Tomorrow, the energy committee will hold a hearing on energy independence. Senators will hear from four witnesses: 

The Honorable R. James Woolsey
Vice President
Booz Allen Hamilton
McLean, VA

Susan M. Cischke
Vice President, Environmental and Safety Engineering
Ford Motor Company
Dearborn, MI

Frank A. Verrastro
Director and Senior Fellow, Energy Program
Center for Strategic and International Studies
Washington, DC

Amory B. Lovins
Chief Executive Officer
Rocky Mountain Institute
Snowmass, CO

President Bush, in his State of the Union speech last month, announced a goal of reducing America’s reliance on Middle East oil 75 percent by 2025. Witnesses will be asked to testify regarding our nation’s goal of energy independence and the steps necessary to achieve that goal. In particular, the witnesses will talk about how United States can more efficiently use existing resources, how we can increase our access to domestic resources while protecting the environment and how we can use advanced technologies to create new sources of energy.

A President of the United States first stated energy independence as a national goal in 1973.  On October 6, 1973, Egyptian and Syrian forces carried out a surprise attack into the Sinai and Golan Heights setting off the Yom Kippur War.  The war lasted nearly three weeks as Arab forces attempted to secure control of areas lost to Israel in the 1967 Six-Days War.  Twelve days after the start of the Yom Kippur War, delegations of oil ministers from the Organization of Petroleum Exporting Countries (OPEC), met in Kuwait City.  At these meetings, the Arab oil ministers agreed to impose an oil embargo, cutting production by five percent from the previous month.  The ministers agreed that they would progressively cut supply over time, while maintaining supplies at prior levels to allied nations.  The nine members present also agreed to a secret strategy of subjecting the United States to the most severe cuts in supply.   Within months of the OPEC decision, retail gasoline prices had climbed an average of 40 percent.

Two weeks after OPEC imposed its oil embargo, President Richard Nixon proposed Project Independence stating, “Let us set as our national goal, in the spirit of Apollo with the determination of the Manhattan Project, that by the end of this decade we will have developed the potential to meet our own energy needs without depending on any foreign energy sources.” 

At the time of OPEC’s embargo decision in 1973, net imports accounted for approximately 28% of US demand.  According to the Energy Information Agency (EIA), net imports equaled 59% of US demand in 2005 and are estimated to be 60% in 2025.  In 2005, the United States obtained 41% of its total petroleum imports from OPEC countries, which equals 27% of total US consumption.  EIA estimates that in 2005, the United States imported 13.5 million barrels per day of petroleum and petroleum products and consumed approximately 25% of the crude petroleum consumed worldwide.  According to the EIA, U.S. petroleum consumption is projected to grow from 20.7 million barrels per day in 2005 to 26.1 million barrels per day in 2025.  World oil demand was 83.7 million barrels per day in 2005 and EIA projects that world demand will rise to 111 million barrels per day in 2025. 

Since President Nixon’s speech in 1973, successive administrations of both parties have advocated for the goal of American energy independence.  In his State of the Union speech on January 31, 2006, President George W. Bush stated, “By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past.”  As part of this speech, President Bush outlined the Advanced Energy Initiative, primarily a set of spending priorities with the stated goal of breaking our nation’s dependence on foreign sources of energy. 

Congress last year passed the Energy Policy Act of 2005, the nation’s first comprehensive energy bill in 13 years. The bill, signed into law on August 8,
sets forth a wide-ranging, long term energy policy that advances traditional forms of domestic energy production, alternative energy sources, more efficient use of our sources of energy and new energy technologies.  Congress, through the bill, advanced nuclear energy, clean coal, wind, solar and geothermal energy; expanded the production and use of renewable transportation fuels; strengthened our nation’s electrical infrastructure and put policies in place to encourage expansion of that infrastructure.

EPACT 05 also invests in alternative energies that can help reduce America’s reliance on Middle East oil. For example, the bill establishes a leasing program for research and development of technologies for the recovery of liquid fuels from oil shale and tar sands resources on public lands.

The bill directs that prospective lands within Colorado, Utah and Wyoming be made available for such research and development.  In Section 369, the section that establishes this program, Congress declares that, “United States oil shale, tar sands, and other unconventional fuels are strategically important domestic resources that should be developed to reduce the growing dependence of the United States on politically and economically unstable sources of foreign oil imports.”

Oil Shale is a type of non-conventional oil produced from shale yielding petroleum upon distillation.  The resource base of technically recoverable oil shale in the United States exceeds 800 billion barrels of potential supply.  At present, the US has 20 billion barrels of proved reserves of crude oil. 

The Secretary of the Interior has since requested applications for these leases and a panel of Federal and State officials received twenty proposals, eight of which have been deemed viable by the Secretary.  Six of the proposals are in Colorado and two are in Utah. Pursuant to section 369 (d), the next step in the process is the performance of a programmatic environmental impact statement.  There are currently two methods of extracting oil shale: surface mining and in-situ.  Shell Exploration and Production has been developing a new method of in-situ which uses an electrical heating element lowered into a well.  Six of the proposals before the Department of the Interior are in-situ, which does not permanently modify the land surface, while two proposals involve mining.

While there are economic, technological and environmental challenges that face the commercial development of oil shale, the US resource base of oil shale makes it an extremely important priority in the goal of working toward energy independence.  The Department of Energy contends that commercializing oil shale is akin to the mission of the Strategic Petroleum Reserve, by adding to our nation’s energy security.  Commercialization of the US resource base is often compared to the addition of Alberta’s tar sands to Canada’s reserves.  Today, oil produced from tar sand exceeds one million barrels per day.  The Department of Energy estimates that oil shale in the US could similarly be developed and be a critical component in reducing our reliance on foreign energy sources and thus strengthening our energy security.

EPACT 05 also expands the U.S. investment in new energies. The bill authorizes the Hydrogen and Fuel Cell Program. This program includes critical public investments necessary to enable private industry, universities, national laboratories and research institutions to build a mature hydrogen economy.  The purposes of the program are to sharply decrease the dependence of the United States on imported oil, to eliminate most emissions from the transportation sector, and greatly enhance our energy security.  The following represents the authorizations through Fiscal Year 2013:

•           $185 million for FY06
•           $200 million for FY07
•           $250 million for FY08
•           $300 million for FY09
•           $375 million for FY10
•           and such sums as necessary for FY11-FY13.

EPACT 05 also authorizes the Agricultural Biomass R&D Program.  This program will develop transportation fuels based on biomass, including new sources of biomass for transportation applications, and increased efficiency of conversion of biomass to bio-based fuels.  The objectives of the program are to develop the technologies necessary for abundant commercial production of bio-based fuels at prices competitive with fossil fuels.  The program will include developing substitutes for petroleum-based fuel stocks and products, while ensuring a diversity of sustainable domestic sources of biomass.  The law authorizes $254 million annually for this work for the years FY06 through FY2015.

EPACT 05 also creates the Production Incentives for Cellulosic Biofuels program. This program will accelerate deployment and commercialization of biofuels, with a goal of delivering the first one million gallons in annual cellulosic biofuels production by 2015, and to ensure that biofuels delivered after 2015 are cost competitive with gasoline and diesel fuel.  The act authorizes $250 million for the incentives program.

In addition to the energy bill, the committee is pursuing legislation this year aimed at reducing America’ dependence on Middle East oil. The committee Wednesday will mark-up a S. 2253, a bill that opens parts of Lease Sale 181 for oil and gas development. Senators Domenici, Bingaman, Talent and Dorgan introduced S. 2253 last month. To date, nineteen members of the Senate have cosponsored the bill.

S. 2253 directs the Secretary of the Interior to offer for oil and gas leasing an area within the Original Sale 181 Area as soon as practicable but not later than one year after the date of enactment of this Act.  The area to be offered for sale under S. 2253 is at least 100 miles from any point on the Florida coastline. The area is not under congressional moratorium or Presidential withdrawal.  Also excluded from oil and gas leasing under S. 2253 is any portion of the Original Sale 181 Area that is east of 86 degrees 41 minutes longitude (the “Military Mission Line”) unless the Secretary of Defense agrees in writing before the area is offered for lease that the area can be developed in a manner that will not interfere with military activities. 

In its most recent resource assessment on the OCS, MMS noted, “The OCS remains a significant potential domestic source of new natural gas resources from fields yet to be discovered.”  The MMS estimate for undiscovered technically recoverable gas resources on the OCS increased 16 percent when comparing the 2006 assessment with the 2001 assessment, and the volume of undiscovered oil resources increased 15 percent over that same time period.

According to recent mean estimates from MMS, there are 930 million barrels of undiscovered recoverable oil and 6.03 trillion cubic feet of undiscovered recoverable natural gas in the entire 3.6 million acre area covered by S. 2253.  In the 700,000 acres east of the Military Mission Line (available for leasing under S. 2253 only with the approval of the Secretary of Defense), MMS estimates that there are 1.17 trillion cubic feet of undiscovered, recoverable natural gas and 130 million barrels of undiscovered recoverable oil.
           
At approximately 19 million acres, the Arctic National Wildlife Refuge (ANWR) is one of the largest refuges in the country and is roughly the size of South Carolina.  The North Slope of Alaska, including portions of ANWR, has long been recognized as an excellent potential for large oil and gas reserves.  The most notable success came in 1968 with the discovery of oil and gas at Prudhoe Bay.  Located less than 50 miles west of ANWR on lands owned by the State of Alaska, Prudhoe Bay has proven to be the largest oil and gas field in North America.  When oil was first discovered, recoverable reserves were estimated at 9.6 billion barrels.  To date, the area has produced 14 billion barrels of oil and is still producing.  Current North Slope production is 908,000 barrels per day – approximately 17% of the total U.S. domestic crude oil production.  At its peak in 1988, production exceeded 2 million barrels per day. 

According to the Department of the Interior, ANWR’s 1.5 million Coastal Plain has the potential to be the greatest onshore untapped reserve in the United States and an opportunity to increase significantly domestic oil production.  Last fall, the United States Geological Survey (USGS) estimated that there are between 15.6 billion and 42.3 billion barrels of oil in the entire assessment area, including federal, state, and private lands.  Of that, between 5.7 billion and 16 billion barrels in the Coastal Plain are considered technically recoverable oil, with a mean estimate of 10.4 billion barrels.  The area is also estimated to contain up to 10 trillion cubic feet of natural gas.

The United States currently imports approximately 1.5 million barrels a day from Saudi Arabia.  Once developed, the Coastal Plain could produce about 900,000 – 1 million barrels of oil a day.  Such development would increase domestic reserves significantly, thus reducing our nation’s vulnerability to disruptions in the world oil market and contributing to the country’s security.

On January 25, 2006 Senators Domenici, Bingaman, Alexander and Mikulski introduced S. 2197, Protecting America’s Competitive Edge (PACE).  The PACE bill is currently co-sponsored by sixty-four members of the Senate.  This bill is aimed at improving our global competitiveness in science, mathematics and technology.  Among many other important provisions, this bill provides new research opportunities for scientists and engineers by strengthening research programs at the Department of Energy and creating a new agency for transformational energy research.  The PACE bill will be instrumental in helping to make the technological breakthroughs that help strengthen America’s energy security.

In the shadow of the 1973 oil embargo, Congress passed the Energy Policy Conservation Act of 1975 (EPCA).  EPCA established corporate average fuel economy (CAFE) standards for passenger cars and light trucks with a gross vehicle weight rating of 8,500 pounds or less manufactured for sale in the United States.  Vehicles which exceed this gross vehicle weight, thus exempt from CAFE, include pickup trucks, sport utility vehicles and large vans.  The purpose of CAFE standards is to reduce energy consumption by increasing the fuel economy of cars and light trucks.  CAFE standards apply to manufacturers on a fleet-wide basis.  Currently, the penalty for failure to meet CAFE is $5.50 per tenth of a mile per gallon under the target value times the total volume of those vehicles manufactured in a given model year.  The National Highway Traffic Safety Administration, within the US Department of Transportation, sets the fuel economy standards for cars and light trucks sold in the United States and the Environmental Protection Agency calculates the average fuel economy for each manufacturer.

In establishing CAFE standards, Congress set a near-term goal of doubling new car fuel economy by model year 1985 setting standards until that time.  For the post-1985 period, Congress provided for the continued application of the 27.5 miles per gallon standard, leaving the Department of Transportation with the authority to make adjustments.  The CAFE standard for passenger cars has remained at this level.  EPCA specified that the Department of Transportation should set CAFE standards at the “maximum feasible level”, taking into account technological feasibility, economic practicability, the effect of other standards on fuel economy and the need of the nation to conserve energy.  For light trucks, Congress did not specify a target and did not set a default standard.  In 2003, the Department of Transportation set CAFE standards for model years 2005, 2006 and 2007 at 21.0, 21.6 and 22.2 mpg respectively.

On August 23, 2005, Secretary of Transportation Norm Mineta proposed a new fuel economy plan for light trucks.  The plan would impact the kinds of vehicles that make up over half of the US fleet today, beginning in model year 2011.  Secretary Mineta estimated that the plan will save 10 billion gallons of gasoline in the future, setting six categories sized for light trucks beginning in 2011.  The Department of Transportation intends to issue final rules next month.

The debate on CAFE standards and whether they should be raised and applied to additional vehicles on the road continues to take place in the Congress and the public at large.  Issues considered in this debate include the effects of these standards on: gasoline consumption, transportation safety, the environment, and the national economy.  The debate over increased CAFE standards will only intensify as we look at ways to reduce our energy consumption and our dependence on foreign sources of oil.

The emergence of mass production of hybrid electric vehicles and flexible fuel vehicles has focused American and foreign motor companies on producing vehicles with improved fuel economy and lower emissions.  In 1999, Toyota Motor Corporation and General Motors Corporation entered into an agreement for a joint fuel cell development project.  Toyota President Katsuaki Watanabe remains non-committal regarding the progress of the world’s largest carmakers on this fuel cell project.  Fuel cell vehicle technology provides what many think is the long-term potential future for an emission-free, petroleum-free vehicle and light truck fleet.  Within the Department of Energy, the FreedomCAR and Vehicle Technologies Program operates through public-private partnerships with the goal of enhancing energy efficiency and productivity.  The program works toward bringing clean, reliable, and affordable energy technologies to the market.  FreedomCAR and Vehicle Technologies Program works with industry in advancing development of advanced transportation technologies to achieve greater fuel efficiency and move toward displacing oil. 
           
During the past decade, the mass production of the Honda Insight and Toyota Prius brought automotive hybrid technology to the attention and driveways of the American public.  Last year, the Ford Escape Hybrid became the first sport utility hybrid vehicle on the market and in 2006 Lexus has released the first luxury sedan hybrid and a sport utility hybrid model.  The hybrid vehicle uses gasoline to power the internal-combustion engine and electric batteries to power electric motors. 

In addition to hybrid technology, American and foreign motor companies are producing Flexible Fuel Vehicles that can function on conventional gasoline, ethanol or a combination of the two.  Flexible Fuel Vehicles run on E85, a blend of 86% ethanol and 15% gasoline.  E10, a blend of 10% ethanol, 90% gasoline can be used in any make or model of vehicle.  Though, in America, ethanol is primarily made from corn, it can be made from virtually any starch feedstock such as sugar cane, wheat or barley.  New technology has allowed us to make ethanol from cellulosic sources, including corn stover, grain straw, and switchgrass.  These advancements in new technologies provide hope for a future of reduced reliance on foreign oil.