mr. diwan's report. >> yes, i'm sorry, mr. diwan. >> i can help you with your question anyway. >> let's get him and then we'll get you. thank you. >> well, delaying permitting has an impact on our projection for the deepwater output. and was the restart of the permitting process. now we are not seeing decline anymore, and we're seeing a flattening further out on the horizon. we passed the bottom of that forecast. >> but i'll say as the representative from the state that has the most besides texas of offshore drilling, it's been a very painful three years. and i know that senator portman talked about producing more. we've got to get the gulf back up and operating and producing. not only is it the home to tremendous opportunities for oil and gas both deep and shallow, but the refining capacity for the country is, in large measure, or a large part of it, and the pipeline system, which is much more robust than other pipeline systems there. so getting the gulf back up and operating, mr. chairman and ranking member, is important, and

mr. diwan. let me ask a very quick final question for dr. gruenspecht since you mentioned heating oil in the northeast. i'm very concerned about pad one, as you pointed out. you talked about the refineries that are down on the east coast. can you talk about the correlation between that, if there is any, and what we're seeing in increased costs for home heating oil in the northeast. >> thank you. i don't think there's really much correlation. i describe the broader picture of gasoline and distillate and, you know, as senator brasso pointed out, distillate prices in wyoming are very high. i don't think this refinery issue this winter so far has been much of the issue. i would point out that in our -- we do a winter fuels outlook at the beginning of each winter. i think in october. and we did flag the, you know, the heating bills as being for oil users as being pretty significant. this upcoming winter -- >> right. >> -- and, you know, we've gotten a little bit of a break on the weather, and that's helped everybody, i think. it's come down a lit

and mr. diwan, you have mentioned some of the supply risk factors that are out there, some pretty considerable risks, whether you're talking about iraq and their ability to move things online. we don't know with nigeria, you mentioned sudan, syria, strait of hormuz with iran. when we're talking about supply risk, it is very, very difficult to predict. so i guess the question is, how certain are we that we do have spare capacity in the numbers that you have referenced. and given the volatility that you have with the supply risk out there, how are we dealing with this? you had mentioned, mr. diwan, or excuse me, i guess it was you, mr. jones, you state that to a degree, threats surrounding strait of hormuz have already been priced into the market, while the likelihood of a prolonged stoppage for hormuz transit is seen as being fairly low. so when we're talking about what is going on with the price of oil, what we have available with spare capacity, what we know, and perhaps what we don't know with su

both mr. diwan and mr. burkehard can offer their own thoughts and insights on where the oil marks are headed. they each have considerable expertise in the geopolitics of oil. let me defer to senator murkowski for any opening statement she has. >> thank you, mr. chairman. i appreciate you convening this very important hearing. it's really a scene setting hearing for us here on the energy committee. in looking at the panel before us, i welcome you all back, recognize that this is a welcome back. we're almost on to ground hog's day here answered would suggest that this is not going to be a repeat of what we heard from last year. as the chairman has noted, there has been a lot that has changed from the last time we convened. the conventional wisdom here is that this congress cannot accomplish any major energy legislation now that we are into -- full on into an election year. i think that that would be a disappointing finish for us, but it doesn't mean that the rest of the energy world is going to be grinding to

. >> mr. diwan? >> i largely agree with ambassador jones. i think that men who have been working between 100 and 120 with a floor due to -- it's exactly what we're in. we have two risks going on. one is the financial disruption in europe, the other is the conflict in the middle east. that's the risk we're fairing in 2012. neither of which occur, we're very likely to stay until that band. >> thank you, mr. chairman. let me ask dr. gruenspech stlau in your sm here that they're a fuel of liquid fuels dropped from 49% last year -- not last year but 2010, to 27 percent in 2014 and 23 by 20, by. >> this was made not including as a result of the fuel economy standards. you have calculated if these fuel economy sand ard which have been announced by the situation and which the auto industry and -- if those are included, what does that do to the percentage of liquid fuels that we have to import? >> dhaeng you, mr. chairman. we are certainly going to include that in our -- a case like that in our pulls can it makes a significant i'd say in the 2035, li

and this is directed to you, mr. diwan. dealing with the potential additional impact of sanctions. we know that the europeans have agreed in principle to ban the imports. but reading from your testimony, it seems that neither italy nor greece will comply at least to the extent that would have been expected. and given your point that you've got india, you've got south korea, turkey, all increasing imports combined with what we know about the strong demand from china, what do you think the practical effects of these new sanctions will be? >> italy and spain will have to comply with the sanction by july 1st. the question is would they do much between now and then to try to diversify their social supply? they have long-term contracts. i think it's not very easy unless the iranians decide to embargo them. the problems are specific for each country -- which refinery gets what from there and there's long-term commercial relations. but it's likely that over the course of the year by the end of the year, they will not be allowed. they won't be able to import as much as they are right now. s