WASHINGTON — IER Distinguished Senior Fellow Mary Hutzler will testify today at 10:00 am ET before the House Energy and Commerce Subcommittee on Energy and Power. Hutzler will discuss the U.S. oil and gas pipeline system and the importance of North American energy trade. The text of her introductory remarks, as prepared for delivery, follows:
Forty years ago, the United States faced the 1973 Arab oil embargo, setting off a series of policy initiatives in Washington designed to reduce our dependence on foreign oil. Despite them, domestic production of oil had declined and oil imports had increased, until recently.
Thanks to American innovation, new drilling technologies have allowed us to tap our vast shale resources and make the United States the largest liquid fuels and natural gas producer in the world. And with Canada’s vast proven oil reserves, the prospect of North American energy independence is no longer political rhetoric, but a promising reality.
The Institute for Energy Research has monitored closely the energy boom that is occurring primarily on private and state lands. Today, we welcome the committee’s review of new ideas to strengthen our nation’s energy infrastructure and facilitate access to North America’s vast, stable supply of oil and natural gas.
According to the government’s own numbers, North America has enough resources to provide reliable and affordable energy for centuries to come, which IER highlighted in a recent inventory of North America’s energy resources.
To fully benefit from this energy renaissance, however, we need the infrastructure to get the energy where it is needed, and the energy security that this infrastructure would provide.
Pipelines have been used for three quarters of a century, providing the safest, most efficient, and least cost transport of oil and natural gas. But due to existing pipelines reaching near full capacity, oil transport by rail has increased dramatically. Last year, oil carried on trains from Canada to the United States increased by 46 percent over 2011 levels. EIA estimates that 1.37 million barrels of oil and petroleum products per day were moved by train during the first six months of 2013, up 48 percent in a year.
Total Canadian oil imports to the United States have also been rising steadily. Between 1993 and 2012, imports of oil from Canada increased by 150 percent. Most of this oil comes via pipeline, though failure to construct the Keystone XL pipeline has precipitated a greater use of trains for oil transport, both from Canada and within the United States from the Bakken fields in North Dakota.
The United States imported almost 3 trillion cubic feet of natural gas from Canada in 2012, 12 percent of our consumption that year. U.S. imports of Canadian natural gas have increased by 316 percent since 1983. The United States gets 94 percent of its natural gas imports from Canada; the rest comes from Mexico and from overseas as liquefied natural gas.
Canadian natural gas imports to the Northeast and Midwest—areas that also benefit from increased domestic production of the Marcellus Shale – are declining slightly, while Canadian natural gas imports into the Northwest are increasing.
Four U.S. states – Minnesota, Montana, Idaho, and North Dakota – account for 75 percent of all the natural gas brought into the U.S. via pipeline. The border states serve as critical links for gas dependent states like California, where 55 percent of electricity generation comes from natural gas. On the east coast, Vermont, the first state to ban hydraulic fracturing, is entirely dependent on natural gas from Canada.
On our southern border, the United States is a net exporter of natural gas to Mexico, where exports have been on an upward trend since 2000 and have more than doubled since 2007.
Mexico is also our third largest supplier of oil and petroleum products, supplying almost 400 million barrels in 2012, though this is down from 2006 when Mexican imports peaked at 622 million barrels.
By maintaining a well-working energy infrastructure between the United States and our closest allies in North America, we can reduce our reliance on Persian Gulf oil.
Net oil imports are now just 35 percent of oil consumption. But because Canada and Mexico are supplying over 60 percent of our oil imports, our net energy dependence on non-North American oil is just 14 percent. This number will drop due to increased production here and in Canada, but we must ensure that North American energy commerce is free from impediments and permitting delays.
More pipelines will mean greater energy security, safer transport, and the ability to move resources to where they are needed most.
The recent politicization of pipelines in the U.S. will not accomplish any goal of those who oppose them. Rather, oil and natural gas producers will simply use more costly modes of transport that pose greater risks to the environment; they will export North America energy investments and jobs to countries with far fewer commitments to environmental protection.
Affordable energy is essential to economic growth. Efficient and low-cost transport of energy provides the arteries of commerce that nourish an economic recovery.
To read the full testimony, click here (PDF).
To watch the hearing live, click here.