Today's hearing is on the Interaction of our Environmental Regulations and the Nation's Energy Policy. This is the first Subcommittee hearing of the year and I would like to welcome our ranking member Senator Joe Lieberman. Senator Lieberman and I have worked well together in the past couple of years on a wide variety of issues here in the Environment and Public Works Committee and also in the Governmental Affairs Committee. I look forward to another two years of productivity working with him in this Congress.
Few would disagree that we are in the midst of an energy crisis in this nation, one that is having a tremendous influence over the state of our economy and affecting the quality of life of the American people. The impact of this energy crisis is, and will continue to be, of such a magnitude that I believe what this committee does this year could have more sway over what happens to our economy and the citizens of the United States than at any other time in recent memory.
All we need do is look at what is happening in the State of California and it is apparent how urgently we need to enact a national energy policy. Brownouts, rolling blackouts, lost business - all have brought chaos to this nation's largest state and largest economy. Not only is California's energy crisis impacting California, it reaches nationwide and across the globe.
California's problem - as large as it is - is just one of the many energy problems faced by communities, cities and states across the nation.
Since the beginning of the 107th Congress, I've been holding a series of public meetings across the state of Ohio where I have asked individuals and business owners to relay their experiences as to how our energy crisis is impacting them.
Last month in Cleveland, I held a meeting with Catholic Charities, Lutheran Housing and the Salvation Army as well as senior citizens, low income parents and handicapped individuals. I heard many heart-rending stories about the struggles that they were going through just to be able to afford their monthly energy bills.
I was told that because of soaring energy costs, the dependency on charitable organizations has risen dramatically.
The Catholic Diocese said that in the year 2000, their helpline received 3,400 calls for basic needs; items such as food, utilities, mortgage or rent. The number of calls the Diocese received went up 96% from 1999 to 2000, and 194% from 1998 to 2000.
In the first seven weeks of 2001, the Salvation Army in Cleveland had 559 families seeking assistance with energy costs. In comparison, for all of 2000, the Salvation Army helped 330 families.
For the least of our brothers and sisters, the choice sometimes comes down to paying for heat or paying for food, and because of this, many are having to rely on hunger centers for their meals. As more people come into these programs, the more it is taking a toll on the various philanthropic organizations to keep up with the demand.
A few weeks ago, I met with business leaders in Cincinnati, each of whom relayed how energy costs were impacting their particular businesses.
For instance, Mr. Joe Maas, who owns JTM Provisions Company, a company which produces products for the food service industry, indicated that JTM will pay $200,000 more this year than last for gas and electric - a 100 percent increase. High energy prices have also increased the prices of JTM's raw ingredients, such as tomato paste, which Mr. Maas buys from California producers. The price of this ingredient alone has increased $2,000 per load due to higher shipping and processing costs.
Another example is H.J. Benken Florists owned by Mr. Michael Benken. This family-owned business reports that energy costs for many California-based companies that provide flowers to Mr. Benken's shop have increased as high as 600 percent. Energy prices have increased so dramatically in California that most roses are now grown in Ecuador or other Latin American countries where energy prices are lower. Mr. Benken also stressed that his products - flowers - are luxury items, so consumers will simply forgo buying them if their prices skyrocket, as they have.
In December, Mr. Benken's heating bill was $15,000, just $200 more than the previous December. However, that was to heat less than a third of the space: Mr. Benken typically heats 20,000 square feet of greenhouse space. This year, he is heating just 6,000 square feet.
The "horror stories" that I had heard from business owners in Ohio were confirmed on a national scale when I addressed the Board of Directors meeting of the National Association of Manufacturers last month. Manufacturers from all over America complained bitterly over the high price of energy they were experiencing.
Many expressed how they couldn't immediately pass these incredible increases in energy costs because they knew their customers couldn't afford it. This has led them to cut costs elsewhere by deferring maintenance, freezing their hiring and even considering lay-offs.
Federal Reserve Chairman Alan Greenspan has indicated that businesses don't have the same capital to invest, since more of it is being used to pay energy bills.
Indeed, at my meeting in Cleveland, a businessman by the name of Jim Krimmel told me that the price he paid for gas had increased from $87,000 in January of 2000 to just over $197,000 in January 2001; even though this year, he was using less gas. By his calculations, Mr. Krimmel indicated that he will pay $1.5 million for gas in 2001- an $867,000 increase over the price he paid just two years ago.
I believe the high cost of energy is a major contributing factor to our current economic downturn, affecting both businesses and individual consumers. Many Americans live paycheck to paycheck, and when they have to allocate more of their paycheck for energy costs, they make a choice to either meet their mortgage payments, pay their bills or cut back on other spending. Usually, they cut back on spending, and since consumer spending makes up 68% of our Gross Domestic Product, America's competitiveness is negatively impacted.
Another aspect of our energy crisis that we must address is the uncertainty over a large portion of our crude oil supply.
The United States is more dependent on foreign oil today than at any other time in our history. I trust that my colleagues remember the Arab Oil Embargo of 1973, when costs went up, gas shortages were everywhere and people sat in long lines to get gas. At that time, the U.S. relied on 35% foreign oil to meet our domestic needs. In the year 2000, our reliance on foreign oil averaged some 56%. By the year 2020, it is projected to hit 65% at our current rate of consumption.
Our dependence on foreign oil is both a national security issue and an economic issue, and a major reason why a lack of an energy policy should be of great concern to all Americans.
In addition, we should be extremely concerned about how our environmental policies have impacted our ability to meet our energy needs here in America. That is the purpose of today's hearing.
This hearing is the first in a series of hearings examining our energy and environmental policies. My goal as Subcommittee Chairman is to harmonize our federal clean air regulations with our nation's energy needs. I want a clean environment and cost-effective reliable sources of energy that will allow continued economic growth. To that end, I am working closely with Senator Murkowski on his National Energy Security Act, S. 388. In fact I am the fourth original cosponsor of his legislation, right behind the Majority Leader.
If you were to listen to the media, you'd think that Senator Murkowski's bill was just about oil drilling in ANWR. It's much more than that. This bill is a comprehensive package of proposals:
It includes general provisions to protect energy supply and security; it encourages clean coal technology - (allowing us to use our 250 year supply); it supports domestic oil and gas exploration; it promotes energy conservation and efficiency; it encourages alternative fuels and renewable energy supplies for homes, businesses and cars; it provides continued assistance under the Low Income Home Energy Assistance Program (LIHEAP).
It is my intention to examine the various environmental issues surrounding our energy policy in the Clean Air Subcommittee in order to prepare for action by the Senate on the Murkowski Energy Bill.
Today's hearing will begin with a broad perspective on America's energy and environmental issues followed by a closer look at utility related issues. Our next hearing will look more specifically at oil and-gas issues. We will then have hearings on Global Climate Change, Nuclear Issues, and Chairman Smith's Multi- Emissions Strategy.
This year, the Subcommittee will also conduct general oversight hearings on the Clean Air Act, Budget Oversight on the Office of Air and Radiation of the EPA and Wetlands Of lice of the Army Corps of Engineers, Indoor Air and a number of other issues. Needless to say, it will be a very busy year.
However, in today's hearing we are addressing the impact between our environmental and energy policies. As I indicated, I believe we are not only entering into a recession, but also an energy crisis; and our energy crisis will largely determine how deep of a recession, and how long it will last.
In my opinion, this energy crisis has several causes, all of which are important:
1) A lack of a national energy policy for almost thirty years.
2) A faulty deregulation law in California. Where deregulation has worked in other states, it has failed in California. As I said earlier, this has placed a drag on California's economy as well as the rest of America's - and they still have not dealt with their problem. California needs to take responsibility for its failed law because deregulation is working in other states.
3) Environmental policies which have contributed to a lack of fuel diversity and difficulties in siting new generation facilities, pipelines, and transmission lines. These policies have gotten much worse over the last 8 years, particularly with the previous Administration's "War On Fossil Fuel."
4) We are too reliant on foreign sources of oil. Just this past weekend, OPEC announced they are decreasing production by 1 million barrels per day - on top of the 1.5 million barrel per day
reduction we faced in January. If we do nothing to shake our dependence on foreign oil, we are going to be held hostage to unstable and/or unfriendly regimes in the Middle East for years to come. It should not sit well with the members of this subcommittee that while our troops are bombing Saddam Hussein, he is selling us oil.
5) The inappropriate demonizing of nuclear power. The U.S. energy industry uses it safely and other countries use it safely as well. The two things we must do is address the waste issue and what to do with it and move forward with building new reactors. We have been discussing what to do with the nuclear repository in Yucca Mountain for some 15 years. It's time to make a final decision on whether or not Yucca Mountain is a viable site for nuclear waste. Either it is the right place to store our nuclear waste, or we should move on.
With respect to fuel diversity, our current environmental laws have helped create greater dependence on cleaner-burning natural gas. Ninety percent of currently-planned new electric generation is from plants that will be natural gas-fired. Right now, there are 31 'peaking" plants planned in Ohio - plants which operate at peak times - and all of which would be natural gas-fired. The major problem with our growing reliance on natural gas is the fact that natural gas production is down. It has dropped 3.7% from the 4th quarter of 1999 and has driven the price of natural gas through the roof.
We need to determine the necessary changes in environmental laws for increased energy production. We need to look at the options that tend to get ignored because they are not "politically correct:" from clean coal technologies, to increased nuclear generation to new refining capacity. If we are unable or unwilling to do so, I believe that for the foreseeable future, we will only see more of the same of what is occurring in California right now, but on a nationwide scale.
As we begin today's hearing I would like to pose three questions for the panelists to consider:
Q. 1 To what extent has the Clean Air Act affected fuel choice and reduced fuel diversification?
Q. 2 To what extent has the Clean Air Act made it more difficult to site and operate energy facilities such as power plants, refineries, and E&P; facilities, transmission lines, and pipelines?
Q. 3 What is the appropriate method for harmonizing our nation's environmental laws with our energy needs? How can policy makers better reconcile the sometimes conflicting policy objectives?
I will indeed be curious to hear the answers put forth by today's panelists.
I thank the witnesses for appearing this morning, and I look forward to your testimonies.