Cornyn To Energy Secretary:

Administration’s Energy Policies Are Hindering American Jobs & Domestic Energy Production;

Rising Gas Prices & Mideast Unrest Require A Plan

WASHINGTON—Today, during a Senate Budget Committee hearing, U.S. Sen. John Cornyn, R-Texas, questioned U.S. Department of Energy Secretary Steven Chu on the Obama Administration’s policies hindering American jobs and domestic energy production. He pressed the Secretary to admit that the transition from fossil fuels to alternative sources will not happen overnight and we must tap into domestic fossil fuels to reduce our energy dependence on unstable foreign nations. Below are a few excerpts and a link to video footage of the exchange:

(click the image to view video)

Transition from fossil fuels to alternative sources will not happen overnight.

Senator Cornyn:

How long will it take us to get from a situation where 83% of our energy supply is fossil fuels to a situation where, let’s just say, half of our energy supply will come from fossil fuels? Are we talking about a one year, five year, ten year, twenty year—what  time table are we looking at?

Secretary Chu:

“Probably not going to be five years, but then beyond that I think a lot of things will kick in. I think in 4 or 5 years, I think there is a reasonably good shot a million cars, electric vehicles, but that’s just scratching the surface. Because there is about 8 million vehicles being sold now in the United States a year. It would really depend on what happens in battery development, as mentioned before...”

Senator Cornyn:

“..Of course a lot of our electricity is generated by the fossil fuels… we can’t imagine a fantasy world where all of a sudden we’re going to be driving plug in cars and we won’t need fossil fuels from some source, correct?”

Secretary Chu:

“I absolutely agree with you…Fossil fuel will have to be a very important part of the next half century.”

The Administration must answer to the average consumer paying $3.38 a gallon – why do they continue to put in place harmful policies that hinder U.S. jobs and domestic energy production?

Senator Cornyn:

“What does that do to the average consumer that’s now paying 3 dollars and 38 cents for a gallon of gasoline? And with a geo-political unrest that we’re seeing in the Middle East and elsewhere, if the Suez Canal was blockaded, if the imports from the countries the chairman mentioned were to occur because of the disruption there, isn’t there a very real danger of gasoline prices sky-rocketing for the average consumer, and what would that do for our fragile economic recovery?”

Secretary Chu:

“Well we are certainly very concerned about what will be happening to the gasoline prices in the near term, but what we have to keep in perspective, the fact that currently the United States consumes about 25% of the oil produced in the world, and we have about 2 or 3 percent of the known reserves in the world, and if you further consider the fact that within our territories we’ve scoured that much more than the rest of the world. Going into the future, those newer reserves, that fraction will be less. While I do support an integrated plan which includes production of oil and gas, we can’t simply say we can end our dependency on foreign oil by simply drilling our way out of the problem given those numbers, 25% and 2/3%.”

Senator Cornyn:

Well nobody’s suggesting that we just drill our way out of the problem. I think we all agree we need a plan—really, what I would like to see is a plan that deals with every element of our energy sources here, and particularly domestic.

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Senator Cornyn: …Mr. Secretary, thank you for being here, and thank you for your service. You have had a distinguished career—continue to have a distinguished career—but I want to ask you about the transition to this green energy future that  you’ve described which all of us, I believe, support from the standpoint of alternative sources of energy, and reducing our dependence on imported energy, and hopefully increasing our dependence on cleaner energy. How is it—well, let me just ask this question: Currently the US energy supply is about 83% fossil fuels and the figure I have is that about 51% of our oil and gas that we consume in America we’re importing from foreign sources. How long will it take us to get from a situation where 83% of our energy supply is fossil fuels to a situation where, let’s just say, half of our energy supply will come from fossil fuels? Are we talking about a one year, five year, ten year, twenty year—what  time table are we looking at?

Sec. Chu: Well, it’s not going to be one year—

Senator Cornyn: It’s not going to be five years either—

Sec. Chu: Probably not going to be five years, but then beyond that I think a lot of things will kick in. I think in 4 or 5 years, I think there is a reasonably good shot a million cars, electric vehicles, but that’s just scratching the surface. Because there is about 8 million vehicles being sold now in the United States a year. It would really depend on what happens in battery development, as mentioned before. For the first time in my career—I’ve been looking at this for a while, and before when I was at Lawrence-Berkley Lab I was in the scientific board of a new innovative battery company, so I know a little bit about this—but for the first time in the last three years I’m seeing things that are saying, well you know, this is going to happen.

Senator Cornyn: Well, I hope you’re right, but of course a lot of our electricity is generated by the fossil fuels. The coal, or natural gas, and we can’t say we can’t imagine a fantasy world where all of a sudden we’re going to be driving plug in cars and we won’t need fossil fuels from some source, correct?

Sec. Chu: I absolutely agree with you. For the coming decades fossil fuel will have to be a very important part of the next half century, and pressing on it’s going to have to be a very important part of what we do.

Senator Cornyn: So Here’s my question: How is it recognizing that we will continue to be dependent on fossil fuels for the near term, and mid-term, how does it reduce our dependency on imported energy to raise taxes to the tune of 46 billion dollars on our domestic energy producers? Which the President’s budget proposes, which this budget proposes.

Sec. Chu: I think the President was calling for an ending of certain tax subsidies on fossil fuels that had its origination in the beginning part of the 20^th Century—

Senator Cornyn:  But you agree with me, however you want to characterize it, will increase costs of production for domestic producers, correct?

Sec. Chu: It will be, I believe, a very small part of the total cost of producing oil in the United States.

Senator Cornyn: Well I think in conjunction with the policies of the administration with regard to the Gulf of Mexico, which has been a job killer in our part of the world—in Texas, and Alabama, and the Gulf of Mexico—and reduce revenue to the federal government in royalties from that production, and has made us more dependent on imported energy from abroad. I worry that along with the additional tax burden that an industry that employ’s 9.2 million people in America right now, by adding 46 billion dollars in additional taxes over the next ten years by the “permit-torium” we’ve seen in the Gulf of Mexico—now  the moratorium is gone away, but the difficulty of getting permits—and  this vision of a green energy future that may occur 10, 20 years out, but it won’t occur next year. What does that do to the average consumer that’s now paying 3 dollars and 38 cents for a gallon of gasoline? And with a geo-political unrest that we’re seeing in the Middle East and elsewhere, if the Suez Canal was blockaded, if the imports from the countries the chairman mentioned were to occur because of the disruption there, isn’t there a very real danger of gasoline prices sky-rocketing for the average consumer, and what would that do for our fragile economic recovery?

Sec. Chu: Well we are certainly very concerned about what will be happening to the gasoline prices in the near term, but what we have to keep in perspective, the fact that currently the United States consumes about 25% of the oil produced in the world, and we have about 2 or 3 percent of the known reserves in the world, and if you further consider the fact that within our territories we’ve scoured that much more than the rest of the world. Going into the future, those newer reserves, that fraction will be less. While I do support an integrated plan which includes production of oil and gas, we can’t simply say we can end our dependency on foreign oil by simply drilling our way out of the problem given those numbers, 25% and 2/3%.

Senator Cornyn: Well nobody’s suggesting that we just drill our way out of the problem. I think we all agree we need a plan—really, what I would like to see is a plan that deals with every element of our energy sources here, and particularly domestic. You’ve expressed great hope and optimism about research and development in electric batteries and other alternative sources of clean energy and I share that hope and I really do hope we develop altnerantive sources b/c I think it is going to take all the above to get us there but you also would acknowledge that we have seen a tremendous fourteen fold increase in the amount of natural gas reserves produced here in the united states b/c of the development of new drilling technology and the fracking techniques that you alluded to earlier. So isn’t that an area that we also ought to continue research and development to see if there are ways we can gain access to domestic energy sources rather than ignore that altogether and put all of our eggs into the basket of something being deployed 10 or 20 years in the future?

Sec. Chu: We are certainly not ignoring that and it is a wonderful thing that the development of the technologies that allow us to frack shale rock to release natural gas…I am certainly looking at what the projected increase in reserves are, I hear estimates all over the map, the EI estimate is much less than that. but that’s neither here nor there…I think as we go forward in time and as the extraction methods get better and safer and all those things I think those estimates will grow, I am not sure it’s going to be 14 times, but it’s a good thing that’s happening b/c this is energy produced in our borders and its’ a cleaner form of energy and gas will be a transition fuel that we will need in the coming decades.

Senator Cornyn: Mr Chairman, Thank you for your indulgence and I would just add that this is jobs here in America.