[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
BURNING THE MIDNIGHT OIL:
WHY DEPLETING THE STRATEGIC
PETROLEUM RESERVE IS NOT
A SOLUTION TO AMERICA'S
ENERGY PROBLEM, PART I
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ECONOMIC GROWTH, ENERGY POLICY, AND REGULATORY AFFAIRS
OF THE
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MARCH 8, 2023
__________
Serial No. 118-6
__________
Printed for the use of the Committee on Oversight and Accountability
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
51-474 PDF WASHINGTON : 2023
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Jamie Raskin, Maryland, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Gary Palmer, Alabama Gerald E. Connolly, Virginia
Clay Higgins, Louisiana Raja Krishnamoorthi, Illinois
Pete Sessions, Texas Ro Khanna, California
Andy Biggs, Arizona Kweisi Mfume, Maryland
Nancy Mace, South Carolina Alexandria Ocasio-Cortez, New York
Jake LaTurner, Kansas Katie Porter, California
Pat Fallon, Texas Cori Bush, Missouri
Byron Donalds, Florida Shontel Brown, Ohio
Kelly Armstrong, North Dakota Jimmy Gomez, California
Scott Perry, Pennsylvania Melanie Stansbury, New Mexico
William Timmons, South Carolina Robert Garcia, California
Tim Burchett, Tennessee Maxwell Frost, Florida
Marjorie Taylor Greene, Georgia Becca Balint, Vermont
Lisa McClain, Michigan Summer Lee, Pennsylvania
Lauren Boebert, Colorado Greg Casar, Texas
Russell Fry, South Carolina Jasmine Crockett, Texas
Anna Paulina Luna, Florida Dan Goldman, New York
Chuck Edwards, North Carolina Jared Moskowitz, Florida
Nick Langworthy, New York
Eric Burlison, Missouri
Mark Marin, Staff Director
Jessica Donlon, Deputy Staff Director and General Counsel
Daniel Flores, Senior Counsel
David Ehmen, Counsel
Jeanne Kuehl, Senior Professional Staff
Mallory Cogar, Deputy Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Julie Tagen, Minority Staff Director
Contact Number: 202-225-5051
Subcommittee On Economic Growth, Energy Policy, And Regulatory Affairs
Pat Fallon, Texas, Chairman
Byron Donalds, Florida Cori Bush, Missouri, Ranking
Scott Perry, Pennsylvania Minority Member
Lisa McClain, Michigan Shontel Brown, Ohio
Lauren Boebert, Colorado Melanie Stansbury, New Mexico
Russell Fry, South Carolina Eleanor Holmes Norton, District of
Anna Paulina Luna, Florida Columbia
Chuck Edwards, North Carolina Raja Krishnamoorthi, Illinois
Nick Langworthy, New York Ro Khanna, California
Katie Porter, California
C O N T E N T S
----------
Page
Hearing held on March 8, 2023.................................... 1
Witnesses
Mr. Alex Epstein, President, Center for Industrial Progress
Oral Statement................................................... 6
Dr. Ilia Bouchouev, Managing Partner, Pentathlon Investments, LLC
Oral Statement................................................... 8
Mr. Demond Drummer, Institute on Race, Power and Political
Economy, The New School
Oral Statement................................................... 9
Opening statements and the prepared statements for the witnesses
are available in the U.S. House of Representatives Repository
at: docs.house.gov.
Index of Documents
----------
* Article, Duke Review, ``Martin Luther King: Unworthy of a Day
Off Over Other Great Leaders''; submitted by Rep. Stansbury.
* Article, Duke Review, ``Race Commission Findings: We Hope
They're Kidding''; submitted by Rep. Stansbury.
* Letter from the Publisher, Duke Review, ``The Racism of
Reparations''; submitted by Rep. Stansbury.
* Article, Documented, ``Prominent Climate Denier Authored
Controversial Articles as Publisher of Conservative Student
Newspaper''; submitted by Rep. Stansbury.
The documents listed above are available at: docs.house.gov.
BURNING THE MIDNIGHT OIL:
WHY DEPLETING THE STRATEGIC
PETROLEUM RESERVE IS NOT
A SOLUTION TO AMERICA'S
ENERGY PROBLEM, PART I
----------
Wednesday, March 8, 2023
House of Representatives
Committee on Oversight and Accountability
Subcommittee on Economic Growth, Energy
Policy, and Regulatory Affairs
Washington, D.C.
The Subcommittee met, pursuant to notice, at 2:21 p.m., in
room 2247, Rayburn Office Building, Hon. Pat Fallon, (Chairman
of the Subcommittee) presiding.
Present: Representatives Fallon, Donalds, Perry, Boebert,
Fry, Luna, Edwards, Bush, Norton, Porter, Brown, and Stansbury.
Mr. Fallon. The Committee on Economic Growth, Energy
Policy, and Regulatory Affairs will come to order. I want to
welcome everyone for coming.
Without objection, the Chair may declare a recess at any
time, and I recognize myself for the purpose of making an
opening statement.
It is an honor to chair the Subcommittee on Economic
Growth, Energy Policy, and Regulatory Affairs. I would like to
thank the witnesses for their testimony today, and I look
forward to working with Ranking Member Bush to provide
necessary oversight on these critical sectors.
Today's hearing will be on the Strategic Petroleum Reserve,
or the SPR for short. The decisions that led to the largest
drawdown of our vital oil in history requires oversight.
At its height, the SPR was at 695 million barrels under the
previous administration. It now sits at 371 million barrels,
which is a 47 percent reduction. It is nearly half.
On the first day in office, Joe Biden canceled the Keystone
XL Pipeline, killing thousands of high-paying American jobs and
openly attacking the oil and gas industry.
Less than a week later, Mr. Biden placed a moratorium on
Federal on and offshore oil and natural gas leases. These
actions increase the average price of gasoline to record highs
by the summer of 2022, forcing Americans already struggling
with out-of-control inflation to foot the bill for poor policy.
In an attempt to hide the failed results of an all of
government war on our domestic energy industry the
Administration recklessly turned to the SPR.
Joe Biden authorized the biggest drawdown in history,
releasing more oil from the SPR than all other previous
administrations combined. All other previous administrations
combined.
In the last two years more oil has been siphoned off our
reserves than in the previous 46 years. For a quick bit of
history, the SPR was founded in 1975 for national security
reasons to protect our country in times of war, national
emergencies, or severe acts of God.
Now, seven months after President Biden authorized the
first release of crude, gas prices reached an all-time high of
just over $5 a gallon in June 2022. Then the Administration
tried to claim it was Putin's fault.
Well, news flash, it wasn't. Despite the Administration's
flimsy claim of the, quote/unquote, ``Putin price hike'' that
didn't necessitate the draw downs. The truth is Mr. Biden set
up failure long before Russia crossed the border into Ukraine.
Shockingly, instead of cutting red tape and allowing
domestic producers to even the scales of supply and demand,
which would have driven down prices for consumers not only here
at home but also alleviated pressures on our European allies,
Joe Biden instead attacked American companies. He asked mini
Putins like Venezuela to increase production instead of
unleashing the American energy sector.
President Biden accused them of price gouging and demanded
they ramp up production while refusing to acknowledge his
Administration's role in the energy crisis.
His cancellation of the Keystone XL Pipeline, the
moratorium on Federal on and offshore oil and natural gas, and
even attacks on the American energy sector have driven this
crisis.
Rather than lowering energy prices and encouraging domestic
energy industry and supporting good-paying American jobs, the
Biden Administration used the SPR as a stopgap to lower energy
prices before the November midterm elections.
Further, the Administration sold millions of barrels of our
crude to companies controlled by the Chinese Communist Party.
So, why is the Biden Administration depleting our own emergency
stockpiles to benefit foreign adversaries?
In fact, Secretary of Defense Lloyd Austin just issued a
memorandum to his forces last week, which said, and I quote,
``An increasingly aggressive China is trying to shape the
international rules-based system to suit its authoritarian
preferences,'' and I agree.
So, why is President Biden draining our SPR to fill
China's? China has nearly 1 billion barrels in their reserve,
and we have just about a third of that. So, that is
unacceptable.
So, this hearing is going to examine why the Biden
Administration is draining our SPR, the national security
concerns with the depleted reserve, the long-term implications
of renewables, exclusive--renewables exclusive political
approach, and the practical policy solutions to ensure energy
affordability and security for years to come.
We know that the Strategic Petroleum Reserve was formed to
protect our country in what--remember, times of war, national
emergency, and effects of acts of God.
Did any of these happen in the last two years? No.
Are we at war? No.
Did we have a severe act of God? No.
And did we suffer through a national emergency that would
have necessitated tapping the SPR? No.
So, why under this Administration were 267 million barrels
of oil depleted from our emergency reserve? So, the fundamental
question that this hearing must help us answer is this. Did Joe
Biden risk our national security and deplete our reserves by
over 40 percent in a vain attempt to curry short-term political
gain before midterm elections?
I want to thank you again very much, and I recognize
Ranking Member Bush for her opening statement.
Ms. Bush. Thank you so much, Mr. Chairman.
St. Louis and I are here today to have a serious discussion
about what energy security looks like for people, not
corporations. This hearing is not that discussion. If House
Republicans actually cared about preventing an energy and
economic crisis from happening, they will commit to investing
in renewable energy.
Unfortunately, there are no serious proposals being
offered. Rising inflation caused by Russia's violent invasion
of Ukraine and COVID-19 pandemic-related supply chain
shortages, combined with dangerous corporate greed and our
reliance on fossil fuels, has left the United States in a
tenuous position of expensive, unreliable, and unsafe energy.
Let us be clear, the Strategic Petroleum Reserve was
precisely created to be tapped in emergencies involving severe
shortages of oil. Of course, I believe that the best way to
avoid similar challenges in the future is to end our reliance
on oil.
But there should be no doubt that President Biden employed
it explicitly for its stated purpose, in an emergency when our
Nation's families and people needed it most.
According to the U.S. Energy Information Administration,
gas prices peaked at $4.88 in the Midwest region last year and
are now down to $3.24 as of this week. People were struggling
to get to doctor's appointments or to keep their heat on, and
the Republican Party would have loved to do nothing.
While the drawdown of the SPR was necessary to bolster
supplies in an emergency, future events can be best ameliorated
or prevented by reducing our demand for and our reliance on
fossil fuels.
But my Republican colleagues have unironically invited for-
profit think tank and oil titans whose expertise is in
maximizing profits, especially at the expense of our Black, our
Brown, and our indigenous neighbors' health, safety, and well-
being.
One of these so-called energy experts is a philosopher who
has previously espoused white supremacist views. For instance,
in his 2000 college newspaper he wrote, quote, ``The African
and American Studies Department has 23 classes. In many of
these classes, African culture is presented not as a----''
Mrs. Boebert. Mr. Chairman, I demand the gentlelady's words
be taken down. She just called the witness a white supremacist.
Ms. Bush. No, I referred to the words, not to the person.
Not to him, the words.
Mrs. Boebert. The gentlelady is referring to the witness'
statement and referred to him as a white supremacist. I would
like a parliamentary inquiry----
Ms. Bush. No, I did not.
Mrs. Boebert [continuing]. Into having the gentlewoman's
words taken down.
Mr. Fallon. The Chair--excuse me. The Chair recognizes
Congresswoman Boebert.
Mrs. Boebert. Thank you, Mr. Chairman.
I would like a parliamentary inquiry into taking down the
gentlelady's words--the Ranking Member's words--for insinuating
that our witness made white supremacist statements using his
words.
Mr. Fallon. OK. The Chair cannot take down words that are
directed to our witness, only to other Members.
All right. The Chair recognizes Ranking Member Bush to
continue her opening statement.
Mrs. Boebert. Mr. Chairman, parliamentarian inquiry.
Mr. Fallon. Say your inquiry.
Mrs. Boebert. Is it appropriate for the Ranking Members to
show respect to the witnesses who are here present in the
committee room today?
Mr. Fallon. I think it would obviously be warranted to show
respect for any witness.
Mrs. Boebert. I would like that sentiment to be expressed
and the Members to be reminded to show respect to our witnesses
who are here today.
Thank you, Mr. Chairman. I yield.
Mr. Fallon. Thank you. The Chair recognizes Ranking Member
Bush.
Ms. Bush. As I was saying, ``The African and African
American Studies Department''--this is the quote, ``has 23
classes. In many of these classes African culture is presented
not as inferior to Western culture but as on equal footing with
it. In other departments the same is done with Latin American,
Indian, and American-Indian culture,'' end quote.
When confronted about these views over two decades later,
rather than disavow them he doubled down on this narrative
saying, quote, ``It has nothing to do with skin color. I was
arguing that those cultures overall are inferior to Western
culture.''
We are not inferior to any culture, speaking as a
descendant of one of those cultures. This is the witness the
Republicans invited to discuss issues of energy security. He
came here to promote fossil fuels, which we know are
disproportionately harming and killing Black and Brown people.
Last week, I joined Ranking Member Raskin and all of my
Democratic Oversight colleagues in calling on Oversight
Republicans to denounce white nationalism and denounce white
supremacy in all its forms. Not one single Republican joined
us.
So, I ask again today will my Republican colleagues condemn
white supremacy and work with us to ensure this Committee
engages in advancing good and reducing harm rather than
perpetuating it. That is respect.
Our Committee needs to be focused on actions that will help
people and prevent financial hurt and pain. Whether we deploy
the SPR or we don't, the instability of our energy system will
continue if we are reliant on oil.
Our committees need safe, reliable, renewable energy and
more investments in public transit.
Thank you, and I yield back.
Mr. Fallon. Ladies and gentlemen, I am pleased to introduce
our three witnesses today. I am looking forward to discussing
the SPR and what policy initiatives should be implemented to
ensuring Americans have access to clean, reliable, and
affordable energy, and thank you all for your testimony.
Alex Epstein is an author, commentator, and president of
the Industrial Progress, which he founded in 2011. He is a New
York Times bestselling author of the books ``Fossil Future''
and ``The Moral Case for Fossil Fuels.''
His research focuses on the global benefits of fossil fuels
as reliable cost-effective sources for both developed and
developing the world.
And then we have Ilia Bouchouev is the former president of
Koch Global Partners and is currently the managing partner at
Pentathlon Investments and an adjunct university professor.
During his 20 years in the global derivatives trading, he
pioneered several energy derivatives products and is recognized
as a pioneer in this space. He holds a Ph.D. in applied
mathematics.
And then we have Demond Drummer, who served as the managing
director of Equitable Economy and was co-founder and executive
director. He currently consults with the Institute on Race,
Power, and Political Economy at the New School in New York
City.
I look forward to hearing from each of you on this
important topic.
Pursuant to Rule 9(g), the witnesses will please stand and
raise their right hands.
Do you solemnly swear or affirm that the testimony that you
are about to give is the truth, the whole truth, and nothing
but the truth so help you God?
[Witnesses are sworn.]
Mr. Fallon. Thank you. Let the record show that the
witnesses all answered in the affirmative. We appreciate all of
you being here today and, once again, thank you for your
testimony.
Let me remind the witnesses that we have read your written
statements and they will appear in full in the hearing record.
Please limit your oral statements to five minutes.
As a reminder, please press the button on your microphone
in front of you so that it is on and the Members can hear you.
When you begin to speak the light in front of you will turn
green.
After four minutes the light will turn yellow, and when the
red light comes on your five minutes has expired and if you
could then just wrap up your thought at that moment. We will
give you a little bit of discretion.
And then I recognize Alex Epstein to please begin his
opening statement, and because you were directly mentioned, as
the Chairman's discretion I want to give you an additional
minute if you would like to address the allegations levied on
you against the Ranking Member.
STATEMENT OF ALEX EPSTEIN, PRESIDENT, CENTER FOR INDUSTRIAL
PROGRESS
Mr. Epstein. Yes, it would be great if they put up the
cards again.
So, thanks for giving me a minute to address the truly
despicable and false attack on me, claiming that anything I
have ever said is white supremacist and then trying to imply
that somehow applies today.
So, I don't know if you want to put those cards back up.
But what I argued and what I have argued for my entire adult
life is that Western culture is superior in the sense that it
promotes individualism and freedom and I have fought my entire
life for freedom around the world, including in Africa,
including in Asia, including in India, and I want everyone
around the world to have the same opportunities that I do in
the United States.
There are different places around the world that are in
many ways inferior. They have female genital mutilation. They
have slavery. These are not as good as not mutilating females'
genitals and not enslaving people.
And so, I make no apology and the idea that this is
associated with skin color is despicable and racist. Skin color
has nothing to do with ideas.
Where you came from geographically is irrelevant. What is
relevant is what is true. So, you can ask more about that. But
that was an insane diversion from the truth.
So, let us talk about the truth. The Strategic Petroleum
Reserve is a crucial tool to protect America's oil security,
which is the foundation of our national security, because oil
powers our military, and economic security--oil powers modern
mobility.
The Biden Administration is, unfortunately, abusing the SPR
and as a result they are threatening our oil security. So, the
purpose of the SPR is to aid the U.S. in securing a reliable
supply of oil and oil fuels by providing an emergency stockpile
of up to one-tenth of U.S. oil consumption to be used during
major interruptions of supplies such as sabotage or disaster,
then refilled after.
The SPR is only an aid to oil security. The core of oil
security, which many here oppose, is facilitating a reliable
affordable oil supply by protecting industries' freedom to
invest in, produce, refine, and transport oil. Without oil
industry freedom the SPR's modest stockpile can't make us
secure.
Now, instead of protecting our oil security by protecting
oil industry freedom and backing it up with an ample reserve,
President Biden has damaged it by, one, attacking the oil
industry's freedom, then, two, dangerously depleting our
reserve for political purposes.
So, how President Biden has harmed oil security by
attacking the industry's freedom? For over 15 years the global
anti-fossil fuel movement with major leadership by Joe Biden
has artificially reduced the supply of oil by opposing oil
investment, production, refining, and transport. When global
anti-fossil fuel policies make oil supply go down and oil
demand goes up, oil prices go up. It is really that simple.
Now, Biden blames Putin's war for today's oil prices. But
the root cause is global anti-fossil fuel policies supported by
Biden, which made oil and other fossil fuel prices artificially
high prewar and prevented the free world from quickly
increasing production in response.
More broadly, had Biden and other Democrats spent the last
four years liberating U.S. fossil fuel investment, production,
refining, and transport instead of restricting and threatening
them, America would produce significantly more oil.
So, to summarize, instead of protecting the core of oil
security, oil industry freedom, Joe Biden and other anti-fossil
fuel politicians around the world have gravely harmed it for
over 15 years by restricting oil investment, production,
refining, and transport.
How Biden--how President Biden has further harmed oil
security by abusing the SPR. The proper response by President
Biden to Europe's and our vulnerability to Russia and to rising
oil prices should have been apologize--apologize for supporting
anti-oil policies and then lead a reversal of them to minimize
further damage to our security and economy.
But instead of responding to artificially high oil prices,
which are a consequence of anti-oil policies, with the reversal
of those policies Biden chose to keep his anti-oil policies,
but then lower short-term prices by depleting our SPR, which is
now down to its lowest level since the early 1980's.
Even when full at 714 million barrels the SPR contains only
one-tenth of U.S. annual oil consumption and now at 370 million
barrels, it contains one-twentieth. This means less oil for
real emergencies such as wars, terrorist attacks, or cyber
attacks on U.S. oil operations.
Now, the Administration claims Putin's war is exactly the
kind of emergency the SPR is designed for. This is totally
wrong. Putin's war is not an oil emergency that justifies
depleting the SPR now. It is a potential oil emergency that
justifies keeping the SPR as full as possible.
Now, Biden's main goal in dangerously depleting the SPR has
clearly been to lower gasoline prices to help his party's
election prospects. This is the same goal he had when he asked
OPEC+ to delay production cuts for just one month so that
subsequent price increases would happen post-election.
Now, a president's discretion over the SPR gives them a
sacred responsibility to use their best judgment about when to
deplete it, doing so only when that is in their honest judgment
what is best for the country's oil security, and President
Biden failed to uphold this responsibility.
So, the solutions to our crippled oil security are, one,
focus on liberating the oil industry as much as possible,
including withdrawing this Administration's many threats, and
then, two, commit to using the SPR responsibly, not
politically.
Now, unfortunately, this Administration and some in this
body are, one, continuing the attacks on the oil industry's
freedom calling for less freedom--even less freedom, which is a
total disaster--and then, two, taking no responsibility for the
abuse of the SPR.
So, I hope that this hearing is a step toward reversing
this dangerous state of affairs and I welcome any and all
questions.
Thank you.
Mr. Fallon. Thank you very much.
I recognize Mr. Bouchouev. Sorry about that. Help me out
with your last----
Mr. Bouchouev. Ilia Bouchouev.
Mr. Fallon. Ilia Bouchouev.
Mr. Bouchouev. Yes. Thank you.
Mr. Fallon. All right. Awesome. Thank you very much. You
are recognized.
STATEMENT OF ILYA BOUCHOUEV, MANAGING PARTNER, PENTATHLON
INVESTMENTS, LLC
Mr. Bouchouev. Thank you, Chairman Fallon. Thank you,
Ranking Member Bush, and the Members of the Subcommittee for
inviting me. It is my great honor to be here today.
I am an academic and scientist even though I spent most of
my career managing the trading business. I would like to share
some thoughts on how the science of markets can help manage the
SPR.
The backbone of oil markets is storage. Storage, literally,
buys time for the problem to go away. The problem of optimal
storage management goes back to the very beginning of human
civilization. It is a difficult problem to solve because a
decision today depends on what might happen tomorrow, which, of
course, we don't know for sure.
Let me illustrate with a simple example of Robinson Crusoe.
Robinson Crusoe lives on a remote island and he has a finite
supply of food. Every day he needs to decide how much food to
eat today and how much food to keep for tomorrow.
If he decides to take his chances and eat the entire supply
of food today, he will be risking his life. At the same time,
not eating anything today is also suboptimal because he might
get weaker and some food, like raw fish, may get rotten so you
actually have to store it.
So, the optimal decision between today and tomorrow is
somewhere in between. If you are managing the oil storage you
are conceptually facing the same problem. A naive strategy
would be to take the chances and sell oil out of the storage
with the hope to replenish it when the price is lower.
This strategy is highly speculative, as the price of oil is
unpredictable. A more prudent strategy, which is what
commercial traders do, would be to lend oil to the market when
the market needs it.
For example, you can--if the oil price today is 20 percent
higher than the price in the future, you can lend 100 barrels
today and receive back 120 barrels, which generates you 20
percent return for free.
The same two strategy of selling oil or lending oil are
also available for management of SPR. Last year, unfortunately,
the strategy of selling oil was chosen.
To put things into perspective, like the Chairman already
mentioned, the magnitude was unprecedented. The sale not only
exceeded all previous sales combined but it was three times
larger than all of the emergency sales in the past 40 years.
While the strategy of lending barrels generate return with
no risk, the strategy of selling oil generate a lot of risk
with no return and I say no return because in the absence of
actual supply disruption SPR cannot have any impact on the
price of oil. The oil price is determined in the futures
market, not in the physical market between buyers and sellers.
The world consumes 100 million barrels of oil per day. But
on a daily basis, the daily trading volume of oil futures and
options is 5 billion barrels a day, which is five times larger.
So, when it comes to the direction of oil prices, financial
market is always going to dwarf and determine the direction of
prices. For example, the recent weakening of oil prices is not
driven by SPR but it is driven by macroeconomic conditions such
as rising interest rate and increasing probability of U.S.
recession.
One way to manage SPR more scientifically and efficiently
would be setting up a rigorous rule-based nondiscretionary
program of oil loans that takes advantage of market conditions
and bring benefits to taxpayers. Essentially, there is no risk.
However, such a problem can only be set up once all the
previous barrels are repurchased. At the moment, SPR strategy
is a speculative trade. Fortunately, this trade is currently in
the money, but the ultimate outcome of this trade will not be
known until the trade is closed and the barrels are bought
back.
This should be done sooner rather than later because the
price of oil--before the price of oil rises again. All traders
know that the risk can only grow in time. Waiting any longer
would be similar to Robinson Crusoe playing with fire.
Thank you, and I will be happy to take your questions.
Mr. Fallon. Thank you, sir.
The Chair now recognizes Mr. Drummer for his opening
statement.
STATEMENT OF DEMOND DRUMMER, INSTITUTE ON RACE, POWER, AND THE
POLITICAL ECONOMY, THE NEW SCHOOL
Mr. Drummer. Thank you, Chairman Fallon, Ranking Member
Bush, and Members of the Subcommittee for the invitation to
give testimony during this hearing.
My name is Demond Drummer and I consult with the Institute
on Race, Power, and Political Economy at the New School in New
York City. The institute advances research to understand and
ultimately undo the unjust identity group-based social
stratification that harms individuals and communities.
I will use my time to show that, in light of the global
energy price shocks resulting from the war in Ukraine, the
Administration's decision to tap the Strategic Petroleum
Reserve was the right decision in the short term to provide
much-needed relief to the American people.
This is especially true for the nearly one out of every
three people in America who live in or near poverty and pay a
disproportionate share of their limited household income to
meet their energy and transportation needs.
To be sure, the Strategic Petroleum Reserve is not designed
to offer a long-term solution to the problem with energy
security. If our shared goal is to achieve true energy
security, the path forward is clear--strategic and substantial
public investments to accelerate our transition to a clean
energy economy.
During the height of the oil price spikes last year, energy
costs alone accounted for approximately half of all inflation.
One year ago this month, the price of oil--of fuel oil, rather,
surged 70 percent and the price of gasoline was up 48 percent
and natural gas 21.6 percent.
Today, overall energy costs are still up 8.7 percent
compared to last year, and while gasoline prices are up only
1.5 percent, fuel oil is up 27.7 percent and natural gas is up
26.7 percent.
The evidence is clear. Whether for powering and heating
their homes or refueling their cars, the economic costs of
fossil fuel energy are unsustainable for American households,
especially those who are paid the least.
Energy is a nondiscretionary household expense. Households
below the Federal poverty line spend 18 percent of their income
on energy, nearly 10 times the energy burden of higher income
households.
Households at 200 percent of the Federal poverty line spend
six percent of their income on energy. That is three times the
energy burden of higher income households. This is despite the
fact that lower income households consume less energy on
average.
Further, households in the bottom two income quintiles pay
anywhere from 15 percent to 25 percent of their income on
transportation costs alone. A high energy burden is not only a
symptom of poverty, but in siphoning resources from other
critical needs such as health care and childcare, it prolongs
and exacerbates poverty.
The evidence is clear. American cannot drill our way to
energy security. The geopolitical turmoil of the last year
highlights the myriad economic risks of U.S. reliance on fossil
fuels. The Russian invasion of Ukraine sent global fossil fuel
commodities prices skyrocketing.
In light of the globalized market for fossil fuel energy
commodities, the U.S. has very limited ability to insulate
American households from the economic fallout of geopolitical
conflicts.
In this moment, it is critical to align monetary, fiscal,
and regulatory policy to accelerate adoption of low-cost
renewable energy and promote the development of high-wage
sustainable industries. Wind and solar energy are by far the
most cost-effective sources of power generation on the planet.
However, in 2021, renewables accounted for only 20 percent
of electrical power generation and only 12 percent of total
energy consumption in the U.S., and beyond power generation,
enacting an equitable and sustainable industrial policy that
prioritizes people and the places where they live is the most
effective way to insulate American households from fossil fuel
price shocks while addressing the existential consequences of
climate change that are being brought on by the fossil fuel
industry.
This requires leveraging the full suite of economic policy
tools available to direct public and private investments toward
developing America's productive capacity to deliver the goods
and services that will power an equitable and sustainable
future for us all.
Thank you again for the invitation to testify. It has been
an honor and I do look forward to your questions.
Mr. Fallon. Thank you, all the witnesses, and just as a
reminder to the Members, we are just starting out here. This is
our first hearing, and the issues that we are debating are
important not only to the Members but to the witnesses as well.
And that said, this hearing and in future hearings we have
in the Subcommittee aren't about levying accusations and
insults at our witnesses, at each other. I think that is
disrespectful to everyone and part of the process and folks
that are here as well listening in.
And quite frankly, it is a waste of time and I think it is
unproductive. I ask the Members to please refrain from this
kind of behavior and focus on the topic of the hearing, which
today is the Strategic Petroleum Reserve and its depletions.
Thank you very much.
I recognize myself now for five minutes.
Mr. Epstein, does the decision to deplete the SPR to
historically low levels mean the Biden Administration has no
real plan for American energy policy?
Mr. Epstein. I think saying no real plan is too charitable.
I think they have a very bad plan. So, the basic plan is to
rapidly eliminate fossil fuels as soon as possible and then
pretend that they can be replaced by unreliable solar and wind.
Unfortunately, I am seeing this advocated here today. But
what the energy crisis should have taught us is that this
doesn't work. You can only try to replace fossil fuels once you
have truly cost-effective alternatives, which means reliable
alternatives and which means replacing all uses of fossil
fuels, including heavy duty transportation, industrial heat, et
cetera.
So, I mean, it is worse than no policy. I wish they had no
policy.
Mr. Fallon. Presidents have only declared emergency
releases of the SPR on three previous occasions: Operation
Desert Storm, Hurricane Katrina, and following the military
intervention in Libya.
Did the Biden Administration properly use, in your opinion,
the SPR?
Mr. Epstein. No. As I tried to indicate in my testimony, I
mean, it is wildly improper, and I think particularly you hear
this rationalization about the conflict in Russia.
Whenever you have an escalating international conflict that
is when you need to keep your reserve as high as possible. So,
the idea of just depleting it to half of its level when we
don't know what could happen, going forward, this is really,
really precarious and I think it is pretty obviously
politically driven.
And, you know, the obvious thing to do--you know, we are
hearing talks about, well, this oil price increase has hurt
low-income families. This is absolutely true. But if this
Administration cared about that, why did every action they took
lead to higher prices?
Why did they cancel the Keystone XL? Why did they threaten
the industry--you know, I guarantee you we are going to end
fossil fuel. Why have they been focused on having the SEC be
sicced on fossil fuel companies? Why was there, you know, a
leasing ban on Federal lands?
Like, every action was directed at making oil more
expensive and thus harming low-income families along with
everyone else.
Mr. Fallon. Well, you just answered my next question. So,
thank you for that.
Mr. Bouchouev, the witness--one of the other witnesses said
that renewables are by far the most cost-effective source of
energy. Do you agree with that?
Mr. Bouchouev. Well, the sun doesn't always shine and wind
doesn't always blow. As I said in my testimony, storage is the
backbone of financial markets. You can get renewables, but
renewables can't really do a whole lot without the storage.
So, it is not a question about renewables. Renewables are
great, but we need batteries. So, if you don't have storage, I
mean, there is not a whole lot you can do.
Mr. Fallon. And, sir, how has China benefited from the
decision to deplete the U.S. SPR?
Mr. Bouchouev. Well, I don't know if China benefited. But
let us kind of--the data in China is very difficult to get to.
Nobody really knows. But one thing that I know that we used to
have a billion barrels in the reserves. Half of it was SPR.
Half of it was private.
Now we are down to about 800 million, and 10 years ago
China had about one-fifth of what we had, about 200 million,
and based on third party data, last year China surpassed a
billion.
So, we are kind of going down. China inventory is going up.
Unfortunately, there is no clean data to put two graphs--two
lines on the same graph. But based on what I have seen, they
are really a mirror image of each other. So, as our inventories
are depleting the China inventories are growing.
Mr. Fallon. So, China used to have--we used to have five
times the reserves that China had.
Mr. Bouchouev. Correct.
Mr. Fallon. Now they have three times--most likely three
times what we have?
Mr. Bouchouev. Not necessarily. As I said, our inventory is
about 800 million. Three hundred seventy million is SPR and the
rest is private. But private to what extent you can rely on
them because they are held by a refinery.
So, if there is a crisis refineries are going to use them.
You are correct that China has three times more than the
government stocked. That is accurate statement.
Mr. Fallon. OK. And, Mr. Epstein, just a little off topic,
but Western culture that you mentioned could exist in
countries, let us say, in Japan and----
Mr. Epstein. Well, yes, and it has proliferated to the
great benefit of all, and it is really about--it is not really
about the location. It is about individualism and freedom and
reason.
So, it is certain values that are universal human values.
The idea that freedom and reason and individualism only apply
to people of certain skin colors that is the actual original
racist idea, versus no, no, no, whatever your skin color is
these ideas are true and good for human flourishing.
Mr. Fallon. OK. Thank you.
The Chair recognizes Ranking Member Bush for five minutes.
Ms. Bush. Thank you, Mr. Chairman.
St. Louis and I are here today to talk about the impact
that fossil fuels have on our community. Let me start by
telling you what energy security looks like in my community. In
my community, energy security looks like having the lights on.
It looks like families being able to stay warm.
It looks like children walking to school without
contracting asthma from local air pollution. It looks like
children being able to depend on stable internet to do their
homework.
Energy security looks like this and so much more, and to my
Republican colleagues here today I want you to know that this
is what energy security looks like in your communities as well.
Energy security is about dramatically reducing our reliance
on fossil fuels whose consumption disproportionately harms low-
income families and communities of color. It is our communities
that suffer the most from instability in the energy market.
Studies have repeatedly shown that Black and Brown
communities pay a significantly higher share of our income in
energy costs.
We are also more likely to live in communities where fossil
fuels are extracted, where they are burned, and in places where
the climate crisis is causing dangerous floods, hurricanes, and
wildfires.
Mr. Drummer, can you tell us more about how the $2 price
jump in gas following Putin's invasion of Ukraine exacerbated
the disparities and energy burdens for Black and Brown in low-
income families?
Mr. Drummer. Absolutely. Thank you, Representative Bush.
We know that particularly in the larger metropolitan areas
the lowest earners live the furthest away from the jobs. So,
what does that mean? Those who make the least had to gas up and
pay a very high percentage of their income just to get to work.
And so, when we talk about energy security, we know in 2020
when everybody was at home, fossil fuel prices, particularly
oil prices, went through the--went down into the basement. They
were in the gutter. What did that do? It put a lot of fossil
fuel workers out of work.
So, Vladimir Putin put fossil fuel workers in the U.S. out
of work and Vladimir Putin made it unaffordable to get to and
from work in 2022.
And so, we cannot drill our way out of this situation. So,
it is hitting folks' pocketbooks and that release was
absolutely necessary.
Ms. Bush. So, you describe that the price increases had a
disproportionate effect on Black, Brown and low-income
communities--families. How did the Administration's actions and
the ensuring--the ensuing drop in gas prices--how did it help
those same families?
Mr. Drummer. While there are a number of factors that
affect the price of oil, in an interview with Oxford, I
believe, Dr. B did concede that the strategic use of SPR did
have an impact. It is hard to quantify and hard to tell, but it
definitely had an impact in the price of oil.
Ms. Bush. We need to focus on making more public
investments to lower our energy demand by taking actions such
as expanding public transit and installing energy efficient
technology like electric heat pumps.
Mr. Drummer, how does making investments in people through
safe energy systems and people benefit climate justice and
energy security?
Mr. Drummer. One of the exciting things from the Inflation
Reduction Act are the domestic content requirements, so private
capital can receive additional tax credits by paying prevailing
wages for the construction of renewable energy and battery
storage projects, as well as domestic sourcing of the
components for these projects.
That is what is exciting about our renewable energy future,
which includes batteries.
Ms. Bush. Thank you. We must make massive investments in
climate jobs and environmental justice and, frankly, this is a
need that is overdue. I believe that we are going to build
high-speed rail.
We are going to establish bus rapid transit systems in
frontline communities. We are going to create green social
housing running on renewable energy. We are going to win a
green new deal that will benefit everyone and let me just say I
cannot wait.
Thank you, and I yield back.
Mr. Fallon. Thank you.
The Chair recognizes Mr. Donalds for his five minutes.
Mr. Donalds. Thank you, Mr. Chairman. Spirited committee
already. A couple of things.
Look, if you are going to look at the costs for any
American, especially Americans on the lower end of the
socioeconomic spectrum, rising energy costs cripple them more
than anybody else. I would assume every witness can agree to
that, correct? Can we all agree to that?
OK. Mr. Drummer, I was reading through your testimony
during all of the opening statements that we have in our
committees. You say that fossil fuel--fossil fuel costs are
unsustainable. Why is that?
Mr. Drummer. It is the data that I just shared, right. And
so, even today, yes, gasoline is--as of the latest February 14
or so CPR report up 1.5 percent.
But that is off of the historic high from last year, right.
This is gouging folks' pocketbooks. Again, the bottom two
quintile----
Mr. Donalds. Mr. Drummer, I want to--I am going to reclaim
time now because I am asking this question. Are fossil fuel
costs more expensive in the United States just because of the
costs of actually drilling for and refining fossil fuel
products or is it also because of government regulation with
respect to fossil fuel products?
Mr. Drummer. The bottom two quintiles of earners pay 15 to
25 percent of their income----
Mr. Donalds. I am asking you what makes it--but I am asking
you what makes it more expensive. Is it just purely the
procurement costs of fossil fuel or is it also the regulatory
burdens on fossil fuel?
Mr. Drummer. It is the global fossil fuel market that we do
not control. When there is chaos happening in Europe and
Ukraine because of Russia's invasion that hits Americans'
pocketbooks.
Mr. Donalds. OK. But Mr. Drummer, people have been drilling
for oil and using gasoline long before Vladimir Putin went into
Ukraine. We have seen rises and falls in gasoline prices.
Let me ask you this. You say in your statement that
renewables are actually the most cost-efficient form of energy.
That is what you say in your statement.
Is that because renewable energy is largely subsidized by
most nations in the world or is that because the actual per
unit cost is being borne by the consumer? Is it the subsidy or
is it the full cost? Which makes it most cost efficient?
Mr. Drummer. This is a great point you bring up,
Representative, because actually fossil fuels are heavily
subsidized more so than renewables right now and still
renewables are more price competitive.
Mr. Donalds. I am not sure what you are talking about, Mr.
Drummer. You need to go back and check your facts.
Mr. Drummer. I will be happy to share the data with you
after this hearing.
Mr. Donalds. Real quick. Let us--I want to move on to a
couple of things. Do you think we need more refineries in the
United States, yes or no?
Mr. Drummer. Absolutely not.
Mr. Donalds. So, you do realize that without more
refineries in the United States the cost of fuel for all
citizens, especially those at the lower two quartiles of the
socioeconomic spectrum, are going to suffer as a result? You do
realize that?
Mr. Drummer. Fossil fuel markets are a global market. We do
not control the price of oil in the West----
Mr. Donalds. But you do realize----
Mr. Drummer. We cannot drill our way out of energy----
Mr. Donalds. Hold on. But you do realize that the supply of
oil that goes to refineries in the United States, if you limit
the capacity of refineries or continue to not allow them to
expand or to actually get the necessary maintenance they are
going to have less output capacity in the United States, which
means all the products we use with fossil fuels, not just
gasoline--the very glasses you wear, the very contact lenses I
am wearing those are derivatives of oil and petroleum as well.
So, you do realize that by not allowing for new refineries
you are going to increase the costs on the very people we are
all trying to help?
Mr. Drummer. I think, again, we are talking about energy
security.
Mr. Donalds. Well, I would agree. This is energy security--
--
Mr. Drummer. Right.
Mr. Donalds [continuing]. Because if you want to make sure
that the costs for the people who have to buy products--you
know, poor people, they don't have escape velocity. You know
what I mean?
They don't have that. So, is it prudent to not allow for
the things necessary to keep costs low in the name of the green
new deal? Is that prudence?
Mr. Drummer. It is imprudent to double down on a losing
strategy of drilling our way to energy security. It is not
possible----
Mr. Donalds. Mr. Drummer, do you realize that America was
energy secure? Literally, four years ago America was energy
secure?
Mr. Drummer. America was not energy secure four years ago.
Mr. Donalds. We were actually--Mr. Drummer, do you not--do
you not acknowledge the fact that we were exporting oil to
other parts of the world in the United States? We were
exporting.
Mr. Drummer. Absolutely. We were exporting----
Mr. Donalds. Four years ago.
Mr. Drummer [continuing]. Natural gas last year when prices
were going through the roof. It did nothing for domestic
consumers of that natural gas. This is a global market and to
insulate American households and our country from all the
vagaries and chaos of the world, the best thing we can do, the
most prudent thing we can do, is invest in batteries,
renewables----
Mr. Donalds. Mr. Drummer, let me jump to batteries real
quick because I am running out of time.
Mr. Drummer [continuing]. To secure our energy future and
not be reliant on the global supply chain.
Mr. Donalds. Let me come to batteries real quick. Mr.
Drummer, reclaiming my time.
Batteries are made up with elements. You need elements to
actually create batteries.
Mr. Drummer. Rare earth minerals.
Mr. Donalds. Do you acknowledge that most of the rare earth
minerals and cobalt are being mined in other parts of the
world, mostly with African child slave labor by the Chinese? Do
you acknowledge that?
Mr. Drummer. I am crystal clear, and do you acknowledge
that----
Mr. Donalds. Do you think that is OK? Do you think that is
OK?
Mr. Drummer. Absolutely--that is absolutely not OK.
Mr. Donalds. You think it is OK for child slave labor----
Mr. Drummer. It is not OK.
Mr. Donalds [continuing]. In Africa to provide batteries
for us here in the United States?
Mr. Drummer. It is not OK.
Mr. Donalds. So, which one is it? I am asking you. You just
said it is OK.
Mr. Drummer. I didn't say it was OK. Let the record reflect
I did not say it was OK. I said it is not OK.
Mr. Donalds. Well, let me set the record straight because I
am over my time. I don't think it is OK. I think it is wrong,
especially considering----
Mr. Drummer. And I agree with you that it is not OK.
Mr. Donalds [continuing]. That fossil fuels provide more
than enough that what we need for our economy to survive.
I yield back.
Mr. Fallon. Thank you. Thank you, Mr. Donalds.
And Ms. Brown is recognized for five minutes.
Ms. Brown. Thank you, Mr. Chairman. I would like to use my
five minutes to highlight what an excellent job the Biden
Administration has done in lowering gas prices on behalf of the
American people.
With the legitimate tools at his disposal, President Biden
effectively addressed the severe energy crisis sparked by
Vladimir Putin's illegal invasion of Ukraine.
Facing uncertainty related to oil production in Russia, the
world's second largest oil exporter, in addition to the
aftershocks of the COVID-19 pandemic, the Biden Administration
worked with the international partner--energy partners to
release oil from the Strategic Petroleum Reserve on an
emergency basis.
That is precisely why the reserve was designed, to bolster
American energy in times of need. In Cleveland alone gas prices
have fallen by nearly $2 a gallon since their peak last year.
To my Republican colleagues, I would argue that is a good
thing. When gas prices are lower working families can focus on
the things that really matter and worry less about paying at
the pump. To further elaborate on the reserve, I will turn to
you, Mr. Drummer.
Mr. Drummer, why was the Strategic Petroleum Reserve
created in the wake of the 1973 energy crisis?
Mr. Drummer. It was created for exactly this type of
situation, to secure availability of oil for the American
people in times of crisis.
Ms. Brown. Thank you for that.
And Mr. Drummer, how did President Biden's efforts to lower
gas prices benefit Americans, especially those most vulnerable
among us?
Mr. Drummer. Right, and as even Dr. B concedes, the release
from the Reserve did have an impact and, of course, the passage
of the Inflation Reduction Act along with the others' packages
are the long-term investment to really secure the energy
security for this country and for households all across the
country.
Ms. Brown. Thank you so much. And I noticed one of our
panelists didn't answer the question. So, I will ask you if you
care to elaborate on your statement as highlighted by my
colleague on the other side of the aisle.
The most cost-effective source of power generation on the
planet is renewable energy. Would you care to explain that?
Mr. Drummer. Yes, we know--I mean, there is no argument
that in terms of energy density nothing beats oil, right. But
when it comes to the cost of drilling and the cost of pipelines
and all that infrastructure it becomes less competitive with
pointing what is literally a sheet of glass--it is not that, I
am being simplistic here--to the sky and using the sun that God
has given us and drawing down all that energy, converting it to
electrons and sending it where it needs to go and then storing
the energy when it gets dark. The same for the wind.
And so, just dollar for dollar, renewables are the most
cost-effective form of energy, period. That is established
fact. Notice Dr. B. said, but you need batteries, and yes, the
Inflation Reduction Act does bring the batteries.
Ms. Brown. Thank you for that.
So, I think we can agree that President Biden's decision to
release oil from our Strategic Reserve was not only critical in
a time of need but was perfectly suited to the Reserve's
mission and if he had not done so, if President Biden failed to
take decisive action when gas prices increase wouldn't we be
here criticizing that decision?
On behalf of the folks back home in Ohio's 11th
congressional District who can now more easily afford to fill
up their tanks, I commend the President for his swift action.
And with that, I yield back.
Mr. Fallon. The Chair recognizes Mr. Perry.
Mr. Perry. Thank you, Mr. Chairman.
Mr. Drummer, you just kind of mentioned your--first of all,
were you alive during the 1970's era gas crisis? Just out of
curiosity. I don't know. So, I am just asking.
Mr. Drummer. I wasn't born yet.
Mr. Perry. You weren't. But you do acknowledge that that
was the reason for the construction and the development--the
advent of the Strategic Petroleum Reserve, right? You will
acknowledge that, right?
Mr. Drummer. Yes.
Mr. Perry. And do you know what caused--what precipitated
that? Why did we do it? Why did America do it?
Mr. Drummer. I would like to follow your point here. Would
you like to elaborate? I mean, it is--why did we do what?
Mr. Perry. Why did we create a Strategic Petroleum Reserve?
What was happening at the time?
Mr. Drummer. There was an energy crisis that was outside of
our control.
Mr. Perry. OK, and who was controlling it?
Mr. Drummer. The cartel that--of states that are the
primary energy producers.
Mr. Perry. In the Middle East, right?
Mr. Drummer. Right.
Mr. Perry. The cartel states in the Middle East.
Now, they said there was an energy crisis. I was alive at
the time, and they said there was an energy crisis and we were
actually running out of oil. That is what they said. There was
a limited supply and it was all going to run out and the prices
were going up and you couldn't get it. You could only buy gas
on odd and even days based on your license plate.
I lived through the whole thing. And so, we created the
Strategic Petroleum Reserve to counteract the global market's
control over it, right. Would you agree?
Mr. Drummer. I am following you.
Mr. Perry. OK. You are following me. OK. So, and I would
acknowledge you say it is a global market, which you said it is
a global market, right?
But you just said with the last--with the last--my
colleague from Ohio you just said that when the President
released oil from the SPRO that it actually reduced cost, did
you not?
Mr. Drummer. I am citing the Majority's witness on--who
acknowledges that of all the factors that definitely did play a
role. Not an outsized role, but it played a role.
Mr. Perry. Did it reduce--did it reduce the cost or not?
That is what I am asking. Did it reduce the cost or not?
Mr. Drummer. It did. But the Majority is arguing that that
should not have been done.
Mr. Perry. OK. So, it reduced the cost. But prior to this
with Mr. Donalds you said it is a global market and there is
nothing we can do to control it. If there is nothing we can do
to control it how did releasing oil from the SPRO reduce the
cost?
Mr. Drummer. It reduced the cost marginally. But the price
was at an elevated level.
Mr. Perry. I don't care if it is marginal or not. But it
reduced the cost. The point is, is that we can do something
about it because, sir, in your testimony you say that we can't
drill our way to energy security.
But clearly, clearly, we can because we can influence the
global market. That is exactly what just happened and you just
admitted to it.
So, what we are here to talk about is the Strategic
Petroleum Reserve and what it is used for. Do you know what it
is used for? Do you know why it was designed? Do you know the
definition why we have a strategic petroleum reserve?
Mr. Drummer. We have the reserve to insulate the U.S. from
these types of energy shocks in times of crisis.
Mr. Perry. In times of crisis. Emergency--national security
emergency and natural disaster. What national emergency was
occurring that required the release of so much, or literally
any, of the SPRO? What national emergency was occurring during
the Biden Administration that required us to do that?
Mr. Drummer. If I recall, there was a war in Ukraine.
Mr. Perry. And that is a national emergency for the United
States of America? Did it imperil the United States of
America's ability to drill its own oil, produce its own fossil
fuels, refine them, and get them to market?
Mr. Drummer. The President made a judgment that----
Mr. Perry. Did it make--just answer that question.
Mr. Drummer. The war in Ukraine--what is driving up costs
for oil to the extent to which it would mandate or even lead
him to make the decision to make the release?
Mr. Perry. Was it an emergency?
Mr. Drummer. It was a global--it was a global energy
crisis. This is well established. Are we debating the facts
here?
Mr. Perry. No, it is not. Sir, you cannot say it was well
established when it is not well established.
Mr. Drummer. There was global--record costs in energy
globally, record costs in food prices globally.
Mr. Perry. You also say--sir, reclaiming my time. What
established facts do you have? You say that wind and solar are
by far the most cost-effective sources of energy on the planet
and you say it is an established fact. What are those
established facts and who established them?
Mr. Drummer. I invite you to read the footnote and source
for that claim in my testimony.
Mr. Perry. Just tell me. This is your testimony. You just
tell me and tell us what the established facts are.
Mr. Drummer. Renewables, particularly wind and solar, are
the most cost efficient and cost-effective means of producing
energy on this planet?
Mr. Perry. Says who? Says who? Says who?
Mr. Drummer. Says physics. Says scientists and engineers.
Mr. Perry. No. No. Who is the person? Name and cite the
study, sir.
Mr. Drummer. Give me a moment. I am going to look at the
report that I cited and give you the name of the report that--
--
Mr. Perry. Sir, have you ever worked in the energy
securities market?
Mr. Drummer. I have worked at the grassroots levels. I have
worked at the national level----
Mr. Perry. The energy securities market. The energy
securities market. Have you advised----
Mr. Drummer. I have not worked in the energy securities
market, but it doesn't take an energy trader. It doesn't take--
--
Mr. Perry. Sir, you have got as much experience as I do,
and I pump gas for a living.
Mr. Drummer. It doesn't take an energy trader to see----
Mr. Perry. That is what this is about. I yield the balance.
Mr. Fallon. Thank you.
The Chair recognizes Representative Holmes Norton.
Ms. Norton. Thank you, Mr. Chairman.
Let me just say it is not surprising that during the Trump
Administration my Republican colleagues had no problem with
President Trump's authorizing releases from the Strategic
Petroleum Reserve in response to an attack on oil refineries in
Saudi Arabia.
This is pure public opportunism. Let me get to my question.
I have a question here for Mr. Drummer. Last year, we tapped
the Strategic Petroleum Reserve to prevent a global economic
crisis and temper the spike in the price of oil caused by
Putin's invasion of Ukraine. I think that has been established.
But the Biden Administration's swift action revealed a key
lesson about how to achieve energy independence. It is just not
the lesson my Republican colleagues think.
After expanding--after years of expanding production, the
U.S. is the world's largest oil and natural gas producer but we
still we are still not energy secure. More oil and gas
production has not led to energy security. American consumers
fell victim to the global price shocks that came from the
Ukraine war.
Mr. Drummer, I want to drill down, forgive the pun, on a
point you made and ask can we drill ourselves out of global
price shocks like my Republican colleagues are suggesting?
Mr. Drummer. Thank you for the question, Representative.
Again, I want to remind the Committee--let us recall 2020
when people were driving less, right. We were shut down for the
pandemic, quarantining and whatnot, and the price of global oil
went to the basement, and around then you needed about $60 a
barrel for it to be profitable to drill in the U.S.
It was down to, like, $15, $16 a barrel, which means there
were fossil fuel workers who were put out of work, not because
of some law or regulation, but because at this point a king in
Saudi Arabia and an autocrat in Russia could not agree on the
production reductions. And so, there was a disagreement within
OPEC and that drove fossil fuel workers in the U.S. out of
jobs.
The reality is that this market is bigger than the U.S. We
can be a player. We are a player. It doesn't matter. Folks are
still paying 15 to 25 percent of their income to commute to and
from work.
So, we cannot drill our way out. The best way forward is to
turn to renewables and make the massive public investments we
need to achieve true genuine energy security, which is not
vulnerable and prone to any foreign interference.
That is what is being argued here.
Ms. Norton. Exactly. The prices are determined by global
demand. We can never drill enough to insulate ourselves from
Russian invasions, of Saudi production cuts.
Mr. Drummer, why do renewable energy sources provide more
price security for American consumers?
Mr. Drummer. It is the same argument for onshoring supply
chains. The same can be said for onshoring energy. And when
backed with batteries, we know with solar the highest costs
with solar are--once it is built in and you are paying down,
you know, your investors and creditors, it doesn't take much to
maintain.
It is very inexpensive to provide solar energy, and so with
battery storage with wind we are really positioned to drive
down the costs. And not just--and I didn't put this in my
report, but we add renewables--we add energy efficiency
insulating homes and all the jobs that we created from that
work as well.
So, there is a path forward with renewables because they
are not vulnerable to the same geopolitical shocks that we are
experiencing today.
Ms. Norton. OK. As we can see from the chart behind me, if
I can have that chart up, of the 10 congressional districts in
the country with the most clean energy projects being developed
right now, nine are Republican districts, including Speaker
McCarthy's, Mrs. Boebert's, and Mr. Sessions' districts because
investing in clean energy is a matter of good business and
common sense. Just ask your own constituents.
I yield back.
Mr. Fallon. The Chair recognizes Mr. Fry for his five
minutes.
Mr. Fry. Thank you, Mr. Chairman. Thank you for having this
hearing today and thank you for the witnesses for taking your
time.
I am struck a little bit by the purpose of the hearing, Mr.
Chairman, that we are here to discuss Joe Biden's withdrawal of
the SPR inappropriately, in my opinion. But we seem to hear a
lot, unfortunately, I think, about distractions. Obviously, we
have already attacked some witnesses.
Mr. Epstein, I am sorry about that. But, you know, the
definition of the SPR is that it is intended as a cushion to,
quote, ``diminish the vulnerability of the United States to the
effects of a severe energy supply interruption and provide
limited protection from the short-term consequences of
interruptions in supplies of petroleum products.''
To me, if you look at the history of this, Mr. Chairman, we
have only done this since its inception in the--before my time
in the 1970's--we have only done this three times. We have only
withdrawn from the SPR three times.
Mr. Epstein, in your opinion have you ever seen this level
of withdrawal in any president?
Mr. Epstein. Nobody has because it is unprecedented.
Mr. Fry. Right. So, we have three presidents that have
tapped it for a limited purpose when there has been a
disruption in the marketplace--for a limited purpose.
And now, under this President we have seen 226 million
barrels. In your opinion, do you think that that was an
appropriate use of the SPR?
Mr. Epstein. I think it was wildly inappropriate because
the underlying cause was the anti-fossil fuel policies that Joe
Biden has supported for 15-plus years.
So, the solution was, obviously, to correct that root
cause, which we could have encouraged production around the
world and the shale revolution showed us that we can make a big
difference in global production ourselves.
And then, in particular, because there is a lot of
uncertainty about Russia, we need the SPR as full as we can
get. It doesn't make any sense to drain it before a potential
catastrophic conflict arises.
Mr. Fry. Dr. Bouchouev--help me here.
Mr. Bouchouev. That is good.
Mr. Fry. That is good. Can you explain the magnitude as
well to the answer the same question? In theory, I guess
presidents can authorize emergency releases to buffer the
market and also replenish an oil stockpile.
Why might have the Biden Administration acted improperly in
2022?
Mr. Bouchouev. Well, there was really no emergency
disruptions. There was plenty of oil. The price was high for
sure. But as I stated in my testimony, the price could be high
for a bunch of different reasons.
I think sometimes there is a misconception that as there is
more demand than supply--price go up. Not always the case. The
rule No. 1 of free markets price goes up because there are more
buyers and sellers and there are more buyers and sellers for
totally unrelated reasons such as inflation or interest rate
hike, trying to control the price. That is very irrational
decision.
As I said, you cannot do that. If I were making such a
decision in private practice, I would have probably lost my
job, and there were no actual disruptions in the physical
market at the time.
Mr. Fry. Thank you.
Mr. Epstein, you tweeted last week on March 3, stating,
``As I have documented extensively, had Biden and other
Democrats spent the last three and a half years, including two
of the Biden Administration, liberating U.S. oil and gas
investment, production, and transport instead of strangling
them energy would be far cheaper.''
Mr. Epstein, has the Biden Administration offered any
realistic solutions to bring the price of gas down?
Mr. Epstein. No, they have been in total denial, and they
are compounding the problem. I mean, this is a president who
ran on, I guarantee you we are going to end fossil fuel.
The U.S. is the leader of the world. Again, we have huge
capacity ourselves. We can also lead the world. Imagine instead
of going to--you know, going to Egypt and saying, hey, let us
all get rid of oil as quickly as possible, Biden had said,
look, this energy crisis shows we are crazy--we need to reverse
course, we should be leading the world on policy.
And just, by the way, in terms of security, I keep hearing
this and it drives me crazy. People are talking about
renewables as secure.
The entire supply chain is dependent on China. It is true
that it is nothing like oil. It is incredibly more insecure
than oil. China controls renewables far more than Russia
controls oil or natural gas.
Mr. Fry. What do you see as possible solutions to creating
more affordable energy, particularly more--or cheaper energy
prices for consumers?
Mr. Epstein. I mean, the main thing is you have to have
actual free markets, not subsidize things that are unreliable
and can't survive on their own, and I think we need--we have a
whole of government attack on fossil fuels.
The first thing we need is a whole of government support
for all--for freedom for all forms of energy. And until that
stops the energy industry is going to be terrified. Many
executives have spoken up and said, hey, it is the whole of
government attack on our industry. That is the reason we are
afraid to invest.
Mr. Fry. Thank you. I yield back, Mr. Chairman.
Mr. Fallon. Thank you. The Chair recognizes Ms. Stansbury
for five minutes.
Ms. Stansbury. All right. Thank you so much, Mr. Chairman.
And I also want to take a moment to congratulate you as
Chairman of this Committee. This is, of course, our first
Subcommittee hearing this morning and I do want to welcome our
witnesses.
I do feel like some of the behavior of our colleagues and
how they have addressed our witnesses has been unbecoming of
this institution. So, we try to welcome folks who come before
us. But it is important, of course, to reveal, you know, what
is going on here and I want to really take this opportunity to
talk about what exactly this hearing is.
I think we have seen some interesting and bizarre theatrics
this afternoon and some challenges in really understanding the
basic facts of how the global energy market works, and leading
the American people astray.
So, I want to just take a couple of minutes here and also
ask our witnesses some questions and establish, you know, what
is actually driving energy inflation and energy prices in the
United States, namely, oil prices at a global level, and this
last year the war in Ukraine and also, which we haven't spoken
about as much, Putin and OPEC+'s actions in the middle of last
year to constrain global production, which highly impacted our
economy and which the President took emergency action to
address--the issues of how Democrats and the President are
trying to address these energy security issues here in domestic
markets and, of course, the talk about the action that we have
taken as a body here in this Congress and the President to
address our energy security long term, namely, global climate
change.
But I think it is important before we kind of dive into the
details of these issues to talk a little bit about the spin of
this hearing and some of the misinformation that we are hearing
and I think it is important for us to acknowledge, as the
Chairman himself said, that actually two of our witnesses here
today are actually fossil fuel industry folks.
And in fact, Mr. Bouchouev, I know we have already
established this, but you worked for the Koch Brothers
organization for more than 20 years. Is that correct?
Mr. Bouchouev. I worked for the company called Koch Supply
& Trading.
Ms. Stansbury. Yes, which is the global partnership and
industry operated by the Koch brothers, correct?
Mr. Bouchouev. It is a trading company that is owned by
Charles and David Koch--majority owners, yes.
Ms. Stansbury. Yes, of course. OK.
And Mr. Epstein, I do--you know, I know it is difficult and
we had some, you know, bizarre commentary, I think, in this
hearing. But it is important for us to really understand who
the people are that are coming before us.
Mr. Epstein. Sure.
Ms. Stansbury. And is it not true that one of your clients
is actually a coal trade association? Just a--just a----
Mr. Epstein. So, I just want to correct--so you falsely
said I was a fossil fuel industry member. That is what you
are----
Ms. Stansbury. Just a yes or no answer. Do you work for the
coal----
Mr. Epstein. No, I can't give a yes or no answers to a
loaded question. So, you can--you can ask me----
Ms. Stansbury. Do you--do you--do you--Mr. Epstein----
Mr. Epstein [continuing]. And you get a real answer or you
can just----
Ms. Stansbury [continuing]. Do you work for a coal trade
association, yes or no?
Mr. Epstein. I don't work for anybody. I have dozens of
clients whom I advise. I do not follow them.
Ms. Stansbury. OK. Mr. Epstein--Mr. Epstein, do you advise
a coal trade association, yes or no?
Mr. Epstein. Proudly. I advise many people and I am proud
of it.
Ms. Stansbury. Yes. OK. OK, great. So, we have already
established that two of our witnesses are here on behalf of the
fossil fuel industry.
Mr. Epstein. Not true. That is not true. I am not on behalf
of them. I am here on behalf of myself. So, you are lying.
Ms. Stansbury. I am reclaiming my time. Thank you.
So, you know, I think it is important to establish that two
of our witnesses who are here--they have been called by the
Majority--really lack just basic credibility around the facts.
But to add insult to injury we have also got this issue about
these past comments about racial superiority of Western
cultures. And so, obviously, I think we are all very disturbed
that the----
Mr. Epstein. It wasn't racial superiority.
Ms. Stansbury [continuing]. That the Majority would stoop
to this level to call witnesses who are not fit to actually
testify on these very important issues.
And as a representative for New Mexico, which is one of the
major energy producers in the United States, I want to just be
clear on the facts. So, let us talk about the facts.
Last year, Vladimir Putin invaded Ukraine. Months later, he
went to Saudi Arabia and OPEC. They constrained oil production,
it jacked up global oil prices, and President Biden and his
Administration took an emergency action to lower gas prices.
The U.S. Treasury studied it. It lowered gas prices up to
$.38 at the pump per gallon. It actually helped alleviate a
massive economic crisis in the United States at the end of the
summer as we were facing fuel and food shortages, and American
production is at an all-time high.
So, those are the actual facts and I am deeply disturbed to
see that the Majority is holding a false hearing to spin
misinformation to the American people about what is actually
happening in energy markets, the ways in which we have lowered
prices, and our efforts to make America and the planet more
secure by passing the largest single piece of legislation to
address the global climate crisis not only in American history,
but in the history of the planet.
Thank you, Mr. Chairman.
Mr. Fallon. Thank you very much.
We are going to have a second round of questions. Each
Member will get five minutes if they choose to take them and,
as such, I recognize myself for my five minutes.
So, let us talk--you know, we heard about facts. So, let us
talk about some facts--indisputable facts. January 20, 2021,
the price--the national price for gasoline on average was
$2.39. That is when this Administration began. That is a fact.
How about another fact? On February--I believe it is
February 24, 2022, Vladimir Putin invaded Ukraine. That was the
Putin price hike, except to an inconvenient truth, to quote
someone that wrote a book about that about 20 years ago, was
the fact that the price of gasoline at that time was $3.52
national average.
It was 47 percent higher before Vladimir Putin crossed into
Ukraine. So, who is going to own up on that? And at its peak it
was $5 and a penny, which was 110 percent increase from what he
inherited. And today, even today, after all this miraculous
intervention by the Biden Administration, it is still $3.41. It
is 38 percent higher.
So, another thing--another fact, an inconvenient one--this
is why we are having a hearing about the Strategic Petroleum
Reserve--is it was only drawn down three times and when it was
drawn down--Desert Storm, 1991, 17 million barrels; 2005,
Hurricane Katrina--that was a catastrophe in Louisiana--21
million barrels. And then the military intervention in Libya in
2011 was 31 million barrels.
And then Joe Biden, it is not 16 or 17 or 20. It is 227
million barrels. That is a multiply--10 times multiplier in the
reduction.
And then this interesting question about how there are--the
energy security can be best achieved with renewables. I have no
problem with renewables. I don't know any of my Republican
colleagues that do.
I am all for wind and solar. I am for a comprehensive,
realistic approach. Because I can tell you that I am going to
get on my unicorn and ride it to a pool to visit my mermaid
that was financed by a leprechaun because that is pie in the
sky and it is not reality.
The fact that the President of the United States in his
State of the Union said, we are going to need fossil fuels for
maybe 10 more years, well, heck, I would love to say that we
are not going to need them next year.
But that is not the reality, and I can't wait if we are
here 10 years from now because it is going to be--very little
is going to change, and even when you make a transition that
takes a decade or two. There is 200 countries on the planet.
Mr. Drummer, why isn't any of them doing what you just
said? If it is more efficient and more cost affordable
shouldn't--renewables should be dominating the industry right
now--dominating the energy sector. Why aren't they? Yes.
Mr. Drummer. It is, honestly, because there is too much
money to be made. It is why my co-witnesses are here. It is why
you are holding the line that you are holding.
Mr. Fallon. Whoa. Whoa. No, no, no, no. That is--that is--
--
Mr. Drummer. There is too much money to be made in the
short term and that is what it is. That is just reality.
Mr. Fallon. Oh, that is going to--hold on--hold on. I
reclaim my time. I reclaim my time.
That is absolute leftist bunk and this is why, and
respectfully, because not everybody is in the oil and gas
industry. If you are in the energy sector and you can make
dough on providing wind and solar, why wouldn't you do it? That
is a rhetorical question. That is obvious.
Mr. Epstein? Mr. Epstein?
They do it when they have incredible subsidies. If they
would just do it with their own money that would be one thing.
Energy security--renewables are going to do it for us? We are
going to be relying on China?
Mr. Epstein. I mean, it is just crazy that we can talk
about solar and wind being incredibly energy secure when the
supply chain is just completely dominated by China, which at
this--they can cut it off at a moment's notice. So, they can
destroy the whole thing. So, that is one.
And then two is--this is very important when we hear these
bizarre claims of cheapness--solar and wind cannot replace
fossil fuels. So, solar and wind are unreliable intermittent
sources of electricity. Not all energy, electricity. They can
go to near zero at any given time, which is why they need near
100 percent backup.
So, when you have solar and wind you can't just look at the
price of the panels and the wind turbines. You have to look at
the price of the backup and this is why in California where I
live, in Germany and Denmark, you see skyrocketing electricity
prices the more solar and wind you use.
So, they don't replace costs on the grid. They add costs to
the grid. So, it is just a total--it is a proven fiction that
solar and wind are cheaper and replacements for fossil fuels.
Mr. Fallon. Mr. Drummer, do you recognize that to move an
18-wheeler there is only two things that can do it right now,
natural gas or diesel fuel? Do you agree with me on that? The
only way it is going to move some big rig like that.
Mr. Drummer. I disagree with you on that. But I am
following the line of questioning.
Mr. Fallon. What--oh, you could make a billion dollars. How
do you move an 18-wheeler?
Mr. Drummer. So, there is a thing called research and
development and there are companies----
Mr. Fallon. Does that exist right now?
Mr. Drummer [continuing]. Working--human ingenuity is
something that we need to lean in on. There are companies
developing----
Mr. Fallon. No. Can we--can we move an 18-wheeler right
now? Sir, can we move an 18-wheeler right now?
Mr. Drummer [continuing]. Battery powered, electric powered
rigs----
Mr. Fallon. Are they on the road right now en masse?
Mr. Drummer. There are companies developing a range of
technology----
Mr. Fallon. Oh, they are developing. They are not on the
road right now?
Mr. Drummer. It is a thing called research and development.
Mr. Fallon. OK. So, they are not. Thank you. I yield.
OK. Ms. Stansbury, I recognize you for five minutes. Go
ahead.
Ms. Stansbury. Thank you, Mr. Chairman.
Well, just on that last point we should clarify that yes,
in fact, there are electric freight vehicles on the road and it
is anticipated over the next 10 to 20 years our entire vehicle
fleet will be electrical, and that that is one of the necessary
steps that we have to take in order to address the climate
crisis.
And so, I want to just use this second round to talk some
more about the climate crisis specifically and the things that
we are doing through the Inflation Reduction Act and talk to
you, Mr. Drummer, about some of the work that you have done
around climate justice and building more equity into the kind
of clean energy economy that we are building.
So, I want to just reiterate that this August, Democrats
here in the House of Representatives and in the U.S. Senate
passed the largest single piece of legislation not just in the
history of the United States but in the history of the world to
address our climate crisis, and I think some of the factual
challenges that folks are having in this hearing today is that
to address the climate crisis we have to address it across all
sectors.
That is correct, Mr. Drummer, right?
And so, we have to do it across the electricity sector. We
have to do it across vehicle sectors. We have to do it in terms
of our emissions, our building materials, things like that, and
the Inflation Reduction Act is the most comprehensive piece of
legislation to ever be created to help invest in all of those
sectors so that we can actually avert passing a tipping point
in our global carbon emissions and we can make this transition
that will be necessary so that our communities do not suffer
more.
And I mentioned in my comments a few moments ago I am from
New Mexico. This summer we just had the largest wildfires ever
in the history of our state. Our state is experiencing a
millennial drought right now.
So, climate change is already here. We are already
experiencing it. I am a water resources manager. I have worked
on these issues for many, many years and we already see the
signature of climate change.
And what we know is that if we don't implement the IRA and
the 40 percent emissions reductions that are in it, we will see
even more catastrophic impacts for communities, which is why we
are seeing such industry resistance and, of course, these
strange attacks here.
So, Mr. Drummer, I wonder if you could talk to us about
what exactly is meant by the idea of a just transition and how
do we build equity into this movement?
Mr. Drummer. Right. The idea of a just transition is about,
one, the places who are most affected and first impacted not
only by the fossil fuel infrastructure. The emissions, the
extraction--you know, it is a product that poisons people and
our environment across its entire product lifecycle.
So, the folks who are most affected by that should be
prioritized in how we transition, which is why the Inflation
Reduction Act gives additional tax credits to private
investors, right, who are siting renewable energy and battery
storage projects in those types of communities.
A just transition also acknowledges that there are many,
many people who work in the fossil fuel sector. I was talking
to one the other day who put his family--all his children
through college welding pipes on--it might not be the technical
term but that is what he did--and the idea is that they should
have a way into the clean energy economy.
And, by the way, there is a lot of work to be done to wind
down this infrastructure, to seal this infrastructure, and to
maintain this infrastructure safely so it doesn't leak and
start poisoning our environment when it is no longer in use.
And so, that is the idea of a just transition that we can
bring everybody along and everybody can be part of this clean
energy economy.
Ms. Stansbury. Thank you, Mr. Drummer.
And I personally really appreciate that, and some of some
of the folks who are here on the Committee today know because I
serve on the Natural Resources Committee and have talked about
my family's story.
But my parents were both energy workers. My mother was a
crane mechanic who helped build a coal-fired power plant in
northwestern New Mexico. My father was a boilermaker and a
welder in the oil fields working for one of the major global
oil companies.
And so, a just transition isn't just for communities who
are living in natural, wild, beautiful places. It is for the
communities that are really at the heart of this transition to
make sure that they have dignity, that they have jobs, that
they are able to build communities and economies that really
reflect their values, their cultures, their languages, and
their needs.
And so, I am really grateful that you are on the front
lines of this effort as a thought partner to us and just
appreciate the opportunity to have the conversation about it.
So, thank you, Mr. Chairman. I yield back.
Mr. Fallon. Thank you. The Chair recognizes Representative
Boebert for five minutes.
Mrs. Boebert. Thank you, Mr. Chairman. So, obviously, the
day that he took office Joe Biden unilaterally declared an all-
out war on American energy production, from shutting down the
Keystone XL Pipeline, which has been mentioned, on day one,
imposing new rules to block pipeline projects, canceling oil
and gas leases on millions of acres in Alaska and the Gulf of
Mexico, imposing moratorium on new Federal oil and gas leases
on Federal lands, and he single-handedly regulated our
communities into poverty.
We want to talk about lifting people out of poverty, well,
my communities in my district that I am proud to represent have
been regulated into poverty because these good-paying jobs are
no longer there. Now we are talking about affordable housing
and childcare because the good-paying jobs are gone. They are
not in my district anymore.
And so, what did Joe Biden do? He helped lead these record
high gas prices right before an election by draining the
Strategic Petroleum Reserves. He depleted them. He begged our
enemies for oil.
Now, a lot of this has been brought up today and, Mr.
Epstein, I would love to get to you. The Inflation Reduction
Act--the IRA--was recently brought up, which is really the
green new deal.
And, Mr. Epstein, I am curious, would the Inflation
Reduction Act with its billions of dollars, hundreds of
billions of dollars, going toward green new deal energy
policies, is that going to protect us from a climate emergency?
Mr. Epstein. Thank you. So, if you are thinking about
emissions,--we will talk in a second about whether there is a
climate emergency--but if you are thinking about emissions
there is obviously only one way to reduce emissions if you are
talking about CO2 emissions because this is a global issue, and
that is to make low carbon energy globally cost competitive.
So, anything you are doing just to randomly subsidize the
U.S., fleece taxpayers to make things more expensive, or to do
these things that can't work on the market, that doesn't
accomplish anything at all.
So, what we need to do is things like liberate nuclear,
liberate natural gas, liberate development so we can have
things like deep geothermal. But you need real market things.
So, first of all, the IRA doesn't accomplish anything in
terms of globally cost competitive solutions and, in fact, it
keeps over subsidizing solar and wind into the indefinite
future. So, it is a total mess.
Also, this idea of a climate emergency is a falsehood.
There is a difference between climate impact and climate
emergency. This idea that we are all going to die very soon
from climate is empirically false.
We are actually safer than ever from climate-related
disasters. Fossil fuels have helped us do things like alleviate
drought, heat our homes when it is cold, cool our homes when it
is hot.
Like, fossil fuels have actually made the climate far safer
for human beings. So, any concern with emissions should be long
term and nonemergency.
It is actually this emergency mentality that led Biden to
say, I guarantee you we are going to end fossil fuel, and led
to all of these catastrophic policies that you are referring
to.
So, what we need is energy freedom where all forms of
energy can compete, and insofar as solar and wind can be cost
competitive and actually provide reliable electricity, great.
But forcing inferior energy on us is a disaster and it causes
an energy emergency in the name of a phony climate emergency.
Mrs. Boebert. Thank you, Mr. Epstein.
And I have a simple question for you. Was America energy
independent under President Trump's Administration?
Mr. Epstein. So, it was much--I would put it as much, much
more energy secure. That is how I would put it, much, much more
energy secure, and in part because President Trump was saying
to the industry, we are going to leave you free in the future,
whereas I want to quote one of America's leading oil
executives, Cody Campbell, who said, ``yes, Biden's war on the
oil and gas industry is driving shortages and high prices,''
and he cited specifically the Democrats' idea that the need for
oil and natural gas is soon coming to an end.
Mrs. Boebert. And, Mr. Epstein--Epstein, excuse me--would
you say then America is not energy secure now or is less energy
secure?
Mr. Epstein. Yes. We are less energy secure because we are
more and more dependent on unreliable forms of energy,
specifically electricity, and we have threatened the fossil
fuel industry going forward, and where I live in California is
the perfect embodiment where we said no more internal
combustion engine vehicles and then five days later Newsom
said, don't charge your electric car.
Mrs. Boebert. Correct.
Mr. Epstein, what should the Federal Government do to help
increase our energy security as quickly as possible?
Mr. Epstein. So, the first thing is just to apologize.
Like, it is really, really important to say, we have been in
the wrong, and I know that that is difficult, but it needs to
happen.
And then this whole of government thing needs to change
because the root cause is the whole of government attack on
fossil fuels and the net zero commitment.
I think a first really good action would be to immediately
withdraw from the Paris Climate Accords and encourage every
other country to do the same. That would be a great action.
Mrs. Boebert. Thank you. I think an apology is necessary to
the American people because I do see this as sabotage.
But, Mr. Epstein, you have illustrated the dangers of
energy insecurity and abusing the SPR. Are we making other
areas in addressing energy security?
Mr. Epstein. Yes. So, we are making many. I know we are
about to be out of time. We are making many, many other errors,
and I would like to offer particularly to Representative
Stansbury, who told several lies about me, if you want to know
the truth about me in this issue, I will sign a copy of
``Fossil Future'' for you so you can learn the facts.
Mrs. Boebert. Great book. Thank you, Mr. Epstein.
Mr. Epstein. Thank you.
Mr. Fallon. The gentlelady's time has expired. A very
generous offer, by the way.
Mr. Epstein. Thank you.
Mr. Fallon. The Chair recognizes Ms. Luna.
Ms. Luna. I actually want to see if Mr. Epstein wanted to
use some of my time to address some of the lies that Ms.
Stansbury told about you.
Mr. Epstein. Oh, sure. Yes, that is great. So, the--so
there is an argument that I--and I don't have the exact
transcript but the basic ideas that I am bought----
Ms. Stansbury. Mr. Chairman, I would like to raise a point
of order, please.
Mr. Fallon. OK.
Ms. Stansbury. Mr. Chairman----
Mr. Fallon. The gentlelady will state a point of order.
Ms. Stansbury. Yes. Mr. Chairman, I would like to inquire
about the Chair's read on the rules for this Committee pursuant
to what we adopted in terms of name calling and correcting----
Ms. Luna. Can I--can I take back some of my time right now?
Because I am interested in the facts.
Mr. Fallon. No, you are--we are going to----
Ms. Luna. OK. I just want to get the facts from you.
Mr. Fallon. OK, hold on one second. There is a point of
order. Ms. Luna, your time is frozen.
Ms. Luna. Thank you.
Ms. Stansbury. Mr. Chairman, I would like to ask that the
words be taken down by the gentlelady from Florida regarding
her name calling of me and the assertion that somehow the
factual exchange that I had between myself and the witness were
somehow other than a normal asking of questions to a witness.
Mr. Fallon. All right. Just give me one second. Thank you.
Ms. Stansbury. Thank you.
[Chairman reviewing the rules.]
Mr. Fallon. So, what I want to do is real quickly read our
rules of witness decorum and I would remind them that this is a
violation of the rules of the House of Representatives to
engage in personalities regarding the President or make
statements that are personally offensive to him, that the rules
govern Members in debate and also applies to us as witnesses
deliver their testimony.
And so, what I would ask is if Ms. Luna could perhaps
rephrase to say maybe some untruths that were spoken. I think
that would be fair and part of decorum, because we are going to
disagree all day long on certain topics as the two parties and
sometimes we do agree and then many times we don't.
And so, perhaps just rephrasing the question would satisfy
everyone. And Ms. Luna, you are recognized for your full five
minutes.
Ms. Luna. Mr. Epstein, would you please correct some of the
mistruths spoken about you? I would like to hear your
perspective on what is factually accurate.
Mr. Epstein. Sure. So, there are two things that
Representative Stansbury brought up. So, one I think I
addressed very clearly, this idea of any kind of racism, and
she attributed--this as almost an exact quote--me talking about
the racial superiority of Western culture and I clarified
probably five times that Western culture has nothing to do with
race and it is about ideas, particularly individuals and
freedom and reason.
So, it didn't seem very honest to me to portray me as
saying racial superiority. It seemed like another attempt to
discredit me, and I think there is an inability to actually
refute any of my arguments.
And I think the same thing is true with the attack that I
am somehow representing and paid for by the fossil fuel
industry. First of all, if I were, which I am not, we need
representatives of the fossil fuel industry here because they
have expertise on this issue, which is about oil. So, that is
one thing.
But it is just factually false. So, I came to all of my
ideas independently and I said, I--once I came to the
conclusion that fossil fuels are good, of course, I proudly
tried to advise fossil fuel companies, including coal
companies, how to tell their story better.
But to use my expertise and my convictions and to claim
that I am dishonest and should not be listened to, and I made a
compelling case, I didn't think that was appropriate.
Ms. Luna. Mr. Epstein, I just wanted to ask you real quick,
is China somehow protected by an invisible shield that prevents
their carbon emissions from escaping?
Mr. Epstein. No.
Ms. Luna. OK. So, if we have the ability to produce clean
energy here or at lower carbon emissions versus China, don't
you think that that would be better for the climate?
Mr. Epstein. Yes, but I think the main thing is the world
needs far more energy and if you care about emissions you need
to find truly cost competitive ways to do that and the best way
to do that is through freedom, through liberating nuclear,
through liberating natural gas.
And, unfortunately, this Administration is focused on
limiting the freedom of certain industries, namely, fossil
fuels, including natural gas, and then imposing extremely
expensive things that the market won't choose on its own, which
is the whole IRA, which is just a total subsidy fest that does
nothing to make alternatives truly cost competitive.
Ms. Luna. No, I agree with you. I think from a perspective
on also national security to say that somehow the United States
is going to go to completely electrical grid would actually
pose a massive threat to us----
Mr. Epstein. Yes.
Ms. Luna [continuing]. Because if you have a hacker they
could shut down an entire first world country and, obviously,
that is something that we don't want.
My final question for you is--first of all, thank you for
coming to testify before Congress.
Mr. Epstein. My pleasure.
Ms. Luna. I appreciate you being here. But with everything
that we just heard, I mean, what is the best way that we as a
country can really prevent China from essentially owning us?
Because as you had stated earlier, the Paris Climate Accord--I
mean, us even engaging in that is hindering us while they are
polluting and destroying our planet.
And I hear a lot about climate change but, you know, few
people of action that are willing to actually address that.
Mr. Epstein. Can I just comment on the grid, which you also
mentioned?
Ms. Luna. Yes, of course.
Mr. Epstein. Because you mentioned the security threat of
the grid and it is vulnerable to these kinds of attacks. I
think the number-one thing that it is vulnerable to is we are
catastrophically reducing the supply of reliable electricity
and then catastrophically increasing the demand for reliable
electricity.
And so, California, where I live, is a perfect example. We
have attacked fossil fuels, we have attacked nuclear, so we
have less reliable electricity, and then we are trying to
mandate electric everything.
And this is why, as I mentioned, Newsom had this
announcement, no more internal combustion engine vehicles, and
then five days later he had to say, don't charge your EV, and
we have signs all over the place saying don't use your
electricity. We only have three percent penetration of EVs.
So, we are talking about this catastrophic, unthinking
increase of EVs, and we are actually threatened--I have this
documented--we are threatened to go to lose 20 percent of our
reliable electricity in the next seven years under the Biden
EPA.
So, that is a catastrophic threat. I can also answer about
China, if you would like.
Ms. Luna. Yes, please.
Mr. Epstein. So, I mean, with China is China actually cares
about energy and they are doing what is good for their people
and also the power lust of the government in terms of energy.
So they, for example, use five times as much industrial
electricity as we do, overwhelmingly coal, and the only way for
us to be secure and out compete them is to have a very
aggressive energy freedom policy and that includes--one, is
liberating domestic development from things like NEPA, which,
unfortunately, this Administration has done nothing to do and,
in fact, reversed the good Trump Administration things on NEPA.
We need to end preferences for unreliable electricity and
actually have all forms of electricity compete, so we can
actually have a stable grid. We need to reform the EPA, so it
stops shutting down reliable power plants.
We need to what I call `decriminalize nuclear', not just
subsidize it and this kind of thing, and in general we need an
emissions policy of long-term reductions, not catastrophic
emergency reductions through liberating American innovation,
not punishing America.
What the IRA does is it punishes America and accomplishes
nothing globally because, as you said, Chinese emissions
influence the global emissions picture just as much as American
emissions do.
Ms. Luna. Thank you so much. I appreciate it. Obviously,
that was very factual, and I think you are very well qualified
to be here. Thank you.
Mr. Epstein. Thanks.
Mr. Fallon. The Chair recognizes Mr. Edwards for his five
minutes.
Mr. Edwards. Thank you, Mr. Chair.
Mr. Epstein, first of all, I want you to know that on the
recommendation of a previous energy secretary I have read your
book----
Mr. Epstein. Oh, wow. Thanks.
Mr. Edwards [continuing]. And it is a pleasure to see the
author of such a piece of work here with us today.
Mr. Epstein. Thank you.
Mr. Edwards. So, thank you.
President Biden, in his recent State of the Union address,
called out corporations for being profitable--energy
corporations for being profitable and he called for additional
taxes on oil and gas companies.
Are higher taxes on corporations a path forward, in your
opinion, for American energy producers to increase production?
Mr. Epstein. So, this is an example of the tragedy I
mentioned toward the end of my testimony, which is that this
Administration has, unfortunately, learned nothing and
apologized for nothing, because the root cause is--of the
problems is global anti-fossil fuel policies and that is what
artificially suppressed the supply and drove prices up.
And so, what is the Administration's response besides
dangerously depleting the SPR? It is to threaten even more
punishment. So, what more taxes says is if you manage to
succeed through the gauntlet of factors that we are using to
restrict you we are going to make you pay even more.
Does anyone think that is attractive to oil investors? What
we need is a free market that oil investors have confidence in.
So, this is 180 degrees wrong policy.
Mr. Edwards. Thank you for that. And my follow-up question,
which you might have answered but I ask you to elaborate if you
can, is how are those Biden Administration policies and actions
toward oil and gas companies discouraging future investment?
Mr. Epstein. I mean, we could spend all day on this. But
the high level is that--the high level is what they call the
whole of government approach to climate change. But climate
change just means--in practice it means attacking fossil fuels.
So, there is a whole of government approach to attacking
fossil fuels--and I think there should be a hearing on this
because this is just the root of all the destruction--is that
every agency, you can go to every agency, subagency, they are
trying to figure out a way to attack fossil fuels.
So, look at the SEC. The SEC has climate disclosure rules.
That is just basically designed to intimidate companies into
agreeing to get off fossil fuels as quickly as possible. You
have pressure on investment institutions through different ESG
policies, and you have the signal sent by opposing the Keystone
pipeline by the leasing ban.
And so, what this says to investors and companies is if you
pursue this space of oil and gas, in particular, you have a
high likelihood of being punished.
Investors are investing because they want to make a profit,
and if you are increasing the risk you are going to decrease
investment. So, that is why we need an apology, and we need a
reversal of the whole of government approach.
And this Administration or future administrations need to
give long-term security to all forms of energy.
Mr. Edwards. Thank you.
And still Mr. Epstein--is there a physical reason that the
oil industry can't meet rising demand?
Mr. Epstein. Thank you for asking that. I wish I had
thought to bring that up. No. So, why are prices going up? Is
it--do we have a physical limitation?
No, we have endless oil in the world for the foreseeable
future. Do we have a know how limitation? Did the industry
forget how to produce things cost effectively? No.
It is obviously a political limitation and the obvious--it
is bigger than an elephant in the room, it must be, like, a
dinosaur in the room--is that we have a global anti-fossil fuel
movement that has been for years suppressing investment,
production, refining, and transportation.
This is obvious. This is what every country in the world is
committing to under the Paris Climate Accords. This is what the
investment institutions are committing to.
So, what happens is they have suppressed the supply of
fossil fuels. That makes prices go up. That is what they
wanted. But what they didn't want is for the electorate to get
angry.
So, they want this consequence. They just don't want the
political results, and the SPR is a way of hiding it.
Basically, if you release oil from the SPR prices go down
temporarily so people don't see the damage you have inflicted
on the global economy and on Americans in particular.
Mr. Edwards. So, thank you for that.
Also, Mr. Epstein, I know this may seem like an elementary
question, but I believe it is important for the American people
to know the answer.
Can you explain why price increases exist when you restrict
the supply of a valuable resource?
Mr. Epstein. Sure. I mean, just if you are thinking about
anything--I mean, if you think about the price of apples and
you take half the apples away from the world, well, that is the
supply, and then the demand is people still have the same
proclivity toward wanting apples.
And so, what happens is there are fewer of them, so the
people who are willing to pay more, those are the only people
who are going to pay--be able to pay for it. And so, the price
is going to go up.
So, it is just--you know, there is the details but it is
the basic supply/demand dynamic and it is very important. The
world, particularly the Biden Administration, have committed to
restricting the supply.
They promised us the demand would go away because
unreliable solar and wind would replace fossil fuels, the same
promise we are hearing today from others. It was a false
promise. Demand went up, so supply went down. Demand went up,
prices go up.
Mr. Edwards. Thank you. Thank you for being with us. Thank
all of our visitors for coming and sharing with us this
afternoon.
Mr. Chairman, I yield.
Mr. Fallon. Thank you.
In closing, I want to thank our panelists once again for
their important insights and testimony today. The most valuable
resource any of us have are time. So, we thank you for your
time.
And I would like to yield to Ranking Member Stansbury for
her closing remarks.
Ms. Stansbury. All right. Well, thank you, Mr. Chairman. It
has been an interesting adventure today, I will say that.
So, welcome to the Subcommittee. I am sure we are going to
have lots of vigorous debate this Congress on these issues.
I do feel bad that we didn't get to ask Dr. Bouchouev more
questions. I could see him shaking his head in disagreement
with many of the comments that Mr. Epstein said, and it is
unfortunate because he is a--while a former Koch Brothers
employee, he is an energy economy expert and there is a lot of
misinformation that was shared in the name of--as testimony
today.
So, I apologize that we didn't have the opportunity to
actually hear the facts about global energy markets. And I do
thank Mr. Drummer for joining us today to talk about and share
your perspective on these issues.
Mr. Chairman, obviously, there is nothing more important
than addressing our global energy security and the climate
crisis. It is something that the Biden Administration and
Democrats understand very well.
It is part of why the Biden Administration has aggressively
pursued energy policies that are both lowering prices,
protecting American access to energy of all kinds, and took
emergency action to take down the SPRO.
There is discussion about what that impact has about
overall energy market stability. We understand that. But it was
an emergency measure that was taken at the time in order to
address gas prices at the pump at a time when we were
experiencing record inflation and food shortages here in the
United States.
It was an energy crisis, just as the SPRO was designed to
do, which was to address issues when OPEC, other cartels, and
global energy prices impacted the American consumer.
So, we are grateful for the Biden Administration's
proactive effort, the impact that it had for communities. But
most importantly, I want to really emphasize the incredible
action that we have taken here in Congress this last year to
pass the Inflation Reduction Act to do as we heard today, to
address climate change across all aspects of our economy, to
invest in our communities, and to ensure that this energy
transition that we are going through is not only good for
business, good for America, good for our energy security that
ultimately is just and equitable for our communities as we are
trying to navigate through this global crisis.
So, with that, Mr. Chairman, I very much appreciate it and
look forward to working with you.
Mr. Fallon. Thank you. I am going to yield back your two
minutes.
No, thank you all again for coming.
Just a couple of things to point out. The United States is
not a planet. We live on a planet. We are part of it. But we
have issues with China and the coal plants that they are
opening. They are increasing their emissions.
I am very proud of the fact that our country has reduced
our emissions dramatically over the last 20 years and we have
India as well has a growing economy that has also contributed,
and I think it is fascinating to know that it is projected that
coal--global coal use will never be higher than this year,
which is really not, I don't think, good news for anyone. But
it is interesting to know.
We haven't talked a lot about and we should have future
hearings about nuclear energy. I want to focus on solutions,
not just rhetoric, but the carbon that is already in the
atmosphere. Trillion Tree project, things like that, that will
filter it. Carbon capture--there is ideas with putting it in
concrete and limestone caves and things like that that are
solutions that we should all get behind, particularly, again,
with nuclear. I think a lot of folks that were on the political
left have seen the light with nuclear energy of late. Not all,
but many.
Also, the electric grid. Can it handle the capacity of
hundreds of millions of cars? It was never designed for that,
and so that is an issue that we are going to have to discuss,
moving forward.
And now--and I recall, like, these almost Thomas Malthus
type--Thomas Malthus exaggerations that some folks have said in
the public sphere and Members of this chamber as well.
One said that--not in this hearing but another one that I
attended, that by 2026 there is going to be large swaths of the
United States that will be uninhabitable, and I believe it was
by 2034 we are going to major famines in the United States.
And former President--Vice President Gore said that global
sea levels are going to rise by 20 feet and the--you know,
there was going to be millions of people displaced. And even
the U.N.'s own IPCC said that it could--global sea levels may
rise as little as four inches in the next hundred years. So,
interesting to know former presidents have purchased properties
at zero sea level on the coast. So, the coastlines aren't being
threatened right now at all.
So, it is going to be interesting over the next eight to 10
years to see the realities of what happens. Are all or some
tractor trailers going to be electric? I don't know. But we are
going to find out.
I don't know if I will be here in 10 years or not. But so,
take note of what is being said. Take note of what was said in
2000. Take note what was said today, and we will see where we
are, moving forward. I think that is very important.
But we, again, need to recognize the realities, and this
Administration did not lower prices. We have empirical data.
Everybody can agree the price of gasoline was $2.39 when Mr.
Biden took office. Today it is $3.41. It is 38 percent higher,
despite the fact that we have drained the SPR to historic
levels.
Seventeen million in 1991, 21 million in 2005, 31 million
in 2011, and then 227 million over the last year and change.
That is remarkably different.
So let us just, again, talk about and focus more on
empirical, undeniable facts. That is why we had this hearing
and that is why we can conclude beyond a shadow of a doubt that
there was no national emergency.
The price of gasoline was already up prior to Putin's
invasion. It wasn't his fault. It was bad policy. If you want
to reduce the costs of energy, then make more of it.
Yes, it is a global market. We are a major player in that
global market that can affect the price. It is a supply and
demand issue, at the end of the day.
So, I want to thank everybody for coming. I appreciate our
first hearing and I look forward to many more.
And in closing, with that, and without objection, all
Members will have five legislative days within which to submit
materials and to submit additional written questions for the
witnesses, which will be forwarded to the witnesses for their
response.
If there is no further business, without objection, the
Subcommittee stands adjourned. Thank you.
[Whereupon, at 4:09 p.m., the Subcommittee was adjourned.]
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