$2 million increase in natural gas technologies r&d. it's my understanding that this effort would fund an initiative with epa and usgs to look at the impacts of fracking. we had -- the president's advisory committee came, reported to us, had a pretty comprehensive i felt report. they presented 20 specific recommendations for how any impacts can be mitigated. so i guess the question to you is what was the flaw in that advisory committee's report and recommendations that you felt were insignificant and now warrant a second investigation that we need to increase the funding? it's my understanding that the advisory board's recommendations are already finalized. most of their proposed

directives actually fall on the states, not necessarily on the federal side. so why are we doing a second run on this? it raises some concern by some that there's an effort to try to find a smoking gun about some bad news about fracking out there. that's why we're going to do a second investigation. so i'm curious as to why this funding increase in this area. >> senator, it's actually the exact opposite. i think the committee you're referring to is the subcommittee of the secretary of energy advisory board led by john deutsche. >> right. >> it's our view in the department of energy -- first, i think that was an excellent report. second, it's our view in the department of energy that if you look amendment the assets of the u.s. government, particularly thinking of usgs and the department of energy, and the intent is can we help drive the technology development forward

to help with the environmentally responsible fracking so that the risks, you can still continue to mitigate any potential risks to water tables and environmental impacts. so the tenor of that report and the attitude we have in the department of energy is exactly that, that in helping with the technology, there are rapid advances in seismic technologies that tell companies exactly what is happening in fracking. there's a lot of recommendations. we can have a coordinating role to help as information clearinghouses so industries can share best practices with each other. so the intent is -- of that fund was not another study to look around. the intent is, as we helped bp stop an oil leak in the gulf of mexico, the intent is actually to work with industry, to help

improve practices when and if possible so we can actually extract this resource in an environmentally responsible way. >> i'll follow up with you. my time has expired. it does appear we're directing an additional $2 million for yet a follow-on study to one you agree and i would agree was a pretty good study. thank you. >> senator wyden? >> thank you. welcome dr. chu. i want to ask you first about natural gas pricing, particularly with respect to american business and american consumers. i've been a s&p porter of natural gas, it's a cleaner fossil fuel of course as a huge boone for american business, steel, plastic, chemicals and our consumers. i do believe there are substantial questions that have to be addressed before our country starts allowing

significant natural gas exports. you made some statements a few days ago that are troubling to me, and i want the kind of walk you through it. as you know, under the natural gas act, your department has an obligation to evaluate whether natural gas exports are in the public interest. so you are, in effect, the regulator. the comments you made the other day suggest to me that you've sort of made up your mind. you were quoted here as saying, and i'll just quote you here, exporting natural gas means wealth comes into the united states. now, that's not what we've heard from our businesses like steel and chemical and plastics. they had representatives sitting where you did the other day. and a very troubling study came out from the energy information administration, a part of your department, indicating that natural gas exports could increase prices by more than 50%

and cost american industry and our natural gas customers as much as $43 billion. i'm looking at the chart thattest maelts, for example, what we would be dealing with in terms of the applications on offer now. it's about $13 billion cubic feet of gas exported per day. that's what we're talking about now. so the applications exceed the amount that eia made that study based on. they looked at about $12 billion cubic feet per day. so i want to get your sense of how you're going to objectively look at this question and i'd like you to dis abuse me of the theory that you already made up your mind oopsz. when i looked at the quote from the recent meeting, i said, shoot, it looks like dr. chu has

already made up his mind. to me, for example, 13 billion cubic feet of gas exported when 12 bill i don't know could raise prices 54%, that would be a huge shock to the american economy. tell me how you'll approach this issue and particularly give us a sense of how you're going to approach it objectively and look at both sides. >> sure. i think the full quote, i'll paraphrase myself, because i've said this a couple times. the full quote is that certainly we don't want to see natural gas prices rise dramatically as we have seen in the price because that has an appalling effect. it creates great difficulties for -- for businesses, for people who heat their homes with natural gas. and so -- i said a major focus on everybody's mind is if we start to export natural gas, liquefied natural gas, if not done right, that could have that

effect. i said but there's another side. whatever we decide, it has to be in the best public interest. there's a flip side to this. we also have to consider that it does create american jobs. and if the prices are kept moderate, then it does bring money into the united states. it helps our balance of trade. it creates jobs. right now the natural gas crisis -- i don't know what they are today, but over the last week or so they were $2.00, $2.50, million cubic feet, low. eia is saying something in the order of four to six in the coming decade or two. we are hearing reports of gas extraction companies now pulling their rigs out, moving them because the prices are too low. and so what we need to do -- first, let me assure you my mind

isn't made up. if you read the full quote -- >> i did, mr. secretary. there doesn't appear to be anything in the article with respect to what you've said, like the public interest test. it makes it out that exporting natural gas is an unmitigated plus. it says, and i quote, supporting natural gas means wealth comes into the united states. >> then the article you're reading from certainly doesn't capture the full -- >> fair enough, fair enough. >> so i think -- certainly our minds are not made up. we're not going to be making up our minds. before we do anything -- first let me just very quickly say that there are two classes of countries. countries we have free trade agreements with, countries we don't. the countries we have free trade agreement with we're obligated to say. the countries that we don't, we have to say what's in the best interest of the united states.

before we do anything -- and i talked to people who are concerned about high gas prices. i also talked to the gas industry and ma people and say we are not going to do anything until we make a determination of what the impacts would be as we permit -- we permitted one liquefied natural gas terminal, we determined that that would have a dim min muss impact. >> 10%. >> well, my -- we can get back to you on the details, but i was told by the eia that that would have a very, very small impact on the price of natural gas in the united states. >> thank you, mr. chairman. >> thank you. senator brass sew? >> thank you very much. mr. chairman, mr. secretary, thank you for being here. we sat close the each other at the state of the union. during that address i was happy to hear the president say, quote, this country needs an all-out, all of the above energy

strategy that develops every available source of american energy. i'm encouraged to hear you echo those comments today in your testimony. unfortunately the president's rhetoric rarely matches the reality. and monday congress learned the lesson once again, of course, with the president's fiscal year 2013 budget. specifically, the tens of billions of dollars in new taxes and fees on american energy, oil and natural gas. it's hard to understand how the president can impose tens of billions of dollars in new taxes on american energy and still pursue the, quote, all-out, all of the above strategy that develops every available source of american energy. i know the american people realize that doesn't make sense. we all support renewable energy. what i see is this president and this administration ignoring the everyday concerns of american families. today the average price of regular unleaded gasoline is

over $3.50 a gallon. "usa today," the morning after the super bowl "chaotic spring predicted for gas, average price likely to hit over $4.00 a gallon." this morning's "wall street journal," oil rise impairs budding recovery." it goes on to say the average price of a gallon of regular gasoline has jumped 13 cents to $3.51 a gallon in the past month. so up 13 cents in the last month. some parse of the country have seen bigger increases, prices approaching $4.00 a gallon in parts of california, and the impact to the families. higher prices at the pump force consumers to cut back spending on discretionary items like restaurant meals, hair consults, family vacations, hurting those industries. a prolonged increase can drive up inflation and drive down hiring. we're trying to get people back to work in this country. it seems if we're going to try to get the economy going again,

we need affordable transportation fuel. we do know the president when he was running for office said under his policies, specifically electricity costs, he would quote, would necessarily skyrocket. people have seen that. that's why i'm hoping congress has a chance to vote on and then reject the president's budget. i come with a number of questions. one is in terms of how the policies of this administration are played out. i'd like to ask you about solynd solyndra. president obama promised his administration would be the most transparent in history. the american people still haven't received all the answers on how their taxpayer dollars were wasted on projects like solyndra. i know tomorrow my colleagues in the house will consider whether to subpoena five administration officials. it's my understanding these house colleagues will cancel that meeting and that vote if the white house just makes these officials available to speak with the investigators. have you asked you the white house to make these officials

available? >> no, i haven't. i wasn't asked to ask. >> will you ask the white house to make these officials available? i'm asking you now. >> i think the white house can make that decision. they're very capable of that. >> the american people still have lots of unanswered questions. so you're not asking the white house and have not asked the white house to make those officials available so i'm clear? >> well, i work for the white house. it will be their decision. >> now i want to move to keystone excel pipeline. a number of us today met with daniel juergen who wrote "the prize," "the quest," an expert on energy. he talked about roughly 170,000 miles of pipeline moving liquid in the united states, petroleum products. keystone is about 1% of that, about 1700 miles. it's my understanding the keystone excel pipeline would

ship up to 100,000 barrels of oil today produced in north dakota and montana. we heard this morning about made-in-america energy. is it fair to say that the keystone pipeline would ifs sill tate oil production in the united states? >> well, first let me back off and say that, if you look at the oil pipelines in the united states, the u.s. government makes a decision on only those parts of the pipelines, and the state department makes the decision that goes across borders. within the united states, a lot of companies have the latitude. the pipelines that are taking the oil from wyoming north dakota down south to refineries are up and running. the biggest bottleneck in the united states apparently right now is from curbing to the golf states. the market is responding.

new pipelines are being built. pipelines are being reversed so oil from wyoming -- another pipeline from chicago to kushing back to before the major refineries are. those oils are going forward. it's my understanding the state department is asked to look at other alternatives and environmental impacts on the part of the pipelines that cross the border. >> it seems to me it is fair to say that the keystone excel pipeline would facilitate oil production in the united states. and then my question to you is should the keystone excel pipeline be part of an all out, all of the above vat gee that develops every available source of american energy which is what the president has actually called for? >> there are pipelines being built and up graded, as i said, from those -- from wyoming and north dakota. i was trying to point out where some of the bottlenecks are and

how the pipeline -- we're all for this. this is why the oil production in the united states is at an all-time high compared to the last eight years. we think -- we are projecting -- first the oil production has gone up about half a million barrels a day in united states over the last several years. and we think because of the -- again because of the technology the d.o.e. invested in tech kaeds ago that shale oil production may lead to another million barrels a day increase. we're in the top three oil producers in the world and we could be either one or two. this is good news for the united states. all that is within the continental united states. so those pipelines being built there are -- these investments are going forward. >> thank you, mr. secretary. thank you, mr. chairman. >> senator frankin. >> thank you, mr. chairman. the ranking member referred to

the first ever downgrade of our treasuries. i would remind the ranking member that the express reason given by s&p was the dysfunction of some in congress who seemed willing to threaten to go into default. i think that we need to investment in energy, and i think we need to invest in energy in the future. i think all of the above doesn't mean all of all of the above. as the bp spill in the gulf showed us, that not exercising judgment -- some judgment about environmental and safety impacts can undermine the economic well-being and the very goal of energy independence. i think what your budget shows to me is a sensible investment

in innovation in energies of the future, including energy efficiency which brings me to the 1703 loan guarantee program. i see that you didn't really ask for additional appropriations for that. that program is for energy efficiency projects and innovation in energy efficiency. i see you just asked for $38 million to cover administration costs. it seems the justification for this is that you have funds left over in this program that you haven't yet distributed. in fact, it seems there are funds left over in this program because there are approved projects that still haven't yet received loan guarantee that is have been promised. one project is from a company in minnesota called sage electrochromics. i know you're aware of that.

sage has developed energy efficient windows that are cutting edge, better than anything in the world, and uses cells to control the window, how dark it gets during the summer to block out uv light and to lower air conditioning costs and to let it all in and lower heating costs in the summer. i've been there. it's an amazing technology. in the spring of 2010, the department of energy promised the company it would receive a $72 million loan guarantee under the 1703 program to build a new manufacturing facility that would create 160 manufacturing jobs and 200 construction jobs in southern minnesota. it's now been two years since sage has been notified that it will receive the loan guarantee and the deal has not yet been closed. while the department of energy prolongs closing the deal, time and money are running out for sage. there are high-tech

manufacturing construction jobs at stake here. it's been going forward with the project assuming they'd get this loan guarantee. but they're running out of time. they may have to sell themselves to a french company. my first is the sage loan guarantee was going to be submitted to the credit committee on august 23rd, but it was stopped. why is the department of energy continuing to delay closing and executing the sage loan guarantee? >> senator, as you know, first, yes, i'm very aware of the company. actually the technology was developed by the laboratory that i used to be the director of. i know about it and it is very good technology. senator, you'll also know that i can't really speak of the particulars of a loan. this is confidential information. we'd be willing to work with sage and get them to talk to you on what they would be willing to divulge. but it has to go through them. we can't really talk about the

details of why. >> okay. i've been going through them and going back and forth, as you know, with d.o.e. and the white house on this. the treasury department reviewed the loan guarantee portfolio conclude thad the program is on sound footing and the 1703 and 1705 programs will cost the pairs $2 billion less than initially expected. if that's the case, why isn't the d.o.e. moving full force ahead issuing new loan guarantees with -- and sage is i believe first in line for that under 1703. >> the bulk of the 1703 loans are applicants we would expect to have been people like vogel, like the vogel project, nuclear power plants, also carbon

capture sequestration projects. there is some concern there because -- we're working with the companies, but we have low gas prices, and so that affects business decisions. so we're working -- you got it right. we actually -- we didn't request more funds except for the management of the program because we do have funds available. now, in terms of carbon capture sequestration, what we are finding is that there are companies who are willing to invest because it requires a lot of matching funds from companies willing to invest in that part if there would be a utilization aspect to the carbon capture where the department of energy would pay for the measurement, the verification of where the carbon dioxide is going. all those things are necessary in a capture and sequestration

project. we could help with the capture technologies that would be needed to capture carbon because by mid century we're going to have to be capturing carbon from a lot of sources. but the utilization part, in particular enhanced oil recovery is enough of a stimulus for those companies to say, all right, we'd be willing to look at those projects. we're again working with companies to look at that. it still carries the agenda forward on what we believe is necessary, develop the technologies of carbon capture storage in geological sites that both would give the public comfort and help us determine -- understand the flow of carbon dioxide in geological strata. >> okay. my time is up. i'm not sure i would really want to talk about d.o.e. moving full

force on 1703 in regard to this one technology which is about energy efficiency for buildings, which buildings consume almost 40% of all our energy in the country. and i think that it's absolutely essential that we essential that we pursue energy efficiency in our buildings and this does just that. thank you, mr. secretary. >> senator coates. >> thank you, mr. chairman. it note this will be the last budget of the energy committee you'll chair. you spent a lot of years investing a lot of time in this subject. i think we're all appreciative of your service. i know we'll have several hearings. this is not a good-bye. >> you'll have lots of chance to see me around here for many months. >> that's good.

we'll take the opportunity to thank you for your years of service. i just wanted to mention that. mr. secretary, last year at a similar hearing, i mentioned to you that it was unlikely we were going to be able to reach the targets of the president's budget and suggested that you needed to go to -- was there a plan b in place or some thought of, if we don't reach this, how are we going to triage or how are we going to make decisions about where the money ought to be spent. it turned out that that was true. the vote against the president's budget was unanimous, 97-0 for 2012 fiscal year. this new budget has been offered. it's unlikely we'll even debate or vote it. the majority leader has said he's not going to bring it for a vote. if it does, it will probably have the same fate. my question is are you looking at a plan b for fy 13 fiscal

year? if not, why not? if you are, could you share that with us either today or in subsequent hearings or work with us to try to address the fact that the country just simply can't afford to do everything that we would like to do? >> well, as what happened last year, i think -- i hope you felt that there was a willingness to work with congress, ultimately it's congress appropriations that determine what we do and what we get with the consent of the president. i think we will -- as the budget process unfolds, we certainly are willing to work with all members of congress in the house and the senate. >> thank you. i think we're going to need to do that. this plan is a billion more than last year, this budget. i don't see the possibility, given our current fiscal situation of being able to defund everything that you've requested. we look forward to doing that. let me just turn to the issue of

loans and guarantees and subsidies and so forth and so on. i want to try to take it out of the political. whether it's a republican administration or a democratic administration, there have been a number of embarrassing moments where winners an losers have been selected on the basis of not doing basic research which i think is a function of government, but in transferring that research to a specific industry, specific company. and it's embarrassing to you. it's embarrassing to the president, embarrassing to congress. it's embarrassing to the way in which money is allocated. talk a little bit about how we can avoid -- the problem is that the political gets involved and there are headlines and there's allegations of crony capitalism

and favoring one company over another for political reasons accompanied with, well, maybe this is the -- maybe this is the future and we ought to invest this money. i know your department has taken some second looks at some of the proposed loan guarantees. one of those was as a result of a letter senator toomey and i sent to you. i thank you for doing that second look, that due diligence which resulted in a different decision, saving potentially the taxpayer well over half a billion dollars. i thank you for that. can you talk a little bit about what i'm suggesting here? and that is two things. one, the due diligence needed to take second looks at what programs are currently being evaluated, and secondly, the whole concept of should the

government be involved. i think it was larry summers who said, pardon the language here, government picking winners and losers is a crappy way to invest money. we've had examples of that. could you address the role of the government being involved in basic research as opposed to selecting specific companies to develop a particular product when we continue to run into, as i said, whether it's republican or democratic administration, continue to run into embarrassing situations on the taxpayers' dime? >> first, senator, let me say i'm very glad to hear you are very supportive of the research and development. that is a proper role for the government. in many instances, not all the investments in research and development are captured by the company that makes that investment. and because of that, not only this country but countries all over the world