Barton: Nigerian Unrest, Iran, Failure to Explore ANWR Combine to Drive Up Oil Prices 'We have more energy resources by a factor of three than Saudi Arabia' WASHINGTON - U.S. Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, made the following statement today during the full committee hearing entitled, "World Crude-Oil Pricing:" "Good morning. I want to begin by thanking all of our witnesses for their time today. In particular, I want to recognize the witnesses on our first panel. "Mr. Guy Caruso, administrator of the Energy Information Administration, has been guiding and advising the Energy and Commerce Committee for over four years now. We're always appreciative to have him before us. "Dr. Daniel Yergin is recognized as one of the most highly respected authorities on international politics and economics in the energy field. We welcome you back to the committee again, Dr. Yergin. "The U.S. government cannot control crude oil prices, and the U.S. economy can't either. We are major players in a global market, both as consumers and as producers, but we don't control the price of crude oil in this country. Major developments in other parts of the world have brought the price as high as $76 a barrel. I think yesterday it closed at $74 a barrel. Let's take a quick look at some of the facts that we know: As many months as it's been since the Katrina and Rita hurricanes, we still have 300,000 barrels a day in oil production in the Gulf of Mexico that's off-line. Iraqi production is increasing from where it was right after the war of liberation, but it is still below its pre-war peak and well below its potential. There are many people that think Nigeria is becoming more unstable and its production is horrible and many traders are taking account of that. I'm not even going to begin to talk about the president of Venezuela, Mr. Chavez, but there are many of us, including myself, who consider him to be quite a wild card. And then we talk about Iran and their expressed intention to make nuclear weapons. The response by the West on this troublesome issue raises more questions about the stability of oil production in that nation. Then we have OPEC. OPEC is a cartel that tries to set the price for oil in world markets. It seems our two experts before us today are going to indicate, at least for the short term, they've lost that ability. Half of our imports come from nations that are members of OPEC. "Now let's look at the demand side. This is where it gets even more amazing. Despite the surge in gasoline prices in the Unites States in the last year and a half, demand for refined products made from crude oil is going up in the United States, including gasoline, although there have been some months recently where the demand for gasoline has gone down. "When you look at China, their demand increase is incredible; up to half-a-million more barrels a day, from that nation alone. When you look at China - keep in mind that in a state like I come from, Texas, we've got more cars and trucks than people - but in China, there's only one car for every 200 people. Just think how their demand is going to grow as more and more Chinese demand that they have the same mobility that we have here in the United States. China's industrial sector is growing, literally, on a daily basis, and their demand for energy is increasing as their industrial sector grows. "We could say the same thing about India. "I expect to hear more today on these geopolitical issues affecting crude oil prices and how much price they add to the barrel of oil. These oil prices and the geopolitical risks surrounding these oil prices concern me as they concern all Americans. Crude oil accounts for more than half of the price of a gallon of gasoline, and I think everybody on this committee and everybody in this country, including the suppliers of gasoline and crude oil, want prices to go down. "Here in the United States, whatever we can do, it's time for us to begin to do it. "At over $70 a barrel, the price of crude oil is nearly four times the spot price on the day back in 1995, 11 years ago, when then-President Clinton vetoed drilling in ANWR. They say there are no short-term fixes, I would agree with that, but if we had authorized drilling in ANWR 10 years ago, crude oil prices would not be, in my opinion, over $70-a-barrel today. "Texas began to drill and produce oil on a large-scale basis in 1894 in Corsicana, Texas, which happens to be in my congressional district. Since that day in 1894, when what we would now call the Chamber of Commerce in Corsicana decided to drill some water wells and instead found oil, the great state of Texas has produced over 60 billion barrels of oil. It's currently producing a million barrels a day, from more than 200,000 wells. "It's estimated that in ANWR the reserves for that one field is 10 billion barrels. One oil field in Alaska is expected to have at least 10 billion barrels and yet we've built one well, a discovery well. In Texas, in 112 years, we've drilled over 200,000 wells, and produced over 60 billion barrels of oil. "It just defies rational explanation to me that we won't drill what will probably be the largest oil field in the North American continent when we've proven we can do it in a safe, environmental way at Prudhoe Bay. "The Energy Policy Act, which passed last year with bipartisan support, and a majority of members from both sides of the aisle of this committee voted for it, included some provisions increasing supply, promoting conservation, and pursuing research into next-generation alternative energy sources. But it didn't do as much as could be done because we didn't have the political consensus on the issues like ANWR and drilling in the OCS. "I think the Congress can and should do more. I think we should do things like we did yesterday in once again passing refinery permitting reform legislation on the floor of the House. I understand that some people feel like that particular bill was moved without the proper vetting at the committee level, and I respect that, but sometimes you have to do things in a quicker way than the normal legislative process. "A Saudi energy official not too long ago told me: 'It doesn't matter how much oil we send you - you can't refine it because you haven't built refineries in a generation.' That is unfortunately sad but true. Yesterday we also had a hearing on reforming the fuel efficiency of automobiles. Maybe that effort will have to proceed without a consensus too, though I hope not. "America seems to be praying that we can buy a ticket in the energy lottery and get the winning ticket without having to do anything other than that. Some people do win the lottery; about one out of a million. I don't think that we should put our prayers on winning the energy lottery. I think we need to do responsible things that make sense, like drilling in ANWR, like looking at the OCS in the moratorium areas, like doing what we can to get the oil shale that we have in the lower 48 into production. "In the last 30 years in this country, because we've been unwilling to do some things domestically, we have almost intentionally made ourselves dependent on the outcomes of what's going on in places like Nigeria, Iran, Venezuela, the various OPEC nations, because we refuse to use our own resources. "North America has tremendous natural resources of all kinds, if you include our coal resources, and our hard-to-get oil resources, we have more energy resources by a factor of three than Saudi Arabia does. It's time that we, in my opinion, use the political process, to try to at least begin to rationalize and maximize the use of such resources, before we become even more dependent on foreign sources. "America is just not likely to win the energy lottery by praying for deliverance from other people outside of our borders." ####