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tv   Key Capitol Hill Hearings  CSPAN  October 17, 2013 10:00am-12:01pm EDT

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old facilities and roads as well as some vandalism. >> thank you. i heard you mention or some of the testimony that you are not able to receive funding, you have to have special m o as. >> we can receive private funding but through agreements. >> they have to be reestablished. >> no. there's private funding flowing through some of the state's to the national park service to reopen. >> but not all of them are party to this. >> all of? >> the state. >> so far we only have six states that signed agreements. >> are you preparing them to bring the other states on line should something, and as you heard there may be other sequesters in the future, to be prepared, to protect those private lands? >> we have a template that works
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efficiently and we are in negotiations, we signed tennessee today, we have missouri, virginia, maryland, a number of other states that are in discussions with us about entering these agreements. >> i yield to mr defazio. >> on a point made earlier about the governor of california having to use scant state funds to reopen yosemite made by california members, there is no guarantee that any of this money will be paid back, none, zero. i would say and republican rules paying back and individual states would constitute an earmark which means you would have to waive the rules of the house to do it but would try to pass a bill to extract this out of the park service, and i and the stand why governors are
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being cautious. >> i thank the gentleman. i might knows that tradition would say you are wrong, they will all be prepared. >> would you yield for a second? that was before you adopted this extraordinary earmarked rule which is problematic. >> thank you, mr. chairman. thank you for your service. i know how hard it is. i want to bring up the specific point that your folks are working on, dan kimball is director of everglades national park, he is working with our local folks to reopen the park. we have 250 guides that require very little from the park. they pay a license every year to work out of the park and not only has an impact on them and their families but has an impact
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on the hotels and restaurants in the area and so i would ask with your very limited staff, this is not your fault but with the inability of the other side to provide any real leadership here, i commend you for your leadership and i commend dan kimball and his service but i ask you as you look at opening up, this is one of those areas where it will not cost you as much as opening up and getting it done these folks require very little of you and they do a great service to monroe county and the florida piece. i want to ask you, what do you think the cost has been to the park service? you have answered this question in a few different ways but if you will indulge me and tell me what the cost has been thus far? >> i really don't have a figure. you mean cost in terms of how
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much we have peer radically expanded during the closure period? >> how much you expanded and failed to collect. >> in terms of failure to collect, we are losing $450,000 per day of income. that would be non appropriated dollars, fees from camping, insurance fees and the like, franchise fees, all of that. we are losing $450,000 per day. >> lisa simon has given some estimates peer. i would love to hear you sort of recap it for me as a freshman, takes a long time for the gavel to get to me so i would like to ask you what this has cost our country and in particular your industry. >> thank you for the question. in the first week of the shutdown our two operators reported $114 million in losses just for the first week.
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we know in the last 16 days that has dramatically increased and we project long-term impacts based on future business that has already cancelled or postponed, we know that does not include the estimated financial losses from the cities and destinations and suppliers that belong to our association as well and we also believe the long-term impact will have an affect on international visitation to the united states, national parks are a huge draw for international markets and we believe that it is going to be difficult for international visitors to regain the confidence of coming back to the united states. they don't understand it. they are having to try to understand, try to explain to international visitors why the parts are closed. >> if i can just, if you could indulge me could you tell me what exactly you tell your international visitors or what
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you would counsel your association members to tell those international visitors the don't understand? >> that is a very good question. we have not been -- what we have done is to try to find alternative activities which include state parks we have for the country as well. >> thank you for being here. to whatever degree some of you have been blamed for some hours in your fast government conspiracy to shutdown parks are want to thank you for your service to our country, your service in trying to preserve america's great treasures and with a little bit of luck we will have figured out our way through this but thank you very much. i yield back the balance of my time. >> the gentleman yields back and i think the gentlelady from
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south dakota for patients a yield five minutes. >> i appreciate the opportunity. and my colleagues allowing me to ask a few questions here today. i want to ask a clarification on an answer you gave to a previous question. when discussing the monuments on the mall you talk about barricading them because of protection of property, that was the purpose for barricading them. was that correct? >> that is correct. >> i assumed was protection of individuals that may go on to that property or for liability reasons but your number one objective was to protect the property that was there. >> my responsibilities to protect the monuments and memorials. >> i am from south dakota. we have mount rushmore in our state. it is a mountain that has been carved, it is viewable by state highways, goes up the mountain and around the mountain and you can go into the national park
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and view it from there up close and personal and enjoy the opportunity to go so, have you visited mount rushmore before? >> yes i have. we had one family that drove to south dakota, got to south dakota and found they could not access mount rushmore, or view it. review aware of that? >> i was aware of the park was closed. i was unaware of the pacific set the local site. >> who made the decision to block the state highway to access, not necessarily getting to the viewing area of the actual park. and part of the mountain got this far. >> those decisions were made at the local level, where to close, which erodes to close.
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>> a family that drove that far found themselves not able to the amount rushmore and we got hit with the blizzard. this hit south dakota, five feet of snow. and we have to visit south dakota. and not necessarily sure what happened to them. and when everyone was digging out many buildings caved in, tens of thousands of livestock, and anybody's lifetime. the economic impact would be huge trees. the very next 80 park officials putting those cones back along this one, five feet of snow, i would like to know if you think that would be there that
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morning. >> i could not, i don't set local priorities like that. >> i got people around that area steamed because they were extremely upset that here they had lost their businesses, lost their livestock, they couldn't access their homes, they were trying to dig out and protect people and the park service was mainly concerned with going out and pleasing cones that didn't allow them to view what they see as partly their monument as well from a far. it was very disturbing to them. from that point do you believe it was appropriate to take that type of action at that point in time? >> i can't comment on local issues like that. i have no knowledge of which roads or any of that, i don't have that local information. >> i know very soon after october 1st the state made the request to the park service to run the monuments themselves and to incur the cost themselves and they were told that was not
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going to be allowed at that point. the state of south dakota has requested it and that agreement has been made so it is open and operating today. what is interesting is the way south dakota approached it, our governors call the businesses and asked if they would sponsor a day at mount rushmore. it made me so proud. businesses lined up to fund mount rushmore for a day because they recognize it was such a treasure and so special they would do that. is not taking taxpayer dollars, separate organizations are funded get for the day which was a wonderful way to get through this type of situation that has been so hard for me. i wish we could have done it from the beginning because many families were turned away at the gate. when they pulled over to take pictures or tried to created more allied of the issue because they were parked in the middle of the highway because they couldn't get in the pull off. i understand that the pull offs are gravel, derek, stones. i don't know what prop. we are trying to protect by blocking
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people from pulling over. do you know what property we're trying to protect? >> i can't speak to local pull off information. i am sorry. >> they have been removed because someone decided it was important that somebody not get killed on that mountain and pull their vehicle over if a rich going to and get on to a pullout. those cones are gone now because of the safety of the individuals that are there. i don't believe that people's safety has been a priority in this situation. i don't believe it was properly tried to be protected because frankly there was no property that was going to be damaged. i believe it was punitive. i am upset about it and thankful for the way south dakota approach things, they do it the right way and this whole situation has shown me fat our park officials need to be very clear on what their role is and their priorities are and that should be making sure americans get the opportunity to view their treasures in their
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national parks and not punish individuals because of situations that are beyond their control. thank you for your time. >> i thank the gentlelady. you answer did you didn't know what you did negotiate the utah deal and doesn't have similar provisions for roads and offer areas similar to what the gentlelady is describing? >> we did negotiate a south dakota one as well. mt. rushmore is back open. everything is completely open. the original letter we got from the governor only wanted to open the entrance road in a parking area, not the entire park so, very tragic snow storm and we entered into the queens of south dakota and now rushmore is fully operational. >> the gentlelady from new mexico, anything further? we finished the first round. >> does the gentleman have further questions? the gentleman from washington. >> i just want to say i am glad
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we had this hearing. it was probably predictable but both sides would say what they said. after all, we are in a government shutdown. you have to make difficult decisions. we are trying to ascertain here and there is going to be some follow-up, why it appears, why did it appear that actions were punitive? that is the optics whether we like it or not, in any way you can avoid it, that is the optics and so that has to be avoided. i recognize, jonathan jarvis, you don't have a say in every one of the 401 national parks. i recognize that and i recognize that the decisions that were made like the exchange that i forget you had with one of the members on our side regarding mount vernon that you weren't involved in that decision. i appreciate that.
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never the less there is the thread that needs to be looked after. harry truman probably said it best, the bucks stops here. policies come from the top. going back to the exchange you and mr. whitman had, you didn't think this was going to be a long shot down. why was such extreme measures taken the first day? if you thought was going to be a longer shutdown, that after all the things you cited, would take place later on. not from the first day and that is where the optics come in, that is where the optics come in and that is why from me because i have been very public on this, i have said it seems to me there is a conscious effort whether it came from you, you say you made the decisions, that is fine. if it was higher up, nevertheless the optics are. this government is exercising something that has been done before to make a political
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point. that is dangerous in the long run with our country. with that, i appreciate working with the gentleman from california, the chairman of the oversight committee and i yield back to him. >> i thank my friend, member of my committee and fellow chairman. it is the best of all combinations here today. i will be as brief as i can. the mayor and a host of other people who operate concessions, small towns and so on have asked specific questions you haven't entered of that weren't answered here today. i hope you will address as quickly as possible their answers and their concerns but let me go through a couple quick questions i need to get for the record. first of all, to the best of your knowledge, when did you begin the process of procuring the barricades that were used on day one. >> more than a day of course,
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more than a week of course. was it more than a month? >> national capital region, national mall memorials >> reporter: and inventory for what we call bike rack. we use them all the time. >> it is your testimony there were no rentals or purchases of cones, barricades or other items in preparation? >> not to my knowledge but i will check on that and get back to you. >> mayor gray and the district of columbia have been seriously impacted by the closing, without any public statement, your signs never said this is closed except for first amendment, your police never said this is closed except for first amendment. as a matter of fact from a public safety standpoint even
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the vietnam memorial got opened on one side either by individuals or your employees and the other side was never opens so people had to walk around it on the grass and so on. or police drove on sidewalks with pedestrians walking on them because you barricaded the roads. your mountain police forces do what horses do and you are not cleaning it up. so you are creating your employees are choosing to have courses on the mall, creating a sanitation issue. your part was very aware that garbage cans were continuing to fill because people were there and they did not emptied them. the mayor asked and has been trying to get specific of 40 to empty those. why is it that you never considered, and please don't tell me you are not familiar with the mall sand monuments in washington. why is it you never considered a deal with the district of
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columbia similar to the ones you are doing with the state's? why is the district of columbia never given a direct opportunity before or during the shutdown to do something similar to mount rushmore in the other areas? >> actually the district of columbia has. i spent over an hour on the phone with vincent gray, the mayor of the district. >> when? >> yesterday. >> yesterday. i want to make sure we're talking two weeks into the shutdown. please. >> mayor greg, the way we stood this up is governors are contacting us just like if mayor gray had wanted to do this we would have entered into an agreement with him as well. we did it at ford's the the yesterday. >> let me make sure i get your testimony straight here. your obligation according to what you told congresswoman knoll, your obligation is to
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protect property and life. cars driving on sidewalks with pedestrians, we will leave that aside. you were supposed to maintain property. you allowed to maintain as many individual employees as are necessary to accomplish that. that is the definition of central personnel. >> that is correct. >> you could have maintained three, five, 10, 20 people for the purpose of if you will offloading responsibility and better maintaining the safety and security of these monuments and parks around the country at expense of other than the federal government. you could have had 10 people there who were in fact lowering your costs and increasing the maintenance and protection in addition to ecommerce these individuals are interested in. you could have done that and it was your decision to recently furlough people and then say i can't negotiate, furlough people who didn't negotiate in advance.
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furlough people who didn't plan and then talk to the mayor and tell him about an opportunity 14 days into the shutdown. that is a long question but aren't those discretions that you made? >> the decisions i made in terms of the closure are guided by our attorneys. our attorneys interpret the law. >> i hereby ask that you deliver to us the legal opinions you had prior to october 1st as to each and every one of the decisions made before and i would like the legal opinions that allowed you to make the changes between october 1st and the end of the shutdown. do ibm a subpoena or will you be able to turn those over in a timely fashion? >> i will have to talk to the attorneys on that. they have control over what is released. you as committee chairman can request it and i will take it to the attorneys but i tell you that i sought their advice in
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each of these cases. >> did you get it in writing? >> in some cases years and in some cases no. >> what did you receive corley? because the writing will get in discovery. what were the oral opinion affecting anna eberly's organization? did you receive an opinion from her before, during or after october 1st? >> we discussed that in detail with our attorneys. effects are we do spend money there and we do spend money there. we provide trash and sewer and road maintenance. our attorneys looked at this information and determine within the window of what we expected the shutdown to be there would be no violation of the entire deficiency act so we could allow it to open.
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>> you got an opinion after you shut her down without an opinion. >> all due respect -- >> trying to paraphrase what you told me. >> you keep saying it is my responsibility to plan in extraordinary detail for a closure. what i do when we are not closed is i open parks and operate parks. that is what my staff is doing. not planning foreclosure. >> i person cruciate that but we lived through sequestration and i watched and found evidence of a punitive direction for a small shutdown and finding ways to make it hurt the public. anna eberly had a pressing answer to my question. >> jonathan jarvis mentioned several things the park service does which are actually incorrect. we don't have the sewer line so you can't possibly maintain it. we have one port a body for
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children who visit the farm and touch the animals and have no place to wash their hands before they eat lunch. we volunteered some time ago to take over the trash collection at the farm because the park service doesn't recycle. what was the other thing you did for us? >> gave you $1 million in the decade or two. >> we appreciated every penny of it absolutely but that came because of congressman moran, not the real initiative of the national park service. and for the last three years we have been plowing the snow off the road the we use and the cia and federal highway department because the park service doesn't get to wasn't all five days later. we appreciate everything you do. >> jonathan jarvis, i know you can't look at 400 plus major
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facilities and minor facilities yourself so in order to make the record complete both for my fellow chairmen, we are going to give you a list of items we are going to want to go through in discovery and documentation and after the reopening you need not do this during the remaining hours and only hours, we are going to want to go through this process but as i turn this over to mr. mica i believe you have a responsibility as you did in sequestration and in april of this year when we found you woefully for in the planning and procedures and papers it should have been the wake-up call that you should have a plan to mitigate at any time any loss period and maximize the leveraging of public partners in every way possible and i would hope that you see, diminishing
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funds that you look and say how can i impact the assignment to better market products. bordallo find more anna eberlys, people like the mayor who have a vested interest in helping you. i have one very short question. you said on the record there is an uptick in threats to the mall. where did you receive that uptick intelligence from? >> our law enforcement. >> through in-house law enforcement? >> we worked collaboratively in this district for all law enforcement forces. >> where did you receive it? where did you receive an uptick in an intelligence standpoint as to threats to the mall? i need to know what agencies were included to the best of your knowledge? >> i was briefed by the department of the interior.
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>> you know what level of classification if any there was? it was in your office. it was then and classified briefing. in that case we will be sending a request to the salmon classified briefing made available to both of our committees. with that recognize mr. mica. >> you certainly have seen a wide diversity of opinion here today. the whole committee and all members of congress are united in one thing. we believe you had some discretion and we believe you can take down the barriers at the world war ii, martin luther king and other open area monuments. are you prepared to do that? >> i am not. i am prepared to respect their first amendment rights to access these memorials. >> are you taking them down in
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that regard? the current barricades are standing blocking access and still up. >> you are not prepared to go back? i think that is wrong. you have the discretion not to put those up. have the discretion to protect the monument and that can be done through law-enforcement, working with the district and others in any jurisdiction. i don't know what it takes. we will be back in this situation probably in two or three months again. i don't like that but that is the way this democratic republic works. we have to debate these things. you do and clearly have stated you have the discretion to take those barriers down and i am asking you, jonathan jarvis, to take those barriers down. veterans have hauled away, members of congress have pushed
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them aside and citizens have come and hauled them away and will continue to do that. would you reconsider, take those barriers down? >> we still feel that -- >> you won't do it. >> lack of appropriations, the barriers are appropriate. >> i don't know who your bosses are. if they have not expressed themselves in a bipartisan manner to send you a wetter with instructions from 100 members of congress, 200 members of congress, 300 members of congress to do that would you do it? >> i will do it when you pass an appropriations bill. >> mr. chairman? >> the gentleman yields back. i want to thank on behalf of both committees, all six of you for being here and testifying and greg bryan, appreciate your
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testifying all the way from arizona. you have shown remarkably good patience for the five hours that you have been here. i don't think i have to go any farther with that but i do appreciate, as many times happens with committees with meetings or follow-up questions or answers sometimes to spark other questions, this was designed, this committee meeting was designed i guess to find out why the optic of this close down was such as it is. that in itself is very serious. if there is no further business before both committees the committee stands adjourned. [inaudible conversations] ..
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.. >> the hous house prepared to ps the debt ceiling do. we expect that she'll talk about that legislation and a path forward. everything is live at noon eastern also on c-span. we expect lots of questions about the debt ceiling deal at today's white house briefing as well. the rollout of the health care law come you can watch that live
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with spokesman jay carney and that is scheduled for 1:30 p.m. eastern on c-span. later on today it's a discussion on the obama administration's relationship with the press corps. the new america foundation hosts and you can see that light at 2 p.m. eastern right here on c-span2. >> 200 year old clock stopped ticking. time stands still. ohio clock is an easy metaphor for the government shutdown. >> we're standing a few feet away from the main entrance to the united states senate chamber in the north extension of the capital. the clock behind is the oldest clock in the united states capital. it was commission for the united states senate in the year 1815 ordered from a philadelphia clockmaker. >> this is one of the many reasons why the c-span feed archives are so amazing. >> the video library is amazing. you can view and share program anytime.
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it's easy. here's how. can't to and go to video library to watch the news video go down to the most recent tab, click on what you want to watch and press play. you can search the data library for a specific topic or a keyword or you can find a person just type in their name, hit search and go to people. go to their bio page and scroll down to their advances. you can share what you are watching and make clips. use the set buttons or handles, at a time and description and click shar share and send my en, facebook, twitter or google+. the c-span video library, searchable, easy and free. created by the cable tv industry and funded by your local cable or satellite provider. >> earlier this month the u.s. energy security council hosted a conference on energy policy and security in washington, d.c. a portion of the to include a roundtable discussion with
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former energy and defense officials along with industry professionals. speakers included former shell oil company president john hofmeister, former lockheed martin share norm augustine, along with former national security advisor to president reagan robert mcfarlane, and former cia director james woolsey. this is just over an hour and 45 minutes. >> ladies and gentlemen, thank you very much for coming today as -- and joining us for what we believe is the launch of ideas of policy ideas that truly can change our pattern for the past 40 years. changes that are easy, that don't cost anything, don't require government subsidies, and that are feasible, truly, thanks to the ramping up of
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shale gas. we have at hands the means to empower our transportation secretary that today is 97% reliant on one fuel, oil. into a competitive sector in which the free market, no subsidies, allows the competition of available choices which include electricity, methanol, ethanol, bio diesel, someday fuel cells. but let the best one win. just open the marketplace. we are honored today to several of our members join in the forthcoming roundtable here. jim woolsey, cofounder with me two years ago of the council, is joined by a number of distinguished people who have served in public life in an
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industry of our country, the energy sector. john hofmeister with us today, a former president of shell. norm augustine, chairman of lockheed martin, the largest aerospace company in the world. former under secretary of the army. donna rydell, director of the world economic forum. also currently chairman of the commodity exchange, a new addition to the council which we welcome today. thanks for coming, donna. professor, college of nobel laureate and member of the council, and truth be told, the contributed to the op-ed published last friday in "the wall street journal," pointing out the feasibility to deploy at
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the pump methanol made from shale gas that would be between 75 cents-1 dollar cheaper when you and i drive up five years from now to buy methadone that is high octane. racecar drivers love it, and available at a competitive price within your lifetimes. boyden gray, former counsel to the president of the united states and ambassador to the european union. marty, president of energy and environment, at probably the best research institute in america, let's health laboratories. i would also like to acknowledge and express our thanks for the attendance today of senator pete domenici, former chairman of the senate energy committee and the
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senate budget committee. admiral base lines, the former commander in chief of the u.s. pacific fleet. thanks for coming, ace. counselor, cb, china's economic attaché with us today and looking forward to cooperation as we try to shape public policy to benefit both china and the united states in the years ahead. counselor, israel's economic attaché. if you had to identify the four most innovative countries in the world with regard to sensible energy policy, surely you would have to put israel, china, brazil, and yes, the united states at the top. so we appreciate all of you joining us today. we would like to turn this now to a roundtable to address one
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of the takeaways we believe we must adopt in our public policies to move us office treadmill of the past 40 years where, evermore, we pay more and more overseas for oil and to remove the vulnerabilities of instabilities to what's going on in the middle east and enable all of us as consumers to go and buy and sell at a competitive market, and come out with a more stable economy, better national security, more jobs, and a cleaner environment. so i'll turn it over.
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thanks again for a forthcoming. [applause] >> thank you, but, and thank you all for being here. you know, oil dependency is in asia as we heard has been talked about by countless politicians and each of them offering their own solutions and all kind of trying to throw meat to their various phases of us on the consumer side, if it's on the liberal psyche through other flavors of me. but at the end of the day almost everyone has been focused on import reduction. the report that we're presenting today really is to demolish the paradigm that energy security equals import reduction. they are serve nothing wrong with drilling, nothing wrong with efficiency. there's a lot of good with reducing our trade deficit, but none of that is going to improve our energy security because it will not serve to reduce the placeable. we will talk a great deal about that today but before you i just want to kind of tip the hat to
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both bud and jim woolsey tour cofounders of the u.s. security council. both of these men both of many, many roles in government, and i am sure that u.s. former national security advisor, and former cia director, the things you don't do this country, some of these we will only know many, many years down the five want to say that personally working with them close on the issue of improving energy security of this country and specifically reducing the strategic import of oil, they both a put their heart and soul into this, and it is i would almost of life driving mission to improve the security of this country. so we all appreciate that very much. [applause] >> we will get into some facts
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and figures on the slide scanner to refresh our memory as we go through the discussion, but just to add color and begin. jam, i know you have some very sharp memories from the oil embargo and that, in fact, get you into the issue of energy and being interested in the importance of energy security. what is your sharpest memory? >> on an october morning in 1973, i was driving into work. i was general counsel of the committee and were holding a hearing that day, and i have about 15 senators waiting for me to show up and get everything organized to hold a hearing. when i hear on the radio that we have an oil embargo and the saudis have cut off our oil because we were trying to resupply israel. and i'm stuck in the gas line for about two and half hours and i'm late for the hearing.
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and the longer i sat there, the madder i got at oil. and basically, i have held that view now for 40 years and about three days. and let me say why. thomas jefferson did not draft a declaration of autarky. patrick henry did not say, kidney autarky or give me death. autarky is effectively not importing or importing as little as possible. that is a very bad decision criterion for u.s. energy policy. it does not do the job. the reason is that boyle has an extremely high inelasticity. with 97% of transportation depending on it. you can see about inelasticity of demand is very high. and so you can stop imports as
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much as you want. you can do a lot of things, and they won't do any good as long as that monopoly sits there with a cartel, opec, nested inside it. they will just see you drill, or see you reduce imports, and they will smile and cut back on production and raise the price. into an half years ago, at the beginning of the arab spring, king abdullah was in the hospital in new york for treatment. he heard about it. he cut off -- he checked himself out of the hospital, got his plane, flew back to saudi arabia and he increased the saudi national budget by something like 130, $140 billion. virtually all about went to pay young man not to work.
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because about 90-95% of the saudi young males workforce does not work. they hang around the streets. they do other things but they don't work. he didn't want them to riot. he was right not to listen up bright, so he paid them, roughly, that 120, $130 billion not to riot. and if you want to know who paid for that, look in the mirror the next time, your rearview mirror angled a few inches are you looking into your own eyes. the next time you pull into a filling station to fill up with oil products. you will not succeed in changing that structure by doing anything other than first breaking the monopoly. then other things can be used and useful.
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but those three left wing keynesians, milton, friedman, adams, smith and -- friedrich hayek, all say the same thing. according to the marvelous page in this book, what they say is it is the number one job of government to have a healthy economy to break monopolies. it's first in order, you do that first, then you may be able to succeed with some of the steps. we're going to talk a lot about other steps here today but i just want to start out by suggesting that we not pull any punches. believing that you can have a reasonable oil market where price will matter and competition exists in the presence of 78% of this cartel's
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holdings, olive oil, they hold 78% of the oil, and riding on a horse that transportation requires a 97% oil. there is no chance, zero, zip, knicks, no. there is no chance of changing that and getting king abdullah to charge as something close to the rest of the world to what oil is worth as distinct from pain his young men not to work. there is no chance to succeed without breaking. >> thanks, jim. i'll just note the usual roundtable rules. if you want to break in and speak can't just turn your card over on its side, and those of you that are not at the table,
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if you have an urgent -- wave your hand or your card and i will make every effort to bring into the conversation. you know, one of the myths that exists in energy policy making is that we import a great deal of oil from the middle east, from the persian gulf in specific but if you look throughout our history we have never imported more than 15% of our oil needs from the persian gulf. right now we are at 9%. as we heard earlier what we are importing from the middle east, what we are importing from opec countries is the price of oil. the energy security paradox really is that we can see the oil import levels dropping down. the price of oil has steadily gone up and up. reducing imports hasn't helped us reduce the price of oil because it is a sponge will
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economy. is a global market. oil market is like a swimming pool. it doesn't matter who we buy our oil from but at the end of the everybody faces the same flight. and here are the figures of what opec matters. it's really striking when you compare 40 years ago, 1973, ma to today, and she compared the number of people alive on this planet. 4 billion men, 7 billion today. the number of cars on the road four times as many. as compared to 250,000,040 years ago. gdp has drastically increased. global oil demand has increased and opec is producing more or less the same amount today as it was then. i always say if it was exxon, chevron, bp and shell that were sitting on the oil reserves, and they accounted for about a third of global production, well,
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those of you here with a great deal of expense in government know who would come knocking down their door, right? they would be facing antitrust action but you can't bring antitrust action against a sovereign regimes. we are very fortunate to have with us here this novel was on the founding board of the venezuelan national oil company. we heard jim talk about how the increases in expenditures of the persian gulf region post-arab spring an effort to maintain stability have really been phenomenally large. and when the output of your budget is growing and input and your budget is oil sales, that means in order to balance your budget, you have two choices, right? you can either sell more oil at a lower price, or sell us oil at
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a high price. fewer barrels at a higher price. what we are seeing opec and decide to do is sell fewer barrels at a higher price. you really had a front seat to venezuela going through the same type of decision. how? -- how does the fiscal break even price of oil play out in venezuela? >> first of all, we must realize that opec is no longer a monolithic block. opec is basically, with a strong set of opec is basically saudi arabia and the for producers in the middle east. they are increasing production. they are producing now something like 16 million barrels of oil a day, and especially india is
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importing about 45% of their oils from these four countries. china about 25%. so it's very important the middle east is very important, but opec is less important. because apart from these four countries, venezuela has become a very minor player in the global sense. our production has declined, is going to clients which don't pay because of political ideological reasons. so common i wouldn't agree that we should be so much concerned with opec as cartel any longer. in fact, i believe that now we have quite a multiplicity of energy offers in the world. we have conventional oil on the
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one side. we have the heavy oils from canada and venezuela on the other side. we have the oil and gas shales on the third place, and then the renewals which are again slowly gaining foothold. so we have like never before, we have multiplicity of offerings in the energy sector that made the u.s. specifically self-confident that they're no longer dependent on imports. venezuela, i must say, is technically bankrupt. you can say that about a country. because of the fact that they depend on oil loans from china, especially from china. so they don't count. >> when we look at this graph here, what we're seeing is essentially the break even price of oil, the fiscal break even price of all required to balance
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the budget to various opec members to in venezuela we see it is around $100 about is the price required to balance venezuela's national budget. when we think of the pricing hawks and doves within opec, that hotness our darkness really is a function of where you are in terms of your physical fitness -- breakeven price of oil. the higher, iran for an example has a very high breakeven price, the more of a hockey will be within opec in terms of want to restrain production, wanting to drive prices up. frank, you are a trailblazer -- sure. >> the cost of listing oil in saudi arabia come according to the saudi king on television a few years ago is $2 a barrel. so these numbers add to the cost
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of lifting oil, for a reason profit might be 30, 40, 50, 60%, say $3 a barrel. what this includes is the young, and the young men not to work as well as thing for other things, other than lifting oil. >> thanks, jim. >> frank gaffney, you really have been a trailblazer for over 10 years now. and at the beginning i know very, very hard and lonely out there among conservatives calling for the importance of reducing oil status as a commodity. why? well, apart from the fact that you told me that was an important thing to do -- [laughter] it's kind of dawned on me that it was an important thing to do, working with jim and but in others around the table, it
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became so transparently obvious -- bud. if we persist in this practice of paying not only substantial amounts but through the nose to people who principally, not exclusively, but principally in terms of setting the price, our adversaries of this country. many of them, in fact, enabling the wars that we are involved in. i call it the war for the free world them but it is the war of our time. is simply insanity. and if we have a choice not to persist and that, then it seems to me that that move to the very top of national priorities. and i just want to say thank you to you guys, and to this council, for really being the path finders in terms of
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explaining how this can work, how it can work mechanically, how it can work in a very practical, very cost effective, very near term way. if we simply adopt kind of the solutions they have identified for fuel choice specifically, so thank you. >> thank you. john, i'm turning over to you, john hofmeister, president of shell oil north america, you've a great deal of understanding of the oil and gas industry. what we're seeing in this picture over here, that bright spot, does anyone recognize the location on the map? that bright spot is north dakota. now, that's not a big city like new york that is shining brightly from a satellite photo. what we are seeing there is flared natural gas. natural gas flares. when i look at natural gas flares what i'm seeing is money going up in smoke. so john, with your experience in the oil and gas industry, talk to us about how companies like
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exxon, like show, like bp, chevron and so forth and monetize natural gas that is currently being wasted. how important is it to open the transportation sector to trent -- competition so this money going up in smoke and returned to something that is something that lowers the price of fuel for american? >> let me respond in two ways. the first is that while you will not hear it from publicly held oil companies, there is an awareness and a deep concern that over the next four to five years global demand for oil, particularly with china, india and the developing world, continuing to want more, global demand will exceed global supply by several million barrels a
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day. in the first instance that has a huge impact on price, and the price of course will serve to hold the global economy in check, unfortunately, but still there will be that incessant demand. auto companies reported that china, auto purchasing in september of this year, exceeded any of the previous month in history. so the chinese love mobility the way americans love mobility. and that's a huge impact on global demand. so i have predicted for some years now, whether it's 2016 or 2018, there will simply not be enough oil. not because the world doesn't have a lot of oil, but the technical difficulties of getting oil from new reservoirs while older reservoirs decline is just overwhelming to the industry. so whether it's deepwater brazil, whether it's arctic
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reserves, whether it's east africa, whether it's other difficult basins, there simply cannot be enough done to meet the global demand in the middle of this decade. that's .1. point number two, the technology revolution that has opened up shale formations including the incredible amount of intelligence in the while. we all think the world of smart phones, the technology that has gone into the well leaves, in my opinion, smart phones in the back of the race, in terms of making use of good technology. whether it's the aerospace industry or the oil and gas industry, the race for technology is never in thing. and that new technology in the oil and gas industry has opened up such new reserve, probable, possible, and proven, that there
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is no end in sight to the expanded availability of natural gas not only in this country but in many other formations around the world. that natural gas doesn't have a market. that can adequately demand enough to get the gas price to where you could actually continue to grow gas supply. we have so much natural gas we don't actually know how much we have. eia is always a year or more behind reporting, and their reporting numbers are incredibly amazing if you follow it. in one year i think was two years ago, 1200 additional trillion cubic feet reported by the eia. and the number keeps growing. what is needed is a new market. what the oil companies are particularly concerned about is the price of natural gas in order to develop their reserves
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completely, and the way not to increase the price of natural gas is by making more electricity from natural gas. that's a low value added contribution to the natural gas industry to simply export lng, or to produce more power generating plants that are gas-based, doesn't really maximize the value. what maximizes the value of the molecules of natural gas is when you apply technology. applying technologies such as making methanol, or making other types of chemical products from natural gas is a much richer, much more satisfying and i think much more contributed to the global economy over time. having said what i just said about the desirability of making, let's and ethanol from natural gas, a problem that has to be faced is what to do with
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the existing economic value existing at the refinery system. this is not easily written down. but at the same time, if they were the kind of enablers, regulatory enablers that open up markets for natural gas, then there's an additional opportunity for companies to invest in the infrastructure to make methanol. that doesn't exist today because there are no regulatory enablers to turn that into come to turn natural gas into it ethanol. so that has to change before the oil companies will get interested. but when exxon bought x. dl and yes, they were accused of overpaying for it, exxon saw the future. when my former company invested major amounts of money in the marsalis, an eagle for and other places, they see the long-term valley. these are long-term oriented compass that make decisions that
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may not pay for decades but, frankly, to my first point we don't have decades. which is why we have to move much more quickly, and was whistled want to manage the crisis of shortages of oil. because not because of geopolitics although that may aggravate the situation, possibly because of supply demand relationship factors. >> thanks, john. just to draw two points in which he said. what i'm hearing you say really is that as blessed as our with this current boom, the real game changer in the global oil market is not so much north american oil production, but if we do the right things, north american natural gas production. if we put natural gas and the very skills that can be made from it as those other commodities and the fuels that can be made from them into competition with oil, that's the game changer and low priced natural gas lets us do that. >> oil is old and dirty. the kind of uses that you have
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from oil aren't going to go away. they are not going to disappear overnight, but the real game changer, yes, not just for the united states or north america but for the world as a whole is to further develop of the uses of natural gas. >> just one more clarifying point. we have methanol, methanol and ethanol sound a lot alike. they are quite different. you can drink ethanol but you really don't want to drink methanol. it will give you much worse than a bad headache. but they are both liquid fuels. [inaudible] >> they are both liquid fuels. they both can be used in flex vehicles that cost about $100 more to make. methanol to unlike ethanol which is made from agricultural commodities, it can be made from natural gas, from coal, from recycled co2. let's jump over to the doctor who we are very fortunate to have with us today.
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and bud introduce you earlier and gave some of the tidbits about your very interesting background to please talk to us about recycling co2 in the fuels and chemicals. >> good morning, ladies and gentlemen. it's a pleasure to be here. [inaudible] recycling co2 is a very interesting concept. nature is not very efficient because nature requires nurture. nurtured means you need to put more photosynthesis, and there's less than one, 1.5% efficiency, how we can get light into broader. so chemistry is the way to recycle. and what we have been exploring is co2 and water and inexpensive energy sources like electrical energy. you can split the water, make hydrogen, hydrogen institute,
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makes it and make methanol. in fact, we are involved in a project in iceland where geothermal electrical energy is used to make hydrogen. makes it was 50 and we're making tons of methanol a day. it is named after my college. -- college. so my feeling is fuel recycling will happen not in the immediate future, the long-term future because mankind i believe does not have an industry shortage. does not have an energy problem. and energy storage and energy problem. because someday it will be there for the next for a half billion years. almost all energy, even her fossil fuels is nothing but fossilized sunshine. it all came from the sun. so we can use any carbon neutral energy sources and store it with co2 and water as matter -- methanol.
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it's very cleanburning and all that. so short of what i would propose for this council is -- in the long run we will recycle city and make methanol by the bucket and we can make all the product that mankind needs. because all of us are made of carbon. without carbon you and i would not be. this is the message i would like to give. >> thank you very much. in fact, every time -- we might as all regarded as something as a resource rather than garbage that has to be disposed of if the resource we can monetize and companies can make money from and convert it into fuel, then that's likely to solve a lot of problems. now, i'm going to turn to the
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economic attaché at the embassy official. and i heard you make a very interesting announcement today, so let's hear it. >> so, it is an interesting announcement but it wasn't out of my office. it was out of the prime minister's office and i hope i'm not investing anyone, but for those of you don't know, israel has taken a lot of initiative in terms from a government perspective to address the oil monopoly and oil subsidies. and amongst that, amongst the many initiatives one of them today, a million dollars prize which be awarded next month at our fuel choices summit to the person doing the most innovative approach to oil substitute over the previous year. and through a purely serendipitous circumstance, i find myself sitting across from the winner who will be announced a but we'l would see the price t month. so congratulations to dr. prakash. >> thank you very much. [applause]
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>> or i can say we are thrilled the award was given for the economics of methanol, not ethanol. and we look forward to working more closely over the future. >> thank you very much. i'm really thrilled, honored, and my colleague, i think i'm sharing with my colleague, and it's in great recognition of my research work. so thank you very much, thank you. [applause] >> just one clarification. this prize is going to be an annual prize. it would be given every year to the person or persons who will demonstrate the biggest achievement towards the diversification of our fuel supply and finding opportunities
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like this team was able to do. i know the government of israel, it's a very a lustrous team of judges and it will be inviting submissions from anybody around the world to sround the world to submit their proposal for next year's prize. so i'm sure that we can share more information about that. >> while i have your attention, the prize is just one piece in a really concerted, focused effort by the government of israel to address the world of oil substitute the hundreds of known to be invested in research and development, coinvestment, et cetera. this is a piece were very proud of, and honored that original corecipient will be dr. prakash and i encourage any of you that are able to attend the fuel conference next month to strictly consider it. a government official doesn't do
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this as an israeli strategic initiative, but in the spirit of what's being said about the table, a global initiative, a strategic imperative to the free world and we're trying to do our small part in making the world a better place. thank you very much. >> thank you. now from the teeny tiny country let's go to a judge country, dean is going to call on you now, right? secretary-general of the international energy security forum, it's an annual event held in beijing, collaboration of the council and cash which is the chinese largest think tank and affect the largest think tank in the world. and being in beijing i was very, very struck to see that the main streets in beijing are 12 and 16 lane highways. full of brand-new cars, full of brand-new suvs in fact. not 80 bp cars but very large
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new cars. china's economy is growing very fast, even within the global economic downturn. how fast is china's oil consumption expected to grow as we move forward given challenges become the world's largest oil importer? >> it's a good question. thank you, thank you, for the invitation. [inaudible] 1993 chinese have become importer of petroleum. and in 2008, china has become the -- importer. so if china real address is oil
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like this, all over the world -- [inaudible] i shall say, in china we have the most -- [inaudible] we have the highest price of automobiles, the highest -- [inaudible] we have the skill to develop electric motor, the high speed railway system. but we have the biggest population and economy expands
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very fast. we have ethanol -- [inaudible] with the saudis. this year, china pass u.s. as number one importer. there are more opportunities. we can collaborate electric motors. [inaudible] we hope we can issue more technology for china, for
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chinese market. [inaudible] i invite all of you here to attend our forum next year in 2016 and next year. so that's it. >> thank you. our report includes domestic recommendations and also includes international recommendations. gal, would you please describe as they pertain to what we just heard? >> yeah, there are a number of prior recommendations on the
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international front. i would like to talk about one of them and the rest -- we believe that for too long we've been hearing about the u.s. and brazil talking more about ethanol, which is grain alcohol. but then you can see the slide here. china has made its choice. and china is going very aggressively toward adoption of methanol fuel. methanol today is already commercial fuel in all of those provinces that you see here in red -- in orange. they are expanded in place. they are provinces larger than the state of california, where almost every fuel station that serves the fuel, again as i said, there are standards so it is not that you're doing it illegally. that are completely within the law.
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very soon there will be a national standard for methanol in china. so clearly between the grain alcohol and the wood alcohol, those to our calls, they have to come up with a new idea. we called it abc online is, america, brazil, china, the top three alcohol fuel blending countries that among the three of those countries you find almost one half of the world's automobile making capacity. in other words, almost half of the world's cars are made within the borders of those three countries. and when you are engaged in a coordinated approach, among the top three automakers, or top two and then brazil, china today makes 19 million cars a year,
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united states about 10. but this gives juan enough leverage -- this gives juan enough leverage to get it what types of cars are going to be driven around the world. and if you have enough of a critical mass of cars that comparable with a liquid fuel that can be made in the united states from natural gas as we heard, can be made in either places of the world from other commodities, can you made in the future from co2, what we wanted is to make sure that those 50% of the cars that are made around the world, maybe even more, our certified and wanted to run on this alcohol fuel. and we think that because of the technological changes and the retrofit costs and the changes
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in infrastructure is associate with this, it will be a very low-hanging fruit to open the door to a fuel that offers so many economic, environmental, and strategic benefits. i would just add that in china, the drive for methanol fuel adoption was actually mostly environmental. those of you who visited the major cities in china no what i'm talking about when we talk about air pollution problem. chinese are increasingly aware of this problem and they would like to see cleaner skies, blue skies for a change. and the pressure is mounting to really a drop cleaner burning fuel. methanol is one of them. -- about cleaner burning fuel. i think there is a unique opportunity to bring those three countries together in a concerted effort and that's one of our primary recommendations
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for in this report on the international front. >> thanks, gal to just do what you said, you don't mean standard where people have to use the fuel, but rather standards for at a particular popular exact was going into your car when you buy a particular product. what's interesting and what struck me also in china, in china, methanol is made from coal. and what struck me is that the fuel is so economic, it's a cheap as compared to gasoline -- let me see if we can find a slight. if you look at this, this is the price of methanol as compared to the price of gasoline. current unit of energy. says apples to apples comparis comparison. and the price is so competitive as compared to gasoline that you accept illegal blending going on which means that this is really economically driven but it's not
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something that popped hundred and i think like but want to jump over the deron lovaas of the natural resources defense council and put you on the spot a little bit. why not? as one of the representatives of the environmental organizations in the room. you hear many voices in the environmental movement over the years have called for high oil prices. a lot of environmentalists believe that high oil prices are good for the environment. well, we have high oil price. are high oil prices good for the environment? >> no. high oil prices in and of themselves are not good for the environment. it's just something that, it's costly to the u.s. economy. it's costly come in because they have little choice but to continue buying oil at skyhigh amounts in order to make their daily rounds.
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it really, it's not what drives better environmental outcomes but what drives better environmental outcomes are good policies, such as the higher fuel economy standards. and other alternatives for americans to use besides their cars in order to make their daily rounds. the good news for the environment in the united states right now is the fact that it looks like oil consumption may have reached a peak in 2007. and looking at as a friend of mine that exxon mobil said, the efficiency as far as the eye can see, where we see more efficient vehicles out on what partly driven by policy and the other thing that's happening is that eias and others, tendency to project per capita driving increases at a per and that percentage out into infinity,
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which is foolish and it looks like we are reaching a saturation point in terms of per capita driving. and these facts are driving our oil consumption down slowly and, therefore, we are seeing pollution peak as well. what happens elsewhere in the world is crucial, of course, and what happens now to capitalize on this remarkable fact in the u.s. is crucial, too, because hopefully this will make the scaling alternatives up easier, right? because efficiency and reduced consumption, it's just part of the equation and that's what i'm gratified to hear so much talk about competition because now the question is okay, if we can envision a world where we use less oil, can we went up real competition for it so that when you pull up to the gas pump its -- walking down the aisle in the grocery store as opposed to right now we have a monoculture basically in the energy sector.
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>> and, of course, actually just to wrap that up, for the supply-side whether it's electricity, whether it's liquids, whether it's gas, for us to the question is, talking about for nrdc, i can't speak for others. people talk about the environmental community, there's so much opinion and variation is an oxymoron, but for nrdc the question for us is what is the net environmental benefit of any substitute fuel in terms of carbon emissions and in terms of global environmental effects. it gets complicated but on the other hand, there's some pretty exciting alternatives that are made all the more possible because we can, in fact, moderate. >> that's good. so competition has been no drive down price to 80 don't have competition in the biggest players in them are going to be able to keep the price is nice and high for them, not so nice for the rest of us, for the
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consumers. i think of this as a situation in which, let's say you very, very severe allergies, food allergies but you have to start your day with a cup of coffee and some milk in a. you are allergic to cow milk and you are allergic to go to milk and you are allergic to soy milk. billy thing you can drink is rice milk. rice milk to go up to $50 a gallon. you still can't put cow milk a goat milk or soy milk or anything else in your coffee. you can make do with less. you can kind of script and save budget don't have the option to switch on-the-fly among the different sources but no. we have a situation where our vehicles have severe food housing. it doesn't matter how cheap others are because you can't use them. norm, i think i can call you a captain of industry, -- >> corporal.
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>> you led a lawsuit and get many important roles in government. how important is opening vehicles to fuel competition, how important is that to encourage a real growth in production capacity for competitive fuels? >> i think it's enormously important to the fact maybe only for a period of time. i'm an engineer and so i kind of do -- i view the world through those eyes, and with the advent of hydraulic fracturing which is made possible by technological breakthroughs, we suddenly have an altogether new opportunity because we've heard the strange thing is, we have less and less energy dependency from foreign sources in this country. the price of energy doesn't draw. that's kind of the ministry. why doesn't it drop? the reason is when you go to the filling station you have a choice. you have three choices.
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you could have depending on the brand you buy, basically that you can regular or high test or supreme. that's your choice. but if you had a real choice, then the free enterprise system kicks in and the free enterprise system really does work. and so you say, why hasn't it worked? to date. and why don't we have choices at the pump? there are a couple of reason to let me cite two that really stand out. one is it's argued it would increase the cost of the vehicles to give it a multi-fuel capability. but if you really look into that, the increase in costs is almost trivial. you may say was an aerospace engineer have to do with making, sharing opinions on the automotive world? i would remind you i am a rocket scientist. [laughter] the second problem i think is
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that it costs money for the filling stations to provide the capability, if there was only one filling station in washington, d.c. to give you an alternative, that's not going to give you a problems we have to build a critical mass. that's really the job we have to do is to build up his critical mass. there he really did get into policies, but the free market will work. competition does work. ..
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as chairman of the studies so you can blame him. my interest in this study was transportation area, together with my student and other people we analyze the various options for seeing how natural gas could play a greater role in transportation. we looked at c n g, we considered conversion of natural gas into electricity and the use of electricity and battery powered cars and we look at conversion of natural gas into
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liquid fuels. after quite a bit of debate, we debated all our conclusions intensely, the conclusion of our group was converting natural gas into a liquid fuel offered the greatest promise for widespread impact in the transportation sector and among the liquid fuels we concluded methanol had the greatest promise because the production of methanol from natural gas is very well-established. we know what the price is, there are many commercial plants and the conversion cost of allowing a vehicle to operate on natural gas as was mentioned earlier is
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essentially trivial, a few hundred dollars. >> talking about methanol? >> essentials -- essentially trivial, a few hundred dollars. we also looked at the use of natural gas not only in the white duty area but also the heavy duty area and natural gas converted to methanol looked attractive to us as an alternative to diesel in trucks. it is the clean burning fuel. vehicle, the cost of the vehicle would actually be lower than the cost of the diesel vehicle because the vehicle would not require a complex and expensive exhaust after treatment system and this could be particularly important in china and let me mention one additional aspect
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that wasn't covered in our study but in an area of my interest which is the special properties of methanol that allow it to enable very large increases in the efficiency of internal combustion engines. methanol has very special properties compared to other fuels. it has very high intrinsic octane, tremendous cooling effect which has the same effect of high octane. these paula engine stops at higher compression ratio and much higher levels of turbocharging allows small engines to replace larger engines that operate more e efficiently. that is one area of the efficiency increase. another area has to do with the past burn of methanol that further increases the efficiency and finally methanol offers a
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good way of recovering exhaust heat. these are unique features and to get. these features can increase efficiency of an internal combustion engine by 50% or more relative to fuel injected gasoline engines, 35% more than the best gasoline engines which are directly injected and this could have an important impact in the light duty area and in the heavy-duty area. so in addition to the lower cost of fuel eventually methanol could save drivers money because they use less fuel, considerably yes and could be important in reducing greenhouse gas emissions from vehicles. so along with cost benefits in its abundance methanol over a somewhat longer period offers
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the prospect for much larger e efficiency vehicles. >> the certain amount of fuel that is cheaper, doesn't require any subsidies, talking about a fuel that on the vehicle's side, very minor cost for private vehicles to light vehicles under $100 for heavy-duty vehicles actually saving money compared to diesel vehicles given the fact that the exhaust that has to come out of the diesel truck has to be so very clean it is cheaper to do this with another fuel. i want to jump to you, chair of the commodities exchange, i know you wanted to jump in with your comment but i have another question to ask you in addition. if a company bids up the price of its own product that is legal, people can go to jail even if you own stock. that is illegal and yet we see as the price goes up sovereign will funds in fleet and we have
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no way of tracking if they are in effect bidding up the price over their product. is there anything we can do about that? >> i was going to talk about the fact that with respect to all of these commodities there is open market and for the most part in the united states and the nymex which is part of the cme and the international petroleum exchange, one can see who is at the end of the they holding the amount of contracts remaining to 8 particular commodity. in concert with that, there i'm many banks and other kinds of institutions that trade not on the floor of the exchange but they trade in the physical commodity or derivative thereof. what i would say is if not completely transparent, it is
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much more so than the period of time we originally started with in 1973 when there was no market whatsoever for transparency. there was a market but not at transparent market on an exchange for any of the complex energy products but with respect to the ones you are talking about in the new form, i looked up quickly that in china they do have trading of futures. not sure what they do with the extent of it in methanol but none of the other exchanges are trading new product. to the extent of financial community can get involved in promoting the competition, i think that would be a very helpful group of people to put at the table because if they can make money on transactions, as they will do it but they also create another person or entity in the blend that can push forward some of your ideas.
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that is kind of answering the question but also adding another component to it. >> how do you bring about trading new commodities? what is the process of creating volume? what needs to happen for one commodity versus a commodity that is not traded. >> for example fuel oil is not a commodity but the components of the mark traded very actively and every single company that is involved in some area where they utilize fuel oil had hedges on and some of it is derived from of mix of what would be on the exchanges and others are from places like goldman sachs or morgan stanley or banks of that nature, also big banks, so if one wanted to start trading you would have to build a first
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those big companies that know how to build the over-the-counter market and in concert with the exchanges. if there can be volume and especially what one would do between natural gas and methanol, it would be pretty step-by-step but you get partners to do it with. >> over to you, joe cannon, director of the fuel freedom foundation. we have been talking about the new vehicle market but the secondary market is important. most cars on the road are not new. how important is it to streamline regulation, reduce the cost of retrofitting existing cars to be platforms for fuel competition? >> thank you for having us here. the mission of the fuel freedom
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foundation is to create competition at the pump for cheaper, cleaner, american made fuels. we are generally agnostic on the fuels' themselves but with all the discussion we had today it is a clear important geopolitical fact that natural gas is a huge -- we could have had this conversation may be four or five years ago. the dramatic diversion of the price of oil and the price of natural gas is an enormous opportunity for our country. even though we are agnostic in general, the deal is how do you make liquid fuel from natural gas available. we talked a lot about methanol and we are big proponents at the foundation but you can also make methanol from natural gas, both liquid fuels which can go into vehicles. if it is really cheap to convert your car to do it as we have
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heard dr. cohn mentioned you have abundant supplies of natural gas, abundant supplies of methanol from natural gas today so what is the issue? the issue is the epa has the regulatory regime, many are critical of the epa, as an assistant administrator, administering these great regulations, they're not crazy regulations. the epa has a mission to prevent tampering with vehicles of the regulatory regime needs to prevent tampering. however even with existing regulations there is the ability to go to epa and get permission to convert your vehicle to run on other fuels so why doesn't everybody do it, the regulations are quite complex, quite cumbersome and expensive and also really weren't designed with this idea of taking natural
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gas, liquid fuel from natural gas. our foundation is working assiduously to look at the technical background of those regulations. as we approach epa and help from with the view that this is better for the environment. their job is the economy, how do we work with the epa to convert more vehicles in the existing fleet to run on liquid fuel for natural gas. we are supporting a good deal of research, working with dr. cohn and others, came from a meeting yesterday at carnegie-mellon, trying to provide the intellectual infrastructure to go to eat the a to caused them to come to the view that this would be good for their mission as well as the rest of the
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country. we sponsored a study recently at resources for the future which concluded that the idea of widespread conversion of existing vehicles to liquid fuels from natural gas is economically desirable and regulatory leasable -- feasible. that is one of the published studies on this and there are other studies coming but the bottom line is two fifty million existing vehicles is a heck of a market for people to look at natural gas converting into a fuel that would go into those cars and little bumper sticker, cheaper, cleaner american made fuels' so thanks. >> thank you. over to you, marty, heading energy and environment. i am going to pick on you because you are -- were in india not -- in india not too long ago
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talking about energy issues, india, very small, cheap car, and a lot of people lifting themselves up into the middle class and the first thing they want to do is to buy a car. how important is low fuel costs to the economy of india and where is india going when it comes to thinking about oil? >> interesting you mention on the paper trail they announce a new vehicle, a c n g vehicle with gasoline. low fuels are key to any developing country and any developing economy. the amounts of money everyone spends on fuel and transportation and to be able to get from your place of residence to a different place of work and what that does to open up your economic opportunities is key to those folks. technology is easy. getting technology to the marketplace is very difficult. if you look at the advances in
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the u.s. years ago, the reflect fuel vehicles those were done on methanol. when the u.s. between big three made them on methanol they couldn't get competition in the transportation system in the u.s. so they went to brazil and converted them to methanol gama getting those changes to the developing countries will be key for those competitions at the fuel pump because with competition you break down the barriers and get more technology into the marketplace and technology is the marketplace the price comes down and more people can rise up. >> we have had an alcohol party peer at the roundtable but i want to emphasize u.s. energy security council is fuel agnostic. we don't have a dog in the race, we don't care which fuelled wins. we are not anti oil. we don't want to defeat oil. we wanted competitive market in which no one commodity is
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important and the analogy and we use, all of us, turning oil into salt which was once the strategic commodity because it was the only way to preserve food so wars were fought over salt and countries shows where to place colonies due to where there was an abundance of salt. with the advancement of refrigeration salt became not that important anymore so nobody really cares for knows how much salt we imports or who controlled worlds of reserves or what the world salt price is. that is true independence, true independence is not walling yourself from world market, it doesn't really matter anymore who sits on the bulk of world conventional oil because it is one among many different options of what you can put in your tank. but since we have been having an alcohol party i wanted to make a
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shout out here to one particular other technology which is vehicles electrification. the most fun car i ever drove. don't know if we have to as low representative in the room but the most fun car i have ever driven was the tesla roadster. any vehicle fanatics out here, get behind the wheel of a tesla roadster. it is an unbelievable driving experience. we heard from secretary schlesinger, this is about getting the cost of batteries down. one of the recommendations on international collaboration focusing our efforts when it comes to vehicle electrification on driving down the cost of the battery because there is tremendous potential when it comes to vehicle electrification. your car does not care whether coal or nuclear power or solar or wind or natural gas or anything else was used to generate the electron is running on so i want to make sure everyone is aware we are not
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focus only one technology year. >> to back up what you are saying, electrification of vehicles and alternative fuels tend to be talked about separately as if they are just alternatives but i have a prius that has been converted to be applied in with a 5 kilowatt hour battery, 20 miles a day on electricity and i have a bolt which says 30 to 40 miles on electricity and once you run out of the electricity from the overnight charge you are on a liquid fuel. if that liquid fuel is cleaner, make some pretty dramatic changes. with today's technology. for example, a little by alan chevy volt says on average given how long i'd drive i get 95 mpg of gasoline because the chevy volt only uses gasoline.
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if the chevy volt also used the 85 or m 85. >> 85% alcohol, 15% gasoline. >> i would be getting 400 to 500 mpg of gasoline every day because you need that 15% gasoline for cold weather starting. you don't have to choose between electricity and alternative fuels. you can both in plug in hybrid. the reason people -- i drove the tears flow when it was the prototype and i never had as much fun. so people love electric cars once they have driven them. they are captivating and so forth but the point is you don't have to choose not to have alternative liquid fuels if you have a plug in hybrid as distinct from an all electric car. you can do both and end up with
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hundreds of miles per gallon of gasoline. the technology is out on a road to do this right now. >> the overview, let me remind you of john hofmeister's point one, the demand for oil continues to grow. china is going to import more. india is going to import more. the consequence is we are going to see a continued price pressure and as john hofmeister observed, we are on the ragged edge of supply and for the ifni the foreseeable future, we will
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continue to be there. so the net effect is we are not going to break the monopoly of opec. we can constrain opec's pricing power with these alternatives, but do not think that we are going to break the power of opec. they will continue to prosper as long as the international environment continues as it is. >> thank you, dr. schlesinger. i want to go to greg bowlen. you'll be the methanol institute. which is the trade association of global methanol industry. talk to us a little bit about the growth in methanol production capacity around the world over recent years and what we can expect going forward.
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>> i would be happy to. i would start off looking at china. if you'd go back about ten years china had less than $1 billion of methanol production capacity. today they have got about fifteen billion gallons of production capacity so they have grown that much in the past decade. most of their new production capacity is used in coal as feedstock, and china made the decision that natural gas based coal is a strategic transportation fuel. >> methanol based. >> methanol based coal. >> coal based methanol. we get it right the third time. >> if you look at what is happening here in the u.s. if you go back to 1997, the u.s. had 30% of the world's production capacity from
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ethanol. we had 20 methanol plants when natural gas price that $2 or $3 you can make methanol all day and get a considerable profit. after that we saw the price of natural gas that we rise up 5, 7, 9, $13. our industry went through rationalization. a lot of methanol plants closed down. some were shipped to china and operating today on cold. but now we have seen that reverse so now because of the shale gas revolution we are seeing a resurgence of domestic methanol industry in the u.s. so a couple years ago we were down to only two methanol plants, two fifty million gallons of production capacity. if you fast forward in the next five to six years we are anticipating to be at five billion gallons of methanol production capacity in the u.s.. last year we reopen the plant that was closed for ten years in texas and in a couple weeks we
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will reopen a plant that was mothballed in texas. one of our member companies is cutting up and shipping fleet to major methanol plants from chile to louisiana to take it that the low-cost gas here. discovery channel is doing a special on the size and scale of that production moving that production. we could be in a couple years that a point where the u.s. becomes again run of the largest methanol producers in the world and potentially a large methanol exporter. within the next five to seven years we could have as much as three billion gallons of methanol looking for a market. we could put it on a ship and send it to china or asia or use the product domestically here as a transportation fuel. >> before i jump back over to you i want to highlight one of our domestic policy recommendations. for many years we have talked
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about the need to open the vehicle to fuel competition. the approach, we are fortunate to have andrew lynhall from congressman angle's department, opening vehicles to competition, open fuel standard. the focus has been for years, let's ask auto companies, tell auto companies have as new cars need to have seatbelts, you need to open your cars to some sort of fuel competition. we don't care what. vehicle electrification, natural gas, liquid fuel. choose whatever you want an open the car to fuel competition. this approach has faced political difficulties. that is an understatement.
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despite the fact, frederick hayek talked about the dangers of monopolies on cartels, many people do not understand the need, sometimes for a little bit of government action to break through and open the market to competition. bashing or head against the wall gets to be a little tiring so in this report there is a very different approach. one of our key recommendations is via the existing fuel economy system. automakers need to meet tougher fuel economy standards. this is existing law and it will be quite expensive to meet these standards and dino the environmental movement says how wonderful and good for men will result in this but the fact is a rise and be tougher for automakers to do.
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one of the approaches we suggest is, half of them in your sleet. some electrified vehicle, cn gee vehicle, and methanol, not wrong enough. and some combination thereof, some other, that allows feel competition. if you make half of the cars feel competitive. government should make it a little easier for you to meet the fuel economy. not with subsidies but by saying we are going to give you mpg credit towards the fuel economy number. existing credits today, vehicles run on petroleum fuels but get them per car. but rather if you meet this
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ratio, if you meet the bulk ratio, if you move the market enough to get the fuel station's attention, if you're monitoring water two cars that use particular fuels, you don't know how they're putting in a fuel pump to serve that fueled. and have ten pumps and 15% in my area use the fuel, and especially if the fuel is cheaper and your mark can be larger. that is one of the key recommendations. there are other recommendations regulatory barriers across the board when it comes to the fuel side and the vehicle's side. now i will jump over to john hofmeister again. >> i would like to make a point that i am actually putting up in a parking space. without recognizing it in a
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discussion like this we could all potentially end of being extremely frustrated. there is enough intelligence, to truly transform the american and global fuels market place. as person from the forces of market. and a practitioner in the industry know that there is no such thing as a free market for energy. essentially anywhere in the world. absolutely every aspect of bringing energy from the ground to the consumer is controlled, permitted or licensed by some agency of the government one way or another. i have never mess an american that didn't love democracy. also know a lot of frustrated americans in the way in which democracy operates. as the secretary said previously
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we had eight presidents who have embarked upon energy independence. i don't think any of them were in competent people. but here we are 40 years on and we are where we are. i have met hundreds and hundreds of members of congress and senators over the years. i can only count on one hand people i thought were not competent at least in the conversation i was having. they are competent people who come to serve. i have met hundreds of appointed officials over the years. i cannot count on anything any incumbent and appointed officials have ever met. ..


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