of supply here in the united states, it is important to be able to hang on to that and access it. because of the ride he of changes in terms of logistics in the region, as well as the changing in terms of the types of crude we are importing and the types of crude we are making , and being able to tap into that in terms of volume and timing is incredibly important. sen. cantwell: ok. but in general, making sure that we are protecting -- if you were looking at terrorism overall, protecting these transportation sectors of the major supply is something we should be concerned about. senator cowan absolutely agree with you. senator harwell: if you look at the external buyers of isis oil, assad regime. it is front and center. as you said senator in your remarks, it would be incredibly useful for russia which has played a destructive role in syria to date, to use its leverage over the assad regime to try to get them to cut

buying oil and gas from their own enemy, isis. that is the largest external purchaser of isis produced hydrocarbons. sen. cantwell: and then, about the impact of bombing the wells themselves. how is it for them to recover? they have had these modular systems, what are we doing here and why is this important to , them to focus on the money aspect? harwell: as you noted last year, when the military began bombing these modular refineries in a syria, isis adapted. they moved to what dr. crane described as teakettle refineries. where the oil is spoiled in open pots and refined in a crude way. perspective,ry those are easy to repair as well

, as the wellheads. from the military perspective, keeping up the pressure on those targets. they know that if it will take a week or two to repair, it will be hit again right away. keeping up the tempo, the operational tempo of the military targets is important. as is the steps the military has begun to take on the distribution methods. to focus on what happens to the money after isis burns it from -- earns it from the oil revenue. from the military front, there are things that can be done in terms of targeting cash houses , and raids on high-value targets. the attack on the isis finance manager was an important step earlier in the year. things like that can happen. again keeping up the pressure on , money exchange houses, and informal places that might help isis move its cash out of its territory into the rest of the

world. sen. cantwell: you are saying we need to be an adaptive and move as they come up with new techniques. senator harwell: absolutely. >> national security, protecting our families, it is on the minds of people in montana every day. it is telling to us today how important energy, american energy independence and security is to our safety, prosperity, as well as the entire world's. count me in as one that believes we should remove the ban on u.s. oil exports, and move or word in the american leadership in oil production. the irony to think that the president just moved forward with removing the ban on iranian

oil exports. we are the only nation in the world that still has a ban on the exports cannot be overstated. i hope we will soon remove that band. -- ban. it is good for the american people, and our economy. i think it is good for the world. as we look at what is going on right now with isis and the testimony we heard today that one of their leading sources of revenue is from oil production. it seems like it is pretty clear that there are two parts of our strategy. one would be to increase american oil production. hopefully we can address that by removing the oil export ban. the second is destroying isis oil production and revenues. attack.two-pronged in the last couple of months, we unfortunately have seen the second largest attack in europe since 9/11. the largest, most lethal attack on our soil since 9/11.

interestingly enough it seems like the tempo of attacks on isis oil has increased. my question for mr. harrell, i have heard from the intelligence -- i am not convinced, you said that one of the most effective ways of fighting isis is to launch attacks on its oil infrastructure. however cia director morel said on charlie rose here couple weeks ago that one of the , reasons the u.s. was not doing this was because of environmental concerns coming from the administration. do you think that made sense? mr. harrell: thank you for the question, clearly the administration has had a number of concerns over the last years as it thought about the operational tempo of attacks including the need to gather intelligence and knowledge about what collateral costs might be. whether to civilians or to future syrian production. certainly in my view right now, given the threat we are facing

from isis, while it is important to consider collateral costs, the near-term benefit of taking out revenues needs to weigh heavily on that scale. i do think it is important that we assess and maintain a robust operational tempo and focus on taking out the oil infrastructure. obviously while minimizing to the extent we can, those collateral costs. >> the words used by the administration is to contain isis. that leaves us to destroying isis back your testimony, saying , their leading source of revenue is from oil. if we cut off their revenue, that would be an important part of destroying their capabilities to launch their terror attacks around the world. mr harrell: it is clear that isis is not a threat we should contain, it is a threat we should destroy. >> thank you.

mr. webster, any thoughts on that as well? we have heard these comments that the limited attacks in iraq and syria have been related to environmental concerns. then we have paris and san bernardino, the strategies change. any insight? webster: i am a global market guy. i would agree with peter that it would seem when you are looking at this, that the cost in terms of collateral damage against what isis brings particularly as , i am looking around the world at increased risks to the global supply system over the next several years, anything we can do to roll that back would be a positive thing. >> this gets back to, we don't want politicians running this war, we want the u.s. military to destroy isis. mr. webster, my question is how would removing the ban on

crude oil exports help reduce the world's risk to terrorism. mr. webster: by removing the ban, what it does is allow the u.s. producers to ensure that they do not get such a big discount compared to global prices. that essentially removes a policy discount. at this particular time, because of high refinery runs in the united states, and because of the low price and because we have lower production, you would not see a lot of barrels leave the country. however, it it is important still to change the policy because by changing this policy, it supports u.s. production growth in the future, rather than doing it when it suddenly becomes an emergency. it is an important policy for us because it allows us to increase u.s. production. by increasing u.s. production, as we all know, u.s. production

is what i would argue is a safer place for production to come from, rather than other countries. that increases overall energy security, not just in the united states, but actually on a global basis. it must be remembered that oil market is a global market. sen. murkowski: thank you. senator heinrich. senator heinrich: i want to thank senator daines for his certainlyand i would encourage him to rather than listening to the former director of the cia on charlie rose, to talk to our current director of the cia and also the folks at dod who have been doing this targeting. the intel has changed. coo, and was a major t made our efforts much more successful. one of the things in talking to dod folks is how you make this

targeting more successful, while also mitigating and minimizing the fodder for isis to run a highly effective inspirational social media campaign which has been an enormous problem for us. obviously what happened in california was not directed. it was inspired. we need to keep that in mind. mr. harrell, you have said in the past that the targeting has had limited impact on combating isis's ability to generate funds. has the recent shift in terms of the oil tanker trucks come has -- tanker trucks, has that moves the needle substantially in your opinion? and to what proportion in terms of their overall revenues? mr. harrell: thank you for the question, i should begin by saying that facts on the ground, on a short turnaround timeframe

gather. together -- to it does appear with that copy a that the latest military campaign is having an impact. as a clear it is serving deterrent to people who previously thought they could ck bucks loading and selling oil. now, they think they need a of work. -- work.k -- new line of it is clear that the impact on the trucks and the larger scale strikes on the oil and gas separation plants -- that is definitely having an impact. what we are seeing is a useful and welcome operational tempo that i hope is maintained going forward. senator: i would agree with that estimate. do you have opinions on whether

it makes sense in addition to targeting those large industrial scale infrastructure like the separation plants, does it make sense to try and target the very small teapot refineries? mr. harrell: that is an excellent question. i think i would note two cautions about whether it makes sense. by all assessments, they are not first, directly run by isis. isis runs wellheads, runs a large infrastructure. these are run by entrepreneurs who have the unfortunate reality of living under isis control. i do not in anyway want to defend what they are doing refining the oil, but they are not isis employees. they are simple kinds of things

that are easily repaired. if there was a way of doing it while minimizing civilian casualties, at a tempo where you could take them out of commission. doing that in practice will be challenging. senator heinrich: that is the challenge that our targeting folks at dod are wrestling with. dr. crane, i want to ask you something that is related to this, although it is not directly touch on the oil financing piece. i want to understand how , substantial is the economic impact of the iraqi government continuing to pay the salaries of iraqi employees who live in isis controlled territory? how big of a problem is that? obviously those salaries are taxed by isil as well. much of that money is propping up the economy in that contested area.

dr. crane: excellent question. the iraqi government has stopped paying mosul. some of the other communities continue to be paid. i could not think of a better policy decision. i think the first decision on stopping payment in july in mosu l was probably the single biggest impact on isil i'm -- isil financing that has taken place so far. senator heinrich: there should be a complete cessation of financing. ilt only in mosul, but any iso held territory in iraq. dr. crane: hopefully, falluja will soon no longer be under isis control. sen. murkowski: senator cassidy. senator cassidy: very stimulating.

first, madam chair i would like to submit for the record, and editorial we just published yesterday. regarding the nexus between exporting u.s. oil and reducing global co2 equivalent emissions and reducing funding for terrorism. the article points out that the iranian oilfields emit about three times the co2 equivalent as u.s. gulf of mexico equivalent to -- equivalents. if iran brings up their daily output right to million barrels per day, they will emit 100,000 more metric tons of co2 equivalents per day. 36.5 million tons of co2 equivalents per year. it lowers global co2 emission by

exporting u.s. oil. let me credit my colleagues in the back mr. , gorman and mr. jack crampton for their health in research. mr. crane, in your testimony you said that one thing we could do to help shut down is that although isis is awash in cash, they do do business with large enterprises, and at some point might attempt to move that cash into banks, if they have not already done so. after treasuries could go them to increase costs. why have we not already? we should have done that a year ago. have we attempted and been unsuccessful? is it a pathway we have not pursued? dr. crane: my understanding is that they do not use banks much.

the question is that there are a number of heavy trucks, some of them are operated by fleet operators. what i think would be useful is to make sure that we have intelligence about which companies, some of them located in surrounding countries or syria, are operating those vehicles. you can then go after them. by lowerthe trucks are operators. senator cassidy: you mentioned large companies that they must deal with. i am sensing you know which large companies those are. have we gone after those? dr. crane: there are some in the kurdish controlled region that have been accused of doing that. i do not know if we have actual intelligence. senator cassidy: mr. webster, you emphasized that the u.s. shale production has contributed not only to u.s. but also global national security and we could do more so if we

allowed oil exports. i am struck that we just assume that the fracking industry can rise and fall effortlessly. from the feel i am hearing, prices have been low so long, now, the production capacity has not only been idled but the workers have dispersed. we cannot ramp up in one week. this fracking capacity, but rather be reassembled over at period of time. the longer we go, the longer it would take to revamp. is that correct? webster: thank you for that question yes, the longer it will , take to reassemble them in terms of the kit and the personnel. while you can bring production backup when there are market signals, the longer that they are not at the high level of investment, the longer it takes. senator cassidy: the more we dillydally, the longer it will take to reassemble.

it will hurt both national and global security. senator: absolutely. senator cassidy the carnegie : institution for peace says the iranian oil production emits three times the co2 equivalent as the u.s. you mentioned they will likely move to refinery capacity. have the iranians shown the refinery business any concern for co2 emission? ms. vakhshouri: i cannot compare the efficiency and emissions and the facilities in iran and the united states. yes, they are going to be producing more emissions than those in the united states. i would like to mention something about iran's crude oil and that is the different kind , of crude oil. different markets and different types the refineries.

senator cassidy: i am out of time. i have one more statement to make can i ask you to hold that , and submit that record for the answer. i apologize. ms. vakhshouri: one more point. the additional refinery capacity would not be as emitive. senator cassidy: we have heard miss yellen the other day that a decrease in u.s. oil production is a drag on the economy. we get from the aspen institute, if we allowed the export of oil we would create new jobs and increase gdp by $141 billion. we hear from mr. wester that by exporting oil we would increase national and global security. if we do not tend to it, we will lose that opportunity. both on an economic and national , security and environmental basis, there is such a strong case for allowing the u.s. export of oil, i cannot imagine

why the administration does not allow it. i yield back. curious, weas understand that isil derives its revenue from taxation. dr. crane, you mentioned that iraq has stopped its payments to persons who live in isil controlled territory and that it was a good thing. what happens to those people? what economic -- what income do they rely upon? is there any concern that stopping this payment, what will happen to these people and where they may turn? dr. crane: a good question. that is why the iraqi government has been so hesitant to turn off those payments. what we are seeing though is

people leave isil control the controlled territory. iraqi christians and iraqi sunnis have all been persecuted and attacked by isil. isil is trying to keep people there. what is happening is we're seeing people leave if you are an iraqi teacher, dr., or civil servant or doctor, and you leave muzzle, and they go to baghdad or a kurdish regional controlled territory, your salary be .estored it is not clear how much they get to keep. isil is not a charitable institution. senator: it leads to further instability in syria and other areas. mr. hamill -- mr. harrell, excuse me, right now the position of the undersecretary is vacant.

you talked about targeting cash houses and exchange houses and going after financial institutions that support isil. this position is vacant. this is a person that leaves the efforts ofleads the our country to counter terrorist financing. how important is it to fill this position? mr. harrell: i worked closely with the administration's nominee for the position. is certainly zubin an incredibly effective individual at combating the financing of terrorism. i think it would be very valuable for the treasury department to have him confirmed. he is obviously working diligently every day. as you know, there is a difference between working in an acting capacity over there and actually being confirmed and in full authority.

i certainly think when you're looking at what treasury can do to combat the financing of isil, having their entire team in place including the undersecretary would be valuable. senator: does anyone on the pedal disagreed -- panel disagree that we should go ahead with this confirmation? nobody disagrees. thank you. another question, mr. harrell, you noted in your testimony that there is a flow of oil related equipment that supports isil's revenue stream from oil and we should target this flow of oil related equipment. do you have any thoughts on how the u.s. could best do that? do we know who is supplying all of this oil related equipment? and what we can do to stop them from continuing to sell the equipment to isil?

mr. harrell: the answer to the second question, if the information is imperfect. gathering additional information so the treasury department can sanction the supply networks is valuable. i also think that short of sanctions, there are a couple of steps that can be taken. for example, reaching out to businesses, both the government and the region and to traders to make them aware of this problem and of the potential sanction consequences if they do sell equipment to isil. the region is awash in it. some people will be selling deliberately, some people will be selling to any buyer that comes across their door, and making sure that the business people selling this are taking these steps. i also think it would be valuable instead of having the sanctions focused on sales to

isis, which can be hard to show. you have to really document this. sales across the borders into isis controlled territories and prohibiting it at a territory level would be helpful. submitter: -- senator: i am running out of time, but what countries are the most likely suppliers? mr. harrell: iraq and turkey. both of them are awash in oil equipment. i would recommend engagement there. sen. murkowski: senator gardner. senator gardner: welcome to the committee. thank you chairman murkowski. to the witnesses, thank you. the first question i would address to mr. webster.

earlier this week, we heard testimony from the nominee to the department of state. talking about the impact of the sanctions we had in place against iran, and how this sanctions had cost the iranian regime $150 billion because of lost oil revenues. how long would it take iran to recoup those after sanctions are lifted? mr. wester: i look at volume and not dollars. i would say probably someone else would be better. ms. vakhshouri: the volume of their exports has dropped severely. on the numbers, because at this moment they do not have access to the funds outside of iran. on the numbers, i cannot give a statement. on their portions, their exports and revenue dropped significantly. even in their budget.

before 2011 iran's export was , 80% of its revenue. 60% of its government revenue. even the share of the budget dropped from 70% to 33%. >> it will be recouped by additional sales. correct? ms. vakhshouri: they make money, of course. >> will that be used for the funding of terrorism? >> i am not an expert in terrorism. i look into the industry. after 2012 sanctions, the influence of the groups that the u.s. considered as supporters of terrorism, they had better access to the network. >> would anyone like to add to that?

increase in sales to iranian oil, that money would go to state onto terrorism? at least some of the money? mr. harrell: some will go to the syrian regime. >> which is killing us on people -- its own people. harrell: -- imagine themcan getting that money. mr. harrell: low oil prices have been hard for some of the energy producing parts of the country. it has been good through -- for national security. >> for the u.s. to change its export policy come it would

-- export policy, that would actually improve u.s. national security? mr. harrell: i would have to defer to some of the experts on the panel. >> the revenue has helped our security, correct? displacing their exports by u.s. exports would help us? mr. harrell clearly, low oil : prices help our national security. there are strong national security arguments for allowing u.s. exports as part of a balanced package, but also addresses a variety of environmental issues. i am not an expert on the domestic side. senator: does it improve our national security? >> absolutely. >> thank you. i wanted to talk about some of the visits we have had from korea, from japan and all talking about u.s. exports. they have also said that teams that have been traveling from japan, for instance, to iran to talk about additional energy

opportunities there. do you anticipate our allies entering into export agreements? >> thank you. i know that iran is trying to get strands together -- terms together so they can entice some of these companies to come back. i think it may take some time to do that. i think iran does represent a -- represents a lot of opportunities for these companies and countries outside of the united states. senator: i want to ask one final question. several of us have requested that the president increased the deployment and embedding of the joint terminal attack controllers to help find and identify targets on the ground. would that be useful in targeting oil production, oil development, oil transportation in syria by isis? i would love to hear anyone's

response. dr. crane: this is personal. i was in iraq for three months in 2003, 5 people i knew were killed. every time, my daughter works with the navy seals. every time we deploy u.s. troops, i recognize the cost with that as well. it would probably improve targeting. mr. harrell: i echoed dr. crane these are complex decisions but , gathering intelligence improves targeting. sen. murkowski: thank you. senator barrasso. senator barrasso: the testimony was fascinating. in the testimony you state, we have to acknowledge that u.s. and coalition efforts to date have at most limited success in actually reducing isis oil revenues.

you went on to explain that the current estimates of $1 million to 1.5 million dollars a day are largely unchanged from an estimated million a day that the treasury estimated isis earned a year ago. finally, you say that one of the lessons of the last year is that limited strikes on isis oil infrastructure are not strategically effective. you served in the obama administration between 2009-2014. you worked on president obama's 2008 campaign. can you give us any insight into why the president has decided not to change his strategy against isis in light of these and other failures? >> thank you senator for the question. i should begin by saying i do think the significantly increased operational tempo and range of targets we have seen at dod over the last 3-4 weeks is

an important step. it appears to be having impact although the results are early. i think that it is an important step. i hope these continued -- we see continued escalation of the targeting oil infrastructure. >> we don't have now what we had a first three or four weeks. you commended the recent airstrikes on the oil tanker trucks. you commended the military's recent decision to strike at larger pieces of isis oil infrastructure that are more difficult to repair or replace. you went through a lot about how easy it was to repair a number of the things from before. you state more needs to be done. he explained that strikes on oil infrastructure need to be comprehensive and not limited. you say the u.s. military should target isis oil infrastructure to the maximum extent possible.

there should be no part of isis oil enterprise where people feel safe to work. as a former official in the obama administration, do you believe the administration today is prepared to take those additional steps that you have outlined? mr. harrell: what we have seen is a welcome increase in operational tempo. i would say obviously, it does take time to develop target packages. on the isishe raid oil minister in may provided a variety of important information that has been used all for targeting. it took time to translate that information and use it. where we are today is a welcome tempo. i hope it continues. >> i wanted to ask you, along those lines, you mentioned that government officials have concerns about avoiding

permanent damage to syrian oil infrastructure, given that oil will be a key piece in rebuilding a post-conflict syria. to what extent are officials within the obama administration can -- continued to have these concerns. mr. harrell: i cannot speak to the current thinking of the obama administration. i do think that while there are legitimate concerns, you always want to weigh collateral costs. where we are today, the threat we are facing is such that the weight of destroying the infrastructure needs to weigh heavily on the scales. >> you would agree that it is more important to defeat isis and then worry about the details , of rebuilding syria. mr. harrell: isis is the most serious threat we face today. we need to take all practical steps to defeat them. >> you also talk about, beyond

oil, the natural gas business in syria. explaining that over the last year, isis captured important syrian natural gas fields. you say multiple sources indicate that isis sales natural gas to the assad regime, hardly -- largely to fuel electricity production. you also said that you have heard from u.s. government sources that the natural gas trade between isis and the assad regime is at this point, significantly larger than the oil trade between them. do you know how much isis earns from producing and selling its natural gas? mr. harrell: i unfortunately don't have a good estimate or breakdown for that specific number. the information i and other experts have gotten on that front has been anecdotal. i don't know if dr. crane would like to comment. dr. crane: it is a complicated question because what has happened is that they ship the natural gas to a generator and then isil is paid in the form of electricity.

a dollar amount is not useful. it does help isil to have access to electric power. senator: my final question. do you believe it is easier or more difficult to cut off come cut off in terms of natural gas versus oil? any thoughts -- obviously the revenue is different. there is a price being paid. knowtural gas, as you well would be the generating plant it goes to, it would be difficult to target the pipeline for say, because it is hard to hit. whether the united states government would want to target something in syria is above my pay grade. it has applications for the horrible situation in syria. as we mentioned on the oil side, i think will -- we will decrease

revenues, but it will not go away. helpful, but it does not make it disappear. you.woman: thank you.or: thank i want to go a little bit to saudi arabia. they have continued to ramp up production, even though the price of oil has gone down. i think they are experiencing a bit of a fiscal crisis over there lacks -- lack of revenues. i have a report here that says in order for saudi arabia to 2015,e their budget in the price of oil would have to be $106, it is obviously much less than that area they have reserves, and they are i'm sure drawing on them as we speak.

ask, in light of that -- if we do, i do export -- support oil exports. do you anticipate this will bring about, in a country such as saudi arabia, and instability that could make those countries even more -- more vulnerable to isis or a terrorist group to be able to come in and -- i don't is a takeover, but become a part of that? is that a fear, or is that something, dr. crane, do you have an opinion? dr. crane: saudi arabia has substantial reserves as you know, they can run a deficit for a long time. more importantly, when i worked in iraq, there is a tremendous amount of waste in government expenditures. almost free electricity, low

prices for gas, whatever. when the iraqis finally did not , there wasine prices not a peek from a population -- peep from the population. cutsgovernments make these and wasteful subsidies, there is a lot of wasteful investment. they have been able to weather the storm. senator cowan and should be able to for quite some time. mr. webster, we talked a lot about who is using the revenues, how the revenues are used, can we boil it down simplicity -- simply to say this percent of the oil is captured by isis is used internally, is it 50%? is at 70%? what percent of sold externally.

webster: our assessment is close to my colleagues here. distribution,e rather if it is within the isis territory, or if it is exported, i am afraid i don't have that. senator: does anybody have an approximation? at is if trying to get 50% of oil revenues -- we talked about this, a lot of it is financial sanctions, they're not using a formalized financial system. they are selling this to countries, there is some way to track -- it is the old movie, follow the money -- the money -- the movieline i guess. that is the question. where do we look for this money. as a global community, i would

think financial sanctions. unfortunately we have had the single largest set of buyers have been a small teapot refineries. once a ghost from gasoline and diesel, a goes everywhere -- it goes everywhere. the largest single sales have been to the syrian government. -- through the syrian government. that is the sad truth. targeting class a those,s, if one targets those people would think three times before engaging and hauling it around. senator: thank you. >> thank you for holding this hearing. i believe that lifting the oil ban is important for the country

and will help with national security through energy security our energyto grow industry in the country. we create a better economy and more jobs . we would be able to supply our allies with oil and gas as well. i wonder if you agree with that generally. if not, why not? i will start with dr. crane. economist -- an there are efficiency costs. mr. harrell: i think from a perspectiveurity there are strong arguments for allowing u.s. oil sports. -- exports. i cannot speak to the domestic side.

dr.: i think it is important that the share of the opec oil export would increase to 75% in the next decade. it is important to have. alternative resources. webster: you probably are aware, i just put out a few studies on a crude export issue. are fining -- finding is it is a clear win for the u.s. economy. it is difficult to find a case where it is not positive. >> thank you. when the united states put the restrictions in place, the sanctions in place on iran, at that time i believe iran was

exporting about 2.5 million barrels a day. after the sanctions had gone into place, i believe there exports declined to just barely over one million barrels a day. plan to president's lift sanctions, can you tell us what you anticipate in terms of exports and the growing volume from iraq -- four iran and a timeline as you see them grow? dr.: thank you for your question. depending on the timeline of a sanction rollback, iran can add about 400,000 barrels a day by mid-next year, and about 200,000 barrels per day. plan for increasing crude

oil is to ramp up crude oil pre-2012 to about 5.7 million barrels per day. , one million. --. on the crude oil side, it would be about 4.7 million barrels per day. to reach to able this production capacity by 2020. 7000 barrels per day would be from the oil. -- new oil. you're saying they already have the capital to make the investment to achieve that growth. by 2020 they would export the equivalent of 40 -- 400 million? dr.: the main plan is to regain

its pre-2012 sanctions level of 2.5. that would be their main priority. this 5.7, the refinery capacity would increase to one million barrels a day by 2020. exporttotal overall would not increase more than 500, if everything's go well. -- if everything goes well. hatcher chemical energy needs about $250 billion of investment. -- reaching its medium-term crude oil and natural gas production by 2020 they only need 50 billion. then goingnticipate back to the 2.5 billion barrels -- million barrels a day of it were by the timeline?

dr.: my anticipation is it takes time -- maximum production increase from iran would be about 500,000 barrels of crude oil. they have to shut down some of the fields. to regain that production capacity. also considering that iran's oilfields are mature, it will take time. saudi arabia think is pushing by am so aggressively in terms of -- pushing volume so aggressively in terms of oil production? dr.: for different reasons. by reducing the price, the demand raise, hopefully. gasolinend on the market would be important for

saudi's. we see how the transportation system removes fossil fuels to other available sources. seehe other side, i don't -- saudis don't see a reason to get back the market access to iran. i don't see any reason for saudi's and market wise to lose this market access. something that is important is how opec is functional in the next decade, or next few years. the way we see that iraq is citing the contracts. iranian oil and new oil regulations would allow companies to increase production.

the prices are so low, they have to increase production to make their money back. it is going to be very tough to keep the balance between the opec. >> i have one more question, do you want me to wait? i am over my time, i will defer. >> very good, thank you. >> thank you to all of you for being here today. mr. harrell, i would like to start with you. in your testimony you point out the u.s. coalition allies have had limited success in reducing the oil revenues that isis has been able to get. they remain about $1.5 million per day. can you tell me why is it that policy has failed to affect what we regard as isis's second-largest source of revenue? mr. harrell: thank you. saying, i don by

think the recently increased tempo of military strikes of the last month or so is having an impact. it is an important move interest reject direction of how to attack those. -- this. i think the fundamental change the u.s. faces there is because ins oil is largely produced small kinds of wells, and distributed widely and largely consumed in isis territory or sold to assad regime, it is really a military decision. the military set of tools are our first. i think that it probably took the administration some time to decipher the intelligence, to figure out where the assets are. what kinds of assets are available to strike those targets to get were to where we are today.

i do hope that the increased tempo we're seeing will be contained and escalated going forward. i do think that is front and center the best way to target the source of revenue. >> increased military involvement would help going after isis target. what about the policing against isis's black-market activities as conducted by neighboring states. is that likely to help with regard to our efforts to hinder isis oil production? mr. harrell: i think that is a useful step. most of the oil is consumed in isis territory or sold to a sod come at does not mean all of it. sad does noto a mean all of it. they need to take this equipment

out of commission. that would be it a very important step. i also think intelligence gaps are real. i understand how hard it is to get intelligence. taking sanctions against the guys who are ultimately buying it in turkey where you can -- identify those people is useful. inwhich of the arab states the region are the best position to help us with these efforts. increasedibute to the military action against isis? mr. harrell: in terms of the oil smuggling out of isis territories, shutting that down. i think it is clear, most of it has been -- most of it is under the assad regime, which will not help. after that, most of it has been going into turkey and the kurdish autonomous region of iraq.

i think more can be that none -- can be done there. >> most of the oil sold by isis has been interest territorial, within isis health territory. what do you think the likelihood is of this to expand? we will see a corresponding increase of the amount of oil exporting, and who if any do you see as the likely buyers and their exports? harrell: thank you for the question, i certainly hope we will not see an increase in the next -- production. i hope we keep military pressure on them. i think that is value. in pressure, we would see an increase. they know this is a major source of revenue for them.

see that they repair facilities when they can, quickly. it is important. clearly, we have to keep up the pressure. the smuggling routes into turkey , these are long-standing smuggling routes that have existed for years. >> long before isis. mr. harrell: yes, that is where things flow out. >> we would likely see action or? -- there? mr. harrell: yes. chairwoman: i will deflect my time. >> how dependent is iran on oil? if they could not export oil, how much difficulty with that create? -- would that create? what percent of their economy is oil?

ift are the ramifications they're not able to export it? dr. cohen as i mentioned earlier, iran's dependency on oil revenue decreased sickeningly since 2012. one issue is because -- decreased significantly since 2012. the lowe is because crude oil prices. iran and other producers of opec -- iran has the less dependency on oil exports. i mentioned that the share of oil export revenue in the iran budget dropped to 33% in 2015. what iran is thinking now is instead of exporting crude oil, or natural gas, exporting natural gas is important because

it creates long-term energy ties with its -- other countries. but to produce more profit products. refined petroleum products. that come from them. also using natural gas and petrochemical factories. they will increase petrochemical facilities and production capacity almost three times by 2025. also exporting electricity. they would be of course -- more income would be generated. more jobs from the government. it is hard to put a ban on the export of electricity at some point the gas -- than gas. it is hard for governments receiving electricity to be convinced to his stop -- to stop exporting electricity. >> all of that you described is dependent on oil and gas.

dr.: iran has lots of sources of income like taxing, which has been increased to subsidize oil revenue. it does come from oil and gas. they will process it. >> thank you. chairwoman: i would like to keep with the subject, but i will ask the question differently, that is, to mutations with iran and how it affects the energy ittor, specifically, how affects the conservative iranian revolutionary guard corporation. and how do i -- diversifying business might be affected. what impacts with this opening might have on getting a diversification of power and influence in the energy sector? is 80you know, iran

million in population. it has a diverse economy. happen is ofseen course the sanctions -- the foundation called the siege have crept into the economy and iran has a long history of being competitive and capitalistic. i think he and the internal -- you know, the internal, political dynamic in iran, we have seen individuals who are much more interested in integrating with the rest of the world economy, seeing the relaxation of sanctions as weakening those groups that ha