white of a brush. i believe your guest should have said that mr. trump proposed banning the entry of muslims and to our country until we can get this figured out relative to how we should let them. i believe that is a crucial distinction with what he said. daesh guest: i recognize your point. that is not providing a finite add to that band. as donald trump talks about it, until we get it talk -- figure that could be years down the line in a trump administration and could be longer than that. we don't really know because donald trump has not given direct answers to this and has talked about this more openly and left it open-ended and for

all intents and purposes when his campaign has been asked about it they describe it in a way that is a total and complete ban. that is the way you have to perceive what he is saying. host: because trump opened the door on these topics you expect more on this in the days ahead. guest: i think it is not just because donald trump but people at the top of the republican field are talking about it and donald trump is going to capitalize it. he is a campaign reporter talking about evangelical voters in 2016, thank you for your time. we will take you to the senate energy and national resources committee. we will take a look at that outlook for modded -- commodity markets. that was run by the chairman republican of alaska. we will take you to that right now.

>> we are live on capitol hill this morning as the senate

energy and natural resources committee is meeting to examine the near-term outlook for energy markets and the commodities markets. plungedrice of oil has in the wake of increased production. this hearing will help committee members shape policy going forward. republican lisa murkowski is head of the committee and she has just left the room so it could be a moment before it starts. live coverage here on c-span.

we will call to order the committee on natural resources. thank you for joining us this morning. this is the first hearing that the energy committee has had in 2016 and i think it is rather auspicious that today we are going to be conducting oversight to examine the near-term outlook for energy and commodity markets. i think everybody is interested in what you have to say, the predictions, the forecast. hopefully your crystal balls are clear and sharp this morning. it is an issue that is not only interesting, but clearly consequential in so many different ways, as we looks of the outlook for not only the energy but the mineral markets as well. -- fewre few much commodities that are more foundational to the health of our economy then energy and minerals.

many americans are familiar with their gas prices and electricity bills but i would submit it is -- responsibility to understand the complex interplay of our energy mix and the influences that drive key energy resource indicators. low oil prices leave it to lower gasoline prices. americans are enjoying that. but what is the not -- the effect with respect to our natural gas prices? fall, howfuel prices does that affect competitiveness for renewables as well as nuclear power. ,hat is the impact on jobs consumer spending, so on. there is so much that is therrelated and complexities of these are such that we require experts to come and give us a little bit of forecast as to how it all plays out. that asinded, however,

we see things like lower oil , they arethe lower 48 not necessarily reflected evenly across the united states. 10 days orin alaska so ago and prices up in gnome are in the mid-five dollar range and where i was the following , about $5.40 per gallon. they're looking with some nv at the fact that in the lower 48 we are looking at house prices above two dollars. sometimes things don't work to the benefit of all evenly and i think that is something that we keep a particular eye on in alaska. did good work in the committee here last year in 2015

and i think within the senate itself we saw the return of regular order in the senate. an energy policy we laid the foundations to modernize our petroleum reserve and lifted the ban on oil exports. more specific to where we are right now, we passed out on a bipartisan vote the energy modernization act. i am working to ensure that bill gets to the floor hopefully as soon as possible. i think it is fitting that we hope this hearing on the broad energy outlook shortly before turn tole senate might the broader energy bill. it is my hope we will gather critical, current information to inform our thinking before we go to the floor to debate 2012. --hink -- i will take all be

i will thank all the people joining us they. we have some newcomers as well and we welcome you. we are fortunate there are reams of data from government and neutral sources to help us to do understanding of the energy market and i look over to hearing from you all. i will turn to my ranking manner , senator cadwell. think you for holding this hearing to examine the near-term outlook for energy markets. i will think the witnesses for joining us on this timely discussion ahead of a potential debate on a bipartisan energy bill. energy markets have been changing rapidly in the last year and i'm sure we'll hear about that i want to emphasize a few things that. wind capacity has increased the cap by about 9%.

also a lower cost in wind power and the purchase power for wind agreements have fallen 7% to two cents per kilowatt hour, that is a 71% drop. these trends are prevalent across the united states. wind power is developed across 39 states and in nine states, wind exceeds 10% of the generation. has emerged asy mainstream over the last few years. solar has grown to more than 10 gigawatts in 2015. this debated tv systems installed on rooftops have seen the same level of growth. 80,000re are more than systems installed. this is possible because a dramatic decline in price. the cost is down 59% over the last six years.

interest in renewable energy has not been just from electric utilities and customers. was a record-breaking year for corporations like amazon, microsoft, google, who purchased large-scale wind and corporate -- and solar energy. this is more than doubled the amount signaled in 2014. these trends have also been benefiting and my home state as washington's wind industry is seventh in the country and ranks 15th in the country for solar power. it is true. 25th in the nation for total solar capacity. recent policy changes will accelerate these trends creating more jobs in reducing carbon pollution and saving consumers money. cost, inhadn't drop in part because of policy. in the addition of new policies

that will build upon the success of previous support for noble energy. 2015, thece, august plan was that it would lose power pollution as a transition to renewable energy and this past december, more than 100 80 nations reached a historic ,ccord to address, change committing nearly every country to lower carbon pollution to keep global temperatures from rising. domestic and global commitments to reducing carbon pollution will create new global market opportunities and export opportunities for the u.s.. the international energy agency estimates that four point trillion dollars and a trillion dollars in energy emissions investment will be made in the next 15 years. at the end of the last year, the omnivorous -- omnibus spending options for clean

energy credits and i will send a signal according to bloomberg energy finance, as i'm sure we will hear, it is estimated this will result in 76% more wind energy and 44% more solar energy. all of these policies continue to accelerate the trend of clean energy development and reducing carbon pollution and saving consumers money and creating jobs. i will say that this is a big factor for us to consider. there are job creation activities going on. panelport from the solar investigatory committee has found that there was a 20% growth in solar energy employment. the solar energy moved 12 times faster than the national employment growth rate during this same time. the workforce is now larger than the more well-established washington fuel generation sector such as oil and gas extraction injuries --

industries. u.s. industry has had similar job growth seeing over 70,000 well-paying jobs but it is important to talk about the consumer in this. renewable energy policy does not only create jobs, it saves money for consumers reside -- provides consumers with options. once berkeley national laboratory's renewable portfolio standard said they help through $3.7 billionand from reduce natural gas prices. recent low oil and natural gas prices have resulted in savings for consumers, for example aaa saved $115mericans billion on gas in 2015 compared to 2014. i think that is an average of $550 per driver. however these fossil fuel

commodities are susceptible to price swings and i'm sure we'll hear about that. less than two years ago prices were less than $100 per barrel. oil prices could continue to experience heightened volatility. that is over the next two years. renewable technologies which use wind and solar are not as susceptible to these price photo of these and consumers should have choice -- price volatilities and consumers should have choice. to supporttinue policies that give homeowners the freedom to generate new development whether you are an environmentalist or tea party person. we need to make sure they have access to being in their own distribution which is something i think we will talk about. thank you for holding this hope that we hear

a lot from our witnesses about what to expect from the next few years. we will turn to our panel of witnesses being led off by the administrator for u.s. energy information administration. he will be followed by the program director for the global market for the center on global energy policy located at columbia university. the managing director for capital for partners and weight -- l partners-- capital rending for that, if you would begin with the panel i know you have a we probably have

to go over our allocated five minutes. this -- >> may be couple of minutes senator. sen. murkowski: we appreciate what you will give to us and know there will be opportunities for expansion. if you would please start off. >> thank you. i really appreciate the opportunity to provide this today on the u.s. energy outlook. the energy information administration is a statistical and analytical agency within the department of energy. analysisia's data forecast is independent of approval by any other federal office or employee. my views should not be construed as representing those at the department of energy or any arm of the federal agency. major changes affecting energy markets have occurred over the

past year in the areas of global commodity prices, energy technologies, and u.s. energy and environmental policies. the annual energy outlook for 2016 which will be published by midyear will include these changes. what i would like to do is talk about last year and then we will talk about the forecast. 2015 with brent and wti below $40 a barrel. has continued with today's price trading just under $30 a barrel. , onshorefall in prices crude oil production began to decline in 2015 but it's still averaged 9.4 million barrels a day and that was a percent higher than 2014. at henry hub and louisiana averaged 2.63. dollars per btu. that was 20% below the 2014

average. continuethe rigs drilling and are highly productive. total natural gas production reached an estimated 74.5 billion cubic feet per day, higher than 2014. this almost higher than 2014. fired electrical generation surpassed coal on a monthly basis for the first time .n history that and lower exports led coal production in 2015 to fall below 900 million short tons, the lowest level since the mid-1980's. investment,ices, and consumer capacity drug changes in electricity. the wholesale price of electricity set by natural gas, fell by 27th of 37% at major trading hubs. nuclear generation through october was the highest since 2010.

due to low levels of outages. they were the lowest on record, 3% of capacity. had your electricity accounted for nearly 6% of generation through october. this byte lower than normal water and snowpack levels. -- this lower than normal water and snowpack levels \ \ and duration8% increased by half over the first eia'sths of 2015 waste on new monthly estimates of capacity and generation from small-scale distributed solar. we are now doing it by both sector and state. now i will turn the to short-term energy outlook which provides monthly forecast. crude oil refined palate prices in 2016 and refined product prices are forecast to be lower

than in 2015 with brent crude backup to $40 per barrel by the 2016 and $50 a barrel in 2017 with wti averaging two dollars to three dollars a barrel lower than brent. a word of caution is advisable. in thesent values option markets suggests that market participants he has very high -- marsh -- market artistic and see the upside and downside of retail and the regular gasoline and gas on average is just a little over dollars gallon. this is down from 243 from last year. in 2014.from $3.36 a big drop in gasoline prices. u.s. crude oil is expected to change in decline for 2016 and

through most of 2017. this is very different two years ago when production was climbing rapidly. global oil market becomes more balanced because of these declines in 2017 and estimates are that it will fall in 2016 about two thirds of that is driven by lower production in the united states. , declines ahe u.s. relatively small because of the and projectents commitments made when oil prices were higher. canada and brazil are good examples of that. eia forecasts that half $1 million a day increase in 2016 and .6 million barrels per day in 2017 with iran. most of ther increase. that 300,000 barrels a day in 2016 and half $1 million -- have the barrels in 2017.

eias forecast assumes the sanctions targeting iran's oil sector will be lifted and that is the case. eias forecast for the prices to average two dollars for btu in 2016i-17 current levels are two dollars. they'll be a fairly big increase but it reflects consumption growth mainly in the industrial sector. eia expects a decline in the power sector as natural gas prices rise and renewable hydro wind solar increase. will beects grows higher. the exports are expected to grow quite a bit both from the pipeline to mexico and tanker later in the spring.

in the power sector is forecast to remain unchanged in 2016 and declined slightly in 2017 while a of higher natural gas prices hopes to support coal generation expecting increases in electricity from renewables and nuclear reduced the need from coal generation. with slower growth and international coal prices also expected, it is expected to decline in 2016 by an additional 9 million tons. the change in a mix from electric generating units, the united states is expected to continue with declining generation share from fossil fuels. of renewable resources as shown in table one and my full written statement. testimony and my i would be happy to answer questions later.

thank you, i'm sure there will be questions. >> thank you very much senator murkowski. i appreciate the opportunity to provide my testimony. i would like to take a step back and speak on the key identifiers. duration of of and the prices have come at a surprise, it hasn't run its course as more room for coal price but eventually the will rebound and the market will surely recover and emerge different from the market it was before. there have been major price collapses about every 10 years. this one is different because the market has changed in key ways.

on the supply side and demand side. on the supply side, two key oil production and the ways of social and western disability -- instability. madempact of shell oil has opec keep up its price management strategies, cutting supply to support prices, with they have identified over the last 30 years. there are three reasons why that is so. one reason is that shale oil has changed the perception of supplies and a question of supply abundance. resource isked huge not just in the u.s. but potentially as well in argentina and russia. this has likely changed the view of major producers like saudi arabia on how best to optimize revenue from resources. the saudi oil minister has

repeatedly come back to the idea that in 20 years it will not be there and saudi arabia might see a huge ocean of oil. it has essentially incentivized producers to speed up extraction of resources and maximize revenue by setting more now and getting less for future generations. another way in which shell oil has changed the picture is by shrinking the trade map for crude oil. the u.s. does not need to import as much as before and that is also the case of europe because europe's refineries have found it difficult to compete with u.s. refineries, which have increased their activity with the development of domestic resources in the u.s.. it has led crude flowing into , less crude flowing

into oil, -- less crude flowing into europe. so in theeasingly next two years making it more difficult for opec to cap reduction and allocate production across the world when opec producers as other producers are increasingly competing with one another in a very finite marketplace in asia. a third factor which limits the , is the way shale has changed the business cycle of the oil market. it is a shorter cycle. the shell companies are very different from traditional, conventional companies. they are required less initial capital investment, they have shorter times, shorter payback times, deeper decline rates, that means that if opec had cutting its strategy of

supply, it would have subsidized shale production and enabled producers to come back to the market quickly as soon as prices come back up so it is not entirely a surprise that saudi arabia and other opec members have given up the practice of cutting production. other producers have been incentivized to produce more. ,his is the case of russia iraq, brazil, all of these producers have been incentivized produce more and make up in inume but they've lost price. on the demand side, demand has .een weak the normal demand response one might expect with the drop in price not happening for a number of reasons. the slowdown in china, changes in currencies of major consuming come in these -- countries, oil

prices. relationion, the quasi- meaning low prices and inflation instead of stimulating economic growth and there are concerns in the oil sector about the rapid of competingration fuels in oil markets like natural gas and renewables. all of these factors are changing the picture. , wee is much more supply are now seeing the beginning of a supply response as supply continues to exceed demand and industries continue to build meaning more pressure. also there would be a correction because the same factors are incentivizing producers to maximize revenue and incentivize them to cut spending and invest in future production. there are a lack of new projects to make up for decline rates and

decline rates are increasing because necessary maintenance has been pushed back. we are likely to see an increase in decline rates and an increase in natural drop in production and a lack of new projects to make up for those declines. eventually we will see a steep rebound in prices. in inventory as it reaches a reflection point and amatory and inventoryn -- starts going down. ] sen. murkowski: thank you. chairman murkowski, ranking member cantwell, thank you for the opportunity to testify before this committee. i am honored you to request my views and the state of the electric power industry and power markets. and these were markets, i will present high-level views on electric utilities and russian power producers and the critical

issues of price formation and market structure in the wholesale power markets. and ie is james lussier am the head of the energy practice at capital energy they serve mostly institutional asset managers and financial participants in the power markets. i have been devoting the bulk of my time to the electric power industry and to the power markets as i first started following them as an analyst at the prudential equity group and the california power crisis of 2001. it has been an interesting 16 years. if i were to characterize the state of the power markets, first, inflation adjustment retail power prices are at historically low levels. also consistent with the historically stable range, showing the system and industry generally have served consumers well by maintaining low and stable prices over a

considerable amount of time. are at a power prices 10 year low which shows service to consumers but also reflects low interest rates of low natural gas prices which cannot be taken for granted. and possible design flaws in the wholesale power markets which are believe may not be sustainable. utilities base, how to maintain or increase earnings to show satisfied shareholders to power demand here on your for the first time in u.s. history since 2008 remains flat or nearly flat which is to say well into the foreseeable future. power base,ing generators are hard-pressed to show a return on equity that would justify new investment in competitive markets to serve two thirds of the u.s. population. downward ine

natural gas prices since 2008, is part of the story. but also are troublesome issues, price remission in the energy markets, and the development of appropriate pricing mechanisms for reliability and the ancillary services. know so well,tee the demands of the epa's clean power ban will drive the greatest investment cycle ever in the history of the u.s. power industry. perhaps amounting to hundreds of billions of dollars as existing base load power plants retire, beginning as we have seen with the mercury and toxic standards. and continuing through 2030 and beyond. the single greatest challenge in the power markets today is financing the technology investment in the interest structure upgrade cycle needed to handle new and unforeseen demands between now, 2030, and beyond.

this challenge must be dealt with now and a prudent, thoughtful, and timely manner unless due to failure to act, consumer price increases that can be managed with a disruptive price shocks later. . the industry has been battered by a series of shocks including interest rates, lobby prices, and the effects of the great recession of 2008. at the same time, this evolving industry is in rapid technological innovation. take aakers should balanced, long-term view, looking to maintain a diversity of options into the future. new technology and innovation while participants should be welcomed. at the same time, policymakers should recognize the existing infrastructure with this diversity, business models, fuel types, and private ownership, represents not just the reserve or flywheel that keeps power flowing, but also the deep pool of investing capital that keeps the system working financially.

that concludes my remarks and i look forward to your questions. sen. murkowski: thank you sir. >> thank you for this opportunity. good morning. thank you for the opportunity today, this is my first appearance before this panel. i appreciate the opportunity to contribute. i am here in my role as an analyst with bloomberg energy finance energy market research division, financial information provider. our group provides investors with data and insights on what we call new energy technology. these include renewables such as wind and solar, electric vehicles, energy efficiency to allergies, power storage, -- energy efficiency technologies, power storage, and others. -- doesresents my views

not represent just my views alone however it does not necessarily represent these are exciting times for new energy technologies both globally and in the u.s.. thanks to the economics and policy actions. economicto think and re-think is underway on how energy is produced, delivered, consumed, and managed in many parts of the world including the u.s.. in 2000 15, investment in these sectors achieved an all-time high of $329 billion globally. the volume of renewable energy can be folded into other power generating technologies and soared to record globally. it is rising at a much quicker , reflecting clean energy unit costs have dropped dramatically. in our clean energy sectors, received over $1 trillion in new capital over the past four years

and over $2.5 trillion in the past decade. with approximately one half of capacity built worldwide in 2015 represented by renewables, it is fair to say clean energy is no longer an alternative source but now very much in mainstream. what is behind this growth? reduce technologies, policies, work from governments. it should be noted that the letter among policy actions, is certainly assisting in achieving lower clean energy prices. in the u.s. we are seeing the power sector continuing an unprecedented shift away from to newer sources of power generation. last year will likely be remembered as a watershed year for decarbonization. consider in 2015 an annual record volume of coal-fired power generation was retired or converted to burn other fuels such as biomass or natural gas.

a record volume is burned in power plants and accounted for proximally a third of all u.s. power, the same as coal for the first time. capacity added hidden all-time high. -- hit an all-time high. the most in four years in the second-most ever. ofce 2000 seven, the share u.s. power provided by renewables including large hydro , natural gas, and nuclear has surged 49% to 65% with wind, gas, solar, accounting for nearly all new capacity added. the net result is the co2 their lowestl to level since sometime in the 90's from the power sector. over the past a year average, reach up our prices in most markets remain roughly level while average also prices of dropped. over the past five years, u.s. demand for electricity and all

sources of energy have remained basically flat. even as the economy has grown. efficiency improvements to homes, buildings, and automobiles have made a contribution. many of these trends will be highlighted in the sustainable energy factbook. the achievements of the past ,ear came as fossil fuel prices notably oil but also gas and coal were falling. and the impact on new technologies has been muted for a variety of reasons. the one area where lower oil prices impacted the sector was in the sale of hybrid electric vehicles which slipped in 2015. be noted. larger sales continue to rise and automakers are ruling out new electric vehicles with longer ranges thanks to lower-priced batteries. ahead, the growth appears wider and better defined

than perhaps at anytime. the so-called paris agreement at the end of 2015 saw over 190 nations committing to reduce co2. the epa's clean power plant has a potential to offer greater certainty for clean energy to the next decade. congress' extension to keep tax credits is sure to cement short run growth as well. the playing field were clean energy technology can beat incumbent rivals and cost continues to expand thanks to technological innovations and economy of scale. risks and potential obstacles exist but the overall reaction is general positive. thank you for the opportunity. sen. murkowski: thank you. thanks to the committee for the opportunity to testify this morning, i am principle of carmen's strategic group based

here in washington, d.c.. include he companies denim capital management, many others are working to make new sources of metals from copper to magnesium, i also work at the institute of defense analyses which supported -- which is supported by the department of defense and we are consulted on matters of resource security and that he is i expressed today are my own. the committee asked a single question and that is where i will start. the near-term outlook for commodities can be summed up in a single word. bleak. we have heard about the collapse in the price of oil, the same is generally true for headline commodity prices. look at the five key industry minerals. aluminum, copper, zinc. aluminum is down 36%, led 35%, copper down 55%, nickel is down

64%. happen, thecles market is self corrective, in the long run, that is true. what's also true is that in the long run we are all dead. how long is the long run? what i can discuss is what risks near-term and in the what we wait for that to arrive. it comes to critical metals, the united states is deeply independent or so. the u.s. geological survey has released a historical snapshot. 30 years ago, the u.s. was 100% more independent. today, the u.s. is 100% and china for 19 metals and more u.s. is dependent --the 100% independent for 19 metals. report of thecent

12 materials the pentagon for stockpiling, china is a significant stockpile or of all 12. we have access to the so-called minor metals and it is taking a major implications. in many cases, u.s. dependence is severe and even complete. consider clean energy. key for energy storage. the united states produces zero natural graphite. indian is needed for flatscreen tvs and solar panels and we produces zero. indium, calio, we have a 600,000 metric ton copper cap and selenium is recovered from copper processing. gallium comes from alumina processing. we need aluminum for high-strength alloys. rhenium is dependent on copper processing.

we need rare earths and too many applications. wind turbines, lasers for medical and national security, smart phones, smart bombs. once again 100% dependent on china. in the effort to reverse resource dependency, the american mineral security acquisition is a step in the right direction. and critical materials institute at the. doe.he -- at they can transport twice as fast at the excessive cost. when the expensive mining process is twice as slow as in many other may nations. we can also scrapped laptops and do so-called urban mining and we should continue efforts to find -- findtals but we must

a substitute its rare metals.l subscriber tom a all of the above, let's recycle, seek substitutes, but let's also recognize there is no way out of dependency without better production. commodities, the prices will come back. remember the long run. if the u.s. allows trends to become even longer, production of some metals will take place elsewhere. manufacturing we want to see right here in america will be pulled to wear metals are. a comment and question. i don't think there's another nation that can match american ingenuity. we can pioneer the ideas behind wind and solar and work on more technologies for our war fighters. the materials that make these applications real? where do they come from? i thank you for the opportunity to testify and i look forward to your questions. thank you, ii:

think it is so important to the conversation that we be discussing minerals and those commodities. i think far too often we get focused on the vulnerability that we have historically had when it comes to reliance on others for oil. but theyew about that failed to make that connect. we are talking about the need for our minerals. and what it is that we use them for. i look forward to that discussion with you. i want to ask the question i think is on everyone's mind. weekendseen over the implementation with the thatment of iran, the fact these sanctions that have been in place on oil coming out of

iran have now been lifted, that those reserves that were sitting in tankers offshore are now able to go out and find customers, in 2016 suggested that we should anticipate 300,000 barrels coming out of iran into the global market. by placing the team, 500,000. additional -- by 2017, 500,000 additional. what we should see from iran is in the range of million barrels a day coming from iran. we are looking at the longer-term and what is happening with the response. today from iran getting their oil out of the market and

impacting, should the global market and to the global price of oil, the fact that we already have a glut of oil out on the foret, what does that mean the short-term facing of oil? you have indicated your estimate 50somewhere between 40 and years. more certainty going beyond 2017 and terms of what iran does to the market and discuss, if you can discuss the situation in youzuela and the fact that have indicated that we cannot a car venezuela and this discussion as we look at the

international picture on production. iran, venezuela, and for good measure we can throw in saudi arabia. mr. simmons gay if you want to start -- mr. iran had been producing 2.8 million barrels a day. in crude oil and other liquids, we think that that hit 3.3 million barrels a day by the end of 2016. these numbers move around a lot and it depends on how much comes out of production. i will come back to that. a good number was 3.7 million barrels a day by the end of 2017. it is a growth number from where they are now with where they are the end of 2017 and the annual average would be different. the trend is up so the annual averages will be lower.

iran, there'sout two aspects. they have between 30 and 50 million barrels of floating storage. that could come to the market quickly. a lot is believed to be a light kind of crude oil. the markets for that are mostly in chemicals. a lot of it was probably destined for china. we will have to see how that works in to the estimates for china's economic growth. the second aspect is how quickly production can grow. that may depend on how rapidly foreign investment is allowed to come into iran to help them rebuild their oil fields. that could be slow as well. there is a lot of uncertainty.

layering on something and one mentioned earlier, this relationship between saudi arabia and iraq and iran is very important. the three big players along with those other area.ies in the gulf and how each of those countries puts their volumes of crude oil on the market has all to do with where prices end up so there .ill probably be back and forth i think we are back to that observation that says the uncertainty in crude oil prices as we look out over the next year is high. agree totally. i think for iran, there are four questions. the first one is how much can they produce now? the second one is how much of a willing to produce now?

the third is how much is the market capable of exploring -- observing from iran -- absorbing from the iran. the bottom line is nobody knows how much can be produced. looking at people who have access to the fields there. managed tois iran -end his- have the capacity to increase production. 800where between 500 and barrels per day. the question is for iran how much production is willing to sell the prices. been since the early days of the iranian revolution.

and that oil is worth more in the market than it is paying for. not surprisingly, i think iranian leaders have made contributions and wanted to ramp up production immediately. they don't want to flood the market to quickly with too much >> the real question is how much can the market and take, and i do not think he could take more than 300 or 400. the capacity to increase the production in a longer-term, depending on the willingness of the investors. sen. murkowski: i asked about venezuela and we have not heard back yet. >> venezuela is struggling. the capacity has been degrading over the years. production volumes have been falling. it has managed to produce as much as it can, but it's revenue

is being hit the dropping volumes and the drop in prices. it cannot sustain its production. the company is asking for its foreign partners to pay for the import -- to export it. the partners are willing to do that. it is going downhill in the outlook is also looking very bleak. the question is, whether social turmoil could cause production to be disrupted. 2003, during the strife there. -- the outlook in the capacity to sustain production looks very dismal. sen. murkowski: thank you for your comments. is soiscussion about iran

appalling as a representative from a state that has enormous potential. iran,l as a country tell .o ahead, produce more at the same time, we are going to continue locking up our potential for further oil exploration and production. -- the it is on potential for offshore. year whereng to be a you will continue to hear me not complaining, but being very angry at the way we have chosen to advance policy when it comes to greater and nationspeople

that have not been good actors and continuing sanctions on ourselves. which is what we are doing with alaska production. chair -- iu madam want to thank the witnesses and your collective wisdom on covering energy markets over your career. it certainly must be an and have yourme expertise asked for because we are on a roller coaster. i'm sure that it has been very interesting. for me, you just have to understand that i come from a hydro state where cheap electricity has revealed our economy over and over again. -- is not only about some environmental costs, but the efficiency, which i

the --s efficiency is going to continue to drive the energy sector as well. that is why so many people are interested in distributing generation because it automatically cut out a big part of costs. about how the year brought a significant shift with comparison between renewable injury -- energy and fossil fuels. can you talk about how you see these trends moving forward, whether they will continue to compete based on price and how do you see solar and battery technology in their trajectories continuing to lower-cost? >> thanks for that question.

the first thing to note about renewables, they are increasingly cost competitive. they are not cost competitive everywhere. the playing field in which this competition is taking place is growing virtually every day. obviously, the place where renewables are most competitive are places where you have excellent natural resources. nd/or high income empowers -- incumbent powers. competitive int oklahoma and texas, iowa and minnesota, we have extraordinary wind. combined with the fact that we are seeing bigger and more wind turbines that can create more power and making it more competitive.

on the solar side, the contest and your -- dropping rapidly. we do not see the same level of decline over the next couple of years, although we do see declines longer-term. when you are competing at the be bestvel, solar can position. the price of electricity is priced on a wholesale basis and summer on a retail basis. on a retail basis, those places are much higher. so it can be met more competitive at a retail level because you just have to off said the price from the homeowners in the final price for electricity which they are playing -- paying for, which includes distribution. the regions where this is taking place is expanding all the time. big part ofard, a thinking about how competitive renewables will be will be contingent on the passive

natural gas. dollars, they two are forecasting up to three dollars in the next several years and we were forecasting the same ballpark. as crisis a relatively low, they will be strong competition between those technologies. as gas prices go back up, renewables are in a well situation. to slope.e >> if you are going to describe this ending the ballgame and reducing costs, we are probably in the second inning. >> probably in the third or fourth. if everyone things one day we cheaper thanand -- fossil energy, it is not work like that. in different places over time, we are seeing more the state place.

lastly, similar economics were power -- you are helping to offset the cost of retail power and in some cases, you are helping to offset surge pricing,-- if you can offset that, you are in good shape. we'll probably see some of his go into the money first. there has been a lot of developments within the utility power -- as more capacity comes. when i look att, where this discussion has gone a fewoil, i remember years ago, i asked what the price was just on the development. barrelcally said $60 a and we are at $30 today and $60

is the recovery costs. it seems there's going to be a correction at some point. i am not hoping for back to $60 a barrel oil, but i want to diverse a fight and make sure we have a smoother path for this transition. thank you for that. >> senator cantwell mentioned that either wind or solar now provides more jobs than those which are oil and gas. if that is what you said, maybe misheard that is not true, the bureau of labor statistics points out that the direct employment under oil and gas is -- 1.866 million jobs doing jobs and renewable jobs related to all renewable jobs in united states is 724,000. there is a greater difference --

you and your testimony speak about how renewables now account for 67% of energy production, would you include natural gas as a renewable. those, an your list of misprint? >> i think i said if you clear renewables that you include nuclear and natural gas. those are different categories. arender renewables, you putting this in a statement. >> that may have been what i said. i described it as a different category and that is my intention. >> i will look at that again, i think i read it differently. i really enjoyed your testimony. i never understood the perspective of the saudis until i read your testimony. thank you for that.

you had mentioned that imports of light oil into the united states are increasing. why is that if we have all of this surplus of light oil in the united states? function of the differential between u.s. prices and european prices. louisiana andhat west texas intermediate are bren butw similar to the transportation cost has to be lesst, here. obviously, you are shipping a from louisiana into a gulf coast refinery. that would be a price advantage. u.s.at is the trick about transportation of crude oil within the u.s. vessels. be done with >> the pipeline all the

louisiana coast. >> circuit -- there is only so much that can be used with pipelines. i am still not quite sure because it seems like most of the west texas intermediate is coming by pipeline. of the impactsure of the gentleman -- i can see if you are moving from louisiana to philadelphia. since most of our refining capacities are in the gulf coast, i'm not sure, unless you are saying we are importing like oil into philadelphia. >> my understanding is that the imports of light crude tend to go to the east coast. >> got you. next, this is not related to your testimony, but this is something i think you are familiar with. eia has projected increase

energy consumption relative to baseline. if there was a baseline five years ago, you predicted energy consumption would be here. your most recent forecasts and showing it they are. there is a tight correlation statistically and it is reflected in the data between economic growth and energy consumption. eia hasir to say that decreased its forecast for the amount of energy and electricity consumed because your forecast has left economic growth? our economic growth forecasts have come down slightly over the past three years, but i think that is a reflection of some of the overall economic conditions that are not just in united states, but globally. i can say that the ratios of energy consumption to gdp generally have been improving .ecause of efficiency gains

some structural changes in the economy. as you move from high-energy consuming and industrial activities to service sectors consumption -- consumption goes down. is serviceleft related jobs. less when using you're gdp is down, but you also use electricity in a service job relative to energy. think these games and efficiencies are taking place around the world, including china. past,ead that in times when inefficiencies have increased, the amount of electricity used has likewise increased because the cost input is now lower and therefore, folks are able to ramp up production because the cost input is lower. eiane of the things when has done with long-term

projections and our annual energy outlook on electricity side, i do know that a lot of reducedovements have the use and have come about and households because of improved efficiency of lighting and big energy. >> hopefully there will be a second set. i will come back to that. >> i'm happy to do that, senator. chairman.ou madam sen. murkowski: alaskan glacier. >> that is great, thank you. i would like to thank all of the witnesses. the obama administration that continually makes it harder and more expensive and more difficult to produce oil and gas in this country through regulation and other

restrictions. at the same time, making it easier for our adversaries to produce and export oil and gas. example is recently lifting sanctions on iran. that is borne out in your and others just got done informing us that u.s. domestic production will decline by approximately 600,000 barrels a day over the next several and i ran and export will increase by 800,000 barrels a day for 2016 and 2017. i think that is the wrong and i think it has ramifications and job creation in this country. an economic growth in this country and national security from a standpoint of energy security. you, i will like

to start with mr. studzinski, i appreciate both of your testimonies. ask for you to put in some production in terms of what he anticipates for the price over 2016 and 2017. others can respond to this as well. meould like for you to give your recommendations as to what we should do from a public policy standpoint so that our industry can better compete in this global economy. as we look at energy legislation , i know that will hopefully bring legislation to this week. what type of revisions should we advance to help our industry compete? senator, i think i will let antoine talk about policy

recommendations since he generally tends to stay with from those. if i want to keep my job, i should as well. has beenestion of what the main factor driving oil prices down, i would say it is the price. i do not think it was policy decisions that caused oil production to decline. >> that was not my question. my question is, how do we empower our industry to compete, rather than shackle it at the same time that our adversaries we are taking steps to assist our adversaries. >> right. one thing that the congress and administration did in a bipartisan fashion was to agree to allow crude oil exports. that will be one answer to your question. for the u.s.allows crude oil production to compete

on global markets. the thing that is limiting the in the wall area is that wti the advantage we have is very limited. banifting the oil export was a good example. what else can we do that can make a difference? again, empowering our industry to compete. do that helps our industry compete which benefits our nation? >> i do not know whether it is necessarily a government function, senator, but i think one of the biggest advantages that the u.s. has had and is likely to continue to have is technology.

the technology of shell oil andlopment occurred here maintaining the improvements and cost of drilling and production is something that would make a positive difference for our producers. halp, do you have better recommendations? >> i wish i had, but i think he is doing a pretty good job competing. i would agree that the lifting of export restrictions positive because it allows oil to go where it is needed any markets in the u.s. can't compete. it is opening up new or markets. that is a very good step. improvingng, data transparency.

the more the market knows about how the industry is doing, where the stocks are going, the more investors are capable of providing the response in making the right moves and helping the industry compete. i think it is a very new world for the oil industry. , forost of its history companies of upgraded into some kind of price umbrella. whether under rockefeller in the spending dollars system or opec, there was always some type of --tection against enable it to make long-term investments. that umbrella has disappeared. opec is out of the picture for now, it could come back later. how toustry has to learn lead in a very different world. projections are that once the

rebalancing of the market runs its course in the market starts recovering, the u.s. industry will be in good shape. i do not think that the wall companies in the u.s. will be the main victims of the price correction. good in saudi out arabia, kuwait, and u.s. companies will come out on top the bigger because of the downturn would be the very heavy big-ticket project in west africa and other high investment projects. --se will be more infected affected. >> anymore recommendations? thank you. thank youwski: senator, very important questions in terms of where

these forecasts placed the domesticates and our production and what it means for our economy, what it means for our jobs, and what it means for prices for the american consumer. months inn a tough 18 alaska. offave seen shell lay almost all of their folks up north. layoffs, made major b&p is also had major layoffs. -- contractors are not moving forward with projects. it has been a discouraging time. low prices and alaska. they do not necessarily translate to good news.

our treasury is hurting. as i mentioned, low prices for the consumers can unnecessarily lined up with what you are saying in the lower -- i mentioned the prices that i tried to get a better read on what they were in october. they were hanging at six dollars and $.22. when i was there in january, $5.50 adropped to about gallon. $9.99 atis now at nowata andc they are trying to halt some fuel across park service lane. i not sure if we will be able to do that. you should be paying. -- $9.99 for the oil the people in washington dc and they are getting it for $2.10 or whatever

it is here. a great deal of an equity and that is what gets my ire up. when i look at the opportunities we have not graded for iran that we are not allowing for alaska or other states like north dakota or louisiana, it should get us riled up. i recognize that so much of this is about price but it is also about the policies we have put in place and making sure that you have an environment that is constructive. that is where want to talk a little bit about the critical .inerals in the situation you said that the outlook is bleak when it comes to our -- critical minerals and particularly with our rare earths. you have stated that 2015 will likely be remembered as

watershed for decolonization. decarbonization. want to be even more reliant than we already are. i appreciated what you did in hows of outlining historically we have been so reliant in certain areas. instead of making progress, it seems that we are going backwards. you have indicated that there are some areas that we might be able to reduce this dependence. the fact that we produce zero where earth's and are now 100% dependent on china for our rare

earths should be unsettling for all of us. we have lousy permitting minerals for mines and . we are close to being the world -- worst in the world. you also mentioned prospects for , butling and substitute you have indicated that even with that, unless we do something to increase our production, we are not going to get ourselves out of this hole. can you speak to what you think our genuine alternatives may be when it comes to this reliance on our minerals? >> thank you, senator. there is a very deep dependency in terms of branching topics

from world and gas to hard rock minerals. side,look at the energy the new energy sources, i would not want us to move from a dependency that has been difficult into a different sort of dependency. sen. murkowski: are we there are ready? >> we are there. recycle.o we have to reclaim the minerals that are in the devices that we use every day. -- a lot of waste mine that are no longer in operation that date

years in the100 rate of extraction is very dependent on technology at the time. also, our interest in the metals and minerals at that time. in many places, we do have opportunities to reclaim -- extracting metals and minerals that are still there that we did not do it efficiently enough the first round. or, we do not work after them and now they are part of that periodic table. we should be doing all of that and looking to substitute, but i'm concerned about the discussions of substitution when you look specifically at what the possibilities are. we are 95% dependent on -- from

kazakhstan and china. are we looking at the degree of dependence that we are reinforcing were looking at the geopolitics of it? we have to expand where we can, bringing new production into play. the metals and minerals, all of the devices that we use, we are at the bottom edge of that. i do believe there is a revolution going on in materials science and it is impossible that it will not put a lot of demand pressure on us. we are going to have to get very inventive. we are a blessed nation, resource rich. but are we bringing new resources into development or are we creating obstacles? as this spirit is evolving so bringing powerre

from the wind in the sun. the physicality of ringing it into the great -- bringing it into the grid, are we going to be buyers of the devices or would you rather be producers of those devices? those are big issues for manufacturing and security. there are a lot of minerals we are going to have to get used to treating in that way. sen. murkowski: the good news is that not only are we blessed amazing resources when it comes to our energy potential. we have some amazing mineral .esources an >> i want to go back to electricity for a few minutes. obviously, the business models , i doanging for utilities not know if they feel that intensely at the moment. it used to be that we had vertically integrated

monopolies, power plants, strong transmission lines distributed, customer billing, and now customers and businesses are demanding more control and getting it. cleaner looking at sources and clearly, there is a lot of change as to what has been a traditional utility model. we obviously want to continue to stir investment and i want to ask you, how do you see these business models evolving for utilities over the next several years? had really make sure that consumers feel even more empowered to get the kind of efficiency they want out of energy prices? >> thank you for that very important question. the utility business model has been evolving rapidly since 1982 -- 1882.

you get low consumer prices and we need a bigger operations. that broke down for a lot of and it in the 1970's wasn't until the 1980's and 1990's were regarded about distribution on a big scale. of unll raise the issue bundling. i think the model of cost ace regulation has been providing infrastructure, but we are moving into a model where scarcity-based pricing is what applies to the wholesale power markets. that is the fundamental issue. you need to define scarcity-based pricing in such a way you adequately priced ,eliability, low following services to keep the grid going. for that reason, i think you need to pay attention to a balance of industries and a

balance of business models so that you have not only the flywheel in the power reserves to keep the grid going, but the financial will keep the entire things going financially. fan atre pretty big pacific northwest. i think this is a very interesting time for utilities and particular, the question you asked earlier undistributed information -- generation that is causing the big sense of disruption. a customer inn your operating area starts generating power off of their roof, they do not need to buy as much from you. if you compound that with the fact that there may be net metering where they could sell the power back into the grid at retail price, they can also be

threatening. confrontational andations between utilities their relatively small industry of installers who put the systems on people's roofs. i would hope that utilities would view this trend as that weg as something want to participate in and take advantage of. helpcan be the ones to either be directly involved or partnering with some of these layers. i said that because this is to a large degree, inevitable. the costs are coming down, technology is getting easier, it is going to happen. it is probably better to be involved rather than being in conflict with what is an emerging industry. >> you have a way to communicate that? the --stified before

>> hope you are right. -- as they participate in creating energy. i think utilities have to understand that. the -- just to show the growth and surpassing of that sector. >> senator, i just wanted to follow-up on the question of regulated facilities. one of the key issues is cost allocation. how do you price of power in the grid? there is a lot of exiting care -- experimentation going on at the if you look at what happened

last year in the equity markets, the snp was down 1% and utilities were down 7%. on the whole, utilities have a much stable facility market. i would director interest to the emerging power markets were lasting or, we saw the stock 30, 40,oing down from even 70%, deal with natural gas and market price issues and policy questions about how markets should be structured in the future. while i think that we can certainly accommodate the distributed generation and a variety of ways, the area that is probably most urgent right now is the wholesale car market that serves 2/3 of the american public. we had northwest has one of

the largest employment of the electric vehicle because we have cheap electricity. there is upside to the utilities. mr. zellers said, get on the side of the consumer ncd mini application. thank you. >> when i look at -- going back to her left off in our last conversation, whether or not the residential efficiencies can totally make up for this loss of projected power. you can explain it if you will. eia's energyat --look figures and your 2015 4070 --

terawatt being 100 billion kilowatts. rule,the clean power plan there is actually a savings of 581 billion kilowatts, which is to say 581 terawatts. can we really say 581 terawatts on residential efficiencies? is that part of your projections? >> there are three big factors that are driving the deployment of renewables. tax issues, technology issues. ,> going back to this question this is clean power plan projections. eia is estimating a 581 terawatts increase over the

clean power plant rule in 2030. you mentioned some of those savings will come from residential efficiencies. is it reasonable to assume that we can say 581 terawatts from residential efficiencies? >> i will have to get back to you with numbers. we have not done our final analysis of the clean power plan and the overall impact. we will have that as part of the 20 16th annual energy outlook. from,the savings come that will be required with the .eduction on coal there was also the other side of that, which is the impossible increases and output of electricity from natural gas and renewables. >> under the clean power plant

rule, natural gas is stable. been looking at how much we would have to invest in renewables in order to make up for the shortfall. the entiredible, state of massachusetts would be covered with the highest efficiency windmills. it does not seem practical. that is what the numbers show. zindler, i apologize, you do read that renewables natural gas accounts for most of the increase. i thought you were including the two, but natural gas is in line on share of that. i apologize. distributed energy and, we speak of in terms of solar panels, but i remember being in california and people were distributing natural gas generators at their office buildings. ndler it to mind, mr. zi

was a quick -- prerequisite for renewables to be degree are the distributed energy sectors actually natural gas in these areas of high electricity, like california, as opposed to solar or wind? i have to get back to you about exact numbers. , the mostecent years of it has been around solar. >> that is in terms of kilowatts produced or in terms of installations? >> i believe in terms of installations because these could be term -- small. it is probably a smaller margin. you raise a good point, there is an and trusting opportunity for gas. there was a good deal of talk around natural gas vehicles,

that was before the gold price collapse. it will be more challenging for gas to compete with vehicles. there are more ways. i would say this, when you do on-site natural gas generation, you have to get the gas there and there could be those issues. something about the solar distributed generations that we are saying that precludes. mr. halff you did a good job showing the international instability that is being created. some countries have increased instability because of high energy. /orher high energy costs and low income from energy production. says for renewables to work, the baseload has to be

-- cold is cheap worldwide. india and china have invested tremendously" in efforts to increase their economic growth. coal is cheap, they do not have to export that sort of thing. if we were to bring those sorts of high energy costs, there seems to be a prerequisite for mass scale electrification of india. that almost seems unaffordable for india. i say that because economic growth is clearly in the interest of injury. -- inre going to chinese this context, is it practical and for seeable that those two countries for example will forgo their use of their own natural resource, coal, for a renewable sort of grid? thatu are absolutely right coal is very attractive for

those countries. retrenchmentsome in china. coal use has been declining lately. cassidy: is that related to the economy? >> it is also to the external costs associated with coal. pollution in major cities has become a public concern. chinese policymakers are deterred -- riots.been a cause of and we haveconcern seen renewables take on the shares from china. entirely just based on the government's ability.

run, some of the coal factories in china have been effective. those are the ones that are been targeted for closures by the government. in india, cold remains a very the case forhe -- renewables transforms the idea --generated >> i think ought india in particular, i'm happy to share with you some of the exciting things going on with renewables, particularly solar.

there are 400 million people in india with no basic access to electricity. one of the most interesting thelopings we have seen as result of the lower cost of solar, the small micro systems that are being distributed for $100 or less communities that provides basic power needs, to turn on a light or even a radio. these are the most basic needs that people have and are starting to be served. persondo the math, a building a giant coal plant, so definitely competes. >> the energy that actually elevates the amount of -- thank you. i have just a: couple of brief questions. i want to go back on natural gas and the reality that we have to .e able to move the natural gas

some of the opposition to infrastructure development, you noted this in your testimony. stayed, opposition infrastructure development could and putthe supply glut the timing of relief in question. you, if we have a situation where pipeline citing and permit thing is elayed on a bigger scale, what do you think the consequences are for natural gas? could these types of impediments , we are seeing them particularly in certain price of is anuntry where there attitude where we want to have pipeline transmission, but we do not want it running through our city, move it to somebody else's city.

wherewe be in a situation opposition,olitical we have a real threat to natural gas supply itself? have too much of a good thing in some parts of the country. there is a tremendous amount of gas, and it is building up. we do not have the takeaway capacity. the price of gas is lower and .hat marcel is region this is putting huge pressure, not just on power prices, but on power plants in particular, on nuclear. takeaway capacity for that gas is key. on the other hand, just 400 miles away, depending, we have new england. new england is totally dependent on gas for its merchant power, but they do not have access to this great gas supply.

we have been fortunate this year to have warm weather. us,ave el niño shining on but we came very close to severe weather events during the polar vortex in 2014, not once, but twice. new england is still a situation where they could still be one weather emergency away from a serious power crisis. that shows the emergency for delivering gas. oversupply to areas that are quite exposed. i think you should definitely pay attention to the efforts to build pipeline capacity into new england. on the broader question of delivering natural gas to provide clean gas generation, we are seeing a record number of pipeline exposures that is straining the resources that are actually doing a good job moving forward. we are also saying is literally surrounded by hunger strikers that are demanding that they should not issue permits for

anything. is also slowing down those pipelines and while natural gas is still a carbon fuel, it is still in the art temperatures. i was driving through southwest virginia this time last year and i noticed anti-pipeline signs. the state of virginia wants to build natural gas power plants to reduce its overall dependence on coal. if you cannot build a power line in virginia, the pipeline is held up, if people are constantly asking about what is happening with the constitution pipeline, what is happening with any number of projects, there is a lot of uncertainty among investors as to whether you can actually build power plants and supply the gas to them. sen. murkowski: this is a huge issue for us. they do not get as near the attention. ist is why i think it important that we are able to move some of our energy policies had withinh as we

the energy policy modernization act that we hope will link to the floor here very shortly. context, about the impact of natural gas and what it does to other energy sources, whether it is cold or nuclear, i want to ask about projections on nuclear. table, number one on non-hydro renewables expected to make 9% of electricity generation by 2017, you , ourated that by 2017 nuclear generation makes up less than that overall portfolio than it has in years past. if we have a situation that we were just talking about, where you are not able to either move that gas to where it needs to

, what does this do to your projection? the viability of nuclear as part of the energy portfolio going forward, given what we are seeing with some of the restrictions on natural gas? >> senator, i think an hour and are long -- annual energy outlook, we have just a small .8, the difference between 789 and 808 billion kilowatt hours of nuclear. in the clean power plan, the proposal will have the final numbers out soon, but that did not change very much. nuclear is, that

flat because we have total electricity consumption growing year.ut .74 .8% per nuclear share is slightly decreasing. back to the question that senator cassidy was asking, we do see under the clean power and the extension of the p , the taxnd and solar credits and improvements in technology. inre will be improvements the use of solar and wind. we are also assuming that natural gas for our generations goes up both in the annual energy outlook in the clean power plan.

the amount of generation under the clean power plan will come down a little bit. it will be replaced by more wind and solar and natural gas, not so much nuclear. lower coal, but the total amount of generation is a little lower. we do not have to have massive andges in the inefficiency residential sector to make up for that. userslly, residential will be using more solar and wind capacity, as well as natural gas capacity, but not nuclear. mr. zindler.i: >> you have probably seen more capacity for natural gas --

there is a lot of pipeline that and it ispproved worth noting that i think that may ease. >> thank you madam chairman. back to their energy and oil price outlook. you indicated that you talked about this black swan concept thoughtc and others that there may be less demand. -- 100 dollars a barrel and russia needs about $100 a barrel to cover their costs in terms of spending in their budget, how does that impact their continuing to

produce at a higher rate with rises as low as they are and how long do they continue that? >> saudi arabia can produce -- there is no immediate pressure. they have been dipping into their reserves. >> you talking about the financial reserves? >> they have the capacity more than any other producers to continue funding for quite a while. however, with we are seeing signs of pressure and we are seeing the signals that there some revolutionary changes in the economy based off of -- it is hard to say how much of that is for real. there are signs of pressure in

terms of the shift in the makeup of the economy. russia is a different situation because they have benefited from the collapse of the currency. costs have come up dramatically, compared to the revenue, which continues to be in dollars. i think that possibly explains why russia has been so much better than what anybody expected. its production increased a medically since things started looking really bad for russia. since the beginning of the price drop and the integration of international sanctions. many expected to fall, but it has increased and it has been producing at record levels. how long can this go on? forever. one advantage that the russian companies has is that they have not been affected by the price

drop as much as the state revenues have. the companies have managed to the onto a lot of their -- state budget has suffered from most of the price drop. that is what we heard the companies put a stop on the kind of -- toaren't those factors going drive prices higher at some point? is $100are all in cost and they are selling at $30 or $40, how long can they sustain that? >> there is no question in my mind that the price will rebound. when that will happen, it is difficult to time, if you will start at 2016 or sometime in 2017.

currently, the futures market of pricing oil in 2020 is under $50 a barrel, i do not think that is realistic. --futures market do not include long-term prices. in my view, it is almost a given prices would be above $50 by 2020. the timing is difficult to assess. the capacity from many countries , russia would not be able to continue producing at the rate we have seen. they have dramatically increased production, but it will be hurt by its incapacity to have companies. increase since the price collapse and takeover of isis will not continue. we have seen production drop in the u.s..