Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 10:00 AM

Senator Pete V. Domenici

Opening Statement

Winter Fuels Outlook Hearing

October 18th, 2005


At the Hurricane Recovery Hearing on October 6th, I said that we need to have realistic expectations about how long we should expect high energy prices and we need to prepare for potential shortages.

The purpose of today’s hearing is to provide a foundation for this winter’s fuel cost expectations and to prepare us for what could be a very challenging winter. 

The impact to residential heating bills this coming winter is anticipated to be severe. 

Home heating costs are expected to be well above last year's levels, the result of a tight supply-demand balance exacerbated by Hurricanes Rita and Katrina.

The energy industry has made valiant efforts to recover from the storms, but we must realize that the depth of the disaster caused by the two Hurricanes may take years to recover from fully. 

We were far from a strong energy situation when those storms hit us.  That precarious state of energy has been a dark cloud over the economy and national security for years. 

The Bipartisan Energy Bill was a long-term plan to address those energy challenges.  It is a good bill that will increase energy security through R&D, regulatory certainty and resource diversification.

We will be in a better place 4 years from now thanks to that bill. 

I believe that if we had passed it 4 years ago as the President requested, we might not be in as dire straits as we find ourselves in today.

Hurricanes Katrina and Rita have exposed an energy vulnerability that will be particularly evident this winter. 

Access to supply and ability to move supply has been seriously compromised. 

If we have a severely cold winter, we could find ourselves facing shortages of natural gas, heating oil and other products.

A majority of the United States’ 110 million households are heated by natural gas. 

EIA predicts that homes heated by natural gas can expect to see on average 48% increase -- roughly $350 more than in their 2004-05 winter fuel bill.  If the weather is colder than expected, these natural gas heating expenditures could rise 67% - roughly $500.

Many people have been focusing on higher gasoline prices and I am worried about those too, but the price of natural gas – particularly this winter – is one of the most distressful energy challenges we face in the near and long term.

In the U.S., natural gas prices are close to $14.  In China, it’s less than $5.  In Saudi Arabia, it’s about $1. 

If we translated gasoline prices to the level of increases faced by natural gas – we would be seeing $7.00 a gallon gasoline at the pump right now. 

When we drive up to a gas station we can brace ourselves for the high prices we see displayed on the station signs, but winter fuel costs could be real price shockers to consumers across the nation when they open their monthly bills.

My goal for this hearing is to make more people aware of the potential winter high price crisis and consider recommendations our witnesses will offer to deal with the winter forecast. 

I expect the witnesses today to emphasize the importance of conservation. 

According to the American Chemistry Council, if every American turns down their thermostat just 2 degrees this winter, it could free up 3 billion cubic feet of gas per day.  That is the equivalent of the output we could get from 3 LNG terminals. 

Other conservation steps that Americans need to consider are things like lowering the thermostat on your gas hot water heater to 120 degrees.  According to API’s Use Energy Wisely web site that can save consumers up to $45 per year.

Conservation will be an important tool to help us get through the winter as well as a good habit to form in the future, but conservation alone will not solve the crisis. 

As I have expressed many times before, I believe that this country must make the best use of all its natural resources without ever failing to protect both the environment and the economy. 

Tomorrow this Committee will report Reconciliation language to the Budget Committee.  That represents a step towards bringing more domestic oil from ANWR to U.S. consumers. 

Although off-shore resources like Lease 181 will not be part of the Reconciliation, I am committed to finding a way to bring those resources to the American public. 

In the area on the Outer Continental Shelf known as the non-leased portions of Lease Sale 181 which is not under moratorium, but in which we are not allowing leasing, there is approximately 7.2 trillion cubic feet of gas.  In the areas more than 100 miles from any state coastline, resources are estimated to be approximately 6 trillion cubic feet of gas.  According to API, 1 trillion cubic feet will heat one million homes for 15 years.

I hope that Lease 181 will be dealt with by the President or Congress in the near future.  The benefits that more natural gas from Lease 181 can provide cannot be ignored while we struggle through a potentially crippling energy crisis.

I thank the witnesses for being here today.