Senate Agriculture, Nutrition and Forestry Committee

Chairman Dick Lugar, U.S. Senator for Indiana

U.S. Sen. Dick Lugar delivered the following opening statement today at a Senate Agriculture, Nutrition and Forestry Committee hearing on energy prices and agriculture:

Are Americans prepared for the inevitable consequences resulting from the lack of a strategic energy policy?

Does an energy policy exist with our government or private industry that will guarantee adequate energy supplies for a growing American economy? And if not, who will tell the American people that we are headed for lower growth in jobs, income, comfort, standard of living and competitive position in the world?

Our nation is facing an emerging energy crisis. Demand for energy is rapidly increasing and supplies may not be emerging to meet that demand, even at high prices. We are here today to assess present energy policy and to determine if amendments to our energy policy are appropriate. In addition to high prices at the gasoline pump, Americans have been alerted to possible shortages of natural gas as well as electrical brown-outs.

In reviewing our energy policy, we must consider the fact that events beyond our borders have tremendous impact on American energy security and environmental interests. As economies of the developing nations continue to grow, so will their demands for energy. Such growth will fuel the greenhouse gas problem and increase world dependence on Persian Gulf Oil.

OPEC decision - making is a major factor. I invited the Oil Minister of Saudi Arabia, Ali Al-Naimi to participate in today's hearing. He is unable to attend due to previous commitments, but I have submitted nine questions to the Minister (which will be included in the Committee record), and have requested his written response to those questions.

Economic growth in the U.S. has produced a tight market for many forms of energy. Electricity demand in the first half of 2000 is up 3 ½ to 4 % from the previous year. Over half the increase in world oil demand from 1998 to 1999 was attributable to increased U.S. demand for oil. The price of natural gas and diesel have risen dramatically due to increased demand, tight supplies and low inventory.

We know that the United States needs to build new power plants but current plans are for these plants to be fired by natural gas. Are natural gas supplies adequate to meet the demand? At the federal level, are we doing enough to address the transmission problems that could be associated with increasingly deregulated electricity markets?

The Energy Information Administration forecasts that demand for natural gas is likely to increase by nearly 2 % per year over the next twenty years. Energy security expert Daniel Yergin asks whether we are prepared to make the investments in exploration, new pipelines and distribution facilities needed to meet this rapidly growing market.

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At the same time that demand for energy is growing, new environmental regulations are being imposed upon energy facilities and fuels. Many of these policies are needed to produce a cleaner environment. The reformulated gasoline program is one example.

We also need to assess our energy research and technology policies in light of the greenhouse gas problem. I have cosponsored Senator Murkowski's legislation to further the growth of new energy technologies.

Senator Daschle and I introduced a bill to solve the MTBE problem and triple the use of renewable fuels by 2010. We have introduced a market trading system that will allow oil companies to produce renewable fuels in the areas of the country where they can be most economically marketed.

President Clinton recently signed into law my bill to establish an aggressive research, development and demonstration program to make it easier to convert biomass into ethanol. Since biomass feedstocks tend to have very low costs, this new program could lead to dramatic reductions in the cost of making ethanol.

One additional idea which I believe needs to be considered is the creation of a Presidentially-led energy and environmental security task force to coordinate our environmental and energy security problems. Such a task force should include the representatives from the National Security Council, the Council of Economic Advisers, the Department of Agriculture, the Department of Energy, the Environmental Protection Agency, the Department of Transportation, and the Department of Treasury.

I thank the witnesses for coming today. I now turn to Senator Harkin for his opening remarks.

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