[Congressional Record Volume 147, Number 70 (Monday, May 21, 2001)]
[House]
[Pages H2372-H2378]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PRESIDENT BUSH'S ENERGY PLAN
The SPEAKER pro tempore (Mr. Grucci). Under the Speaker's announced
policy of January 3, 2001, the gentleman from New Jersey (Mr. Pallone)
is recognized for 60 minutes as the designee of the minority leader.
Mr. PALLONE. Mr. Speaker, last week President Bush announced his
energy plan in front of a backdrop on which was printed the word
``conservation,'' and I strongly suggest that my colleagues not be
misled by this subliminal approach. I have always said that actions
speak louder than words, and President Bush's actions during his first
100 days clearly illustrate that he will undermine any environmental
regulation that prevents implementation of the administration's energy
plan. So, please, I caution my colleagues, do not be confused by the
fact that he has the word ``conservation'' printed prominently behind
him in a backdrop. There is nothing conservation-oriented about
President Bush's energy policy.
Clearly, neither President Bush nor Vice President Cheney nor the
National Energy Policy Development Group believes that conservation
should be the foundation of sound comprehensive energy policy. In fact,
the Vice President recently stressed that the Bush administration views
conservation as a sign of personal virtue but not a sufficient basis
for a sound comprehensive energy policy.
And when we talk about conservation, conservation is the planned
management of a natural resource to prevent exploitation, destruction
or neglect. It is the only basis on which to build a comprehensive
energy policy that provides for the responsible long-term use and
development of our Nation's energy resources. And by missing this
simple principle, President Bush's energy plan is immediately flawed.
Mr. Speaker, I would like to examine some parts of the Bush plan
beyond its fundamental flaw, because I think many Americans do not
understand the direct impact it will have on them. First, the
administration's plan will do nothing to lower the prices that
Americans are paying for energy today and will do little to mitigate
price fluctuations in the future.
When I talk to my constituents, they are concerned about the high
cost of gasoline and the fact that gas prices keep going up. When I
talk to my colleagues from California who are facing blackouts on a
somewhat regular basis and more potential for blackouts as the summer
progresses, they are concerned about the fact that they cannot get
electricity. But if we look at the Bush policy, it will not lower
gasoline prices, and it does nothing to prevent the rolling blackouts
in California or prevent price gouging by the industry. It will not
significantly affect America's dependence on foreign energy sources.
On the other hand, what it does do, the President's energy plan does
impact the quality of life for every American. The President's plan
will damage public health through increased pollution of the air and
water, it will speed up the impact of global warming and industrialize
our Nation's pristine wilderness and open spaces.
In my home State of New Jersey, we are already facing relatively
dirty air and major problems that we have had with polluted water. And,
frankly, I just do not see how we could possibly face a situation where
the impact of the energy policy is to actually increase air pollution
or increase water pollution, nor in New Jersey are people willing to
tolerate the risk of contamination of our coastal environment by
drilling off the coast.
Now, I know that the President has not specifically mentioned
drilling off the coast of New Jersey, but the Minerals Management
Service within the Department of the Interior has a plan to drill off
New Jersey, as it does for most of the coast. And the logical extension
to President Bush's policy would be to seek out offshore oil
essentially in every State.
The reason that I believe that the President is moving in the
direction he is, which basically is to drill more, try to increase
production without addressing conservation, is primarily because of his
alignment and his historic involvement with the oil industry. If we
look at his references, they are all oil. And when we talk about the
environment, conservation, and efficiency, I think we just see him
giving more and more lip service.
The National Energy Policy Development Group, which put together the
President's plan, did not once have a substantive meeting with
environmental - or conservation - minded organizations, so there really
was no input from conservationists or environmentalists. The input was
all from the oil industry.
Let me talk a little about some of the problems I foresee with the
President's new energy policy. First, I think it is going to accelerate
the problem that we have with global warming. He calls for increasing
coal and oil production. Specifically, the President requests a 10-
year, $2 billion subsidy for clean coal to make coal plants less
polluting. However, in the energy budget, the administration did not
specifically earmark funding for less polluting technologies, and
instead, the budget requested this funding only to expand the use of
coal in the United States.
So the problem is that what we are going to see is essentially more
coal-fired plants, and the emissions that come from those will only
aggravate the situation that we already face with some of the air
emissions that are coming from those plants right now. The largest
contributors of greenhouse gases are coal-fired power plants and
gasoline-powered automobiles.
Power plants in the United States emit almost 2 billion tons of
carbon dioxides pollution each year, and this is equivalent to the
carbon dioxide emissions of the entire European Union and Russia
combined. But as we know, or we learned a couple months ago, the
President completely ignores this fact and he does not recommend any
solution to reduce carbon dioxide emissions, even though he talked
about that during the campaign. The President's plan regulates only
three pollutants, and so carbon dioxide is completely left out.
[[Page H2373]]
I have to point out that even in my home State there are utilities
and utility executives who come to me and say that they are more than
willing to regulate carbon dioxide. Around the time of Earth Day, the
end of April, we actually did a bus trip where some of the Members of
Congress joined me and we went around the State. One of the stops that
we made was in Linden, New Jersey, where Public Service Electric & Gas,
which is one of the two largest utilities in New Jersey, was about to
construct a new generating plant which would cut back on the carbon
dioxide that was generated by the old plant by about a third. So the
reality is that many companies, not only in New Jersey, but around the
country, are taking actions to reduce the carbon dioxide output from
their plants and there is a significant segment of the power industry
that supports the regulation of carbon dioxide emissions.
Now, why are we not dealing with it? Why does the President not want
to deal with it? I do not know, other than I think he is the captive of
the special interests and the oil interests and those who do not want
to see this kind of regulation.
Utility executives who support reducing carbon dioxide emissions take
the science of global warming seriously and they understand that carbon
dioxide emission regulations are likely to develop within the life
expectancy of coal-fired plants built today. One of the biggest
problems that I see with the President's energy policy is that he is
advocating taking these old coal-fired plants that are grandfathered,
and most of them are in the Midwest, that are allowed to generate
emissions that do not meet the air quality standards that we have
adopted in the last, say, 10 or 15 years, and which continue to spew
forth the air pollution that the newer plants that were built more
recently are not allowed or not built to do, and in his energy policy,
the President is saying he would allow those older coal-fired plants to
expand their operation and basically generate more capacity and still
be grandfathered for that additional capacity power that they generate.
What we are saying, and those who would be concerned about
conservation and the environment would say, is rather than allowing
these older plants to expand, they should be retrofitted to reduce
carbon dioxide. In the long run, it probably saves money. And there are
industry executives now that are willing to do that, but they are not
going to do it unless they are told by the Federal Government they have
to. And so essentially what President Bush's plan does is ignore them
and says, okay, let us expand, let us continue to pollute, that is
okay.
The administration's plan also calls for the creation of 1,300 to
1,900 more power plants in the United States over the next 20 years.
Now, 1,300 power plants equates to an additional 26 power plants per
State, in every State, and that equals five new power plants on line
every month for the next 20 years. The question is where are we going
to place these plants; and is that really doable? I do not think it is.
But the major problem with that, of course, is that if we somehow
managed to do that, we would increase air emissions and air pollution
tremendously, particularly if we did not require them to meet the
existing strict standards.
{time} 1945
Mr. Speaker, I can give an example in my State. In New Jersey, we had
a government analysis of our air quality this year reported that every
county in New Jersey has poor air quality. So one can understand why I
would not want to see any backsliding on the issue of air emissions
from power plants because if we are already in a bad situation, what
the President proposes would only make it worse.
Finally, on this point I wanted to mention if one looks at the
President's plan, he claims the goal of his energy plan is to reduce
America's dependence on foreign oil. However, the solutions espoused
will sacrifice our environment and do little to alter the imported
quantities of oil the U.S. will actually need. Let me talk about why I
think what he is proposing will not reduce our dependence on foreign
oil.
First, the Bush administration supports drilling in the ANWR. They
claim there are responsible ways to go about the drilling. However, if
you think about it, drilling for oil in the Arctic refuge would require
hundreds of miles of roads and pipelines, millions of cubic yards of
gravel and water from nearby water bodies, housing, power plants,
processing strips, air strips, landfills and services for thousands of
workers. There is certainly nothing environmentally responsible about
that.
But even more important, there remains significant oil reserves in
already-developed areas of Alaska's North Slope. Estimates from the
State of Alaska project from 1999 to 2020 another 5.7 billion barrels
of oil could be produced from the Prudhoe Bay region while 15 to 20
billion barrels could be produced in nearby WSAK oil field. This land
was made available under the Clinton administration, as were thousands
of other acres around the country.
I do not think President Bush wants to open the ANWR, the Arctic
National Wildlife Refuge, because there is an energy crisis; I think
his aim is to open this wilderness to drilling because he believes he
has the political support to do so. I do not think he does. I think if
you talk to Members on both sides of the aisle, both in the House and
Senate, you will find that there is a majority against drilling in
ANWR. But he persists that we should drill there.
Let me go back to why opening up ANWR does little to reduce the
U.S.'s dependence on foreign oil. The U.S. Geological Survey estimates
there are between 3.2 and 16 billion barrels of oil, of which about 3
billion barrels are economically recoverable. Furthermore, the DOE's
EIA, which is environmental impact assessment, reports that the U.S.
exported 339 million barrels of oil in 1999, far more than the 106
million barrels that might be produced in the Arctic.
I can go through the statistics all night, but the general point I
want to make clear is that drilling in ANWR is not a reasonable
solution to meeting energy needs. Even if one were able to do what the
President wants, it is not going to have an impact.
What we really should do if we want to be serious about trying to
reduce America's dependence on foreign oil is increase the fuel
efficiency of our own automobiles. If one thinks about what we could
accomplish, one could increase the fuel economy of automobiles today to
40 miles per gallon. That would save more than 50 million barrels of
oil over the next 50 years. This would change the oil use charts in the
President's energy brochure. But again, he does not want to do that.
The President does not want to change efficiency standards until
another government agency finishes another government study,
determining the effectiveness of raising fuel standards. Basically that
is the excuse he uses. That is another agency, that is another
department.
I think that the biggest thing that bothers me about the President's
policies and the ideology around President Bush's policies, they do not
take into consideration American ingenuity and creativity. We have the
ability to find new ways of doing things: efficiency, renewable
resources, conservation. We have the ability and the know-how to
effectively implement those kinds of strategy, rather than reverting to
the supply-side, energy-based approach which is drill, drill, drill. I
think it is backward, and I think it is not in the tradition of
Americans trying to find solutions to their problems.
If I could, Mr. Speaker, I want to spend a little time talking about
what the House Democrats have put forward in terms of an energy policy,
and contrast that a little bit with the President's plan. I have been
to the floor. I was here last week with some of my Democratic
colleagues where we talked about the Democratic proposal.
I think the most important thing I can say about the Democratic
proposal which was unveiled just a couple of days before the
President's proposal is that we try to address the immediate concern
that the average American has. And when I talk to my constituents, I am
home every weekend and I hear from them, they say look, the biggest
problem are gas prices. Even though we do not think that that we are
going to have blackouts in New Jersey, they remember last summer. And
when we hear about what happened in California, we think maybe that is
going to reoccur.
What the Democrats have done in our energy plan, first of all, with
regard to
[[Page H2374]]
the California situation, we have basically put what I would call caps,
if you will, on wholesale prices for gasoline. The Democrats believe
that the FERC, the Federal Energy Regulatory Commission, basically has
failed to enforce the law and should step in and essentially put in
place ways of controlling prices and looking at the wholesale prices.
We have asked specifically for the Department of Justice to
investigate energy pricing to assure that illegal price fixing does not
occur.
The other thing that we do that directly impacts what needs to be
done in terms of foreign sources, is that we say that the President
should go to the next OPEC meeting, which I believe is going to take
place within the next couple of weeks in June, and he should request
that there be an increase in production at this time.
During the campaign, then-candidate Bush said if it were up to him,
President Clinton should demand that OPEC increase production. Now as
President, he says that is not necessary, I am not going to ask them to
increase production.
Similarly, we have a source of oil called the strategic petroleum
reserve which basically is a storage of petroleum that the U.S.
Government has made over the years. During the Clinton administration,
the Republicans and then-candidate Bush said the SPR should be used to
control prices in the fashion that has been done many times over the
last 10 years or so. Even under former President Bush, we used the SPR
in that fashion. Now President Bush says no, we do not want to touch
the SPR, that is not its purpose.
The Democrats are saying look at wholesale prices, control wholesale
prices of energy so we can hopefully help out California and the other
western States. With regard to gasoline, demand more production from
OPEC. Use the SPR as a hammer, and try to deal with the immediate
crises that we face.
I see some of my colleagues have come in, and particularly I see two
colleagues from western States who I think are very knowledgeable about
what has been going on.
Mr. Speaker, I yield to Mr. Sherman who has been up here for the last
couple of weeks on a regular basis talking about this problem very
effectively.
Mr. SHERMAN. Mr. Speaker, I thank the gentleman from New Jersey. He
may have noticed that 60 minutes ago on this very floor, the gentleman
from Pennsylvania attacked me personally, and attacked my State. This
gentleman refused to yield for even 30 seconds because his arguments
were subject to such total rebuttal.
Mr. Speaker, I thank the gentleman from New Jersey for yielding more
than 30 seconds because to outline all of the mistakes of the gentleman
from Pennsylvania, a man who would not yield 30 seconds, yet ended his
speech a full 20 minutes before his time had expired, this gentleman
needs rebuttal on this floor, not to the attacks against me personally,
but to the attacks against my State.
The gentleman tried to create the image that California's suffering
is somehow the just-desserts for environmental extremism in California,
and that our energy shortage is as a result of opposing offshore oil
drilling. Keep in mind that all offshore oil drilling would be an
attempt to develop petroleum, and we do not use petroleum in the West,
and certainly not in my State, to generate electricity.
This attack that we somehow prevented the building of a sufficient
number of plants. First of all, California has had sufficient plants to
generate all of the electricity we need. Now at times the supply might
be a little tight, but enough electricity to keep every light bulb on
in the State was available except for one thing: They deliberately
withheld supply.
Nothing the environmentalists do or have been accused of doing rises
to the level of deliberately withholding supply in order to jack up
prices; and nothing the environmentalists did or were accused of doing
would solve that problem.
But let us go through this argument that somehow environmentalists
prevented the creation of plants in California. First, it is simply not
true. The incredible lack of knowledge about what is going on in
California is matched only by the loud vituperation of those who are
not from anywhere near my State when they come to this floor. There was
no effort to build plants in California. I know, as every elected
official in California knows what happens when powerful interests want
to build something and environmentalists are trying to hold them back.
It becomes a political question. It is brought to a variety of
political levels.
Nobody made any attempt to build a major power plant in California
until quite recently. The utter proof of that was that there was no
big, political brouhaha anywhere in the State, except for one plant in
San Jose, and that related to just a few miles one way or the other,
and was very recent. Over the last 10 years, no plants were built
because the private sector did not want to build them.
And a further proof of that is when the private sector had the chance
to buy all of the existing plants, they did not pay a premium price for
them. So to say that private industry was desperate to build plants,
they did not even pay a premium for the plants that were already there.
But also, contrary to the physics that may be taught on the other
side of the aisle, the physicists that I consulted tell me that
electrons are unaware when they pass a State border. You can supply Los
Angeles with power just as easily building a power plant in Nevada or
Arizona as you can building one in Northern California or far Eastern
California. Yet no private company was trying to build plants in Nevada
or Arizona unless we are to believe that these are States where
environmental extremists are in total control.
So they did not try to build plants in our State, they did not try to
build plants near our State, and they were not anxious to buy plants
already built in our State because there was not a lot of money to be
made until they saw that opportunity to withhold supply; and then the
absence of rate regulation on the wholesale utilities became obvious.
Then, by withholding supply, by redefining ``closed for maintenance''
as meaning ``closed to maintain an outrageous price for every
kilowatt,'' these gouging utilities, chiefly based in Texas, have been
able to charge sometimes 10 times, sometimes 100 times the fair price
for energy they generate from those same old plants that served
California so well under the previous regulated regime.
So we are told that the Federal Government must do everything
possible to ensure that Californians suffer, and this administration is
doing that, but it is not out of a sense of justice or retribution; but
rather, for the beneficiaries. You see, as long as gouging occurs,
there will be a huge transfer of wealth from California to a few very
rich corporations, mostly based in Houston, mostly very close friends
of the current administration.
{time} 2000
We paid $7 billion for electricity in 1999. In the year 2000, we paid
over $30 billion for the same electricity. This year we will pay over
$60 billion. We are not using any more; we are paying more, and we are
paying more to those who withhold supply to drive up price.
Let us not blame environmentalists in California. Let us not come to
this floor and assert that somehow environmental extremists control
Carson City and Phoenix. Let us realize that the private sector bought
these plants thinking they would earn modest profits. They fell into an
opportunity. They fell into the opportunity to withhold supply and
charge outrageous profits. That is what they are doing for the benefit
of a few companies based in Texas.
This is not a morality play. This is an economic crisis. California
needs price regulation based on cost of our wholesale electric
generators.
Mr. PALLONE. Mr. Speaker, I want to thank the gentleman from
California (Mr. Sherman) for his comments, and I want to continue
talking about the issue of what is happening in California.
I know that our other colleague, the gentleman from Washington (Mr.
Inslee), has actually introduced a bill that is designed to return the
West to just and reasonable cost of services, and I know that his bill
was actually part of the Democratic proposal that we have been talking
about. So I was going to ask if the gentleman, which is probably what
the gentleman was
[[Page H2375]]
going to do anyway, but I wondered if the gentleman would specifically
continue with what our colleague from California said and what we can
do in that regard.
Mr. INSLEE. Mr. Speaker, I appreciate the gentleman from New Jersey
(Mr. Pallone) being here and asking that question. I am reporting from
the State of Washington up in the Pacific Northwest about what is not
just a California problem, but indeed a western United States problem
of price gouging on the electrical markets.
I now can report back to the House the reaction the President's
energy inaction plan is getting from my constituents in the State of
Washington. In the immortal words of Siskel and Ebert, it is two thumbs
down, big time as they would say. The reason is that while California-
bashing is one of the favorite sports of the State of Washington, the
President's callous indifference to the whole West Coast is not just
hurting California. It is hurting small businesses and people in
Washington and Oregon who are paying wholesale electrical prices that
have gone up a thousand percent, a thousand percent wholesale
electrical prices, from last year.
Where communities that paid $25 for a megawatt of energy in
Washington, not California but in Washington State, $25 a megawatt hour
last year, we are now paying $600-plus for a megawatt. No one on this
floor, I have heard, had the courage, I guess it would be, to come and
try to defend that kind of a pricing change over a year.
It just bears repeating that it is not just California that is
suffering here. The State of Washington may lose 43,000 jobs as a
result of the President's willful neglect of this crisis on the West
Coast.
Now, if the President has some indifference to the State of
California, for whatever reason, we do not appreciate allowing him to
have the energy-gouging locusts that sort of visited that plague on the
whole West Coast, and we are getting hurt, too.
Last weekend when I went home, I had people coming up to me in the
ferry boat lines and in the supermarkets absolutely shaking their
heads, livid about this failure of the elected official.
The President, he has had ties to the oil and gas industry. That is
not exactly a secret. But he does not work for the oil and gas industry
anymore. He works for us on the West Coast, and he has simply sent a
message to the West Coast in this moment of trial, to guys like Cliff
Syndon, who has cut his energy bill by like 40 percent and has seen his
bill go up; who has been dedicated to conservation, a guy who wrote me
an e-mail and said, I have cut my energy almost in half and my bill
went up.
What are we supposed to tell people like that who are trying to be
good Americans in this moment of crisis, as we are when everybody wants
to pull together, and then have the President say, well, Cliff, go
fish; you can just go fish, for all I care. Yet, that is the signal the
President is sending to the West Coast of the United States.
Now it is not like he does not have a tool. As the gentleman has
indicated, I have introduced a bill supported by a goodly number of
folks that essentially would have a short-term cost-based pricing
system in the western United States. This is a very reasonable, common-
sense tool the President already has. We should not have to pass a bill
here to make him do this. He should do this because it is already the
law, because the law of the Federal Energy Regulatory Commission is
that they will require reasonable rates to be charged in this country
for wholesale electricity.
What our bill does is simply call a time-out for this plague, and the
time is that for 2 years we simply have cost-based plus a reasonable
degree of profit for the wholesale electrical market, something similar
we have done for decades in this country since the Edison Round; we are
simply saying we ought to do this at least for 2 years while these
markets become better established.
We also would respond to the President. I talked to the President. He
told me he did not want to do that because, well, nobody will build any
more plants to generate electricity if we did that. Well, the President
missed one aspect of our bill. We would exclude new generating capacity
from the impact of this cost-based pricing.
It cannot be a disincentive for someone when they are excluded from
the application of this system, which we would do to make sure that
these energy sources can continue to come online. That is something he
has simply missed in his analysis.
So I can say that on the Main Streets of the first district in the
State of Washington people are very, very angry about this President's
callous indifference to their plight. It is small businesses that are
curtailing hours. We have heard about the big industries, the aluminum
industry that is going to heck in a handbasket; the pulp and paper
industry that has shut off hundreds of jobs, but the small businesses
are getting hit, too; the Highland Ice Rink in Shoreline that has to
curtail its hours because they cannot pay the energy costs. Restaurants
are having trouble. School districts, they are now not being able to
hire the teachers they need to. Edmonds School District, the prices are
going up $600,000 in one year for energy.
These are real people that are really suffering. For the life of me,
I cannot understand why the President will not seriously consider this
issue, except perhaps the history of their economic lives. And that is
extremely disappointing.
We are going to continue on this floor to advance this issue because
it is too important to let go.
Let me also say that I think there are short-term and long-term
strategies we have to have on energy. The problem with the President's
proposal is he has exactly zero short-term proposals. Zero. It is sort
of like the people in the West are drowning and he says, well, I have a
strategy for them as soon as they can swim to shore. Well, 43,000
people are not going to make it to shore. They are going to lose their
jobs in the State of Washington alone; and he has offered them exactly
zero short-term relief, no caps on electrical prices; no jawboning
OPEC; no nothing. We are going to suffer as a result of that.
We are going to continue this effort. We hope FERC will reexamine
this issue.
Let me point out one other thing, too. I will give you some good
news. We should have some good news in the House just for a moment. I
talked to Steve Wright, who is the acting administrator of the
Bonneville Power Administration, last week who told me that there are
currently 28,000 megawatts of energy plants which in the Pacific
Northwest or at least in some fashion are considering opening up plants
in the Pacific Northwest, 28,000 megawatts. That is a big chunk of
electricity. That is the good news. The market is responding to what is
going on.
When we have an economic major dislocation with the economy going to
be in the tank by the time that new energy gets here, we are going to
look back at this period and the White House's indifference is going to
have to cost this economy a good amount. That is why we are going to
continue to insist that the President reconsider this, and we are going
to pass legislation here if we have to do that.
I hope I explained this proposal.
Mr. PALLONE. I am glad the gentleman did. The gentleman explained it
in detail. Of course, I characterize it sort of briefly and probably
too generally as wholesale price caps, but it is not exactly that. It
is, as the gentleman said, more detailed than that. Nonetheless, the
point is that neither the President nor the FERC are willing to do
anything about prices at the wholesale level.
I thought the gentleman said something very interesting. If we think
about it, when one tries to say to their constituents why is it that
the President and the Vice President do not want to deal with this, it
obviously makes sense to deal with the immediate problem and have in
place something to address wholesale costs the way the gentleman
describes. I am convinced and the only way to explain it is because of
the administration's ties to big oil and their history.
I am not going to go on forever about it, but I just wanted to
mention that big oil give $3.2 million to the Bush campaign in the last
election and $25.6 million to Republicans overall, and other sectors of
the energy industry have been similarly generous.
[[Page H2376]]
If one thinks about it, we have the President himself who was
involved in oil ventures in Texas and abroad in the 1980s. He run
Arbusto Energy Firm, which after a few years become the Bush
Exploration Oil Company. It merged with two other companies.
Vice President Cheney, who was the former CEO of Halliburton, the
world's largest oil fuel services company, in August of last year he
received $20.6 million for a sale of Halliburton stock. But it is not
just them. The National Security Adviser Condoleeza Rice served on the
board of directors for Chevron, a major U.S. oil company, for 10 years.
Chevron gave GOP candidates and committees in the last cycles $758,000;
$224,000 to Republican Congressional candidates. The list goes on. The
Secretary of Commerce Evans who spent 25 years at Tom Brown, Inc., a
$1.2 billion Denver-based oil and gas company. We can mention the
Energy Secretary and the Interior Secretary. They were also big oil
money recipients when they ran for public office.
There is no other way to explain it other than the special-interest
money they are getting. Otherwise they would not be doing these things
because they do not make sense.
Mr. INSLEE. Mr. Speaker, will the gentleman yield?
Mr. PALLONE. I yield to the gentleman from Washington.
Mr. INSLEE. I need to leave the floor. There is just one point I
would like to add. I want to make sure people understand that our
proposal is not going to leave these energy-generating companies
penurious. What we are suggesting is that they receive, for a 2-year
period, their costs plus a reasonable degree of profit. They are going
to be assured making money.
What we have suggested is pick the highest level of profit ever
historically enjoyed by anyone possibly in the oil industry and these
prices probably are still going to be cut in half.
We are very generous, profit-oriented in saying pick the highest
number that we cannot have people laugh at us on Main Street and we
will go along with it; but when they are charging, as the gentleman
knows, the equivalent of $190 a gallon for milk, that is wrong.
We ought to restore some sanity, just for a couple of years, while
this industry gets back into a market-based approach and we get some of
that 28,000 megawatts back on line.
Mr. PALLONE. I could get into the oil companies' profits, and maybe I
will do that later; but obviously the profits have just soared in the
last year. Maybe we will give some examples of that later.
I would like to yield to the gentleman from California (Mr. Sherman)
at this time.
Mr. SHERMAN. I would like to comment on the misperception of some of
our colleagues that California is asking for a handout. California
wants nothing more than to have our hands untied. For 100 years we were
successful with cost-plus profit regulation of our private utilities. A
few years ago, we made a mistake. We went with this new-fangled system.
Had there not been conspiracies and probably illegal actions that we
will never be able to prove, it would have worked. We were not
completely stupid. We went with a system that worked on paper, but it
did not work in reality. So we went with a system that did not work. We
now want to go back to the system that we know works. We do not want to
affect anybody else. We do not want any tax revenue. We just want to
have cost-plus profit price regulation of electric generators.
Federal law prohibits us from doing it. Federal law preempts. Federal
law has us bound and gagged while the muffled laughter from the White
House can almost be heard here on Capitol Hill. All we ask is that we
who benefit or are harmed by the electrical policies affecting our
State be able to return to the policies that served us and almost every
other State very well for nearly 100 years. Instead, we are told it is
California's problem, California has to deal with it and, oh, by the
way, they will remain tied, bound and gagged.
Now, the White House tells us that we will be tied; we will be bound
and gagged for our own benefit because the kind of sane regulation
described in detail by our colleague from the State of Washington is
somehow bad for us and the White House should protect us from it.
{time} 2015
We are told that reasonable prices for electricity will prevent
conservation. The President himself has admitted that California is
already doing a spectacular job of conservation, that we are about to
be first, we are now second, we are about to be the first on the list
of States who minimize their use of kilowatts per person. We are doing
a spectacular job of conservation, and I can assure the House that
everyone in our State will continue to do so.
Now, I might say the President does not praise us for this
conservation effort in order to praise California. He praises
California's conservation effort in order to degrade the concept of
conservation, saying conservation must be terrible, they are good at it
in California. But nevertheless, even the President admits, we are
doing a spectacular job of conservation. We do not need to be hog-tied
by Federal preemption laws in order to diminish our usage.
But second, we are told that price regulation will diminish supply.
As the gentleman from Washington points out, both his bill and the bill
put forward by the gentleman from San Diego, California (Mr. Hunter)
and the gentlewoman from northern California (Ms. Eshoo) exempts new
production. So it cannot prevent the production of electricity through
the construction of new plants.
But then we are told that only if there was unlimited prices are we
going to get maximum production. Now, think about it for a minute. If
it costs $40 to create a megawatt and you are allowed to sell it for
$60, you only make $20 for every one you make and you maximize your
effort by making as many as possible. But what if, instead, it still
costs $40 to create a megawatt and one of your options was to make as
many as you could and sell them at a nice profit, but your other option
was to produce less, produce fewer megawatts, force the price up not to
$60 a megawatt, not to $600, but to $700, $800 a megawatt. By producing
less, the price goes crazy, the profits go crazy, the transfer of
wealth from California to Texas exceeds anything that anybody ever
thought was possible. So that is what is happening. The California
Public Energy Commission has determined that we are getting less
because we are paying more than a fair price. About withholding supply,
we get blackout and enormous electric bills.
The solution is obvious. Let California have the system that
Californians are begging for. Allow California to regulate its own
wholesale generators, or better yet, have the Federal Energy Regulatory
Commission do its job and impose these regulations. That is why the
bill of the gentleman from Washington (Mr. Inslee), the bill of the
gentleman from California (Mr. Hunter), these are the bills that this
House ought to pass. But the only reason we have to pass them is
because the President of the United States has instructed his Federal
Energy Regulatory Commission to stand on the neck of California, and
the laughter is almost audible here over 2 miles from the White House
from which it emanates.
Mr. Speaker, I yield back to the gentleman from New Jersey.
Mr. PALLONE. Mr. Speaker, I want to thank the gentleman. I was
talking before about the oil company profits, and it is amazing. We
just have a little table here that talks about six of the largest
companies, and to just give my colleague some examples, for Exxon-Mobil
in the first quarter of this year, profits were up 43 percent; for
Texaco in the first quarter, profits were up 45 percent compared to
last year; Chevron, 53 percent compared to last year; Conoco, 64
percent compared to last year; and the first quarter of this year for
Phillips Petroleum, profits are up 96 percent by comparison of last
year.
Mr. SHERMAN. Mr. Speaker, if the gentleman would yield, I would point
out that these price gougers in California, the ones that are
generating electricity, withholding some of that possible generation,
driving up prices, their profits are not up 40 percent, their profits
are up 400 percent. And, the four big companies, the four big companies
that have pipelines that bring natural gas into California from Texas
and Colorado, they have increased their prices by a factor of 12, they
have increased their profit by a factor of 2,000 to 3,000 percent.
[[Page H2377]]
The gouging from a few huge Texas-based companies is not limited to
those that deal with petroleum companies that are having the rather
startling profit increases that the gentleman from New Jersey
indicates, but those that are crucial to the generation of power in
California. The natural gas pipeline companies and the wholesale
electric companies are beyond comprehension in their profit increases.
I yield back.
Mr. PALLONE. Mr. Speaker, I am going back to the oil companies again
now, but if we think about these examples for oil, electric utilities,
nuclear waste and coal, just to compare what they gave to the Bush and
Republican campaigns as opposed to what they are going to get if the
Bush energy policy went through, to talk about the oil and gas
industry, which gave $3.2 million to the President's campaign, $25.6
million to the Republicans in the Congress. But if we look at what they
stand to gain based on the President's energy policy that just came
out, he would permit oil drilling in the Arctic National Wildlife
Refuge, permit oil drilling on Federal lands, that is, national parks,
national forests, national monuments, permit oil drilling off the cost
of Florida, undercut environmental protections to permit new oil
refineries and pipelines, review and potentially lift economic
sanctions against Iraq, Libya, and Iran so that U.S. oil companies can
do business there, and lock in place record prices at the pump at the
same time that they see record profits. Now, that is the oil and gas
industry. Let us go to the electric utilities.
They gave $1.3 million to Bush, $12.9 to Republicans. The Bush energy
plan says no price caps in the western United States, which is what the
gentleman from California (Mr. Sherman) and the gentleman from
Washington (Mr. Inslee) have been talking about. The Bush policy would
waive environmental standards for the Endangered Species Act, for
hydroelectric plants, and it would enable FERC to seize private lands
for constructing electric transmission lines.
Then we go to the nuclear industry. They gave $105,000 to Bush, $1.2
million to Republicans in Congress. They get to gut current licensing
procedures for nuclear plants to ensure public input on safety and
nuclear waste disposal and tax credit for more nuclear plant
construction.
Then lastly, coal. The coal industry gave only $110,000 to Bush, $3.3
million to GOP Republican congressional candidates. If we look at what
they get out of the energy policy, the Bush energy policy, basically it
is what I mentioned before, the permission for coal-fired power plants
to exceed clean air limits.
I have to stress that last one again, because as the gentleman knows,
in my home State of New Jersey, much of the air pollution comes from
these old coal-fired plants in the Midwest that do not meet current
clean air standards, but were grandfathered. What they would do in
order to expand is that they would expand their existing plants and
they would use the same old standards, the grandfather standards,
rather than the new ones under the Clean Air Act. It went so far and
got to be so outrageous that the EPA, under the Clinton administration,
actually brought suit in Federal court and managed to win, to succeed
in the Federal courts with their suits, and the courts required these
companies to put in place new standards when they expanded their
generating capacities.
So we actually are in a situation now where those court actions are
in the process, if they are allowed to continue over the next few
years, they will have settlements in place that basically require these
old coal-fired plants to meet the up-to-date standards, not for the old
generation, but for new generation, expanding the capacity.
The way I understand the Bush policy, he basically would throw that
all out and say, okay, maybe they have been sued, maybe they have been
successful, but we are just going to let them expand their capacity and
not have to meet the new standards.
First of all, what does that do to the air quality? Obviously, it
deteriorates, but what does it also say to those utilities who have
been the good actors and who have built the new plants and have
expended resources to do so and who are now told, well, you probably
are stupid that you did that and did the right thing, because you could
have just waited around and you would have gotten an exemption, and you
will not even be able to compete with them because the dirty guys are
going to be able to produce and generate capacity at a much lower rate.
So it is really outrageous. Every day when I look over the
President's proposal, I get more and more upset, because he started
out, if anyone watched him last week, he had all of these charts and
big bulletin boards behind conservation, everything was green and blue,
and we are supposed to either think of trees or maybe the ocean.
Everything was beautiful. I said it was subliminal. I do not know much
about these subliminal things, but if you looked at it on TV, I think
it was trying to give the impression that he was green or he was blue
or he was a good guy, conservationist. Then we look at the details and
it is just the opposite. It really upsets me, because I do not like to
see that kind of chicanery, if you will, pulled by government
officials. Everybody thinks we all do that, but I do not think we all
do. That was particularly egregious, in my opinion.
Mr. SHERMAN. Mr. Speaker, to chime in on this, I am so focused on the
short-term disaster in California that so far I have not mentioned the
long term.
Some of the less progressive elements in the energy industry have
sought to crush the alternatives. They have sought to eliminate
conservation as a way to go, to eliminate research and to slash
renewables. The President's budget reflects these worst elements in the
energy industry. He cut by an average of one-third, here in the middle
of an energy crisis, cut the precrisis efforts for renewables,
research, and conservation. That is the budget he brought here to us.
Then, that budget is rammed through both Houses, and this week they are
going to ram through the tax cut that locks that budget in. Then, the
President, having arranged for the passage of a budget that cuts by
one-third the amount for conservation renewables and research, dares to
have a press conference in which he says he wants to spend more money,
tax credits he wants, expenditures he wants.
What hot air it is to propose things only after one has maneuvered a
budget through the House and the Senate that guarantees that there will
not be a penny to do any of the things the President was talking about.
In fact, the President's budget does not provide adequately for the
other tax cuts that he is working so hard to achieve, some of them as
necessary as extending the R&D tax credit, does not provide for the
military increases that we know this House will adopt; provides
nothing, not one penny of an increase in Federal spending on education,
and does not reflect the proposal of our Secretary of the Treasury that
every corporation in America should be exempted from income tax.
So how, how are we going to provide for conservation research and
renewables? Obviously not at all. The only source of money would be
dipping deep into the Social Security trust fund, and I do not think
even those of us who are dedicated to new forms of energy want to see
that.
So the President stands before the green and the blue posters and
promises while, at the same time, his people are here on Capitol Hill
making sure that not one penny will be provided to meet the President's
promises.
Mr. Speaker, there is something else subliminal about those blue
posters, and that is, and I hesitate to say this, Californians will be
very blue when they review, will be singing the blues when they see
their electric bill.
{time} 2030
But what Californians have to understand is if their electric bill is
double, that does not mean that these wholesale gougers are only
getting double a fair price. Sixty percent of the energy we use in
California is regulated, so 60 percent of our bill is made up of
electrons sold to us at a fair price. Forty percent is what we are
getting from these gougers. Yet, our bill is double. That is because 60
percent of the energy we are buying at a fair price and 40 percent we
are buying not at double but at triple or quadruple the fair price.
Now, we might think that means triple or quadruple profits. No,
profits is what is left over when we pay our expenses. If we are able
to jack up the
[[Page H2378]]
price by a factor of three or four while the expenses are not affected
by the gouging activity, then the profits might be going up by 800
percent, 1,200 percent.
That is indeed what is happening for a few huge corporations based in
Texas who are, with such a powerful friend in the White House, able to
avoid commonsense rate regulation on the electricity they are selling
in California.
Mr. PALLONE. Mr. Speaker, I know we only have a couple more minutes,
so I am going to try to wrap up. If the gentleman from California would
like to add to this, please do not hesitate.
I just wanted to point out, I started out this evening by saying that
actions speak louder than words. Really, I think that describes what we
are seeing from this administration and from the President. We are
seeing a lot of rhetoric about conservation and no action.
The gentleman talked about the budget. Two things I wanted to
mention. We know that renewable energy programs were slashed by 50
percent in the President's budget proposal. But what he did in his
energy plan that he came out with last week, and I think it is really
hypocritical and really outrageous, he recommended the creation of a
royalties conservation fund. This fund would provide money in royalties
from new oil and gas production in the Arctic National Wildlife Refuge
to fund land conservation efforts, and it would also pay for the
maintenance backlog at national parks.
So what we are basically being told is that we have to destroy the
wilderness, the Arctic wilderness, in order to protect the national
parks, or to provide money for other land conservation efforts. I just
think it is a slap in the face to any conservation or environmental
efforts to suggest that that is the way we are going to fund these
things, and then just go ahead and cut all things in the Federal
budget.
I think the only thing we can do is to continue to speak out, as the
gentleman has so well done. I know the gentleman is probably going to
be back again tomorrow night or another night this week, and I plan on
doing the same thing, because we have to get across to the public that
as much as the President has a lot of rhetoric about conservation, his
energy policy really is a disaster for the environment, and is not
going to do anything, either long-term or short-term, to deal with the
problems that we face now with gas prices or blackouts. Does the
gentleman wish to add anything else?
Mr. SHERMAN. I thank the gentleman for his leadership on this issue,
especially because his State is not facing quite the disaster we are
facing in California.
I think it is simply outrageous that we in California are prevented
from having the kind of rate regulation at the wholesale level that we
all want, that we so desperately need, and that we are precluded from
having by Federal preemption.
Mr. PALLONE. Mr. Speaker, we will continue until we get that
opportunity. I want to thank the gentleman again.
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