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66–456 2011

DRILLING FOR A SOLUTION: FINDING WAYS TO 

CURTAIL THE CRUSHING EFFECT OF HIGH 

GAS PRICES ON SMALL BUSINESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON AGRICULTURE, 

ENERGY AND TRADE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

APRIL 14, 2011 

Small Business Committee Document Number 112–011 

Available via the GPO Website: http://www.fdsys.gov 


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(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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C O N T E N T S 

Page 

OPENING STATEMENTS 

Hon. Scott Tipton ..................................................................................................... 1 

Hon. Mark Critz ....................................................................................................... 2 

WITNESSES 

Mr. Jim Ehrlich, Executive Director, Colorado Potato Administrative Committee, Monte Vista, CO ...................................................................................... 5 

Mr. Rick Richter, Operator of Richter Aviation & President of the National 

Agricultural Aviation Association, Maxwell, CA ............................................... 11 

Mr. Dick Pingel, Operator of Finally Trucking, Inc., Plover, WI ......................... 22 

Mr. Robert Weiner, Professor of International Business, Public Policy and 

Public Administration, and International Affairs, George Washington University, Washington, DC ...................................................................................... 30 

APPENDIX 

Prepared Statements: 

Mr. Jim Ehrlich, Executive Director, Colorado Potato Administrative Committee, Monte Vista, CO ...................................................................................... 8 

Mr. Rick Richter, Operator of Richter Aviation & President of the National 

Agricultural Aviation Association, Maxwell, CA ............................................... 14 

Mr. Dick Pingel, Operator of Finally Trucking, Inc., Plover, WI ......................... 24 

Mr. Robert Weiner, Professor of International Business, Public Policy and 

Public Administration, and International Affairs, George Washington University, Washington, DC ...................................................................................... 32 

Statements for the Record: 

National Association of Convenience Stores .......................................................... 48 

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HEARING ON DRILLING FOR A SOLUTION: 

FINDING WAYS TO CURTAIL THE CRUSHING 

EFFECT OF HIGH GAS PRICES ON SMALL 

BUSINESS 

THURSDAY, APRIL 14, 2011 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON

AGRICULTURE, ENERGY AND TRADE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Scott Tipton [chairman 

of the Subcommittee]. 

Present: Representatives Tipton, Fleischmann, Landry, Critz. 

Chairman TIPTON. Well, good morning everyone. I would like to 

thank you for joining us for this hearing and it will now come to 

order. 

This is our first Subcommittee hearing and the subject truly 

could not be more timely or important. Rising oil and gasoline 

prices have a crippling effect on small businesses, as well as our 

overall economy. In fact, just this morning the headline of the 

Washington Examiner—I will even grab this—it says gas prices 

hobble small businesses. When we look at yesterday’s Washington 

Post, $4 a gallon gas fuel fears stymie our recovery here. 

I would like to extend special thanks to each of our witnesses for 

making this trip to Washington, D.C., and taking time out of your 

busy schedules. I would especially like to welcome Jim Ehrlich 

today, who is a constituent of mine out of Colorado. 

Today we will hear directly from small businesses on how increased fuel prices have affected their bottom lines and ability to 

expand and be able to create jobs. Small businesses have been hit 

especially hard by high fuel prices. In addition to driving up the 

costs of transportation for their goods and services, the spike in gas 

prices is drying up consumers for many of our small businesses. 

Just yesterday, Walmart’s chief executive officer told the Washington Post that the retail giant’s number of customers is increasing with rising gas prices. In an effort to tighten up their budgets 

by driving less, consumers tend to consolidate their shopping trips 

to one larger box store to be able to do their shopping rather than 

going to a handful of community shops where they would normally 

visit. 

This trend is even more alarming when taking into consideration 

that many communities across our country have already seen their 

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ment. We are essentially watching the extinction of the mom-andpop shops play out before our very eyes. 

Retailers, of course, are not the only ones feeling the pinch of 

high gas prices. As we will hear today, it is hitting our farmers, 

our ranchers, especially hard, and any business that relies on fuel 

to send or receive their goods and services. This increased cost of 

doing business is either absorbed by the company, diverting resources away from investment and expansion, or passed along to 

cash-strapped consumers who have already tightened their belts in 

cutting back. In either case, it is a roadblock to economic security 

in this country, economic recovery, and job creation. 

In this country, in addition to hearing testimony today, we will 

be talking about the direct impact high fuel prices are having on 

small businesses. We will explore the root causes of these rising 

costs, including overregulation and punitive taxation on the energy 

industry. We will look at possible solutions to jumpstart the energy 

exploration and production in our country and discuss the need for 

the U.S. to embrace an ‘‘all of the above’’ energy platform that includes wind, solar, oil, natural gas, and coal. I look forward to 

hearing from our witnesses as they provide testimony today, and 

we seek to find solutions to curb the effects of high gas prices on 

small businesses. 

I would now like to recognize our ranking member, Member 

Critz, for his opening statement. 

Mr. CRITZ. Thank you, Mr. Chairman. And before I go into my 

statement I just wanted to thank the witnesses for coming today 

to talk about the gas prices, but also to thank Scott, our chairman. 

He and I have had a couple of meetings, a couple of talks, and it 

looks like we are going to have a very productive Subcommittee. I 

am looking forward to working with him on this issue and on many 

issues that face small businesses. 

Small businesses play a key role in the economy creating nearly 

two-thirds of net new jobs. However, with gas prices rising, their 

contributions to this growth may be jeopardized. In the last 3 

months, oil prices have reached a 30-month high exceeding $112 

per barrel. With the U.S. importing more than 200 million barrels 

of oil per month, the cost of doing so is substantial. Many analysts 

are suggesting that these increases could lead to gas prices of $5 

or more per gallon. Small businesses are drivers of economic 

progress, but a recent report shows that surges in energy prices are 

a top concern among them. According to the PNC Economic Outlook Survey of Small Firms, nearly three-quarters responded a sustained rise in energy prices would have a negative impact on their 

business potentially restraining growth. 

In order to deal with these price increases, small businesses are 

often faced with two choices. They can either absorb the costs or 

pass them on to their customers. Absorbing the higher prices creates financial challenges resulting in less capital to expand their 

business or hire new employees. Passing the cost increases on to 

consumers can reduce demand for a firm’s goods and services. Neither are preferable alternatives and this is why we must find a solution. 

Whether these solutions focus on increasing supply or reducing 

demand, it is clear that the status quo is not an option. Steps must 

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be taken to increase U.S. energy independence. While much of the 

price increases are tied to the uprisings occurring in Northern Africa and the Middle East, growing demand as the global economy recovers is also a significant part of this equation. Increasing the 

supply of oil can lead to lower gas prices. While there are several 

options to do so, one of the most promising is increasing access to 

potential oil resources under the U.S. Outer Continental Shelf, particularly in deepwater areas. 

The Department of Energy projects that oil production would increase from 5 million barrels per day to 7.3 million barrels per day 

by 2030 with a complete access to this area. Doing so could lead 

to greater domestic oil reserves and ultimately reduce prices for all 

consumers of gas, including small businesses. 

Another important energy alternative is to increase the use of oil 

shale. I know the Green River Oil Shale Formation in Colorado, 

Utah, and Wyoming is estimated to hold the equivalent of 1.38 trillion barrels of oil equivalent in place. The Marcellus Shale is the 

largest unconventional natural gas formation in the United States. 

Until recently, the natural gas in the Marcellus Shale was locked 

in an impermeable layer of rock which made the natural gas uneconomical to extract. However, with the advent of new drilling technologies coupled with the rising demand for domestic natural gas, 

the development of the Marcellus Shale has increased exponentially in states such as Pennsylvania, Ohio, and West Virginia. 

The shale is estimated to hold 4.9—excuse me, 493 trillion cubic 

feet of extractable natural gas currently valued at more than $1.8 

trillion. As with most economic activity, the impacts of the natural 

gas affect more than just the specific firms directly involved in the 

industry. There are also important employment and income effects 

on local businesses who supply the industry, such as oil-filled service companies, restaurants, retailers, and hotels, in addition to effects that result from employees spending their wages locally. 

In Pennsylvania, 75 percent of the natural gas it uses every day 

is being imported. The Marcellus Shale Formation holds enough recoverable natural gas reserves to not only serve Pennsylvania’s 

needs but to turn our country into a significant exporter of energy 

generating equally significant economic benefits. This is incredible 

when you think back to 10 years ago when we were only discussing 

the importation of this gas. The high-paying jobs available today in 

the Marcellus Shale gas industry are expected to multiply in the 

future, meeting the needs of gas companies’ efforts to increase drilling and production across the region. In Pennsylvania alone it is 

estimated that more than 110,000 new jobs have been created because of the development of this shale. 

I would just like to emphasize that as long as we develop this 

shale in an environmentally responsible manner, its potential is 

monumental. This is an immediate source of alternative energy 

that is currently being tapped. Excuse me. As our country continues to develop new sources of energy, carbon capture and sequestration technology allows it to continue using coal as a base 

load fuel while capturing and sequestering the carbon emissions 

that would have otherwise been released into the atmosphere. 

The United States has enough coal to meet projected energy 

needs for almost 200 years. Here again is another immediate 

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source of alternative energy. While supply-related options show 

great promise, there are equally important policy options that could 

reduce demand. Reducing the use of gas by improving energy efficiency measures could also lead to lower prices. Small businesses 

can readily do this by adopting new technologies such as replacing 

gas-based vehicles with hybrid flex-fuel or electric-based cars and 

trucks. This would lessen their and our nation’s need for oil. By 

doing so, entrepreneurs would face less volatility in their energy 

costs. 

Several initiatives are spearheading the replacement of gasbased vehicles. Small businesses have been encouraged to purchase 

more fuel efficient vehicles through tax credits, including gasoline 

electric hybrids and plug-in electric vehicles. In addition, substantial funding has been provided to advance research into alternative 

automotive energy and fuel cell technologies. As commercialization 

occurs, small businesses will have a broader array of energy efficient vehicles to choose from. Whether it is increasing the domestic 

supply of oil or decreasing demand, everything should be on the 

table to help reduce U.S. dependence on foreign oil. Doing so will 

not only benefit small businesses and consumers but will increase 

our nation’s energy security as we can reinvest savings into alternative fuels. 

In this regard, I am particularly looking forward to hearing the 

witnesses’ views on policy options and what effect they could have 

on prices. If we do nothing, rising gas prices have the potential to 

dramatically impact small businesses and disrupt the recovery we 

are currently experiencing. If small firms are going to lead the 

economy forward and create new jobs, they need greater predictability and less volatility in the prices they pay for energy. I hope 

today’s hearing is a step forward in this direction. 

Thank you, Mr. Chairman. I yield back. 

Chairman TIPTON. Well, thank you, Ranking Member Critz. 

Talking about developing energy here at home we are going to get 

along just fine. I do appreciate that. 

I am a small businessman. This is the first Committee hearing 

that I am chairing. I would like to thank our chairman for having 

the privilege of being able to do this. Sam is very gracious. And I 

would also like to give a tip of our hat to our staff as well. A lot 

of the work that goes on behind the scenes to be able to put one 

of these together is extraordinary. And I really appreciate all of the 

help. And Mindi, thank you for your help as well. 

So if other Committee members do have an opening statement 

prepared I would ask that they submit that for the record today. 

And I would like to take a moment, gentlemen, to be able to explain our lighting system in front of you. You will each have five 

minutes for your testimony. The light will start out as green. Once 

it gets to the four-minute level it will then turn to yellow, and at 

the expiration of time it will then turn red. And I would ask that 

you wrap up your comments at that point and we would appreciate 

it as you finish. 

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STATEMENTS OF JIM EHRLICH, EXECUTIVE DIRECTOR, 

COLORADO POTATO ADMINISTRATIVE COMMITTEE; RICK 

RICHTER, OPERATOR, RICHTER AVIATION; PRESIDENT, NATIONAL AGRICULTURAL AVIATION ASSOCIATION; DICK 

PINGEL, OWNER, FINALLY TRUCKING, INC.; ROBERT WEINER, PROFESSOR, INTERNATIONAL BUSINESS, PUBLIC POLICY AND PUBLIC ADMINISTRATION AND INTERNATIONAL 

AFFAIRS, GEORGE WASHINGTON UNIVERSITY 

Chairman TIPTON. So it is my pleasure right now to be able to 

introduce our first witness today, a constituent of mine, Mr. Jim 

Ehrlich. 

Jim is the executive director of the Colorado Potato Administrative Committee, representing a significant industry in my home 

district. Jim, we appreciate you being here today and we look forward to your testimony. 

STATEMENT OF JIM EHRLICH 

Mr. EHRLICH. Well, I would like to thank Chairman Tipton and 

the Committee for inviting me today. 

I speak on behalf of the 170 different potato growers in the San 

Luis Valley of South Central Colorado. These growers typically 

produce about 2.2 billion pounds of potatoes a year with a market 

price of 175– to $240 million depending on the price of potatoes 

that year. The San Luis Valley is a high alpine desert, base elevation of 7,600 feet with less than 7 inches of moisture annually. 

Irrigation supplies are dependent on abundant snowpack and sustained utilization of a vast underground aquifer. Colorado ranks as 

the second largest shipper of fresh market potatoes in the country, 

a fact that many people do not know. 

This 6-county region of Colorado is dependent upon agriculture 

as the economic engine for the valley’s 50,000 residents. Unfortunately, we possess some of the poorest counties in Colorado with 

many rural families having incomes below poverty level and without opportunity for better jobs. 

Today I am going to focus on three things: the impact of high energy prices and gas prices on potato producers in the valley, the inability of the United States to increase domestic production of our 

vast energy reserves, and the cost of regulation to potato producers, 

the impact of high energy and gas prices on potato producers. 

I recently read a report claiming that for every 10 cent increase 

in gas prices there is a net loss of $5 billion to the United States’ 

economy. When you consider the fragile state of the worldwide 

economy and our economy in the United States, this has great significance. When you consider that petroleum-based products are 

the only source for most of the transportation needs in the world 

today, there is no real mystery why when you have one supply and 

limited supply of that one item and worldwide demand is growing 

like it is, why there is a problem. 

Agriculture requires energy as a critical input to production. Potato production uses energy directly as fuel and electricity to operate tractors and equipment, cool potato cellars, process and package product indirectly, and fertilizers and chemicals produced off 

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ergy costs of an irrigated potato crop in the San Luis Valley can 

be as great as 50 percent of the total production expenses. 

Unlike areas of the country where irrigation is unnecessary or 

no-till practices are common, this is not the case with potato production in the San Luis Valley. It requires large amounts of electricity to irrigate and large amounts of tillage. Crop must be stored 

at the correct temperature and humidity year round to ensure marketable condition for consumers. The crop must be shipped in refrigerated trucks to distant markets across the country throughout 

the year. 

So what happens when gas prices rise like they have this year? 

Because farmers are price takers and lack the capacity to pass on 

higher costs through the food marketing chain, the net result is a 

loss in farm income. The reality is prices of most fuel sources tend 

to move together. So as gas prices typically rise, other energy 

prices rise in concert. Fertilizer prices are dependent upon natural 

gas prices and potatoes require large amounts of nitrogen, phosphate, and pot ash fertilizers. Harvest, sorting, grading, and shipping are all heavily mechanized energy-dependent steps. The San 

Luis Valley is located in an isolated mountainous region. High diesel prices affect freight rates and truck availability cutting into the 

growers’ bottom line. 

The economic reality for our area is when gas prices rise, farmers 

make less money. The local economy suffers because it is dependent on the farmers. Farmers are forced to cut back on expenditures 

and this lack of economic activity impacts local businesses and 

communities, school districts, et cetera, the inability of the United 

States to increase domestic production of vast energy reserves. 

Because the United States relies on imported sources of oil for 

over 60 percent of our oil needs, we export wealth daily, primarily 

to countries that are hostile to us. This not only causes economic 

stress but is a threat to our national security. Without a stable 

source of relative economical energy for agriculture, our nation’s 

food security is at risk also, and as a result, our national security. 

As the proud father of a U.S. Marine serving in Afghanistan currently, I speak from my heart. 

I recently read a report from the Congressional Research Service 

detailing the potential fossil fuel reserves of the world. This report 

came out in December. I was encouraged to see the United States 

might actually have the largest fossil fuel reserves in the world, 

but I was distraught because as a country we continually fail to develop these resources. It is time to find bipartisan solutions to develop all energy resources available in this country, including alternative energy sources. Energy prices are going to continue to rise 

with increasing worldwide demand, even if we develop every source 

of energy we have available as quickly as possible. Failure to act 

puts our great nation and its ability to feed the world at risk. 

The last thing I want to talk about is the cost of regulation to 

potato producers. I encourage the Committee to consider the economic impact overregulation has on agriculture and small businesses across the country. Any new regulation should be thoroughly analyzed for the often unintended economic consequences 

that result. I applaud the recent House vote to prevent unnecesmstockstill on DSK4VPTVN1PROD with HEARING

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sary NPDES permits that were actually being forced on agriculture 

without just cause. 

As a nation, we have to respect and consider everyone’s opinion 

when we make decisions affecting the environment, food safety, 

school meal plans, et cetera. But as elected officials, you have the 

responsibility to create laws that carefully represent the beneficial 

interest of the majority of citizens. It is not impossible to please all 

interests and I know this because I work with farmers and make 

progress. 

An example of this overregulation is the EPA. I cannot even 

begin to go there but I will point out one example. They are proposing dust regulations for rural America and they do not have the 

data to show that these regulations are an actual problem. They 

do not even have a rural dust monitoring network. The reality is 

rural America is dusty. Potatoes grow in the dirt, the good dirt that 

feeds all of us. 

In closing, I would like to thank the Committee for the opportunity to testify today. Colorado potato growers are very grateful 

for the work you are doing and the commitment you have to agriculture and our nation. Thank you very much. 

[The statement of Jim Ehrlich follows:] 

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Chairman TIPTON. Thank you very much, Jim. I appreciate your 

testimony. 

Our next witness is Mr. Rick Richter, who has flown as an agricultural pilot for over 32 years and is the proprietor of Richter 

Aviation. He is the current president of National Agricultural Aviation Association and represents them in his testimony today. Mr. 

Richter. 

STATEMENT OF RICK RICHTER 

Mr. RICHTER. Thank you, Chairman Tipton, Ranking Member 

Critz, and all members of the Subcommittee for the opportunity to 

testify on the effects that the increase in fuel prices have on small 

aerial application businesses. 

My name is Rick Richter, owner of Richter Aviation, an aerial 

application business in Maxwell, California. And I am testifying 

today on behalf of the National Agricultural Aviation Association, 

also known as the NAAA, of which I am the 2011 president. 

NAAA is a national association which represents the interests of 

small business owners and pilot licensed as commercial applicators 

that use aircraft to enhance the production of food, fiber, and 

biofuel, protect forestry and control health threatening pests. 

Aerial application accounts for an estimated 18 percent of commercially applied crop protection products in the United States and 

is often the only method for timely pesticide application, especially 

when wet soil conditions, rolling terrain, or dense plant foliage presents the use of other methods of treating an area for pests. 

The average aerial application business consists of two operating 

aircraft, four people, including two pilots, a mixer-loader, and an 

administrative staffer. Increases in fuel prices result in a number 

of cash flow and service marketability issues for the aerial application industry. And, of course, the price of fuel for agriculture will 

trickle down to the end consumer of food. 

According to the United Nations’ Food and Agricultural Organization, food prices reached a record high in February, and prices 

in March of this year remain 37 percent higher than those in 

March of 2010. 

At the beginning of the season, an aerial applicator sets a base 

price per acre treated by air based on the expected cost of operation. This is the amount he charges his farmer clients. Depending 

on the type of fuel used, of which there are two—avgas for piston 

engineered aircraft and Jet A for turbine engine ag aircraft—an operator includes a base price for fuel going into the season. Some applicators stick with this price regardless of fluctuations in fuel 

price, and as a result may lose money when prices go up steeply. 

Other applicators will incorporate a fuel surcharge into their pricing structure. 

Incorporated within that fee per acre charge is the fuel charge 

which is based on an average price of fuel per gallon. This ranges 

but on average it is estimated to be about $2 per gallon. If fuel 

rises above that figure, a fuel surcharge is added, and a typical fuel 

surcharge is the difference between the average price for a gallon 

of fuel that an applicator builds into his acre charge and the price 

of a gallon of aviation fuel at the time of application, assuming that 

the latter is a greater amount, multiplied by the average number 

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of gallons burned by that particular aircraft in an hour multiplied 

by the amount of time it took to make the application for the farmer. 

Fuel surcharges in our industry have been met with minimal 

complaint by farmer clients as of late because they will be getting 

a good price for the crop. If this was 2002 and we were faced with 

the same high prices for fuel that we are facing today but ag commodity prices were two to three times lower than what they are 

today, our industry would be facing some real challenges. As of 

April 6, 2011, the wholesale price of Jet A without taxes was $3.33 

per gallon as quoted by a large Southeast U.S. fuel supplier. If in 

2002 when commodity prices were much lower and Jet A fuel for 

turbine-powered ag aircraft was the same price today or the same 

price that it was at its height in 2008 when it averaged $4.72 per 

gallon, it would be much tougher for a farmer to embrace a fuel 

surcharge for aerial application services rendered. 

Realistically, when input prices such as fuel are high and commodity prices are low, a significant drop in the use of aerial application services and other farm services would occur as a result of 

containing costs. Well, this helps the farmer contain expenses but 

frequently results in less yield and poor crop quality, hence negatively affecting his revenue potential. The lack of application work 

is a challenge for an aerial application operator that requires 

steady business each season to remain viable. 

Another challenge that aerial applicators face, particularly when 

fuel prices are high, is the financial terms that fuel suppliers have 

for payment of their fuel and how those terms differ from their own 

accounts receivable terms. The typical payment term that an aerial 

applicator has with his fuel supplier is 10 days with established 

credit. This usually differs from payment terms that aerial applicators’ customers are accustomed to paying, which is typically between 45 and 60 days. This can pose challenges because fuel costs 

consist of approximately 20 percent of an aerial applicator’s total 

expenses. If the average ag aircraft burns 50 gallons per hour and 

is flown 300 hours per season and there are 2.2 aircraft on average 

per aerial application operation, then 38,600—excuse me, 36,816 

gallons of fuel will be required. 

When an applicator is facing a deficit in accounts payable compared to his accounts receivable and outlaying large chunks of capital for fuel particularly when the price of fuel is high, this may result in sizeable interest payments for small aerial application businesses. It is widely expected that higher interest rates will return 

and coupled with the greater demand for fuel globally will likely 

lead to a steady increase in the price of fuel and place much greater cost pressures on small aerial application businesses. High fuel 

cost conditions in some instances do lead to aerial applicators taking more risk in trying to hedge the price of fuel by filling up their 

tanks early and storing fuel. But storing for too long of a period 

can result in developing moisture in the fuel, algae problems in Jet 

A, and possibly evaporation of avgas. 

One other issue of concern to the agricultural aviation industry 

that is related to fuel supply is an effort underway to phase out the 

use of avgas. EPA has mentioned the possibility of a new environmental standard associated with avgas due to its emissions of lead 

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in the air and calls by environmental activists to ban the fuel completely. Avgas is used in 51.87 percent of ag aircraft in the U.S. 

today. NAAA’s primary concerns are with the safety and feasibility 

issues associated with mandated a shift from avgas. NAAA has encouraged the EPA and the FAA to allow time for and devote resources toward the development of a suitable alternative to avgas 

before imposing avgas regulations or banning the use of the fuel altogether. NAAA urged the agency to consider the detrimental economic impacts that could occur to our industry and the farmers 

that rely on us should avgas be phased out prior to the development of a safe and practical alternate fuel. Piston engines are a notably less expensive engine for ag aircraft compared with turbine 

engines and for smaller aerial application businesses it may be the 

only affordable type of power plant available. 

Chairman Tipton, Ranking Member Critz, thank you very much 

for the opportunity to explain these issues affecting the aerial application industry in regards to the increase in fuel prices and supply for ag aviation aircraft. More detail on the issue and how it affects the aerial application industry can be found in the written 

comments that we have submitted. A national policy that can be 

developed that would ensure a stable price and supply for Jet A 

and avgas is imperative for our industry and the farmer clients we 

treat. Also, continuation of the fuel tax exemption for aviation fuel 

used for large aircraft while flying over the farm has provided some 

relief to our farmer customers. 

Our industry provides a valuable service in aiding in the production of the safe, affordable, and abundant global supply of food, 

fiber, and biofuel, and as such, a steady supply and price of fuel 

is vitally important to us and our farmer customers. Thank you 

again to you and the members of the Subcommittee. 

[The statement of Rick Richter follows:] 

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Chairman TIPTON. Thank you, Mr. Richter. We appreciate your 

testimony. 

I would like to now introduce Mr. Dick Pingel, who has been an 

owner-operator trucker for over 28 years, and I also have it on good 

authority that Mr. Pingel has personally driven over three million 

miles without a single accident. That is notable. The Subcommittee 

appreciates you taking the time to speak with us today, Mr. Pingel. 

STATEMENT OF DICK PINGEL 

Mr. PINGEL. Good morning. My name is Dick Pingel. I live in 

Plover, Wisconsin, and have been a small business trucker for the 

past 28 years. I am a member of Owner-Operators Independent 

Drivers Association and currently run a one-truck operation hauling food around the country. 

As you are most likely aware, O-O-I-D-A, or OOIDA as it is 

known in the trucking industry, is a national trade association representing the interests of small business trucking professionals and 

professional truck drivers. The more than 152,000 members of 

OOIDA are small business men and women in all 50 states who 

collectively own and operate more than 200,000 individual heavyduty trucks. 

The majority of the trucking community in this country is made 

up of small businesses as 93 percent of all carriers have less than 

20 trucks in their fleet and 78 percent of carriers have just 6 or 

fewer trucks. In fact, a one-truck operation such as me represents 

nearly half of the total number of federally registered motor carriers. Assuming that the trucking industry exclusively moves about 

70 percent of our nation’s goods and that just about all freight is 

moved by truck at some point in the supply chain, it is not hard 

to see that the costs and burdens that encumber small business 

truckers have an impact on our nation’s businesses and consumers. 

The cost of fuel is very often the largest operating expense with 

which small business truckers must contend. For folks like me, fuel 

costs can easily be 50 percent or more of our annual operating expenses. To give you some perspective, the average OOIDA member 

runs their truck about 120,000 miles or more each year while getting somewhere in the ballpark of only 7 miles per gallon. Most of 

us will be operating trucks equipped with either twin 135-gallon 

tanks or twin 150-gallon tanks, so we can easily see a bill of over 

1,000 dollars when we fill up. 

In addition to the fuel going into the tanks of my tractor, I use 

a trailer with a diesel-powered refrigerating unit to haul dairy 

products for producers in Wisconsin. Until recently, I could count 

on it costing about $50 to fill up my tank for the reefer unit. However, in recent months the cost to fill this tank has increased to 

more than $100. The additional money I am now spending on fuel 

for my truck and trailer once went into investing in other areas of 

my business, but now it must cover basic operating expenses. 

Every time I pull into a truck stop I hear similar stories, as truckers are paying significantly more at the pump. 

The national average for diesel is now around $4.12 a gallon, 

with prices in some states approaching $4.50 per gallon. To put 

this into perspective, each time the price of a gallon of diesel fuel 

increases by a nickel, a trucker’s annual cost increases by $1,000. 

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Diesel prices today are more than a dollar higher than they were 

this time last year, resulting in an enormous extra burden on small 

business truckers whose average annual income is less than 

$40,000. However, unlike past spikes in fuel prices, the recent increases in the cost of fuel are not occurring in isolation. Over the 

past few years, the trucking industry has been laboring under a 

steadily increasing amount of costly and often unnecessary regulations which, when coupled with the rising cost of fuel, are certain 

to force many small business truckers in very difficult, if not insurmountable economic situations. 

Small business truckers operate in a hyper competitive market, 

so managing their number one expense is imperative for their survival. In our marketplace, we often see costs increase without any 

corresponding rate increases. As such, the only way to survive is 

to become more efficient in how one operates their truck. Small 

business truckers always drive with an eye towards saving fuel no 

matter what the price because our business survival depends on it. 

As small business truckers like myself know, reducing fuel costs is 

not a science, it is an art and one that we pride ourselves on being 

masters of. However, our ability to practice this is made more difficult by increased regulation and artificially high fuel prices, 

issues we look forward to working with Congress to address. 

Thank you for this opportunity to speak with you, and I look forward to answering any questions that you may have. 

[The statement of Dick Pingel follows:] 

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Chairman TIPTON. Thank you very much, Mr. Pingel. I appreciate that. And I would now like to yield to Ranking Member Critz, 

who will be introducing our next witness. 

Mr. CRITZ. Dr. Robert Weiner is a professor at George Washington University. Professor Weiner has authored or co-authored 

four books on energy markets and oil. He has also authored more 

than 50 articles on environmental and natural resource economics 

focusing on energy security, risk management, and the oil and gas 

markets and companies. Professor Weiner’s current research interests include financial innovation and commodity markets, oil and 

gas trading, and risk management in the oil and gas industry. 

He received his Ph.D. in 1986 from Harvard University and has 

been at George Washington since 1994 serving as chairman of the 

International Business Department from 2001 to 2005. He is currently associate director of the Global and Entrepreneurial Finance 

Research Institute at George Washington. Dr. Weiner. 

STATEMENT OF ROBERT WEINER 

Mr. WEINER. Mr. Chairman, Ranking Member, other members, 

thank you very much for the opportunity to be here. I would like 

to say that I am not representing anyone except for myself as a 

student of the industry. 

What I would like to do is divide my remarks into three parts. 

First, where prices are and where they are going and the implication for small business; second, political risk and the impact of political risk, including political risk in the United States on investment in the oil industry, oil production, and eventually prices; and 

third, time permitting, the causes of the underlying increase in oil 

prices. 

First, the key question for everyone especially for small business, 

is how to adapt to higher and more volatile prices. In order to figure this out we have to get a sense of where prices are going and 

also where they are likely to be in the future in an industry in the 

United States that produces over 5 million barrels a day. The average well produces 10 barrels a day. So I would like to remind people here that the small business that we discuss includes the oil 

industry. There are many small businesses in the oil industry, both 

in conventional oil but also in the newly emerging technologies that 

will be important in the future, such as shale and services for deepwater exploration. 

In order to look at forecasts, we need to get a sense of what the 

market thinks. I am not a forecaster but I am a consumer of oil 

price forecasts, and the advantage of the market forecasts are 

three. The first is that they are widely available, and like some of 

the best things in life they are actually free. You do not have to 

pay for them. Second is they reflect the consensus of many, many 

small buyers and sellers in the market, putting their own capital 

at risk and their clients’ capital, and they will lose if their forecasts 

are wrong. And then finally, the tendency of these forecasts to be 

right on average. In other words, these forecasts are on bias. Whatever the forecast is for the end of the year, which is about $105 a 

barrel, the chances are equal that it will be too high and too low. 

What the forecast tells us is four things. First, that people expect 

the price increase to be permanent, where permanent in my world 

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means six or seven years. The futures price for the end of 2016 is 

$105 a barrel, only slightly below today’s $110 a barrel. And, of 

course, future price expectations include expectations about the deliberations of this August body in terms of the ability of the U.S. 

or the lack of the ability of the U.S. to increase production. And so 

that skepticism or concern is inherent in prices. 

Second is prices are expected to stay high but to plateau. No future increase in prices unless there are some political events that 

are hard to predict such as those in Libya or Japan or indeed in 

the Gulf of Mexico. 

The idea of peak oil, which is the third idea, is simply not supported by expected prices. Peak oil suggests we are running out of 

oil. I think we have seen the entrepreneurship and the ingenuity 

and technology of business in the United States. The ability to, at 

least for now, stay well ahead of the battle against depletion and 

to be able to increase, if allowed, by regulation our domestic energy 

production. 

And finally, there is no intrinsic value for oil. All of us who may 

have hoped that just because prices are higher than historically 

now means that they will go back to previous levels, the forecast 

says that they will not. The new normal is that there is no normal. 

Because I am running out of time I would like to switch to talk 

about political risk. Political risk restricts investment at all levels. 

Political risk is not something that we think about just for a country like Libya or Iraq. Political risk is very much present in the 

U.S., especially in the deepwater Gulf of Mexico and in shale because of uncertainties about environmental effects and difficulties 

of the industry in getting permits and permission to drill. Right 

now an enormous amount of industry capital is tied up essentially 

doing nothing or very little, wondering when permits will be issued. 

The industry has long been able to deal with regulation and taxes 

as long as it is clear. As the president of Exxon said a few days 

ago, the U.S. is a very difficult country to do business right now. 

Political risk means it is hard to figure out whether the industry 

should invest. Without more investment there will not be more production, and without more production there can only be higher 

prices. 

I see that I am out of time so I will reserve the rest of my remarks for my written testimony. Thank you very much. 

[The statement of Robert Weiner follows:] 

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Chairman TIPTON. Thank you Dr. Weiner. We certainly appreciate your testimony and paying attention to the lights, too. We 

often ignore them up here. 

I appreciate all of you gentlemen taking the time for being able 

to join us today and I will start out our questioning here. And I 

would like to start out with my constituent, Jim Ehrlich. 

Jim, I do not think that Americans truly realize the significant 

amount of energy that is necessary to be able to produce food stuffs 

in our country that we eat daily. Given that upwards of 50 percent 

of total production expenses are reliant upon energy costs as you 

noted in your testimony, do you believe that if oil prices reach or 

exceed, and they already have now, the 2008 gas price level of $4 

a gallon that it will force potato farmers out of business or force 

them to make substantial cutbacks? 

Mr. EHRLICH. Well, I think that they will definitely have to cut 

back but I think the key to that is the price of potatoes. This year 

the price of potatoes is quite high, as all commodity prices are. As 

a matter of fact, a lot of commodity prices are at all-time highs. 

Whether that is sustainable, history would tell us no. So I would 

say that they will definitely be hurt. If potato prices go back to last 

year’s levels, it will force producers out of production. 

Chairman TIPTON. Well, I thought it was worthy of note in your 

testimony you were talking about the domino effect. If the potato 

farmer is not doing well, essentially you were noting that the person who operates the local theatre or the local drive-in is going to 

be impacted as well. Are you seeing that as well in our rural communities? 

Mr. EHRLICH. Well, I would say since the economy had the downturn, our area of the country has suffered. And it was not—it did 

not happen rapidly in agricultural rural areas like that, sometimes 

the effect happens a little later. But I would say we are actually— 

we are not out of a recession in the area that I live in. And if the 

farmers are the only ones making money down there right now, 

this rise in fuel prices will definitely have a detrimental effect on 

our area. 

Chairman TIPTON. Great. Thanks, Jim. 

Dr. Weiner, as you know, President Obama’s 2012 budget included roughly $90 billion on taxes on the energy industry. Given 

your testimony that you just presented, do you believe that implementing more stringent tax policies on energy producers will contribute to higher prices at the pump? 

Mr. WEINER. I think it will but I think what is most important 

is that the energy producers know what the taxes are. I think the 

thing that is most difficult is when they do not. And one important 

aspect of higher taxes and tax uncertainty is value destruction. In 

the current budget for the U.K. that was just released a couple of 

weeks ago there was a sharp rise on taxes proposed for U.K. and 

foreign oil producers. The immediate effect was a 15 to 20 percent 

destruction of value of those investments. So these taxes go right 

to the bottom line and where there is destruction in value of the 

asset, of course there will be less investment and eventually less 

production and higher prices. 

Chairman TIPTON. Great. Thank you. 

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Mr. Richter, in your testimony you pointed out that potential 

EPA regulations on avgas, which is still being used by the majority 

of agricultural aviators, you noted that there is no viable alternative right now for avgas. If gas restrictions are put into place, 

would this effectively close a lot of our sprayers? 

Mr. RICHTER. Mr. Chairman, yes, it would. It would definitely 

close some of the smaller businesses that are using piston-engine 

aircraft. What you have got to understand is that the larger turbine aircraft are several times more expensive than the smaller 

ones, and if it would restrict or if there is a ban completely on 

avgas you would see probably some of those going out of business 

because small businesses could not afford the larger turbine aircraft. And it would eventually have an effect on food prices in the 

end. 

Chairman TIPTON. Great. Mr. Pingel, you indicated that over the 

last five months, 15 new major regulatory rulemaking proposals 

were proposed on the trucking industry. Can you highlight some of 

the most significant new regulations that you are seeing come out? 

Mr. PINGEL. Well, we have seen laws come out at FMCSA on onboard recorders, on speed limiters, on cell phone use. We have 

seen, not so much in the last five months but in the last few years, 

07–10, we have had EPA regulations coming out for emissions on 

the trucks and those have all, you know, we have had to pay for 

those. 

Chairman TIPTON. Just kind of curious. You know, in your commentary that is over and above when you noted that for every nickel increase in a gallon of gasoline that is a thousand dollars a 

month if I recall correctly or $1,000 annually in terms of cost. 

Mr. PINGEL. Annually. 

Chairman TIPTON. These are for independent small business peo- ple earning $40,000 a year? 

Mr. PINGEL. Correct. And that comes off the bottom line. 

Chairman TIPTON. So the increased regulations that we are seeing are hurting small businesses, costing consumers more, and 

hurting the American economy? 

Mr. PINGEL. Correct. 

Chairman TIPTON. Thank you so much. I appreciate that. I would 

like to now yield to Ranking Member Critz for questioning of the 

witnesses. 

Mr. CRITZ. Thank you, Mr. Chairman. You know, what is interesting about these hearings is that usually we come with prepared 

questions and then as we listen, all these other questions come to 

light that we want to ask. And Mr. Ehrlich, you had mentioned 

about in your area the downturn in the economy usually hits slower and it stays longer. I am from rural Pennsylvania and it is usually an indicator in most rural indicators that it takes longer for 

recessions to hit but it usually hangs on longer and it takes our 

areas longer to recover as well. And although our hearing is about 

gas prices, you hit on something that is really a sore spot for me 

as well. 

And actually, my question is going to be to Dr. Weiner, is that 

EPA regulations—and you know, we did just take the vote on the 

NPDES—but you had mentioned, Dr. Weiner, about EPA regulations and the need for stability and ways for companies, whether 

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they be oil, gas, or any company, to be able to plan based on what 

a stable environment looks like in the future. And I am curious if 

you can, although it is sort of off the track of gasoline, if you could 

comment on some of the actions currently that are going on at 

EPA, what you see, and what the future looks like and what we 

need to do up here at the congressional level to try to create that 

stable playing field for industry. 

Mr. WEINER. I apologize, Congressman, I am not an expert on 

EPA at all. I know more about energy than the environment. 

I think in general when you are looking at regulations, some regulations affect the bottom line of producing companies a lot more 

than others. Those are the ones where stability and certainty are 

really the most important. And there may be a lot of regulations 

and some of them may be irrelevant or a nuisance but they may 

not have as big an effect on the bottom line. The question is where 

does it—where does the buck stop? That’s when the question about 

whether it affects people’s decision on investment. The little description that I gave you about the increase in taxes which is just 

as important for stability in the North Sea, the first thing that 

happened is some of the companies said we are reassessing because 

these are high cost fuels to produce. We may not be investing anything. If they do not invest, no production. And no production simply means that more and more of our oil is going to come from 

places like Venezuela and Iraq and places that we have come to depend on. 

Mr. CRITZ. Okay. And I think it is that stability. You mentioned 

at some point there is a whole lot of people sitting around waiting 

for permits and different things which means there is no production going on. And like I said, that is sort of a sore spot for me. 

And when you mentioned the EPA and NPDES and you mentioned 

it, I thought, sorry, I have got to veer off here because I have got 

a thorn in my side and I am trying to extract it. 

Mr. Pingel, I have one question for you that, again, it is about 

gas prices but it is also about infrastructure. Is that there is a debate going on about—and actually this could be for anyone who 

wants to comment—a debate going on about highway—the reauthorization of the highway bill and what it means to infrastructure, 

building our infrastructure. And we have a huge issue because of 

lack of money in the Highway Trust Fund to do a lot of these 

projects. So there is a lot of debate going back and forth on increasing a gas tax. And, of course, in our neck of the woods that is, you 

know, talking about increasing taxes is nothing that anybody ever 

wants to talk about but when you are talking about infrastructure 

sometimes you have to have a tough nut to swallow. 

I would be curious what your thoughts are being in the trucking 

industry you are on the highways all the time, and actually in 

aviation as well. What that means, you know, what the lack of a 

highway bill means to you folks. 

Mr. PINGEL. Well, I think as far as the gas tax, we realize, the 

industry realizes that we have to pay for the infrastructure and we 

know that it is crumbling. But we also see that if we can improve 

the infrastructure, we can save ourselves money and congestion 

and, you know, wear and tear on equipment. It is just a matter of 

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structure, not for high-speed rail and bullet trains and bike paths 

and some of the other stuff. I mean, as an industry, I mean, like 

I said, we realize that we use it probably more than anybody else 

and we are willing to pay for it but we want that money to stay 

where it goes. 

Mr. CRITZ. Right. Right. Okay. Any comment, Mr. Richter? 

Mr. RICHTER. I might add that many of the agricultural operations, aviation operations, occur on airstrips that are not improved. They are on private airstrips. And we are very fortunate 

to have a fuel tax exemption. And that has been real good for our 

industry. It has served us very well. But as such, we rarely use improved airstrips. 

Mr. CRITZ. Okay. Well, I appreciate that. 

Mr. Chairman, I have about a thousand questions but in the interest of time I will yield to other members of the Committee so 

that they can ask their questions and on the second round we will 

come back around. Thank you very much. 

Chairman TIPTON. Thank you, Member Critz. And I would now 

like to recognize Congressman Fleischmann. 

Mr. FLEISCHMANN. Mr. Chairman, Ranking Member, thank you 

very much. 

Gentlemen, this is outstanding. I have really enjoyed this testimony so far. It is very helpful. 

My name is Chuck Fleischmann. I represent the 3rd District of 

Tennessee. In addition to serving with the chairman on this Committee, I serve on the Committee of Natural Resources, Energy, 

and Minerals Subcommittee with my distinguished colleague, Mr. 

Landry. I am also on the Small Business Committee, so this has 

really brought my three disciplines together and I have enjoyed 

this very much and I thank you. 

Dr. Weiner, I appreciate your comments on this and I listened 

very, very intently. One of my goals and one of my passions is to 

encourage the development of our natural resources in this country—coal, oil, natural gas. I think we have got the domestic resources, particularly the oil, to go out and harvest and develop it. 

When we were talking, and I appreciate your discussion about 

value destruction and the like, we were talking about taxes. I am 

generally adverse to taxes. Okay? Overwhelming. But with the 

Obama administration’s proposed taxes on the oil industry, I think 

that would be viewed more as a deterrent. You mentioned the term 

about predictability. What would be the best thing in your view to 

get the industry to be more attractive as an investment to go out 

and to develop our oil resources? 

Mr. WEINER. Congressman, I think you make some very good 

points. I think the single most important thing is access and stability about access. Right now people who have invested hundreds 

of millions in heavy equipment in the Gulf of Mexico are watching 

their equipment stay idle. Of course, that is costing a lot of money. 

People are uncertain about the ability to lease things, both on land 

and offshore. Uncertainty about environmental treatments. And so 

one of the questions about shale gas which extends to your state 

as well is about the ability to exploit shale gas given environmental 

uncertainties. 

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Resolution of uncertainty is very important. Just like the trucking industry, the oil industry can live with taxes as long as the industry knows what the taxes are. And when you get a lot of uncertainty and flipping back and forth in policy, people in the industry 

do not know what to do. That is where the value destruction comes. 

If you cannot exploit the asset, as you mentioned the natural resources, it is just lying idle it is not contributing any value to society. 

Mr. FLEISCHMANN. Okay, thank you. Dr. Weiner, I wanted to ask 

you something about the permitting process. It seems to have been 

impeded greatly by this administration. Have you delved into that 

and ways it perhaps could be alleviated so that we could get more 

permits so that we could actually go about recovering our resources? As you say, these people have got the rates and the machines ready to go but they cannot get the permits at a rapid 

enough pace. It has been impeded greatly until lately. They just recently eased up. Do you have any thoughts about that, sir? 

Mr. WEINER. Very important question, Congressman. The big 

change has been the change in regulations associated with the 

Deepwater Horizon accident from exactly a year ago. The procedures have changed and, therefore, the review process changed and 

the Bureau of Ocean Energy Management that does this permitting 

does not have much of a staff. And so unless you guys see it appropriate to give them the resources that they need it will be hard for 

them to get more permits. They have a very small number of staff 

members for a lot of ocean out there, so one of the things you have 

got to do is give them the resources and the industry, like the 

trucking industry, has a good return on capital and would much, 

much prefer having a stable process where they know they can get 

their permit process as opposed to just sitting on someone’s desk. 

That is much more important than just having lower taxes. 

Mr. FLEISCHMANN. Thank you, Dr. Weiner. Thank you, gentlemen. I yield back, Mr. Chairman. 

Chairman TIPTON. Thank you, Congressman Fleischmann. I 

would now like to introduce Congressman Landry for questioning. 

Mr. LANDRY. Mr. Chairman, I have got to tell you I cannot thank 

you enough for bringing Professor Weiner here. I am going to work 

on trying to get you in front of the Natural Resources Committee. 

Your testimony today has been enlightening in an argument that 

we have been making for the past month and a half in that committee. 

But I want to make sure that what I am hearing is correct. We 

have the ability or do you believe that we have the ability that an 

increase in production in this country of oil has the ability to affect 

the price? 

Mr. WEINER. Yes, Congressman, it does. 

Mr. LANDRY. Thank you. Thank you. 

The other question—and of course I represent the 3rd District of 

Louisiana which is along the coast. All that idle iron that you are 

talking about, all of those hundreds of million dollars in investment 

of my constituents and my business owners that are reeling from 

this de facto moratorium and the policies that this administration 

is putting on us. One of the things that I found amazing is that 

the price of natural gas seems to have stabilized over the course 

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of, I would guess, the last 24 to maybe 36 months. Would that be 

a correct statement? 

Mr. WEINER. Yes, you are seeing the effects already of the shale 

gas investment and the shale gas production. Shale gas has come 

online much earlier than people expected and so now you have a 

disconnect where gas is much less expensive relative to oil than in 

the past. And I think one of the opening remarks of one of your 

colleagues said the U.S. has the capability in a few years to be actually an exporter of gas which would help our country in a number of different ways. 

Mr. LANDRY. Would you say that prior to that trend oil and natural gas, that prices moved in cadence from peaks and valleys 

when you look at the graph, I guess, in the last 30—other than say 

from 2008, I guess, from the time the shale plays were put into 

play, but prior to that that oil and gas basically moved in cadence? 

When oil was up, gas was up. 

Mr. WEINER. That was true most of the time because gas has a 

restricted transportation system. When you have something like a 

freeze in the central part of the country where you cannot get more 

gas in there you sometimes had these peaks and spikes in natural 

gas prices that you did not see in oil, especially in the cold winter. 

But your statement is true, over the longer term they tended to 

move together. 

Mr. LANDRY. Now, when they move together, I am just curious, 

I do not know the answer to that but when they move together, we 

were still importing a tremendous amount of our oil but we were 

not importing a lot of natural gas. Was it just that oil drew gas up 

or was it truly a supply and demand issue? 

Mr. WEINER. Well, Congressman, I believe that everything is 

truly a supply and demand issue. 

Mr. LANDRY. Me, too. I am confused by it. 

Mr. WEINER. The U.S. imported about 10 to 15 percent of our 

natural gas needs so we were importing primarily from Canada, 

but also liquefied natural gas to Louisiana and other places. Oil 

and gas—oil is priced in a world market so we have an influence. 

If we produce more, that will put downward pressure on oil prices; 

if we produce less, it will put upward pressure on oil prices. Natural gas is more of a local or regional phenomenon, so it tends to 

track oil but not exactly. Until some of my distinguished colleagues 

on the panel can put natural gas more easily into their transportation equipment, natural gas will continue to sell at a discount to 

oil. Seventy percent of the nation’s oil consumption is in transportation. 

Mr. LANDRY. And I only have one minute but it is a great point 

because my question would be if we move natural gas, aka transportation-type fuel, we would recognize there would be a bump in 

the cost of natural gas. But based upon the supply that we have 

in the country would that be—how great would that rise be do you 

believe? Would it be a dollar? Two dollars? Would it be 5–, $6? 

Mr. WEINER. I think nobody knows for sure. The outlook for natural gas, especially with shale, is very promising. And so I am 

afraid that if we do not do as you suggest, the price of natural gas 

could go way down and that would hurt the natural gas producers 

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dustry. So I actually think that making natural gas into more of 

a transportation fuel would help support the domestic industry. 

Mr. LANDRY. So it would actually act as a buffer, both protecting 

the natural gas industry but also keeping the price at a stable 

level? 

Mr. WEINER. That is correct. 

Mr. LANDRY. Maybe just a little higher than it is today but nothing near the records that we are seeing oil at? 

Mr. WEINER. Nobody knows for sure but I think that is a very 

good guess, Congressman. 

Mr. LANDRY. Thank you so much. Thank you again. Excellent. 

Sorry, guys. 

Chairman TIPTON. Thank you, Mr. Landry and Mr. Weiner. We 

appreciate that. 

I would like to do one follow-up question and I know the ranking 

member has a couple. 

Mr. Ehrlich, I saw your head bobbing when we were talking 

about being able to use natural gas. Is that a good viable alternative for our agricultural community? 

Mr. EHRLICH. Well, I think it could be. Probably the reason my 

head was bobbing was I was thinking about fertilizer production 

and the cost of natural gas because that is a huge deal for our producers. And quite frankly, most of the fertilizer coming into the 

United States today or actually most production of fertilizer in the 

United States today is imported. And so I was just—I think natural 

gas would be a good choice for vehicles but I do not know enough 

about it to make a good comment. 

Chairman TIPTON. Thank you. I now yield to the ranking member. 

Mr. CRITZ. Thank you, Mr. Chairman. I just have a couple more 

questions. 

Mr. Ehrlich, in your testimony you talked about how you have 

massive amounts of energy needed to irrigate your crops and that 

your association is exploring solar power as an alternative. Could 

you describe what you have been doing in that or what the cooperative has been doing with that and are we at the federal level supporting the efforts in any way? 

Mr. EHRLICH. Yes. Well, we are in a coalition with several other 

members, agricultural-type members like often with the utility 

companies, trying to develop solar power. More of a communitybased economic development program, too, that would allow us to 

use this solar power to irrigate, to run pumps and motors and 

things like that. But one of our problems is to use it as economic 

development we have to have more transmission capacity. And so 

we have met some opposition with landowners of where the line 

has to go in order to export power out. 

Mr. CRITZ. Right. 

Mr. EHRLICH. And so it is a difficult process because there is a 

very wealthy landowner in that part of the valley and we respect 

his private property rights, but he has been very successful in 

using the regulatory process to slow down the project. So I do not 

know what the outcome will be but that is what we are involved 

with. 

Mr. CRITZ. The landowner is not Ted Turner, is it? 

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Mr. EHRLICH. No. 

Mr. CRITZ. I get the land report every month and I see he is like 

the largest landowner in the country. 

Mr. EHRLICH. He owns land very close to it. 

Mr. CRITZ. Okay. See, I was not far off. 

Mr. Pingel, the trucking industry is starting to increase its use 

of alternative fuels such as natural gas, ethanol, and biodiesel. 

How does that work for the independent trucker? I mean, you are 

not—you mentioned and I know I have lots of small family trucking firms all around my district and, you know, when you are talking 3, 6, maybe 10 trucks, is it economically feasible for the small 

transportation company to move from strictly diesel to some sort of 

either mix or completely natural gas engine? 

Mr. PINGEL. Well, some of the states like Minnesota, like I said, 

being from Wisconsin, they mandated B5, a 5 percent biofuel. And 

the problem that we ran into at that time was during the winter 

because biofuel has a tendency to gel up faster. So it is great during the summer. And as far as natural gas, the problem with natural gas is the range on my truck right now in miles per gallon is 

over 1,000 miles. You cannot carry enough natural gas to go that 

far, and the range on most of the natural gas trucks that I have 

seen is right around 300 miles. So you are stopping consistently 

more times. 

Mr. CRITZ. Right. Right. And that is what I have seen as well, 

is that there is a future but it is not just you flip a switch and you 

get there. 

Well, I appreciate it, Mr. Chairman. Thank you for your testimony. I really appreciate it and this is a great hearing and, you 

know, from the articles the chairman showed, obviously we are all 

thinking about gas prices right now. So thank you, Mr. Chairman. 

Chairman TIPTON. Thank you, Ranking Member Critz. And I 

would like to thank all of our witnesses once again for testifying 

before the Subcommittee today. You highlighted many of the negative impacts of surging gas prices on small businesses in the 

United States and, more importantly, you have shown us here in 

Congress that the best way to be able to reduce these heavy burdens is to engage in an ‘‘all-of-the-above’’ approach to high gas 

prices. 

The keystone of this strategy is American oil from American soil. 

By allowing increased domestic drilling within our borders and 

within our waters in the near term we can reduce our significant 

dependence on foreign oil while enabling other more cleaner, more 

sustainable fuels to be further explored and better integrated into 

our society, such as natural gas and biofuels. 

The recommendations voiced today have not fallen on deaf ears. 

We will take what we have learned today and inform our colleagues as we move forward or enact or amend policies affecting 

American small businesses. 

I would ask for unanimous consent that members have five legislative days to submit statements and supporting materials for the 

record. Without objection, so ordered and this hearing is now adjourned. Thank you. 

[Whereupon, at 11:05 a.m., the subcommittee was adjourned.] 

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