groups, and the ones who were from the sochi area, indigenous people before the russians arrived, people who really no longer are on the ground, maybe a few thousand shops, 3,000 or 4,000 but most of those if they are anywhere their descendants living in turkey or gordon, all they really wanted was to be acknowledged that they existed, that they are indigenous people from this kerri and by coincidence or black coincidence the 150th anniversary of the massacre and deportation in 1864 happened on this precise spot where the games are being held. little more sensitivity from the russian government would have

gone along way. unfortunately the russian government, vladimir coo and are not famed for this kind of sensitivity towards ethnic minorities. sergei reminds us in 2010 they went to the vancouver olympics, sending out the wrong signal given that the cossacks associated with the destruction of the native peoples. i don't anticipate, wouldn't anticipate any kind of effort by sarkhasian to disrupt the games. if there is -- these are islamists, not sarkhasian nationalists. we have seen islamists targeting people with a national agenda in places like bulgaria in the

north caucusus, we have seen a few fascinations of academics who have been trying to portray non islamist identity for the sarkhasians. just to finally a few extra words about the north caucusus. i should also mention another reason abkhazia is problematic which no one has mentioned so i should mention september 9th the russian vice consul in abkhazia was assassinated, the main suspect is a chechen who was wounded in georgia. that is a different subplot. that is a reason for the russians to regard abkhazia as a problem and a threat to these games rather than as an opportunity. a couple words about north

caucusus. gordon and i would agree we have differences of perspective of problems in the north caucusus he knows the details-left over chechen war lord who didn't have to be killed when basically the chechen insurgency was finally defeated in the yearly 2,000s. he successfully read branded himself as a kind of islamist leader but it is not clear to me, they have a good web site and branding and the russian interest to kind of pay attention to the caucusus but to me looking at it from a difference, who doesn't study it day-by-day, looks like an umbrella organization in which

the individual operatives have a very loose if any association, if you are pakistani islamist i think doku umarov is a leftover it chechen nationalists warlord who doesn't feel much affinity, we don't have a map here but we should also remember the north caucusus is very long, pakistan which is obviously the most hostile and dangerous part of it is a long way from sochi. and what happens in dagestan has no relationship to what happened in sochi itself. what is happening in dagestan i think looks to be very unfortunate. it looks to be vladimir putin again having a very short-term

response to the games, lots of reports of rounding up marginal young men, the kind of young men who could be sitting at home doing nothing or if they are rounded up and abused by the police could be going over to the militants, and i think the new head of dagestan was trying to control those people back into the fold but because of the tactical response to the sochi games, people being rounded up, that makes the problem worse. just to some up, this is not going to be unfortunately a moment of great caucusus reconciliation between georgians and russians it is going to be at best games where there will be heavy security presence, where there is going to be all

these raises done with many, with net costs being trained by russian security personnel and the best we can hope for is to get through without any major incidents. >> thank you for the comprehensive perspective, bringing in a broader look at the caucusus and the political and security challenges and threats regarding anniversaries, to at the closing ceremonies on feb. 23th will be the 70st anniversary of stalin's deportation of the chechens, not a particularly happy anniversary to take place during the games and the fact that it takes place

on the final day of the games, i don't know who was planning the timing of that. let me turn now to my great colleague and friend one zarate. in many of the things i was negligent about in my introduction this morning, juan is the author of a recently published book entitled treasuries war:the unleashing of a new era of financial warfare. the floor is yours. >> thank you. an honor to be part of this panel. the advantage of being last is i can ride the intellectual blake of the big brains in my wake and also commend you the report and congratulate sergei for a digestible compendium of the analysis but also great source of data points as you look

through the document, great research and great revelations of interesting points. what i thought i would do as opposed to rehash what the real experts have to say on this is to give you a sense how the u.s. may be perceiving this and is proceeding the threats from the games. i had the advantage of being in the government during several olympics and the beijing olympics to coordinate u.s. security and potential response to threats. it is fair to say not from an alarmist standpoint but an objective standpoint given everything we heard and everything we know that these are the most dangerous olympic games since 9/11 given both a threat environment and given all of the opportunities various groups gordon laid out have in terms of this game.

let me lay out how the u.s. might view this and why i suggested the most dangerous context of the olympic games since 9/11. in the first instance the u.s. used the terrorist threat as serious, that is defined by the intent of the groups that could threaten the games, the capability of those groups and the opportunity. let me go through that simply and quickly because that is how the intelligence community and the policy community thinks about and categorizes threats and in this context makes very clear why it is that the u.s. is concerned with threats. first you have the declared intent of groups to disrupt the olympics. it is clear, from the senior most readership of the various groups, the caucusus emirates in

particular, doku umarov, significant and important the july of 2013 statement is not just a call for attacks from the games and massive disruption but the lifting of the moratorium on attacks on civilian targets which is in essence a call to arms and an opening of the targets around the sochi olympics and not just the venues but also the transportation hubs and other venues that are potentially vulnerable and the site of soft targets. in terms of capabilities we have obviously seen over the last decade the ability of a variety of groups to hit not just in the caucusus but in the russian heartland with not just efficiency but great devastation. we saw this in boca grande -- l --bulgagrad and the description

in the report is you have these groups that are not only motivated and have the intent but have practiced the capabilities and mastered a variety of vectors to attack. that is to say these are groups that don't just specify, these the groups that can plan a variety of ways to attack secured site and unsecured sites. you have seen this with singular suicide bombers, coordinated attacks, truck bombs and bus bombs and the use of multiple militants in targeted assaults and you have seen their willingness and ability over the course of the last decade to attack all sorts of venues that are vulnerable, transportation hubs, metro attacks and the rail line attacks, you have seen a tax on schools, security, police

stations, hospitals, so these are groups that not only have the intent demonstrated capability to attack from a variety of factors and are well practiced in many ways in how to do this. finally the opportunity obviously as jeffrey laid out, the olympics is a center stage for world attention, you have the media there, all of the world watching and hopefully watching for the right reasons, success on the slopes and the eyes, terrorists understand not just the significance of the games but the significance of the games to vladimir putin and the personalization of the game in some ways presents a red flag, and attractiveness for these groups to demonstrate their ability to attack and

embarrass vladimir putin and the russians in a very important way. i take you back to the july 2013 statement from doku umarov that not only called for attacks on the sochi games and lifted the moratorium on attacking civilian targets but called for a new face in the law work for liberation in the caucuses and the establishment of the emirates and what is most interesting to me from the point of view for the broader threat, variety of terrorist groups not just from the caucusus but central asian groups like iau or returning fighters from the syrian conflict of foreign fighters that flow in is the attack and this may be a moment of convergence, not just the rejuvenation of the fight and accelerated terrorist campaign from some of these groups under the banner of the caucuses --

caucusus and rex but rejuvenation of the global jihadis narrative about attacks against russia as the near and far enemy in the global jihadis narrative and by that i mean not only has chechnya and dagestan always been part of the global jihadis narrative as seen most recently in ayman al zawahiri 's speech about the noble fighters, and the backing of what is viewed as the global jihad groups as the backing of the slaughter of sunni muslims has really put itself back into the heart of the global jihad the narrative as a key potential target forced to hit and that may not manifest itself in sochi but it certainly will manifest

itself in the future and that is an important point. in the mind ofs likely of the group's operating at a caucus -- caucusus this is a moment to embarrass the russians but also an opportunity for the global jihad the narrative to take advantage of sochi and take advantage of a moment of real generation. the environment itself presents opportunities so it is not just the potential to attack in sochi, to launch attacks or provide logistical support, the report lays out a recent instance of terrorist cashs captured, weaponry and supplies in abkhazia. the environment itself provide opportunity logistically. ..

and citizens who are visiting. two other key points of concern for the u.s. government that have i think accelerated over the last couple of weeks. one is the continued lack of visibility into what the

russians are seeing in the doing in terms of the actual terrorist threats or threat they are falling into the disruptions that are under way. there's no question the russians are following threats. we have seen reports of the black widows that may have been overblown but there are concerns about particular terrorist operatives and threats, and it's clear as well that the russian forces have been engaged in counterterrorism and counter insurgency operations, knocking down doors, engaged in firefights and particular to be as involved as possible. and the reported death is still unclear if that is accurate as andy indicated but the lack of visibility concerns the u.s. government, because that creates a blind spot for the potential threats to the u.s. interest at the site. though i would say there's been nothing at least publicly that suggests there are the direct

threats at the u.s. athletes but they are a part of the environment, and the concern over this is manifested in symbol signals. you have seen for example of the advisory for the u.s. athletes not to wear identifying including outside of secure then use. that is a concern the u.s. government has that there may be vulnerable. utter is a concern about contingency planning. every country that goes through security planning are now that the olympics wants to demonstrate not only they can put on a successful game but they want to demonstrate their security services are professional, they can do it on their own terms and this is many planes of nationalist pride. so often you won't get as much visibility as you want, regardless of the allied. even in london it was and sort of complete and open visibility. every country manages security

at an even talk like this on their own terms, but i do think there is an important set of concerns about how the u.s. government might plan for worst-case scenarios for example how one thinks about a potential eve activation -- evacuation. nothing to suggest that is going to happen that you have to plan for the worst. and i would say bringing into this, the u.s. political environment interestingly enough the post-benghazi world there's the question whether the government is proceeding that ret appropriately, repositioning assets the right way and planning for, again, worst-case scenario has been much of the criticism in the post-benghazi review. and so that's a way of thinking about u.s. concerns. let me not be labour this, but

let me just reference three broad points that i think are important to note. one is a matter of scheduling. this may be helpful to you and your publisher, but keep in mind we have not just the olympic games in february but we have the c3 in march, so we have a two month window of potential vulnerability in sochi. but i would say is the terrorist groups likely don't mind too much if their attack planning moves into march and they are able to effectuate the rather significant attack that may not be when nbc has 24/coverage but the paralymics is quite widespread. you remember how that was in the london context how popular it was, you can imagine again the

terrorists if they do not have an opening opportunity that's right in february, thinking that the opportunities might a rise in march, so keep in mind this is a larger window than one would imagine. second, this is actually a moment of great opportunity of cooperation between the u.s. and russia. it's always a moment of potential cooperation around multinational security events where information sharing cooperation can be enhanced and you have seen this in the u.s. government trying to push this with the offering of more fbi agents and security personnel from the state diplomatic security on the ground, the offering of four technology from the department of defense and offer of more coordination and turns of planning on the ground. it is not clear to me if the russians are taking fuller advantage of this, and they aren't, but it's important to note that this is a moment of opportunity in the relationship

between the u.s. and russia because there is a coincidence of interest in having a safe and successful games and ensuring that the terrorists do not succeed in disrupting them. finally, just to reiterate the point, and it's an unfortunate reality that the perception of insecurity in many ways does perhaps not just as much damage materially, but psychologically. it to the extent this is the game's to be locked down because of security or where any time a terrorist group says boo and the russians run or the u.s. security officials have to respond, that unfortunately is a success for these groups come and again, keeping in mind that sochi may not be the end of the story for these groups in many ways for the groups and the caucuses and the global jihadi networks. this may be the beginning of a

chapter and viewing it that way is a way of viewing the threat differently and explains why, as i said at the start, this may be the most dangerous olympic games we have seen since 9/11. >> that was an insightful presentation. i would like to make a couple of comments. one that builds directly on the points that you made in the last one. to me, this sochi games, looking at the protagonists, the terrorist groups, not only russian-based juan intimated, the image of the american

narrative high noon at the corale or the sort of ultimate for the terrorists i would suggest this target, and not necessarily in sochi itself but throughout the russian federation the efforts to spoil the games some house of this is the holy grail of juicy targets for the russian based terrorists groups. and just to amplify on the very insightful remarks that jeffrey made, for vladimir putin, his political career, he emerged virtually from aware when he was named prime minister in 1999. his political career is a national political figure in russia skyrocketed on the perceived success in the beginning of the second chechnya

or after they made the incursions' in pakistan after the fall of 1999. putin has said on many occasions that he sees himself actually having a special role, almost a messy role for him to stabilize the caucusus, so why all of the world's attention is on this region, anything that would further tarnished that narrative of his i think is very significant. and i think the point that gordon was making is that this could be a very significant inflection point for mr. putin himself because he has so much riding on the success on these

games. one point and this is at csis, we believe in appropriately referencing the source of insight. as a point i want to make that jeff made a couple weeks ago at a press conference that well, okay, we know that these are locked down games and putin has guaranteed security. of course nobody can guarantee the security of anything in reality, but i think the real point is that any security system is only as strong as its weakest link, and in this case, the deep corruption of russia, including security forces, police and others is a real problem. it's been a real problem that's facilitated successful terrorist attacks in the past, and

possibly successful terrorist attacks in the future. finally, i have an inquiry from foreign affairs in the week is their something that hasn't really been covered about the sochi games and that led me to think with all of the trees that have been filled and commentary about the sochi games, my question was okay this is my title, you can't use it. what if you had an olympics and nobody came? jeff mentioned the attendance issue and there's 70% of the tickets have been sold, which of course may or may not be true. whatever amount of tickets had actually been sold, or those tickets really going to be used?

obviously the interest of the international community in attending the games has been dramatically reduced. i think there have been serious reservations on the part of many russians citizens themselves. now, when i raised this in our session with the opposition figure that jeff kringen for vladimir here on monday he said that isn't going to be a problem because look, the russian authorities are very effective in busing people in for the rallies or e elections to vote chicago style many times and the like. nevertheless though, i think there should be some concern about -- it would look rather embarrassing if international cameras are on the stand and it doesn't appear that -- movie

attendance is really a problem. and just tied to that, let's not forget the possibility of well, people of course talked about the lgbt community making some kind of a demonstration or a whole set of possible actors that have reasons for making some kind of using the podium of the games to use a demonstration in some way, shape or form. but the one thing that struck me, i was recalling the ultimate fighting competition that was held at the olympics stadium in doors, large venue in moscow a couple years ago and put in -- putin. a russian did someone and he used that to make some russian remarks to the crowd of thousands and he was booed and

hissed very, very embarrassing. so, something of that nature could transpire also. and like all of my colleagues of course we hope that none of these threats and challenges that we have outlined here in our opening remarks will come to transpire, but i will be watching these games with a special-interest. and let me also -- i want to acknowledge sergei for the work that he has done and i'm sorry he's not able to be with us today. i also want to take the opportunity to thank the carnegie corporation of new york that supported the fellowship of sergei here and also the publication of the report. so, let me now open up the floor to questions and comments. if i may, i would like to turn over to an old friend here who

has arrived in washington in of late summer of last year. that is the esteemed ambassador to georgia. >> for the others, please identify yourself briefly for us. >> thank you distinguished panel georgia holds a unique angle on russia generally. as the new government which came to power months ago and decided to review its policy towards russia to slightly improve the relationship with russia to mitigate the risks what has

happened. and they've decided to change the policies of the old government and during the games not to boycott them. so very small, but still. and also the georgian government offered the russian government cooperation on security. so far we haven't received any response from russia, but nonetheless, we indicated to signal to them that we are in favor of the conduct of the games because if anything bad happens it is in nobody's interest except for those doing that. especially for georgia who is the closest to the foreign country that enables the site, immediate neighbors of the games, and as we all know the russians especially the government who fails to prevent

from happening this undesirable thing to try to find scapegoats elsewhere. sometimes, many times russia would by doing so would point at georgia, and georgia once these games to go peacefully. i would agree with andy. i don't remember any olympic games, summer or winter games we were not talking about which of the national teams would get how many medals. this time we talk about whether or not they will be peaceful so this is the first-ever instance we are very much concerned about the safety of the games. and i gather from this panel the

possibility of a terrorist attack is there and is quite likely. so, my question would be to the panel in case anything of this kind happens in russia, what this would mean for putin and their representation of russia as a safe place to hold this kind of event because down the road we also -- and we have the world cup games. what kind of implication this kind of an undesirable event have? paralymics. >> paralymics, ambassador. but me express my hope that

georgia brings home some gold. what we also know that we are over time to moderate and showing of late the panel is prepared to be here until 10:45 and obviously you have not been held hostage. let me turn now to jeff and juan to make a brief comment to the investor's question. >> the point that the ambassador made to the folks of the olympics on the security rather than the medal count is right and quite striking. there have been terrorist attacks in olympics in the past. in munich in 1992 and most notably in atlanta in '96. what was different about those is that in the aftermath of them had nobody used them to call into question the legitimacy of the political system, the country holding the olympics. because so much of the russian

government's, and putin's procedure is tied up in these olympics. it sends a very negative signal internationally and also within the country that could have i think long-running political fallout. you mentioned also the g20 and the world cup. i think regardless if there is a successful attack on the olympics or not, complications that we have already seen that run up to the games i'm sure is treating heartburn in the headquarters when they think about having to do an event that is even larger than the olympics spread across the entire country if you have security challenges with regard to single venues, imagine that now multiplied by multiple times across the country for all the different places you could be holding the world cup. so i think it is to be a problem that we could see come up again and again as russia continues to

hold these international events in the years to come. a cynic would depend on the nature of the event of course and so the scope what matter. and i think also the reaction on how the russians responded. whether or not the what is viewed as competent and helpful because i think it's, as jeffrey , atlanta happened but the games didn't collapse or the sense that the u.s. was in the appropriate venue for the future major international event. what a be the type of scope and real vulnerability is that really do colin to material questions russia's ability to hold these kind of defense. and i think we are all hoping and praying that things go very well. but if something were to happen that would happen immediately.

>> line with the bbc and i wonder if you can tell me what you think the most serious number one threat and also with the u.s. is doing about that. >> in terms of likelihood probably suicide bombings, but i wouldn't think the threat to undertake a chemical attack. that could have been psychological terror. that may have been the purpose. on the other hand, who knows. >> with respect to the u.s. and what they do, the u.s. intelligence community and law enforcement try to understand any particular threat other than the broader environment which they understand very well, but the particular threat which is why the question of disability -- visible but he becomes important. they are trying to alter any cooperation and the u.s. is preparing contingency plans, so

that is what you do in an environment like this. but at the end of the day coming you are be holding on the host governments willing to cooperate, and their effectiveness in preparing for the event and any eventuality. >> just a brief comment. i want to highlight of the syria aspect in the chemical weapons issue as gordon has talked about. if you go back to assad's decision to give up his chemical weapons, which undoubtedly in my mind, he was basically given an ultimatum by mr. putin and the russians that either you do this or we will no longer be able to support you in any way, shape or form. we can talk about that more. i think the question is to which actually assad and the syrian forces were and are able to

control an have effective control over their chemical weapons arsenal which was disbursed in 40 plus places around the country. that has worried me for a long time. let's go to this side. yes. >> alisa with eir magazine. after the bombings at the end of september, the russian foreign ministry issued a statement that said that these attacks were very much like what's happened in the united states and libya and syria and they went as far as to say all of these attacks were coming from the same quarters. second, saying this is -- these are -- this is a global issue. it didn't just happen and volgograd. what better than hosting a in a place close to chechnya and

these different conflicts, but they are being held there. and my question is to further underscore the issue of global terrorism and not just the attack on sochi, if you remember in the summer at the height of the syrian crisis, crest from saudi arabia held a meeting with putin and said if you don't back off your support of assad we cannot guarantee they will not attack sochi and he said we've finance them. so, for the united states to have all of this discussion about security and the corruption of putin, for the united states to continue to call saudi arabia and ally i think is just a little bit hypocritical. so my question -- my direct question is how we raise the level of collaboration between the united states and russia and have a conversation about the saudis and other terrorism because if something happens in sochi, that isn't russia's

problem, that's our problem as well. thanks. >> i am not sure that saudi arabia said that. there is no stenogram of that meeting so i have my doubts. i think that was put out by a iranian source. the other thing to keep in mind i think is when discussing, you can pretty much leaves out the word chechnya. this is now the worldwide cooperation, and the dagestanis are leading the charge since 2010. that doesn't mean it's irrelevant. i agree with what was said earlier but we don't have time to go into that. the third point is it is part of a global jihadis movement. it's not an affiliate of al qaeda but that doesn't mean it doesn't share the goals and the

ideologies. i will just leave it there. a cynic it's certainly a strategic opportunity for russia to reinforce its message with respect to what's happening in syria, so there is no question that is the potential here and in some ways as i said earlier it is a moment of potential cooperation but in the u.s. and russia, whether it is on who we is fueling this and what is behind it, etc., but there is a narrative ideological command to a certain extent, connectivity between what happens in the caucasus and what happens in syria because that is how the group's view it and for me this is an interesting moment of understanding sochi and what's happened in the caucuses and -- caucusus and syria becomes the resurrection of the al qaeda driven moment from the sunni

violent. that doesn't mean that assad should stay. we have to policy goals in syria and not just one. >> two quick comments on this. one, let's remember the boston marathon bombing, the tsarnaev brothers. this was an intelligence failure that took place on the united states territory. but also highlighted a two things. one, it was a failure in the u.s. russian collaboration, security cooperation. number three, i think it emphasized to the united states intelligence community and the security community and the importance of tracking the caucusus as a seedbed for the global terrorism.

next question comment. we are running out of time. you had your hand up earlier. >> i am a professor at george mason and george washington on terrorism and the question, you kind of stole my thunder and it's also patriot's day which is when the marathon bombing was for us, too. but with all of this talk concerning the terrorist attacks and potential terrorist attacks and the e-mail that was sent out to the kennedys and -- committees, haven't the terrorists pretty much already won by suppressing the attendance were the popularity's of the olympics coming into the question i have is when do they lose all the international prestige because of this and he put his name on this olympics and how does that translate internationally to the prestige and the credibility when it comes to some of these other events and negotiating power on

the united states like with snowden or chinese or whatever on the international realm. >> great question. the other point in the previous question is the united states have wanted to cross with russians that they have not been very enthusiastic about it. that is an issue. where is the red line for mr. putin, jeff? >> i don't know. i don't know if we can say if x then y. we are going to have to wait and see what happens. the games can surpass expectations and go off without any terrorist attacks occurring and they could do very well. i want to emphasize again, that because so much of the audience that putin is focusing on, the performance of the athletes is

going to matter in terms of how they are perceived in the narrative that he is -- putin is trying to get across to his own constituency. on the international perspective, i don't know. i would be curious to hear juan's thoughts on this. we already know that this is a problem for russia and there hasn't been as much cooperation as we would have liked on the counterterrorism issue, but there are still all of these other areas and whether it is syria or iran or china or anything else. where we are kind of condemned to work together and i think that's not going to change regardless of what does or doesn't happen at the olympics. >> [inaudible] >> this may be very easy but sad question and that is on the global showcase, which is the

olympics based on the personification of the olympics and as the panel has so well described. has any panelist imagined a terrorist group not making an attempt how that could be thwarted in its early stages but can anyone imagine that they would ignore this opportunity? >> we will start with juan. >> they haven't ignored the opportunity and they will take advantage. the one thing to keep in mind with these types of groups is they will take a vintage of the opportunity and they will strike when they are ready. and so, they have been thinking about this for a while and this is why i raised the march window because it may not be that it comes at the second week of february. it may be down the road. >> concluding remarks, please. >> are they going to take the

opportunity against itself targets hundreds of thousands of miles? >> on the previous question, i think that they are already trying to take the tax on going. the timing may be different. on the previous question they are going for something bigger. unless the stadiums are completely empty, then they can say that's a victory. but they are going for something bigger. they are very much like umar and the dagestanis and give a big bang so to speak not to use a pun but i think that's what you're going for. >> i would agree with the previous commentators. this is a golden opportunity for the insurgents to make a point to the media as well as everybody in russia that is

focusing on what happens in sochi. they've already made an attempt both successful and unsuccessful and i would be completely -- they are continuing to make the preparation, yes i think those attempts will continue. >> my answer is yes, of course. i would conclude by saying that we have emphasized what mr. putin has riding on these games more in the negatives, but if there isn't a successful terrorist attack in some way she bore for me even though there's already been significant kind of disturbance because of what's happened and what has been said, then this would be looked at as some sort of defeat for those that have announced that these games are a target and having said that, that threat isn't going to go away anytime soon

because unfortunately, the sources that are generating those that are inspired to make these kind of the attacks isn't going away anytime soon. let me thank juan, gordon, jeff, for attending in your excellent questions. may we not have a reason to have a press conference or a meeting at csis during or after the games where we are talking about security threats. thank you very much. [applause]

[inaudible conversations] associated press reports today president obama says he believes the winter olympics in sochi will be safe and is not a discouraging americans from attending. the president will have more to say from the white house. he is wrapping up a week of speaking events in which he has highlighted different goals from the state of the union address. this morning the president will be meeting with the heads of some of the more than 300 companies that pledged not to discriminate against the long-term unemployed. among them wal-mart, apple, ford

>> we are very focused on the sochi olympics and we have seen an uptick in the reporting of sochi and this is what we expected given where the olympics are located. there are a number of extremists in that area and in particular a group which is probably the most prominent terrorist group in russia. the leader of that group last july announced in a public message that the group would intend to carry out attacks in sochi in connection with the olympics and we have seen a number of attacks stemming from last fall, suicide bombings in

volgograd. if you're going to school on the repeated links so it's made it much more difficult for us to find them, and to address the threats that they pose. when i look at the threat relative to 9/11, as a country i think that we have done a great job at addressing some of the vulnerabilities in the system and putting together an information sharing architecture that allows us to move the information very quickly. but you never know what you don't know. >> the probability of the attack now compared to 2001 is a hard question to answer because principally because of the very dispersion of the threat where we are very focused initially on the degree in that time period on al qaeda and now we are

facing a much more dispersed threat. with domestic energy production on the rise, senators held a hearing to examine whether to lift the ten year ban on exporting u.s. cruid oil overseas. a panel of experts and oil industry officials testified about the impact on oil production, prices and overall energy security. the energy and natural resources committee hosted the hearing and it's one hour and 45 minutes.

>> the senate committee on energy and natural resources will come to order. we are going to have a very busy morning today, but i want to start with particularly exciting news. senator landrieu will be having her first grandchild in a few hours. she has been up most of the night and we will give her a round of applause. [applause] i'm not sure i would have even been conscious this morning. but senator landrieu with her energy is with us and we are glad that she is. senator murkowski and i particularly wanted to have this hearing because the energy renaissance has sparked a conversation on whether exporting crude oil is in the national interest. i think it is fair to say that this conversation is not going to be a result -- resolve any times over the next few weeks. certainly, there is a lot of

interest here in the congress on this subject. and that is why we thought it was important to hold this hearing to begin a real conversation on a very important issue. personally, i believe deeply in expanded trade. in my state, one out of six jobs depend on international trade, and the trade jobs often paid better than than on trade jobs because they reflect a higher level of productivity, which is often required to get american goods and services, and to the international markets. i'm asked to summarize my economic views i often say that one of my principal goals is to help make things in america, growth things in america, and value to them in america and then ship them somewhere. and i have promoted that philosophy as the chairman of the finance subcommittee on international trade. that is why today's debate is

especially important. the fact is energy is not the same as blueberries. and accordingly, it is treated differently under the federal law. the energy policy and conservation act allows for the export cruid oil only when doing so in the national interest. they're simply isn't that kind of requirement for blueberries or other commodities. national security of course is involved when americans talk about exporting energy. right now there are several armed conflicts around the world. south sudan, libya, mozambican and others that are being enflamed by fights to come call oil. now i will put blueberry's against just about anything. the last time i looked, nobody is fighting it more over blueberries. it's hard to believe only a few years after campaign for

america's energy independence having donated the slogans like drill baby drill we find ourselves having a conversation whether it should import cruid oil. energy independence has been a staple of virtually every politician's energy speech for decades. now, our country is in the enviable position of having choices about our energy future. in other words, the question becomes how can this energy boom create the greatest benefit for america. can energy help grow our economy and create jobs? the answer is of course. can the production he is the pain at the pump for the hard-working middle class families? of course. can the country reduce its dependency on fuel from countries that do not always have our best interest in mind? again, of course. those are the easy questions. the hard question is how can you come up with a policy where america can have it all?

can our country get the domestic benefits from exports and still maintain the cost advantage for domestic consumers both businesses and families? .. i just want it understood that on my watch, the consumer is not going to get short shrift. it looks like a number of influential voices want to start exporting oil. i just want to hammer home the point this morning that for me, the litmus test is how middle

class families will be affected by changing our country's policy on oil exports. it's not enough to say some algorithm determines exports are good for the gross domestic product, or some other abstract concept. american families and american businesses deserve to know what exports would mean for their specific needs when they fill up at the pump, or get their delivery of heating oil. simply charging forward and hoping for the best is no way the way you get the best policy decisions. the responsibility of our committee, and we have always worked on these issues in a bipartisan way is to make sure consumers will not get hammered by the cost of gas going up because of some theory that everything is just going to turn out hunky dory in the end. i'll wrap up by saying that there are important issues with respect to timing. there may be a time when crude oil exports are appropriate. one of the questions we're going to have to explore is whether that time is now.

while a conversation has begun on exporting crude oil, i'm not hearing a similar conversation on ending imports. our country still importing about 40% of its crude oil, including from those places that do not always have our best interest in mind. every member of this committee understands the debate about energy as a global commodity. we've all heard about how it's a global price and i'm sure we'll hear that today. but a global price does not automatically mean a stable price. if oil stopped flowing from saudi arabia next week american consumers and businesses would feel it in a hurry. the question is, does real energy security mean having the ability to be energy independent, even if we never actually do it? i think most americans think our government would choose not to import oil and provide funding to regimes unfriendly to the united states, if given the option. all of that said, we'll listen

to the arguments pro and con i personally need to hear more and will not be making any judgments today. i look forward to working with senator murkowski and all of our colleagues so that our country can maximize what i think we all would say is a historic set of circumstances that we want to think through carefully about how we can tap the potential of. senator murkowski. >> thank you, mr. chairman. i appreciate your considered remarks and the opportunity to bring up this issue before the committee. as you and i have both noted over the past year, we haven't shown any reticence in taking up the difficult issues that face this nation when it comes to energy, energy production, the issues of export whether its natural gas or now oil.

this is what people expect us to do, is take up the hard issues, have considered, thoughtful debate, dialogue, and then where and when appropriate, to act on that. my hope is that today's discussion is the beginning of many very considered and thoughtful discussions on what is certainly a very timely issue, given the position that this country is in when it comes to our dramatically increased oil production. so again, i appreciate the opportunity to discuss it today. i would note that it has generated a fair amount of discussion. we haven't seen a full hearing room in a while. we've got a good representation here on the committee, so i'm pleased to see that. mr. chairman, you will recall that you and i were speaking together at the center for

strategic and international studies on unconventional natural gas production. it was last year just about this time i think, maybe a week or so off, but during the q&a after our presentation one of the attendees asked us about the ban on crude oil exports from the united states. and you proceeded to answer the question in a very thoughtful manner. and when it came time for my response i said, isn't it amazing that you were able to ask that question and not be laughed out of the room? because a year prior to that it would not have even been possible to have that discussion. so where we have come in just a year in recognizing, again, that as a nation when it comes to our energy production on several different fronts, the landscape has changed dramatically.

and thanks to my colleague at the end here, what we're seeing coming out of north dakota has really changed the dynamic from an energy perspective. it has helped with, clearly with our jobs and our opportunities, but it's not just north dakota it's what we're seeing in texas, california. unfortunately, we're not seeing it in alaska and i regret to inform my colleagues that we will not see the opportunity for exploration of been -- shell has just announced they're not going to be moving forward in 2014 because of the recent decision by the ninth circuit, and the lack of certainty from a regulatory and preventing perspective from this administration. very troubling to me. but let me get back to where i think we want to take the conversation here this morning. just a couple of weeks ago i addressed the brookings

institution. i presented a white paper on the energy trade, and i called at the time for ending the prohibition on crude and condensate exports. i will tell you, i have been really gratified by the thoughtful responses but it hasn't been a knee-jerk, oh, my gosh, we can't do it, the sky is falling. it is much more considered and much more thoughtful and i think that's where we need to be with these discussions. i want to prompt further discussion and debate on the issue. the analytical in the trade winds are blowing fiercely. it's not just the polar vortex. it's a discussion on an up or niche. architecture of u.s. energy exports must be renovated in our nation is to lead the world on issues of trade, the environment and energy. the highest profile example is the outdated doctor prohibition on crude oil and condensate exports. this ban threatens record-breaking u.s. oil production on american jobs by

creating inefficiencies, lott and other distortions. it is my hope and expectation that this hearing continue the conversation that began at brookings raising all the issues considering all sides and most important, reaching the conclusion so that we can move forward rather than let the global energy market developed around the world pass us by. having said that, i don't expect that we are going to either see the administration moving forward with a decision next week or legislation coming forward from you or other members of the energy committee here. what i am hoping is that we can advance this discussion so that it is clearly understood, that from a consumer's perspective it is understood and appreciated why exports would make sense. the timeliness issue you bring up is critically important. because timing is key. the impact on american consumers is critical.

i happen to believe that opening up world markets to u.s. crude oil will lower the global price which will in turn lower global prices for petroleum products. all things equal, the american consumer will benefit from this interaction, as well as americans who are employed directly and indirectly as a result. geopolitical impacts are also noteworthy here. the international trade commission, given the ongoing trade talks with europe and asia, is just beginning to be understood. from today's vantage point i believe national security will also be enhanced by our strength and a posture on energy trade. we cannot let short-term thinking distract us from the long haul. gasoline prices will fluctuate. we know that. we see it every year. there will be variations across different regions of the united states, and this is due to a constellation of variables, including infrastructure challenges, differing tax structures across states,

various economic inefficiencies and other aspects of the nation's refining and distribution system. regional variations and prices are still ultimately variations on global prices. lifting the ban is about production, about jobs. the international agency, international energy agency, iea, has warned that maintaining the ban may actually result in the celebrating or shut in production which would be to the detriment of the nation's likelihood. so many things to chew on this morning. many things to carry forward in further discussion. we've got a panel in front of us, mr. chairman, that i think is clearly knowledgeable and poised to speak to the issues, and i think we will gain from their input is morning and i thank them for being here and thank you for allowing us to have this opportunity on this important discussion. >> thank you for a thoughtful

statement. without the committee being hit by one of those politifact's, i'm told by our committee historians the first hearing in the congress in 25 years on this topic. so given that, and the fact we have more than 10% of the senate here, a number of senators indicated they would like to make a short statement, senator franken did. senator speedy's i just wanted -- i didn't want to interrupt the ranking member, but when she was talking about where we've come in the last few years in oil production, and thanked my 16th -- my esteemed colleague, north dakota, senator hoeven. i just wanted to point out i'll as governor he did all kinds of things to make sure that it was developed there, he did not discover the oil there.

[laughter] i just want to point that out. but if you would please discover some oil in minnesota, it would be most welcome. [laughter] >> you need to talk to our guests, harold hamm, and he may do that yet. spin we are clear going to have a rollicking morning. [laughter] let me go back and forth. is there a colleague on the other side would like to make a quick comment? land would like to have one. i just know that a lot of you are under a time crunch. is there a colleague on the other side who wanted a minute or two? senator hoeven. >> thank you, mr. chairman. i would just like to welcome harold hamm today. he has been a pioneer in the balkan. senator franken is not too far off when he talks about discovering oil. he didn't discover the oil but he certainly was a pioneer in discovering methods including hydraulic fracturing and

directional drilling, and developing those methods in a way that made that oil recoverable in the billions of barrels, and it is absolutely being in energy renaissance in this country. so by way of introduction i'm very pleased to welcome and introduce harold hamm this morning. thank you, mr. chairman. >> thank you. i very much enjoyed my visit to north dakota as well and appreciate your getting that opportunity. senator landrieu. >> i think for your purposes we have an excellent panel this one and want to thank both you and senator mikulski for such a thoughtful opening statement. i'm going to say that my statement for the record but i do want to say that we are witnessing an energy revolution in the country today. producing more energy at home here than we have in decades, and to translate that into numbers, the eia predicts this year the u.s. will average a .5 million barrels a day in production, 1 million per day

more than the average in 2013. and most importantly, very near the record of 9.6 million barrels a day last achieved in 1970. that's why we're having this hearing today and i think the testimony that mr. hamm and others will provide is that this number could be increased substantially, based on new technologies, new opportunities which will benefit not just the exploration and production companies, which many of from louisiana, we are proud, but also the landowners, also the oil supply and gas suppliers, also the general manufacturers that make products completely unrelated to oil and gas but that is a great deal of americans that are experiencing the excitement about the additional supply, potentially, stable prices and reasonable prices. i will put the rest of my statement in the record.

most importantly i think for our refineries we do need to get on the record what our refineries anin the country are positionedo process today, and the kind of crude that is being produced and the mismatch of there. we have to be very aware and sensitive of the investments that have been made by our refineries. so i think we're going to hear some of that today. i'm really looking forward to testimony, particularly the users of it like a delta airlines that uses a tremendous amount of fuel and has an important perspective for us to consider. so thank you, mr. chairman. i will submit the rest of my statement for the record. >> let's go the other side. is there anyone on the other side who wanted to make a brief comment? senator manchin i know is interested. >> i want to thank both you and senator michalski for holding this historic hearing today, but i just can't help but think that where we are today and where thinking about this we would've

never had this discussion a year, two years, five years ago. it speaks of the innovation and the changes that you'll have been able to develop for our country to make as much more secure. i can i think about discussions on lng exports where we're going to import a couple years ago. so that's part of this, to complain into it and i think senator wyden, you but sosa simply that basically that sweet spot. and i can only think about 100-150 years ago the coal integer, with the coal industry did coming from my little state of west virginia making this deal to build the ships and built the industrial revolution as we have it. gave us the life we have today. so many people have forgotten about and what they are still depending on from our little state. where we would be if we had sent that product out of the market. there's a balance to be had, and they think we are able to find that sweet spot, thank you and i just think -- i'm also going to

induce my statement for the record in more detail, but i'm most interested in this topic come in this discussion not just for us but for our children and grandchildren. and basically for the security of our nation. so i think all of you for what you've done and what you contributed. >> thank you, mr. chairman for holding this important meeting. i read the book this past weekend called breakout. there's a section on what mr. hamm has been able to accomplish, about pioneers of the future and he truly is one. it goes into the epic battle that will decide america's fate and a lot of it has to do with our energour energy resources, y did billy, production and the new technology that has made it possible. i want to thank you, mr. chairman for your leadership in bringing this group together. thank you. >> thank you, mr. chairman. thank you for the indulgence of the statement, and all tried to be brief as possible. i guess there are two issues i want to make sure our address. but i don't know if they'll be

addressed at this morning's discussion but those are the issues of safety and price. i'm not saying that you can't have oil transported safely, but we just had a huge fire and the report is being released today about the death and what happened from that. and certainly we've had incidents of now oil can be think of the north dakota and export opportunities, where is that going to go on real and so what of that safety issues and how do we address them? so to me that's a very important issue. secondly this issue of price. i certainly believe it's a global market and a global price. i definitely think we can do more to continue to please those markets to make sure that the manipulation of oil futures doesn't affect the day-to-day price of oil, which isn't part of today's discussion either or part of it will industry but more about the banking industry and how many people have their fingers in the oil futures pod when they really aren't taking

delivery for an end-user. but my point is that this price issue for us in the pacific northwest, given the world market and yet still being an isolated market we've had some of the highest gas prices in the nation constantly. so it affects us so we will pay attention to that. when the congressional research service gave an informal back of the occult estimate about this particular issue on export is saying that consumers could be as much as five to 10 cents more a gallon if the ban is lifted. that's an informal discussion. i know the chairme chairman andg member will get back to us at some point but to me this is the issue. we know that oil markets and our images once that affect our economy will always be tight in the future. how do we best police them so they're functioning like to markets, and how do we protect consumers in delivering the most cost-effective resources so that our economy may continue to grow. so i thank the chairman for this indulgence today.

you are letting us have a stork input before the witnesses, so thank you for that. >> a colleague on the other side? senator portman? >> thank you, mr. chairman. i hadn't expected to have this opportunity did but i appreciate you holding this hearing. we haven't had a discussion because we haven't had a reason to, and now we do. takes to hydraulic fracturing and horizontal drilling and the technologies and michel find. lng exports issue was i think more controversial a year ago than it is now and it's because we found ourselves in a situation where basin economic analysis it looks like we can afford to export and still help our manufacturers in places like ohio achieve what is happening which is unbelievable. it is a revolution in the sense that we are finding more natural gas and oil and prices are low. but it's much more important as it has an impact on jobs in my state and other states where manufacturers are coming back,

adding jobs. people are saying there will be a long-term and stable price for energy which is an important input, particularly and some of the industries in my state. on the issue of will, the one thing i would love to hear today is whether the price out the pump is determined through the global market. i appreciate what senator cantwell said and she made some good points. we also hear that in effect what happens at the pump in ohio and around the country is effected by the global marketplace. predominately, and we see that. when there's an issue overseas where there is no disruption of supply but the potential for, we see the prices go up. i would like to hear more about that, understanding how this differs from natural gas in terms of the market, and ultimately what it would mean for our consumers. finally, since senator manchin talked about the sweet spot, i would love you a little more about what could be done in terms of maybe a swap specific with mexico that's been

suggested by some folks where we would be exporting light, sweet crude in exchange for heavy crude, and whether that makes sense. it may not be a wholesale lifting of the export ban at this point but it might be some opportunities for us to enhance our competitiveness in this country and be sure we have the right balance of energy resources in the context of again this revolution that has put the united states any position to be more competitive across the board. so those are things i would love to hear, mr. chairman, today in the conversation. again, really appreciate the witnesses being here. we have a great panel. >> we are going on a long time is i will try to be brief. spent it's been 25 years spent a lot of bottled up ideas here, but i just want to remind my colleagues that one of the reasons why we're having this conversation, one of the reasons why the market has changed so much is because of this technology that's been developed.

as you said, horizontal drilling but also hydraulic fracturing, much of the basic research from that came out of our national laboratories, including sandia national labs in new mexico. and my point is only that after several years of declining budgets and sequestration i think it's incredibly important for us to realize the things that we consider mature and industries that have been around a long time can be radically changed by our investment in basic research and we need to continue to make sure that we don't lose sight of that. >> spent i feel left out if i didn't say something so i will say something last night. >> not on our watch. >> thank you, mr. chairman. you are always so kind and gracious. having opportunity to go to midland, texas, recently and see the results in the impact of hydraulic fracturing as well as horizontal drilling is quite remarkable, especially when you look back over the history of

2004-2005-2006 because we were going to plateau. the end was coming very soon. the reality of it is i think was george mitchell perhaps invest a lot of resources and the amazing risk to get us as the country into position where we could have a larger conversation at some point in the near future about the impact of these export opportunities on our national security. one of the things we recognize that as we become more aggressive with her oil production and hopefully exporting, i think it puts our middle these competitors in a very unique position to take a serious look at their own budgets, own revenues. certainly of the look at ours, ours is pretty positive but i think it is more of our national security than we really articulated in the last several years. >> thank you. senator scott. any other's? >> thank you, mr. chairman. i wanted to talk little bit

about the context in which i'm going to be listening to the testimony and thinking about this input. i mentioned it actually after hearing quite recently. because this winter in wisconsin, families and business owners have found one issue on the minds, and that's the cost and availability of propane. it's an especially cold winter in wisconsin this year, and for many people who have for years relied on a steady propane supply, this year they're unable to find fuel to fill their tanks. and at the same time regional suppliers have been depleted, prices have risen from about $2.20 per gallon to over $6 per gallon. it's risen in just three weeks. this is really devastating and very frightening for thousands of families across wisconsin, and i'm hopeful that the committee will take a close look at how we can solve this problem

and figure out how we can prevent it from ever happening again. but in addition to very tight domestic supplies, this season we've also witnessed a dramatic, a very dramatic increase in propane exports. in fact, in the last three months at the very same time that midwestern supplies were dwindling, the export industry nearly tripled exports. the propane supply crisis should be -- should inform the larger discussion about another fuel that is also critical to our economy your consumer supply protections are essential part of any size debate about the future of crude oil exports. and let me just add one other issue. i don't know if i'm going to get a chance to stay long enough to ask questions amid i will just to just one area of interest.

one of the major causes of the propane shortage in the midwest has been as a result of infrastructure changes. pipelines that have served the region for decades have been repurposed to serve new oilfields. and as oil production increases, these infrastructure pressures i think will only increase. so all part of what -- the context in which i will be during today's discussion. and again, mr. chairman, and ranking member, i very much appreciate our chance to the testimony to that spent i think we're ready to go to our witnesses and our guests but any other comments from the other side? all right, let's go forward and. harold hamm, chief executive officer, continental resources in oklahoma city, graham burne burnett. ms. amy myers jaffe, executive director of energy and

sustainability, graduate school of management, transportation studies area, university of california at davis. mr. daniel weiss, senior fellow, director of climate at the center for american progress. we welcome all of you. we will make your prepared statement a part of the rugged. thank you -- i think there's great interest among senders and you'll plenty of time. mr. hamm, welcome. [inaudible] >> okay. i'll start again. good morning, chairman wyden, ranking member murkowski and members of the committee. my name is held in. i served as chairman and chief executive officer of continental resources in oklahoma city. we do not have refineries. based -- it i is in our to addrs today on the critical substance of exports and where the barrels of go, -- summit and the same

with his critical product we're talking about, crude oil. we need to lift this restriction sooner rather than later. as chairman of message producers alliance, ceo of a company that could develop the first appeal ever drilled exclusively with horizontal drilling, and the country that is the largest leasehold and most after drilling in the bok and play, i was in a unique position to be one of the first to say american independence on the horizon three years ago. and as technology continues to advance and new supplies of premium crude oil are discovered, today i see firsthand what's necessary to continue this american oil and gas renaissance and achieve ultimately energy independence for our country. i appreciate you inviting me to share my expertise and insight with you today. and october 2011, depa put a stake in a great effort to get

american energy independence by 2020. america's independent oil and gas producers have unlocked the technology and resources that make this a reality. as a result we can today marked the recent 40th anniversary of the opec oil embargo by ending the era of oil scarcity in america and along with that ending the last of shortsighted revelations passed during that same period. the laws passed in the '70s artificially controlled the supply, demand and price of u.s. energy and brought about unintended consequences. one law even banned the use of natural gas as a boiler fuel and mandated u.s. power plants switch to a less friendly alternative, coal. we understand what happened. thankfully in response to dramatic changes in our global energy industry, legislators have repealed or let expire nearly all post tomorrow -- post relations safe to come the

energy policy and conservation at the bank and 75 and the export demonstration act of 1979, which essentially banned crude oil exports. the scarcity the mentality that led the creation of the export restrictions no longer reflects the economic reality of the global energy market place that we have today. we are entering a new era of energy abundance in america and the world. heretofore we've only been able to extract hydrocarbons from reservoir quality rock, primarily through vertical wells. but through technological breakthroughs in horizontal drilling we can develop resources previously thought to be unattainable. america now counts our natural gas supply in centuries, and experts agree we'll be energy independent within this decade. this phenomena was brought about by a group of independent american producers and missed by the general consensus of the industry. it was in complete contrast to

popular belief that the united states was running out of oil and gas at the turn of the 21st century. today we must correct another misconception that we are not exporting trillions. nothing to be further from the truth of major oil companies are exporting product without any limitations. why should independent producers not be allowed to do the same? over the years some have argued when his -- free access to world markets. the opposite is actually true. unlike exports of crude oil export of gas and other refined products are not restricted. and under current law government is arbitrary subsidizing some u.s. refineries, many of which are foreign owned by giving them the ability to source american oil at artificial low prices yet sell petroleum products into high-priced international markets. the true benefits of exports of

american consumer -- indeed crude oil is no different than any other commodity manager i consumers. lower prices are only brought about by increased supply, greater competition, weaker demand for improved efficiency in the market. when governments begin to legislate low prices no matter how well-meaning the laws may be, market distortions and unintended consequences inevitably results. supply and competition fall short of potential anticonsumer in something higher prices. over the past 18 months, consumer prices to both gasoline and diesel have been reduced almost 20% due to the american energy renaissance brought about by horizontal drilling. a recent release only yesterday, report by icf international states american consumers cost for these commodities can be reduced another $6.6 billion per

year if the export ban is removed. we find ourselves at a crossroads. federal rules and regulations to reflect reality of today, ma lifting export restrictions will strengthen our domestic oil industry, a critical component of economy is impact reaches far beyond the american consumer. the energy sector has added jobs for millions of americans and has also served as job multiplier for our nation's growing manufacturing industries. energy independence doesn't mean being isolationist as we've seen in cuba, venezuela and north korea. boasts a size don't work. energy independence mean energy security. and in conclusion, the world has drastically changed since the opec oil embargo and reactionary enactment of federal regulations in the 1970s. even then that man was symbolic as we had no oil to export.

americans and consumers of all nations would benefit from the immediate lifting of these restrictions that inhibit the export of crude oil produced in the u.s. thank you, mr. chairman. >> mr. burnett. >> chairman wyden, ranking member murkowski, and members of the committee, thank you for inviting to testify before you today. i asked the full remarks be included in the record. my name is graeme burnett and then senior vice president for fuel optimization at delta airlines. in this position i managed delta's jet fuel supply as well as chairman of the board of monroe energy, a company that owns and operates delta's refinery in pennsylvania. behind u.s. military, delta is the largest use of jet fuel in the world and jet fuel is our largest expense. because of this we are uniquely situated both as a user of crude oil and a refinery to comment on the crude oil export ban and the current debate over whether to lift it.

we believe strongly that the ban on use crude oil exports is good policy and the lifting export limits now would come at the expense of the american consumer. they would pay more for gasoline, more for heating oil and more for the price of an airline ticket. today the going price for a barrel of you screwed is $11 less than a barrel of salt in your. this price differential can be easily explained. u.s. crude markets is a competitive one with price determined by supply and demand. once these domestic market incorporates its supply of crude, in places like north dakota, the price of a domestic group of oil came down. in contrast the global market is influenced by a cartel were opec countries control production in order to set prices. if one of the export ban we would in essence be allowing the transport of crude out of the competitive market in this country and into a less

competitive global one controlled by a few oil-producing states. the results would be easy to predict. u.s. crude would flow out of this country and onto the world market. opec would reduce supply to maintain high global prices. the united states' use of home-grown oil would diminish and prices here at home would rise to match the high global price for a barrel of crude. as one commentator put it, allowing for the export of home-grown u.s. crude would do nothing more than import higher opec prices into the u.s. market. it's clear who gains from this scenario. the oil exploration and production companies, many of which are foreign owned. with the increase what have you screwed helping to push prices down, these companies want to sell u.s. crude on the global market at higher prices largely determined by opec. it's equally a parent who would lose, the american consumer, they would see prices rise for gasoline, petroleum prices and

for most consumer goods that rely on fuel. our country's refinery workers also stand to lose from lifting export limits. some recent history can help explain why. before the shale oil boom, there was too much capacity and refineries in the northeast and along the gulf coast and many were closing. delta purchased its pennsylvania refinery in 2012 from conoco phillips after that facility had been closed for nearly one year. the shale oil revolution breathed new life into u.s. refineries and created jobs for thousands of refinery workers. in thinking about the export ban, we should also consider one of its goals, which was to help achieve energy independence and by independence, i mean the ability to meet our energy needs from sources within north america. notwithstanding of swing and domestic production, this country still imports around 33% of its daily crude oil needs from outside of north america.

that's what exporting you screwed makes little sense. if we allow for the export of u.s. crude, we will have to import more oil from overseas and subject ourselves once again to an increasing degree of price volatility and higher global prices. in sum, the export ban works. it may have taken a bit longer than we anticipated in the 1970s, but we are now seeing its benefits. lower prices for crude in this country compared to global markets and an increase in home-grown energy. the ban may be unnecessary at some point in the future, but we still of a long way to go to protect against oil market volatility and achieve true energy independence. that's why, and our clothes with a sports metaphor here, lifting the ban that would be like ending the game after the first quarter. thank you, mr. chairman. i look forward to answering the questions that you and other members of this committee may have. >> thank you very much.

ms. jaffe, welcome spent thank you very much. chairman wyden and ranking member murkowski and members of the committee for this opportunity to talk to you about this important subject. i have been writing about the influence of opec on our country since it was a junior in high school, believe it or not. i want a term paper contest in the state of massachusetts with an essay on that topic. and i'm so glad to be here to be able to for the first time in 25 years talk about the fact that we might get the goalpost to take a sports analogy, get the ball through the goalpost. so the united states is a leading global power and economy. we promote open markets and free trade. we have for the last 30 years spent immense amount of diplomatic effort to promote open markets and free trade and energy. that is a vital interest of the united states. i appreciate the thoughtful

comments of the committee in terms of stimulating full debate on this subject. we do not want to take policies or action that enhance rather than weakens the monopoly power of opec or russia. to use energy as a weapon or a tool stay crappy we want to lead from the front, not from behind, and it is important for us to have his thoughtful debate and reevaluation of our current export policy. and in doing so we need to consider how to avoid creating market distortion. whether they temporary benefit some consumers in a particular region or some industry, we want to make sure that we are doing things that are more helpful than damaging. and we need to consider the following things. number one, we actually export our new oil and gas. we export our oil in the form of

refined products directly so we don't have an export ban on gasoline or diesel fuel or propane. and so, therefore, what exporting that instead of exporting the crude oil. so what we're really discussing is, number one, what is the best way to organize the free markets, and to eliminate distortions and who gets to profit from exports, with the refining industry get the profits? will the upstream and gas industry get the profits from the export? what other industries get the profits from the export. because we are not in here to discuss banning all energy exports, the united states and we need to keep that in mind. because we are physical bottlenecks that prevent us from exporting our surplus of natural gas, we are currently exporting coal. and we need to understand that when you blocklike little boy with a finger in the dyke, when you block a hole in one point of the dyke, pressure comes another

point and something will be exported that is a different thing. and i think the natural gas example is the best example because nobody expected the united states would have an abundance of natural gas and the industry, lower electricity prices that it is promoting big nobody expected the result of that to be the export of cold to your. and i'm just returning from the world economic forum, and i can say that the entire discussion focused around europe's need to reevaluate their entire energy policies because they're importing coal, the emissions are going up. they're not going for natural gas and they realize that they have the huge distortions that great a great economic advantage the u.s. economy and the great disadvantage of the european economic system. so we want to make sure that the policies that we promote here in our country will continue to

allow us to achieve the advantages that we have. i want to address for one moment the issue of gasoline price volatility because that is of such great concern. the solution to gasoline or any kind of consumer volatility in prices is to mandate minimal standards for inventory. that is what happens in your. that is what they do in japan and in south korea. that is how industrialized full economies protect consumers against sudden disruptions like a refinery fire or a sudden cold snap in the winter, inventories level of the critical issue to tie markets under temporary swings that come for this week or that we are month for a period of time. and i just come and closing my remarks, i want to remind the

committee and our public that when we had a temper disruption of gasoline supply during hurricane rita and katrina, as senator landrieu might remember, europe loaned us gasoline supplies from their mandatory strategic stocks that they require industry to hold. and that is how we weathered through a crisis, and we need to consider our relationship with our allies like europe, when we think about our future export policies. >> ms. jaffe, thank you. mr. weiss spent chairman wyden, ranking member murkowski and senders, thank you for the opportunity to testify about whether to lift the crude oil export ban. since 2008 the united states has produced more and use less oil due to advances in drilling technology can individually upload by mr. hamm and his companies and due to more efficient vehicles.

this -- that could cause a gasoline price spike. lifting the ban on crude oil exports could squander this weasel improve energy security and price stability. to maintain these benefits we urge you to defend the existing domestic crude oil export ban. when congress passed in 1975, the u.s. produced 64% of its oil and liquid fuel while importing only 36%. in 2013 we produce and imported nearly the same or portions of petroleum. only expense we've had in the united states of lifting oil export prohibition occurred following the 1996 removal of a ban on alaska oil exports. during the ban much a lasting ownership to the west coast, a congressional analysis found that letting the oil ban tripled the already existing price difference between west coast and natural gasoline price.

crs concluded that quote when alaskan oil exports ceased, the gasoline price differential between the west coast and the national average did decline. lifting the nationwide export ban could simply raise gasoline prices. the analyst barkley predicts lifting the export ban could add $10 billion a year to consumers fuel bills. without the ban, oil companies could sell their oil at the higher world market price which the energy information administration projects will average $9 per barrel higher this year. in fact, yesterday inform domestic price for oil was $10 a barrel. of a domestic production has significantly grown over the past five years, thanks to mr. hamm and many of his colleagues, these energy information administration projects that crude oil -- sorry, the crude oil production will peak in 2019 and begin a steady decline after that. this energy abundance could be a

temporary phenomenon. the eia also predicts that in 2014 the u.s. will consume 5 million barrels per day more of oil and liquids then we produce. this gap between demand and supply will continue at least through 2040, growing by 13%. i would advise you to look at the chart that the clerk has. thank you. this is hardly energy independence. any domestic oil sold overseas -- my mother raised a polite son. son. [laughter] any domestic oil sold overseas must be replaced by more expensive imported oil which could raise gasoline prices. the replacement oil would likely be heavy crude imported from venezuela and canada. as you know, venezuela is not very friendly to the united states, and although canada is our closest ally, its heavy tar sands oil produces nearly double the carbon pollution responsible for climate change compared to conventional u.s. oil as

measured from well to take by the national energy technology lab. neither of these are good options. u.s. imports more oil from the organization of petroleum exporting countries, or opec, than any other single source. opec oil is vulnerable to supply disruptions. eia found recently interruptions quote made a perfectly for a variety of reasons including conflicts and natural disasters. oil produced in the united states significantly is less mobile to supply disruptions and, therefore, provides more energy security. as mr. hamm and ms. jaffe both noted, the u.s. is exporting 3 million barrels per day of refined petroleum products. so we are exporting oil already, but as a finished product made by american workers. that explains why richard trumka opposes the export of crude oil. he would rather see that oil

kept here and made into a product by american workers rather than shift as a raw feedstock to be made into a product by foreign workers. oil companies are doing quite well. they are already making huge profits even with the export ban. the five largest oil companies, bp, chevron, conoco phillips, x. in mobile and shell made combined total profit of over $1 trillion in the last decade and that figure is based on the quarter reports. our transportation system is almost entirely powered by oil which makes crude oil different from many other commodities. american families, the economy and our energy security are vulnerable to sudden foreign oil supply disruptions and price spikes. we must invest in alternatives nonpetroleum transportation power including electric vehicles, advanced clean biofuels and public transit to reduce his exposure of relying on only a single fuel for such an important part of our

economy. there's no independent evidence that energy security or fuel prices would remain unchanged after the removal of the crude oil export ban. president obama and congress should maintain our recent gasoline price stability and energy security by defending the ban on crude oil exports. thank you for having me. i'm happy to answer any questions. >> mr. weitz, thank you. thank you to all the. it's been very helpful. i'm going to ask one question to start this off and particularly about what jumps out at me. mr. hamm and mr. burnett have different views. mr. hamm is for lifting the restriction on oil exports, and mr. burnett is not. but both believe the same benefits and potential pitfalls exist for their preferred policy position. lower prices, if the senate follows their advice, higher prices if we don't. so the question then becomes for

me, how can this be? we've got two very thoughtful individuals here, and they have diametrically opposed views and they think the same benefits and same pitfalls will ensue for their position. so is this a lack of knowledge on the effects of the policy lacks is it possible, as ms. jaffe alluded to, in her written testimony, to different regions of the country would be affected in different ways? and is the question if export restrictions are lifted, is it possible that america would see prices go up in some parts of the country and down and others? why don't we just sit down the road and here the road and here the four of you weigh in on that. mr. hamm. >> thank you, mr. chairman. i think it comes down to one example i can give recently. a spokesman for a large oil

refinery in the united states talked about the national export ban. he said he would enslave american consumers from geopolitical price caps but in reality he told the market recently, and these graphs that he handed out, that it provided a particular unfair advantage, if you will, in the market to bolero. because they were saying pressure on refineries outside of the u.s. and closures occurring. and, in fact, this year projected about a million barrels a day refinery closures. last year about a half million barrels. and in 1.6 knowing barrels per day the previous years. now, i think we all realize the refinery closures is not good for consumer prices. anywhere that they are going.

and they are not good for my business. we need refineries so that we can get oil to. if we are fortunate to sure if we're forcing refiners out of business with an unfair advantage that they have, that they've been given, that's not good for anyone. so the difference between me as a producer without refinery and this gentleman with refinery is this considerate. >> i think the fundamental difference in our position is whether the u.s. oil prices would go up or go down as a result of exports. it's my position that if the u.s. begins exporting crude oil, the opec producing countries and saudi arabia in particular will act to maintain crude oil price by reducing their output. so my logic is based on the fact that crude oil prices will rise to an international level, will not decrease. the net result of that would be

increased feedstock cost to our refineries and the closure of refinery capacity in the united states, particularly in the northeast. a consequence of that is less supplant gasoline and other fuels and higher costs. think you spent ms. jaffe, you sort of started this idea lucia and that there may be regional differences. so let me let you take a crack at this. >> first, i have to talk about how the international oil market works because sometimes people are unclear. when we export refined products globally, it means that refiners in europe have bought those products and they have cut their refinery runs. and so, therefore, opec is already affected because they cannot sell more of their crude oil to europe because those refinery runs are shot. and our gasoline exports are already hurting the opec. ever opec policies they will take, they will take whether we export the products or whether we export the crude oil.

so that is not the issue, right? the issue is the oil market, we have a slogan in the oil market, we call it the tyranny of geography. the tyranny of geography means that whether i'm selling refined products or whether mr. hamm is selling his crude oil, he wants to sell it to the closest possible refire because that is how he makes the highest amount of money, because the transportation cost gets into his product -- profit. that means if we're to lift the export ban, the crude oil went first and foremost look for a buyer inside the united states because that is how it would be most profitable because that would be the cheapest transportation. now, if it happened that there was a refinery in mexico or canada that would benefit, actually most of our condensate today is going to candidate for

use as a bill you went for the transportation of heavy foods, the oil will flow to the best possible use. now, what that can mean when we have bottlenecked, whether that's a pipeline bottleneck or we have some kind of a transportation bottleneck with some kind of predatory bottleneck is that those bottlenecks create some distortion that might artificially lower prices in one particular geography for a particular time until the bottleneck is remote -- >> i'm over my five minutes. mr. weiss, quickly spent i'll be very quick, thank you. it's important to note that we would've export very much gasoline right now. a little less than 400,000 barrels a day. the primary product we export, particularly to europe, is low sulfur diesel. that's about a million point to barrels per day. so i don't see that as being a real challenge. i would agree with mr. burnett

that it's tough to try and lower the price when the price of the commodity is controlled by a cartel that is committed to having at least $100 a barrel oil. i would see that it would not lower prices at all to a exports of gasoline, sorry, exports of oil. >> we will continue this discussion. just know that the pacific northwest has a history of some of the highest gasoline prices in the country. so if there are issues relating to the tyranny of geography in some way, you can be sure that the people that i represent are going to be very interested in that issue, and steps taken to protect them and their well being. senator murkowski. >> thank you, mr. chairman. and mr. weiss, you have made reference to the alaska export issue. and there was also an essay that was recently released from the center for american progress. i guess it was published this

week, that also made some claims about alaskan crude oil exports. mr. chairman, i want to insert into the record 1999 study from the gao that examined the impacts of lifting the ban on crude oil exports from alaska. and in that report they state despite higher crude oil prices for some refiners, no object increases occurred in the prices of -- three important petroleum products used by consumers on the west coast, gasoline, diesel and jet fuel. this was decided in the essay. i'd also like to submit for the record a report from crs back in 2006 which was also cited spent without objection, so ordered. ..

mentioned that we get to the point we are going to have a mismatch between what we are producing domestically, and our ability to meet the capacity within our refineries. so just understanding and appreciating that it's getting to the point now where we have reconfigured as many refiners as we can. maybe there's a little room. we are looking to some pretty