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June 27, 2000, Tuesday

SECTION: CAPITOL HILL HEARING

LENGTH: 22557 words

HEADLINE: HEARING OF THE HOUSE INTERNATIONAL RELATIONS COMMITTEE

SUBJECT: ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC) OIL PRICES AND POLICIES AND THEIR EFFECTS ON THE U.S. ECONOMY

CHAIRED BY: REPRESENTATIVE BENJAMIN A. GILMAN (R-NY)

WITNESS: WILLIAM B. RICHARDSON, SECRETARY, U.S. DEPARTMENT OF ENERGY

LOCATION: 2172 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

TIME: 10:48 A.M. EDT DATE: TUESDAY, JUNE 27, 2000

BODY:
REP. GILMAN: (Raps gavel.) The committee will come to order, Members, please take your seats.

We are very pleased to welcome Secretary Richardson back to our International Relations Committee for a hearing this morning on OPEC's policies' threat to our U.S. economy and to note that later on this week, Secretary Richardson will speak on similar topics before at least three other committees in the House and Senate. It sounds like you have a busy week, Mr. Secretary.

And I want to welcome former Senator Howard Metzenbaum, who has joined us today. Welcome, Senator.

Today's hearing is the third in our series on the impact of the price-fixing schemes of the Organization of Petroleum Exporting Countries on the American homeowner, on the small businessman, on our commuters, on our aviation industry, on the truck drivers, and the policy-maker who sits in this seat and must manage this uneasy and very troubled relationship.

We look forward to holding additional meetings of our committee to explore additional issues related to the energy crisis facing the American people, including a sustainable energy strategy and a review of the profits of the major oil companies -- they're up some $7 billion over the past year -- and the OPEC nations, whose revenues have doubled over the past two years -- and also note that the General Accounting Office released a report over the weekend, reviewing areas where existing controls over foreign travel of our nuclear scientists can be, and should be, strengthened. I would ask our good secretary if he'd make a brief comment on that issue during the course of the morning. And I realize that these incidents occurred before your watch at the department.

In regard to our topic today, I can't help but conclude that our policy toward OPEC is hard to discern and harder still to explain to the average American, who has seen these gasoline prices rise some 60 cents, over the past year and a half, to record levels in the Northeast and Midwest.

Our vice president has called for an investigation by the Federal Trade Commission into possible price gouging by the oil companies, and I think many of us agree that that would be appropriate. But certainly that's not enough, and it's certainly not a forward-looking policy that will lead to lower gas prices in the future.

Oil prices today are higher than at any time since the Iraqi invasion of Kuwait. Continued high prices for gasoline and other fuels are now beginning to stunt our own economic growth and to curtail global growth prospects, as well.

In addition, they're stoking the flames of inflation, inducing bankers to raise their rates and curtail lending.

How has the administration reacted to this growing threat to our pocketbook and to our prosperity? Remarkably passive in the face of OPEC's continued assault on our free-market system and our antitrust norms, this administration is still firing blanks when it should be making an all-out attack on the production allocation system, which has kept oil at $30 a barrel for much of this year.

The oil producers are in clover, with multi-billion-dollar profits, while the consumers are in hock to a cartel that's turning our economy's soft landing into an abrupt free fall, with apparently no rip cords left to pull.

We'll still waiting for the answers that we raised at the first hearing. What has the administration done to systematically review our policies toward OPEC and its member states? Why has the administration failed to weigh in strongly enough with OPEC last year to prevent a continuation of production cutbacks? And how can we begin to take effective action against its continued production cutbacks and price-fixing behavior?

The administration's laissez-faire approach has sent a clear signal to OPEC that price fixing is okay by us, that production cutbacks are not so bad after all, and that as long as we keep trying to aim at a reasonable price for crude oil, we can overshoot every mark with $30-a-barrel oil with not so much as a slap on the wrist. Our government has become the victim of the manipulation of the oil market by OPEC.

The legislation I introduced last week, the Foreign Trust Busting Act and the International Energy Fair Pricing Act of 2000, will ensure that this administration adopts a consistent and a comprehensive policy of opposition to OPEC and to other similar cartels.

In the ongoing energy crisis facing our nation, it can help keep the spotlight where it belongs, on this international energy cartel.

With the enactment of this measure, the administration will no longer be able to go back to business as usual in supporting any backroom arrangements and cartel-like behavior. The first measure would allow lawsuits to be brought against foreign energy cartels. Our second measure would specifically direct the president to make a systematic review of its bilateral, multilateral policies and those of all international organizations and international financial institutions to make sure that they're not directly or indirectly promoting the oil price-fixing activity policies in any of the OPIC programs.

It would require the administration to launch a policy review of the extent to which international organizations recognize and/or support OPEC, and to take that relationship into account in assessing the importance of our relationship to those organizations. It would also set up a similar review of the programs and policies of the Agency for International Development to ensure that that agency has not indirectly or inadvertently supported OPEC programs and policies.

And finally, it would examine the relationship between OPEC and the multilateral development banks and the International Monetary Fund and mandate that our U.S. representatives to those institutions should be using their voice and vote to oppose any lending or financial support to any nation that provides support for OPEC's activities at manipulating fuel prices.

I'll now turn to our ranking minority member, the gentleman from Connecticut, Mr. Gejdenson, for any opening remarks.

REP. SAM GEJDENSON (D-CT): Mr. Chairman, the failure to act about our energy independence really starts here in the Congress. And if you think of the initiatives of the Republican-led Congress over the last six years, I think one of its earliest initiatives was simply to abolish the Energy Department.

But it got worse. When we take a look at where we are today as a nation, this Congress has continuously prohibited the administration from increasing the standards of the efficiency on automobiles. This is not simply as bad as living with the status quo, because as Americans moved from cars to trucks, it actually reduced our overall fleet average. And if you want to create new energy and you want to do it quickly and efficiently, one mile per gallon, just increasing our fleet average by one mile per gallon would save 12.5 million barrels of oil per year.

For those of you who think that this would somehow infringe on our personal freedoms, think about this. When I was a teenager, a Corvette got nine miles to the gallon. Today that same car, more powerful and faster, gets 27 miles to the gallon because Congress and the administration, after the energy crisis, forced the automobile industry by increasing CAFE standards, not as this Congress has done, by blocking the administration from increasing CAFE standards.

One mile per gallon, one mile per gallon, 12.5 million barrels of oil. That is an impact that clearly would help us towards energy independence.

We also have a problem here with oil company mergers. The oil companies keep running to us with new mergers, arguing they are increasing efficiency. The only efficiency that seems to be gotten from these mergers is the oil companies are more efficient at ripping off the American people. The first quarter profits, before the most recent increases in gasoline profits, indicated that some of these companies had increased profits of as much as 500 percent. And while we can complain, and rightly so, about oil supply from other nations, these American corporations are taking advantage of America and damaging its economy in a conspiracy that will hurt all of us.

We are in a difficult situation in the Northeast, and the one place where I think the administration has not moved fast enough, Mr. Secretary, is last year in February, when we hit that cold snap and suddenly New England saw escalating energy costs, I said then that the heating oil crisis of that winter would become a gasoline crisis of this summer.

And I can tell you now, as sure as we're all here, that this gasoline crisis is still going to become a heating oil crisis.

Now, today, or at least yesterday, when I took a look at the day before, there was about a six-dollar difference between the spot market and the futures market on oil. Even though the Senate -- and Mr. Lott has sat for 76 days on reauthorization of the SPRO, the House passed reauthorization of the strategic petroleum reserve, whose legislative authority had expired, the Senate has sat on that legislation for 76 days as Mr. Lott and others make speeches about this crisis. We ought to be dumping SPRO, trading SPRO, increasing the short-term supply, to drive prices down. And we ought to make sure that there's a strategic petroleum reserve in the Northeast. The House rejected that by two votes just recently, 193-195. This just- on-time delivery by these handful of largest merged oil companies will leave our Northeast citizens again in the dark and in the cold if we're not careful. Congress and the administration needs to move quickly to make sure there is a strategic petroleum reserve. You can drive less, possibly, if there are high gasoline prices. You may be able to carpool. But when heating oil prices get to the point where citizens can't afford to heat their homes, we endanger their lives and security.

Again, from my Republican colleagues, often we hear the solution to higher energy prices is take away environmental protection laws, cut the standards of emissions into the atmosphere. That's unacceptable. We need to make sure that we invest in alternative energy that will give us clean energy and make this country independent. We have squandered the twenty-some years since the last energy crisis. Let's hope we have a wake-up call here that we can leave this, you know, kind of hearing of the weak that we're having and move on to legislative action by the Congress. The Congress ought to pass a new CAFE standard demanding more efficient automobiles for trucks and cars. The Congress ought to provide the funds for research and development in alternative energy even when oil prices are low so that we can't be blackmailed when oil prices are high.

You know, the first hearing that the Republicans had on energy happened about a year and a half ago. And it was interesting, a number of the members at that hearing were complaining that the administration was at fault. They were complaining the administration was at fault because oil prices were too low, that oil prices were $10, $12, $13 a barrel, and they thought oil prices needed to be $25 a barrel. Well, again we're here, and it's the administration's fault.

Well, it seems to me Congress before it puts the blame on the administration ought to take the initiative and do the things we can do. We ought to get Mr. Lott to get out of the way so we can reauthorize the strategic petroleum reserve.

We ought to make sure there are tax credits for alternative energy. Every one mile per gallon gives us 12.5 million barrels of oil, just as if you drilled a hole in the floor here and came up with that oil. Increase the CAFE standards, help alternative energy, help weatherization, and we'll make this country more independent and strong.

Thank you, Mr. Chairman.

REP. GILMAN: Thank you, Mr. Gejdenson.

And permit me to remind my colleagues and Mr. Gejdenson that today we'll be looking at the issues we raised -- we'll be looking at the issues Mr. Gejdenson raised, but we'll also be focusing on OPEC and our failed policies toward that cartel. And I'd remind my colleagues that a recent CRS report concluded that 80 percent of the recent rise in gasoline prices is attributable to the higher crude prices, and that's attributable to OPEC.

Any other members seeking recognition?

REP. DOUG BEREUTER (R-NE): Yes.

REP. GILMAN: Mr. Bereuter.

REP. BEREUTER: Thank you, Mr. Chairman.

I want to welcome our former colleague, Secretary Richardson. He and I were next-door neighbors for four years in the House of Representatives, visited a lot of dangerous and unpopular places, like Angola, together. I think perhaps the secretary's a little nostalgic for the days when he could be asking the questions up here. (Soft laughter.)

I would say, to our colleague from Connecticut, I've never complained about low oil prices; that's for sure.

In Secretary Richardson's home state and my home state, people have to travel long distances to conduct the daily affairs of life and to get to their jobs, and a very high proportion of those population of the people have in fact that situation. So I would have liked the FTC to move beyond looking at the problems in Illinois and Wisconsin, to the upper Great Plains.

Just to give you one example, at a time when we had very low commodity prices, we have the worst drought conditions in the 115-year history of climatology in our state. Perhaps some of you who are air travelers have noticed those green circles in the western half of the United States. Those have nothing to do with alien spaceships. Those are center pivots, and they are particularly needed now. And today it is costing our farmers, when they really need to move those center pivots, 50 percent more in fuel every time they revolve around the field than it did a year ago.

So we're very concerned if in fact the administration intervened early enough, energetically enough, with respect to OPEC, and what we can do to make sure that we are not subject to their price setting by oil production limitations.

And so that's why we're here. I hope we'll focus on these issues, and we're looking for some answers.

Thank you, Mr. Chairman.

REP. GILMAN: Thank you, Mr. Bereuter.

Mr. Lantos.

REP. TOM LANTOS (D-CA): Thank you, Mr. Chairman.

I want to welcome our good friend and former colleague Secretary Richardson, who seems to be the designated victim of the week. And I would like to pay public tribute to his long and distinguished public service both in the Congress and in the administration, at the United Nations and at the Department of Energy.

I was rather amused, Mr. Chairman, when you accused this administration of pursuing a laissez faire policy because, unless I am mistaken, laissez faire policies have been the hallmark of the Republican Party for a long time. And I am not sure as of this moment whether you have used the phrase "laissez faire" as a pejorative or as a laudatory statement concerning the administration.

But be that as it may, I do not believe that it will be successful on the part of anyone on this committee, or in the other body, to place the blame of responsibility for the current high prices of energy on the shoulders of this administration. As my colleague indicated earlier, the Republican majority began its energy policy by recommending the abolition of the Department of Energy, which is a hell of a way of crafting an energy policy for the one remaining superpower on this planet.

That idiotic notion has now been abandoned. But I would not like to embarrass my colleagues by having a roll call of all my Republican colleagues in both the House and the Senate, including some presidential candidates, who joyfully called for the abolition of the Department of Energy as their first step in crafting an intelligent energy policy for the nation.

I also think it's important to realize that it is the majority which has had for a long time -- a long, long time -- an incredibly chummy relationship with the giant oil companies. Now, for us to hold a hearing on high energy prices and not to recognize that the American people currently are being gouged by the oil companies, where the profit margins have increased to absolutely obscene proportions, would indeed be naive in the extreme.

But I would like to focus in on two or three specifics, Mr. Chairman, if I may: funding for energy research and development during the three Congresses where your party was in the majority. Just a quick examination of the Energy and water and Interior appropriations for fiscal years 1996 through 2001, the period in which you controlled the budget, clearly demonstrates that the majority has repeatedly failed to invest the resources necessary to improve our energy independence.

This has occurred at the very same time when the Clinton-Gore administration requested higher levels of investment in this crucial field every single year.

Every single year, the majority cut the request by hundreds of millions of dollars. For energy supply research and development at the Department of Energy -- the major account, Mr. Chairman, that supports R&D to develop alternative fuels and renewable energy technologies -- the cumulative cuts below the administration request is $1,970,291,000.

Some -- now some members of the majority are accusing this administration of not doing enough to encourage the development of the domestic oil and natural gas industries. In the FY 2001 bill, recently approved by the committee, the majority cut funding by 84 and a half million dollars below the president's request.

I want to spend a moment, if I may, Mr. Chairman, on funding for conservation. It's self-evident that we can dramatically improve our energy security by boosting conservation efforts. Every action we take that reduces the consumption of a barrel of oil means we have to import one barrel of oil less. Once again, the Republican record when it comes to investing in conservation is abysmal. In Fiscal Year 1996, the first year the new majority wrote the appropriations bill, that investment was slashed to $552 million by the House, a reduction of $202 million below the year-earlier level. In the first year, your majority cut by $202 million investment in conservation. Between Fiscal Year 1996 and 2001, the cumulative reduction below the administration's request for energy conservation exceeds a billion dollars, Mr. Chairman.

So we are not going to sit here quietly and listen as to how the administration laissez-faire policies led us to where we are. My colleague has said about CAFE standards, "Current standards have been in place now for a long time, and you don't have to be a rocket scientist to recognize that increasing CAFE standards would dramatically enhance our energy security."

My view of the administration's failure is really concentrated in two areas that I think the administration, as indeed the previous administration, deserves criticism.

REP. GILMAN: Mr. Lantos, I'm going to ask if you would be brief so that we could have an opportunity to hear the secretary. I'm going to ask any further opening remarks -- REP. DANA ROHRABACHER (R-CA): Mr. Chairman, I would like to make some opening remarks.

REP. GILMAN: We will limit them to five minutes.

REP. ROHRABACHER: I appreciate that, Mr. Chairman.

REP. LANTOS: Do you want me to make my criticisms of the administration or not, Mr. Chairman? (Laughter.)

REP. GILMAN: I would just ask you to summarize, if you would, Mr. Lantos, so other members will have an opportunity.

REP. LANTOS: I'll be happy to. This administration, as the previous Republican administration, has not been forceful enough in dealing with OPEC. The two key countries of OPEC, Saudi Arabia and Kuwait, are today countries because we went to the Persian Gulf to protect them. Had we not put a half a million American military into the Persian Gulf War, the king of Saudi Arabia would be living on the French Riviera and the emir of Kuwait would have a villa next to him. I think both the Republican administration and this administration should have exerted far more effective policy measures vis-a-vis OPEC, particularly the two countries whose very survival we ensured less than a decade ago.

Secondly, I am one of those who has advocated for a long time dramatically increasing our strategic petroleum reserve. Had we done so, we would now be in a much more comfortable position of releasing significant supplies. I still believe that under present circumstances, releasing supplies from the strategic petroleum reserve, once the legal possibility is open, should be done.

Thank you, Mr. Chairman.

REP. GILMAN: Thank you, Mr. Lantos. I'm going to ask our further speakers to please be brief so that members will have an opportunity to hear Secretary Richardson. Mr. Rohrabacher.

REP. ROHRABACHER: Thank you very much, Mr. Chairman. And I certainly agree with Mr. Lantos on a couple of things he said, but on some others I have some disagreement. First of all, I agree with Mr. Lantos in welcoming Bill Richardson here. He's a man of impeccable credentials and a fine record of public service, and I will not be using him as a punching bag, even though he's got the punching bag suit on, to take the blows for administration policies that he, of course, as a member of the administration, has to be the advocate of.

So, with that said, welcome, Bill. And again -- and the other thing I agree with Mr. Lantos on is that this administration has not used -- the Clinton-Gore administration has not used the leverage that it has on members of OPEC, especially Saudi Arabia and Kuwait, to keep oil prices under control. And the American people are suffering because of that. It is the Clinton-Gore administration that has not used this leverage. It's not Congress. It's the Clinton-Gore administration.

Now, why haven't they used that leverage? Why haven't we told our Saudi allies and Kuwaiti allies that we have to have some stability in the price of oil other than these gouging and major increases that we're suffering under today? It's because the Clinton- Gore administration supports higher prices for gasoline.

Now, all of the political rhetoric we hear from the other side of the aisle can't hide the fact that Vice President Gore has made it very clear. He wrote a book about it. He wants higher prices for gasoline. He blames the American consumer for the fact that the United States is contributing to the global warming problem, supposed global warming problem.

And what is his solution? His solution is pay more money; have the people in our country pay more money for gasoline, as if it's not going to affect their standard of living. It's this administration, the Clinton-Gore administration, that is pushing for these Kyoto protocols. Again, what's the purpose of those Kyoto protocols? To raise the price of gasoline.

There's no political rhetoric on the other side of the aisle that's going to disguise this. You can talk about some of the proposals the administration has made for conservation, which are aimed at lessening the pain suffered by the American people. But the fact is, the Clinton-Gore administration blames the American consumer, blames the victim, rather than using its leverage against the OPEC cartel and rather than trying to expand America's supply of energy.

Mr. Chairman, I think that Congress and this administration should be working together to increase the supply of oil so that our people won't suffer. And we must quit playing these political games which we've heard today in which we're trying to blame Congress, for Pete's sakes, on this. We've got an administration spokesman to talk to, and let's be serious about it.

Thank you very much.

REP. GILMAN: Thank you, Mr. Rohrabacher. Mr. Ackerman, please be brief; all of my colleagues.

REP. GARY ACKERMAN (D-NY): I ask unanimous consent to put the full text of my remarks in the record.

REP. GILMAN: Without objection.

REP. ACKERMAN: Mr. Chairman, I want to echo the sentiments of Mr. Gejdenson and Mr. Lantos in their entirety, and also add my personal welcome to our former colleague, Bill Richardson, who has shown tremendous courage and determination all over the world in spreading humanitarian and human values, and doing acts that I think all of us would recognize are heroic, and for doggedly sticking to the task of trying to bring some reason and responsibility to America's energy policy.

Having said that, I can't help but comment on the politics that's going on here, first in the construct of the hearing. I find it incredible that we're having a hearing on how oil prices are affecting the American economy and providing a safe haven by excluding the appearance of the oil companies at this hearing.

REP. GILMAN: Mr. Ackerman, if you would pause a moment, let me interrupt. We will be conducting a further hearing with the oil company representatives.

REP. ACKERMAN: When will this be, Mr. Chairman?

REP. GILMAN: As soon as we can put it on the schedule. The staff is working on it now.

REP. ACKERMAN: Would it be within the next few weeks?

REP. GILMAN: We would hope to get it out as quickly as possible.

REP. ACKERMAN: Does that mean in the next few months?

REP. GILMAN: No, it would be as quickly as possible, Mr. Ackerman.

REP. ACKERMAN: Would that be before the November election?

REP. GILMAN: Possibly into the next tenure if you're going to pursue this. (Laughter.) We're going to have it as quickly as possible.

REP. ACKERMAN: We're prepared to wait as long as hell freezes over in the Northeast, Mr. Chairman, because that's --

REP. GILMAN: Mr. Ackerman, we have a limited period of time.

REP. ACKERMAN: Mr. Chairman, I will use my time the way I see fit. Nobody interrupted your 25-minute oratory. Thank you, Mr. Chairman. I think all the members deserve the same courtesy.

The (rest ?) of the politics in blaming the Clinton-Gore administration for high oil prices is also absurd. Or haven't we taken a look at where all the Texas oil money is pouring into whose campaign? It's poured into the campaign of Mr. Bush and Bush the sequel. It doesn't seem to be going to the Clinton-Gore administration. So a little bit of reality here, Mr. Chairman, would serve us well.

I think I've said my peace, and I don't need the rest of my five minutes and yield back the balance of my time.

REP. GILMAN: Thank you. Mr. Brady.

REP. KEVIN BRADY (R-TX): The inescapable fact is America is addicted to foreign oil, and we're falling deeper into addiction every day. Many have chosen to blame OPEC, the dealers of the oil, for not selling to us at a fair street price, which is ludicrous. America needs to kick its habit, its dependence on foreign oil. And that is one of the questions that Secretary Richardson needs to answer today, why we fail to address real problems.

America's oil and gas production is at its lowest in 50 years. We've walled off reserves of clean coal, Alaskan Gulf Coast oil. The president has vetoed efforts by Congress to increase our independence. There is no responsible, sensible energy policy to decrease dependence. And so far, our energy policy with this administration is summed up like this: Buy fewer Ford Explorers and more longer-lasting light bulbs. That's why we have higher fuel prices today.

Others, as you heard on this dais, have tried to divert blame by pointing fingers at the oil companies. Well, the lack of a comprehensive, responsible energy policy has resulted in a loss of 100,000 American jobs this decade in the energy industry. That's 10 times more than steel and it's every bit as many jobs as we've lost in agriculture. Since this administration took credit for the low fuel prices, it's important that they take the deserved blame for the higher fuel prices.

And finally, Mr. Chairman, one of the key questions today deals with conflict of interest. Do the current high fuel prices promote this administration's environmental goals? Do we have a conflict of interest between the environment and affordable fuel for homeowners? Thank you, Mr. Chairman.

REP. GILMAN: Thank you, Mr. Brady. Mr. Royce will be our last (inaudible) -- and then we'll go on with the secretary's testimony.

REP. ED ROYCE (R-CA): Thank you, Mr. Chairman. I appreciate that. We've heard a defense of the Department of Energy after the disastrous guarding of our nuclear secrets, after we've seen the inability of the Energy Department to formulate an energy strategy. And let me just say this for the record. It's not for the lack of spending. We spend $17.8 billion over in the Department of Energy.

Is this really the record we wish to defend? The answer we've heard here is to raise taxes, to spend money on new subsidies for alternative fuels. The world is awash in oil reserves, and it's a matter of using our diplomatic clout to increase production out of OPEC. And yet what we have here is a call for more funds into the Department of Energy.

I just want to share with you my observation. This administration has been able to push up the gas taxes to the point where they're 66 cents a gallon, state and local. That's the hit now. And I just want to share with you the words -- a quote: "The United States should start by gradually imposing a higher gasoline tax, hiking it by one or two cents per month, until gasoline costs $2.50 to $3.00 per gallon, comparable to prices in Europe and Japan." That's what Paul and Anne Ehrlich said in their book. And this is what Vice President Al Gore said: "The time for action is due and past due. The Ehrlichs have written the prescription."

Now, it was Vice President Gore, who is the chief advocate of the energy tax, arguing it was good for the economy, good for the environment. And I would urge you to read George Stephanopoulos's book, "All Too Human," about that. This administration has pursued this goal.

What we would like to do, what the chairman of this committee would like to do, is get some focus on the question of OPEC and getting some leverage on OPEC to break that cartel. And I would just like to say, as chairman of the Africa subcommittee, I have listened to the Nigerians explain that they would like to double their production of oil. I think this would be wise for the administration to get behind that effort.

You know, new technology is allowing for deeper offshore drilling. West Africa is one of the top regions for oil prospecting. Frankly, their known reserves dwarf anything in the Caspian Sea. We need to have a focused energy policy on breaking up this OPEC cartel and taking those countries that want to develop more production on their reserves and encouraging them to do so. And I hope we end today's hearing with some commitment that we will focus on the pieces of legislation the chairman of this committee has introduced in order to try to go after that OPEC cartel and break it up.

Thank you, Mr. Chairman.

REP. GILMAN: Thank you, Mr. Weiss. Mr. Menendez.

REP. ROBERT MENENDEZ (D-NJ): Thank you, Mr. Chairman. Mr. Secretary, let me just first say I was appalled at how the headhunters over at Mount Olympus, which is the Senate, treated you. We, however, have a different view. We understand and recognize your service here in the House of Representatives. We recognize your service as our U.N. ambassador. And we recognize the tough issues you're facing in the Energy Department and want to give you the opportunity to further explain those issues as they develop. And so we appreciate your service, and I want you to know that.

On this issue, let me just say that as we enter the season, not only are gas prices a concern, but I'm even more concerned about home heating oil costs this coming winter. The current inventory of home heating oil on the East Coast is 40 percent lower than at this time last year.

Now, Mr. Chairman, this is not the first time we are having this discussion. Many of the steps we can take are already before us. Certainly OPEC should be persuaded that collusion now in the effort to gain high prices in the short term could come back to haunt the cartel in the long term. This country should not be underestimated in its ability to develop alternative energies, if we work towards them.

Now, the vice president's announcement this week of a bold new energy policy should be read as a welcome sign to America's consumers and a warning sign to OPEC's producers. Now, I have joined a large number of my Democratic colleagues in calling for urgent action on several fronts. We have asked the Federal Trade Commission to expedite its investigation into price gouging on the part of the oil companies. Major oil companies have nearly tripled their profits as a result of these price increases, from $4.5 billion in profits in the first three months of '99 to more than $12 billion in the same period this year. We have also urged the leadership in Congress to unblock efforts to renew the Strategic Petroleum Reserve. And once given that authority we hope the president will release some of the -- and/or exchange some of the reserves from the SPRO.

And finally we call again on Congress to authorize the Northeast Oil Reserve as passed by the House but languishing in the Senate. And lastly let us not forget, Mr. Chairman, that the leadership of this Congress shares a responsibility to act now. The Republican leadership has failed to provide Americans with energy security. It has failed to reauthorize the Strategic Petroleum Reserve. It continues to send Alaskan oil to Japan, despite our current domestic price hikes. And, most damaging, it has failed to fund research and development into alternative fuels and energy efficiency. In fact, over the past five years Republicans in Congress have funded only 12 percent of the administration's requests for new investment in renewable sources of energy and energy-efficiency initiatives. This measly and irresponsible level of funding has been nearly $2 billion short of the Clinton administration requests. I don't think it's appropriate to claim here that today that the administration has no energy policy. Republicans have not only failed to build up the Strategic Petroleum Reserve when fuel was cheap; but before we faced this conflict and the difficulties we are having now, they propose getting rid of the Energy Department, and selling off the reserve -- policies that would have been extremely detrimental if carried out as proposed. And while they are not trying to abolish the department, they are starving it.

So if we allow the oil companies a slight reduction in price, settling at still higher than necessary prices, we may very well affect our surplus forecasts for the future.

So, Mr. Secretary, I hope that when we are finished here at the end of the day we can agree on taking some steps now, action now here in the Congress now hoping the Republican leadership will put their actions against their words so that the American economy and American consumers this summer, this winter, will have some relief before we face a winter of discontent. Thank you, Mr. Chairman.

REP. GILMAN: Thank you, Mr. Menendez.

REP. MCKINNEY: Thank you, Mr. Chairman. I would like to join with my colleagues in welcoming the secretary to our hearing today, and I am glad that the secretary isn't going to be the punching bag, but it sure sounds like he's been so far.

I have some concerns that I'd like to express. My first concern, Mr. Secretary, is that it appears that the old standard oil trust is reassembling itself, and they are being supported with repeated mergers and consolidation, and that is happening on our own shores and not thousands of miles away. And I haven't heard much of an outcry about that.

Also, Mr. Secretary, I am concerned at reports that have been produced saying that oil prices as high as they are -- gasoline prices as high as they are -- are higher in black and minority neighborhoods than they are in white neighborhoods -- probably a new manifestation of driving while black.

I am also concerned, Mr. Secretary, that racial discrimination and racial harassment at Savannah River site, the poor employees have to foot their own legal bills when they fight back, but the multi- billion dollar Westinghouse Corporation can tap taxpayer funds and fight the employees. And there we have got situations where such as an example where one black employee was surrounded by white co-workers who were dangling nooses. And yet Westinghouse can proudly say that they are going to use taxpayer funds to defend themselves when black employees try to fight back.

I am also concerned that oil companies have given hundreds of thousands of dollars in campaign contributions, and probably no telling how much they have given to these 527 organizations that have no disclosure requirements whatsoever. And quite frankly they have given more money to George Bush than they have given to Al Gore, although I do have problems with Al Gore's association with Occidental in Colombia as it affects the Uwa (ph) people.

But, finally, I would just like to say that I think it's a travesty that given what's happening in the oil industry that we don't have anyone from the oil companies here at this hearing today. But I do want to welcome the secretary.

REP. GILMAN: Thank you, Ms. McKinley. And again I want to remind you we will be conducting a further hearing in the near future with our oil company experts here.

Mr. Manzullo.

REP. MANZULLO: Thank you, Mr. Chairman. Welcome, Mr. Secretary. We were here several months ago, and I asked the secretary what the administration's policy if any would be toward an international criminal conspiracy where people got together, decided to fix the price of oil; where if that had been done by domestic companies those people would have been jailed. The secretary advised that diplomatic talks were underway, and that's about the best that he could give us. That may be about the best that the secretary can give us absent the clear direction from the president or from the United States Congress.

I guess what bothers me is that I represent an area, one of whose counties is in the Chicago metropolitan area where the price of gasoline is $2.50 a gallon. This hurts farmers, this hurts the trucking industry. These costs are being passed onto the consumer. And were it not for the fact that the cost of energy is excluded form the core index for inflation, it probably would be reflected in higher interest rates, which in fact may be the case if in fact the Fed decides to raise those interest rates. Maybe they (ought to do more to coordinate interest rates ?) and take energy into consideration. Let's hope not.

But the things that bothers me more than anything is an attempt to try to get at the cause of the problem. The Congressional Research Service says that 48 cents of every dollar increase in gasoline is attributable to OPEC; 25 cents for every gallon is attributed to the energy policy of the administration and prior administrations, the new formula for gasoline to be used in nonattainment areas; and 25 cents per gallon is a problem with distribution caused by the new mixing. That at a dollar per gallon. We have three reasons here to go after OPEC and to make EPA accountable.

But I just want to add this: that the people that have tried to make this political -- and Ms. McKinney talked about it -- is that the vice president's portfolio of Occidental has doubled in value from between $250.5 million to a half million, one million dollars as a result of his being influential in privatizing some oil fields that were formerly owned by the federal government.

So the Gore -- or the ox goes both ways in this situation. But I would say let's not politicize anything. Let's ask the secretary what his views on this proposed legislation are, because I think in all defense to the secretary, absent clear direction from Congress and from the administration he is doing what he can under the circumstances and has been very limited -- the authority he has been given has been very limited. Thank you.

REP. GILMAN: Thank you, Mr. Manzullo.

We would like to ask the secretary very shortly what his views are. Mr. Delahunt will be the last speaker. I am told the secretary must leave us by 12:30. Mr. Delahunt.

REP. DELAHUNT: Thank you, Mr. Chairman, I'll be very brief. To pick up on the observation by Mr. Manzullo regarding his desire not to politicize it despite the fact that he did make a reference to the vice president and his holdings in Occidental. I think in response to that it behooves me to enter into the record the fact that while Vice President Gore has accepted $100,000 in oil and gas PACs, in fact the campaign of Governor Bush has accepted in excess of $1.5 million from oil and gas PACs. I think it's important to set that record straight so we can have a context here.

While this hearing is entitled "OPEC policies," I can't believe that OPEC's policies in and of themselves, unless the major oil companies in this country are part of OPEC, and maybe Mr. Secretary you can amplify the relationship between the oil companies and OPEC for our benefit. But I simply can't believe that the cost of home heating oil and gasoline at the pump is totally unrelated to the fact that in this quarter, the first quarter of 2000, as compared to 1999, the profits for these following companies has increased by these percentages: Texas 473 percent over 1999, the same quarter; Conoco, 371 percent; BP Amoco, 296 percent; Chevron, 291 percent; Philips, 259 percent; Arco, 136 percent; Shell, 117 percent; and Exxon Mobil 108 percent. I just thought I would read those figures into the record to provide some context, and I yield back.

REP. GILMAN: Thank you, Mr. Delahunt.

We are pleased to welcome the secretary before us today. Mr. Richardson is of course well known to all of us. For eight terms as a congressman he represented the Third District of New Mexico, and from 1997 to 1998 Mr. Richardson ably served as our ambassador to the United Nations. And in August of '98 Mr. Richardson was sworn in as our ninth secretary of Energy. He has also served as the president's special envoy to many of the world's troubled areas. And I am pleased to welcome Secretary Richardson today as the leading energy trouble- shooter. Mr. Secretary.

SEC. RICHARDSON: Thank you very much for your very gracious and supportive comments that many of you made.

Let me just start out with hopefully what we see in the short term as good news. But we can't yet call this a trend. But heading into the 4th of July this is good news, and hopefully -- and I said hopefully, we are turning a corner on gasoline prices. We are examining a trend in the last week, nationally conventional regular gasoline dropped 3 cents. In the Midwest, conventional regular gasoline dropped 7 cents. In the Midwest, reformulated gasoline dropped 12 cents to $1.88 in the last week. Prices are still unacceptably too high. We are working vigorously to bring them down. And my main message here is that we have to do this in a bipartisan fashion, that we need to take some steps and the Congress needs to take some steps, and we have to resolve these problems together.

Mr. Chairman, any actions we take in the Clinton-Gore administration on energy are based on a number of steadfast principles. This is what they are: market forces not artificial pricing; diversity of supply and strong diplomatic relations with energy-producing countries; number three, improving the production and use of new technology development; number four, diversity of energy sources with long-term investment in alternative fuels and energy sources; fifth, increasing efficiency in the way we use energy; and, lastly, maintaining and strengthening our insurance policy against supply disruptions, and that's the Strategic Petroleum Reserve.

Mr. Chairman, I addressed you in the spring in what I felt was a very productive hearing regarding actions by the administration to counter tight markets, low worldwide oil stocks, and gradually increasing prices. At that time we were taking specific actions to address an untenable balance between supply and demand, one that risked negative repercussions in the world economy. We continue to believe that market should set prices. But while we import 22 percent less oil from OPEC today than we did around our last gas crunch, which was in 1977, it remains clear that actions by major oil-producing nations still significantly affect oil supply.

That is why this spring I spent a great deal of my time talking with energy ministers and leaders from the oil-producing nations -- Saudi Arabia, Kuwait, Mexico, Norway and Venezuela -- often getting grave criticism from one side that I wasn't tough enough; from the other side that we were too pressure oriented.

Each of these nations is well aware of the special economic and energy relationships between their country and the United States, as well as to other importing countries. Each of these nations agrees that stability is our common goal, and that volatility in the oil markets is undesirable. We met with some success at that time. In February, all OPEC governments were quoted as saying the production increases were unnecessary. But on March 28th, OPEC announced their decision to increase production, and other producers joined them. We saw some trimming of crude prices then and some slight easing on gas prices. They did go down for a while.

But very low stocks and soaring demand have boosted prices still higher since that increase. So I have continued to keep producing nations abreast of our situation and made our position clear. With prices staying high since spring, we needed to do more. I urged OPEC to keep an open mind.

Now, it's worth remembering that OPEC is a consensus organization, and not all governments in OPEC are friendly towards the United States. Still, the consensus that came about when the OPEC leader met in Vienna, Austria last week increases output by roughly 3 percent, about 708 barrels a day, and Mexico will provide an addition 75 barrels a day, Mexico being a non-OPEC country. We also anticipate an additional small increase from other non-OPEC producing countries soon.

Overall, we believe that OPEC's decision is a testament to the fact that those governments responded to the concerns that we raised. While this recent lift is modest, it is an important step. Mr. Chairman, since this time last year, we have seen a nearly 3.5 million barrel per day increase in production. This is substantial, and it is not only good for America, but it is good for Asia, Europe and all the world economies.

I am pleased to report that in the past week, as I said, we have seen some positive movements in the market. This study if from the Energy Department's Energy Information Administration, reporting as I said that conventional regular gasoline has dropped 3 center per gallon over the past week nationwide; and in the Midwest, where we are seeing very high prices, EIA sees a drop of about 7 cents per gallon on conventional regular. Reformulated gas is down 12 cents a gallon in the Midwest. We can't yet, as I said, call this a trend; but heading into the 4th of July, this is good news.

But we are still not seeing the greater price decreases, both for a barrel of oil and per gallon of gas that we might have hoped for. The reason for this is quite simple: demand. The world's thirst for oil is steadily rising. Other than in 1977, the second quarter of this year may show the strongest year-over-year growth, 2.1 million barrels per day, ever. When combined with our need to build inventories from historically low levels, even large supply increases of 3 million barrels a day are not enough, and demand will continue to grow.

We need to encourage methods to temper that need. We are not relying on other governments for those answers, and certainly not to ensure our energy security. As I mentioned, our nation has a firm energy policy that serves as a foundation ensuring that we have the energy resources we need. And beyond that policy, the administration has also made some aggressive short-term rules to cool off particular hot points. You'll remember that we had a heating oil shortfall in the spring. In response, the president released almost a third of a billion dollars of funds in the springs so that low-income households could pay their heating bills. He asked for $600 million more in low- income housing energy assistance funds. And the president is seeking an additional $19 million from Congress for low-income home weatherization.

We addressed the issue of supply through increased support for tankers, small business loans for distributors and other small businesses impacted by high prices, and encouraged refiners to increase production.

We also reestablished an Office of Energy Emergencies at the Energy Department to coordinate with the states and other federal agencies regarding any energy-related crisis. This move is helping us right now as we assess the demand for power during the very hot summer.

We are also seeking to turn around domestic production of oil via where we are seeing some good results -- developing alternative sources of energy and increasing energy efficiency. In energy efficiency, one of our most exciting prospects is our work in the partnership for a new generation of vehicles, PNGV, where we are looking to develop a car that will get 80 miles per gallon. While Congress has eliminated all our funding for PNGV via a recent amendment, we remain committed. We need your help on this. You've likely read of the new release of Honda's Insight, which is nearing our miles-per-gallon target. These vehicles are not just of the moment; they will be part of the lasting solutions we can commit to today for tomorrow.

We are also looking to help independent oil producers test new production technologies and give a hand to small producers in existing fields. And we are helping refiners deal with the new EPA Tier 2 rules through our ultra-clean fuels program.

And I think to the congressman that talked about domestic production, we are interested in marginal oil relief for small independents, for G&G expensing, steps that we think are important for domestic oil and gas producers.

But still we remain concerned about oil supply. There is significantly more oil on the market today than there was prior to OPEC's March meeting. And domestic production is turning around. But we need to ensure that supply is sufficient enough to meet demand and to build stocks both worldwide and here at home.

This will help the market operate within a comfortable margin of safety for the remainder of the year.

Still, facing the imminent Fourth of July weekend, America cannot declare independence from the gas pump. This is peak driving season, and refineries in the U.S. are already operating at 96 percent utilization, and at 99 percent in the Midwest. When levels are that high, it clearly indicates that demand is the driving factor. So I don't think that the production boosts are going to immediately push prices lower, but I think we are close to turning the corner.

We remain very concerned about gasoline prices in the Midwest, especially around Chicago and Milwaukee. President Clinton is very concerned about this. And there's no question, drivers in those cities and other parts of the Midwest are angry. We're looking for solutions, but questions remain.

While we did have a regional pipeline problem in the spring that left supply hobbled, our experts are talking to the Environmental Protection Agency to see what we can do in the near term to bring some relief to consumers. And while there was some easing of prices at the pump in the past few days, as I mentioned in the opening, the FTC, the Federal Trade Commission, continues its investigation of pricing practices in the region, probing for unfair or illegal activity. We hope to hear from the commission sometime in July.

We took several other steps, Mr. Chairman, in the past two weeks to meet some rather unexpected issues. On June 15th, I ordered a limited exchange of crude oil from the strategic petroleum reserve, West Hackberry site, the two refineries, after a commercial drydock collapse near Lake Charles, Louisiana. A response came within hours and shows our commitment to responding quickly. The Army Corps of Engineers has since worked overtime to dredge a new channel, so oil traffic is moving once again. And when there was a pipeline problem near St. Louis, we granted a waiver that postponed implementation of the new EPA rules on reformulated gasoline until the problem was solved.

But there's still more that we can do together to get relief to consumers, and these are the kinds of long-term solutions we need to embrace to ensure that we get out of lasting cycles with prices pegged at one extreme or another.

Last week, President Clinton sent a letter to the Senate majority leader and the speaker, urging that the Congress work with us to enact the president's energy proposals without delay. One central component of the president's energy initiative is a $4 billion tax package of tax incentives to encourage domestic oil and gas production and for consumers to purchase more efficient cars, homes and consumer products. This package has languished here on the Hill for two years.

The president has also consistently asked for increased investment to meet our energy needs. In the FY 2001 budget, the president proposed a $1.4 billion investment for Energy Department programs and energy efficiency, renewable energy, natural gas, distributed power systems. We need the Congress to support these critical goals. And unfortunately, it has approved only 12 percent of the increases over the past seven years.

We're also concerned about the deletion in the FY 2001 budget for energy efficiency below last year's level. As I mentioned, the recent House amendment cut virtually all of the department's funding for the partnership for a new generation of vehicles, where we work with the big three to develop more fuel-efficient cars. The House has added a rider to the transportion appropriations bill prohibiting the department from even studying increases in CAFE standards.

We've also had perhaps what we consider the most harmful action delaying extending the Energy Policy Conservation Act, which authorizes two programs at the core of our nation's energy security. I know the House has acted, but it's still languishing. And that is the strategic petroleum reserve and our participation in the International Energy Agency. Mr. Chairman, the strategic petroleum reserve authorization expired on March 31st, and we need to work together to get this done.

The president also submitted a comprehensive electricity restructuring bill two years ago. We have not enacted a bill, with the latest failure last week in the Senate, when they failed to report comprehensive legislation.

To better ensure our energy security this last year, the president also has called for the establishment of a regional home heating oil reserve in the Northeast. And, Mr. Chairman, we need action on this, because we are concerned about stocks of home heating oil. We're talking about 2 million barrels. We're talking about a modest effort, only to be used for emergencies, and we are concerned about those supplies. We also need a replenishment of the low-income energy assistance program emergency fund, which we needed to tap during the heating oil shortfall last year.

In conclusion, Mr. Chairman, we simply cannot ensure America's energy security with such a lack in commitment to its energy future. We have to act expeditiously together. And I would urge the Congress to act so that we can establish the home heating oil reserve in time for next winter. Nobody wants to see people in the Northeast next winter debating whether they can afford to eat or stay warm. It is a devil's choice, and Americans shouldn't have to live that way.

Mr. Chairman, we have viable options before us to improve America's energy security and do so in ways that are cleaner and more economical than ever before. I appreciate again this opportunity to explain to you what I've done as Energy secretary to bolster that confidence. Again, I thank every member here for their courtesies. And I urge the Congress to work with us to do its part and act on the critical energy proposals before us.

Thank you.

REP. GILMAN: Thank you, Mr. Richardson. Because of the very short time remaining for the secretary's appearance, I'm going to ask our members to cooperate and to be limited to -- limit their questions to three minutes each so that each member may have the opportunity to be heard. And I'll be calling on those who have not had an opportunity to make an opening statement first, before we get on to the entire list.

Mr. Secretary, the Congressional Research Service issued a paper earlier this month on the very sharp rise in gas prices in the Midwest and noted that gasoline prices nationwide have increased 60 cents a gallon over the past 18 months, with 48 cents of that increase attributable to higher crude oil. Do you agree that OPEC and its member states have been playing a decisive role in our domestic energy price crisis?

SEC. RICHARDSON: Mr. Chairman, we agree with the Congressional Research Service that high crude prices are a factor. But we also believe that transportation problems, refinery problems, high demand, low inventory, contributed to these Midwest price spikes. We also agree that RFG costs five to eight cents more than conventional gas. We don't agree in that report that ethanol RFG accounts for 25 cents of the 48-cent price differential between RF-2 and conventional gasoline.

We could not totally account for the price differential after we did a supply assessment, and this is why we asked for an FTC investigation. In other words, Mr. Chairman, we believe the causes are higher demand in the Midwest than the national average, 3 percent compared to 1.6 percent. Gasoline inventories were low going into the summer driving season, 15 percent lower than last year. Thirdly, as I said, RFG-2 was introduced into the Milwaukee-Chicago market. And then there was a pipeline problem. The Explorer pipeline in the Chicago-Milwaukee area contributed to a loss of net 6 million barrels.

But the main question that needs to be answered is, why is there such a high price differential between conventional gasoline and reformulated gasoline? We believe that pollution-controlling devices do not cause that price spike. Yes, it's maybe three, four cents more, but 30 cents. And this is why the Federal Trade Commission is investigating. They should have a response by the end of July. The oil companies have some explaining to do. The refineries have some explaining to do. But again, let's await the results of this investigation. But all of these factors, Mr. Chairman, should not be attributed solely to the price differential that has occurred.

REP. GILMAN: My time has expired. Mr. Gejdenson.

REP. GEJDENSON: Thank you, Mr. Chairman. Mr. Secretary, we look at the estimates in the Northeast to be 22 percent below last year's level for home heating oil. Any kind of cold snap at the beginning of the year could be deadly if people's houses catch fire as they turn to alternative heating; obviously, the impact of really cold homes. And I would hope that you would continue to vociferously press this Congress to get that home heating oil reserve established in the Northeast. This is a life-and-death issue.

Secondly, I think that the investigation of the oil companies -- we haven't seen the second-quarter profits yet, but my sense is they're going to be even larger than the first-quarter profits of almost 500 percent increase over a year earlier. You've got to use your bully pulpit and stay after them just like you stay after OPEC.

And the last thing I'd say is, again, that swap (or sale?). You've got a $6 differential between the spot market and the futures market. You ought to dump that out. Even if the Saudis and everybody fulfill their commitment, there's a gap in getting it here. There is obviously a shortage that exists already. Get that product out there. You're going to make a profit. You can put in more into the SPRO afterwards with the extra money you get, so you can end up with more oil in SPRO. You could end up helping the supply problem.

So I hope you take these messages very seriously. And the only other question that I'd have for you is, what do you think the capacity is of non-OPEC countries for increased production, Mexicans and others? Where do they stand? Where do some of the major OPEC countries stand?

SEC. RICHARDSON: Congressman, first, I share your view about the Northeast reserve. We need this. And we need to work with you to make this happen. We are concerned about home heating oil in the Northeast. If we can work together to get this legislation passed -- the House has passed it. It's tied up in the Senate, although I am informed that there is an amendment to the energy and water appropriations today in the House, and I hope it gets support, because what we're talking about, Congressman, is not an effort to deal with prices.

We just want a regional reserve for the Northeast off the docks of New York and New Jersey. We can lease the space. We don't have to build anything; 2 million barrels for emergencies, for emergencies, not for pricing. We worry about what might happen in the Northeast. We also had some difficulty getting some reprogramming funds to get it moving, about $8 million. We need your help on that.

Looking at what options the president uses, Congressman, for the future to deal with this problem, let me just say that we have to continue monitoring the gasoline situation. A big problem is low crude oil stocks and low gasoline stocks in this country and worldwide, too; unusually high demand. This is happening right now. We are hopeful that there won't be any more refinery or more pipeline problems. Transportation problems you can't always account for. But we're working on this.

Your last point was on the --

REP. GEJDENSON: Last point was on the OPEC nations and non-OPEC nations. Are there particular countries that have capacity, and are some countries at capacity?

SEC. RICHARDSON: Most non-OPEC countries, Congressman, are producing at capacity. We do predict small increases for non-OPEC countries. As I mentioned to you, in March, Mexico announced that they would do 50,000 barrels more per day. In the last meeting, in March -- in June, which just happened -- they said they're going to do 75,000. Norway is another non-OPEC country that contributed 100,000 in March and may be making a decision shortly about increased production in March. This is good, but again, they have to go through their parliament.

The other countries that were involved in increases in production, non-OPEC, one was Oman. And we don't know where they may be in this cycle. And Russia was another one. But basically, most non-OPEC countries are producing at capacity.

REP. GEJDENSON: Thank you.

REP. GILMAN: The gentleman's time has expired. Mr. Chabot.

REP. CHABOT: Thank you, Mr. Chairman. Mr. Secretary, consumers in my district, Cincinnati, and throughout the Midwest, are getting gouged -- or perhaps I should say "gored" -- at the gas pumps. Working families are being priced off the highways. Small businesses are feeling the squeeze. And frankly, your administration is rapidly losing credibility.

In February, when our constituents felt the first major spike in gas prices, you said, and I quote, "It is obvious that the federal government was not prepared. We were caught napping. We got complacent," unquote. Now it's late June, and those taxpayers are still waiting for relief. Many of my constituents have asked me if there isn't something the Clinton administration can do when it engages in dialogues with the price-fixing oil cartels. After all, it hasn't been so long ago that American servicemen and women laid their lives on the line for some of those oil-producing nations that are not threatening our economy with cutbacks in production and higher prices.

I have got to ask the same question: What goes on in those meetings? I note that you traveled to Saudi Arabia in February of 1999 -- oil was then selling for $12 a barrel. In March you went to the OPEC meeting in Vienna -- the price jumped to $14.68 per barrel. In July you hosted the Western Hemisphere Energy Ministers conference, and the cost of oil per barrel soared to $20. In August, a trip to Nigeria, $21 a barrel. By December 1999, when you hosted the African Energy Ministers Conference, the price went to $26 a barrel. After you traveled to Saudi Arabia, Kuwait, Mexico, Norway and Venezuela in February this year, the price of oil rose to nearly $30 a barrel. Apparently whatever our government was doing during those meetings wasn't working very well. Do you think it's perhaps time for the Clinton administration to take a different approach? Do you think perhaps we can send a strong message to the price-fixing oil cartels that we take a dim view of this criminal behavior, and that our president will finally respond to this crisis by exercising the authority he has as chief executive? Can we tell them to look elsewhere for assistance perhaps in the area of arms sales?

Mr. Secretary, the working people of my district in Cincinnati and all over the Midwest, and in fact all over the country, are growing angrier by the day. They want their government, the government they pay for, to lend them a hand. The time for complacency is over. Would you care to comment?

SEC. RICHARDSON: Congressman, I really do care about your constituents. This is an agonizing problem for all of us, and let me just talk about OPEC, because there are a lot of members here who have a lot of negotiating experience -- this is the International Relations Committee.

We were always very firm with OPEC. We started out in this effort -- OPEC was not going to increase production. In March they went close to 2 million barrels a day. They were not going to increase production on this last time, and they are close to 8- or 900,000 barrels per day.

Now, what we say to OPEC is what the international community needs is stability. There is too much volatility. A good American economy is good for everybody. The developing world -- Asia, Europe needs price stability, and prices are too high.

Now, when I went out to those nations that you mentioned, it was very visible, and I was criticized on the one hand for being too visible and pressuring, and on the other hand for not being strong enough in I think using some of the measures that Congressman Gilman and others have advocated. OPEC did increase production, so whatever actions we took worked.

Now, that is not sufficient. We have got some gasoline problems in the Midwest that I've outlined, gasoline demand problems. There's problems relating to pipelines, there's problems related to refineries, there's problems related to low stocks, increased demand. And I think, congressman, what we are looking at in your region is why is it. And I don't know the type of RFG -- I wish EPA were here with me -- reformulated gasoline that is in Cincinnati, but this is why I think we have to get the facts. Why is there such a high price differential on conventional and reformulated gasoline? Why in some districts of some of your colleagues' prices are substantially lower? I think we have to get at the facts.

I believe our policy of engagement with OPEC is working. Now, let me just tell you a little bit about OPEC, and you know this very well. There are some countries there in OPEC that we don't have strong relations with -- Iraq, Iran, Libya. There are other countries that we have strong relations with -- Saudi Arabia, Kuwait, Venezuela, Nigeria -- I know Congresswoman McKinney has been there many times -- Indonesia. OPEC operates by consensus. And I engaged them -- every minister -- intensively. I did not travel this last time, but telephoning incessantly, of making our case, saying keep an open mind. And we think that the results were positive. They we e modest but positive.

Now, everybody here knows you don't want to -- you work with your friends in an institution like that where you have nations that don't want to increase production, that like the prices high. And what we are doing is try to find ways that you balance your diplomatic efforts. And my point, congressman, is I think our diplomatic efforts of quiet diplomacy, engaged diplomacy is working. There are other factors that we need to deal with too. That doesn't mean we don't continue dealing with OPEC. But it's better to engage them in a way that produces results, and we believe that we can have some in their September meeting, you know, playing it cool, working with them -- we can continue the progress we have made.

Congressman, I think that in Cincinnati you were affected by that pipeline I mentioned, the Wolverine pipeline. You get conventional there as I understand it. And that pipeline problem was one of the reasons for this disruption.

REP. GILMAN: The gentleman's time has expired.

REP. CHABOT: Mr. Chairman, if I could just respond, and I will

REP. GILMAN: Your time is expired --

REP. CHABOT: We don't have reformulated gas, and we were affected by that pipeline.

Ms. Danner.

REP. DANNER: Thank you, Mr. Chairman. Welcome, Mr. Secretary.

I would like to follow through on two questions based on what my colleagues have talked about. You talked about, and I quote, "an anticipated increase in output from some of the non-OPEC countries." I am particularly interested in Russia, because you know we have talked about all we have done for the OPEC countries with regard to the Gulf War, but let's talk about the fact that we are sending literally tens of billions of dollars into Russia according to the Congressional Research Service. What particularly is Russia planning to do to increase their output? They certainly have the supply availability.

SEC. RICHARDSON: Congresswoman, Russia has enormous resources. The problem with Russia is not that they don't want to do it. They have some infrastructure problems. We are trying to get Russia to do what is called more production-sharing agreements with American companies, with Western companies, so that they can increase their production. So their production capability is the problem; it's not a lack of will. I think in the years ahead you will see Russia concentrate extensively on improving that productive capacity.

REP. DANNER: And I might say that in all the years that I have been traveling between Kansas City, Missouri and Washington, D.C., for the first time ever gasoline prices are less expensive in Shirlington than they are in Kansas City, Missouri, and that certainly is something that has impacted my constituents, and that's the increase in gasoline prices. My husband tells me that last week overnight the prices went down 15 cents per gallon.

The interesting thing, and one of the things that I have inquired of the FTC, and I hope in your conversations with them you will pursue it too, is the interesting fat that I think that we are talking about some collusion between the gasoline companies within areas. For example, if one of my -- one of my -- one of the gasoline stations located in my district raises its price, every price goes up throughout that area exactly the same amount overnight. It's almost as if they have a telephone tree. It seems strange to me that with different base prices based on real estate, code branding, all of those things, that they all happen to have the same price to charge for all of my motorists. And for those of us who live in the less populated part of the country, the Middle West, it is a surprise to me that we are the ones with all the reformulated gasoline when the traffic here in the Washington area is certainly much more heavy than it is north of the river in Kansas City, Missouri.

SEC. RICHARDSON: Congresswoman, on that FTC investigation, they are going to be issuing subpoenas soon, and they expect to complete their action, at least the preliminary report, by the third week of July. Their objective is to find out the high price differential, as you mentioned, from formulated and conventional and nonreformulated. The price differential, 30 cents, 40 cents, has caused significant questions to be asked, and the oil companies have not adequately explained it. Now, again, the issue of price fixing will be examining. That's the purpose of this.

REP. GILMAN: The gentle lady's time has expired.

REP. DANNER: Thank you, Mr. Chairman. Thank you, Mr. Secretary.

REP. GILMAN: Mr. Salmon.

REP. SALMON: Thank you. Secretary Richardson, it's good to have you here today. We're neighbors from the same part of the country -- actually lived in New Mexico for four years -- four of the best years of my life.

It's interesting, about 15 months ago my constituents and your former constituents -- I guess they are always your constituents -- were really getting gouged at the gas pumps. In Arizona the price of a gallon of gas went up about 35 percent over the course of two weeks. And 15 months ago I started calling for hearings. It fell on deaf hears, Mr. Chairman. Nobody wanted to even talk about it 15 months ago. Then a strange thing happened, and I think you see the same phenomenon. When the Northeast started feeling like it was getting gouged, then there was a big hue and cry, and everybody wanted to take a look at this thing. What an interesting phenomenon -- what a difference a day makes. But I really believe that if we had been ahead of the curve 15 months ago and started these hearings back then when I started to call for these hearings, maybe we could be on top of this thing by now.

I find myself being very, very frustrated with the way we all in government have handled this situation. A month or so ago, a couple of months ago, the House passed a measure which I think would have been about as beneficial as a Hallmark card to send to the OPEC countries and tell them how dissatisfied we are with what's going on, because I don't really feel it had any teeth. But we had an opportunity to put some teeth in it. And one of the ideas that I was planning on including, had the bill that we passed really had some teeth, was to give the president the power of seizing the assets of those OPEC nations if we found out that price fixing was occurring. Can I get your comments on that? And if that isn't something that we could look at doing, what -- is there anything else that we in the Congress can give the president so that he has more tools in his tool belt when it comes to dealing with these problems, because a lot of us really do believe in our hearts, even though we haven't proven it yet, that there is some price fixing going on, and that there is some skullduggery going on with these OPEC nations? So what can we do for you guys to give you more arsenal to deal these problems that we perceive are happening?

SEC. RICHARDSON: Well, congressman, let me first commend you, because you have been a leader on renewable energy, and that is very important. That is key to improving our energy security. Secondly, you're also like I was from the oil patch, and we have some initiatives, the president does, to help marginal oil tax credits, oil producers, some of the small oil producers that even though prices are high now it still has taken them a long time to recover when they were $10 a barrel in regions -- and your part of the world and my part of the world we are hurting because energy is so important.

Congressman, I think the way you engage OPEC is through effective diplomacy, and I believe we are doing that. Now, we can't support the chairman's bill of sanctions. Now, the second bill -- and I don't know that that's the one you are referring to -- the Justice Department and the State Department are reviewing it. I -- is that Chairman Gilman's bill, the asset --

REP. SALMON: It's the one that we passed about 45 days, 30, 45 days ago. And more -- I believe it was just a resolution.

SEC. RICHARDSON: Congressman, I would say that we would oppose that bill, because we believe in engaging OPEC. And if you look at the record -- for instance, Saudi Arabia has been forthcoming. They have been leaders increasing production. Kuwait has also, and I think Chairman Gilman effectively made a case with Kuwait earlier and was helpful. So there have been countries -- Algeria is another country that has taken some surprising positive positions in increases in production.

What we try to do with OPEC is engage them, convince them, make our arguments on economic grounds, not political grounds. It doesn't pay, I have found, to coerce or threaten, but to be forceful. And, as you know, a lot of OPEC countries were not happy when I made those visible trips and when I advocated very strongly for our position.

This last time we took a more low-key approach, but it still involved a number of telephone calls and quiet visits that took place. That's how I think we should deal with OPEC. OPEC is a reality. They are going to be around. And as a nation we need to reduce our reliance on imported oil. I think that is message number one. And this is where together in a bipartisan fashion we can deal with renewable energy and those tax credits and the home heating oil reserve and helping domestic oil and gas production.

REP. SALMON: Secretary Richardson --

REP. GILMAN: The gentleman's time has expired. Ms. Lee.

REP. LEE: Thank you, Mr. Chairman. Let me also thank you, Mr. Secretary, for your forthright testimony, and also for the success that you are having, though not complete success, but some success. And let me just ask you a couple of things. In your opening statement you did mention the fact that prices have dropped in some parts of the country. I don't believe you mentioned the West Coast. And as you know, in the West Coast we've had huge -- high prices for a couple of years now.

And, Mr. Chairman, in fact, I'd like to insert for the record -- I'd like unanimous consent to put this GAO study in California gasoline price behavior.

REP. GILMAN: What's the date of that?

REP. LEE: The date is April 2000.

REP. GILMAN: Without objection.

REP. LEE: Thank you, Mr. Chairman.

But let me just ask you in terms of the discrepancies in terms of prices in California and in the West Coast versus the rest of the country. We know California is really the third-largest consumer of gasoline in the world, behind the United States and Japan. Gas prices in the Bay Area -- Oakland, San Francisco in particular -- are higher than any area in the state, and probably in the country. So now we are still dealing with this with no real relief in sight.

Secondly, let me just ask you, in terms of the explanation by the oil companies, have they actually explained to you a rationale for how they see the increase in prices? And do you see a correlation between their huge windfall profits and the soaring prices of gasoline and home heating oil?

SEC. RICHARDSON: Congresswoman, as you know, California has some particular features that probably occasion higher gasoline prices for consumers. Number one, there's higher state and local taxes, as you know, almost total taxes as much as 10 cents per gallon above the national average -- this is in taxes.

Number two, product quality. In other words, it costs more to make reformulated gasoline in California than it does -- five to eight cents per gallon more to produce than conventional gasoline.

Thirdly, the Rocky Mountain region, there's some transportation problems, some logistical problems that have taken place that prices in the region have been more independent than in other regions. There's been some pipeline problems. Specifically, the shutdown of the Olympic Pipeline that took place in June of '99 because of -- and some gasoline markets in Washington and Oregon were also affected.

So California has those particular problems that we have been trying to address. I've been out there. We are trying to find ways to reduce that gasoline price there. And there has been a slight drop. But, again, we're monitoring it very closely.

REP. GILMAN: The gentleman's time has expired.

Mr. Smith?

REP. CHRISTOPHER H. SMITH (R-NJ): Thank you, Mr. Chairman.

First of all, I want to say to my good friend, Mr. Richardson, Secretary Richardson, welcome, and I remember our good times working on the Helsinki Commission together, and I want him to know that I have a great deal of respect for him. Let me just say that I -- and I also think you are trying. It's a very difficult process. But let me just raise an issue, because I am deeply concerned that the administration, while you're pushing hard in one area, may be deeply conflicted on the issue of gas prices and the impact on my constituents in New Jersey and in my district, I hear about it all the time. People are concerned, they're paying more, they don't like it, and it is impacting upon their lives.

We saw not so long ago a deep conflict on the issue of MFN, most favored nation status, for China. And there is a correlation here. When the linkage was there with trade and human rights during Mr. Clinton's first couple of years in the White House, there was a major effort made by people inside the White House to de-link. There was a conflicted White House. There were people who had, particularly in the Commerce Department, a decidedly negative and jaundiced view as to whether or not human rights ought to be linked. And sure enough, one year later there was a total de-linking and there was a total unravelling of that policy.

I'm afraid that there may be a disconnect here as well. I -- having read Vice President Gore's book "Earth in the Balance", I'm seen the quotes, some of the people today have quoted it. But I have read "The Population Explosion" by Paul Ehrlich. I also read the previous book "The Population Bomb". It is a book of pseudo-science, extreme exaggeration, a book filled with worst case scenarios. As a matter of fact, I went back and looked at some of the things with "The Population Bomb", they haven't happened. And yet that was used to drive policy for years, and yet those worst case scenarios were nothing but worst case scenarios that didn't even come close to happening. And hyperbole like that is very dangerous when it has such an impact on policy.

Now, in looking at "The Population Explosion", there's a quote -- and again, I read the book. So, you know, I am very well acquainted with it. But one pulled quote from it: "The United States could start by gradually imposing a higher gasoline tax, hiking it by one or two cents per month, until gasoline costs $2.50-$3.00 per gallon, comparable to prices in Europe and Japan." That's on page 219-220. As we all know, the vice president wrote the promo for that and said, and I quote, "The time for action is due and past due. The Ehrlichs have written the prescription." If that's not an endorsement of higher gasoline prices, I don't know what is. And I would just ask you respectfully, Mr. Secretary, can you not understand why reasonable people, looking at the vice president's many utterances and writings on this, would not at least feel that the administration might be conflicted? You are pushing for lower prices, but there may be other people who say, "Hey, if it goes up, it goes up. It'll be good for the environment."

You know, I'll never forget how Justice Bork was skewered by his writings. He had so much in written form that members of the Senate could go back and look at it and said "We don't like this opinion, we don't like that." And I think, you know, we should be held accountable for what we say and for what we write. And the vice president has clearly made it clear that he would like to see higher prices as a way of mitigating consumption as an environmental issue.

So, you know, why isn't that not unreasonable for those of us who look at those writings to conclude there could be a problem here? I yield to my friend.

SEC. RICHARDSON: Well, first of all, I -- the congressman is, as usual, awfully skillful, and I admire your work on human rights and diplomacy and et cetera. Let me just say, Congressman, I have been -- and by the way, the vice president is making a speech today on his views on energy in Philadelphia -- in fact, this morning. He may have already done so. This is what we want to see.

We want to see tax credits for fuel efficiency, for storing domestic oil and gas industry, for renewable energy.

We want to see federal investment in domestic sources of energy. I've been, not necessarily in your district, Congressman, but I know the transportation problem, some of the truckers there. We need to really revive this partnership for a new generation of vehicle. I know that the vice president cares about how we can make automobiles and trucks more fuel efficient and still ensure that Americans have a free choice in buying them. I just heard today that SUVs, the sale is dramatically increasing, in the last two weeks more than ever, the most-sold automobile. We want to see a more creative policy on natural gas, on distributed generation systems. That's what I know the vice president believes in.

REP. SMITH: But his previous --

REP. GILMAN: The gentleman's time has expired.

REP. SMITH: -- (inaudible) -- $3.00 deal, and that's been ready.

I thank you.

REP. GILMAN: Mr. Crowley.

REP. JOSEPH CROWLEY (D-NY): Thank you, Mr. Chairman.

I ask unanimous consent to revise and extend my remarks for the record.

REP. GILMAN: With no objection.

REP. CROWLEY: First let me welcome you, Mr. Secretary, again. The more things change, the more things seem to stay the same. We were here just last March, as you mentioned earlier, to discuss the issue of home heating oil and the price.

And I just point out for my colleague from the West and the Southwest that the issue of home heating oil was of greater importance, in my opinion, because it was life and death in the Northeast. There was concern that people would not have the ability to heat their homes. And I just make that distinction. And I believe that if our chamber doesn't work together with this administration to solve some of the problems, we'll be back here again next winter trying to figure out what we can do to reduce the cost of home heating oil as well.

Gas prices in my district have gone up over 75 cents since last summer. And I represent a working-class district in Queens and the Bronx in New York City. They're working people, working-class people, many senior citizens who are living on fixed incomes and fixed budgets. They're paying their mortgages, they're setting aside funds for their kids' education, and they're also attempting to save a little bit to go on vacation this year. It just seems that they may have to save a bit more now in order to do that.

Therefore, again, I implore the secretary once again because of this to open up SPRO to provide immediate relief to my constituents. We all know what happened back during the Gulf War when then-President Bush opened up the SPRO to reduce the price of oil by $10 a barrel overnight. I'm not going to go into my comments about OPEC. I'll leave those for the record as well. A lot has been stated already.

But, having stated all that, I'd like to address just momentarily the partisan bickering that is taking place. Not so much today. I have to commend my colleagues for not being as partisan today as they were last week, and not necessarily this House, but particularly the other house. While I disagree with the administration on their policy regarding the opening of SPRO, my Republican colleagues are wrongly, I believe, blaming the president and this administration for every problem under the sun. This administration has advocated the creation of a home heating oil reserve for the Northeast, but my Republican colleagues refuse to fund that, no funding in the Interior appropriations for the Sanders amendment for $10 million for this reserve, which failed this year by 193 to 195 in our House.

The administration had continuing work for the reauthorization of SPRO, but again, the Republican Congress has blocked that as well. This president has worked for greater energy efficiency in the alternative sources of power, all to see his work destroyed by the Republican majority in this House.

And lastly, this Congress has voted yesterday to cut the funding for the Federal Trade Commission, the people who investigate price fixing here in the United States, by $30 million from the president's request, and under -- and $10 million from last year's enacted appropriation. This Congress has been fiddling while Rome burns and then has called the president an arsonist.

Mr. Secretary, I just have one question, because my time is actually out of -- I'm running out of time. In your opinion, why is it that we as a Congress have not reauthorized SPRO at this point in time?

SEC. RICHARDSON: Well, Congressman, my most urgent plea here is that, regardless of anyone's position on whether we use the Strategic Petroleum Reserve or not -- and there are arguments on both sides -- we have hesitated to use it, because we -- the law says it should be an emergency supply disruption, and not a price problem. But ultimately, the president makes those decisions.

We need the full authority to use the Strategic Petroleum Reserve, and we don't have it right now. We have limited use of it. As I mentioned earlier, I used it last week with a dry dock problem in Louisiana, and basically 500,000 barrels of oil were exchanged with some energy companies that dealt with a disruption. That was a swap. But we need that full authority. I'm not going to ascribe any motives. I think there was some dispute because in the House, the home heating oil reserve was attached to it; in the Senate, it was clean. There was some stripper well provision that I believe was in the House that was added that, quite frankly, we didn't think was that bad.

My main point, Congressman, is we just need this SPRO authority passed, and the sooner you can do it, the better. I don't want to ascribe any motives, but the fact that it's not there hampers our ability to deal with a potential problem.

REP. GILMAN: The gentleman's time is expired.

REP. CROWLEY: Thank you.

REP. GILMAN: Ms. Ros-Lehtinen.

REP. ILEANA ROS-LEHTINEN (R-FL): Thank you, Mr. Chairman. (Greets Secretary Richardson in Spanish.) Thank you, Mr. Richardson.

First, following up on Mr. Smith's question, I don't think that we got a response on whether Vice President Gore has abandoned his commitment for higher gas prices in order to save the environment. I'd like to get an answer to that, but I wanted to ask you also about the dismantling of the OPEC cartel, Mr. Secretary.

With real oil prices at its highest levels since '85, is the administration doing anything to put into place a long-range strategy for the dismantling of the OPEC cartel? The inability of OPEC to predict world demand for oil before and after the Asian financial crisis and its single-minded focus on the importance of rising demand for gasoline in the U.S. has, yet again, clearly demonstrated that it cannot fulfill the purpose of this organization without damaging the interest of the consumer countries such as us here in the United States.

So please describe in detail, if you could, the efforts of the administration to show that its demand projections were flawed and its quota system was harmful to the global economy. And, contrary to your statement, Mr. Secretary, OPEC, I think, has consistently failed to bring stability to the market. The Saudi oil minister, as you know, has admitted that OPEC was caught flat-footed by the revival of the Asian economies following the economic downturn in that region in '98, and he has backpedaled on his earlier claims that demand for gasoline in the U.S. was the key factor in driving prices up, and OPEC, in short, is not capable of engineering a soft landing for oil prices. So if you could address those concerns, beginning with Vice President Gore, the dismantling of the OPEC cartel, and OPEC's commitment for stability.

SEC. RICHARDSON: And thank you for your nice opening words. Congresswoman, let me start with OPEC, and then I'll deal with the second issue.

I remember going to Saudi Arabia when prices were $10 a barrel and there was great concern in Saudi Arabia. There was great concern in America's oil patch, in New Mexico and Texas and California and Arizona -- and many other states, Louisiana -- because our domestic oil and gas industry was hurting. And our policy has been to say that $10 is too low, $30 is too high. It's now over $30 -- $31 I think -- and we are saying it's too high.

Now given that, what has been our policy with OPEC; our policy with OPEC has been to forcefully engage it. When they had the production cuts, we expressed strong concerns. We are against artificially set prices; we think the market should dictate. Now, the last two decisions OPEC has made to increase production, we think, is good for us and good for the world economy. We have advocated that.

Our preference, Congresswoman -- and you have been very successful in this arena, too -- is to forcefully engage them, to explain our position, not to coerce and pressure. And I believe we have been getting solid results. There are other factors; increased demand, the low stocks -- the low stocks of gasoline and crude oil that exist, pipeline and refinery problems, reformulated gasoline. All of these factors have contributed to the spike at a time when, after OPEC took those decisions, you recall, prices started going down.

Now on the second question -- (laughs) -- no, I have never read that book of the vice president's. I can tell you that he wants to see an energy policy where there is a balance; where there is a balance for renewable energy, where there is a balance for economic growth. You know, he will outline his policy today. But as I mentioned before, he has been very --

REP. ROS-LEHTINEN: With all respect, Mr. Secretary, the question had to do with the vice president's commitment for advocating in favor of higher gas prices in order to bring a more livable future for our generation.

REP. GILMAN: The gentle lady's time has expired. And the secretary has given us 10 additional minutes, and we have tried to make good use of it for those who haven't been called on.

Mr. Meeks?

REP. GREGORY W. MEEKS (D-NY): Thank you, Mr. Chairman.

And I want to thank the secretary also.

Let me just say maybe something that might not be as popular to say. But I think that we just need to be mindful and always believe in counting our blessings. Though we are going through a crisis here in America right now, with reference to oil and gas prices, still as I was walking over here with my intern, she mentioned to me, you know, "Aren't we still getting gas and oil cheaper than anyplace else in the world?" And that is probably true, and we should count our blessings for that. But it does not mean that we should be easy and take it easy.

And there is enough blame to go around with reference to the crisis that we are currently in. Clearly I agree with Mr. Brady, for example, whereas there is blame on the consumers' part. We have not been smart consumers. There is blame on the administration; there is blame on Congress. And we can sit here till we are blue in the face, blaming one another and pointing fingers at one another, and not resolving an issue here of trying to make sure that we reduce the oil and heating prices.

And I want to thank you, Mr. Secretary, for rising above the fray. I mean, you have been attacked personally and politically for a long period of time. But yet, as I sat here and listened to you, you still continue to want to work in a bipartisan manner, trying to work together, so that we can make sure that we solve some of the problems that the American people are concerned about.

They're not concerned whether or not it's a Democratic or a Republican they're concerned about someone working together to resolve some of the issues that they have, that's confronting them now with the oil and the heating prices. And particularly for those of us who live in the Northeast, you know, it is going to be a matter of life and death for some of them, you know, making a decision of whether or not they can eat or whether they have to have enough oil so that they can have heating.

Let me ask this question, then, just -- and I just wanted to pick up on something that Mr. Royce said. And I've heard some -- I think some meaningful suggestions and recommendations that's coming from both sides of the aisle here. But something that Mr. Royce had talked about with the increase of production of oil in Nigeria, but not only in Nigeria, but in all of West Africa. What can we do or what are we doing to look that we can increase the oil production in West Africa, and how would that affect us and how would that help us with some of the crisis that we have here in America?

SEC. RICHARDSON: Well, Congressman -- and I think Congressman Royce knows Africa very well, since he chairs that subcommittee -- we think Nigeria has enormous potential for more oil and gas production, and we're working with them to bring more technology, to bring more American investment. We've got substantial investment there. They've had some infrastructure problems, as you know, because of some of the political issues that have been affected there. There was a lot of corruption. Instead of revenues coming in from energy production for other capacities, they went elsewhere.

And what we want to do is develop -- we have a three-prong strategy; develop oil and gas resources in three key regions, in Africa, in Latin America, and in the Caspian. We think if we bring our leadership in that area, especially in Nigeria where there's a pro-market, pro-democracy government that is doing the best it can to get the economy back and bring some true democracy and it's having some good effects, we are very bullish about Nigeria. The problem still is their infrastructure, their pipelines. We also support a West Africa gas pipeline. We've been very involved in spurring the production of that with both some energy companies and some of the governments there in Chad and Nigeria and other nations that are key to that. So we think that Africa is a real untapped resource, not just for itself, but for our country.

And I thank you for your very instructive comments.

REP. GILMAN: Thank you, Mr. Meeks.

Mr. Payne.

REP. DONALD PAYNE (D-NJ): Thank you very much. It's good to see you, Secretary. I'd like to once again say our work together in Congress, your work on getting hostages freed in dangerous places, your work with the United Nations, our trip together to the Democratic Republic of Congo, all these things really -- and, of course, your work here as secretary of Energy.

When I was listening to the Senate last week, one thing for sure, they are certainly bipartisan. They're not very partisan, they are equal opportunity bashers. I don't know if any one side was any worse than the other. But your head was bloodied, but it was unbowed. That's the secretary I knew well.

I would just like to say that I think that the work that you've done, bringing the African energy ministers to the United States some time ago, perhaps had something to do with Nigeria saying "We want to pump more oil because we know we have a friend in our Energy secretary." And so I'd like to compliment you on a number of the initiatives.

And I couldn't agree more with Mr. Brady. You know, we keep pointing to everyone else and we're looking for the enemy, and the enemy is us. Housing prices go up, so we're not bringing in the National Home Builders Association and bashing them. It's going up because the demand is exceeding the supply. The same way in my state of New Jersey. It's just common sense. The cost of higher education is going through the roof. Why? Because the demand is outstripping the supply. Health care, it's the same thing.

And so I don't like it either, I don't like our prices to go up. But I can't understand why Americans and our political leaders here are so surprised that somebody's got something that they can -- that's the American way. They've got something you want, and they're going to shoot the price up to maximize the profit.

I think what we need to do is to stop being so dependent. I think what we need to do is stop buying all those sports vehicles, as you mentioned. Every since the crisis got here, the jump has gone through the roof. So we're blaming other people. I think that we need to have alternative energy sources, we need to talk about ways to reduce the consumption of these gas guzzlers that have been reintroduced into our country. And I believe that what we need to do is to start looking at ourselves to see how we can come about.

Let me just ask a quick question. There were a number of initiatives that were introduced that were not passed by the Congress. In your opinion, if some of these initiatives that were mentioned earlier, initiatives made by the administration, but the Republican- controlled Congress felt that we shouldn't spend the money that way, do you think that we should revisit those initiatives and perhaps that could be an alternative plan of trying to become less energy dependent and more frugal in the manner in which we guzzle up energy? Mr. Secretary, maybe if you could respond to that.

SEC. RICHARDSON: Congressman, we need the following -- and we hope the Congress acts in a bipartisan fashion: $4 billion in tax incentives for fuel efficiency, tax incentives in the domestic oil industry and renewable energy.

Secondly, we need to pass the Strategic Petroleum Reserve Authorization, the full power. This is critically important. We need also to pass what is called electricity restructuring legislation that's before the Commerce Committee. There are brownouts and blackouts in the country. I've been going around the country warning that our grid is hurting, that we need to modernize our grid. I was in your district, your state. We need to do that. There are some outage problems, possibly soon, that are taking place in the West Coast and in the Northeast that we're concerned about.

We need to get that program restored for the Partnership for a New Generation of Vehicles for more fuel-efficient vehicles. We need domestic energy funds for more investment in solar, wind and biomass and bioenergy. We think it's important to fund the weatherization program to its full capacity, the low-income energy assistance. We would like to also look at a number of other initiatives that the president has put forth that are emergency measures -- the home heating oil reserve for the Northeast. We think that needs to happen.

My main message, Congressman, is that we need to do this together. We need to stop blaming each other and move forward and find ways that we can act on some of these measures, because you can't have energy policy problems blamed on one factor -- OPEC or whatever. There's a number of factors that we have to play with. And one that you've been very aggressive and positive on is developing countries, having shared market partnerships with the Nigerias, with the Congos of the world. And we've been trying to do that.

REP. GILMAN: The gentleman's time has expired.

Mr. Brady.

REP. KEVIN BRADY (R-TX): Mr. Secretary, is Governor Bush responsible for our current high fuel prices?

SEC. RICHARDSON: George Bush? No.

REP. BRADY: Governor Bush isn't responsible for our current high fuel prices.

And I think we can agree that some of the comments earlier today by my Democratic colleagues can be dismissed as just partisan inaccuracies. You may not describe it that way, but I think that's the point.

It's true that oil prices have gone up, and we are working together to bring them down, but it's important to remember that rent has increased 10 times the amount that fuel has over the last 20 years. Dental services, things we all need for our kids, 20 times. But we don't launch investigations into apartment owners or to dentists. The fact of the matter is that, as George Foreman, world championship boxer, one of my constituents, once said, "You have to do your own roadwork." And in this case, I agree with the gentleman, Mr. Payne and others, who recognize that we have to take responsibility for our own energy needs.

We talk about Africa and the Caspian Sea and Latin America, but why aren't we doing more to significantly increase the responsibility America takes for our energy needs? Is it the conflict between our environmental goals and our energy goals? Is it the unwillingness to stand up to special interests and say we've got to have a long-term energy policy that allows us to be more independent? What is it going to take to get a responsible energy policy that all of America is engaged in?

SEC. RICHARDSON: Well, Congressman, first of all, it's going to have to be, I think, a bipartisan effort, because a lot of these measures can't be approved without the support from your side and our side. I think that's number one.

Number two, I think we have to stop blaming each other. I mentioned that I don't believe Governor Bush is to blame; neither is our administration or the vice president. I think our energy policy has been laid out. It's had successes and right now, our biggest challenge is high gasoline prices. How do we achieve that? I've given you our measure.

I think a key component is we cannot forget our domestic producers. We cannot forget -- not just oil and gas, but we've got to help our own, our coal people, we've got to help our other industries that are fossil fuels; renewable energy, we have to invest. But in particular, what we have is a balanced package. A balanced package in fuel efficiency, in tax incentives for a number of measures to make homes and buildings and automobiles more fuel-efficient, but also an effort to help our own domestic production with marginal well assistance and other factors, which I think is essential. We need to get these approved and passed.

REP. BRADY: My only -- my only correction to that, I agree with what you said, is that you, in your role as secretary of Energy, our president and vice president, have been at the helm for seven and a half years. It's fair to ask, How did we get here? What are we going to do to get out? It's not a factor of blaming. It is a way of looking to see what we ought not do in the future so we don't end up here with people in tough situations another eight years from today.

And Mr. Secretary, I appreciate the efforts you're making, too, on our domestic production and our smaller, independent producers.

SEC. RICHARDSON: Thank you.

REP. GILMAN: The gentlemen's time is expired. Mr. Rothman.

REP. STEVEN ROTHMAN (D-NJ): Thank you, Chairman. Mr. Secretary, a pleasure to see you again, and I certainly agree with you that we need to work as a Congress with the administration, Democrat and Republican, in reducing our reliance on imported oil and developing alternative sources of energy, and I hope we can -- the Congress, my Republican friends, along with my Democratic colleagues -- can pass the host of initiatives that this administration has put before the Congress, pleading with Congress to pass, to help address the oil price crisis in America.

And I hope in particular, being a congressman from New Jersey, a region which is also suffering very high gasoline prices and who suffered with the dangerously high home heating oil prices of last winter, that we do pass the Strategic Petroleum Reserve reauthorization and create, as the Clinton administration is pleading for Congress to create, the home heating oil reserve.

But I cannot avoid the feeling that there is extraordinary price gouging going on by the oil-producing nations of the world and the oil companies located here in America.

I believe, if you examine all of the figures of increased oil production that have occurred in the last 12 months and that are occurring now, the increase in oil production, we are not seeing a commensurate drop in price. It is inescapable to me the certainty that there is price gouging going on by the oil companies and these oil-producing nations.

Now, we introduced some legislation here in Congress recently to prevent arms sales to those oil-producing nations that were price gouging. We've certainly got to try to get it out of committee. But I want to know what we can do about these oil companies that are price gouging. Now, you can say, "Look, this is the marketplace, and they've got a commodity that people want and they can set their own price." Well, that's true, but this government has the ability to create laws that can get the attention of these oil companies so that they understand that they cannot double and triple the price of their product whenever they feel like it, even if there is no -- just to create double and triple-sized profits, when the American consumer is suffering. Enough is enough, oil companies. And the United States Congress, in conjunction with this administration, I believe, has the tools to send a clear message.

And I'm asking you, Mr. Secretary, what can we do to let the oil companies know that we will not forget their greed, the greed that is causing them to gouge prices on our consumers at the very height of the oil demands of this summer?

SEC. RICHARDSON: Congressman, we are investigating the oil companies for potential price fixing. The Federal Trade Commission will conclude in late July. There are unexplained price differentials in the Midwest, unaccounted for price spikes, conventional versus reformulated gasoline, of as much as 30 to 40 cents. There are other factors that are involved. You mentioned the production supply. There is increased demand, unusually high demand, low stocks. There's been transportation problems. There's been refinery problems. There's been pipeline problems. There's been reformulated gasoline -- in some cases the differential is slight, two to three cents, maybe a little more. That doesn't account for 30 cents. So I think the burden is on the oil companies to explain why this happened. This is why the FTC is investigating.

REP. GILMAN: The gentleman's time has expired.

Mr. Rohrabacher.

REP. DANA ROHRABACHER (R-CA): Thank you very much.

Again, Bill, welcome. And just let me note that there's been no one on this committee that in this hearing has raised any objections to your job, and no one has used you as a punching bag. We respect you, we like you, you are our friend and our former colleague. But we do have some fundamental questions about administration policy.

And let me just say that when you talk about responsible policy, and what we see from this side is that the Clinton-Gore administration, it seems to us, has not had a responsible energy policy, and perhaps this is due -- and we can't overlook this possibility -- to the fact that it is being unduly influenced by loony environmental ideas that have been espoused by the vice president for decades. The vice president has been the number one advocate of higher gas prices in order to achieve his environmental goals for decades.

Now are you or are you not here telling us that the vice president has or has not abandoned his commitment to dramatically raising the price of gasoline in America?

SEC. RICHARDSON: Now, Congressman, the vice president does not favor higher gasoline prices for consumers. Let me just state that for the record --

REP. ROHRABACHER: He has always advocated that! This is not --

SEC. RICHARDSON: That's not the case.

REP. ROHRABACHER: That's not even debatable, Bill.

SEC. RICHARDSON: He has advocated -- he wants to see tax credits for families to purchase fuel-efficient vehicles --

REP. ROHRABACHER: No, no, he has advocated in his writing, he has advocated in speeches that Americans -- that we're at fault because we want to use our cars too much, because the price of gas is too low. Does that mean the administration has backed off of its commitment to higher gas prices through the Kyoto agreement?

SEC. RICHARDSON: We never --

REP. ROHRABACHER: Has the administration backed off of that?

SEC. RICHARDSON: Congressman, we've never been for that.

Let me just tell you what the vice president wants to do. You mentioned automobiles. He is the author -- it's through him that the Big Three and the Department of Energy and other agencies are trying to make SUVs more fuel-efficient, 40 miles per gallon, 80 miles per gallon. That is his objective. He believes that there should be freedom of choice for the American people in any vehicle they --

REP. ROHRABACHER: Okay. So you're saying you -- are you trying to tell us today --

SEC. RICHARDSON: But we want to see more fuel-efficient --

REP. ROHRABACHER: -- are you trying to tell us today that he never advocated higher prices for gasoline -- SEC. RICHARDSON: Yes.

REP. ROHRABACHER: -- as a means of achieving his environmental goal?

SEC. RICHARDSON: Yes. Yes, and I also --

REP. ROHRABACHER: Well, that goes against every -- I don't -- (inaudible) -- it goes everything we believe.

SEC. RICHARDSON: (Chuckling.) Well, I've never heard him say that. And --

REP. ROHRABACHER: We're just mistaken.

SEC. RICHARDSON: Congressman, look --

REP. GILMAN: Mr. Rohrabacher, give the witness an opportunity to respond.

SEC. RICHARDSON: Congressman, there are a number of initiatives that we need that require legislation and appropriations. I've pointed them out. We need to do this together. I think to just try to engage in the dialogue you and I have had, even though we're friends, and I know you have to establish your position, I don't think it's productive.

I think what we need to do is -- there are some emergency measures that we need to deal with this problem. I've outlined those.

There are a number of tax credits that are needed. There a number of initiatives that I think many on your side could support, like the domestic oil and gas incentives.

REP. ROHRABACHER: Clearly.

SEC. RICHARDSON: We need to just move forward.

REP. ROHRABACHER: Thank you.

REP. GILMAN: The gentleman's time has expired.

Ms. McKinney?

REP. CYNTHIA MCKINNEY (D-GA): Thank you, Mr. Chairman. First of all, I'd like to thank you for allowing those of us who have stayed throughout the entire hearing to get a second round. And I'd like to thank the secretary for staying here to respond to all of our questions.

I'm going to change the subject a little bit, but I want to bring something that I feel is very, very important to your attention, that I'm sure you're not aware of. And it has to deal with the situation of African American workers at Savannah River site. I just want to list some of the things that are alleged to have taken place there.

There's a work area where African Americans primarily work. That area is referred to as "Coonsville." Nooses have been placed on African Americans' work stations, and electricians brought a noose to the site and demonstrated the historical value of a noose. The N-word is reportedly regularly used by both management and staff.

African Americans at the Savannah River site have 1.7 to 1.8 times the exposure to radiation than their white counterparts. African American employees feel that management places African Americans in the work sites to get the radiation. Twenty percent of the total workforce at Savannah River site is African American, yet 40 percent of the staff in the areas of exposure to radiation are African American.

Two percent of the upper management at Westinghouse are African Americans. There has never been an African American vice president at Savannah River site.

A machine named the "Manipulator" is referred to as the "Slave Master."

And then finally, I would just like to say that I had the president of Westinghouse Savannah River Site in my congressional office, Mr. Buggy (sp). And while there, Mr. Buggy (sp) actually used the "N" word in my presence, in my office. That is the kind of leadership that exists at Savannah River Site Westinghouse under contract by DOE.

Now, I also have a letter from Mary Anne Sullivan, general counsel, dated May 15 2000 from the Department of Energy where she says that litigation expenses are considered to be costs of doing business. My question to you, Mr. Secretary, is why should the U.S. taxpayers foot the bill for litigation expenses against poor employees who have already been victimized by that kind of management and that kind of an environment, and why should that be condoned by the Department of Energy?

SEC. RICHARDSON: Congresswoman, I'll get back to you on these issues. Let me just say that after that "60 Minutes" report came out and I think you're aware of that -- I sent a team down there to look at some of those allegations. I also sent my ombudsman, somebody who I appointed in the department, to find problems of racial profiling. We've had some problems with Asian Americans in the suspect case at Los Alamos. And I wanted to send a message that we don't tolerate racial profiling.

I will have somebody come see you, or I'll come to see you myself to look into some of these issues that you raised with me.

REP. GILMAN: The gentlelady's time has expired.

REP. MCKINNEY: Thank you, Mr. Secretary.

REP. GILMAN: Our last intervener (sic) will be Mr. Royce, and I want to advise my colleagues that Senator Metzenbaum has been patiently awaiting to testify, and he'll follow Mr. Richardson -- Secretary Richardson.

SEC. RICHARDSON: Mr. Chairman, I would also like three minutes to explain -- you asked that question about that GAO report --

REP. GILMAN: Yes. We'd welcome your comments.

SEC. RICHARDSON: So at the end, if I could do that?

REP. GILMAN: Thank you, Secretary.

Mr. Royce.

REP. EDWARD R. ROYCE (R-CA): Thank you, Mr. Chairman.

And Mr. Secretary, I want to say that I'm glad that you recognize the potential for West African oil production, and I'd mention also the Chad-Cameroon gas pipeline. It's about to get underway.

I think we should be pressuring OPEC, as I said earlier, to increase production. And you've told us today about some of the things you've worked on in the past to do that. And my question is what does a secretary of Energy bring to that task that the secretary of State or the secretary of Defense couldn't do with more leverage? I think that cabinet colleagues of yours would bring more leverage to the table. And I am reminded of a conversation I had once with Casper Weinberger, the former secretary of Defense. And he said, "Frankly, the security issue over our nuclear secrets should be handled by the Department of Defense, as it was in the past before the creation of the Department of Energy." He said that the culture in the Department of Energy can't be changed; the Department of Defense will safeguard these secrets.

And that's why he backed a measure, a piece of legislation, I introduced in the past.

And the reason I am raising these points is because in many ways, in my view, you have been saddled with a responsibility through the creation of a separate Cabinet-level position of Energy, that in my view should be done by other sectors. Department of Defense, I believe, should be handling the security, as it once did. The issue of leveraging OPEC, I think frankly, Department of Defense or Department of State -- you know, our secretary of State -- probably could do that with more leverage.

And this goes to the issue that you have been saddled with a responsibility here that's very difficult. The concept that was dreamed up, that we would develop these alternative energy sources with subsidies, rather than go through the market -- I am reminded of the Oil Shale Project, where we spent $1 billion and never developed a drop of oil out of that. And I think some of it goes to the original way in which we invented this separate Cabinet-level position. And in many ways, it's unfortunate.

And I think that in many ways, it is an outdated and duplicative boondoggle, as many critics have charged. Every year we get reports about inefficiency, corporate welfare, failure to respond to high gas prices, and so forth. And I am not sure this in fact can be handled the way we have created this agency. And I wanted to give you a chance to respond to those critics who raise these points.

SEC. RICHARDSON: Well, Congressman, first of all, while I have shouldered the principal discussions with OPEC and have traveled and have phoned these ministers and worked them very hard and in fact, have good working relationships, which I think is key, I have not been the only actor. The secretary of State has made phone calls and visits that have been extremely helpful. The vice president, the president has made calls. I have had the principal responsibility because Energy -- this is a task that other Energy secretaries' discussions with OPEC have had.

I think you are absolutely right: How do you maximize the full leverage of the United States, the full economic-political relationships? And I believe we have done that, not just through my visits, but through other interventions by others. And I can assure you -- and I can go into more detail.

On the issue of Energy and the nuclear weapons; civilian agencies have always handled our nuclear weapons. What we are doing right now, Congressman, is -- with our nuclear weapons complex -- a semi- autonomous agency, headed by General Gordon, who I met with yesterday, deputy director of CIA, that basically streamlines a lot of the nuclear weapons responsibility into this semi-autonomous entity that reports to me, but basically has its own structure. And that's what we are looking at now, and I am giving it my full support.

But I'd be very pleased, especially to work with you, on some of the Africa issues you mentioned and go into more detail as to how we have interacted with OPEC.

REP. GILMAN: The gentleman's time has expired.

Mr. Secretary, we'd welcome your comments on the GAO report.

SEC. RICHARDSON: Mr. Chairman, I would like to have Ed Curran join me here. He is the director of our Counterintelligence Program.

REP. GILMAN: Please, Mr. Curran?

SEC. RICHARDSON: Mr. Chairman, you mentioned, even though this report covered a period of time when -- '95 to '98 -- where I was not secretary of Energy; nonetheless, I think the report shows the success of our program. As you know, we cooperated extensively with the GAO, provided the data on some of these counterintelligence issues.

Ed Curran is the best counterintelligence person we have in our government.

He broke the Ames case, the Aldrich case, who knows how many others. But he has now been the director of counterintelligence in the Department of Energy. And I might add, too, that we have the most effective brief and prebrief and postbrief programs, we believe, of any agency in government. And I think it's reflected in this report, which we believe shows our commitment to security and to protecting our scientists.

Let me just say that even the GAO said there's no evidence that any espionage was obtained. So I want to state that for the record. And I'd like to defer to Mr. Curran.

EDWARD J. CURRAN (Director of counterintelligence, Department of Energy): Thank you, Mr. Secretary.

I'd just like to explain it in a very --

REP. GILMAN: Mr. Curran, identify yourself for the record.

MR. CURRAN: I'm Edward J. Curran. I'm the director of counterintelligence for the Department of Energy. I'm a current FBI employee who was detailed over to the department by the FBI 2-1/2 years ago as a result of the Presidential Decision Directive 61 signed by President Clinton in February 1998.

My assignment was, first of all, to review the counterintelligence program within DOE, prepare a 90-day study with recommendations, and improve the counterintelligence program.

REP. GILMAN: Thank you, Mr. Curran. Please proceed.

MR. CURRAN: I think it's important to state is that after our findings almost 2-1/2 years ago as a result of PDD 61, there were 46 recommendations came out of my office to the secretary. I'm not going to go over all those recommendations, but basically what we found 2- 1/2 years ago was the counterintelligence program at Department of Energy was almost non-existent. It didn't even meet minimal standards. We said that, and we said we have a lot of things to do here.

The 48 recommendations were very controversial within the department and the laboratories. There's a great deal of resistance to any of those recommendations. We broke them down to tier recommendations -- tier one, tier two and three. The ones -- tier one was those recommendations that we need to do right now to fix the problem at DOE.

One of those recommendations was to enhance our prebrief and debriefing programs of our scientists who are traveling overseas. And we acknowledged two years ago they are targets of foreign intelligence service, just like anybody else in the government, DOD or other government agencies, including private industry.

The results of this GAO study, we worked very closely with them in the past eight months while they were preparing this. We gave them complete access to our database that we include where we put the information on our prebriefings. These are prebriefings that the secretary has approved in November. Despite the resistance, he approved all 48 of these recommendations.

We considered prebriefs of our scientists, which was basically non-existent before, as a critical area to prepare our scientists to interface with their counterparts overseas, especially those from sensitive countries. Today, 2-1/2 years later, rather than having a counterintelligence program to meet minimum standards, I believe it is equal to all counterintelligence agencies within the government, and better than most. And basically it's because this man sitting next to me had the courage to go forth and approve the recommendations that we made despite tremendous resistance.

The only difference we had with the GAO study, and it is not a major difference, is that they say we're not spending enough time looking at the threat from non-sensitive countries. We agree totally that all our scientists are at risk, no matter where they are outside the United States, whether it be because of economic espionage, proprietary information. What we have to first address, though, are those countries, the sensitive countries that have a track record, have been identified as activities by those intelligence services that threaten immediately our national security.

Our scientists get prebriefs, all of them, personal briefings, before they go overseas.

We gather this type of information. We know what countries do what to us. And it's a defensive mechanism that, whether we do this or not, the targeting is going to take place overseas. We feel that to have a structured program to prepare these people to go over is of tremendous interest to counterintelligence.

If I could just read from the GAO study just one paragraph, which was unfortunately leaked to the news media last week, and I think some elements in the news media believe that anything that's leaked is critical to the Department of Energy. I think you need to read it thoroughly, though, to see that this is not a critical report.

On page 3 of the GAO study, it says, "DOE and its laboratories have instituted several national security controls over official foreign travel by laboratory employees. They include threat assessment and analysis provided by DOE's Office of Counterintelligence, security and counterintelligence awareness training, a review and approval process for foreign travel request, face-to-face or written pre-travel briefings, classification review of publications and presentations, and face-to-face or written post- travel debriefings and trip reports prepared by our traveler. All official contractor travel is subject to these controls."

So I think, in whole, we agree with the GAO study.

REP. GILMAN: Mr. Curran, did you have any report of any important secure information being given by any of the lab scientists when they were overseas?

MR. CURRAN: No, sir. What we try to do is if you do these prebriefings early, we can come up with a determination whether a particular employee is being targeted or singled out, whether because of science he happens to be working on or whether he may show some vulnerabilities.

Once we determine that, if we consider an employee to be in harm's way or being unusually targeted by -- we will take him out of that country.

REP. GILMAN: And do you properly brief your scientists before they go overseas?

MR. CURRAN: Every scientist within DOE that travels to a foreign country is required to have a prebrief with the Counterintelligence Office. Every employee that goes overseas is required by the secretary to have at least an annual briefing on awareness training and counterintelligence security issues before they go.

REP. GILMAN: And are those pretty thorough briefings?

MR. CURRAN: Yes, they are, sir. This is where we get this type of information, and we have to have the confidence of the scientists who are willing to come forth and share this with us. The only thing we've said to DOE is that you cannot identify these employees or attribute it to a certain laboratory, because if they don't have the confidence to come and share this information with us, we're not going to get it.

REP. GILMAN: (To fellow representatives.) Do you want to inquire about this? Do colleagues want to inquire about this? Mr. Payne?

REP. PAYNE: No, I'd just like to thank the gentleman for bringing that information and to -- making it public here. And we certainly will -- I have not taken the time -- it hasn't been brought to my attention to study, but I certainly will have staff and I will certainly look into the recommendations. And -- but I thank him for bringing this to light.

REP. GILMAN: And let me state that we will have a further hearing with regard to the security situation at a later date, and we'll ask Mr. Richardson and yourself to attend.

Mr. Sherman, a very brief statement, because the secretary is beyond his time limit.

REP. BRAD SHERMAN (D-CA): Well, I thank the secretary for his indulgence.

We're being told that oil prices would be lower if we just got rid of all environmental concerns, drilled everywhere, eliminated any attempt to reduce air pollution, and nothing could be further from the truth.

And I want to thank the administration and the secretary for standing firm on environmental concerns.

What we should instead focus on is the fact that we went to war in the Gulf. We could have experienced thousands of casualties. And we had an opportunity to turn to Saudi Arabia and to turn to Kuwait and say, "In return for your continued existence as countries, we insist that you leave OPEC and produce oil at the -- at a reasonable economic rate." Instead we returned Kuwait to its sultan or its emir. And let's face it; Saudi Arabia would not be an independent state today, had we not acted, without asking for a single concession for the American consumer or motorist. And in doing so, we not only failed to overthrow Saddam Hussein; we failed to at that point -- and that was, I think, the only point we could have -- to break OPEC.

Those who blame the environmentalists should recognize that if it wasn't for environmentalist concerns, we'd be getting 12 miles a gallon in our cars and eight miles a gallon or six miles a gallon in our trucks and SUVs. And I think that we need to go further, if we want to break OPEC, toward fuel efficiency standards and toward fuel efficiency research.

We're told that America is addicted to foreign oil, and so the solution is huge subsidies for big producers of oil domestically. And yet we as motorists pay the same price, whether we are buying oil from Saudi Arabia or from Texas. Domestically produced oil sells for no less. And so when OPEC forces the price of oil up, the producers in Texas do just as well as those in Kuwait, and yet we're told we're supposed to give more subsidies, more tax breaks to those who are already getting huge prices for their oil. The key is not foreign oil versus domestic oil; it's just total world supply of oil.

Focusing on that, Mr. Secretary, I have a number of questions, and I don't know if you'll choose to answer them here, where I know your time is limited, or furnish these answers for the record.

The first regards our --

REP. GILMAN: Mr. Sherman, the gentleman's time has expired. We've had a -- we had to cut back on time so that we could wind up. I'm going to suggest you submit your questions in writing.

REP. SHERMAN: Mr. Chairman, if I could just have 30 seconds.

REP. GILMAN: Without objection.

REP. SHERMAN: You commented earlier in your testimony that Mexico's producing another 50,000 barrels of oil per day, I believe, was the figure. But I'd like to know how much oil could Mexico produce beyond what it's producing now, if they had over the last several years and currently been producing oil as quickly as they could, in as large a quantity as they could, instead of cooperating with OPEC. How much oil do we save each year because of our fleet efficiency/CAFE standards? And finally, what is the total additional money flowing to domestic oil producers as a result of the recent run- up in prices?

REP. GILMAN: The gentleman's time has expired.

REP. SHERMAN: My time has expired.

REP. GILMAN: If you want, have one question to be responded to, Mr. Secretary.

SEC. RICHARDSON: The statistics, Congressman, is Mexico in the March OPEC flow, as a non-OPEC nation, increased their production by 150,000 barrels per day. And in this last meeting in June, they agreed to 75,000 per day more.

We believe that they're at full capacity. And in these discussions Mexico has been helpful.

I would only point out one thing, Congressman, and that's -- we have had a period of unprecedented economic growth in this country.

The economy has grown enormously in the last seven years, and there's been a dramatic decrease in sulfur emissions. So I think what we're trying to achieve is a balance between economic growth and environmental goals which you espoused.

REP. GILMAN: Thank you, Mr. Secretary.

And if the gentleman wants to submit any statements for the secretary, I'm sure he'll be pleased to respond.

We thank you for being patient, for over-extending your time. And this portion of the hearing is completed.

SEC. RICHARDSON: Thank you, Mr. Chairman.

REP. GILMAN: Thank you, Mr. Secretary.

END

LOAD-DATE: June 28, 2000

Document 17 of 40.


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