[Congressional Record Volume 140, Number 7 (Wednesday, February 2, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 2, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
   GROWING U.S. DEPENDENCE ON FOREIGN OIL: DOMESTIC INDEPENDENT OIL 
                         PRODUCERS ON THE BRINK

                                 ______


                            HON. JAY DICKEY

                              of arkansas

                    in the house of representatives

                      Wednesday, February 2, 1994

  Mr. DICKEY. Mr. Speaker, The Department of Energy [DOE] announced in 
its recent annual report that America's dependence on foreign sources 
of crude oil continues to grow as domestic crude oil production 
declines. the DOE report predicts that net imports of foreign oil will 
reach 60 percent of total U.S. consumption by the year 2010.
  As America's dependence on foreign oil escalates, the very foundation 
of our domestic oil industry--small, independent oil producers around 
the country, including most in southern Arkansas--are struggling to 
stay alive because their production and other overhead costs far exceed 
the price now being paid by refiners for domestic and imported crude 
oil.
  The Congress, the administration and all Americans need to understand 
the seriousness of what is happening, and how it has come about. If the 
Congress and the administration fail to act soon to provide some 
meaningful assistance to prevent many small independent oil producers, 
who drill approximately 80-85 percent of all domestic wells, from going 
out of business--as many are right now--then they will be responsible 
for the long-term threat to our national security. While many people 
may see low-priced foreign sources of oil a blessing now, as America 
becomes 60 percent or more in the grasp of oil from foreign countries, 
we will be at their unmitigated mercy economically and otherwise, when 
foreign crude oil prices again increase, as they eventually will.
  While the buildup of the U.S. strategic petroleum reserve [SPR] may 
help reduce that burden in the short term, it will not free us from the 
economic and supply calamity that would result. Only with support now 
for incentives to increase domestic production by independent oil 
producers will we avert a desperate situation in the coming years.
  What makes the present plight of America's independent oil industry 
even more sad, and their frustration so understandable, is that U.S. 
foreign policy also actually contributes to, and subsidizes, foreign 
crude oil production, at the expense of our domestic production. 
America does that through U.S. loans by the Overseas Private Investment 
Corp. [OPIC], most recently to Russia and other former Soviet 
Republics. As some of my independent oil constituents rightly point 
out, the United States provides similar foreign oil development loan 
and grant subsidies through the World Bank, the Export-Import Bank, and 
our own State Department, to countries such as Mexico and Venezuela. We 
promote and subsidize crude oil production in those countries while 
watching America's own domestic oil industry face bankruptcy.
  Why do the Congress and the administration continue this policy which 
is so detrimental to American energy independence and American jobs and 
tax revenue?
  I've met with and heard from many independent oil producers in my 
southern Arkansas congressional district regarding the difficulties 
they are experiencing. In a recent letter, one independent oil producer 
doing business in southern Arkansas sent me a nine-point chronology of 
how congressional and administration actions since 1972 have brought 
independent oil producers to the precipice. I want to share that 
historic perspective with my colleagues.
  First: 1972--After oil prices had remained stable from 1956 through 
1971, at plus or minus $3.00/bbl, we were placed under price controls 
in 1972. In 1973 price controls were taken off all oil products, except 
crude oil.
  Second: 1976--A Democrat Congress extends price controls on oil, and 
President Ford, for political reasons, refused to veto the bill.
  Third: 1977--President Carter keeps price controls and labels the oil 
industry public enemy No. 1. Do you remember the three-tiered prices 
for domestic crude oil--old oil, new oil, and new new oil? Meanwhile, 
imports came into the United States at world prices, which were much 
higher.
  Fourth: 1980--World oil prices escalate, and President Carter and the 
Democrat Congress respond with a windfall profits tax on domestic crude 
oil. This little measure sucked $100 billion out of the industry 
between 1980 and 1986.
  Fifth: 1986--Oil prices fell from $27/bbl to $16/bbl. Tax law changes 
also adversely affect the domestic oil industry. Depletion allowance is 
cut again, and it and intangible drilling expenses are made subject to 
the alternative minimum tax.
  Sixth: 1988--The domestic oil industry has lost one-half of its 
workforce because of low oil prices.
  Seventh: 1990--Environmental regulations escalate and Congress and 
the Bush administration lock up most of the desirable prospective areas 
left in the United States. The exodus by the major oil companies from 
the United States accelerates.
  Eighth: 1992--Finally, independents are given some slight tax relief 
with intangible drilling costs and depletion allowances being taken off 
the alternative minimum tax structure. The repeal, while welcomed, is 
probably too little, too late.
  Ninth: 1993-94--Oil prices fall to the lowest level in 20 years. 
President Clinton's Energy Department will study the plight of the 
domestic oil industry.
  That is one person's chronology of mostly ill-advised Federal 
Government policy actions regarding domestic oil exploration and 
development. When all that is combined with present low world oil 
prices, and the earlier mention of U.S. foreign policy that promotes 
and subsidizes foreign crude oil production at the expense of American 
domestic production and jobs, plus costly overhead in terms of high-
demand electric rates and environmental-bonding requirements in some 
States, it serves to demonstrate the difficult situation now faced by 
independent oil producers in America.
  While there are short-term economic benefits produced throughout the 
United States because of low crude oil prices, unless we help sustain a 
domestic independent crude oil industry those short-term benefits will 
eventually become long-term burdens to U.S. economic and national 
security, which we will have knowingly visited upon our Nation and our 
future.
  Thank you.

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