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22–203 PDF 2005

ANWR’S BENEFITS FOR SMALL BUSINESS

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY REFORM AND 

OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

WASHINGTON, DC, MAY 19, 2005

Serial No. 109–16

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT 

W. TODD AKIN, Missouri Chairman 

MICHAEL SODREL, Indiana 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

SUE KELLY, New York 

STEVE KING, Iowa 

TED POE, Texas 

MADELEINE BORDALLO, Guam 

ENI F. H. FALEOMAVAEGA, American 

Samoa 

DONNA CHRISTENSEN, Virgin Islands 

ED CASE, Hawaii 

LINDA SA ́ NCHEZ, California 

GWEN MOORE, Wisconsin

TOM BEZAS, Professional Staff

(II) 

C O N T E N T S 

WITNESSES

Page 

King, Hon. Steve (IA-05), Congressman, US House of Representatives ............. 2

Hood, Mr. Gerald, Government Affairs, Artic Power ............................................ 6

Wright, Ms. Karen, President/CEO, Ariel Corporation ........................................ 8

Goodstein, Mr. Eban, Professor of Economics, Lewis and Clark College ............ 9

APPENDIX

Opening statements: 

Akin, Hon. W. Todd .......................................................................................... 21

Prepared statements: 

King, Hon. Steve (IA-05), Congressman, US House of Representatives ...... 24

Hood, Mr. Gerald, Government Affairs, Artic Power .................................... 31

Wright, Ms. Karen, President/CEO, Ariel Corporation ................................. 34

Goodstein, Mr. Eban, Professor of Economics, Lewis and Clark College .... 39

(III) 

(1)

ANWR’S BENEFITS FOR SMALL BUSINESS 

THURSDAY, MAY 19, 2005

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON REGULATORY REFORM AND

OVERSIGHT

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Subcommittee met, pursuant to call, at 3:07 p.m., in Room 

2360, Rayburn House Office Building, Hon. Todd Akin [Chairman 

of the Subcommittee] Presiding. 

Present: Representatives Akin, Westmoreland, and Bordallo. 

Chairman AKIN. The hearing will come to order. This is a hearing on the subject of ANWR, and I believe that we are going to 

have a double panel situation with our first witness being my good 

friend Congressman Steve King. But let me start with a quick 

opening statement. 

I would like to extend a warm welcome to those that are here 

and have taken time out of their busy schedules to testify before 

this committee. First of all, we are here to discuss an issue which 

I think all of us recognizes as one of high importance, and it is important particularly not just to the oil and gas industry but the 

whole future of our country and our energy needs as a nation. 

We are going to be taking a look at the question of drilling in 

ANWR, and it is a sensitive topic for a variety of people and one 

that deserves to be considered with diligence and care. Now, opponents of this policy decry what they call the inevitable apocalyptic 

fallout of the environment. 

Yet, over the next 20 years, America’s oil consumption will continue to rise even after increases in renewable energy supply and 

energy efficiencies are factored in. That is why safe and efficient 

drilling in ANWR is so essential. Today our witnesses have been 

asked to come to speak about this issue from an often overlooked 

perspective, that of business, particularly small business. The intent of the hearing is to illustrate the benefits ANWR will have on 

small business owners. 

There is no doubt that small business owners are leaders in innovation. They pay the majority of our nation’s taxes, employ the majority of our nation’s workforce, and more specifically, according to 

recent Bureau of Labor Statistics data, employees of small businesses in the oil and gas exploration industry average an income 

of $3,214.16 per month. This wage is higher than any other nonmining industry. 

2

Keeping this in mind, at current levels, U.S. crude oil production 

is expected to decline by 1.5 barrels a day by the year 2020. This 

drop in production translates directly to thousands of lost jobs in 

an industry that has already lost a half a million jobs over the last 

10 years. Oil exploration in ANWR will revitalize this important industry, creating millions of dollars in opportunities for our small 

businesses, not just in Alaska but throughout the Nation. 

One of our guests today, Ms. Karen Wright, president and CEO 

of Ohio’s Ariel Corporation, has travelled all this way to explain to 

us how manufacturing in the Midwest will get a much-needed jolt 

from oil exploration. 

The subject of energy exploration in ANWR is not a new one. A 

segment of Alaska labeled 1002 was set aside by Congress in the 

Alaska National Interest Claims act of 1980 to study the feasibility 

and potential yield of production area; 1002 would only use 2,000 

acres of ANWR’s 1.5 acre coast line and could yield up to 700,000 

jobs. 

My friend, Congressman Steve King, who has been very active in 

this issue, has offered to share some critical insights on our need 

to proceed with energy exploration as well as how to best go about 

it from a legislative standpoint. 

[Chairman Akin’s opening statement may be found in the appendix.] 

Welcome, Steve. 

Mr. Gerry Hood is also in attendance today to explain what impact drilling in ANWR will have on the overall development of 

small business domestically, the opportunities small businessmen 

have been able to take advantage of as a result of projects under 

way in Prudhoe Bay, the Nation’s largest energy complex. 

Professor Eban Goodstein of Lewis and Clark College has come 

here from Portland, Oregon, to discuss certain economic ramifications that he feels should be taken into account when discussing 

this important issue. 

Witnesses, I thank you for coming. 

Before we get started, I would just like to greet my colleague, 

Ranking Member Ms. Bordallo of Guam who is, I am told, on her 

way immediately, and we will have her make a comment. But we 

like to keep things moving here. 

So in her absence, also, Congressman Westmoreland, thank you 

for being here because, if you weren’t here, we couldn’t get started. 

I like to keep the hearings moving. 

Chairman AKIN. So let us go directly to our witness, Steve, welcome. We are eager to hear what you have to share with us. Thank 

you. 

STATEMENT OF THE HONORABLE STEVE KING (IA-05), US 

HOUSE OF REPRESENTATIVES 

Mr. KING. Thank you, Mr. Chairman, I appreciate you holding 

this hearing today, you and Ranking Member Bordallo and the gentleman from Georgia. As I listen to your opening comments, a lot 

of things about energy raced through my mind. I would ask also 

unanimous consent to revise and extend my remarks and enter 

those into the record.Chairman AKIN. So ordered. 

3

Mr. KING. Thank you. That will allow me then to maybe flow a 

little more freely about some of the things that I think are important with regard to ANWR. 

My involvement, first, I represent Iowa’s Fifth Congressional District. It is the western third of Iowa. We sell—we are fourth in the 

Nation of Congressional districts on the value of agricultural products sold. Yet we sell large commodities, so we are producing a lot 

of agriculture. 

Natural gas costs are killing us there. We get beat up on both 

ends, because it is an input cost. It is a grain-drying cost, and it 

is a harvesting cost, et cetera, both gas, diesel and natural gas, or 

all three of those. So it is essential to us. We also produce ethanol 

and biodiesel on it. We are an energy export center from that perspective. We have a lot of wind energy up, about 359 huge wind 

chargers are right here where I live. So we are not proprietary on 

energy. 

My point is that there is a huge energy pie out there that is comprised of crude oil, natural gas, wind energy, hydroelectric, ethanol, 

biodiesel, go right on down the line. What we need to do is continue 

to increase the size of that pie so that the overall energy supply 

is greater. When we do that, then, we can slowly increase in cost 

or actually diminish the cost of all of our energy which is a component of everything that we sell. 

Well, I got involved in ANWR from this perspective: Back in 

1970, I was signed up to go up to Alaska to be one of the first people working there in the North Slope area of Alaska. I was signed 

up with a company at that time named Green & Grossbeck. We 

had 600 miles of right away from Fairbanks north. 

Well, I planned everything to do that, adjusted my life schedule 

to do that, and I got poised to go up there into the frozen north 

land and make some of the best wages ever known to the construction business for a worker, but a court injunction was slapped on 

that project of developing North Slope. So it was lifted 2 years 

later, and 2 years later was a different type of requirement for my 

life, and so I didn’t go. 

Yet I always watched Alaska. I watched that energy supply. I 

watched that pipeline supply be built. I watched those tankers go 

out of Valdez. I watched what happened to our overall energy supply in the North American continent because we had the courage 

and the vision to go up and address the North Slope issue of Alaska. 

It supplied a lot of oil and built a pipeline, a pipeline today, if 

it is left to go dry, will erode on the inside of it and may not be 

salvageable if it sits empty for a period of time. 

I went up to ANWR a year ago last August, thinking I was going 

to see the Arctic National Wildlife Refuge. I thought, when we flew 

across that 1.5 acres of coastal plain, that you had spoken to in 

your opening remarks, that I would see vast herds of caribou and 

pristine alpine Forests. But what I saw was, long before we ever 

got to the coastal plain, we had seen our last tree. 

The definition of the Arctic Circle is a line north in which trees 

do not grow. So when those commercials say, don’t disturb a pristine alpine forest, that is not a problem. There is not a single tree 

in that entire coastal plain, not enough for a lath or a picket fence. 

4

There is not a single resident caribou on the coastal plain at 

ANWR, not a single resident caribou, not one. 

There is a herd that comes in from Canada about thefirst part 

of May until about the middle of June. They have their calves over 

there in the ANWR region, and then they leave and go back— 

Chairman AKIN. Mr. King, I don’t want to interrupt you, but you 

might want to know you have amendment on the Floor. So if you 

would like to scoot and do that, we will try to fit you back in. It 

is up to you, but we have a message you are probably needed on 

the Floor. 

Mr. KING. Mr. Chairman, in order to keepin the good graces of 

my wonderful staff, as you would do, I appreciate the opportunity 

to have a moment, and I will come right back. 

Chairman AKIN. We will have you right back and give our ranking member a chance to give her opening statement. We will fit everything in and still get it all done in time. 

Mr. KING. Thank you. 

[The Honorable King’s statement may be found in the appendix.] 

Ms. BORDALLO. Thank you very much, Mr. Chairman, I apologize 

for being late, but I was down on the Floor as well. 

I want to thank you, Mr. Chairman, for calling a hearing today 

on the issue of oil and natural gas extraction and development in 

the Arctic National Wildlife Refuge, ANWR. Issues surrounding the 

development of ANWR transcend traditional public policy jurisdictions as legislation to permit drilling in ANWR will have far-reaching consequences in terms of energy trade, the environment, foreign policy and national defense. 

I am pleased that our chairman here has taken pains in organizing today’s hearing in order that we may thoroughly investigate 

the specific consequences for small businesses of enacting legislation to permit ANWR development. 

For the record, I have voted in favor of allowing natural gas and 

oil exploration and extraction in ANWR during consideration by 

the House Resources Committee of the energy bill. 

However, this was not an easy decision for me. In reviewing the 

many competing facets of this debate, I decided to join a congressional delegation to visit ANWR in order that I might meet the 

people living in the region and hear firsthand their views on development of the coastal plain. 

I learned that they are generally supportive of oil and gas extraction in the region for reasons of local self-determination and local 

economic development. They dreamed that the economic infusion of 

oil and gas extraction will translate into jobs, education for their 

children. 

In fact, I remember one that came to a public hearing said, I 

would like to see my granddaughter go to Harvard, and the opportunity for the development of presumably small local businesses 

that would serve as mainstays of the development of their communities. Therefore, despite my many concerns about the environmental impact of ANWR drilling, I have lent my support to this 

initiative. 

There are parallels between the desires of Alaskan natives and 

the sentiments of the people of my home district in Guam. Most of 

5

Guam’s economic development was made possible by years of Federal investment, supporting military installations. 

The ability to provide support services to the military has translated into economic opportunities for our locals in Guam. Local entrepreneurs have developed numerous small businesses in areas 

such as waste management, construction, transportation, housing, 

banking, insurance, retail and other industries to support the military infrastructure. The result has been the opportunity to retain 

wealth on the island for continued development of other industries 

and the accrual of economic benefits to local entrepreneurs who, in 

turn, provide jobs and contribute revenues for public services. 

I want to stress, however, that the benefits of economic growth 

will not automatically accrue to local residents if strategic plans do 

not prioritize the development of and the support of locally-owned 

small businesses. Today’s witnesses will largely focus can on potential small business gains at the macro-economic level, and I am 

hopeful that energy development in ANWR will yield benefits that 

will be felt throughout the Nation. 

However, national small business growth and national energy 

policy are abstract in the context of local economic development, 

and I hope to learn from today’s witnesses about how economic 

benefits of drilling in ANWR will be used to allow residents of 

these villages in Alaska to develop economically sustainable communities and how developing local small businesses will fit into the 

larger plan. Thank you, Mr. Chairman. 

Chairman AKIN. Thank you, Ms. Bordallo. That was eloquent, 

very well done. 

I think what we will do now, since Steve is over on the Floor 

working an amendment there, that we will just go ahead and call 

our second panel. 

Gerald Hood, Karen Wright and Eban Goodstein, please have a 

seat. Okay. 

Gerald, who heads Government Affairs with Arctic Power’s office 

in Washington D.C.—what we usually do in terms of these hearings, we try to start off with—I will give each of you a chance to 

make a 5-minute opening statement. If you want to submit written 

comments for the record, you can do that. So if you want to be just 

more relaxed— I prefer to run it—it is not like we have thousands 

and thousands and thousands of people in here. I like to run it a 

little bit more like a conversation, but we try to keep more or less 

at 5. That is what that little box is. It turns red when you have 

run out of your 5 minutes. 

What we will do is come back and try to do some interacting. I 

will ask some questions. If I can, I usually like to wrap these 

things up within an hour of when we start. So it should be fairly 

quick. 

Obviously, the material that you are giving us is being distributed to other members of the committee. It is actually public record 

and everything. So this has some influence in the way the course 

of decisions are made down here. We are so thankful for your taking time, especially coming all the way from the West Coast, to join 

with us. 

Chairman AKIN. I think we will just go ahead and start with—

is it Gerald or Gerry? 

6

Mr. HOOD. I like Gerry. 

Chairman AKIN. Gerry Hood, please go ahead and share with us. 

STATEMENT OF GERALD HOOD, ARTIC POWER 

Mr. HOOD. Thank you, Mr. Chairman, Ranking Member Bordallo 

and the gentleman from Georgia. I appreciate the opportunity to 

come here today and the development of ANWR and how it affects 

small business. I expect considerable time educating the members 

of Congress and the general public about the positive aspects of 

opening ANWR, and I appreciate the opportunity to focus today on 

small business. 

America’s 23 million small businesses employ over 50 percent of 

the Nation’s private workforce, generate more than half of the Nation’s gross domestic product and are the principal source of new 

jobs in our economy, according to the Small Business Association. 

These small businesses must have a stable, reliable source of energy to fuel their continued success and contribution to our economy. The surge in oil and gas prices has tremendously impacted 

America’s small businesses. 

Senator Stevens from my home State of Alaska reported on the Floor of the Senate last year, for every $0.01 increase at the gasoline pump, we lose $1 billion in consumer spending. A recent poll 

conducted by the International Profit Association found that over 

66 percent of small businesses are feeling the impact of rising fuel 

costs. 

Gregg Steinberg, President of International Profit Associates 

said, and I quote, ′′small business owners and managers are caught 

in an environment where costs are escalating and margins are 

being squeezed.′′ this situation is forcing small business owners to 

decide between passing on their increased costs to the customers, 

absorbing them or cutting jobs. 

Kenny Crenshaw, owner of a small lawn-care company in Memphis, Tennessee, recently told MSNBC that the spike in gas prices 

has—and I quote him—′′put pressure on everyone to raise prices 

for everything. If there is a 20 percent price increase and 10 percent of our customers leave us, we are going to have to lay somebody off.′′

Well, the United States is vulnerable. Declining domestic production coupled with decreasing dependence on foreign sources of oil, 

especially from a region of the world that is hostile to U.S. interests, is leaving Americans and American businesses defenseless 

against higher fuel prices. They are threatening American jobs, and 

it is costing the United States economy. 

Small business owners are feeling the brunt of this as their costs 

go up and the consumer spending goes down. Increasing domestic 

oil production through responsible ANWR development is one component of a commonsense approach to this problem. 

Although economists vary in opinion on the degree to which 

ANWR development will affect the price of oil, it is more than reasonable to assert that increasing domestic production will ease our 

energy crisis and the burden that it has placed on small businesses. The mean estimate of recoverable oil in ANWR is 10.4 billion barrels, none of which, under the proposed legislation, will be 

exported. That is more than twice the proven reserves in all of 

7

Texas, nearly half of the United States proven reserves of 22 barrels and represents a 20 percent increase in domestic production by 

the year 2025. 

New technology will allow us to produce ANWR’s 10.4 million 

barrels from just 2,000 acres of the 19.6-acre refuge. That is just 

one-tenth of 1 percent of the entire refuge. While minimizing environmental impact, responsible development in ANWR will create 

hundreds of thousands of new jobs for Americans in every State of 

the Nation. It will generate billions of dollars in revenue. 

A job study conducted by the Wharton Economic Institute at the 

University of Pennsylvania concluded that ANWR development will 

create 735,000 jobs nationwide. It also forecasts where those jobs 

would be created and calculated, for example, that 14,100 new jobs 

will be created in Missouri; 15,500 in Indiana; 18,000 in Georgia; 

60,000 in Texas; and 48,000 in New York. This study has been 

criticized as being overly optimistic, as it has assumed a price of 

$40 a barrel at a time when oil was running under $20. 

However, based on current prices hovering around $50 a barrel, 

the study’s findings are more relevant today than ever. Moreover, 

it should be noted that the study was conducted under the assumptions of 1990s recovery technology. Since that time, advances in 

Arctic technology have reduced the cost to producing a barrel of oil 

and increased the amount of technically and economically recoverable oil. Given those facts, the study’s conclusion on the number of 

jobs that ANWR development would create seems to be not only 

relevant but conservative. 

In addition, between 1997 and 1994, the oil industry spent 

roughly $60 billion throughout the United States on the products 

and services required to bring that oil to market. Literally, thousands of small businesses across the country benefitted from this 

consumer spending. 

For example, Mr. Chairman, small business shared in the roughly $203 million spent in Missouri; over $15 billion in Texas; $1.5 

billion in New York; and $236 million in Georgia. 

Mr. Chairman, oil fuels America’s small businesses and small 

businesses in turn fuel our economy and employs over half of the 

country’s private workforce. Everything we can do we must do to 

ensure their growth and success. 

Chairman AKIN. We are about out of time here. 

Mr. HOOD. In closing, if I could just have 10 seconds, more, sir. 

ANWR development will not only enhance our energy security 

and affordability, it will create jobs for Americans and yield America’s small business billions of dollars in consumer spending. Thank 

you. 

[Mr. Hood’s statement may be found in the appendix.] 

Chairman AKIN. Thank you very much. You had some interesting 

statistics. I am sure they will come back up in some of the questions and discussion. 

Now we have Karen Wright, President and CEO of Ariel Corporation, Mount Vernon, Ohio. 

Welcome. 

8

STATEMENT OF KAREN WRIGHT, ARIEL CORPORATION 

Ms. WRIGHT. I am glad you corrected the name. It is Ariel, and 

it was named after my dad’s Ariel Square motorcycle. Our company 

is a small business. 

Chairman AKIN. If you could just slide the mike a little closer. 

Thank you. 

Ms. WRIGHT. Is that better? 

Chairman AKIN. I think so. Is it on? 

Ms. WRIGHT. I think so, yes. My company employs about 700 people. We are in a small town in the center of Ohio. We manufacture 

natural gas compressors, which is a capital good. You will never 

buy one, probably. We are the largest manufacturer of this type of 

compressor in the world. We are a small private family business, 

started by my father in our basement in 1966. 

So I am the second-generation owner and president of the company, and I am grooming my four sons to succeed me eventually, 

I hope. So, consequently, I have a pretty good perspective on family 

businesses, manufacturing, the oil and gas industry, which we are 

right in the heart of, and also motherhood, not necessarily in that 

order. 

That being said, I have been involved in this business for about 

26 years, and I can say with a lot of certainty that we are a patriotic business, both manufacturing and the oil and gas industry. 

Oil, which is kind of the thing that everybody talks about as regards to ANWR, is not the only thing that is there. There is also 

a great deal of natural gas. 

The interesting thing about natural gas is it is not a global commodity. It is a regional commodity; 96 percent of the gas consumed 

in the United States is produced here in Canada and in the United 

States. 

Even if all of the blockades are removed for LNG, which you see 

a lot of stuff about, even if all of those blockades are removed, only 

about 10 percent maybe could be produced by about 2010. So that 

isn’t something that we can count on to supply the gas needed for 

heating homes, generating electricity, agricultural and industrial 

feedstock, steel production and, more importantly, the military 

equipment that is needed to maintain our strength in the Nation, 

manufactured here, and maintain our strength as the peacekeeper 

of the world. 

It is really up to our industry to meet the increased demands for 

a growing vibrant economy. In short, it is important that we make 

sure America doesn’t run out. It has to come from here. We don’t 

get much thanks for that. We are on a roller coaster with regard 

to price and profit margins. The public perception of our industry 

is that we don’t care about the environment. While we are at it, 

if you look at the media representation of our industry, the average 

American thinks that oil and gas and manufacturing are dirty, rotten, dishonest and insensitive. 

I beg to differ. The public doesn’t realize that hundreds of thousands of people, as Gerry pointed out, are employed in the oil and 

gas industry right here in America. 

These jobs cannot be exported overseas. They are not going to go 

to China. The public doesn’t realize that the strength of the AmerVerDate 0ct 09 2002 11:47 Nov 04, 2005 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 G:\HEARINGS\22203.TXT MIKE
9

ican economy rests on our shoulders, First, energy and then manufacturing. The two go hand in hand. 

The public doesn’t realize that American manufacturing alone, if 

it were a country, would be the fifth largest economy in the world. 

Over 14 million people are employed in manufacturing with about 

40 million people directly affected, if you count their families, so a 

lot of people. That is 14 percent of the population. 

Manufacturing contributes about 13 percent to the GDP. But the 

energy industry—and without us, the manufacturing that it supports, there wouldn’t be a service economy, because there would be 

nobody to provide service to. 

The other thing that I think people fail to realize is that we live 

here, too. We are concerned about the environment. We do care 

about ANWR and other places in this Nation. We don’t want to see 

it ruined either. 

I think the great thing that has happened today is that technology has caught up with conscience. We can produce the natural 

gas that is required and the oil that is required for our manufacturing and for our whole Nation’s strength without damaging the 

environment. The technology available today allows us to act in 

good conscience. I think we can be like the Boy Scouts. We can 

leave it like we found it or better. 

This applies to ANWR and is really probably the most important 

factor in my mind. We can only develop it if we make sure that we 

set the rules out and make sure that it stays pristine. We need to 

take care of it. But I think that that is possible today. 

I see that I am running out of time. So I will skip a few pages, 

and I will just go to the end. 

I think the most important thing today is that energy is the base 

of our economy. It is absolutely essential, especially natural gas. 

We have to produce it here. We are not going to be able to get it 

anywhere else. We probably are not going to be independent, as far 

as oil production is concerned, but certainly this will make a big 

difference. And it is affordable energy. It is critical to our Nation’s 

strength across the board. 

So I think ANWR is just part of that, but we also need to open 

up the continental shelves. We need to open the Rockies. We need 

to start producing and turn this industry loose, let it do what it 

does well but set the rules. Okay. Sorry. 

[Ms. Wright’s statement may be found in the appendix.] 

Chairman AKIN. Thank you very much. 

Both of you have raised a lot of very interesting points and questions. It is clear that you are well prepared. We just appreciate 

your coming. 

Last but not least is Eban Goodstein. 

You are a Professor of Economics, I believe, at Lewis & Clark 

College, Portland, Oregon. 

Mr. GOODSTEIN. That is correct. 

Chairman AKIN. Proceed, please. 

STATEMENT OF EBAN GOODSTEIN, LEWIS AND CLARK 

COLLEGE 

Mr. GOODSTEIN. I thank you for the opportunity to testify today. 

I am a economics professor. I teach natural resource economics and 

10

am author of a widely-used college textbook, Economics and the 

Environment, as well as another book and a number of articles related to energy policy and the environment. 

Small businesses are particularly vulnerable to oil price increases like the doubling we have seen this past year, both because 

of the direct bottom line impact but also because of the macro-economic slowdown that major price shocks can create. I want to emphasize one point today on which economists agree: This vulnerability does not have anything to do with our dependency on oil imports, but instead depends on our overall economic dependence on 

oil, whether that oil is imported or domestic. 

Given this economic fact, Arctic Refuge development will do nothing to reduce the exposure of small businesses to high and volatile 

world oil prices. In addition, it will not create many jobs outside 

of Alaska. Instead, small business would be better served by policies that reduce the oil intensity of the economy, win/win solutions 

that would improve energy security for businesses, create jobs and 

save consumers money to spend on domestic goods. 

I would like to make five quick points. First, quoting the Energy 

Information Administration,′′The impact on world oil prices of 

ANWR is not expected to be significant.′′ in their optimistic sce- nario, the EIA projects a price decline of $0.30 per barrel—that is 

not per gallon—a less than 1 percent price decline. 

More likely, OPEC will respond to any increase in Arctic production capacity with a slight decrease in their own rate of field development, and as a result, there will be no noticeable effect on world 

oil supply or prices. 

Second point, since the 1970s, the U.S. economy has become 

much less petroleum intensive and is, as a result, much less sensitive to oil price shocks. Most noticeable is that, in spite of price 

increases of around $4 a barrel during 2000 to 2002, the economy 

rebounded solidly out of the 2000 recession. 

It wasn’t until the dramatic price increases last year, near doubling, that analysts have begun to pin negative macro effects on 

rising oil prices. So any small reduction in world oil prices from refuge development will thus have no noticeable effect on job creation 

from accelerated national growth. 

Third point, as the past year has shown, the U.S. economy does 

remain vulnerable to large and sudden increases in world oil 

prices. However, because this vulnerability depends on overall consumption of oil and not the percentage of oil that we import, there 

is simply no economic security argument to be made in favor of 

Arctic oil development. 

Fourth point, oil development in the Arctic will likely create U.S. 

jobs as a result of the increase in aggregate demand from the expenditure on oil field development and, some years later, from a reduction in oil imports. A likely increase in jobs nationwide would 

be around 40,000 to 50,000 jobs. A large percentage of these jobs 

will be in Alaska. To put that number in perspective, for the past 

15 months, the economy has been adding about 140 jobs every 

month. 

Last point, unlike Arctic Refuge oil development, reducing overall 

petroleum dependence would create jobs and help protect small 

businesses from damaging oil price volatility. As one example, if 

11

the trend in fuel efficiency improvements that were seen in this 

country from 1978 to 1988 had continued instead of actually reversing, then the average small business owner would today be experiencing a greater than 50 percent savings on his or her gasoline 

bill. Improving vehicle efficiency by 3 miles per gallon would reduce 

oil imports and provide the same addition to U.S. aggregate demand as development of Arctic Refuge oil with the same small 

positive impact on jobs. It would also provide valuable insurance 

against sudden oil price increases. 

Finally, the National Academy of Sciences has recently concluded 

that much larger improvements in fuel efficiency than 3 miles per 

gallon can be achieved with no net cost to consumers since increased up-front vehicle costs would be offset by fuel savings. 

Bottom line, over the next 45 years, the U.S. will consume almost 

500 barrels of oil. That is half a trillion barrels of oil. The Arctic 

Refuge is thought to contain about 1 percent of that. 

Overall, dependency is a reality that we cannot drill our way out 

from under. Ultimately, we can only escape dependence on foreign 

energy sources by reducing our overall economic dependence on oil. 

Small businesses remain vulnerable to oil price shocks. 

Our oil dollars are fueling terrorist activities in the Middle East, 

and oil combustion is a leading cause of global warning, which in 

my State and throughout much of the West threatens to wipe out 

around half of the water flow in our streams and rivers by mid-century with huge impacts on farms and small businesses in rural 

areas. Development of Arctic Refuge oil fails to address these costs 

of petroleum dependence for small businesses and offers only very 

small increases in actual employment. 

Thank you for the opportunity to talk today. 

[Mr. Goodstein’s statement may be found in the appendix.] 

Chairman AKIN. Thank you very much. 

Well, we have got enough information to start a pretty good debate, I would think, already. I am going to allow us to hear from 

Congressman Westmoreland. If you would like to start with a question, and you have had a chance to make a statement. I will let 

you go next, and then I will follow up. 

Mr. WESTMORELAND. Thank you, Mr. Chairman. 

Mr. Hood—by the way, thank you, Mr. Chairman, for having this 

hearing. 

I have often wondered at the impact that the drilling would have 

on small business and especially Georgia—and I couldn’t figure out 

how we could work that out to get some business down that way. 

But you mention in your testimony, it is about 18,000 jobs, I believe, and about $236 million. Exactly where are those jobs going 

to be created? 

Mr. HOOD. From vendors that supply the industry that brings 

that oil to market in various forms, those northbound, by the way, 

Congressman, come from actual vendor lists from the period that 

I mentioned, from the major oil producers on the North Slope of 

Alaska, where they actually spent those dollars. So that is a pretty 

hard dollar figure that was spent in the State of Georgia during 

that period of time. So it is industries and small businesses in your 

State that provide services and materials that we use on the North 

Slope of Alaska to bring that oil to market. 

12

Mr. WESTMORELAND. Thank you. 

Ms. Wright, I want to thank you. I read your—I guess the history of your company and your dad was—is he still alive? 

Ms. WRIGHT. Yes. 

Mr. WESTMORELAND. That is a real tribute to the entrepreneurial 

spirit. I loved the way he named things, so that was a good thing. 

Mr. Goodstein, just one comment to you. I don’t know, you know, 

I am not going to doubt your statistics or anything that you have 

got. I think they are quite different from what the other two people 

in the panel have. But the one thing I will tell you about being an 

American is that I will be proud to be burning some American oil 

and not having to be so dependent on foreign oil. If even just a little bit, at least I will know that it is coming from American soil 

and that we are doing something. It is a starting point to solve 

some of our energy problems. 

Thank you, Mr. Chairman. 

Chairman AKIN. Thank you. 

Anybody want to respond or answer? As I said, I like to run 

things a little more as a discussion. We have a few minutes here. 

Mr. GOODSTEIN. I could respond to the issue about the jobs in 

Georgia. Those jobs that came from the Wharton—the WEFA 

study. Most of those jobs were not jobs that were direct spending 

from the oil industry. The WEFA study gets all that three-quarters 

of a million jobs estimate by asserting that Arctic oil would dramatically reduce the price of world oil which would lead to more 

rapid economic growth and which would generate jobs throughout 

the country. That is inconsistent with what serious economists 

think about the impact of Arctic oil. 

Chairman AKIN. We are just getting started. Obviously, some of 

the testimony wasn’t agreeing with each other, so that is interesting to hear how that comes across. 

Ms. Bordallo. 

Ms. BORDALLO. Thank you, Mr. Chairman. 

I enjoyed all the testimonies of our witnesses today, and it is a 

real insight to some of the statistics that were provided us. I guess 

we are all on the same line when it comes to job gains. We all have 

numbers there. They just are in such a wide disparity. 

Mr. Hood, you said 750,000, right? 

Mr. HOOD. Thirty-five, 735,000. 

Ms. BORDALLO. Dr. Goodstein, you said anywhere from 40,000 to 

50,000. That is quite a disparity. 

Are we sure we are all correct on these statistics? I mean, even 

if you should take in—besides the—I think you said associated jobs 

that come with the industry and so forth. But that is still a disparity. Do you have a comment on that? 

Mr. GOODSTEIN. Yes. The study that Mr. Hood referenced, the 

WEFA study, was done in 1991, funded by the American Petroleum 

Institute. It generates these very large job estimates by asserting 

that there will be a bigger-than-expected find of oil in the Arctic, 

but primarily by asserting that that increase in oil will drive world 

oil prices down a lot, about 5 to 10 times as much as the government estimates in the recent Energy Information Administration 

study. So that is sort of step one in why those numbers are wrong. 

13

Step two is that it asserts that declines in oil prices generate sort 

of dramatic increases in economic growth, and that is how you get 

all these jobs. 

I mean, what we are saying here is that, somehow, development 

of a couple of thousand of acres of Alaska wilderness is going to 

create enough jobs to employ not only everybody in the State of 

Alaska but everybody in the State of Delaware. 

It is difficult to see how that could happen, unless you tell a 

story about how it is going to have dramatic increases, impacts on 

U.S. national growth. But both because there is not going to be any 

impact on world oil prices that will be noticeable; and, second, 

these prices, these days, the U.S. economy is very sensitive to declines in oil prices. We need to be focusing on the direct job creation associated with the oil expenditure by the oil industry of a 

few billions of dollars by oil development. 

Ms. BORDALLO. Thank you, Doctor. 

Mr. Hood, would you like to comment? 

Mr. HOOD. I do have a comment, Mr. Chairman, Ranking Member Bordallo. I am glad today we have made a little bit of history. 

The fact that we may disagree on jobs numbers from our perspective— 

Ms. BORDALLO. But we all agree on jobs. 

Mr. HOOD. But we have agreed now, for the first time, I think, 

that we will only impact 2,000 acres in the coastal plain. 

Ms. BORDALLO. Thank you very much. 

I have another question for you, Mr. Hood. I assume that your 

company would have much to gain from ANWR drilling, and I also 

assume that, as an Alaskan-based businessman, you will make 

sure that the people of Kaktovik and other villages around the 

ANWR coastal plain would share in the benefits. 

What will you do to help these people develop locally-owned enterprises that will share in the economic benefits of extraction and 

set these communities on the path to long-term economic sustainability? 

Mr. HOOD. First of all, Mr. Chairman and Ranking Member 

Bordallo, Arctic Power is a broadbased citizens group that, if the 

Congress opens ANWR, will be out of business. Our job will be finished. We will have accomplished our goal. So there is no advantage in a business sense for Arctic Power, because we are just an 

advocate on this issue. 

One of the things that all of Alaskans have fought for is the inclusion of the Inupiat Eskimos, who are directly affected by this development, to have input on what occurs from an environmental 

perspective and from their subsistence lifestyle perspective. 

You know, they don’t have a 7-Eleven or a Safeway store to run 

to get supplies. They live off that land. They hunt the caribou. 

They hunt the whale. They fish for the salmon. They harvest the 

waterfowl eggs. 

And if they thought for a minute that that subsistence lifestyle 

was going to be harmed or damaged and harm their culture in any 

way, they would not be as supportive as they are, and they are 

supportive. They are the only people that live inside the boundaries 

of the Arctic National Wildlife Refuge. 

14

Section 1002 is not a part of the refuge. It is not wilderness. It 

is an area in that land that was set aside in ANILCA for future 

exploration and potential development for hydrocarbon resources. 

That is a misnomer that a lot of people think, that we are going 

into a wilderness area to drill for oil. That is, in fact, not the case. 

The Inupiats, through ANILCA, and the other natives of Alaska, 

through that legislation, have created corporations, as opposed to 

the reservation style that Native-born Americans in the lower 48 

live under. They have developed native corporations, which are 

small to medium to large businesses that have benefitted from the 

oil development on the North Slope of Alaska. 

They intend to be a large part of the ANWR development in two 

ways, in a business sense to enhance their business opportunities, 

and also to make sure that that land is protected forever. They 

were the environmental stewards of that land for thousands of 

years before we all came up and discovered oil. 

Ms. BORDALLO. Thank you, Mr. Hood. I will agree with you. 

When we were up there for the Resources public hearing, Mr. 

Chairman, one of the witnesses, he said that he had traveled 300 

miles on a snowmobile to get to the hearing. I know it is truly a 

wilderness up there. It is beautiful. I have never, ever experienced 

such beauty in my life. 

Ms. Wright, I agree with you. I think that, whatever we do, however this goes, that as long as we set up strict policy guidelines to 

protect the people there, we are in good shape. 

I have to agree with one of my colleagues here when he says that 

he feels very comfortable when he knows that drilling is coming 

from our country, and I feel the same way. 

Thank you. Mr. Chairman. 

Chairman AKIN. Thank you. 

I thought there were some good comments and thoughts of a couple of different perspectives. 

The first thing is, I have had a chance to see where the American 

dollar goes after we buy Middle Eastern oil, because I was in Pakistan, and I heard about the madrasas schools where we are using 

American oil money to train terrorists, to destabilize Pakistan, or 

Pakistan has nuclear weapons. I have a son over in the Middle 

East. I understand that there are some supply-and-demand questions, costs of oil, how it affects jobs, everything, but, ultimately, 

funneling money into the pockets of terrorists is counterproductive. 

The greater our dependence on that source of oil is, the less we 

have flexibility in trying to deal with that. So that is a factor that 

I have had a chance to actually see where that money is going. 

Just a thought. In this committee, you are allowed to have questions and answer, and that is in the answer department. 

Changing the subject a little bit here, Karen, just from a technical point of view, my background is in engineering. I wasn’t much 

of an engineer, or they wouldn’t have let me in politics. But you 

said that there was a lot of natural gas in ANWR. Is that something that is also piped, just like the oil would be, or is that something that has to be impressed and shipped, or how is that transported? 

15

Ms. WRIGHT. There are the—this whole country is a grid of natural gas pipelines; 55 percent of the households are heated by natural gas, and that comes through pipelines. 

So, yes, it could be put through a pipeline to bring it to Canada, 

for example, because there are pipelines then coming from Canada 

to the United States. So that would be— 

Chairman AKIN. I think of that like an electrical grid, or isn’t 

there a penalty for the farther you have to move it? 

Ms. WRIGHT. No, that is what they use our impressers for, is to 

keep it. 

Chairman AKIN. Move it a long ways is your point of view. 

Ms. WRIGHT. Actually, this would be a great thing for us. But I 

think, you know, everybody keeps concentrating on the oil aspect. 

I think the natural gas part is really more important, because you 

cannot transport it very readily in tankers like you can oil. 

LNG, which is liquid natural gas, each one of those ships costs 

about $500 million. Nobody wants a terminal in their backyard. 

You know, we could put them in California on the various coasts 

and so on— 

Chairman AKIN. Let me interrupt a little bit. LNG is chemically 

a little different than natural gas, right? 

Ms. WRIGHT. No, it is just liquid natural gas that has been 

cooled. 

Chairman AKIN. Super cooled. 

Ms. WRIGHT. Super cooled, and then they keep it in liquid form 

because gas, natural gas, is a gas. 

Chairman AKIN. You run it down a pipeline. You compress it, but 

you don’t super cool it? 

Ms. WRIGHT. Right, it is cooled. 

Chairman AKIN. It is still a gas. 

Ms. WRIGHT. It is still a gas, but it is compressed so it moves 

through a pipeline. Those pipelines are everywhere. 

Chairman AKIN. Are there natural gas pipelines already coming 

through Alaska, or is that all oil? 

Ms. WRIGHT. No. There are already natural gas pipelines. 

Chairman AKIN. All oil— 

Ms. WRIGHT. Yes. May I ask—no, there aren’t. It is just oil? 

Mr. HOOD. If I might just interject, Mr. Chairman, a couple of 

points. Number one, existing reserves of natural gas in Alaska is 

about 35 cubic feet of known reserves today. When you take into 

consideration what may be mixed with the oil in ANWR and also 

NPRA, the estimates are that we have about 155 trillion cubic feet, 

155 trillion cubic feet of natural gas on the North Slope of Alaska. 

Congress, in the last Congress, authorized incentives for the construction of the Trans-Alaska Gas Pipeline, which has paved the 

way for the State of Alaska to negotiate with the industry on getting that gas pipeline built, which would, as Karen said, connect 

them under the current proposal to existing pipelines in Canada 

and distribute gas through existing pipelines in the lower 48 and 

distribute that gas throughout the country. 

So that project is on the table. And we thank the Congress, all 

of us from Alaska, thank you all for providing those incentives that 

allowed us to finally, after 30-some odd years to get that project 

started. 

16

Chairman AKIN. So the project to move natural gas from the 

North Slope or from Alaska anyway down to the lower States is not 

complete yet? 

Mr. HOOD. No. 

Chairman AKIN. But you are building it. 

Mr. HOOD. The process that we are in now is the State of Alaska, 

under Governor Murkowski, is negotiating with the industry to put 

together a package that is economically beneficial to both the producers and the State of Alaska to allow us to be able to bring that 

gas— 

Chairman AKIN. It is in the planning stages, is what you are saying. 

Mr. HOOD. Yes. 

Chairman AKIN. So we don’t have any real flow currently of natural gas from Alaska to the lower 48? 

Mr. HOOD. No. But other than— 

Chairman AKIN. Relatively, what, just to try and understand in 

boxcar numbers, are we talking about, just in terms of the numbers 

of BTUs? Is there more natural gas or is there more oil on the 

North Slope, or just our best guess? 

Mr. HOOD. I don’t have the technical expertise to be able to answer that. 

Chairman AKIN. You don’t have a feel for that? 

Mr. HOOD. With regard to BTUs, no. 

Chairman AKIN. Is it your sense there is more natural gas, or 

there is just more oil in general? Don’t you have a feel for that either? 

Mr. HOOD. I think you have apples and oranges with regard to 

the amounts. You have got between 5.6 billion barrels of oil in 

ANWR to 16 billion barrels—it is different sources of energy. I am 

not expert enough. 

Mr. GOODSTEIN. Could I make a comment on this point? 

Chairman AKIN. Sure. 

Mr. GOODSTEIN. At the request of a member of Congress, I can’t 

remember who it was, last year, the Energy Information Administration was asked whether developing the Arctic Refuge—because 

it would open up the natural gas deposits there—would make the 

construction of a natural gas pipeline more economically feasible. 

They concluded not, because the exploration that is ongoing in the 

National Petroleum Reserve and around the Prudhoe Bay areas, 

which is sufficient to drive that project if that project is going to 

get driven. 

So they concluded that although there is potentially significant 

natural gas deposits in the refuge, from an economic point of view, 

they are not going to be developed quickly or soon. They don’t have 

any impact on the pipeline. 

Chairman AKIN. What was the reason for why they wouldn’t be 

developed, because there is too much of it down south already? 

Mr. GOODSTEIN. Elsewhere on the Arctic coastal plain, there is 

much more advanced exploration development. So people know 

where the stuff is and where we are coming from. So at this point, 

there is not a shortage of natural gas deposits up there. There is 

plenty of it. The question is just whether or not a pipeline makes 

sense economically at this point. 

17

Chairman AKIN. Do the other two of you agree on that agree or 

disagree? 

Ms. WRIGHT. I guess I don’t know enough about it to do either. 

Chairman AKIN. Fine. 

Mr. HOOD. Mr. Chairman, the economic viability of the gas is 

what is being discussed now to determine whether it is economically feasible to build that pipeline. 

Chairman AKIN. Right. 

Mr. HOOD. Those are the discussions that are ongoing in the 

State of Alaska. 

Chairman AKIN. Hasn’t the price of natural gas gone up a lot? 

Ms. WRIGHT. Yes. 

Mr. HOOD. There is an extreme natural gas shortage in the lower 

48. 

Chairman AKIN. Would it ever make sense to use natural gas 

there to create fertilizer in Alaska and then move the fertilizer; has 

anybody ever thought of that? 

Mr. HOOD. That has been discussed. In fact, there are plants in 

the Kenai Peninsula that do that now with the Cook Inlet gas, not 

with North Slope gas, because there is no current mechanism to 

move the North Slope gas even to south-central Alaska, let alone 

to the lower 48. The gas reserves in Cook Inlet are being rapidly 

depleted. 

Chairman AKIN. I didn’t mean to ask all of the fun questions and 

discussion here. 

Mr. WESTMORELAND. I just want to ask one question. When we 

are talking about liquid natural gas, all the ports for our liquid 

natural gas are on the East Coast right now. Is that not true? 

Ms. WRIGHT. I think there are some in Louisiana, too. 

Mr. WESTMORELAND. Yes, there is one in Louisiana, and I think 

Boston. 

Ms. WRIGHT. Right. There aren’t too many, and they are kind of 

unmothballing a couple that had been shut down. 

Mr. WESTMORELAND. Right, but right now, a lot of our natural 

gas is coming from the Middle East, too, I guess. 

Ms. WRIGHT. I think more, maybe Venezuela. 

Mr. WESTMORELAND. Trinidad. 

Mr. HOOD. Mexico. 

Mr. WESTMORELAND. But they are converting it and shipping it 

over here on those tankers that you were talking about. 

Ms. WRIGHT. Right. 

Mr. WESTMORELAND. I am assuming it is piped from these ports 

that we have to the West Coast. Is that not correct? 

Ms. WRIGHT. Right. Once it gets into the grid on the East Coast 

or Louisiana, then it goes anywhere in the United States. 

Mr. WESTMORELAND. So there is some infrastructure. 

Ms. WRIGHT. Yes. The infrastructure to deliver natural gas is 50-

years-old and is very, very complex and very good. I mean, like I 

said, 55 percent of the houses in the country are heated by natural 

gas. I mean, it is in place. The great thing about gas is that it is 

clean-burning, you know. It doesn’t pollute. 

We actually do have a lot of it, if you look at the reserves off the 

continental shelves and, you know, the Rockies area. There is a tremendous amount. But drilling for it is being held up time and 

18

again by, you know, various and sundry things that—environmental concerns, yes. 

Mr. WESTMORELAND. Plus, too, you know, if we could get a more 

abundant supply of natural gas, it would help us with our powergenerating plants where we are using— 

Ms. WRIGHT. Exactly. That is kind of something that was a 

switch. About 50 percent of the electrical generation is coal. Then, 

I am not sure, maybe 20, 30 percent is the natural gas. There is 

some fuel switching that goes on; some is nuclear. A lot of the new 

plants that were built in the last 10 years are gas fired, because 

it was clean burn, better than coal for that reason. 

The problem is, now, with increasing demand for electricity, it is 

putting a crunch on the supply of gas, and that is cause for the 

price to go up. Probably in the last 3 years, it has almost tripled, 

and that probably does make it economically viable then to put a 

pipeline in. You know, if it is only $2 a million cubic feet, it is not 

worth it. But when it gets to $6, it is. So right now, actually there 

is a huge boom going on in my industry, because with $6 gas, it 

makes it feasible to drill deeper wells, more complicated wells, that 

kind of thing. 

Ms. BORDALLO. Mr. Chairman, I don’t have any further questions, but I would like to take this opportunity to thank you, Dr. 

Goodstein, Ms. Wright and Mr. Hood for your testimonies. I think 

I have a better insight of this subject matter, and hopefully, we will 

be able to work something out. Thank, thank you, Mr. Chairman. 

Chairman AKIN. I had wanted to come back around a second 

time. This is sort of just trying to understand what you are saying, 

doctor. I think what I am hearing you say is that there is so much 

oil in the Middle East that these guys really can control it as a 

commodity. Isn’t that the bottom line of what you are saying? 

So, in other words, if we bring something online, they can make 

adjustments and still kind of control the market, because they have 

got such a big chunk of it. Is that part of what you are saying in 

terms of an economic argument? 

Mr. GOODSTEIN. Yes, the issue about energy security is, it somehow makes sense if we drill our own oil, we can control the price. 

But we won’t. I mean, when the price of oil goes up, it is a world 

oil market. So if there is a supply disruption in the Middle East 

and oil prices rise to $40 or $50 a barrel, if Middle Eastern oil rises 

to that price, Alaskan oil will rise to that price. So there is no protection from small businesses by reducing the import share by just 

a little bit. It really depends on how much oil we use as an economy, not where it comes from. 

Chairman AKIN. Everything is subject to the supply-and-demand 

equation. The more that we have—supplies that we control, it 

makes us less wagged, you know, by the Middle Eastern prices. I 

suppose even though your point is that it is not a large percent, 

because of the huge supply over there. But it does have some influence if we can control some of the prices. 

Mr. GOODSTEIN. Well, if the OPEC producers don’t respond at all 

to Alaskan oil coming, the refuge oil coming online, then you would 

get a drop in oil prices, per barrel drop in oil price, the Energy Information Administration predicts about $0.30 a barrel. That is 

about a $0.01 price drop. 

19

But more likely, because the OPEC nations will see Arctic oil 

happening 6 or 7 years before it does, they will just ease off a bit 

on their development plans, because they don’t want to facilitate a 

glut. That is basically why most economists would say there will 

be no impact on oil prices. 

But I had a comment related to Ms. Bordallo’s concerns related 

to job growth or who will get the jobs in the Arctic, if I could. Historically, Alaska tracks workers during booms, out-of-state workers, 

who then leave when the economy turns down again. So during 

pipeline construction in the 1970s, actually, the State population 

actually grew by 25 percent over a 4-year period. In fact, Alaska’s 

unemployment rate is typically stuck at about plus 2 percentages 

points above the national rate. Because when jobs pick up, Alaskan 

people tend to migrate in and migrate out. Actually, even during 

the 1990s, when the oil industry was in slow decline, about a quarter of the jobs in oil industries were held by out-of-state residents. 

So while it is undoubtedly the case that Alaskans will get jobs 

if the Arctic Refuge development happens, also you would anticipate there would be a big influx of skilled construction workers and 

that kind of work for folks who will come and go. 

In terms of the oil industry itself, in terms of the Alaska State 

government, around 83 percent of the employees in the oil industry 

work for the State’s largest employers. It is obviously, again, the 

case that in the urban areas, Anchorage, Matsu Valley, Fairbanks, 

there would be spillover opportunities for small business. 

But the reality is, it is very hard for small businesses to survive 

on the North Slope. It is a very difficult environment, unless you 

are pretty heavily capitalized, to be able to do much. 

Ms. WRIGHT. Wouldn’t it be people though that would be there 

though to provide food, shelter, all the service organizations would 

provide jobs for local people, because that isn’t going to come in? 

Mr. GOODSTEIN. It actually does, though. There are big oil-service companies like Halliburton that are sort of in the business of 

housing, feeding and entertaining workers. 

Ms. WRIGHT. It still, to a certain extent, has to spill over into the 

community. 

Mr. GOODSTEIN. To some degree. 

Ms. WRIGHT. Doesn’t it stay there, like what you are talking 

about in the North Slope and so on, there is something that has 

remained there, right? 

Mr. GOODSTEIN. Well, that is because there is still oil development. 

Ms. WRIGHT. Yes, that is what I am saying. In the long term, 

there will be more development than there was initially, because 

those things will stay there to support the oil development that 

happens. It isn’t going to go away in 5 years, it will be there for 

20, 30, 40 years. 

Mr. HOOD. Mr. Chairman, a couple of comments with regard to 

the oil support services industry on the North Slope of Alaska. 

While companies like Halliburton and other major world conglomerates do operate on the North Slope, most of the oil support services, quite frankly, are Alaskan businesses owned by native corporations. 

20

I speak from personal knowledge, because, in my former life, I 

ran the Teamsters Union in the State of Alaska, and I represented 

most of those workers. So it is not the major conglomerates that 

have operations on North Slope of Alaska. It is, in fact, Alaskan 

businesses. 

Again, with the type of development that we are talking about 

in ANWR, we are not talking about the great influx of work and 

activity that we had during the pipeline construction, until such 

time as we build that natural gas pipeline. But ANWR will be—

facilities will have to be constructed and moved into the area. But 

the degree of work in that regard for the people in the State of 

Alaska will not be as great or anywhere near as great as it was 

for the construction of the Trans-Alaska Pipeline, and in fact, more 

jobs will be created outside of the State than in the State. 

Ms. WRIGHT. Can I say something real quick. 

Chairman AKIN. Sure, you can. Yes. 

Ms. WRIGHT. I was thinking on the way over here today, you 

know, we have 700 employees. But if you look at our supply chain 

and our customers, that is probably 20- or 30,000 people who are 

just involved in our one little business. 

And clearly, if this happens, it would affect our business. And it 

would affect all of our suppliers, and it would affect all of our customers, because we are all suppliers to the oil and gas business. 

So, you know, it is not going to be jobs in Alaska, but it is going 

to be jobs in a whole bunch of States in the United States, the 

Lower 48, because that is what we do. We manufacture equipment 

for that industry. 

Chairman AKIN. Well, I appreciate the discussion, of course. It 

is all part of a larger question about the overall direction of the Nation. And one of the things we see in Armed Services and internationally is a tremendous increase in demand for oil, particularly 

from people like China and other countries that are competing for 

those resources. 

We also see some export of jobs in this country to a certain degree, although we are creating a lot of new jobs, as well. But certainly just from a common-sense point of view, there does seem to 

be a certain level of additional security if we have a larger percentage of our own natural resources or things that—you know, we are 

not quite as dependent on the foreign. 

But this is an interesting discussion. I believe it will be followed 

perhaps over in the Senate as they engage in this topic over there. 

As you were perhaps aware, the House has passed the drilling 

in ANWR. I think that a lot of the environmental questions are sufficiently answered, that this seems to, at least, convince the majority of the House, so we will see where things go. 

But I appreciate you all coming and your perspectives. And I 

think each of you has contributed a lot. And thank you so much 

for being part of it, Dr. Goodstein and Mrs. Wright and Mr. Hood. 

It is a good perspective from three different directions. Thank you. 

Mr. HOOD. Thank you. 

Chairman AKIN. This committee is adjourned. 

[Whereupon, at 3:12 p.m., the subcommittee was adjourned.]

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47

Æ


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