The hearing will come to order. I ask our guests to please be seated.

Good afternoon. This hearing continues the Select Revenue Measures Subcommittee's inquiry into ways the tax code can promote a stable and secure supply of energy.

Our first hearing last month examined proposals in the President's budget as well as expiring provisions of the tax code, such as Section 29 tax credits for producing fuel from unconventional sources and the Section 45 credit for renewable energy.

Tomorrow, our third hearing will involve testimony from interest groups and businesses on other proposals.

Today's hearing will give the panel an opportunity to hear from nearly two dozen of our colleagues in the House of Representatives.

The fact so many of our colleagues from across the political spectrum have taken the time to be with us today demonstrates the importance of developing a comprehensive national energy policy.

I am particularly pleased so many of our colleagues from the west, particularly California, will share their experiences and perspectives. While consumers across the country are fighting higher energy prices, especially at the gas pump, Californians continue to be at risk for rolling black-outs, and the situation is expected to worsen as we head into the hot summer months and energy consumption spikes upward.

Several of the witnesses will discuss policies included in the recommendations of the National Energy Policy Development Group, which was Chaired by Vice President Cheney. I look forward to this testimony to better understand proposals relating to issues such as clean cars and landfill gases.

It is impossible to overstate the complexities of energy production and distribution. The Members testifying before us today will provide a wealth of ideas and experiences as to how the tax code can help us better meet our energy needs. As the Committee contemplates elements of an energy tax bill, their perspectives will be particularly helpful.

And as we review the testimony and consider which proposals represent good tax policy and should be included in any energy package considered by the Committee, I believe we must keep four principles in mind:

First, an imbalanced approach will not help us secure a stable supply of energy. Recognizing patterns of human behavior, no known technology or inducements will allow us to conserve our way out of this problem. That is especially true of proposals which cap prices and therefore insulate consumers from the true costs of greater consumption. Likewise, despite the vast untapped oil and gas reserves, increased production alone won't ensure supply keeps up with demand. Alternative and renewable fuels can help close the gap, but are alone not enough. Simply put, conservation, production, and renewable and alternative fuels must all be part of our efforts to reduce our dependency on foreign oil.

Second, we must address bottlenecks in the distribution chain. An adequate supply is only valuable if it can be efficiently distributed to where it is needed, when it is needed.

Third, the free market still works best. Government intervention frequently misses the mark. For example, it seems clear that the Midwest is experiencing spikes in motor fuel prices because of the myriad of special blend fuels which must be refined. Regulation of the markets should be the last resort, not our first option.

And fourth, we must balance any enhanced production with environmental concerns. If we are to explore and produce in new areas, we should do so in a manner which is sensitive to the surroundings.

These principles are flexible, because I believe meeting our energy needs in the long-term require ideology to yield to pragmatism. Nevertheless, I believe these four principles will serve as useful guideposts as we examine the proposals offered by our colleagues today and by other interested parties in our hearing tomorrow.

We have a long and distinguished list of Members, and I welcome them all. Before introducing our first witnesses, let me yield to my friend from New York for any opening statement he may have.