Copyright 2000 Federal News Service, Inc.
Federal News Service
March 29, 2000, Wednesday
SECTION: PREPARED TESTIMONY
LENGTH: 1444 words
HEADLINE:
PREPARED TESTIMONY OF REPRESENTATIVE EDWARD J. MARKEY (D-MA)
BEFORE THE HOUSE JUDICIARY COMMITTEE
SUBJECT
- "SOLUTIONS TO COMPETITIVE PROBLEMS IN THE OIL INDUSTRY"
BODY:
Mr. Chairman, and Members of the
Committee. I want to begin by thanking you for giving me the opportunity to
testify at today's hearing.
As I consider the current energy outlook, I
am struck by the transformation that has taken place since the early years after
I first arrived in Washington. Back then, we had price controls on oil and
natural gas -- controls which had been in place since the Nixon Administration
and which established at least 32 different prices for natural gas and 7 tiers
of oil prices. Oil prices were beginning to spike upward from
$13 towards a peak of over $37 a barrel.
Consumers were about to resume facing gas lines at the pump. We were supposedly
running out of natural gas and therefore had to pass a Fuel Use Act barring it
from being used for electricity generation. President Carter was calling for a
massive multi-billion dollar government investment in synfuels, which he
claimed, was essential to meeting our future energy needs. Energy Secretary
James Schlesinger was telling us that if we didn't build 1000 nuclear power
plants we would be facing blackouts and brownouts across the country. We were
going to strip oil from shale in a corner of Colorado that would, in light of
the relevant impact upon the environment, be designated a "National Sacrifice
Zone." New cars consumed an average of 12 miles per gallon, and Detroit was
telling us they just couldn't make them any more energy efficient than the Model
A Ford my Dad bought back during the Depression.
Today so much has
changed. The concept of oil and gas price controls now seems as distant and
dated as polyester leisure suits and avocado green refrigerators. The Carter-era
synfuels program that was supposed to lead us out of the world of ever-higher
oil prices actually had nothing to do with today's lower prices. In fact, the
program is long dead, buried, and largely forgotten. Colorado survived.
Moreover, today, we are awash in cheap natural gas -- with pipelines coming down
from off the coast of Nova Scotia that will transform our energy marketplace in
New England. We haven't ordered a single new nuclear powerplant since 1973, but
we have met our electricity needs with alternative fuels and by becoming more
energy efficient. Today, new cars consume an average of 27 miles per gallon
(although Detroit is still telling us they just can't make them any more energy
efficient)!
But, in recent months, the world has again been facing an
upward spike in oil prices. And while many observers believe that the current
high prices are likely to be much shorter in duration and severity that the huge
oil shocks we experienced back in the Seventies, these increased prices have put
increased focus on the importance of a sound national energy policy and upon the
competitive structure of the domestic oil and gas industries.
Over the
course of the past year, the Commerce Committee's Energy and Power Subcommittee,
on which I serve, held two hearings on the competitive issues raised by the
Exxon-Mobil merger and another hearing on oil price increases in which we
examined concentration in the oil industry. The testimony we received at those
hearings has clearly indicated a tendency towards greater concentration in the
domestic oil industry, a development which merits continued regulatory and
Congressional attention. However, our hearings also showed that the Federal
Trade Commission has been willing to vigorously examine oil company mergers and
take strong legal action pursuant to its authorities under the federal antitrust
laws to block anti-competitive mergers or require divestiture where necessary to
address competitive problems. In both the Exxon-Mobil, and the BP/Amoco-ARCO
cases, the FTC ordered divestiture of certain key assets or, in the
BP/Amoco-ARCO case, was willing to block a proposed merger in order to force
such divestiture. I would hope that the Committee would support providing
increased resources for the FTC so it can continue its ongoing anti- trust work
in these markets. For example, the FTC, in its most recent testimony to the
Subcommittee, indicated that it is currently providing support to the Attorneys
General of several Northeastern states that are currently investigating the
increases in home heating oil and diesel fuel prices.
But in addition to
focusing on the competitive issues within the industry, policymakers also must
focus on assuring that our nation has a coherent national energy policy. In my
view, such a policy must include the following elements:
* First, we
should immediately reauthorize the President's authorities under the Energy
Policy and Conservation Act, which empowers the President to draw down stocks
from the Strategic Petroleum Reserve. EPCA is set to expire at the end of this
week. Congress should schedule immediate action on the EPCA reauthorization
bills before it expires -- as the President has requested. I think that it sends
a terrible signal to OPEC if, just a few days after the Vienna meeting, the U.S.
Congress fails to reauthorize the President's power to deploy the Strategic
Petroleum Reserve when and if needed.
* Second, we should create a
regional refined product reserve in the Northeast in order to better insulate
this region -- which is most dependent on heating oil in the winter -- from
sudden, unexpected price shocks. The President has announced his support for
such a Reserve, and last week, I sought to attach an amendment to the Oil Price
Reduction Act (H.R. 3822), which would have accomplished this objective by
amending the Markey-Lent-Moorhead amendment to EPCA to authorize such a regional
reserve. Representative Sanders has also introduced a freestanding bill calling
for such a Reserve. While enactment of such legislation would be desirable, it
is important to recognize that EPCA already provides authority to the President
to create a regional reserve.
* Third, we should increase our energy
efficiency and diversify our fuel supply base. For example, the President and
the Vice President have proposed a budget that includes over $1
billion next year to accelerate the research, development, and deployment of
alternative and more efficient energy technologies, as well as
$4.0 billion in tax incentives over five years to benefit our
energy-reliant consumers and businesses. Unfortunately, the Budget Resolution
passed by the House last week was silent about these tax incentives.
*
Fourth, we should increase our investment in renewables and energy efficiency
technologies that help our nation reduce its consumption of fossil fuels. For
example, the Administration's budget request includes a proposed
$275 million in R&D efforts next year to make offices,
homes, and appliances 50% more energy efficient within a decade. People
understand what that means for their home heating bill. Overall, meeting this
goal would save consumers $11 billion a year in energy costs.
Congress should fully fund this program.
* Fifth, we must assure that
low-income working families get the help they need to reduce their consumption
of fossil fuels. Expanding DOE's Weatherization Assistance Program would help
low-income households make their homes more energy efficient. Such households
are least able to afford high monthly energy costs. This program has already
weatherized almost 5 million low-income homes and is saving 3.0 million barrels
of oil each year. With funding from DOE and the states, our nation could add
more than 150,000 homes to the list in the next year -- thereby saving more than
an additional 91,000 barrels of oil per year. The Administration's budget
request seeks $154 million for this program in FY 2001 and an
additional $19 million for the current year in the FY 2000
supplemental spending bill. Congress should approve this request.
*
Sixth, we should increase automobile fuel efficiency standards, and extend such
standards to cover light trucks and sport utility vehicles. If we had adopted 45
mile-per-gallon CAFE fuel standards for cars and 34 mile-per-gallon CAFE
standards for Sport Utility Vehicles and light trucks five years ago,
we would have saved 237 billion gallons of gas over that time. It is time for us
to update CAFE standards, so that our automobile companies will
take additional steps to make the vehicles we buy more fuel-efficient.
I
believe that this package of initiatives would do much to reduce our nation's
vulnerability to the type of oil price volatility that we have seen in recent
months. I look forward to working with you, Mr. Chairman, and other Members of
the Committee, to advance such measures in the coming year.
END
LOAD-DATE: March 30, 2000 
