cpsc, and about his perspective when he was there at the ground floor of the creation of the agency as a staffer and then came in and worked with david -- john liebowitz over at f.d.c. or before that debbie majoris. all the folks that i worked with over the years from the staff and from the political leaders, you know, what it means about culture and how we could impart a better safety culture for everybody. and then i came to ntsa. and the interesting challenge that we face every single day, and as we work with all of you and work with the manufacturers is where we have to evolve safety culture, how we talk about sort of the next steps and what we do. not only as an agency but collectively as a country. i'll give you a little example of this. back in 1977, my father gave my

mom a brand-spanking new 1997 lincoln continental mark v. i mean, big gun boat of a car! i mean, i remember the thing that my father showed everybody in our neighborhood and all my aunts and uncles about the quad row tonic sound system. in the lincoln mark v. [laughter] >> i remember that lincoln had a little demo tape of -- actually it was an eight-track tape, i should say. demo eight track of elton john songs that were specifically tracked to show the quad row tonic angles of the car. and it was all this great stuff. and my mom and i in the car pile in. was i in a safety belt when i was riding the car with my mama? no. quad row tonic sound was great. long road trips. was i actually even sitting in the backseat of that car? i was up in the back deck in

between the rear window. and you know that little back deck that was huge enough back there? i was back there, hurdling along in a car with my mama. and my mama had a lead foot. has a lead foot. i've tried to teach her the ways of speed control now that i am the administrator. it would be incredibly embarrassing for the mother of the administrator to be getting speeding tickets. [laughter] >> so hopefully in georgia she is heeding my word and doing the right thing. i believe that she is. [laughter] >> but nobody thought that was wrong. you saw kids riding in back -- that back flat areas in cars all across america. nobody blinked an eye about it, right? today, what would you do if you saw an unrestrained child riding that way on i-395? a lot of you would all lose your mind and start honking. some of you all will call the state police and say, we've got

a problem over here. but that's what i'm talking about in terms of the evolution of expectation and safety culture. and a lot of it has had to do with the hard work of the national highway traffic safety administration, our partners like all of you here in the room, our state law enforcement partners, mothers against drunk driving, safe kid, consumers union, consumer federation of america. the laundry list is huge. but originally all highway advocates. i'm sorry, jackie. i would never forget you. this is the problem. if i go list the people you all know me personally. you didn't name me. jackie, i owe you something special. we have to have lunch. i can never forget advocates. but the point being is this. it took a tremendous amount of work to get the behavioral changes to people to accept the usage of the technologies we were doing. so when you try to get better

three-point belt systems. in some instances i know some of the manufacturers have automatic belt systems which they've gone away since then, for people to actually say when you're improving occupant protection, when you were working on child restraint systems, trying to put in latch, how we get people to do it. how we move the needle and the choices that they make. that's power collect elf that we all have. ntsa has a huge role in this, and we don't shy away from it every day. in terms of our research, rulemaking authority, rulemaking priority plans. the work that we have done that has moved the needle on saving children specifically. talking about from 1975 to 2008 with estimated almost 9,000 kids were saved by child restraints, either by a safety seat or using adult see the belt. that's huge. it's huge. and it's a great success and

we've got to do better. but then as we're thinking about all these things, and the hard work that it took, over the years in terms of the education campaigns, in term os. law enforcement about to say mobilizations, in terms of your hard work and your outreach and your publications and your lobbying on the hill and you getting resources to our agency and others, this turns into the positive momentum that we need. but then it creates new challenges. because along with the notion of safety culture we also have the movement of technology and how we sort of balance these two. i'll give you a great example of that. now, as a proponent we are working very hard at ntsa on the next generation of safety technology, specifically crash avoidance. now, we've been working for decades on crash avoidance along with a lot of people in this room. and we've done this through a lot of ways.

improving crash avoidance by highlighting issues in the highway safety program that we upgraded for 2011. it's the hard work of cfa and hard work of c.u. and "consumer reports" guides. hard work of the advocates talking or highlighting those particular choices of technologies and behaviors and state laws. it's the hard work of -- it's a hard work of a whole bunch of people. but then the question is where safety culture goes along with this technological advance. because then you sort of get the counter argument from a lot of folks that have a different perspective on government regulation, on i'll excuse the term that i really dislike but i guess the best way to capture how to describe things, nanny government, right? how do we convey where the responsibility of the driver begins and end, where the responsibility of the automobile manufacturer begins and end, and

where the responsibilities of the regulatory regime begins and ends. because we can issue rules, we can make manufacturers make modifications and changes. but we also have to have the people be willing to accept it. and in some instances in fact for the five-star safety rating for example, having people look at that and make choices for their vehicles. whether they're doing to buy a five star safety-rated car. the whether or not that's going to be a factor in their decision. whether they're going to choose to buy a vehicle that has lane departure warning systems or forward warning collision that the agency has highlighted in this last go around in our upgrades. because those are technologies that have a huge ability in the future to keep the crash from happening in the first place. but then there's the question of, well, how reliant do we want our drivers to be on these

systemsy value those particular systems? are they rigorous enough? is the cost that we'll be adding to a vehicle worth mandating it on every vehicle in america? will we save enough lives? but there's a bigger question before you get there. because just like an electronics stability control, for example, there is a mandate now that's going to take place starting in 2012. but before that there was market penetration by the private sector for electronic stability control. insurance companies gave rebates for cars that had esc on them. people were hearing about esc as part of the packages of things. and they were choosing to buy it because it could probably help them keep control of the vehicle. and that had so much power that we were able to make those decisions. but once again, does that mean do we encourage people to drive

aggressively? because you have a safer system embedded within it? the answer is no. we want to support the driver in times of emergency. and as we layer more things into the car, as the car has more systems in it which will intervene when there is a point of no return for a driver, there are some systems that some automakers have which have crash -- braking now where they can and there is no way a human being is going to be able to intervene and get that brake pedal down hard enough to get that car to stop so the car will stop itself. now, some people think, i don't want vehicles making decisions for me. and that's one thing we're hearing in crash avoidance where we're talking about the people talking about awe ton mouse

driving systems and where this leads. but question always has to be for all of us and our expectations. what about our safety culture? there is nothing that we as an agency can do to substitute for an alert driver who cares about the people around them when they're on the road every day. you can't substitute for that. we can't. at the same time, it's our responsibility as an agency to create a zone of safety, recognizing that there are some risks created on the road every single day that if we have a way to help eliminate them or mitigate them to such a point that we can get fewer people involved in accidents and in suffering fatalities and injuries, then that's the way we want to move. but it all has to be together. but then the next question comes to all of you. when you come to our agency or you come to the consumer product safety commission or you come to the federal trade competition and say, this this is a

priority. this is something that's happening right now that you have to do. and then against every other risk that all of our agencies have to work down and through versus the other sort of cross currents that maybe would be happening politically. from the cross current of what consumers are willing to buy and accept. i think the classic example of the great conundrum for us as an agency is the dad system or the driver alcohol detection system for safety. it's work that we're doing collaboratively with the manufacturers. it's a five-year project where you can have a technology, hopefully by the end of our work in some years in the future, that a car could figure out whether you're over the limit before you start the car. you touch the wheel. it and if you are over the limit, if you are over .08, it

could interlock the vehicle so you don't ever get on the road in the first place. as a society, we don't want drunk drivers on the road. we have vigorous state laws that will imprison you if you drive over the limit. we have spent millions of dollars every year in high visibility campaigns on advertisements to support law enforcement to have checkpoints and do all this stuff. as the people we demonize impaired driving. we don't want to have anybody driving drunk. and luckily more people -- i think we've done a great job on social drinking issues. that was part of the bigger issue. but now we're down to a group of hard-core drivers that have a real problem that have a disease and they continue to make the choice to drive. so what's the next step? technology. so we're investing as an opportunity to see if this can work. and we have -- so far we finished phase one, we're into phase two. but the question then becomes,

the car will be making decision whether or not you are able to drive. and i can tell you there's a lot of people that are very uncomfortable with the notion from a privacy standpoint, from a decisionmaking standpoint, they don't want a machine telling them that i've made a poor choice and i'm going to stop you. safety culture. people know that impaired driving is wrong. you will go to jail if you're caught doing it. if you have a vehicle that has the ability to assist you in making that assessment, knowing that if you're over the limit and you get caught you're going to jail. that's the best-case scenario. you could end up killing yourself or others if you do it. but you know something? if i came out and said publicly that we were thinking about doing this 20 years from now as a mandate, the amount of

controversy that you would imagine would be unheralded because it's a combination of technological ability, a combination of our ability to sort of figure out the costs and the risks, and then ultimately whether or not drivers, consumers, are willing to accept it. and that's what we face every day as people that believe in the mission of keeping people safe, keeping people alive, making sure that people aren't cheated. like how much freedom and how much risk are we -- do we think that we personally are willing to absorb that the consuming public at large is willing to absorb, whether the political framework is willing to accept, and the ability for the agency such as my agency or my other sister agencies in public health and safety can do.

so that's the great question. we have a fan asicly vigorous rulemaking agenda. i'm happy to talk about that. i'll take q&a for a bit to talk about those specific issues. but i really do want to sort of pose that general open question to all of you. we've made great strides in our mission at ntsa in trying to keep people alive on the roads every day. but we are really at sort of a new day in term of where we are and our expectations of the vehicle, our expectations of the safety roads and design and all this other stuff. and we still have to move the needle. i want to be able to see a number of the things which we are seeing as huge risks on the road every day, people not wearing belts, people driving drunk, people speeding excessively, people driving fatigued, i would love to see that being as demonized as seeing a 9-year-old african-american boy riding on the back plate of a continental -- a lincoln continental driving down the road way too fast.

i know that's my hope and my prayer and my vision. i know ron and i will come to work every day leading a dedicated staff trying to figure out these hard questions how to move the needle forward. and we need all of you and our exchanges and our conversations. our doors are oh. but i just want to lay out there this we approach safety culture in the dawn of a new era especially in vehicle safety. thank you all very much. [applause] >> all right. david has agreed to take five minutes' worth of questions. >> hi, david. i'd like to thank you and your agency so much for looking into rental car safety. >> yes. >> and i know that ntsa doesn't have direct jurisdiction over the the rental car companies unfortunately because i wish that you did. but wanted to thank you for that and see if you could just comment a little on that.

.. once you have declared a defect, and still people do not want to do it.

that could end up hurting our killing someone. i know there is legislation last year, one of the bills has that provision. i'd love to see that provided to the agency. i know the secretary is interested in that. they are a group of businesses that can get this done. [applause] >> i use to run the new jersey law and we used to deal with this a lot. i want to ask you about -- i bought a hybrid, and we had the toyota problem, you just lose power, and i got panicked just

as i was mocking my friends who had the prius, but my hybrid stopped. there was no power. they said it was a technological thing. a tip or something. it was not clear to me. i know that you deal with that. is this -- we want to use hybrids and the electorate. i want to make sure that you're on top of that issue. i had it with my for fusion. >> i would definitely suggest that people go to safercars .gov, and it is the difference from shifting from internal combustion to the hydroelectric engine. sometimes when you have the switchover, it has this feeling

of the celebration. it feels like -- deceleration. it is a software fix and how it the car -- of breaking, and the switchover between the engines, and and is a frightening thing. >> i knew that i would not be killed. >> my parents had a brand new prius and had that feeling. if you feel that in terms of hybrid systems, let us know when we will take a look at it. did and they went from a lincoln to the prism? i am very effective. [applause]

>> can you tell us the status of your fantastically bigger is rulemaking agenda, including the extent to which your comprehensive settlement talks on the 2017-200025 fuel economy standards has affected by the house commerce and energy committee legislation that would block epa from regulating greenhouse gas emissions? >> i would defer -- ron, i would need to grab you for a second. ok, as opposed to me laying out, we will have that posted on the website. sen. i know that is coming. we will update you on that. we will take a full look at it. in terms of the work, i will say this, and i will make it very clear. fuel economy needs both federal

agencies in the states together to work together. air conditioning -- we need to the epa and their authority to give the most complete picture to make sure we can save the most fuel and a -- reduce the greenhouse gases as much as we can. i know from the president, the secretary, and die, we stand shoulder to shoulder on this. the only way we accomplish the maximum gain and make sure you have the safety vehicles that the agency stays in the role and does this together. we are working hard every day to

get this timeline done for the proposal. our staff is talking right now. >> thanks very much. [applause] >> we will get started with the next session right now.

because we like getting people out on time, we are going to start right now. >> thanks. it is my honor to introduce d.c. commissioner. i have been in washington a number of years, and i have seen people come and go. usually when people talk to me, i am angry or frustrated or disappointed. i get excited, and then i get disappointed again. we battle with the administration and congress. we battle consumer advocates. we are committed to make sure they are protected. we have seen over the last decade all of the terrible things that have happened to consumers. everytime i get angry or frustrated, i think about the

people in government who are our friends. they are dedicated as consumer advocates to making sure this world is a better place. we want to protect consumers from the worst practices we have seen. we smile and can feel better about the world, when i know that one person is at the sec. i think that deserves some applause. [applause] we cannot have a better person than julie there. she is appointed for the next six years. thank goodness. she is the first commissioner in recent memory whose primary expertise is in consumer protection. she is an expert on anti-trust matters.

she created the best fare credit report law than we have seen pretty much ever. she and her fellow comrades in that state -- state of vermont and have done great work. she also has lectured at columbia university school of law. she was the assistant attorney general in the state of vermont for over 20 years. shi'ahs received several national awards. and has served on main national panels focused on consumer protection such as pharmaceuticals, data security, and tobacco.

please join me in welcoming her. >> thanks. i am honored to be addressing this group. i see so many of my good friends around a room such as aarp, consumers union, and of the consumer advocacy groups in the trenches every single day doing amazing and critical work. i also want to a knowledge my former colleagues from the state offices and my new colleagues that are here today.

a special thanks to the industry representatives attending. you are some of the fiercest allies that consumers have. you understand that the pro consumer is by definition pro- customer. that is good for business. a common refrain heard in this town from politicians giving speeches is i am one of you. i do not get to say that very much, because i am not a politician. today is different, because i am one of you. i remember work that was done since the teddy roosevelt on administration. when i first started doing consumer protection work, which seems like 100 years ago, one of the great challenges we face was making sure that every household gods of their annual sears roebuck and company catalog in terms -- in time to mail in the order by the

holidays. those were the simpler times. there was not a shortage of thieves during that time. out of town newspapers warn travelers to new york city to avoid the gentleman that would sell sections of central park to foreigners. [unintelligible] they talk about cities invested with the scum of pickpocket nurse -- thieves, pickpocket,

scoundrels. they have always existed but today they come out of so many different directions. a consumer who moved his wallet to his inside pocket, steered clear of dark alleys, and arm themselves with moral fortitude could probably navigate the marketplace relatively intact. today's consumer is fall -- vulnerable online, over the phone, and even in emails. it is addressed as a beloved aunt molly. croaks do not just pick pockets, they pocket pictures shot with

children, they fish for passwords and crushed credit ratings. they are in your computer, on your smart form -- smart phone, in your doctor's office, at your kid's school, and at your bank. there are so many more avenues for them to pursue their scam. those of us in the government charged with consumer protection have to adopt a multi-level approach if we are going to throw up roadblocks on every one of those avenues where the cammers are. we are trying to determine how best we can do that in a fast and technologically advanced marketplace.

many are thinking about the opening day of baseball. the anticipation of the first crack of the bat makes it difficult not to think in sports metaphors. i would like to talk about the need to approach protection with the team work, coordination, and the solidity of the great double play combination. for those not steeped into 20th- century baseball trivia,, the players i mentioned were chicago cubs when they won it chivvying ships. -- championships.

they were known for a famous double play. joe tinker caught the ball. nobody ever won without a star shortstop. it requires lightning fast reaction, a keen sense of where the batter is going to put the ball next, and a deep understanding of the strategy of the game, and the ability to handle anything they hit at you. g's are like the shortstop. they get the consumer complaints about everything.

through their complaints, handling, and mediation services, they try to resolve each case, getting a refund here, or a contractor to complete work over there, or stopping a foreclosure down the block. they often hear about the problem that consumers are facing before we do here in washington. multiple state components will work together to tackle a nationwide problem. for example, they worked together to take on tobacco companies that marketed to kids in failed to disclose the health threats that the cigarettes compose. some told that the drug they were selling could do much more

than -- much more than it really could. and they also dealt with the issue of some companies charging fees that cannot be justified. with the help of people like you, my consumer protection family, i have been able to work on this. i have been honored to serve as a commissioner with the federation -- ftc. my consumer protection family is still right here with me, helping me and my colleagues take on the tough issues that impact consumers throughout the country. i am often asked about the difference between working with the ftc and the state a.g's.

the ftc is the second baseman, johnny evers. his role as complex in the class a double play. we catch what the consumer's cost us by following up on local trends into taking the campaign against them national. we campaigned on issues such as online privacy, credit reporting, green marketing, telemarketing, debt collection, and competition in health care industry. we are fighting in abusive deal between pharmaceutical companies that keep low-cost generics often of the market. it is costing consumers $3.5 billion per year in higher drug costs. we give consumers the tool and the information they need to protect themselves from those trying to steal second base.

there are programs like the do not call list, which is the most popular government programs since the elvis stamp. [laughter] one thing that every second baseman has to watch a lot for is the runner. they come at second base with the spikes up. the economic downturn has provided that opportunity for schemers trying to squeeze the last dime out of a financially strapped consumers. one of our goals is to get these sheets out of the game. and action was announced against countrywide home loan servicing operation charged homeowners who were behind on their home mortgages, outrageous

fees that added up to thousands of dollars per consumer for such routine services as lawn mowing, which was meant to protect the lender's interest in the property. the mortgage market imploded, and countrywide profited as more homeowners fell delinquent. millions of dollars were retrieved from countrywide and we are working on returned that money to consumers. just this december, we broke up a massive internet marketing rain that targeted consumers desperate for cash. the ringleader, and jeremy johnson, created a tangled web of over 60 shell companies that

lord consumers into trial memberships. there was a grant to getting to work at home money-making scheme. services were never rendered. he got to under 7 $5 million out of these customers. johnson led a life of luxury. he had expensive cars six helicopters, three airplanes, several high in the properties, including an extravagant home that cost $8 million to build and he had a taste for high stakes gambling online and in las vegas. him in thistely got

case. we shut down his operation and froze his assets for future distribution. [applause] our staff was really fabulous on this case. the second baseman will frequently get this out with the help of a shortstop. the ftc fight some of its biggest battles in the state. we announced operation empty promises. we targeted schemers like johnson, who falsely promised consumers that they could make thousands of dollars in a guaranteed job and a work at home opportunity. it included three new enforcement actions, 28 actions

by the state attorney general, 48 criminal prosecutions by the department of justice, and seven civil actions. we also have worked with seven of our state partners to with the aid -- when a final judgments, responsible for getting tens of millions of dollars from consumers into the pockets of scam artists. we carried out operation health- care hostile. it was a coordinated law enforcement scheme involving a total of 54 lawsuits and regulatory action against sellers of a phony medical discount plans that masqueraded as health insurance. together, the ftc and the state

have targeted mortgage modifications and foreclosure rescue schemes that prey on desperate consumers who are in fear of losing their homes. defrosters collect large up- front fees in exchange for the false promise that they can prevent a consumers foreclosure. since february 2008, the ftc has brought many actions on foreclosure rescue and modification frauds. more are in the works. we have cooperated with ever stayed problem -- partners and. -- state partners. over the past decade, we have brought 260 cases to stop debt relief providers in deceptive and abusive practices focused on consumers in financial distress.

because we have seen a spike in the amount of harm caused to consumers, we promulgated regulation that would require those that pitch mortgage assistance in debt relief services to deliver on their promises before they can collect one dime for -- from consumers. i have been impressed with the values saved with the corporation. i have seen this at the management and staff level. on many occasions over the past year, friends from the enforcement community have commented on our efforts to coordinate with the state in enforcement initiatives. this is exactly how it should be. i am very proud of this accomplishment.

it is great when the shortstop and second baseman work together. but it usually that will only give the team won out. there is a new player on the team. the consumer protection act has given us our new first baseman. our frank chance. the new agency charged with protecting consumers in the credit and financial markets. i know some of you will argue that playing first base is for big hitters that cannot handle the outfield. i disagree. as the first baseman of the st. louis nationals wrote nearly 100 years ago, the couple first baseman will need all of the speed, the arm, and the head he can press into service.

let me add to that. the reached. -- reach. he should have long arms. he will never will making authority. the bureau has a right to examine the books of most of these institutions enforce the law against them if they are found to be in violation. most importantly, the bureau will have a substantial budget, equal to 10% of the federal reserve budget and automatically delivered without having to go through the appropriation process. that gives every other governmental agency, including mine, budget in may. the bureau will also inherit

hundreds of consumer protection employees from other agencies and will hire 100 more new ones. that does not mean the bureau will be working alone. the fcc into the state a.g's will work together -- ftc and will continue to work together. the bureau can reach some of the

players that the ftc and the state cannot. in particular, large, federally chartered banks. the ftc retains its entire jurisdiction as to the state a.g's. in addition, there is enhanced rulemaking authority regarding automobile dealerships. several of you here today have told me that you have seen abuses in the auto-financing industry. not as many as we saw in the mortgage industry. premiums and undisclosed add-ons in fees. the ftc announced that we will be taking a good hard look at those sorts of practices in order to protect car buying

consumers. some are worried that there are many areas in which the bureau and these agencies have overlapping jurisdiction. while i understand these concerns, i would like everyone, consumers and producers have strong interests to ensure a fair marketplace with ample choices, fair prices, and accurate information. business is playing by the world do not want skimmers to pick the pockets of consumers. the action of consumer protection agencies are not aimed at shutting down businesses. we are clearing the frauds out of the marketplace so that honest businesses plane by the

rules can continue to serve their customers. consumers can feel safe and secure when they shop on the corner, at the mall, or online. unfortunately, there are so many that we need to take out, that the ftc and the new bureau will be far too busy to double-team legitimate businesses. they are requiring us to put a level of understanding in place to make certain that neither government or business and resources are wasted. we will not be turning inning double plays against businesses that play fair, because they are on our team. these are hard times for american consumers.

the wave of technological innovation that has brought so many exciting ways to communicate and work and of recreates also carry new opportunities for skimmers to take the last dollar from these consumers. protecting vulnerable consumers is not a game. baseball has served as a metaphor for american life almost as long as apple pie has. consumers need to be served by a team that is coordinated, powerful, in a successful as the double play trio of -- and that i just mentioned. this can be that team. thanks again for the invitation

to speak to you today. thanks for listening. most importantly, thanks again for the work you do. i look forward to working with all of you in the coming months and years. [inaudible] [applause] >> we have time for two questions. >> can you comment on the practices that you were commenting about? >> i have been meeting with a number of consumer groups, industry players, who have

raised some very interesting and a troubling concerns all lines of undisclosed financing is construct did not realizing they will be rate, charged, dealing with these add-on fees. many of the practices that we have seen in the mortgage industry as you mentioned, the the -- we will hold a series of round tables in detroit. we will bring together consumer groups, consumer advocates,

industry players, financing people, to talk about some of the things that we have been seeing. i want to mention one aspect of this. it is the impact on the military. we have heard a lot about the practices of dealerships that seem to rain on military bases. you can see a lot of the auto dealerships around them. a number of them are having their first paycheck for the first time and may not be as educated as we would hope they are on how to purchase an auto and make sure that it will be a purchase worth the money. then they go overseas and start dealing with this purchase that can affect military readiness. it is something on their mind. their car may be taken away.

they are going to be away from their family. i know holly has been thinking about a lot of these issues. we have been in the bureau as well. we are trying to look at all of these issues through our workshops and tried to determine what kind of rule making we should be engaged in. >> i am with the national consumers league. i direct a fraud center there. you mentioned working with the city. they are doing amazing work mmers.day to shut down skimmerca we are working on the ability for the agency to go after them overseas. i was wondering what you have seen in coordination with the department of state and what you

are doing now, and what you think could be doing better on problem. >> that is a good question. was everyone able to hear the question? it was about what we will do about focusing on scammers overseas. an act was designed to clarify that the ftc had full jurisdiction over online scam artists, who are affecting u.s. citizens. they are entities outside of the country that are obtaining money inappropriately from consumers from the kinds of scams we are talking about this morning. we have full jurisdiction to go after them. we also want to work with

partners in other countries, whether they are seeking information about u.s. players affecting their citizens or whether we need their help to go after the people out of the country affecting u.s. citizens. we recently brought a case involving privacy issues with respect to a company that was here in the united states that was affecting united kingdom consumers. we have a pretty good track record of dealing with international issues. it is a huge problem. i am sure there are many people that would lock -- would like to do more. i think the tools that we need to start that kind of activity should be put in place, especially with this act. little bit more

hampered because we do not have those relations with international affairs that words very hard in this area. a.g do not have that luxury. we need more tools to deal with things on the international front than global players. >> let's think julie once again. [applause] hos [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> next the 2012 budget on

request by the bureau of ocean energy management. then the house hearing on gas prices, and "washington journal." >> if you recall in the 1960's and 1970's, we were writing off urban america. >> kathryn wylde talking about keeping the city the center of the business world and how new york gained that position. >> new york city was being pulled into the global economy and became america's gateway to that economy and has prospered ever since. >> watch the rest of the interview sunday night on "q&a." >> on american history tv, the organization of american historians meeting from houston with authors offering insight on what the -- why the south split from the union, and the rise and fall of one of the world's

leaders in energy, enron, and the trying " shirt factory fire 150 years later. also, of panel replaced on the terrorist attacks of september 11, as this year marks the 10th anniversary. get the complete schedule at our website or you can have the schedule e-mailed to you. >> the bureau of ocean energy management director discusses his department's 2012 budget request on thursday. he also discussed a report on the loss of royalty fees from companies. they are requesting a $348.4 billion. this hour is one hour and 25 minutes.

half hour hearing. [inaudible conversations] >> with the committee will come to order. the chair announces the presence of a quorum. today the committee on the natural resources is here to hear the testimony of harnessing american resources to create jobs and address rising gasoline prices. domestic resources and economic impacts. under the rule 4f opening statements are limited to the chairman, ranking member of th committees so they can hear from -- so we can hear from the witness is clearly so i ask unanimous consent any member that desires to have an opening statement in the recd shall be granted. without objection, so ordered. the chair will recognize himself for an opening statement. every american is feeling the pain from the risng gasoline

prices. there's no escapes at. it costs more to drive to work and run errands. it costs more to take the kids to school. even those who don't own a car are paying more for groceries and other goods because the transportation cost to get prodts to market. the natural resources committee has jurisdiction over all federal land both onshore and offshore. what this is where the majity of americans energy reserves are located and also where the obama administration has done the most to block energy production. the purpose of today's hearing is to examine how to harness these energy resources on federal land to help create jobs and address the issue of the rising gasoline prices. a recent report from a congressional research service detailed just how large our energy reserves are in the united states. our combined recoverable oil, natural gas and coal resources

total 1.3 trillion barrels of oil equivalent. the largest in the world. more than saudia arabia, china and iran. and this figure doesn't even account for the vast oil shale reserves in the west, which the u.s. geological survey estimates to be greater than 1.5 trillion barrels of oil. the best way for the united states to insulate themselves long term from unpredictable world events and rising gasoline prices is to produce more energy here at home. we have the resources to produce our own energy and we have the best and the latest technology to accomplish it safely. but for some baffling reason, this administration is choosing not to do so. since the president earliest days in office, his administration has blocked, delayed, hindered and obstructed energy production across america from coast to coast, onshore and offshore all the way to alaska. this administration has canceled

leases in utah, the late oil shale production and colorado, in pos de facto moratorium on the gulf of mexico, block offshore energy in both of the atlantic and the pacific coast, retroactively to truth the coal mine in west virginia, blocked energy production on the tribal land f what the country and in people offshore and onshore production in alaska and the list goes on and on. all of these actions cost american jobs to led to higher gasoline and energy costs. incredibly the president and the white house have been telling a very different story. but the rhetoric doesn't match the reality. the white house has even been touting statistics on increased u.s. oil production. they are trying to claim credit for actions that took place long before president obama took office. an increase in oil production today is the result of the pro energy policies of the previous

administrations, not this one. less production, higher gasoline prices, jo being shipped overseas and deeper dependence on foreign countries these are the real results of this administration's policies. i'm full believer in expanding american energy from solar and wind to hydro and biomass. howeve, oil and natural gas and coal are in trouble parts of our daily lives and argues for far more than just fuel and transportation. they enable millions of americans to heat their homes in the winter. they are an essential ingredients in prison plastics, tires, farm fuel lasers, computers and ther high-tech devices. evin blackberrys and iphone is that members of the staff can never seem to put down are in this category. i announced yesterday my intention to introduce bills the will help produce more energy b putting people in the gulf back to work and reverse this president's offshore trawling than. these will be the first of

several bills the will be introduced. we are working on an array of specific proposals introduced as part of american energy institute. so, really it all comes down to one very simple choice. do we want to produce our energy here in america and create american jobs, or do we want jeopardize our national security by deepening our reliance on foreign countries for energy? to me, the answer is not a difficult one. so, with that, nce i see the minority some of their members are not here, in fact i now know why. one of the ranking members on the floor of the house i see so modern innovation has allowed me to see that. you don't see it but i do. [laughter] and so when he comes back we ill give him the opportunity to make his statement. i advised we are going to have the votes here in the shortest

ten minutes at happens in this process. but i want to call the first panel and icrc to. we have the honorable richard, administrator of the u.s. energy information administration. bring the price come energy resource coordinator for the u.s. geological survey. mr. genomic me, manager of the energy research congressional research service. dr. michele, chief energy economist at the university of texas. mr. caruso, senior adviser energy and national security center for strategic and international studies and mr. frank rusco -- i had two choices and i missed the first one. director of energy and science issues for the gao. so we will proceed with our panel right now. and i'd like to recognize richard toole, and i might mention that und the rules we have here we have a timing mechanism. you're full statement will appear in the record, but i

would like to ask you if you keep your oral testimony to five minutes. when the green light is on it ans you have to be could have up to four minutes and when the yellowight is on this 30 seconds and when the yellow light goes on i would ask you to close your remarks if you could. so you are recognized for five minutes. >> thank you mr. chairman. i appreciate the opportunity to appear before you and the committee today. the energy administration is the statistical analytical agency in the u.s. department of agency. the eia doesn't take positions on policy issues and has independence with respect to the information and analysis we provide. therefore our views shouldn't be construed as representing those of the department of energy or other federal agencies. starting on the near-term ouook for e oil and gasoline markets the eia expects the prices over the next two years particularly in light of recent events in north africa and the middle east, the world's largest

oil-producin region. our latest forecast issued earlier this month projects regular gasoline at the retail pump will average $3.70 per gallon this summer and $3.56 per gallon for the entire year, which is about 77 cents per gallon higher than last year's level. there is significant regional variation in the gasoline prices and there's also sycophant on uncertainty surrounding the forecast as discussed in my recent tesmony. the market might be affected by the issues considered in this hearing is important to recognize the important differences markets for oil and natural gas. the price of oil and gasoline produced from it generally reflect conditions on the world oil market including the global balance between supply and demand and concerns related to actual and potential disruptions. in contrast, the price of natural gas is largely determined by the balance of the supply and demand in north america pure yet for this reason i would like to address natural

gas and oil separately starting with natural gas. in 2010 the overall u.s. natural gas production increased while prices were generally stable. we expect the trend to continue although natural gas prices can be volatile often due to weather-related events. the current u.s. natural gas market reflects the tremendous growth in the shale gas production which more than doubled between 2008 and 2010 and 2010 represented 22% of the total natural gas production in the united states. u.s. proved reserves of natural gas grew by over 63% in the last decade and have now reached the highest level since 1971. the eia sees considerable potential for the continued growth in the shale gas production with shale gas to supply nearly half of the u.s. natural gas production by2035. the eia's annual energy outlook preference case which assumes the continuance of current laws and regulations and the increase

in the natural gas production over the next 25 years with u.s. net imports of natural gas expected to fall from 11% of the consumption in 2010 to only about 1% of consumption by 2035. because the domestic shale gas resources are located primarily under the private and state las we would not expect access issues on federal land to have a major affect in the projections for u.s. natural gas production reserves or prices. let me now turn to issues surrounding oil production in the markets. when considering the effect of changes in the future production it is important to recognize the resource access doesn't typically translated immediate or near-term production. in addition, the impact on market prices depends only on the magnitude and timing of actual production flow, but also the magnitude relative to global liquid supply which is currently about 88 million barrels per day. in the short term, oil markets

react, constantly react to competing factors in the global context and it is extremely difficult to disentangle the near-term impact of the made to long-term involvement in the context of oil markets that see typical daily price movements in the range of one to 2% and much higher fluctuation at that time long term we would not expect additional volumes of oil what uld flow from resources on federal land due to greater access to have a large impact on or oil and gasoline prices. this is due to the globally integrated nature of the world oil market and the more significant long-term responsive text of oil demand and supply to the price movements compared to the short term responsiveness. given the increasing importance of opec supply in the global oil supply and demand balance, another issue is how opec production would respond to any increase in the supply potentially offsetting any direct price effects of increased u.s. production. of course, greater domestic crude oil production the matter

what the cause be increased development, higher resource potential in the fields or wider application of advanced technology what impact local economic activity and net oil imports. my written testimony provides additional information on the eia's estimates and projections. mr. chairman and members this concludes my testimony and i would be happy to answer any estions. >> that is absolutely perfect timing, mr. newell. [laughter] if that is a template for how we are going to do that this is going to be a wonderful during. [laughter] thank you -- hank you very much. now the pressure is on ms. pearce. you are now recognized for five minutes. >> thank you, mr. chairman and members of the committ for the opportunity to appear today to discuss with you the u.s. geological survey role in studying, understanding and assessing domestic energy resources. the u.s. conduct science investigations and assessments of geologically based energy resources including conventional and unconventional resources.

the mission of the u.s. -- usgs program is to understand the process is critical for the coordination, accumulation, occurrence and alteration of the geologically based energy resources to conduct scientifically robust assessment of the resources and to study the impact of the energy resource occurrence and or production on the use of the environmental and human health. the result from the scientific studies are used to evaluate the quality and distribution of energy resources accumulation and to assess the energy resource potential of the nation exclusive of the federal offshore waters and the petroleum resource potential of the world. one important goal of the usgs domestic energy activities to conduct research assessments of undiscovered technically recoverable oil and natural gas resources of the united states exclusive of the federal outer continental shelf. the amount of the undiscovered technically recoverable resources changes over time because of advances in the geological understanding, changes in technology and industry practices and other factors. this necessitates the resource

assessment be periodically updated and taken into account the advances. recent examples include usgs of the balkans for asia and the u.s. portions of the basin. this assessment released in 2008 shows an estimated three def 3.4 billion barrels of undiscovered technically recoverable oil compared to the usgs's 1995 estimate of 151 million barrels of oil. our geological understanding of the basin he evolved since 1995 and significant technological advances redefined what was technically recoverable in 2008 compared to 1995. another kid was the usgs as some of the gas hydrates from the alaskan slope. as the result in the understanding of the emerging resources, the usgs assessment estimates the mean of 85.4 trillion cubic feet of technically recoverable gas from the gas hydrates on the alaskan slope. research and challenges remain to determine if the technically recoverable resource will be economically recoverable but the current multi organizational including the usgs and multi

disciplinary efforts focusing on the overcoming of obstacles. usgs is conducting its systematic inventory of the technically and economically recoverable coal resources of the significant bids in the uned states to provide a comprehensive estimate of how much of the nation's coal and all it is actually for the development and available under the certain market conditions and mining concerns. the first base and us west is the river basin of wyoming and montana. the usgs as some of the powder river basin will be the most thorough comprehensive inventory of the nation's most significant base and to date. this inventory with the others on the schedule will provide licy and decision makers with important information of the valuable planning tools. the usgs also evaluates renewable resources such as the geothermal industry. they recently completed a national resource assessment the first one in more than 30 years. the usgs assessment indicates the full development of the conventional identified systems could expand the geothermal power production by about 260% of the current land total in the

united states. the estimate for the unconventional enhanced geothermal systems is more than an order of magnitude larger than the combined estimates of both identified and undiscovered resources. if successfully developed they could provide an installed geothermal electric power generation capacity for about half of the current land power generating capacity of the u.s.. energy resources assessments are traditional stngths of the usgs. they will continue to seek ways to expand its research and assessment portfolio to better include comprehensive suite of energy resources. their resources assessment and research can providvaluable information for the public and government discourse about the energy resource of the nation. the usgs looks forward to working with congress and examines the challenges and opportunities. thank you for this opportunity to provide anoverview of the usgs research assessments of geologically based resources and i would be happy to answer any

questions. >> thank you very much. this is an all-star panel i tell you. [laughter] next dr. jean of the energy research you are recognized for five minutes. >> mr. chairman and members of the committee on behalf of the congressional research service i would like to thank the coittee for its invitation to testify today to address the subject of rising gasoline prices and domestic resources. domestic energy production printer but to the economic vitality of the nation and reduce its reliance on foreign energy resources. much of the energy production takes place on the federal land or federally owned our continental shelf. congress has worked hard to ensure resources to double on federal land provide revenue to the american people through the least purchased rents and rolties. but energy production like many

industrial process these involved some risk to human health and safety and to the environmental quality. thus numerous laws have been passed in recent decades to ensure energy production in the united states is done in a safe and responsible manner. policies have been established for statute and through federal agency will making to provide a controlled access to federal land and regulate the activities of energy production. the purpose of my testimony today is to describe the responsibilities and authorities of the federal land management agencies and through that description to outline the process is that energy companies must navigate in order to export, develop and produce oil in the united states. there is an ongoing tension between the expansion of energy prodtion and which companies seeking access to federal land and water to find and produce oil and regulation by federal

agencies to ensure that the exploration and production proceeds safy and with minimal environmental impact. the tension has been especially high in th week of the deepwater horizon event. access to the onshore federal land for the energy exploration and production is managed primarily by the interior department's bureau of land management and by the u.s. service in the department of agriculture. resources on the federal outer continental shelf are managed by the bureau of ocean energy management regulation and enforcement in the department of the interior. each of these agencies develops land use plans and resources management plans that determine how and when a federal land and offshore areas are developed. the plan for onshore development seek to accommodate the uses of public land including energy mineral development, grazing, recreational activities, timber harvesting and preservation of

wildlife habitat and waterways among others. offshore development and must coexist with the fisheries, shipping, recreational the activities and preservation of marine ecosystems. resource management plans are developed with public input and must comply with the requirements of the national environmental policy act, the endangered species act come here and watervliet to leave the water regulation and seval other applicable status and regulations. each resource management plan includes a schedule of energy and mineral leases for the planning units. the leases for oil and gas on federal land and offshore are sold at public auction. the winning bid for a particular parcel purchases the lease and gains the right to produce oil and gas from the area. the holder must pay rent on the land and royalties are paid on any oil and gas produced. a portion of the royalties is shared with the state's.

the owner of the least must obtain a permit to drill on the lease. the permitting process is also guided by a number of laws and regulations including several new requirements instituted by the interior department after the deepwater horizon incident. the process of approval on an application for a permit to drill is affected by the ability of the federal agencies to process the application as low as the ability of the permit applicant to meet the requirement for approval. other and on procedural issues may delay or prevent wheel and gas development from proceeding on a particular lease including a shortage of drilling rigs or other equipment, shortage of skilled labour or issues associated with the company's financial strategy. legal challenges against the government or against the energy company might also delay or prevent the development on federa leases. in summary, the process of leasing federal land and water, the approval of permits to drill

and the lgistics of exploration production are lengthy and complex process these subjects to a large number of laws and regulations which make simple characterization's of the overall process difficult. thank you for the opportunity to pride this information on behalf of the congressional research service. i would be glad to answer any questions. >> this is -- i have to tell you i am impressed with these three witnesses that have hit on the mark. we have to come up with an award i think for that. >> if the chairman would yield we should point out that as the witnesses come on time with their testimony we judge testimony on both content and quality. [laughter] and on both scores they are doing well. well i'm glad you said that because the next person to testify is the ranking member -- [laughter] who wasn't here. we have been called to vote but we have time and i want to give

the courtesy to mr. markey to make his statement and then we can go to the bolten and come back. mr. markey, following mr. rosh's lead. >> thank you and happy st. patrick's day to you. the rerence in the title of the hearing to harnessing american resources is appropriate because we are in a horse race. but rather than a blanket of roses at the finish line, the winner gets uch more valuable prizeslower unemployment and lower energy prices for american families. there are t horses in the race, the old horse that has been running flat out for decades is natural baby drill. it is owned by a syndicate of the richest international oil companies in the world and opec. the second horse, a much more recent entry in the race is clean energy. that horse is owned by the

american people in partnership with researchers, investors and companies developing new technologies to produce energy from wind, solar, geothermal, highest row power, biomass and other renewable sources to get our republican colleagues in claims about the race but they are handicapped in is highly suspect. first they say they want a fair race and claim they would be happy to see both forces when. it is is they're all of the above claim that the truth is our republican friends have taken a terrible risk. they've put it all on just one horse. they bet billions of dollars in subsidies and tax breaks not to mention that in our economy and future all on the natural beebee koza -- drill baby drill stands on seven hearings based on drill baby drill and 01 clean energy. the republican majority also claims that the obama administration is pulling back the reins on drill baby drill.

the trouble with this administration is riding the horse as hard and fast as ever. republicans want to debate permits or a curse or tenu projections, but let's just cut to the chase. the amount of oil and natural gas produced from our public land has gone up every year of the obama administration, period. ..

know how many subsidies or tax base the day, the price at the pump remains beyond our control. the harder we wth the worst worst comes to further the finish line seems. at some point, we have to face facts. the republican energy policy amounts to nothing more than beating a dead horse. so what might happen if we get serious, clean energy out of the gate? well, the first thing you need to know is that clean energy can catch up because it is incredibly fast. just think about the speed of the arrival of the internet for the last time between directory dial pho when this country puts its mind to something. i'm rachel bebe ch, the longer that clean energy run, the

cheaper it gets. is it worthwhile for solar this is a timely double production to the cost of solar panels dropped 18%. the investment we make is the best that we've ever made. the most important clean energy we can wn -- the most important is that it clean energy can win this race. while trilby be rilled is in place, clean energy is moving forward. this horse will create new jobs, american jobs, developing american tech elegy. and this can cut energy prices by reducing oil imports. if we unleash green energy, let her out of the starting gate, we will find ourselves in the winners circle in no time at the country, looking over our shoulders at number two in three of the world. that is our oppounity and that is the onclusion of my opening statement with 17 seconds left to spare. i thank you, mr. chairman.

>> europe to the challenge. i think the ranking member r that. we have two votes. the committee will stand in recess until approximately 11:00. hopefully we can do it before that, but no later >> the committee will reconvene and we will continue with our panel and i went to thank all of you for bearing with us while we have votes on the floor to introduce.your thoughts. your recognize.

>> thank you and i think members of the committee for inviting me to serve as a witness. hydrocarbons are exceptional commodities that it proves living standards and quality of life. they are commodities and surprises are variable. races are variable for many reasons including actions and events. we are at a time in which events are exceeding expectations about christ is without leaves us with the number of questions. what do we do about this? had we managed it? what kinds of things we think about? to me, one of the most important things is to ensure the domestic can remain abroad. it's as if a charter for the industry and government. a good way to start is by understanding the business cycle. ivo and many people like me, tend to view the interview cost structure on the basis of full breakeven costs. not just what it costs to sink a drill bit and truly well, but

stay in business. somebody has to be carried by companies to do what they do, to hold ended torry, regardless of whether it's public or private leases, to pay for geological and geophysical staff -- engineering staff, to explore, to do research and to your family ready to do a chilled bowl prospect. full breakeven finding and development cost for high and have been raising for a number of reasons. part of it is because they are abundant. resources are everywhere, but they are -- kosovars are complex and so i complex and so it commits a cost of extracting additional barrels per cubic feet of gas from those resources can be lived. as long as we have the high and rising original cost or, then we will have price variability. so how do we manage the high and rising costs for? what are the kinds of things we can do?

one is to look at where we can increase production volumes because the more that you can produce for a given dollar invested, the better off you're going to be. natural gas offers one way to do that. we have an abundant natural gas base. it also has high structure, but we can already see improvements being made to bring costs down. we can understand the cost the company states are affected by many names. policies, regulations and other issues. we can understand that companies need access to resources in order to be able to maintain portfolios that can be used to develop prospects. replenishing production is an essential part of maintaining competitive foreignness in the domestic business. protecting private property

rights and ensuring access to private plans is just as important as ensuring access. our show cast has succeeded largely because of private mineral ownership and the ability to negotiate access of private owners. but we have to look at our public lands in the gulf of mexico and reach a point in which we can feel comfortable we can responsibly manage access to those forces, maintain critical science and technology base for offshore exploration and continue to push the production renaissance we seem to be having in the united states in typical of mexico. we can also be problematic history of. we have an interesting situation in which domestic crude is lower than international crude into a large extended because of infrastructure. we need to continue to expand oil and oil products pipeline, not just within the united states, but across our borders.

we also need the socioeconomic benefits the industry provides. and these are large and varied and includes jobs, not only directly in the industry, but also indirectly through service companies and local investments in procurement. the industry pays taxes. the defection of the larger taxpaying entities. i want to just how the committee's attention to "the wall street journal" that matched her own research on this to the degree to which the petroleum industry pays up to one third of affected taxes for the united states. much larger than internet-based companies, which is interesting to think about because i don't think i can put a spoke in the gasoline tank. the final thing is to understand better how energy affects transportation system and the differences between some of the clean energy options we would like to pursue and energy values in gasoline. thank you. >> thank you very much, dr.

foss. next we will go to dr. caruso, study for -- you are recognized for five minutes. >> thank you, mr. chairman. good morning to members of the committee and a thank you for the opportunity to give my views on the global oil market and implications for u.s. energy policy. 2010 with a strong year and global market, so we go into this period of political unrest in north africa with a fairly strong arc with prices breakout of a range of $75 to $80 a barrel, which they were in most of last year to over $90 before the unrest began. we saw most forecasters expect dean allowed him to be a year in which prices would challenge to

the $100 range. so this is a strong market we are in. and i think we now have the situation in libya were about 1 million barrels a day had been destroyed to. last year, opec began increasing demand. non-opec supplies were increasing. and that's going to continue. most forecasters now believe that given the uncertainty about libya and whether it will spread are now looking maybe two at $10 or $20 to that price. we have seen already between five and $15, depending on your views of a pure premium in the oil market. despite these demonstrations, the most important concern is

will it spread to algeria, were demonstrations have existed, even to places like saudi arabia, which so far has been a spirit of any disruption. we have the capacity to meet the 1 million-barrel a day decline in libya. if it spread, who will most likely require and the president has said that the administration has prepared to use the spr, should that become necessary. assist in marketing to adequately supplied rate now. i think that the proper course. but continuing monitoring, continuing working with partners within the iea and others in the oil crews and communities, probably the right thing to be doing now. however, the spr is a powerful

tool, should this disruption increase and it could be used to manage the exit patient a further risk, which is out there. and should the disruption expand may well be necessary in court nation with their partners in the international agent the tuc sbr. opec countries have said they are prepared to add barrels to the mark in saudi arabia has said he done that. over the longer term, of course, we have any issues that of arty pin in many statements here. i'm both a of the equation, reducing demand through efficiency and the increasing supply. i think it is important that the u.s. energy policy recognizes the long-term nature of the investments on both sides of the

equation that michelle outlined. come on the playa site. on side, there are a number of things that we need to keep doing, especially improving efficiency and automobiles through policies like café standards and other incentives, certainly using market mechanisms to incorporate the externalities of both security and environment into the price that we pay to facilitate development of natural resources that's the important work of this committee. and i think the infrastructure needed to develop things that was mentioned as a potentially large resource for domestic oil and gas. it is important that facilities be encouraged, things like

imports from canada should also be cursed as well as continuing to improve on the amount of money spent for r&d to link to detect allergy and innovation that both of your opening statements indicated would be required. there are many other specifics, but i'd like to leave that for the q&a and once again thank you for the opportunity to be here today. >> thank you very much, mr. caruso. next we'll go to mr. rusco, accountability office, you're recognized for five minutes. >> thank you, mr. chairman and members of the committee. and please to speak with you about department of the interior oil and gas produced on federal lands and waters. in the context of economic impact of these domestic resources, the department of the interior manages the federal lands and waters for oil and gas

exploration development and production. these activities provide an important domestic source of energy for the unit pace, create jobs and oil and gas industry and raise revenues that are shared between federal, state and tribal governments. oil and gas exploration and development tv has been correlated with oil and gas races over the past 80 on federal lands and waters has generally increased. however, during the same period, interior has found it difficult to strike a balance between encouraging domestic oil and gas production on one hand, and on the other, maintaining operational environmental safety and providing reasonable assurance that the public's financial and other interests are being taken. i will focus by remaining remarks and out into your can improve its management practices and implementation of laws and regulations to provide reasonable assurance that the

interest are protected in that development of federal lands for oil and gas can continue in a timely and efficient manner to contribute to the nations stability. interior has struggled to higher train people with enough skills to keep up with its regulatory responsibilities. for example, in 2005, the reported blm staff could not keep up with increased applications to drill. the agency ended up pulling staff were hired to do national environmental lack reviews to instead applications to drill. in 2010, we found the staff is he unable to keep up with the increase for a associated with public protest a proposed lease is envious approval -- lease approvals were late, which created uncertainty in costs for oil gas companies. improving interiors could lead to better protection of the environment as well as issuance

of leases. interior does not have a centralized process for improving use of the type ologies of oil and gas leases. at best, this post on the process for improving the tape allergies that can improve oil and gas production and a brisket prevent new technologies from being deployed or allow an appropriate technologies to be used. further, interior has not been consistent across field offices in completing production verification inspections and oversight, leaving uncertainty about whether the public is getting a chair oil and gas revenue. creating more consistent practices and interpretations of laws and regulations that benefit both the public and oil and gas companies. revenue collection is a broader concern. and to does make, we reported that interior has not comprehensively evaluated its revenue collection schemes in over 25 years despite significant changes in the

industry. the current revenue collection scheme is complex, including payments from companies such as bonuses paid for the right to develop a release royalties for gas found, corporate profit and other taxes and land grants as well as subsidies including royalty relief, tax credits and favorable depreciation schedules. interior is currently undertaking a comprehensive study of the system and we hope there will be ways to simplify and improve the complex schemes for the public can have confidence it is receiving an appropriate share of revenue that oil and gas companies continue to view the united states as a desirable place to do business. inclusion, regulation and management of federal, oil and gas exploration, development and production should have two important goals. one is to protect the financial and other interest of the public and provide confidence that oil and gas development is safe and

environmentally sound and to reduce uncertainty in any unnecessary regulatory burden on oil and gas industry. striking the appropriate balance between these two goals as importance of the country can continue to enjoy the economic and strategic and effective domestic of domestic oil and gas production. thank you. i'd be happy to answer any questions you may have. >> thank you, mr. rusco. and again, i said this earlier. i really do think the panel for adherents. that is very, very helpful and if they mention your full singable appear in the record. we'll begin questioning then i will start. ms. pierce, second stay with you. there's always a lot of discussion about reserves that we have. remember discussions going way back in it seems like when it aeration happens, however it is reserves get larger. i say that's very broadly. boulware and federal lands or waters come up from your

research, that currently are not open for development of the largest reserves? could you point out or he cannot fight two or three of those quiet >> so, you probably well know there's a difference between resources and reserves. reserves, which is a usgs does technically recoverable. some of the largest producers are open and are producing. but there are clearly areas offshore and i don't want to avoid your question, but i want to do it justice. and so, i would refer to do for it, to the research, look at resource numbers, with soft ltd. provide the answer in writing. >> we want to get accurate information, so that's good. >> and i was going to ask, dr. whitney, you pointed out there's a difference between resources and reserves. and i noticed in mr. whitney's report, they talked about that.

could you go more in depth as to the explanation between reserves and resources clacks >> short. >> reserves are amounts of oil or gas that have been proven to it is through drilling. companies use reserves as word of an inventory that they will produce at some point in the future. as those reserves are produced, they add new reserves, either through reserve growth and an existing field or through development of new fields. for that reason, reserve values, preserve numbers tend not to vary wildly. they may creep up and down, but over time they don't change very much be keys these are amounts of oil that companies keep in reserve for production. the undiscovered resource is our

geological estimate in areas that either have not been trailed or include some field, but extend beyond the seals. those geological estimates are based on several geologic fact there is within the base in the region, such as the existence of a source route that is rich in carbon, most experienced thermal histories for oil or gas and there must be the existence or potential existence of reservoirs and traps. so there is a comparison between undiscovered resources and the resources that have been produced in other basins. there is an estimate that is derived from statistical

treatment of the parameters and compared to production in other basins. the undiscovered technically recoverable resources re: geological estimate. either way, because they recoverable, the number changes as technologies evolve. >> is it fair to say with a comparison then that just in general, resources -- a book that quantifies much larger than reserves because you know pretty much represents our? >> that's right. and reserves typically are composed of volumes of oil that are moved from the undiscovered category to reserves and into production. >> i guess that's why hearing in the past when people are talking about the term used. it always seemed to exceed because resource insert after

but. >> that's interesting. i appreciate that. my team is going to expire and so i yield to the ranking member, mr. markey. >> thank you, mr. chairman. my republican colleagues like to say we are not doing enough trailing in the united states. a lot of the numbers that have been tossed around by witnesses of fundamental point that i believe our country must comprehend. we have 2% of the world's proven oil reserves. we improve 11% and we consume 25% of the world's oil on a yearly basis. 60% of the reserves, 11% of the

oils produce, 25% of the oil we can soon. now, i've put together a graphic to help us to take these numbers together and understand what they mean. this is the noblest tradition at the rate at which our country is producing its reserves and compares arab or an rates to of the other top 15 oil-producing countries in the world. what do we learn? no other nation on earth is matching the burn rate of the united states in terms of consuming their own reserves. we consume more than any other nation. we are burning through our savings, our reserves faster than any other country on the

planet. as you can see down here, and iraq, then assail the, they have very low birth rates. in the long run, is a shot which obviously is going to cost our country great problems. i guess what he has to you, mr. carissa, is the burn rate of our reserves sustainable over the long-term? yes yes or no? >> ultimately, we will reach the peaking point and we did reach that in 1872 in terms of domestic reserves. how long can it go? it can be a very long tail, but clearly we will be, based on anybody's forecast, we will be importing a significant amount of oil for his falling out as can see.

>> mr. rusco, do you agree? >> know, unless we discover some new reserves were developed more reserves -- it can be sustained, but at most likely declining. >> and do you agree, mr. rusco? >> yes, inevitably at any rate of production, we will eventually reach a total be followed followed by a decline. we have reached a peak, but they are maybe a long tail. there's a lot of hydrocarbons out there and we don't how fast will be a lot to produce them. >> which countries are the oil-producing countries in the world? which of these countries benefits in the long run most

from the fast burn rate of the united states in terms of its oil reserves, mr. caruso? >> well, the opec member countries at the ones that have been most determined to manage the praise. they aren't always successful, but clearly i would say in general, opec countries are benefiting. >> do you agree with that, mr. rusco? >> yes, i would say that loyalty in a global commodity, in some sense, it really doesn't matter where the oil is produced. price is determined by oil demand globally, and the benefits and costs of that accrue globally. >> in this context, the faster we burn down our reserves, the

more powerful in the marketplace those that have massive reserves the balance of the century will have in terms of influencing the price in the market for the work of the cartel, which united group that, mr. rusco? >> i agree i agree about the cousin successfully managing the price and that is a long-term strategy. >> but gentleman stands at higher. i now recognize the gentleman from louisiana. he met thank you, mr. chairman. first of all, went to complement the panel because this is some of the most cogent and formative stuff we've had in a long time here. you know, we are approaching in some cases past $4 a gallon for gasoline. and just as the law of gravity of everything must come down, the same applies to pricing for

commodity. it's all about supply and demand. we do see some spikes at times when there are disruptions or economic issues that may come up. the underlying pricing is all about supply and demand. what is interesting is that to the two worst analogy, where you have alternative energy reasoning the fossil feels for hydrocarbons, what we see particularly is an explosion of discoveries we didn't know we had. and also with new technologies that can exploit to get to those we have in unable to before. ..

ben bernanke testified on march 1 on banking housing and urban affairs. he said it would represent a threat to economic growth and overall stability. stability. now we hear the obama administration would rather release oil from the strategic petroleum reserve, when in fact we have as i understand now 1.3 trillion barrels of oil equivalent in the ground just here in the united states, which is the largest in the world. so, despite some of the things

that you're hearing today, information is coming from your agency and is telling us that we have a lot of stuff we can use for many years and that is the whole problem with alternative sources of energy is it's still not competitive in the marketplace. why? because overall we still have a very abundant supply of energy ahead of us. but what's interesting is in 2008 now energy secretary chu told "the wall street journal" energy prices are the linchpin to an energy overall. somehow we have to figure out how to boost the price of gasoline to the levels of europe. so we actually have people in washington who are working to get that price up when the rest of america is going to the pump and seeing a 50-dollar fell in their car jumped $75 that's crunching the family budget. so i would just like to have some responses to some of the

other panel members today just real quickly how you may respond we will start maybe to the far left over there, to my left, your response to some of these comments and statements that we've heard today. >> in terms of what specific aspect -- >> well, about -- i think that you are hearing different versions. what is our ability to be energy independent in this country using hydrocarbon, realizing the we've gone from 30 per cent dependency overseas tunnell 60% and we are shutting off anwr commission and of offshore drilling. we have it under attack which would severely construct our flow of natural gas. what in your opinion is the future of hydrocarbon if we are allowed to exploit those and how

it affects prices. >> well, currently coal, natural gas and petroleum provide the vast majority of the u.s. energy supplies over 80%. you know, our projections over the next 25 years which would assume the continuance of the current law and regulation would see a modest decline in the fuel share as other sources of energy, renewable energy in particular increase. but at least in our outlook for others to be a sycophant change from the current share of fossil energy system something would need to change in the current policy and other market trends we are not currently for seeing. >> the gentleman from new jersey is recognized. >> i thank the witnesses.

the members of congress always like to think we can term short-term news stories and to immediate political benefit, and this is no less true with short-term news about gasoline prices, and i guess i would try to draw our attention to other longer-term implications of the news today, which is uprisings in the middle east show how perilous our dependence on petroleum is and the melting nuclear melting in japan shows how perilous our dependence on nuclear power is and they underscore our failure to have a broad based energy portfolio and our failure to have a rational look at our energy usage.

mr. russo, - to set prices are determined by supply and demand globally, and several of you have said that sort of thing. let me ask i guess the first mr. newell, what is the scale and let's put it in perspective here of possible short term energy production. i mean, suppose there were a lot more leases for offshore drilling released in the last couple of years to hear the curious oppose or even a in the drilling on private land. what is the scale of the increase in production we might achieve compared to what opec

can do by turning defaults up and down in the short term? >> welcome there is a considerable lag in the increased access resources and an expiration and the element and the ultimate protection of the resources so there's an important issue would return to the time scale which i think you mentioned in the short run to respond to the immediate impact send crude oil supply one needs to look at the availability of the ferre production capacity in opec which is where that currently relies. in terms of the non-opec countries tend to produce available capacity at full production certainly in the short term that's where the available spare capacity -- in the longer term various -- >> i'm talking about short-term. >> in other words just to make

sure we are clear on this, opec can affect the price of a barrel of oil rather quickly compared to anything we could do by production in the united states. and i stating that correctly? >> i would say that's correct. a vast majority of that is in saudi arabia. >> there are so many things to cover, but let me just pursue this point a little bit longer. mr. marchi pointed out that over the longer term this would be more and more true, will not? because if the u.s. is warning its oil reserves faster than any

other nation and it is largely opec countries that are burning through their reserves at a much, much slower rate than we are, that means they will have more and more leverage than we will in future years. if we have 2% of the reserves, he 11% of the production now and 25% of the consumption. am i describing that accurately? please, mr. newell. >> opec countries currently provide about 40% of the global oil liquid supply and old non-opec about 60%. we and most other analysts i've seen expect the share will increase over time because the vast majority of reserves of oil are located in the opec countries. >> and because we are burning through our reserves considerably faster than they

are so we will have a smaller and smaller share even if some of these larger possibly economically recoverable by some stretch of the imagination are out there is that correct? >> you can shortly after. >> the time of the gentleman has expired. and if you would like to respond back in writing i'm sure that mr. holt would be appreciative of that. >> the gentleman from florida is recognized. >> thank you, mr. chairman. i wanted to ask -- i know all of you have probably read the report that was delivered by the commission the president put together regarding the disaster in the gulf. and i'm just curious because seem to understand this issue as good as any panel we have seen come before us. i'm just curious, i asked members of the administration

this question and i'm curious of your answer. in light of the president's statement that he believes holley oil prices are acceptable he made that statement august 20th 2008 that it is a necessary occurrence to push us in a direction to make us explore other energy sources, and it seems that with the department of interior's issuing a 720 violations to bp, which is bothersome to me and not rescinding the jones act, in light of that to help contain the oil spilled into the goldfine just curious and this is a yes or no i'm going to run down the line here. mr. rusco, does the government bear any responsibility, any?

for the disaster in the gulf? >> the commission said -- >> i'm not interested in the commission. it already been here. i'm interested in what you think i've got time, yes? >> yes. >> yes. >> yes. >> no, you're on the panel, just you and me talking. forget all these other people. it's just you and me. give me your opinion, ms. pierce. >> [inaudible] >> i understand it's difficult and that's why i asked it but it's really not that difficult. 720 violations cited, refusal -- and this is my time, that's right, asking the question. yes or no?

>> [inaudible] >> you don't know? so the 720 violations and the refusal in containing the action and rescind the jones act, in light of what we have seen, the underwriting of the oil exploration in countries like brazil by this administration you're telling me the government has no responsibility and mr. salazar is an amazing man and has 70,000 employees at his disposal of 12 billion-dollar budget to can focus like a laser beam as he stated last week in testimony here. do they bear any responsibility -- 1%, 5%? >> [inaudible] okay. and that is where that oil -- the well was? thank you. mr. newell. >> the congressman, respectfully i have not evaluated the issue and so i'm going to decline to answer. >> really? you would rather report -- >> with the gentleman yield? >> yes, i would.

>> it's difficult sometimes when you call members of the administration albeit different agencies to respond on those questions in deference to my friend, and i know very well how focused he has been on that but i just wanted to make that observation. >> let me ask what my remaining time -- with the remaining china mr. newell, do you believe with the decline of over 250,000 barrels per day do you believe this will cause job producing companies to remove their rigs from the gulf and move to other countries are not of the world? >> in the short-term energy outlook we are having a decline of 250,000 per day relative to last year in the offshore gulf of mexico oil production which is maybe roughly half of that one could attribute to the well below what moratorium and subsequent regulatory situation.

the other half is due to possibly natural decline because we've been on an upswing in the production in terms of they're certainly job losses associated with the coin production there in terms of their rigs and their specific location early on there hadn't been much movement of the rigs. to be honest i haven't recently tracked exactly where they are and so i couldn't comment specifically on that. skimming the ones missing are not in the gulf? >> so they are somewhere. they are somewhere. we know their somewhere. they are not where we would really need them to be though. we know that. >> correct, there are rigs that are moving? >> it's true at some point in time they will move on. early on the last time i looked closely they hadn't because they were waiting in anticipation that there would resume and so

at the point in time when i last looked there hadn't been significantly movement but there was a while ago and so i can't comment on mix ackley with the situation is today. >> the time of the gentleman has expired. >> thank you mr. chairman. >> mr. speaker to come in your statement on page two you said that what you're about to discuss in your report did not take into effect what happened in japan and japan would definitely have an impact on what you are looking at this short term energy outlook. can you tell me if you were to calculate that into your statement here what would have an impact? >> sure. the short term production and price outlook reflected in the testimony is from the outlook which came out a couple of weeks ago and since then we've seen significant fluctuations in oil

and gasoline prices. in terms specifically of japan, yesterday in terms of immediate response we have seen the decline in the oil prices which i think most of us with associate to a concerned about to be the decline in the economic activity, immediate decline in the requirement for fuel but also brought sense that there was a hit to japan's economy and has global implications. as of yesterday, the price of oil was down significantly. today it is up again. so in terms of how this shakes out there's a number of things going on right now in the global markets. there is the principal on rest in the middle east and north africa. japan was weighing on that yesterday, but today it seems the resurgence is more associated with again turning to the unrest in the middle east and africa so the same thing would have to reflect the effect of japan we will see over the next several weeks how that unfolds. >> my next question is for

mr. caruso. you are in some reports the you've been quoted in your speaking about the release of the oil from the strategic petroleum reserve, and for all of us the main question is how does that then translate to the consumer? can the consumer expect some kind of release if we were to go to the releasing of oil from the yes br? could you comment on that? >> i think it depends on the amount and the duration of the release. but we saw both during the iraqi invasion of kuwait and the post-katrina releases that were presidential drawdowns that did have an impact on lowering the price of oil from where it was before the release and after so it depends on specific circumstances and a significant release for a relatively long duration which in my view would

be 30 days or more and could have an impact on the price depending or whether or not the opec countries might respond by reducing their production. so it's a lot more contingent on what happens elsewhere in. but in the specific answer is it could have an important effect depending on the volume and the duration. >> is their anything else that could have an impact like that in the short term? is that our best tool to reduce the price for the consumer right now that you can think of? >> added that particularly if it is done in cooperation, coordination with our international energy agency point partners is the most important short-term crisis management tool we have in our

arsenal. >> thank you. my next question is for the director rusco. it seems to me you are talking about two different things in your report. one is the revenue for the interior feel your i guess for the lack of a better description for the monitoring of the revenue source. and second is the permits and what is going on. can you tell me if in fact the permitting system or the leasing system by the interior has really resulted in the loss of the revenue? >> that's very complicated, but we do think that the efficiency of the management of permitting leaves a lot to be desired and could be done in a more efficiently if interior could do better work force planning and better management of its human capital assets so that it had the right number of people to

respond to changes in either applications to drill or nominations for land to be leased but also to respond to public protests of the leases and it hasn't responded to those kind of changes very effectively in the past. so there have been delays. the delays on the leases associated with protests have been a matter of months though not years or anything like that. >> the time of the gentlelady has expired. the gentle man from colorado. >> i appreciate panel taking the time to be here today. i'd like to start with mr. newell first. i've come out of the district of colorado to where we have a tremendous

>> can you give us an idea where we are looking at oil, how many

potential barrels of oil or captured? >> there is a tremendous amount. >> can you give us an idea? >> we just recently did a re- evaluation of that. i do not have the numbers at my fingertips. we did not do a technically recoverable resource estimate. it is one technology that has proven that there is a lot of potential oil. >> it is an investment in technology to liberate this energy, america can have a bright energy in terms of energy development in this country? quite possibly.

>> i have no idea what the peake might be. i do not think people can claim to know that. the earth is a huge place. geologically, we have abundant resources that we have not begun to explore or learn how to utilize. i think what we are faced with or periodic constraints. how demobilize investment and direct that into a new place and new areas, new technologies? every time we do that, we report -- we replenish our production. that is what we do in this country. it is unfair to look at burn rates. it is my understanding that what we are very good at is moving from that resource category to a reserve category to production. we do that in a very efficient way. it is a powerful process that has to be better understood and

shepherded the right way and manifest the right way. i do not see any reason to think about peaks or other constraints. i think the constraints have more to do with how we feel about our resources that are available and the various options we have for developing them. >> we have had a lot of comment. if you can never take the politics out of everything. in regards to u.s. energy production under the obama administration, can you give me an idea, in regards to our on short places that are producing after 2008, how many of these were due to leases that were approved by the previous administration? >> i really cannot answer that. that is not in the u.s. geological survey. we will be happy to give you that answer. >> we hear that we have 2% of

the oil's reserves in this country. there is a lot of opportunity for this country to be able to develop our resources right here at home, to switch in terms of how we use some of those resources. when it comes to be able to drive our vehicles, those opportunities will be there. thank you, mr. chairman, for your time. >> the gentleman's time has expired. >> thank you, mr. chairman.

one point i response to a statement made by my friend, mr. sutherland. there are actually more rigs in the gulf of mexico now than there were before the bp spill. there are 125 rigs in the gulf compared to 1221 year ago. i just want to put that on the record. i have a question for mr. newell. speculation is pointed to when it comes to a rise in oil prices. last year's wall street reform legislation included provisions to regulate these kinds of trades to the commodity trading commission. however, hr-1 would cut funding by $56.80 million -- almost a

third of the agency's entire budget. this is despite the german recently testifying before the senate agricultural committee that the policy does not have enough funding to properly enforce these provisions under the wall street reform bill. can you speak to the role of speculation and the price of oil and the difficulty of addressing these problems with the budget was reduced for the agency in charge of the cracking del on speculation by almost a third? what is your position on role of speculation? should we be cutting out the money used to scrutinize the speculation? >> to the first part of your question, speculation clearly

has a role in the oil and commodity markets. because commodities are storable, there will be an expectation about what the price might be in the future. therefore, and there will be actors in the market voicing their opinions to the marketplace about how they think those prices will change over time. in terms of the role of different regulatory agencies, their role is to oversee transparent and efficient markets. the proposals they are developing relate to limits in energy commodity markets. the intent of those is to prevent excess concentration of any particular actor in markets. from a market efficiency point of view, the role of that is to prevent any undue influence on

market prices. in terms of expressing a further opinion -- >> congress last year felt that speculation did play a role and, therefore, passed legislation to try to scrutinize and regulate that speculation. we want to know whether we should be -- did that legislation makes sense in the first place? cutting the budget of the agency -- it is not a huge budget in itself. but what to cut it by one-third. the think it is a prudent thing to do -- do you think it is a prudent thing to do? >> i think the decisions are loaded with policy implications.

i declined to comment on that. >> does anyone else what to comment on that? i do not see anyone jumping in. all right, i will try to find the answer from someone else. thank you very much. >> does the gentleman yield back? >> i do. >> the chairman recognizes the gentleman from pennsylvania. >> thank you, mr. chairman. gas is averaging $3.54 a gallon. i guess we started this whole situation with the drilling of oil. i take exception with one of the comments made by one of my colleagues earlier about big oil. there are families of independent drillers, small businesses -- they have been drilling oil for 151 years.

in big oil is not an issue for me. this is about small businesses, jobs, and energy security. just one quick note -- in terms of burning through the reserves, the country with the closest burnt rate to the united states is more weight. -- is norway. size probably does have a bearing on how much we use. my question -- i have one quick question that should be very easy. i will open this to the panel. is there any renewable fuel that will take the place of oil in the next decade? we can go yes or no based on your professional experience. >> in terms of a fuel that would

replace oil over our projections is biofuels. >> i take that as a note since i said a decade. >> we do not see petroleum -- >> thank you. no? >> no. >> not this century. [laughter] i refer -- i defer to the eia. mr. rusco, this is a very basic question but i think it's important for people to understand. tell us who owns the oil natural gas on and off shore on the federal land. >> who owns the gas on federal land? >> on and off federal land.

certainly based on that i'm sure you agree that that's owned by the american tax payers or i guess not all of it is on federal land. how much would you estimate to be the american taxpayers? >> i don't have with me an exact figure for that. it refers to all of that so that would be under the private land. offshore in the federal offshore is about 64 billion barrels which is federally going into effect by the public but there's more than that. >> based on the as as i have to have confidence in the stuff that is the resources are privately owned. it's the issue we brought up

against is the taxpayers own that would have a good job of production triet >> of the 219 let me move on some of the maffei tried to do some basic math, not a strong suit of mind, qalqilya approximately 814,000 square miles of the lower 48 offshore miles placed off limits by the president, noeth lease, we are not talking about the gulf of mexico. we are the most to recent leases were released so it was the remaining part. so, the 814,000 square miles off lease. that's nearly 521 million acres or five times the size of california. mr. newell or ms pierce, can you tell how much oil, natural gas are contained in the 521 million acres and as a part of your answer, would you tell us when the last modern seismograph inventory was taken of the offshore oil and gas?

>> i will defer to brenda on the second part. in terms of the major part in terms of areas currently under congressional moratorium would be the central and eastern gulf of mexico which i believe is six-point something billion barrels. that is the most promising area in the gulf of mexico and also in terms of what is available on the pacific and atlantic coast is the gulf of mexico where the vast majority of production is already occurring so that is the central and eastern part under the congressional moratorium of 2022. >> in terms of the seismic i would have to look at some of the numbers. some is recent and dated several decades old depends upon where you are in the outer continental shelf. >> the time of the gentleman has expired. mr. defazio. >> thank you mr. chairman. mr. newell, on page seven in the middle of the testimony given

the increasing importance of the opec supply in the global oil supply demand and the other issues how they respond to the increase in the non-opec supply in our production potentially offsetting any direct price effects. we hear this all the time. it is a world market. and for years starting with the bush administration the clinton of the mission, bush administration, not the obama administration might ask we file a complaint against opec for the legal commodity manipulations under the wto. i am told that it's not covered. well, the only exception is for conservation purposes. opec never pretends to be conserving their oil. they are setting the market by granting of the production up and down. they tramped up because libya, they have a price target. so, if we produce some additional oil is that likely to change unless lisieux opec and go through the wto process and

break the cartel? the can easily offset the productions here by dropping the production there. >> i think that's correct. >> thank you. >> and second, i would engage anybody on the panel in pushing this issue and legislation. i've written bipartisan problem pushing the administration, clinton administration of the obama administration special trade representative will not take on opec. i guess we are scared of them for some reason. second, mr. newell, the enron of loophole or the commodity speculation, you spoke as though we had set a stringent new limit on the the market's for the players in the market. as i understand the financial service reform accepted people who are not in accusers from this, particularly hedge funds and others and the other regulations for pension funds

and folks like that haven't been promulgated yet. so we don't have very significant restrictions get on people accumulating large numbers of contracts, dewey? >> i don't have an opinion on the relative stringency of the cftc regulations whether that is too much or too little. >> right. but, okay, the point is you are saying there is little or no effect by speculators. there are other experts as saying there is a dramatic effect by the speculators on the market because right now there is not an oil shortage but we have seen the prices run up very dramatically to the nitze if there isn't a shortage and we are talking about supply and demand one with the price run-up so much if there's a balance between supply and demand? i think there's only one other -- it has to be problems with speculators, it? >> there's been a number of factors over the last several months of driven prices higher. there's been a rebound in the

global economy and i know that is sometimes hard to appreciate here because the u.s. still has a high unemployment rate but there's been a rebound in the global economic growth that has led to visit the degette resurgence in a global demand service that brought prices back up in the the 75 to 85-dollar per barrel range in the last quarter of last year there was increased high demand for the fuel which led to the fourth increase in the prices and on top of that we had the recent unrest in the middle east and north africa which has on several of the market and has taken about at least a million barrels per day of the market and has also unsettled during the center of the -- >> and they have so i guess the question is where is all of that money going? i know where some of it is going. exxon's profits last quarter of last year was the largest quarterly profit for any entity in the history of therly proces?

that's just supply and demand, no speculation involve criminal manipulation, nothing. u.s. consumers just say that's the way it is. is their anything we can do about this? >> if we let all the leases we discuss that because opec will just drop -- they want to keep the price target they can keep it. we want to come into the wto. we've got exxonmobil operating with such market quotes they can drive the market, too and increase their profits 53% in one year. it's extraordinary. do you have suggestions how we can deal with that? we of long-term issues by supply and