U.S. Energy Policy Means Lower Prices and More Jobs

Date: March 30, 2004
Location: Washington, DC

U.S. ENERGY POLICY MEANS LOWER PRICES AND MORE JOBS -- (House of Representatives - March 30, 2004)


Mr. PEARCE. Mr. Speaker, I thank the gentleman, and I appreciate him bringing this very critical issue to the American public tonight.

Our friends on the other side of the aisle continue to complain about the jobs being driven out of this country as if it is the President's fault. The gentleman from Colorado, my friend, has adequately described the problems of a failure to pass the energy policy through the entire House as a source of great difficulty in this Nation. There are two things, Mr. Speaker, that we must provide to keep our way of life, to keep our standard of living in this country. Those two things are food and energy. If we ever ship all of those requirements overseas, this Nation will find itself undergoing a change in the lifestyles and the abundance which we have been treated to and which we have become accustomed to.

This Nation has been blessed with abundant natural resources, including natural gas and other fossil fuels. Almost all of the natural gas used in the United States comes from inside the United States, comes from domestic sources. Natural gas provides a cheap and plentiful source of fuel for home heating and, more importantly, manufacturing facilities, particularly the chemical industry. The chemical industry uses natural gas as a fuel and also as a raw material in the production of its products. Those products include plastics, fertilizers, and many of the other products that we find and use daily. Today, the United States has the highest natural gas price of any industrialized nation. It costs the equivalent of $10 per gallon of gasoline. Most people do not know what they pay per thousand cubic feet of gas, but it equates to $10 per gallon in gasoline, and one can imagine the stress that industries are undergoing.

Sadly, this increase in price has contributed to higher home-heating costs and the loss of thousands of American jobs, including jobs in my home district in New Mexico. Throughout the United States, chemical manufacturers have lost an estimated 78,000 jobs since natural gas prices began to rise in 2000. These 78,000 jobs lost in one industry, the chemical industry, the chemical manufacturers, have been lost to manufacturing facilities in the Middle East, Asia, Europe, and South America. Why do those jobs move overseas? Because our domestic supplies have been interrupted to the point that our prices in this country for natural gas are in the $5 to $8 range. Typically in this country, $2 is the range for natural gas.

We had a briefing in the Committee on Transportation last year which showed us that the price of natural gas here in this country is between $5 and $8. Overseas in Russia and overseas in Africa, the price is 50 cents and 70 cents respectively. When we are paying 10 to 20 times more for natural gas in this country as other countries, the economics will eventually take hold and companies will move infrastructure out of this country.

What happened to cause the gas prices to increase so dramatically? First, there are two conflicting domestic policies.
Number one, the U.S. adopted a policy in the 1990s encouraging the use of natural gas as the fuel of choice to burn in power plants to generate electrical power, even though we have abundant domestic coal resources. Natural gas was the clean fuel, the fuel of choice; and it was mandated by the Federal Government. The increased U.S. restrictions on oil and gas, however, the restrictions to production of natural gas on public lands has caused the supply to decrease, while the demand is increasing. Those two conflicting domestic policies have combined to force jobs offshore into other countries.

Mr. Speaker, we cannot long sustain the loss of these jobs because of conflicting policies and because of the special interests who would drive our jobs overseas.

In 2000, Americans consumed about 23 trillion cubic feet of natural gas, almost 23 percent of the energy used. The U.S. Energy Information Agency forecasts that by 2020 domestic natural gas demand will increase by more than 60 percent, to between 32 and 35 trillion cubic feet.

Much of the U.S. current production is coming from mature fields. Gas supplies from these fields are declining at about 29 percent per year. A mature field is one where the gas has been produced out of oil to the point that the down-hold pressures do not force the gas to the surface in the same quantities as used to occur. It is a naturally occurring phenomenon that you are able to gather in so much gas from one well before you have to drill another well.

We find these declining production curves to be a major threat to the price of natural gas in America and, therefore, a continued impediment to creating jobs in this country.

We often hear from our friends about the failure to create jobs, and they themselves are standing arm in arm with the groups who would limit the production of our natural gas which would get the cost of the natural gas to a point where our industries would become competitive again. Most of the promising new oil fields and gas fields in the U.S. are on public lands: the Rocky Mountains, Alaska, and the outer continental shelf. These areas are in the Rocky Mountain regions and Colorado and New Mexico.

Mr. Speaker, if we as a Nation choose not to access our own natural resources, with our high standards for compliance
with our environmental laws and regulations, we deliberately reduce our economic security and reduce the opportunities for continued leadership in resource development, manufacturing, and technological advancement; and, at the same time, we deny our fellow citizens the opportunity for high-paying, family-wage jobs with good benefits.

We do not even bring up in this discussion the additional risk to national security. It is time my colleagues and I take the bull by the horns and fix our Federal land use policies so we can access our abundant natural resources for the benefit of all Americans. Why do we need to do this? People in the southern district of New Mexico understand why.

Mr. Speaker, the reason we need to do that is that our standard of living is at stake. Also, the number of jobs that are created in this country are at stake. But even more importantly, the ability to pay for our utilities is at stake.

People on fixed incomes are facing the price increases that my colleague from Colorado has mentioned to us already.
We are facing tremendous increases in the price of gas, in the price of electricity, in the price of heating our homes and cooling our homes. Lest we forget, last year in the heat wave in Europe more than 10,000 people died from that. This is a matter of life and death as well as the future of our economic engine that powers this country.

Mr. Speaker, families spend about 5 percent of income on energy, but for many low income and minority families nearly half of everything they earn is spent on energy. Price increases will be a crushing blow for many, Mr. Speaker.
Many people in my district are forced to choose between essentials of heat and food. While we have soaring natural gas prices, the cost is carried by the consumer.

Consumers pay more for goods that are produced with natural gas. These goods, I have mentioned before, include fertilizer, which is a key component in the food production.

We get to the unhappy state where the supply of natural gas can scarcely meet demand in two ways: First, it is an effort to make our air cleaner, which is an admirable condition. Many electricity producers and factories have switched to natural gas. But this switch has caused the demand to increase to such a point that the prices are now making our industries non-competitive with overseas markets.

Mr. Speaker, if we are to do anything about the loss of jobs and the failure to create jobs, we must begin to have a balanced approach to our policy of accessing public lands. Our balanced approach would say that, yes, we can be environmentally friendly while we develop our resources.

It has been proven in Alaska, that State we saw the concerns about the tundra there in Alaska along Prudhoe Bay. We found that what producing companies did was drilled in the wintertime. They built ice pads and ice roads. When the well was drilled, they did no damage. Then when the spring came, the thaw came, those ice pads and ice roads disappeared to leave just the hole in the ground and the producing wellhead.

Since our way of life is at stake, since our entire economic engine is powered by affordable energy, Mr. Speaker, it is past time for us to begin to discuss and begin to solve the ways that we access our public lands.

Mr. Speaker, I have more comments, but I will yield back to the gentleman from Colorado (Mr. Beauprez). I thank him for bringing this important discussion to the floor of the House.


Mr. PEARCE. Mr. Speaker, I think my friend from Colorado (Mr. Beauprez) is like I am, a business owner. He understands that you just do not create jobs out of thin air, and you do not do it without good thoughts and good resources.

The gentleman from Illinois adequately pointed out that it is hypocritical of our friends on the other side of the aisle to talk night after night about the failure to pass an energy policy when it is the other side of the aisle that is blocking that energy bill from being passed.

The environmental extremists who stop production of oil and natural gas are the ones who are responsible.

The process for drilling a natural gas well on public land is to file an application for permit to drill, an APD, and that process simply goes in for review, and when it is reviewed, the application is either given or denied.

What happens is that the extremists will file a lawsuit, and many times that application simply dies right there without ever even a hearing, and by the way, they have limited access. The extremists have limited access to over a trillion cubic feet of natural gas in the Rocky Mountain regions.

Now, then, sometimes the cooperation between the extremists and the government groups has gotten just a little bit too close and friendly. In a recent case that the media has not done a very good job of covering, three BLM employees in Wisconsin were convicted of racketeering, conspiring to keep people from drilling on public property. It is going to be very interesting to see how other employees in the Federal Government begin to respond to that conviction, understanding that their actions sometimes are simply extortion.

I have constituents of mine who report that Federal employees will tell them no, no, you really do not have a problem, but your case would go much easier if you would contribute to, say, this archaeological study that our office is doing. If you gave a check of $25,000, maybe things will go easier. When I was out flying over the Salt River project, one group held hostage that project for a $25 million contribution into this extremist environmental fund.

Mr. Speaker, those are the things that are driving jobs offshore, that hostility to business and the development of energy. The most heartbreaking story, Mr. Speaker, that I have seen here in Congress occurred in the Committee on Resources about a month ago. Members of the union came in, the union that deals with workers who cut timber and who create the pulp wood and paper. Those union employees were talking about the loss of their jobs in that industry and were heartbroken by the fact that they were going to lose the wages that their families depended on, and they are good, good living-wage jobs.

The Members on the other side of the aisle said, oh, but you do not understand, you can get a job in the hospitality business. I am sorry, but the unions and Republicans do not often match up. The unions and the other side of the aisle do the most, and it was their friends telling them you could lose these high-paying jobs in the timber industry and you can get a job working at the hotels. The union representatives literally spit back at them across the table the words, We do not want your hospitality jobs; we want our jobs in the timber industry.

What a heartbreaking thing. I began to do research on that, and I am pleased to show a chart tonight. I am not pleased to show the chart tonight. I am horrified to show the chart tonight that describes the loss of pulp and paper mills and plants throughout this country.

The dots on this chart represent the mill closures and employee layoffs from 1989 through 2003. The blue dots with Xs are mills that have been closed, and the red dots list the number of employees that have been laid off during the past 16 years. The small blue dots represent the remaining operating U.S. mills and plants.

Since 1997, the forest products industry has lost more than 120,000 family-wage jobs and closed more than 220 plants. While there are many factors that contribute to these mill closures and the loss of family-wage jobs, several issues stand out.

Number one is the lack of access to timber resources on the Federal lands that have been brought about through the Endangered Species Act, the roadless rule, and the lawsuits filed by the anti-development environmental extremists. Access to timber resources results in lack of raw materials needed by the mills to produce their products.

High natural gas prices, and we have discussed why we have high natural gas prices, are also driven by misguided environmental policies. During the 1990s, the U.S. environmental policy encouraged the use of natural gas for the generation of electricity as a clean alternative to the coal-fired plants. However, during this same time and continuing through the present, area prospectives for oil and gas production have been put off limits to exploration and development. This includes almost all of the outer continental shelf offshore gas production, portions of the gulf, and a significant part of the Rocky Mountain natural gas resources.

America gets more than 85 percent of the natural gas we use from domestic production. These conflicting policies have driven natural gas prices to historic highs, above $5.50 per thousand cubic feet, the highest natural gas prices of all the industrialized nations. This makes the United States less competitive and is outsourcing our manufacturing industries, including the production of forest products.

Our misguided environmental policies are directly responsible for the loss of the majority of family-wage jobs in the forest products industry. In 1990, almost 12 billion board feet of timber were harvested from the Federal estate. That is 12 billion in 1990. Today, we harvest 2 billion board feet of timber from the Federal estate. Our national forest resources are allowed to lie fallow, to build up excessive fuels. They are subject to overgrowth, they are subject to disease, and they are subject to fire.

We are finding that the wildfires are going to destroy our forests before we ever cut them. When the fire races across
the top of our forests, killing these mature trees, it only makes sense to go in and harvest the charred timber. But, instead, the extremists will file injunctions, they will file lawsuits to slow the process down.

Recently, in my district, we had a large forest fire. Before the timber could be cut, the value of the timber had lost 60
percent of its value because of delays created by the extremists who said it is better not to ever touch one tree than to cut these charred stumps that were left and had valuable timber in them.

Mr. Speaker, our watersheds are completely dependent on the quality and the character of our healthy forests, but also an entire industry is dependent on the way that we manage those resources. In this landscape, my constituents are asked to forego a development project that would provide family-wage employment so that a passerby's view is not spoiled.
The same passerby expects my constituents to live with the charred remains of timber that could have provided feedstock for a local mill, that could be made into 2-by-4s for a neighbor's home, that could be paper used by a local school or business, a lovely piece of furniture to be passed into the next generation, or it could be used to make a young woman's high school prom dress.

If we as a Nation choose not to access our own natural resources, with our high standards for compliance and with our environmental laws and regulations, we deliberately reduce our economic security and reduce the opportunities for continued leadership in resource development, manufacturing, and technology. We deny our Federal citizens the opportunity for high-paying, family-wage jobs with good benefits. We also risk our national security.

Mr. Speaker, on the second chart, and I would show it briefly, it has a picture of a mill that is being closed; and much like the Vietnam wall, the names of the casualties are listed down below in black. Those names go on and on, 220 of those that have closed. I have got the closings here in a document that is 25 pages, with 35 mill closures on each page.

There are mills that have been closed in Alabama. Over 300 jobs lost at another plant in Alabama, at Cusa Pines. Here is one where 450 jobs were lost in Mobile, Alabama. Another 500 jobs lost in Mobile, Alabama. Camden, Arkansas, lost 600 jobs to these policies. We go page after page after page, California, Florida. St. Mary's, Georgia, lost 800 jobs in one mill closing. Page after page. Illinois lost many, many jobs to mill closings because of the misguided attempts of environmentalists to block every single tree from being cut. We have Louisiana with mill closings, Massachusetts, Maryland, Maine, and Michigan. State after State, 25 pages, 35 mills per page. When we get to Oregon, we have page after page after page of mill closings in Oregon, 100, 180 jobs.

This information is readily available to those in this body who would want to access it, but the disappointing thing is that our friends do not want reality in the debate about where jobs are lost and why they are lost. They simply are looking for their agenda to be carried out at all cost.

My friend from Illinois adequately characterized it as hypocritical. The job loss, the pain in the States and the rural areas of this country are borne by individuals who have to live with the policies that are implemented in our courts and in our regulations that face our businesses as they try to make a profit in the hostile environment that is created in this country.

Mr. Speaker, I thank the gentleman from Colorado (Mr. Beauprez) for organizing this, and if I have an opportunity, I will have further comments to make. I thank the gentleman.


Mr. PEARCE. I thank the gentleman for yielding.

(Mr. PEARCE asked and was given permission to revise and extend his remarks.)

Mr. PEARCE. We will do more on this same subject at another time. In the closing minutes, let me talk about the hostility that we find against business in this country. Behre Dolbear publishes an annual survey entitled "Ranking Countries For Mineral Investments." This survey ranks the 25 countries with the largest mining industries and/or the most significant mining industry potential. To establish the annual rankings, the survey considers seven criteria that influence investments by the mining industry in each of those 25 countries. These criteria include economic systems, political systems, social issues, permit issues, corruption, currency stability, and tax regimes. A review of each country relative to each of the above criteria is performed, using the general assumption that a technically viable mining operation is being considered in that country. The countries are then given a ranking from 1 to 10 in each category, with 10 being the most favorable.

Recently in 2004 the USA scored well in economic systems and currency stability, et cetera; but it had a dismal ranking in the category of permit issues. This ranking is based on the time and expense required to get permits, not on stringency of regulations. In 2004, the U.S. had a numerical score of 4. That score puts the U.S. 19th out of 25 countries. The U.S. ranks below Peru, Ghana, Colombia, South Africa, Argentina, Canada, Brazil, Namibia and Bolivia. Only seven countries rank below the U.S.

Keep in mind that this is an improvement, that the Bush administration has made progress because previously under President Clinton, we had a 2 ranking. The U.S. was tied for 24th out of 25 countries with Indonesia. Just why does the U.S. have to have such a low rank in permit issues?

Mr. Speaker, we have covered tonight the many, many reasons that jobs are moving offshore in America while our industries are being decimated, why manufacturing is being sent overseas and our friends, while talking about it, continue to be a part of the problem. I thank the gentleman from Colorado (Mr. Beauprez) and the gentleman from Illinois (Mr. Shimkus) for allowing me to participate in this Special Order.