[Congressional Record Volume 146, Number 82 (Monday, June 26, 2000)]
[Senate]
[Pages S5773-S5776]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            GAS PRICE CRISIS

  Mrs. HUTCHISON. Mr. President, I rise today to talk about an issue 
that has been discussed by Senator Thomas, and others, just before I 
came to the floor. It is also an issue that every American who drives a 
car has on his or her mind.
  No one could fail to see the impact the high price of gasoline at the 
pump is having on hard-working Americans and American families at the 
end of June who are looking to take their family vacations. They hope 
to do it by car. I hope they can, too. But we have a situation with 
regard to gas prices that has occurred for a number of reasons. And 
because Congress and this administration have not acted, we have a 
worse situation than ever.
  I will talk a little bit about some of the causes of this. But I do 
not think we have to dwell on the causes all day because I think we can 
do something proactive that will begin to be a solution--both a short-
term solution and a long-term solution.
  First, the causes. Clearly, we have an incredible dependence on 
foreign oil today. Seven years ago, we had about a 46-percent 
dependence on foreign oil; today, it is 56 percent; and it is projected 
to be 65 percent of our oil needs by 2020. So I think it is incumbent 
on all of us in public office to try to take short-term steps to solve 
the immediate crisis, particularly in the Midwest, but not without 
taking long-term action as well.
  We have a bill that is pending at the desk today. It is the National 
Energy Security Act. It would take some steps, putting some things on 
the table that would make a difference for our country and for the 
working people of our country who depend on gasoline.
  Let's look at some of the causes for the gas price crisis now being 
seen in the Midwest and elsewhere. The Congressional Research Service 
has attribute 25 cents of every gallon of gasoline at the pump in 
certain parts of the Midwest to the reformulated gas phase 2 
requirement that the EPA is insisting on imposing beginning June first 
of this year. These additional costs are the result of the added 
expense of adjusting the refining process for the new gasoline 
requirement, particularly when the gasoline is required to be blended 
with ethanol, as is the case in the Midwest. In addition, there are 
added costs of transporting the ethanol, which cannot be moved via 
pipeline, to the sites where the gasoline is blended and distributed. 
Other additives, such as MTBE, are readily available at the refineries 
and so you have reduced transportation costs. You can put the MTBE--
which was the requirement in the past--in at the refinery and send it 
to places such as Illinois, Wisconsin, and Michigan--the places that 
are suffering right now--but the ethanol has to be carried from the 
agricultural areas, where it is grown, put into a new system in the 
refineries, and then shipped back to the Midwest. So you are talking 
about time, shortages, and costs that have added 25 cents per gallon. 
CRS estimates that an additional 25 cents of the increase in Midwest 
gas prices is attributable to recent problems with oil and gas 
pipelines that feed the upper Midwest, which have come at a time when 
gasoline stocks nationwide are particularly low and when the demand for 
gasoline is on the rise.
  With regard to the EPA requirements, we had hoped the EPA would say, 
OK, we are facing a crisis right now, so maybe for this summer we can 
relax those new EPA regulations and go with what has been the 
regulation of the past.
  Secondly, it is very important to realize that each State and many 
local governments impose additional taxes on gasoline at the pump. It 
just so happens that many of the midwestern States and cities within 
those States have higher taxes than the average in the country. The 
average combined federal and state gasoline excise tax is about 40 
cents per gallon. In Chicago, Illinois, however, it is 61.3 cents per 
gallon. In Milwaukee, Wisconsin, it is 47.2 cents per gallon. So we can 
see that there are wide differences across the country in taxes of 
gasoline.
  I commend the Governors of these States who are seeing the crisis and 
responding immediately. The Governor of Indiana has put a moratorium on 
the State sales tax on gasoline. The Governor of Illinois is calling a 
special session of the legislature to review taking similar action.

[[Page S5774]]

  The Federal Government should assist these and other States by 
repealing, for a time, the 18.4 cents-per-gallon Federal gas tax. If we 
suspend this Federal tax through Labor Day of this year, that will give 
relief in addition to the State taxes selected States are giving, and 
it will give us time to catch up with the EPA regulations and some of 
the other transportation problems that have caused the rise in gasoline 
prices. We should follow the lead of these midwestern Governors. That 
may also encourage other States to follow suit by responding in a 
similar fashion and giving the American people some much needed relief 
at the pump.
  I would not for one minute suggest we should take the money from that 
gasoline tax and take it away from the highway trust fund. We need to 
keep the highway trust fund whole so we can continue to make the 
improvements in safety and highway construction necessary for the 
States that depend on those funds.
  The on-budget Federal surplus is estimated to be about $60 billion 
this year. The estimates are going up because in fact we are getting 
more and more of a surplus. We know we want tax relief for hard-working 
Americans, and this is in fact tax relief for hard-working Americans, 
including truckers who are suffering under the increases in diesel fuel 
costs.
  We read stories about our own Coast Guard not being able to patrol 
the waters, where they are supposed to be doing drug interdiction and 
patrolling for summer safety. They can't afford the fuel because the 
prices have gone up so much. We need to give relief across the board, 
and we need to give tax relief for hard-working Americans.
  I am today introducing legislation granting a temporary repeal, 
through Labor Day, of the entire Federal gasoline and diesel tax. The 
bill will also ensure that the highway trust fund is made whole. This 
bill will give hard-working Americans immediate tax relief during the 
peak summer driving months, those who have to drive to work or who are 
going to take a family vacation this summer. At the same time we in 
Congress must act to take the longer term steps that we must take to 
have an energy policy in this country that makes sense.
  Let's talk about that for a minute. This administration is not only 
adhering to the regulations that make it so hard to drill for oil and 
gas in our own country, causing hundreds of thousands of jobs to go 
overseas, but they are also insisting on increasing the oil royalty 
rates. I fought the increase in oil royalty rates last year and the 
year before because I was very much afraid we were going to add so much 
to cost that our domestic drillers would go overseas. In fact, that is 
exactly what has happened. We are continuing, through this 
administration, to have increases in oil royalty rates at a time when 
oil prices have spiked to $30 a barrel.
  The fact is, we can't survive on $10-a-barrel oil and we can't 
sustain the economy on $30-a-barrel oil. That does not make sense for 
our country. What we need is price stability within a reasonable and 
sustainable range. The numbers show we are more and more dependent on 
foreign oil because we make it so hard for the little guys, the 
marginal well producers, to make it in our country. The big guys are 
leaving our country in droves because it is more efficient to go 
elsewhere to drill for oil and gas.

  As a matter of fact, just to cite a few real numbers, when oil was 
$10 a barrel, the little oil and gas producers went out of business in 
droves: 150,000 marginal oil and gas wells closed--that is out of a 
total of 600,000--65,000 good paying jobs were lost in this country; 
communities were devastated.
  In one example, in Midland-Odessa, the unemployment rate doubled in 1 
year from 5 to 10 percent. School district revenues were hit by $150 
million, causing a virtual halt to any new hiring, and in some cases 
school districts were having to let teachers go in the middle of the 
term because they could not pay their salaries for the rest of the 
year. They had to close classrooms because of this crisis when the 
price of oil was $10 a barrel.
  For some reason, when we were having that kind of problem, people 
weren't as tuned in. What has happened is, when we lost the 150,000 
marginal wells, we lost the ability in 15-barrel-a-day wells to match 
the amount of oil we import from Saudi Arabia every day, because it 
adds up. We can produce 20 percent of the needs of oil in our country 
with these 15-barrel-a-day wells.
  Just to put that in perspective, a well in Alaska produces on average 
about 600 barrels a day; a well offshore, over 1,000 barrels a day. We 
are talking 15 barrels a day for marginal wells.
  What I would like to do is have a trigger. If the price goes below 
$14 a barrel for these 15-barrel-a-day drillers, let us have a tax 
credit so they will be able to stay in business and keep those jobs, 
not cap the wells, so that when the price goes up to $17 per barrel or 
more, those people have stayed in business and will keep producing. 
That is one part of a long-term strategy that would bring us up to 50-
percent capacity for our oil needs every day.
  This problem is not going to get better. Dr. Daniel Yergin, the 
Pulitzer Prize-winning author who is probably the most credible 
independent oil economist, told a group of Senators and Members of 
Congress just last week that one of the problems we are facing is an 
increasing demand because of an increasingly hot economy worldwide.
  We know our economy in America is very strong, but that is also the 
case around the world. That causes more demand on our energy resources. 
So if we are going to have a policy that we would be dependent on 
foreign oil only 50 percent, we are going to have to produce oil in our 
own country and we are going to have to have those little barrels that 
add up, those little wells that produce 15 barrels a day, that add up 
to hundreds of thousands of jobs in our country, that support our 
schools. We are going to have to keep those people in business because 
they can't make it at $10 a barrel, but they can make it on $17 a 
barrel.
  So if we will treat them like farmers and when we don't have markets, 
or when the prices are so low that a farmer can't make it, we will try 
to keep them stable and level. That is what we have been doing in this 
country for a long, long time. I would like to see us treat our small 
oil producers in the same way because if there is anything that is 
crucial to the security of our country, it is at least being able to 
produce 50 percent of the energy needs of our country in order to have 
some stabilizing effect. When we depend so much on foreign oil, what 
happens is they can shut down the supply whenever they want to, and the 
OPEC countries have clearly done that. That causes a spike because of 
low supply, high demand, overregulation in our own country, and the 
unwillingness of this administration to say we are in a crisis. Let's 
work together to do something about it.
  Senator Lott, Senator Murkowski, Senator Domenici, Senator Nickles, 
Senator Breaux, Senator Bingaman, and Senator Landrieu have all been 
very proactive in trying to put forward a program that would give us 
short-term relief and long-term relief for energy in our country. I do 
want the short-term relief of the 18-cent Federal tax to be paused 
until after Labor Day for our independent truckers, for our families 
going on vacation, and for the working people of our country who must 
use cars to go to and from work. I want that relief, but we must tie it 
to long-term relief because, if we don't, if things stabilize for the 
short term, we are still going to be under the thumb of foreign 
interests; we are still going to face the possibility that another 
crisis will come. Why not anticipate it and do something proactive now 
that will provide long-term relief as well as short-term relief?
  I am introducing legislation that will provide the short-term relief. 
We must tie that in with the long-term relief if we are going to do 
what is right for this country. The National Energy Security Act is 
pending before the Senate. I hope we will take the action that has 
certainly been called for with the crisis we are facing. But let's take 
a longer-term view. Let's try to put some long-term energy policies in 
place because, certainly, this administration has failed to do so.
  If this administration would step up to the line and say: Of course, 
we are not going to increase our royalty rates at a time like this and 
say we need a little more time before the phase II ethanol regulations 
take effect in the major cities--let's try to tamp down this crisis. 
Let's help the Governors of the Midwest, who are taking State

[[Page S5775]]

taxes off gasoline for this summer, and take the Federal gasoline tax 
off as well, make the highway trust fund whole by giving tax relief to 
hard-working Americans, and let's realize that the security of our 
country depends on our being able to provide for our own energy needs. 
It is clear that no matter what we do for our neighboring countries 
that supply most of the oil and gas we consume in this country, they 
don't seem to pay back. I think the fact that they will not up their 
production to meet the demand is wrong; nevertheless, I am not going to 
whine about it. I am going to take positive action that puts America in 
charge of our own destiny. That is the responsibility of this Congress, 
and that is what this Congress must do.
  Hopefully, the President will follow our lead and we can do something 
that is right for America, even if other countries we have helped in 
the past will not give us a break. We can do what is right for 
ourselves, and I hope we will.
  Thank you, Mr. President.
  The PRESIDING OFFICER (Ms. Collins). The Senator from New Mexico is 
recognized.
  Mr. DOMENICI. Madam President, I note the presence of the Senator 
from Alabama. I am sure he is here because he would like to speak as in 
morning business. I know we are going to go to an appropriations bill. 
I think the bill is open to amendment. In any event, I don't think the 
Senate would object.
  I ask unanimous consent that I may have up to 20 minutes to discuss 
two matters and, following that, Senator Sessions have 10 minutes as in 
morning business.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. DOMENICI. Madam President, the first thing I want to do is 
congratulate the distinguished Senator from Texas for her speech today. 
Before she leaves, I say that I summarize the problem we have today in 
a way that maybe down in your country, with Texas in mind, they might 
say it this way: The chickens have come home to roost.
  The truth is, we have no energy policy, and until something like a 
crisis occurs, nobody seems to worry about it--in particular, this 
administration. We have had a ride economically--up, up, and away. Part 
of it is because oil prices from foreign countries was so cheap, and 
America was reducing some of its own, and we just decided that there 
was no worry about becoming more and more dependent on foreign oil.
  Look at the facts. While we have had this booming economy, I might 
suggest to everyone that the unit utilization of petroleum products 
that make this economy go has come down--not because of anything we did 
but the high-tech industry uses a little bit less. Nonetheless, we have 
grown so much that we use far more--as much as 14 percent more--
petroleum products now than we did a few years ago. Guess what 
happened. The foreign countries became our source of supply in ever 
larger proportions. We were happy-go-lucky when Mexico was starving on 
$11-a-barrel oil that we were buying from them. They could not pay 
their debts; we were just gobbling it up, and the American producer was 
disappearing. The price was so low we closed down the opportunity to 
drill.
  The litany of what this administration has done so we will produce 
less domestic oil is as long as this sheet of paper; from saying that 
in big areas in which you could look for oil 10 years ago, you can't 
look for it anymore because something is more important. Not very much 
is more important than our growing dependence, as the greatest 
industrial might in the world, upon the dictates of foreign countries 
who sell us that tremendous product, without which we fail. At least 
from what I can tell for the next 35 or 40 years, there is no 
substitute for it.
  I heard recently that this administration has somewhat of a defense 
because they are going to say: We asked you for some renewable energy 
research money and you didn't give it to us. I say right here before 
the Senate that we will take every single proposal this administration 
has made for renewables--wind, solar, and the like--and submit it to 
experts. And we will ask them: Would that have changed the crisis of 
dependence on foreign oil? And, if so, how much? Do you know what it 
would be? Zero. We don't use those kinds of energies in automobiles 
anyway.

  Frankly, we are getting answers that the way for America to go is to 
put more in renewable sources and the like. We ought to do that. But if 
anybody thinks that is a solution to America's growing dependence on 
foreign oil, they had better take a long sleep because when they 
finally wake up, they are going to be absolutely surprised that our 
dependence grew while they took a nap.
  The truth of the matter is we had better sit down with the President 
and decide how we are going to start fixing this.
  I want to say right now that it is in the worst condition it could 
be--less American production; more of our land taken out of production; 
and more demand from the foreign countries; and they have finally found 
out how to enforce their agreements. They did not cheat the last couple 
of times on each other; that is, if Saudi Arabia agreed to X number of 
millions of barrels, they didn't sell it to someone on the side to 
flood the market, nor did Mexico, nor did any country in South America.
  They are putting just so much oil on a world market that demands 
more. What do you think happens? The price goes up. It is now past $30 
a barrel. It was as low as $10 a barrel. But, in the meantime, nothing 
is being done for the American producer--large and small--to 
substantially increase their domestic production.
  I am informed enough not to want to leave false impressions. We do 
not have the wherewithal to totally eliminate dependence. Look at our 
great Nation. We are going to be dependent on Saudi Arabia, Mexico, and 
a few other countries that produce for a long time after I have left 
the Senate, if I am successful in staying here 2 more terms. I don't 
know how long my good friend, the Senator from Texas, expects to be 
here. But we are going to be dependent.
  Let me predict the next thing. We are going to have brownouts in 
America, which means the electricity supply to a region of the country 
cannot quite supply enough because we are exchanging it between areas. 
Then there will be another hue and cry: Who did that to us?
  Just like the answer of this administration today--that it is 
gouging. They may find some gouging. But that is not going to fix this 
energy problem.
  We are going to have brownouts because we have not been producing 
enough electricity. We are scared to death to produce it anyway, other 
than through natural gas, which is the cleanest fuel around. Yet it is 
a carbon dioxide producer and is a small portion of the problem that we 
have in the ambient air and the so-called greenhouse effect.
  While we hide under the desk and don't want to even discuss nuclear 
power--which currently supplies 21 percent--it has literally zero 
greenhouse gases. Eighty-four percent of France's electricity is 
nuclear. Their ambient air is as clean as a whistle. They are not 
frightened one bit to have interim storage of nuclear waste.
  Here sits the greatest industrial Nation on Earth in a total logjam 
over the issue of moving forward with just a little bit of the nuclear 
energy and saying let's temporarily store it, while Europe is doing it 
without any difficulty and no fear.
  Where are we going to get the electricity in the future?
  The problem with greenhouse gases is so severe, according to some, 
that we aren't going to be able to build any coal-burning plants until 
we clean it up more. Are we going to do every single one in the future 
with natural gas? Then the citizens are going to wake up and say: What 
did you do to natural gas prices? Our bill went up in our homes, and 
now we are coming to Congress and asking them to do something about it.
  If you decide to produce all the electricity needs in the future with 
natural gas, you are going to put a huge demand on American natural 
gas. Who knows where the price will go? Yet we have literally an 
abundance of natural gas in the offshore regions of America. We are 
frightened to death to drill any more wells. Those who do not want to 
change that one bit because they are scared of environmental things 
have won their way, and we are not open to the production of natural 
gas as much as we should.

[[Page S5776]]

  I close today by saying I believe 7\1/2\ years of doing nothing has 
``come home to roost.'' We are just going to get around the corner 
maybe with this election. But I submit this great Nation is in for two 
big problems: Where do we get our electric-generating power in the 
future? What do we do about nuclear energy?
  We ought to do much about it instead of falling under the table when 
a small percentage will raise their concerns. We ought to increase the 
domestic supply of oil so that the world knows we haven't gone to sleep 
by opening as many areas as we can.

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