Thank you for inviting me to testify. Americans are again suffering at the pump. Gasoline and diesel cost more today than they did a year ago.
As ExxonMobil’s CEO recently testified, the prices of those fuels are a function of crude oil prices, which are set by global supply and demand. As a matter of geology, America will never control more than a tiny fraction of the world’s oil supply. Therefore, America cannot prevent gasoline and diesel prices from rising. Still, all else being equal, buying a barrel of American oil is better than buying a barrel of foreign oil.
Last year, American oil production reached its highest level since 2003, and President Obama recently announced steps that the Interior Department is taking to increase safe and responsible oil production here at home. Deputy Secretary Hayes will describe those steps today.
For parts of the Outer Continental Shelf, Congress has declared that a company cannot operate drilling equipment that emits large amounts of air pollution without first demonstrating, through EPA permitting, that the emissions will not harm Americans. That requirement is not simply red tape, because a single exploratory drilling operation can emit as much air pollution on a daily basis as a large oil refinery.
In 2007, Shell Oil began seeking from EPA’s Region 10 office air permits for exploratory drilling operations on the Outer Continental Shelf off Alaska. Region 10 has since issued five permits to Shell. An administrative court called the Environmental Appeals Board remanded two of the permits last December, after Alaska residents had challenged them.
I am confident that we will give the Board the analysis it has called for, in time for the permits to be upheld before the start of the next drilling season. I should note that, on average, the Board decides air permit appeals in just over 5 months – that only 4 of the Board’s more-than-100 air permit decisions have ever been appealed to a federal court – and that none of the Board’s air permit decisions has ever been overturned. Currently, there are only 4 pending air permit applications for drilling on the Arctic OCS. That includes the 2 that I just mentioned. We anticipate many more, though.
So, at the President’s direction, the White House has formed a team of relevant bureaus at the Department of Interior, the Department of Commerce, and EPA to coordinate closely and prevent unnecessary delays.
Thanks to advances in drilling technology, including hydraulic fracturing – or “fracking” – America’s potential natural gas resource is nearly 50 percent larger than we believed it was just a few years ago. The price we pay for natural gas is not set on a global market the way the price of oil is, and burning natural gas creates less air pollution than burning other fossil fuels. So increasing America’s natural gas production is a good thing.
Fracking involves injecting chemicals underground at high pressure, and various substances come back to the surface with the gas. It is not surprising, then, that Congress has directed EPA to study the relationship between fracking and drinking water. We are doing that, with input from technical experts, the public, and industry.
In the meantime, EPA will step in to protect local residents if a driller jeopardizes clean water and the state government does not act. President Obama has made clear that we need to extract natural gas without polluting our water supplies.
We can mitigate the impact of high fuel prices on American families and businesses by enabling them to travel the same distances and conduct the same commerce on less gasoline and diesel. The fuel efficiency standards that EPA and the Department of Transportation established last year for new cars and light trucks will save the average American driver $3,000 over the life of the car and conserve 1.85 billion barrels of oil.
Additional standards that we will set this summer for heavy-duty trucks will save a tractor-trailer operator up to $74,000 dollars over the life of the rig and conserve another half a billion barrels of oil. The increased bio-fuel production mandates that EPA set last year will displace 7 percent of America’s expected gasoline and diesel consumption in 2022 while decreasing oil imports by 41.5 billion dollars.
I am proud of the role EPA is playing to shield Americans from the harmful economic impact of high gasoline and diesel prices. EPA’s core mission, though, is protecting Americans from harmful pollution. That is what Congress has ordered EPA to do, and that is what the American people expect. Even when gas prices are high and the economy is still recovering, Americans do not like it when their families and livelihoods are harmed by industrial pollution that could have been avoided.
Thank you, Mr. Chairman.