“Thank you all for being here today.  This is an oversight hearing on the U.S. and global energy market outlook for 2012.  As many of you know, we often start the year by holding a broad overview hearing such as this. 

“Obviously, a lot has happened since our discussion of this topic last year.  Many countries in the Middle East and North Africa, the key oil-producing region of the world, experienced popular uprisings that resulted in new governments taking seat, in what is now referred to as the ‘Arab Spring’ of 2011.  As a result, Libya, an important OPEC member and exporter to Europe, spent much of 2011 with oil production and exports near zero. 

“With Libyan production and exports now mostly totally restored, our focus on that region of the world has a new complexity because of multi-lateral sanctions against Iran, which also is one of the world’s largest oil-exporting nations.  Although the U.S. has sanctioned Iran since the 1980s, and has not imported any Iranian oil since that time, Iran remains an important source of Asian and European oil imports.  So as Europe now works to implement its own sanctions against Iran, we can anticipate some dislocation in crude oil flows as the world adjusts to this new situation.

“These geopolitical uncertainties serve as a reminder that oil markets, and to be more specific, oil prices, are a very important factor in our country’s economic security.  That’s why it is so important to fully understand the connection between U.S. and global oil markets.

“The oil market outlook in the U.S. is brighter than we would have thought possible, even a few short years ago.  Our oil production is up, our production of alternative liquid fuels is up by about the same amount, and our reliance on imported petroleum is down.  At the same time, our cars and trucks are using that oil more efficiently than before.  The United States has successfully reversed what seemed to be an inevitable trend of becoming ever more dependent on imported oil.  This is an accomplishment we can all be grateful for.

“However, it is important to note that in part because of this enhanced U.S. security, we, the United States, are no longer the primary driver behind the world oil markets and prices.  As our oil production has gone up in the past few years, oil prices have gone up as well.  The U.S. became a net exporter of refined products in recent months; yet consumers are still paying higher prices at the pump.

“That’s why I hope we will use today’s discussion to understand broad energy trends in both the U.S. and around the world.  My view is we need to understand not only how to make the U.S. less vulnerable to oil disruptions, but understand what events and actions actually affect world oil prices.

“We have a panel of four expert witnesses before us today that can help us understand the inter-related markets for oil, and for all energy sources.

“We start today’s discussion with Dr. Howard Gruenspecht, the acting administrator of the Department of Energy’s Energy Information Administration, and he will share highlights of EIA’s latest short- and long-term energy market forecasts.  This committee is a heavy consumer of EIA products.  We always appreciate having EIA share its data and analysis with us.  I note that President Obama has nominated an impressive candidate, Adam Sieminski, to become the next administrator of the EIA.  In the meantime, we very much appreciate Dr. Gruenspecht for being here to present the EIA’s position.

“Then we’ll hear from Ambassador Jones, the deputy director of the International Energy Agency, in Paris.  We look forward to discussing the IEA’s forecast of total world energy supply and demand through 2035.  I also note that the IEA was founded as a forum for responding to oil supply disruptions, and still has an important role to play in that capacity.  Given the current geopolitical environment, we are especially grateful to be able to have Ambassador Jones’s expertise here today.

“We are also pleased to have with us two leading energy analysts, both of have been before our Committee, having testified before the Committee on several occasions.  Both Mr. Diwan and Mr. Burkhard can offer their own thoughts and insights on where energy markets are headed, and they also each have considerable expertise in the geopolitics of oil.”

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