K. Conaway

Mr. CONAWAY

Mr. CONAWAY. Absolutely. Absolutely.

Mr. CONAWAY. I thank the gentleman. And I'm glad he is hosting this hour tonight so that we may have an opportunity to have a bit of an exchange of ideas and dialogue on these energy issues. One of the catchphrases that has become popular among the uninformed is the ``use it or lose it'' phrase which trivializes an incredibly complex process. It trivializes the importance of an energy policy in this country and tries to reduce, as I said, a complex issue to a bumper sticker. It is demeaning to those in the business. And it demonstrates a fundamental lack of understanding of exactly how the process works. The idea is that oil companies in these United States, including major oil companies, are somehow warehousing good drillable prospects in the hopes that crude oil will go higher than it already is. Well $140 plus a barrel is plenty of incentive to drill almost everything in these United States. I want to walk you through a brief description of some of the things that go on in the development of a prospect, the drilling of a prospect and bringing crude oil to the market. Now this applies onshore and offshore. The onshore processes are a little quicker because the infrastructure is already in place. The offshore is staggeringly more expensive than the onshore. And it takes a longer time. The first thing you have to have is an idea of where you think oil and gas might be. You can't just willy-nilly drill in the United States offshore, or anywhere in the world, and expect to find crude oil or natural gas. You have to have a reasonably scientific guess as to where crude oil or natural gas might have occurred. You base that guess on other production in the area. You base that guess on the geologic history of that particular spot in the world. But you have to have some sort of an idea that there might be oil and gas in that place. Once you come up with that idea, you do some preliminary geological work trying to map what that subsurface structure might look like under where you're trying to drill. You may be able to do some preliminary geophysical work in that process to get this idea to a point where you're willing to invest thousands, hundreds of thousands and millions of dollars. And with respect to offshore, it's billions of dollars of shareholder capital, your money or the bank's money, depending on how you have financed this particular idea. So you have the idea. You have done the preliminary work. And you say, all right, here is an area where I think there is oil and gas. I need to make a deal, a trade, with the people who own the minerals under that dirt. Now the United States is one of the few countries in the world where individuals own minerals on their property. The government owns a lot of property. It owns those minerals. Private citizens own a lot of property. And they own those minerals, or they have sold those minerals or detached them from the surface rights. But somebody owns those minerals. You have to find all those people. And depending on the size of the block of acreage that you're wanting to put together, it could be one owner. It could be hundreds of owners that you have to make a deal with. So you go through that process. You finally come to a lease term. Let's do an easy one. The Federal Government owns all the minerals, has all the surface and you have one owner to deal with. You negotiate that opportunity with the Federal Government. The Federal Government then puts the leases out for bid across anybody who wants to bid. Well you have the idea in mind. You think you have nominated that prospect, that acreage for drilling. So you put your bid in. You win that bid. You negotiate that lease. You pay your upfront lease bonus money for the right to then begin spending some really big dollars on trying to find out what that's done. Now let me talk a little bit about that lease, because this speaks to the ``use it or lose it'' nonsense that is currently permeating the debate in this House. This lease is a legal contract between the lessor, the landowner, in this instance the Federal Government, and the lessee. It has specific terms that the lessee has to abide by. One of those terms, of course, is a lease bonus payment typically based on the number of acres. So you put that money up front. It will have a fixed term. Onshore non-Federal lands, it could be 3 years, it could be 5 years. Offshore it's generally 10 years just because of the timeline that my friend will show us here in a minute that it takes to move from point A to point B, selling the crude oil or natural gas off that. So there's a fixed term that you have paid upfront money to. You have the right to explore all of that acreage for the term, for the primary term of that lease. Now while you're exploring and not producing, you will have to pay annually delay rentals of some negotiated amount just to maintain your position in that lease. Once you have gone beyond that primary term, many leases, most leases, will have what is referred to as a continuous development clause in that you have to continue drilling wells, producing wells, at a fixed rate over some period of time in order to keep the acreage that you have not developed. If you decide that you have drilled all you want to, then the acreage that is outside your production unit, when you drill an oil well or a gas well, in Texas it's the Railroad Commission that will assign a spacing unit. Oil wells are typically 40 or 80 acres. Gas wells could be 160 or 640 depending on the depth. That is the aerial extent of the land that they think that one well will drain efficiently. So any acreage outside of that production unit after the primary term, and once you have quit meeting your continuous development clauses, reverts back to the original owner. So if I have leased a 5,000-acre tract from the Federal Government, I've done all the G and G work, drilled it, found production and I know exactly where it is, I don't think the rest of that acreage is worth drilling, then once that primary term of that lease expires, all of that acreage under the terms of the written contract goes back to the Federal Government and can be leased by someone else throughout the process. Now you say, well, why would you let that acreage go once you have made that decision that you're not going to drill it? Well, A, you have invested a per acre bonus in all of that acreage, B, someone else may come up with the idea that they think there is oil and gas under that. Even though you don't, they may think there is oil and gas under that. You have paid your upfront bonus money. It's your property to deal with during that time frame under the terms of your lease. So somebody comes to you and says, I think there's oil under this piece of property. You have got the control of the minerals. You don't own them outright. You have them leased. Can I do a deal with you so that I will drill it? That is called a ``farmout.'' I will farm out that acreage and then you put your risk dollars up so I don't release that acreage when it's under the primary term because I have paid for it. I will keep it through the end of the lease. I am making the delay drill payments. Somebody else may have a better idea that there is oil under that place. There is a serendipity kind of thing. You never know when that happens. Once you have the lease in place, you then begin the complex G and G work that is on the property. Offshore or onshore, you will do additional geological work. You will shoot seismic perhaps, you will evaluate that seismic on 2-D, 3-D, go through a lot of work. In the meantime, while that is going on, you also begin the permitting process that on Federal leases is quite extensive. There are some 29 agencies that may get involved in your ability to drill on the lease that you have already paid for. You have to get EPA permission. You have to get Bureau of Land Management permission. You have to get drilling permits. There are all kinds of things that you have to go on. And all of that takes time. It obviously cannot be done instantly, because some of these permits are piggy-backed. You have to get one before you get the other. Some of them you run concurrently. And all of that work is going on while you are trying to pick the spot you want to drill that first well. Once you have the permitting in place and you have a reasonable idea of when you can start drilling, you then go through the process of negotiating all those contracts to drill the well. You'll have a contract with the drilling contractor for the rig. You'll have contracts to buy mud. You'll have contracts for logging, other services, casing, equipment, all those kinds of things. You have to get all that gathered up and moving toward your location. Now onshore it's a little easier than offshore but nevertheless, the process is still the same. You then put your rig up. You set up the rig or rig it up, and you drill your hole. And if you're lucky, one in six wildcat wells will discover oil. There is a little better percentage than that on development wells. But you will then go through the completion process. Once you have got it completed, you will build out the surface facilities, tank batteries, flow lines, all those kinds of things in order to move your product, either gas or crude oil, from that well site into a market. At that point, you also have to negotiate a contract to sell the product. Now, crude oil is a pretty quick contract. They are very standard. And the product has got a certain quality, and you sell it. Natural gas, on the other hand, is a little different animal. And the contract negotiations for natural gas take a lot longer. Once you have got the contracts negotiated and you have all the permissions to drive and do everything you've got, now you're ready to sell that first barrel of crude oil or that first Mcf of gas. And the length of time that can take varies. There's not a standard that you go by, because every single deal is different. Onshore is different from offshore. All the offshore deals are incredibly different than the onshore.

Mr. CONAWAY. That use it or lose it is like telling General Motors you can only build one car at a time before you can start to build another car. Oil and gas companies, much like manufacturing companies, have a work-in-process scheme that includes all of these steps. They could have multiple number of prospects in their inventory that they are working diligently on to make that happen. So this use it or lose it phrase, in addition to being demeaning to the process and to the industry, is wrongheaded at best.

Mr. CONAWAY. To be fair, doing things offshore, 150 miles from shore, is technically much tougher than it is doing it in the heart of an oil- and-gas region like Fort Worth is. So there is a natural difference in time. Some of it has to do with the permitting and all of the other stuff that goes on. But also, it is tougher to drill 150 miles offshore where everything has to be brought out there.

Mr. CONAWAY. Sure. The Dallas-Fort Worth airport is a large facility in between Dallas and Fort Worth. Underlying all of that airport is a formation called the Barnett Shale. Barnett Shale is a gas-bearing formation that the industry has known about for a long, long time. It was not commercially producible on a vertical well bore because the formation would not give up enough gas on a vertical structure in order to be able to make your money back out of what it took you to drill that well. Someone had an idea and said, what if we drill the Barnett Shale horizontally, you know, go down 8,000 feet, and then drill a leg out 3,500 feet to 6,000 feet? I wonder what that would do? They did that. And all of a sudden, they got a commercial gas well. The estimates are for the Barnett Shale, which is very extensive from the middle of between Dallas and Fort Worth, just north of that area, all the way down toward Waco and out toward Abilene. They don't have the extent of where it's commercially producible at this point in time. But current guesses are that it's 26 trillion cubic feet of natural gas in the Barnett Shale. This is a gas plate that has been there and been known for 50 plus years, maybe even longer than that. But it's only been recently that they have developed it. Dallas airport sits over the Barnett Shale. So Chesapeake went through the airport authority and said, we want to drill. We want to negotiate those leases. My recollection is they negotiated the lease in 2003 and paid the upfront bonus of $186 million to drill. They will drill 303 wells on Dallas airport property. They will use 52 pads to drill those 303 wells, and so obviously each pad will have multiple wells. The royalties will go to the airport. First production began in 2005, and they are now continuing to drill.

Mr. CONAWAY. Yes, in the time line. Leases were obtained in 1995. You walk through the step, the first production was September of 2007. The ship was commissioned for full operations in December of 2007, so 12 years of activity that went on in investment, more importantly dollars invested because they had to pay for the building of that platform. The folks who built it didn't say, okay, when you start producing crude oil, you can pay for it at that point in time. They wanted their money up front. And so only major oil companies have the resources to be able to drill in 7,000 feet of water. The technical aspects of drilling like that, many of them had to be developed on the fly because they didn't know how to do it. Bottom hull temperatures at 20,000 feet are very high. And the ability to maintain casing, maintain well, maintain the down hole structures, they had to figure that out, because no one else had ever done it in the world. So being able to do that is technically very, very complicated.

Mr. CONAWAY. Yes. In the Gulf of Mexico there is a production platform, a drilling platform, a production platform and a crew quarters platform called Atlantis. It is about 150 miles offshore in the Gulf of Mexico. I don't know if it's technically in Louisiana or Texas. It's 150 miles offshore. It's in 7,000 feet of water. So you have 7,000 feet of water before you hit the seabed. And they have drilled 13,000 feet once they've reached the seabed. So it's about a 20,000-foot well that they have drilled and they have I think five producing wells. This will produce about 150,000 barrels a day. It's rated for 200,000 barrels. Billions and billions of dollars are invested in this floating monstrosity that sits in the Gulf of Mexico and produces crude oil and natural gas. It's an incredible amount of investment. Now if you have invested in Atlantis or if you have invested in a prospect onshore, you get no return on your dollar. You get nothing back from your investment until you sell crude oil and natural gas. And therein lies the misunderstanding by some of our colleagues on the other side of the aisle. There is no juice in sitting on production. At $140 a barrel, the only way I get my money back out of the investment I have got in this well is if I sell crude oil and natural gas. So I have no incentive to sit on it for any reason because there's no way for me to get money back out of my investment. So there are plenty of good business reasons why the oil and gas is being produced in a commercial properly developed manner.

Mr. CONAWAY

Mr. CONAWAY. Madam Speaker, on that I demand the yeas and nays.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I come to the floor today to celebrate the wonderful and full life of Robbie ``Gran'' Juanita Sepolen. In her 105 years on this Earth, Gran was a daughter, a wife, a mother, a foster parent, a student, a teacher, an activist, grandmother, great-grandmother, great-great-grandmother, and even a great-great-great-grandmother, and most importantly, she was a devoted Christian. Her accomplishments are innumerable and the lives that she touched along the way are countless. Growing up in Brownwood, Texas, Gran was part of the first graduating class from Brownwood Colored High School in 1918, later named the Rufus F. Hardin High School. After college, during a time of great bigotry against the African American race, Gran overcame those boundaries and shared her love of learning with others as a teacher and librarian in the Brownwood School District. A true public servant, Gran used her rights as a voting citizen to help others find their voice by helping them register to vote. She was active in the senior citizen ministry as well, sharing her love of the arts in senior citizen centers throughout the county. Gran never tired of meeting new people or learning new things, participating in numerous cultural events, and was even crowned the 2001 Cowboy of Color Rodeo Queen in Houston, Texas. While we mourn the loss of such a unique and wonderful woman, we must also celebrate a life well lived and move forward knowing that Gran left footprints on the hearts of all that crossed her path.

Mr. CONAWAY

Mr. CONAWAY. It would make it a little unpalatable for some of us who don't like Davis-Bacon.

Mr. CONAWAY. I am sure you are right. If the unions, for goodness sakes, could force a vote on card check, an absolute walk-the-plank vote across America, a 90 percent issue, if they could force our colleagues across the aisle to vote for a card check bill, why can't they force our colleagues to vote for an American refinery bill? The other point I want to make is we hear this glib little smart aleck remark that, well, we can't just drill our way out of this problem. You know, that is shallow and insincere. I mean, it is just insulting, quite frankly. The raw mechanics are that every well that is drilled, not only in the United States, but in the world, has a finite amount of crude oil and natural gas that will be produced out of that well. That is a finite resource. And so if we have got 86 million barrels of production today and we produce 86 million barrels, we have got to find 86 million new barrels to tack on to maintain just flat, where we are, because demand is continuing to grow. Night after night, we come down and talk about demand growth in India, demand growth in China, demand growth in the United States. So in order to just stay flat, we have to continue drilling if we are going to use crude oil and natural gas as a source to drive automobiles and trucks and airplanes, which we are. The real issue is not the ultimate end game of weaning ourselves off of crude oil, as an example. That is not going to happen in my lifetime, but it will happen one of these days. But we all agree where we are trying to get to. The difference in our conversation between us and the guys on the other side of the aisle is, what do we do between now and then? We all want to get there, but how do we get between now and then? Crude oil is a finite resource. It will always get more expensive. There will be ups and downs, but it is going to get more expensive. How we manage that growth, those increases in costs of crude oil, how we buffer against those increases is really in our best interests. And, quite frankly, the commonsense plan that the Speaker has either kept to herself or not, I can understand why she didn't roll it out in 2006, because we were in charge and we might try to steal the good idea and implement it and take credit for it. But we have been out here better than 18 months now and we still haven't seen that commonsense plan to address gasoline prices. Not the overall energy thing, but to address gasoline prices, which she spoke about. So I heard it loud and clear all week long, on every stop, every town hall meeting, every coffee shop, every conversation that I had. ``You know, what is the deal with drilling offshore? What is the deal with drilling in ANWR? What is the deal with oil shale, coal-to-liquid, all these kinds of things? Why is there a political issue going on?'' Because these solutions don't wear party jerseys, you wouldn't think. It is really what is in the best interests of America. This is not about Republicans. It shouldn't be about Democrats. This ought to be about a rational, thoughtful, straightforward energy policy for America that takes advantage all our natural resources and exploits those natural resources until we can move to whatever is next for the internal combustion engine that revolutionized America and the world coming out of the 19th century into the 20th century. So I appreciate my colleague letting me get up here tonight and rant and rave a little bit and spit all over the folks sitting down here in front of us. But this is important stuff. And our cutesy little sayings, we use them, the guys on the other side of the aisle use them, we can't drill our way out of it, use it or lose it, all that little nonsense, is disrespectful for the seriousness of this particular policy. Emptying the Strategic Petroleum Reserve, I had not heard her say that. As long as we can buy crude oil, let's buy it. Let's keep our savings or the Strategic Petroleum Reserve for that weird eventuality when we can't get it from anywhere else and we have got to try to figure out a way to survive in that environment. How we deal with the cost of crude oil, you, you don't take the savings out of the ground for that; you drill or do whatever you have to. But that is a really bad idea and one that is not a particularly thoughtful idea that seems to be rampant in this environment.

Mr. CONAWAY. I want to thank my friend. There was an interesting headline and a couple of sentences in today's Hill newspaper, one of the leading newspapers in all of Washington, DC, by the way. It says, ``The Energy Bill is Out of Gas.'' The lead sentence is, ``House Democrats are in a bind on the focal point of their energy plan. Worried that a floor vote on any energy related measure will trigger a Republican-forced vote on domestic drilling, the leadership has scrubbed the floor schedule of the energy legislation that it vowed to tackle after the 4th of July recess.'' Politics, Mr. Speaker. I spent all week in West Texas and Central Texas, an area that is blessed with a lot of crude oil and natural gas production. There are an awful lot of folks that make a living in drilling and producing crude oil and owning the minerals and owning the land that it is produced from. And I heard every day, why are these prices so high? Why can't we do the logical, rational things to lower these prices. So if I am hearing that from a district that is very pro oil and gas, very pro drilling, I can't imagine what my Democrat colleagues heard on the other side. I was able to look them in the eye and say, Mr. Speaker, I am for it. Let's drill ANWR. Let's drill Outer Continental Shelf. Let's do all those things, all five things that my colleague from Georgia talked about. Let's do all those things. I can't imagine any of my colleagues going back and facing their constituents, their voters, and looking them in the eye and say no, it is really best that we keep these prices high. It is really in your best interests that we don't drill Outer Continental Shelf, we don't drill ANWR. It is really in the best interests of the United States to continue to buy crude oil from folks who hate our guts, from a clown in Venezuela. That is really the best public policy. I am surprised we had 300 people voting here tonight, because had I gone home and done that, I'd have got lynched, and it wouldn't have been a new rope. I am going to make two points. We have some natural allies in this fight, and they come down here almost every single night and rail about NAFTA and CAFTA, the anti-trade crowd. Where are they in this particular issue? You know, they gripe about us exporting jobs to the other parts of the world. They gripe about the impact that NAFTA and CAFTA have, all the bilateral agreements. They vote against them. They just rail about them. Why aren't they down here screaming about this issue? Because every well that is drilled in the Outer Continental Shelf and ANWR, every plant that is an oil shale plant, the coal-to-liquid, those are American jobs. And that is what the anti-trade folks are all about, is American jobs. Every new refinery that is built, those are American jobs. The other natural ally is most all of those refinery jobs are union jobs. Now, the domestic drilling, et cetera, isn't much unionized. But in the refinery world, those are union jobs. Where are those guys?

Mr. CONAWAY

Mr. CONAWAY. My first reaction to reading this bill was how could 236 Members of Congress on the Democratic side, their legions of staff, and their hired guns, know so little about a fundamental industry like we've got that they would think that these exploration companies would invest millions and, in some instances, billions of dollars of shareholder equity and debt and lease bonus payments, regulatory compliance and bureaucratic compliance costs, geological and geophysical costs, drilling and exploration expenditures, production facilities, to then sit on these generally unsalvageable investments and not produce oil and natural gas, which is the only way to recover these investments and make a profit. This chart, Mr. Speaker, shows a 14-year timeline of the typical exploration in the Gulf of Mexico. It is a difficult process to get through. There are some 27 bureaucratic steps that we go through. This legislation today will add another ongoing step that these companies will have to comply with. My colleagues here on the other side of the aisle know this discourages exploration. It fits in with their overall attempt to continue to keep gasoline prices high. It is one more dagger in the heart of the American lifestyle that has been developed since World War II that has centered on reasonable gasoline. Defeat this bill.

Mr. CONAWAY

Mr. CONAWAY. The traditional offshore lease needs to be at least 10 years because from start to finish--we have got some graphs here that we can show you the logical, businesslike progression that companies have to walk down. What is not mentioned so far is all the litigation costs that are associated with these leases, particularly in the Rocky Mountains. If a company is able to win a lease, they are immediately sued by environmentalists to prevent their exploring for it. This current price of gasoline and crude oil is a product of supply and demand. About 86 million barrels a day of production, about 85 million barrels a day of usage, and that varies from day-to-day. Inventories start dropping. That means demand has gone beyond the current production supply. The most immediate area for quick relief in this regard would be Iraq. The Iraqi government has recently reached out to ExxonMobil, Shell, BP and Chevron to ask them, ask the experts, the folks who have the money to be able to do it, to come into Iraq and help them increase the amount of production that Iraq produces from oil and gas. They are about half of what they were under the Shah. And their fields are on land and the most quickly responsive to getting new oil and gas supplies to the market. Charles Schumer, a colleague on the other side of the building, immediately weighed in, said that is wrongheaded and said he wants to find out some way to prevent Iraq from developing Iraq's resources. It is not good enough that we prevent America from developing America's resources, but now we want to tell the Iraqis how they should be able to do it as well. We are about to run out of time. That is one of the things I wanted to say, and I appreciate getting to weigh in on this. Here is the bottom line: Post-World War II, we have developed an American lifestyle that was incredibly dependent on inexpensive gasoline, suburbs, rural America, that requires being able to drive to and from work, to and from recreation. Maintaining these high prices, as our colleagues across the aisle are intent on doing, is, in my view, an attack on that way of life. You can call it partisan or not, but if you look at where the bulk of the Democratic support is in the Congress, it is in big cities, where they have access to mass transit, trains and buses and those kinds of things. But in rural America, flyover America, where most Republican support is, we don't have access to that. I can assure you, the folks who live at Lake LBJ, named after Lyndon Johnson, and work in Marble Falls and Llano and Burnet, there are no buses to get to and from work. They have got to drive their cars. So as we continue to on purpose maintain these high gasoline prices, this is an attack on our suburban way of life, an attack on rural American and the rural way of life and a lifestyle that has served us well since post-World War II. One final statement: When I go home, this is all my constituents talk about. And if I were to come up here and take the position that I am going to ignore what they are saying, the way our Democrats appear to be doing, I would get tossed out of office, because apparently they are not hearing the same thing that you and I are hearing when we go home. Apparently in Democratic districts the high gasoline prices are not particularly relevant, which begs the question that 71 percent of Americans want to drill. So I appreciate my colleague letting me speak tonight. We can solve this. We can fix this. But it is going to require some modification on our part, some modification on our Democratic friends' part. But we really do need to start listening to each other and quit demagoging, and particularly with respect to the oil business, considering those folks less than human as we look at what they do for America every day. I yield back.

Mr. CONAWAY. Well, I thank my classmate from Georgia for hosting this hour tonight. We spend an awful lot of time at these microphones, both sides, basically talking past each other. Usually, the rhetoric is heated, and we don't listen. My experience is this is the worst 435 listeners on the face of the Earth because we are clearly more interested in hearing what I have got to say than listening to what you have got to say. It happens time and time and time again at these microphones, basically because we tend to polarize and take the absolute positions, knowing full well that the best path for America is somewhere in the middle. The best path for America includes working all the other alternatives and trying to develop those and trying to see as far over the horizon as we can for a day in which crude oil and natural gas will no longer be available, not by choice but by the fact it has all been used up. It is a finite resource. We should be conserving everywhere we get, not on an individual basis but collective as well. Yes, from our position, we should be exploring and developing and producing American resources; crude oil, natural gas, uranium, nuclear, oil shale, tar sands, the full gamut of these resources. So if we can actually spend some time and sit together and try to work out our differences, I think there is a solution here that is really best for America. When I first read the ``use it or lose it'' bill, my first reaction was how can 236 of my colleagues on the other side of the aisle and all of their staffs and all of their hired consultants know so little about a fundamental industry that is so vital to our national security, our economic security, and that is the oil business. Then I came to the cynical conclusion that I was wrong; they do know about it. They do know exactly what they are doing by this bill that was up earlier today on a suspension calendar that we were able to defeat because over a third of us said that is wrong-headed. Here's a quick basic. When an oil and gas oil company, generally a major oil company because it requires so much money, leases in the Gulf of Mexico, where we have been drilling for a long, long time, they pay a lease bonus, which is a sizable amount of money that is given to the Federal Government, that says for a time certain I get exclusive rights to explore and try to find crude oil and natural gas on this particular parcel of land. That bonus money is a sunk cost because if they find oil, they get to produce it. If they don't find oil, too bad. This industry, much maligned from these microphones, is a group of dedicated, hardworking, patriotic, honest people who have an incredible tolerance for risk in this environment. So they put up the lease bonus money, sometimes millions and millions of dollars, just for the right to wade into the bureaucratic morass that we have created around these circumstances, where you have got 27 permits and all kinds of stuff to get to just until you get to start the process. The process includes geological studies, geophysical studies, evaluation to try to find where on that parcel of land the best spot may be. You have got sunk costs, regulatory compliance costs. Then, once you have decided where you are going to drill, that you decided that you think there are commercial reserves in place under that dirt, under that ocean, then you still don't know it until you drill it. Then you have got the cost of drilling, all the expense there. Then, if you find commercial quantities of crude oil, you have to build a production platform that has got to be uniquely built for the particular formation you have got, and that has got to be moved out into the gulf and anchored. So what you have is many millions and millions, in some instances, billions of dollars of shareholder equity and debt that's been invested in trying to find crude oil and natural gas. Most of that is sunk cost. The only way they get a return on their investment, the only way they justify to their shareholders that they are making the right decision is to produce whatever crude oil and natural gas is in place. So there are plenty of incentives already built in to produce. The idea that they would ``sit'' on production in the hopes that this price gets even higher, which they know the price is too high now, is just wrong-headed.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I appreciate and thank the ranking member for recognizing me. It's interesting that, if you look at this bill, which I intend to vote for, what it basically does is it points a finger in the face of the commodities future trading corporation and very sternly and mean- eyed says: Do your job. Great. They're doing their job. As a matter of fact, I'm sure it's already been mentioned on the floor this afternoon that we had the acting chairman of the CFTC in front of the Ag Committee this week, and he reported that he is, in fact, doing his job, that he looks for every day manipulation in the oil market. He looks every day for undue impact by speculators on swaps in the market. And to the best of their ability and their economists' estimation, the price of crude oil is currently fundamentally set by laws of supply and demand, and that while they are not able to find any evidence of it, they look for that evidence or look for manipulation and undue influence of speculators in the market every single day. I want to thank the chairman for doing his good work on that committee. I know that he will take this stern advice to continue to do his job to heart.

Mr. CONAWAY

Mr. CONAWAY. Well, I thank my colleague from Texas, and I want to say a few things. We'll get to some of our other speakers who are here tonight before we get into the heart of what you and I intend to talk about. Mr. Speaker, the serious business of providing energy for America, whether that energy is electricity to light the lights in this hall or to run manufacturing facilities or gasoline, whether it is diesel or jet fuel to move people and goods and us around, is serious business. Yet our colleagues on the other side of the aisle are not treating it seriously. This week's get-out-of-town energy strategy included four peripheral bills that are not intended to really deal with it or intended to give cover, political cover, for the folks who voted for these four bills. Next week, when we all go home to our constituents, we'll have to look them in the eye and tell them that, yes, we've done absolutely nothing to address the cost of gasoline that you're paying. The interesting thing about gasoline is that we may not buy gasoline every single day, but as we drive around, we see the price posted all over town, and I dare say that every single driver looks at the price to check to see what it is. Even though you may not intend to buy gasoline that day, you check those prices constantly. So it's constantly in front of our minds as it is when we have town halls or telephone town halls. The get-out-of-town strategy included a price-gouging bill--again, puffery--because seven DOE and Federal Trade Commission price-gouging studies over the last decade have shown absolutely no evidence whatsoever of price gouging. This serious business of providing gasoline to consumers at prices that they can afford has been reduced to sloganism: ``Use it or lose it.'' ``We can't drill our way out of these problems.'' They're casual, offhand, flippant comments that don't do the seriousness of this issue justice. A 30-second sound bite works well on a television commercial, but at the heart of the matter, these are complicated issues that deserve and that should get serious consideration on both sides of the aisle. The solutions aren't Republican. The solutions aren't Democratic. The solutions are what are best for America. To the extent that we can begin to delve deeper into what the issue might be and into what the solution might be, the better off we are, but as long as we're just very cavalier about what we're doing with the get-out-of-town energy policy or with the sloganism that seems to permeate everything that we do with respect to energy, we will not solve this issue. Gasoline prices will continue to rise. Electricity costs will continue to go up as natural gas prices rise and as we use more and more natural gas to generate electricity. So we are not about the good work of trying to find solutions. We are simply about the bad work of being very casual, very cavalier and very unthoughtful, quite frankly, about this particular issue. So I look forward to hearing the comments from the other two speakers we have with us tonight, and then I look forward to delving a little deeper into things that I've already talked about. With that, I yield back.

Mr. CONAWAY. Mr. Speaker, I thank my colleague for hosting this night's hour. I hope that it helps some of our colleagues learn a little bit more about the oil business. One of the things that is true in almost every area is that before you begin to regulate something, before you begin to try to control something, you really ought to understand it first. And the lack of understanding, not malicious, but it's not in their professional background. But the lack of understanding of most of our colleagues about the oil business and how it happens is--most of that information is limited to the ``Dallas'' TV show and J.R. Ewing, which was anything but the truth. The interesting thing about Section 526 is that it basically says the Federal Government can't buy fuel from unconventional sources unless it can be proven that the lifecycle greenhouse emissions are less for the unconventional source than under the conventional source. What this mechanically does is it takes a tremendous buying power of the Federal Government out of the development phase of getting to unconventional and new sources of ways to drive our cars that are better. The Federal Government has great capacity to buy and buys great quantities, particularly the Department of Defense, and we've now pushed that market aside in terms of being able to use that market to be able to develop these alternatives. In addition, we've said that rather than buying fuel from tar sands in Canada, which no one can prove whether or not the lifecycle of greenhouse gases is more or less under those circumstances, we can't buy that fuel, but we can buy fuel and crude oil from countries that are, at best, not our allies. In fact, we have recently passed on the floor of this House, hopefully it won't get any further in the Senate, the opportunity for Americans to sue OPEC to increase OPEC production. Again, an example of how the wrongheaded energy policy has become under the leadership that currently runs this House. On the one hand, we will sue OPEC to increase production, on the other hand, we say it is not in our best interest to have oil and gas production from stable sources like the Outer Continental Shelf of the United States or the Rocky Mountains of the United States. We don't want to produce those resources, but we want to sue OPEC to force them to produce more crude oil that we would, in fact, buy. I'm also anxious to see how OPEC is going to respond to that by allowing--setting in place the mechanisms to allow their citizens to sue America to force America to produce its own energy. And the reason they would do that, of course, is that crude oil is a worldwide market, and to the extent that America is withholding her crude oil from the market, she is, in effect, pushing up the price of crude oil worldwide. So on the one hand, we want to sue OPEC, force them to produce their barrels, but on the other hand, we don't want to produce our own barrels which would go into the worldwide supply and would help bring down that cost. Now, I suspect there is some crafty Federal Trade Commission lawyer that would look at America as creating some sort of a tort within that system by withholding specifically supplies off the market in order to push up the price of crude oil. I think that you could be arguing with that. I wanted to walk through the energy work that we're going to take up this week. One of them we've already taken up was the price gouging bill. Price gouging is an interesting phenomenon. There's no real good definition for it. It's pretty vague and in the eye of the beholder. But the price gouging bill that we took up today would have penalized gasoline retailers for trying to adjust their prices during a time of emergency to equalize supply shortages and demand circumstances in those shortages. The market is the best allocator of that resource, and it happens to be on price. So what we were setting our retailers up for, must of which are mom- and-pop shops or small convenience store chains, or corporations like Valero, which is simply a refiner and also a retailer of gasoline, for the fall of this deal because if this bill had passed today, the Federal crime that would have been committed was ill-defined. And I want to read briefly from a CRA international study done back in 2007 talking about price gouging. It says, Under legislation that threatens to punish acts that are defined vaguely and ambiguously, the behavior of the enforcing agencies is inherently unpredictable. And businesses potentially affected by the legislation could form expectations of prosecutorial conduct that could discourage the efficient functioning of markets. Excessively harsh penalties for setting the wrong price could give pause to market decisions that are critical to alleviate shortages, especially if individuals, unsure about the actions of the enforcers, were to adopt very conservative behavior so as to ensure compliance with the law. The result would be exactly the opposite to the good intentions of the legislation's authors, disincentives to provide additional . . . the waste occasioned by gas lines and the failure to allocate supplies to those who benefit the most. And then finally, this FTC study is in fact only the most recent assessment of claims of gasoline price gouging. In the last decade, the United States Department of Energy and the FTC have investigated all of the numerous incidences of regional price spike--gasoline price spikes. Their conclusion in every case has been that gasoline prices increases--gasoline price increases were due to the operation of supply and demand in light of an interruption of supply and that the magnitude of price increases was consistent with the magnitude of the loss of supply. There has never been a finding that gasoline price increases were caused by manipulation of the markets. And yet we continue to hammer away at price gouging, the second time at least that this bill has come up, and it failed again today. There is also a title of a bill that will deal with speculators in the market. And as of early this afternoon, we've not seen the actual language of that bill. But it is an attempt to go after speculators. Now, it's interesting that the ag committee that I serve on, the full committee had a hearing today in which Walter Lukken, who's the acting chairman of the CFTC, the Commodities Futures Trading Corporation, which oversees the speculative market in crude oil, among other things, testified today that while he is constantly on the lookout for potential manipulation by speculators and/or other participants in the market, that they have seen no evidence that those speculators are having undue influence on the price of crude oil. And then in fact the price of crude oil is set by supply and demand as best they can tell it. But they are on the lookout every single day. And again, Mr. Lukken feeds his family trying to protect markets from manipulation like the speculators might have an impact on. The other bill is a ``use it or lose it'' that my colleague from Texas has already talked about. One of the other facts--it's interesting. If we say facts around here, if you say a wrong fact often enough, and often enough as we clearly do, it becomes legend; and that 68 million acres is tossed about by every member of the Democratic leadership, 68 million acres. We have asked how they came up with that number. The Bureau of Minerals Management can't figure out how they've come up with it. The Department of Interior can't figure out how they've come up with it. And we've gone to the leadership and said, We don't know if that number is right or wrong. Tell us how you got to that number. And much like the extrapolated production numbers that our colleagues just talked about, they won't tell us. All they'll say is that the majority staff of the Natural Resources Committee came up with this number. Now, we don't know if it's good or bad without knowing what it is. So we're having to defend against a number that may have just been flat-out made up. But our colleagues across the aisle won't come forward with their methodology to help us understand what they've done. And it's a pretty clear statement. If you're going to beat us about the head and shoulders with a number of 68 million acres, then you need to prove to us what that is and how you came to it and whether or not we should be beat about the head and shoulders with it. And then the final bill which we take up is something referred to as the Saving Energy Through Public Transportation Act of 2008. This is an attempt to help Federal employees cope with these higher commuting costs through public transportation and reimbursements for that, which is not a bad thing, but it clearly shows how tone deaf our colleagues across the aisle are. They will listen to their employees who are saying we're having a hard time getting to and from work and we need help to reimburse that, but not being able to understand that that is going on across the United States, that that's not limited to just Federal employees. So they've taken the position that it's a good thing to try to help Federal employees help deal with and cope with these higher gasoline prices, but let's ignore the rest of America who are actually paying the taxes that would have to be used to pay for those commuting costs. So looking forward to my colleagues' continued comments on these and other issues, the 526 bill, Section 526 repeal is important. We've made several attempts at it. We've included with that a refinery siting bill that would ask the President or require the President to locate no fewer than three potential unused military bases for sitings of refineries, go through all of the proper evaluation and permitting processes, and the governor of the States involved would have a veto. But nonetheless, an attempt to say, Here are some places we can build refineries to help alleviate the strategic vulnerability that this country has. And so far, we've just been shut out on any attempt to move towards actual more and new production of crude oil and natural gas that would, in fact, deal with this issue of higher prices.

Mr. CONAWAY. I want to thank our two colleagues for being with us tonight to talk about this. What you're really talking about is an attack on the American lifestyle. We have built a Nation predicated on cheap gasoline because it has always had cheap gasoline, and we've built suburbs. We've expanded into rural areas. We've built a lifestyle that demands low gasoline prices. And what we are telling Americans is that this Democratic-led Congress wants high gasoline prices and wants to attack the American lifestyle.

Mr. CONAWAY

Mr. CONAWAY. I thank my colleague from Texas for allowing me to rise. I, too, support the short-term extension of this bill. But you cannot talk about the regulation of the airline industry without talking about jet fuel prices. As has already been stated in a variety of ways, airlines are experiencing dramatic increases in their cost of fuel. They're trying to cope, they're struggling to cope with these high prices, but baggage fees and soda fees and blanket rentals are not going to get there in terms of allowing them to become profitable again. They need more jet fuel at a cheaper price. One of our problems is additional refining capacity. We don't build refineries in America anymore. We import some 3 million barrels of refined products every day. Even Iran recognizes that they're vulnerable and have announced a doubling of their refining capacity so that they no longer have to import refined products, and yet we continue to do that. As we take steps and measures are brought to this floor, I urge my colleagues on the other side of the aisle to understand the impact that those have. I am told that we will have a bill on the floor later on this afternoon on price gouging--in the face of all evidence that there has never been any price gouging--that they want to try to curtail. This price gouging bill that they will bring again will have a chilling effect on anybody who wants to build a refinery because it will place grave uncertainties as to whether or not, during times of emergencies or times of shortages, that the market will be able to function the way the market is supposed to. So I urge my colleagues to vote for this short-term extension, but we also ought to be about rational, thoughtful approaches to increasing the fuel supply in this country, whether it's diesel for truckers, gasoline for cars or homes, or jet fuel. We can fix this problem. We really need to quit talking by each other and understand that the extremes don't work. The path is in the middle of responsible development of American resources and American energy to reduce our vulnerabilities and, at a minimum, address a crying need these airlines are trying to deal with, and that is higher jet fuel prices. I urge my colleagues to vote for this bill.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I move that the House do now adjourn.

Mr. CONAWAY

Mr. CONAWAY. Madam Speaker, my previous colleague is a friend from Washington, but he really doesn't get it either. When you have a convoluted national energy policy that the Democrats are putting forward, they meet themselves coming and going. On the one hand we have had speaker after speaker stand here today and tell us we can't drill our way out of it. Yet earlier this month we passed a bill that allows American citizens to sue OPEC to force them to produce more oil and gas. The only way for them to produce more oil and gas is to drill more oil and gas. On the one hand they say production won't affect supply, and on the other hand they want to sue OPEC to force OPEC to produce more oil and gas so that we can buy it, from folks who are, at best, not our enemies. This is wrongheaded on every level. I expect the OPEC companies today are working on legislation to allow their citizens to sue America to force America to produce her energy. We can do better than this. We can quit talking past each other and make this thing work if we just do it.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I ask unanimous consent that my name be removed as a cosponsor of both H.R. 6041 and H. Res. 356.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, Heywood Broun, a renowned sportswriter and life-long champion of the underdog, once said that ``Sports do not build character, they reveal it.'' I've heard it before, but today I finally understand it thanks to Rochelle High School junior Bonnie Richardson. On the weekend of May 9 and 10 this year, high school athletes from all across Texas gathered for the State track and field championship. At the meet, athletes compete for two honors, for success in each event as individuals and for the State championship as a team. With Bonnie Richardson as a sole member of the Rochelle High School Lady Hornets to qualify for the meet, the Lady Hornets were the ultimate underdog to win a team trophy. Yet, after medaling in all five of her events--winning two golds, two silvers and a bronze--Bonnie found herself in an unlikely position, standing atop the podium to accept the girl's Class 1A team trophy. Her five individual medals earned her 42 points, more than any other school in her team's class. She also wrote herself into the Texas Track and Field history books as the only female ever to win a State team championship without the help of teammates. While Bonnie's accomplishment defines the word ``exceptional,'' the depth of her character is not revealed in her medals or trophies, but in her attitude. Even as her story has been transmitted around the world and back again, her comments reflect a young woman with poise beyond her years. In every article and in every quote, Bonnie has been very gracious to her competitors and modest in her unparalleled achievement. In an era where athletes' behavior and attitudes can be more infamous than celebrated, Bonnie's self-effacing demeanor shows us how sportsmanship should be practiced. I am amazed by Bonnie's athletic prowess, but I am humbled by her easy and free manner in which she praises her opponents, remains grateful for her gifts, and uplifts those around her. Although such an attitude may seem routine to her, a lifetime has taught me that character like hers is not as common as we would all wish. Bonnie's quiet confidence extends beyond her abilities in track and field. She is a well-rounded athlete who is an all-state basketball player and an accomplished tennis player. In addition, she is in the running to be named her class valedictorian. It is clear to me that her attitude is an asset in all she undertakes. It is an honor to represent Bonnie and all the students like her across the 11th District of Texas. As she prepares for her senior year, and as her national notoriety begins to wane, I wish her luck in returning to her version of business as usual--excelling at everything--and success in the upcoming season and beyond.

Mr. CONAWAY

Mr. CONAWAY. Mr. Speaker, I want to thank my good colleague from Arkansas for assisting and allowing me to speak tonight. Mr. Speaker, over the next 3 or 4 days, a partisan tone will be exhibited in these Chambers, harsh rhetoric will be exchanged on both sides, some of it intentional, some of it in the heat of the moment, some of it out of simple frustration with not being able to convince ourselves of issues that are going on, but nevertheless, partisanship that is communicated back to America and America's despair that we will ever get past this partisanship. Is there some way for us to listen to you and you listen to me and let us thoughtfully consider our positions and then make those compromises that have to be made in order to deal with the issues that face this country? It is not brand new. Two hundred twenty-one years ago, Benjamin Franklin observed the same partisanship, the same ugly tone going back and forth and came upon a solution that he communicated to President Washington in a letter. And I would like to read some of that letter into the Record tonight, because that solution I think would stand us in good stead as well. Reading from Benjamin Franklin's letter to George Washington: ``In this situation of this Assembly, groping as it were in the dark to find political truth, and scarce able to distinguish it when presented to us, how is it happened, Sir, that we have not hitherto once thought of humbly applying to the Father of lights to illuminate our understandings. ``And have we now forgotten that powerful Friend? Or do we imagine that we no longer need His assistance? I have lived, Sir, a long time, and the longer I live, the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice, is it probable that an empire can rise without His aid? We have been assured, Sir, the sacred writings, that `except the Lord build the House they labor in vain that build it.' ``I firmly believe this, and I also believe without His concurring aid we shall succeed in this partial building no better than the builders of Babel. We shall be divided by our little partial local interests; our projects will be confounded, and we ourselves shall become a reproach and bye word down to future ages. And what is worse, mankind may hereafter from this unfortunate instance, despair of establishing Governments by human wisdom and leave it to chance, war and conquest. ``I therefore beg leave to move that henceforth prayers imploring the assistance of Heaven and its blessings on our deliberations, be held in this Assembly every morning before we proceed to business, and that one or more of the Clergy of this City be requested to officiate in that Service.'' Mr. Speaker, we observe that tradition today. Every morning our House Chaplain and maybe one of our constituents from back home will come and pray and seek God's wisdom on our deliberations. As effective as that is, Mr. Speaker, I would argue that 435 members of this House observing that tradition of daily seeking out the plea that Solomon had in II Chronicles 1:10 in which he asked God for wisdom and knowledge that he might govern this great people, that 435 of us and 100 on the other end of this building, on our knees every day, seeking wisdom, guidance and knowledge as how we would reduce the partisanship, how we would try to strive valiantly to come to conclusions and compromise with each other that deal with the problems that face this country. Our constituents are crying out for it. None of us go home that we don't come across somebody who has asked, why do you constantly argue with each other and fuss and fight? Get something done. Benjamin Franklin knew a solution 221 years ago, Mr. Speaker. I would argue that that solution is more powerful today, and it is clearly more needed today by this body than even 210 years ago.