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THE EFFECTS OF RISING ENERGY COSTS ON 

AMERICAN FAMILIES AND EMPLOYERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY POLICY, 

HEALTH CARE AND ENTITLEMENTS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 14, 2013 

Serial No. 113–8 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

MARK POCAN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

PETER WELCH, Vermont 

DANNY K. DAVIS, Illinois 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

VACANCY 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON ENERGY POLICY, HEALTH CARE AND ENTITLEMENTS

JAMES LANKFORD, Oklahoma, Chairman 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

JACKIE SPEIER, California, Ranking 

Minority Member 

ELEANOR HOLMES NORTON, District of 

Columbia 

JIM COOPER, Tennessee 

MATTHEW CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

DANNY K. DAVIS, Illinois 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

(III) 

C O N T E N T S 

Page 

Hearing held on February 14, 2013 ....................................................................... 1 

WITNESSES 

Mr. George E. Hand, General Manager, Canadian Valley Electric Cooperative 

Oral Statement ................................................................................................. 5 

Written Statement ............................................................................................ 8 

Ms. Paula M. Camody, President, National Association of State Utility Consumer Advocates 

Oral Statement ................................................................................................. 14 

Written Statement ............................................................................................ 16 

Mr. Eugene M. Trisko, Attorney at Law and Energy Economist 

Oral Statement ................................................................................................. 26 

Written Statement ............................................................................................ 28 

Mr. Daniel J. Weiss, Senior Fellow, Center for American Progress Action 

Fund 

Oral Statement ................................................................................................. 47 

Written Statement ............................................................................................ 49 

Mr. Daniel Simmons, Director of Regulatory and State Affairs, Institute for 

Energy Research 

Oral Statement ................................................................................................. 75 

Written Statement ............................................................................................ 77 

APPENDIX 

The Honorable Jackie Speier, a Member of Congress from the State of California, Opening Statement .................................................................................. 109 

The Honorable Matt Cartwright, a Member of Congress from the State of 

Pennsylvania, Opening Statement ..................................................................... 111 

The Honorable Elijah E. Cummings, a Member of Congress from the State 

of Maryland, Opening Statement ....................................................................... 112 

U.S. Total Crude Oil Production 2004–2011 ......................................................... 114 

The National Association of State Utility Consumer Advocates Resolution ....... 118

American Coalition for Clean Coal Electricity, Energy Cost Impacts on American Families, 2001–2013 .................................................................................... 120 

Committee on Oversight and Government Reform Staff Report, The Department of Energy’s Weatherization Program: Taxpayer Money Spent, Taxpayer Money Lost ................................................................................................. 134 

Annual Motor Gasoline Regular Grade Retail Price ............................................ 182 

(1) 

THE EFFECTS OF RISING ENERGY COSTS ON 

AMERICAN FAMILIES AND EMPLOYERS 

Thursday, February 14, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY POLICY, HEALTH CARE AND

ENTITLEMENTS, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, D.C. 

The subcommittee met, pursuant to call, at 1:04 p.m., in Room 

2154, Rayburn House Office Building, Hon. James Lankford [chairman of the subcommittee] presiding. 

Present: Representatives Lankford, Jordan, Walberg, DesJarlais, 

Farenthold, Massie, Speier, Norton, Cartwright and Horsford. 

Also present: Representative DeSantis. 

Staff Present: Lawrence J. Brady, Staff Director; Joseph A. 

Brazauskas, Counsel; Caitlin Carroll, Deputy Press Secretary; 

Sharon Casey, Senior Assistant Clerk; Brian Daner, Counsel; Ryan 

M. Hambleton, Professional Staff Member; Christopher Hixon, 

Deputy Chief Counsel, Oversight; Mark D. Marin, Director of Oversight; Jaron Bourke, Minority Director of Administration; Nicholas 

Kamau, Minority Counsel; Adam Koshkin, Minority Research Assistant; Jason Powell, Senior Counsel; and Rory Sheehan, Minority 

New Media Press Secretary. 

Mr. LANKFORD. I would like begin this hearing by stating the 

Oversight Committee mission statement. We exist to secure two 

fundamental principles. First, Americans have a right to know that 

the money Washington takes from them is well spent. And, second, 

Americans deserve an efficient, effective government that works for 

them. 

Our duty on the Oversight and Government Reform Committee 

is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right 

to know what they get from their government. We will work tirelessly with—in partnership with citizen watchdogs to deliver the 

facts to the American people and bring genuine reform to the Federal bureaucracy. This is the mission of the Oversight and Government Reform Committee. 

This is also the first meeting of this particular Subcommittee on 

Energy, Healthcare and Entitlements. It is my joy to get a chance 

to introduce as well the ranking member that will be serving with 

me, Jackie Speier from California. Looking forward. 

This committee as well is focused on trying to identify ways that 

we can help the American consumer, the taxpayers to have their 

money protected and also have a government that is efficient. 

2 

When the government spends $3.7 trillion, there will be areas of 

waste and inefficiencies. We want to help identify some of those, 

and we can work in a bipartisan way to be able to accomplish that. 

But this is also a moment that we look at the policies and the ways 

that we do things specifically to work to protect the American consumer, which is what this particular hearing is focused on. 

Our Nation and our economy runs on energy. Costs of energy 

rises and falls based on the cost of fuel and capital costs. But the 

American consumer has a sense that they are being squeezed. This 

hearing will work to address the changing costs of energy and the 

direction of energy production in America. 

According to recent polling, energy costs are the most important 

financial issue facing American families today. The Gallup poll 

from last month shows that 79 percent of Americans said that the 

price of energy, including the price of gasoline, is hurting their finances. More specifically, the prices of electricity and gasoline are 

so high, they are impacting American families’ finances more than 

food, taxes, or even health care, according to that poll. Gasoline 

prices account for the largest single increase in consumer energy 

costs over the past decade. Average U.S. Family will spend an estimated $3,730 a year on gasoline in 2013, compared to 1,680 a year 

just 10 years ago. 

Since 2001, the energy cost impacts on American families have 

been steadily increasing and are now at their highest levels in over 

10 years. On average, about 60 million households, or about half 

of the households in America, American families, now pay 20 percent of their income towards energy costs. The poorest Americans, 

those making less than 24,000 a year, are often forced to make 

choices between food, medicine, or Edison. In fact, those who earn 

less than 10,000 a year will pay an estimated average of 77 percent 

of their income towards energy. 

Businesses, and especially small businesses, are also experiencing in the adverse impacts of higher energy costs. According to 

the U.S. Energy Information Administration, manufacturers spend 

on average $136 billion a year on energy, and commercial buildings 

spend a $108 billion a year. Small businesses are more susceptible 

to negative impacts on rising energy costs. 

Energy-intensive industries are building-block industries because 

they produce the components that are used for the rest of the industrial manufacturing and construction sectors. These industries 

see energy as a percentage of costs sometimes as high as 85 percent. 

With the rise in horizontal drilling technology, hydraulic 

fracking, and other advanced recovery methods, it has vastly increased the potential for recoverable domestic oil and natural gas 

in places like North Dakota and Pennsylvania and others. However, efficient use and production in North American petroleum are 

facing cumbersome obstacles from the Federal Government. These 

range from restrictive policies on oil production on Federal lands 

to the continued rejection of more pipeline infrastructures, such as 

the Keystone XL. State regulatory primacy is also being challenged 

in all aspects of energy production. These hindrances harm the 

ability of families and businesses to cheaply access vast resources 

of energy. The EPA-mandated framework for the sale of differently 

3 

blended versions of fuel across the United States, which means 

that gas supplies often can’t be shipped between cities even in the 

same State. 

The U.S. also has an opportunity to rejuvenate the once-vibrant 

nuclear industry, as well as a very advanced wind industry that 

continues to increase. For the first time in decades, new nuclear 

plants are under construction. Further new technologies, such as 

small modular reactors, offer tremendous opportunities in the global market. This opportunity will be lost if political and regulatory 

uncertainty impede domestic development and innovation in that 

industry. 

America has vast domestic energy resources. In order to achieve 

affordable energy, Americans should have access to this energy 

through all sources, coal, oil, gas, nuclear, and all of our renewables. However, the costs of these energy resources to families and 

businesses must always be taken into account when providing subsidies to promote some and promulgating regulations which sometimes limit others. Today it is right for us to just take a closer look 

at the costs and the opportunities for America’s energy. 

I’d now like to recognize the distinguished ranking member, the 

gentlelady from California, Ms. Speier for opening statement. 

Ms. SPEIER. Mr. Chairman, thank you. And let me say how—how 

much I’m looking forward to working with you on this subcommittee this year. And while we come from different parts of the 

country, the issues that we will address will affect every single 

American, as this hearing does today. So I truly look forward to our 

coordinated efforts on behalf of the American people. 

You know, no matter who controls the White House, oversight of 

the executive branch is fundamentally a responsibility of Congress. 

Holding the bureaucracy, its contractors, and the corporations accountable isn’t a partisan issue, it’s a congressional duty. 

The title of today’s hearing is ‘‘The Effects of Rising Energy Costs 

on American Families and Employers.’’ In this economy it’s imperative that we in Congress do more to help families recover from the 

recession as they pay off these bills. What are we doing, for example, to raise the minimum wage in this country? What are we doing 

to create more jobs for the middle class and ensure that hard work 

leads to decent livings? To be sure, we must investigate the high 

price consumers and small businesses are paying on their energy 

bills. Are regulations the sole factor causing prices to rise, or are 

record-breaking profits of the oil companies part of the cause? 

Here is a chart we were hoping to have up for you. But it shows 

that the five oil companies in 2011 made $41 billion, an increase 

of 31 percent; $31 billion, an increase of 54 percent; $26 billion, an 

increase of 114 percent; $27 billion, a 42 percent increase; and $12 

billion, a 9 percent increase. 

One thing is certain: The American people do not have to choose 

between economic growth and environmental protection. We can do 

both responsibly. The good news is that the United States is already making great strides towards energy independence. Under 

the Obama administration, domestic oil production has reached its 

highest level in 11 years. And, in fact, this chart shows how far we 

have come in a very short period of time in oil production. 

4 

U.S. total crude oil production averaged 6.4 million barrels per 

day in 2012, an increase of .8 million barrels per day from the previous year. The largest single increase in domestic annual production since 19—no, excuse me, since 1859. Furthermore, domestic 

natural gas production reached a record 28.6 trillion cubic feet in 

2011, marking the highest level of natural gas production in this 

country in more than 30 years. At the same time, we’ve made investments in renewable energy by providing loan guarantees to 

build the Nation’s first commercial-scale cellulosic ethanol plant in 

Kansas, the world’s largest wind farm in Oregon, and the world’s 

largest solar plant in California, among many other cutting-edge 

projects. 

An energy company in my district said it best: Congress 

shouldn’t pick winners and losers. We should support all of the 

above. All of these gains have been achieved while maintaining 

strong protections for public health and the environment. We have 

doubled the distance our cars can travel on a gallon of gas, reduced 

CO2 emissions from power plants, and weatherized homes to make 

them safer and more efficient. 

The benefits of our environmental policies, meanwhile, have far 

exceeded the costs of regulatory compliance. But as the President 

made clear in his State of the Union Address, we must also confront the reality of climate change. In 2011, the United States endured more than 14 extreme weather disasters, each costing over 

a billion dollars. There were another 11 such disasters in 2012, and 

the GAO that just finished his presentation here earlier today 

talked about climate change and how we have got to factor it into 

our crop insurance and flood insurance, as many of the private insurers in this country already do. 

According to NOAA, the combined 25 disasters from 2011 to 2012 

are estimated to cost $188 billion in total. The record drought of 

2012 is estimated to cost $12 billion, and Superstorm Sandy is estimated to cost $71 billion. Responding to these extreme weather 

events will produce a measurable drag on our economy, and the 

timing for American families could hardly be worse. Paying the 

bills is strain enough, let alone after the crops are wiped out by 

searing drought or houses left flooded after a superstorm. 

In conclusion, Mr. Chairman, I don’t believe in the false dichotomy that energy and environmental innovation precludes economic 

growth. In the face of climate change, seizing the opportunities before us in clean energy is critical not just to preserve a livable planet for our children and grandchildren, but to prevent Americans 

from bearing the real economic consequences of inaction. 

With that, I’d like to thank our panel of witnesses for being here 

today, and I look forward to your testimony. 

And, once again, thank you, Mr. Chairman. 

Mr. LANKFORD. Thank you. 

Members will have 7 days to submit their opening statements for 

the record. 

We’ll now recognize our panel today. 

Mr. George Hand is the general manager of the Canadian Valley 

Electric Cooperative, a fellow Oklahoman with me, and we’re glad 

that you’re here. 

5 

Ms. Paula Carmody is the president of the National Association 

of State Utility Consumer Advocates. From Maryland; is that correct? 

Ms. CARMODY. Yes. 

Mr. LANKFORD. Okay. Glad that you’re here. 

Mr. Eugene Trisko is an attorney and energy economist. 

Mr. Daniel Weiss is the Senior Fellow at the Center for American Progress Action Fund. 

And Mr. Daniel Simmons is the director of regulatory and State 

affairs for the Institute for Energy Research. 

Thank you all to be here. Pursuant to committee rules, all witnesses need to be sworn in before they testify. So if you’d please 

stand and raise your right hand, and be prepared to take the oath. 

Do you solemnly swear or affirm that the testimony you’re about 

to give will be the truth, the whole truth, and nothing but the 

truth so help you God? 

[witnesses answer in the affirmative.] 

Thank you. Let the record reflect the witnesses answered in the 

affirmative. 

You may be seated. 

In order to allow time for discussion, and we will have Members 

that will come in and out at different points to be able to ask questions, and so you’ll see that movement as it goes through, we have 

included a very handy clock right in front of you. That clock is really a series of lights there, green, yellow, and red, which I think is 

pretty standard practice on it. The yellow will come on when you 

have 1 minute left, and then the red will come on when it’s time 

to stop. You could wind up as soon as possible on that. There are 

bonus points for finishing before 5 minutes because we’d like to be 

able to have time for questions as well. 

So to allow time for that, I’d like to go ahead and begin. 

Mr. Hand, you are first up. And I’d be honored to be able to receive your testimony now. 

WITNESS STATEMENTS 

STATEMENT OF GEORGE E. HAND 

Mr. HAND. Chairman Lankford, members of the subcommittee, I 

want to thank you for this opportunity to be heard and appear before you today. My name is George Hand. I consider myself fortunate and blessed. I was born in Oklahoma and lived there all my 

life. I’m the general manager of Canadian Valley Electric Cooperative, headquartered north of Seminole, Oklahoma, and I’ve served 

in that capacity for 28 years. 

At Canadian Valley Electric Cooperative our purpose is simple 

and straightforward: To provide electric utility service to our customers at the lowest possible cost, consistent with sound business 

practice. This mission guides us daily, and we have not strayed. We 

believe that if we can be successful in our mission, it will give the 

customers we serve the best opportunity for a better life and the 

businesses that look to us for electric power energy the greatest opportunity to be successful, grow, prosper, and provide jobs. 

Profit is not our purpose. Our purpose is to help others prosper 

and profit. Most of the territory we serve would not be considered 

6 

desirable or even feasible service territory to a for-profit electric 

utility. Our power supplier, Western Farmers, which we are a part 

owner, has a diversified electric-generation resource mix comprised 

of coal, natural gas, wind, hydro, and purchased power. About 30 

percent of the energy last year was produced with coal, about 6 

percent from wind, about 15 percent from our own natural gas 

plants, and then the balance, purchased power, which was a mixture of coal and natural gas and some additional wind. 

Electric utilities understand the desirability of a diversified electric-generating fleet. This helps control price volatility and, to a degree, enhances reliability. Diversity is also a hedge against the current flavor of government regulation. 

Today, in Oklahoma, we have several large coal-fired generating 

plants. All of these coal plants in Oklahoma were built in the 1970s 

because the Federal Government mandated that no more natural 

gas-fired electric generating plants be built, and, further, that the 

existing gas plants would have to shut down in the future. 

In response to what was the law of the land, the Fuel Use Act, 

electric utilities in Oklahoma and elsewhere began building large 

coal-fired generators to replace these banned gas-fired generators. 

The law was clear. By the early 1980s, expensive excess generating capacity was everywhere, and about that time we discovered 

that maybe the country was not running out of natural gas. Congress relaxed the pressure to shut down the existing natural gasfired generating plants. Later Congress, in the face of reality, removed the prohibition on building new natural gas-fired plants. 

But the damage to customers, business, and the economy had 

been done. Electric rates to consumers and businesses doubled as 

utilities had to service the debt on these new unneeded generating 

plants. The cost burden of this mistake on customers and business 

lasted for the better part of two decades, until the economy grew 

enough to be able to utilize this additional generation. 

We must realize that regulation have a cumulative cost, and 

eventually the consumer will rebel or just give up. We should be 

especially concerned when we have a government bureaucracy that 

can generate new regulations faster than the electric utility industry can build new generating plants, and much faster than the consumer and the economy can absorb the cost. 

The impact on people. What comes first, food, shelter, medicine, 

electricity, doing without? At Canadian Valley, we have people who 

call our office wanting to know how much their next electric bill is 

going to be so they will know how much they have to spend at the 

grocery store. 

Growing pressures on the electric utility industry will continue 

to put upward costs—pressure on costs, additional environmental 

regulations governing air, water, and disposal of ash, as well as 

continued increases in fuel prices. More mandates from the Environmental Protection Agency on air emissions, water quality, coal 

ash storage, and handling threaten to significantly increase the 

cost of producing electricity. 

The EPA has proposed carbon emission standards, which forces 

roughly 50 percent reduction in CO2 emissions from new coal 

plants. The rule could impact existing coal-fired plants if they undergo significant modification. Coal has historically been our lowVerDate Aug 31 2005 09:43 Apr 02, 2013 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\80086.TXT APRIL
7 

est-cost fuel to meet the growing electrical economy. Now the risk 

of present and future regulations have effectively taken our Nation’s most abundant, least-cost energy resource off the table for future requirements. These potential threats create too great a capital risk for electric utilities to continue building new coal-fired 

plants. 

I thank you for this opportunity. 

Mr. LANKFORD. Mr. Hand, thank you very much. 

[Prepared statement of Mr. Hand follows:] 

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Mr. LANKFORD. Ms. Carmody, we will receive your testimony. 

STATEMENT OF PAULA M. CARMODY 

Ms. CARMODY. Chairman Lankford, Ranking Member Speier, and 

members of the subcommittee,thank you for inviting me today to 

testify about the impact of rising energy costs on American families. I am Paula Carmody. I am in the People’s Counsel for the 

State of Maryland. I head an independent State agency that represents the interests of residential utility customers. 

I am testifying today in my capacity as president of the National 

Association of State Utility Consumer Advocates, or NASUCA. 

NASUCA is an organization of agencies designated by State law to 

represent consumer interests before State utility regulatory agencies. We advocate for policies and programs that provide safe, reliable, and affordable energy services for our consumers in our respective States. 

Consumers have experienced changes and energy prices and 

therefore energy bills over the past decade, even as most incomes 

have remained stagnant or declined in real terms. One positive 

note recently has been the drop in wholesale and retail prices for 

natural gas. This has provided welcome relief to families relying on 

natural gas to heat their homes and water. We can reasonably expect that these natural gas prices will remain relatively stable over 

the next few years. This is good news for gas consumers, even as 

issues related to environmental impacts of hydraulic fracking and 

LNG exportation continue to be addressed by policymakers. 

The decrease in natural gas prices also has had an impact on 

electricity prices in many States as natural gas-fired generating resources have become more competitively priced in comparison to 

other resources. The overall reduction in energy demand, a result 

of the economic slowdown and the impact of energy-efficiency programs, also has affected electricity prices. In Maryland, the decrease in wholesale electricity prices has been reflected in lower annual electricity bills for residential customers. For example, the average annual electricity bill for residential customers of Baltimore 

Gas and Electric Company, our largest combined gas and electric 

company in the State, was about $1,900 in 2009. In 2012, this bill 

was estimated to be about $1,600. 

While the focus of hearing today is on the impact of rising energy 

prices, it may be useful to think in terms of the affordability of energy bills for our consumers. But what is the affordable energy bill? 

In general, we tend to consider for our households an affordable bill 

is one that can be regularly paid on a full and timely basis without 

substantial household hardship. 

NASUCA has expressed particular concern for those low-income 

and vulnerable customers whose bills are not affordable. They pay 

far more of their household income towards energy bills than the 

average customer, and are at greater risk for falling behind in utility bill payments and losing service. This concern is reflected in our 

association’s resolution supporting full Federal funding for the Low 

Income Home Energy Assistance Program, or LIHEAP, which has 

helped households with heating bill assistance since 1981. 

NASUCA also has a long tradition of support for the adoption of 

cost-effective energy-efficiency programs for all consumers as a way 

15 

of conserving valuable energy resources, reducing demand, and reducing customers’ utility bills. Energy-efficiency programs can 

produce benefits by directly reducing energy usage for individual 

customers. They can positively impact energy bills by reducing 

market clearing prices in regions with restructured electric utilities. They could also help to avoid construction of more costly generating facilities for vertically integrated utilities, and thereby mitigate potential bill increases. 

Low-income customers often live in housing in poor condition and 

with faulty heating equipment. To ensure that low-income families 

can benefit from reducing their energy usage and, therefore, their 

bills, NASUCA also supports federally funded weatherization programs for low-income consumers, such at the Weatherization Assistance Program, to reduce energy usage. 

NASUCA members frequently address issues involving resource 

planning or generating facilities in their respective States and regions, whether their regulated utilities are vertically integrated or 

purchase electricity supply in wholesale markets. In either circumstance, the type and proportion of different resources used to 

generate supply have varying impacts on the retail prices paid by 

consumers in those States. 

NASUCA has long noted the importance of long-term planning 

and resource diversity. In a 1990 resolution, NASUCA recognized 

that it was in the interests of consumers to factor potential future 

costs of reducing greenhouse gas emissions into generation resource 

planning. However, given the potential for cost impacts on consumers in the near term, NASUCA also urged policymakers to 

keep these cost impacts in mind when adopting policies or mechanisms to reduce greenhouse gas emissions or to address other environmental concerns. 

NASUCA has not taken a position on the merits of any of the 

existing or proposed EPA regulations that are at issue these days; 

however, NASUCA recently adopted a resolution urging the EPA 

to establish compliance timelines that provide sufficient time to 

consider appropriate least-cost responses so as to avoid rate shock 

to our electricity customers. 

NASUCA continues to advocate and support policies and programs designed to provide affordable energy to our consumers, 

while maintaining safety and reliability. As part of that advocacy, 

we have supported energy efficiency programs, low-income weatherization programs, adequate funding for direct energy assistance, 

and the implementation of policies to support the development of 

diverse energy resources. In supporting these type of policies and 

initiatives, NASUCA has also emphasized the need to address cost 

impacts on consumers in the decisionmaking in order to minimize 

the impacts on our consumers throughout the United States. 

Again, thank you for the opportunity to testify here today. 

Mr. LANKFORD. Thank you. 

[Prepared statement of Ms. Carmody follows:] 

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Mr. LANKFORD. Mr. Trisko. 

STATEMENT OF EUGENE M. TRISKO 

Mr. TRISKO. Thank you, Chairman Lankford, Ranking Member 

Speier, members of the subcommittee. 

My name is Eugene Trisko. I’m here to present the findings of 

a study of the impacts of rising energy costs on American families. 

I’ve conducted this study periodically since the year 2000 for the 

American Coalition for Clean Coal Electricity. The latest version is 

attached to my testimony. 

The report analyzes consumer energy cost increases since 2001, 

and examines the pattern of energy expenditures among four income levels. Energy costs for gasoline and residential utilities are 

summarized in nominal dollars by household income category for 

U.S. households in 2001, 2005, and 2013, using data from EIA, 

CBO and the U.S. Bureau of the Census. Energy expenditures as 

a percentage of nominal after-tax income are estimated for the effects of Federal and State income taxes and Federal Social Security 

and Medicare insurance payments. 

The report’s findings in sum are: Lower-income families are more 

vulnerable to energy costs than higher-income families, because energy represents a larger portion of their household budgets. 

Energy is consuming one-fifth or more of the household incomes 

of lower- and middle-income families, reducing the amount of income that can be spent on food, housing, health care, and other necessities. 

Approximately one-half of U.S. households have average pretax 

annual incomes below $50,000. Measured in constant dollars, our 

median, median household income of about $50,000 is nearly 9 percent below the median household income peak of some $53,000 in 

1999. 

Family incomes are not keeping pace with the rising cost of energy. In 2001, U.S. households with gross annual incomes below 

$50,000 spent an average of 12 percent of their average after-tax 

income of $21,600 on residential and transportation energy. In 

2013, these households are projected to spend an average of 20 percent of their average after-tax income of $22,600 on energy. These 

percentage findings would not change if the current dollar values 

I’ve cited for household income and energy expenditures were adjusted for the 30 percent rate of inflation since 2001. 

Residential electricity has maintained relatively low price increases compared with residential natural gas and gasoline. Virtually all of the residential electricity price increases over the past 

two decades have occurred since 2000. Between 2001 and 2013, residential electric prices are projected to increase in nominal dollars 

by 40 percent to a national average of 12 cents per kilowatt hour, 

above the 30 percent change in the CPI from 2001 to 2012. These 

increases are due in part to additional costs associated with meeting U.S. EPA clean air and other environmental standards, as 

mentioned by witness Hand. 

Higher gasoline prices account for three-fourths of the increased 

cost of energy since 2001. Consumers feel this pain every time they 

stop at the gas pump. Average U.S. household expenditures for 

gasoline will more than double in nominal dollars from 2001 to 

27 

2013. In comparison, residential energy costs for utilities will increase on average by 46 percent, compared with the CPI increase 

of about 30 percent. 

Fixed-income seniors are a growing proportion of the U.S. Population and are among the most vulnerable to energy cost increases 

due to their relatively low average incomes. In 2011, the median 

gross income of 27 million households with a principal householder 

age 65 or older was $33,000, one-third below the national median 

household income of $50,000. 

These findings are discussed in more detail in the report. I am 

happy to answer any questions from the subcommittee, and will 

graciously accept any bonus points the chairman wishes to confer. 

Mr. LANKFORD. They are given. 

[Prepared statement of Mr. Trisko follows:] 

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Mr. LANKFORD. Mr. Weiss. 

STATEMENT OF DANIEL J. WEISS 

Mr. WEISS. Thank you very much, Chairman Lankford, Ranking 

Member Speier, and members of the subcommittee. I am honored 

to be at the subcommittee’s first hearing. It’s like going to the first 

Oklahoma Thunder’s basketball game. 

When considering the energy prices, there are three important 

considerations. First, fossil fuel prices do not include the costs of 

their side effects, such as air pollution and the associated costs for 

premature deaths or asthma attacks. Second, the Obama administration has adopted important policies to reduce energy costs for 

middle- and low-income families. And, third, expanding domestic 

oil production in protected lands and waters owned by all taxpayers will not lower gasoline prices. 

First, fossil-fuel-generated energy has real external costs. When 

assessing the effects on rising energy costs, it’s essential that this 

evaluation also include the external costs of fossil fuel use and who 

pays them. For instance, mercury and toxic air pollution from 

power plants threaten children, senior citizens, and the infirm with 

brain impairment, respiratory illnesses, and even early death. Reducing these pollutants will return $3 to $9 in health benefits for 

every $1 in cleanup costs. 

Coal-fired power plants produce one-third of all the climate pollution in the U.S., and Climate change has real costs to our economy. 

For instance, the National Journal just reported that the drought 

will reduce the Mississippi River barge traffic, resulting in, quote, 

‘‘losses of about $7 billion through the end of January,’’ unquote. 

As Ranking Member Speier mentioned, the National Oceanic and 

Atmospheric Administration reported that in 2011 and 2012, there 

were 25 floods, droughts, storms, heat waves and wildfires that 

each caused at least $1 billion in damages. Together these severe 

events caused 1,100 fatalities and up to $188 billion in total damages. Pollution reduction requirements internalize some of the costs 

from pollution so that the costs are paid for by the fuel users rather than by everyone else. 

Second, the Obama administration has adopted important policies to reduce energy costs. As Ranking Member Speier mentioned, 

doubling the fuel economy of passenger vehicles by 2025 will reduce gasoline purchases by $8,000 over the life of a 2025 car. It’s 

been estimated that this will be like getting $1 off the price of a 

gallon of gasoline. 

The Department of Energy set efficiency standards for nearly 40 

different appliances, including washing machines and refrigerators, 

that together will, quote, ‘‘save consumers nearly $350 billion on 

their energy bills through 2030,’’ unquote. 

As mentioned by the previous witnesses, the Weatherization Assistance Program weatherized its 1 millionth low-income home in 

2012. The Department of Energy estimates that this saves each 

family up to $400 a year on heating and cooling costs. 

I agree with Mr. Trisko and Ms. Carmody that those concerned 

about the impact of energy prices on lower-income households 

should restore the recent funding cuts in the Weatherization and 

Low Income Home Energy Assistance Programs. Eliminating speVerDate Aug 31 2005 09:43 Apr 02, 2013 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 C:\DOCS\80086.TXT APRIL
48 

cial tax breaks for the Big Five oil companies can provide $2.4 billion annually in offsets. 

Last, expanding domestic oil production into protected Federal 

lands and waters will not lower gasoline prices. Oil prices are set 

on a world market that’s not really affected by domestic production, 

and the price is set by a cartel. Two-thirds of the gasoline price is 

based on the oil price; therefore, higher U.S. oil production has little impact on gasoline prices here. 

As Ranking Member Speier noted, the U.S. is already producing 

the most oil it has in 15 years. The Energy Information Administration reports that Federal lands and waters produced 13 percent 

more oil in the first 3 years of the Obama administration compared 

to the last 3 years of the Bush administration. That’s 2 billion barrels under Obama versus 1.8 billion barrels Under Bush. 

The Associated Press tested whether more U.S. Drilling would 

lower gasoline prices. After analyzing 36 years of monthly U.S. oil 

production and gasoline price data, AP found, quote, ‘‘no statistical 

correlation between how much oil comes out of U.S. wells and the 

price at the pump,’’ unquote. 

High oil and gasoline prices do benefit the Big Five oil companies: BP, Chevron, ConocoPhillips, Exxon Mobil, and Shell. They 

made a combined profit of $255 billion over the last 2 years. 

To protect American families and business from high energy 

prices, we must do a few things: First, reduce the costly pollution 

costs by fossil fuel use, which has a real cost to our economy. Continue to improve the energy efficiency of vehicles, appliances, and 

buildings. Fully fund the Weatherization and LIHEAP programs. 

And last, eliminate unnecessary tax breaks for the Big Five oil 

companies that are already swimming in profits. 

Thanks again for the opportunity to be at your inaugural hearing. 

Mr. LANKFORD. Thank you. 

[Prepared statement of Mr. Weiss follows:] 

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Mr. LANKFORD. Mr. Simmons. 

STATEMENT OF DANIEL R. SIMMONS 

Mr. SIMMONS. Mr. Chairman, Ranking Member Speier, and 

members of the subcommittee, thank you for the opportunity to 

talk today about the impacts of rising energy prices on American 

families, and particularly about oil prices. 

It’s easy to take affordable, reliable energy for granted, but we 

should not do that. Having a plentiful supply of affordable, reliable 

energy is the result of deliberate policy choices, and these policy 

choices matter for many of the reasons that Mr. Trisko talked 

about. 

Energy prices are frequently unavoidable costs for family and 

businesses, and they are—and high energy prices are disproportionately felt by middle- and low-income families. Families that 

make over $50,000 a year spend 9 percent of their income on energy, but families that make less than 30 percent spend nearly— 

well, spend three times that portion, or 27 percent of their income, 

on energy costs. And this is the fundamental disconnect with President Obama’s energy policies. During the State of the Union, he 

talked about wanting to strengthen the middle class, and yet his 

policies intentionally increased the price of energy. 

So why have we had high oil prices over the past few years? The 

reason for that is that oil is a globally traded commodity, and with 

global supply and demand for—because of the global supply and 

demand for petroleum products, increased global—global demand, 

particularly from Asia, is driving price increases, especially combined with unrest in the Middle East and with OPEC intentionally 

limiting supply. 

In the U.S. over the past couple weeks, we have all noticed prices 

have increased, gasoline prices have increased. The reason for that 

is a decline in U.S. refinery production and seasonal maintenance. 

Refineries have spent over $128 billion in regulatory compliance 

since the 1990s. These high refinery costs have reduced the amount 

of spare capacity and refining diversity. Over that time, 66 refineries have closed, and as a result, when a refinery closes for maintenance and repairs, gasoline prices increase. 

So what can we do about high oil prices? One is to increase 

North American oil production. Robust oil production in North 

America does two, two critical things. First of all, it increases the 

global oil supply; and, second, it increases global spare oil capacity. 

When we have more spare capacity, it lessens the impact of unrest 

in the Middle East, such as when—during the Libya civil war when 

Libya’s oil production went offline, and it lessens the global dependence on Middle Eastern oil. That leads to lower global oil 

prices overall. 

In 2011, the United States experienced the largest 1-year increase in oil production in our history. These large increases, however, occurred almost exclusively on private and State lands. President Obama likes to take credit for this. That credit is—is completely wrong. 

According to CRS, 96 percent of the increase of oil production between fiscal year 2007 and 2012 came from private and State 

lands. This rapid increase is the result of hydraulic fracturing and 

76 

directional drilling on private and State lands combined with rational regulation from the States. Because this is—and that is the 

difference between the State regulators and—and the Federal regulators. 

Some say that hydraulic fracturing is dangerous or controversial, 

but let’s just look at the record. It’s been used for over 60 years in 

more than 1.2 million wells, and even EPA Administrator Lisa 

Jackson says there isn’t a single confirmed case of groundwater 

contamination from hydraulic fracturing. 

And Federal lands have even more energy potential. We know 

there’s more than 1.4 trillion barrels of oil shale and shale oil. 

But—for example, but the Federal Government leases less than 2 

percent of offshore areas and less than 6 percent of onshore areas 

for energy production. 

If the Federal Government were serious about lowering oil 

prices, they would do two things. First of all, they would follow the 

States’ example on leasing and regulation of oil development, and 

they would help export the States’ exemplary policies around the 

world. 

For example, it takes 307 days for the Federal Government to 

process a permit to drill on Federal lands, but it only takes the 

State of Colorado 27 days and North Dakota 10 days. While the 

President in the State of the Union said that he would, quote, 

‘‘keep cutting red tape and speeding up new oil and gas permits,’’ 

close quote, the reality is quite the opposite. The amount—since 

2005, the amount of time that it takes the Federal Government to 

process a permit to drill has nearly doubled. 

There are vast oil and natural gas resources in the United States 

and Canada. Even more oil resources are available if the Federal 

Government and other countries around the world were to follow 

the lead of States like North Dakota, Texas, and Pennsylvania with 

their regulation and benefits from hydraulic fracturing. So far the 

only place in the world they have seen the transformative power 

of hydraulic fracturing to dramatically increase oil and natural gas 

production is on private and State lands. Rational regulation on 

Federal lands and around the world would lead to greater energy 

produced—production and lower prices. 

Thanks for the opportunity to testify, and I’d be happy to answer 

any of your questions. 

Mr. LANKFORD. Mr. Simmons, thank you. 

[Prepared statement of Mr. Simmons follows:] 

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Mr. LANKFORD. Thank you, all of you. All of you, as you know, 

your written testimony will be made part of the permanent record 

as well, because I know that is in addition to what you did in your 

oral testimony. 

I’d like to also submit with unanimous consent some of the other 

documents to go into the record, the two different charts that Mrs. 

Speier submitted during her oral testimony. 

Also, Ms. Carmody had referenced a resolution from her organization. I would like to make that part of the permanent record as 

well. 

The report that was done on Energy Cost Impacts on American 

Families that Mr. Trisko referenced in his testimony, make that 

part of the record as well. 

And then there have been several comments about the weatherization program. This committee actually last session did a pretty 

extensive study on the weatherization program. And I hate to say 

some serious problems. There are many of the programs that we 

have that are very efficient. That one proved to not be very efficient in the distribution of funds from DOE actually down to 

homes. So I’d like to be able to put that report as well into the permanent record as well. 

Without any objection, all that will be submitted. 

Let me begin our questioning time, and we’ll take 5 minutes for 

questioning and then begin to move back and forth on that for 

those of you that have not done questioning before on it. 

Mr. Hand, let me begin with you on this. You talked about diversification of fuel, and talked about some history as well, when natural gas was then prohibited by the Federal Government, and so 

the industry went to coal and is now shifting back to natural gas 

again. I look forward to the day that 30 or 40 years from now that 

we have this same conversation again about coal and begin to shift 

back again and to see what happens on that. 

What is the lifetime of a power-generating facility? What’s the 

typical life expectancy for them? 

You need to get your microphone turned on there. Sorry. 

Mr. HAND. We’ve talked about that many times in our board 

rooms and especially because it—we look to see what the depreciation costs are. The coal plants can be updated. We believe that 50 

years on a coal plant is a reasonable lifetime for it to be—technology is something that—at times gas is an area where technology 

may have caused the—to shorten that to—as far as a base-load 

generation on the older gas plants because of the combined cycles 

and the lower amount of fuel that it—natural gas it takes to create 

that kilowatt hour. 

Mr. LANKFORD. So whatever means it may be, let’s say if the 

plant was built in the 1990s, and it was expected to be a coal plant 

for a 50-year time period on that, pushing them down and pushing 

them out is very difficult to do, obviously, with capital costs. And 

then also you’re planning a decade ahead of time for construction 

of new production. So that becomes a—a significant burden in the 

past. 

Can anyone begin to define now as far as a breakout for me of 

the cost of, let’s say, electricity, of where it would break out, the 

cost that’s actually delivered to the consumer, what part of that is 

91 

the fuel, what part of that would be regulatory costs, what part of 

that would be the delivery costs of that? Anyone give an estimation? 

Mr. HAND. I have some costs that we actually experienced 

through Western Farmers, what their costs were. That would not 

be the same for every utility, but I can give their numbers for last 

year. 

Mr. LANKFORD. Okay. Do you have those at hand, or do you want 

to submit those? 

Either way. I have them here. 

Go ahead. List some of those out. 

Mr. HAND. The coal was 2.6 cents. The combined using, combined 

cycle natural gas, this was at a lower gas cost than today, but during 2012 was 2.5 cents. This—the simple cycle was 3.2 cents for 

natural gas. Combustion turbine, 3 cents. We did purchase some 

hydro, which had an all-in cost of about 1 cent. Our purchased 

wind, which was about 12—almost 13 percent, was an average cost 

of 3.9 cents, which we would consider that all as a fuel cost. 

Then we had other purchased power, which we—in the 2.7 cent 

range for the fuel portion of the kilowatt hour. 

Mr. LANKFORD. Okay. And a typical kilowatt hour purchase is 

how much, so the actual charge to the consumer? The charge to the 

consumer is how much for a kilowatt hour? 

Mr. HAND. For just the fuel component? 

Mr. LANKFORD. Just the total cost to them. They are paying how 

much? 

Mr. HAND. Just to the—for the generation of the kilowatt hour, 

not including distribution cost—— 

Mr. LANKFORD. I’m talking about how much the consumer pays. 

Mr. HAND. How much the consumer pays? 

Mr. LANKFORD. Yes, sir. 

Mr. HAND. A residential consumer on our system with an all-in 

cost would be around 9–1/2 cents. 

Mr. LANKFORD. Okay. 

Mr. HAND. I don’t have that number exactly in front of me. 

Mr. LANKFORD. All right. Thank you for that. 

Mr. Simmons, you made several—several comments about gasoline itself and about increasing supply on Federal lands. You also 

referenced the President during his State of the Union made a very 

strong comment about increasing production on Federal lands and 

decreasing the regulatory environment. You made a comparison between State and Federal regulations. 

What do you experience right now or are seeing in the reduction 

of oil and natural gas as far as the—the pressure towards Federal 

regulations versus State primacy and State regulations? 

Mr. SIMMONS. Well, especially in the area of hydraulic fracturing, 

the Federal—hydraulic fracturing is regulated by the States because it deals with groundwater. It always has been regulated by 

the States. And the Federal Government, now the Bureau of Land 

Management wants to regulate it on Federal lands. That will definitely increase costs. And according to one study, it would cost over 

$250,000 per well for the Federal Government to do that. 

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ment, and that’s one of the reasons that we’re seeing dramatic increases of oil and natural gas production. 

Mr. LANKFORD. Okay. Thank you. 

Ms. Speier. 

Ms. SPEIER. Thank you, Mr. Chairman. And thank you all for 

your testimony. 

I’m trying to find some consensus here. And we’re talking about 

the high costs of energy for families and employers. And three of 

you, Ms. Carmody, Mr. Trisko, and Mr. Weiss, all spoke about the 

LIHEAP program. So let’s see if we can get some consensus here 

on LIHEAP. 

It was a $5.1 billion program. It has since been cut. I don’t know 

to what extent it’s been cut. If we’re really trying to help the lowincome people in this country not spend 20 percent of their income 

on energy, LIHEAP is part of the solution; is it not? 

Ms. CARMODY. Yes. Ranking Member Speier, from our point of 

view, NASUCA has consistently for any number of years supported 

full funding of LIHEAP. In my testimony I did mention the $5.1 

billion cost figure and the fact that it’s down to, I believe, around 

3.4 billion at this time. This is not sufficient from our purposes or 

for our low-income consumers to provide adequate funding. 

One of the things that we have noted in the State of Maryland, 

certainly over the past 4 to 5 years, are a few things. One, of 

course, is the significant increase in the number of applicants for 

energy assistance; that is, that they meet the income guidelines. 

Because of reductions in State funding and private donations, there 

are actually lower dollars available to supplement LIHEAP from 

the State level. So what this means is that the average benefit that 

our customers in Maryland are getting between LIHEAP and State 

contributions is running around what it was in 2002 and far less 

than it was in 2008. So we do support full funding, and NASUCA’s 

on record as doing that. 

Ms. SPEIER. Thank you. 

Mr. Trisko? 

Mr. TRISKO. Thank you, Ranking Member Speier. 

My paper submitted for the record notes that LIHEAP’s current funding level, about 3.4- or $3.5 billion, is equivalent to 6 percent 

of the total residential energy bills that I’ve calculated for the year 

2013 for the income category of gross income $30,000 or less. 

Ms. SPEIER. So only 6 percent of those making $30,000 or less 

actually access it. 

Mr. TRISKO. Only 16 percent. 

Ms. SPEIER. Sixteen. 

Mr. TRISKO. Pardon me. The 6 percent number is $3–1⁄2 dollars 

represents 6 percent of the total energy bills, residential energy 

bills, for households with gross incomes of $30,000 or less. In other 

words, it only scratches the surface. But also bear in mind that the 

participation rate in the LIHEAP program is only 16 percent; that 

is, only 16 percent of those households that qualify for LIHEAP assistance actually apply for and receive it. So there’s a serious lack 

of participation in the program in addition to an apparent lack of 

adequate funding. And it’s my understanding generally that all of 

the major energy associations support adequate funding—— 

Ms. SPEIER. All right. 

93 

Mr. TRISKO. —for LIHEAP. 

Ms. SPEIER. Thank you. 

Mr. Weiss, do you have anything to add to that? Or I’m going to 

ask you another question. 

Mr. WEISS. Just very briefly that I would observe that the $1.6 billion funding cut for LIHEAP is less than the $2.4 billion a year 

that the Big Five oil companies received in special tax breaks, according to the Congress’ Joint Committee on Taxation. 

Ms. SPEIER. Okay. Thank you for that comparison. 

Let me ask a question of all of you: How many of you believe in 

climate change? Let’s just go down the line. Mr. Hand? 

Mr. HAND. Yeah. 

Ms. SPEIER. It’s not a trick question, yes or no. 

Mr. HAND. To say that I don’t believe that climate ever changes 

would be to deny history. I believe history as far as far as full climate change. 

Do I—am I convinced that man is the—— 

Ms. SPEIER. All right. Thank you. You’re not certain man is. 

I’m running out of time. I just want to make sure everyone gets 

the question answered, and then I have a question for Mr. Weiss. 

And I don’t think I’m going to be able to ask it. 

Go ahead. 

Ms. CARMODY. Yes. I would just note that in 2007, a NASUCA 

resolution did indicate that there was a growing scientific consensus on the need to reduce emissions of greenhouse gases, and 

did cite a number of reports and studies on climate change. And 

I will decline to offer my personal views since I’m here on behalf 

of—— 

Ms. SPEIER. All right. Thank you. 

Mr. Trisko. 

Mr. TRISKO. Ranking Member Speier, I am in an even more difficult position. And I would speak on my own behalf. I have attended for the past 20 years every United Nations International 

Framework Convention on Climate Change meeting, and it is 

abundantly clear that unilateral actions by the United States on 

CO2 reductions would have no meaningful 

impact on future concentrations of global CO2. Further, any actions—— 

Ms. SPEIER. All right, Mr. Trisko, my time has expired. 

Mr. Weiss. 

Mr. WEISS. Yes. There is an overwhelming scientific consensus 

that climate change is real, it’s here, and it is caused by human 

activity burning fossil fuels. 

Mr. LANKFORD. Mr. Simmons. 

Mr. SIMMONS. Yes, I believe in climate change. 

Ms. SPEIER. Mr. Chairman, I regret that I’m going to have to 

leave temporarily to participate in a press conference that is bipartisan in nature. So I will return as soon as possible. 

Mr. LANKFORD. Thank you. 

Mr. Walberg. 

Mr. WALBERG. Thank you, Mr. Chairman. And thank you to the 

panel for being here. 

Mr. Trisko, appreciate the fact that you’re a man of numbers and 

statistics. 

94 

The President stated in his State of the Union Address we 

produce more natural gas than ever before; nearly everyone’s energy bill is lower because of it. 

Do you believe that nearly everyone’s energy bill is lower once 

EPA’s regulations go into effect? 

Mr. TRISKO. Congressman, I believe that one of the most telling 

statistics noted in my testimony, in the submitted testimony, is 

that EPA’s current MATS rule, the Mercury and Air Toxic Standard rule that Mr. Weiss referred to, has an estimated annualized 

cost by EPA of some $9.6 billion annually. And that compares to 

EPA’s estimate of the annual costs of all prior Clean Air Act regulations on the utility sector of $6.6 billion. 

Mr. WALBERG. All prior. 

Mr. TRISKO. All prior. So this one regulation alone exceeds the 

costs of all prior Clean Air Act regulations. 

And we are basically now confronting a chain of future regulations, including potential regulations on water intake, on coal ash, 

and whatever is determined with respect to existing source emissions of CO2, that could potentially dwarf the cost of that 9.6 billion. 

So looking forward, the expectation in terms of impacts on electric bills is for increases both in current and real dollars. 

Mr. WALBERG. How much—— 

Mr. WEISS. Mr. Chairman. 

Mr. WALBERG. Let me continue on here. 

How much can Americans expect their electricity bills to increase 

in the next couple of years, based upon those figures? 

Mr. TRISKO. I believe that it’s—the EIA publishes a series of projections in their long-term energy outlook in which they take into 

account the EPA regulations. I don’t know the average annual rate 

of increase offhand. Mr. Weiss does. 

Mr. WEISS. May I answer? 

Mr. Chairman—sorry, Mr. Walberg, the Energy Information Administration projects that electricity costs will remain essentially 

flat over the coming 10 years. 

Mr. WALBERG. Well, it will be interesting to see it essentially 

flat. I’d be delighted, but hearing the figures about this eclipses all 

previous regulations, I’d find that hard to believe. But thank you. 

Ms. Carmody, can you please go into some detail on NASUCA’s 

June 2012 resolution on EPA regulations and also what prompted 

it? 

Ms. CARMODY. Yes. Thank you, Mr. Walberg. 

As I mentioned previously, we’ve got members from over 40 

States in the United States, and as you can imagine, they come 

from every region of the country, you know, certainly, the Midwest 

the Northeast, West, Southeast. And the individual members and 

States have different perspectives. The resolution that came out in 

June of 2002, and this is the one that recommended, you know, or 

urged the EPA to certainly factor in cost impacts in terms of looking at compliance deadlines, this was a result of a—lots of discussion and an attempt to reach consensus of agencies with different 

perspectives on a broad point of view to protect consumers basically 

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ment on the EPA regulations themselves because of varying points 

of view. 

But we all recognized as individual State agencies that deadlines 

or compliance deadlines, if they are too rapid, can impose certain 

rate shocks and abrupt cost impacts on consumers, particularly in 

certain States. And that was the impetus for passing the resolution 

to urge that these factors be taken into account as we’re moving 

forward with environmental regulations. 

Mr. WALBERG. Thank you. 

Mr. Hand, I notice in your testimony you have troubles with the 

lesser prairie chicken and the costs that could come from that. I’ve 

got troubles in my district with the Eastern fox snake and siting 

of the new—new proposed Fermi nuclear plant. 

But let’s move over to Utility MACT. Will regulations like Utility 

MACT increase the costs of electricity that you provide to your customers, and what implications does that specifically have in rural 

areas? 

Mr. HAND. Yes, that will, because it will require additional capital investments that have to be paid for. And one of the things I’d 

address about—I’m glad you asked me about rural areas. We serve 

our roughly 90 percent resident—farm residential with about 40 

percent of that group retired. Many are homes that are not the 

most energy efficient. And approximately half of the homes being 

built in our area today are mobile home manufactured housing that 

do not have the same potential to be energy efficient. We’re very 

concerned about the people that are there today and the ones that 

are coming, because many of these homes are there because that’s 

all the people could afford to put there, and their electric bills we 

see many times in the hot months and cold months far exceed their 

house payments. 

Mr. WALBERG. Thank you. Thank you, Mr. Chairman. I mean, 

these, as recognized in rural America, are lower-income and middle-class families that we are talking about here and the impact of 

these regulatory costs. 

Mr. LANKFORD. Ms. Carmody, before we move on, I want to be 

able to check one thing in your reference. You reference a 2002 report on that. Did you mean the 2012? 

Ms. CARMODY. If I said 2002—I think I have to recall what—we 

do have a 2012 resolution. And that was the one that I just discussed with the compliance deadlines. If I said 2002, my apologies. 

I need to correct it to 2012. 

Mr. LANKFORD. That is great. A decade in Federal time is no 

time at all. I just wanted to make sure your record was clear on 

that. Thank you. 

I want to be able to recognize for 5 minutes a new member of 

the panel Mr. Horsford. You are welcome to be able to do questioning for 5 minutes. Thanks for being here. 

Mr. HORSFORD. Thank you very much, Mr. Chairman. It is my 

pleasure. And this is a very important discussion today, as it affects all of us as consumers, both residential as well as businesses. 

And I would like to ask each of you quickly to just touch on energy production from a renewable energy standpoint. I am from 

Nevada. Over 80 percent of our land is controlled by BLM. And we 

have an abundance of wind, solar, geothermal resources, and can 

96 

be a net exporter of energy. And I am of the view that we need all 

of our energy resources to be considered on the table in a fair and 

equitable manner. So I would like to ask you to just touch on briefly renewable energy production as part of the equation here. 

Mr. HAND. I would be glad to. And I would just say in Oklahoma, 

the Western Farmers, our power supplier, we were the first utility 

in Oklahoma to embrace the large wind farm, sign the first contract with them, and bring it into our system. We have continually 

added to that at every opportunity. 

We have had some concern over how much we can bring in just 

to manage the system and keep it stable, but it has been more than 

we thought. And we consider it, as I said earlier, a hedge. 

Again, now, there are costs, such as the transmission to move it, 

that kind of gets blended in and don’t get charged to that. But we 

believe that is part of coming forward with a balanced energy program. 

The mention of the lesser prairie chicken not only affects us and 

the ability to build transmission lines to move this power, it is 

going to affect the ability to build the wind generators where they 

are needed. 

Mr. HORSFORD. Thank you. 

Ms. CARMODY. Thank you. I am here, and I stated earlier before 

you entered the room, in my official capacity on behalf of the National Association of State Utility Consumer Advocates. So I did 

want to make a distinction between that, that I am speaking on 

the association’s behalf. 

In the resolutions that I referred to in my written testimony and 

orally today, those resolutions do contain support for the inclusion 

of different and diverse energy resources in long-term planning, 

generation planning. And in those resolutions we do identify renewable resources as part of that diverse portfolio. 

Mr. HORSFORD. Okay. Let me just break in so that I don’t take 

up all the time. 

On the question, though, of the Federal land, Mr. Simmons, I 

know you touched on it, Mr. Weiss, I don’t know if you have any 

additional comments. So the focus was more on natural gas. But 

what about Federal land use for renewable energy development? 

Again, I have one county in my rural part of my district where over 

90 percent of that county is controlled by the BLM, and, therefore, 

they cannot enter into local agreements for development for renewable energy without a lot of BLM involvement. So what’s your perspective on that, Mr. Weiss? 

Mr. WEISS. Well, first, under the current administration, they 

met a goal of siting 10,000 megawatts of renewable electricity on 

Federal lands. Second, there is vast potential on Federal lands for 

additional renewable electricity. We actually did an analysis on it, 

and I would be happy to submit it for the record. And third is that 

one of the things that the current administration did is they sped 

up the paperwork process for getting approval of wind or solar facilities on Federal lands. 

Mr. SIMMONS. If I may, obviously renewables have positive and 

negatives, as all sorts of energies. With renewables it is frequently 

the cost. And in the case of the Federal lands, it is so difficult to 

do any type of activity, any type of energy production on Federal 

97 

lands, that even when it comes to solar or wind that the administration would like to expedite on Federal lands, it is still very difficult and time consuming. 

One thing that would—I think would definitely be a positive for 

all sorts of energy is to streamline the process for all types of energy, and that way, you know, we can be able to use the Federal 

lands in a more multiuse method. 

Mr. HORSFORD. Mr. Chairman, I agree with the need for us to 

look at streamlining the process. I know the Interior, under the 

leadership of Secretary Salazar, has done yeoman’s work and made 

tremendous progress, but there is much more that can be done. 

And on behalf of a State that is controlled by more than 80 percent 

by the BLM, we need to have this discussion in ways that really 

produce some solutions for local governments and States that want 

to have more control over the development of our resources. 

Mr. LANKFORD. I would completely agree on that. People asked 

me about the State of the Union Address and where I found common ground with the President, and he listed and articulated very 

clearly he wanted to be able to speed up the regulatory process and 

the speed of that for Federal lands for both oil and gas and renewables. And we would welcome that and work in any way we can 

with the administration for that. So thank you for your testimony. 

Mr. DesJarlais. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

Mr. Simmons, oil refineries on the east coast and the Gulf of 

Mexico have had difficulties with expeditiously getting oil to their 

facilities. What would more pipelines like the Keystone XL mean 

for gasoline prices? 

Mr. SIMMONS. Well, the problem with the refineries on the east 

coast is that for years they have been dependent on Brent crude, 

oil that is transported from—essentially from the North Sea, and 

traditionally that has been cheaper oil. And for the last few years, 

it has been much more expensive. In fact, for a while a couple 

years ago, it was—the refined products were actually cheaper than 

the cost of the oil itself. 

What more pipelines to those facilities means is that you can 

move the cheap, low-cost oil that’s being produced in the Bakken 

and in other parts of the country, or all the way from—all the way 

from the oil sands in Canada to those refineries, giving them access 

to low-cost energy—low-cost oil supplies. And here is the price difference. Brent crude is currently $110 a barrel. The cost per barrel 

for the oil coming out of the oil sands is about $50 to $55 a barrel. 

So when you can buy a barrel of oil for $55, or, you know, it will 

obviously cost more after pipelining costs, but you are still able to 

make money compared with buying from Brent Sea crude. And 

that is why the pipelines matter, is to move it to where there is 

spare refining capacity. 

Mr. DESJARLAIS. Do you think it is realistic, then, that we can 

build more reliable and efficient transmission systems even to the 

east coast? Obviously, the Keystone would be an asset, I think you 

would agree. Can we build pipelines to the east coast as well? 

Mr. SIMMONS. Oh, sure. Sure. What matters is reliable supply, 

that it makes sense to make those multimillion-dollar and multibillion-dollar investments. 

98 

Mr. DESJARLAIS. Thank you. 

Mr. Hand, many people say that since the United States now has 

a lot of natural gas that we do not need to use coal anymore. Is 

this accurate? 

Mr. HAND. Me working in an area where we have to deal with 

the price of electricity every day, and have been doing that for a 

long time, I remember when the price of natural gas after Katrina 

went to nearly $15, and the price of electricity followed it very rapidly. I have seen many changes with favoring oil. I believe that it 

is important that we have a diversified supply of energy. But we 

know that we have an abundant amount of coal in the ground that 

is available, and I don’t believe we should ever ignore that valuable 

resource. 

Mr. DESJARLAIS. Now, you serve rural and underserved areas. If 

we were to limit the co-op from burning coal, how will the underserved rural areas receive their electricity? 

Mr. HAND. When you say limit, that concerns me greatly, because as I regularly read even in Oklahoma, we have had one 

major utility negotiate a settlement, I don’t know how far it has 

gone, with the EPA to shut down a coal plant. I continue to see 

that across the country, where more coal plants are being shut 

down. Today we don’t have the capacity to be able to supply all the 

needs with those plants, and you don’t bring them online tomorrow. 

Mr. DESJARLAIS. So regulations are seriously preventing or limiting your ability now, and that would get much worse. In other 

words, it’s the regulations right now that are a major hindrance for 

you and your ability to provide services? 

Mr. HAND. Today we are only beginning to see the costs of some 

of the control technologies that we are having to put in. The CO2 

issue and how strict it is on existing plants could be a matter of 

rationing in our area. 

Mr. DESJARLAIS. Are there even—I guess that would bring me to 

my next question. Are there any other sources of electricity even 

available in some of your areas if you didn’t have coal? 

Mr. HAND. Well, they would rapid—I don’t believe there is that 

much capacity, especially with today’s transmission system, to be 

able to move it in. Today much money is being spent in the area 

of transmission to better move power, but today we have become 

so dependent—and not so much more than other States, I don’t 

mean to claim that—as the part of our capacity that comes from 

coal-fired generation. It would be an extreme hardship. 

Mr. DESJARLAIS. Okay. Thank you, Mr. Chairman. I am going to 

try to get just a few bonus points, so I yield back. 

Mr. LANKFORD. Thank you, Mr. DesJarlais. 

Ms. Norton. 

Ms. NORTON. Thank you, Mr. Chairman. 

In this very room this morning the GAO reported on its—or testified here on its, quote, ‘‘annual high risk report.’’ And, you know, 

normally we are looking at things like Medicaid or Medicare, and, 

of course, all of those things are always there. Number one on its 

list was climate change. So here we had a government agency 

known for its objectivity which not only spoke about the increasing 

evidence of climate change, but went further and spoke of what I 

can only call shocking exposure of the Federal Government, leave 

99 

aside all the rest of us, because of the amount of land the government owns, because the government, of course, must give assistance all over the country, and because of the unpredictability of 

what had been rare, which has now become routine, extreme climate episodes. 

Now, I noticed on page 3 of your testimony, Mr. Weiss, you speak 

about higher gasoline prices due to Middle East unrest and speculation, and then you go into some of the unrest in the Middle East. 

I am interested in the speculation. It’s going to be very hard to 

come to grips with the unpredictability of climate change and what 

the Federal Government ends up having to do. But analysts for 

some time have told us that notwithstanding what’s happened in 

the Middle East in the recent year or so, that speculation accounts 

for as much as a third, or almost a third, of the price of gasoline. 

Is there anything that a free-market government can do in light of 

that kind of inflation that is absolutely useless and hard to justify? 

Mr. WEISS. Thank you, Ms. Norton. 

A couple years ago the head of Exxon Mobil testified to the Senate Finance Committee that the price of speculation, which are 

people investing in oil futures who do not plan to take physical possession of the oil, so they are different than end users such as an 

airline who actually has to buy the physical oil, that speculation 

was responsible for anywhere from $20 to $40 a barrel of the price 

of oil, and at that time the price of oil was about $100 a barrel. 

In fact, last year McClatchy did an analysis that found that twothirds of the trades in the oil futures back in the winter of 2012, 

when we were having unrest in the Middle East and Libya, was 

due to speculators who were making two-thirds of the trade, end 

users were one-third of the trade. 

Fortunately, the Commodity Futures Trading Commission has 

new authority under the Dodd-Frank law to be able to limit the 

ability of speculators to drive up prices based on the fear that the 

price is going to keep rising. They have not really been put into 

place yet, but they are being implemented now by the CFTC. So 

hopefully that will limit the ability somewhat of speculators to 

drive up the price, which makes the end users like the airlines and 

other industries have to pay more for their oil. 

Ms. NORTON. Not to mention you and me. 

Since there is much we can’t control, the increasing evidence of 

gas prices going up when we least expect it has, of course, led to 

much concern about what you’ve just described. I can only hope 

that—and I don’t know how they do it—but however they control 

this speculation will help us, it seems to me, at least in the long 

run on that portion of the issues with gas prices that comes from 

inflated speculation. 

Yes, Mr. Weiss? 

Mr. WEISS. One initiative the President announced on Tuesday 

night was the Energy Security Trust, which would be funded by oil 

and gas royalties paid to the Federal Government for oil owned by 

all Americans that they then take off of our lands. And that money 

would be invested in alternatives to oil, like electric vehicles and 

recharging stations and natural gas trucks. 

And one of the ways to help protect people from gasoline and oil 

price volatility is to give them other options of other fuels, whether 

100 

it’s electricity, natural gas, or investment in public transit. That 

will make people less subject to the volatility that comes from gasoline. 

Ms. NORTON. Thank you very much, Mr. Weiss. 

Mr. LANKFORD. Thank you. 

Mr. Farenthold. 

Mr. FARENTHOLD. Thank you. 

And I would like to actually follow up on that for a second with 

Mr. Weiss. We talk about the increased income that is potential to 

the Federal Government for the exploitation of the oil and gas and 

other natural resources under public land, but we see time and 

time again the regulatory burdens make it next to impossible to do 

that. 

Now, ignoring for a fact that we spent that money two or three 

times already with the programs the President was outlining—I 

think there has been talk about spending that money to repair our 

aging transportation infrastructure, be it fixing roads, bridges, or, 

you know, even going so far as to do high-speed rail—what is— 

what do you see as the holdup here, and how do we fix it? I will 

let Mr. Weiss and Mr. Simmons both take about 30 seconds at that 

one, if you please. 

Mr. WEISS. Thank you, sir. 

Well, in fact, as I mentioned earlier, oil production on Federal 

lands under the first 3 years of Obama were about 13 percent higher than oil production on Federal lands and waters under the last 

3 years of President Bush. 

Mr. FARENTHOLD. Compared to a substantially higher number on 

private land. 

Mr. WEISS. Pardon? 

Mr. FARENTHOLD. A substantially higher increase on private 

land. 

Mr. WEISS. Understood. But it’s still increasing on public land as 

well. 

Second, just lack week the Department of Interior put up for auction another 37 million acres of leases. 

Mr. FARENTHOLD. I am from Texas, I understand the oil and gas 

industry. We have a lot of—it’s no problem getting the lease; it is 

getting the permit to drill that’s the problem and the permit to do 

the operations. You have operators whose leases—have to beg for 

extensions of their leases because they can’t get the permits. 

Mr. WEISS. Can I add one quick thing? 

Mr. FARENTHOLD. Quickly. 

Mr. WEISS. One way to speed that process is to provide more resources to the people who are to review the permits over at the Department of Interior and make sure they have the bodies they need 

to do the work. 

Mr. FARENTHOLD. Or additionally get rid of some of the regulations. 

Mr. Simmons. 

Mr. SIMMONS. Well, yes. Instead of—follow much more of the 

States model. The model from the Texas Railroad Commission, for 

example, is a much better model about if we’re actually serious 

about increasing oil production and natural gas production on Federal lands. 

101 

And, you know, Mr. Weiss mentioned that oil production in the 

last 3 years of the Obama administration were higher than the 

Bush administration, and the question is why? Well, it has to do— 

those were all—80 percent of the production, of the oil production, 

on Federal lands comes from offshore. Almost all of that is deepwater offshore that where a lease was issued during the Clinton 

administration and the Bush administration, unfortunately. And 

sadly, that is—I mean, that’s why we had an increase, not because 

of unfortunately—— 

Mr. FARENTHOLD. And I don’t mean to rush you and cut you 

short. I have a lot of questions, because this is an issue I’m passionate amount. 

I’d like to go to Mr. Hand for a second. I was intrigued, as I was 

preparing for your questioning, reading your testimony. You talk 

about how as you grew up, your energy was a wood-burning stove, 

and how despite the fact you work for an electric company, your 

mom still doesn’t like to turn on the air conditioning because the 

electricity is so expensive. 

And this is something that I see is a real problem is we’ve gotten 

the low-hanging fruit on people lowering their energy costs. I 

mean, we’ve been doing it since the Carter administration. Take 

gasoline, for example. It’s almost doubled in price since President 

Obama. There’s not a lot of ways you can cut your gasoline consumption. You cut out your unnecessary trips, but there are very 

few unnecessary trips now. People don’t have the time or the 

money to go on vacation. You go to work, you go to school, you go 

to the doctor’s office. There’s no real way to cut it. Really it’s just 

turning off the air conditioning, getting very uncomfortable. 

So I guess my question is what are we missing for how do people 

lower their energy costs through what they can do? Or do we just 

need to force the price down through, you know, more production 

and lower cost? 

Mr. HAND. One of the things that—a number I heard earlier, 

which I’m sure is right, which I had some of this in my testimony, 

I had to dig it out, but that only 16 percent of the eligible customers were availing themselves of the LIHEAP program. 

Mr. FARENTHOLD. So existing programs. There are some ways 

to—— 

Mr. HAND. No, I am not going that direction. I’m saying we still 

have a lot of people who will themselves still don’t just automatically sign up. Now, some people get pushed into it, and it becomes 

a way of life for them. But we still have the majority who are within that 84 percent who want to take care of themselves, and they 

do it by reducing their use. 

Mr. FARENTHOLD. I’m sorry, I have less than a minute. I want 

to get one more question in to you, and that has to do with wind. 

You indicated that your cost of purchasing wind is in line with the 

fuel costs that you use for gas and other. But isn’t that held substantially lower by the production tax credit, and without that tax 

credit, wind would not be competitive just on a free-market basis? 

Mr. HAND. That is exactly right. I think it is 2.2 cents that comes 

into—— 

Mr. FARENTHOLD. So almost double the price of the wind energy. 

102 

Mr. HAND. And another point of the cost of wind, and, again, I 

am not—wind is good for—wind production is good for Oklahoma. 

Mr. FARENTHOLD. I’ve got a ton of wind farms in the district I 

represent. 

Mr. HAND. But that cost doesn’t have assigned the additional 

transmission costs that are being imposed to bring that wind into 

the mix. 

Mr. FARENTHOLD. I don’t want to go over my time. I appreciate 

your answering my questions, and thank you very much. 

Mr. LANKFORD. Thank you. 

And I am going to yield to Mr. Massie in just a moment, but Mr. 

Hand brings up a point there about 16 percent of the people that 

are eligible for LIHEAP don’t use it. And that has come up several 

places. And that’s because people in Oklahoma are like many 

places in the country, they don’t want to take Federal assistance 

when they don’t have to. They would rather work hard, save, be 

efficient than use Federal assistance because they want to earn it 

on their own. It’s still a unique American characteristic, and is very 

much so in Oklahoma as well. 

Mr. Massie. 

Mr. MASSIE. This question is for Mr. Hand. I am from Kentucky, 

and I was recently informed by a CEO of a power company in Kentucky that they built a state-of-the-art clean-coal facility, within 

the past 2 years it’s come online; but that currently, even though 

this thing was eligible for tax credits 2 years ago, it would be illegal to build today. But it was so state-of-the-art, it qualified for 

these tax credits. 

Is it true that the New Source Performance Standards effectively 

keep us from building another coal plant today? And if that’s not 

true, what is the technology that exists, if any of the other members are aware of it? And what would that add to the cost per kilowatt hour? Mr. Hand first. 

Mr. HAND. I don’t know that I can fully answer your question. 

About 3 years or 4, in that time frame, but in the early 2000s, 

there were three new coal plants proposed in Oklahoma. None of 

them have been built. And they were canceled before the New 

Source Review. I assume that’s talking about the 50 percent reduction in CO2. I’m not aware of any technology that does that today. 

I don’t believe the sequestration is even greatly accepted as a possibility. 

Mr. MASSIE. Any of the other Members like to comment? 

Witnesses? 

Thank you. 

Mr. TRISKO. Congressman Massie, yes, happy to respond. The 

proposed EPA greenhouse gas New Source Performance Standard 

applicable to coal and natural gas combined cycle plants is based 

on an emission rate limit of 1,000 pounds of CO2 per megawatt 

hour. That is a rate that can be met by natural gas combined cycle 

plants, but not by coal plants without the use of carbon capture 

and storage technology. That technology has not been commercially 

demonstrated in this country, according to the interagency task 

force report on CCS technology. 

Now, with reference to the incremental costs of CCS, EPA’s estimate in this rulemaking is that the application of CCS technology 

103 

to a new coal plant would increase the cost of power produced by 

the plant by 80 percent. I think it is, therefore, on its face clear 

that such a plant could not be commercially viable in today’s market; in other words, could not be financed, could not be permitted, 

could not be operated. 

Mr. MASSIE. Yes, Mr. Weiss. 

Mr. WEISS. Thank you, Mr. Massie. 

I would just observe that after the Senate failed to pass a comprehensive climate energy legislation in 2010, which included that 

bill as well as the one that passed the House, the American Clean 

Energy and Security Act, both included significant subsidies to help 

coal plants build the very first commercial-scale carbon capture and 

storage technology. Because, as with any technology, it is very expensive when you first start it, so let’s get some experience. Copious subsidies, billions of dollars. But after that bill failed, some of 

the larger utilities, for example, I believe, Southern Company, had 

pilot carbon capture and storage projects going at power plants, 

and they shut them down because they knew they weren’t going to 

have to do any cleanup. 

So what you would need to do to be able to address this in the 

way that you just described is to create a system that requires 

cleanup, but also provides revenue in the way that the American 

Clean Energy and Security Act does to help them build the first 

CCS facilities. 

Mr. MASSIE. So whether it was—the burden was placed on the 

consumer or the taxpayer, you’re saying it would cost billions of 

dollars to develop this technology. 

Mr. WEISS. Yes. But there is also, as we were talking about earlier, substantial economic costs for leaving climate pollution unchecked: extreme weather, health, smog, tropical diseases. Those 

also have real costs for our economy. 

Mr. MASSIE. Thank you very much. I yield back my time, Mr. 

Chairman. 

Mr. LANKFORD. Thank you. 

Let me do a quick round of questions on a couple things, because 

I’m trying to sum up some of the things that we’ve dealt with 

today. 

There seems to be two different perspectives on how do we get 

to the cost of energy to the consumer and the affordability of that. 

One seems to be trying to find a way to increase affordability by 

continuing to increase subsidies for some so that those who can’t 

afford it continue to get Federal subsidies to be able to offset the 

rising costs. The other one is to try to determine why does it cost 

so much, and why are the costs going up, and to deal with that for 

everyone. 

Now, those divergent, different opinions that say we continue to 

allow costs to rise on everyone and then just subsidize more heavily 

a smaller amount, I think it would make more sense to try to find 

what can we do to solve the problem of rising energy costs and be 

able to determine how to fix that for everyone. Does that make 

sense? The issues that we deal with on it are how do we get to 

those things? And I understand there is a diverse perspective of 

both infrastructure, of trying to get fuel to market, of trying to 

make sure it’s clean and efficient, trying to deal with health issues 

104 

that we have as a Nation. I get all that. But I think our best course 

of action would be to say, how do we make this more affordable for 

everyone? 

And I think it goes back to something Mr. Hand mentioned an 

hour ago, and that is the diversification of fuel. When the cost of 

one goes up, you supplement it with another one. And when the 

other one goes down in cost, you begin to offset that. If we ever 

push to getting to one type of fuel, or a couple types of fuel, we are 

in trouble, I think, as a Nation. So a diverse fuel package seems 

to be essential in this process, and trying to find that correct formula on that. 

There were a couple things that came out as well that I heard. 

One was dealing with the last 3 or 4 years of oil and gas production. 

Now, Mr. Simmons, you had mentioned as well the permitting 

issue. And I think we can’t leave that unchecked. A typical permit 

takes about how long on Federal lands to acquire that permit? 

Mr. SIMMONS. I don’t know the total time for the permit. It is not 

too long for the first permit for the lease, but then you have to do 

a NEPA analysis. 

Mr. LANKFORD. Right. I understand. But before you start, 

though, when you actually poke a hole in the ground and get going, 

how long does that take? 

Mr. SIMMONS. It’s years. But I would have to get back to you on 

that. 

Mr. LANKFORD. So are we talking 4, 5, 6, 7 years? 

Mr. SIMMONS. It could be. 

Mr. LANKFORD. Mr. Weiss, how long do you think it is? 

Mr. WEISS. I believe, and I know I’m under oath so I’m saying 

I believe, that the permit time has been collapsed dramatically 

under the current administration down to about 150 days. It takes 

about 5 to 7 years from the time an acre offshore is leased. 

Mr. LANKFORD. What about onshore? 

Mr. WEISS. Much less. I don’t know the time. But offshore takes 

5 to 7 years because these are very complicated—— 

Mr. LANKFORD. Right. I understand. Those are complicated and 

became more complicated when BP made some errors that they 

have now admitted to and complicated it even more. Onshore it is 

several years in the process. So it’s interesting to note that the 

Federal land increase of oil production in the first 3 years of the 

Obama administration is not due to permits that were started during the Obama administration. Those are permits that were started 

in a previous administration and then now we’re facing production. 

The better question long term will be how much production of oil 

and gas is there on Federal lands in the last 3 years of the Obama 

administration—that will be the most telling part of the administration’s opinion about it— and in the first 3 years of the next administration, whoever they may be. 

Mr. Weiss as well, oil and gas production in the United States, 

up or down in the last 5 years? 

Mr. WEISS. It is up. It the highest it has been since, I believe, 

1996. 

Mr. LANKFORD. CO2 emissions up or down in the United States 

in the last 5 years? 

105 

Mr. WEISS. CO2 emissions are down for three reasons. One is the 

new fuel economy standards means that people are emitting less 

carbon from their cars. Second, the switch from coal to natural gas 

for electricity generation. 

Mr. LANKFORD. Replacing that because of cost. It’s cheaper now. 

Mr. WEISS. Yes, because of cost. 

And third is increased energy efficiency. Demand for electricity 

is basically flat even though our economy is growing steadily. 

Mr. LANKFORD. Terrific. Has our Nation met the Kyoto Protocol? 

Though we didn’t sign off on it, have we met the standards of the 

Kyoto Protocol? 

Mr. WEISS. I couldn’t tell you that, but we are halfway to meeting the goal that President Obama articulated in 2009 of a 17 percent CO2 reduction below 2005 levels by 2020. We’re at about a 9 

percent reduction right now. 

Mr. LANKFORD. The understanding of this is there is a sense of 

we have all these increased storms, we have all these increased 

things, we are meeting the Kyoto Protocol. We’ve dramatically reduced carbon emissions not because of the mandates in cap-andtrade, but because of price. Natural gas has come online. It has become easy to be able to get access to, or easier. I say it’s been easy; 

I’m not the one actually drilling a horizontal well and trying to hit 

something as big as a suitcase 4 miles away with a drill bit. So I 

can say easy for me on that. But the challenges that we face as a 

Nation are being solved by the technology, not by a government 

mandate as much. 

Mr. Weiss? 

Mr. WEISS. Mr. Chairman, the fuel economy standards were due 

to a mandate worked out with the auto companies, but it was possible under a law passed under President George W. Bush, the Energy Independence and Security Act, which did mandate an increase in fuel economy standards. 

Mr. LANKFORD. Sure. No, I understand. I was talking specifically 

about coal versus natural gas. Yeah. That’s correct. 

And then the issue of speculation that you mentioned earlier. 

You mentioned the cost of speculation, which I agree, there is speculation that is going on that becomes a serious issue. If we are 

North American energy independent, and we are not speculating 

on what happens in the Middle East, and we’re dealing with more 

west Texas intermediate crude than we are Brent and other prices 

on it, because what’s happening is from Canada, the United States, 

and Mexico, how does that affect speculation on the market for us? 

Mr. WEISS. Well, the State Department looked at that question 

with regards to the Keystone XL pipeline and concluded that building the pipeline would have no impact on the amount of oil that 

we consume here or on its price or the price of its products. 

Mr. LANKFORD. Not on consumption. I’m talking about—because 

the Keystone doesn’t get us to independence. The Keystone basically does the equivalent of removing our dependence on Venezuela. So the amount that would come in from Canada—— 

Mr. WEISS. Actually, even less than that. 

Mr. LANKFORD. Right. The amount that comes in from Canada, 

which Canada seems to be a pretty good trading partner since the 

whole War of 1812—— 

106 

Mr. WEISS. They are our number one—— 

Mr. LANKFORD. Yeah, since the War of 1812 was settled, we seem 

to get along pretty well with Canada since then. 

Mr. WEISS. And they were British back then, too. 

Mr. LANKFORD. I know. That’s what I’m saying. So since that 

time period, they have been a very reliable trading partner for us, 

and great relationship, much more so than Venezuela. So we have 

not only the issue of price, but we also have the issue of long-term 

relationships between us and Venezuela versus us and Canada. 

That possibility of bringing fuel in there brings us one step closer— 

let’s say 15 years from now, due to increased production, we’re able 

to achieve North American independence, where it’s Canada, Mexico, and the United States only for oil and gas. How does that affect 

price? That is not the State Department report. Mr. Trisko, you 

have a response to that I’m seeing? 

Mr. TRISKO. Mr. Chairman, I would like to add that in addition, 

moving in the direction of an all-domestic energy supply would also 

tremendously—would greatly reduce, if not eliminate, this country’s national security vulnerabilities with respect to its imports. 

And in terms of the costs associated with maintaining that defense 

structure in the Middle East and elsewhere in the world, those 

benefits alone would justify moving in the direction of a domestic 

energy supply. 

And I note that in that regard I concur totally with your opening 

remarks in this line of questioning, which suggested that an ‘‘all 

of the above’’ approach is what we need. What we do not need in 

order to effectuate this goal of a domestic self-sufficiency is a policy 

that precludes the construction of state-of-the-art coal plants, 

which represent the largest single fossil energy reserve on the 

planet. 

Mr. LANKFORD. Right. Right. 

Ms. Norton. 

Ms. NORTON. Thank you very much. 

Now, we have information that I’m going to say startled me that 

in 2011, the United States—when you speak of we could get this 

all-domestic oil supply—in 2011, the country exported more gasoline and diesel and oil-based fuels than it imported. This apparently was the first time that we were a net exporter since 1949. 

Now, oil is traded on an international market. So I don’t understand this notion that somehow we could be an island unto itself, 

and that will take care of oil prices. Mr. Weiss, perhaps you could 

speak to that. 

Mr. WEISS. Yes, you’re right. In fact, the export of refined product, diesel and gasoline predominantly, has continued to increase 

since 2011. As you know, U.S. law prohibits, for the most part, exports of crude oil, because that’s seen as a—it’s related to our energy and economic security. I would observe that, you know, one 

of the things that the chairman talked about was price volatility. 

One of the reasons why we have—we’re so tied to—we’re so 

harmed by price volatility for gasoline is because it’s basically the 

only transportation fuel that we have. We do have a diverse set of 

fuels for electricity, not for transportation. That’s why we need to 

invest a lot more in developing these alternatives to oil to use for 

transportation. 

107 

Ms. NORTON. Such as? 

Mr. WEISS. Such as electric-powered vehicles, natural gas buses 

and trucks, and, of course, public transit, which we have a great 

system here in your city. 

But it’s important to note that—Mr. Lankford, you were talking 

about government subsidies—in fact, every new and even mature 

energy technology that we have had in this country in the last 100 

years has received heavy government subsidies. For example, the 

oil and gas industry has received $80 in subsidies going back to 

1919 for every $1 that the renewables industry has received. And 

so I think it’s a smart strategic move to invest in research and development and deployment of some of these technologies that can 

get us less hooked on gasoline as a transportation fuel. 

Ms. NORTON. Yes, Mr. Simmons. 

Mr. SIMMONS. I don’t think anyone is saying that if the United 

States—if we were an island to ourselves in terms of oil production, 

if we produce all this oil domestically, that we will be 100 percent 

insulated from global oil—from global oil markets. I mean, oil, as 

has been stated, is a globally traded commodity, but what producing more oil at home does is it makes us more resilient, and it 

also reduces the global spare capacity. 

One of the problems, and this was particularly a problem during 

the Libya crisis, was that there was very little global spare capacity. If somewhere else besides Libya had stopped producing oil, 

prices would have spiked even more. By having the United States 

and other very stable countries like Canada producing more oil, it 

means that there’s much less of a risk when these, you know, geopolitical situations happen. 

Ms. NORTON. Yeah. Everybody wants us to be less dependent on 

foreign oil. So I think we can all agree on that. On the price, on 

the price, I’m not sure it would make any difference. 

Yes, Mr. Weiss? 

Mr. WEISS. Representative Norton, you’re absolutely right. As 

long as the oil price is tied to the world market, which is controlled 

by a cartel, the OPEC cartel provides 40 percent of the world’s oil, 

it is going to be hard for us to produce our way to lower prices. 

Look at where we are right now. We’re producing the most oil in 

15 years, yet gasoline prices are high. Why? Because the world oil 

price is high. The Washington Post just reported a couple days ago 

that since 2011, the world has increased 2 million barrels of oil a 

day in terms of production, half of that is from the U.S., but yet 

oil prices remain high. Why? Because there’s also been growing demand. So as long as it is a worldwide market and a worldwide 

price controlled by a cartel, it’s going to be hard to do that. 

Gasoline is a bit of a different story. It is much more of a local 

and regional price because of refining measures, the kinds of things 

that Mr. Simmons was discussing. 

Ms. NORTON. Thank you very much, Mr. Chairman. 

Mr. LANKFORD. Would the gentlelady yield? 

Ms. NORTON. I’d be glad to yield. 

Mr. LANKFORD. It’s the two of us left, so we can field whatever 

questions we would like from here. 

But it is interesting to me that oil production specifically, when 

we get into this, we’re now at a spot it wasn’t that long ago 60 perVerDate Aug 31 2005 09:43 Apr 02, 2013 Jkt 000000 PO 00000 Frm 00111 Fmt 6633 Sfmt 6633 C:\DOCS\80086.TXT APRIL
108 

cent of the oil that we were using in the United States was imported. Now 60 percent of the oil that we’re using in the United 

States is from the United States on that. And we’re pushing over 

80 percent of the oil that we’re using in the United States is from 

North America only. And so we’re only 20 percent away from being 

North American energy independent, which I think is the first step 

towards being American energy independent. 

The last forecast I saw from the energy statistics showed that 

just 32 percent—in just 10 years, 32 percent of the oil we’re expecting to be from the United States only, as far as the imports coming 

from outside the United States. So it’s a very significant jump that 

is happening right now based on the current technology and what’s 

happening. 

Mr. Weiss, I did have to smile at one of your statistics about the 

tax treatments between oil and gas and all the renewables and 

going back to 1919 to compare those. I don’t remember a lot of 

solar subsidies that were occurring in the 1920s. So I would encourage you to take that statistic and bring it a little more up to 

date on it. 

I do remember as a high school student paying attention to what 

was happening during the administrations there, and even as a 

middle school student, and seeing the solar panels that were on the 

White House at that point. I have no opposition to solar and to 

wind and every other technology, but comparing some of the subsidies that are the start-up subsidies—and I get that—for some of 

these renewables to some of the tax treatments that are normal 

business treatments for oil and gas is a little bit of a jump in between. And if you look at the top five energy companies in the 

world versus the top five technology companies in the world, the 

top five technology companies make more and have greater—like 

the 199s—greater subsidies, if you would want to call them that, 

as far as tax treatment. 

So, there is a fairness system to make sure that we keep all the 

stats and everything all clean and consistent on that. 

So, Ms. Norton, I want to close up unless you have any other 

final comment. I do appreciate the witnesses coming. I appreciate 

all the time that you spent not only getting here, but in your written statements, which were extensive. And I appreciate the research and the insight in that. And I look forward to getting a 

chance to hear if you have any other additional follow-up comments. Feel free to submit those for the record. 

Mr. LANKFORD. With that, this hearing is concluded. 

[Whereupon, at 2:45 p.m., the subcommittee was adjourned.] 

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