things but they don't necessarily get things done. in the case of trump is he's getting all these things done and people say, i didn't like this tweet or i didn't like how he interacted in this thing. i'm a results-oriented people. i look the at how our country is doing, are people making more money, is the country safer? net/net i think most people would generally agree that if we can get the right things done for the country, then that is a better place than someone just talking about the right things to get done. >> watch "after words" sunday night at 9:00 p.m. eastern on c-span2's booktv. the senate energy and natural resources committee held a hearing yesterday on oil prices, the role of the opec oil cartel and suggestions from iran it could disrupt trading. lisa murkowski of alaska chairs the committee.

good morning, everyone. the committee will come to order. we're here this morning for a couple of reasons. if and hopefully when, a quorum is present, we'll proceed with the business meeting to report four of our nominees for the department of energy but recognizing we don't have yet 12 members present, i'll go ahead with agenda item 2, which is a hearing to examine the factors affecting global oil prices. this year has been marked by greater volatility which has shown up in the prices being paid at the pump by nearly every american family and business. prices are notably higher than a year ago, so the question we're here to ask include, why is that? will it remain this way, and what, if anything, can we do about that? of course, that's what everybody really wants to know, where are we going with this. when i look at the global markets i see a number of factors pushing oil prices up but also a few significant factors that are also restraining them. on the one hand, global oil

prices are the direct result of strong economic growth. in some ways this is almost a tradeoff. prices were a lot lower when our economy was a lot weaker but i don't think that any of us would want to trade our remarkable pace of job creation and low unemployment to go back to those days. another factor leading to the higher prices is that global oil demand is rising, not falling. this is kind of economics 101. and the driver on this front is not the u.s., but much of the rest of the world led by emerging economies such as china and india. at the same time, we're dealing with the fallout from opec's strategy of artificially restricting supply from its members. there is no question that that has reduced inventories and pushed prices higher. we're also seeing the effects of supply disruptions across the globe from libya to venezuela to canada. on the other side of the ledger there's somewhat of a silver lining. we're seeing that while prices are higher, it's not as bad as it could have been.

that's largely because of significant increases in u.s. production. america's shale revolution has brought tremendous benefits to our country and the global economy. as we produce more, we're creating jobs, we're generating revenues, bringing a degree of stability and confidence to global markets. we've also made smart policy decisions like lifting the ban on u.s. crude oil exports that are allowing us to become a major power on the global stage. i think it's complicated enough to understand where we are today, but again, i think most folks are interested in figuring out what really lies ahead, where are we headed. will markets loosen up as production in countries like saudi arabia continue to rise? are we accounting for global demand? before are the geopolitical hot spots where substantial supply could disappear from the market at a moment's notice? and then we've got the wild cards that are out there. what will happen if we fail to build needed infrastructure in

the u.s., to ensure energy can be transparted from where it's 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 conditions? what will tariffs mean for the viability of domestic energy projects and our ability to access markets in countries like china? and what will happen as global spare capacity shrinks and we no longer have a cushion of production that can be brought online quickly? and also, what are the looming impacts of regulations like the international maritime organization low sulfur standards? and then, of course, front and center, front page on all the news right now, is what will happen with iran? i believe our best course is to continue with our efforts to produce more oil here at home, particularly in places like alaska, where we have the will and capacity to do so. that's why i believe it was the right move to begin to open the coastal plain of anwar to

responsible development while i support the new five-year program for offshore development. i think there's no substitute for u.s. production. for as long as we need it, even as we seek to diversify away from oil. here to help us understand all of this is a truly distinguished panel of witnesses from as far away as the international energy agency in paris. we have one witness, mr. mcnally who literally wrote the book on crude volatility. we have another, mr. bordoff, who has come full circle since he testified here in 2016 about the impacts of low oil prices. we also welcome mr. auers and mr. braziel who will share their perspective on the north american market. we're not quite to 12 yet. senator cantwell, i'll turn to you. >> thank you for scheduling a timely hearing on global oil

prices because every family and business across america is feeling the burden of higher fuel prices which is forcing average u.s. households to pay $155 more in fuel costs this summer's driving season as compared to last year's. gasoline and diesel prices are currently around 60 cents more than they were at this time last year. that's the highest we have seen in four years. my constituents are particularly aware of the prices at the pump since washington state drivers pay the third highest gas prices in the country. i believe even more than in some places in alaska, which i find hard to believe. but currently, drivers are shelling out $3.41 per gallon. that means that every gas station fill up costs washington drivers about $8 more than it did last summer. that means everything from boaters to people who are moving products that are key to getting product to market are paying more and making things more expensive. which means that's less takehome pay and higher pretail prices for the goods they transport.

given the impact higher fuel prices have on family budgets in our economy, we need to take aggressive action on all fronts to make sure we are policing these gas prices and markets. not only do we have international cartels artificially con training price, obviously lots of statements in the last couple of days are leading to uncertainty in the markets. what happens if the iranians do follow through on their threat to shut down the strait of hormuz? about a third of the seaborne petroleum passes through the shipping lane is three kilometers at its narrowest points. we also see in tight oil markets the opportunity for volatility and manipulation. we must continue to find ways to protect consumers on all of these issues and continue to make sure that we are breaking monopolies at the pump. whether that means continuing to aggressively look for alternatives to fuel markets and

solutio solutions or continue to focus on opportunities. i'd like to learn more about why record level oil production is not providing any relief at the pump. last month we reached a new production record of 11 million barrels a day, slightly behind russia's 11.4 million barrels a day. putting aside the fact that continuing to put that level of carbon in the atmosphere is unsustainable, america's increase in fossil fuel production seems to be only padding a bloated oil economy profit rather than helping the household budgets of many consumers. in fact, i read just yesterday this friday analysts expect exxon to post a 62% increase in quarterly profits to $5.4 billion. the reality is, is even as crude oil prices have doubled over the last two years, oil supplies have been relatively flat despite the u.s. crude oil production. that's because opec and other producers like russia agreed to

set supply quotas starting in january of 2017. the more we pumped, the harder we worked to make sure the prices stayed high. so it's very hard for us to drill our way out of this problem. the effective way to reduce this fuel cost nationally and individually is to beat the opec mond monopoly with competition at the pump. americans should be able to fill up with homegrown biofuels and we should continue to push for electric vehicles and lower operating costs for our consumers. members of this committee have been instrumental in increasing fuel economy standards but now the administration is trying to reverse that progress. reduce consumption of oil in the united states by 2.4 million barrels per day is where we were on track for 2030, saving consumers in the united states 130 $billion billion, but

implementing these policies and reducing oil consumption, we have learned also has been creating jobs. it credited for more than 288,000 automobile manufacturing jobs and 1,200 jobs across the united states. so, these alternatives are showing that we can produce pressure to -- as an alternative to gasoline supplies and we need to keep moving forward. unfortunately, as i said, the trump administration seems to be adhering to trying to tear down these alternatives. i also today want to talk to our witnesses about what else the executive branch could be using reducing its regulatory and investigative authority to make sure untoward things are not happening in our supply chain. recent one-day changes in the price of crude oil have raised the concern of speculators with automatic trading and algorithms. on july 11th oil futures had the

steepest one-day decline in one year. these dramatic changes in one day have caused market observers and analysts to raise concerns about automated trading. so, this is something i'll ask our witnesses about today. so, madame chair, obviously, all of these tools should be in our tool box to continue to focus on giving the american driving public the best opportunity to have low fuel prices. i look forward to asking our witnesses about these questions. >> thank you, senator cantwell. we do have a quorum present, so we will proceed with our business meeting to consider the four nominations for department of energy on today's agenda. we circulated this previously. it's in front of each member. we have terry donaldson, inspector general. miss karen evans, cyber energy and emergency response, dr. christopher fall to be director of office of science and mr. daniel simmons to be assistant secretary of energy for energy efficienty and

renewable energy. a roll call vote has been requested on the nomination of mr. simmons to be assistant secretary of energy for renewable energy. the question is on the nomination of mr. simmons and the clerk will call the roll. >> miss murkowski. >> aye. >> mr. lee. >> aye. >> mr. flake. >> aye. >> mr. deans. >> aye. >> mr. gardner. >> aye. >> mr. alexander. >> aye. >> missy. antwell. >> no. >> mr. hoban. mr. sanders. miss davano. >> no by proxy. >> mr. king. >> aye. >> miss duckworth. >> no by proxy. >> miss cortez masto. >> aye.

>> miss smith. >> no. >> by this vote the ayes are 14, nos are 9. >> there are no objection, the committee will now voice vote on block the nominations of miss donaldson, miss evans and dr. fall. members will be recorded in opposition at the request after our voice votes. so, are there any objections? hearing none the question is on the nominations of miss donaldson, miss evans and dr. fall. all those in favor say aye. the ayes have it. nominations are record ready favorably. are there any senators who wish to be recorded as no on the nomination we just favor impli recorded? >> madame chair, be recorded no on miss evans. >> you will be recorded as no on miss evans. any other members? are there any members who wish to make brief statements about any nominees who have been

favorably reported? i would note in the interest of time those statements can be included as part of the record. seeing no comments, that concludes our votes and this business meeting is adjourned. we will now turn back to our full committee meeting. i appreciate the members being here so we can expeditiously conduct this meeting. with this, we will now turn to our full panel. as i mentioned, we have a distinguished panel before us. we will begin -- we will begin with you, mrchlt sadamori. mr. keisuke sadamori. mr. sadamori is from the energy markets and security director at international energy agency. we welcome you to the committee. mr. robert mcnally, who i

mentioned in my previous comments is the founder and president for the energy group, welcome. mr. rusty -- is it braziel? chief and president of rbn energy, llc. welcome. mr. john auers is executive vice president for turner, mason and company. mr. jason bordoff is founding director for center on global energy policy at columbia university. we welcome each of you to the committee this morning. we'd ask that you try to keep your comments to about five minutes. your full statements will be incorporated as part of the record, but as you can see, we have a great deal of interest from the committee this morning and the words you have to share with us. so, mr. sadamori, if you would like to begin, thank you. >> thank you, chairman. chairman murkowski, ranking member cantwell and distinguished members of the committee, thank you for the opportunity to present the international energy agency's

view on the factors affecting the global oil prices. let me start by conveying his best regards from the ia executive member to members of the committee. for more than 40 years since the ia's establishment, the united states has played a critical leadership role in the iea. thanks to the shell revolution in recent years, u.s. is leading supply growth both in oil and gas, making enormous contribution to oil and gasoline supply security. the iea's role has expanded but oil markets and 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 steady oil demand growth and overachievement of the vienna cuts agreement from opec and non-opec producers and some supply reductions in some

countries. stock has declined from more than 3 billion barrels in january 2017 to 2.8 billion barrels in may 2018. and they have been below the five-year average since march. all this points to tightening market and the rise in prices from the low point of less than $28 per barrel for brent in january 2016 to to nearly $80 per barrel in may 2018. so, going forward, following factors should be considered -- the global oil demand growth is relatively steady at 1.4 million barrels per day, but there are signs of stress in some countries with oil price increase. many developing countries recently reduced or eliminated subsidies for the oil products, and so higher global oil prices more directly translates to the higher prices at the pump. with stronger u.s. dollar, some

countries in their currency terms have seen sharp rises in their domestic cost of oil. the current trade tensions, if escalated, could adversely impact the global economy with a knock-on effect on oil demand. there are several major supply uncertainties. the first is iran. at this time we cannot know how much iranian oil will be removed from the world markets by the u.s. sanction, but the recent indications point to the shortfall being significant. secondly, collapse of oil production in venezuela is continuing. production currently is only 1.3 million barrels per day, and could be below 1 million barrels per day at the end of this year. in libya, the recent strike against the oil infrastructure resulted in production falling from 1 million barrels per day to about half a million barrels per day. the situation seems to be improving, but we cannot be sure

if it stays there. disruptions are happening in other regions, including iraq, canada, north sea and brazil. under such market conditions, the decision by signatories to the vienna agreement is welcome in supporting stability to oil supply markets but it comes at the expense of the global spare capacity cushion. the united states is already the single largest contributor to the supply increase growing faster than the global demand growth. the iea, however, sees legal scope to revise it upwards even with recent price increase because of the constraints in pipeline takeaway capacity. the tight situation is not helped by the recent low level of investment in the upstream oil and gas industry. we should not forget production from existing fields is declining by more than 3 million barrels per day. that's about the size of the entire north sea field each year.

so, we are in a very volatile and challenging period. geopolitical factors even more than purified metals are in oil price. despite the rapid growth, oil will be the dominant field for the transport sector as well as important stock for the petro chemical products in decades to come. emergency oil stock system managed by the iea and its members, therefore, will continue to be critical to be prepared for the rainy day and, in short, stable functioning of global economic functions. for its part the iea is engaged in close dialogue with major oil producers and consumers both inside and outside the iea family and we are monitoring market to advice on any support that might be needed to ensure market stability. on behalf of hrch at the iea, thank you for inviting me before this committee. i'm happy to answer any questions. thank you, chair. >> thank you, mr. sadamori.

mr. mcnally, welcome. >> madame chairman, ranking member cantwell, members of the committee, i'm honored to be back before you today. i thought what i'd do in my brief five minutes is focus on three things. first, return to authentic boom/bust oil prices. secondly, factors pushing oil down and up in the near term, as the chairman alluded to. third, an oil issue that's been preoccupying us in the industry for years now, and, frankly, it's remarkable how little notice it's gotten in washington. that's imo 2020. before delving into the detail about the up and down, let me just step back and note that these haven't been normal oil prices in the last 15 years. you just don't see a near quintupling on crude oil without a modern war. but it happened from 2004 to 2008. you don't see oil prices fafl half a percent as we did in 2014 without a recession or sudden

supply surge. this is unusual in modern times. we have to ask ourselves why. since the beginning of the modern oil market, oil prices have exhibited a proneness to wild boom and bust swings. now, when oil was just a lighting fuel in the 1800s is wasn't a problem but when it became the world's life blood in the 20th century, it became a problem. this volatility, not just for the oil industry, but for you, for governments, industry, for airlines, for everyone who depends on oil, which is most of us. to vanquish oil's wide spring swing and stabilize prices, governments and the industry regulated production. and folks forget, the united states was the king of opec. specifically, the state of texas. the state of texas exhibited heavy-handed intervention in a market that would have made, forgive me, a mouse tongue blush. the texas commission met once a month for 40 years and they 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. now, why did the good folks in texas, who normally want to limit government and produce oil, why did they agree to heavy-handed intervention in the market? to stabilize prices. to vanquish that boom/bust we saw from the '20s and '30s. now, some folks thought that opec took over from us in 1972 and they lost it in 2008. now, some folks thought maybe shale oil would be the new swing producer. we saw that failed. $28 brent, $26 wti in 2016. that didn't work out too well. others think this new entity formed by saudi arabia and russia will be the new opec. i have my doubts but we can discuss this. the bottom line is this, but we haven't seen in four generations this type of volatility. no swing producer, nobody regulating supply, no peace in oil prices. now, turning to the here and now, as chairman alluded, we have forces pushing prices down.

supply is growing faster than demand. the iea, the eia, opec, we were barrel counters, all of us see the market loosening up as we go into next year. strong production growth in the united states. brazil, saudi arabia, other places. even with good demand, kind of pushing prices down. there's a lot of fear in the market right now with trade wars and the fed raising rates and the dollar being strong, which makes oil more expensive around the year. the concern is also forces pushing prices up and that is geopolitical disruption ricsks. this gets back to the spare capacity issue. when you have a swing producer regulating supply, they usually hold back supply. we call that spare production capacity. that spare production capacity acts like a fire department in a wooden city. when you get into a disruption or war, you want to call on the fire department. you call on the extra supply to

douse the fire before it burns down the whole city. right now spare production capacity is near zero. that's dangerous is light of the disruptions in libya, venezuela. in the oil market, few barrels make big difference in price. with zero spare production capacity and commercial inventories back to normal, the loss of 2.5 million barrels a day would be a big problem in terms of oil price stability. now, iran has threatened over the weekend to interrupt the 19 million barrels a day that flows through the strait of hormuz. that's a bigger problem. the biggest problem that those at the iea and in the oil industry prepare and analyze. while our military would clearly prevail over the iranian military in a conflict, i think we ought not be complacent how long that narrow strait would be closed. it's cleaning up the mines,

ensuring the insurance companies they can insure those ships to go through. i'm out of my last minute. i'll stop here and perhaps get into imo in the q&a. final quick statement, i wish i could confidently predict stable crude prices. that would be optimal. in 2012 i had the honor of testifying and noted crude oil prices had entered a new space mountain aera of boom/bust skic. we should all buckle up for a continued roller coaster ride on space mountain. thank you, madame chairman. >> thank you, mr. mcnally. mr. braziel, welcome. >> one of the reasons you have these hearings is because you want to get different views. rbn energy is a consultancy and market analytics company based in houston.

most of our work involves infrastructure analysis, production, transportation, processing for both crude oil and gas and natural gas liquids. so, you mentioned a few minutes ago that production is up to 11 million barrels a11 million barrels a day. in 2011 it was 5 million barrels a day so we're double over that course of period of time. that's why we call it the shell revolution. but i want to focus on the responsiveness, the swingness, if you will, bob, of u.s. production. what happens when prices go up? what happens when they go down. it's the nature of this responsiveness that i think has had such a big impact on global markets, and i'll explain what i mean by that in a few minutes, but let's first talk about a few fundamentals that kind of get me to that point. the big driver on all of this has been productivity improvement. productivity improvement that has radically changed the supply curve for u.s. oil production. today one rig can bring as much

as 5 to 11 times that one crude rig could do in 2011. the producers learned how to drill them fast. the result has been a dramatic reduction in the per-unit cost of production, in other words, lower marginal cost. over the past seven years, the u.s. is now shoving about 4.5 million barrels a day of this marginal production back into the global market, and that's precisely why opec found it necessary to reduce their production two years ago in order to support global prices and make room for u.s. production. 85% to the growth of the last two years since crude oil prices started kicking back up comes from five bases. anadarko and four others. it's even more concentrated than

that. almost all the growth from those five basins actually comes from 28 counties, a land area of about 27 square miles and a surface area about the size of louisiana. but that's today. the land area where crude oil production is economically viable, what producers called their sweet spots, expands and contracts with the price of crude oil. so, for example, if higher prices provide -- higher prices do provide higher revenue per well, so smaller wells, wells that produce lower yields of crude oil, become economically viable. so the sweet spots get larger when crude oil prices increase. of course, the inverse is eke equally true. that's what i mean by response sine responsesieveness. it's been a key in u.s. global markets. and it's going to get more responsive. our firm prepares 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 for the next five years, another one at $50 flat for the next five years. that $50 difference means a three-barrel-a-day change in the two scenarios. a relatively small result in crude prices results in a big change in u.s. production. the implication for the u.s. is now that we are fully capable of responding in a meaningful way to increases and decreases in price, enough to have a substantial impact on the global crude oil market. so as prices increase, drilling economics approve, producers drill more wells. prices fall, economics become less favorable, producers produce fewer wells and production volumes drop. but here's the key in this. the oil in the ground didn't go away. when prices are are low, production of those barrels are simply put on hold, waiting for a price signal in order to bring

those barrels to market. it takes time but it's almost like those barrels are in a storage tank just waiting for the high sign, for a signal to withdraw that oil and move it to refineries both in the u.s. and throughout the world. so the triggering mechanism, of course, is market price, not a government edict. of course, that's not to say that oil markets are free from governments, far from it. but that power has at least been constrained or limited by shale development or that's limited as shale production continues to grow. i think that's good for the country and forr the world, for that matter. i thank you for letting me speak today. >> i express thanks to all the senate members and committee members for allowing me to present my testimony which will focus on the downstream industry

in the u.s. for decades the u.s. has set energy independence as a goal but the current administration has recently upped that to energy dominance. while that might sound like political posturing, the refinery upstream and midstream -- since 2007 we have turned into being the largest importer to the largest exporter. it has moved from a shortage of 2.5 million barrels a day to a surplus of well over 3 million barrels per day. to maintain that position, they depend on things they have and will do well and a failure of competitors around the world. the free mark environment which they're planning to operate has been a key driving force. over the years, markets defend the herd as the main facility is involved in the most complex set of refineries in the world.

this allows u.s. refineries to run more difficult crudes, turning them into more valuable products than any other region in the world. they also have the deepest and most refined refinery in the world. combined with more flexible employment, work rules that exist in many other countries, this allows the u.s. to run their plants for safely and at higher operating rates. it allows them to perform maintenance activities at a lower cost despite high wage rates. the boost in refineries in recent years has been the shale revolution. it has allowed both oil and gas production to soar, resulting in low domestic natural gas prices, smaller refinery costs and particularly in europe and asia. more important has been the booming oil production which has substantively lowered the final

crude cost. building and running refineries is very complex regarding not only skilled but experienced manpower and operating maintenance, execution and planning efforts. many of those have been lacking in other parts of the world, in large part due to elevated marketing environments. our nations to the south in latin america particularly make 50% to 70% despite 90% in the u.s. this hasn't been for a lack of trying and expansion of green has been anticipated. much of the delays are by government planning companies by insufficient planning. those same issues of operating, as a result it has grown by 2

million barrels a day in the last decade. the export markets have been a necessity for help in the u.s. mining sector. even with the strong growth experienced in the last three years as a result of lower prices, there are still 9,000 barrels lower in 2017 and the peak demand year of 2025. despite this, friends in europe and japan were shutting down barrels of capacity in a similar environment. the u.s. was able to go to capacity of 1.5 million barrels a day. together the boom of domestic accrued gas production has been a major contributor in reducing the trade deficit. it's also led to a hearty degree of security where products had to be imported. this is particularly important. a prime recent example of this and a true compensation, last

year's demand and supply of harvey's devastation on the u.s. coast. it will be dependent on a variety of factors including geopolitical development in a changing environment both domestically and globally. new domestic globalization all could negatively impact u.s. refinery processes. perhaps a bigger threat in the petroleum industry could be more restrictive trade policies. tariffs on steel and aluminum could have a negative effect on importers. more impact still could be tariffs on crude and products themselves. the biggest threat could be the potential for an all-out trade war which leads to growing and economic growth and product demand. new regulations can also be positive for the industry and consumers. certainly the cut in corporal

taxes has and will need to more capital investment every segment as new products move above the hurdle rate. they move to lower transportation fuels and more stringent environmental rules, u.s. refineries have had to make those adjustments. there is a mandate to increase bunker sulphur in 2020 might be the single biggest event on the horizon, and while advanced refineries could be a major challenge to others. to close out my remarks, let me just say it's a critical resource to any country. it's important to the economy as a whole and consumers but a big asset. they have spent billions in an attempt to achieve this goal. the u.s. refinery system has risen to the top by being allowed to develop and grow in a true market environment. let's start examine the impacts of health on this vital

industry, the results on humans any legislation they consider. thank you very much. >> mr. bordoff, welcome. >> my apologies. mr. cantwell, members of the committee, thank you for letting me appear before you today. i was last here in april 2016 to testify about low oil prices at a time when prices had collapsed from about $115 a barrel in mid-2014 to the high 20s in early 2016 and they've since surged around to about $80. let me explain the factors that have delivered those swings and offer three observations about the policy implications of them. key factors in the 2014 oil price collapse included surging u.s. shale production, which you've heard about, and the decision by opec countries led by saudi arabia not to cut production in november 2014, widely condemned by many at the time as a war on shale. in 2016, after oil prices had fallen below 30 there are$30 a ,

along with non-opec countries including russia propped up prices. oil prices were covered in the mid-250s to 2017 and they began to surge for many reasons. one, opec worked and brought down excess inventories. they have been excessivily strong over the 10-year average and we heard from iea in light of the tragic economic situation. more recently several additional factors pushed our prices even further. president trump pulled iran out of the nuclear agreement raising concerns about the oil supply loss. there were short-term adages in canada and elsewhere, and all of this was exacerbated by fears about the historically small buffer of spare capacity, as my colleague bob mcnally has explained so well in our book series from columbia. and then prices fell again as opec countries announced they

would put more supply in the market. libyan supply came back on line, and the trump administration did three things. first, it signalled a softer approach toward the implementation of iran sanctions. second, it raised more fears about the potential for a global economic slowdown as a result of an escalating trade war, and third, it was reported to be considering tapping the spr. so what does all this mean for policy? first, it is impossible to predict future oil prices and few policy actions we have at our hands today, provide relief at the pump in the near term. so i think energy policy decisions, whether it's to reduce consumption or anything else should largely be made independent of today's oil price. one policy action that would reduce oil prices possibly, albeit temporarily, could be a release of the spr. i do not believe current conditions warrant that and there are better ways to mitigate the potential price impacts of reimposing sanctions on iran.

there are few signs of a shortage in the oil market today. risks still loom, and as i testified before this committee before, i believe they should avoid selling off this national security asset to pay for other priorities. second, the shale revolution has been trans fformational, but oi prices are still set in an integrated market, so that means when global oil prices spike, consumers feel it at the pump despite how valuable an import we are. shale can be ramped up and down more quickly. i do not think it's a true swing supply. the global market comes from how much you produce rather than that buffer capacity you might choose to hold, so when oil prices fell to $30 two years ago and soared to $80 this year, shale could not support the market. that job fell mainly to saudi arabia which is the only country that chooses to hold a meaningful amount of spare capacity.

third, the best way to reduce the exposure of consumers to inevitable future oil price shocks is to produce the oil our economy uses in the first place. cafe increases is one way to do that as well as reducing greenhouse gas emissions. while increasing production does not help consumers at the pump prices, it does help that reduce for demand can help the economy overall for higher oil prices by lowering import dependence. the more consumer spending on fuel circulates within the u.s. economy rather than floats overseas. the converse of that is why the u.s. economy saw much less benefit of the oil price collapse of 2014 and 2015 than previously would have been the case. because the consumer savings at the pump were offset by reduced oil-related investment, which is a bigger share of the economy now as a result of the shale boom. we heard about the

infrastructure bottlenecks. i think policymakers can facilitate responsible production without undermining needed environmental reviews and by avoiding a trade war. that threatens to raise costs of steel and aluminum or possibly lead to tariffs on exports. 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 with, again, the subject that everyone has been talking about this week, and that is iran. we've heard several of you mention the supply disruptions, the global disruptions that we have seen in venezuela and libya and certainly with the potential for iran going off line. so the question, and i think i'll direct this to you, mr. satemori and mr. mcnally. we've got a 100

million-barrel-per-day oil market, so where does this supply come from in this short term to meet the potential for a shortfall? and then if i can have you both discuss this issue of spare capacity. this is something that 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 had mentioned that really it's 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's 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 in addition to what else we have seen and how does the global spare capacity factor in and to what assurance do we have that we've got enough to take us through? mr. satemori. >> thank you, ms. chair. the question about where does the supply come from in the very short term, we have to take note of the fact of the agreement by opec and some of the non-opec-producing countries, they're still maintained. and of course they are producing a lot less than their target and also they are coming from the unintended production declines in countries like venezuela. but the fundamental agreement we understand in the last june meeting was that they would

increase production and lower the level of compliance to 100%. that means there is some countries in that group who is producing less intentionally, a lot less than their capacity. so while the normal expectation is the additional barrels should come from them. >> to what extent should the u.s. increased production play? >> in terms of the numbers, in our most recent report, we expect that those -- the opec members along the gulf coast of saudi, ue and could yskand kuwa should have spare production capacity. also the country that can increase production will be russia. indeed, we are already seeing that saudi and russia, they already started to open taps in june. so the increase is already

happening. so that's about the opec and some non-opec side the response to that oil cuts agreement. the united states, yes. the u.s. is increasing production at a very fast pace, 1.7 million barrels a day in one day in 2017. but in a sense the market already incorporated those very fast production growth in the united states. and what we are seeing right now is, as i said, there is the pipeline takeaway capacity which is some of the preventing further growth in the short term. of course, we understand that many projects are going on in places like texas, and those pipeline projects will be completed sometime in 2019. but before that, in the very short term, it is really hard to

expect u.s. production to grow significantly before the pipeline takeaway infrastructure issue is to be solved. >> mr. mcnally, anything to add to that? >> yes, madam chairman, this is something i thought about and worked with when i was in the white house security council with my colleague senator bordoff under president obama. we thought very much about this. the policy problem, again, even though it's 100 million barrels and we're only talking about a couple million barrel disruption, a small disruption can mean a big price spike and a problem for our economy. where do you go for quick supply because you can't bring on an oil field really fast. the first place you want to go, if you suddenly lost a couple million barrels of oil a day, you go to saudi arabia. we went there in 1990 and 1991. they were a little late in getting there. saudi arabia provided that before we liberated iraq in 2003.

that's the first result. that's what the fire department is for. you call the fire department. the problem is there is no fire department today. mr. sademori mentioned the saudis is going up. spare capacity we almost agree is 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 and we had extra inventory. so if we had to work it off a little faster, that would have been okay, we wouldn't have had to have higher prices. now the growing part of the world in asia and africa, we don't see those inventories. while the rich world's inventory is normal, the rest of the world is tight on inventory. if we were to draw down commercial inventory, it would put pressure on prices. that leads us to our last resort which is strategic stocks held in the united states and other countries, principally germany and japan. we unfortunately decided to sell off our strategic stocks to sell

budgets and expenses. frankly, in my view, were we to lose iran's 2 million barrels a day later this year and the next, and certainly were there to be a disruption in oil use, that would make a disruption. finally, the iea has a higher number for spare production capacity. i think it's above 3 million barrels a day because they count oil that saudi arabia could bring on but in several months. in history and the eia we have a stricter definition. it's oil you can get in weeks, four weeks, to be exact. the eia has another definition, about half a million barrels a day. however you count it, it's really tight and relative to the risks we face. >> thank you both. senator cantwell? >> thank you, madam chair, and thanks to the witnesses. you've painted, all of you collectively, a picture of what

the roller coaster looks like for the future, and i think that's the most challenging thing for us to get our minds around, is that the roller coaster is going to continue. so for consumers at home, it obviously can be very, very devastating. so to me i think mr. bordoff, you said it best, that the best thing we can do is diversify off of oil just because of that integrated market and now spare capacity issue, that even though we have upped production, we are not going to avoid still being wrapped around that global market and the challenges of that global market. so one thing i wanted to ask about, obviously everybody has talked a lot about iran. when we were focusing on high prices during the -- well, a decade ago, one of the issues that people put, or at least a lot of the oil executives would

say there is a terrorist premium, a threat of terrorism activity disrupting supply, so they would say there is something between a 15 and 20% increase in price just based on that fear factor. do you have some sense of what the iranian issue might be causing in the market today? yes, mr. bordoff. >> it's hard to put a dollar figure on it. we do see a move. it will take a harder or softer line implementing sanctions. a state official was in an anonymous briefing and said there would be no exceptions for iran oil purchases, so customers had to go to zero in november, we saw oil prices spike i don't know how many dollars a barrel, and then administrators walked that back a little bit.

i do think that tool is an important one we should remember. i think the petroleum reserve is designed to deal with short-term temporary severe supply disruptions, not the potential of a long-term supply loss for 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 and make sure we were imposing on paying iran without imposing shooting ourselves in the foot at the same time. >> you're saying both trade wars and this issue are causing some level of increase in price. >> well, i think recently it's had a little bit of the opposite effect because the new sanctions that were announced -- sorry, the new tariffs that were announced against additional chinese goods raised that the trade war could be worse and that had a negative impact on the gdp growth, and the gdp growth is a very strong factor of how strong oil demand is and

it could push prices higher in a global market. libya is one, venezuela is another for potential conflict in the middle east and elsewhere as we've seen in social media and other places the last few days. >> so what did we get in the tax break oil plan we gave to other countries? months later we gave a $4 billion tax break, a new one in addition to the lowering of the corporate rate, we gave them additional foreign investors, and yet here we are paying higher gas prices. what did we get out of that? >> i don't know that i can comment specifically on what was in the tax bill. the general point about increased production and to what extent it helps consumers at the pump. i think in your opening remarks you made the comment that we have increased production, yet prices have still gone up.

that's partly because prices are set in a global market. there is a limit to what shale can do as extraordinary as doubling oil production has been. this has been a five-year increase of oil production in any country. that is a staggering outlook of what oil was not that long ago. if that had not happened, we would be facing a different oil price outlook right now. >> i don't think that's fair use of the taxpayers' money to give oil companies a huge tax break and now we're seeing a spike in taxes. i would think about this issue on what can we do on the spare capacity side? the chair and i are both very interested in making sure that we worked with secretary moniz 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? why not look at creating more mechanisms for industry to have

more spare capacity? they have a reserve as it relates to -- we're 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. so what can we do now to help create, if spare capacity is such a big issue that's controlled by somebody else, the saudis, not us, what can we do? >> we don't have the ability that a country has to spare capacity. the extent that shale grows is due to economic decisions of thousands of independent actors throughout the united states. companies hold 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 were used by

the government, but that is, again, sort of extraordinary circumstances. it raises the question of whether the 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. i was going to make one other point in that we're talking about how shale can be a swing supply force and ramped up quickly. that comes at a cost, and i don't need to tell senators here for oil-producing states, and they lose their jobs when the school funding base soars and collapses, volatility in output can be difficult for communities to manage even though it may have a benefit in stabilizing global prices. >> i'm way over, but i would say, yes, i endorse your statement that the best thing to do is get us off the roller coaster by diversifying off of oil. i endorse that. in the meantime, i'll write

something for a question for the record, madam chair, on this issue, but i do think europe has looked at jet fuel as a significant way of increasing supply, so we'll ask that for the record. thank you. >> senator gardner. >> thank you, madam chair, thank you to the witnesses for being here today. i want to talk a little bit about the tax cut conversation, because i think in the context of other energy costs, if you look at utility rates, for instance, 101 utilities have cut their rates as a result of the tax cut. that's $3 billion in savings to the american people, so i think it's important to talk about all the ways the economy has grown as well as people saving money because of the tax cuts in every congressional district. i wanted to ask you, mr. mcnally, a little bit about concerns i have on state policies. there may be some efforts in colorado this year to once again try to ban oil and gas production. the eia estimates 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 with that level of production? >> thank you, senator gardner. what we would do in that case is forgo an opportunity to avoid a real problem. if you look back at 2011 and 2012 when crude oil prices were $100, gas 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 there a$150 a barrel in 201 is because shale oil production kind of galloped over the hill and 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 open for permitting, you have to have openness to resources, the takeaway capacity, because all energy production needs a solo license to operate. but you don't want to have across the board bands. if we didn't have something like that, we wouldn't have had the gas boom earlier which changed things in the atlantic and forced them to loosen for? across the board bans would have hurt us geopoliticalically across the board and we hate to think of what we could lose if that happened. >> if you could just tell us about the pipeline and what it could mean for security in europe and ukraine. >> i think i would like to refrain from making comments on

those projects, but in general terms, we think the gas supply security would be a very crucial incident for the european countries. so the fundamental question is how they can really diversify the source of supply in the real sense. of course, that also comes to the issue of kind of transit roots, so whether they can secure a deal, kind of a diverse way in that sense. i understand that various discussions are going on, so 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 european energy security? >> it may not be appropriate to talk about a hypothetical kind of situation, but i recall in the g-7 energy minister meeting,

there was an agreement by the energy ministers of the leading -- the countries of the g-7 that the energy resources, the energy should not be used as a weapon. so the supply needs to be secured. i think that would be a very important detail. >> i agree with that. has russia used their energy as a weapon? >> so i'm not talking about the specific behavior of specific countries. what i'm talking about is kind of a general agreement made by -- >> would you consider shutting off a pipeline to a country to -- perhaps in the middle of winter, shutting down that supply? is that utilizing energy as a weapon? >> i don't mean to talk about the use of energy as a weapon,

but the recent history, back in -- i recall that was in 2008 and 9 and again 2013, there was a concern in consuming countries about the stable supply of their natural gas. and that was in the middle of winter. so the gas was intensively -- a lot used for their heating purposes of the building. and unlike the electricity who has other generation sources like coal or other resources, when it comes to the kind of heating, based on the infrastructure type seating, it is hard to find those. that led to the intensive discussions inside europe about how they can secure. >> thank you. i'm out of time but i am concerned about the security of energy, and i think we've seen one country use it as a weapon.

and that's russia. and to see europe become more reliant on that is a concern. >> thank you, madam chair, and thank you all for being here today. very interesting testimony. as i listen to you, it's really clear that we can see that production in this country has grown tremendously over the last decade, and yet obviously we are still susceptible to rising prices because this is essentially a global market. and 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. and mr. bordoff, at the end of your testimony as senator cantwell remarked, you make a point that i think is really important. the best way to reduce federal oil shocks is by reducing our o

oil, and it will be interesting to see what the trump administration will do. in minnesota, the strong efficiency standards that were replaced by the obama administration are estimated to have saved consumers about $50 million. in 2030, if those standards were left in place, the average household would be about $3,000 richer. >> it creates jobs in our united states because, so could you talk more about the role that these are playing and our ability to control higher prices? >> as i said in my testimony, thank you for the question, senator. gasoline prices are set in a global market, so whether -- regardless of how much we're 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. u.s. shale production can help as an additional source of supply and putting another 5 million barrels a day on the market certainly has. but fundamentally reducing the energy and intensity of the economy, i think, is what makes it most resilient to oil-priced shocks, which i think is inevitable. bob wrote a whole book about it. we'll see prices go up and down and they don't have the ability. so i think policies that help reduce the energy intensity of the economy and improve energy efficiency for equal changes as well as climate change. >> does anybody else want to comment on that? thinking about particularly the opportunities around keeping vehicle efficiency standards in place in order to help protect

consumers from price increases. >> i'll say a few things on that. efficiency standards are good, but as i made a point in my remarks, the free market and taking leashes off this wonderful thing allows them to integrate and improve frequency, and they'll do that. having efficiency standards that are too regimented and too fixed can cause situations where we're not creating the optimal environment to create the most efficient decisions whether it's on fuel deficiency or anything else. it's important to keep in mind to provide -- allow the market to do its thing, i always look at how a football game or basketball game is officiateoff.

government should play the role of an official. an official does not flag happy or call ticky-tack fouls, but it keeps the game moving and allows teams to make the decisions and not play the role of coach. >> the challenge -- i'm hearing your point, but i think the challenge is the way the prices are set don't always include all of the extra nalaties included in that price. for instance, bio fuels appear to be higher cost than oil, but if you consider the low-carbon fuel standard, if you account for all those costs, the price is actually competitive, but of course those costs aren't assigned in the market. i don't have too much more time, but i think that's a really important point here.

mr. bordoff, i would love to follow up with you on this. what is the benefit to consumers if we develop a bio-carbon fuel standard in order to consider all those issues. madam chair, i know i'm out of time, but i want to note that i'm leaving to go to the agriculture committee where we'll be taking up the issue of the -- there's some discussion about how speculation is affecting oil prices and what we need to take a look at that. the agriculture committee is holding a hearing right now on the nominee of the ctfc commissioner. this might be one of the things we're discussing and i appreciate that being raised here as well. thank you. >> senator cassidy? >> gentlemen, i enjoyed your testimony, all of you. for the record, some of you mentioned we sold off a portion of it, but we haven't sold yet.

we have a way of timing the market by selling high and replenish back low. theoretically i think it's 2023 to take advantage of high market prices. a win for the taxpayer but also 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 put out, the companies accelerated and planned for the early 20s because of the five-year depreciation. so midstream is responding to our tax bill and that would be one answer to senator cantwell's problem. the other thing i want to point

out is a delay that occurred in the last administration on the construction of the keystone xl pipeline has definitely created a supply constraint. gulf coast refineries use that oil from the canadian tar sands and from the balkan. the last administration put in constraints and now we're complaining about higher gas prices when it was the previous administration's policy that contributed to that. i also wish to point that out and we would not be talking about midstream constraint had there not been some strategies of the previous presidential administration. all of that said, i've ugsed up two minutes. let me just 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, say, 60. and that kind of drove prices

down. we've now shaken up the production market, knowing that you know this but just for context -- we've shaken it out so those cushioned to get through the low price period survived. in a sense, because prices are up, more fields will be developed. inevitably there will be some that again hedge, but they will bring out -- so somebody mentioned or i've read in my state, austin chalk, which is coming on line and is going to be at least in the near term an intermediate, a new source of production which probably will maybe overproduce for a little bit? any comments to loosen the intermediate? maybe six months from now,

making a higher part of these products? >> austin chalk certainly will. the reason austin chalk works is exactly the reason you said, is because the u.s. supports drilling in austin chalk and the others we mentioned a few minutes ago, too. so what's happening in the market is, in fact, giving us the response we would expect. now, shale in the united states is not going to be a swing supplier getting to your four weeks, whichever one you guys set -- >> four weeks. >> we really can't expect relief until, say, after labor day, because not only will summer driving season be over, plus the russians going into winter has to stay at full production. is that a fair statement we can't expect. the forward price of crude oil

in pest texas. that's the place we've been talking about here for the most part. that price in 2023 is $55. so going back to dr. cantwells. i could make an argument that all the uncertainties add, they'll do it at $15. keep in mind, then, back to your decision you have to make when you want to do something with the spr. >> it is in a condition to sell it, it just has not been sold when the capacity amendment and hark is 55 bucks on the consumer

market. if i was a trainer 15 years into my career, i'd sell now. >> you mentioned, plausibly we can say that with the keystone xl pipeline being built, the intermediate being burned from. and then i'm told by the supermajors that they're going to the competence 1 to 4 years which may account for the $54. it is something i believe the eiu and the united states believe it will be no more than the lion's share of growth. as long as we remain open in

production and permitting, we can expect that to expand. if i may in the spr, i was never a trader. but i am a student of history. in 1996 congress and president clinton last sold spr crude for budget expenses in '97. 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, the national security council after 9/11 and saw the overfilling of the spr at much higher prices. so i'll predict, and i've predicted before, we may think we're selling high. but i predict we will put those barrels back in and may have to buy them from the chinese at higher prices after the next emergency. i agree with mr. braziel not on selling them now. i think we should hold them now. >> it's just a matter of time in the market.

i have more questions but i ran out of time so i yield back. >> some people didn't think we should have sold. senator mench? >> i agree, madam chairman. i just want to make it as simple as i can. we're producing more oil than we've ever produced on a daily basis. that's an accurate statement, correct? then for 40 years we froze our exporting ability of oil from '75 to 2015. and now we've opened that up since 2015 with twice the production that we've ever had. the people back home in wv est virginia are asking, how come the prices are going up? if we're so rich in technology, and i've heard all the comments today, it's hard to go back and talk to someone that we have more than enough. are we producing for the benefit of the united states market?

which one do you think is getting the best play on this? either one or both of y'all. yeah. >> senator, as jason bordoff said, it's our pump prices in montana or west virginia are all set in 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 spiked in the united states -- our main customer and our main purpose and our constituency is the. what would you predict a spike that would concern us that the americans are paying to stabilize a global market? americans are paying a higher price than normal.

>> which spike group -- >> is there a ceiling? >> there is. when i think about the roller coaster in space mountain we're on, i'm really worried about how we diagnosed the price and if we don't win, we go back to 4, $5 per gallon, and i would think we have a critical mass, it concerns us that we're carrying this load. we're asking people to accept the new technology and production and more pipelines and everything is going to benefit our economy. they don't see it benefit to them. that's where wee get pushed back. i want to move on to something very quickly on natural gas. west virginia, i think you know about marcellus butico, so we've

hit some pretty good opportunities and we're producing an awful lot of liquids. those extreme visibilities down in the southwest. i've been told talking to rick perry, and we were governors together. moving up the houston channel, what it does. it disrumpts the energy chain ad industry markets in america. we're trying to get a storage hub strategically. you all know enough about that. have you looked into it enough? >> i've looked it up so i'm genuinely familiar on what it would do to we're very vulnerable and every time we have an oil production, we've

been blessed. >> the ability to go multiple directions with any particular hydrocarbon is a good thing. that's what the hub is going to do. >> yeah, with all these natural liquids that we have with a global supply, even, because we're exporting that, too. the weekend -- there's a new pipeline that's being built in the philly, so you want that pipeline to be delivered relatively soon. >> yeah, but we want to bring for our national interest and concerns, but also we can create a whole new, cracking in all these things that need to go in line down stream. >> it will be a big thing.

>> we have one basket right now. do you all believe that most of our energy eggs are in one basket as far as production, refineries, everything down in the southwest? >> you're moving a lot of methane to the gulf cost right now. that's one basket. i illustr ativ ely -- >> i think it would help the resilience of the united states markets also. >> senator king? >> thank you for calling this a confessional hearing, and well, you all. it said oil prices in the future can always be the opposite of what you think today. that's proven true if you think

thir high. we have more conservation. if you're higher than low. a couple very specific questions and we have a limited time just like you did in your statement, so try to be as brief as you can. one is what is saudi arabia's cost of production? anybody know? >> it would be in the single digits, $5, $10. >> so they can sell a single barrel of money and make money, they just don't make as much? >> their company would fall apart, but they couldn't meet their amount at that level. >> i want to add something to

that. that's true on shale production, incremental new production, it's much higher. >> are there estimates -- is there a limit to the shale oil production that we have or do we know, you know, sort of like produce i believe reserves? is there any upward limit? is there a finite capacity here? >> it depends on the price. the price, the more you can produce. >> because most economic wells are suddenly economic. >> that's exactly it. so if the price does go to $75, we'll produce more than if it's $50. >> so 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? >> there is a wide -- to some

degree pulling iranian oil off the market is i think priced in, but there is a wide range of views how severe the impact of imposing sanctions would be from maybe half a million barrels a day to 2 million barrels a day, and that's why how strict would be on enforcement of sanctions has an important effect on the market. >> there is an improved spare capacity, so 2 million a day may be a spare supply, but it has an increase on prices, is that correct? >> if they actually pulled 2 million barrels off this year and next year, it would have an impact on the markets. >> i think we agree that the level we're talking about strategic petroleum would be con served, is that right? >> beyond a few days would be a genuine capacity. >> what size of the strategic petroleum reserve? how many million barrels? >> i believe it's 670 million

barrels is the latest in the u.s. i believe we have sold off a little bit of that over the past few years. we're a little over 700 at the top, so we're down to about 670 million barrels. >> sales are projected to bring it down to 4 over the decade. >> so doing the arithmetic, it would be about a month. >> senator, if we think about that, though, it's not the stockpile, it's the flow rate. they said they can flow at 4 million barrels a day. >> so even the strategic petroleum reserve is not instantly fully available? >> not with japan and germany coming in. we could cover iran at 2.5, but not straight at 219. >> that's probably why the modernization for the fpr was sold and funding was made important to increase that flow

rate. >> and the flow rate is a technical constraint? >> yes. we built the reserve and pointed the pipes north because we thought we would be taking oil off and we would have to feed our refineries. now we need to export that oil mainly and get it out. we have to move the pipes around, but there's been degradation in the logistics in it, so forth, and that gets into it, as well. >> when we were projecting global demand, what do we think of electric vehicles and conservation? conservation and electric vehicles have moved faster than people thought they would. and i think you mentioned the principle use of petroleum is transportation. >> yes, sir, we have our eggs all in one basket on transportation. it's all about oil. jason bordoff center on energy just came out with a fabulous study that looks at the 15 forecasts from governments and others about electric vehicle penetration. and it costs some -- there's some skepticism there about maybe we're being a little too optimistic about how quickly

batteries will fall and consumers will take them up. folks say, if you took a picture in 1910 and 1912 in manhattan, you would see horses in one and cars in the other. why can't we do that? the reason was, we developed an energy source and a technology that consumers found affordable and took up really quickly. and evs aren't there yet. they may be, but they're not there yet. so there may be a little bit too much optimism in some of our official forecasts. we all hope we get there. but i think we should be pragmatic. we were on horses for 5,000 years, we may be on oil for a little longer than folks think. >> as for the circontribution f the ev, the central scenario of the world energy outlook last year, 2017, assumes that the evs will expand rapidly to 300 million vehicles by 2040. but the displacement of oil, we are limited to 3 million barrels per day with that. so a lot more contribution -- >> that would only result in going to 300 million in electric vehicles would only result in a

diminution of 3 million barrels a day of oil? >> that's right. so the light-duty vehicle oil consumption may decline a bit, but there are heavy-duty trucks, ships, airplanes, and also field stocks. all in all, we expect that it's really hard to see the oil demand peak before 2014. that's the conclusion. >> i'm out of time, but one more answer. what's the proportion of transportation versus petrochemical feed stocks in the use of oil today? >> at this moment, transportation is by far the largest demand, in oil. >> 70%, 80%, 60? >> excuse me, i need to go back, but something like 60%, in the transportation sector. and 30%, also, in the petrochemical feed stock. but i'll get back to the preset number. >> thank you, madame chair. >> thank you.

>> chair mccowski and ranking member cantwell, thanks for having this hearing. in montana, the average price of fuel is around $2.70, $2.80 a gallon, which is similar to, probably a little lower than the national average. for most montanans, fuel prices are their main interaction with global oil prices. and when you're in an ag-rich state like montana, our number one economic driver, we talk about farmers about inputs and outputs, fuel prices is a very important input, not to mention impacts on fertilizer as well. for montanans that work in the oil fields, the energy sector, global energy prices can determine if they come to work tomorrow or not. so this is an important issue for a state like montana. i'm 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 approve liaising in area 1002 in alaska.

we could reduce some burdensome and only adding cost 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 i used to do in the private sector, i really believe there are three long-term competitive differentiators that allow the united states to win when we think about competition with china, russia, the eu, other nations as it relates to global economic competition, we win because of the rule of law, we win because of freedom, and we win because of energy. it's a unique differentiator that we have here, where we're not only self-sufficient, but isn't the world going to be a much, much better place if we

reduce dependence on the middle east and reduce the dependence on russia, where we see 30% of their energy needs for europe coming from russia, 50% of germany's. the u.s. and our european allies should not be dependent on oil from russia. it's not that good thing that china is dependent on oil from russia and the middle east, when we're 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, you remember growing up in the days of the early '70s in the arab oil embargo, and what that did in shocking our economy, shocking the world's economy, to having that insular removal now from those shocked because of our significant and revolutionary increase in oil production is a very good thing for our economic and our national security. so this is focusing on the impact of global oil prices. as i look at it, i see this as

more of a supply and a demand issue. we're seeing a robust economy. we're seeing more americans traveling. they're spending more money. that's a good thing. they have more money in their pocketbooks. this leads to more demand and the best way to check a rise in price is to produce more. the u.s. wti crude price is already lower than the global brent crude price, with increased u.s. production, we can continue this trend, creating lower prices at the pump for montanans. mr. mcnally, i'm particularly interested in how the u.s. can play a larger, more beneficial role in lower oil 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, as i

mentioned early in the '70s, '80s, and even early 2000s. mr. mcnally, do you believe with a more active u.s. production and exporting of oil to our allies, the u.s. can play a stabilizing role in global oil prices? >> senator, thank you for that question. absolutely. the history shows, again, our 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 independent on the middle east from our gas as we were from oil. and that changed completely to where now, it's 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 in making them available to europe has weakened moscow's ability to impose prices on europe. and that is unambiguously a good thing. and with lithuania and other countries, the obama administration was quite

powerful on this, the bush administration, the trump administration seized those geopolitical benefits. same thing with oil. again, the galloping of shale oil over the horizon in 2011 and '12 presented a return to $150 in my view, because the market was getting really tight and disrupted at that point. and 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 just that we have a strategic stockpile, and i hope we don't sell all of that 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. i've got a quick question. in order to meet the u.s. and global demand, i believe we need to invest more in energy infrastructure including pipeline and refineries. having spent a career involved in manufacturing operations for most of my life, you're only as good as what the constraint is,

as you look at a supply chain. what do you believe we need to do to get this project up and running and relieve any of these bottlenecks that stop us from getting oil to markets, both refined and crude. >> most of the bottlenecks that exist right now actually exist for commercial reasons. there certainly are 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 have 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 didn't sign up for those new pipelines. they did sign up, those pipelines are now being developed as we sit here today, but like in the permian, where the biggest constraints exist, it's still going to be about a year or so before those pipelines get built. and there's very little that the federal or the 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, have the right regulatory structure, in order to be able to build pipelines as fast as possible. >> thank you. thank you very much, chairman. >> thank you, madame chair. 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, it was noted that most state 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 non-regulated entities, ie, corporations, they have not done anything of the sort. they have not -- have not raised wages. they have bought back their stock, et cetera. so i just wanted to make that note. this is a question for mr. b

berdoff. hawaii has the highest gasoline prices in the country. it's around $3.78 a gallon, in contrast to what senator dane said about the cost in his state. and i'm particularly concerned with proposals to stop progress on fuel economy standards that can save drivers $8,000 over the lifetime of a new 2025 vehicle. however, according to press reports later this week the trump administration will propose to freeze vehicle fuel economy standards at the 2020 level and seek to revoke california's authority to set automobile emissions recognized in the 1970 clean air act. mr. berdoff, would affect would freezing fuel economy standards have on consumers in 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, senator hirono. it would slow those efforts. rising fuel economy standards, i

think the evidence to date shows can be achieved without significant economic harm in driving up the price of vehicles beyond the benefits, both to consumers and the social benefits of reducing oil demand and greenhouse gas emissions. so it would slow that transmission. i would also just observe that i think that this is -- i don't think it's good for consumers making decisions about long-term investments and where they live and what kind of car they're going to buy. these are things they think about in the long-term, not to mention automakers who need to plan for the long-term. so we're going to move to a position where potentially, we try to move california's authority. i think 12 or 14 other states have joined california. there's going to be a period of litigation about the authority to do that. this creates several years of uncertainty for consumers and for the industry about what these standards are likely to be and whether there may be two different standards across different parts of the country. i think it would be more constructive to bring everyone together as the last administration tried to do and

try to 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. >> so, you said say that the administration's proposal to freeze these standards, that's really not getting to us where we need to be. >> i think it's a -- i don't think it's a constructive course forward to roll back fuel economy standards that have been planned. >> this is a question for the panel. we realize -- i realize that oil prices are set in the world market. so in an interview with cnbc aired on friday. president trump stated he was willing to place tariffs on all goods imported into the united states, worth some $505 billion last year. i think that you all have recognized the geopolitical effects of these kinds of trade decisions, but my question, specific question, what impacts 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 in the price faced by consumers at the gas pump? any of you care to respond? >> well, you know, i mentioned again, as an example, you mentioned on the mid stream side, three quarters of all of the steel that's used comes from overseas, primarily because it's not available locally. we're finding industries same way, if you have a direct negative impact on project liability from tariffs on imported steel, but the worst thing, as i mentioned was, if this led to overall trade war, you know, that carries very negative implications for economic growth, both domestically and internationally. and that's the biggest threat. so it's bad news. it's certainly good to try to do what we can to get others to play fair, but we've got to be careful on how far we go.

>> would the rest of you agree with that? that, you know, 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 are saying is that we're trying to go for stability here in this market, as well as what's going on in our own cup, and that's not really what's happening now. thank you very much. >> thank you, senator hirono. mr. mcnally, mr. brazil, both of you mentioned the imo 2020. in fact, mr. mcnally, you said that you -- tlahat was a whole section of your talking points that you weren't able to get to, due to time constraints. so i'll give you that opportunity now. i also referenced these imo, international merit time organizations, low sulfur standard. these are set to take effect in january of 2020. the standard will reduce sulfur limits and marine fuels.

we'll certainly look to the environmental impacts, the positive impacts on health, but 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. and since we're talking about where do we go from here, those unknown factors or perhaps those things that are out 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. and whether you share the concern that i have raised that we could potentially see some price impacts, increases where we perhaps might not expect it, whether it's in my state for

those who rely on diesel for heating or power and transportation or the folks in pennsylvania that rely on home heating fuel. so can we have a discussion about this imo 2020? >> yes. the oil industry and market has been preoccupied with this issue for the last several years. a subject for a whole afternoon's discussion, but on january 20 -- january of 2020, the limit on sulfur emissions for what we call marine bunkers -- so fuel used in heavy ocean-going ships. this is across the ocean now, will fall from 3.5 to 0.5% sulfur. so very, very clean. there are two options to comply, really. one is to put a scrubber on your ship. so you can still use the dirty stuff, but you scrub away the sulfur emissions. folks agree, the shipping industry is not nearly installed enough scrubbers and it's too late to put on scrubbers. a small fraction of the ships will have scrubbers. so the most likely compliance option is to get cleaner fuel in

your ships. so we'll see a scramble away from what they call heavy fuel, the bottom of the distillation, the heavy, gunky fuel oil, they're going to stop using that and go in and put lighter, much lighter sulfur mostly diesel fuel. there's no credit trading. there's a concern, the iae has raised this concern in their reports that the industry is concerned, we don't have the equipment to make that enough low-sulfur fuel. part of the solution, unfortunately will be the shippers coming to the port who are currently using low-sulfur distillate. home heating consumers, road diesel users, farmers and their tractor equipment, railroads and

airlines. we've already gotten that to be really clean. they'll say, we don't have enough, we've got to comply. that will cause price increases. the iae has indicated they expect a 20 to 30% increase in the praise of distillate next year. others have expressed the concern that the price of crude could go up because the refining industry will scramble to run more food through the refineries and they're working pretty hard to make more distillate. so while the environment will benefit, while human health will benefit from getting this sulfur off of these ships. and our complex refiners, in the gulf coast especially, they're going to do very well. so we specialize at making this high-quality, low-sulfur distillate. some folks will do really well. but for consumers, there's a real risk that for a period of f years now, the lack of preparedness for a january 2020 start date will lead to a substantial spike in the price of fuel onshore. >> so potential for 20 to 30% increase. you factor this on all of the

other global uncertainty, the potential for disruptions, that's not a very cheery way to end this hearing. mr. brazil or mr. sutamori, do you want to comment in terms of what we might be able to do to avoid these increases? >> the problem is exactly as bob mentioned. it's the fact that we're going cold turkey on a particular day. if this had been faced phased ih the shipping industry and refining industry would have been able to accommodate things. so i think what has everyone concerned, they're going to wake up on january 1, 2020, and the rules are all going to be changed. if there was some way to mitigate that, and i think there is a way to mitigate that, there's probably going to be so much noncompliance, that there'll have to be some sort of accommodation made. i think that's likely. and john and i have talked about it some. i think john has numbers figured in, like 25% noncompliance into

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 available. heavy crude, like canadian crude, less valuable. so it's actually a good news story for u.s. producers. >> it helps us in the united states. >> in the united states producers, it actually helps us. >> helps the producers. >> helps the producers. >> doesn't necessarily help the consumers. >> if you have folks in your state driving diesel, you need to be prepared for what you need to say to them, because their diesel prices are going up on january 1st, 2020. >> that's my state. and people in alaska would look at this and say, wait a minute, this is july of 2018, you guys have plenty of time to figure it out. figure it out. >> so i agree with the other witness' views.

not enough investment is happening. there's another option using lng as fuel for the maritime, but it takes time and requires an enormous amount of infrastructure investments. so what would probably happen at the start of this new regulation is we'll rush for a limited amount of low-sulfur fuel oil and the maritime diesel. and by the way, probably, this low-sulfur fuel will have to depend on the kind of molecule as the maritime diesel. so there will be kind of a mismatch in terms of the refinery's procurement of the certain types of crude. so we expect even though we have not come up with any specific kind of numbers, percentage of oil price increases, we don't do. but we expect that there will be a very kind of a tight supply -- demand situation on very specific types of the crude

fuel. so that's what we are kind of. concerned about. and we try to keep track of it. >> well, coming from three maritime states here, washington, maine, and alaska, clearly pay close attention to this. mr. allers, did you want to add anything to this? you were referenced earlier? >> yeah, i would agree with what they have said. we're definitely going to have a bump in distillate prices. it will cause a bump in crude prices, but potentially bring those crude prices down. so our view, it's truly a guesstimate of what's going to happen in 2020. this is the first global-wide product specificity change. we've had low-sulfur gasoline, low-sulfur diesel in the u.s., europe, asia, other places. this is a globalwide specification change. it's impacting 4 to 5 million barrels a day of bunker fuel and so it's going to have a huge

impact on the market. there are provisions and waivers. i do agree with what rusty said, is that the market will work itself out, when they see the problems that are going to happen, i think we're going to see use of some of that -- ty mo is one that has to obviously take action. and we'll probably see some steps taken by the imo. and the u.s. as a member of the imo, certainly, can have a voice in that and and help phase it in. our number at 2% quoted on noncompliance, that's a guess. it could be higher or a bit lower, but it's going to be substantial, because there's not a real uniform enforcement mechanism in the open water. every country is able to enforce on its own. it's going to be enforced in the u.s. and europe. >> my time is well over, but mr.

boa bordoff,ed up you wanted to ju? >> we shouldn't forget the significant public health benefits that come from reducing so2 emissions. the increased demand for diesel is coming at a time when cities move away from diesel. and third, the industry has known about these rules for many years. some have taken further steps than others to prepare. i think injecting an element of uncertainty about delaying them now could hurt the companies thaef taken steps to prepare and just injects an element of uncertainty now, where people are starting to get ready for this and maybe they should wait and maybe they're not sure, could actually worsen the transition period. as rusty said, if it's not the case and the rules are far more disruptive than we think, the imo has the ability to issue waivers in case of lack of ability in case of low-sulfur fuels. and with new pipelines being built in the permian, it takes a year or two, so there will be a

period of adjustment. but i think history suggests these often resolve themselves in response to price signals more quickly than we think they will. >> hopefully. senator cortez masto, we've done a full round and are starting round two, but we can interrupt and go to you. >> thank you. thank you so much, madame chair, and ranking member, for this incredible discussion. i'm bouncing between two hearings, so i appreciate the opportunity to to read your comments beforehand, as well. let me jump back to mr. mcnally. in your testimony, you discussed the energy impact of widespread usage of automated vehicles, with estimates ranging from a 60% decline in energy use to a 200% increase, and that largely depends on which fuels avs will use, oil or electricity. can you elaborate on what factors to contribute to that large estimate range? and what policy recommendations

would you make in the situation to keep energy costs on the low end? >> sure. and thank you for that question. so when we think about sort of robo cars or automated vehicles showing up, in the first instance, we have to realize, this will provide transportation services to people who don't have them or don't have them easily. people who are house bound and don't want to walk to the bus and so forth. we will vastly expand probably demand for transportation. now, it will be more efficient transportation, it will be wired. but there will probably be a big increase in demand. so the easy and the convenience and the lower cost of travel. i don't have it at my fingertips, but if you ever took a look at a chart of the percentage of americans who are of driving age, but do not have a driver's license is higher than you could think or hope. in which case, we can expect big climate and environmental

benefits, as long as we're producing that electricity cleanly. but there's the real risk in some of the researchers at enreally and other government labs and academics who have looked at this and said, it's not a guarantee that we'll figure out evs before we figure out avs. so if that robo car showing up in front of your aunt's house or my aunt's house, who she's delighted to get in is a diesel or a gasoline car, remember, the oil industry and car industry is always getting more efficient. they're getting more and more efficient. we could see that 200% explosion in fossil fuel demand. and that could upend our consensus forecast for this sort of decline in oil demand. and include actually go like this. because once again,

>> more than anything else that would lesson our dependence and address some of the geopolitical risks we're seeing? >>. >> i don't think so, near term. there's not a lot we can do in terms of energy transformations, near-term. meaning the next weeks, months, years. unfortunately, probably decades. energy transitions just take decades, unfortunately. so i think for our lifetimes, in the foreseeable future, i think we have to look at other things, strategic stocks -- >> no, but i'm talking long-term. >> oh, long-term. >> i get today. what we're talking about here is long-term. >> long-term, i'm going to bet that we will be off of oil. we'll have that transformation, like we had from 1908 to 1915. but it won't be because of government policies, it will be because ingenious inventors discovered a new energy source. could be hydrogen, electric, biofuels. could be something we haven't

thought of yet. and a new technology that will give us that transportation in a better way. when that happens, government will just stand out of the way and flower very fast. i'm not smart enough to know what it is, though. >> thank you. >> thank you, madame chair. >> thank you. >> mr. mcnally, did you want to put a date to that? >> i hope my grandchild sees it, senator. >> okay. well, i think the issue for us in washington since we're paying i think $452 million more this year than last year is the roller-coaster that you've all described and how we continue to diversify from our fuel sources and get off of it. so for us, because we have very affordable electricity as it is today and a very high percentage of our consumers driving electric cars, i think we see in the transition in the northwest of some great companies, even in the trucking industry, like pac car making great energy efficiency moves. so we're definitely going to go

as fast as we can. i wanted to ask mr. bordoff, i asked in my opening statement about the high volume of trading that's going on and whether that's something that we needed to take a look at. i think for the volume of west texas intermediate, trades has dramatically increased over the last five years. i think they've seen something like a 276% increase in the number of trades per minute. is this something that the cftc should be looking at and just making sure that the automatic trading process is not creating some spikes in -- or distorting the market from true supply and demand fundamentals? >> thank you for the question. ranking member, cantwell. so this is not an issue that we've studied carefully, i will caveat with that.

it is true that alg ro myorithm trading has increased significantly since 2008, as in many other financial markets. and the -- i think the behavior of this type of trader, the implications of this type of market participation certainly merit further research. i think it's been limited to date in part by poor data transparency. i'm not aware of studies on this issue. anecdotally, i've heard market participants suggest a view that algorithmic trading may lead to sharper commodity price swings and volatility. there was a research note from citigroup just a week or two ago noting that some of the recent sharp sell-offs seems to have stemmed at least in part by some element of machine trading. i will note, i think it's important to recognize that even if algorithmic trading leads to greater very short-term price swipg swings in traded bench marc crude prices, my colleagues may have a view on this, too.

that doesn't necessarily mean those price moves affect the price of physical barrels and the price we're paying at the pump. so i think that's a question worthy of further study. >> i was just going to say before mr. brazil raises haze hands, i think he'll have something to say about this. i think those who have been in the business have seen the unbelievable actions of the financial markets have grave impacts. so mr. brazil? >> yeah, i mentioned earlier, i spent 15 years as a trader, so i've kind of been on the other side of this thing. more trading volume in a futures market and any kind of tropic market is actually a good thing. it's because it creates more liquidity in that market. so the market becomes more responsive to supply and demand and getting back to what jason was talking about, you want your financial markets to be reflective of what goes on in the physical markets. and the higher level of volatility, the higher level of trading that you have, the more

likely that will be. the volatility comes from what's going on in the supply/demand scenario itself that we've been talking about all morning. in terms of the electronic trading, the algorithmic trading, the changes that happened happened in seconds. so wherever eia kicks out a new statistic, the price might jump a few dollars because of the algos getting in there. but that impact goes away very quickly. so from the cftc's perspective, they certainly may need to look at it. but from a market perspective like what we've been talking about in the morning, it's pretty much a nonevent. >> okay. so we'll definitely follow up with the cfdc. i know they've had one case already where they had a settlement where they were concerned about somebody impacting that. and i think the thing we've learned, the tighter the markets, the more you want to have transparency to make sure they're not affected.

so madame chair, thanks for the hearing this morning. i think there's lots to do to continue to focus on this shall. we certainly need to make sure we're having, i think, our colleagues have done a good job of bringing up these other issues of investment for the future, so i hope that we'll look at that maybe as a follow-up hearing. >> senator cantwell. senator king, you had a follow-on? >> just, i think -- i wanted to sort of bring it back to why we're here. in maine, a $1 change in oil and gas prices is $1 billion out of our economy. and we're a relatively small state. those are the kind of numbers we're talking about that are really, really significant. and i just think it's important to remember that and anything -- i thought it was interesting. senator dane said if the price is going up, the only thing to do is to produce more. no, actually, there are two things. one is to produce more. the other is to use less. and that will affect price just

as surely as an increase in production. so i think that's something we need to keep focusing on and what worries me is the roller coaster that we started with. and i'm not a great believer in government intervention in these things, but i think we do need to think about the policy implications and the long-term price implications of the things that we do that increase the volatility, because that translates to people's ability to buy groceries rather than gasoline. and i just think it's important to continue to ask those kinds of questions. i think the witnesses, this has been a very informative and important hearing. thank you, madame chair. >> i want to thank you for that add-on, senator king. i think we recognize that there are some things that we can control and some things that we cannot control. you cannot control some of the volatility that you see with political issues with other nations. there are some things that are well beyond our control, natural

disasters that bring about shortages that you could never predict, but there are policies within our own government that we can look to critically. and while sometimes we're not able to predict all of the consequences, unforeseen consequences that are out there, i think that's part of our job to try to reduce the volatility to the extent that it is possible. so being cautious and careful and perhaps thoughtful and moderated in our policies is not a bad approach. so with that, gentlemen, thank you for our contributions this morning. i think this has been a very informative hearing. you have helped round out our thought here as members of the committee and appreciate what you're doing in this broader and more global discussion, that has such immediate impact on our

constituents from maine up to alaska. so with that, we thank you and the committee stands adjourned.

in about 90 minutes, we hear testimony from secretary of state mike pompeo on u.s. relations with north korea. president trump's recent trip to the nato summit and his meeting with russian president vladimir putin. he'll speak before the senate foreign relations committee. it gets underway live at 3:00 p.m. eastern here on c-span3. and a reminder about tomorrow. coming up tomorrow, u.s. trade representative robert light hooizer will speak about the trump administration's trade policy and his agent's 2019 budget request. he'll testify before a senate appropriations subcommittee. that starts live thursday at 9:45 a.m. eastern on c-span3. saturday at 10:00 a.m. eastern on american history tv, live all-day coverage of the confederate icons conference,

from james madison university in harrisonburg, university. speakers include christy coleman and the museum's historian, john kosky. kevin walker, ceo of the shen d shenandoah valley's battlefield, and james robertson, author of the book, "after the civil war: the heros, villains, soldiers and siccivilians who changed america." watch the confederate icons conference saturday morning starting at 10:00 eastern on american history tv on c-span3. sunday night on "afterwards," former white house press secretary sean spicer discusses his book. he's interviewed be former republican national committee chairman, michael steele. >> and ronald reagan and donald trump are about 180 degrees apart from each other and yet, here we are in this space.

how did you navigate that? because we're both reagan conservatives in that regard. >> that's right. >> so was it a little bit of a, you know, dance every once in a while or how did you do it? >> with respect to the president himself, look, there's no question. he is not traditional in terms of how he speaks. he's got his own vernacular. but he also connects to people in a way that most politicians never have. and he talks very bluntly in his own style. but i don't think that he would have won the presidency, wouldn't have won the nomination if it wasn't for that style. and i think there's always this balance with elected officials, right? is that they say all the right things but they don't necessarily get anything done. and in the case of trump, there's a lot of, he's getting all of these things done and people are saying, i didn't like this tweet or i didn't like how he interacted in this thing. i'm a results-oriented person. i look at how the country is doing, are people looking better, are they making more money? is the country safer? i think net-net, i think most

people would generally agree that if we can get the right things done for the country, then that is a better place than someone just talking about the right things to get done. >> watch "afterwards" sunday night at 9:00 eastern, on c-span2's book tv. up next, a hearing on the issues, benefits, and security of virtual currencies. we hear about the potential advantages and disadvantages of the broad use of cryptocurrencies and how criminal enterprises might use them. held by a house financial services subcommittee, this is about an hour and ten minutes. the committee will come to order. without objection, the c