i thought that's what the 05 energy bill to, but obviously didn't so that's what i hope the legislation would be, do we make sure the taxpayers dollars always come first before the private investors. mr. chairman, i know i'm almost out of time. thank you for the time he had >> at this time a recognition woman from texas, duck or burgess for five minutes. >> mr. frantz, let's stay on the subordination issue. the act of 2005 m. sure you are familiar with because you are one of the original hires at the long project office in 27 to administer this program in 1703 under subordination with the obligation to be subject to the condition that the application is not subordinate to other finance team. simple straightforward statement. even among boyhood like myself can understand it. the difficulty and i think mr. graham is exactly right. the difficulty goes that then

the law does not go on to prescribe any penalties, civil or criminal in violation of days. so while i believe the secretary to have been a technical violation of this passage of the energy policy act of 2005, there is no penalty. for that reason earlier this year by introducing another bill, 5063 to prescribe the monetary penalty between 10 and $15,000 for people who violate the statute, the bill is based on the anti-deficiency act and provides administrative penalties for executive branch officials who violate appropriations bills that pass over a century precedent. i honestly believe this may be a better way to get at this problem. you reference -- actually secretary chu came to her committee referenced other committees on the watch list. can you provide us with the list of those companies who are on the watch list?

i don't expect you to have it at your immediate disposal, but will you provide that to the committee? [inaudible] >> the reason i want you to be responsive in the reason my support and is the whole purpose of this hearing is no more solyndras act. vb should be no more low subordination. are we at risk you have to look at loan subordination of a last-ditch effort to save dollars as you describe. i want to help you here. you keep talking about hindsight is perfect. i want to sharpen your force icu can anticipate the next low subordination activity and either have it not happen or if it does happen, make sure we follow the letter of the law or if we don't people understand there's penalties for not following the letter of the law down. on the issue of hindsight or foresight or whatever state we on great know, i heard several people talk about the factor was

the a that finback solyndra. to recall that as part of the discussion? >> factually it is part of the discussion. >> know factually for days prior to the closing of the loan is an e-mail from the energy cheese. this is ted seven and your evidence binder. an e-mail from the budget with this opinion. that prescribes the problems. he wants them to slow down. he says you're going too fast and not following the rules and referencing at the bottom of the e-mail chinese solar firm revises price. as prices slump, solar industry suffers. solar panels drop in price because of chinese imports. this is not a surprise. your own office of management and budget was saying, we need to slow this thing down and instead of the speeded up for reasons the best of my knowledge still has not been able to

discern and that's where the whole investigation is hinged. it would've done itself to get out in front to be honest with the committee. if this is a mistaken me except the fact that people make mistakes and can improve policy from recognizing mistakes. a big mistake was made here and anyways paid over it. do you have any comment about that? >> i don't. >> to have the evidence binder in front of you? >> i do not, sir. >> all right. we'll get it for you. i'd like you to look at the player still here. i just have one question on the energy efficiency. he spoke a lot about electric cars. it was kind of interesting nonetheless energy appropriations bill there was an amendment from california who said people suffer from ranging ascites and electric cars. i don't know what she do short of a 300-mile extension cord, but there are other tech

knowledge is in this whole concept of picking winners and losers done in my neck is that the world talks a lot about using natural gas to power the big rigs on the road. by week the collector car to knowledge he winners competing technologies other people are investigating? why pick a winner over a loser in this? >> first as i said my testimony, the department of energy has a full portfolio of r&d in that vehicle space. we are interested in natural gas and would enjoy having a conversation with you on that. as you look at vehicles out there that we used from light duty to heavy duty, it does seem different technologies have sweet spots in different areas. >> the difficulty you have as consumers don't want what you are trying to make and we would be far better served if we let the market observed the appropriate signals and respond

by the dennis tried to force an issue on the american people. in the interest of time i will use back. i know we have a bill pending. >> thank you. anyone on your site? who do we have here. >> dr. gingrich for five minutes. >> mr. chairman, thank you. mr. frantz, i know it seems like we beat the supports to death, but i don't think quite so, so i want to go back to the askew of subordination. particularly in light of the fact that you have said repeatedly before this committee this morning that you believe under this loan program you have the authority to subordinate in an extreme situation. you have said that a number of times and i'd be happy to have you either refute that or confirm that.

but here is the situation. in the private sector, if they alone were to be subordinated in the scenario you describe that the borrower is about to default, to declare bankruptcy or whatever and the person who made the original loan that is in the first position is going to likely of those all their money because of the bankruptcy that is likely to occur in a deal could be structured, maybe the original lender has no more money or is unwilling to put up any more money, throw good money after bad as the expression goes than somebody else that was willing to do that. maybe because they get a higher rate adventurist to comment and

pony up some more money. you might be able to restructure an idea like that, but i would think you got a legal team behind your job, bright looking people and you've been in business yourself a lot of time and maybe done some of these deals. you would have to go to the first position in get their approval before you could restructure and subordinate them to a secondary position, would you not? >> you do. you're in consultation with them, as we were. >> you are not in consultation with me. i am a taxpayer. you are not in consultation with we the taxpayer. that is the problem here and that is the thing that just amazes me that you don't seem to get. now there was a memo that our committee obtained, the sheik abu, former director of omb that

not only to the department of energy, but as i understand to every other agency in the department of the federal government, very specifically saying it is circular quay 129 to be exact, the document by director of omb jacob lew to heads of executive departments. you cannot do this under these loan programs, whether they're department of energy department of energy, department agriculture or whatever. this cannot be done. and you guys were told repeatedly, consult with the treasury. after all is in the department of treasury where the money was being lent a new repeatedly refused to go to the source of the funding to ask a question if this is okay. you just as my colleagues have pointed out, asked some murky

junior counts on the department of energy to give you a quick and dirty opinion so you could go ahead and get this done and get it out the door. that's where you say you and i use that term, mr. frantz generically. he's been a good quickness and been honest with us, but i think you're honestly wrong in thinking that you could continue in this loan program. i would like some of my colleagues on both sides of the i/o. i am not ready to say we should throw the baby out with the bathwater and just eliminate the loan program entirely. i want to think long and hard on that before i would think to do that. but if you're telling me we continue the loan program and you are the guy there, you are the straw that stirs the drink

in this loan program in another extreme situation comes up in your judgment, you would subordinate the taxpayer. if that's the case, i would say let's get rid of the thing. i don't think you have the authority to do that. i want you to respond to me and if you're unclear about it, get together with your thing and you a better look of the documents and studies is long and hard because i think you're wrong on this. >> file their response and reiteration of my comment, we would hope to never have to subordinate. it is a tool of the last resort. i have more experience in the private sector. >> monday in a rescue for just a second because you're going down the same path. it is not a tool of last resort. in your toolbox you don't have that tool. don't you understand that?

>> the advice, and i again do not have a license to practice law, so i have to depend on civil service device of our general counsel as he reached a different conclusion, sir. >> well, i suggest you go back with your counsel and i suggest you talk with the attorneys and bankers and department of treasury and maybe even a little sidebar with jacob lew himself and look very carefully because mr. chairman, again i apologize to my colleagues for going back to this issue over and over again, but the gentleman just doesn't seem to get it. that's the reason why i think we just need to make sure that he does get it. and without i yield back. >> at this time i recognize the gentleman from kansas.

>> thank you, mr. chairman. thank you, mr. frantz for being aired today. i've heard two different -- we've got this bill. trying to make sure we don't have anything like cilantro. i've heard two different descriptions of the problem. mr. frantz, you cite as inadequate foresight. if you have it again you do it differently. he might not make the lover to use of subordination and of one identification of the problem. the second on both sides here today because we just need a few more processes and procedures that we will and appear today, so they're both wrong. the government has no business having you in section 17 by this section. you are stuck here testifying today is that it's inevitable loans go bad. i came from a air. it is absolutely inevitable. the government should be in this business because we will always want to second-guess. and when we find things like

support nation and e-mails talking about hurrying to limit the door because there's going to be a press conference where the president or vice president wants to go, the government subjects themselves and we don't get documents, we have to pursue that kind of inquiry. i'm going to get you out of this completely. you have to ever come testify about a cell phone again. i would love to see us do that. we have a provision that does let some folks continue in the 1703 program, those folks that have filed applications. if we went further and say you couldn't disperse funds to those people to tell me what that would do to you in the loan program office. >> i think congressmen, the point is the program was established as a bipartisan program to bring new and innovative technologies that also reduce sequestered greenhouse gases or pollutants. having spent my whole career in

the energy infrastructure industries, this is high-risk business. the other point i would like to make for the benefit of the entire committee is that this involves what we call discretionary capital expenditures. major corporations don't have to do this. what is happening now, the success of the program is that we have brought a small investors as well as large investors forward to take that take very high-risk decisions, employing and bringing in new innovative technologies to the marketplace. we have done it very successfully and otherwise there would not have happened. there's a lot of testimony here. >> i have more confidence in the private sector. i asked you a specific question. if we denied any further guarantees from a given those folks an application, tell me what that would do.

>> we have a group of projects which it indicated which are 17 or three qualified that did not need to be a deadline of september 302011 and within that cadre of projects, there are new and innovative technologies that we want to bring to the commercialization. >> how much money have they extended? and concerned about the entities that have put money and underline and what in trying to avoid doing harm to what the new or that is my question. can you tell me, i don't have those numbers right in front of me the balance of my time. >> the gentleman yield back the balance this time i recognize for five minutes, the a couple

of questions when it comes to solar projects, how not when applications, how may become active participants are in i think at the have been solar projects, but only two of those four we identified on this those those -- so essentially 12 plus you set a number of benchmarks and milestones. >> yes, sir.

>> are those major milestones are those the terms of the contract itself quite >> matter of fact. >> you make sure they comply with every turn. >> yes, sir, we are. on there is a reasonableness and that is what we have done now going forward is we are and we will cease dispersing if in fact they are not of the contract, are all 12, existence meeting every term of their contract? payment to the best of our knowledge. the only ones in default are the identifying, are they in technical default quick >> no, we we can to permit them

time. a perfect example you are familiar with. if there has played, it might delay the about terms, every single one of of their contract to the tee. >> to the best as i said, we all of them pay wages as required quick >> to the best don't know would have to take that question what changed in those was switch to questioning of ms. hogan.

talk about sent a letter republicans signed this letter commending the president for his work on a $2 billion worth of investments in energy savings for performance contracts, making but there've actually been 55,000 potential energy conservation measures where we are in and agencies. can you tell me what we do to advance certainly the program is working with agencies around the conservation measures that they one cannot find all of the mashers just because one of the day conversations is where does the as well as what team.

>> of course you don't need to have funny because it's all done big effort right now is two of successful with the president's challenge for the 13. >> hundred $53 million. but that is the lowest level since you talk more about why we are not encouraging more energy savings performance contracts to get to we are encouraging as aggressively president's challenge to the federal agencies has been get everyone got a tracking system each of

the agencies is measured towards their piece of the commitment to sort of monthly tracking to see where are right now on. so we are feeling. >> i from louisiana, mr. scully's have been looking into solyndra for committee has done tremendous only the scandal related to solyndra but the flaw in want to ask, mr. frantz, when you had conversations with other members about the live, servants

in the general counsel office are hiding behind the am not sure how much you reviewed the documents on prior the department of energy was having on whether it was illegal and it was my understanding there was a draft of an opinion would not be illegal to the department pulled back and said we would find someone in house to get best the opinion be wanted and that is where are you familiar? >> with all respect, i can't comment have seen some i am not

disputing one way am not familiar with those talked about these others and many have disputed whether you have legal say here today that you still have legal if you can show me and allow where you have it are hiding behind outside counsel telling you you don't have is forum shopping in the department of energy. even within the obama administration we have e-mails from the the department of energy we don't think it's legal you ought to talk i don't understand how you can tell us

you're serious about reforming said we don't want to make mistakes was broadcast on c-span. we had to subpoena some of these documents and you tell us today you didn't you are serious about reforming a program when you didn't of what we have uncovered in the public domain you can read about problems you don't even know what don't even know how it got to i am familiar with what we did and is part of what got us have been 535 million wasn't just people in the

agencies you were telling me you haven't even read those e-mails? >> no, i have not. >> go back and is part of your job to know how we lost five taxpayer money. how many more billions of dollars in taxpayer money are out there at risk as i indicated to you and how >> it's not clairvoyance enough to know what how much is invested? i think you should be able to give me an answer. you run 16.5 private sector

yearwood said we probably don't think these investments are good, so we won't went to your agency and they got you are now the steward of would hope he would go back and look at the history of how we have lost hundreds of millions of they're still billions you understand why it's important you know i find it perplexing because we've had hearings on the and democratic people thought got the documents and know what of them hope to never have to the

attorneys advised me that it u.n. please go look at the history. there's risk, not to mention was , beacon and others. >> we don't have a document notebook for the series and i would request that mr. scully's referring to it was illegal into the rack or so because nobody's talking about. >> we have many documents in the record. >> we would be happy to continue to go down this would be happy to put them in the record for this hearing. at this time i would recognize

i believe what you're referring to are other strategies you request use to address transportation dealing with vehicles miled traveled. dealing with con getion issue. it's an area where the department of energy is actively engaged with the department of transportation and others and addresses those issues through sort of a clean. >> what kind of outreach to we

do to local things like a stop sign is five times more -- why are we continuing to not only pay for, allow, but pay for local government putting up four-way stops or putting up city yields or not sink nicing traffic signals or not using round abilities. -- abouts. why aren't we as aggressive. >> well, certainly we have a conversation about what the role victim graft is in this base. what we have been doing very actively for a number of years is working with the states and local governments to bring forth the best practices to show them what the benefits are with the strategies so they can adopt them. it is having a fair amount of effectivenesses. >> let me tell you. i come from the local side. i'll tell you, we have spent

decades talking about fuel efficiency in the cars. i would challenge this committee has held more than a few hours or even a few minutes discussion about how to require traffic management to be modified to be more efficient. and that -- when you've talk about studies showing more than 20% of mobile sources, this is a big deal that i think our credibility is destroyed if we say we're going to do this to the private sector. if it's the public sector creating the problem we're going to joe overlook. rather than being prowe're anti. e i think we can gain a lot of credibility but being tough on the fellow government agency as the private sector. i've been there the fact we can't allow a blinking amber light next to the building. it's easier to have a blinking red light. it's just why bother because every one of those blinking red

lights forces con -- consumers and burn more fuel and pollute more. we standby and don't bother. it seems to small to bother with. when you talk 22% we should revisit and be more a aggressive. >> i think we should look at those types of opportunities and figure how to share the best strategies to get those savings. we'd be glad to have a conversation. >> thank you. i appreciate it. cashes had said to be big and heavy to be save. you find find who use government use the same arguments. we have to have stop signs and stop traffic. it's time we put the pressure on the mayor and county supervisor just like we do on the automobile manufacturers. that's something both sides should be dealing with. >> i would say, i got my driver's license then. i was glad to have a car in the '70s. >> we look forward to working with you on that.

we have votes on the house floor, and we have seven votes, indian. we're going to dismisthe first panel i want to thank you for taking time to be with us this morning. we appreciate your testimony. and we look farred to working with you as we move forward. those members, those panelists on the second and third panels, i do apologize in advise for the -- advance for the delay. we're going make every effort to be back here within one hour. which will give opportunity to have a wonderful mole at the calf fear -- meal at the cafeteria. hopefully we'll meet you back here at fifteen to 1:00. the committee is in recess until then. thank you.

[inaudible conversations] [inaudible conversations] committee will go ahead and reconvene. members making their way back from the house floor. we have two mans left to go

through on the subcommittee and energy of power and subcommittee hearing. and for our second panel this afternoon, we're fortunate to be joined by dr. david christopher who is a research fellow in energy economics and climate change from the heritage foundation. diana -- i didn't get your name right. senior fellow from manhattan substitute for policy research and mr. ken knit berlin and policy and programming coalition for grown capital. we will recognize each of you for five minutes for an opening statement and we will not interrupt. i ask you pay attention to the black box in front. doctor, you're recognize for five minutes for the purpose of opening statement. >> thank you very much. members victim committee, for giving me the opportunity to discuss loan govern tows. my name is david i'm research

fellow and energy climates and change at heritage foundation. the view i express of my own should not cointreau any anything from the -- my first point is that private capital markets will fund risky projects projects involved large amount of capital, and projects take a long time to repay their investors. these features are not characteristics of market failure, nor do they justify subsidizes, loan guarantees on or mandates. 10-year-old christmas trees and 20-year-old whiskey as is the development of new drugs can which can take decades and cost billions of dollars. my second disappoint that the section 1705 loan program was founded on a flawed concept. the department of energy both commercially viable and unable

to attract sufficient private investment. the definition of commercially viable has to mean the expected returns exceed the expected cost in present value sense. the sense that matters to financial markets. the implication is the department of energy can consistently uncover profitable investment they have missed. third, loan guarantees can miss allocate capital even when the loans are repaid. the project that can use funding in the economy are many times greater than the resource available to fund them. so the project must be sorted and ranked. this is just what financial markets do. projects with higher expected rates of return get funded before those with lower rates of return. and my written testimony i describe a project that was sold by the initial developer hours after receiving a 1705 loan guarantee. i estimated that the loan guarantee was about $100 million and with this valuable govern see part victim package the this

employs without the loan guarantee the project had a negative return. that is the input had hire value than would the energy these projects were going produce. my final point, the 1805 program is likely fund two sorts of project one that are not viable or on the other hand one that should have been financed privately. victim 26 projects listed on the department of energy website having received 1705 loan guarantees three have gone bankrupt already. they have solyndra, and abound solar. a fourth company, nevada go yo thermal appears to be struggling stork price dropping dramatically since 2010.

one generally electrician and a company who market capitalization is $17 0 billion. nevertheless, the projects received a loan guarantee for $1.23 billion. which received a loan guarantee of 90.6 billion. it is a subsidiary of goldman sachs. it's incredible one victim world's most -- of mergers accusations in 2012 could have a viable project they could not get funding. the market cappization of $23 billion received a loan guarantee of $6 46 million. they received a loan guarantee of 1-68d.9 million. it is 75% owned by brooke field management which has a cap.

owned by a subsidiary of separate energy the market cap is $16.5 billion. next era energy resources received a less than gowrn tee of $2.3 million they have a market cap of $20 million. nrg received a huge gap. energy has a market cap at $3.9 hour one of the projects has partners who have parent companies of bp, chevron, and state oil. those companies alone have a market captivation close to have a trillion dollars. unless they received a loan guarantee. a real estate trust with a market cap of $15.2 billion received a loan guarantee of $1.4 billion. in conclusion, private markets fund risky, large, and long-term projects. pretending that loan guarantees

are necessary for projects leads to failure or unwarranted taxpayer subsidizes. firms with tens and hundreds of wls of dollars don't need the guarantees. thank you. >> yes, you're welcome. your opening statement. >> thank you. i'd like to introduce the one with me today. i have christopher, the -- chris and my son. they are privileged to be here at the hearing. >> welcome. welcome. nice to have you. expl solyndra bankruptcy has been contributed to the factors beyond the control lower cost of pricing in china. the documents sphieled by slin d.a. dray with the security exchange in commission --

visited the premises and ahead of the initial public offering that saled in june 2010 shows that the company was fully aware of the risk. solyndra authors expressed public concern about the company. reuters reported, quote, the price of the llp said solyndra recurring operating losses negative cash flows, $5 32 million stockholder deficit and other factors raise substantial doubt about the ability to continue. solyndra itself in the public filing at fcc in september 2009 offered 22 pages of reasons why it might fail. in case anyone missed the point, the report included a table of fortunate and operating data from 2006 to 2009 showing six different measures of growth and

net losses. not one positive outcome. on may 24, 2010, valery senior adviser to the president forwarded a block post by senator smith in clean tech to -- chief of staff of vice president biden. the report outlined the doubts of price water house coopers. the post stated, quote on a pure business analysis you have to agree with the authors. they are not a growing concern. they said, quote, as you nope, a growing concern that is not good. she knew that solyndra would go under, two days later on may 26, 2010, the president visited slib dray and declared it is here that companies like solyndra are leading the way toward a brighter, more prosperous future. by january 2010, it was clear to many that solyndra was going to

fail. still, the department of energy helped shore it up bay lowing a previous panel to draw on another -68d million in government loans. in addition the department signed up on a restructuring agreement that allowed $3 85 million in government loans to take a backseat to $75 million in new investors funds. in the restructuring, the aped million from investors became senior to all government set except the $14 3 million. a lot objections were raised from department the justice the energy department paid no heed. on august 16, tony 2011 unnamed official are in an e-mail assistant secretary for financial market at treasury, quote, the title -- the title 17 statute and the doe regulation both require the guaranteed loan

shall not be subordinate to any debt or obligation. it states they shall treasury before they grant any quote deviation from the requirements of the regulations. to the extent that such requirement is not specified by the statute. that could substitute as substantial change to the financial term of the loan guarantee agreement. but i will bet a quarter that the doe lawyers have some kind of theory on whatever restructuring they have done and whatever they are considering does not violate these requirements. -- can't wait to hear it, unquote. the question before us, is why is the government under pressure from voters and credit rating agencies to reduce the budget deficit issuing these loan guarantees at all? that is why the no more solyndra bill is valuable. one answer we hear, repeatedly

is fear of china the new red scare. now america is throwing billions of dollars in renewable energy electric cars concern that china is getting ahead of us and tale stealing our jobs. china is not using solar energy for the electricity production. as 2008, 70% of china's energy came from coal. wind and solar provide less than 12% of power for china's electricity. if we're afraid of china's growth, domestic industrial policy is not the answer. rather, we should improve economic growth through more efficient tax and regulatory policy and increase use of our domestic resources such as coal and natural gas. thank you very giving me the opportunity to testify. >> thank you. welcome. >> good afternoon, mr. chairman, ranking member, and member of the subcommittee. my name is ken i'm senior vice president of coalition for green capital. the coalition has been working

on the state and natural level to establish what commonly called green banks. and they are basically funds that provide low interest loans to clean energy, and energy efficiency projects. in particular, we have been working apart of the market that's not been discussed yet today. we are working to provide low interest loans to very low risk energy generation projects such as wind and solar generation projects. as such, we're not seeking to provide the financing because commercial banks find the project is commercially too risky. instead, what we're trying to do is provide funding because the clean energy brojt dealing with needs to lower their cost they can deliver electricity first at the price that doesn't raise cost to consumers, and second, still allow an adequate rate of return for investors who want to

invest in the project. because we have a rate which you can buy electricity and because investors have to get a rate of return, the only way to put it together and get adequate rate of return is lower the cost. that's what we're trying to do in the project. i'm pleased to report in looking at green banks in this way, we're getting strong bipartisan support. we passed the green bank in connecticut in 2011. and the connecticut house 18138138-8. the amendment 7.a billion of seed capital for a national green bank that passed bipartisan basis we're working now in probably a dozen states working with the democratic and republican legislators to establish these blanks. now why are we getting this kind of support even though we're providing low interest loans toback. i think there are a cup of

reasons. i have six in the written submission. i want to comears a couple first. -- core industries in the country for many years. and all nose energy industries have received government support where needed. the clean energy in the industry is potential one of the potential great industries of the 21st century. it's going to be a huge industry in the united states and around the world, and we think it deserves and needs support at this point in time. second, by providing this support, we are low-cost financing benefiting everyone in the market. it helps consumers by lowering the kilowatt price hour. it helps private owners by giving them ak sses to capital. it creates jobs and democratic value by moving the projects from abroad to the construction phase. it helps in we think it's important the private sector spending and private sector

investment and research development rd since greater demand for -- sparks circle that leads to next decades' breakthroughs. most of the breakthrough in the area are great discovery for all a sudden you get a new energy technology that cheaper anything out there. they slowly develop over time. and it's our view if you want to create innovation in the industry, you have to work with the technologies to bring as they come down the course. what we're trying to do is lower cost of the projects. so that in fact they can come down, all the technologies are coming down the cost curve at rapid rate eventually be fully price competitive on their own. meanwhile getting technology, innovation, as we go forward. we're also in doing this, really trying to meet a demand from the states. approximately 30 states have renewable portfolio standard. it's very strong demand to build

clean energy for many reasons including sustainability, energy and other reasons. what we're doing by providing low cost is making sure that states can implement these renewable portfolio standards without raising the cost of electricity to the consumers. it may not be enough on the own times they are. they make it easier to reach those kinds of results. the key mantra what we're doing in all this we cannot we have to be repaired -- we paid on the loans. we're work the area there's low risk, tremendous experiment in how they work. you can do a potentially much more risky loans to do that you need something different. you need a different economic model for the loans a model that takes into act the models will fail. we think it should be separated out from low risk loan and be put in separate windows if we do a greenback. we think we need consensus in

congress. congress has to be willing to work on manufacturing projects, and get the benefit from encouraging manufacturing in the u.s. what we would like to see avoided is a situation that we have now in the united states has developed most of the major solar technology in the world as of today we don't have a single one of the manufacturing companies in the world in the united states. actually once here but produces outside the country. we want to see the technologies come back and see manufacturing develop too. the green bank is working on loan risk technologies. thank you. >> thank you. and i'll start my questions. the president the united states in a press conference criticized me he said the chairman of the oversight committee thinks we can't compete with china in the green energy policy. i think he's wrong. i think the united states can compete. isn't it true that china's not

using solar energy for the electricity production? >> that's true. less than 2% of chinese electricity production is from wind and solar and other renewables. 70% from coal. >> isn't it true china is importing coal from the united states to meet their electricity needs? >> that is correct. and they want to import the oil from canada that we cannot have down here because the keystone pipeline has not been approved. >> china is subsidizing their solar industry significantly. i understand it's $30 billion is that correct. >> yes. >> is china producing solar panels and wind stuff for the own use or to export to america? >> they're using some for their own use but not most of the devices is for export to america. >> what they're doing is sub skying an industry to make it cheep to export to america. >> right so we can produce more

expensive energy. they the inexpensive energy. birth date president is crit -- the president is criticizing me for saying with can't compete with china. china is subsidizing they compete with us and sell it to us cheaper than we can manufacture it. >> that is correct. >> then why should the united states try to compete with china when they're not really trying to do it themselves and they're relying on coal which we have an abundance of. what would you say to the president after you said that he thinks we can compete with china ? >> we can compete with china on many ways. we do want to implement wind and power and solar energy want chinese are not doing it. the best way is to use the coal, use domestic resources. we have far more innovation than china does. we have far more creativity.

these are the ways we compete with china not by putting in place expensive forms of energy that drive up energy cost for american hose hold. >> okay let me ask you a tougher question. how do you respond to proponents of federal loan guarantees who contend unless the united states government subsidizes clean energy project they will use the clean energy race to china or spain. >> they haven't been successful in spain, they will -- they are comot competitive energy wise here. in a couple of households around the area, are going to get their electricity bill from the heat wave they're going to have high electricity bills from keeping on the air-conditioning. those who go not lose their power. if we had wind and solar powering the electricity. the bills would be two or three times high. >> we're into a huge.

how would you respond to the proponents of federal loan guarantees that contend that loan guarantees do not cost much since the loans are supposed repaid. >> we have seen they don't always get repaid. the solyndra loans costing us looks like over $500 million inindication is they're not going much out of bankruptcy. not going to get much out of. we see a pattern of the loans not being repaid. i think even more fundamentally we see goings loans to people who adopt don't need it. >> i think that was in your opening statement. you talked about the federal government providing loan guarantee to companies worth $10 billion. $20 billion. $200 billion to finance project. why should the united states government go to the free market to have market caps that are $200 billion? why is the president talking about doing this under the section 1705 program.

>> i don't understand why myself. i saw mr. france at the presentation saying the criteria they had to be commercial viable and demonstrate they couldn't get private financing. well those are exclusive. you can't have a project that is both. you have to fund one or the other. projects that aren't commercially viable which you don't want to fund. or projects who could get public funding. >> what we have discussion draft with no solyndra. we're trying to come up with the help of the all members here. do you think in the package we should put some criteria if any loan guarantees go out subject to the market cap or if a company is worth $200 billion it shouldn't get. is that a criteria we should use in. >> i feel more strongly not having them. it's not an appropriate area for government activity to guarantee loans for commercially viable project. it's not a loan program similar

to basic research which is completely different question. trying to come up with a loan program for commercially viable projects is one that the government shouldn't be involved in. >> picking winners and lose per. >> yes. >> order, mr. chairman. >> i'm in the chair. my only point, dhen, -- then if the government goes own and gift the small companies. you're recommending we give it to research and development rather than giving it to companies that are have a limited market cap or viable. is that what you're saying. >> the closer the research gets to basic fundment tal research the better it is for government involvement. the worse argument there is for government involvement. >> thank you. my time expired. mr. waxman. >> thank you, mr. chairman. i want to ask some questions about this proposal that's before us we strong a -- we have

a specific bill. mr. berlin, the republican loan guarantee bill would change the program the loan guarantee program itself was created to support innovative research innovative energy technology and that's why congress established a program bipartisan basis in 2005 under this bill, the program can continue to issue tens of billions of dollars in loan guarantees in the years to come, but this bill prohibits doe considering any application or for loan guarantee submitted after december 31, 2011, so the republican bill creates a winner's list of a few dozen projects that are eligible for future loan guarantees. those are the only application deal we could ever look at. any project not only the list can't get alone guarantee, period. it doesn't matter how ground

breaking the technology is, if it isn't on the winner's list it can't receive support. does it make sense? should congress prevent doe from new application. >> i think it's important for us to think through how we want to encourage innovation in the united states and how we want to get innovative new technologies. and i think that there are situations where there is a need for government funding to help get these kinds of projects off the ground. and . >> you wouldn't the application that are silting there now. >> i'm sorry. >> you wouldn't limit the loan guarantees only to the loan application. >> the reason people said if you accept there's a need to support innovation, it doesn't make sense in my view to cut it off now when you might have a new project that comes up tomorrow that's better than the project. >> innovation out the window and repaces it with a static list of

winners who happen to submit application by the end of 2011. you wouldn't want this bill to continue funding projects that are doe now you don't think we ought to have a loan guarantee at all. isn't that right? >> [inaudible conversations] >> if we're talking about going forward. i'll not sure we want to go back. >> no. >> there's going to be a point. >> these are not agreements we've made. these are application for loan guarantees. and the bill allows for loan guarantees only for those pending a doe. do you think that makes sense. >> i think you have to have a cut off point at some place. if you want to cut it off the ones who received the loans, you know, that would be one case. i don't know that's a picking winners and losers. that's a separate question. i'm arguing that loan guarantees are bad idea from the government that innovation will take place in private markets. >> if we agree with you we should end the program.

>> yes. >> okay. the premise of the republican bill is the loan guarantee program has been a big failure what do you think? has the overall port portfolio project ban failure? >> well, the one of the studies i read estimates about 87% of the projects funded by the this fit in the low risk category. energy generation projects we should see major developments froax in large scale solar projects as a result of the legislation. so i certainly would nautical it a failure. >> some argument the government has no role in support clean energy technologies because these technologies are inheritly risky or get their own capital and they don't need government intervention. some of the same people say we should continue using taxpayer funds to provide subsidizes to well-established oil and gas companies that have received government support for decades.

how can the government best create a level playing tbreeld new clean energy technologies can succeed. >> i think new energy technologies needs subsidizes for the reason i said earlier. they come in when they're first developed they. they come in a more expensive level almost every time the existing technologies. know they're going to do move down the cost curve. that's what happened. we have to bring them down so they become competitive. it will be a large worldwide market for the technologies. i don't agree, for example, the china is not putting solar in place for china or putting considerable solar in place. i don't agree they're ship soggy lar to us a cheaper price we can sell in the united states. ic we have to be involved in this. >> i'd like to ask, do you think we ought to continue subsidizing oil and natural gas through the tax breaks we give them?

>> i don't think oil and gas should have special tax breaks. i think they should have the same as other domestic manufacturing or other industries the pharmaceutical industry. >> you think we ought to have a level playing field and have everybody compete. >> yes. just as dmerveg manufacturing has a 9% deduction i think oil and gas should also be a domestic manufacturer have at% detection. it has a 6% deduction and president obama wants to get rid of that. it put it is on unlevel playing field. it's unfair to the oil industry. >> i agree with that. the okays 199 tax deduction you get the big numbers the oil and gas subsidize the domestic solar panel manufacturers window manufacturers, newspaper they all get 199 deduction. as pointed out, they get a bigger one. it's not i think it's disinbegin wees to call that oil and gas

subsidize. >> thank you, mr. chairman. >> thank you. i want to thank the panel for being with us this afternoon. and i want to ask you doctor, and roth. realizing this legislation no more solyndra act may not. perfect. would both grow it's a step in the right direction? >> yeah. we're not allowed to support or pose. i think the policy of cutting off loans is good one. the fact you may not cut them at the point i would choose doesn't mean it's not a good idea. >> yeah. i think it's a great bill. and companies play awhrong the rules they are given. up to now we had the rule loan gowrn tees available. companies gone through a great deal of trouble putting together open indication. it seems sensible to allow those

who made the assessment be on the list. it's no matter of picking winners or losers. it's matter of invested. after december 11 the program is cut off. >> mr. berlin, responded to mr. waxman's voice. you talked about he felt maybe 78 percent of the projects have loan guarantee program in successful and that was because a lot of loan risk. that's one of the reasons that i'm quite concerned about the program because most of those very significant loans were made to well capitalized companied. most of them new york stock exchange. general, goldman sachs and at the time we have a $16 trillion federal debt, and this president particularly talking about protecting the middle class, why

would we making loan guarantees to companies that strong financially? >> i would agree with you, mr. chairman. and it gets back to the false premises on which the loan guarantee was based. there are market viable projects that can't get private financing. they don't exist on regular basis. the incident loan risk project and you have a well capitalized firm and market viable, they shouldn't need a guarantee. there should be private financing it. >> doctor. >> yes. i would certainly agree with that. at the time the program was nut place, in 2005, we had no idea that we would have a 200-supply of natural gas at about $2 per million btu. we concerned about energy security with the domestic resources. with the great american revolution energy revolution that occurred the past three years. we have a ton of supplies of

inexpensive domestic energy. we don't need the program anymore. >> people who support 1705 say it was a bipartisan bill in congress. that was a number of years ago, it was approved, but i can tell you what, we were voting on that today, because of today's current financial situation in america, i do not believe the results would be the same. and when we have debate here in this committee about regulation come out various federal agencies, and the purpose of the stimulus funds, we hear about creating new green jobs. that is what everyone talks about. and i've heard comments that 3 million new green jobs have been created. and when i read some of the definition of new green jobs like antique shop workers because they're recycling septic tank workers, teachers in environmental studies.

it's misleading the american people. let me ask you, do you think the stimulus packages and these loan guarantees have been successful in creating significantly new green jobs for america? >> i would say no. i would say they don't create jobs in aggravate. you subsidize one group. when you start looking at that green jobs count, it wasn't just the categories of green job. it was the volume. over 50% of the jobs in steel mill were counted as grown. there were 33 times as many green jobs in septic tank as in solar unity i. nobody should say that number with a straight face any longer. >> well, . >> i would agree with that large part of the 3.1 million green jobs is grown labeling. people who produce have the message we have the power to save energy. it count a green job.

it has environment message. if the company had architect of the both sides, it's producers would not have green jobs. and this number is fraudulent number. it is imprecise. it shouldn't be used. >> the american people are being mislead. >> thank you, mr. chairman. it's the panel bear with me for one moment. i want to return to earlier testimony. earlier repeatedly claimed the department of energy received a legal opinion from outside counsel that determined the intosh nation was illegal i'd like to make this part of the record. his claims are incorrect. the committee received a rough draft of a legal analysis produced by doe outside counsel. the document noted language in section 1702.

but it did not speak to the doe legal analysis which concluded the issue nation of the loan during restructuring was allowed under the law. the document is now illegal opinion. it does not dearea it to be legal in restructuring scenario. the committee staff interviewed the loan program chief counsel for nearly six hours. in the gear views she indicated outside counsel as well as the general counsel with the department of energy reviewed an cor can the legal opinion that subordination during restructuring ever allowed. the minority reached out with former general counsel of the department of energy now in private practice, she conducted an independent analysis of the subordination question and found doe's opinion to be proper and correct. all of these documents previously been made public, in order to set the record straight, i'd ask unanimous

consent to introduce the rough draft analysis document, two subsequent e-mails, did, oe formal legal opinion and the general counsel into the record as hearing. >> it's already. my staff said it's already part of the record. >> secretary chu, we put that in part of the record. unanimous consent, put it in again. >> great. thank you. move together panel with my remaining time. doctor talked about two categories of projects he suggested there are only two categories of project in the world. one are those who do not require government sport through a loan gowrn tee or program or otherwise because they've got sort of backing out there that would allow those to move

forward. in the absence of that in the other category of projects are one that are not commercially viable. and he employ -- em plies those projects are only going to be ones that are never going to be commercially viable. i think you ought to -- we need to dwoid it into two categories. those who may never be commercially viable. you want the department to be scrutinize it to try to ascertain now in the front if possible sometimes you never know. but i think there's another category of project which are not yet commercially viable, in other words for purpose of the launch of that technology, which say well if they were launching be themselves with no govern tow or support there's no way they could make it in the market. the fact they're not yet commercially viable does not mean that they will never be

commercially viable. and i'd like you to speak to that, you know, move in space where analysis of what can be viable if you get launched is done all the time. my understanding is you participate maybe after the launch stage in bring withing things that are already out in the market bringing that cost curve down over time to accelerate the competitive position they can hold relative to the rest of the market. but certainly you must have a view that there has to be a category of projects while maybe not yet, commercially viable could be one day and that's the role can be played be i the valuable important loan guarantee program. >> yes, 100% agree with that. we're actually not profit savings. we're not doing it directly ourself. but i think if you look at wind and solar technology right now, they are more excessive there's

no doubt in many mind over time the projects will be exferl. we need in the real world and we talk about commercially viable now, is this. let's say we have a project out there that a company looks at and says if i build the project using commercial loans, i will get 9% of rate of return. i'm not going get a project unless i get 10%. that's minimum. that's the reason you help big companies. we come into the bank and say we want to percentage of loan at low interest rate. we can bring the cost down so the project funds will build the project and consumers get energy at price that it competitive with the current price. it's both. one is the division may be small before things are commercially

viable. those are the oning come down. if you look at curve they're all coming down. if you look at history of the energy in the united states. we subsidize every technology. we same problem with nuclear. we have to make a choice we want to develop those we have to fig qur out a way to bring them down. hopefully they'll get there. we do know they'll get there. >> thank you. gentleman's time expired. gentleman from texas is recognized. >> thank you, mr. chairman. good afternoon. i thank the panel for coming back. i appreciate your patience and expertise, and i represent texas 22, which is a suburban district. and so using analogy for back home, the people i represent are outraged and angry.

that 500 million dollar of the taxpayer's money will be waste on loan guarantees the administration of people texas 22 knew was risky in the future spacex mirror ration on three magic themes. it's my job to get them answers. how the money can be spent carelessly. my first question, i apologize again, -- i was brokinged by your testimony -- intrigued by your testimony. could you elaborate what you mean by industrial policy why policy makers should be weary about . >> right. industrial policy picking out winners and losers for example, there are many projects in the united states that are not commercially viable right now that might be in the future.

we have venture capitalist. we have private equity funds. it's up to them to choose which do invest not the federal government. the federal government has a role in basic research but not in investing in enterprises that might someday be notable. amazon.com for example when it started out was no commercially viable. it became that over time it's a block bust are now because of private funding. blackberry 201 it wasn't very commercially viable when it was first started out. now many people have them. it might go down because they are having trouble. it doesn't mean the federal government or the canada government should. >> do you believe the administration learned a lesson from solyndra about the power. would you believe they doubled downgoing forward here? >> well, i don't think they were

investing in these for cost benefit reasons. they investing for political reasons some of the supporters of the campaign contributors such as george was solyndra had an interest in these projects. so i do not think they learned their lessons. there are always pressures for the government to invest in worthless projects and it's up to ul awe do you take a stands. >> it's a political operations or political pressure forced upon the administration that's why they made the decision nays weren't economically viable. >> i believe that is one reason, yes. >> any idea why they rejected the solyndra proposal in 2009, the obama administration by march of 2009. any idea why they revisit why they thought it could make money? >> george was a big investor in solyndra. he made visits to white house it is dpowmented in the records. that's one reason. you can read the entire e-mail

trail where there was pressure to have vice president appear solyndra event in september. and that was why there was rush. many career officials run record of saying it was too rush and did not approve of the project. doe apparently overruled them. >> yes, there was evidence solyndra announced they were going to close. they delayed the closure until november 3rd of 2010, the day of the election. question for you doctor, i want to ask you. better suited to discover private e, investors or department of energy. >> i would say private. they're subject to a discipline the department of energy is not. they get great reward what they hit a home run. they suffer penalty when they strike out. they have a huge astowmtion make -- the department of energy does ?rot the same discipline. >> how do you -- when they get

the home runs they get a lot of money. neighbor that's how they cover the cost of the losses. we were lending essentially a treasury bond rates, almost, to high risk ventures. doesn't make sense. certainly not if you're a venture capitalist. it doesn't make sense if you're a taxpayer. >> thank you. i thank you for your questions. i yield back. >> recognize the gentleman from texas for five minutes. >> thank you, mr. chairman. and mr. chairman, i know in our subcommittee typically we square witnesses. you made statements about and you, doctor, about how this decision was made. are you priefe to information on how this decision . >> i don't believe i made any comments about that.

i'm talking market v government. i have no motivation. our investorrers did a lot of. your testimony is conflicting with what the investigators said. do you have any individual information that help us on this? you made statements about the decision made. somebody made a visit to the white house and great many of the department of energy staff opposed this. is it true? did you hear that from somebody? >> i made the statement that the officer of management invited staff opposed approving solyndra. that is in e-mail collected by your committee have been release to the public. i also made the statement that george was a major contributor to president obama's campaign. that is a matter of public record. he made a ton of visits white house before it was approved. that is public. >> so some of the judgments you're making is based on that

information. >> correct. >> and -- but i have to admit. i was disappointed as my colleagues about solyndra. but also know this law we have, was passed by this committee on in '05, and frankly, the members that are here today except for any colleagues that are new, congressman olson, actually supported this law in '05 and the loan guarantees in place. i support it also. because i'm a big one for nuclear power in our country. and that was part of it. of course, i also come from texas where we had huge expansion of wind power that's been not only based on state assistance but also federal assistance because we made a decision that's another way we can be energy capital of the world and whatever is called gas, energy, nuclear. i'd love it to be in texas. let me just say that in eleven interviews with career staff about 50 evidence there was no come up any kaiser influence on

the approval the department of energy. >> okay. yeah. >> and you acknowledge that. you're shaking your head yes, assume you acknowledge. it. >> it's probably a coincidence he made so many visits to white house. it's probably a matter of coincidence. >> i've been around here for a lock time. a lot of people visit the white house for lots of things. i'm sure there would be more information if we can do that. let me get back to the concerns i had about the in china and i know that was heard earlier. china's investing and somebody invested in a lot of companies in china that top tin solar panel producers from china. is that correct? >>. >> i don't have the precise number in front of me. >> it's not a free enterprise country. so assume the government of china or the peoples' army invested in that. so wouldn't that be a

significant amount of government support in china? >> yes. they do have a significant amount of government support. it doesn't mean we need to support it here. >> let me give you an example, though, that one of the reasons in which you either you are all three yoch you are part of the problem solyndra had they were producing panels that could not compete with chinese solar panels. >> solyndra -- they were height cost producer even in the u.s. so with or without china they did not have great perspectives. they had new technology it is exitiveness depended on the silicon prices. they have access to our markets. i don't think we should take china as i agree. in fact, i believe in our free

enterprise system if somebody loses money they lose it. in china, if you lost $500 million, i don't think we would see it ever again. that's the punishment. perhaps. >> i don't have export or chinese law. >> i know people talk about it in texas. we have the death penalty. we appeals processes. sometimes china imposes a penalty before you can an apole. i thank you for coming out today. i come from houston, we have energy economy. i have reason twenty plus chemical plants. we're primary oil and gas our port and chemical manufacture stand to benefit from alternative energy sources. i remember a few years ago, there was a hesitation on doing cogeneration twenty five or thirty years ago. most of my plants use it in their energy. we were working in an energy bill to gate credit for the

savings they get from using it. i'm seeing a change in the industry that's all of the above in even though i oil and gas doesn't get loan guarantees but and i agree with your opinion on the tax issues. ..

>> the amendment that was included for the $7.5 billion -- i think it is passed through 44 to aids or date or something like that. and the committee. >> not on the floor because the bill came up under close rule. >> we were not allowed to amend them as they came through. >> okay. as you know, i drew attention to some of the memos as well, when we were questioning the other witnesses. to the point of emphasis come you have -- i mean, evidenced by her at the table there under tran-seven, as i believe, the e-mail, which he referenced which is an e-mail on august 31, 2009. the names are redacted, but in my understanding is the energy branch chief, it was issued four

prior to the closing of alone on solyndra. it says that i preferred the announcement be postponed. the credit crew is out on leave this week. this is the first loan guarantee and we should have all hands on deck to make sure that we get it right. furthermore, the announcement this week would require us to have a waiver to the requirement that 30 days last, setting a bad precedent. so it sounds like the system was blinking red and the traffic cop held his hand up and said stop. don't do this. where was this coming from to make this decision so important that we couldn't even follow the simple rules that were outlined

for this procedure. is that one of the points you are trying to make? >> it has been so hard to get the information, the committee staff has made inquiries, starting back when the republicans in the majority of the house in the majority on the committee beginning back in those documents from july -- members of the department of energy who were no-shows were committee when we are trying to get answers to some of these questions. the very first e-mails were kind of dribbling out and we were getting these impressions, but it was because the day we were to have that hearing, this witness table had no witnesses that is forced to offer a resolution leading to the subpoena that has been allowed to get this information that you are quoting. it is disingenuous for anyone to

say that this committee has not done its work of oversight. it is constitutionally authorized work of oversight, in order to come and no, not just embarrassed the administration, that you find out where the problems were. this sounds like someone was saying no, and someone else offstage was saying go. that has been with this committee has been trying to discern. i can't say at the end of the day we will ever identify the person with their fist on the go button, but clearly that is what is going on. the other part that is important at this e-mail, and we heard the testimony on the other panel, that oh, wait a minute from, hindsight, you can do this in retrospect. but the foresight, the citations at the bottom of the e-mail, china racing ahead of u.s. and the drive to go solar. chinese solar firm revises crisis are marketed as crisis drops, solar industry suffers. each of these titles is all of

what a website in "the new york times", -- those were followed y website. the system was blinking red, you're going down the road where the price is being undercut by a foreign competitor and whether it is legitimate or not, whether it is to adverse subsidies on the part of the chinese, nevertheless, the market is in peril. would you agree with that assessment? >> yes, those e-mails are absolutely right in their many others that you could've quoted that also demonstrated same issue. twenty-five was very different one, now it's clear that it is a far more expensive form of energy. whenever the government is in charge of giving out money, they're always going to be pressures to pick winners. that is why this bill would

solyndra is so valuable, and i very much hope that it becomes locked. >> valerie jarrett should've been here on our committee were kept for questions for the committee. the same thing. this has been a frustrating process from start to finish. demonstration has violated in schools and when you have bad news commuted out early. i think they should learn something from this experience. i yield back the balance of my time. >> we recognize the gentleman from massachusetts. five minutes. >> i would like to state -- restate mr. berlin's part of you. in 2009, it was 51 to six, including a quote on that green vote. just so everyone has a history on that.

do the republicans really want to split renewable energy as opposed to any other energy source? that is the real debate. welcome back to the committee. i would appreciate answers to the questions, doctor tranter. you agree that a publicly traded company has been the regulated from the stock exchange because it's shares of trading are under a dollar limit that the federal government probably shouldn't be giving you two billion-dollar taxpayer loan guarantee? >> you know, i have been tricked into these questions before, because i don't know -- >> if a publicly traded company is warned that it could be delisted, should the federal government be giving a loan dollar guarantee the company? >> i think i have made it clear that the government should not be in the business of making loans. >> i don't think the government should give loan guarantees any company.

>> i got it, thank you. cylinder was given a b+ credit rating before the doe issued its loan guarantee. which means it was highly speculative. if a company had a lower credit rating, for example a triple see plus rating, do you agree that the government probably shouldn't be giving out a 2 billion-dollar loan guarantee? >> i would tend to answer that yes. >> we have a trillion dollar deficit. we are borrowing $40 out of every dollar that we spend. >> what about the cost of a 14 billion-dollar project, yet it has begun barely to start construction? he believed government should not be giving it an 8 billion-dollar loan guarantee what are basically doubles the cost? >> i don't think the government

should do so. i don't know how far down the road they are doing, if there marty signed agreements, i don't think of the 26 loan guarantees should be held back. i think there needs to be a point where you say here is where we stop. >> i'm not talking about hypothetical projects. i'm talking about nuclear loan guarantees. this legislation does not preclude from moving forward and i would like to work with the majority to preclude them from moving forward. the department of energy has been given a subsidy to build two nuclear reactors that the nuclear preparatory commission experts warned could shatter like a glass cup in an earthquake. the department has also provided hundreds of millions of dollars of taxpayer money in their last to the bankrupt enrichment corporation, which has a pending application, but we have never had a hearing on these projects, despite my repeated requests to do so.

the 28 loan guarantees for renewable energy total $16 billion. congress appropriate a $2.5 billion to cover the possible defaults. 16% of the total bone value of these projects is backed up by currency of the department of energy the doe documents indicate it will only take 2% to $8.3 billion nuclear power plant guaranteed to mitigate the massive risks. >> shouldn't the department require a larger insurance policy before moving forward with these loan guarantees, but given what we've learned from solynda and the incident, given the already very questionable history? >> i don't know the particulars of those loans in what would be appropriate guarantee. if i had to start over again, we would not have loan guarantee in the first place. how far down we are the road

with us and to what extent have they been committed, i can't answer. and i think the committee has put together a bill that has hit a point beyond which we no longer accept them. >> let me just interrupt right there. we have recently begun to hear republican complaints that some of the loan guarantees that were issued resulted in manufacturing jobs being created overseas. i am hearing what they are saying. these loans should not be issued to companies that plan to use the funds to outsource jobs. i just like to point out that both the united states and the southern companies plan to utilize these components. i'm sure my colleagues are as stressed about this as i am. hopefully your work quickly to make sure that these companies and united states enrichment corporation cannot be doing with those so that we have the same policy for foreign solar panels in the same for nuclear industry

so the components that are used in reactors are there. just a preview of coming attractions and the paradoxical of dealing with loan guarantees and trying to separate solar from nuclear and pretend that there is a coherent policy which has been constructed. >> thank you, mr. chairman. i would just point out to the colleague out of the 1703 program, the creditors must pay the credit cost. and under the 1705, taxpayers pay that cost the company. with that, i turn it over to the senator from new hampshire for five minutes >> unquestioned will take about 30 seconds. my question to mr. berlin was if anyone was watching this and got the impression that the bill was brought to the florida house under anything but the most closed of rules and we were not

allowed to offer amendments, even though leaving the rules, there were maybe 300 new pages of legislation added to the waxman bill. that is why i was so startled by the comment. i occasionally veer off into supporting mr. merkley and the committee. i will try not to let it happen again. >> okay. we are going to let the second panel go and call up the third panel if he would come and thank you for your patience as we do this here, and we participate your participation. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> tomorrow, at the center for strategic and international studies examines the conflict in syria. it has taken the lives of an estimated 70,000 people. we will hear from amnesty international advisor and a foreign affairs analyst. live coverage begins at 1030 eastern on c-span. >> this weekend on book tv, growing up in the shadows and secrets of the rocky flats nuclear weaponry facility from full body burden, kristen iversen looks at the effect on the environment and the people saturday at 7:00 p.m. eastern. and sunday on afterwards, the light of jeane kirkpatrick. she meant she was a magnolia with a magnolia and accent. by 1979, she was in full-fledged opposition to what she saw as carter is him. particularly, she saw the fall

of the shah and nicaragua. a couple of lacerating experiences for her people like her. we met the political woman behind the cold war doctrine sunday night at 9:00 p.m. this weekend on c-span 2. throughout july on c-span radio, historic supreme court oral arguments focusing on election issues. >> throughout the sec, they refer to us as being a nominally independent, professionally run, the candidate knows who is helping him and why. we think that these are all code words for saying that we are effective. >> saturday from 1985, the federal election commission and national conservative clinical

action committee at 6:00 p.m. eastern in washington dc. nationwide on channel 119 and online at c-span radio.org. >> to energy analysts discuss the possibility of a north american oil and gas boom. at an event hosted by the new america foundation. afterwards, they were joined by energy executives to talk about whether the boom has the potential to kickstart a kick start a new era of prosperity in the u.s. participants often discuss the politics around current federal energy policy, including international negotiations regarding global climate change. this is two hours. nine months ago, the world's premier energy historian, daniel juergens, wrote the sequel to this seminal work the pride.

in his quest, he attempted to chronicle the central issues in the energy world. primarily, that included the theory of oil and global warming. these are issues that have residents not only in the oil industry, of course, but also to civilization. one issue that was not covered in the book, however it was not mentioned at all was the new age -- the golden new age of oil abundance. a flurry of new oil discovery. these discoveries are so large they could remake the world. they have the potential to make north america independent of oil from the outside. and they could disrupt the

geopolitics around the world. in china, the middle east, in russia, too. daniel juergens was not alone. two weeks ago, the ceo said he was also blindsided by. the last two weeks we have seen a report of competency on the topic. it is an issue of the first priority. do we have a priori evidence that the volumes under discussion are at that scale are going to materialize. as our world going to be shaken up by a flood of new oil coming in the decades, or is what we

are talking about an aspiration? what could happen with all the stars if their lineup. if the costs are right. if the price is right. if the right technologies are applied correctly? >> if we don't get pushback from the environmental community. today we put the scenario, the oil abundance in area to the test. i asked them from are you willing to be challenged on stage, live, all the same time and all the same place? >> the response was enthusiastic. so it is today that we are privileged to have six of the energy thinkers to scrutinize the age of oil abundance.

this session is on the record and it is being broadcast live by c-span 2. it is the webcast live on the new america website. please turn off your phone's board the sun on your phones come if you wish to tweak from today, please use the hash tag. let's begin. the first session that will scrutinize the oil age abundant will be modernized by michael levi who runs the council on security relations. >> this panel, that is a lot of feedback. we put together a fantastic structure for today's discussion. we are going to have two components to it. this is about really taking

scenarios of oil abundance, understanding what assumptions go and what factors might affect it and trying to decide how plausible and likely these are. and in the second, we will talk about the consequences. we will separate those two pieces in order to have a really rigorous discussion. in order to talk about where we are heading and where we might be having, we have two fantastic panelists discussing with us the first. the first will be the administrator of the u.s. energy information administration who is previously the director for energy and climate at the national security council staff and for that, adam will be giving out the basics. it is the gold standard for government forecast of the energy world and he will be talking about what they see in the future. the second presenter will be ed

-- edward morse come the man responsible for identifying the trends that we are talking about and really trying to flush them out when everyone else is putting a three-page papers on the issue, he is putting out hundred page ones read a note of his staff enjoys it, but there is a benefit to all of us in giving us robust data information to talk about. we served as the head of commodities research, an economist at lehman brothers, and is part of the energy policy. no more introductions, adam, you have eight minutes to tell us your view and we will have a chat.

>> do we have the technical help? to otherwise i will do it without the slides. >> this is a good opportunity -- is this working? now, it is working. okay. we are in good shape. okay. i would like to think the new america foundation for the forum. it is a great opportunity. stephen michael, thank you, and it's always a pleasure to see you. and very quick amount of time, i'm not going to spend a lot of detail on the slides, but i want

to set the scene and i will particularly use the u.s. as an example. but let's start off with some world numbers. this comes from the eia's annual energy outlook that was just published a little bit ago red we are looking at global world demand growth between now and 2035, going from roughly 89 or 90 million barrels a day up to 120 million barrels a day, almost all of that is going to be in the non-oecd countries. that has interesting implications that we can come back here. this is kind of fascinating to me. this is just the next few years, but look at where the main growth and non-opec production is. the united states leading the table here with tremendous oil and oil liquids growth in 2011, 2012, and 2013, followed by canada and russia.

china and colombia, kazakhstan, blairsville, we believe it was the production growth and we believe that has the duplications that we will be getting into. how is this materializing? places growing very very strongly in 2012. and likely to continue along those lines as the industry gets more comfortable for oil development. there has been analysis on what the reserve artist. it looks pretty good. in the eia reference case, that w. in the eia reference case, that will support a certain level of production, but high estimated ultimate recovery case for a

high total reserves case that could push production or potential production numbers up even higher. the reference case is a darker shade here, but as you can see, there are a number of cases, particularly with high reserves, where net imports shrank quite a bit. as you get out to 202025 and 2035. honestly we have had import numbers that depend on not just domestic supply but what is happening with demand as well. let's look at some of the possibilities here. the reference case in the eia is energy outlook for the u.s. shows dependence on imported

petroleum, which will shrink from about 50% in 2010 by now we are already down below 45% to 36% in 2035. if we were to take the high production case and combine that with the low demand case, that number could be 14%, down close to 3 million barrels a day. if not, if not impossible, it is possible to think of some cases that lead to even further shrinkage and dependence on net imports. if you had higher order prices and more conservation, if you had stronger fuel efficiency standards, if you had better technology in the demand sector, including things like how much oil is being consumed and home

heating, commercial heating, all of that could lead to further shrinkage and that import number. one thing that i think you should keep in mind in all of this, and i will close on this topic, is a bit of caution in terms of interpreting what it would mean if the u.s. were to become self-sufficient in oil the harvard county school just published a report in month ago that suggested even if the u.s. were toward totally oil independent, we would still be be dependent on global oil markets in terms of price settings and the critical importance of middle eastern foreign policy issues would not go away. despite the potential for oil

imports to shrink considerably. with that, i will close and we will turn it over to ed now. >> thank you very much. thanks for a rematch, steve, and the foundation for setting us up and thank you adam for setting the stage. what is happening is a really big deal. i'm not going to talk about foreign policy issues right now. we will have time for that later. trying to deny that this is a big deal is like trying to deny that the internet would have you can for implications. what is unfolding is truly a technological revolution is assisted by entrepreneurial capacity among a bunch of copies in america in north america that have come up with the assistance of higher prices over the last

decade, been able to exploit geology outside the scope of mankind. it is not the shale resources of north america. there are three levels of unconventional resources that high prices allowed technological innovation to tap into. these are clearly the deep water. they are the oil pans in canada, and they are the type formations from which shale and source rock has managed to escape, not completely skate, but escape into a slightly more porous rock that new technology can make even more porous than we and we know this source of it, and the scope of the resource base. we don't yet have a technologically defined set of numbers about commercial resource. to put the technological revolution into perspective --

the resource base for the shale like oil prices, only a slight increment, the source itself is many times larger than the amount of oil that is commercially available globally if it is a trillion and a half barrels of oil that are available globally, a trillion and a half in place in wyoming, including utah and colorado. clearly, what will be commercial, 100 billion barrels and that is kind of what is going on in north dakota, saskatchewan and montana. that is not just america, it is the world as a whole. our report looked at north america, and it is important for north america, i know it is significantly less conservative than those of the energy

administration. but we look at what is potentially available, and by the way, our numbers show different profiles than the numbers that adam shows from the eia said show a continued decline in mexican production. i think the world will be defined at the end of the year that mexican production will be up your end from onshore production. there are discoveries in deep sure that have just been announced. full results of extradition in the extension from texas to the other side of the border, they are just becoming publicly available. there is no reason to assume that the geology won't work. what those reasons will be, somewhat skeptical about, whether a company like this can do at the oil companies of north america can do. let me be very specific about this. what has allowed this work makes it difficult, the company liked

even exxon, entrepreneurial independence empowers people at a significantly low level in the hierarchy to make decisions about drilling. and to experiment on drilling. this enables the entrepreneurial company to do things that others can't do. what has triggered this clearly was on the national downside. what is happening on natural gas is truly important and cannot be ignored. we look at the oil balances in north america and we have to think of where natural gas is going to by the end of the decade, almost certainly in oil consumption. one of these is natural gas vehicles. it's probably going to unfold pretty quickly and probably in the heavy-duty truck fleet, so i want to make a note on this and we can talk about it later. the economics of converting a heavy-duty truck fleet from

diesel and natural gas are compelling. it cost about $7000 to do the conversion without having a new rig or engine and that $7000 can be made up more or less in the year. depending on where in the u.s. you might be able to get this worked out, that is a big issue. in comparison to a 4.5-gallon diesel, you can have the equivalent amount of natural gas somewhere between $1.10 and $2.50. the economics on that are very compelling. we, looking at 2 million barrels a day decline in consumption, have a natural [inaudible] from trucking fleets for diesel into natural gas.

the high prices certainly had an impact in north america with the shale gas prices, but it is really global. when robin and i were trying to build petroleum finance company in the early 1980s, one of the first things we were able to do is get a contract with the world bank where we looked at the investment cycle of the oil industry. we look at the things that go into capital expenditures. there are six things that go into capital expenditures. those six things explain a lot about what is happening. the total capital spending in the world peak in today's dollars of 200 billion in 1981, and sharply fell off as oil prices fell off. among the six elements of capital spending is enhanced recovery, extend the life of the a field, low prices make that on

economically appropriate in the event, which leads to an increase of decline rate. they lived off the acreage -- companies do, for two decades as the cost of it went down in 2002 and 2003, for a bunch of reasons related to opec, company companies that it was wise to start investing. they started increasing capital flow by sixfold and the result of that is coming home to roost. what is happening in north dakota and texas and ohio and pennsylvania on the downside in oil side is a reflection of the results of cap ex globally. it is happening in the deep water as well again as drilling activity has now revealed. there's a big lead time between the release of the capital and

the result in the chart on the right that shows in most years before 1984, the amount of oil discovered includes extensions and revisions tool discoveries, it was the amount of oil consumed. for this year in which the industry was living off of old investments and the amount of oil discovered with less, and now, the evidence is clear that discovery rates are significantly higher than in will remain higher than oil consumed for the time to come what is required to keep this going is really high enough prices. this is a map it can be seen, but the 250 most recently discovered fields and their economics. most prices can be done at $7 a barrel. excuse me, $70 a barrel. one has to ask question about the sustainability of oil

prices, which is another issue, but if oil prices are the same at a robust level, there is plenty of indication that the robust levels we have seen can continue. thank you very much. [inaudible conversations] [inaudible conversations] [inaudible] [inaudible] >> i want to start by asking each of you when you look at the other case, what are the one or two biggest differences, not an outcome which we can see in the total number, but in the assumption -- what you see is the biggest factor explaining the difference in the

projection? maybe i could ask adam to do that first. >> that was looking at a global case and the numbers i were presenting work for the u.s. next year the eia will publish their outlook again. one of the decisions made in the first few months at the eia. we also had a forecast for the short-term energy outlook. >> in regards to the north american case, [inaudible] you could come close to self-sufficiency or go beyond self-sufficiency by 2020? that is certainly not what the eia essaying. >> that is actually not right. if we take the low demand case and find out the high demand

case, if you combine most of that, more than that what is already coming from mexico and canada, so that would actually imply on north america, mexico, and canada basis that he would be independent. one of the things i think you should keep in mind, and it was on that last slide that i showed you, the number of the different cases the eia ran in the annual energy outlook, not all of them lead to lower demand for higher production. there are possibilities with stronger economic growth that could lead to higher demand or problems on the production side that, you know, maybe the resource base this doesn't turn out to be or that there are

complications in terms of the cost associated with hydraulic fracturing. all of that could lead to lower production could give you a situation where the u.s. would still be importing, let's just say, five, six, 7 million barrels a day of oil out beyond 2025. i would say in general the direction we are going is towards more optimism on higher production and lower demand. >> the same question, ed. when we do this before, one of the things i should make clear is we did a report on what could

happen. i think it is important to bear that in mind. among the things we saw happening was drilling in the gulf of mexico and doubling of production there from the deep water based on pretty decent information coming from companies. i am pretty confident that if there is not another disaster we will see a robust growth, more robust than the eia has predicted. when we look at onshore production, we ran a lot of efficiency improvement. the surprising thing which also gave us more robust numbers than the eia has, surprisingly, we understated the degree to which the teens had been growing. we had a more robust view of

canadian production. that is partly based on new revisions from the canadian government. and we have an uptick in that production. i think the major differences are found in the deep water and judgments of god improvement, incorporating new technologies into a very robust situation. >> essentially it is the theory of micro- analyses of different opportunities rather than different macro assumptions about the investment environments on. let me ask you something about timing. when i said that scenario doesn't have a north american independence case by 2020, i picked 2020 on purpose. if i look at the charts that you had up there, you got to that point by 2035. as you have is happening, i think maybe i'll ask you first that you have done the study and

a cycle along time ago. what makes you confident that you can ramp up production without running into this cost inflation and the constraints that might stop you reign. >> their sexual history can use. if you take a one-year look at costs, you can see much more inflation in the last year than you would otherwise. if you look at it to your moving average of cost, basically that we look at it, i know some people look at them even going up. i don't like their methodology. i'm happy to debate what the methodology is. there are technological improvements that have been bringing costs down. you know, i think that is sort of the most important point. >> adam, you talk about a lot of

different cases and there are downside cases as well, particularly if you have low global oil prices. can you talk about that, how big is that possibility? how big is the risk that the case gets undermined by oil prices, whether because of global demand, a rocky prices, have you looked back? >> to a certain extent, you have to be careful that the assumptions that you make, high production and so forth, but they don't come back end result in a lower price argument. if there is tremendous success on the production side both in the oecd countries in north america and outside, as well as improvements in places like iraq, libya, and elsewhere, and

the opec countries, it is very possible. technology improves and the costs come down. that results in lower oil prices. it could ultimately prove to be a circular kind of argument. have seen that happen before. it is not clear to the bulk of the analytical degree that oil has to be 100 or 125 or $200 a barrel with the eia type oil price gauge. to get the supplies needed to meet demand. we have seen occasions where it goes up and down pretty sharply. i think the market ultimately will set the price, and we will have to see how strong the oil

rig count remains both in the u.s. and globally if prices continue to move south. so on a production front, a technology front could lead to lower prices would ultimately the ability to reduce the incentive for production or technology. >> would take that for a little bit further. i know when the typical response is given, we talk about prices being high. members talk about revenue needs and so on. is there a point where those countries, those countries have to make a choice tween how much they get? and that causes prices to come down and undermanned them?

>> it's no doubt that a lot of what is unfolding has resulted from an opec subsidy and drilling. built into a model for a short period of time is the issue that we just raised. score requirements of commodity producing countries, and it is not just venezuela and iran. it is also russia which has a higher breakthrough even in saudi arabia, which is much lower than that. i think there are a whole bunch of trade-offs. some of this is trade-offs that are already developed. you don't have to wait for north american energy independence to see some of this unfolding. if you look at the rate of decline of imports into the united states golf coast -- the gulf coast.

we are importing less crude from africa. sometimes the gold coast will import no prude. it used to be $2.5 million would be ordered. all going to the east coast refineries. this is already a challenge for angola and nigeria and among the opec producers. a few years roll by and a couple of pipelines, canadian crude, down to the u.s. gulf coast. it would probably mean that the u.s. needs to import no oil from venezuela ordered saudi arabia or from iraq. that also poses problems because the quality of that crude, specifically his attractive in the u.s. gulf coast wineries.

there will be specific pain inflicted on particular oil exported even without a flood of oil coming out of the new production. >> at him, i don't want to misquote you, but if i remember correctly, you cited recently -- depending on the north american oil production, you might be tempted to export, perhaps export light oil and import heavier oil and take advantage of the refining capacity? >> if political barriers make that impossible, how do you see that affecting the outlook? the potential for expansion and north american supplies? >> it is always a good thing for me to state that the eia tries

to provide the best unbiased and nonpartisan energy research for its customers. and we don't do policies. the level of exports of energy exports of gas and oil is a policy issue being worked on by inappropriate policy and agencies forgot what the eia can do is something that ed was already alluding to, crude oil production, for example, a huge surge in production of crudes and condensates, going into the refining system in the u.s., that was designed to upgrade heavier and higher sulfur crude. particularly in the gulf coast

with what that suggests is ultimately, it might make some sense to try to look at that from the standpoint of what would be best for the overall national interests and what would help from the standpoint of growth in the economy, jobs and managing in whatever the environmental issues are. i think if you are going to continue to see an increase in domestic oil options, if you made that assumption and then further assumed that some kind of exports policy was not going to be allowed, that would drive prices down for those crudes, lower prices for those crudes would mean potentially that they would not be developed and we wouldn't have people employed in doing it and the benefits of the economy would be lost.

so that would be the case. we have a ways to go before we are going to be faced with that, but it is certainly worth policy makers considering. >> would you reach a point where the people invested in the refining capacity and that kind of oil? >> it is hard to see a great deal of investment in the u.s. i think more likely, in two or three years, there is already shifts in the transportation system designed to move in places like north dakota, where the refineries are set up on the east coast, more of them are designed to handle crude. that is going to require changes in infrastructure, we are are to getting more crude by the railroad, more that will occur, and extending pipelines to move the crude in the direction of

the refineries of the group. >> before i go to questions, i want to ask you one more thing. the one big potential barrier to the scenario that you lay out his opposition on environmental conservation. how do you see that? what exactly do you mean by opposition? >> the american public has been split on a bunch of oil issues. those splits our perceptions of the national interest and they have not gone away, and in many respects, they have been exacerbated over time. they don't like using dirty material or extending the usefulness of what our dirty -- as part of what we do. part of it comes in a couple of layers. there are people who don't like

importing environmentally unsound or what is perceived to be crude oil profits in unsound ways from canada. there are people who are opposed to exports, largely on the ground that it perpetuates environmental damage or questions the integrity of the environment. specifically in the plant of refineries or uses of hydrocarbons and waste products. it is clear that we have a barrier robust set of environmental interests in this country. those who don't like hydrocarbons. >> we talked about a variety of different sources. you're talking about offshore, oil, canadian oil, is all of

that in the question mark category? or a son of a more uncertain than others? >> we have had a recent public debate on these issues. it has been important for the development of this industry, so much of the research comes from private land or statement rather than federal land. that has been good in terms of development. on the other hand, it has enabled the growth on a state level and an industry level, specifically if you look at tracking the issues, related to the integrity of aquifers, issues with different reasonable

people that have their minds in different places. what i am concerned with among these is having their integrity maintained through these cementing practices. i think the aboveground waste disposal is a particularly difficult issue. i think the annoyance of having -- >> truckers -- it is something that is of concern, should be of concerns underground injection of hydro- cracking fluids. it has been associated with unusual seismic activity in places like the united kingdom and that also strikes me as a legitimate concern, i think that

it is fair to say that most of these can be dealt with at a higher cost. and the question is what is that higher cost? and how to deal with it. >> i have a very interesting conversation recently with someone who is pro- development and had significant concerns as well. let's take some questions from the audience. please put your hand up. there is a gentleman with a microphone who'll bring it to you. >> over here? >> i was wondering if you could tell us how long it would take for the brazilian pre-salt production to come online and what impact that will have? >> i am happy to address the issue. some of it is an optical that doesn't exist. in terms of the cost, you know, one of the great changes of the

last decade and a half is in the growth of the deep water drilling fleet. which numbered 17 in 2000, and our numbers posted at 300. which is one of the reasons that i am bullish about this. i think when it comes to nationalism, the inevitable temptation to buy material, the inevitable temptation to reduce competition between the state enterprise and international oil companies -- it has significantly slowed. the progress of development, as the new ceo has admitted, in putting in place a more reasonable projection, a more reasonable projection doesn't affect the ultimate level of this but getting to the ultimate

path. >> just to put this in context, compare the scale of the brazilian potential to be others at the beginning of various discoveries and africa and the north american picture. how does this apply? pig of a piece of the pie is this? >> if you look at the deep water production in the u.s., when we hit 1.7 million barrels a day. we have gone to that level of roughly those girls a day. deepwater had been growing at about 10% rate. there was no reason to think that that was going to stop in the next decade. the brazilian part doubled from last [inaudible] 2022. that is a significant number.

>> it is time for one last quick question. >> thank you. bill murray. by 2020 we are talking about the possibility of having, you know, imports down to less than 3 million barrels a day, including nafta being that way as well. it doesn't make any sense to consider asking the question about [inaudible] the u.s., and what value that would be as a tool of the strategic value -- what that would be? >> i think that is a great question for the next panel. we will talk about the broader implication of this. let me turn it into a question about the resource base. ..

>> we have the example of what happens. if you word to extend that

to, it is fair to say 10 years ago nobody had any etfs what it could be. it is possible we might discover the same thing about whale. >> we are out of time on this panel. thank you for a fascinating discussion. it helps us to understand in the age of abundance looking forward. we will move straight into the next panel to discuss

the implications. [applause] [inaudible conversations] baja [inaudible conversations]

>> the panel will presume they to of way ago and the dependence does materialize not energy implications but geopolitical implications to put that surplus on to the market. our editor is the editor in

chief of foreign policy magazine. >> can you hear me? no? okay. likud news is no opening statements. [laughter] this is a terrific opportunity to have a conversation what do we make of it? was not throw more numbers that take as a given the new age of relative new america and is upon us. let's unpack the geopolitical implications. speculation is the sort we

all excel. i will not slow us down with long introductions but we do have my goal, mr. sieminski from the u.s. energy information administration, edward morrice from citi group and edward zhao -- . [laughter] rabin west and edward chow from dead strategic studies and also john hofmeister ceo

of citizens for affordable energy. now with this group where we agree and where we disagree. i will ask ahead and moors who said this new age of abundance makes america look like the new middle east what is your speed levin when this comes on line? >> you don't want numbers but i have to give some. with 3% of gdp but when you cannot avoid it is no longer a significant issue and has

been argued with the deficit and the dollar is the big achilles' heel we are free of the shackles of that. looking to the world it would likely be maintained for a long period of time. not having the current account deficit rehab us based foreign policy not bowling to fuel monarch's to other aspects and that will be eliminated. but this strikes me as an

obvious place where energy independence makes a big difference. >> we will the longer kowtowed to dictators. but rabin you have made a sweeping sense of what energy independence could mean to us? the equivalent of the berlin wall becoming the top producer again? what did you mean? >> it changed our perception of the world to include canada with the better states you have the u.s. as self-sufficient -- self-suff icient. if we are, i agreed entirely

with rabin but the crude flows will go more to asia and as a result asian countries moody's focused. the same question i was asked last week will the american people being sending 100,000 troops to kuwait 10 years from now? i don't think so. it is a tremendous challenge. importantly, it was the private sector/free-market success. the federal government had no role.

94 or 95% it was a complete surprise driven by independent companies companies, innovative, respo nding to higher prices. there were 1 million people on the brooklyn bridge. it was a big crisis. if you look at some much policy, and pol politicians believe energy policy is too important to be left in the market. part of the narrative is we

were the energy glut in. the president likes to say we consume 20% but the fact is we are 20% of the global economy and consume 20%. that is about right. population is a demographic. not economic. some of that whole narrative will change as well. i do think it is to scale of the berlin wall coming down. that was completely wrong. >> maybe ahead of its time?

>> a lot of places have declined rates i think there will be a tighter market certain technologies may not work here but possibly others. it is not over. it is part of the cycle. >> talk about the role of private companies when news that from an interesting vantage point*. how will lead it look geopolitical czar? how has the landscape

changed? >> when i retired 2008 steer the capital away from the united states. confused on energy policy this government has taken on it was said disable lourdes. not be unable where. government was the primary in a blur of a great expansion post world war ii with major legislative movements to make things happen. until the federal government comes to grips if it is the and a bowler or said disable lourdes that is a higher

priority, i would be very careful. there are some of their trees don't grow to the sky. fault of the prospective growth could be achievable but also could not depending on in the macro policies. the market only has so much strength. we could do so much more. not only zero weigh in and

natural-gas the internal combustion engine with flex fuel engines and at the same time we open bet domestic assets. the whale and gas industry today has 100,000 job openings. 100,000 jobs would to lourdes decelerate activity with those stem educated students with the numbers going forward i spent

tuesday in the louisiana. nobody can not find a machinist. people to pass the lourdes drug test. offshore workers, engineers. these other limitations to be worried about. there are other systems in that country. >> going outside the united states, what about said demand from china and india? how does the rise scramble to our assumptions of the political weight of those

countries? are we overly optimistic with a stronger hand? >> i am not sure it has the way expected but it takes this zero sum game out of the equation. we have mixed feelings of energy investment around the world. our concern over lack of supply in the united states. that is the interesting part. to not raise the concern

mindich trainees the accompany don't seem interested. a much more relaxed attitude. and then to follow suit very soon. and then with at growth rate it takes away the element geopolitically it is a healthy phobia. >> guy will lead to my best.

and really we should be less concerned whether it is true or not where they will not liberate kuwait because we will become more. middle eastern or real end of our economy are intimately linked to. only one global power can secure. of are we going to relinquish that role and cooperate with others with a global responsibility?

to help not just the domestic economy. clearly this will not happen overnight to change the thinking of the chinese to think we have not thought about it very much. >> many facts have come from his terrific peace. and to bring a note of questioning to the conversation how do translate into political

independence? in the sense of breathing a sigh of relief around the corner? >> words like feelings comment attitudes attitudes, variations come up. how will this affect our reception and the underlying economics of hallmark of the global economy. is likely to affect our perception. you find oil influences international politics. then based on those believes with real-world consequences. that does it matter saudi

arabia is a big supplier? it does not matter what the advisers chose to. reality is affected by a perception and also by reality. we live in a globally integrated oil market. it is not all that people claim. but we essentials the do. even if we produce as much as we consume, when something goes wrong with the price by the is to bar the export of the export capacity that you are not allowed to export will.

that is a big decision. >> fact is if those prices go down with the peace with good geopolitical implications but if you think of the producer export policy, all which has geopolitical implications. >> i am interested in your thoughts. i also want to step back these are times of high eight oil prices. is the number to get the

internal politics? a lot of assumptions with high it will prices. it is stability of other parts of the world. >> a number of analysts and private sector companies with a large oil exporter and number of countries have very high prices and others have low break even. if you consider the range most of the members were

falling and the average of the low 90s per barrel. due to higher prices and production in the country's main the the mid '80s instead of the mid nineties. skipping that going back to the major theme brought up up, one thing to be considered, what does this mean for the u.s.? is the productivity shock to the u.s. economy. strengthening the dollar, the trade

deficit, everything that is tremendously positive. one thing to keep it in mind the u.s. has managed to make more progress more than any other country around the world. and then to proceed into other countries. with canada or australia has not move negative rapidly as you might expect. >> what about china? today have a change of the internal energy picture? [laughter] >> it is just beginning.

there is a lot of other things going on. particularly with the chance for rain to return the of which they start to experiment with. also to change their relationship with russia. it has become urgent at the time they did not add the availability as a substitute to make it easier to come together.

there are a number of applications for the conventional gas, methane, we could find that out and 10 years. and china's role internationally with supply. >> how would do you respond to the question if way that our he l