Hearings and Business Meetings
February 16, 2006
SD-366 Energy Committee Hearing Room 10:00 AM
Senator Pete V. Domenici
S. 2253 -- 181 HEARING
Chairman Domenici -- Opening Statement
Good Morning and Welcome.
In today’s hearing we will discuss S. 2253, a bill to direct the Interior Secretary to offer areas within the 181 Area for oil and gas leasing. Yesterday, in his first congressional testimony since assuming the position of Federal Reserve Chairman, Ben Bernanke stated that while the US economy “performed impressively” in 2005, rising energy costs present an economic risk. The Chairman stated that, “The possibility of significant further increases in energy prices represents an additional risk to the economy; besides affecting inflation, such increases might hurt consumer confidence and thereby reduce spending on non-energy goods and services.”
I view this as a serious warning from the chairman of our nation’s monetary policy. We will likely hear these same warnings today from the agricultural community as we have in the past from the chemical industry, manufacturers, the paper industry, residential consumers and scores of other Americans and representatives of almost every sector of our economy.
What will history say about this nation’s policy makers when people look back on our time? On February 15, 2000, the price of natural gas closed at $2.61 per million btu. At the close yesterday, six years later, the price of natural gas in the U.S. was $7.32¬. Over that six year period, America’s natural gas bill has risen from $50 billion to $200 billion. That is $150 billion less that the American people have to spend, save and invest. And it serves as an additional burden on the businesses that drive this nation’s economy. This burden acts as a tax on the American people and only serves to stymie growth.
Last week, across the world in the midst of the frigid Russian winter, the price of natural gas was at about $1.25 per million btu and, in Oman where the government of the Sultanate has entered a joint venture in a petrochemical plant with an American chemical company, the price of natural gas is approximately $1. In today’s global economy our failure to act is setting us up to get left behind. So, what will history say about us when we are presented with all this testimony from our business leaders, from the Chairman of our nation’s central bank, and from our residential consumers? What will they say if we are too timid to act? What does it say about us when we let the misplaced fear of others, against all evidence to the contrary, get in the way of reasonable proposals that will bring much needed energy to the American people? What will we tell the folks in our home states who bear the burden of these costs in their winter bills? What will we say when they ask what we did to remedy this glaring problem?
I will try my best with this 181 bill. I, along with Senators Bingaman, Talent and Dorgan have offered a bipartisan plan to add an additional supply of natural gas to help alleviate the cost to consumers. We are told that this is the single most important thing that this Congress can do this year to bring a substantial supply of natural gas to the market. We are told that this should impact the price of the commodity in the market in the near term. While it is likely that production can be brought on within two years from the date of a lease sale, it is also likely that action on this bill will send a positive signal to the markets. The message will be that we are serious about taking action to increase the domestic supply of natural gas and to reduce the cost of energy. Remember, markets work on supply and demand, but they also operate on information, and on anticipated supply and demand.
Opponents of our plan have concerns about the Florida coast. I have said it in the past and I will say it again-- I would never do anything to hurt Florida, and I don’t think President Clinton, Secretary Babbitt and Governor Chiles would have done anything to hurt Florida either. They negotiated drilling in an agreed upon territory that is larger than the area in our bill and closer to Florida’s coast than the area covered under this Domenici-Bingaman Bill. And they negotiated in a price environment of $20 oil and $2.50 gas. Our 181 bill provides that the Secretary shall not offer leases within 100 miles of the Florida coast. The State of Delaware is 100 miles long and 30 miles wide. There is nothing minimal about the 100 mile area exclusion provided in this bill.
Also, in this bill, we protect the prerogative of our nation’s military to conduct activities in the Eastern Gulf of Mexico. Pursuant to a letter written by Secretary Rumsfeld in November 2005, we have stated in this bill that there shall be no leasing in the area east of the Military Mission Line that is within the 181 Area unless the Secretary of Defense agrees in writing that the lease does not interfere with military activities. This is clear in the bill and the seriousness with which we take the military’s request is not in dispute.
Today we have a broad range of witnesses who will testify about current state of energy costs in the United States and the effect on residential and industrial consumers; the level of industry interest in exploring and producing oil and gas in the area covered by this 181 bill; potential environmental challenges and impacts from exploration and production in the area; the potential resource base in the area covered by this legislation; the likely schedule for bringing these resources to market; and the possible effect that this additional supply of oil and natural gas will have on the price of these commodities. They are here at a critical time for our nation’s energy policy and we should listen to what they have to say.