has approved seven applications to export U.S. 

liquified natural gas to countries in Europe, Asia, and South America, and that’s on top of other planned exports to countries with 

which we have a free trade agreement. So, just to be clear, American companies have been approved to export natural gas. 

When Secretary Kerry recently testified before the committee he 

noted that approved LNG projects would eventually produce 8.5 

billion cubic feet of gas per day. That number is even higher now 

with this week’s approval of the Jordan Cove plant in Oregon. Let’s 

not forget it takes lots of time and money to construct these complex multi-billion dollar facilities. 

The first LNG export facility at Sabine Pass, Louisiana is expected to go on line next year. Exports from that plant could go to 

a number of countries, including Ukraine, Romania, Hungary, or 

other Eastern European countries provided they have the necessary import infrastructure. 

However, it’s not clear what impact U.S. exports would have on 

Europe’s energy relationship with Russia. U.S. gas production has 

already ended most gas imports into our country, expanding the 

supply available for other countries, so Russia will continue to be 

a major European energy supplier due to its large reserves and 

proximity to its customers. By contrast, U.S. natural gas must be 

chilled into a liquid and shipped across the Atlantic, which obviously could be very costly. 

A Rice University study found that higher U.S. gas prices plus 

higher export costs could make shipments to both Europe and Asia 

unprofitable. In other words, the impact of American gas on European markets may be limited. As we weigh the pros and cons of 

increased energy exports, we must also carefully consider the impact on working people, small businesses here at home, and environmental aspects, including those in my district in New York. 

A 2012 study by the U.S. Department of Energy concluded that 

gas prices would rise by up to a third if the U.S. exported 12 billion 

cubic feet per day, yet the total volume of all export applications 

currently pending at the DOE is 36 billion cubic feet per day, three 

times as much. If that volume of gas were exported then domestic 

gas prices could go much higher, and that would almost surely 

have a very negative impact on all of our constituents. 

On a related issue, I’d be interested to hear from the panel on 

what would happen to domestic gasoline prices if the 40-year-old 

ban on crude oil exports were lifted. As we examine the future of 

American energy, we also need to consider the environmental impacts of extracting shale gas and oil. This process requires the injection of chemicals and other substances to unlock gas or oil deposits. I believe that companies should be required to disclose what 

they pump into the ground just as they must tell us what they put 

in our food. 

Using more natural gas in the United States to produce electricity could displace dirtier coal, thus lowering greenhouse gas 

emissions and the negative impact on our climate. We could also 

4

bolster U.S. national security by using natural gas as a transportation fuel, which helps reduce our reliance on oil. 

In fact, Representative Ros-Lehtinen and I introduced bipartisan 

legislation last year, the Open Fuel Standard Act, that requires 

half of all new vehicles to run on non-petroleum fuels such as natural gas or electricity. This bill would give consumers greater flexibility to choose more affordable fuel sources. 

So, I’m very interested in the prospect of us exporting energy, 

but I think we have to weigh the pros and cons and come up with 

a solution. It opens up great possibilities for us, and that’s why I 

am very interested in hearing from the panel, and what the panel 

has to say. So, again, thank you, Mr. Chairman, for holding this 

important hearing, and I look forward to the testimony. 

Chairman ROYCE. Thank you, Mr. Engel. 

We are going to go 2 minutes with Mr. Steve Chabot of Ohio, and 

then 2 minutes to Mr. Brad Sherman of California. 

Mr. CHABOT. Thank you very much. And, first, I’d like to thank 

Chairman Royce for calling this timely hearing today. I want to 

thank the panel of distinguished witnesses for taking the time to 

join us. We’re all looking forward to hearing your testimony this 

morning. 

The potential benefits afforded us by the recent U.S. energy 

boom are really astounding. We are presented with an opportunity 

to significantly strengthen our national security, to improve our 

economy here at home, and increase the global reliance on U.S. resources into the foreseeable future. And this is particularly timely 

when we find ourselves in a situation where we see the Russians, 

particularly Putin, acting up as he is now. 

While energy independence may not be realistic, energy interdependence is, and it should absolutely be pursued. The bottom 

line is the U.S. must seriously consider the geopolitical merits of 

exporting greater quantities of U.S. natural gas and oil, and we 

should be considering policies very seriously that are preventing us 

from doing more of that right now. If we did so, it might well undermine Russia’s influence over some of our European allies that 

are so dependent on Russia for both their fuel, whether it be gas 

or whether it be oil. 

And, as I said before, when you consider what is happening with 

respect to Crimea, Ukraine, potentially many other countries in the 

region, we absolutely have to consider this. So, I want to thank the 

chairman again for calling this very timely hearing this morning. 

I yield back. 

Chairman ROYCE. Mr. Sherman. 

Mr. SHERMAN. Mr. Chairman, thank you for having these hearings. Our Subcommittee on Terrorism and Trade has had several 

hearings on this already, and we’re having additional hearings tomorrow. The hearings tomorrow will focus just on oil as opposed 

to gas because oil and gas are extremely different on this issue. 

Petroleum is by far the cheapest fuel to transport across water. 

Natural gas is by far the most expensive fuel to transport across 

water. The United States is not in our lifetime going to be a net 

exporter of oil, or even a net exporter of energy, but we can be a 

net exporter of natural gas, and we can consider the export of oil 

from Alaska and import of oil onto our East Coast. This will have 

5

very little effect on anything, except it will reduce transportation 

costs, and it will raise the question of whether we can stop the 

process and keep the Alaskan oil in a time of world emergency, or 

disruption of the markets, whether we’ll have both the legal and 

physical infrastructure to make that change. 

The question then is whether we export natural gas. Keep in 

mind that in Germany they’re paying triple, in Japan they’re paying quadruple for natural gas than what we are in the United 

States. If we export, our natural gas prices will go up. That will 

be here in the United States for natural gas, very substantially. 

That will be good for the natural gas industry, including jobs in the 

natural gas production and transportation industries, but it means 

higher prices for consumers, it means higher prices for manufacturers, it may take away a huge advantage for manufacturers that 

cost us far more jobs than we will pick up in the energy sector. 

From the environmental standpoint, most environmentalists will 

oppose anything that produces or moves any carbon fuel. On the 

other hand, to the extent that the world burns more natural gas, 

that may be a boom for the environment compared to the chief alternative, which is coal, which produces twice as much carbon and 

greenhouse gases, and even far more than that in the terms of soot 

and pollution as compared with burning natural gas. And you can 

argue that even fracking is not as bad for our environment as is 

the burning of coal. I yield back. 

Chairman ROYCE. Thank you, Mr. Sherman. We’re going to have 

a diverse group of energy specialists this morning. Let me start 

with Admiral Dennis Blair. During his 34-year Navy career, he 

served in the Atlantic and Pacific fleets, and commanded the Kitty 

Hawk Battle Group. He was Commander-in-Chief of the U.S. Pacific Command. He was also the Director of National Intelligence 

from 2009 to 2010. He is currently a member of the Energy Security Leadership Council, and Commissioner on Geopolitics at Securing America’s Future Energy. 

Mr. Harold Hamm is the chairman of the Domestic Energy Producers Alliance. Mr. Hamm is also chief executive officer and chairman of the board of Continental Resources, Incorporated. He previously served as president/chief executive officer and as a director 

of Continental Gas from 1967 until 2004. 

From 2008 through 2013, Ms. Elizabeth Rosenberg served as a 

Senior Advisor at the U.S. Department of Energy. She is currently 

a Senior Fellow and Director of the Energy Environment and Security Program at the Center for New American Security. 

Before joining the Council on Foreign Relations, Dr. Michael Levi 

was a non-resident science fellow, and a science and technology fellow in foreign policy studies at the Brookings Institute. 

Now, without objection the witnesses’ full prepared statements 

will be made part of the record. The members here of the committee are going to have 5 calendar days to submit any statements 

or any questions they might have of the witnesses, and any extraneous material for the record. 

And we’ll ask Admiral Blair to go first. Please summarize your 

remarks and then we’ll go to questions. Admiral Blair. 

6

STATEMENT OF ADMIRAL DENNIS C. BLAIR, USN, RETIRED, 

MEMBER, ENERGY SECURITY LEADERSHIP COUNCIL, SECURING AMERICA’S FUTURE ENERGY 

Admiral BLAIR. I think, I agree this is a very timely and important hearing. Energy has been a huge factor in national security 

matters during my experience in it. We are now in an era in which 

we have new possibilities due to increased domestic production. 

And I urge the committee to think hard, think long about how we 

can take advantage of this to bring advantages to our national security. 

I’m co-chairman of a Commission on Energy and Geopolitics. It’s 

a bipartisan group of high-ranking former U.S. military, diplomatic, and national security officials. It’s a project of the nonpartisan, nonprofit organization, Securing America’s Future Energy, and we just published a report called ‘‘Oil Security 2025: U.S. 

National Security Policy in an Era of Domestic Oil Abundance.’’ 

And we make a series of recommendations to take advantage of the 

booming U.S. oil production to enhance American national security. 

Our increased production has already supported our national security objectives. The additional 3.5 million barrels per day that we 

now produce in this country compared to what we produced in 2005 

has compensated for the virtually curtailed oil production in Libya, 

and the slower increase in Iraq’s exports than was expected. 

We’ve been able to maintain sanctions against Iran, including 

sanctions against its oil exports. Back in 2005, we were not able 

to pursue this policy because the market was too tight. 

So, increased American oil production has already been very 

positive, but our study concluded that it will not be the cure all 

that some pundits have prescribed or prophecized. As long as we 

fuel 93 percent of our transportation sector with petroleum, the security and resilience of the global oil market will be a vital American national security concern. If supplies are interrupted prices go 

up, and no matter how much we produce at home or import from 

North America, our economy will suffer, and may suffer badly. 

The Middle East will continue to be a region of vital interest. 

With an overall tight global oil market driven by increasing world 

demand, the Middle East will remain the swing producer. It will 

be the only region able to increase production quickly, and economically to compensate in the medium term for supply disruptions, whether natural or manmade. And at the same time, OPEC 

will manipulate the production for its own purposes, to keep prices 

high to support its own foreign policy objectives, so the United 

States will continue to be vitally concerned about this region, but 

we must do so in a smart way. 

Our study makes recommendations in four areas. First, we recommend a series of global policy recommendations to make the 

world oil market more secure, more resilient to supply interruptions. As one of the largest consumers and producers of oil, the 

United States can encourage better coordinated international action to toughen oil production and transport systems, to take swift 

and effective action to deal with shortages. 

For long-term improvement, we should share our mechanical 

fracturing technology to increase total oil supplies. We should help 

7

build more resilient and stable political conditions in producing 

countries. 

In the Middle East, we recommend insuring the security of oil 

producing friendly countries, but with a diplomacy-centered approach. The military support component should be reconfigured in 

a flexible deployed posture with a demonstrated capability to bring 

major forces forward when needed, is what is required. 

The Middle East will continue to be a volatile and violent place 

primarily because of domestic tensions within the countries there. 

And over the long term, we need to support peaceful evolutionary 

reform to develop more stable and eventually more democratic societies and governments there. 

China will account for almost half of the increased energy demand over the 20 years, and the United States needs to involve 

China in plans to deal with supply interruptions and price spikes. 

We should help China with tight oil development and include it in 

the International Maritime Security operations needed to protect 

oil shipping. Of course, all these actions depend on the Chinese exercising restraint in the aggressive actions that it is taking now 

around its maritime borders. 

And, finally, and most importantly, the United States must diversify the energy resources for its own transportation sector. We 

need to shift a significant portion of our car, truck, and airplane 

fuels away from petroleum primarily to natural gas and electricity. 

This means government-supported research and development, and 

other government policies that while not picking commercial winners and losers, remove the barriers to this shift away from oil for 

transportation. 

Developing a strong forward-looking energy policy is one of the 

most important things we can do for this country’s national security, and I urge this committee to take a strong role in forging one. 

Thank you. 

[The prepared statement of Admiral Blair follows:]

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Chairman ROYCE. Thank you, Admiral Blair. Mr. Hamm. 

STATEMENT OF MR. HAROLD HAMM, CHAIRMAN, DOMESTIC 

ENERGY PRODUCERS ALLIANCE 

Mr. HAMM. Good morning, Chairman Royce, Ranking Member 

Engel. I think the last time I saw the ranking member Engel was 

on location with a hard hat on in North Dakota in the Bakken oil 

field up there, and appreciate that. In addition to the DEPA that 

I represent, also co-chair, the Council for Secure America, where 

we had several of our friends of Israel that toured the field up 

there, appreciate that. 

Continental Resources is primarily an oil producer, but we’ve certainly produced our fair share of gas, as well. The American energy 

independence on the horizon 3 years ago. I’ve been in a position to 

see that and actually DEPA put a stake in the ground at that time 

in October 2011, and that we were going to achieve American energy independence in this country by 2020. Quite a lot of skeptics 

at that time, but today we don’t see near as many. 

This technology that’s come about is tremendous. You know, we 

hear a lot about fracking and all that, but really what’s gone on 

is the space-age technology that’s brought the horizontal well-bore 

in existence and the ability to go down three miles, drill over three 

miles further, and contact so much more rock of this type, rock that 

we couldn’t produce earlier. So, it’s a tremendous thing that’s happened. It’s unlocked a great deal of resources and it’s brought about 

this reality that we have today. 

Today I see what’s necessary to continue this American oil and 

gas renaissance to achieve energy security for our country and also 

the world. This includes utilizing American crude oil as a diplomatic tool to reduce the unfair advantage in the neighborhoods of 

rogue nations. And although LNG exports can’t happen quickly, 

and someone mentioned it couldn’t be done overnight, virtually we 

could help with oil exports that could have an immediate impact 

to the world. 

You know, during OPEC that was mentioned here, reactionary 

Federal laws were passed in the 1970s. The Natural Gas Boiler Act 

was one of those. It took a long time to get rid of that, and brought 

on a lot of the problems that we have today. The global energy industry has changed during all that time. Elected officials have repealed or let expire nearly all of those post-embargo regulations except those banning exports, those crude oil exports. And we’ve had 

almost a virtual ban of LNG. We’re seeing a few permits come 

through, now it’s up to seven, but there’s been like 25 that’s been 

out there waiting in the wings. 

I think the debate really, whether we’re going to see lower prices 

to consumers or not, the real debate is about the principles of free 

trade in the world. And if America is going to be an energy leader, 

we’re certainly going to have to act like one and be able to export 

what’s produced here. 

Will prices of natural gas go up if we’re exporting? That is a good 

question, but I think the real answer to that is that we’re going to 

see a lot of stability in prices as we go forward. We’re not going 

to see the ups and down swings that we’ve had with natural gas 

in the past. $2.50 is not good for anybody, it’s not good for supply, 

19

and $8 or $10 is not good for the consumers, but we’ll see a much 

broader market as we go forward. 

Someone mentioned jobs, heard about 10 million jobs in this industry today. If we’re allowed to go forward with exports, I’m sure 

we’re going to add about another 1 million jobs. We’re also going 

to add about 1 million or more barrels of production per day in this 

country for sure, in addition to what we would as we go forward. 

You talk about jobs. Somebody said well, you know, the refineries, you know, if we only refined here the product and ship it out 

that the large jobs are there. But with the refineries, it takes about 

as much to run a refinery if you run at 75 percent capacity or 100 

percent capacity. The jobs are created downstream, that’s where 

the jobs are. 

So, I’ll summarize and stop there. You know, you have my testimony, and I’ll be ready to answer questions. Thank you. 

[The prepared statement of Mr. Hamm follows:]

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Chairman ROYCE. Thank you, Mr. Hamm. Ms. Rosenberg. 

STATEMENT OF MS. ELIZABETH ROSENBERG, SENIOR FELLOW 

AND DIRECTOR, ENERGY, ENVIRONMENT AND SECURITY 

PROGRAM, CENTER FOR A NEW AMERICAN SECURITY 

Ms. ROSENBERG. Chairman Royce, Ranking Member Engel, and 

distinguished members of the committee, thank you for the opportunity to testify today on the Geopolitical Potential of the U.S. Energy Boom. In my remarks, I’ll discuss several themes that are explored in much greater detail in my written testimony, which I 

have submitted for the record. 

Remarkable recent increases in U.S. energy production have substantial economic and geopolitical benefits. Aside from strengthening our economy, which is instrumental to our nation’s security, 

the domestic energy boom means that a larger portion of global oil 

and natural gas supply comes from reliable sources. 

The broad innovation and economic gains associated with the energy boom reduce U.S. indebtedness, including to countries sometimes hostile to U.S. interests, and allow the United States new capacity and flexibility to advance foreign policy interests. 

To fully realize the geopolitical potential of the U.S. energy boom, 

however, national leaders must revise paradigms and policies that 

restrict energy exports. We would not be wise to hoard energy at 

home, and disengage from strategic relationships with major global 

energy producers. That approach will not make us safer. 

We would have more scope to promote stable global markets, 

U.S. prosperity, and our foreign policy interests with greater energy production and a more nimble and permissive export regime 

for liquified natural gas or LNG, and crude oil. 

For this reason, national leaders should accelerate the permitting 

of LNG export facilities and allow the export of crude. U.S. crude 

exports are subject to near total restriction currently. Lifting these 

restrictions would ease supply bottlenecks and market dislocations, 

and signal drillers to continue production growth. This would generate more revenue and expand the share of global crude from a 

stable producer, crude exports would raise some oil prices in some 

parts of the United States to come in line with global benchmark 

pricing; however, it’s unlikely that this would increase retail gasoline prices for consumers, and they might even drop marginally. 

If the United States maintains current crude export restrictions 

it will prevent U.S. oil production expansion. This means foregoing 

an opportunity to shrink OPEC’s market share and its cartel pricing power. Foregoing crude exports would also mean reduced U.S. 

policy leverage over Iran. If international nuclear talks with Iran 

fail, U.S. policy leaders may want to implement tough new sanctions to remove all Iran’s oil exports from the market. 

Congressional proposals to this effect are credible if sufficient affordable alternative oil supplies are available so that the international community will participate in sanctions. The United 

States should help insure that these alternatives are available by 

encouraging its crude production and exports instead of relying on 

OPEC to do so. 

Future planned U.S. LNG exports represent an economic and 

strategic benefit for the United States. They would bring greater 

26

supplier diversity, more competitive pricing arrangements, and less 

politicized contract terms for allies and partners abroad. The 

United States is a stable producer and would ship LNG along trade 

routes that involve few maritime choke points and hot spots. U.S. 

LNG would represent an important economic plank of the U.S. rebalance to Asia, and would meaningfully contribute to the energy 

security of America’s alliance partners in Northeast Asia. 

Additionally, LNG exports will directly and indirectly help to diversify European gas markets away from their 30 percent reliance 

on Russia. This, other technical assistance, and diplomatic engagement to help Europe access its indigenous shale gas and reform regional markets will have meaningful impact in eroding Russian 

pricing power, and coercion on Europe. 

Refraining from selling LNG or crude abroad in order to support 

domestic manufacturing or refining industries, or to halt energy 

production growth would undermine U.S. foreign relations and the 

scope of our leadership abroad. It would also cause the United 

States to lose out economically to other countries that promote 

greater production and export. 

As the United States thinks about the energy and foreign policy 

agenda that can best promote prosperity and our national interest, 

it must prioritize responsible production of energy and its 

unencumbered export. 

Thank you for the opportunity to testify. I look forward to answering your questions. 

[The prepared statement of Ms. Rosenberg follows:]

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Chairman ROYCE. Thank you. Dr. Levi. 

STATEMENT OF MICHAEL LEVI, PH.D., DAVID M. RUBENSTEIN 

SENIOR FELLOW AND DIRECTOR, PROGRAM ON ENERGY SECURITY AND CLIMATE CHANGE, COUNCIL ON FOREIGN RELATIONS 

Mr. LEVI. Chairman Royce, Ranking Member Engel, members of 

the committee, thank you for inviting me to speak with you here 

today. I’m a Senior Fellow for Energy and Environment at the 

Council on Foreign Relations, and Director of CFR’s program on 

Energy Security and Climate Change. 

Rising U.S. oil and gas production is delivering important economic security and climate benefits even as it poses real environmental challenges. I want to begin by discussing these in the context of energy exports in Russia before touching on some broader 

issues. 

The United States should allow both oil and gas exports. The 

basic geopolitical calculation is not fundamentally about Russia. 

The United States has long promoted open markets as the best 

guarantor of energy security. In the last 2 years, it has effectively 

challenged Chinese restrictions on raw materials exports at the 

World Trade Organization. If the United States were to block exports or restrict them only to friends or NATO allies, that would 

undermine its ability to challenge other countries’ restrictions, and 

to uphold a global open trading system. Turning our back on our 

longstanding strategy would be unwise. 

Exports are, however, not without costs. While both oil and gas 

exports would on balance be mildly beneficial to the U.S. economy, 

and while oil exports would probably nudge gasoline prices down, 

natural gas exports would raise the domestic natural gas prices 

slightly, increasing home heating and electricity bills. At a minimum, Congress should mitigate harm to the most vulnerable by 

insuring that the Low-Income Home Energy Assistance program is 

properly funded. 

Energy exports would also promote greater domestic energy development, and along with it local environmental risks. That 

makes it all the more important for state authorities to develop 

strict environmental rules and for the Federal Government to impose minimum national standards, including for disclosure, where 

practical. 

I haven’t said anything yet about Russia. Let me focus first on 

natural gas. U.S. natural gas exports would, indeed, hurt Russia. 

U.S. exports would prompt Russia to lower its natural gas prices, 

reducing Russian revenues and harming the state. The ultimate 

impact, though, would be limited by the fact that relatively highcost delivered U.S. gas exports can push prices down too far, and 

because Russian revenues are dominated by oil, not gas sales. 

U.S. natural gas exports would do far less to reduce European 

dependence on Russian natural gas. U.S. exports will flow mainly 

to Asia because that is the most profitable destination. Russia can 

largely maintain its market share in Europe by under pricing U.S. 

exports. In addition, in a future crisis Europe’s ability to shift from 

Russian to U.S. supplies will be limited by scarce terminal and 

pipeline capacity. 

34

Expediting or eliminating the Department of Energy review process wouldn’t fundamentally change any of this analysis. Commercially attractive projects have mostly been able to get DOE approval. It is the commercial fundamentals and the time to build facilities that is the main restraint on U.S. exports. 

I haven’t mentioned oil exports in the Russian context yet. That’s 

because oil exports are a fairly weak tool against Russia. Europe 

can already buy oil from elsewhere if Russian supplies are cut off. 

It doesn’t need U.S. exports to do that. Our own oil exports might 

also eventually reduce world oil prices by a few dollars marginally 

hurting Russia, but not dealing it a large blow. 

I’d like to close with two broader observations about the geopolitical potential of the energy boom. The first is that the greatest 

security dividends will come from increased production, not from 

increased exports per se. How different would our conversations 

about how to confront Russia today be if we were a natural gas importer, which is what essentially every expert predicted 10 years 

ago? 

On the oil front, the greatest geopolitical dividend is a reduced 

risk of higher oil prices, and all the security complications that entails. It’s impossible to pin down the precise impact of the U.S. 

boom on oil prices, but the odds of higher prices have been reduced. 

The second broad observation is that we create real risks by 

overstating the benefits of the boom. The oil boom will not make 

us energy independent in any meaningful way, and it’s essential 

that we continue to pursue efforts to cut our own oil consumption 

in order to reduce our vulnerability to disruptions in the world. 

It’s also essential that we carefully weigh the environmental 

risks of oil and gas production in deciding what areas to open to 

development. In fact, I would submit that putting our industry on 

as firm and sustainable a regulatory foundation as possible is essential to fully exploiting the long-term geopolitical opportunities 

presented by the boom. 

Members of the committee, thank you again for inviting me to 

be here today. I look forward to answering any questions you have. 

[The prepared statement of Mr. Levi follows:]

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Chairman ROYCE. Thank you, Dr. Levi. 

My focus has been fundamentally on a particular set of circumstances in Eastern Europe in which Russia does have a monopoly, monopoly with some countries, near monopoly with others. Poland, two-thirds of their gas is from Russia today. 

What gets our attention, I think, on the committee was, I don’t 

know how many of the members here saw the story, but a few 

years, actually last year, Russia was involved in its machinations 

in Ukraine. They were able to turn off the valve, or threaten to 

turn off the valve. And what the Poles did, and what the Hungarians did was to sell 2 billion cubic yards of gas, run it through their 

pipelines back into Ukraine in order to keep Ukraine on life support. And watching what Russia has done repeatedly in terms of 

turning off the valves, you know, going to this larger explanation 

that Ms. Rosenberg and others explained in terms of the competitive effect, or what happens when you do have a monopoly. And 

that’s what Russia has been able to do with Gazprom, by having 

a state-run company, and basically nationalizing this and controlling it, they’ve been able to do the same thing that OPEC does in 

tandem with Russia in terms of trying to set the oil price. They 

have been able to set the price, and they’ve been able to do one 

thing further, which is actually turn off the valves in winter when 

somebody doesn’t do their bidding, which has created enormous 

consternation inside Ukraine, for example. 

We would not be here today, we would not have had a government fall in Kiev had it not been for the ability of Russia to help 

create a crisis there. So, geopolitically, as we’re looking at Eastern 

Europe, my interest has been what could we do in order to try to 

engineer a circumstance where enough gas gets approval. It’ll take 

a while, you know, obviously for the facilities to be built, although 

there are facilities in Spain, for example, that would feed into the 

pipeline, but the futures market operates instantaneously. The 

market responds quickly. The ruble, currencies fall quickly when 

they hear about a national plan, and your ability to control a monopoly is dissolved when there is an alternative. So, this is the 

question for me, is how much of an advantage is it for us in terms 

of our strategic interests and those of our allies? 

I note, by the way, that the Speaker of the House has a letter 

from the Head of State of the Czech Republic, Slovakia, Hungary, 

Poland, all asking for just such an initiative. For the same reason 

that Ukraine has this dependency, they have this dependency. So, 

their request is can you develop a strategy where you can export 

into that market? That’s what I’m interested in today, and I would 

just ask Ms. Rosenberg, or Mr. Levi, or anyone else. I know there’s 

a little bit of difference of opinion on this but, Ms. Rosenberg, what 

would be your take on that? 

Ms. ROSENBERG. So, the point of the role of U.S. LNG is helping 

to diversify European gas assets, gas supplies and its ability to 

help Europe get out from under some of the influence of Russia, 

LNG has a role to play, but as has been noted already, the impact 

won’t be immediate, and it won’t be the silver bullet here. So, it’s 

true that sending a strong signal from the United States——

Chairman ROYCE. Well, let me ask you this. Lithuania’s sole supply of natural gas comes from Russia. Clearly, this is one of the 

41

reasons you see the Lithuanians toying with the idea of an LNG 

facility. Now, pricing may not depend upon this, maybe the monopoly doesn’t drive price, but in Lithuania’s case it pays the highest 

price for gas in all of Europe. So, it sounds like there’s perhaps a 

more direct connection to that monopoly than we’d like to assume. 

The Lithuanians certainly believe it, so that’s why I raise these 

points. 

Ms. ROSENBERG. Right. I would note that Lithuania will be in 

the position to benefit from LNG, additional LNG supplies available to its market, which will help diversify its gas supply. That 

being the goal for reducing the pricing influence of Russia. 

Chairman ROYCE. Mr. Levi. 

Mr. LEVI. The answer to your question is going to depend on the 

particular country. And we need to look at how each has integrated 

or not integrated into the European energy space. 

Let me just focus on a few pieces of this. Ukraine is different 

from these other countries. In the case of Ukraine, Russia is not 

threatening to raise prices from typical levels to much higher ones, 

they’re threatening to raise prices from severely depressed levels, 

subsidized levels to the kind of price that a country like the United 

States might offer. So, we are hard-pressed to combat that. If we 

want to help make Ukraine more resilient there, we need to provide assistance that helps them transition from their heavy industry, which is completely unprofitable unless they get subsidized 

Russian gas to a more sustainable foundation. Our aid packages 

are typically focused on getting through the current crisis. 

Chairman ROYCE. All right, but—I take your point, although 

they’re talking about doubling the price of gas, but I take your 

point. 

The reality, though, is if you’re in manufacturing, I used to be 

in business, and you’re going to have interrupted supply, and you 

find out that in the winters your supplier, Russia, is going to turn 

off the valve, that doesn’t leave for a lot of rationale for investment 

for overseas in rebooting your economy. Mr. Hamm. 

Mr. HAMM. Thanks, Chairman. You know, it’s not about Russian 

revenues, it’s about heat, and that was your point. And when you 

have the ability to turn off that heat, you know, we can relate that 

pretty well with the winter we’ve had here this past winter. So, you 

have to have alternatives. And if the alternatives are there immediately, you have an impact, so providing the alternatives to the 

LNG transport and other things, you know, that could be that 

you’d have storage there, and a few things like that, that could alleviate those situations where they couldn’t turn the heat on. 

Chairman ROYCE. Thank you, Mr. Hamm. Mr. Engel. 

Mr. ENGEL. Thank you, Mr. Chairman. 

I, too, have the concerns that the chairman has. I am intrigued 

by the possibility of exporting gas and oil to counter Russia, to give 

Putin less of a monopoly, or less of a start. And I think that by and 

large we would have to be crazy not to consider it. I think it needs 

to be looked at and considered, and I’m all for that from a geopolitical point of view. I’m not saying we should rush to it, but we 

should do it. And we should do it, I think look at this as soon as 

possible. 

42

But the bottom line when I look at my constituents, and the rest 

of us look at our constituents, people back home want to know the 

bottom line, will prices of natural gas go up? What will the impact 

be on gasoline prices? The average person is more concerned about 

their own pocketbook, and that’s a concern of mine. 

The whole fracking issue. Mr. Hamm, I’m very glad I went to 

North Dakota, saw you there, and was frankly impressed by and 

large. I still have questions, but impressed with what I see. 

The average person in my district hears about fracking and they 

go crazy because they think it’s going to ultimately contaminate 

their drinking water. They hear all kinds of horror stories. So, I 

think those of us, we have to weigh the overriding concerns and 

geopolitical concerns which are very important, but we also have 

to care, obviously, about what our constituents feel about the danger, potential danger of fracking, or whether the prices of natural 

gas will go up, prices of gasoline will go up. So, I’m going to give, 

let me start with you, Mr. Hamm, the opportunity to talk a little 

bit about what I’ve said. 

Mr. HAMM. Thank you, Chairman Engel. You know, you saw 

firsthand, you know, the psyche that goes into the fracking process 

up there, and that’s good. You know, there’s a lot of concern out 

there and a lot of situations. I think before you debate all the benefits of price and all that, just take into consideration what’s really 

happened already with the tight oil that’s been on, particularly the 

Bakken. We’ve seen average prices reduced by about 20 percent on 

diesel because of the content of that quality premium crude up 

there. Also brought down the price of gasoline. We’ve seen it lower 

this year than before, so it’s very helpful as we see the broaden 

market. And it will also help this broadened market of gas, natural 

gas is helping. 

I mean, I used to talk about natural gas in terms of 55 Bcf per 

day, now we’re approaching 75. We’re able to take care of that market and do it very well because of the increased supply we have approaching 200 years supply that many of us think is there. So, 

overall, I think the price is going to be much more stable, and can 

take care of these LNG exports. 

Mr. ENGEL. Because there is, and I mentioned it, a 2012 Energy 

Department study that said natural gas prices could rise by up to 

a third under a high export scenario of 12 billion cubic feet per day, 

and the total volume of all export applications before DOE is 36 billion cubic feet per day, or three times higher than DOE’s high scenario. So, I worry about the effect of domestic prices if all the gas 

in the contracts are exports. 

Dr. Levi, let me ask you, you testified that the impact of U.S. energy exports on U.S. relationships around the world is being overstated. You mentioned that the infrastructure constraints in Europe, for example, and higher LNG prices would make it unlikely 

that U.S. gas would displace Russian gas. Could you talk more 

about these market dynamics? 

Mr. LEVI. Absolutely. The reality is that in the European market, 

Russian gas is less expensive than delivered U.S. gas. Certainly, 

the domestic gas price here is much lower, but once you liquify it, 

transport and regassify it, you end up with a fairly high price. 

43

Now, there are some consumers who will pay for diversity, and 

will pay to spread their bets a bit, and that’s why I would not say 

that U.S. gas will displace no Russian gas. But for the most part, 

these companies want to be competitive on a day-to-day basis in 

the global economy, and are going to go to the lowest price. 

And the other thing to keep in mind is crisis dynamics. We all 

saw over the last several months during this record cold snap in 

the United States how infrastructure constraints in this country 

made it difficult to bring our abundant natural gas to parts of the 

country where it was in extraordinarily high demand driving natural gas and electricity prices up. Infrastructure constraints are 

real, and companies don’t over-bill massively just to respond to unusual events. It’s no different in Europe. And that would undermine Europe’s ability to absorb very large amounts of gas from a 

different source during a crisis. 

Mr. ENGEL. Thank you. Thank you, Mr. Chairman. 

Admiral BLAIR. Mr. Chairman, could I just add one point to the 

discussion? I get a little impatient about discussions of the day-today price when you realize that by having a low day-to-day price 

with a very vulnerable, rickety program, you are subject to crises 

which we will then have to spend billions, and tens of billions, and 

hundreds of billions of dollars on to fix with military force or higher, or other forms of national power. I’ve seen it in the Middle East 

where the price of oil was not what we were paying at the pump, 

it was the price of what we were paying plus the lives, the treasure 

of the country that we were sending over to that part of the world 

in order to keep stability and restore order there. 

So, the idea that we just have to keep the lowest possible price 

on a day-to-day basis and not think about some consequences that 

could happen if we don’t take prudent action to be more resilient 

and more independent, is I think really shortsighted. And we have 

to balance these long-term needs, which we have paid in the past, 

which we will pay in the future unless we take prudent action now 

in terms of diversity and resilience. 

Mr. ENGEL. Well, Admiral, I agree with you, but we have to balance it because the average consumer out there, the average constituent that all of us has cares a lot about what happens in the 

Ukraine, as I do. But the bottom line for them is how much are 

they paying out of their pocketbook, and that is certainly a factor 

that those of us that make policy have to consider because the people back home are concerned about fracking, are concerned about 

the price of natural gas, and are concerned about the price of gasoline. 

So, while I believe that we need to look at our policy because I 

don’t like what Putin’s done, I want to have a counter balance to 

Putin. Our constituents, the first thing that’s important to them is 

the bottom line in terms of what they pay. And every one of us that 

needs to be responsive to our constituents really have to take that 

into strong account. 

Admiral BLAIR. Yes. With respect, Mr. Engel, I think we’re 

undervaluing the American people a little bit here. I think they understand that to make life better for their children, not to have to 

send military forces out to handle situations which could have been 

handled had we taken prudent domestic action earlier is a smart 

44

investment. And with good leadership, I think they will understand 

that, and that they will support wise policy in that area. 

Mr. ENGEL. Well, I hope so, but please understand that everything is a balance, and those of us who run for office have to weigh 

that balance. 

Mr. LEVI. Congressman, if I can briefly add. The main investments in resilience in the current context need to be made by our 

friends and allies in Europe to build extra capacity so that they can 

be resilient in the face of a crisis. Their under-investment leads to 

our having to come in and bail them out. 

Chairman ROYCE. We’re going to go to Mr. Duncan of South 

Carolina. 

Mr. DUNCAN. Thank you, Mr. Chairman. 

As I noted through my amendment that was accepted in the 

Ukraine legislation we marked up in this committee yesterday, I 

strongly support U.S. promotion of natural gas exports and advances in energy extraction and exploration technologies. 

I further believe that it’s urgent that the administration strive 

to expedite approval of LNG export terminals. The approval of the 

Jordan Cove project in Oregon on Monday is a good sign, but we’ve 

got more work to do. 

I think blanket approval would have an equally important psychological impact on the geopolitical environment especially surrounding the Ukraine. 

I point the committee to a Thursday, March 20th, Wall Street 

Journal opinion called, ‘‘A Gas Export Strategy,’’ and I’ll provide a 

copy for the record, Mr. Chairman. But the Russian economy and 

Mr. Putin’s political cronies are highly dependent on petrodollars. 

And I think it’s important that we send the right signal not only 

to Russia, but really to a lot of folks around the globe. 

I also want to point in that article it mentions that European nations are currently dependent on Russia for 70 percent to 100 percent of their natural gas, and that Deputy Chief of Missions for the 

Czech Republic told at a House hearing this year that his country 

has found that even the decline in U.S. gas imports in recent years 

has freed up more gas for Europe, lowered prices, and thus weakened the Russian negotiating position during contract renewal 

talks. I think that’s imperative, that we think about if it’s weakened their negotiating position, if it’s weakened their income, and 

their income stream to Putin’s presidency. 

So, I can’t really talk about the energy and geopolitical arena 

without talking about the benefits of the U.S. energy boom with respect to why we need the Keystone Pipeline, Keystone XL. I recently met with some Members of the Canadian Parliament, and 

it’s crystal clear to me that the President’s polarization and 

unexplainable delay on the transport of Canadian crude oil to the 

U.S. refineries through Keystone has hurt the geopolitical relationship with one of our most important and biggest trading partners, 

and that’s Canada. 

I also want to mention for the sake of the discussion here today 

that former Joint Chief Chairman Martin Dempsey said in a House 

hearing just last week:

‘‘An energy independent U.S. and a net exporter of energy as 

a nation has the potential to change the security environment 

45

around the world, notably in Europe and in the Middle East. 

And so, as we look at our strategies for the future, I think 

we’ve got to pay more attention, and particular attention to energy as an instrument of national power.’’

I think that sums up my position. If we want to change the geopolitical environment, the United States being energy independent, 

and lessen our dependence on anything coming from the Middle 

East changes the geopolitical environment with regard to support 

for terrorism and other things that may come out from the Middle 

East. So, I think that is a tremendous summary of where we are. 

So, I’d like to shift gears, Admiral Blair, and focus in this hemisphere to the south, and that’s with Venezuela, because I think it’s 

imperative that as we talk about energy and political dynamics, 

that we think about that tremendous exporter to the U.S. that Venezuela is. So, they have the largest proven reserves of oil in the 

world, estimated in 2013 at 297 billion barrels. In 2011, Venezuela 

was the fourth largest foreign supplier of crude oil and products to 

the U.S. With the protests and violence that have resulted in the 

deaths of more than a dozen Venezuelans at the hand of President 

Maduro’s regime, should the U.S. use its economic leverage and 

halt our imports, or limit our imports of Venezuelan oil? And as 

that revenue doesn’t impact the people in Venezuelan as much as 

it would impact the regime that’s down there with President 

Maduro. 

So, if you could speak to two things. If you could speak to Chairman Dempsey’s remarks that I mentioned earlier about American 

energy independence and its being an exporter, and its impact on 

geopolitical dynamics. And then if you could speak to Venezuela, I 

certainly would appreciate it. So, Admiral. 

Admiral BLAIR. Sir, I certainly share General Dempsey’s contention that if the United States uses its new-found oil abundance 

smartly it would be a real game changer. 

I guess my feelings have solidified by watching the Middle East. 

We did not send troops into the Middle East to take possession of 

oil fields and to take over the oil, but we sent them there in large 

numbers because of the oil-based importance of that region to the 

world economy and, therefore, to the U.S. economy. And the stability and security of that region was important to us from a national security point of view. 

Had we not been so dependent on the Middle East in that sense, 

we would have treated the troubles there the way we treated them 

in other parts of the world that are going through turmoil, where 

there’s suffering going on, where there may be a combination of interests and opportunities, but this huge investment, the military 

force there at the bottom was caused by the oil importance of that 

region. So, I agree completely that energy security for this country, 

more flexibility in terms of our energy picture would make a huge 

difference, a decisive difference in the position of the United States 

in the world, so I think that’s completely true. 

On Venezuela, unfortunately, as you know better than I, the oil 

market is pretty well an international global market. And exactly 

where it comes from, and exactly where it goes to is really not—

really does not make that much difference. We are not very dependent on Middle East oil, for example, but we are dependent on 

46

oil, and that’s what makes the difference. So, I don’t really think 

that—I haven’t found that blocking particular exports from particular countries really makes a big difference in the whole thing. 

As you know, Venezuela is doing a pretty good job of running its 

oil industry into the ground on its own without any help from anybody else. And the dissatisfaction within Venezuela is caused by 

that in terms of the standard of living, the corruption and so on. 

It’s doing a pretty good job of discrediting Maduro’s administration 

as it had the Chavez administration before he died. And they’re 

going to have a hard time holding on to power. So, I think that 

we’ve got a lot of important internal forces in Venezuela that are 

working for us, and if we could do a few things to help those along, 

I think that would be just fine. But I think the Venezuelan people 

are going to take care of this corrupt, and autocratic, and misguided government that they’ve had to endure for a while themselves. 

Mr. DUNCAN. Well, I appreciate that. I’m out of time, Mr. Chairman. I will remind the committee there is no national security 

without energy security. With that, I yield back. 

Chairman ROYCE. We go to Mr. Brad Sherman of California. 

Mr. SHERMAN. Thank you. 

I misspoke a little earlier, our subcommittee hearings on the export of oil are next week, not tomorrow. 

I don’t think we should be fantasizing about the United States 

being a net exporter of oil. That’s just not going to happen. Yes, 

it would dramatically change the world, so would the invention of 

coal fusion, but that’s not around the corner either. 

And the wars that we have fought in the Middle East have been 

about oil used chiefly for vehicles, not natural gas which competes 

with coal, which while dirty is at least abundant. And I don’t think 

a country has fought a war just to meet its carbon targets, as much 

as every country would like to brag to the world that it’s creating 

less greenhouse gases. 

What is the—and I don’t know who to address question to so, Dr. 

Levi, you’ll answer it unless somebody knows more. What does it 

cost per Mcf to liquify natural gas, move it 1,000 miles over water, 

and regassify it? And does the price go up much if you’re moving 

it 10,000 miles instead of 1,000 miles? Is there a major cost to the 

ocean transport, or is the key cost liquification and regassification? 

Ms. Rosenberg. 

Ms. ROSENBERG. Sure. Perhaps $6 to $8 for the liquefaction, the 

transportation, the regassification. Of course, as you mentioned, 

the price depends somewhat on how far you’re transporting it. And 

Europe being——

Mr. SHERMAN. So, you could make quite a profit if it wasn’t for 

the Federal Government and buying gas for $3.35 per Mcf and 

spending $6 to $8 to transport it and selling it in Japan where it 

sells for 16 bucks. 

Ms. ROSENBERG. That’s the reason why many——

Mr. SHERMAN. That’s why we’re here. 

Ms. ROSENBERG. Yes, and why there’s an expectation that, in 

fact, much U.S. LNG will be exported primarily to that market, the 

East Asian——

47

Mr. SHERMAN. Okay. So, we have a circumstance where American manufacturers are paying less than a quarter of what Japanese manufacturers are paying. And if we allowed this export, we 

would still have an advantage because American manufacturers 

wouldn’t have to pay for liquification, et cetera. But instead of having a four times advantage, we’d have a say two times advantage. 

Has anybody done a study as to how many manufacturing jobs 

we would lose if we lost that tremendous advantage to our manufacturers for the price of natural gas? Dr. Levi? 

Mr. LEVI. It’s difficult to pin down. I did some basic calculations 

a year or two ago that suggest that the impact on U.S. manufacturing would be roughly neutral, and on overall jobs would be beneficial. The reason it’s neutral for overall manufacturing is because 

exports affect manufacturing in two ways. First, they raise the 

price of natural gas, but they also spur our demand for manufactured products, particularly steel and cement that are heavily used 

in the natural gas industry. About 30 percent of the cost of a well 

is——

Mr. SHERMAN. So, the non-energy industry would lose jobs, but 

the energy industry would pick up jobs, and some of those jobs 

would be classified as manufacturing jobs because the energy industry isn’t just the people who lay the pipeline, it’s the people who 

make the steel for the pipeline. 

Now, I’d point out that one way to possibly deal with this would 

be to impose some tax on our exports of natural gas. I would point 

out that the U.S. Constitution has a provision designed to prevent 

that, and I don’t know if—I’m going to ask others unless the panel 

has any loopholes in there? Any proposals to talks of the export of 

natural gas that would get through the Constitutional provision? 

I can ask Constitutional experts, Dr. Levi, unless you have an 

answer? 

Mr. LEVI. I share your policy inclination, but the provision is 

being upheld in the face of a variety of attempted loopholes over 

the last decades. 

Mr. SHERMAN. My old bros in the tax law industry have always 

found a loophole to prevent a tax, and I’m sure that that same energy can be used to impose one. 

In 2012, the Department of Energy found that domestic natural 

gas prices would rise by about a third. Do you tend to agree with 

that outcome? And what does that do for my dream of having a 

natural gas-powered vehicle fleet in the United States instead of 

petroleum, which would be a game changer in geopolitics? Mr. 

Hamm. 

Mr. HAMM. Yes. Well, I think that number is quite high. You 

look at what happened this winter, we had a tremendous draw, the 

increased demand was way high, but we didn’t see natural gas 

prices go up a third. We saw it increase moderately, so I don’t believe those numbers. Nobody in the industry believes those numbers. 

I’d like to comment, too, on the fantasy of exports from the——

Mr. SHERMAN. I’m sorry, I’ve got limited time, and commenting 

on my fantasies is something that will have to be reserved for others. 

Mr. HAMM. We’re exporting currently 4 million barrels a day. 

48

Chairman ROYCE. Mr. Perry of Pennsylvania. 

Mr. PERRY. Thanks, Mr. Chairman. Mr. Hamm, if you want to 

comment on the export, please go ahead. 

Mr. HAMM. I appreciate that. A lot of people don’t understand 

the extent of the exports that we’re doing today. We are exporting. 

We are exporting refined products to the tune of 4 million barrels 

a day according to current IEA numbers. So, if anybody doesn’t 

think we’re exporting, read the numbers, 4 million barrels. And 

we’re exporting the very things that are important to the consumers, diesel, gasoline, propane. That’s what we’re exporting 

today, 4 million barrels a day, so that’s going on. 

One other example I’d like to point out, the Hawaiian example. 

That’s been—the product that they use there is being delivered by 

South Korea; yet, due to the ban we can’t send them oil from America. We can’t send oil to supply that demand, so it’s being supplied 

by foreign oil. So that’s just another fairly good example. 

Mr. PERRY. Thank you. Dr. Levi, regarding disclosure and 

fracking, because you mentioned it a couple of times in your testimony, just exactly from your opinion what is it that the folks that 

are doing hydraulic fracturing aren’t disclosing? 

Mr. LEVI. There aren’t consistent rules to require disclosure of all 

the contents of fracking fluids. Now, let me be clear, I am not personally worried that injection of fracking fluids is contaminating 

water. My recommendations are driven by a desire to increase public confidence in the process. 

Mr. PERRY. I don’t know that there’s a lack of public confidence, 

in my opinion. I mean, I think there’s a certain constituency, but 

I think your words are powerful, so I think it’s important that you 

realize when you say certain things they have an effect. And even 

though there might not be regulatory efforts to your standard at 

a Federal level or to your desire, something as simple as an OSHArequired MSDS, Material Safety Data Sheet, requires that everybody disclose every single thing on every job site, including everything that’s put into the ground. So, when people say nothing is 

disclosed, to me that is a gross—you’re not decrying the facts as 

they really are. And if you want to comment, go ahead. I’m not 

here to impugn you, but I want to make the record clear. 

Mr. LEVI. No, and I want to make the record clear, as well. I did 

not intend to say that there is no disclosure. I think we could do 

better. 

Mr. PERRY. Well, we can always do better at everything, I imagine, but that’s important. So, when you talked about—I think you 

also talked about you would advocate for increased production. So, 

would you be advocating for more drilling permitting on Federal 

lands in the United States? 

Mr. LEVI. I think you need to look on a case-by-case basis. I 

think if we’re looking at the shale boom right now, the opportunity 

is primarily on private lands. That’s not mainly because of Federal 

policy, that’s because of the geology. So, I don’t know that that is 

the place to focus our energies. 

I think we would do better if we wanted to focus energies on 

making sure that infrastructure can be built. We heard about flaring, for example. 

Mr. PERRY. Right. 

49

Mr. LEVI. Gas not being used. That’s primarily not because of a 

lack of exports, it’s because people don’t have the right regulatory 

infrastructure in which to build pipelines to bring that gas to domestic markets. So, those are the places I would focus first. 

Mr. PERRY. Okay. So, based on that, I mean, I understand the 

geology. We’ve got to go where the source is, but it seems to me 

that wherever it is, whether it’s Federal or private lands, our strategy ought to be whatever is economically viable and supports 

what’s good for America. That’s what we ought to be doing. And regarding the pipeline then, are you saying you’re supportive of the 

Keystone XL Pipeline, concluding that or starting with construction 

of that and finishing it? 

Mr. LEVI. I think that the benefits of approving the Keystone XL 

Pipeline would exceed the costs. There are costs, but if I were to 

provide advice, it would be that we approve the pipeline and start 

focusing on things that actually matter for Americans. 

(Simultaneous speech.) 

Mr. PERRY [continuing]. My time, but I’m fascinated that you 

think the benefits would exceed the costs. But the folks that are 

willing to invest, obviously, think that the benefits far outweigh the 

cost from every single measure. But, anyhow, I’m not looking for 

an answer, I just find that fascinating. 

Admiral Blair, just because your organization and you look at it 

holistically, what would be good for America from a geopolitical 

perspective in energy? Should we be drilling in ANWR? 

Admiral BLAIR. We are not going to either drill or conserve our 

way out of our current dependency. What we really need to do is 

get off oil in the transportation sector. That’s the single—that’s 

where I’d put my first emphasis. 

Mr. PERRY. Okay, so what about a second emphasis? Because 

we’re not going to get off oil by the flip of a switch, so in the meantime what are we doing? 

Admiral BLAIR. Right. I think that we should be drilling more 

under safe and rigid environmental constructions, and from my—

and I believe that that should be done in Alaska, as in other places. 

Mr. PERRY. Thank you, Mr. Chairman. 

Chairman ROYCE. So, we go to Mr. Sires of New Jersey. 

Mr. SIRES. Thank you, Mr. Chairman, and thank you for the 

panel being here today. 

You know, this fellow, Putin, I think while we sleep he plots. 

And I think he’s been plotting this for a long time, taking over. And 

I think he saw what Saudi Arabia means to oil, he figured that by 

assuming the gas in Russia he could do the same thing. But I want 

to bring it closer to home, because we have a—I know we’re focused 

on the Ukraine, and what’s going on, but I want to bring it closer 

to home. 

We have a situation in Venezuela. You have Maduro who is constantly using the oil, and basically bending other leaders in the 

Caribbean and in Central and South America, their arms in terms 

of what they can say and can do. And we have a situation now 

where the OAS I think is afraid to speak because of all the members who are dependent on Maduro’s oil. 

What would be wrong for us to become an exporter of fuel to the 

Western Hemisphere and play a role, and take away some of this 

50

influence of some of these leaders? Can you talk a little bit about 

that? 

Admiral BLAIR. I can address part of that, Congressman Sires. 

As Mr. Hamm said, we do export distilled products and a lot of 

that does go to Latin America. But the question is—and as you 

know, the main recipient of cheap Venezuelan oil is Cuba. 

Mr. SIRES. Also, Dominican Republic and some of the other islands, you know, and some of the other——

Admiral BLAIR. Right. But I don’t think we want to get into a 

price war for who can give away the cheapest oil to Latin American 

countries with Venezuela. That’s a losing game in the long run. 

I think in the long view, increasingly the Venezuelan people, and 

certainly a lot of others in Latin America recognize the Venezuelan 

Government for what it is, and they turn to other forms of government. And I don’t mind mentioning that along, but I think we 

ought to recognize that the long-term trends are in favor of those 

Latin American countries who realize that stronger democracies, 

better rights, more open economies are going to win. And that’s 

playing in our favor in the long run. 

Mr. SIRES. I also think long term, Venezuela is starting to realize 

that giving away the oil is not in their best interest, and I think 

their attitude is changing. So, if there attitude is changing and 

we—and there’s a void there, I mean, North America is going to 

be flush with oil. You’ve got Mexico, you have us, you have Canada. 

I don’t know, I just think we could be a bigger player in some of 

these areas. 

And can you talk about the winners and losers of exporting oil, 

because I know that the National Economic Research Association 

conducted a study of the impact on the U.S. economy of exporting 

fuel. Can you talk a little bit about the winners and losers? 

Ms. ROSENBERG. Congressman, can I make a point on your 

former question on Latin America? 

Mr. SIRES. Sure. 

Ms. ROSENBERG. I think, actually, that we would do well to learn 

a lesson from the conversation we’re having about Europe and 

helping Europe to get out from under Russian influence, energy influence. So, when we talk about exporting energy to Europe, we 

also talk about the impact of exporting energy technology. That’s 

something we can do for Latin American countries, as well, exporting energy technology and know how, technical assistance to help 

establish or improve some of the legal taxation, regulatory regimes 

that can help them to better access their own domestic energy resources to improve markets pricing in that region which can help 

them to also diversify their supply base and rely less on certain 

supplies that they receive from Venezuela. 

Mr. SIRES. I agree with you. I mean, it gets some of these countries away from somebody’s, you know—they got them under their 

thumb. They can’t move. 

Mr. LEVI. Congressman, on the exports question, producers 

would benefit, refiners would pay more for their oil supplies. Those 

are the main constituencies affected. There would be smaller consequences for the overall economy, positive consequences that are 

relatively small, and small consequences for consumers, slightly 

lower gasoline prices, but not much lower gasoline prices. 

51

Mr. SIRES. My time is up. Thank you very much, Mr. Chairman. 

Chairman ROYCE. Thank you, Mr. Sires. We’re now going to go 

to Mr. Yoho. 

Mr. YOHO. Thank you, Mr. Chairman. Appreciate it, and I appreciate all the panel being here. 

Admiral Blair, now this is for everybody, and this is kind of a 

rhetorical question, but the number one charge for the Federal 

Government is national security, and I think we’re all in agreement 

with that. And as Congressman Duncan said, we can’t have national security if we don’t have energy security, and that goes with 

food security and several other things. 

You were talking about—do you feel energy independence or security is possible, Admiral Blair, in this country, the United States 

of America? 

Admiral BLAIR. I think energy security is possible, Congressman, 

not energy independence. And security means that the system that 

we depend on, a combination of what we make ourselves, and imports is resilient enough and we have enough repair capacity that 

we can handle most of the interruption that would occur. And I 

think we can build that if we can get this amount of petroleum 

down that we use in the transportation sector from 93 percent, 

which it is right now, down to say 50 percent, 40 percent. 

Mr. YOHO. Right. 

Admiral BLAIR. Then we have energy security. It’s not independence, and I think that’s kind of a phony——

Mr. YOHO. Well, I think we get tied up on energy independence 

versus security, and I think security is the more important issue. 

And I agree with you 100 percent, and it’s imperative, wouldn’t you 

agree, that we are secure in the fact that—I lived through the 

1970s oil embargo. Dr. Levi, were you around then? 

Mr. LEVI. Depends which one you’re asking about. 

Mr. YOHO. The one where the ships weren’t coming in and I had 

to wait in line for hours to get 10 gallons of gas that we could buy 

on odd or even days depending on the last number of our license 

plate. And I never want to be there again. And I think every policy 

we do as a Federal Government should be to make America stronger because if we don’t do that, who’s going to do that? Nobody else 

is going to look out for America. So everything we do, and I think 

the energy sector is the number one driver, it supports so many 

things. I’ve got a real strong ag background. The price of diesel 

goes up, the price of every product you buy goes up immediately. 

And to be secure, we have to have a secure, steady supply, whether 

it’s from our allies like Canada or Mexico. And it’s just imperative 

that we work out that security agreement. 

And, Mr. Hamm, in your opinion do you see it possible that the 

U.S. could be a net exporter of energy? 

Mr. HAMM. Yes, we are today. I mean, we get right down to it. 

Mr. YOHO. I was glad to see you clarify that because I agree, we 

can, and I think we should be. Because I think that, again, it 

makes America stronger. 

Our manufacturing sector, if our policies aren’t for the betterment of America, these manufacturers with the increased prices 

are going to go overseas. You know, we’re already fighting regulations, rules, mandates, the Affordable Care Act. So many of these 

52

companies are running overseas because they can’t afford to do 

business here, and the assault on coal in this area is just unconscionable that a government would do that. So, again, every policy 

we do should be to make America stronger. 

With the net export do you project the cost and the price in 

America to go up? And it sounds like across the board it was pretty 

much no, or not nearly what we’re saying, hearing from the experts. 

Mr. HAMM. That’s correct. 

Mr. YOHO. Dr. Levi. Is it Levy or Levi? Levi. We’ve got a county 

in our district called Levy County, so excuse me. 

Mr. LEVI. I’ll have to visit it. 

Mr. YOHO. And it’s a great county, it’s a big agricultural county. 

You were saying that strict economic rules would increase the 

cost to the average consumer, especially the very one most vulnerable. You were talking about the LIHEAP program and how it’s important that we keep that in there. 

Mr. LEVI. Right. 

Mr. YOHO. It’s kind of a subsidy that we keep there, but yet with 

our strict environmental rules does that not increase the cost of the 

energy? 

Mr. LEVI. It does increase the cost of energy. Let me give you 

some figures to then give you a broader context. The International 

Energy Agency did a study a couple of years ago where it outlined 

22 golden rules for gas to put on sound footing, and estimated that 

it would cost an extra 7 percent in capital costs for each well to 

comply with those. When I talked to senior executives from one of 

the top oil services company and said is that realistic, 7 percent, 

they said no, it’s much lower. So, that’s important to keep in mind. 

It’s also important to keep in mind that if there is a public backlash against development and people say you can’t drill no matter 

how you do it, the prices will go up far more. 

Mr. YOHO. But I think we need that balance between national security and cost, as the Admiral brought up. I don’t think we need 

to worry so much about the cost because you can’t put the cost 

against national security. So, I think we—our policies that we move 

forward, we can’t be strong, and we can’t export gas if we don’t put 

in the infrastructures today. 

Mr. HAMM. Could I comment on that? 

Mr. YOHO. Mr. Chairman, I’m about out of time. Can he comment? 

Chairman ROYCE. We’ll let Mr. Hamm comment, and then we’ll 

go to Gerry Connolly of Virginia. 

Mr. HAMM. Right now we have a very strong state system for 

regulations. We don’t need an overlying Federal system. We have 

a 2,000 foot pipeline right now that’s held up, that’s federally controlled, federally controlled lands in North Dakota that’s held up a 

pipeline system up there for over 10 months. We have all the rest 

of it built, so that’s what we get up against. 

Mr. YOHO. I agree. Thank you for your comment. 

Chairman ROYCE. Gerry Connolly of Virginia. 

Mr. CONNOLLY. Thank you, Mr. Chairman. And let me just say 

to my friend, Mr. Yoho, Mr. Levi and I both read about that ‘73 

53

in history books, and delighted to be with somebody who actually 

lived through it. 

Mr. Hamm, let me just, given your last comment. I mean, basically, another way of interpreting what you just said was the states 

can handle fracking regulation on their own and we don’t need no 

stinking Federal Government to get in there and regulate for us. 

The fact of the matter is there is wide variety of regulation in 

fracking that’s anything but uniform. We go from some states that 

have fairly strict controls, California, to some other states that 

have wild west controls, I don’t know, like maybe Pennsylvania. 

Your view is that’s a system that’s working just fine in protecting 

consumers and communities, and doesn’t need any help from the 

Federal Government whatsoever. Is that right? 

Mr. HAMM. That’s correct. That system has done a very fine job 

in Oklahoma. We’ve got over 100 years, and fracked hundreds of 

thousands of wells, zero pollution to fresh water. Pennsylvania has 

been to Oklahoma. They’ve gone through all of our regs there. 

They’ve got a very good system, and it’s working fine there. 

Mr. CONNOLLY. Okay. Good to have it on the record. 

Mr. Levi, you were asked about the Keystone Pipeline. Is there 

any evidence at all that the Keystone Pipeline will help us in terms 

of our domestic security? Admiral Blair doesn’t like the term energy independence, and I take his point, but for the sake of shorthand in achieving energy independence, my impression is all of 

that oil has been signed up for five long-term contracts going to 

Port Arthur, Texas for a reason, not for consumption here, but for 

export. Correct me if I’m wrong. 

Mr. LEVI. I don’t think that the Keystone XL Pipeline would substantially increase American national security for the reasons that 

Admiral Blair talked about in a broader context. We live in a global 

oil market. 

Mr. CONNOLLY. I’m asking a different question. 

Mr. LEVI. About exports. 

Mr. CONNOLLY. Is there any evidence any of it would go for domestic consumption? And if so, how? 

Mr. LEVI. Well, I’m confident that at least some of it would go 

for domestic consumption. The intention, as I understand it, is that 

it would be refined in the United States and some of the refined 

products would be shipped abroad where there’s a bigger market, 

and others of them would be sold domestically. 

Mr. CONNOLLY. Have you looked at the long-term contracts 

signed by the owners of the Keystone Pipeline? 

Mr. LEVI. I have not. 

Mr. CONNOLLY. Every single one—there are five long-term contracts, which is a little unusual for a pipeline because generally 

they kind of participate in the spot market. But all five contracts 

are long-term contracts, and all five are with companies that specialize in export. And the reason you go to Port Arthur as opposed 

to throughout the Middle West all the way down to Port Arthur 

presumably, is because you’re near the ocean where there are big 

ships that can carry product. I mean, why would I pipe oil or product to Port Arthur, Texas in order to refine it so that consumers 

in the middle of Nebraska can benefit from it? 

54

Mr. LEVI. We have sophisticated refineries in Texas, and when 

you have refineries in place, multi-billion dollar refineries that are 

tuned to a particular quality and type of oil, you don’t take them 

apart and put them somewhere else. 

Mr. CONNOLLY. Uh-huh. Are you aware of the fact that the documents filed by the company that would own the Keystone Pipeline, 

the Canadian company, actually admit explicitly that if the pipeline were to be built, the price of oil and other related products in 

the Midwest would probably increase? 

Mr. LEVI. Yes, and I think that’s a correct judgment. That’s part 

of the goal. It’s important to distinguish between oil and refined 

product. I do not believe they have said that the price of refined 

products would increase. The price of refined products is set by a 

global price, not the price of——

Mr. CONNOLLY. Yes, but one of the reasons is because there’s a 

bit of a—or there has been at the time of the filing of those papers, 

bit of a glut in the Midwest markets, in part because there wasn’t 

this terminal all the way down in Port Arthur, but okay. 

Admiral Blair, is—do you think that there’s—with respect to—

the title of this hearing is Geopolitical Potential. Do we have a geopolitical potential in light of the Russian invasion, and occupation, 

and annexation of Crimea? Do we have a potential in Western Europe and former Eastern Europe to have our countries, and former 

Republics of the Soviet Union, to actually provide product, especially natural gas, as a substitute for Russia? And do you think 

that’s a realistic thing to promise any time soon given logistics, and 

infrastructure, and so forth? 

Admiral BLAIR. Representative Connolly, what I’ve learned about 

the natural gas business is it’s sort of a three-dimensional chess 

game. And, in fact, we’ve already improved the energy security of 

Europe by our domestic natural gas. In that same Port Arthur 

area, there are a bunch of liquid natural gas facilities built for importing natural gas from Qatar because when those were started 

building 7, 8 years ago we thought we would need it. Those plants 

are completely idle now. That gas went to Rotterdam, liquified 

there, brought the price down from the artificially oil-based price 

that Gazprom had been charging. And that has, in fact, improved 

the lives of Western European consumers. It’s not a global market 

like oil, but it does have these global interactions. 

I think the—so, I think diversity of liquid natural gas supply is 

important for Western and Eastern European security from Russia. 

I think, though, that it’s not the only factor, that the interconnection of pipelines and LNG terminals is necessary in order for Europeans to be able to switch from Russian gas to LNG. And this is 

something that they have to do. And I think they would pay a premium for it. It would be duplicative. 

As you remember, since we both sat in oil lines together, there 

was a——

Mr. CONNOLLY. You’re mixing me up with Ted Yoho. 

Admiral BLAIR. But as you remember, this Russian gas to Europe controversy has been going on since early 1980s, and Europe 

has this approach avoidance with Russia. I think Crimean incidents have demonstrated the avoidance side pretty conclusively, 

and the Europeans need to build themselves a more flexible natVerDate 0ct 09 2002 11:21 Jul 02, 2014 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\032614\87336 SHIRL
55

ural gas structure which then Qatar, Australia, and American 

liquified natural gas could feed so that they wouldn’t get the lights 

switched off, so that they wouldn’t get the price jacked up. And I 

think that that ought to be a joint venture that we work on together. 

Mr. CONNOLLY. Mr. Chairman, my time is up, but I commend 

that last thought to you, as you kind of played a potential trip to 

the region. I think that’s really a very important point. In the long 

run, Europe itself has to look at infrastructure that would allow for 

alternative supplies. 

Chairman ROYCE. To reach that market. And you’re right, Mr. 

Connolly. I think that’s one of the things that Lithuania or the Baltic states are looking at in terms of this floating platform which is 

underway in terms of the building of this. 

I better turn to Mr. Tom Marino of Pennsylvania. He’s been very 

patient. 

Mr. MARINO. Thank you, Chairman. I apologize, I’ve been juggling the schedule like everyone has this morning. 

Let me get right to the point. As a prosecutor, I’m going to ask 

direct questions, I would like direct answers. Dr. Levi, what is in 

fracking that has not been transparent to the public, particularly 

in the State of Pennsylvania where I come from? 

Mr. LEVI. I can’t give you a state-by-state take, but in general 

the public does not always know what is in the fluids being used 

in the particular fractal. 

Mr. MARINO. But in Pennsylvania, and correct me if I’m wrong, 

that has to be listed, and they have access to that information. Is 

that——

Mr. LEVI. They have access to that information. I’m not sure exactly when. But you know the Pennsylvania rules better than I do. 

Mr. MARINO. Right. And my good friend from California, Pennsylvania, the EPA has stated that Pennsylvania is one of the best 

states in the Union when it comes to protecting the interest of people as far as their health in fracking, and the process by which it 

is being monitored, so we just give—offer the country an opportunity to come to Pennsylvania and see how we do it, if that’s what 

you’re going to have to do. 

I don’t want to see the Federal Government—Federal Government, we’ve seen what the Federal Government has done over the 

past 4 years. It’s put us $18 trillion into debt, so the less Federal 

Government in my life the better, but we do need to make sure 

that standards are followed like they are in Pennsylvania. 

So, you know, I hear from people that do not like fracking, do 

not like gas, they’ll say to me did you—there’s a program that 

shows where you turn the spigot on and you put a match to it and 

poof. Well, you know, 45 years ago when I was at my uncle’s cabin 

in Cascade, Pennsylvania, that was kind of neat when he turned 

the spigot on and snapped the light on and poof, there it was. 

That’s methane. Okay? That happens, nothing new. 

As far as energy independence, is there such a thing, and can we 

achieve it? And anyone who wants to address this, please. 

Admiral BLAIR. I would say, Mr. Marino, that back to these oil 

embargos that we talked about, back in the ’60s and ’70s Norway 

and the U.K. were in theory energy independent. They produced 

56

more than they consumed, and they sent it over. When the prices 

went up because of the OPEC embargo, Norwegians and Brits paid 

four times as much for gas as they had the year before. 

Mr. MARINO. I guess we need to put a meaning on energy independent, don’t we? 

Admiral BLAIR. Security is the right word. 

Mr. MARINO. Security. 

Admiral BLAIR. Security is the right word. 

Mr. MARINO. I like that. 

Admiral BLAIR. And I think that’s what we’re really looking for. 

And then security means that don’t get jacked around by other 

countries, or groups of countries in pursuing our own interests. 

And we can jack around countries that are misbehaving for their 

purposes. 

Mr. MARINO. Great point. As I said, I live in the middle of it. I’m 

out in the country. I like seeing the bear and the deer grazing on 

my property. I get my water from a well out of the ground. I have 

children, and how dare someone who opposes gas drilling say that 

I would jeopardize my children’s health. I know this process. I’ve 

been on more rigs, I’ve done more readings, I’ve reviewed more 

studies, I’ve talked to more scientists. 

In fact, in one of the areas in my district in Pennsylvania there 

is a big deal about it’s polluting the water. Well, finally the EPA 

came and said there is no scientific evidence whatsoever that 

fracking is polluting the water. And if it does, and attempts to 

cause harm in the environment I’m going to be the first guy there 

in line saying it’s got to stop and we have to fix this. 

Let’s talk about the price for a moment. I’m concerned about the 

price of gas, natural gas going overseas for this reason, and this 

reason alone. I don’t want to see the American people, I don’t want 

to see the people in Pennsylvania have to pay a higher price for 

their gas that is their gas because they can sell it for a better price 

overseas. I don’t have a problem with it being sold overseas at 

whatever price they can get, but I think the people in Pennsylvania, and the people in this country deserve a fair price on the 

natural gas. Care to talk about that? 

Mr. HAMM. If you don’t mind, I’d like to address that. 

Mr. MARINO. Please. 

Mr. HAMM. I can assure you that with the Marcellus production 

being so tremendous, the people of Pennsylvania will never have to 

pay more for their natural gas due to LNG exports. 

Mr. MARINO. That’s just what I want to hear. 

Mr. HAMM. I have one more comment. You know, the Bakken on 

ramp on Keystone that’s projected for the Keystone XL Pipeline 

would add 300,000 barrels, none of which is contracted for exports. 

Mr. MARINO. Good segue, because I want to finish with saying, 

let’s talk a moment not about if it’s going to decrease the price of 

oil, or the consumption. Let’s talk about this administration who 

talks a good job about creating jobs, but could create 20,000 jobs 

instantly if they signed—if the President signed to have the Keystone XL Pipeline go into effect, and then an additional several 

hundred thousand jobs over the next few years. And let’s talk 

about, you know, there was an issue about refining. Yes, I know 

a little bit about oil refining, too. There are different plants that 

57

refine for different reasons and come up with different byproducts 

that could be sold in this country cheaper. So, if for nothing else, 

how about creating jobs? And I see that my time has expired, and 

I must yield back. Thank you. 

Mr. CONNOLLY. Mr. Chairman. 

Chairman ROYCE. Yes, over here, Mr. Connolly. 

Mr. CONNOLLY. Mr. Chairman, the Washington Post did an extensive analysis of job creation related to the Keystone Pipeline, 

and they found no such figures as suggested by my friend from 

Pennsylvania. So, I would ask with unanimous consent that the 

Washington Post analysis be entered into the record. 

Mr. MARINO. If my friend would yield for a moment? 

Mr. CONNOLLY. I have to—I’m going to—this is a special request 

for the chairman. 

Chairman ROYCE. Let me yield first to the gentleman. 

Mr. MARINO. And I can come up with ten articles which show the 

jobs that will be created on this. Now, you know, there’s a back and 

forth on this, and we know there’s a back and forth on this, but 

there’s no downside to this. There’s no downside whatsoever to executing this XL pipeline. 

Mr. CONNOLLY. Mr. Chairman. 

Chairman ROYCE. I’m going to return, I’m going to award time 

to the gentleman. I’m going to recognize the gentleman from Virginia. 

Mr. CONNOLLY. Yes. Thank you, Mr. Chairman. I would just say 

to my friend from Pennsylvania, that’s not the point. The point is 

he cited some figures about job creation that are directly disputed 

by the Washington Post analysis which was fairly thorough. And 

he’s more than welcome to enter something into the record that 

would dispute it, but I’d like the Washington Post analysis in the 

record because it’s a considerable variance from the assertions 

made by my friend from Pennsylvania. 

Chairman ROYCE. Let me opine on this for one moment, if the 

gentleman will. Let me respond to the gentleman from Virginia 

that both of you would be allowed to submit for the record your 

facts and figures, whether they be from an article in the Washington Post, or whether they be from some studies that have been 

put together by those who have—support the pipeline. 

Mr. CONNOLLY. I thank the chair. 

Chairman ROYCE. And I would also just like to thank our witnesses for the efforts they put into their statements. There is considerable information within those statements themselves. Ms. 

Rosenberg and gentlemen, it’s impressive what you’ve put together 

laying out your arguments. I think we’ve had a dynamic discussion 

here because of our witnesses about the geopolitics of energy. 

I do think it’s logical. I see the point that one of the things that 

keeps Russia afloat as a nation is the exports of their gas and oil; 

70 percent of their trade is exports. So, clearly, in their calculus, 

exporting the oil is key to their influence. They’re wielding a tremendous amount of influence as a consequence of it. 

And, clearly, we do have a situation here where for a number of 

reasons the administration is blocking exports. I mean, the pipeline 

would be one example, but another example would be the LNG, 

58

and the question of whether we’re going to use that strategically 

with respect to the situation in Eastern Europe. 

Now, I guess for me one of the vexing things about this is that 

when you have a glut in your market of gas, you end up seeing 

that gas flared. And if there’s an environmental consequence, it’s 

flaring of gas. Certainly, in Africa we worked to address that issue, 

flaring of gas across Africa back when I used to chair that subcommittee, and that’s being addressed. So, we do have a glut, we 

do have flaring of gas here in the United States. It would seem to 

me logically if we could export that gas in order to help break the 

monopoly pricing situation, that would be good. 

Energy innovations, you know, this is the hard thing to keep up 

with, the constant change in this industry of energy innovations. 

They are making the United States more competitive. We’re seeing 

that. We’re also seeing companies from around the world moving 

to the United States because we have lower cost manufacturing 

here. Mr. Connolly, this is just one point I would make. 

If we see the Keystone Pipeline, a pipeline built not here to 

where we basically have a hand in the outcome, and where it’s 

proximate to our markets, but instead to Vancouver where it is 

shipped to our economic competitors overseas in Asia. Right now, 

our principal competitor there has an energy price that’s 30 percent 

higher than our’s. It’s one of the reasons why our manufacturing 

is still competitive despite the labor differential. 

So, it does seem logical to me that we would want to make certain at the end of the day that that energy is refined in refineries 

which are cleaner burning here, cleaning burning than the ones 

that are in Asia, and in which that product instead of being unleashed in a market with a higher energy price is proximate to, you 

know, the Southeast United States, and to manufacturing facilities 

there, because we’re going to continue to be in that economic conundrum where we’re competing with Asia, principally a country 

in Asia which right now is disadvantaged. I don’t want to see us 

mishandle a situation and have our economic competitor end up 

with a lower cost of energy than we have here in the United States 

as a consequence of us treating Canada in a way that, frankly, our 

ally is taking very personally at the moment. So, let’s create the 

jobs here. We need to build on our domestic strengths. We need to 

use them, also, as an asset for national security. 

And, again, I thank the witnesses, and I thank the members of 

this panel. We’re adjourned. 

[Whereupon, at 11:53 a.m., the committee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE RECORD

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MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE GERALD E. CONNOLLY, 

A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA


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