oil prices have risen this summer as trade tensions between china and the u.s. increased. next energy leaders discuss the potential impact, including oversupply worries and a threat to close a port. the natural resources committee is chaired by lisa makowski. good morning, everyone, the committee will come to order and we are here this morning are a couple of reasons. hopefully we will proceed with the business meeting to report for nominees for the department of energy and recognizing we don't have a yet 12 members present, i will go with agenda item 2, a hearing to examine the factors affecting global oil prices.

this year has been marked by greater volatility, showing up in the price at the pump. >> there are notably higher than a year ago. the question is, why? it remains this way and what can we do about it? that's what everyone really want to know, where are we going with that? when i look at the global market, i see factors pushing global oil prices up. they are the direct result of strong economic growth, this is almost a trade-off. prices were a lot lower when the economy was a lot weaker. i don't think anybody would want to trade our remarkable job creation and low unemployment to go back to those days. >> another factor is global oil demand is rising, not falling. and the driver on the front is not the u.s., but much of the rest of the world led by

emerging economies like china and india. we're dealing with a fallout of opec's strategy of artificially restricting supply from members. there is no question that reduced inventories and pushed prices higher. >> we are also seeing effects of supply disruptions from libya to venezuela and canada. there is somewhat of a silver lining. we see well prices are higher, it's not as bad as it could have been, largely because of the significant increases in u.s. production. >> the american shell revolution has brought benefits. as we produce more, we are creating jobs, bringing stability and confidence to the global market. >> we made smart policy decisions like lifting the ban on u.s. crude exports allowing us to become a major power on the global stage. >> it's complicated enough to understand where we are today, but most folks are interested

in figuring out what lies ahead. markets listen up as production in saudi arabia arises. where are the geopolitical hotspots where substantial supply could disappear at a moments notice. then we have the wildcards. what will happen if we fail to build needed infrastructure in the u.s. to ensure energy can be transported from words produced to where it's consumed? what will happen if the u.s. releases oil from the strategic petroleum reserve? not in response to an emergency, but to manage tight market commissions. what will tariffs mean for the viability of domestic energy projects and our ability to access markets in countries like china? >> what will happen is global spare capacity shrinks and we no longer have a cushion of production that can be brought

online quickly? also, what are the looming impacts of regulations like the international maritime organization low sulfur standards? >> the and of course, front and center, what will happen with iran? i believe our best course is continue with efforts to produce more oil in places like alaska. i believe it was the right move to begin the coastal plain. i support the five year program for offshore development and i think there is no substitute for u.s. production. even as we seek to diversify away from oil. >> here to help us understand as a distinguished panel of witnesses from as far away as the international energy agency in paris - we have one witness who wrote the book on crude volatility, and other who has come full circle since he

testified in 2016 about the impacts of low oil prices. we also welcome these men who will share perspectives on the north american market. >> we are not quite to 12 yet, so senator - maybe we can get to the business meeting. >> thank you for opening and scheduling a timely hearing on global oil prices. every family and business across america is feeling the burden of higher fuel prices. average households have to pay $155 more in cost this summer compared to last year. gasoline and diesel prices are around $.60 more than they were this time last year, that's the highest we've seen in four years. mike and insurance are aware of the prices since washington state drivers paid the third- highest prices in the country.

>> currently drivers are shelling out 300 -- $3.41 per gallon. every philip cost washington drivers about eight dollars more than it did last summer. everything from boaters to people moving products to markets are paying more and making things more expensive. that's less take-home pay and higher retail prices. given the profound impact it has on family budgets and our economy, we need to take aggressive action to make sure we are policing the prices and markets. not only do we have international cartels artificially constraining price. >> there is uncertainty in the market. what happens if the iranians do follow through on the threat? about a third of the world's seaborne petroleum passes through that check point where

the shipping lane is at three kilometers at its narrowest point. i hope to ask our experts about that as well. >> in tight oil markets we also see the volatility and potential for manipulation. we must protect consumers on these issues and continue to make sure we are breaking monopolies at the pump. whether that means to continue to aggressively look for alternatives to feel markets and solutions - or making sure we focus on opportunities - i would like to learn more about record level or protection in the u.s. and why it's not providing any relief at the pump. last year we were 11 million barrels per day, only slightly behind russia. >> putting aside the fact that we continue to with that level of carbon in the atmosphere and it's unsustainable, america's increase in fossil fuel production only is padding a

plywood -- bloated economy. >> this friday exxon is going to have quarterly profits of $5.5 billion. even though prices have doubled over the last two years, oil prices have been relatively flat despite the u.s. crude oil production. it's because producers agree to set multiple -- market supply quotas starting in january 2017. the more we pumped, the harder they worked to make sure prices stayed high. >> it's very hard for us to drill our way out of this problem. the effective way is to reduce fuel cost -- costs nationally and individually by beating with competition at the pump. americans should be able to fill up with homegrown biofuels. we should continue to push for

electric vehicles and lower operating cost for consumers. members of this committee have been instrumental in increasing fuel economy standards. now the administration is trying to reverse that progress. we want to reduce consumption of oil in the united dates by 2.4 barrels per day, that was what we were on track four by 2030, saving $130 billion. implementing these policies and reducing oil consumption has also been creating jobs, a credit for more than 288,000 automobile manufacturing jobs and 1200 jobs across the u.s. >> alternatives are showing we can produce pressure as an alternative to gasoline supplies and we need to keep moving forward. the trump administration seems to be trying to tear down these

alternatives. today i also want to talk to witnesses about what the executive branch could be doing using existing authority to make sure things aren't happening in our supply chain. recent steep one-day changes in the price of crude oil have raised concern about automatic trading and algorithms. >> on july 11 domestic and international oil futures have the steepest decline in more than a year. these dramatic changes in one day have caused market observers and analysts to raise concerns about automated training. this is something i will ask witnesses about. >> madam chair, obviously all of these tools need to be in our toolbox to focus on giving the american driving public the best opportunity to have low fuel prices. i look forward to ask the witness is these questions. >> thank you, senator. we do have a quorum present so

we will proceed with the business meeting to consider the four nominations with the department of energy on today's agenda. we circulated it previously, it is in front of each member. karen evans is to be the secretary - dr. christopher fought to be the director of the office of science and mr. daniel simmons to be the secretary for the renewable energy. >> there is a nomination for mr. simmons to be secretary of energy for energy efficiency and renewable energy. the question is on the nomination of mr. simmons and the clark will call the roll. -- role. [ role call ]

if there are no objections, the committee will voice vote unblock the nominations of miss donaldson, miss evans and dr. fall. are there any objections?

hearing none, the question is on the nominations of miss donaldson, miss evans and dr. fall, those in favor say aye? >> i. >> as opposed sign a. >> the eyes have it. are there any senators that wish to be recorded as no on the nomination we just favorably reported? >> madam chair, you recorded it as no on miss evans. >> you will be recorded as no on miss evans, other members? any members who wish to make brief statements about any of the nominees have been favorably reported? i would note in the interest of time, statements can be included as part of the record. seeing no comments, that includes votes and this business meeting is adjourned. we will now turn back to our fall committee meeting. i appreciate members being here so we can conduct this meeting. with this, we will now turn to our full panel. we have a distinguished panel before us, and we will begin

with you mr. sutter mori. he is from the energy market and he is the security director at the international energy agency. we welcome you to the committee. mr. robert mcnally who i mentioned in previous comments is the founder and president for the rapid energy group. mr. rusty brazil is the president and chief executive officer for rbn energy llc, welcome. mr. john ours is the executive vice president for turner, mason and company. mr. jason board off is the founding director for the center on global energy policy at columbia university. we welcome each of you to the

committee this morning. we ask you try to keep comments to about five minutes. full statements will be incorporated as part of the record. we have a great deal of interest from the committee this morning. >> thank you, chairman. thank you members of the committee for the opportunity to present the international energy agency's views on factors affecting global oil prices. let me start by conveying best regards from dr. fatty borough. >> for more than 40 years, the u.s. has played a critical leadership role in dia. the u.s. is leading global supply growth in oil and gas, making enormous contributions to global oil and gas supply security.

the role has expanded and the oil security system continues to be the core mandate for the agency. >> global crude oil prices are more than 50% higher than a year ago. this reflects demand growth and overachievement of the production agreement by opec and non-opec users. >> more than 3 billion barrels in january 2017 to 2.8 in 2018. may have been below the five- year average since march. the rising point is from less than $20 -- $28 a barrel in january 2016 to nearly $18 a barrel in 2018.

going forward, the following factors should be considered. >> the global on-demand growth is relatively steady at the 1.4. but there are signs of stress with some countries with oil price increase. developing countries recently does it reduced -- reduced subsidies. >> with a stronger u.s. dollar, some countries have seen sharp rises in oil. the trade tensions escalated and adversely impacted the global economy with the knocking effect on oil demand. there are several major supply uncertainties. at this time, we cannot know how much uranian oil will be removed from the world market by u.s. sanctions.

we indicate it will be significant. secondly, collapse of oil production in venezuela is continuing. it is currently only 1.3 million barrels per day and could be below 1 million at the end of the year. in libya, the recent strike against the infrastructure resulted in production following -- following from 1 million barrels to about a half a day. the situation seems to improve, but we cannot be sure if stability is safe there. this is also including a rack, canada, north sea and brazil. under such market conditions it is - vienna agreement - it comes at the expense of the global spare capacity. >> the u.s. is the single largest contributor to the supply increase growing faster than global demand.

because of the constraints in pipeline take away capacity. the pipe supply situation has not been helped by the recent low-level investment in the upstream oil and gas industry. the production from the existing fields is declining by more than 3 million barrels per day, about the size of the entire north sea field each year. >> we're in a very volatile and challenging period. political factors are important in determining oil price movements. despite the rapid growth of edy's -- ed's oil will be the prominent field. in decades to come, emergency oil stock systems managed by the iea and members will continue to be critical and prepared for the rainy day

functioning of local economic systems. >> we are engaged in close dialogue with producers and consumers, inside and outside iea family and reemerging marketing developments. on behalf of everyone, i want to thank you again for inviting me before this committee and i'm happy to answer any questions. >> think you. welcome, mr. mcnally. >> i am honored to be before you today, i thought what i would do in my brief five minutes is focus on three things. first, the return to authentic boom bust oil price cycles, secondly factors pushing prices up and down and an oil issue that has been preoccupying the industry for years now.

it's remarkable how little notice it has gone in washington and that is i am a 2020. -- imo 2020. >> these aren't normal oil prices. you don't see this without a war in the persian gulf. it happened in 2004 and 2008. you just don't see them fall 60% in half a year as we did in 2014 without a recession or sudden supply surge. this is unusual in modern times, why? oil market, prices have exhibited a prone -- proneness to wild swings. in the 1800s it wasn't much of a problem, but when it became the life lead in the 20th century it became a problem for governments, industry, airlines and everyone who depends on oil, most of us, to vanquish

the wide swings and stabilize prices. governments and the industry regulated production. folks forget the u.s. was the king of opec, specifically texas. >> texas exhibited heavy-handed intervention in a market that would have made someone blessed. the railroad commission met once a month for 40 years and set quotas well by well, field by field. when opec is getting along, they meet twice a year and set quotas most of them ignore. >> we were the king of opec. way where the good folks in texas agreeing to heavy-handed intervention? to stabilize prices and vanquish the boom bust we saw from the 20s and 30s. >> some folks thought opec -- maybe shale would be the new

producer, we saw that fail. others think this new entity formed by saudi arabia and russia will be the new opec. i have my doubts. the bottom line is this, we haven't really seen this type of volatility and for generations. no swing producer, no regulation and no peace in oil prices. as the chairman alluded, we have forces pushing prices down. supply is growing faster than demand. >> all of us see the market loosening up going into next year. strong production growth for the u.s., brazil, saudi arabia and other places. even with good demand, it is pushing prices down. there is a lot of fear with trade droids -- wars about demand putting prices down. the concern is also forces pushing prices up and that is

geopolitical risk. >> we have a swing producer regulating applied to keep prices stable, usuaey y hold back supply from the market. that doesn't normally happen, we call that a spare production capacity. it acts like a fire department in a wooden city. when you get into a disruption or war, you call on the fire department being held back by regulators to come in and douse the fire before it burns down the whole city. right now spare production capacity is close to or near zero. that is dangerous in light of the disruptions in libya, venezuela and iran. iran experts 2 1/2 million barrels a day in a $100 million judgment terrel at a market. with zero spare production capacity and commercial inventories back to normal, the loss of 2 1/2 million barrels a day would be a big problem in terms of oil price stability.

iran threatened over the weekend to interrupt the $19 billion judgment barrels a day. that is a bigger problem, the biggest for us and iea to prepare for and analyze. our military would clearly prevail over the iranian military, we not thought to be complacent about how that would be closed. the street is entering companies to ships -- for ships to go through. >> perhaps i will get into imo in the q&a. i wish i could confidently predict stable, comfortable prices that would be optimal. in 2012 i testified in the house small business committee and notice -- noted pump prices entered a new space mountain.

i maintain that view, we went through a bust recently, and eventually we will go through a boom. if a swing producer does not emerge, we should buckle up with a continued roller coaster ride on space mountain. >> thank you, mr. mcnally. mr. brazil, welcome. >> part of the reasons you have these hearings is to get different views. we will have a different view. rbn energy is a consultant and marketing analytics company. we are in houston doing information analysis, production, transportation and it's for crude oil and natural gas. we are up to 11 barrels a day. in 2011 we were up to 5.5 million barrels a day. we have doubled. instead of focusing on the magnitude of the growth, i want to focus on the response, the swing this -- swingness of u.s.

production. >> i think it has had a big impact on global markets and i will explain what i mean in a few minutes. first, let's talk about a few fundamentals. the big driver in all of this has been productivity improvement that has radically changed the supply curve for u.s. oil production. >> today you can bring on between five and 11 times between -- the amount of crude oil you could do in 2011. producers have learned to drill them fast. the result has been a dramatic reduction in the per-unit cost of production or lower marginal cost. for the past seven years the u.s. has been shoving about 4.5 million barrels a day of this marginal production into the global market and that is way opec found it necessary to reduce production to support

global prices and make room for u.s. production. the geography of this production in the u.s. has been concentrated - 85% of the growth in the last two years comes from five bases. more than half of that growth is coming from the permian by itself. it's even more concentrated than that. >> almost all of the growth in those five basins come from 28 counties. a land area of about 50,000 square miles, 1.7% of the u.s. lowering -- lower 48 service area about the size of louisiana. that's today. the land area where production is economically viable and called the sweet spot expands and contracts with the price of crude oil. if higher prices provide higher revenue per well, then smaller wells that produce lower yields

become economically viable. sweet spots in larger when crude oil prices increase. >> that's what i mean by responsiveness, it's been a key to the growing influence of u.s. production now and in global energy products -- markets. it will get a lot more responsive. we prepare a production forecast several times a year for the u.s. we just completed a new update. we did one for prices staying at 70 bucks flat, another at 50 bucks. there is the $15 difference, meaning a 3 million barrel a day change in the forecast between those two scenarios. >> the relatively small price results in a big change. the implication is the u.s. is fully capable and responding in a meaningful way that increases

and decreases in price. enough to have a substantial impact on the global crude oil market. producers drill more wells and production increases. prices fall and economic become less favorable. producers produce fewer wells and production and volume drops. here is the key, the oil in the ground didn't go away. when prices are low, productions are simply put on hold, waiting for a signal to bring the barrels to market. it takes time, but it's almost like those barrels are in a storage tank waiting for a signal to withdraw the oil and move it to refineries in the u.s. and throughout the world. the triggering mechanism is market price for my not a government edict. >> that's not to say all markets are free from the innovation of the government. but that parr has -- power has

been constrained or limited. most likely that constraint will continue further as shale production continues to grow in the u.s. i think it is good for the u.s. and world. appreciate the opportunity to speak with you today. >> mr. hours, welcome. >> thank you very much, thank you senators and committee members for allowing me to present my testimony, focusing on the downstream industry in the u.s. for decades the u.s. set energy independence is a goal, but currently it has been energy dominance. the u.s. industry was supported by the upstream admitted stream in its own sector of energy business. since 2007 we transition from being the largest importer of fine products to being the largest exporter. we moved from a shortage of 2.5 million barrels per day to a

surplus. where becoming a global export powerhouse and to maintain that position it depends on successes and failures. >> the free market environment is allowed to operate in the u.s. and has been a key driving force. facilities remain in the most advanced refineries in the world . they allow us to make more valuable products at higher yields than any other region in the world. the u.s. has the most deepest talented finery -- refinery label pull in the world. we can bind more flexible employment work rules that exist in many other countries so we can run plants more reliably and safely. it allows them to operate plants and capital projects with maintenance activities at low cost.

>> competitors lately have been the shale revolution. this is facilitated by the free market environment and has allowed oil and gas reduction to soar. natural gas prices that are lower provide operating opportunities. >> a further advantage has been the difficult experience - accomplice -- a complex task meeting incentivized operating, maintenance, play is -- planning and execution efforts. these issues over south and latin america have been particularly helpful for u.s. refineries. most countries in the region average between 50 to 70% compared to 90% in the u.s.

>> regional capacity and surplus has declined over the next decade -- last decade. most plants have not gone off the ground or encountered a lot of delays. the sponsorship from most have been by government controlled funding. it has a negative impact to the operations at existing plants. >> successfully penetrate and grow expert markets as a necessity for the -- use of the refinery center. >> the peak demand your 2025. despite this, well friends in europe and japan were shutting down 3 million barrels per day in the somewhere environment for the u.s. was able to increase refined capacity by one point oh billion barrels

per day. domestically and globally. the regulatory -- will limit market feedstock axis will inevitably impact competitive next. perhaps the biggest threat to refiners and other segments of the petroleum industry could be restricted trade policies. it would have a direct negative

impact on critical markets in all sectors. three quarters of the steel use in this pipeline come from overseas due to the lack of necessary great domestically. morn will could be prices and themselves. regulation can be positive for the industry and consumers. as more prices move above the hurdle rate. countries around the world move toward glover -- lower sulfur great, he was refiners will have to make those investments. international maritime organization mendes -- mandates will present challenges. let me say that the critical resource -- and consumers but

it is an important national concert he -- security assets. there has been a resigning system that has risen to the top. they have been allowed to develop and grow in a truly market environment. resulting effects on consumers and legislation to consider. thank you very much. >> thanks for the invitation. as the chairman noted, i was here last in april 2016. to testify about local prices. at a time when prices had collapsed from 115's a barrel in mid 2014 to the high 20s in early 2016. and since surged back to about $80.

let me explain the factors that have driven those wings and then offer three observations about the policy implications of them. key factors in the 2014 will price collapse included surging it was shale production what you heard about. and the decision by opec countries led by saudi arabia not to cut production in november 2014, widely condemned by many as a were on sale. in 2016, after the prices had fallen low $30 a barrel, opec along with several non-opec countries, notably russia came together to cut production and profit prices. they recovered to the mid-50s for much of 2017. then they began to search for many reasons. they brought on excess inventory and then demand has been strong, above its tenure average and then we heard from the iea about venezuela's production cup last -- collapse. more recently several additional factors pushed up prices even further.

president trump will the u.s. out of the iran nuclear agreement, raising concerns about additional oil supply loss. libyan production fell by have to do political unrest due to short-term outages in canada and elsewhere. this was exacerbated by fears about the historically small buffer of spare capacity that bob mcnally has planed -- explained so well. in the last the week, prices fell again as opec countries announced they would put more supply in the market, libyan supply came back online and the trump administration did three things. it signaled a softer approach to the implementation of iran sanctions, second, it raised more fears about the potential for global economic slowdown as a result of an escalating trade war, and third, it was reported to be considering having the sbr. what did this mean for policy? first, it is impossible to predict the future oil prices and few policy actions we have at our hands today provide relief at the pump in the near

term. energy policy decisions weather increase production or reduce consumption or anything else should largely be made independent of today's will price per one policy action that would reduce oil prices possibly albeit temporarily could be a release of the sbr, i do not believe current conditions where that in there are better ways to mitigate the potential price impact of re- imposing sanctions on iran. there a few shines of shortage in the oil market today, significant geopolitical playlists will dance risks real limb. i think congress should avoid further selling off this important national security asset to pay for other priorities. second, the shell revolution has been transformational for the u.s. energy outlook , delivered enormous benefit. the gasoline prices are still based on oil prices and oil prices are still set in an integrated market so that means in the global oil prices is like best buy, consumers feel that the pipe regardless of how much less import dependent we are.

shell can be ramped up and down more quickly, i do not think it is true swing supply. geopolitical influences and the global market come less from how much he produced and from that buffer of spare capacity you might choose to hold until in all price falls below $50 and shell could not stabilize the market, that job fell to opec mainly saudi arabia. which is the only country that chooses to hold a meaningful amount of spare capacity. third, the best way to reduce exposure of consumers to inevitable future oil price shocks is to reduce how much oil our economy uses in the first place. continuing planned increases is one way to do that not to mention to reduce greenhouse gas emissions. while increasing production does not inflate consumers for higher pump prices, it is important to note that more supply along with potential for reduced demand can reduce the harm to the economy overall from higher oil prices by lowering import dependence. because more the increase of

consumer spending on fuel circulates within the u.s. economy rather than flows overseas.the converse of that is why the u.s. economy saw much less benefit from the oil price collapse from 2014 and 15 than previously have been the case because the consumer savings at the pumps were offset by reduced oil related investment which is a bigger share of the economy as a result of the shale oil. we've heard about the infrastructure bottlenecks and i think policymakers can facilitate responsible production by officially permitting infrastructure without undermining needed environmental reviews. and by avoiding a trade war that threatens to raise material costs like steel or aluminum or possibly lead to retaliatory tariffs on u.s. energy exports. members of the committee, thank you for inviting me here today and i look forward to your questions. >> thank you, mr. bordoff. thank you all. very interesting this morning. i want to start off again with the subject that everyone is talking about this week and that is iran. we heard several of you mention

supply disruptions, global disruptions that we have seen in venezuela and libya. and certainly with the potential for a run going off- line. so the question, and i will direct this to you mr. sadamori and mr. mcnally, we have 100 million barrel per day oil market so where does the supply come from in the short term to meet the potential for a shortfall. then if i could have you both discuss the issue of spare capacity, this is something i have raised over the years and trying to get a real handle on what we truly understand to be spare capacity right now. within opec, within the non- opec countries, mr. bordoff you mentioned that really it is only saudi arabia that has true

spare capacity. your suggestion that u.s. shale oil is not necessarily spare capacity or that swing supply that is needed. so can i have a conversation about this, where do we go if we do have this severe disruption that iran can clearly contribute to an addition to whatever else we have seen and how does the global spare capacity factor in and what assurance do we have that we've got enough to take us through. >> thank you, chair. the question about where the additional supply can come from in the short term, we have to take note of the fact that the vienna reduction cuts agreement by opec and the non-opec producing company they are

still maintained. of course they are producing a lot less than their target. also they're coming from the unintended production declines in countries like venezuela. the fundamental agreement we reached in the last june meeting, was that they will increase production and lower the level of compliance 100%. so that means that there are countries in that group who is producing less intentionally, a lot less than their capacity. so the normal expectation is that those additional barrels should come from them. >> to what extent should the u.s. increase production? >> and also in terms of the numbers, in a most recent report, we expect the opec members along the gulf coast,

saudi, kuwait and uae, together they should have a bit more than 2 million barrels per day of spare production capacity. also the producer who can increase the production will be russia. we have seen that saudi and russia have opened taps. so the increase is already happening. so that is about the opec and non-opec states, the participants with the production of cuts agreement. on the other hand, in the united states, the u.s. is increasing production at a very fast pace. 1.7 million barrels per day, in one year -- 2018. we expect that to continue a bit slower but still 1.2 million barrels per day in 2019. in a sense, the market participants already incorporated those very production growth in the united states. what we see now is as i said,

there is the pipeline taking away capacity which is somewhat preventing the further growth in the short term. of course we understand that many projects are going on in regions like texas and those pipeline projects will be completed sometime in 2019. before that, in the short term, it is really hard to expect production to grow significantly before those pipeline infrastructure issues to be solved. >> mr. mcnally, anything to add to that? >> yes, madam chairman, i thought about this when i worked in the white house national security council like my colleague, mr. bordoff, under president obama. and working for president bush when we liberated in iraq. we thought very much about this. the problem, the policy problem again is even though it's 100 million barrels and really talking a couple of million barrel disruption, a small disruption can mean a big price spike and a big problem for our economy. so where do you go from here for quick supply because you

can't bring on an oilfield really fast. the first place you want to go for something like that, if you suddenly lost 2 1/2 million barrels of oil a day you go to spare production capacity held by mainly saudi arabia. we went there in 1990 and 91, they were a little late in getting there. saudi arabia provided that before we liberated iraq in 2003. that is the first resort, that's what the fire department is for. the problem is there is no fire department today. mr. sadamori mentioned the saudi's are going up, i have a word about defining spare capacity in a second. their capacity, we almost agree, is at least very tight if not completely absent. so the next place you go is commercial inventories. back in the last two years, we had this glut, we had this glut and we had extra inventory so if we had to work it off a little faster, that would've been okay and we would not have had to have higher prices. but commercial inventories and we can only see them in the rich world, is now the growing part of the world in asia and africa, we don't see those

inventories. so the rich world inventories are normal, the rest of the world is tight on inventory. so if we were to draw down commercial inventories right now by that 2 1/2 million barrels it would put upward pressure on prices. so that leads us to to the last resort which is strategic stocks held in the united states and in other iea countries, principally germany and japan. we unfortunately decided to sell off our strategic stock to pay for budgetary expenses. so our protection is being reduced but that's where you want to go and frankly, in my view, if were we to lose iran's 2 1/2 million barrels a day, later this year or next, and certainly were there to be an interruption in the strait of hormuz, 19 million barrels of oil a day, that would constitute a legitimate use of strategic stocks. final word on defining spare -- because folks define it differently. the iea has a higher number for spare production capacity. they have -- i think it's about 3 million barrels a day because they count oil that saudi arabia could bring on but in several months. in history, and that eia, we have a stricter definition, it is all you can get in weeks,

four weeks to be exact. on that definition, the eia has a lower definition. about 1 1/2 million, the way we counted it is lower than 1 million barrels a day. however you count it, it is really tight relative to the risk that we face. >> thank you both. senator cantwell. >> thank you madam chair and thanks to the witnesses. you have painted collectively what the roller coaster looks like for the future and i think that is the most challenging thing for us to get our minds around, that the roller coaster will continue. for consumers at home, it obviously can be very devastating. and so to me, i think mr. bordoff, you said it best, the best thing we can do is diversify off of oil because of that integrated market and now spare capacity issue. even though we have upped production, we are not going to avoid still being wrapped around the global market and the challenges of that global

market. so one thing i want to ask about, obviously we talked and everyone has talked a lot about iran, when we were focusing on high prices during a decade ago -- one of the issues that people say -- or least a lot of oil executives would say -- there is a terrorist premium, a threat of terrorism activity disrupting supply. they would say that there's something between a 15-20% increase in price just based on that fear factor. do have some sense of what the iranian issue might be causing in the market today? yes, mr. bordoff. >> it is hard to put a dollar figure on that point. we do see oil prices move in response to signals from the administration, they will take a harder or softer line toward implementing sanctions. a few weeks ago when a state

department person was giving an anonymous briefing and said there would be no exceptions for significant reductions in iranian oil purchases, so countries had to go to zero by november and we saw all prices spike several dollars a barrel, i don't remember how much, but the administration seemed to walk that back a little bit. i do think that tool is an important one that we should remember. i think the strategic petroleum reserves is designed to deal with short-term temporary severe supply disruptions, not the potential for a long-term supply loss from implementing sanctions against any country against their oil supply. the iran statute was written with a mechanism built into it to try to take account of conditions in the global oil market to make sure we were imposing pain on iran without shooting ourselves in the foot at the same time. >> you said both the trade wars in this issue were causing some level of increase. >> i think recently it had more

the opposite effect because the new sanctions that were announced against -- the new tariffs that were announced against chinese goods raised fear that the trade war could be worse and that might have a negative effect on global economic growth. and the rate of gdp growth is one very important factor in how strong will demand growth, which could push up prices in a tightly balanced market. there are a lot of geopolitical risks and iran is one and libya is another and venezuela is another. in general, potential for increased tensions or conflict in the middle east or elsewhere as we have seen in social media and other places in last few days. >> what did we get out of the $4 billion tax break, the new tax break in the tax plan that we gave oil companies? what do we get out of that? in the context of here we are, one that's months later we gave a $4 billion tax break, a new one, in addition to the lowering of the corporate rate, we gave them to additional foreign investors and yet here

we are paying higher gas prices. what did we get out of that? >> it is hard -- i don't know that i can comment specifically on what was in the tax bill for the general point about increased production and to what extent it helps consumers at the pump, i think you made the comment about how we have increased production get prices have gone up. that is partly because prices are set in the global market. there's a limit to what shale can do as extraordinary as doubling of production has been. this is the largest five-year increase of oil production in any country in history. that is a staggering turn around from what the outlook was not long-ago. i think it's fair to say that if that had not happened we would be facing a different oil outlook right now. >> i don't think that's fair use of the taxpayer money to give these oil companies these huge tax breaks and a spike in prices. i would prefer that we think about this issue of what can we do on the spare capacity side. what more can we do. the chair and i are both

interested in making sure that we work with the secretary at the time to increase the infrastructure so that it was robust enough for us but what about the way europeans look at jet oil fuel, one looking at creating more mechanisms for industry to have more spare capacity. they have a reserve as it relates to -- we are not at that point yet but definitely the last decade was a huge roller coaster for the airline industry because of high fuel costs. a lot of people lost their jobs, lost their pensions, lost everything because of that spike. what can we do now to help create them if spare capacity is such a big issue, that is controlled by somebody else, the saudis, not us, what can we do? >> we don't have the ability like a company does who

controls its national oil production has to hold back spare capacity. the responsiveness of shale and the extent to which it still grows as determined by the individual economic decisions of thousand independent actors throughout the united states. companies sold some level of inventory that makes sense for them. we have government held stocks which i think are more responsive than privately held stocks, when they are used by the government but that is again sort of extraordinary circumstances. it raises the question of whether government's role is actually to provide oil price stability moving forward and whether there are other actions we can take to reduce how exposed our economy is because of how dependent we are on oil. i would make one other point that we are talking about to what extent shale can be a swing supply stores to ramp up and down quickly and if you can, vanquish the role of opec oil. that comes at a cost and i don't need to tell senators here from oil-producing states, when truck drivers making six- figure salaries soars and then it collapses and then schools lose their tax base, the

volatility in oil output can be difficult for communities to manage even though it may have a benefit in stabilizing global prices. >> i would say yes, i endorsed your statement that the best thing to do is get us off the roller coaster by diversifying off of oil. i endorsed that in the meantime, though i do think we should be, i would write something for a question for the record on this issue but i do think that europe has looked at jet fuel as a specific way of increasing supply. we will ask that for the record, thank you. senator garner. >> thank you, madam chair. thank you to the witnesses for being here today. i want to talk about the tax cut conversation which is a fascinating one because i think in the context of other energy costs, if you look at utility rates for example, 101 utilities cut the rates as a result of the tax cut. that is $3 billion in savings to the american people as a result of utility rate cuts. it is important to talk about all the ways the economy is

growing as well as people saving money because of the tax cuts. and -- in every congressional district i want to ask you, mr. mcnally, about the concerns i have about state policies. there may be some efforts in colorado this year to once again try to ban oil and gas production. the eia estimates that in august we could have about 611,000 barrels of oil being produced in the state of colorado. this is an incredible number. what happens if you were to see success in banning oil production in a state like colorado? without local production? >> thank you, senator gardner. what we would do in that case is look for an opportunity to avoid a real problem. if you look back to 2011 and 2012, when crude oil prices were $100, gasoline prices were $4 a gallon. we lost libya and then we put sanctions on iran, spare capacity was really tight. the reason we didn't go back to

$150 a barrel in 2012 and 2013, like we were just almost at in 2008, is because shale oil production galloped over the hill, it started ramping up just in the nick of time. even though shale is much more responsive and does act more quickly in response to prices, you have to have states that are open to permitting, you have to have openness to the resources, to the take away capacity. it has to be well-regulated because shale oil like all energy production, needs the social license to operate. but you don't want to have across-the-board bans. had we had anything like that, not only would we not have had the calvary save us in 2011 and maybe double dipped into recession, we wouldn't have had the gas boom earlier which change things in the atlantic and made russia a force and forced them to lose their pricing power in europe. across-the-board bans would have deprived us of some the biggest wins we have had geo- politically and economically in

the last 20 years. and going forward, one would hate to think what we would lose by doing something like that. >> mr. sadamori, could you talk about your take on the nord stream 2 pipeline insecurity in europe and what effect that has on geopolitical security, particular security in europe and what it could mean for ukraine. >> i think i would like to refrain from making comments on that issue. in general, we think that the gas supply would be a very crucial in issue for the european countries. the fundamental question is how they can really diversify the supply in the real sense. of course, that also comes to the issue of transit routes, whether they can secure the the supply security in that sense. understand that the various discussions are going on at the various levels. we would like to monitor the development.

>> does your organization take a look at the concerns that russia may pose when it comes to energy deliveries to europe and what that could mean for our energy security? >> it may not be appropriate to talk about the hypothetical situation but i recall that in the g7, in the energy ministers meeting that there was an agreement by the energy ministers of the leading countries of the g7 that the energy resources, energy should not be used as a weapon. so a diverse secure supply needs to be secured. so i think that would be a very important issue for the global economy. >> has russia used their energy as a weapon? i am not talking about the specific behavior of specific countries. what i'm talking about is a general agreement.

>> would you consider shutting off the pipeline to a country, perhaps in the middle of winter, to shut down the supply, is that utilizing energy as a weapon? >> well, i don't mean to talk about the real use of energy as a weapon but the recent history, back in -- i recall that was in 2008, 2009, and again in 2014, there was a series of concerns on the european consuming countries about the stable supply of natural gas. that was in the middle of winter. the gas was intensively being a lot used for heating purposes. so unlike electricity, who has other generation sources like coal or other sources, when it comes to heating based on the infrastructure setting, which

is hard to find a replacement for the fuel. in that respect, there are serious concerns on the european side. that led to the intensive discussions inside europe about how they can increase the gas supply security in their countries. >> thank you. i am out of time but i'm concerned about the security of energy and i think we have seen a country use it as a weapon and that is russia. and we have seen europe become more reliant on that is a concern. >> thank you, madam chair and thank you to all of you for being here today. very interesting testimony. as i listen to you, it is really clear that we can see that production in this country has grown tremendously over the last decade. obviously we are still susceptible to rising prices because this is essentially a global market. you're talking about the issues around what we can do to affect prices on the supply side and then what we can do to affect pricing on the demand side. mr. bordoff, at the end of your

testimony as senator cantwell remarked, you made a point that i think is important that the best way to reduce our exposure to future oil shocks is by reducing our oil consumption in the first place. this seems to be such a timely observation given that we are wondering what the trump administration is going to do in their anticipated move to rollback fuel efficiency standards. in minnesota, the strong efficiency standards that were in place with the obama administration are estimated to have saved minnesota consumers about $650 million. in 2030, if those standards were left in place, the average household would be almost $3000 richer. it has a real pocketbook impact. also, of course, it creates jobs in minnesota because our state is a biofuels producer. so could you talk a little bit more mr. bordoff about the role that these vehicle efficiency

standards can play in our ability to cope with higher prices. >> as i said in my testimony, gasoline prices are set in a global market. regardless of how much we are producing in the united states. consumers are still going to face prices at the pump based on what's happening in the global oil market. use of shale production can help as an additional source of supply and putting another $5 million a day on the market certainly has. fundamentally, reducing the energy intensity of the economy i think is what makes it most resilient to oil price shocks which are inevitable, they will happen. barbara wrote the whole book about it. we will see prices go up and down and that is difficult for consumers to manage. they don't have the same ability to hedge prices the way airlines and large companies do. they don't have those tools available. i think policies that help

reduce the energy intensity of the economy and improve energy efficiency are good for those reasons. economic reasons as well as for the climate change. >> thank you. does anybody else want to comment on that? on the question of what else we can do, thinking of a particularly the opportunities around keeping vehicle efficiency standards in place in order to help protect consumers from price increases. >> i will say a few things. efficiency standards are good but as i made a point in my remarks, the free market and taking leashes off of this wonderful thing that is the free market, allows them to innovate and increase efficiency and they will do that on their own given the proper price signals. the problem with having efficiency standards, they are too regimented and too fixed, it can cause situations where we are not creating the optimal

environment to make the most efficient decisions on whether it is on fuel efficiency or anything else. so it is important to keep in mind to provide -- to allow the market to do its thing. i always look at how a football game or basketball game is officiated. government should play the role of an official. an official that is not flag happy or calling ticky tacky things but officials that keeps the game moving and allows the teams to become -- to let them make the decisions. and not play the role of coach. >> the next challenge i think, i am hearing your point, but i think the challenge is that the way the prices are set don't always include all of the externalities that are involved in the full cost of the price. with your analogy, the market isn't including all of those things. first this is an issue in

minnesota, at first glance, biofuels appear to be higher cost than oil but if you consider the low carbon fuel standard -- shows that if you account for those costs, the price is actually competitive. those costs are not assigned to the market. i don't have too much more time but i think that is an important point here. mr. bordoff, i would love to follow up with you on this. one of the benefits to consumers and the environment. if we adopt california style low carbon fuel standards in order to consider all of those issues. madam chair, i know i'm out of time but i want to note that i will be leaving to go to the agriculture committee where we will be having some discussion about how speculation is affecting oil prices and that we need to take a look at that and the agriculture committee will hold a hearing right now on the nominee of the cftc. and this will be one of the

issues that we are discussing and i appreciate that being raised here as well. thank you. >> thank you. senator smith. >> chairman, i enjoyed your testimony. a couple of things for the record. in terms of selling strategic petroleum reserves, you mentioned that we sold off a portion of it. we haven't sold it yet. we have an amendment that allows the government to time the market to sell at high and replenish back low. so theoretically i think it is 2023 that they currently plan to sell but they could move it up now to take advantage of high market prices. in a win-win. a win for the taxpayer but to get the higher price now to do the repairs to the infrastructure that madam chair was able to put in. secondly, i want to point out that senator cantwell asked about the tax cut and jobs act done for this. i've been told by folks that companies have accelerated

their pipeline construction that was planned for the early 20s into these current years because of the five-year depreciation. so they're taking advantage of the tax cut and jobs act built to move these projects now and so midstream is responding to our tax bill so that would be one answer to senator cantwell's problem. the other thing i want to point out is that the delay that occurred in the last administration at the keystone xl pipeline has definitely created a supply constraint. my gulf coast refineries use that oil from the canadian tar sands and from the bakken. the last administration put in constraints and now complaining about higher gas prices when it was a previous administration's policy which has contributed to that. i also wish to point that out and we would not be talking about extreme constraint had there not been some of the strategies of the previous presidential administration. so all that said, i used it two

minutes. let me explore something. i will note that when the prices fell, part of the reason they fell is that overextended shale producers had hedged future production. they continued to produce even though prices were $30 because they had hedged to sell at let's say $60. that drove prices down. so now shaking out the production market, knowing that you know this but for context, we are shaking it out so it's more efficient for those who have the cash, allowing them to get through the low price period, survived. but in a sense, shale will respond as a swing producer. because now that prices are up, more fields will be developed, inevitably there will be some that hedge. but they will bring out. so somebody mentioned or i read somewhere that in my state austin chalk is coming on line. it is going to be at least in

the near-term and intermediate a new source of production which probably will maybe overproduce a little bit. any comments on the role of things like austin chalk and the ocs and these other fields coming online to at least in the intermediate, maybe six months from now, make some impact on these high prices? >> austin chalk certainly will. the reason why austin chalk works is exactly the reason that you said, it's because the economic support and drilling in austin chalk. and support drilling in permian and all the other basins that you mentioned a few minutes ago. what is happening in the market is in fact giving us the response that we expected. shale in the united states is not going to be a swing supplier getting to your four weeks or whatever you said. austin chalk is not gonna happen in four weeks. >> we can't expect relief after labor day because not only will summer driving season be over,

but the russians going into winter i understand have to keep full production or else they freeze in. then some of these things like austin chalk will be perhaps hitting their stride. is that a fair statement that we can expect relief after labor day? >> that is a fair statement. one thing that has not been mentioned so far is the forward price of crude oil in west texas intermediate and in cushing, oklahoma. that's the price we are talking about for the most part. that price in five years in 2023 is $55 so going back to senator cantwell's question, of what is the price premium in the market for these various uncertainties that we are seeing right now in the market place? i could make an argument that all of the uncertainties added up are a $15 premium. if somebody wants to sell or buy crude oil right now in 2023, they will do it at $15. keep in mind then back to your decision that you have to make

about when you want to do something with the spr, i tend to think that spr ought to be saved for some real crisis. >> it just hasn't been sold had the markey amendment and the caskey amendment had been adhered to. >> my only point would be the price right now is $70, the price in 2023 is $55. on the futures market. i was a trader for 15 years of my career, i would sell now. >> you mentioned mr. mcnally that we will always be in boom and bust. on the other hand, plausibly we could say that with the keystone xl pipeline being built, the intermediate being built from the permian and elsewhere, in the midstream, then i'm told by the super majors that they're going back out to the outer continental shelf, that we will have significant production supplies the next 1-4 years which may account for the $55 a barrel. we may see some leveling off,

is that fair? >> certainly senator. it's a fair statement. i believe the iea and others believe the united states is going to be half or more of non- opec supply growth. so we took the lion's share since 2009 and we will take the lion's share when we build out the midstream infrastructure and connected, again if we remain open to production and permitting, we can expect that to expand. if i may on the spr, i was never a trader, i worked for a hedge fund for 12 years but i never traded but i am a student of history. in 1996, congress and president clinton last sold spr crude for budget expenses in 1997. at that time oil prices were on the high end of the range. they thought they were selling high, about $26 a barrel. i was in the white house in the national security council after 9/11 and oversaw the refilling of the spr at much higher prices. so i predicted before, i'm afraid so, that we may think we

are selling high but i predict we will put those barrels back in and we may have to buy them from the chinese at higher prices after the next gulf emergency. i agree with mr. braziel, not on the timing of selling, but i think we should hold it for emergencies, with respect. >> again, the decision to sell has been made, it's a question of timing the market. more questions but i am way over time. i yield. >> some of us didn't think we should have sold. senator manchin. >> i agree, madam chairman. i want to make it as simple as i can, we are producing more oil than we've ever produced on a daily basis. that is an accurate statement, correct? for 40 years we froze our exporting ability of oil from 1975-2015. now we have open that up since 2015. with twice the production that we have ever had. the people back home in west virginia are asking how come

the prices aren't going down. if we are so enriched with all this new technology and all this oil in surplus, i know i've heard all the comments today, it is hard to go back home and talk to somebody in bangor, west virginia, explain that we are doing better than ever, we are producing more. so are we producing more to stabilize the global market of oil or are we producing for the benefit of united states' market? which one do you think is getting the best play on this? either one. >> senator, as jason bordoff said, it is our pump prices, the prices in montana and west virginia are set on the global market. so to answer your question, i would say we are exporting to stabilize the global oil market so that we may stabilize our own market. >> we tried to put an amendment on that that said if the prices spike in the united states, our main customer and our main purpose is the constituency is

united states. in west virginia, maine and all of us here. in alaska, too. where do you, where would you predict a spike that would concern us that the americans are paying to stabilize the global market, americans are playing a higher price than normal. >> which price spike? >> is there a ceiling, you think? >> there is. when i think about the roller coaster and space mountain we are already on, i am worried about how we diagnose these booms and sometimes the misdiagnosis and i'm concerned that or when we go back to $4 a gallon, we will say it is exports. but sir, with respect, i believe if we were to close that ban and ban exports, i think we have less production and higher prices. >> we are not saying ban. we are saying basically when it hits a critical mass that concerns us that americans are carrying this load and we are producing twice as much, we are asking to accept the technology and production and more pipelines and everything is

going to benefit our economy. they don't see it benefit them. that's where we get to push back. we are very much concerned about that. >> yes, sir. >> i want to move on to something quickly. in natural gas. i think you know about the marcella's utica and now we have rogersville that will come on so we've had some pretty good opportunities, that we are producing a lawful lot of liquids. those liquids are extremely valuable. also, we know that we are vulnerable down in the southwest, i've been told talking to rick perry and the governors and he said joe, i've seen the model with a horrific hurricane, a class 5 moving up the houston channel and what it does. it disrupts the energy chain and energy markets in america. we are trying to get what we call a mid-atlantic energy hub. a storage hub. strategically. you all know enough about that,

have you looked into it enough mr. braziel? >> i have looked at it some, particularly in terms of ethane, so i'm generally familiar with what's going on on the ethane side. >> do you want to comment on what it would do to stabilize the energy markets in america? because we are very vulnerable and you know that every time we have a weather hit in the southwest -- we are not too prone to hurricanes in west virginia. we have been blessed. >> anything that creates the optionality in the transportation system, the ability to go multiple directions with any particular hydrocarbon is a good thing. that's what the hub will do. >> we have these natural liquids and if we are able to help with the global supply even, because we are exporting that, too. then there's more coming on with the terminals where we can send liquids out. is that a benefit? >> it is a benefit. there's a new pipeline that is being built over in the philly area right now that they're having trouble getting finished right now so you want that pipeline to be finished relatively soon.

>> if we want to keep that product in our central states, in west virginia, ohio and pennsylvania, then we become the backup strategically for the national interest and concerns but also we can create a whole new energy hub, with chemicals, fracking and all those things that need to go online with that. it will be a good thing. >> the more diversity you have, the more storage you have is good. we have all our eggs in one basket, do you agree that we have all of her energy eggs in one basket? >> is it for production, refiners, everything down in the southwest? >> no, you are moving a lot of ethane to the gulf coast right now. that is one basket and you're moving a lot of ethane up to canada right now. so that's another basket, you do have some supply diversity. some demand diversity, i should say. >> if you could, if you would look into the storage hub that we've been talking about and see how you think it would stabilize the markets and i think that would help with the results of united states markets, also. thank you, madam chair.

>> senator king? >> thank you, madam chair and thank you for calling this fascinating hearing and thank you all. the most profound observation i ever heard about oil prices was back in the 80s from a professor at the university of maine who said oil prices in the future will always be the opposite of what you think today. that has proven true. if you think about it, if we think prices will be high, then two things happen, we have more drilling and we have more conservation. we think they will be low, we have less drilling and less conservation and people buy trucks instead of prius models and then that seems to be the dynamic. i remember that from 35 years ago and it has carried through over the years. a couple of very specific questions. we have a limited time just like you did in your statements. i will be brief. what is saudi arabia's cost of production? >> senator, i believe their cost of production would be in the single digits, $5, $10,

$12. >> so they can sell barrels at $30 a barrel and make money, they just don't make as much. >> their budget revenues, their budget couldn't handle it, their country would fall apart. but they could cover their production costs at that level but they couldn't meet their social spending at that level. >> but their cost of production is a lot lower than, for example, shale. second question -- >> i want to add something to that, that is true for existing production but on incremental new production it is much higher. it is a totally -- which is not different from other places. are there limits to the shale oil production that we have or do we know sort of like producible reserves, is there any upward limit, is there a finite capacity there? >> it depends on the price. the more you can produce -- >> the more you can produce, the less economic wells suddenly are economical. >> that is exactly it. so if the price does go to $75,

we were producing more than if it stays at $68. >> is taking iran out of the market through sanctions priced into the market today? or will it increase prices later on? is the threat already priced in? >> to some degree, pulling iranian oil off the market is priced in but i think there's a wide range of views out there about how severe the impact of reimposed sanctions would be from maybe 500,000 barrels a day up to 2 million barrels a day. that's why the signals about how strict it will be in the enforcement of sanctions has an impact on the market. >> the testimony was there is limited spare capacity so 2 million a day may not be 2% of world supply but it would be significant terms of prices, is that correct? >> if the reimposed sanctions would pull 2 million barrels a day off by the end of this year or next year, that would have a big impact on the market.

>> i think we can agree that disruption in the strait of hormuz would be a catastrophe of the level that we are talking that strategic petroleum reserve being important, correct? that is 19 million, i think one of you testified? it would be prolonged more than a few days it would be a catastrophe. what is the size of the strategic petroleum reserve, how many millions of barrels. >> i will look back to my smarter colleagues, i think it is 670 million barrels. in the u.s. i do believe we have sold off a little bit of that over the past few years. maybe a little over 700 at the top so we're just down about 670 million barrels. >> about 650. a gao study that was commissioned with sales projected to bring it down to just over four in a decade. >> strait of hormuz -- i'm just doing the arithmetic -- would be about a month -- >> senator if we think about that, it is not the stockpile, it is the flowrate. the strait of hormuz is 19 million barrels a day, the iea says it can flow at 4 million barrels a day.

there are questions whether we can do that but we can't cover the strait of hormuz. >> even with the strategic petroleum reserves, even with the iea with japan and germany coming in, we could not cover the strait of hormuz. we could cover iran at two and a half but not the strait of hormuz at 19. >> if i may, that's the reason why the modernization of the spr, of which a little bit was sold, and funding was made available, is important to increase that flowrate. >> the flowrate is a technical constraint? >> it is technical, yes. we built the reserve and we sent the pipes north because we thought would be taking oil off and blockaded or embargoed from the water so we would have to feed refineries so now we have to export that oil, mainly to get it out so we have to move the pipes around which is also degradation on the logistics side. so that gets in the way as well. >> when we were projecting global demand, what you think about electric vehicles? conservation, electric vehicles have moved faster than people thought they would. i think as you mentioned, the principal use of petroleum is transportation.

>> yes, sir, we have our eggs all in one basket in transportation, it's all about oil. jason bordoff said the energy policy just came out with a fabulous study done by marion -- that looks at the 15 forecasts from governments and others about alleged vehicle penetration and i will let him speak to that. there is some skepticism about being too optimistic on how quickly batteries will fall and consumers will take them up. folks say that if you take a picture of 1910 and 1912 in manhattan, it is horses in one and cars in the other. why can't we do that? >> the reason was we developed an energy source and technology that consumers found affordable and took up quickly. ev's aren't there yet. they may be but they're not yet. there may be a little bit too much optimism in some of the official forecasts. we hope we get there. we should be pragmatic. we rode horses for 5000 years so we may be on oil for a little longer than folks think. >> for the evs, it assumes that the ev's will expand rapidly to

300 million vehicles by 2040. the displacement of oil will be limited to 3 million barrels per day. so we have a lot more contribution -- >> going to 300 million electric vehicles would only result in a dimishment of 3 million barrels a day of oil? >> exactly. i need to point out that the personal duty light-duty vehicle may decline a little bit. but there are heavy-duty trucks, ships, airplanes, and also petrochemical feedstocks, we expect it is externally hard to see the demand peak before 2040. so that is the conclusion from the center. >> i am out of time but i want one more answer, what is the proportion of transportation versus petrochemical feedstocks in the use of oil today? >> at this moment transportation is by far the

largest of demand in oil. petrochemical is 70% -- >> 60% 80%? >> excuse me, i need to go back and check but something like 60%. the transportation sector. 30% in petrochemical feedstock. i will have to get back with you with the precise number. >> thank you, madam chair. >> chairman murkowski, ranking member cantwell, thanks for having this hearing. in montana, the average price of fuel is around $2.76 or $2.80 which is similar to or probably a little lower than the national average. for most montanans, the fuel prices are their main interaction with global oil prices. when you're in an ag state like montana, the number one economic driver, we talk with farmers and ranchers about inputs and outputs, fuel prices are an important input and fertilizer and so forth as well. for montanans working in the oil fields, in the energy

sector, global oil prices can determine if they come to work tomorrow or not. so this is an important issue for a state like montana. i am very thankful for the work of this committee and my colleagues in the u.s. senate. as we were able to lift the crude oil export ban finally and approve leasing in an area of 100 in alaska where we can reduce burdensome -- and only adding cost cutting kind of regulations as well as tax reform. all of this has led to an important boost in u.s. oil and gas production. and this is moving us to a very aspirational kind of goal which is not just energy independence but truly global energy dominance. as i travel around the world in the capacity i have today as well as in the private sector, i believe there are three long- term competitive differentiators allowing the united states to win. when we think about competition with china, russia, the eu, other nations as a relates to

global economic competition, we win because the rule of law, we win because of freedom, and we win because of energy. it is a unique differential we have because we really can be not only self-sufficient but is down the road going to be a much better place if we reduce dependence on the middle east and reduce dependence on russia -- who received 30% of their energy needs for europe coming from russia, 50% of germany's. the west and our european allies should not be dependent on oil from russia. when we are able to produce it right here, it is not a good thing that china is dependent on oil from russia and the middle east. when we are able to produce it right here in the united states and even in places like montana. this not only will stabilize prices, it makes the u.s. and our allies more secure. many of us remember growing up in the days of the early 70s

and the arab oil embargo and that was a shock to the economy and the world, having that insular removal now from those shocks because of our significant revolutionary increase in oil production is a good thing for our economic international security. so this hearing is focusing on the impact of global oil prices. as i look at it, i see this as more of a supply and demand issue. we see a robust economy and more americans traveling, spending more money, that is a good thing. they have more money in their pocketbooks. this leads to more demand and the best way to check a rising price is to produce more. the u.s. wti crude prices are already lower than the global crude price with increased u.s. production, we can continue this trend leading to lower prices at the pumps for montanans. mr. mcnally, i am particularly interested in how the u.s. can play a larger or beneficial

role to lower all prices as well as geopolitical trends, many oil-producing countries also tend to be less stable. more volatile, or have ulterior political aims, sometimes adversarial aims. this can cause dramatic shifts in prices as we saw in the 70s and the 80s and even early 2000. mr. mcnally do you believe that with more active u.s. production and exporting of oil to our allies that the u.s. can play a stabilizing role in global oil prices? >> senator, thank you for that question. absolutely, the history shows the windfall in natural gas which is where the shale boom first started, utterly turned around what we were looking at when i was in the white house in 2003, becoming dependent on qatar. becoming as dependent on the middle east from gas as we were oil.

that changed completely to where now. it is unfortunate that the germans are becoming more and more captive to russian pipeline gas but at least our gas exports or our refusal of those imports and making them available to europe has weakened moscow's ability to impose prices on europe. that is unambiguously a good thing. lithuania and other countries, the trump administration the obama administration was quite powerful on this. the trump administration sees those geopolitical benefits. same thing with oil. the galloping of shale oil over the horizon in 2011 and 12 prevented the return to $150, in my view, because the market was getting really tight and disrupted at that point. we can expect those types of things going forward as we look at confronting a dangerous actor like iran or russia. our allies are more likely to support the united states if they can be reassured, not that we have a strategic stockpile, i hope you don't sell it off, but that we have and we keep open a production ability and export facilities that we supply that diversity which is

the key of energy security. >> thank you. a quick question to mr. braziel. in order to meet the u.s. and global demand, i believe we need to invest more than energy infrastructure including pipelines, refineries. having spent a career studying chemical engineering and been involved in manufacturing and operations most of my life, back to constraints, knowing what the constraint is, look at the supply chain. what do you believe we need to do to get this project up and running and relieve any of these bottlenecks to stop us from getting oil to the markets both refined and crude? >> most of the bottlenecks that exist right now actually exist for commercial reasons. there are certainly regulatory issues that could be addressed but in fact what really happened is that the crude oil market did not look to be nearly as strong as it turned out to be over the last two years. remember two years ago when we would've had to start building those pipelines, crude oil prices were a lot cheaper. so what happened was a lot of

producers just didn't sign up, a lot of shippers did not sign up for those two pipelines; they did sign up and the pipelines are now being developed as we sit here today, but like in the permian where the biggest constraints exist, it is still going to be about a year or so before those pipelines get yield. there is very little that the federal or state government can do in order to expedite that. what we can do in the future is make sure we don't get caught in that situation again and make sure that the companies involved have the right tax incentives and the right regulatory structure in order to be able to build a pipelines as fast as possible. >> thank you. earlier in this hearing there were references to the positive effects of the huge tax cuts for the richest 1% of people and corporations in our country. there was noted that most states' utilities have cut costs to consumers but they did so because they were required by the regulators to pass on the benefits of the tax cuts to

their consumers, whereas in the nonregulated entities, i.e. corporations, they have not done anything of the sort. they have not raised wages, they have bought back stock. i wanted to make that note. this is a question for mr. bordoff. hawaii has the highest gasoline prices in the country. it is around $3.78 a gallon in contrast to what senator dean said about the cost in his state. i'm particularly concerned with proposals to stop progress in fuel economy standards that can save drivers $8000 over the lifetime of a new 2025 vehicle. however, according to press reports, the trump administration will propose a freeze on vehicle fuel economy standards of the 2020 level and seek to revoke california authority to set automobile emissions recognized in the 1970 clean air act. mr. bordoff, what effect would

freezing fuel economy standards have on consumers and the u.s. and the overall effort to find alternatives to our national dependence on oil that you called for in your testimony? >> thank you for the question. it would slow those efforts, rising fuel economy standards. i think the evidence to date shows it could be achieved without significant economic harm and driving up the price of vehicles beyond the benefits both to consumers and the social benefits of reducing oil demand and greenhouse gas emissions. it would slow that transition. also i would observe that i don't think it's good for consumers to make decisions about long-term investments and where they live and what kind of car they will buy in the short term, these are things that they think about in the long term, not to mention automakers who need to plan for the long term. we will move to a position where potentially we try to

remove california's authority, i think 12-14 states have joined california. there will be apparently litigation about the authority to do that, several years of uncertainty for consumers and the industry about what the standards are likely to be, and whether there may be two different standards across parts of the country. i think it would be more constructive to bring everyone together as the last administration tried to do and find some compromise to figure out how in a cost-effective way we can continue to help reduce the oil intensity of the economy and encourage options and alternatives. >> you would say that the administration's proposal to freeze the standards is really not where we need to be. >> i think it is -- i don't think it is a constructive course for us to roll back the fuel economy standards that have been planned. >> this is a question for the panel. we realize, i realize that oil prices are set on the world market. in an interview with cnbc here

on friday, president trump stated he was willing to place tariffs on all goods imported to the united states worth some 505 billion dollars last year. i think you will have to recognize the geopolitical effects of these kinds of trade decisions. my question specifically is what impact would such tariffs have on the cost of construction in the oil and gas industry, the willingness of the industry to make new investments in the united states and the price faced by consumers at the gas pump? >> i will mention again, as an example, on the midstream site, three quarters of all of the steel that is used comes from overseas. primarily because it is not available locally. we test the refining industries the same way. we have a direct negative impact on project viability from tariffs on imported steel. the worst thing as i mentioned

was if this led to an overall trade war, that carries very negative implications for economic growth both domestically and internationally and that's the biggest threat. yeah, that is bad news to -- it is good to do what we can to get others to play fair but we have to be careful on how far we go. >> would the rest of you agree with that? that there are unintended consequences to these kinds of comments and pronouncements from the president and i think what i get from what all of you saying is that we are trying to go for stability here. in this market as well as what's going on in our own country and that's not what is happening now. thank you very much. >> thank you, senator hirono. >> mr. mcnally, mr. braziel, you mentioned the imo 2020. there was a whole section of

your talking points that you weren't able to get to due to time constraints so i will give you that opportunity now. i also referenced these imo international maritime organizations, low sulfur standard that is set to take effect in january 2020. the standard rule reduces sulfur limit in marine fuels and certainly we look to the environmental impacts, the positive impacts on health. i think the concern that is out there is that compliance isn't moving along at the expected rate which could pose a burden going forward. since we are talking about where do we go from here, those unknown factors are perhaps the things on the horizon that may have some unintended consequences. i would like an opportunity to talk a little bit about them this morning. can you walk us through the imo 2020 standard, the options for compliance and what it might

mean for the middle distillate markets. then whether you share the concern that i have raised that we could potentially see some price impact increases, where we might perhaps not expected, whether it is in my state for those who rely on diesel for heating or transportation or the folks in pennsylvania who relied on home heating fuel. let's have a discussion about that point >> thank you, senator. yes, the oil industry and market has been preoccupied with this issue for the last several years. subject for a whole afternoon's discussion. on january of 2020, the limit on sulfur emissions for what we call marine bunkers, fuel used in heavy oceangoing ships, this is across the ocean now, will fall from 3 1/2% to .5% sulfur, so very clean.

there are two options to comply, really. one is to put a scrubber on your ship. you could still use the dirty stuff but you scrub away the sulfur emissions. folks agree the shipping industry has not installed nearly enough scrubbers. and it is too late to put scrubbers on, so only a small fraction will have scrubbers. the most likely compliance option is to get cleaner fuel in your ships. so we will see a scramble away from what they call heavy fuel oil, what they have been using, the bottom of the fuel distribution, the heavy dirty fuel oil, 3 1/2% sulfur, stop using that and they will go and put lighter, much lower sulfur diesel, mainly diesel fuel, in their ships to comply. there is no phase-in, there's no credit treaty, it is overnight: they have to comply in january 2020. there is a concern and i know the iea has raises concern in their reports. the industry is unprepared but we haven't seen the scrubbers being built and we don't have the global level, the global level of the equipment to make

enough low sulfur fuel. so part of the solution unfortunately, will be the shippers coming to the folks who are currently using low sulfur distillate. home heating oil consumers, road diesel users, farmers and their tractor equipment, railroads, airlines. this is all the same kind of fuel we have already gotten that tends to be really clean and they will say, we really don't have enough and we've got to go get supply. we need to bid it away from you. now that causes price increases and now iea has indicated they expect a 20-2030% increase in the price of distillate next year. others have raised the concern that the actual crude price could go up because the refining industry was sort of scrambling to run more crude through the refineries and they are working pretty hard to make more distillate. while the environment will benefit, while human health will benefit from getting the sulfur off the ships, and our complex refiners in the gulf coast especially, they will as well because we specialize in making this high-quality low sulfur distillate.

some folks will do well. but for consumers, there's a real risk that for a period of years now, the lack of preparedness for a january 2020 start date will lead to a substantial spike in the price of consumer fuel onshore. >> so potential for 20-30% increase. you factor this on all of the other global uncertainty that potential for disruptions, that is not a very cheery way to end this hearing. mr. braziel or mr. sadamori, do you want to comment in terms of what we might be able to do to avoid these increases? >> the problem is exactly has he mentioned, we are going cold turkey on a particular day. if this had been phased in, both the shipping industry and the refining industry would've been able to accommodate things. i think what has everyone concerned is that when they wake up in january of 2020, the

rules will be changed. if there was some way to be able to mitigate that, and frankly i think there will be a way to mitigate that, there's probably going to be so much noncompliance that there will have to be some sort of accommodation made. that is likely and john and i have talked about at some point -- i think john has the numbers figured in. like 25% noncompliance in the plans that turner mason has put together. we think the same thing is going to happen. ironically, what it does is it makes light crude, shale crude, more valuable, heavy crude like canadian crude less valuable. which is actually a good news story for you as producers. in the united states for producers it helps us. >> it helps the producers? >> helps the producers. >> not necessarily be consumers. >> if you have folks in your state driving diesel, be prepared for what you will need to say to them because their diesel prices are going up in

january 2020. >> that is my state. people in alaska would look at this and say wait a minute, this is july 2018. you guys have plenty of time to figure it out. figure it out. mr. sadamori? >> i agree with the other witnesses. we also understand that not enough investment has happened on the ship or scrubbers. there's another option. using lng. it is the fuel for the maritime. it takes time and also requires an enormous amount of infrastructure investment. so what probably will happen is at the start of this new regulation, will be the industry will rush for a little bit amount of low sulfur fuel oil. and the maritime diesel. by the way, probably as low sulfur fuel will have to depend upon the same molecule as the maritime diesel. there will be a mismatch in terms of the refineries

procurement of the certain types of crude. so there will be -- we expect that even though we have not come up with any specific kind of numbers, percentage of oil price increase, we don't do that but we expect that there will be a very tight supply demand situation on very specific types of crude. of crude fuel. that's what we are concerned about. we tried to keep track of it. thank you. >> coming from three maritime states here, washington, maine and alaska, clearly we pay close attention to this. mr. auers, do you want to add anything to this? >> i agree with what rusty said and others have said, we definitely will have a bump in distillate prices. it will cause a bump in crude prices but in terms of bringing the crude prices down -- so where crude will head is difficult to say. our view and it is purely a guesstimate, what will happen

in 20 years, this is the first global wide product specification change, we have had low sulfur gasoline, low sulfur diesel in the u.s. and in europe and other countries and asian other places, this is a global wide specification change. it is impacting 45 million barrels a day of bunker fuel. so it will have a huge impact on the market. the converse of that is why the >> there a provision for weezer's -- waivers. the market will work itself out. when they see the problems that will happen, i think we will see use of some of that in the imo is one that has to obviously take action. we will probably see some steps taken by the and the u.s. is a member of the imo, certainly can have a voice and that. and to help provide some sort of way of phasing this in because there will be a disruption unless something is done.

some of that will come and our number of 25% of noncompliance, that is a guess. it could be higher. it could be a bit lower but it will be substantial because there's not a real uniform enforcement mechanism in the open water. other countries deed it to enforce on their own. it will be enforced by the us and europe but who knows what will happen everywhere else. >> my time is well over. mr. bordoff do you want to jump in here quick? >> i would say that i agree in part, i think there are a few mitigating factors. we shouldn't forget the significant public health benefits that come from reducing co2 emissions. cities will be moving away from diesel. the industry has known about these rules for many years. some have taken further steps than others to prepare including many u.s. refiners and u.s. shippers. i think injecting and that that's a level of uncertainty

could hurt the companies that have taken steps to prepare and inject an annulment of uncertainty where people are getting ready and maybe they should wait or force the transition period. as rusty said, it if -- if it is not the case, they could issue waivers and the lack of ability of low sulfur fuels. there could be pipelines built in the permian and there could be a period of adjustment. these often resolve themselves in -- response to price signals. >> hopefully. we have done a full round and we are starting around 2. we can interrupt and go to you, thank you. >> thank you madam chair. and ranking member. for this incredible discussion. i am bouncing between two hearings. i appreciate the opportunity to read your comments before hand, as well.

let me jump back to mr. mcnally, there was some discussion of this. in your testimony you discuss the energy impact of widespread usage of automated vehicles. estimates ranging from 60% decline in energy use to a 200% increase. that depends on which fuel they would use, oil or electricity. could you elaborate on what factors contribute to such -- that large estimate range and what policy recommendations would you make and the situation to keep energy costs on the low-end? >> sure, thank you for the question. when we think about robo cars or automated vehicles showing up, i think in the first instance we should realize this will provide transportation services to people that don't have them. people who are housebound and don't want to walk to the bus. we will vastly expand probably demand for transportation and it will be more efficient, it will be wired that it will be at

a big increase in demand for the convenience and the lower cost of travel, remarkable i don't have it at my fingertips that the chamber did a chart of the% of americans who are of driving age but don't have a license is higher, that there's a big number. imagine that will be opened up so the question then becomes what will fuel the vehicles? will they be electric which i think most people think or hope, in which case we can expect big climate and environmental benefits as long as we are producing electricity cleanly. there's the real risk in some of the researchers at and rolling over -- others have said it is not easy to figure out ev's before we figure out av spirit that robo car showing up in front of a house is a diesel or gasoline carpet remember the oil industry is getting more efficient, they are getting more efficient. we could see that 200%

explosion in fossil fuel demand. that would upend our consensus forecast of this decline in oil demand and we did go like this because once again, like back in 1912, we discovered a new technology and made the blessing of transportation even cheaper and easier for people. i would be happy to point to -- . some studies you're well. >> you talk about the geopolitical risks. to lessen the geopolitical risk, is it fair to say that if we were to go down the path of electric vehicles more so than anything else, that would lessen the dependence and address the geopolitical risks? >> i don't think so near term. there's not a lot we can do in terms of energy transformation near term. meaning the next weeks, months, years, unfortunately deaf it -- decade, it takes that long. so i think in our lifetime and

for the foreseeable future, we have to look at other things like strategic stock. >> i'm talking about here is long term. >> i am going to bet that we will be off of oil. we will have that transformation like we did from 1908 to 1915. it won't be government it'll be because of ingenious inventors will have figured out a new energy source, it might be hydrogen, could be electric, it could be biofuel. it could be something we haven't thought of yet. a new technology that will give us that transportation in a better way. when that happens we should stand out of the way. i don't know what it is, though. >> thank you madam chair. >> mr. mcnally do you want to put a date to that? [ laughter ] i hope my grandchild caesar, senator. >> i think the issue for us in washington since we are paying 452 million more than last year,

is the roller coaster that you all described and how we continue to diversify from our fuel sources and get off of it. we have very affordable electricity as it is today and a very high percentage of our consumers driving electric cars. i think we see the transition in the northwest, some great companies, even in the trucking industry like paccar making great energy efficiency moves. so we are definitely going to go as fast as we can. i wanted to ask mr. bordoff, in my opening statement i asked about the high volume of trading that is going on and whether that is something we needed to take a look at. i think for the volume of west texas intermediate trade has dramatically increased over the last five years. i think they have seen something like 276% increase in the number of trades per minute. is this something that the cftc

should be looking at and making sure that the automatic trading process is not creating some spikes or distorted the market from true supply and demand fundamentals? >> thank you for the question. it is not an issue that we have studied carefully. i will have that caveat. it is true that algorithmic trading activity is significantly in commodity markets and modesty derivative market since 2008. as in many other financial markets. i think the behavior of this type of trader, the implications of this type of market participation certainly merit further research. i think it has been limited to date in part by limited data transparency. i'm not aware of studies on the -- i have heard market participants adjust as you that

algorithmic trading may lead to sharper commodity price swings. and volatility. there was a research note from citigroup a week or two ago noting that some of the recent sharp selloffs included the week before stemmed in part by some element of machine trading. i will note it is important to recognize that even if algorithmic trading leads to greater very short-term price swings in traded benchmark crude prices, my colleagues may have of you on this but that doesn't necessarily mean the price moves upset the price of physical barriers paid by refineries and that the pice -- price paid at the pump it is worth studying. >> i was just going to say before miss brazil said, i hope he does have something to say. i think those who have been in the business have seen the unbelievable actions of the financial markets have great impact. mr. braziel? >> i mentioned that i spent 15 years as a trader. i have been on the other side. more trading volume in the

futures market and any kind of electronic markets is actually a good thing. it is because it creates more liquidity and that market. it becomes more responsive to supply and demand. getting back to what jason was talking about, you want financial markets to be reflective of what is going on in the physical market. the higher level of volatility, the horrible in the up trading you have the more likely it will be, the volatility comes from what's going on in the supply and demand scenario itself. >> in terms of the electronic trading, the algorithmic trading, the changes that happen , happen in seconds. whenever eaa puts out a new statistic, the price might jump a few dollars because of those getting in there but the impact goes away very quickly. so from the cs piece -- cftc

perspective, they made to look at it from a market perspective we have talked about this morning it is a non-event. we will follow-up the cftc. they had a settlement where they were concerned about somebody impacting that. i think the thing that we have learned is when the tighter the market, the more you want to have transparency to make sure they are not affected. thank you for the hearing this morning. there's lots to do to focus on this issue. we need to make sure that we are having -- i think, our colleagues have done a good job of bringing up these other issues. these investment for the future so i hope that will be looked at as a follow-up hearing. >> senator king, you had a following? >> i wanted to bring it back to why we are here. in maine, a one dollar change in oil and gas prices is $1

billion out of our economy. we are a relatively small state. those are the kind of numbers that we are talking about. it's really significant. i think it is important to remember that and anything, i thought it was interesting, senator dane said if price is going up, the only thing to do is to produce more. no, there are two things .1 is to produce more the other is to use less. that will refract -- affect christ just as much as increase in production. we need to keep focusing on and what worries me is the roller coaster that we started with. i'm not a great believer in government intervention in these things but i think we do need to think about the policy implications in the long-term price implications of the things that we do that increase the volatility because of that translates to people's ability to buy groceries rather than gasoline. i think it is important to

continue to ask those kinds of questions. i think the witnesses, this has been a very informative and important hearing. thank you madam chairman. >> thank you for that add-on, senator king. there are some things that we can control and some things we cannot control. you cannot control volatility that you say. with political issues and other nations. there are some things that are well beyond our control, natural disasters that bring about shortages that you could never predict. there are policies within our own government that we can look to critically and well sometimes were not able to accurately predict all of the consequences that are unforeseen or unintended. i think that is part of our job to try to reduce the volatility to the extent that it is possible, to be cautious and thoughtful and moderate in our policies.

that is not about approach. with that, gentlemen, thank you for your contributions this morning. this has been a very informative hearing. you have helped round out our thoughts here as members of the committee and i appreciate what you are doing in the broader global discussion. it has such immediate impact on our constituents, whether from maine or up to alaska. with that, thank you the meeting is adjourned.

wednesday on the c-span networks, the house returns live at 10 on c-span. at noon they consider for suspension bills including a resolution condemning violence perpetrated by the government of nicaragua. they take up a bill on health savings accounts. on c-span2, the senate continues work on a federal spending package, financial

services, transportation, housing and urban development and the agriculture department and related agencies. on c-span3, fda commissioner scott gottlieb said the for house subcommittee and that is five and 9 am eastern and then in the afternoon secretary of state mike pompeo breves foreign relations committee on president trump's meetings with the leaders of russia and north korea. that is live at 3 pm eastern. c-span's washington journal, live every day with news and policy issues that impact you. coming up wednesday morning, from statuary hall and the capital, members of the agriculture committee from both sides of the aisle discuss how president trump's trade and tariff policies are impacting their bottom lines. on the program, kansas republican congressman roger marshall, massachusetts democratic congressman and subcommittee on nutrition member james montgomery and senator

and agriculture nutrition and forced committee member steve baines. be sure to watch c-span's washington journal, live at 7 eastern, wednesday morning, join the discussion. saturday at 10 am eastern on american history tv. live all day coverage of the confederate conference but from james madison university in harrisonburg virginia. speakers include kristi coleman, ceo of the american civil war museum. and museum historian john koski. kevin walker, ceo the shenandoah valley battlefield foundation, caroline janie, purdue university professor and james robertson, author of the book after the civil war, the heroes and villains, soldiers and civilians who changed america. was the confederate icon conference saturday morning, starting at 10 eastern. on american history tv. on c-span3.

supreme court nominee brett kavanaugh continues to meet with senators on capitol hill. follow the confirmation process on c-span leading up to the senate confirmation hearing d the votes. watch live on c-span watch anytime on c-span.org or listen with the free c-span radio app. the nation's chief law enforcement officer attorney general jeff sessions spoke about three -- free speech on campus -- college campuses to a group of high school students. >> great to be with you. you made my morning, i have to say.