U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

65–494PDF 2011

RISING OIL PRICES AND DEPENDENCE ON

HOSTILE REGIMES: THE URGENT CASE FOR

CANADIAN OIL

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE WESTERN HEMISPHERE

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MARCH 31, 2011

Serial No. 112–24

Printed for the use of the Committee on Foreign Affairs

(

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

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

VACANT 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE

CONNIE MACK, Florida, Chairman 

MICHAEL T. MCCAUL, Texas 

JEAN SCHMIDT, Ohio 

DAVID RIVERA, Florida 

CHRISTOPHER H. SMITH, New Jersey 

ELTON GALLEGLY, California 

ELIOT L. ENGEL, New York 

ALBIO SIRES, New Jersey 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable David L. Goldwyn, president, Goldwyn Global Strategies, LLC 

(former U.S. Department of State coordinator and special envoy for International Energy Affairs) ...................................................................................... 8

Mr. Lucian Pugliaresi, president, Energy Policy Research Foundation, Inc. 

(former National Security Council member) ...................................................... 18

Paul Sullivan, Ph.D., professor of economics, National Defense University, 

adjunct professor of security studies and of science, technology, and international affairs, Georgetown University ............................................................ 25

Mr. Jeremy Symons, senior vice president, Conservation and Education, National Wildlife Federation .................................................................................... 57

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable David L. Goldwyn: Prepared statement ...................................... 11

Mr. Lucian Pugliaresi: Prepared statement .......................................................... 20

Paul Sullivan, Ph.D.: Prepared statement ............................................................ 27

Mr. Jeremy Symons: Prepared statement ............................................................. 60

APPENDIX 

Hearing notice .......................................................................................................... 84

Hearing minutes ...................................................................................................... 85

The Honorable Connie Mack, a Representative in Congress from the State 

of Florida, and chairman, Subcommittee on the Western Hemisphere: 

Prepared statement .............................................................................................. 87

Statement from the Council of the Americas ..................................................... 89

The Honorable Eliot L. Engel, a Representative in Congress from the State 

of New York: 

Letter from mayors to the Honorable Hillary Clinton dated March 24, 

2011 ................................................................................................................... 92

Letter from LiUNA! to the Honorable Hillary Clinton dated October 22, 

2010 ................................................................................................................... 95

Written responses from Mr. Lucian Pugliaresi to questions submitted for 

the record by the Honorable Connie Mack ........................................................ 97

(1)

RISING OIL PRICES AND DEPENDENCE ON 

HOSTILE REGIMES: THE URGENT CASE FOR 

CANADIAN OIL 

THURSDAY, MARCH 31, 2011

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE, 

COMMITTEE ON FOREIGN AFFAIRS, 

Washington, DC. 

The committee met, pursuant to notice, at 2 o’clock p.m., in room 

2172 Rayburn House Office Building, Hon. Connie Mack (chairman 

of the subcommittee) presiding. 

Mr. MACK. I would just like to start by thanking everyone for 

being here and thanking our witnesses and the members for their 

patience as we try to work through votes that occurred at the same 

time as the starting of this hearing. Again, I want to thank the witnesses for being here today. 

After recognizing myself for 5 minutes, myself and the ranking 

member each for opening statements, I will recognize members of 

the subcommittee for 2 minutes each for their statements. We will 

then proceed directly to hear testimony from our distinguished witnesses. 

The full text of their written testimony will be inserted into the 

record. 

Without objections, members may have 5 days to submit statements and questions for the record. 

After we hear from our witnesses individual members will be recognized for 5 minutes each to question our witnesses. 

I now recognize myself for 5 minutes. Again, I want to thank everyone for their patience and thank the witnesses for being here. 

In light of the recent events in Egypt, Tunisia, and Libya, the political unrest throughout Northern Africa and the Middle East has 

caused significant instability in world oil markets. In the last 

month, the price of oil has risen to $105.00 per barrel, a 29-month 

high, which led President Obama to consider tapping into U.S. oil 

reserves. 

I was pleased to hear the President say yesterday in a speech at 

Georgetown, and I quote:

‘‘Importing oil will remain an important part of our energy 

portfolio for quite some time, until we have gotten alternative 

energy strategies fully in force. And when it comes to the oil 

we import from other nations, obviously we have got to look at 

neighbors like Canada and Mexico that are stable and steady 

and reliable sources.’’

2

I share similar concerns with President Obama and I am pleased 

that yesterday he announced his administration’s intent to increase 

domestic natural gas and oil production and to reduce America’s 

dependence on foreign oil. 

I agree that it is imperative that the U.S. reduce its imports of 

foreign oil over time. However, the Obama administration has 

failed to act. We need to immediately concentrate on replacing foreign oil from thugocrats like Hugo Chavez in Venezuela with reliable, stable allies like Canada. Doing so will ease U.S. energy concerns and provide economic stability while U.S. oil companies make 

greater use of their Federal leases both onshore and offshore to 

help increase domestic oil production. 

What President Obama and his administration have failed to do 

is increase American security. By approving the Presidential Permit for the Keystone XL pipeline this administration could create 

tens of thousands of jobs to help boost the ailing economy, and secure an additional 500,000 barrels of oil per day into U.S. refineries 

in Oklahoma and Texas. 

Delays in this approval process have cost the United States valuable jobs at a crucial time. For example, companies like MasTec in 

my home state of Florida have the potential to bring home economic benefits from the construction of the Keystone XL pipeline. 

In recent weeks I have criticized the administration for their lack 

of policy not only in the Western Hemisphere but on a global scale. 

Instead of shoring-up important national security and energy resources from a close ally, our nation continues to rely on the likes 

of Hugo Chavez for approximately 10 percent of our oil and the 

price we pay is reliant on the actions of unreliable and corrupt dictators such as Libya’s Qaddafi. 

Furthermore, this oil dependency holds the State Department 

hostage when they should be calling out the Chavez regime for its 

vast human rights violations and support of terrorism. 

The approval of the Keystone XL pipeline to transport Canadian 

oil to our southern refineries would add supply to the global markets while allowing our refineries to operate at full capacity. Further, U.S. energy companies will benefit by linking into the pipeline allowing the U.S. to increase its production of domestic oil, 

provide direct access for U.S. energy companies to Gulf refineries, 

and reduce congestion in Cushing, Oklahoma. 

The result of the pipeline would increase productivity, but most 

importantly for me, it would force Hugo Chavez to realize that the 

United States is not beholden to fully funding his regime indefinitely. It must be made clear to leaders such as Hugo Chavez, who 

utilize state-owned oil companies to violate U.S. sanctions on Iran, 

that there are consequences for their actions. 

While the influx of jobs and the arguments for increased energy 

security and national security speak for themselves, the environmental concerns of extracting and refining oil from the Canadian 

oil sands are fueling a well coordinated effort to politicize this vital 

progress. 

Let me make a few points toward this end. 

The Canadians have sovereign rights to the development of their 

oil sands, and any attempt by U.S. politicians and interest groups 

to impact their ability to extract this oil is like Canadians trying 

3

to control when and where we extract our resources, and I might 

add, such efforts are a waste of U.S. time and taxpayer money. 

This oil will be extracted and sent to Asia if it is not allowed to 

support our southern refineries. 

Lifecycle green house gas emissions related to the extraction and 

refining of the Canadian crude oil are less and better regulated 

than the emissions related to the oil imported from Venezuela, 

Saudi Arabia, Nigeria and Mexico, the United States’ top suppliers 

outside of Canada. 

While breaking the U.S. dependence on oil is critical, and an 

area where we should enhance our current partnerships with Canada and Brazil, a stable economy with energy and national security 

is imperative to allow the necessary research and development of 

green technology to propel the U.S. forward. 

Securing the Keystone XL pipeline will provide us with that luxury and must not incur additional delays. 

I would like to recognize Mr. Sires for 5 minutes for an opening 

statement. 

Mr. SIRES. Thank you, Mr. Chairman. Thank you for holding this 

hearing today and thank the witnesses for your patience. I was 

here earlier and we had a vote. 

We are in the midst of an energy crisis. We have a situation in 

the Middle East that really quite frightens me as we head into our 

venture in Libya. We have a situation where the price of oil, the 

price of gas is increasing in the United States. We have a situation 

where we can remedy some of this with this Keystone XL pipeline. 

I was concerned, I must admit, at first about the environmental 

impact but, quite frankly, I am confident that this is something 

that is good for Canada and it is good for the United States. I think 

we are going to create in the process something like 118,000 jobs 

and bring in something like $20 billion into our economy. We certainly cannot pass that up. 

Furthermore, I think that we can stop our dependency on foreign 

oil. Canada has been a friend. Canada will continue to be a friend 

and we will continue to work with Canada so I am looking forward 

to hear from you and I am looking forward to this project when it 

eventually gets done so we can reduce our reliance on foreign oil. 

Thank you very much for being here. 

Thank you, Chairman, for holding this hearing. 

Mr. MACK. Thank you, Mr. Sires. 

I would like to recognize Ms. Schmidt for 2 minutes for an opening statement. 

Ms. SCHMIDT. Thank you, Mr. Chairman. I could not agree more 

with both of your statements. As we look to the Middle East and 

the instability that continues to grow in the region and the fact 

that so much of our reliance on foreign oil comes from that part 

of the world, we really have to look to another part of the world 

for that oil. 

As we all know, over 50 percent of what we use in this country 

today comes from a foreign source. Of that, when you look at the 

total pie of the foreign source, right now we are receiving about 23 

percent from Canada. We need to grow that portion of the pie. It 

makes absolutely no sense to delay this Keystone pipeline, for a national security reason as well as an economic reason. 

4

From a national security reason, it is because our friends are Canadians. It is always good to do business with friends. The second 

is, as we see a spike in gasoline prices at the pump, my fear is with 

more consumption in the summer that is only going to continue to 

grow, it is only going to weaken our economy, so getting the opportunity out there for another good supply of oil for our citizens in 

the United States makes sense. 

I urge that we allow this to occur, get the permitting done quickly. Let us build the pipeline and let us move not just Canada forward, but the United States as well. 

I yield back the balance of my time. 

Mr. MACK. Thank you very much. 

I would now like to recognize Mr. Payne for 2 minutes for an 

opening statement. 

Mr. PAYNE. Thank you very much. Thank you, Mr. Chairman, for 

calling this very important hearing dealing with TransCanada and 

its pipeline. As we know, this is an issue that has two very clear 

sides; proponents of the Canadian oil, Keystone pipeline including 

Canadian agencies and petroleum industrial stakeholders to energy 

security, economic benefits such as job creations. 

We have heard about that here not only in Canada but in the 

United States. Some contend that Keystone project secures growing 

Canadian oil supplies for the U.S. market, which would help offset 

imports from less dependable foreign sources. They claim that the 

oil output cannot flow into the United States infrastructure; it may 

get exported to Asia. 

Of course, those opposed to the pipeline, primarily environmental 

groups, object to the project principally on the grounds that it support dirty Canada oil sand development and that it would pose an 

environmental risk to ground water and that it promotes continued 

U.S. dependence on fossil fuels. We have certainly two sides. I 

would like to hear both sides of the argument and hopefully we can 

come up with what is in the best interest of the majority. 

Thank you. I will yield back. 

Mr. MACK. Thank you, Mr. Payne. 

I would now like to recognize for 2 minutes Mr. Rivera for opening statements. 

Mr. RIVERA. Thank you very much, Mr. Chairman. Thank you to 

the witnesses for testifying before our committee today. Today the 

average price per gallon in Florida, my home state, stands at $3.61 

a gallon. The ramifications are felt across the economy when you 

take into account the hidden costs associated with such a surge in 

fuel cost, especially when you consider it was $2.80 just 1 year ago. 

Consumers see the affects of rising fuel costs in their daily lives 

from the increased price of transportation, the increased cost of 

moving goods from producers to store fronts and to market, the increased cost of utilities, the increased cost of literally feeding their 

families and so on. 

My constituents are being squeezed by these increased costs and 

the administration does not seem to have a coherent plan to expand supplies and help ease price pressures. With additional supplies, the tight market conditions that have put pressure on our 

constituents are going to persist. 

5

To address our current situation we need to increase capacity 

and explore for new domestic sources of oil and natural gas. 

Since the Deepwater Horizon accident, production in the outer 

continental shelf has fallen by 270,000 barrels per day. Furthermore, the Energy Information Administration expects Gulf of Mexico production to fall by 250,000 barrels per day each year over the 

next 2 years. 

I also understand that EIA has lowered their annual energy outlook because of, from their own report, ‘‘Expected delays in nearterm projects in part as a result of the drilling moratorium.’’ Canada is America’s No. 1 supplier of petroleum. 

In January of this year we imported over 2,100 barrels of oil a 

day from our neighbors to the north. Our Canadian friends are capable of providing us with much more petroleum resources but we 

currently lack the sufficient infrastructure to bring them to refineries for processing and eventually to market. I look forward to 

your testimony on this critical issue. 

Thank you, Mr. Chairman. 

Mr. MACK. Thank you, Mr. Rivera. 

Now I would like to recognize the ranking member, Mr. Engel, 

who had some votes at another committee. 

We appreciate you being here and you are recognized for 5 minutes. 

Mr. ENGEL. Thank you. Thank you very much, Mr. Chairman. I 

appreciate your holding this for me. Thank you for calling this very 

timely hearing. Thank you also to our distinguished panel of witnesses. I look forward to hearing your testimony and I have no 

doubt that our question and answer session will be lively. 

At this point it is not my intention to launch into a fierce monologue in support or opposing the Keystone XL project. On the contrary, I am certain there are some very sound and reasonable arguments in support of this project. However, I am equally sure there 

are cogent and convincing arguments opposed to Keystone XL. This 

is perfectly normal for such a large undertaking with significant 

ramifications. 

We are speaking here about energy dependence, international 

commerce, jobs, and more. We are talking about oil, hostile regimes, foreign relations, and geopolitics. We are discussing greenhouse gases, groundwater pollution, and pipeline safety. We must 

consider all of these factors, not just some. 

I have to confess my mind is not made up on this matter. On the 

one hand, I have no problem with energy imports from Canada. 

Canada is already our country’s largest foreign source of energy including oil, natural gas, and electricity. However, I think that before this project can go forward some serious environmental safety 

and economic questions must be addressed. 

As the ranking member of this subcommittee I believe we must 

elicit views from both sides, not only to inform and educate myself, 

but to aid my colleagues in the same endeavor. It has been nearly 

1 year since the disastrous oil spill occurred in the Gulf of Mexico 

and we still have much further to go to recover from that catastrophe. 

Of course, what happened in the Gulf is not what is being proposed here. However, there are a few key lessons we must draw. 

6

Most importantly, we must ensure that the regulatory failure 

which contributed to the crisis in the Gulf does not reoccur on the 

Keystone XL review process. 

We witnessed a tragic event of such massive consequences last 

April that we must ensure we are taking every reasonable safety 

precaution and examine this proposal from all angles to prevent a 

similar disaster in a different part of our country. 

As the co-chair of the House Oil and National Security Caucus 

I have long believed that our dependence on oil is quickly ascending to unacceptable levels. It may perhaps already be there. As I 

look at the Keystone XL pipeline I wonder whether this pipeline actually increases our dependence in the long run. 

Yet, I strongly agree with Chairman Mack that Hugo Chavez is 

a menace to the region. Any solution or strategy that lessens our 

dependence on Venezuelan oil, or even our dealings with that regime, is certainly an idea with merit and worthy of consideration 

as this project is. 

I would like to voice one word of caution, though. I have heard 

it said that the State Department is the only thing holding up the 

Keystone XL pipeline and if they would only get out of the way, 

this project would move forward. Sometimes in our excitement 

about a specific idea or exuberance for one approach or another it 

is easy to overlook the serious legal obligations which we in Congress impose on our government agencies. 

The State Department is in the process of reviewing the permit 

and drafting an environmental impact statement for the Keystone 

XL pipeline under the National Environmental Policy Act. This is 

important work with legal and procedural requirements which cannot be swept aside because one industry or another wants to move 

ahead in great haste. 

I do not believe the State Department is acting in a obstructionist manner. States should not and must not simply act as a 

rubber stamp pressuring the State Department to unduly hasten 

its decision-making process in the face of such far-reaching consequences is not appropriate. 

By no means do I mean to suggest a decision in opposition to the 

project is pre-ordained or even the right decision to make. However, as we see the potential benefits of greater energy inputs and 

additional pressure on Chavez, we also know that there are environmental pipeline safety and groundwater concerns. 

I look forward to hearing from our witnesses about all of these 

points. I think that we need to look at energy policy. I think we 

need a balanced energy policy. I do not think we can automatically 

just say no to everything and then at the same time complain 

about importing oil. 

I do think this is interesting. I, again, have expressed some of 

my concerns about it and I look forward to hearing all of our witnesses today. I thank the chairman for calling this hearing and, 

again, I thank the witnesses for their presence here today. 

Mr. MACK. Thank you, Mr. Engel. 

I would now like to introduce our witnesses. 

Oh, I am sorry. Sorry, Mr. Poe. 

I would like to recognize Mr. Poe for 2 minutes for an opening 

statement. 

7

Mr. POE. Thank you, Mr. Chairman. Thank you for allowing me 

to participate in this hearing. It seems delay, delay, delay is the 

administration’s energy plan. The Keystone XL project, which the 

President has had on his desk for over 2 years, is long overdue. 

Two weeks ago I wrote a letter with other Members of Congress 

to the administration to approve the Keystone XL permit immediately. It will bring 700,000 barrels per day from stable Canada 

to the United States. Canada could be a reliable source of oil for 

years to come. Canada’s 175 billion barrels of oil reserve is second 

only to Saudi Arabia. I would rather import oil from Canada than 

from the unstable Middle East. 

The pipeline which would start in Alberta, Canada, would end up 

in my gulf coast district where thousands of my constituents already work in the energy industry. I probably represent more refineries than any other member of the United States Congress. Gas prices are hitting $4 a gallon. Oil prices have hit $100 a barrel for the first time since October 2008. For every penny the gasoline price increases the cost to consumers is an additional $4 billion 

a day. By just signing a piece of paper to grant Keystone XL its 

permit the President could inject thousands of new jobs in our 

economy. 

The President’s delays of signing off on this permit is, in my 

opinion, because the State Department, the EPA, and out-oftowners are stonewalling the project. The EPA has environmental 

concerns and attacking a pipeline on these grounds is absurd in 

this case. Experts agree the pipelines are the most cost effective 

and most environmentally sound way to transport oil and natural 

gas. 

We need to get oil to the refinery someway. We can import it 

through a safe reliable pipeline or we can use tankers from the 

Middle East. This should be an easy decision; reduce our reliance 

on oil from the Middle East, and increase our reliance from an ally, 

create thousands of jobs. The administration needs to approve the 

XL permit today. It is time to start laying pipe. 

Thank you, Mr. Chairman. 

Mr. MACK. Thank you, Mr. Poe. 

Now I would like to introduce our witnesses. 

First, the Honorable David Goldwyn. Mr. Goldwyn has served as 

the coordinator and special envoy for International Energy Affairs 

at the U.S. Department of State. Prior to serving as special envoy, 

Mr. Goldwyn was counselor to the Secretary of Energy. 

Currently Mr. Goldwyn is the president and founder of Goldwyn 

Global Strategies, LLC. 

Second, Mr. Pugliaresi has worked as a consultant on a wide 

range of domestic and international petroleum issues. Prior to 

being a consultant he served in the National Security Council, Department of State, Energy Interior, as well as the Environmental 

Protection Agency. 

Currently he is the president of the Energy Policy Research 

Foundation, a nonprofit organization that studies energy economics. 

Third, Dr. Paul Sullivan is a professor of economics at the National Defense University and an adjunct professor of security studies and of science, technology and international affairs at GeorgeVerDate 0ct 09 2002 14:06 Jun 29, 2011 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\WORK\WH\033111\65494 HFA PsN: SHIRL
8

town University, where he teaches classes on global energy and security. Mr. Sullivan has written on the economics of war and peace, 

the political economy of oil and gas and energy security. 

Finally, Mr. Jeremy Symons is the senior vice president of the 

National Wildlife Federation’s Conservation, Education, and Advocacy Programs. Mr. Symons leads a staff located at a network of 

National Wildlife Federation offices from Washington, DC, to Anchorage, Alaska. 

Thank you all for being here. 

Mr. Goldwyn, you are now recognize for 5 minutes for your testimony. 

STATEMENT OF THE HONORABLE DAVID L. GOLDWYN, PRESIDENT, GOLDWYN GLOBAL STRATEGIES, LLC (FORMER U.S. 

DEPARTMENT OF STATE COORDINATOR AND SPECIAL 

ENVOY FOR INTERNATIONAL ENERGY AFFAIRS) 

Mr. GOLDWYN. Thank you, Mr. Chairman. It is an honor to speak 

to the committee and to be on this distinguished panel to talk 

about the importance of Canadian oil for U.S. and global energy security. 

You have my lengthy statement for the record so I think I will 

just speak to you really about the issues. 

We heard the President say yesterday we live in tumultuous 

times and energy security is important. We heard the recognition 

from him and from each of you today that oil is and will remain 

a strategic commodity for our economy for decades to come. 

We have taken some, I think, visionary steps led by the President on the demand side on fuel efficiency, on advanced fuels, on 

critical research and development which in time will take us to a 

world where we are less dependent on oil. But we are not in that 

world today and we won’t be for the next couple of decades. 

Even with increased production from the Bakken and from other 

areas and revived production in the Gulf of Mexico, we will be importing 8 million barrels a day. 

The question is from where? Into this context comes the question 

of is it appropriate for the United States to permit this pipeline, 

Keystone XL, to the United States in light of the environmental 

impacts that it may have as required by the Congress for the 

United States to examine. 

So let me take a step now and answer that question. I believe 

the answer is that after considering those impacts indeed it is very 

much in the United States’ national interest to permit this pipeline 

but the environmental considerations are important and I think 

there is hope to be had there. 

In terms of supply security, we have reason to be concerned. The 

world is going to consume a lot more energy. Mexican production 

has declined and while they are trying to revive it, it will be 

awhile. Venezuelan production has declined because of their own 

policies. 

There is uncertainty in the Middle East. Even optimistic projections for the call on OPEC in 2035 for 52 percent of our oil supply 

assume that there will be increased production in Venezuela, in 

Libya, in Iran. These are precarious assumptions at best. We do 

9

need to worry about whether there will be adequate investment in 

the world for oil supply. That leads us to Canada. 

Canada not only is our number one supplier, 22 percent of oil 

right now, our number one trading partner, they have the largest 

reserves outside of OPEC in the world and are right next door. 

So as we look at the question of whether permitting this pipeline 

is in our national security, I think we look at five considerations. 

First, permitting Keystone XL will enhance supply security somewhere between 590,000 and up to 900,000 barrels a day with compression if it is needed. It is close by, a very short distance. 

Oil delivered by pipeline is not subject to either weather problems in the Gulf of Mexico, which can happen, or problems in sea 

lanes which my colleague, Paul Sullivan, I am sure will talk about. 

It can provide oil to the midwest and to the Gulf Coast. It is also 

an on-ramp for the Bakken. As we look at increasing domestic oil 

production, having a pipeline, or having access to route that oil to 

the Gulf Coast, is going to be critically important. 

Second, Keystone XL can provide infrastructure security. It 

makes a difference when oil comes by pipe. The chance of a political disruption or interruption in Canada is pretty small, I think, 

these days. Infrastructure itself, diversity of terminals, diversity of 

ways we get oil in, diversity of places we refine it is why we are 

so secure. 

Japan worries about whether it can get oil into the country. We 

have many refining centers, many import centers but a pipeline is 

part of that security. Having redundant pipelines, excess pipelines, 

or even pipelines which may not be full now but may be in a little 

while, is critically important. 

Third, the money which we pay to Canadian suppliers is much 

more likely to be recycled and spent in the United States than in 

any other country that we would trade with because they are our 

number one trading partner. Employment impacts: I don’t know 

what the numbers are exactly. There are many studies. It is intuitively obvious that a large infrastructural project largely sourced 

in this country will provide jobs. And there is the enhancement to 

national security because it does matter where the rent goes. It 

does matter where the money we pay for oil goes. We don’t often 

get a chance to pick where our oil rents go, but in this case we do 

and we get to choose Canada. 

The environmental impacts are important. As Representative 

Engel noted, we are required—the United States is required under 

NEPA to consider them. But there has been tremendous study and 

we have learned a lot from the pipeline process. In fact, the pipeline is safer because of the comments that we have received in the 

process, that the U.S. Department of State has received. 

In fact, Canada has made transparent and accelerated its own 

plans to deal with the water and air and other impacts of the pipeline. These are things that Canada is doing at the national level 

and at the provincial level and also at the commercial level, but 

there is no doubt that the diplomacy that has been attended to this 

and the comments to the pipeline have helped accelerate that process and make it clear. 

Last, I would just say these are serious issues and they are held 

by people of good will on all sides. The process that we have gone 

10

through has worked. I think the State Department is being as deliberate as it can to make sure that when it comes to a conclusion 

it is beyond reproach. 

In that process we have learned a lot about how to manage the 

environment and manage security. I think the national interests 

are clear. The last study that we have gotten from the Department 

of Energy shows that the environmental impacts will take place 

whether or not this pipeline is permitted. 

Canada will produce the oil. It will ship the oil. It will be refined 

some place. I thank you for your attention to this issue and look 

forward to your questions. 

[The prepared statement of Mr. Goldwyn follows:]

11


65494a_1.eps
12


65494a_2.eps
13


65494a_3.eps
14


65494a_4.eps
15


65494a_5.eps
16


65494a_6.eps
17


65494a_7.eps
18

Mr. MACK. Thank you very much. 

Next Mr. Pugliaresi is recognized for 5 minutes. 

STATEMENT OF MR. LUCIAN PUGLIARESI, PRESIDENT, ENERGY POLICY RESEARCH FOUNDATION, INC. (FORMER NATIONAL SECURITY COUNCIL MEMBER) 

Mr. PUGLIARESI. Chairman Mack, Ranking Member Engel, thank 

you so much for this opportunity to give testimony on this very, 

very important issue. I will just summarize my remarks not to be 

repetitive to——

Mr. MACK. Can you push the button on the mic there? 

Mr. PUGLIARESI. It is on. 

Mr. MACK. Okay. Pull it a little closer. 

Mr. PUGLIARESI. Maybe what I can do is sort of add a little bit 

to Mr. Goldwyn’s comments here so we are not too repetitive. 

I think, first, it is absolutely important to understand that this 

is North American energy. To the extent that we expand Canadian 

oil production into the United States, it is nearly the same as expanding it within the United States. These two markets are so integrated, with a very long history of safe transportation of Canadian crude into the United States going back to the 1950s. 

Since the 1960s, oil sands has been a growing proportion of that 

production in shipment into the United States. In fact, Enbridge 

itself, one of TransCanada’s competitors, moves 70 percent of the 

crude oil production of the United States from Canada already. 

Another aspect of this issue that is very important to understand 

is that the American refining sector is facing a very extensive competitive environment worldwide and it deepens upon matching the 

crude types in the world to the complexity of its operations. It is 

the blended bitumen from Canada, the heavier crudes, for which 

American refining is most efficient. 

To the extent that more Canadian crude can flow into the United 

States market, that, as David said, we can make our transportation 

of crude supply more efficient, we can improve the production potential for our own producers, particularly in the Bakken. But we 

can also make sure that our domestic refining sector is a much 

more sound competitive basis going forward. 

This is very, very important because the loss of Venezuelan and 

Canadian crude production over time has squeezed the differential 

between light and heavy crudes and made our domestic refining 

sector less competitive. This will change those terms. 

Now, another issue is we wanted to look at what is the potential 

over time, so we asked Turner Mason and Company, a very respected petroleum and refining consultant from out of Dallas, to 

look at our numbers as well and they gave their perspective on the 

issue. 

According to Turner Mason, they expect total Canadian crude 

production will increase by 400,000 barrels a day in the next 5 

years and almost 1.1 million barrels a day in the next 10 years. 

But more importantly Turner Mason’s assessment of economically 

recoverable unconventional oil shows that Canada can now exceed 

the reserves of Saudi Arabia. It is crucial that we take the steps 

to encourage the Canadians to develop this resource. It is good for 

Canada and it is good for us. 

19

What I want to do is just take a moment to give you what I think 

is the most important point. In world oil markets prices are determined not only what is happening now, but also expectations that 

buyers and sellers have about future production, including future 

American energy policy. 

We are often told that quickly moving forward on Keystone, 

opening up Alaska, permitting drilling in the Arctic, expending oil 

and gas leases on new properties in the United States, and even 

deepwater drilling in the Gulf of Mexico plays too far in the future 

to have any affect on prices now. But this is just off the case. 

Putting aside that we say this every time there is a crisis, if we 

open up more North American resources for development, we may 

very well shift long-run expectations on domestic supply and receive the benefits of lower prices even before this production comes 

to market. This what happened in ’73/’74 and 1979. 

We did not lose that much oil from the Arab oil embargo. It was 

expectations on future growth came way down that prices went up 

in the current period. We want to reverse that. We want to change 

expectations abut what we are going to do in terms of our policy 

and future production. 

I want to leave you with a statistic worth thinking about. If we 

can alter the long-term price of crude oil by $20 a barrel over any 

base-case period, say $80 instead of $100, the present value savings 

in our import bill alone is $1 trillion. For the national economy it 

is probably twice that. 

This means the jobs, the return on capital, corporate and personal income taxes, government revenue for bonus bids, royalties 

all grow substantially. It is a no-brainer for us. 

With that, I will conclude my testimony. 

[The prepared statement of Mr. Pugliaresi follows:]

20


65494c_1.eps
21


65494c_2.eps
22


65494c_3.eps
23


65494c_4.eps
24


65494c_5.eps
25

Mr. MACK. Thank you very much. 

Mr. Sullivan, you are recognized for 5 minutes. 

STATEMENT OF PAUL SULLIVAN, PH.D., PROFESSOR OF ECONOMICS, NATIONAL DEFENSE UNIVERSITY, ADJUNCT PROFESSOR OF SECURITY STUDIES AND OF SCIENCE, TECHNOLOGY, AND INTERNATIONAL AFFAIRS, GEORGETOWN 

UNIVERSITY 

Mr. SULLIVAN. Thank you, Chairman Mack, Ranking Member 

Engel, and members of the subcommittee for giving me the opportunity to testify today on this issue. 

I also need to make the usual caveat that these are my opinions 

alone and do not represent those of the National Defense University, Georgetown, or any other organization I may be associated 

with. 

It is indeed an honor to be part of this important discussion 

about Canadian oil. The most important energy security challenge 

we face in this country is oil and, most particularly, imported oil 

which represents most of our needs. 

Oil represents 37 percent of all of our energy use. Two-thirds of 

the oil is used for transportation and two-thirds of that is used for 

gasoline. Ninety-one percent of our transport is based on oil. Importantly, when it comes to transportation our military is almost entirely vulnerable to oil markets. 

We are facing increasing instability in the Middle East and 

North Africa, an area where over 70 percent of proved reserves of 

conventional oil are known to be. We saw the splitting of Sudan 

into two countries. Sudan is an oil producer. We saw the revolution 

in Tunisia which rocked the region and spurred on other uprisings 

and revolutions. 

Tunisia is not a large energy producer but its revolution has 

made a huge difference to the stability in the region. We have seen 

a revolution in Egypt where the important energy transport nodes 

of the Suez Canal and the Sumed pipeline are found. 

Again, Egypt is a net oil importer but it is the most important 

country in the region with regard to cultural change and political 

impetus. We are now seeing a bloody revolution and civil war in 

Libya, a country that used to export 1.5 million barrels a day. Its 

exports have been cut drastically. 

Now, Algeria could be next in line. They export 1.8 million barrels a day. Bahrain is not a large oil exporter or producer, but has 

become a focal point for rebellion via the Sunni-Shia split. He is 

in the most important region for oil production and export in the 

world. Iran is clearly behind many of the troubles in Bahrain. 

Most of the populations above the major Saudi oil fields including the Ghawar field, which is the size of Pennsylvania, 300 meters 

deep, are Shia. Iran is likely stirring up trouble in that part of 

Saudi Arabia. Saudi Arabia is the world’s biggest exporter of oil 

and has the largest conventional reserves of oil accounting for 25 

percent. 

Iran could be facing instability. It exports 2.5 million barrels a 

day. Syria is becoming more violent by the day and it is connected 

in with the issues in Lebanon, the peace process, and Iran. Yemen 

26

could be one of the most complicated places right across from Somalia. 

On the coast, to the southwest and the west of Yemen there is 

the Bab-Al Mandab where 4 million barrels a day goes through and 

10 percent of the world container traffic transits. Yemen could split 

into multiple failed states and this could happen sooner than we 

can think. 

Iraq exports about 1.7 million barrels a day but 95 percent of its 

exports go through two geographically tiny, but strategically gigantic, facilities, the Al Basra Oil Terminal, and the Khawr Al Amaya 

Oil Terminal right near it. Syria, Yemen, and Iraq all have SunniShia tensions. 

Then we have the Ab Qaiq facility in Saudi Arabia where six to 

seven million barrels a day goes through for sweetening and processing. Al-Qaeda got in the first fence in 2006. 

Well over one-fourth of all the oil exported in a single day comes 

out of the Middle East and North Africa and this is an area of increasing turmoil. Importantly, almost all of the excess capacity in 

the entire world is found in the GCC and 80 percent of that is in 

Saudi Arabia. 

Under certain scenarios, we could be looking at $200 to $300 a 

barrel of oil if all goes south. Hopefully that won’t happen. 

Our number one source of imported oil is quiet, stable, safe, and 

friendly Canada. It is our closest military cooperation. Our largest 

and closest trade relations are with the Canadians. Our most important energy trading relations are also with the Canadians. They 

have over 175 billion barrels of reserves. 

We are also facing peak oil at the same time and need to go to 

unconventional oil. Fifty-two percent of the unconventional oil not 

owned by nationalized oil companies can be found in Canada. 

It would be great if we could quickly lightweight our transport 

vehicles, make the drive trains and other parts of the engines, etc., 

for efficiency. Focus much more on flexible fuel options is a good 

idea for our policy option to consider. Or more toward electric plugin cars, more hybrids, CNG and so forth, but that could take a very 

long time. 

We need energy security now and for the medium term to help 

us as a nation move beyond oil within the next 50 years or so and 

go toward these alternatives that we have all been discussing. 

Mr. Mack, you mentioned that, and this is the bridge we need. 

This is the security we need. Thank you very much. 

[The prepared statement of Mr. Sullivan follows:]

27


65494d_1.eps
28


65494d_2.eps
29


65494d_3.eps
30


65494d_4.eps
31


65494d_5.eps
32


65494d_6.eps
33


65494d_7.eps
34


65494d_8.eps
35


65494d_9.eps
36


65494d_10.eps
37


65494d_11.eps
38


65494d_12.eps
39


65494d_13.eps
40


65494d_14.eps
41


65494d_15.eps
42


65494d_16.eps
43


65494d_17.eps
44


65494d_18.eps
45


65494d_19.eps
46


65494d_20.eps
47


65494d_21.eps
48


65494d_22.eps
49


65494d_23.eps
50


65494d_24.eps
51


65494d_25.eps
52


65494d_26.eps
53


65494d_27.eps
54


65494d_28.eps
55


65494d_29.eps
56


65494d_30.eps
57

Mr. MACK. Thank you, Mr. Sullivan. 

Mr. Symons is recognized for 5 minutes. 

STATEMENT OF MR. JEREMY SYMONS, SENIOR VICE PRESIDENT, CONSERVATION AND EDUCATION, NATIONAL WILDLIFE FEDERATION 

Mr. SYMONS. Chairman Mack, Ranking Member Engel, members 

of the subcommittee, thanks for having me here today. I have to 

say, Mr. Chairman, I am feeling a little outnumbered. I was hoping 

I might see 30 minutes for equal time but, alas, I will proceed. 

My name is Jeremy Symons. I am with National Wildlife Federation. I am Senior Vice President for Conservation and Education. 

National Wildlife Federation is a nonpartisan, nonprofit organization with 4 million members and supporters and 47 state affiliates 

across the nation. 

Events in North America and the Middle East, as you have already heard, and rising gas prices once again underscore our dangerous addiction to oil and the high price we pay due to the instability of global oil markets. America needs energy security, so the 

question is what is the best way of getting there. 

As much as we may wish otherwise, there are no quick fixes by 

switching suppliers of our oil imports from one country to another 

and turning to extreme oil such as Canadian tar sands. There is 

only one way out. We need to get serious about the innovation and 

our transportation and fuel sectors that will create jobs here at 

home and provide Americans a healthier, cleaner, and more secure 

energy future. 

One myth that I often hear is that Canada will find a responsible 

way to mind tar sands. Years of experience have proven otherwise. 

I have been there. I have seen the damage. I have listened to courageous people who have suffered as they have stood up to big oil 

and the oil companies up in Alberta. 

Alberta tar sands operations are the most destructive source of 

oil on the planet. It can take five barrels of clean water and four 

tons of sand to squeeze out just one barrel of tar sludge. This tar 

sludge is so thick and heavy it must be diluted and pressurized to 

transport it through pipelines to refineries. 

Last year I flew over the tar sands operations and I brought 

some of the pictures here today and they are up on the monitors 

here today that I took. As you can see what was what forest wilderness has been turned into barren strip mine waste land and lakes 

full of toxic waste that stretch as far as the eye can see, mine after 

mine after mine. The scale was shocking and difficult to imagine. 

You can see here if you go to the next slide one of the movers, 

the sand movers. If you go to the next slide it takes you back to 

the original image. You can’t even see those movers in there but 

they are out there from this distance. They are just tiny dots, tiny 

pixels to give a sense of the scale. 

You can also see of the toxic waste lakes in this picture that are 

created. If you go to the next slide, you can see the goo here and 

the toxic sludge that kills thousands of birds that fly north from 

the United States as they migrate each year. Then the final slide 

you can see the advanced technology that people like to talk about 

that protect wildlife. That is a scarecrow. That is what they use. 

58

Air pollution from tar sands production also causes three times 

more carbon emissions than conventional oil, escalating greenhouse 

gas emissions when we should be moving in the other direction. 

In Alberta I met with First Nation communities and listened as 

they told the heartbreaking story of how cancer rates have increased as the tar sands operations have expanded. 

One elder told me that they pull their kids indoors whenever the 

air gets too noxious. 

Large volumes of toxic waste leaks into the Athabasca River 

every year contaminating the water supply and fish. 

So this is what you expected me to say. You might not have 

known the extent of the damage but you knew there was an environmental price. The question really comes down to is it worth it. 

Is it a price that we have to pay? 

I have to say, though, we are living in—we are really seeing Canadian oil as some sort of mirage for our energy security. The idea 

that expanding Canadian tar sands production provides energy security is really just an illusion. Let us look at what has happened 

in the past month since outbreak of violence in Libya. The price of 

Canadian oil has increased by $20 a barrel. 

That is actually twice as much as the jump in the increase in 

global oil prices. Twice as much as what we have seen in Saudi 

Arabia. Nobody likes getting oil from the Middle East, but why is 

getting oil from Canada better when the oil companies who control 

it will take advantage of a crisis anytime there is one anywhere in 

the world to increase oil prices, and speculators will make us pay 

at the pump. 

This isn’t about Canada. This is about being loyal. 

Every hour Americans are now spending $2 million more for Canadian oil than we did 1 month ago. Where is the economic security in that? Oil produced from Canadian tar sands is some of the 

most expensive oil to produce in the world. As we drive up global 

oil prices, countries that don’t like us will profit whether we buy 

their oil directly or not. Where is the energy security in that? 

We currently have surplus pipeline capacity to carry all the oil 

Canada can provide to America’s midwest. So why do oil companies 

want to rush to build the Keystone pipeline? Because they want to 

access the deep water ports down in Texas so they can export the 

oil that we are bringing in. 

We are actually exporting twice as much for fine oil products 

than we were just 5 years ago. Chairman Valero just said that the 

future of Iraq refining in the U.S. is in exports. Why do we want 

to move oil that is coming in from the midwest down to Texas so 

it can be exported to China or other places and want to call that 

energy security? 

Those refineries in Texas, by the way, are owned by Venezuela 

and by Saudi Arabia. 

The only certain impacts to the Keystone XL pipeline are that it 

will help oil companies manipulate gas prices in the midwest and 

that it puts to risk the Ogallala Aquifer in Nebraska which provides irrigation for much of America’s bread basket and drinking 

water for over 2 million people. 

In seeking the Canadian permit, TransCanada actually said to 

the Canadians, they said that they will increase gas prices by $4 

59

billion a year on the U.S. That was the purpose, $4 billion for oil 

we are already getting and not another drop. 

I know that I am running out of time, Mr. Chairman, so let me 

just say that there has also been a huge spill last year in the 

Kalazmazoo River in Michigan where we saw 800,000 gallons from 

a tar sands pipeline because tar sands are corrosive and we have 

not updated our pipeline regulations for tar sands as need to be before we build a new pipeline so we really appreciate that the State 

Department is taking a proper look at the safety of these pipelines 

and the environmental impacts before they rush forward. Thank 

you very much. 

[The prepared statement of Mr. Symons follows:]

60


65494b_1.eps
61


65494b_2.eps
62


65494b_3.eps
63


65494b_4.eps
64


65494b_5.eps
65


65494b_6.eps
66


65494b_7.eps
67


65494b_8.eps
68

Mr. MACK. Thank you very much. 

Again, I want to thank all of you for your opening statements 

and your testimony. We will now go into questions. I recognize myself for 5 minutes. 

Mr. MACK. Mr. Pugliaresi, could you talk a little bit about how 

buying or having this oil from Canada will reduce the leverage over 

hostile regimes like Venezuela and Libya? I think you mentioned 

that in your statement and I like to, if you would for the committee, talk about that. 

Mr. PUGLIARESI. The price of oil is determined on the world market. It is a highly fungible product. However, some oils are better 

matched to certain refinery configurations than others and the 

United States has a very complex structure of refining. That means 

that we can take advantage of the relatively lower price of heavy 

crude oils. 

This gives the Venezuelans a slightly greater leverage when they 

market the crude oil. People will bid it up because they will want 

to use it in the more complex refineries. As we add more heavy 

crude oil to the market, we will probably continue to import Venezuelan oil, but the leverage will decline dramatically because now 

refiners have alternative suppliers. They have the Canadian oil, 

blended bitumen. 

Mr. MACK. Mr. Sullivan, would you like to respond to that as 

well because I think you might have an interesting insight on that 

as well. 

Mr. SULLIVAN. Well, actually, yes. I think the comment that the 

refineries in Texas are owned by the Venezuelans and the Saudis 

does not recognize that Exxon, Chevron, Shell, and others have refineries down there as well, if I may comment on that. 

Also, if you have 175 billion barrels of oil in a friendly state right 

beside you, that will keep certain other countries in check if they 

want to cut back on their production for whatever reason. Canada 

is not a member of OPEC. It could be a counter to OPEC’s power 

in many ways. 

Also, Venezuelan oil, you mentioned that many times, Mr. Mack. 

If you take a look at the unconventional resources proven in the 

world, there are two major producers potentially in the short run 

and medium run, Venezuela and Canada. If we turn to our friends, 

the Canadians, we put the Venezuelans in partial check but not 

full check because we would still probably need to import some, 

which means that we would probably need to produce more internally. 

I have proposed in the past, and I will propose here, a phase-in, 

phase-out process for offshore oil and onshore unconventional, as 

well over the next 25 to 50 years. We have a pile of reserves out 

there and yet we leave ourselves vulnerable to the world markets. 

I know it is a fungible commodity and the price is actually defined 

sometimes by things that happen in places halfway across the 

world. Still, the more we have available close by, the more power 

we are going to have in this situation. 

Mr. SYMONS. Mr. Chairman, can I add something——

Mr. MACK. Yes. 

Mr. SYMONS [continuing]. On the refining issue. Shell is down 

there but the refining expansion that Shell is doing is being paid 

69

for by Saudi Aramco, the Saudi national oil company. The need to 

get heavy crude down to Texas because Venezuelan crude is going 

away, that is so we can get it down to the Citgo refineries owned 

by Venezuela. There is no——

Mr. MACK. Let me ask you this. Do you think, though—would 

you rather be in business with Hugo Chavez or with the Canadians? 

Mr. SYMONS. Well, if it was a choice to be in business with the 

Canadians, I would take the Canadians, but the oil——

Mr. MACK. Well, it is a choice. 

Mr. SYMONS. The oil companies are the same. 

Mr. MACK. It is a choice and this is precisely why we are having 

this hearing. I would suggest to you—I don’t know if you followed 

some of Hugo Chavez’ actions and statements but his support for 

terrorist organizations, support for narco traffickers, destruction of 

human rights, confiscating of industries, rigging elections, destroying democracy and freedom in his own country and exporting that 

around the world. 

I don’t know how—look, I understand the place you are coming 

from. You don’t want the oil. You don’t want any of it because of 

the environmental concerns with it, but we have a choice to make 

and if we continue to buy from Hugo Chavez, we continue to support a dictator that is intent on destroying our way of life and why 

wouldn’t we want to support our friends in Canada who are allies 

and friends. 

They are going to sell this oil anyway. As I think you heard earlier, it is a heavy crude, the same type of heavy crude that comes 

from Venezuela. There is not very many places around the world 

that can take that heavy crude. If we stop buying it, it will have 

a significant impact on Hugo Chavez. 

Mr. SYMONS. It is not that we don’t want oil. It is that we don’t 

want to make a 50-year bet like a $12 billion pipeline that is putting our kids’ future in the hands of oil companies for another 50 

years. That is the problem. If you want to keep——

Mr. MACK. Don’t you agree, though—I mean, we are not going 

to be able to flip the switch tomorrow and stop so this is part of 

a long-term plan. 

If I could, I wanted to move on real quick. Can someone quickly—actually, I see my time has expired so I will come back to this 

in a minute. 

Next I would like to recognize Mr. Engel for 5 minutes. 

Mr. ENGEL. Thank you very much, Mr. Chairman. Let me ask 

first an environmental question to a gentleman who our supporters 

of it. I am told that the Keystone XL pipeline would cross over one 

of the largest fresh water reserves in the world, that being the 

Ogallala, I hope I pronounced that right, aquifer which is mostly 

in Nebraska but which spans eight states providing drinking water 

for 2 million people and supports $20 billion in agriculture. 

Current Republican Senator and former Secretary of Agriculture 

Mike Yohannes has said, ‘‘There could not be a worse route in the 

entire State of Nebraska’’ for the proposed pipeline. Then he said, 

‘‘There maybe couldn’t be a worse route in the entire country.’’ 

That is a quote. 

70

My question is, is it wise, particularly after the havoc which occurred in the Gulf last year, to build a pipeline in such close proximity to this key source of fresh water, particularly as its builders 

have requested safety-related waivers regarding the materials with 

which the pipeline would be built? 

Are these waiver requests prudent or irresponsible given that the 

proposed pipeline would track through a seismic zone that produced a 4.3 magnitude earthquake as recently as 2002? I suppose 

Mr. Symons would agree with everything I have read. I would like 

you gentlemen to refute it if you can. 

Mr. Goldwyn. 

Mr. GOLDWYN. If I could comment on that briefly. It is true that 

the pipeline crosses the Ogallala for 250 miles. I think there are 

already something like 21,000 miles of pipeline which already cross 

the Ogallala and 3,000 miles of those are also hazardous materials 

pipelines so this is not new to Nebraska. 

I think one of the benefits that has come out of the NEPA process is that TransCanada has changed the specifications on the 

pipeline so it will be some of the highest specifications of any pipeline crossing the United States in any place. 

The other thing I think is worth noting is that gas pipelines in 

a sense are different than oil pipelines in terms of both their tendency to leak and also the damage that they can incur. I think the 

Federal authorities have looked at this very carefully and Nebraska has faced this question many times before so it doesn’t seem 

to be unique and the safety issue seems to have been very fully addressed by our PIMSA authority in the Department of Transportation. 

Mr. MACK. Yes, Dr. Sullivan. 

Mr. SULLIVAN. Well, just briefly to add what David said. The 

farmers in the areas have also been pouring pesticides and herbicides and fertilizer into that aquifer for years. Does that mean we 

should stop farming in Nebraska? There are certain tradeoffs that 

we have to make. 

One of the most important tradeoffs is, yes, environmental issues 

are important. About the waivers, I am not so sure about that. I 

have mixed feelings on that one. We need to protect the environment but we also need to protect the economy and our energy security. These are very difficult tradeoffs—extremely difficult tradeoffs. 

Mr. ENGEL. Let me ask you this, Dr. Sullivan. I would like you 

to talk about the distinction between energy independence and oil 

independence and I will tell you why. I often hear calls for energy 

independence to reduce our reliance on our adversaries in the Middle East and elsewhere. I hear pronouncements about the need for 

more solar, wind, clean coal, and nuclear power. 

It seems to me that no amount of new electrical power will make 

us anymore independent. The U.S. already gets nearly 100 percent 

of our electricity from our domestically produced coal, natural gas, 

nuclear, hydroelectric, wind, and solar. Do you agree that the problem is not energy independence, it is oil dependence? 

Before you answer that, I want to tell you why. It seems to me 

that the reason we are not all independent is because of our transVerDate 0ct 09 2002 14:06 Jun 29, 2011 Jkt 000000 PO 00000 Frm 00074 Fmt 6633 Sfmt 6633 F:\WORK\WH\033111\65494 HFA PsN: SHIRL
71

portation sector. Virtually every car, truck, bus, train, ship, and 

plane manufactured and sold in the U.S. runs on oil. 

The transportation sector is by far the biggest reason why we send $600 billion per year to hostile nations in the Middle East and 

to Venezuela. I believe we need a game-changing way to alter this 

dynamic and I believe that we need to break oil’s monopoly over 

our transportation sector. I would like you to comment on that. 

Let me just finally add I have introduced before, and will introduce again, the Open Fuel Standard Act, an open fuel standard ensuring that every car sold in America is flex-fuel capable. Flex fuel 

enables cars to run on any blend of gasoline and alcohol such as 

ethanol and methanol. I believe this is the cheapest and the most 

effective way to break oil’s monopoly over our transportation sector. 

I urge my colleagues to take a close look at this legislation in the 

weeks and months ahead. I know I have read a lot but I wanted 

your comments on what I have said. 

Mr. SULLIVAN. I would certainly agree with your idea about flexible fuels. I think that is a very important thing that fits in with 

my earlier statement, and actually with my written statement. 

What we need is a bridge to change in that direction. We can’t 

change it that quickly without serious disruptions in the economy 

and the overall energy situation. Yes, it is oil security. That is the 

key here. 

We have enough coal. We certainly have enough natural gas considering the unconventional gas that is now being discovered day 

by day. Uranium is another issue. Actually about 10 percent of the 

lights coming into this room right now probably come from ex-Soviet missiles. We import a lot of uranium so maybe there is an 

issue there but we certainly have the capacity here to produce that. 

Also, rare earths, an issue I am sure you are all interested in, 

is also a major part of our energy security situation. We need rare 

earths for refining oil but also for the new technologies that you 

are talking about. 

We can move forward with new types of cars. There are thousands of technologies out there, but there are also simple answers 

to that, including light weighting cars and making them out of carbon fiber and actually a safer car. F1 racers are made out of carbon 

fiber. 

There are also ways of making more efficient drive trains. CNG? 

We have that natural gas certainly. That is an alternative. Clearly 

these things can be part of our energy future and our energy security future but they are going to take time. They are going to take 

a lot of time. 

Mr. MACK. Thank you, Mr. Sullivan. 

I now would like to recognize for 5 minutes Mr. Rivera from 

Miami. 

Mr. RIVERA. Thank you, Mr. Chair. Thank all of you for being 

here today. I want to focus in a little bit on this issue of the Keystone pipeline because from everything that I have read, everything 

I have seen and from a lot of what I have heard, this seems to me 

to be a no-brainer. 

From what I have seen here this would increase the supply of 

safe, secure, reliable oil from Canada, our friendly neighbor. I think 

we would all agree on that point. Spur $15 to $20 billion in new 

72

private sector investment in the United States economy. Create 

somewhere between 15,000 and 20,000 high-quality jobs during the 

pipeline’s construction phase. Generate $6.5 billion in new personal income for U.S. workers and their families. Stimulate more than $585 million in new state 

and local taxes in states along the pipeline route. $5.2 billion in 

property taxes over the lifespan of the pipeline. From $100 million 

to $600 million in economic impact to the Gulf Coast and the midwest. 

Now, we have seen particularly the economic strain that has 

gone in the Gulf Coast, particularly recently. The economic strain 

on our entire nation is undergoing. The situation with job creation 

in this country and infrastructure and personal income, unemployment. 

I wonder why is it that anyone would try to hesitate or place obstacles or in any way try to impede this pipeline which would immediately help increase the domestic oil supply which is a key goal 

announced by President Obama just recently. What am I missing 

in terms of why this administration or others would try to impede 

development. 

I will go with Mr. Goldwyn, Mr. Pugliaresi. 

Mr. GOLDWYN. Thank you, Congressman. First, I think it’s important to note that the Congress requires that for a cross-border 

pipeline that the Department of State assess the environmental impacts of that, open it for public comment, take those comments, 

evaluate them, and then issue a final environmental impact statement. 

This is the process which the Congress has required and that is 

what the State Department is going through right now. Subsequent 

to that assessment they make a national interest determination 

about whether considering environmental and other concerns 

whether this has been done appropriately. They went through this 

process with the Alberta Clipper pipeline and others and it is always the subject of controversy. It is always the subject of litigation. 

The Department is being, I think, extremely careful to make sure 

that everyone has an opportunity to be heard and that new issues 

that were raised in the environmental impact process are fairly 

considered and now described and disclosed to the public so they 

have an opportunity to comment. 

It is not obstruction. It is an abundance of caution. I would say 

we have learned important things in the draft EIS process. One 

was that there were comments on ways to improve the safety of the 

pipeline. Those comments were taken and the design of the pipeline was changed. 

The other is that the Department of Energy commissioned a 

study because they believed that these environmental impacts of 

the pipeline would not take place if we didn’t permit this pipeline 

so, therefore, we would be at fault. It would be our responsibility 

that if we would only not permit this pipeline, then perhaps these 

emissions would not take place. They commissioned an extremely 

thorough study by ENSYS. 

What the result of that study came to is that the environmental 

impacts of oil sands production will take place whether or not we 

73

permit this pipeline. While it is intuitively obvious, it has now been 

validated. That is because Canada will produce this oil whether we 

take it by pipeline or not. It will move by rail. It will move by 

truck. 

Mr. RIVERA. Mr. Goldwyn, I only have 1 minute left of my time 

and I want to respect the time for my colleagues on the dias. 

Mr. Pugliaresi, would you like to weigh in as well? 

Mr. PUGLIARESI. I think we often present ourselves with a false 

choice. We think if we would just have electric cars, we wouldn’t 

need this Canadian oil. But there is no study that suggest we will 

not be importing oil. At the margin we can address the true energy 

security problem with concentration of low-cost reserves in unstable parts of the world. 

To the extent we can proliferate supplies outside those unstable 

places like Canada, we get direct benefits. Other producers will be 

unable to extract high rents from us because there will be more 

supply and the world will be less subject to volatility. We need to 

proliferate supplies from safe parts of the world and this is a great 

strategy to do it. 

Finally, I would like to say is that although we saw those pictures of the open mining, Canadians are moving to an in situ process which is much less disturbing of the surface of the earth. 

Mr. RIVERA. Thank you. 

Mr. Chairman, I would suspect we should be expediting this 

process rather than putting any impediments but I yield back. 

Mr. MACK. Thank you. 

Now I would like to recognize Mr. Sires for 5 minutes for questions. 

Mr. SIRES. Thank you, Mr. Chairman. 

Mr. Symons, I would assume that you don’t believe that Canada 

has enough environmental regulation to minimize the environmental impact of tar sands extraction. 

Mr. SYMONS. That is true. Alberta has basically teamed up with 

the oil industry and is not listening to the communities in the area 

in enforcing environmental regulations. They are not reclaiming 

this land. It is hard to reclaim, frankly, a forest when you tear it 

up. You can’t pull apart an ecosystem and put it back together. 

Mr. SIRES. My concern is that if we don’t move in, China is going 

to move in. 

Mr. SYMONS. Yes. 

Mr. SIRES. If we don’t move into the Western Hemisphere, China 

moves in. 

Mr. SYMONS. Right. 

Mr. SIRES. I keep saying to people when I was in Columbia and 

the president of one of the most prestigious universities said to me 

that the second most studied language in Columbia today is Mandarin. 

Mr. SYMONS. Right. 

Mr. SIRES. So, you know, sometimes we have to make a difficult 

decision. 

Mr. SYMONS. Sure. I understand that. This idea that Canada is 

sort of holding a gun to our head and saying, ‘‘If you don’t take our 

pipeline, we’ll take it somewhere else’’ is another one of the myths 

that the oil industry is perpetuating here. 

74

We already have more than enough pipeline to take all the oil 

Canada can produce into the U.S., according to Canadian petroleum industry, and according to the Department of Energy all the 

way through 2025. We have the pipeline to bring it here. It’s coming to the midwest and keeping gas prices down in the midwest. 

They want to get it to a port where they can export it. 

Mr. SIRES. But it is not so much the pipeline. It is the extraction 

of this that you are concerned about. 

Mr. SYMONS. Well, it is actually the pipeline because, unfortunately, the pipelines that were improved like the Alberta Clipper 

recently led to this huge spill in the Kalamazoo River that still has 

the river closed, that led to a lot of health problems and the pipeline rules have not been updated because this particular type of tar 

sands oil is corrosive and our pipeline laws——

Mr. SIRES. I just heard Mr. Goldwyn say there are 45 that go 

through Nevada? I am sorry. Who said that? Somebody said that 

before? 

I am sorry. I can’t hear you. 

Mr. GOLDWYN. Yes, there are 3,000 miles of hazardous waste 

pipeline but overall there is something like 21,000 miles of pipeline 

crossing Nebraska all together and 3,000 of those are hazardous 

waste. There you go. You can see it is a pretty dense web there. 

But there are also precautions to take with this particular pipeline to be able to isolate it. There are things underneath the surface and it is of a higher tensile strength than any pipeline, or as 

good as any pipeline built in the U.S. 

Mr. SIRES. And I have a question regarding the refineries that 

Venezuela owns and that Saudi owns. Of the oil refined in those 

refineries, how much is consumed domestically? 

Mr. PUGLIARESI. Well, we do export some product. A lot of product is exported to Canada but that’s largely logistics. In other 

words, we actually——

Mr. SIRES. I am talking about the refineries down in Texas. 

Mr. PUGLIARESI. The refineries in the Gulf Coast I think last 

year we exported almost 500,000 barrels a day of distillate. 

Mr. SIRES. What percentage is that? 

Mr. PUGLIARESI. It is a very small percentage. 

Mr. SYMONS. We export from the Gulf Coast more oil than we 

import from Canada. 

Mr. SIRES. That is not my question. My question is of the oil refined how much of that is consumed domestically and how much 

of that is exported? 

Mr. PUGLIARESI. We are consuming well over 90 percent of the 

oil that we process in this country. Keep in mind the scare resource 

is not the refiners. The scare resource is the crude oil. That is the 

product we want to maximize production of. 

Mr. SIRES. And there are not many places that Venezuelan oil 

can be refined. Is that my understanding? 

Mr. PUGLIARESI. That is right. That is right. 

Mr. SIRES. Because of the type of oil that it is. 

Mr. PUGLIARESI. Exactly. 

Mr. SIRES. Is this oil from Canada the same type of oil as Venezuela? 

Mr. PUGLIARESI. It has similar characteristics. 

75

Mr. SIRES. There are not that many refineries around that can 

refine this oil. 

Mr. PUGLIARESI. Of course, people can build such refineries. 

Mr. SIRES. Yes, but that would take years. 

Mr. PUGLIARESI. It is finding new supplies of oil that is hard. Absolutely. 

Mr. SYMONS. But it won’t displace. I mean, the purpose of this 

oil is to fill the capacity that has already been vacated by Venezuela and other producers and to fill new capacity that is being 

built by Saudi Arabia and others. Valero is the company that has 

bought into this pipeline. 

It was their CEO that said that week that they are moving to 

exports from those Texas refineries. That is the future. It is a massive growth that is happening there. It is hard to believe because 

we import so much crude but oil companies are global companies 

and they are just focused on profits. It doesn’t matter where the 

oil is. It is their oil, not our oil. 

Mr. SIRES. But if we refine it here and we consume it here. 

Mr. SYMONS. Yes. 

Mr. SIRES. You are saying we are not going to be doing that. You 

are saying we will refine it here and export it. 

Mr. SYMONS. Absolutely. We will get a good portion of that oil 

because we will pay through the nose for it like we are now paying 

$2 million more than we did. 

Mr. GOLDWYN. We have over 8 million barrels a day of refining 

capacity in the Gulf Coast going to about 9.3. We export a small 

fraction of that. Most of that is refined product which goes to the 

Gulf Coast and southeastern United States. That is where the gasoline comes from. We have some of the most highly efficient refineries in the world. Canadian oil is actually, because it is so heavily 

discounted, some of the cheapest oil. 

If you back out Venezuelan crude, they go shopping around the 

world for other places but they are going to pay that transportation 

cost. The bottom line is the net back to Venezuela is smaller and 

the reliability of Canadian oil will enable Gulf Coast refiners to 

source that oil with Canada and those are the shipper commitments that are underlying the financing of the pipeline to begin 

with. 

Mr. PUGLIARESI. We have to keep our eye on the ball here. The 

real issue is expanding crude oil production. The refiners are important in terms of efficiency of operations, but in terms of energy 

security what we need is more production from the United States 

and more from Canada. We will get a lot of value out of that. 

Mr. SIRES. Thank you very much. 

Mr. MACK. Thank you. 

Mr. Payne, you are recognized for 5 minutes for questions. 

Mr. PAYNE. Thank you very much. 

The whole question of consumption of fuel is something that has 

been on the table for a long time. Let me just ask, Mr. Symons, 

25 mayors addressed a letter to Secretary Clinton last week expressing their grave concern about the prospects of expanded imports of tar sand oil from canada. 

The mayors indicate fears over increasing dependence on highcarbon fuel for decades to come at a time when local governments 

76

are working hard to decrease dependence on oil. The mayors believe that expansion of high-carbon projects such as the proposed 

Keystone tar sands pipeline will undermine the work being done in 

the local communities across the country to fight climate change 

and reduce our dependence on oil. 

Would you comment on how this pipeline would affect such efforts in your opinion and will the small communities be hampered 

in their efforts to build clean energy economies? 

Mr. SYMONS. Well, thank you for the question. First of all, everybody has to do everything they can to reduce emissions and deal 

with the important threat of climate change. Mayors have been 

leading the way and should, regardless of what happens, continue 

to lead the way. 

But buying into a 50-year pipeline for oil that is three times the 

greenhouse gas emissions of conventional oil makes a mockery of 

the efforts that we all are pursuing to reduce our own emissions, 

pursue clean energy here at home. Canada agreed internationally 

and signed an agreement to reduce their greenhouse gas emissions 

and they have completely ignored. 

Not only will their emissions go up but Canada is undermining 

the value of global cooperation through technology and other pieces 

on addressing the important threat of climate threat, protecting 

our environment for our kids’ future. 

Mr. PAYNE. That leads me to my second question as you mention 

that. Most people recognize that tar sand oil production puts more 

greenhouse gases into the atmosphere than the extraction of conventional oil. Some contend, however, that the environmental impact of the means of producing Canadian oil is a Canadian issue. 

Others say that the global warming recognizes no boundaries 

and if we are going to use oil, which is produced through a method 

which generates excessive carbon dioxide, we are responsible as the 

Canadians. With that argument do you agree and why? 

Mr. SYMONS. I think you can apply a common sense test here in 

raising your own kids. Right? I mean, if your kid said, ‘‘Well, yeah. 

I participate in this but someone else actually is the one that did 

it. I encouraged them to do it,’’ we wouldn’t say, ‘‘Oh, that’s okay 

then.’’ We are part of this, too, and we have a say in this. 

You get back to the fact that this pipeline is about profits. It is 

about raising gas prices in the midwest by 10 to 20 cents a gallon, 

particularly on midwest farmers. The National Farmers Union is 

stepping forward raising concerns about the pipeline safety. It is 

not just environmentalists that are interested in what happens to 

a water supply. 

I am sure they will take exception to the fact we should build 

this pipeline just because farmers are out there farming. We need 

to look at the common sense test of whether or not this is a project 

that we should permit and say is in the national interest because 

once that happens, once the State Department issues that permit, 

then foreign energy companies come in and bully landowners with 

the threat of eminent domain. 

In fact, TransCanada has documented stories and press reports 

throughout the country threatening landowners and otherwise bullying them on this. It is an important decision. The government 

has a responsibility to get it right. 

77

Mr. PAYNE. We do hear this question of energy. We use nuclear 

and we say that it is safe today and, of course, Japan goes up. I 

asked the question a couple of weeks ago at a conference out of the 

country, ‘‘What are you going to do about spent fuel?’’ ‘‘Don’t worry 

about it. Not a problem. Got it contained.’’ Look at Japan. 

We look at our good friends in Canada, and they are our greatest 

allies. However, I guess making a buck is making a buck. If the 

price of oil goes up coming from Saudi Arabia and Bahrain is up 

in flames and Libya, they say, ‘‘Hey, might as well jack up the 

price and stick it to our American friends because, hey, that’s business.’’

You know, you have a fiduciary responsibility to your stockholders. You know, with friends like that, who needs enemies? I 

just think that this whole picture has to be looked at a little bit 

more carefully. Water is being destroyed. I don’t have the answer. 

That is for sure. 

One thing we have to talk about is conservation. We don’t talk 

about the sacrifice. Everybody has—my time has expired, but especially down in Florida, the air conditioners are up very high in the 

summer. I mean, we have to learn how we are going to consume 

energy. With that, I will yield back. 

Mr. MACK. Thank you, Mr. Payne. I invite you to come spend the 

month of August in Florida. If you would like, I will turn the air 

conditioning off and see how that goes. 

If you all wouldn’t mine, I think we have another round of questions. We appreciate your patience. 

Mr. Goldwyn, I want to get to this issue a little bit about some 

of the environmental concerns. A couple times you have mentioned 

how because of input of this pipeline, how it has evolved in that 

the strength of this pipeline, I don’t know if you would say is kind 

of leading the way or equal to the strongest or how you would say 

it but it is hard to believe that with all of the attention that has 

been put on this pipeline and the concerns that the environmentalists continue to have that somehow this pipeline is going to be built 

in such a way that it is going to have a negative impact on the environment. 

Mr. GOLDWYN. Thank you, Mr. Chairman. In the process of permitting the pipeline the questions come up how much pressure will 

the pipeline hold and what will the materials be that it is made 

of. Comments came in that suggested that if you lowered the pressure, then the kind of steel that the pipeline is being built with 

would be safer. 

It would be less subject to pressure or disruption. They took 

those comments. I think there are two issues. One is the quality 

of the steel, which I think has now been required to be at the highest level. The second is the pressure with which the pipeline will 

be operated. I think the lowering of the pressure is what has added 

to the safety. 

Then you have our own responsibility in the United States, the 

Department of Transportation, to monitor and inspect. As we have 

learned in other places, our responsibility doesn’t stop when the 

pipeline gets built. You have to watch it and so we will have that 

responsibility also. I think the extensive comment on this has significantly improved the design of the pipeline. It is among the best 

78

that we have crossing—would it be permitted that we have crossing the U.S. 

Mr. PUGLIARESI. Yes, Mr. Chairman. First, the pipeline owners 

have no desire to have that pipeline fail, I assure you. They have 

very, very detailed specifications on the sand content and the material content. They will not accept crude that does not meet those 

specifications. There is a long history of monitoring this quite closely. 

Mr. MACK. Thank you. Then, if I could, we will start with you, 

Mr. Goldwyn. I want to get back to this issue because what bothers 

me about this discussion is somehow we are led to believe that it’s 

not safe and I don’t think that is the case. And that because of the 

environmental issues in Canada, we shouldn’t bring that oil here 

into the United States and that somehow Chavez would benefit 

from that oil coming to the United States because of his refineries. 

Maybe you could talk a little bit about that. Isn’t this really a 

win for America and our security, both economic and national security, and not having to continue to prop up a thugocrat like Hugo 

Chavez? 

Mr. GOLDWYN. I think on many levels, Mr. Chairman, the permitting of this pipeline dramatically enhances U.S. national and 

energy security. There is just no question about source of supply 

that close and the ability to displace oil from other places through 

a direct pipeline dramatically enhances our energy security. It is a 

global market but having the oil delivered makes a big difference. 

We do have a responsibility as consumers and under the law to 

assess whether our decision to permit the pipeline will cause adverse environmental consequences, so careful study has been done 

on that. This is really, I think, the key point. 

These emissions, however you consider them, will take place 

whether we permit this pipeline or not, so it is not a question that 

if we don’t permit it, you are not going to have these consequences 

in Canada. I think that was an important question and that has 

been determined by the Department of Energy’s ENSYS study. But 

Canadians also do care about these issues. 

It is not just Americans. In my testimony I detail things, at the 

national and the provincial and also the commercial level, that are 

taking place and the level of regulation has stepped up. ERCB is 

a great regulator. They have a lot of people that feel they are good 

at what they do. They are on this and I think it is worth perhaps 

having those things in the record to understand that Canada is 

taking this seriously and not just because we care. 

Mr. MACK. But do you think that—this is foreign affairs, Western Hemisphere. This should be pretty simple to answer, but do 

you think that it is in our best interest to buy this oil, this heavy 

crude, from Hugo Chavez or from Canada? 

Mr. GOLDWYN. We have a choice where the rents go and I think 

if we have a choice to pay the rents to Canada where they will be 

recycled and traded with the government that is our close ally and 

partner, that is the place to put it. 

Mr. MACK. Thank you. 

I would now like to recognize Mr. Engel for 5 minutes for questions. 

Mr. ENGEL. Thank you, Mr. Mack. That was a loaded question. 

79

Two things before I ask the questions. First of all, I want to 

thank you for putting up my amendment before marking it up 

when I wasn’t here. Secondly, I just wanted to comment given your 

pedigree, that today is the first day of baseball season and here we 

are sitting at this hearing so something is wrong with that. I don’t 

know. 

Anyway, gentlemen, will any of this oil go to the northeast? Find 

its way to the northeast? 

Mr. PUGLIARESI. Well, what we want to do is have this oil moved 

through the system as efficiently as possible. This oil itself may not 

move to the northeast but it could displace the movement of other 

supplies to make greater access to northeast refiners. I don’t think 

that is really that important an issue. The real important issue is 

how do we improve the whole distribution of feedstock throughout 

the American economy. 

Mr. SYMONS. The real question there is where is the oil coming 

from. You are actually hearing, if you listen closely, people are kind 

of having it both ways, ‘‘Oh, we are going to get more oil from Canada,’’ as in Canada is going to produce more oil. The fact is they 

are not. This oil is going to come from the pipelines where it is already going into the midwest, much closer, of course, to the northeast. It is going to go all the way down to Texas. 

Then it has to work its way back up. Why would oil companies spend $12 billion to build a pipeline to take it further away to take 

it back up? Well, they are going to be able to charge more because 

once they get it out of the midwest to a deep water port, they can 

send it anywhere and charge higher prices. 

Those higher prices are what are going to fill the coffers of Chavez at the end of the day because Canadian oil is one of the most 

expensive oils in the world to produce. If we bet on it for 50 years, 

we are betting on high oil prices and that is going to make Chavez 

rich. 

Mr. GOLDWYN. Can I respond to your question? I have the statistics, actually on the exports. I was digging for them. I think the 

more relevant question is whether the products come to the northeast because the oil goes to the refining centers and those we know 

refine something like 8.1 million barrels a day. 

Net exports of petroleum products in 2009, which are the figures 

that I have, were about 400,000 barrels a day. The oil comes to this 

huge refining center. They make gasoline and other products and 

those products go to the southeast. Some of those product pipelines 

go north. 

The question of whether or not the actual gasoline that is made 

at a Gulf Coast refinery goes there has more to do with how much 

New Jersey is refining and providing and how much demand there 

is in New York. But the idea is that more product lowers gasoline 

prices for the country as a whole. Having our—they are the cheapest refineries, the most efficient refineries. 

While Canadian oil is among the most expensive to produce, it 

is among the cheapest for refiners to acquire. Way cheaper than 

light sweet crudes from Saudi Arabia importing from Nigeria. If 

they don’t refine that product either from Venezuela or from Canada, they are going to buy higher grades from other places so we 

are going to refine it. We are just going to pay more. 

80

Mr. ENGEL. Mr. Goldwyn, let me ask you something in relation 

to a comment you made before. You said that TransCanada has 

changed the specifications for the pipeline and has made it safer 

and made it better. I am happy, obviously, about that. What does 

this say about the safety of existing pipelines from Canada, because obviously this route is going to be different. Should we worry 

about the existing pipelines? Do those need to be changed? 

Mr. GOLDWYN. Well, the determination of what specifications 

need to be in the pipeline has to go with how big the pipe is, how 

much pressure it is, and where it is transiting. Essentially TransCanada was asked to raise the standards of the pipeline to an extent that the entire pipeline is treated as if all of it were in highly 

environmentally sensitive areas. It is sort of above standard but 

they agreed to do that. 

I don’t know a lot about the specifications for existing pipelines, 

but I think should we pay attention to the Department of Transportation’s capacity and resources to inspect and monitor the pipeline system? Absolutely. Like building regulatory capacity every 

place else. It is something that Congress should support. 

Mr. ENGEL. Thank you. Let me mention one of Mr. Mack’s favorite people, Hugo Chavez. You mentioned him before, Mr. Symons. 

Chavez is a bad guy and we need to do everything we can to put 

pressure on Chavez and to reduce his oil revenues. Supporters of 

the Keystone XL pipeline contend that the oil it would carry would 

help push Venezuelan oil—I think you said that—from refineries in 

the Gulf Coast to the U.S. and that the Venezuelan oil would have 

nowhere else to be refined. 

Can someone comment on whether you think construction of the 

Keystone Pipeline will actually push out Venezuelan oil? If Venezuelan oil would be displaced by oil from the Keystone pipeline, 

how much would actually be displaced and how fast would this 

happen? And are new refineries being built outside of the United 

States which could handle heavy Venezuelan crude? 

Mr. SYMONS. Why would Chavez choose Canadian oil over his 

own oil if he didn’t have other options? The point is the reason that 

TransCanada says it wants to go to the Gulf Coast is because they 

are increasing refining capacity because Saudi Arabia is expanding 

refining capacity. And because there has already been a decline 

that needs to be filled in Chavez’ refineries. It is not about forcing 

them to do anything. It is about filling the backlog. 

Mr. ENGEL. Dr. Sullivan, I know you had your hand up. 

Mr. SULLIVAN. Yes. That would go back to Mr. Sires’ question 

about China. China is actually building refineries to use Venezuelan oil and China is building 17 large super tankers to bring 

that oil through the Panama Canal which China is, part of, widening and deepening. 

So things are changing in the east as we are talking about the 

west. China is also looking at a pipeline going from Alberta tar 

sands to the west coast of Canada to export the tar sands oil to 

China. There is a direct competition going on here. 

Mr. ENGEL. Let me ask you this and I will make this my last 

question because I know I am really over here, involving China. 

Robert Jones, who was a TransCanada executive in charge of the 

Keystone project, said during a conference call on Tuesday that the 

81

fate of the Keystone expansion will have, and I quote him, ‘‘no impact on oil sands production’’ because he contends that the U.S. 

blocks the flow of more oil sand south. 

It will just go overseas to one of the pipelines proposed to bring 

oil to China and other Asian markets. Is this a statement of concern? How would increased exports of Canadian oil to China affect 

our country? Does China have the refining capacity to receive the 

heavy Canadian bitumen? And are they building additional refining? 

Let me add: What is the marginal additional cost per barrel of 

shipping oil to China versus sending it by pipeline to the U.S.? 

What price per barrel does oil have to reach for exports of Canadian tar sand oil to China to make financial sense? It is all about 

China. 

Dr. Sullivan. 

Mr. SULLIVAN. If we could take a look at the transport charges, 

which brings up an important thing here also for us. If oil is being 

shipped by tanker it has to go through the market-based pricing of 

oil tankers which has been all over the map in the last 5 years. 

At the height of the price of oil and demand for oil in the world 

in 2008, third quarter, it was $90,000 a day to rent one of these 

super tankers. Now it is down to about $25,000 a day. It is very unstable. The 

price of sending oil along a pipeline will be regulated by the Canadian regulators and our FERC, essentially locking it in for a while. 

Yes, the Chinese are building capacity to use this sort of oil. They 

need this kind of oil. They need oil from all over the world. They 

are growing at 7 to 9 percent. 

Hu Jintao, when asked by our previous President George Bush 

what kept him up at night, his answer was 25 million jobs. They 

have to create 25 million jobs every single year. Now the question 

goes to, and this is rather complicated, do we want them to have 

the 25 million jobs? I think the answer is probably in the main part 

yes because we don’t want instability in China and what that could 

bring to us. 

Mr. ENGEL. Mr. Symons had his hand up. 

Mr. SYMONS. Thank you. Let me just say the idea of the Canadian western route to get to China, the Canadian people are rejecting it because of the results. They know what is in the results of 

this report by Pipeline Safety Trust and others that Alberta pipeline spills are 16 times as common as spills down here because 

harsh sands oil is not like conventional crude and it is much more 

dangerous to transport by pipeline. 

Think about the question you are asking before we all stand up 

and sing the Canadian national anthem. Canada is threatening 

and blackmailing us with that. Canadian oil companies are holding 

a gun to our head. Think about that before we make a 50-year bet 

that Canada is going to be our friend with oil. 

Mr. PUGLIARESI. I think there is a more basic point that we 

shouldn’t lose track of. We have a long experience with the Canadians. We have been importing oil from Canada for a long time. We 

export products to Canada. 

If we deny this pipeline, we change all expectations on that relationship. The market, the buyers and sellers, the whole political esVerDate 0ct 09 2002 14:06 Jun 29, 2011 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 F:\WORK\WH\033111\65494 HFA PsN: SHIRL
82

tablishment, expects a relationship with the U.S. and Canada to 

continue the way it has in the past because it is good for both 

sides. 

One of the big benefits of approving this pipeline is that the existing relationship is now reaffirmed, that it is going to continue. 

Canada can safely produce more oil and that the American market 

will continue to be open to them. That is a central point that we 

shouldn’t lose track of. 

Mr. MACK. Thank you very much. I want to thank the panel for 

your testimony today. I thought it was a very good conversation. 

Even though you might have felt outnumbered, you held your own. 

I don’t agree, as you can imagine. 

I think when it comes to our national security and economic security, the simple question of should we be buying this heavy crude 

from Venezuela or should we be buying it from Canada, the answer 

is self evident. It doesn’t take scholars to come up with the right 

answer. 

Thank you all for being here and the meeting is now adjourned. 

[Whereupon, at 4:38 p.m., the subcommittee was adjourned.] 

(83)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

84


65494n.eps
85


65494m-1.eps
86


65494m-2.eps
87


65494e_1.eps
88


65494e_2.eps
89

MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE CONNIE MACK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND CHAIRMAN, SUBCOMMITTEE ON THE WESTERN HEMISPHERE


65494f_1.eps
90


65494f_2.eps
91


65494f_3.eps
92

MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE ELIOT L. ENGEL, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK


65494g_1.eps
93


65494g_2.eps
94


65494g_3.eps
95


65494h_1.eps
96


65494h_2.eps
97


65494l-1.eps
98

Æ


65494l-2.eps