Hearing of Committee on Energy and Natural Resources EIA 2005 Annual Energy Outlook

HEARING BEFORE THE COMMITTEE ON ENERGY AND NATURAL RESOURCES

EIA 2005 ANNUAL ENERGY OUTLOOK

Senator WYDEN. Thank you, Mr. Chairman. I am going to be in and out a bit this morning. I appreciate the chance to make a brief statement.

Mr. Chairman and colleagues, in terms of energy security, I am now convinced that taxpayers are not getting the best bang that they can get for their buck. According to the Congressional Research Service, two of the current tax incentives for oil exploration and production are especially inefficient. These two subsidies cost the taxpayers alone about $1.3 billion per year, and I would ask, Mr. Chairman, if that Congressional Research analysis could be put into the record at this point.*

The CHAIRMAN. Absolutely.

Senator WYDEN. Mr. Chairman and colleagues, at the same time we are wasting taxpayer funds, our country is not providing
enough incentive for oil producers to use enhanced oil recovery techniques that could go a long way toward reducing our Nation's dependence on foreign oil. According to the Congressional Research Service, it is estimated that nearly 400 billion barrels of oil remain in abandoned reserves. The Congressional Research Service also says that 10 percent of that oil consists of known recoverable reserves that could be produced with the proper techniques if the appropriate financial incentives were there.

So according to my math, that is an additional 40 billion barrels of oil that could be produced right here in our Nation. At the current level of about 10 million barrels per day, 40 billion barrels is roughly what the United States will import over the next 10 years. So I think as we go forward, with respect to this whole discussion, Mr. Chairman and colleagues, we ought to look and look in a bipartisan way at using, particularly, tax incentives that are now in place and are not particularly efficient and reconfigure those incentives so as to increase production.

One last point that I am going to want to explore with Mr. Caruso is that I cannot understand why U.S. oil producers are allowed to pocket more than a billion dollars in subsidies and then are allowed to export more than 1 million barrels of U.S.-produced oil each day. It seems to me that if taxpayers are subsidizing an oil company's production, the United States ought to get to keep that company's oil production in our Nation. Mr. Chairman, again, I thank you for your thoughtfulness and
being able to make this statement. I look forward to working with you and our colleagues.

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