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 at 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 supporter of natural gas, it's a cleaner fossil fuel of course as a huge boon 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 to 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 that estimates, 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 disabuse me of the theory that you already made up your mind.

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 billion 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 many 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 difficult minute diminimous 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 barrasso? >> 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 parts 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 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 xl 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 1,700 miles. it's my understanding the keystone xl 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 facilitate 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 cushing 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 cushing back down to the gulf states 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 xl pipeline would facilitate oil production in the united states. and then my question to you is should the keystone xl pipeline be part of an all out, all of the above strategy that develops every available source of american energy which is what the president has actually called for? >> there are pipelines being built and upgraded, 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 decades 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 franken.

>> 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 guarantees that 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 question 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 t what they would be willing to do and it has to go through them. we can't really talk about the details of why. >> well, i have been going through them and been going back and forth with d.o.e. and the white house on this. the treasury department reviewed the loan guarantee portfolio conducted by herb allison. concluded recently that the program is on sound footing and that the 1703 and 1705 programs will cost $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 i believe is first in line under

1703. >> well, the bulk of the 1703 loans are applicants. we would expect to have been people like vogual -- like the vogual project. and the sequestration projects. and there is some concern there because -- and we're working with the companies. we have low gas prices. so that affects the business decisions, and so we're worki working -- you've 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 these -- this 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 monitoring verification of where the carbon dioxide is going. we could help all those things are necessary and capturing sequestration project. we could help with the capture technologies that would be needed to capture carbon because mid century we have to be capturing carbon from a lot of sources. but the utilization part, it's enough of a stimulus for the companies to say, all right, we're willing to look at the projects so we're working with companies to look at that. it develops the technologies of carbon capture storage and gee logical sites which 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 how -- 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 pursue energy efficiency in our buildings and that this is -- this technology does just that. so thank you, mr. secretary. >> senator coates? >> thank you, mr. chairman. mr. chairman, i'd note that this will be the last budget hearing of the energy committee that you'll chair and you've spent a lot of years investing a lot of time in this subject. i think we all are 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 for many months. >> that's good. i just wanted to mention that. secretary, last year, at a similar hearing, i mentioned to you that it was unlikely that we were going to be able to reach the targets of the president's budget. and -- and as 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 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 that we'll either debate it or vote it. the majority leader has said he

won't bring it for a vote, but if he does, i think it will have the same fate. my question to you is, are you looking at a plan "b" for fy fiscal year, and if not, why not, and if you are, could you share that with us or work with us to try to address the fact that the country can't afford to do all we'd like to do? >> as last year, i hope you felt there was a willingness to work with congress that determined what we do and what we get and with the consent of the president and so i think we well -- you know, 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'll need to do that. this plan is $1 billion more than last year and i don't see

the possibility given our current fiscal situation of being able to fund everything that you have requested. so i look forward to doing that. let me just turn to the issue of loans guarantees and subsidies and so forth and so on. and i want to try to take it out of the political, whether it's republican administration or a democrat administration, there have been a number of embarrassing moments where winners and 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. it's embarrassing to you and to the president and to congress and it's embarrassing to the way in which money is allocated. talk a little bit about how we can avoid -- and the problem is

that the political gets involved. and then there are headlines and there are allegations of crony capitalism and favoring one company over another for political reasons. accompanied with, well, maybe this is the -- you know, 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 is as a result a letter senator toomey and i sent to you and i appreciate you doing that second look, the due diligence which resulted in a different decision. saving potentially the taxpayer well over half a billion dollars. and so 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, you know, should the government be involved in the -- i think it was larry sommers who said, you know, pardon the language here, you know, government taking winners and losers is a crappy way to invest money and i think we have had some examples of that. could you address the role of government being involved in pacic 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 democrat administration, continue to run into embarrassing situations on the taxpayer's dime? >> well, first, senator, let me say that i'm very glad to hear you are very supportive of the research and development. that's a proper role for the government, because in many instances not all the investments in research and development are captured by the

government that makes that investment. because of that,b not only this country but countries all over the world feel that it is a government responsibility to help with the competitiveness of the businesses in their home countries. to continue research and development. as you go more towards deployment, that becomes increasingly in a larger responsibility to -- to really the responsibility of the private sector to decide what they want to invest in. and having said that, there have been policies in the united states that go back a century or more that help beginning industries start off. and this has been part of the tradition if you think about going back again. about 100 years, and beginning oil industry in the united states. there were incentives to help