Senator MCCLURE [presiding]. Thank you very much. STATEMENT OF LEROY WATSON, LEGISLATIVE Mr. WATSON. Thank you, Senator. And on behalf of the 365,000 Grange members across the country, I would like to thank you and the Committee for the opportunity to present our views in support of S. 1217. As others far more qualified than I will tell you, the Coastal Plain of ANWR is considered to be the best remaining prospect to find large amounts of oil on land in the United States. Now, our support S. 1217 can be summarized by two major points. First is the fact that rural Americans in general understand both the benefits and risks inherent in the exploration and development of oil. For decades most of the exploration and production of this Nation's oil and natural gas has occurred in rural America. This Nation's small towns and rural communities have benefited from jobs and economic activities associated with oil and gas development. But those same towns and communities have also borne a disproportionate share of the environmental risks associated with oil and gas development. To better manage the risks and the benefits of oil and gas development, the Grange supported and often sponsored land owners associations and regulatory efforts, have negotiated with petroleum development and exploration companies for many years. These rural landowners ask tough questions of the people who want to come onto their property and drill holes in it. As such, educational efforts on both sides and innovative technical solutions were often needed to allow oil and gas drilling to occur in areas of this country as environmentally sensitive as anything on the ANWR Coastal Plain. Few family farmers are willing to gamble with the long-term agricultural productivity of their private property with the relatively short-term profits from oil and gas development until they are convinced that the risks will be kept to the barest minimum. This has given our membership across the country the personal experience and informal technical background to judge the claims that the ANWR Coastal Plain can be explored in an environmentally sound manner. As residents of rural America, our Grange members feel confident that ANWR can be developed in an environmentally sound manner. Our second major point is that for farmers and other residents of rural America, domestic energy security and the cost of energy are important concerns. In passing the Food Security Act of 1985, Congress sent a clear message to the American farmer that lower commodity loan levels and gradual decreases in commodity target prices over the life of the Act means that American farmers must adjust their operations to efficiently derive more of their income from market sources. The Grange believes that implicit in that message is a commitment by Congress to our family farmers that if their farm products must be priced and sold in a competitive free market, then the inputs they use to produce those products must also be priced in a competitive free market. Now, petroleum and natural gas prices, both directly and indirectly, are among the largest components of the costs of production in our Nation's family farms. Using data provided by the USDA, our staff has calculated that a $10 a barrel increase in the cost of oil above today's levels would place family farmers in a severe cost price freeze. On sample 300-acre farms, which are not really large by today's standards, $10 a barrel increase in oil prices would raise the average yearly costs of production in a range from $660 to $3,000 a year, depending on whether the farm primarily produced soybeans, wheat, corn, cotton, or rice. In our opinion, artificial contrivances that discourage the exploration for and the production of U.S. domestic petroleum resources will only distort future and current petroleum product prices upward, and will break the implicit commitment made to this Nation's family farmers in the Food Security Act. The fate of rural America, we believe, is entwined with the fate of this Nation's natural resources, such as oil. The National Grange believes that S. 1217 follows a progressive policy that allows a reasonable development of our domestic oil and natural gas resources in an environmentally sound manner. We understand the concern by some that oil and natural gas development on the ANWR Coastal Plain will damage fragile Arctic ecosystems or degrade local economic resources. However, after examining the available data on all sides of the issue, we believe that developing the ANWR Coastal Plain will benefit our national energy security, our jobs, our farms, and our environment. Thank you very much. [The prepared statement of Mr. Watson follows:] STATEMENT BY THE NATIONAL GRANGE BEFORE THE U. S. SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES OCTOBER 14, 1987 RE: OPENING PORTIONS OF THE COASTAL PLAIN OF THE ARCTIC NATIONAL Mr. Chairman, my name is Leroy Watson. I am a Legislative Representative for the National Grange, this nation's first general farm and rural affairs organization. I work out of our national headquarters in Washington, D.C. at 1616 "H" st., N.W. and on behalf of the 365,000 Grange members across the country, I would like to thank you and your Committee for the opportunity to present our views in support of our position to open the Coastal Plain of the Arctic National Wildlife Reserve (ANWR) to oil and gas exploration in an environmentally sound manner. The Coastal Plain area of ANWR, which is located near the famous Prudhoe Bay oil fields of northern Alaska, is considered to be the best remaining prospect to find large amounts of oil on land in the United States. Valuable experience obtained during the exploration and development of the Prudhoe Bay fields has given the U.S. oil industry the technical know how to find and extract petroleum resources in the sensitive environmental north of the Arctic Circle without resulting in irreversible ecological damage. Furthermore, the existence of the nearby TransAlaska oil pipeline makes the transportation of oil from the ANWR Coastal Plain both economically feasible and environmentally more benign. Rural Americans, in general, understand both the benefits and risks inherent in the exploration and development of oil. For decades, most of the exploration and production of this nation's oil and natural gas has occurred in rural America. This nation's small towns and rural communities have benefitted from jobs and economic activities associated with oil and gas development, but those same towns and communities have also borne a disproportionate share of the environmental risks associated with oil and gas development. To better manage and weigh the risks and benefits of oil and gas development, Grange-supported, and often sponsored, landowners' associations have negotiated with petroleum development and exploration companies for years. These rural landowners ask tough questions of the people who want to come on to their property to drill holes in it. As such, educational efforts on both sides and innovative technical solutions were often needed to allow oil and gas drilling to occur in areas of this country as environmentally sensitive as anything on the ANWR Coastal Plain. Few family farmers are willing to unknowingly and recklessly gamble with the long-term agricultural productivity of their private property for the relatively short-term profits from oil and gas development until they are convinced that the risks will be kept to acceptable levels and the barest minimum. The process of oil and gas development in their communities, often in unique environmental circumstances on valuable private property, has given our members all across the country the personal experience and informal technical background to judge the oil industry's claim that the ANWR Coastal Plain can be explored and developed. As residents of rural America, Grange members feel confident that the ANWR Coastal Plain can be developed in an environmentally sound manner. For farmers and other residents of rural America, domestic energy security and the cost of energy are also important concerns. In passing the Food Security Act of 1985, Congress sent a clear message to American family farmers that lower commodity loan levels and gradual decreases in commodity target prices over the life of the Act means that American farmers must adjust their operations to efficiently derive more of their income from market sources. The Grange believes that implicit in that message is a commitment by Congress to our family farmers that if their farm products must be priced and sold in a competitive, free market, then the inputs they use to produce those products must also be priced by a competitive free market. Petroleum and natural gas prices, both directly and indirectly, are among the largest components of the costs of production on our nation's family farms. Using data provided by the U.S.D.A., our staff calculated that a $10 a barrel increase in the cost of oil above today's levels would place family farmers in a severe cost/price freeze. On sample 300 acre farms (not really large by most of today's standards), a $10 a barrel increase in oil prices would raise the average yearly costs of production as follows: |