the prices of oil or other commodities would represent a threat both to economic growth in overall price stability. now we hear the obama administration would rather

release oil from the strategic petroleum reserve, when in fact we have as i understand now 1.3 trillion barrels of oil equivalent in the ground just here in the united states, which is the largest in the world. so, despite some of the things that you're hearing today, information is coming from your agency and is telling us that we have a lot of stuff we can use for many years and that is the whole problem with alternative sources of energy is it's still not competitive in the marketplace. why? because overall we still have a very abundant supply of energy ahead of us. but what's interesting is in 2008 now energy secretary chu told "the wall street journal" energy prices are the linchpin to an energy overall. somehow we have to figure out how to boost the price of gasoline to the levels of europe. so we actually have people in

washington who are working to get that price up when the rest of america is going to the pump and seeing a 50-dollar fell in their car jumped $75 that's crunching the family budget. so i would just like to have some responses to some of the other panel members today just real quickly how you may respond we will start maybe to the far left over there, to my left, your response to some of these comments and statements that we've heard today. >> in terms of what specific aspect -- >> well, about -- i think that you are hearing different versions. what is our ability to be energy independent in this country using hydrocarbon, realizing the we've gone from 30 per cent

dependency overseas tunnell 60% and we are shutting off anwr commission and of offshore drilling. we have it under attack which would severely construct our flow of natural gas. what in your opinion is the future of hydrocarbon if we are allowed to exploit those and how it affects prices. >> well, currently coal, natural gas and petroleum provide the vast majority of the u.s. energy supplies over 80%. you know, our projections over the next 25 years which would assume the continuance of the current law and regulation would see a modest decline in the fuel share as other sources of energy, renewable energy in particular increase. but at least in our outlook for others to be a sycophant change from the current share of fossil energy system something would need to change in the current

policy and other market trends we are not currently for seeing. >> the gentleman from new jersey is recognized. >> i thank the witnesses. the members of congress always like to think we can term short-term news stories and to immediate political benefit, and this is no less true with short-term news about gasoline prices, and i guess i would try to draw our attention to other longer-term implications of the news today, which is uprisings in the middle east show how perilous our dependence on petroleum is and the melting

nuclear melting in japan shows how perilous our dependence on nuclear power is and they underscore our failure to have a broad based energy portfolio and our failure to have a rational look at our energy usage. mr. russo, - to set prices are determined by supply and demand globally, and several of you have said that sort of thing. let me ask i guess the first mr. newell, what is the scale and let's put it in perspective here of possible short term energy production. i mean, suppose there were a lot more leases for offshore drilling released in the last couple of years to hear the

curious oppose or even a in the drilling on private land. what is the scale of the increase in production we might achieve compared to what opec can do by turning defaults up and down in the short term? >> welcome there is a considerable lag in the increased access resources and an expiration and the element and the ultimate protection of the resources so there's an important issue would return to the time scale which i think you mentioned in the short run to respond to the immediate impact send crude oil supply one needs to look at the availability of the ferre production capacity in opec which is where that currently relies. in terms of the non-opec

countries tend to produce available capacity at full production certainly in the short term that's where the available spare capacity -- in the longer term various -- >> i'm talking about short-term. >> in other words just to make sure we are clear on this, opec can affect the price of a barrel of oil rather quickly compared to anything we could do by production in the united states. and i stating that correctly? >> i would say that's correct. a vast majority of that is in saudi arabia. >> there are so many things to

cover, but let me just pursue this point a little bit longer. mr. marchi pointed out that over the longer term this would be more and more true, will not? because if the u.s. is warning its oil reserves faster than any other nation and it is largely opec countries that are burning through their reserves at a much, much slower rate than we are, that means they will have more and more leverage than we will in future years. if we have 2% of the reserves, he 11% of the production now and 25% of the consumption. am i describing that accurately? please, mr. newell. >> opec countries currently provide about 40% of the global oil liquid supply and old

non-opec about 60%. we and most other analysts i've seen expect the share will increase over time because the vast majority of reserves of oil are located in the opec countries. >> and because we are burning through our reserves considerably faster than they are so we will have a smaller and smaller share even if some of these larger possibly economically recoverable by some stretch of the imagination are out there is that correct? >> you can shortly after. >> the time of the gentleman has expired. and if you would like to respond back in writing i'm sure that mr. holt would be appreciative of that. >> the gentleman from florida is recognized. >> thank you, mr. chairman. i wanted to ask -- i know all of you have probably read the report that was delivered by the

commission the president put together regarding the disaster in the gulf. and i'm just curious because seem to understand this issue as good as any panel we have seen come before us. i'm just curious, i asked members of the administration this question and i'm curious of your answer. in light of the president's statement that he believes holley oil prices are acceptable he made that statement august 20th 2008 that it is a necessary occurrence to push us in a direction to make us explore other energy sources, and it seems that with the department of interior's issuing a 720 violations to bp, which is

bothersome to me and not rescinding the jones act, in light of that to help contain the oil spilled into the goldfine just curious and this is a yes or no i'm going to run down the line here. mr. rusco, does the government bear any responsibility, any? for the disaster in the gulf? >> the commission said -- >> i'm not interested in the commission. it already been here. i'm interested in what you think i've got time, yes? >> yes. >> yes. >> yes. >> no, you're on the panel, just you and me talking. forget all these other people. it's just you and me. give me your opinion, ms. pierce.

>> [inaudible] >> i understand it's difficult and that's why i asked it but it's really not that difficult. 720 violations cited, refusal -- and this is my time, that's right, asking the question. yes or no? >> [inaudible] >> you don't know? so the 720 violations and the refusal in containing the action and rescind the jones act, in light of what we have seen, the underwriting of the oil exploration in countries like brazil by this administration you're telling me the government has no responsibility and mr. salazar is an amazing man and has 70,000 employees at his disposal of 12 billion-dollar budget to can focus like a laser beam as he stated last week in testimony here. do they bear any responsibility -- 1%, 5%? >> [inaudible] okay. and that is where that oil --

the well was? thank you. mr. newell. >> the congressman, respectfully i have not evaluated the issue and so i'm going to decline to answer. >> really? you would rather report -- >> with the gentleman yield? >> yes, i would. >> it's difficult sometimes when you call members of the administration albeit different agencies to respond on those questions in deference to my friend, and i know very well how focused he has been on that but i just wanted to make that observation. >> let me ask what my remaining time -- with the remaining china mr. newell, do you believe with the decline of over 250,000 barrels per day do you believe this will cause job producing companies to remove their rigs from the gulf and move to other countries are not of the world?

>> in the short-term energy outlook we are having a decline of 250,000 per day relative to last year in the offshore gulf of mexico oil production which is maybe roughly half of that one could attribute to the well below what moratorium and subsequent regulatory situation. the other half is due to possibly natural decline because we've been on an upswing in the production in terms of they're certainly job losses associated with the coin production there in terms of their rigs and their specific location early on there hadn't been much movement of the rigs. to be honest i haven't recently tracked exactly where they are and so i couldn't comment specifically on that. skimming the ones missing are not in the gulf? >> so they are somewhere. they are somewhere. we know their somewhere. they are not where we would really need them to be though. we know that.

>> correct, there are rigs that are moving? >> it's true at some point in time they will move on. early on the last time i looked closely they hadn't because they were waiting in anticipation that there would resume and so at the point in time when i last looked there hadn't been significantly movement but there was a while ago and so i can't comment on mix ackley with the situation is today. >> the time of the gentleman has expired. >> thank you mr. chairman. >> mr. speaker to come in your statement on page two you said that what you're about to discuss in your report did not take into effect what happened in japan and japan would definitely have an impact on what you are looking at this short term energy outlook. can you tell me if you were to calculate that into your

statement here what would have an impact? >> sure. the short term production and price outlook reflected in the testimony is from the outlook which came out a couple of weeks ago and since then we've seen significant fluctuations in oil and gasoline prices. in terms specifically of japan, yesterday in terms of immediate response we have seen the decline in the oil prices which i think most of us with associate to a concerned about to be the decline in the economic activity, immediate decline in the requirement for fuel but also brought sense that there was a hit to japan's economy and has global implications. as of yesterday, the price of oil was down significantly. today it is up again. so in terms of how this shakes out there's a number of things going on right now in the global markets. there is the principal on rest in the middle east and north africa.

japan was weighing on that yesterday, but today it seems the resurgence is more associated with again turning to the unrest in the middle east and africa so the same thing would have to reflect the effect of japan we will see over the next several weeks how that unfolds. >> my next question is for mr. caruso. you are in some reports the you've been quoted in your speaking about the release of the oil from the strategic petroleum reserve, and for all of us the main question is how does that then translate to the consumer? can the consumer expect some kind of release if we were to go to the releasing of oil from the yes br? could you comment on that? >> i think it depends on the amount and the duration of the release. but we saw both during the iraqi invasion of kuwait and the post-katrina releases that were

presidential drawdowns that did have an impact on lowering the price of oil from where it was before the release and after so it depends on specific circumstances and a significant release for a relatively long duration which in my view would be 30 days or more and could have an impact on the price depending or whether or not the opec countries might respond by reducing their production. so it's a lot more contingent on what happens elsewhere in. but in the specific answer is it could have an important effect depending on the volume and the duration. >> is their anything else that could have an impact like that in the short term? is that our best tool to reduce the price for the consumer right

now that you can think of? >> added that particularly if it is done in cooperation, coordination with our international energy agency point partners is the most important short-term crisis management tool we have in our arsenal. >> thank you. my next question is for the director rusco. it seems to me you are talking about two different things in your report. one is the revenue for the interior feel your i guess for the lack of a better description for the monitoring of the revenue source. and second is the permits and what is going on. can you tell me if in fact the permitting system or the leasing system by the interior has really resulted in the loss of the revenue? >> that's very complicated, but we do think that the efficiency of the management of permitting

leaves a lot to be desired and could be done in a more efficiently if interior could do better work force planning and better management of its human capital assets so that it had the right number of people to respond to changes in either applications to drill or nominations for land to be leased but also to respond to public protests of the leases and it hasn't responded to those kind of changes very effectively in the past. so there have been delays. the delays on the leases associated with protests have been a matter of months though not years or anything like that. >> the time of the gentlelady has expired. the gentle man from colorado. >> i appreciate panel taking the time to be here today. i'd like to start with

mr. newell first. i've come out of the district of colorado to where we have a tremendous amount of energy reserves that are accessible for the nation. do you know how many oil and gas leases are backlogged in the state of colorado? >> i do not. the would be the department of interior. >> that fall under that. >> in terms of the backlogs mr. rusco when you talk about creating efficiency in the permitting process do you have some good ideas we can pass on to the secretary of interior? >> we have recommended that the interior look at trying to rationalize the implementation of the laws and regulations across the many field offices in the bureau of land management. so what we see is an inconsistency in the application of laws and regulations. we feel that coordinating and providing a better guidance across all field offices would make it easier, more efficient,

both on the perspective of companies supplying but also in terms of protecting the environment and the safety and also the right amount of revenue. >> nist pierce come can you give an idea we are looking at when we are looking at the oil shale how many potential perils of oil or captured in the oil shale? >> there's a tremendous amount. >> can you give an idea? how many barrels? >> we recently did a re-evaluation of that and i don't have the members on my fingertips but there are billions of potential resources. we didn't do a technically recoverable resource estimate because there isn't one technology yet that is proven but there is a lot of potential oil. >> so investment in technology to be able to liberate this energy america can have a bright future in terms of energy development in this country? >> possibly. >> possibly. >> you know, mr. rusco, you made

the comment that we had reached our peak i believe it was in 1970 to around 1972 concerning domestic reserves and i just happened to read some body language and i saw her shake her head. would you care to comment on that? >> i have no idea what it might be, and i don't think anyone does, and i think people can't claim to know that. the earth is a huge place. geologically we have abundant resources we haven't even begun to explore or learn how to utilize. so i think we are faced with our periodic constraints of timing. how do you mobilize investment and direct that in two new plays and prospectus areas, new technologies? and every time we do that we replenish our production and i wanted to put that on the table from the previous discussion, replenishment. that's what we do in this country.

so it's unfair to look at the rates and things like that without understanding that what we are very, very good at is moving from that resource category to the reserve category to the production in a very efficient way. and it's a helpful process that has to be better understood and shepherded the right way and managed the right way by the industry and government. i don't see any reason to think about peaks or other constraints. i think the constraints have more to do with how we feel about our resources that are available and the various options we have for developing them. >> ms. pierce, we can't take the politics of anything and in regards to the u.s. energy production under the obama administration, can you give me an idea in regards of our onshore leases that are began producing after 2008 how many of

these were due to the leases that were approved by the previous administration? >> i can't answer that because this in the u.s. geological survey that we would be happy to work with the management to get to that answer. >> by way of comment we hear that we have 2% of the world's oil reserves in this country and that we have a burden rate of around 25% there are some who believe and i happen to be one we benefit the world. we happen to be one of the highest productive people in the world that reach out when we are talking about japan, u.s. naval ships, the resources we are able to bring to bear to be doubled to help people when they are in need the technology which never comes in our intellectual capital into our trade calculations and exports as well. there's a lot of opportunity for this country to be able to develop our resources right here at home to switch in terms of how we are using some of those

resources. the t. boone pickens plans when it comes to be able to drive our vehicles as well. as opposed to opportunities are certainly going to be there. thank you mr. chairman for your time. >> the time is expired. the chair recognizes the gentleman from michigan. >> thank you, mr. chairman. first, just one states code debate point made by mr. the sutherland. the point of the verification. there are more rigs in the gulf mexico than before the be peaceful. there are now 125 rigs in the gulf compared to 1221 year ago. i just wanted to put it in the record. but i have a question of mr. newell. speculation is often pointed as a cause of rising or unstable oil prices. to help prevent harmful speculation, last year's paul

st. reform regulation included provisions to regulate the commodities futures trading commission. however the spending bill would cut funding for the cftc by $56.8 million almost one-third of the agency's entire budget. despite the chairman of the cftc recently testified before the senate agricultural committee. but the cftc already doesn't have enough funding to properly enforce these provisions under the wall street reform bill. can you speak to the role of the speculation and the price of oil and the difficulties of addressing this problem on h.r. one would reduce the budget of the agency in charge of cracking down on speculation by almost one-third. what i am asking you is your position on the role of the

speculation and whether we should be cutting the money used to scrutinize and enforce that speculation. >> welcome to the first part of your question, if you know, speculation clearly has a role in oil and other commodity markets. because commodities in particular are storable there is always going to be in anticipation or expectation by what the price might be in the future and therefore, there will be actors in the market making basically voicing their opinion through the marketplace about how they think that prices will change over time. in terms of the role of the regulatory agencies, the agency i had is not a regulatory agency, the role of the regulatory agencies like the commodity futures trading commission is to oversee the transparent and efficient

markets. the proposals they are developing relate to the position limits in energy commodity markets. the intent of those is to prevent excess concentration of any protractor in those markets and therefore from the market efficiency point of view the role of that is to prevent any undue influence on the market prices. but i would -- de fer in terms of expressing for their opinion on the role of the regulation. >> the congress last year introduced or felt the speculation did play a role and therefore the past legislation which is the lobby of the nation to try to scrutinize and regulate the speculation, and i guess we want to know whether we should be -- if that made sense in the first place would be cutting the budget of the agency that is to look at that speculation. it's not a huge budget in

itself, 56.8 million. you want to cut by one-third. to see that as a prudent thing to do. >> i think i will decline. i think they are pretty loaded with policy implication so i'm going to decline in opinion on that. >> i invite anyone else who wants to comment on that. >> as the gentleman yield back? the gentleman yields that his time and i recognize the gentleman from pennsylvania mr. thompson. >> thanks for calling us of this hearing. this $3.54 a gallon today. i come from a district i guess we started this whole situation with the drilling of oil within

walking distance my district office in titusville i take exception with one of the comments made by one of my colleagues. i have to tell you there are families in independent travelers, small businesses, the controlling oil for generations for 151 years. so this is not a big oil is not an issue with me. this is about small businesses and jobs and energy security. just one quick note i thought was interesting to read the chart shown in terms of earnings for the reserves, the country with the next the closest burn rate to the lowest portrayed in the united states, the united states of a 330 million americans population, norway 4 million. so, the size probably does have a bearing on how much we use. my question -- those are all about the current -- one quick question that should be very easy and i will just open this to the panel is is there any

renewable fuel which would take the place of oil in the next decade we will say? yes or no based on your experience we will go down the road if you could. estimate in terms of the fuel that would replace oil over the productions in the start of 2035 is biofuel for the four so far -- >> suit to 35, i will take that as a no sense i said a decade. i have a number of questions if we could -- >> we don't see petroleum being reserved in a decade. >> thank you. >> no. >> no. >> of the century. >> not this century, there you go. >> i would refer to the eia. >> very good. appreciate it.

mr. rusco, this is a very basic question but i think it's important for people to understand. tell us who owns the oil natural gas on and off shore on the federal land. >> who owns the gas on federal land? >> on and off federal land. certainly based on that i'm sure you agree that that's owned by the american tax payers or i guess not all of it is on federal land. how much would you estimate to be the american taxpayers? >> i don't have with me an exact figure for that. it refers to all of that so that would be under the private land.

offshore in the federal offshore is about 64 billion barrels which is federally going into effect by the public but there's more than that. >> based on the as as i have to have confidence in the stuff that is the resources are privately owned. it's the issue we brought up against is the taxpayers own that would have a good job of production triet >> of the 219 let me move on some of the maffei tried to do some basic math, not a strong suit of mind, qalqilya approximately 814,000 square miles of the lower 48 offshore miles placed off limits by the president, noeth lease, we are not talking about the gulf of mexico. we are the most to recent leases were released so it was the remaining part. so, the 814,000 square miles off lease. that's nearly 521 million acres

or five times the size of california. mr. newell or ms pierce, can you tell how much oil, natural gas are contained in the 521 million acres and as a part of your answer, would you tell us when the last modern seismograph inventory was taken of the offshore oil and gas? >> i will defer to brenda on the second part. in terms of the major part in terms of areas currently under congressional moratorium would be the central and eastern gulf of mexico which i believe is six-point something billion barrels. that is the most promising area in the gulf of mexico and also in terms of what is available on the pacific and atlantic coast is the gulf of mexico where the vast majority of production is already occurring so that is the central and eastern part under the congressional moratorium of 2022. >> in terms of the seismic i would have to look at some of

the numbers. some is recent and dated several decades old depends upon where you are in the outer continental shelf. >> the time of the gentleman has expired. mr. defazio. >> thank you mr. chairman. mr. newell, on page seven in the middle of the testimony given the increasing importance of the opec supply in the global oil supply demand and the other issues how they respond to the increase in the non-opec supply in our production potentially offsetting any direct price effects. we hear this all the time. it is a world market. and for years starting with the bush administration the clinton of the mission, bush administration, not the obama administration might ask we file a complaint against opec for the legal commodity manipulations under the wto. i am told that it's not covered. well, the only exception is for conservation purposes.

opec never pretends to be conserving their oil. they are setting the market by granting of the production up and down. they tramped up because libya, they have a price target. so, if we produce some additional oil is that likely to change unless lisieux opec and go through the wto process and break the cartel? the can easily offset the productions here by dropping the production there. >> i think that's correct. >> thank you. >> and second, i would engage anybody on the panel in pushing this issue and legislation. i've written bipartisan problem pushing the administration, clinton administration of the obama administration special trade representative will not take on opec. i guess we are scared of them for some reason. second, mr. newell, the enron of loophole or the commodity speculation, you spoke as though we had set a stringent new limit

on the the market's for the players in the market. as i understand the financial service reform accepted people who are not in accusers from this, particularly hedge funds and others and the other regulations for pension funds and folks like that haven't been promulgated yet. so we don't have very significant restrictions get on people accumulating large numbers of contracts, dewey? >> i don't have an opinion on the relative stringency of the cftc regulations whether that is too much or too little. >> right. but, okay, the point is you are saying there is little or no effect by speculators. there are other experts as saying there is a dramatic effect by the speculators on the market because right now there is not an oil shortage but we have seen the prices run up very dramatically to the nitze if there isn't a shortage and we are talking about supply and

demand one with the price run-up so much if there's a balance between supply and demand? i think there's only one other -- it has to be problems with speculators, it? >> there's been a number of factors over the last several months of driven prices higher. there's been a rebound in the global economy and i know that is sometimes hard to appreciate here because the u.s. still has a high unemployment rate but there's been a rebound in the global economic growth that has led to visit the degette resurgence in a global demand service that brought prices back up in the the 75 to 85-dollar per barrel range in the last quarter of last year there was increased high demand for the fuel which led to the fourth increase in the prices and on top of that we had the recent unrest in the middle east and north africa which has on several of the market and has taken about at least a million barrels per day of the market and has also unsettled during the center of the -- >> and they have so i guess the

question is where is all of that money going? i know where some of it is going. exxon's profits last quarter of last year was the largest quarterly profit for any entity in the history of the world. 9.25 billion cut its 53% in one year. is that supply and demand? 53%? someone that has a substantial stranglehold on the market? they may have 53% increase in the quarterly process? that's just supply and demand, no speculation involve criminal manipulation, nothing. u.s. consumers just say that's the way it is. is their anything we can do about this? >> if we let all the leases we discuss that because opec will just drop -- they want to keep the price target they can keep it. we want to come into the wto. we've got exxonmobil operating

with such market quotes they can drive the market, too and increase their profits 53% in one year. it's extraordinary. do you have suggestions how we can deal with that? we of long-term issues by supply and short-term issues about people being screwed at the pump right now by big oil and opec and we are not doing anything about it. >> the time is expired. the gentleman from georgia, dr. brown is recognized. >> thank you. i believe very firmly the nation cannot he did so for close itself, it is not energy independent it's not a secure nation. we are not a secure nation because we are not energy independent. the department of energy was founded during the carter administration as we all know to make us energy independent. it's been a an abysmal failure in that charge. the nationwide the gil troy

gasoline is about $3.55 a gallon. this is the highest price ever in the month of march and is over 40 cents higher than just a month ago. the skyrocketing gas prices in a risky dependence on tools supplied by volatile for innovations such as libya for the american energy policy that emphasizes production and decreases our reliance upon foreign oil. the united states is the only nation on earth that bids development of its own god-given natural resources. we've been blessed by our creator with abundant natural resources and we shouldn't be hesitant to tap into it. especially of the time when the energy cost is so high. however, since taking office the obama administration has done everything in its power to block of our energy resources even more with the defect code moratoriums. the production of the gulf of mexico alone has declined by

400 barrels -- 300,000 barrels of oil per day just due to the obama administration's actions. energy is the lifeblood of american economy. our nation's economic prosperity is closely tied to the availability of the reliable and affordable sources of energy. unfortunately u.s. energy production has grown by only about 13% while energy consumption has grown by 30% since 1973. at a time when 9% of our citizens are unemployed in the district we had 17% unemployment. food prices are giving high with a still struggling economy we must do everything in our power to allow the responsible use of our known american supply of energy. now doctor, it's been proposed by the obama administration of tapping the possibility of

tapping the strategic petroleum reserve. does this make sense at all or should we develop the known resources that we have here in the united states? >> i think the psychology of the marketplace would be much more significantly impacted by the decisions that affect us long term rather than now. i don't think -- this is my own opinion. i don't think that the release right now would matter much because i don't think we have an inventory problem, we have if your problem about the future. we have expectations about the future, uncertainty about how events will unfold in the critical producing region and uncertainty about policies here and investment actions here, and i think that symbolic steps, meaningful steps that indicate we are willing to make sure we have a robust industry here would have much more impact on the treaters and treaters ecology and market psychology than using the spr.

>> thank you, dr. foster to devotee tapping into strategic reserves is not sound policy and i think that it is an aim to even consider doing so. there are other things we can do. i take the first time a drill hits the ground and starts drilling in anwr you will see the prices come down worldwide. but what can we do, doctor, here in the u.s. to lower the gasoline prices? >> i think some good points came up in the panel today both on the supply side ensuring that the moving portfolio of resource reserve production conversion is able to continue to function the right way. so that means looking how the industry operates and ensuring that appropriately given 000 for site is there but that it's done

the right way. streamlined, sprint, everybody can understand it. the public industry and the government agencies that are involved. the industry has to be able to maintain portfolios of the prospects. and people have to understand what that entails in terms of both public and private mineral leasing access to resources and the investment cycles that are needed and then on the demand side i think some key points were made considering how malleable the hydrocarbons are because of their energy content we should use them wisely and i think by now we have the reams of research show how much we can gain by affecting things like combustion engines, performance in vehicle technology that allow us to get basically more bank for the buck for every gallon of gasoline we use and that's what we ought to focus on.

>> my time is expired. >> thank you. i now recognize the gentleman from louisiana. you don't have a witness here that speaks the same language like you do yesterday but you are recognized for five minutes. >> i'm going to try. i have a lot to ask. i never have enough time. [laughter] i want to make one quick comment that i'm certainly glad that mankind didn't calculate the perils or perilous circumstances of the voyage by 400 years ago so that they could find the great country. i guess that is why my colleagues on the other side of the ogle are mad. they didn't do the calculation. i guess if they would it wouldn't have come over here and they could have been born in europe. but just common sense over here. i wanted to ask, and i don't know if they ask you this i had to step out a couple of different times but last week the president had a precious

conference. he made some statements and did the white house call you and ask you to give any statistics on that? >> i'm sorry, what specific are you referring to? >> he had a press conference he talked about production increases and how he was doing a fabulous job of increasing oil production in the country and i just wondered were you in that meeting -- did a brief you and call you and ask you to send them some statistics? no, no, that is a yes or no. did they call you last week to ask you to send them some data? >> there is data that comes, yes. >> sent specifically to the white house on the request of last week? speenine i wasn't involved in providing the data. it's very routine -- >> do you know if you send them the data that says in the first

quarter of 2011 your agency said the production in the gulf would decrease from 1.59 million barrels to 1.4 million barrels a day. >> are you asking me if the number in the short-term energy all? >> no, no. i know that's your number. did you send that to the president? did you send that to the administrator? because he never mentioned that in his press conference. he just said production was the highest. he's a fellow who gave us our all. did you send that to the white house? i'm trying to figure out did you or did you not send these statistics to the white house if they asked you last week was this statistic in there? >> my recollection of what is on the fact sheet was kind of history, historical as opposed to the forecast -- >> don't you think -- >> you don't just send facts,

but he evidently tried to influence policy but in forecasts or you wouldn't have run these numbers. don't you think it was your responsibility to send it to the president and say i think you're fixing to make a tignes statement? >> we certainly do not to our forecast to influence the policy. quite the contrary. we do it to inform people about the current state of affairs and the link the state of affairs in the future given what we see in the market and regulatory outlook. >> that didn't answer the question, but do you or don't you agree under the current policy the production of the gulf of mexico will continue to decline? >> [inaudible] spec no, no, it's yes or no. pretty simple. it's just is the number going down or is it going up? >> over the next two years which is where the short-term outlook goes there is a decline in the gulf of mexico in terms of offshore oil production. >> and so the gulf of mexico

production in fact is in the entire domestic production, correct? so that means if that goes down, in domestic production goes down; is that correct? >> other things tend to lower the rate of change of the domestic production. >> other things equal. >> there is also offsetting effects -- >> such as? >> increased production of the liquid natural gas and increase productions in the lower -- >> i'm glad you brought that up because you see he's taking credit for the increased production but yet there is one project in the gulf one in deep water project started under ronald reagan and bush or clinton, and then i think started drilling in bush from a neck to win 99 and the platform set in 2005, 250 barrels a day. to hundred 50 -- to you think there is anything on sure that can produce that much oil

onshore? no, no, that's yes or no. that's pretty easy. you know the facts. do you think that there is a project on shore we can get 250,000 barrels a day out a well know. >> thank you. i yield. >> mr. johnson of ohio is recognized. >> thank you, mr. chairman, and think the panel for being here with us today. not long ago we had an opportunity to question secretary salazar in a hearing here. it became very clear to several of the questions, and the secretary made a comment that oil prices are determined on an international markets, and therefore america has no

influence, little to no influence on the price of oil thereby little control over the price of gas at the pumps. do you agree with secretary salazar, dr. foss when he says the u.s. cannot impact the price of oil and therefore the price of gas at the pumps? >> i disagree. >> would you explain why you disagree? >> we are both a large producer, the largest producer, and a large consumer, and i still think we are the largest consumer. it hasn't been passed up yet. that gives us i think market clout we don't use to our advantage and i think there's a lot of ways of exercising that that came up this morning i think through the international relationships for our own actions and our own country

through our industry activities how we signal to the will of our intentions going forward. all of those things, how we manage our energy consumption and things we do to put in place to use our energy resources wisely. all of that has impact. estimate it encourages me that you think so, because i certainly think so as well, and as i commented to secretary salazar, it greatly concerns me that our leaders and the administration and in the cabinet seem to have felt their hands are tied behind their back and that is a further indication to me as i mentioned them that we have a field energy policy. you are in america and that should be alarming to the american taxpayers. it's certainly alarming to me. another question, he brought forth a budget and one of his justifications for his increase in the budget was so that they could put in a robust permitting

approval process in place. i don't have these numbers exactly right, but you will get the intent of my meaning. three years ago, two years ago, 300 some permits approved. a year ago, 100 some permits approved. this year, 30 some permits approved, and we are on the study downhill curve. why do you think it is that the department the interior needs more money in 2012 to go back to producing and authorizing permits at a level for which they were doing it for less money three years ago? does my question make sense? we were authorizing 300 plus permits just a couple of years ago. we are down to the 30's in the deepwater area we are now almost

none, one or two. but yet they want more money to the robust process in place. they were doing it for a lot less. three years ago. why do you think they need the additional money and increase in the budget, dr. foss, to put a permitting process in place -- help me out. >> sure. thanks for clarifying you were addressing the question to me. >> i'm sorry. >> that's all right. i think that there is a certain amount of public funding that probably needs to be used. i'm not a budget expert. there are other people who are federal budget experts and i'm not. happiness the process happens we that it should. but not commission report and around other discussions, there are also additional avenues of making sure that federal areas are managed and administered in

a way that doesn't put as much pressure on the federal budget as perhaps some might think. and that includes a range of things. how they function themselves, giving the industry to participate the right way. there are options. >> i just want to rap up with one final question, sort of a yes or no as well. do you agree that we have a small permitting process? >> i can give implementation problems. >> are we proposing the number of permits that we should be producing to tap into america's resources? >> i think we need to think about how to implement a permitting -- >> that is a yes or no question. >> yes. >> okay. thank you. i yield back, mr. chairman. >> thank you. i recognize the gentleman from california. >> thank you, mr. sherman. i actually had a number of questions on the permitting

today which i will submit and look for an answer in writing because i think that it's the most pressing issue right now actually has to do with the door right. i'm surprised to see mr. marchi's crafts, and i would agree the burn rate -- we don't want to approach was all so we are in jeopardy birding for all of our natural resources. but i think that the chart suggests norway -- if you believe norway and mexico are larger than the united states, that would actually be a factor. or if we only had 2% of the world's oil reserves. is that is actually what i wanted to ask a number of questions on and first of all, mr. whitney specifically let me start with the president's statement last week was even if we tap every single resource available to us we can't the state the facts according to the president we only control 2% of the leal but we consume over a quarter. some people are talking about kunkel versus actually what are

the reserves. so i want to clarify that the crs did come out with a report and the 2% figure is 19 billion barrels of oil; correct? >> [inaudible] about 21 or 22 billion barrels -- >> and the number that i shall hear from the crs report actually is 140 -- 145.5 billion barrels? >> again, that number has been updated. i don't know the latest number is that it's near that, yes. >> i mean, there's a difference. we are saying that 2% is less than 20 billion but we actually believe there's over 145 billion -- >> welcome this is -- >> it would obviously affect the right. ..

>> if you understand all of our energy reserves we can obviously balance those different reserves and make sure that we are self-sufficient. we want to be self-sufficient and not in danger of war markets. >> right in their other issues we can address. for example the consumption of oil types or transportation system so if the transportation system in the future is converted to an electric system or more reliant on electricity than natural gas, coal and nuclear are fuels for generating

electricity, and that could help move us away from consumption of oil. >> mr. marquis's charge of how we compare the rest of the world. 1.3 trillion, how does that compare to the rest of the world? >> it is the largest number in the world but i want to caveat that very carefully because as i put in the report there are some caveats and disclaimers within the u.s.. we have very good numbers for proved reserves and for technically recoverable resources thanks to usgs and iea. once you get outside the united states, united states, that data is much, much harder. >> how do we define recoverable? the recoverable is defined by what current technology. >> is killing rich in californid

recoverable? >> i'm not familiar with that feel. >> mr. newell, killing rich. the biggest project in california one of our largest states. >> it is existing technology can get resources at some price then yes that would the. >> are we assuming we don't have the technology? i would hope we are stemming we have the technology. >> i was agreeing. as long as you have the technology it would be so yes that would be included. >> that would be included in the 19.1 billion barrels that the 2% the president is referring to? >> i'm not sure because that is proven reserve so i don't know specifically whether those have been looked by a company which has an additional set of requirements for it to be considered a reserve. i just don't know. >> what i'm trying to get down to and i have a number permitting question so what i'm trying to understand is when mr. marquis shows a chart 2% and throws off these burden rate numbers and the president talks about 2% are we talking about

oil that we know of, oil that is permitted and we are pulling out of the ground or somewhere there in between? >> 2% number is referring to a reserve number which is it proven reserve. technically recoverable resources is a much bigger number. >> the time of the gentleman has expired. >> thank you mr. chairman. >> the gentleman from south carolina. >> thank you mr. chairman and american energy independence is what we are talking about. in 2007 and 2008 i served under the previous administration department of interior mms five year planning ocs five year planning subcommittee which dealt with oil and natural gas on the outer continental shelf and talked about the next five-year plan in where those leases would go. and i was amazed during that process how convoluted it really was, because we are very limited

on what we can talk about. we were limited to certain grid section in the western gom in one small spot of the coast of alaska and they were both an ultradeep water. in 2005 i went out, probably 2006 i went out to louisiana and it was post-katrina, and we flew out to a deep water production platform and a deepwater drilling platform. the platform i went to us the devils tower floating and 5600 feet of water. we also went to a drilling platform which was a pontoon drilling platform for natural gas about 4 miles away and so i've seen it for myself. and, congressman landry has been very clear about the impact of the de facto moratorium on the gulf coast states. the fact that it is not just the energy companies, the petroleum

companies that are drilling. it is a trickle-down effect all the way to the smallest welder. it is a trickle-down effect to the states that are hit by this recession that are losing the royalty revenues is a double whammy to an art impact of economy that was impacted not only by this bill which was unfortunate, but understanding from talking with folks is that the companies that do expert -- exploration and drilling have met every requirement of this administration that was put out there in order to get that to work, in order for the permits to be issued but yet to this day we'll may see that to permits have been issued. the american people want to see us to deal with american energy independence and they understand it is a national security issue. let me be clear, i am for all, all resources that we have in this country to meet our energy needs. i am very pro-nuclear energy. i am pro-on drilling.

ocs in here on the mainland. we have had thanks to the direction of our chairman, we have had ahead of the l. n. and the committee and we have talked about the wildlands act and the fact that secretary salazar fired the secretary of order in december to basically accelerate the designation of wilderness areas. a sickly usurping the power of this congress which has the only statutory authority to designate wilderness areas usurping the authority so now we are saying the federal lands are being taken off the table for energy exploration and energy production to meet our energy needs in this country. i think that is abysmal. this administration spoke recently about, and i applaud them for this, about the necessity of increasing domestic production, but actions speak louder than words. so i asked this administration to accelerate the permitting process. let's get the people back in the

gulf of mexico that have leases. let's extend the current leases that are expiring because those folks that do to the plate and they bought the rights to explore for energy sources and produce energy sources on those leases. having been on that five year planning subcommittee i know the process that it takes to recommend to the ocs committee the next five-year plan of where those leases should be. it is a long process. and if we started today we are five, six, seven years out for the next release so we have got leases expiring and we don't have another lease sale. in fact i don't know when that is going to happen. anwr should be back on the table mr. chairman. it is the size of the great state that i come from but as we talk about the impacted area in anwr we are talking about the size of the columbia airport in colombia or maybe the size of the city of charleston. if i stuck a postage stamp on that wall that is what we are talking about. is time for us to be serious

about energy production meeting the needs of this country with american resources for american energy production. that is deep water, onshore and that is offshore. fracking, hydraulic fracturing. james lankford from oklahoma mentioned they have been fracking in the houma for 50 years without an incident. he said come and drink our water. come and drink our water. we are proud of it. we have got the ability to do that mr. chairman. let's not remove this federal land from access for exploration and see what is out there and and than we can produce it. georgetown i saw a sign $4.69 a gallon. i think that is the highest in the nation but still it is alarming. $3.95 is alarming. i know what $4.95 of diesel fuel meant to my small business in 2000 i know with the rising cost of fuel means to large and small businesses in this country and it is time for us to be serious about that. >> the time of the gentleman has expired. the gentleman from florida.

>> thank you very much mr. chairman. i want to give you an indication of perhaps what is going on with some of the residents in my state in the state of florida where on average the price of a gallon of gasoline in florida is currently about $3.56 which is higher than the national average just a month ago, just one month ago the average in florida was $3.13 and at this time just in one year ago, in my state, the average was $2.82 of this is a 74 cents or 26% increase over the past year in my state's fuel costs. initially i thought to ask the panel whether they were aware in certain states like florida what the average household income was and whether that household

income in florida was keeping pace with the rise in fuel prices and that of course was going to be a rhetorical question. i presume what he may not know the exact amount you would probably all know the answer is absolutely not, that household incomes have not kept pace. so the fact of the matter is according to the latest american community survey put out by the u.s. census bureau the average median income in my state in florida has been declining. people's incomes are going down. so florida families and across the nation are having a harder and harder time paying their bills, having a harder and harder time providing for their families. and this administration's policies or perhaps the lack thereof in certain areas are making it even more difficult to provide for their families. and the economic resources are diminishing rapidly.

with political unrest in the middle east and north africa the summer travel season picking up in the coming months, and the additional rising fuel costs that accompany it, americans i believe are anxiously awaiting for the administration's plan, for the plan to increase our fuel supply and try to suppress price spikes for foreign supply disruption, whatever the cause is. the american people need to see the way out. what is the plan? >> i have a question for mr. newell if you would. according to your agency, production in the gulf has declined by nearly 300,000 barrels a day since last april. berrigan project declines of 200,000 barrels a day or will be for the next two years continuing declines. have you calculated how much in revenue by royalties the federal

government and the producing gulf states have lost? >> we have not done that compilation. that would be the kind of calculation the department of interior would do. we have not done that. >> let me ask perhaps dr. foss if you would. this year, the president's fiscal year 2012 budget, the proposed budget includes over $60 billion in new taxes and new fees for american energy production. if you couple that with the lag in getting permits approved in the gulf where we have been discussing during this hearing, can you tell us what you believe this will do to fuel prices and whether these actions will encourage or discourage companies to invest in american energy production?

>> anything that affects the cost of doing business that breakeven finding and development cost that i mentioned in my testimony will make the resources that are recovered more expensive and the only way to offset that is to streamline other things, for example the cost of obtaining permits or the cost of dealing with regulatory oversight or other actions and increase production volume so that the cause cost could be spread over more arrows for more gas. >> anyone else like to elaborate? perhaps mr. caruso? >> no, i think the thing that in that budget that is likely to have a significant effect is the increased cost by reducing or eliminating the intangible

drilling, the ability to expense intangible drilling cost. i am told from the smaller independent oil and gas producers that is going to have a significant negative effect on their ability to drill as much as their expert patients were. so i think that in the longer term will reduce the u.s. production. >> thank you mr. chairman. >> the time of the gentleman has expired. the gentleman from utah, mr. bush of. >> thank you mr. chairman. i thank the panel for staying as long. ms. pierce i appreciate the conversation you had with mr. tipton about oil shale and i appreciate you saying we are billions of euros actually the energy department believe there are 800 billion of arrows that could be recovered and that is

which -- which much bigger than what saudi arabia house. the state share would do a great job in funding our state's education system. as we can tell when the secretary of the interior told by leading his process 77 oil leases have a direct impact on the funding of education in my state as well so i appreciate that comment. i do want to hit up dr. foss if i could with some questions. dealing with what we have talked about so far because it is very clear when gas prices go up and heating prices go up that becomes part of the collateral damage oftentimes of administration decisions especially lately so i want to follow-up with what mr. rove there was talking about. in your opinion which americans are really the most impacted by rising gasoline prices? >> the americans has been the most money on gasoline relative to their disposable household income so people who have a larger sale of their household budget.

spivak becomes a lower economic strata of our society than? i am assuming that is lower. okay. so i mean it would be safe to say that americans would be the ones who stand to benefit the most from an increase in american-made oil and natural gas production. vis-à-vis the ones who we would be helping the most i am assuming? >> yes, that is correct. >> let me stick with you dr. foss. we currently lease less than 4% of the 2.5 billion a curse of the federal mineral estate. if we were to allow access to more bad federal mineral estate is not logical we could increase our domestic reserve days? >> yes, we would. >> we are used to bigger answers but thank you for the direction. what advantages does the united states have compared to other countries or maybe even hindrances do we have two other countries that we might and congress address that would

encourage more domestic development? >> i think the one that we just talked about, which is budget and taxes and there are two things to think about there. one is a direct effect on the producers themselves, the producing community itself. so the tax structures they face, the cost structures they face but then the other one is the health of the overall economy because just like any other industry that companies will do better if the overall u.s. economy and budget are in better shape. >> i appreciate that. just one last one of view them. because we heard yesterday a great deal of comparisons between the united states in other countries that i think somewhat were skewed in the response of doing that at how does the domestic oil and gas industry compared here, compared to the industry and other countries in terms of science or technological development?

>> it is the norm ashley different. for one thing we have thousands and thousands of producers of all sizes and shapes and specialties anywhere from nine to 10,000, 9000 to 10,000 is the roof estimate of the total number of active producers in the united states large and small. they are motivated to deploy and develop the best technologies that they can and they tried to do that. and they do that freely in an open open market and competitive industry activities. and they have access to private owned minerals and not just the public owned minerals. we are the only country that is organized organized outweigh. >> i appreciate that very much. i also appreciate the fact we have talked a lot about offshore development that i come from an inland state that has a great deal of potential development of the were allowed to be there and if somebody is on a schoolteachers retirement my

retirement is the future of my retirement is based on ability of economy and my state to fund that as well as my kids education system so i'm very sensitive than remake of arbitrary decisions it takes that potential development off the table when we could be benefiting from that. mr. chairman of five a few minutes left and i yield to the gentleman from louisiana if i have a few seconds left? >> the gentleman has 19 seconds left. >> do you want 19 seth -- seconds jeff? >> i would like to just for the record talk about their rig count real quickly, the rigs that are out there that are claiming in the gulf of mexico, those rigs may not be drilling. is that correct? so it doesn't do us any good to to -- drilling. >> correct. rigs could certainly be there not drilling. i can speak to the longer-term issue of how fast it could recover. >> the time of the gentleman has

expired and there is a desire for second round so i will certainly recognize the gentleman. the gentleman from utah's time has expired. there is a desire for second round. i have one question of mr. holt and then finish up with mr. landry. dr. foss, there have been records that have been -- between that price differential of the world crude in the west texas and the suggestion is because this has been the rise or the impact of north dakota. and i understand that new production probably would have an impact on the world prices but is this difference in price an indication that more domestic production could provide a price base for american consumers in that regard as well as the national security aspect that i have been talking about for some time, dr. foss? >> yes. >> boy that is very definitive. do you want to elaborate?

that is the only question i have so i'm not going to ask you another one. explain briefly. >> i understand what you are asking which is the impact of our crude production in our own markets? >> right, exactly. >> course it is a huge impact and i mentioned an idea the suggestion that we need to think about which is the bottlenecking to make sure we can benefit from it, because and we have this problem, we have had this problem before. we have a, natural gas sides periodically and we have new areas that grow and start flourishing. we have pipeline bottlenecks and storage bottlenecks and we can't get it out to the markets that we have an accumulation of inventory and one in one part of the country right now and it is contributing to the disparity between our domestic price and internationally traded price of crude, so to the extent that provides an indication to investors that perhaps there is money to be made by building

additional oil pipeline and storage terminals and other capacity, they will get there as long as they can get it permitted and enter the market in a way that they feel will work timing wise. >> and all that would be based on the assumption that would be less than the world market prices and therefore benefiting american consumers. is that correct? >> well, they would take advantage of arbitrage to make the investment work. so when you have a disparity in a price signal like this, a low price in a producing area relative to higher prices and markets, that allows you to actually finance the structure. that basis differential as we call it that allows people to move forward with projects like new pipeline capacity and other the bottlenecking strategies.

benefits consumers. >> which goes back to your original short answer yes it it helps bennett that the american consumer. now i will yield back my time and recognize the gentleman from new jersey, mr. holt. >> i thank the chair and i thank him for his courtesy and allowing further questioning. several of our colleagues raised the point of the cost of gasoline at the pump today. $3.50 am more compared to months ago or a year ago. but i think it has come out quite clearly in the testimony today that oil prices are much more a function of what opec does then a function of the rate of issuing oil drilling permits, and gasoline prices are even less correlated with that. gasoline price fluctuations are much more a function of

speculation and even what i would call couching. gouging. wishing and hoping and dreaming won't change reality. when we talked about reserves -- that is reality. what resources can be estimated with reasonable certainty to visit -- at exist under reasonable economic conditions. i think we have to face the fact that we must have a broader balance of energy portfolio. simplistic solutions won't do. drill baby, drill is simplistic. it does not capture what we have. we do not dominate the production of oil in the world. we never will again dominate the world oil production.

the burn rate actually has some meaning. we can quibble about exactly where we are relative to norway and others but what it means is that our leverage in oil prices will be less and less and less and it is already not great. so my question has to do with oil reserves and not cool by the way. in talking about how many barrels equivalent we have of coal, is not really relevant here today. in trying to explain that the burn rate doesn't mean anything, dr. foss says well but we are continuing to expand our knowledge of our reserves. my question is, when was the last time that more oil was

discovered then was actually produced? in other words, when did this view of reserves around the world stopped keeping up with our use of oil? yes, do you know what you are that was dr. foss? >> we always have more reserves than we have production. reproduce some reserve's. >> let me pretend we are playing jeopardy here. that has been something -- the last year that more oil was discovered than was actually produced, what is 1984? more than a quarter of a century ago. we can hope and dream and wish, but we have got to face facts. we can't look for simplistic solutions. we have to have a broader energy portfolio and of course oil is

important to louisiana. of course oil is important to texas. of course oil is important to all of their country for all sorts of reasons. but we can't change reality, and we have got to face facts as mr. markey said early on. we have ridden this horse and we have ridden this horse and the legs are giving out. i yield back my time. thank you. >> the gentleman yields back his time. i will recognize mr. landry to close. >> i think we have a few more horses in oil. we have got natural gas. i think this horse is a pretty solid horse. we should put her in the gate. we have got a lot of coal. put colin the gate and nuclear certainly does a good job here in this country if we could get back to building refineries and i'm confused to know i know it is hard to say right and there

is a lot of confusion on the other side of the aisle, because they talk about opec having a stranglehold and another member comes up and says that exxon has a stranglehold. that is kind of confusing. as to who exact we has the stranglehold. anyway, how long do you think that this trade of speculation has been around in this world? come on, you are all smarter than me. someone knows. do you want to guess? 100 years? 200 years? century so speculation of commodities has been around for centuries. so it evidently we have been able to grow this country -- this country has been able to grow and prosper all the way through the speculators for centuries and centuries ago. they didn't hang them back then or anything. do you know? if they did or not? was at a punishment for

speculation? >> i don't believe so. >> okay, all right. what bothers me is we always want everybody else to increase their production capacity for our gain but we don't want to take responsibility for what we could do ourselves. the interim safety rule issued by the interior department in october 142,010 said that there is sufficient spare capacity in opec to upset the decreases in the gulf of mexico's deep water production. do you all believe that is true? i mean if that is the case then prices shouldn't be continuing to go up. wow. [laughter] that may ask you this question.

are any of you all familiar with water cuts? any of you familiar with the mideast reserves out there? does anyone want to comment? i'm going to give you off the floor. i've got some time here. >> i'm not sure what the question is. >> if you are familiar with the problems, we always want to turn to the middle east but is it true that the middle east really has a problem with that spare capacity? every time the united states asks the middle east for saudi arabia in particular to increase its spare capacity, doesn't that put drescher on saudi's reserves such that it actually damages the research rather than allowing for longevity of these reserves? >> my experiences they manage their reserves pretty efficiently, but i don't have any evidence.

>> ms. foss? >> i think and i think many other people would agree including all of our colleagues at eia, that one of the more difficult estimates to put together is that estimate of spare capacity along oil-producing countries and that is one of the things that contribute to great deal to uncertainty in the oil markets themselves. >> what potential does the united states have to create spare capacity here at home domestically? >> we have a great deal of capacity to do that because again it is about portfolios. portfolios of opportunities that are available to companies on both public and private lands and to the extent that those portfolios of opportunities are robust. that is our spare capacity. >> will the gentleman yields?

on the issue of speculation i don't know the gentleman does grocery shopping and his family are not, but i would guess that your wife from time to time will buy a two for the price of one. would you consider that speculating? >> know, that is more shopping. >> right, but it makes the point. i would guess that your wife is making that purchase because you are speculating the next time she buys that product the price would go up and she speculating on keeping it down. when one talks about speculation, if you put it in that terms like that we do that every day in our lives. you buy a jumbo instead of the other because they are speculating that price is different, the differentials so that is why apparently you don't do the shopping. >> she does smart shopping. she buys two for one. >> the time of the gentleman has expired.

the gentleman from california is recognized. we get the courtesy to him. certainly if the gentleman wants to have the time he is certainly recognize. >> thank you very much mr. chairman and i do appreciate that. i noticed than a long hearing and that it has been an important hearing and i thank you for putting it together. it has been six years since i've been on this committee and we have obviously had this discussion and debate throughout the six years, and i find it interesting that we all use the same facts more or less but obviously using those facts come to different conclusions. and it is interesting we come to different conclusions even though we want in essence the same goals, the same goals that they want, a cleaner more reliable sources -- i say sources of energy for a nation that will be economically viable that will reduce over the years

our dependency on foreign sources of energy but the same goals. and it seems with lacking to me me -- what is lacking to me is how we can agree in a bipartisan fashion on how we obtain that goal. and it is not that we are lacking for plans. since 1973, i remember clearly when president nick's and, we experience the first energy gas lines where people had even and odd days to get your gas, and announced a plan then that was called energy independence. i'm not so sure that we ever truly are going to be independent but certainly everybody believes we ought to reduce our dependency on foreign sources. at that time we were importing 30% of our energy as foreign sources and since that time every president and numerous congresses have all had energy proposals on plants that in some fashion have been implemented.

and of course we have gone from 30% of our energy sources being imported to now almost 60% or more of our energy sources. so you have to set -- step back for a moment and say since we want the same goals, and we have all had a lot of plans out there what has been lacking and i will tell you what i think has been lacking is the ability for any congress or any administration to reach a consensus on a short-term interim and long-term energy policy that in fact will fulfill those goals of dealing with the the new technologies reducing our dependency on foreign sources of energy and sticking with a plan. we can't stick with any plan. our plans, you know the planned issuer, the plan for the day. with a plan for this year, two years, three years. we change it and energy prices go up.

make certain alternatives are viable and energy prices go down. it makes less energy alternatives viable and we have this kind of circular browbeating up one another that at the end of the day doesn't help the american public nor a long-term energy plan. mr. caruso, what do you think in using all the energy tools in our energy toolbox because i don't think there is a silver bullet out there. i think we have got to use all of them. i have always maintained that for the six years i've been there. how do we do a transition and adopt a plan in the near term with more reliant on our fossil fuels and the interim as we transition to longer-term policy and i define longer-term twenty-year send out, to reach the sword of near-term and long-term goals that our country needs to i think the chief and we ought to be focusing on a bipartisan basis.

i mean when do we do an inventory of what our current energy needs are? what they are going to be in the midterm and the longer-term, and how to use different energy tools in the energy toolbox you transition? >> i think you are absolutely right about the timeframe. we need to be thinking decades long transition. fossil fuels are going to be with us for a long time to come, and the alternatives for a variety of reasons, technology, economics, scalability are going to take a long time to develop but that doesn't mean we shouldn't start as you are alluding to and on that side, the focus should be on technological development and innovation through research and development. and that is the long-term. >> but under short-term part of

the conservation is low-hanging fruit. we are 20% trying to get to 30% by the year 2020. >> in the short-term as i mentioned in my opening statement that the vehicle efficiency, improvements in efficiency and homes, the use of code generated electricity. there are a lot of things that can be done to reduce demand so i think we need to do it all and not think it is going to happen overnight. so i think there has been an unrealistic expectation created by all of us including us energy experts. >> thank you mr. chairman for the time and allowing this and to sum things up. i look forward to working with you on these important issues. >> i thank the gentleman very much and i want to thank this panel. it has been over three hours that we have convened this and especially i really mean that, especially appreciate the brevity and in fact we have been kicking around some ideas able

we are going to call it. it could be as time goes by ward, the once upon a time award or the good time award. whatever it is, i will say that this panel here today on st. patrick's day is the recipient of of the award so thank you during much and the committee will stand adjourned. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations]

the head of the nuclear regulatory commission told white house reporters today that the nuclear plant crisis in japan lamont affect u.s. air quality no matter what happens. his comments came at the daily white house briefing with press secretary jay carney. deputy energy secretary daniel poneman also talked about u.s. efforts to contain -- contain the crisis on the ground in japan. this is a half-hour. >> happy st. patrick's day everyone. a lot of green out there. i appreciate that, as a carney. i would just start by saying i assume you all thought the advisory on what the president had to say this afternoon. i have again brought today some of our experts who can discuss the situation in japan and more specifically what this

government is doing to help the japanese in dealing with that situation and what the implications are for american citizens, so i will turn this over to them very briefly. actually in a minute. i just want to again say that if they could make their quick opening statements and take questions from you on this subject area that concerns them so that they can then depart i will stay and take questions on other issues. just to remind you i have with me on my far right the chairman of the nuclear regulatory commission mr. greg yasgo and on my near right the deputy secretary of energy. i will turn it over to them. greg what are you start with a statement and then we will take questions. >> this gives you a brief status update on basically three points. one, we have a team of 11 technical experts who continue to work in tokyo to provide

assistance to the japanese government and to the ambassador in tokyo. yesterday the nrc looked at the available information that we had. based on that information we took a look at out we would deal with a situation similar to that in the united states and based on that we recommended that citizens out to about 50 miles should be evacuated. we provided that recommendation to the ambassador and he issued a statement for american citizens to that effect. and i want to stress that this is we think a prudent precautionary measure to take. and finally i just want to reiterate that we don't see any concern from radiation levels that could be harmful here in the united states or any of the u.s. territories, so i will turn it over to dan. >> thank you and good morning. we have continued working very hard in consultation with our great friends and strong allies

in japan as they have come to terms and wrestle with this very challenging situation. i think most of you know that our equipment that we sent over to support them in their efforts has arrived on a c-17. we sent a team of 33 additional people, which were added to the six people we are to had out there in japan. they had over 17,000 pounds of equipment with them. they have unpacked that. they have actually taken the two pods the aerial measurement of ground deposition, mounted them one on a fixed-wing aircraft and one on a helicopter and we flew those aircraft on their first missions. we have been collecting information as they have come back with the process of sharing that information with their japanese hosts, and while that is still being looked at, the preliminary indications are that they are consistent with iraq came down from the chairman of the nuclear regulatory

commission which ambassador used to make the 50-mile evacuation guidelines so the indications are that fab looks like it was a prudent move. other countries around the world i'll continue to do what they can to support the japanese as they lead this effort to address this challenge. we have had a number of consultations. i have personally been in contact with the counterparts in france and russia. all of the thinking about ways in which we can assist the japanese as they come to terms with this challenge. that is going to continue to be our focus in the days and weeks ahead. we are going to continue to work very closely with the japanese and come to do what we can to see a safe pass through this in support of the japanese led efforts to come to terms with this very dangerous situation. we will begin with quite.

>> two questions for chairman yasgo. when you talk about the 50-mile recommendation yesterday being based on the best available information can you tell us where exactly the united states is getting its information and whether it is considered hard facts are best guesses? >> as i said we have a team of 11 of summer best technical experts in tokyo and they are working with counterparts from the utility in tokyo as well as other individuals with the government so that is one of the sources. we are collecting data from as many places as they can as i said to make the best judgments and we can with the information available but i would stress that this is a very difficult situation. there is often conflicting information and so we made what they thought was a prudent decision. >> how would you characterize your faith in the accuracy of that information today? >> well i think a team we have in place is providing us with good and reliable information and we continue to do what we can to support the people of

japan and to provide assistance and recommendations where we can. this is a very difficult situation there will be a lot of work continuing as we go forward to deal with continuing to cool the reactors and to provide cooling to the spent fuel pool so as we go forward we will continue that dialogue and discussion. >> last question. insure assessment as you stand here today about where this is heading? best case scenario and worse case scenario? >> had a really don't want to speculate on where this could go. there is tremendous efforts ongoing right now to continue to provide cooling to the reactors and continue to provide cooling to the spent fuel pool so we are working to provide assistance where he can with ideas about how to address that and if necessary provide equipment and other means. speeches to follow up on ben's initial question. how safe -- is the administration satisfied with or

not how japan is handling it and how would you categorize -- the level of information being provided by japanese authorities? >> on the head of an independent really tore a administration so i would defer to the others but i would just say again, our efforts are really working to help the japanese people deal with what is a very difficult and tragic situation so that is where we will continue to focus and see what we can do to provide them with any assistance we can. >> you no americans, we always want more information and we are causally trying to find out what every candidate is the chairman said the facts on the ground are genuinely complex and generally confusing. we have had a dialogue. we have had our two experts that are already out in japan. they been engaging directly with the japanese. we have had as recently as yesterday senior-level officials

from the nuclear industrial security agency in japan and wrecked council tatian with us. we are going to maintain that dialogue and do whatever we can in support of their efforts to get the situation under control. >> mr. chairman you said there is no concern here domestically that radiation will be harmful. in addition to the ongoing measurements i guess that are taken on a regular basis aside from this disaster, what else is being done to get an accurate measurement that none of this will impact the united states? >> again i would probably turn to dan to answer that question. we are really focused again first and foremost on making sure the plants in this country are safe and then continuing to provide assistance to the japanese with their efforts in dealing with the crisis there. >> in addition just to the regular measurements that are taken, have you read up that effort and a sense of quality in

the united states? >> there is a continuous effort as you well know that the epa runs to make sure we have detectors all over the country. >> is there anything that that is an avid? >> i will refer you to epa for more specifics. what we have been doing to support them in that effort is to make sure that we have people at lawrence livermore who are working on the modeling aspect of this so when data comes and we have got the capability and a robust want to analyze that information. that is something we do in conjunction with no and -- so everything that could be done to be prepared for such a time as that mechanism needs to be used has been done but i would go back to what the chairman has said. there's nothing that indicates that the state that is going to be required under the circumstances as we now understand than. >> should there be concern at

this point? >> i just want to stress i don't think there is any real disagreement here. there are basic physics and basic science that tells us there can't any risk or harm to anyone here in the united states or hawaii or any of the other territory so that is something that we feel very comfortable with. is really just based on the basic facts and science that are involved here. >> mr. chairman could you tell us it has been three days. why did the situation deteriorate the way it did with the four reactors? can you explain what actually happened? we have seen the pictures of the reactors. >> the situation continues to be very dynamic in japan and as we looked at a lot of the available information we saw a greater challenge i think with providing cooling to some of the spent fuel pools that had initially not as much of an issue so that was really one of the major changes that lead us to reevaluate some of our information and come up with a

recommendation we did. >> and the situation as it stands right now, the thames today to but water don't seem to have done much. >> i would say right now there is continued efforts to do that. they are continuing to provide water into the spent fuel pools as well as providing water to the core reactor. that is the focus for some time to continue the activity of cooling and getting water or other means to cool the reactors and the pools. this is something that will likely take some time to work through. possibly weeks as eventually removed the majority of the heat from the reactors and then the spent fuel pools. soda something that will be ongoing for some time and that is why assisted we are continuing to do everything we can to provide assistance to the japanese as they deal with the situation. >> you said that the 11 experts, 11 american experts are in tokyo. does that mean they are completely reliant on japanese officials and utility officials

closer to the site to give them the information that they have been analyzed or is there an independent way for them to get information about what is actually happening? >> they are working with counterparts from the utility and other officials there to gather information and then of course they are using their judgment, they are communicating with our staff and headquarters. we are reaching out to experts in this country to provide additional ideas. >> is their independent information or is it all coming through them from somebody japan? >> the information is coming for them from sources ultimately in japan. again this is a very dynamic in a very bad thing confiscated situation in japan, so they will continue to work with their counterparts there and continue to provide recommendations to us about what we think we can do to help the japanese. >> even the prime minister of japan and certainly the japanese public have expressed great frustration with the secrecy and

lack of transparency coming in particular from the utility. are you experiencing that same frustration in getting information? >> they are. i think the people we have in tokyo, they are talking with experts there. they are talking with individuals from the utility and i think they are getting information that is useful to us in making the kinds of recommendations that we need to make and our focus really is on looking at how what the situation be similar to a situation in the united states and then providing suggestions for actions we may need to take relative to american citizens. the japanese are as i said they are dealing with a very significant crisis and they have a lot of efforts focused on trying to do with the reactors, trying to do with the situation on the ground so we have a small team there that is getting information and we will continue to do all we can to help. >> i might just add there, that is why it is so important to get the information that we have now sent the equipment over to collect and we have had two flights come back.

we send other detectors over there, other sampling equipment and so it is not just people talking to people. we are beginning to collect information that will give us the measurements that will help us inform policy. >> is that it is you are frustrated you haven't been able to get that information directly? >> no, to the contrary. >> even though the prime minister himself blew up at the press conference over the lack of transparency. >> as they said americans are as one information that we but we want a combination of data and things we can get through collection and things we get through talking to people who are dealing with this but we are trying to do what we can to support the japanese in their efforts and it is a continuing dialogue and i'm sure it is going to continue. >> on the 50-mile issue do you agree it is a situation that you can have different citizens from different countries getting different advice on this and doesn't lead to all of these standards?

>> we have different predatory systems throughout the world and we have different approaches to dealing with these kinds of issues, so we took the available information we had and we have looked at how we would deal with a similar situation here in the united states and we made the recommendation about 50 miles. >> so are american citizens that don't abate that information risking their lives? >> the recommendation is ultimately a precautionary measure right now based on what we looked at are some of the risks and challenges going forward in this situation so we provided a recommendation to the ambassador and the ambassador made that recommendation and we think it is a prudent measure to take. as i said we think it is a prudent measure to follow the evacuation based on how we would handle a situation like that in the united states. [inaudible] >> i think i've answered that one. >> mr. chairman my understanding senators boxer and harper have sent a letter to you to review the ability of american

facilities to withstand different types of disasters. the other day it sounded like maybe that review wasn't necessary because we are constantly reviewing our facilities, but have you seen the letter? what is your reaction? what do you think? >> anytime there's a significant event like this anywhere in the world or even something like this in the united states, we are going to take a look at what happened. they are going to do a systematic and methodical review of the information that we need to make changes to our program we will make changes to our program but i want to emphasize and stress we have a very robust program where we look at the safety and security for nuclear facilities on a minute by minute basis, and this certainly will be new information that when we have good credible information about what happened in japan we will take that information and we will work to see what changes we might need to make it any to our system. >> i might just add to that from the aspect of policy, safety has

always been our paramount concern and we will continue to strive to make sure that all of our energy sources keep that first and foremost. and so we continue to rely on the independence of the nrc and its ability to make those judgment calls as to whether it is operating safely enough, but we will not rest from our perspective at all and continue to take every data we can into account a continue to improve the safety of our nuclear power and any other energy source we are advancing. >> the one-two punch of a massive earthquake and tsunami have to make people in this country concerned about whether our facilities can withstand this kind of thing? >> i would think we do not need to have that great stimuli to have a continued focus on safety. it goes back decades as we have discussed. after 3-mile island which was a different set of facts and what we are now presented with, we

improve the way we do our regulations. we move toward a more passive design approach when it comes to cooling cores and so forth and we exercise and we have come up with hypotheticals and then we take facts and it is going to be a continuous effort. it's built into the management principles of our organization and we are always going to look to do what we can to make sure activities are carried out in the safest manner possible. >> mr. secretary secretary in your opening statement he said the aerial footage confirmed the chairman's recommendation. the chairman testified yesterday there was no more water, essentially no more cooling mechanism. >> those are two different things. just to be clear, what we sent out where these pods and these pods measured deposition of radioactive materials on the ground and so what i said was that are culinary indications

because the data is being analyzed in being shared with the japanese so they can analyze it too, suggest prudential measure the chairman recommended in terms of the 50-mile radius for evacuation is consistent with what we are finding. it is not related. >> evidence for the pool -- you had feared that there was no more water in the fourth reactor in the spent fuel pod. is that correct? >> if i could say i think i can answer the question. the japanese themselves have indicated that the level of water in that pond is low and is of concern, and certainly i saw the chairman's testimony yesterday and we are getting whatever data we can on the situation at that cool. it doesn't change what is important and that is the japanese as they themselves have indicated me to get more cooling water into that pool so anything

that can be done in that direction whether it is water cannons or water drops that is going to be something their focus on and of course we will do whatever we can to help them. .. from the prime minister speaking to people who show their continued commitment to that, and we as close friends

and allies and as a country that is also committed to the safe development of nuclear energy for peaceful purposes to build a low carbon energy future we're going to continue to support them in that effort. >> the statement the embassy put out yesterday the protective action for the doses could exceed five rems how is it in the current situation [inaudible] >> well, again, the recommendation we made was based on the possibility of surgeon scenarios have been that haven't happened yet. we thought given the situation we were seeing that there was a possibility of the situation becoming worse and as a result we thought was a prudent measure to take the recommendations the we provided. >> but you don't have the dosing estimates for say within a

radius? >> well, we've done some preliminary modeling, just to give an estimate of where we think the likelihood of radiation levels around the plant would be high enough to trigger these protective action recommendations. right now, again, it's based on a series of prudent assumptions and proven assessments of what could happen which is the way that we go about generally during our protective action recommendations here in the united states said that's the way we approached. >> picking up on the question, the japanese officials today say they do not know if the cooling pool house and emptied. is it still your assessment that the cooling pond is now empty? >> well, everything when we made the determination the other day everything indicated that was the case, and i think it has been said there's a lot of

conflicting information around this, but the bottom line is they're clearly appears to be a challenge keeping the spent fuel filled with sufficient water. so it is a very dynamic situation. and again, our efforts are focused on helping the japanese deal with what is a very tragic and difficult situation, and we will continue to provide recommendations and expertise where we can to help. >> will the embassy released the data to the public -- >> we did release the data. >> one of the questions in the letter mike referenced is which u.s. nuclear power plant [inaudible] japanese reactor facility. do you have a tally of the plants but have the similar design features and is there any -- you talked about the potential for the review but what about the system reviewing those plants?

>> well, there are 35 so-called boiling water reactor designs in this country. 23 of those have the so-called mark one containment which is the containment which is similar to the type that is used in the facilities we are dealing with in japan. and over the years, we have done studies and assessments of those particular types of reactors, and actually over several decades in the late 80's and the early 90's and changes were made to those commitments to deal with these types of very severe scenarios. so again, when we get all of the relevant data and we have good solid data about what happened in japan we intend to take a very thorough look at what happened and what changes we could make. and i understand the president yesterday recommended that this is something that the nrc should look at and something we will. >> at this point you will see the need for the specific review

of [inaudible] >> will again, we don't know what the most relevant information is right now from japan. so we want to get that information and we want to do it systematic and in a methodical look at what changes we may need to make to those types of plants or possibly any other types of plants in the country. >> let's take a few more. apr? >> i want to go back about the plants that are similar [inaudible] -- going back to what you said about the teaching, the plants that are here that are similar, are those the ones you're looking at; are they the ones full point and has there been any kind of way if there is a possibility of an earthquake how would this cooling system be able to handle [inaudible] >> all of the plants in the united states are designed to deal with a wide range of natural disasters, whether it is

earthquakes, tornadoes, tsunamis, of their seismic events. we require all of those to deal with them. and we look at is historical and what are the largest kind of defense that we've seen happen, and we then add a little bit of something extra to that just because we know we don't know everything. and from that, we designed a plant to be able to withstand that kind of activity. now, as i said over the years, we've gone a little bit beyond that as well. because we know that sometimes there is limitations in our knowledge, as we look of what we call for the reactors which are these kind of very catastrophic situations, and in the plants over the years have made modifications that deal with these very catastrophic types of defense. and finally, following september 11th, the agency ordered all the nuclear power plants in this country to basically presage equipment and materials and have procedures in place to deal with the situation very similar to what we have in

japan where you have a catastrophic loss of power, you have a very catastrophic situation at the nuclear power plant. we have inspected that all the plans of those procedures and they have the equipment in place. so we think there's a very robust than in the country to deal with those things. >> to follow-up, how many of the nuclear facilities on the fault lines in the united states? >> all of the nuclear power plants in this country are designed to deal with seismic events. we tend to think about it at the nrc in terms of not the fault line, the different types of seismic activities. so in fact, every plant in the united states is designed to deal with whatever seismic activity is likely -- >> [inaudible] that is the question. is their concern about some of the nuclear reactors? >> certainly with the plants in california they are designed to a very robust seismic standard and for the ones on the coast they are also designed to deal

with a very significant tsunami and in fact after the 2004 tsunami, we took a look at the programs we have in place to deal with the tsunami much as i suspect we will do here with the situation from japan. >> thank you. >> week. sorry. >> i wanted to quickly -- about the new measurements that have come back. these come back in fact after you made the 50-mile radius recommendation, right? is what they show the japanese is underestimated the radiation? is that with the data shows? >> first of all, we are analyzing the information and sharing it with the japanese. the preliminary look has indicated that measures that have been taken have been prudent ones from all our perspectives. what we monitor from the u.s. side is often the ambassador informed by the chairman recommendations in a 50-mile radius and we have no reason to

question the assessment is made on the recommendation made by the japanese authority. >> they don't suggest that the japanese was an under dessel? >> the preliminary indication suggests that all of the measures that have been recommended either by the government of japan or by the government of the u.s. have been prudent and appropriate.

elizabeth warren has been named by the president to establish the new consumer financial protection bureau. this agency was created in last year's dodd-frank financial regulation bill and will be operational in july. ms. warren testified about the agency at this hearing of the house financial services committee. this is two and a half hours. >> i would like to welcome everyone to what i believe will be one of the most important hearings the subcommittee will hold this congress. we are joined this morning by professor elizabeth warren, special of pfizer to the secretary of the treasury put the consumer financial protection bureau who will be

answering questions from the members of the subcommittee on the creation of the consumer financial protection bureau which we are going to call the cfpb because i cannot get the four words out quickly. so i would like to welcome her and thank her for her participation. she will be and has made the request because of her scheduling issues she will be in the hearing until 12:30 so we want to respect that. and i think the we will have good vibrant hearing and plenty of time to do that. the debate over the creation of the cfpb was intense with many they're seven different opinions on the best way to modernize the financial regulatory system for the consumer protection. i think we could all agree there were lapses in oversight and editor and problems within the regulatory structure. that said, many of my colleagues in the house of representatives have concern about creation of the new bureaucracy with little congressional oversight. many of us would have preferred to cut through the red tape and create a modern regulatory structure that demands better

communication between the federal regulators and presides the consumers with the tools they need to report fraud in the system. what consumers need is the regulatory structure allows them to maintain information on a variety of products and make an informed decision about which products best suit their financial needs and in the professor statements she will be addressing those issues. one of my concerns is the creation of the cfpb with little accountability to the congress and the consumers could start to lose the ability to choose from a wide variety of products. it would be better for all parties if a portion of the bureau's budget with a part of the annual appropriations process, claiming the congressional oversight is present because congress has the ability to overturn the rules. i believe it is the most effective way to conduct oversight. additionally, i have questions about the role of the stuff the bureau are playing the role of the stuff of the bureau is planning an ongoing rule making. it has come to light that

representatives from the bureau have been playing an active role in the settlement discussions between large market mortgage servicers, regular regulators and state attorneys general. by statutes of durell were not in the operational until july of this year. the end of the in the bureau employees in these discussions i think raises questions. i have many more questions for professor warren and realize time is limited. i would like to thank her again for joining us today and for her willingness to meet with so many errors of the congress and her statement she mentions she's met with over 60 members and certainly has more of the members i appreciate that very much. i would like to now recognize the ranking minority member of the gentle lady from new york mrs. maloney for the purpose of the opening statement, and i'm going to scoot out very quickly but i willt be back. fo but not before i think you for calling this hearing and for your friendship and leadership on so many important issues including this one. you and thank you and welcome to elizabeth warren, who has been at the forefront of the effort

to create a consumer bureau for viars. ser thank you for your service and commitment.milies. to all the american families. you have been a true champion american consumer, and i am getting reports from all sectorsm all sections, from all stakeholders in our financial community that you have reached out to them and you have been fair and balanced in your approach. history has long shown us that our country is at its most secure and its most prosperous when the middle class is economically vibrant and growing. the recent history has also shown as that the reverse is true. although it is hard to come by an exact figure, in 2008, the worst year of the great recession, household wealth in america fell by more than $11 trillion. let me repeat that stunning

figure -- $11 trillion. and the middle class, by any and reasonable measure, has borne the brunt of the -- by any reasonable measure, has borne the brunt of the economic collapse. they have lost their jobs, their homes, the chance to go to college, and their hopes of a better and brighter future. that hard inescapable fact was one of the most compelling reasons for the enactment of the bill and the creation of the consumer protection bureau. we take steps forward to create a level playing field for the american consumer and the middle class. for far too long in our financial system, regulatory concerns about consumer protection came in at a distant second or a third or was not considered at all. but now, for the first time, anyone who opens a checking account or savings account,

anyone who takes out a student loan or mortgage, anyone who opens a credit card or takes out pay-day loan, it will have someone on their side to be fair and balanced and to protect them. for the first time, consumer protection authorities will be housed in one place with an independent appointed director, an independent budget, and an autonomous rule-making authority. for the first time, a truly independent authority will be able to write new rules for non- banks, financial firms, including paid estate lenders, debt collectors, mortgage brokers, -- including pay-day lenders, debt collectors, mortgage brokers, and other lenders.

this kind of evenhandedness and common-sense oversight of our financial system with strong consumer protections will insure the safety and soundness of the system as a whole and is clearly in the best interest of the american consumer and the driving force of the american economy. elizabeth warren has been at the helm since september, 2010. i will be -- i am interested to hear how the process is going and what the initial parties will be once the authority is officially transferred in july. thank you. >> welcome, a professor warned. i would just like to make a couple of observations. a number of people in the regulatory community and a

number of economists have raised concerns about some of the unintended consequences of the titles in dog frank -- in dodd frank that was not really thought through. title 10 seems to be particularly problematic and i will explain some of the concerns. beginning july 21, the federal reserve has to transfer to the bureau what ever funds the bureau's director has requested, despite the fact that neither the fed nor congress will have any say into the bureau's budget. that is unique. that is one concern that has been raised. as a byproduct of that, it really raises two problems. first, this agency will be able to act outside of the normal

appropriations process in the way that dog frank said it appeared that means it will not be held accountable for the -- in the way dodd frank set it up. that means it will not be held accountable in our regulatory structure. we tried this model with the gse's and it did not work. former heads have said that that competing regulatory structure will fail vs hud and contribute to the failure of fannie and freddie. instead of abolishing the model, we have replicated that regulatory model throughout the financial system. that gives cause for all of us to ponder whether this was done correctly. the final concern i have is the

assault on -- i think we should all be able to agree that one uniform standard is much simpler, much more effective. we already have 97% of the lawsuits in the world today, encouraging more litigation and more uncertainty in this. i just think dodd frank takes a major step back. banks' subsidiaries will now have to comply it with laws instead of one national uniform interpretation here. i think -- it will do little to protect consumers are make our capital markets more competitive i hope this committee will take the next necessary steps to correct these failures. we now go to mr. scott of

georgia for his comments. >> thank you very much. i appreciate that. welcome, ms. warren. i think that you have a delicate balance. on the one hand, if you have to make sure that the consumers have the proper information to educate them about some of the practices in our financial services industry, but you also have the requirement to make sure that what you do will not thwart access to capital. for our consumers, for the banking community, and for small businesses. well at the same time, give the confidence to day that you will also protect the american consumer.

protect access to capital. i would also like for you to address what impact my good friend on the other side of the aisle representative -- on the other side of the aisle has a bill. that bill basically 62 defunct -- seeks to defunct and keep you in treasury. i would like to address what this means to you. how will this make your duties better or make your duties worse? finally, i would like for you to address concerns of the banking industry. the banking industry is scared to death of this. they feel this is a threat. the banking industry is the hearts of our economic system. it comes to the money -- pumps

the money throughout our system. it might be good for you to address that. to ease some of the concerns within the banking committee that you are not the threats or the evil empire that some of them might think. this is a very timely hearing. you do have a delicate balance. i hope that you will address some of these concerns. and that we all will be this hearing far more weiser and more confidence than europe -- in your ability and the operations of this new bureau. it is not a threat, but a much needed solution and approach and a very trying economic times. i yield back the balance of my time.

>> thank you. directorre director's warren, you are tt probably directing the most powerful agency that has ever hs been created in the washington.i it's not a confession. is it will regulates all providers of credit, savings, pavement and the consumer products and services. covered persons is to find that any person who engages in offering more providing a financial product or service. the definition of financial service, you will define what

that is. it is not defined in the statute. also, you will have the ability to identify any financial products or services that is deemed unfair, deceptive, or abusive. there is no legal definition of abusive. you'll have the right to make that determination. as $500ave as much million from the federal reserve available and you can seek appropriations of $200 million more. that compares to the cftc, which has 169. the sec has $900 million.

i will start by saying that no one questions your commitment to consumer protection. i want to acknowledge that. as you'll make the decision to when consumers are protected and when they are not and what products will be offered and which products won't. you'll have quite a budget. you've not been nominated by the president. i did not know when that will happen. or whether he will be nominated. we asked secretary geiger and september and he said that nomination will be made soon. six months later. i think you would like denomination to be made. no one is getting confirmed by the senate. yet, you have a lot of discretion and a lot of power.

i see very little accountability. we have to almost rely on just a good-faith reliance on your abilities and integrity and judgment. that is quite a burden for you and quite a burden for us. i think it adds to a great deal of uncertainty. i look forward to hearing your testimony. i will tell you that since last july, but we passed dodd-frank, i have advocated for a commission all along. i believe that having a board is a much better approach. i think it is asking one person to do too much. thank you. >> two, mr. chairman. -- thank you, mr. chairman. >> when cfpb was debated, we

were concerned that your agency would have a lot of power with very little congressional oversight. we were concerned that severe economic consequences would arise from the separation of consumer protection and safety and soundness duties. while that question was before us in theory, it is now in front of this in a very real way in the form of a recently released mortgage servicers settlement term sheet. our economy is still very fragile and the recovery in the housing market will play a big part in getting our nation back on its feet. a number of the provisions of the term sheet could cause a crippling slowdown in that recovery. i looked forward to speaking with you about this and i appreciate you holding this hearing, chairman. >> thank you. i would like to recognize mr.

pierce from mexico. >> your new agency is going to wield a lot of power. the basic problem is that we are spending $3.50 trillion a year and our revenues are $2.20 trillion a year. our economy is frozen in place, the recovery is stalled out by regulations which are causing uncertainty. the health care regulation is causing people to lay off employees to get below caps. it is freezing the medical creation of jobs in the field. we city regulators freezing loans. banks have the money to lend and they are afraid to lend it. i would be interested to hear what you are doing to unfreeze the market to create certainty.

with that -- without that, our economy is doomed to fail if we continue on the path that we are on. i look forward to talking with you. >> welcome, ms. warren. the borough would be a self regulated governed by one individual and funded outside the congressional appropriations process. the zero promises rules to -- this bureau promises to regulate all products available. all financial firms will be subject to its regulatory authority in some way. all this power is given with little no mechanism for overseeing. as a former bank regulator, i am concerned that this -- in a time and we are seeing the signs of

recovery, blasting our lenders need now is for an intrusive one size fits all government regulatory agency submitting more regulation to them. i yield back. >> thank you, madam chairman. i think all of us on the panel are concerned about consumer protection. we cannot let theoretical consumer protection be the vehicle for categorically eliminating consumer choices or for prohibiting new customized for sophisticated financial products. doing so would not protect consumers or jobs. the question comes down to who makes the best decisions about financial products? at both the state and federal

levels, we already have countless relevant law, regulation and regulators. do we really need to superimpose another multi-billion dollar bureaucracy on top of the pre- existing legal infrastructure? if so, shouldn't new bureaucracy at least be accountable to the american people? shouldn't congress give the new bureaucracy more guidance than relying on an abstract concept? ensure that this bureaucracy never jeopardize his bank safety and the name of consumer protection? i hope that we will reflect on whether any theoretical bureaucratic benefits justify the risk that this new bureaucracy poses to consumers, to jobs, and to our economic growth.

thank you. >> i would like to recognize mr. canseco from texas. >> thank you for being here today. the consumer financial protection euro seems like a good idea. an agency is mission is to protect the consumer. unfortunately, like so much else within the dodd-frank, the unintended consequences continue to come to light. it turns out that consumer protection really means consumer restrictions. having the federal government restrict the choices available to consumers in the name of protection since a terrible precedent. professor moran has -- if there is no greater advocate for families that a husband and wife sitting down at a table

planning at the family's finances without government interference or oversight. there is no room for a third seat at that table. one occupied by a faceless bureaucrats who does not even know their names, much less what is in their best interest rate american families deserve the dignity of being able to make the financial decisions by themselves. decisions about credit cards and mortgages belong to the family at the family table, not a washington bureaucracy. i look forward to your comments. >> thank you. that concludes our opening statements. i welcome the professor back. i look forward to hearing her testimony. thank you. >> thank you.

thank you for inviting me to testify. this is the first oversight hearing for the new consumer agency and i welcome it. i hope you will permit me to begin with a personal note. i did not come to washington because i yearned to be a government official. i came to washington because congress passed a year. i first job started 2.5 years ago when i was appointed to the congressional oversight panel, where i served as chair. at the oversight panel, which worked to reduce -- produce reports for you about tarp every single month. during that time, i came to capitol hill on many occasions to testify about our oversight and to answer your questions. you schools meet early on the importance of oversight and i believe in it. since taking the job of putting together the new bureau, i have had more than 60 one-on-one conversations with members of

congress. i have saw your good council on many issues. for today's hearing, i have prepared a 34 pages of details and testimony to document our startup efforts. the testimony describes our vision for the new consumer euro and the progress we have made so far. i hope it is helpful in guiding your oversight efforts. the consumer out -- is straight forward. make risks clear so that consumers can compare one product to two or three others. fine print is great for those who want to hide something. but not good for families who want to know what they're getting into. mortgages, credit cards, checking accounts, america's families have a right to see the deals right up front. there is another issue that i know many of you are concerned about. i would like to address head-on.

the department of justice has been coordinating with federal agencies and 50 state attorneys general to review and address these decisions. last month, this country's chief banking regulator came to congress and said these deficiencies have resulted in a violation in state and local foreclosure laws. they have damaged mortgage markets and the u.s. economy. as you know, this new consumer agency is still getting started and. we will not be a party to any formal settlement with mortgage servicers. however, later this year, the bureau will receive the authority to set standards for the mortgage servicing industry. for this reason, secretary

geithner arent, the justice department, and other agencies have requested the consumer agency provide. we have provided our comments and let me tell you why. it is very -- if there had been a cop on the beat with the authority to hold mortgage servicers accountable, a half- dozen years ago, if there had been a consumer agency in place, the problems in mortgage servicing what had been exposed early and fixed while they were still small. long before they became a national scandal. the mortgage servicing problem illustrates the importance of fair, consistent enforcement. we need a cop on the beat that american families can count on. it is critical that we get this right. a real cop on the beat. right now, our government is trying to hold down a settlement

to end the scandal. this is a law enforcement matter. it includes a bipartisan roster of law enforcement officials at several agencies, at the department of justice, and 50 state attorneys general. while live would be inappropriate for me or for anyone else in government to disclose the substance of the discussions regarding an ongoing enforcement matter, i do want to say that i am glad that the consumer agency has been able to provide assistance in this important matter. i think congress for creating this agency to help provide a voice for american families. that is why we are here and that is what we are doing. thank you. >> thank you, professor warren. i will stop the questioning. we will go through the various members. in reading your statement am looking at the goals for the

euro -- bureau, you have mentioned repeatedly going back is moving forward in terms of weeding out aul out and a regulatory reform with the existing regulations. f rieou give me just a brief update on where you are on that? particular issue? >> yes, ma'am.y am i really am glad that you ask this question. it permits us to talk about not just our overall -- we have reached out to community banks, credit unions, financial industry, people across the spectrum to try to learn from

them. where the regulations are most problematic and we have settled on our first priority for this agency. to take two forms, one is called -- these are forms -- you may remember the last time he bought a home. somewhere in the stack of documents that you dealt with, these are two forms that committee bankers tell me have roughly about and 80% overlap in terms of the content. they are written differently. they have different pieces to them. as a result, they are expensive to fill out. they have regulatory compliance costs. there are real regulatory consequences if they did something wrong. in several meetings, i of that

committee bankers come to me and show me these forms. show me what it is like and how much time they have to spend. what we have proposed to do at the consumer agency, to bring those two forms together. you would think that would not be a hard thing to do. because financial regulation has been scattered among several different agencies, at this particular one has been held by two different agencies and there has been negotiations for more than in years to try to merge those two forms into one. now they're both coming to the new consumer bureau.. we are now able to work with the community banks and credit

unions. we are going to put those together. what we are looking for it is a one-page mortgage shopping sheet that is easier, shorter. lower regulatory costs, higher value to the consumer. we regard that as the sweet spot in this agency. >> i am interested in your response. you mentioned more than a few times community banks and credit unions operate in creating this agency, those entities were led to believe that they would be exempted from the purview. in your comments, it nullifies that impression. you are going to import ideas. i applaud that effort. having bought homes before, it is very confusing. we all know that. you are backing up what might committed to a banker -- what

might community bankers said. he is already had to hire one person in a community bank to meet these challenges this is a question that goes to the heart of the overreached or exempting the is community banks that do not have the $10 billion level. they are a part of this. in terms of the service issue, we addressed that a lot and our opening statements. the real question is, this agency does not go into effect until july. are you really a cop on the beat? kenya perform as a cop on the beat when you have not had your training yet -- can you perform as a cop on the beach when you have not had your training yet?

>> thank you. i would like to ask unanimous consent to place a new record an article that was in the wall street journal yesterday. >> without objection. >> thank you so much. the dodd-frank has a slew of checks and balances. it is accountable to the american people and congress. could you identify some of those and go through some of those checks and balances? >> thank you. i want to start by making a point about accountability. i came here originally because congress passed me to be part of the effort to oversee tarp.

i hope that every time i talk about accountability, we are also talking about the accountability of financial institutions. that there will be someone, a cop on the beat to make sure that they follow the law. in terms of accountability, let me remind everyone the structure of this new agency. it is the only agency in all of government was rules can be overruled, obliterated, negated, by other agencies. the structure of dodd-frank is to make this the one agency or other agencies can come in and say, we do not like that rule.

we're not going to prevent that rule. that is not true for any other agency. the second thing is to focus on banking regulators. in case of banking regulators, the throughout america's history, it has been the case that banking regulators are funded outside the political process. they have always had independent funding. the consumer agency, the one voice for american families, should have that same independence. the reasons for making banking regulators independent is very obvious. given the way it that the process works. i will say in terms of the unlike any of the

other banking regulators, the consumer banking regulator will not be able to set its own budget. its budget is capped by statute. if the consumer agency thinks that it does not have enough money to put enough cops on the in order to supervise the lending industry, the agency has to come back to congress and ask congress for more money. that means that in this respect, the consumer agency is not the strongest agency in government. it is the most constrained and the most accountable agency in government. i should also note that in the overall structure of dodd-frank, there are about 18 federal statutes that have bits and

pieces and chunks of consumer financial protection. currently, those 18 statutes are scattered among seven different federal agencies. seven different agencies about responsibility for enforcement in different bits and pieces. most critically, for no agency is a first importance. what dodd-frank provided was to say, we're going to take existing block and we will gather it up and instead of having the conflicts, the inability to be able to negotiate and get a simple form, we will sweep of that inefficiency out.

we will concentrate on exactly one agency that will be accountable on consumer issues. there are many more pieces. i apologize long. i think the issue of important. i wanted to hit the highlights. thank you. >> i would like to recognize the chairman of the full committee, mr. bachus, for questioning. >> thank you. professor warren, you have participated in the foreclosure settlement discussions with the banks. you have the knowledge that earlier. >> congressman, let me put this clearly. we have been asked for advice by the department of justice, by the secretary of the treasury, and by other federal agencies. when asked for advice, we have given our advice. >> you do that as the -- advice

from the consumer and financial protection board, where they consulting you in that role? what role were they asking when you say we were asked for advice? >> right now, we are part of treasury. we are just a division. >> the cfpb. when you say we are -- >> the standing up of the consumer agency. >> so you were asked, in your role as the -- >> as part of treasury. the first request was specifically from secretary geithner. >> he ask you for advice on what to do it? -- he asked for advice on what to do? >> he asked for advice about the ongoing problem we have with the mortgage servicers do have

violated both state and federal law. >> these are criminal enforcement procedures? >> it is my understanding that what the department of justice is dealing with -- i do not know whether they are criminal proceedings involved. >> have you sat down and talked with the justice department about these enforcement actions? >> the justice department asked for our advice. >> our being the cfpb? >> a section of treasury. >> a section of treasury. do you envision yourself as the acting director of this agency? >> no. there is no acting director. >> so you envision yourself as just the political adviser to the president? >> i have two jobs.

i have a job as an assistant to the president, and then the job that is the 14th an hour a day job, and that is the special adviser -- special assistant to the secretary of the treasury for the purpose of starting the consumer financial protection program. >> have you discussed with secretary geithner or with the president and nomination -- who should be nominated to head this agency? >> in the course of my work in trying to get this agency going, i have had many conversations with secretary, with the white house, and with others about the qualities of what might be needed -- the qualities of the person who would run his agency. >> have they told you when they

may make a nomination? have you urged them to make the nomination? >> i have tried to make it clear that it is important that we have an nomination. >> and that it began almost immediately? >> i would not want to describe any conversation in detail, but i am aware of the need for urgency. >> have they given you any indication -- what if they made a recess appointment and that appointment was you? would you except that? would you say i would rather not have a recess appointment, knowing the ball back from that? -- blowback from that? >> congressman, there is a process in place. i have tried to contribute what i can. i understand that there will be nomination soon.

that is all i know. >> the setting mortgage servicing standard. you had engaged and given input and advice into does. is that correct? >> when we were asked by the secretary, by the department of justice and others, we have given advice. >> thank you very much. >> we go now to mr. gutierrez of illinois. >> thank you so much for coming before the committee this morning. i wish you godspeed in your endeavor. i find it interesting we're worried about how is this is going to become a permanent nomination to head the agency and what is going on within the service there's any different departments. fightk we're going to that is a theme that will be carried out most of the morning

and continued at -- we're going to find out that is a theme that will be carried out most of the morning and continued the next couple of years. i am really concerned about consumers and not the financial institutions because i have a funny feeling that if we carded everyone sitting behind you, banks and investment bankers and pay lenders. i do not know how many family budget makers are very well represented out there. i am not too worried. as a member of congress, i can assure everybody that those from financial institutions are ready, willing, and able, and always have been. they have sometimes had an overwhelming voice here. i would like to ask you, when we did dodd/frank, and i want to make this clear, are you able

to supervise car dealerships? >> no, we are not. we will not be able to do that. >> and that is expressly prohibited in dodd/frank? >> yes. >> i just wanted to make clear that for those of us here while we create your agency, the financial institutions, including the car dealers, got their take. they got to be taken out. as i sit around my family table, i assure you that they were here. the banks were here. goldman sachs was here. the car dealers were here. the pay lenders were here. they were all here. let me tell you, they were extremely too successful. let us not be too sympathetic about the port corporations. -- p