Representative Todd Tiahrt - 4th Congressional District of Kansas

| Energy Self-sufficiency and Science |

Energy self-sufficiency and reliability are an essential part of a vibrant economy.

Businesses cannot grow without reliable, cost-efficient sources of energy.

Republicans have a plan that will not only stabilize our energy systems but also strengthen our businesses and create hundreds of thousands of new jobs.

Total energy consumption in the United States is expected to increase more rapidly than domestic energy supply through at least 2025.

Our energy crunch is exacerbated by:

Limited access to known resources.
Statutory and regulatory constraints.
Uncertainty in the energy industry that inhibits investment.
Failure of past federal efforts to coordinate energy, environment, and trade policies.

Yet air quality has not been negatively affected by increased energy use. Since 1970, aggregate emissions of six principle air pollutants have not cut 48 percent. During that time GDP has increased 164 percent, energy consumption has increased 42 percent, and vehicle miles traveled has increased 155 percent. (The Heritage Foundation)

The Energy Information Administration projects that net imports are expected to constitute 36% of total US energy consumption in 2025.

Our domestic production industry is not ready to meet these needs

Since 1981, one-half of the refineries have been shut down, no large-scale refinery has been built in the U.S. in over 20 years.
Capital improvement investment has been greatly reduced.
Public and private research and development expenditures sharply declined in the 1990s.

The Annual Energy Outlook (AEO) forecasts an increase in refined oil products of 3 million barrels per day, overall oil import dependence is estimated to rise from 55-64 percent during the next 20 years.

KANSAS ENERGY facts

Kansas is a state that plays a vital role in our domestic energy production. In recent years investors and geologists have taken a more serious look at Southeast Kansas' coalbed methane reserves, which have great potential for revitalizing local economies. Methane is the main component of natural gas that we use to heat our homes, water heaters, etc. Coalbed gas represents approximately 7 percent of total dry gas production in the United States.

Kansas ranks 7th in the nation for natural gas production and 8th in oil production. The Fourth Congressional District has many workers whose jobs are directly linked to energy production for the country.

The Kansas oil and gas industry is a $3 billion industry that puts tens of thousands of people to work each day and pumps hundreds of millions of dollars into the state's economy each year that helps support families, fund schools, and build roads. The average oil and gas producer in Kansas employs three people and spends nearly $2 per barrel of oil produced on environmental protection. Oil and gas is produced in 89 of Kansas' 105 counties and the average well depth is about 3,500 feet.

Kansas is also a major natural gas producing state. According to the Kansas Geological Survey, at the University of Kansas (KGS), Kansans produce almost twice as much natural gas as they consume. In 2002, Kansas produced more than 450 billion cubic feet, which is down significantly from peak production. However, with increased wellhead prices, the decline in Kansas gas production appears to have slowed significantly. And the increased contribution of Kansas coalbed methane production appears to be helping stabilize Kansas natural gas production.

Coalbed methane is a growing and significant worldwide energy source that is expected to increase over the next several decades. The four-county area of Labette, Montgomery, Neosho and Wilson in southeast Kansas is the center of coalbed methane exploration and production. Coalbed methane extends west into Chautauqua County as well.

Oil:

The recent rise in oil prices "has been substantial enough to and persistent enough to influence business investment decisions", and carried the potential to "significantly affect the long-term path of the US economy." - Alan Greenspan 4/28/04

The International Energy Agency claims that if prices are kept at current levels, about half a percentage point will be cut from world economic growth

Gasoline:
Rising gasoline prices and increasing price volatility are painful to consumers and producers and adversely affect the U.S. economy.

Gasoline Price:

53% crude oil price
16% federal and state taxes
22% refining costs
9% marketing and distribution costs

Federal regulations have contributed significantly to the high-price, high-volatility environment.

These regulations have led to the proliferation of numerous fuel blends--known as "boutique fuels" --which in turn have increased refining and distribution costs.

These obligations greatly complicate the ability of refiners to predict and service highly localized gasoline markets, and greatly magnify the impact of isolated and unforeseeable events--such as a refinery fire--on fuel price and availability in regional markets.

Corporate Average Fuel Economy (CAFE) standards were designed to improve mileage but have had perverse effects such as increased cost and safety risks.

Electricity:
Our electricity grid is inadequate as demonstrated in the blackout of August 2003 that affected NYC, Cleveland, and other cities.

Reserve margins that were substantial at the outset of the economic expansion of the 1990s have now been depleted.

Natural Gas:
Natural gas is used to produce nearly everything--from food to fertilizers and cars to clothes. It is used in schools, restaurants, stores, hospitals, and a myriad of other buildings, also in cooking meals, heating in winter, cooling in summer, and dehumidifying all year long.

Natural gas has become extremely popular as a major source of energy in the U.S., in part because it burns cleanly and has minimal impact on the environment.

High sustained natural gas prices are a hidden tax on consumers, depresses disposable personal income and savings, imposes economic growth, and adversely affects U.S. competitiveness.

Small business owners and family farmers must work harder to make ends meet.
Manufacturers are forced to consider cutting jobs or completely moving production overseas.

The United States today only has four liquefied natural gas (LNG) terminals in operation, and thus LNG accounts for only 1 percent of total U.S. consumption even though LNG could clearly and safely meet many of our energy needs.

Today new computer-driven technologies for finding and drilling natural gas make it possible to tap those reserves with almost no risk of environmental harm. (American Petroleum Institute)

Studies by the U.S. Geological Survey estimate that drilling in just one remote 2,000 acre area of the Arctic National Wildlife Refuge (ANWR) could yield up to 16 billion barrels of oil--an amount roughly equal to 30 years of oil imports from Saudi Arabia.

2,000 acres is a parcel no bigger than Dulles Airport and would leave 99.9 percent of ANWR untouched.

Diesel:
Trucking, construction, and other industries reliant on heavy equipment are struggling with the high cost of diesel fuel. Taxes add a significant amount to the price of diesel motor fuel.

Nationwide, the tax on diesel is 48.5 cents per gallon.

Nuclear Power:
Nuclear power should be a critical component in the alignment of energy and environmental needs.

Rather than increasing capacity in nuclear power plants, the U.S. has been de-commissioning power plants.

Competitiveness

"A new economy has taken a hold in America. Structural shifts in the economy have moved investment away from manufacturing and toward the commercial and service sectors. Knowledge-based sectors now constitute a sizeable share of our national GDP. Unprecedented technological advancements are forcing sweeping cultural and institutional changes. These shifts will have a major impact on demand for energy and the necessary networks for delivering that energy." (Business Roundtable)

Economists say climbing prices for oil and gas, and rising heating and electricity bills, are sure to slow economic growth this year as they eat into consumers' discretionary incomes and discourage businesses from hiring and spending on other items. Industries that are big users of oil and energy--such as chemicals, aluminum and fertilizer --have already seen thousands of job losses and plant closings. (Washington Times 3/18/04)

High natural gas prices alone have led to the loss of American jobs--including more than 80,000 in the chemical industry.

Prices are slowing U.S. economic growth and forcing some manufacturers to make their products elsewhere.

Currently natural gas costs more than $6/thousand cubic ft. in the U.S., compared to about $0.70 in Venezuela, $0.40 in North Africa, $0.80 in Russia, and $3.70 in Western Europe.

Agricultural producers have also been hit hard.

The cost of natural gas-based fertilizer has risen from around $175 per ton in 2000 to as much as $380 in 2004.
Those who depend on natural gas for irrigation face even more lost profits due to energy costs.

High oil prices are having a particularly oppressive effect on the Transportation Industry (Based on Global Insight, Air Transport Association, The Petroleum Economics Monthly, American Trucking Associations' letters to Washington, Union Pacific and CSX's press releases)

Trucking Industry:

Trucking represents 5 percent of the GDP, and more than 70 percent of America's communities rely solely on trucks to deliver their goods. Fuel is typically the second highest expense behind labor.

Historically, trucking companies have survived on razor-thin profit margins of 2-4 percent and are unable to pass the additional fuel expense on to the consumer due to the highly competitive industry. On average, for every 10 cent per gallon increase in the price of diesel fuel, 1,000 motor carriers with 5 or more trucks in their fleet will file for bankruptcy; this excludes the potentially thousands of smaller truckers that will fail in the same environment.

70 percent of the over 400,000 U.S. trucking companies have fewer than 6 trucks on the road and are being hit the hardest by high fuel prices. Most are small, family owned businesses that are unable to buy their fuel needs in bulk and are at the mercy of high prices at the pump.

Railroad Industry:

While the rail industry does not rely on fuel to the same extent as other transportation industries, a one dollar increase in the price per barrel of oil equates to approximately $100 million in additional expense for the rail industry.

As a means to make up some of this shortfall, major rail companies have sought to repeal fuel taxes and have modified their fuel programs.

Airline Industry:

Air transportation is vital to the economy, given the role it plays in the movement of people and goods and the many businesses it supports.

The U.S. airline industry has been plagued by massive losses and bankruptcies - one out of every five workers has lost their job since the tragic events of September 11 and nearly half of the jobs lost within a year were in the aviation or travel-related sectors.

Every one dollar increase in the price per barrel of oil equates to $450 million annually in additional expense for the U.S. airline industry alone.

As the second largest expense, fuel price's impact on profitability, service levels, and jobs is significant.

Natural Gas and Coal:

More than 400,000 direct and indirect new jobs will be created through the construction of the Alaska Natural Gas Pipeline, while at the same time bringing an affordable energy supply to the Lower 48 states. (British Petroleum)

38,000 direct jobs, 80,000 indirect jobs and an estimated 400,000 jobs from the multiplier effect.

America's substantial investment in clean coal technology creates 62,000 jobs and ensures Americans new electricity that is abundant, reliable, affordable, and cleaner than ever before. (Coal Utilization Research Council)

40,000 new construction jobs created by the construction of approximately 27 large clean coal plants.
12,000 full-time, permanent jobs related to plant operation.
10,000 research jobs in the fields of math, engineering, physics and science at an estimated annual salary of $125,000.

Nuclear Energy:

Building a first-of-its-kind nuclear reactor to co-generate hydrogen will create 3,000 construction jobs and 500 long-term, high-paying, high-tech jobs. (Nuclear Energy Institute)

Nuclear production tax credits will spur the construction of approximately 6 light-water nuclear reactors for a total of 8,400 megawatts of clean and affordable energy. This construction will create between 12,000 and 18,000 jobs. Running the plants will create more than 9,000 high-paying, high-tech jobs. (Nuclear Energy Institute)

The Price Anderson renewal in the bill would protect 61,800 jobs at 103 plants nationwide. (Nuclear Energy Institute)

Renewables:

Incentives for geothermal energy will bring between 350 and 500 megawatts of clean and renewable geothermal energy online over the next three years. This will create between 750 and 1000 direct jobs and between 7,500 and 10,000 indirect jobs. (Geothermal Energy Association)

Incentives for solar energy will assist in creating 20,000 new jobs in the solar energy industry by 2010. (The Solar Energy Institute Association)

Biomass provisions will put 1,000 people back to work in at least 20 biomass plants from New York to California that have recently been idled.

Incentives for wind will help create an estimated 5,285 new megawatts of clean and renewable power through 2007. Each new megawatt of wind energy creates between 15-19 direct and indirect jobs, for an estimated 100,000 new jobs through 2007. (American Wind Energy Association, European Wind Energy Association)