Wednesday, July 29, 2009

Mr. Merkley

Mr. President, I rise today to address one of the defining challenges of our time–the restructuring of our Nation’s energy supply. Reforming our energy policy is critical for multiple reasons: to improve our national security, to create jobs and rebuild our economy, and to protect our children and our communities from the damaging effects of carbon pollution. Today I want to focus on just the first of these–improving our national security.

   It has been said before and it will be said again, but it deserves repeating until we in Congress act to change it: Our Nation is addicted to foreign oil. This dependence makes us vulnerable to the whims of nations that do not have our best interests at heart.

   This afternoon, I would like to examine this problem in some detail and consider the implications for a national energy policy that will strengthen our national security and end our addiction to imported oil. I emphasize that there is a cure. If we as a nation focus on smarter, wiser use of energy and aggressive development of homegrown renewable energy sources, we can indeed greatly reduce or eliminate dependence on imported oil, improve our national security, and strengthen our economy, all at the same time.

   Well, let’s talk about dependence on foreign oil. Our dependence on foreign oil comes from two intertwined factors: First, our economy depends upon oil for transportation. Cars, trucks, trains, planes, boats that we use to move ourselves and our goods around the country are entirely dependent on oil. Indeed, 95 percent of the energy used in our transportation sector comes from oil. Second, our oil addiction relies on foreign imports: 58 percent of the oil we consume is imported. Thus, access to foreign oil is essential to the vitality of our economy. The result is that maintaining access to this oil becomes a very high priority for our national security.

   Exactly whom do we depend on? The good news is, nearly 30 percent of our imported oil comes from our democratic neighbors to the north and south in North America. But that is where the good news ends. Take a look at this chart. Seventy percent of our imported oil comes from outside North America, and this chart shows the top four nations outside North America from which we import oil.

   All four of these countries represent security challenges for the United States. Saudi Arabia is No. 1 on the list. It is the source of one in nine barrels of imported oil. And before addressing the fact that it presents national security challenges, it should be noted Saudi Arabia has often been a significant ally to the United States in our interests, in a relationship going back decades. Nevertheless, the dependency on their oil creates two national security issues:

   First, the oil infrastructure and delivery systems of Saudi Arabia are vulnerable to terrorist attack or to manipulation by governments in the region. Consider the Strait of Hormuz. The Strait of Hormuz is really a vulnerability for all Persian Gulf oil, 90 percent of which moves through the Strait. The Strait is 21 miles wide, with a narrow shipping channel. So, geographically, it is vulnerable to disruption, and Iran has explicitly threatened to put pressure on traffic going through the Strait or attempt to control it outright.

   Second, the wealth we send to Saudi Arabia in exchange for petroleum has not always served us well. Former CIA Director James Woolsey testified in the Senate a few years ago that over the last three decades the Saudis have spent between $70 and $100 billion to support conservative institutions that often promulgate viewpoints and actions hostile to the United States. The wealth dispensed in this manner has, in some cases, migrated into terrorist organizations, like al-Qaeda, to recruit and build institutional capacity. This has led former CIA Director Woolsey to say of our current military conflicts, “This is the first time since the Civil War that we have financed both sides of a conflict.”

   Venezuela is No. 2 on the list. It is, of course, led by President Hugo Chavez, a vocal critic of our country who has explicitly threatened to cut off U.S. oil supplies. He told an Argentine newspaper that Venezuela has, “A strong oil card to play on the geopolitical stage ….. a card that we are going to play with toughness against the toughest country in the world, the United States.”

   The third nation on this list is Nigeria. Nigeria has had a series of disruptions just this year due to civil unrest. In February, oil companies reported to Reuters that 17 percent of the country’s oil capacity was cut off from export because of attacks and sabotage by militants. According to testimony given to our Senate Foreign Relations Committee by the National Defense Council Foundation in 2006, Nigeria loses 135,000 barrels per day to theft.

   Iraq, No. 4 on our list, has gone through enormous upheavals. Saddam Hussein’s forces destroyed much of the nation’s oil infrastructure when President Bush launched the Iraq war in 2003. That infrastructure has been subject to ongoing sabotage over the last 6 years. A significant share of Iraqi oil, like its neighbors, moves through the Strait of Hormuz, an additional point of vulnerability. Moreover, Iraq has not succeeded yet in passing a national law to share oil wealth among the ethnic groups in the nation, and the friction that comes from this continues to allow the possibility of factional conflict and disruptions in supply.

   Now, Iran isn’t on this list. We have an embargo against Iran. We don’t import oil from there, but it is still worth mentioning. Many of our allies get oil from Iran and their oil supplies are large enough to affect the world markets and thereby the stability and cost of our own supply. Again, turning to former CIA Director Woolsey testifying in the Senate, he noted that Iran derives 40 percent of its government budget from oil exports. According to the RAND Corporation, higher oil revenues have not just emboldened the Iranian Government to defy the United Nations regarding their nuclear program but also helped Iran to finance the activities of Hezbollah and Hamas.

   Our dependence on foreign oil makes us vulnerable to a disrupted energy supply, and the risk is heightened because most of the world’s proven reserves are controlled by just a few governments. State control means countries can and do manipulate energy supply. We had a case this last year when Russia manipulated gas markets to dominate new democracies in Eastern Europe.

   The Energy Modeling Forum at Stanford University brought together a group of leading experts to assess the chances of a major oil supply disruption. They identified major areas of the globe where oil disruptions are most likely due to geopolitical, military or terrorist threats. Those areas include Saudi Arabia, the rest of the Persian Gulf, Russia, the Caspian states, and a group of nations in Africa and South America–which account for 60 percent of world oil production.

   So the threat of disrupted supply is a serious one for our economy, as we found out during the oil shocks of the 1970s, which cost our economy about $2.5 trillion. If repeated today, such a crisis would cost our American economy about $8 trillion. We were reminded of the threat of supply disruption again when Hurricanes Katrina and Rita disrupted supplies and caused price spikes here in our Nation.

   These don’t supply the United States, but they do supply our allies, and in a global oil market these supplies are interdependent. A disruption of European oil supplies would have effects on our economy.

We also expend extraordinary resources to maintain our access to foreign oil because it is so important. It is important to the success of our economy. While estimates vary, according to a study produced by the National Defense Council Foundation, they estimated that the direct and indirect security and military costs relating to securing our access to oil amount to about $825 billion. That equates to more than $5 a gallon, on top of the price we pay at the pump. So we cannot allow our Nation’s security and the health of the American economy to rely on the whims of unstable, unreliable, even hostile governments.

   If we refuse to address our single greatest point of vulnerability, we fail in our most fundamental duty to protect this Nation. It is clear we need to end this addiction. We need to be energy self-sufficient. But how are we going to get there? One answer, which we heard chanted in rallies across America last year, was: Drill, baby, drill.

   It is true, that we could increase production from American reserves in the short term with an aggressive drilling strategy. In fact, I support changing leases on hundreds of thousands of acres already approved for petroleum drilling and converting those into “use it or lose it” leases because major oil companies have secured those leases, and they are sitting on them without doing a thing.

   Nevertheless, drilling is not, and cannot be, a long-term strategy for the security of our Nation for one simple reason: America uses a lot of oil but has, globally speaking, limited reserves. In fact, the United States has just 2 percent of the world’s oil reserves, as this chart shows right here. Here we are, down here at the small end, with Mexico and Europe. Then, we see Eurasia, with 7 percent; Africa, with 9 percent; Central and South America, with a little bit more; then Canada; and then the whopper, the Middle East, which makes my point about security for our supplies.

We have looked at the reserves side of this, but now let’s look at the consumption side. As this chart shows, America, which has only 2 percent of the reserves, consumes 24 percent of the world’s oil. So we only have one-fiftieth of the supply but we consume one-fourth of the output. Now that’s a formula for trouble. A nation would be in a strong position if it had very high reserves and very low consumption, but it is vulnerable if it has very low reserves and very high consumption. Unfortunately, that is right where America is.

   To make things worse, the price of petroleum is going to continue to rise as the thirst from China and India increases. Because of the position we are in, our addiction to imported oil will only grow if we don’t significantly change our energy strategy.

   So what about other fossil fuels? In my home state, energy speculators are looking to build terminals to import LNG, liquefied natural gas. Where does LNG come from? Well, there are vulnerabilities there as well. Top producers include Qatar, Indonesia, Malaysia, United Arab Emirates, and Oman.

   Other folks argue we can extract more oil from Canadian tar sands or turn our abundant domestic coal into transportation fuel. But it is worth observing that these strategies require extraordinary energy to produce fuel and emit extraordinary amounts of pollution in the process. So we have to look elsewhere to find a solution, and the place to look is energy efficiency and renewable energy.

   Energy efficiency is the fastest and cheapest way out of our dependence, and we know it works. In response to the 1970s oil crisis, the Nation doubled the required gas mileage performance of our cars and trucks and saw per capita oil consumption plummet, even as our economy grew. Our progress in this area has not been steady, however. It has stagnated over the last two decades.

   Progress resumed this year, when President Obama made the announcement that we would increase gas mileage standards to more than 35 miles per gallon 5 years ahead of the date scheduled. But we can do better. China beat us to 35 miles per gallon, and 35 miles per gallon isn’t sufficient. We could aggressively develop and employ plug-in hybrid technology–cars with highly regenerative braking that can go at least 30 miles on a charge, enough to cover the daily commute, with no petroleum at all.

   We need to deploy efficient strategies for the trucks that carry out our commerce–similar strategies with efficient body design. We need to move goods by rail and barge. A barge can move a ton of cargo 576 miles on a gallon of fuel, and a train can move a ton of cargo 413 miles on a gallon of fuel.

   We should give our families and workers better transportation options, better access to rail and bus lines. We know from experience that with the right policy choices, we can use far less energy to power our economic activity.

   We use a fraction of the energy today for gross domestic product that we did 30 years ago. If we give American scientists, engineers, and businesses the right incentives, tomorrow’s economy will be orders of magnitude more efficient.

   The other half of the equation is renewable energy, produced right here in America. It is the second major weapon in the war against oil addiction. Renewable electric energy can replace oil by providing power for plug-in electric vehicles.

   I have heard Senator Reid describe Nevada as the Saudi Arabia of solar power, renewable electric energy, and I have heard the good Senator from North Dakota describe North Dakota as the Saudi Arabia of wind power, renewable electric energy. We need to seize this Nation’s potential for renewable electric in wind, solar, wave, and geothermal.

   We can also transition to homegrown renewable liquid fuels in the form of biofuels. In my State of Oregon, as one example, we have lots of fiber that can be converted, forced biomass that can be converted into fuel. We can produce biobutanol, biodiesel, and bioethanol. Producing biofuels from agricultural and forestry waste and waste from nonfood crops raised on marginal lands, we can produce significant quantities of energy and create jobs and wealth for America’s farmers and timber workers.

   If an American car can go 30 miles with renewable electricity and then, if needed, switch over to a 50-mile-per-gallon engine burning cellulosic biofuels derived from forest biomass, that car isn’t using a single drop of imported foreign oil. It is running on 100 percent red, white, and blue energy.

   Mr. President, in energy efficiency and renewable energy, we have twin elements that can break our addiction to foreign oil, but to achieve that self-sufficiency we need a comprehensive energy policy, a comprehensive strategy for saving energy and producing our energy here at home. That Mr. President, is what President Obama called for and what the Senate Committee on Environment and Public Works is developing–drafting a comprehensive system of incentives and investment that, in combination with energy policies crafted by the Senate Committee on Energy and Natural Resources, will reduce our fossil fuel dependence and put us on the track to energy self-sufficiency.

   Now some say that energy conservation and renewable energy are too expensive. They could not be more wrong. Every economist will tell you that the cheapest energy is the energy you never use. Even today, renewable solar, wind, and geothermal are cheaper than imported oil when you factor in the huge price we pay to maintain our access to that oil.

   And let me add, when we stop spending $2 billion a day on imported oil and spend that money on renewable fuels here in the United States, we are going to create a lot of good-paying jobs for America’s families.

   Mr. President, Depending on a few foreign nations for imported oil is a colossal mistake. We need to change course, improve our national security, and spend our energy dollars here in America to create jobs. That is why I hope every member of the Senate will join me in supporting our 2009 Clean Energy and Jobs Bill when it comes to the Senate floor this fall.