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61–954 2010

IMMEDIATE RELIEF FROM HIGH OIL PRICES: 

DEPLOYING THE STRATEGIC PETROLEUM 

RESERVES 

HEARING 

BEFORE THE

SELECT COMMITTEE ON 

ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JULY 23, 2008 

Serial No. 110–44 

( 

Printed for the use of the Select Committee on 

Energy Independence and Global Warming 

globalwarming.house.gov 


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SELECT COMMITTEE ON ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

EDWARD J. MARKEY, Massachusetts, Chairman 

EARL BLUMENAUER, Oregon 

JAY INSLEE, Washington 

JOHN B. LARSON, Connecticut 

HILDA L. SOLIS, California 

STEPHANIE HERSETH SANDLIN, 

South Dakota 

EMANUEL CLEAVER, Missouri 

JOHN J. HALL, New York 

JERRY MCNERNEY, California 

F. JAMES SENSENBRENNER, JR., 

Wisconsin, Ranking Member 

JOHN B. SHADEGG, Arizona 

GREG WALDEN, Oregon 

CANDICE S. MILLER, Michigan 

JOHN SULLIVAN, Oklahoma 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

GERARD J. WALDRON, Staff Director 

ALIYA BRODSKY, Chief Clerk 

THOMAS WEIMER, Minority Staff Director 


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C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. John Shadegg, a Representative in Congress from the State of Arizona, 

opening statement ................................................................................................ 5 

Prepared statement .......................................................................................... 6 

Hon. Hilda Solis, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 7 

Hon. Earl Blumenauer, a Representative in Congress from the State of Oregon, opening statement ...................................................................................... 7 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 8 

Hon. Jay R. Inslee, a Representative in Congress from the State of Washington, opening statement ................................................................................... 8 

Hon. Jerry McNerney, a Representative in Congress from the State of California, opening statement .................................................................................... 9 

Hon. John Hall, a Representative in Congress from the State of New York, 

opening statement ................................................................................................ 9 

WITNESSES

Mr. C. Kyle Simpson, Policy Director, Brownstein, Hyatt, Farber, Schreck ...... 10 

Prepared testimony .......................................................................................... 13 

Dr. Joe Romm, Senior Fellow, Center for American Progress ............................. 21 

Prepared testimony .......................................................................................... 23 

James May, President and CEO, Air Transport Association of America ............ 31 

Prepared testimony .......................................................................................... 33 


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IMMEDIATE RELIEF FROM HIGH OIL PRICES: 

DEPLOYING THE STRATEGIC PETROLEUM 

RESERVE 

WEDNESDAY, JULY 23, 2008 

HOUSE OF REPRESENTATIVES, 

SELECT COMMITTEE ON ENERGY INDEPENDENCE

AND GLOBAL WARMING, 

Washington, DC. 

The Committee met, pursuant to call, at 9:22 a.m., in room 210, 

Cannon House Office Building, Hon. Ed Markey (chairman of the 

committee) presiding. 

Present: Representatives Markey, Blumenauer, Inslee, Solis, 

Cleaver, Hall, McNerney, Sensenbrenner, Shadegg, and Blackburn. 

Staff Present: Morgan Gray. 

The CHAIRMAN [presiding]. Good morning, and welcome everyone 

to the Select Committee on Energy Independence and Global 

Warming. 

Today we have a very important hearing because American families are facing $4 a gallon gasoline, skyrocketing energy bills at 

home, and an impending home heating crisis this winter. We are 

in an energy emergency. Gas prices have nearly tripled since President Bush took office and American consumers are being pummeled at the pump as a result of the administration’s energy policy. 

At current prices, the average consumer is now spending $2,375 

every year filling up. That means that the poorest 20 percent of 

American families are now spending nearly 12 percent of their pretax income just on gas. The average consumer at the median income level is spending nearly 5 percent of their income just at the 

pump. That doesn’t even count insurance, maintenance or the cost 

of the car. American families are in desperate need of help this 

summer. 

Today, we will begin the first in a series of three hearings that 

the select committee will conduct over the next 2 weeks to examine 

the Democratic new direction energy plan that will not only provide 

consumers with immediate relief from skyrocketing energy prices, 

but also provide long-term solutions that will reduce our energy dependence and help our economy. 

The Bush administration continues to oppose Democratic proposals that will provide consumers with relief right now and put 

us on a path to a renewable energy future in the long run. Our nation’s Strategic Petroleum Reserve currently contains more than 


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706 million barrels of oil and is filled to over 97 percent of its capacity—the highest level in its history. 

More than 2 weeks ago, Speaker Pelosi called on President Bush 

to take action to immediately lower oil prices by deploying oil from 

this reserve. Each day that passes without the Bush administration 

taking action is another day that American families and our economy fall deeper into crisis. We cannot afford to wait any longer. 

Deploying oil from the strategic petroleum reserve has driven 

down prices when it has been used in the past. In 1991, when 

President Bush’s father deployed oil from the reserve, oil prices fell 

33.4 percent. In 2000, President Clinton conducted a time exchange 

of oil from the SPR and prices again immediately dropped by 18.7 

percent. 

And in 2005, when President Bush himself released oil following 

Hurricane Katrina, prices fell 9.1 percent. That is an average drop 

in the price of oil of 19.2 percent. If we experienced a similar impact now, it would mean a $25 reduction in the price of oil. But 

President Bush and Republican leaders in Congress continue to oppose releasing oil to help consumers. 

Instead, President Bush proposes giving away our nation’s beaches and wilderness areas to big oil. The Bush administration’s own 

Energy Department has stated that drilling off our coasts and in 

the Arctic National Wildlife Refuge will not produce any oil for 10 

years and will have an insignificant impact on prices 20 years from 

now. 

So all that President Bush, Vice President Cheney, and other Republican leaders in Washington have to offer to consumers who are 

being shaken down at the pump on a daily basis are the same tired 

drilling schemes that won’t provide any relief whatsoever for 10 or 

20 years. That is the agenda of the American Petroleum Institute, 

not the American people. In contrast, Democrats in Congress want 

to provide American families with help in the next 10 to 20 days 

by deploying our nation’s oil reserve. 

While President Bush is willing to deploy our National Guard reserves to protect oil fields abroad, he continues to refuse to deploy 

our strategic petroleum reserve to protect American consumers 

here at home. The strategic petroleum reserve is a powerful weapon that the American people have against big oil, OPEC, and the 

speculators and manipulators that are driving up prices and it is 

time for President Bush to use it. 

Let me now stop and turn to recognize the gentleman from Arizona, Mr. Shadegg, for an opening statement. 

[The prepared statement of Mr. Markey follows:] 


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Mr. SHADEGG. Thank you, Mr. Chairman. 

I will insert my opening statement in the record. However, I will 

make a couple of quick comments. 

First of all, I want to welcome our witnesses. I particularly want 

to welcome Mr. May who I know is working aggressively to help 

the airline industry. My home town is the base of an important airline in this nation. I know that the airlines have been crushed by 

the sudden spike in fuel prices. 

I really hadn’t intended to get partisan in this discussion. However, listening to you, Mr. Chairman, I feel somewhat compelled to 

do so. Certainly, I believe the SPR is one possible avenue. I voted 

for not putting any more oil into it earlier this year. I think acknowledging that either not putting more oil in to the strategic petroleum reserve or taking some oil out of the strategic petroleum 

reserve is an intellectual acknowledgement that increasing supply 

will have an effect on prices, indeed that there is a link between 

supply and prices. 

You say the president is not willing to release oil from the SPR 

and therefore that is damaging. I would turn the tables on you and 

say regrettably your party is unwilling to do anything about supply 

other than the SPR. I would note that in the testimony of one of 

our witnesses, when the president earlier last week, I believe on 

Monday or Tuesday, announced that he was going to open the 

outer continental shelf, which we have put off-limits, and we put 

off-limits back when gasoline prices were $1.30 or $1.40 a gallon. 

We continue to keep it off-limits from any further production or 

exploration now that gasoline is $4.12 a gallon. But when the president lifted the executive branch limit restriction on outer continental shelf drilling, there was a drop of $6.48 in the price of a barrel of oil on the very next day, the single largest drop in the price 

of oil in any one day since 1991. 

I don’t think this is an issue on which we ought to be partisan. 

I think this is an issue on which we need to be very concerned 

about American consumers, particularly about those consumers 

who are in the worst financial position, the people who drive the 

oldest cars because they can’t afford newer, more efficient cars; the 

people who live the furthest from work because they can’t afford to 

live near where they work; and quite frankly, we need to be deeply 

concerned about the American economy. 

It does not serve this nation for us as politicians to be throwing 

partisan shots back and forth at each other while American businesses, for example the American airline business, are suffering 

when they have to compete with foreign competitors. The weak dollar is an issue in this debate. Some people believe speculation is 

an issue in this debate. I think anybody with any rationality understands that the tight situation between supply and demand is a 

part of this problem. 

If we don’t address every at least every conceivable aspect of this 

issue and do everything we can, we are not serving the American 

people well. 

For that reason, I do commend you, Mr. Chairman, for holding 

this hearing and I look forward to the testimony of our witnesses. 

[The prepared statement of Mr. Shadegg follows:] 


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The CHAIRMAN. Great. The gentleman’s time has expired. 

The chair recognizes the gentlelady from California, Ms. Solis. 

Ms. SOLIS. Thank you, Mr. Chairman, for having this hearing. 

And I thank the witnesses for being here. 

I recall that the other day while I was being interviewed by Fox 

News, the anchor person asked me if there was really a crisis going 

on and if we should really be dipping into the SPR. I said, when 

is it not a crisis when our people have to pay $4.60 or more a gallon, and people are losing their businesses, and I am talking about 

people from a district like mine where we have seen prices as high 

as $4 for the last 8 months. 

We see no relief, and we find that a good proportion of constituents are spending about 12 percent of their income just on transportation, many who are transit-dependent and also many who are 

driving older cars. This crisis did not come upon us because of 

Democrats taking over the House a year ago. This came about because of our lack of investment in renewable energies. 

Yesterday, I had the opportunity to hear Mr. T. Boone Pickens 

talk about renewable sources. I was quite surprised to hear what 

he had to say, very enlightened in fact. These are other issues that 

we need to be focusing in on. It can’t just be about oil dependency. 

I think the public and even people from districts like mine get it. 

They know that we have to change our course. We are large consumers of fossil fuels, and we need to change that. 

We do care about our planet and the climate changes that are 

going on. We see a hurricane that is going to hit right now in Mexico and Texas. It is further going to, I think, erode our ability to 

obtain more fossil fuel there. That is why I think we need to be 

looking at investing in other alternatives, and that is what the new 

direction Congress is looking at. 

I thank our witnesses and look forward to hearing from you. 

Thank you. 

The CHAIRMAN. Great. The gentlelady’s time has expired. 

The chair recognizes the gentleman from Oregon, Mr. 

Blumenauer. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. 

I appreciate the opportunity for us to explore with our witnesses 

the implications of deploying the strategic petroleum reserve now. 

Given in the course of the last year, they have essentially doubled 

the price of a barrel of oil on the world market, there has been— 

what?—a 2 percent increase in world demand. There is something 

else going on here. 

I seriously doubt that the prospect of some oil supply 20 years 

from now on the outer shelf or someplace else in the United States 

was responsible for a reduction of $6 a barrel. I think the fact that 

we have been having serious discussion with Speaker Pelosi and 

others, including yourself, Mr. Chairman, about the wisdom of the 

redeployment of a small amount of this oil, to signal where we are 

going, and the fact that over the course of the next 2 or 3 months 

there could be a deployment of a small amount of that reserve, but 

disrupting some of the strategies of people who would manipulate 

the market, I think is very, very important. 

I appreciate your leadership and that of the speaker zeroing in 

on this. I look forward to exploring further with our witnesses. I 


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think this is part of a multi-faceted approach in the short term to 

try and squeeze the speculative bubble because there is clearly, 

whether it is $10 a barrel or it is $70 a barrel—I don’t know. The 

witnesses we have heard before this committee and others have not 

been in agreement, but it is clear that that is part of the issue, put 

in place with a comprehensive approach to energy, broadening our 

sources wherever they are, and not being reliant on a fossil fuel, 

petroleum-based economy. 

I welcome the call from the former vice president about setting 

our sights high. It is something you and the speaker have been 

doing. I look forward to exploring these elements with our witnesses in a few moments. 

Thank you very much. 

The CHAIRMAN. I thank the gentleman. 

The chair recognizes the gentlelady from Tennessee, Mrs. 

Blackburn. 

Mrs. BLACKBURN. Well, is this on? Yes, it is on. Okay. The little 

button is not working. 

Thank you, Mr. Chairman, and I thank you for the hearing. 

And our witnesses, I thank you very much for being with us 

today. We are looking forward to visiting with you and hearing 

what you have to say on the issue on the release of the portion of 

the strategic petroleum reserve, should that be undertaken. I will 

tell you, that is an action that I do not support. I don’t think that 

oil should be taken out of the SPR unless there is a genuine emergency where supplies have been cut off. 

I think the situation that we face with instability in the Middle 

East shows us that an SPR release would not be the wisest move 

that we could make at this point. I think this issue is very different 

than when Congress passed the bill, with my support, to stop filling the SPR. This brought more oil supply to the market. It did not 

significantly affect our emergency supply and it provided temporary immediate relief to the American consumer. 

But what really is behind this initiative is, I think, the failure 

of the majority’s leadership to have a comprehensive or a rational 

energy policy. They are not listening to what my constituents, and 

certainly what most Americans are saying, and what they are demanding of us when it comes to energy policy. They want us—the 

American people want us to get to work on this and to do something that is going to affect long term. They want us to drill here, 

drill now. They want to end up paying less. 

So I am looking forward to hearing what you have to say today, 

and appreciate the fact that we are having the hearing to approach 

the issue. 

I yield back. 

The CHAIRMAN. Great. The gentlelady’s time has expired. 

The chair recognizes the gentleman from Washington State, Mr. 

Inslee. 

Mr. INSLEE. I would just like to say I think a small release from 

the SPR is entirely appropriate. But I want to respond to this sort 

of continuing canard that somehow Democrats aren’t for increasing 

supply of energy. In fact, we are for an increase in supply of energy 

as proposed by famous Republican T. Boone Pickens, who addressed our caucus yesterday and said we have got enormous 


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amounts of energy blowing in the wind. The fellow just invested $4 

billion in building the world’s largest wind turbine farm in Texas. 

What Democrats are for is to really expand our sources of energy, but not just in oil. We are seeing the DOE that has told us 

we can have 20 percent of our electricity from—electricity that can 

power our cars. And this is the great vision that Democrats have 

of powering our cars with electricity either through the use of lithium ion batteries or through, as T. Boone Pickens has suggested, 

displacing it and use natural gas and use natural gas for cars rather than residential. 

You can argue about which one is going to win the race—natural 

gas or lithium ion batteries—but Democrats are providing a vision 

for more energy. We know there is not enough energy off of our 

coastline to make an appreciable difference in the price of fuel, because it is less than 1/2 percent of world oil supplies. But we also 

know that we are blessed with enormous supplies of energy in 

wind, in our water, in our sunshine, in our engineered geothermal, 

and these are the sources of energy that finally can break the slavery that we now are suffering under to oil. 

The only way to break slavery and the chains of this addiction 

is to provide new sources of energy that are not oil. We are for increasing supply in the places where we can really make a difference, and we are going to get that job done. 

Thanks. 

The CHAIRMAN. Great. The gentleman’s time has expired. 

The chair recognizes the gentleman from California, Mr. 

McNerney. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Today’s hearing is both timely and important. I believe that the 

strategic petroleum reserve is the exact right tool to go after speculators and to make sure that the market is being controlled in a 

strategic way. We don’t need to use very much of the strategic petroleum reserve. Small amounts, five million barrels once a week 

or once a month should discourage speculation. But I want to hear 

it from the experts to understand what you think is possible and 

how you think that will affect the market, and if you think that 

that will discourage speculation, and if so, how? And if not, what 

can we do to make sure it does? 

So I welcome your testimony. In my district, we have seen some 

of the highest prices of gasoline in the nation. People are definitely 

hurting. In fact, I have to drive over a very large district, so I feel 

the pain from the high price of gasoline. So we all want to find a 

solution. I don’t think it enhances the problem by pointing fingers 

at each other, but it does enhance it by discussing rationally what 

the future will look like, how we can use the strategic petroleum 

reserve, and what other long-term objectives we need to go after. 

So thank you, Mr. Chairman. 

The CHAIRMAN. Great. The gentleman’s time has expired. 

The chair recognizes the gentleman from New York, Mr. Hall. 

Mr. HALL. Thank you, Mr. Chairman. 

I would echo Mr. Inslee’s remarks and say I personally am—I 

don’t own any drilling equipment, but I am not stopping anybody 

from drilling. In fact, I would be very happy if the oil companies 

would drill on the 68 million acres they have already leased and 


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permitted in the lower 48 and adjacent offshore plots. But that 

can’t be and won’t be the long-term solution because we just don’t 

have, and in fact the world will not have enough oil to last forever. In New York this morning, gas prices are averaging $4.27, and in some places $4.50. Like the rest of the country, they have been 

high for weeks. In the last week as the price of crude fell, the price 

of gasoline at the pump continued to climb, once again showing the 

disconnect that I think should be looked into by the Consumer 

Products Trading Commission. 

In an area like ours, where commuting is not so much a lifestyle 

choice as it is a necessity, this is an economic squeeze for families 

that are already being squeezed by higher consumer costs. We 

didn’t dig our way into this hole overnight, and we need to keep 

pushing the visionary new solutions that this committee and this 

Congress have tried to advance. 

President Bush has often alluded to the fact that he can’t simply 

wave a magic wand to make gas prices go down. But in fact, he 

does have a magic wand to give us some slack immediately, the 

SPR. A release of oil from the SPR is a tested, proven, secure and 

effective method of calming markets and lowering prices. The last 

three presidents have successfully used SPR oil to head off serious 

economic damage and dangerous record spikes. 

I would also note that the oil in the SPR has been put there 

through the royalty in-kind program for exploration of public lands, 

meaning that the oil in the SPR is the American people’s oil and 

the administration should use it to help them now. 

Today, I look forward to hearing from our panelists about what 

is the best way to do just that, and I yield back. 

The CHAIRMAN. Great. The gentleman’s time has expired. 

All time for opening statements has been completed. 

We will now turn to our first witness, Mr. Kyle Simpson, who is 

currently the policy director for Brownstein, Hyatt, Farber and 

Schreck. Mr. Simpson has formerly served in a number of positions 

at the Department of Energy, including associate deputy secretary 

of energy and senior policy adviser to the secretary. In those roles, 

Mr. Simpson’s responsibilities included policy development and direction for the strategic petroleum reserve. 

We thank you for being here today, Mr. Simpson. Whenever you 

are ready, please begin. 

STATEMENTS OF MR. C. KYLE SIMPSON, POLICY DIRECTOR, 

BROWNSTEIN, HYATT, FARBER, SCHRECK, WASHINGTON, 

D.C.; MR. JOE ROMM, SENIOR FELLOW, CENTER FOR AMERICAN PROGRESS, WASHINGTON, D.C.; MR. JAMES C. MAY, 

PRESIDENT AND CEO, AIR TRANSPORT ASSOCIATION, WASHINGTON, D.C. 

STATEMENT OF KYLE SIMPSON 

Mr. SIMPSON. Thank you, Mr. Chairman. Good morning to the 

members of the committee and thank you for asking me to appear 

here today. 

The history of market reactions to releases of crude oil from the 

reserve shows that strategically deploying oil from the SPR is good 

public policy and can have an immediate beneficial impact on crude 


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oil, gasoline and other petroleum product prices. SPR experience 

also shows that the downturn of gasoline and other prices is apt 

to occur with the mere announcement or anticipation of an announcement of a release. 

I will focus on some of the details of the results of the actions 

taken by the reserve, including the release of oil before the first 

Gulf War, the announcement of the sale in 1996, the 2000 exchange of oil, and the announcement of a release after Hurricane 

Katrina in 2005. 

Each of these releases from the reserve are good examples of the 

implications that can be the result of a release. They provide insights into the results of actions by the reserve in response to real, 

anticipated or perceived oil, and in some cases product supply 

shortages, or to send message to overly heated markets that the 

U.S. government is prepared to use the reserve to protect consumers. 

The sale of oil from the SPR in concert with the first Gulf War 

was announced on January 16, 1991 in anticipation of the impending conflict. The disruption on which the finding was based had not 

actually occurred. In the fact of impending military conflict, the administration utilized the SPR’s anticipatory authorities for the 

drawdown. On January 17, the price of oil fell from $32.25 to 

$21.48 and stabilized. 

In the Omnibus Appropriations Act for 1996, the Congress di- rected DOE to sell $227 million worth of oil to achieve the overall 

budget target for the year. At that time, retail gasoline prices were 

climbing. Shortly after the law was enacted, President Clinton implemented the sale of approximately 12 million barrels from the 

SPR. The decision to sell the oil immediately resulted in a downturn in gasoline prices on April 29 and 30 that continued through 

the first week of October of that year. 

The principal impact of the announced sale was psychological, 

temporarily halting the bullish pressures in the market, and led to 

a reversal in both crude and product prices. Selling oil is not the 

only way the SPR can be used to help alleviate price problems. 

In 2000, home heating oil inventories were extremely low, and 

President Clinton gave then-Secretary Bill Richardson the authority to exchange 30 million barrels from the SPR to the market. As 

a result, as the chairman pointed out in his opening statement, oil 

prices dropped 34 percent by the end of the year, going from $30.94 

to $20.38 per barrel. 

After Hurricane Katrina, prices began to rise very dramatically 

because of disruptions in production capacity in the gulf. On September 2, 2005, President George W. Bush issued a finding of severe energy supply interruption and directed the secretary to withdraw and sell oil from the reserve. The announcement—after the 

announcement, and in each of these cases it is the announcement 

that causes the price to change. The actual movement of oil occurs 

weeks later. The price dropped from $69.50 to $66.91 the next day 

and continued a steady decline for several months. The price did 

not exceed the peak until April of 2006. At that point, the refilling 

of the reserve was suspended for another year. 

It is difficult to know the exact impact of a release, but as these 

releases indicate, the psychological impact and the fact that more 


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oil is going into the market has caused the price to go down for extended periods of time. It has to be a substantial amount of a release in order to have that effect, but I think some of the proposals 

that are being considered today by the Congress would be substantial. 

I also want to point out that you have a unique opportunity to 

utilize the SPR to address the current energy crisis in a way that 

can add to significant funding for new alternative clean energy for 

the future. If you took the GAO’s advice to release oil, light oil from 

the reserve, which is all it contains right now, in contrast to the 

some–40 percent heavy oil that our refining industry uses today, 

and did an exchange over time, and allowed the department to 

make decisions as to when that oil would be released and when it 

would be brought back, the price differential that GAO has estimated is about $12 a barrel between light and heavy oil. 

If you monetized that differential over the 70 million barrels, you could bring in more than $800 million into the government that is 

not anticipated under the current budget, and use that for many 

purposes, but one that I would suggest would be as a down payment on the next generation of clean domestic energy resources. 

I see that I am about to run out of—have run out of time—so 

I would just want to point that out and make those suggestions. 

I hope the history of the reserve has been helpful, and I thank you 

for asking me to come today. 

[The statement of Mr. Simpson follows:] 


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The CHAIRMAN. Thank you, Mr. Simpson, very much. 

Our next witness is Dr. Joe Romm, who is a senior fellow at the 

Center for American Progress. He also served in the Department 

of Energy in a number of capacities, including acting assistant secretary and principal deputy assistant secretary for energy efficiency 

and renewable energy. He has written extensively on the strategic 

petroleum reserve. 

We welcome you, Dr. Romm. 

STATEMENT OF JOE ROMM 

Mr. ROMM. Thank you, Mr. Chairman and members of the committee. 

I have three main points. First, we tried offshore drilling in 2006 

and oil prices doubled. Second, the only plausible remaining strategy for reducing oil prices quickly is opening up the strategic petroleum reserve, while making a major push for oil conservation. 

Third, I think we are going to sell off the strategic reserve by midcentury anyway, so why not do it now when consumers need the 

relief and we can use the money to help end our oil addiction. 

We must be honest with the public. Oil prices are headed much 

higher over the next 5 to 10 years unless we jumpstart the transition to low-cost alternative fuels, something even oilman T. Boone 

Pickens has said. Some insist that more offshore drilling will lower 

prices, but that is the one strategy we know has failed. We tried 

opening up most of the Gulf of Mexico to offshore drilling 2 years 

ago, but oil prices have doubled since then. 

Ending the moratorium on coastal drilling, where there is maybe 

one-fifth the oil already available for drilling in the gulf, offers no 

realistic hope for reducing oil prices. Indeed, the Bush administration’s own energy experts have made the same point. But selling 

a relatively modest amount of crude oil from the strategic reserve, 

while promoting oil conservation, could pop the speculative bubble 

and lower oil prices. 

It worked very well when President Bush’s father did it during 

Desert Storm, as you heard from Kyle, and as my chart in the testimony shows—hopefully someone will flip that chart over there. 

As Kyle said, we only—the president merely announced that he 

would sell 34 million barrels. As you can see, oil that had started 

to spike up in price immediately collapsed, and it was about a onethird drop over the course of a day or two. 

So imagine what would happen if the current President Bush announced today he was going to sell three times as much oil, 90 million barrels, over the next 6 months at the rate of 500,000 barrels 

a day. I advocate combining that sale with a strong push for oil 

conservation. This president, or more realistically the next president, should use his bully pulpit to launch a national oil conservation education campaign, urging consumers and businesses to take 

a variety of steps to reduce gasoline use. That could easily double 

the oil provided by the strategic reserve. 

Now, if oil prices did drop as a result of these actions, as I expect, then obviously that would vindicate this strategy. But if oil 

prices did not drop, that would merely demonstrate how useless the 

strategic reserve was in the first place. You know, I try to make 

this point in my testimony. The strategic reserve is not strategic. 


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It was created at a time when people worried that countries could 

withhold oil from us. But now we have a global market, so that 

isn’t possible. 

We have replaced the possibility of oil shortages with the reality 

of rising prices. So if we don’t use the strategic reserve to deal with 

our current price spike, when would we ever use it? Indeed, I ask 

people all the time: name me a scenario in which we would use the 

strategic reserve, any significant fraction of it? After all, in the entire 3-decade history of the strategic reserve, a mere 32 million barrels were sold during crises, and we now have 700 million barrels. 

So we are not—and I think we are not going to keep this relatively useless reserve for many more decades. As you know better 

than anyone, Mr. Chairman, we need to be almost completely off 

of oil by mid-century to avoid catastrophic global warming. So 

sometime soon we are going to sell off the SPR’s oil because I can’t 

imagine the taxpayers and their representatives are going to seriously sit on $100 billion sitting under the mattress forever. It is 

just not going to happen. 

We are going to sell it off, so why not do it now when we can 

use the price relief and we could generate tens of billions of dollars 

this year and in coming years. Some of that could help low-income 

families deal with high energy bills and some could jumpstart the 

transition to a clean energy economy and end our oil addiction. 

Gasoline prices are headed much, much higher unless we begin 

an aggressive switch to the only domestic alternative fuel that is 

both abundant and much cheaper than gasoline, namely electricity. 

We need to start building billions of dollars accelerating the deployment of plug-in hybrids, energy efficiencies, recycled energy, wind 

power, solar, photovoltaics, and solar baseload. 

In conclusion, some argue that oil prices will drop if we end the 

federal moratorium on coastal drilling, even though that would 

only deliver maybe 100,000 barrels of oil a day sometime after 

2020. I just don’t understand how anyone can believe in more 

coastal drilling and oppose releasing 500,000 barrels of oil a day 

starting now. Of course, the first strategy would benefit oil companies, and the second strategy would benefit the American people, 

so that may explain who supports what. 

Thank you. 

[The statement of Mr. Romm follows:] 


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The CHAIRMAN. Thank you, Mr. Romm. 

Our final witness is Mr. Jim May. Mr. May is the president and 

CEO of the Air Transport Association, the nation’s oldest and largest airline trade association. Mr. May has been with ATA since 

2003. 

We welcome you, sir. Whenever you are ready, please begin. 

STATEMENT OF JAMES MAY 

Mr. MAY. Thank you, Mr. Chairman. I would note that one of the 

first things I did within 2 weeks of joining ATA in 2003 was to ask 

for a release from the SPR publicly before the Senate Energy Committee. So there is a little bit of precedent to our position. 

First, thank you and the other members of Congress and the 

committee for your leadership in assuring that we do not continue 

to fill the SPR at these extraordinary prices. I don’t have to convince you that high oil prices are smothering our nation’s families, 

taking an especially heavy toll on aviation, but also trucking and 

agriculture and hospitality industry and other key sectors that help 

drive the U.S. economy. This morning, oil was trading at about $126 and change, versus $75 a year ago. That is well over $4 a barrel for American families. 

I would also note for you that due to limited refining capacity and 

global demand, jet fuel—Jet A, which we burn—costs as much as 

$30 a barrel more than gasoline, so we have been paying upwards 

of $170 a barrel, which is significantly greater than in 2007. In 

fact, we are going to spend $62 billion as an industry domestically 

this year on fuel. That is about $20 billion more and accounts for 

the $10 billion we are projected to lose in this calendar year. 

To give you a perspective on a per-consumer basis, we are spending today about seven cents per mile for each of the passengers 

that we carry. That is a fuel bill of about $420 per person. When 

you consider that our average round-trip ticket across all classes 

and all distances is probably in the range of $400 to $500, you 

begin to get an appreciation for how difficult an equation we are 

trying to deal with. 

And deal with it, we are, but not in happy ways. We have cut 

32,000 jobs. Over 100 communities have lost service or will lose 

service. It is having a devastating effect on the economy. There are 

a lot of reasons. We have talked about them this morning—the 

weak dollar, increasing demand in developing economies, insufficient exploration and refining capacity, geopolitical instability and 

all of those things. 

I would suggest to you that there are also a number of solutions, 

in no particular order: increasing domestic supply, conservation, alternative fuels are critical to the future. Reining in unchecked speculation, a subject that we have become well known for talking 

about for some period of time, is critical. And I think a third component, the third leg of that stool, if you will, is a release from the 

strategic reserve. 

Now, increasing our domestic supplies will reduce our dependence on foreign oil and help lower prices. I think a release from the 

SPR is a good first step. We have 706 million barrels. It is over 97 

percent full. We suggest, as the speaker has, that a 10 percent release, which is roughly 70 million barrels, would make a very 


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marked increase. You heard the testimony this morning about pricing. When President Bush did it back during Desert Storm, it was 

about a 38 percent drop. 

I would suggest a framework for that release. One, if it is going 

to be released, don’t let people know in advance. Don’t let the markets know in advance. Just do it on a timed basis. Two, make sure 

it is light, sweet crude, not sour, that is being released. Three, restore U.S. commercial inventories. They are down about 58 to 60 

million barrels, and that roughly equates to the 70 million/10 percent that we are suggesting. 

And finally, two things: dedicate the revenue, as has been suggested this morning, to development of alternative fuels. We are 

working on biofuels projects for aviation use, for example, and set 

up a framework for continuing to do this as conditions dictate— 

triggers, targets, something of that sort that would be worthwhile. 

As I said, we think the speaker’s proposal on a 10 percent release 

would be appropriate and positive. I would also note that there is 

another reserve, it is the New England heating oil reserve, which 

could be worthy of consideration for a release, and then a refill before the winter comes. 

And finally, Mr. Chairman, let me reiterate what I started with. 

We think this is a three-legged stool. We think that rather than engaging in an exercise in who is to blame for high fuel prices, Congress ought to immediately embark on a program of how we can 

share credit for solving the high fuel prices. We need more supply. 

The Republicans introduced a package yesterday that many in the 

majority party won’t like, but I think it is absolutely worth consideration. 

Two, I think, as I have said before, the speaker’s plan on releasing from the SPW. And three, Mr. Stupak’s PUMP Act, which I 

think does a terrific job of trying to attack rampant speculation in 

the marketplace. We need all three and any other solutions. We 

have thousands of people out of work, more coming, more communities are going to lose service, and we need the Congress to address this before the August recess if at all possible. 

Thank you. 

[The statement of Mr. May follows:] 


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The CHAIRMAN. Thank you, Mr. May, very much. 

And now we will turn to questions from the committee of members. 

Mr. May, one of the arguments that is made about the deployment of the strategic petroleum reserve is that we are not in an 

emergency. What does the airline industry have as a response to 

that assertion? 

Mr. MAY. Mr. Chairman, I think there are least 32,000 families 

who have had a breadwinner that has lost a job in my industry 

that would suggest this is absolutely an emergency. I would suggest all of those communities that are losing service, the people 

who can’t move as efficiently and rapidly around the country, 

would suggest this is an emergency. 

I support the continued use of the SPR. I think from a strategic 

tactical perspective, it is important. But I think there are also 

times when it ought to be used to address the economic emergency 

that exists in this country. So I would suggest to you there is 

ample reason to have a controlled release. 

The CHAIRMAN. Mr. Romm, Mr. Simpson, you both worked at the 

Department of Energy. Does the economic condition that we are 

now being confronted with qualify under the law as a situation 

where the president could deploy the strategic petroleum reserve? 

Mr. Simpson. 

Mr. SIMPSON. Under the law, the definition is really somewhat 

vague. It can be interpreted in many different ways. There is a 

strong reluctance to use economic concerns. But the definition of an 

emergency as a result of inadequate supplies can be fairly broad. 

The flexibility that the secretary has to do emergency or test drawdowns, test sales, different types of things, is fairly discretionary. 

So if Mr. May’s definition of an emergency is people losing jobs, 

I think that could be part of the definition. 

The CHAIRMAN. Do you agree with that, Mr. Romm? 

Mr. ROMM. Absolutely. I would also add that if you had described 

current conditions today to us in the Clinton Administration and 

said, would your release the SPR now, I think everybody absolutely 

would have. I mean, we debated it under a situation that was far 

more mild than it is today. 

The CHAIRMAN. Mr. Simpson, what are the, if any, operational 

obstacles to the deployment of the strategic petroleum reserve in 

the short run? 

Mr. SIMPSON. I don’t think there are any operational obstacles to 

releasing it. The implications of an exchange that I talked about 

would be actually positive in the long term for the reserve because 

we would begin to make the capacity of oil in the reserve more reflect the 40 percent of the refining industry’s use of heavy oil. I 

think we have—we are in jeopardy here. We have a hurricane coming in down in Texas. If it had turned south and gone into Mexico 

and disrupted some of the heavy oil production down there, we 

wouldn’t have a way to replace that heavy oil using the strategic 

petroleum reserve. 

The CHAIRMAN. So you are saying, releasing light crude now and 

replacing it with heavy crude is something which is consistent with 

industry practices and needs? 

Mr. SIMPSON. Very much so. 


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The CHAIRMAN. Okay. Thank you. 

And Mr. Romm, we have already seen a disruption of heavy oil 

imports from Latin America under Hugo Chavez’s regime in 2002. 

Both GAO and the Department of Energy have concluded that including some amount of heavy oil in the SPR would be wise. 

Do you agree with that conclusion, Mr. May, that Mr. Simpson 

just reached? 

Mr. MAY. I am not sure I followed the question, Mr. Chairman. 

Do I agree with which statement? 

The CHAIRMAN. The statement that Mr. Simpson just made, that 

having more heavy crude would actually be something that 

could—— 

Mr. MAY. Yes. I am not an expert on heavy versus light. I can 

tell you this, that to the extent you are releasing light, you are 

making it available to all of the refineries in the United States. 

There are a number of refineries that cannot process heavy sour. 

So replacing that with heavy sour is a perfectly sound strategy, 

and releasing light sweet will have the most immediate impact on 

the refineries all being able to use it, and for the consumer to get 

gasoline, jet-A diesel fuel, et cetera. 

The CHAIRMAN. Now, let me just conclude by asking this question of each of you quickly. If we did pass legislation which said 

to the president, deploy 10 percent of the strategic petroleum reserve over the next 5 or 6 months, without telling him which day 

of the week to do it, but if there was something happening in Iran 

or Nigeria or other parts of the world, he could deploy one million 

barrels of oil a couple of days before or after that incident, and 

maybe not deploy anything for a week or so after that. 

Would that have, in your opinion, a downward pressure on the 

price of oil, if the president had that authority and had to deploy 

70 million barrels over a 5- or 6-month period? Mr. Simpson? 

Mr. SIMPSON. I believe it would. In looking at the history, I think 

that is the case. If you add the government as a player, and there 

are people who advocate both sides, but if you put the government 

in as a player, it makes it more difficult to accurately predict, as 

the speculators would like to do, what the oil price would be in the 

future. 

The CHAIRMAN. Dr. Romm. 

Mr. ROMM. I would agree with that. I mean, obviously it assumes 

that the president would make use of that authority. But if the 

president were willing to make use of the authority, I don’t think 

it would have any question that it would have a downward pressure on prices. 

The CHAIRMAN. Mr. May. 

Mr. MAY. It would have a downward pressure. 

The CHAIRMAN. Okay. Thank you. My time has expired. 

The chair recognizes the gentleman from Arizona, Mr. Shadegg. 

Mr. SHADEGG. Thank you, Mr. Chairman. 

Mr. Simpson, I want to begin with you. I have some questions 

about your knowledge of prior draw-downs. In your testimony, how 

many draw-downs did you cover in your analysis? 

Mr. SIMPSON. Four. 

Mr. SHADEGG. Four. And in each of those instances, prices fell? 

Mr. SIMPSON. Yes. 


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Mr. SHADEGG. Can you tell me what the percentage reduction 

was each time of the overall SPR—5 percent, 30 percent, 50 percent? 

Mr. SIMPSON. It was not—I would have to go back and look at 

the math—but it was in the range let’s say they offered 34 million 

barrels in 1991 and we had about, I think about nearly 600 million 

barrels in the reserve at that time. So it would have been a 5 percent reduction. 

Mr. SHADEGG. Do you recall if any of them were more than the 

10 percent which Mr. May has expressed support for? 

Mr. SIMPSON. No, they have not been. 

Mr. SHADEGG. Okay. 

You said that the current law is vague, and if vagueness goes to 

the issue of whether it is supposed to be used for a military emergency, I take it, versus an economic situation like we face now, is 

that right? 

Mr. SIMPSON. Actually, it is usually viewed as a supply disruption. It has been used—in 1991, it was military; in 2005, it was a 

hurricane. 

Mr. SHADEGG. Mr. Romm testified that he could see no circumstance under which our supply of foreign oil could be cut off, 

apparently not the closing of the Straits of Hormuz nor a war with 

Iraq nor a war with whoever in the Middle East, that under no circumstances because we have a world market, that our supply 

would be either cut off or dramatically reduced. At least that is 

what I understood him to say. I will ask him in just a moment. 

Would you agree with that? 

Mr. SIMPSON. There are circumstances where the global supply 

could be diminished. A circumstance where U.S. supply could be 

cut off, I don’t think exists. 

Mr. SHADEGG. Right. It could be reduced, but not cut off. 

Mr. SIMPSON. Right. 

Mr. SHADEGG. Presumably. 

Is there a safe, in your mind, or an unsafe level of draw-down 

that we could do—10 percent would be safe, given what might happen to us that we don’t anticipate, versus 90 percent might be unsafe? Or do you think it doesn’t matter? 

Mr. SIMPSON. I think the way the reserve is put together that if 

you talk about a 10 percent reduction, and if some of the proposals 

I have heard, we would never actually be 10 percent short. If you 

look at the reserve, and let’s just pick West Hackberry or Bryan 

Mount, they are comprised of many different caverns. So you could 

draw one cavern down, draw another one down, and then begin to 

replenish it as market conditions played. 

Mr. SHADEGG. Fair enough. I need to get to Mr. Romm. 

Mr. Romm, did I misstate your position? I thought I heard you 

say, and as a matter of fact I took notes, that there just is no circumstance under which we would need to draw it greater than 

now. I presume that means even war or even a cutting off of the 

Straits of Hormuz. 

Mr. ROMM. Well, what I tried to say was I ask people to describe 

me the scenario. I have never heard a plausible scenario. I mean, 

if you shut down the Straits of Hormuz, I mean I guess it would 

depend on the circumstances, but obviously the price of oil would 


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skyrocket immediately, and I am not certain the strategic petroleum reserve would have any impact. 

But in 30 years, we have never released more than 30 million 

barrels, so it is very hard to say sometime in the near future we 

are going to need 500 million barrels to release. There just is no 

historical evidence that any circumstance like that would ever happen. 

Mr. SHADEGG. Mr. May, as I understand your testimony, it is essentially all of the above—at least a three-legged stool. We need to 

be doing everything we can. 

Mr. MAY. Mr. Chairman, that is correct. We support the continued existence of the SPR, but we think a 10 percent draw-down 

would be positive economic news. We think that supply-side has to 

be part of the equation. You and I have talked about that many 

times in the past. And we think that there has to be a strong, credible, no-nonsense approach to speculation in the marketplace, and 

think that Mr. Stupak’s bill does a terrific job of addressing that. 

Mr. SHADEGG. Two quick points, and then I want to have a follow-up question, Mr. May. 

You did note that the price of oil dropped $16, roughly, following 

the president’s announcement—— 

Mr. MAY. Yes, sir. It is all due to ATA’s efforts on speculation. 

Mr. SHADEGG. Congratulations. I appreciate that. I don’t really 

care. I am with you. I don’t care what the cause is. I just want 

to—— 

Mr. MAY. I don’t either. And I want to give everybody credit. I 

don’t want any for us. I just want to get the prices down. 

Mr. SHADEGG. I like the idea. 

Let me ask you for one more piece of advice. Let’s say that we 

pass legislation now directing, say, a 10 percent reduction in the 

SPR. And we also pass the PUMP Act. Mr. Stupak had a witness 

at his hearing who I believe has advised your industry, who said 

that if the PUMP Act were to pass, his testimony was the price of 

oil would drop by 50 percent in 30 days. 

Mr. Stupak himself, being somewhat more humble and afraid 

that that might not be true, on the floor last week said that he believed that if the PUMP Act were to be passed and signed into 

law—and for the purposes of my question let’s assume it is. So we 

do the SPR and we do the PUMP Act. Mr. Stupak said the price 

of oil would drop by 30 percent in 30 days. 

My question of you is, let’s assume we do both of those before the 

August break to help the American people. And let’s assume that— 

let’s give Mr. Stupak and the SPR time to work. Let’s say 45 days 

from now, the price of oil is not down at all. What would you then 

suggest we do? 

Mr. MAY. Mr. Shadegg, at that point, first of all, I very strongly 

believe that if you do both of those things, it will have a huge impact, downward impact on prices. If God forbid it doesn’t, then I 

think you have got to go the supply side, even though it may have 

as minimal short-term effect, and there is going to be some shortterm effect as well as long term. I am not smart enough to know 

beyond that what else there is to do. 

Mr. SHADEGG. Do you buy the 30 to 50 percent figure? 


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Mr. MAY. I don’t know that I buy 30 to 50 percent, but what I 

do buy is most of the experts suggesting that the normalized cost 

of production, which is the fancy term for what should oil sell for 

today in a real-world market, supply and demand being what it 

is—China, India, the dollar, et cetera—is probably about $75 to $80 

a barrel. If it is trading at $126 this morning, then we have a long 

way to go to get there. 

Mr. SHADEGG. Thank you. 

The CHAIRMAN. The gentleman’s time has expired. 

The chair recognizes the gentlelady from California, Ms. Solis. 

Ms. SOLIS. Thank you, Mr. Chairman. 

My question is for Dr. Romm. When I go back to my district, people say, why do we not have more supply available and why are 

we not drilling? What would your response be to the average person on the street about what that means? Clearly we have to articulate that what you said earlier about drilling, that those supplies won’t be made available for another 20 years. What are some 

good things that we could be telling our constituents about the reality of what is really happening out there? 

Mr. ROMM. Well, I think people need to understand that it took 

us 2 or 3 decades to get into this mess. Certainly, many of us have 

been urging for quite some time that we need a much more aggressive strategy on fuel efficiency and alternative fuels. I am not certain that is a lot of comfort to your constituents. 

I certainly would tell them that in 2006, Congress opened up 

most of the Gulf of Mexico to drilling. And according to the Energy 

Information Administration, the Bush administration’s own EIA, 

there is about 41 billion barrels there. And we have found about 

seven billion in the last 2 years. 

Now, the coastal drilling—I don’t know what else to call it, because I think the public is confused. They think we are not drilling 

offshore. We are doing a lot of drilling and exploring offshore. According to the EIA, there is about 18 billion barrels, which is a lot 

less than what is in the gulf. And it should be pointed out that of 

the 18 billion that the moratorium applies to, 10 billion is off of 

California. I think if we left it up to the state of California, then 

probably we wouldn’t be doing any drilling. 

So we are not talking about much oil, and I think the notion that 

if we opened up 40 billion barrels in 2006 to be drilled, and since 

then oil prices have doubled, the possibility that if you ended the 

moratorium to a lot less oil, anything that would happen to oil 

prices is absurd. I think it is incumbent upon political leaders like 

yourself to just give the public straight talk. 

I understand that the higher oil prices are, the more people believe, hey, we should drill more. We are drilling flat-out. We have 

been—and I am sure you have the statistics. The Congress, the 

White House has been opening up land, on-shore and offshore, for 

drilling. 

Ms. SOLIS. I wanted to change the subject a little bit. We talk 

about gearing up for renewable energy, new technologies. We had 

a bill signed into law by the president last year, our energy bill 

that included green jobs, the Green Jobs Act. Can you give me 

some insight there about how this plays into getting our dependency off of fossil fuels and what that means. 


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Maybe Mr. May could also talk a little bit about that, too, because of your industry and how you are driven, and how this transition may impact your area. Very quickly. 

Mr. ROMM. Sure. Well, I think it is very clear. This year, we are going to spend $700 billion, American consumers are going to 

spend $700 billion overseas to purchase oil. And as T. Boone has 

said, there is no prospect that that number is going to be lower for 

the next 10 years. That is going to be $7 trillion. Obviously, it 

would make a great deal of sense to spend money in this country 

on plug-in hybrids, wind power, solar photovoltaics, energy efficiency, and keep the money in America paying people to do installation, to build better cars, et cetera, than to send trillions of dollars overseas. 

Ms. SOLIS. The criticism we get, though, if I could just quickly 

say, is that we are actually going to decrease the number of jobs 

here at home. That is an argument that is being used by the other 

side of the aisle against this now, that if we reinvest, it is going 

to take away from those jobs that currently exist. 

Mr. ROMM. Well, we are importing almost, you know, about two- thirds of our oil. So $700 billion out of, let’s say, $1 trillion we are 

going to spend on oil this year is just going to go to Saudi Arabia. 

It is just going to go Venezuela. It is going to go to Russia. It is 

going to create jobs in those countries. I don’t see how that $700 

billion can do anything for Americans. If we could spend $2 trillion over the next 10 or 20 years, invest in this country, and then reduce that from $700 billion to $200 billion, we would be bringing back a half-trillion dollars each year, 

keeping it in this country. I just think it makes obvious sense that 

that is the way to economic health and well being. 

Ms. SOLIS. Mr. May, just quickly. I know my time has run out. 

Mr. MAY. I think that two quick points to make. Number one, the 

aviation space, the aviation sector feels that being environmentally 

sound is in its own best interest for one very simple reason. We are 

totally carbon-intensive right now in terms of our fuel, and so the 

less we burn, the more environmentally friendly we are going to be, 

and we are desperate to spend less money on fuel in whatever way 

we can—next-generation air traffic control, you know, winglets. We 

can go down a long list of things that we are working on. 

Ms. SOLIS. I would love to hear more about what that cost would 

mean, or investment that would be made. 

Mr. MAY. We will be happy to provide that to you. 

Ms. SOLIS. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. The gentlelady’s time has expired. 

The chair recognizes the gentleman from California, Mr. 

McNerney. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

The CHAIRMAN. I am sorry. Excuse me. I would like to recognize—— 

Mr. MCNERNEY. Yes, I thought the gentleman from Oregon 

had—— 

The CHAIRMAN. I am sorry. Excuse me. 

The gentleman from Oregon, Mr. Blumenauer. 

Excuse me. 


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Mr. BLUMENAUER. Thank you. 

I wanted to follow up on Ms. Solis’s point because it seems to me 

that saving a quarter-trillion, half-trillion dollars, reinvesting it 

here, helping the United States move from a position where we 

waste more energy than any country in the world, to being ready 

for the next generation of generation. 

And I wanted to start, Mr. May, just if we were to have 10, 20, 

30, 40 billion dollars over the course of the next 5 years that we 

can accelerate investments in helping industries like yours reduce 

your carbon footprint—— 

Mr. MAY. Sure. 

Mr. BLUMENAUER [continuing]. What impact could that poten- tially make, if there is an extra, say, $10 billion available to subsidize a new generation of aircraft, retiring the elements of the 

fleet that may not be necessary because of changing configurations 

of the market. What—— 

Mr. MAY. Well, congressman, the reality is we are in an economic crisis. We are going to lose $10 billion this year. That is $10 billion 

we are not going to invest in new Boeing aircraft, for instance or 

a number of other changes. So you know, trying to figure out what 

sort of national investment needs to be made I think should be a 

high priority. And it ranges from more money going into the development of biofuels, biomass—Boeing has a project they debuted at 

the Farnsborough Air Show just this last week—to environmentally 

sensitive CTL, to a whole range of different technologies. 

Next-generation air traffic control can save us billions and billions of dollars, and hundreds of millions of metric tons of CO 2. Mr. BLUMENAUER. In the course of a plane, is the takeoff and the 

landing the most energy-intensive part of the trip? 

Mr. MAY. I am going to guess it is, Congressman Blumenauer, 

but I am not sufficiently expert to answer that without doubt. I can 

get an answer for you. 

Mr. BLUMENAUER. I would appreciate your information, your reference that it is costing seven cents per passenger mile for fuel. 

Mr. MAY. For fuel today. 

Mr. BLUMENAUER. I am interested in how that varies in terms 

of trip distance. 

Mr. MAY. That figure is an average figure across all, but I will 

get you the details. 

Mr. BLUMENAUER. I understand. Great. Thank you very much. 

I am interested in this notion about a sustained draw-down for 

a while. If we don’t need 706 million barrels of oil, and I think I 

am not quite where you are yet, Dr. Romm, but I do think there 

is strong evidence that we could get by with hundreds of millions 

of barrels less, that that were transitioned into the fuel supply system so that there is something that is sustainable over the next 2 

or 3 years, and concurrently the revenue that is generated from 

that would be available to help the transition of technologies, to 

bump this up, that it would be sort of a double benefit. 

I mean, I am still stunned that a 2 percent world increase in demand has over the course of the last year, we have seen prices double. There is something going on in terms of speculation and market manipulation it seems to me without question. But using the 

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term strategy so that we have a 3- to 5-year bridge, that we can 

make a difference. 

I am wondering if you would care to comment on that notion. 

Mr. ROMM. Sure. Well, we could sell 500,000 barrels of oil a day 

for 4 years and run through the entire SPR, so you can sort of decide for yourself how much of the SPR you think we need. It is 

hard for me to believe we need even half of the current SPR. Again, 

if the SPR were half as big as it is now, it would still be 10 times 

the size of the amount of oil we have ever released during crises. 

So you know, running a half-million barrels of oil a day for 2 

years obviously would have an impact on prices and would generate a lot of revenue to, you know, jump start the clean energy 

transition. But you can ask Kyle’s opinion. 

Mr. SIMPSON. I disagree somewhat with Joe. I do think we need 

to have a strong robust strategic petroleum reserve. I do, however, 

think we ought to use it. It seems silly to have an investment of 

that magnitude in the ground and not be willing to use it for things 

like helping to pay for the transition, the R&D that we need for 

the next generation of clean energy technology. 

Mr. BLUMENAUER. But just, would you feel comfortable if we 

were making a strategic allocation of 100 to 200 million barrels 

over the next 2 to 5 years as we are trying to work this through? 

Is that something that is within your comfort level, absent some 

other development? 

Mr. SIMPSON. I don’t know that I would go that big. I like the 

idea of this exchange. 

Mr. BLUMENAUER. Okay. 

Mr. May. 

Mr. MAY. I think the exchange works. What we suggested in testimony, congressman, is that you set up a framework for how it 

would be used. You may set target prices—a fill below a certain 

level, as Congress has already directed, release above a certain 

price level. Use it as a safety mechanism to balance out what is 

going on. 

Mr. BLUMENAUER. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Great, great. The gentleman’s time has expired. 

The chair recognizes the gentleman from California, Mr. 

McNerney. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Mr. Romm, I was actually I won’t say startled, but surprised by 

your prediction that the SPR would be gone by mid-century. My 

personal feeling I think lies more with Mr. Simpson that we ought 

to keep that around for the kind of purpose that we need it for 

today, to keep the market speculation in check. And you have 

shown with your testimony that, jeez, that has been done a couple 

of times in the past. It works, and why don’t we keep some of this 

stuff around just for that purpose if nothing else. 

But I believe that there is a sufficient supply of oil out there 

today. I am not talking about 5 years from now or 10 years from 

now, but there is a sufficient supply of oil out there today, and the 

SPR can be used to start a medium-term drop in the oil prices. 

Do you all agree with that, that the SPR can be used in light of 

an adequate supply today to initiate a medium-term drop in prices? 


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Mr. SIMPSON. I believe it can. I think that you can, if you do it 

right, you can help also address the next problem, which is we need 

to get off of oil. So if you use the strategic petroleum reserve to 

help keep the prices in a reasonable band, whatever that may be, 

and use the money that is generated to help develop the technology 

to move us on to the next generation, then it is serving the dual 

purpose. 

Mr. ROMM. Could I just say—— 

Mr. MCNERNEY. Sure. 

Mr. ROMM [continuing]. Imagine what happens if we don’t use it 

now. That means we are sending a signal to the market that there 

is never going to be a price or economic reason we will ever release 

it. So that is just going to encourage the speculators. Hey, they 

have got all this oil they are never going to use. It is just crazy, 

really. 

Mr. MCNERNEY. Well, I see the strategic petroleum reserve being 

used to decrease the price. I think that is going to happen maybe 

in the next presidency. But what I don’t want to see is that since 

we are importing 60 to 70 percent of oil, that we are still a very 

high risk for our economy, for our future. 

But fortunately, we have the technology coming out today, with 

plug-in hybrids, with all-electric vehicles that if the Fed does its job 

in encouraging the American consumers to become efficient, within 

a decade or so we will see most new vehicles being plug-in hybrids 

or all-electric, and the whole oil price issue will be a non-issue like 

it is today. I think that is perfectly within the realm of possibility. 

Do you agree with that? 

Mr. ROMM. I agree with half of that. 

Mr. MCNERNEY. Okay. 

Mr. ROMM. I just think that what is happening in China and 

India means that if we did make this aggressive switch to plug-in 

hybrids, we would shield the American consumer from high oil 

prices. But I don’t know that we would lower oil prices, because demand is just going to grow as you see the urbanization and industrialization of the developing world. 

My reason for advocating the transition to clean energy and plugin hybrids is that fuel is substantially cheaper than gasoline. So if 

you own a plug-in hybrid, you don’t care, really, what the price of 

gasoline is. I would hope, if we could get China and India to transition over to electric vehicles and clean energy, then we might be 

able to bring the price of oil down. 

Mr. MCNERNEY. Especially if we were manufacturing those items 

and sending them over there. So I think we are pretty much in 

agreement. If we get ahead of the efficiency curve, then we are 

going to be insulated from the high prices that are inevitably going 

to come. 

One other question, the strategic petroleum reserve is there. It 

is a resource for us. Is there specific legislation that any one of you 

would recommend in terms of how we would legislate using that 

in the future? 

Mr. SIMPSON. There is a piece of legislation, H.R. 6067, that was 

introduced by Congressman Lampson and cosponsored by the 

chairman and others on the committee, that would create, would 

cause an exchange, and then would reinvest any revenue that was 


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gained as a result of the price differential between light and heavy 

crude, to be invested in energy R&D across the board, that has 

been authorized by the Congress, but the money has not been 

available to fully fund those programs. 

Mr. MCNERNEY. Thank you. 

I am going to yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

The chair recognizes the gentleman from New York, Mr. Hall. 

Mr. HALL. Thank you, Mr. Chairman. 

Mr. May, it is good to see you again, sir. 

Mr. MAY. It is a pleasure, Congressman. 

Mr. HALL. I was interested to see that you, that ATA considers 

this an emergency. My constituents consider this current situation 

an emergency. In New York’s 19th district, I am hearing from people who can’t afford the gas to drive to a job interview. I am hearing from school districts who are wondering how they are going to 

power their buses and whether they will be able to, or whether 

they will be required to reduce the number of bus runs by cramming kindergartners on the same bus with high-schoolers to save 

on diesel fuel. I am hearing from families that are having to choose 

between a third meal in a day and gasoline. 

So as badly as the gulf coast was hit during Katrina, and not to 

diminish by any means the suffering that they are still going 

through down there in the recovery, the attempted recovery from 

Hurricanes Katrina and Rita, nonetheless the impression we have 

in New York, in the 19th district anyway, and that I hear from others around the country, is that as a whole our economy is suffering 

more today than it was during and after Hurricane Katrina. 

The impact that is being had by the increase in gas prices on the 

economy across the board, whether it is aircraft, cost of goods that 

is being increased, difficulty in the tourism industry or the trucking industry, or go on down the list, is more widespread and more 

pervasive and more of a crisis than it was when we were hit by 

those two hurricanes in a row. 

So I would make the argument that this is a crisis and that 

there should be a release. I am happy to hear all of you saying 

that. I guess the question is, how much over what period of time. 

I totally agree that using the benefit—we actually stand to for the 

first time maybe ever, to have the taxpayer sell something that it 

bought earlier and make a profit at it. Most of the oil there I would 

guess we bought at less than $50 a barrel. 

Mr. ROMM. About $30. 

Mr. HALL. An average around $30, so if we sell it at $120 or 

$130, whatever it may be—it may come down a little bit once this 

starts to be known—it will nonetheless be at least double what we 

paid for it. It is, as Mr. Simpson has said, an opportunity for us 

to use this profit, whether it is a swap or an outright sale, to bring 

renewable fuels and alternative fuels to market and start to get 

ourselves an alternative, a competitor for oil. 

Last night, T. Boone Pickens spoke to our caucus. I understand 

he also spoke to the Republican caucus as well. And he has a very 

interesting plan that he is heavily investing in himself, which is to 

use the wind belt up the central part of the country from Texas to 

the Dakotas, and somewhat to each side and both coasts as well, 


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to produce enough electricity that we could replace the natural gas 

that is currently being used for power generation, so that can be 

diverted to transportation, and that much less liquid fuel used in 

our cars and trucks will mean more that can be used by the aviation industry, and so on. 

I think that I see in my district, I mean, I helped to build with 

work gloves and a hard hat on down in the trench, helped to put 

in geothermal systems that will cut air conditioning costs to practically zero and cut heating costs in the winter in our latitude to 

about 50 percent of what they currently are. I could go on and on. 

You know the story between the air, the solar, the wind, the geothermal, the tidal power and so on. So the alternatives are there. 

The question, which will probably use up my time, is many of my 

constituents are already locking in purchase agreements for home 

heating oil for this coming winter and are experiencing some serious sticker shock, looking at $5 heating oil, whereas last year it 

was $2 and something. So how could a release from the SPR best 

help to take the edge off of home heating oil prices in addition to 

gasoline? 

I would ask you, starting with Mr. Simpson, if you could each answer that please. 

Mr. SIMPSON. Well, I think you go back to the exchange that occurred in 2000. It was precipitated by a concern about heating oil. 

It was a physical shortage of heating oil that they were concerned 

about at that time. But if you could release oil, have it refined into 

heating oil, and it is the price of the oil that is going to drive the 

cost of the heating oil, so if you put enough into the market that 

it does stop some of the speculation and allows the price to get 

back to what many have suggested is a much lower price under the 

fundamentals, there is time to do that before the winter heating 

season. 

Mr. HALL. Thank you. 

Mr. ROMM. Well, I would just say, you know, if we released a 

half-million barrels of oil a day for let’s say 6 months, that should 

drop the price substantially and that would obviously benefit people who drive cars, who fly planes, and who have to heat their 

homes with oil. If it didn’t reduce the price of oil substantially, that 

would tell us something very important, which is that we are in a 

very big long-term supply-demand mismatch and we had better 

work really hard to do what T. Boone says. 

So I think we, you know, I just think that we should find out 

how much speculation, how much froth there is in the market 

versus how much the price is actual supply-demand trends, and releasing a fair chunk of oil from the SPR would tell us that very 

quickly. 

Mr. HALL. Mr. May. 

Mr. MAY. Mr. Hall, I noted at the outset of my testimony that 

this is not an issue that simply affects airlines or truckers or agriculture or retail or the hospitality industry, but consumers everywhere. I think anything this Congress does, and I have recommended three legs to that stool, anything you do to bring prices 

down is going to have a sweeping effect across the whole economy. 

I think it will impact the constituents in Poughkeepsie, who are 

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consin or anyplace else where it is particularly cold. It is going to 

make a difference for transportation. It is going to make a difference for the hotel and lodging industry that is having such a 

tough time because we are cutting back on the number of flights 

going to a lot of these different destinations. 

So I think the sooner the better, the more widespread, the more 

sweeping the relief that Congress can provide, the better. 

Mr. HALL. Thank you. 

I yield back. 

Mr. BLUMENAUER [presiding]. Okay. 

Mr. Sensenbrenner. 

Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

Technology has failed with microphones on the Republican side, 

I guess I should say, I am not surprised. [Laughter.] 

But that being said, let me say that release of crude oil from the 

SPR is going to be temporary at best. It will cool the futures market. There is no question about that. But if Dr. Romm’s fear is 

right, that there is something more to this than speculation and a 

bubble that has been created, it seems to me that everybody’s going 

to have to step back and look at what to do. 

We have heard an awful lot of opposition led by the speaker of 

the House and the other side of the aisle against drilling anywhere. 

I would hope that if there is a release from the SPR and nothing 

happens relative to immediate relief that is significant enough to 

make a dent in the economy for the better, then it is my hope that 

my friends over on the other side of the aisle will realize that drilling is at least a part of the answer. 

I think that we on our side of the aisle, most of us at least—myself included—know that drilling is not the exclusive answer, but 

we think it should be a part of the answer and they don’t. So the 

only observation that I would make is I think that releasing oil 

from the SPR is worth a try, but if it doesn’t work, then we have 

to do something more fundamental and we ought to do it in September before this Congress adjourns sine die. 

I yield back. 

Mr. BLUMENAUER. Thank you. 

Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. Pickens, T. Boone Pickens, suggests that unless we reduce our dependence on foreign oil that a barrel of oil could rise to $300 

a barrel. Is that an exaggeration? Or do any of you see that as the 

next normal? 

Mr. ROMM. Well, let me say, I don’t think there is any question 

that if we don’t get off of our current path on oil, oil prices are 

headed much higher. The CIBC actually projects $200 a barrel of 

oil in 2 years. So no, I don’t think—whether it is, you know, $200, 

$250, $300, it is hard to say. 

Mr. CLEAVER. Yes, over 10 years is what he said. I should 

have—— 

Mr. ROMM. Right. And over 10 years, I think that is reasonable. 

I think it is absolutely reasonable because after all, it looks like 

current prices of oil aren’t destroying demand or generating huge 

amounts of extra supply. And demand is just going to keep going 

up because of China and India and other countries. 


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So you know, at some point, the price has to rise until demand 

is destroyed or there is a lot of more supply. One of those two 

things has to happen or else prices just keep rising. 

Mr. MAY. Congressman, I am going to take a somewhat different 

view. I think that my colleague is correct here in one respect. On 

the other hand, I think there has been great joy and sport taken 

in predicting $150, $200-plus oil by a whole lot of folks in the trading community who are delighted to see the expectation of increasing prices become a very profitable sideline. 

And I am not at all happy with that byproduct of this speculation 

that is assisting in the process of driving prices up. I do think there 

is a speculative bubble, and I happen to believe that the marginal 

cost of production for oil is somewhere in the $65, $75, $85 range, 

and that it is realistic to expect $100 oil just as easily as it is $200 

oil. And that is a somewhat different view. 

Mr. SIMPSON. Mr. Cleaver, one thing, it is kind of hard to argue 

with Boone Pickens with as much money as he has made and the 

predictions that he has made. I think the price could go up and the 

price could go down. But the one thing that we, we may not have 

a lot of control over that, but we have got tools that we can use 

to keep us from having to be in this situation. 

There are many technological advances that are either out there 

to be deployed or just over the horizon that if we can get some 

pressure released by trying—and I thought Joe’s point was great. 

If we release oil from the reserve and it works to drive prices down, 

great. It we release oil from the reserve and it doesn’t work, that 

is a wakeup call. We have got to get out of this situation, and we 

have the tools to do that. 

Mr. CLEAVER. What would be a reasonable test period to see 

whether or not the release of oil from the reserve is impactful on 

the economy? I mean, is it for one quarter? Should we wait a year? 

I mean, if it doesn’t drop the prices at the pump, I mean, do you 

think people are scared because of Freddie Mac and Fannie Mae, 

I mean, that would generate I think a crisis in this country. 

I have changed. I used to think we had a transportation-based 

economy. I think we now have a confidence-based economy. You 

know, if the confidence of the public drops, we are in trouble. So 

what period of time—I happen to support it, but I am also at the 

same time frightened by the prospects of it not dropping the prices 

of oil. 

Mr. ROMM. Could I just say that one of the reasons why no one 

ever uses the SPR is that it is always argued in the highest levels 

of the government that that will show that the government is 

scared, and it is a crisis, and that is why they are releasing the 

SPR, so they never release the SPR for that reason. And so as I 

say, I personally think the SPR is relatively useless. 

I would say 3 to 6 months. If the president announced that he 

is going to sell half-million barrels a day for 3 to 6 months, and 

he started doing it and nothing happened, then people should panic 

because that means T. Boone is probably right, and we are headed 

to $300 unless we really make a concerted effort to end our addiction to oil. And that I think would be worth knowing also. 

Mr. SIMPSON. And I would say, I think 3 to 6 months, history 

shows that if the announcement is made, you see the reaction and 


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then you begin to—it takes time to get into the gasoline markets 

because it takes time to refine the product that you have already 

got. But I would also make an observation that I wouldn’t say I am 

going to release 500,000 barrels a day every day for the next 3 to 

6 months. 

I would say we are going to release a set amount of oil, and make 

it 70 million barrels or 90 million barrels, and then let that uncertainty as to when that oil is going to come out will further tamp 

down the markets. But if you—and they might sell it all at once, 

but they might trickle it out and let it go at different times. 

Mr. CLEAVER. I apologize for being late. I was over at the House 

in another meeting, so you may have already dealt with this. But 

do you have any dates and times—I probably should know this— 

when we deployed the reserves previously? You may have already 

talked about it. 

Mr. SIMPSON. Sure. And in 1991, right before Desert Storm, and 

I will expand a little bit on what I said earlier. The president announced on January 16 that we were going to attack Iraq, and that 

we were going to release 34 million barrels from the strategic petroleum reserve. The next day, the price of oil dropped by onethird, $10. 

I want to point out that that was not the only thing that caused 

that to happen. In October of the previous year after the invasion 

of Kuwait had occurred, there was a test sale. The secretary of energy said, you know, we haven’t used the strategic petroleum reserve in a while, not sure the companies really are aware of how 

to interact with us on this, so we are going to do a four million barrel test sale, which was a pretty good forecast that the government 

was going to use it. That actually helped to dampen prices a bit 

in the fall. 

And then there was a coordinated effort with the International 

Energy Agency, our allies going into the war, that they released 

some oil. It was a coordinated effort. The president made his announcement and the price just dropped, and they actually didn’t 

sell the 34 million barrels. They only sold 17 million, but the markets stabilized. 

And then there was 1996, when the Congress directed the Department of Energy to sell 227 million barrels of oil to help balance 

the budget. It was enacted into law, signed by the president I think 

on April 26. Prices of gasoline were rising dramatically, particularly in California where there had been a refinery fire and some 

other things, a whole multitude of things coming in place. 

And President Clinton made an interesting decision. It is smart 

to sell oil from the reserve. If you have to raise $227 million, why 

not sell the oil as fast as you can while the prices are high and get 

value for the taxpayer back? It was a very good move. Coincidentally, the price of gasoline dropped the next day and continued to 

fall through October of that year. 

The heating oil exchange in 2000 is another example where there 

was a shortage. The price dropped I think around 30 percent at 

that time. And then after Hurricane Katrina, even though the 

problem after Hurricane Katrina was more of a refining capacity 

problem, or at least equally a refining capacity problem because the 

refineries got flooded out, as it was a loss of production, the fact 


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that they released oil from the—announced the release of oil from 

the reserve caused the price to drop fairly dramatically. 

Mr. CLEAVER. One more question. 

I apologize, but when we have people with your expertise here, 

I want to try to squeeze every drop from you. And this is—I am 

asking you to be swamis almost I guess, but if the U.S. released 

from the strategic petroleum reserve 200 barrels or 300 barrels, 

whatever, a large number, and then Japan also announced that 

they were going to release a couple of hundred thousand barrels, 

and our friends around the world, if we have any left, do you think 

that that would have even a greater impact and success in dropping the price at the pump would be a lot more significant if more 

than the U.S. announced a drop, that they were going to release 

the strategic petroleum reserve in large amount? 

Mr. SIMPSON. Well, it has worked in the past, so I would think 

the more oil you could put into the market, the better the result 

would be. 

Mr. ROMM. Again, I think the other impact would be is it would 

send a signal to the market that those reserves weren’t in fact just 

dollars, you know, money stuffed under a mattress that was never 

going to be used, but in fact we would actually use it for this very 

purpose. As long as the market thinks we are never going to use 

it, then the speculative bubble is just going to grow. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. BLUMENAUER. Mr. Hall. 

Mr. HALL. Mr. Chairman, thank you. 

I just wanted to ask one more question. And before I do, I want 

to with all due respect refute the statement by the ranking member 

that Democrats are against drilling. In fact, last week I believe we 

voted for the Drill Act that attempted to make oil companies drill 

on the 68 million acres in the lower 48 and some of the 20 million 

acres that are available in Alaska that they are sitting on and not 

drilling on. 

Coincidentally that same day, the administration announced the 

sale of 2.6 million acres, a lease sale of 2.6 million acres in the 

NPRA in Alaska, which obviously they could have done last week, 

last year, or 5 years ago, whenever. We were not stopping them 

and we are absolutely for drilling on the land that is already 

leased, and there is plenty of that. 

But the question I have here goes to refining capacity. It is my 

understanding that there was one application in the last 30 years 

in this country for a refinery. It was granted and that refinery was 

never built. Is that accurate, to your knowledge? 

Mr. SIMPSON. There haven’t been any refineries built in the last 

30 years. I think that is right. 

Mr. HALL. But it is not because the applications are being denied. 

Mr. SIMPSON. It is not necessarily. It is a very complicated, obviously, process to do a green-build of a refinery. It is also not true 

that we have less refining capacity. We have actually a lot more 

refining capacity than we did 30 years ago. There has been expansions at existing facilities. 


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Mr. HALL. Just quickly, because I am over time already, but I 

just wanted to say, my understanding is that our refineries today 

are running at just below 90 percent. Does that sound—— 

Mr. SIMPSON. That sounds about right. 

Mr. HALL. About right. So to be clear, given the market-calming 

impact and supply-increasing impact of a release from the SPR, 

there should not be any credence to arguments that a lack of refining capacity would mitigate the effect of an SPR release. 

Mr. SIMPSON. That is true, because you are releasing oil into a 

global—even though that oil would stay in the United States, it 

means that there is some oil that would not then have to come in 

here that could go to other places and it would have a global effect. 

Mr. HALL. Thank you. Okay. I just wanted to clarify that refining 

capacity doesn’t stand in the way of a release in the SPR having 

the desired effect. 

I want to thank you all for your testimony. 

I yield back. 

Mr. CLEAVER [presiding]. Thank you, Mr. Hall. 

The acting chairman just departed here. There is a bill on the 

floor, which makes me the acting chair and the ranking member. 

I am all-powerful now. [Laughter.] 

I have been waiting for this for years. 

But if we can, you know, maybe close out this session by looking—let’s look at the other side of all of the things we have been 

talking about. There are those who would suggest that because oil 

is finite that we are foolish to release the strategic petroleum reserve and think that we will drop the oil prices and that everything 

is going to be fine, everybody is going to be happy, divorces will be 

reduced, life is good again. 

And the truth of the matter is, we are dealing with a finite substance and that the next generation will deal with this problem unless we deal with it. There are some things happening. Consumption has dropped. Americans are grudgingly moving from the 12- 

cylinder calls. Amtrak ridership is up. In my community, the area 

transportation authorities, buses, are increasing their ridership. 

The big bus companies in the country are riding—in fact, some of 

the Amtrak lines are sold out of seats because of people making 

long-term plans for Thanksgiving and Christmas. I mean, they are 

selling out on Amtrak all the way into December. 

Deaths—automobile deaths are down because people are not 

driving. I mean, you look at a number of indicators and you think, 

well, you know, maybe Americans need to face the reality that 

prices at the pump, you know, are not going to go down and our 

society would be better off if they didn’t because we can now start 

doing what we should have done. 

Is that too tough a philosophy? You are not going to expect any 

candidate to say that, but in reality, just in here where nobody is 

listening—— 

Mr. SIMPSON. Do you want to take that on? 

Mr. ROMM. Well, let me—obviously, we have squandered the last 

2 or 3 decades. And all the analyses show is that, you know, cars 

last 20 years and behavior patterns become very ingrained. So yes, 

if you want to get off of our current path, you have to work really 


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hard for 10, 15 years, like T. Boone Pickens or Vice President Gore 

have said. 

Otherwise, the oil prices are headed up. I think the American 

public has figured that out, which is why they are buying different 

cars and changing their behavior. I don’t view that as an argument 

not to sell off the SPR. I mean, if—and I would just repeat what 

I said in my testimony—one of two things will happen. Either oil 

prices will drop or they won’t. If they drop, that is a good thing. 

The SPR has worked. If they don’t, then we have learned that we 

are in a very big problem that in fact we are at peak oil, or near 

it, which I think is actually the case. In which case, it will be incumbent on Congress to take the very strong action that people 

have been urging to finally end our addiction to oil. So yes, I think the American consumers need to get used to $4 oil and it will then be $5, $6, $7, unless their representatives take 

pretty strong actions to reverse the course. 

Mr. SIMPSON. I would just add to that, a release from the reserve 

is not going to be a permanent solution. It has not been in history 

and it won’t be again. But we are in an era now where prices are 

higher. It is remarkable to me the number of new energy technologies that are coming out and the pace at which they are coming, and to see T. Boone Pickens come out and propose what he 

proposes is fairly remarkable. 

But I think we have been a high-price situation for a long 

enough time now that we are beginning to see a transition in the 

way American consumers think. They are buying smaller cars. 

They are parking the Tahoes. They are taking mass transit. They 

are improving the efficiency of their homes, which is a very useful 

thing. But there is no reason to put them at the mercy of those who 

would drive the price up higher than the market fundamentals 

would be. The price is not going to fall back down to a point where 

I think we are going to see just, oh gee, that was a bad 6 months. 

Mr. MAY. Congressman, at the risk of prolonging this, I think the 

equation is real simple. The longer you debate this, the longer you 

talk about it, the more people that are going to lose their jobs, the 

more communities that are going to lose service. It is time to have 

the Congress do something, and as quickly as possible because it 

is a crisis. 

Mr. CLEAVER. Thank you. Thank you. 

We appreciate you coming. Since I am the power here, we are 

going to increase your honorarium for appearing before this committee. We appreciate—I think all members will have time to submit remarks to the chairman for the record. 

We appreciate very much your time, and I appreciate your talent. 

You are very informative, and I appreciate it very much. Hopefully 

we will act quickly. That is one of the positives we have gotten 

from this hearing today. Thank you very much. 

The meeting is adjourned. 

[Whereupon, at 10:59 a.m., the committee was adjourned.] 


jlentini on DSKJ8SOYB1PROD with HROC