[Congressional Record Volume 150, Number 66 (Wednesday, May 12, 2004)]
[House]
[Pages H2898-H2899]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 PETROLEUM PRICES AND THE TRADE DEFICIT

  The SPEAKER pro tempore (Mr. Chocola). Under a previous order of the 
House, the gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 
minutes.
  Ms. KAPTUR. Mr. Speaker, today the United States Department of 
Commerce announced a record U.S. trade deficit of over $46 billion for 
just the month of March as imports coming into our country swamped our 
exports going out. That means more good U.S. jobs are being off-shored 
to China, to India, to Latin America, jobs everywhere but here in the 
United States.
  Since this President took office, 2,740,000 more people in this 
country have lost their jobs; and we have record trade deficits, as 
these numbers indicate today, record budget deficits, unemployment, 
people who cannot get unemployment benefits, and soaring gas prices at 
the pump. It sounds to me like we are trading away America's economic 
independence.
  This chart describes the trade deficits keep growing year after year 
after year as we keep losing our good jobs. This year it is projected 
over one-half trillion dollars in trade deficit. The numbers today 
confirm this.
  One of the interesting aspects of the numbers today is the trade 
deficit related to petroleum, imported petroleum, which has grown by 
$1.3 billion more imports into our country since February, with rising 
prices. In fact, the new record trade deficit increased by one-third 
due to our trade deficit related to petroleum. Every time an American 
goes to the gas pump and spends one dollar, 54.5 cents goes out of this 
country. Saudi Arabia gets 7.5 cents, Mexico gets about 6.5 cents, 
Canada gets 6.5 cents, Venezuela 6.25 cents, Iraq gets nearly 5 cents, 
and a penny goes to Kuwait.
  Over years and months, this totals billions of dollars of wealth 
draining out of this economy. Today, our trade deficit for petroleum is 
over $12.5 billion a month. Imagine if we were investing those dollars 
in ourselves here at home in new energy industries, which we are not.
  Becoming energy independent at home could yield the strongest impetus 
to job creation that this Nation has seen since we began to move to 
launch a Moon shot nearly 40 years ago.
  This evening, I would like to insert into the Record an excellent 
editorial done by Paul Craig Roberts entitled ``Disaster Lurks in April 
Jobs Numbers.'' He says there is no good news in the April payroll data 
because disaster lurks in the job numbers. The U.S. Labor Department is 
becoming Third World in character. He says the troubling pattern is 
that despite a massive trade deficit that pours $500 billion of our 
money into foreign pockets, the U.S. economy cannot create jobs in the 
export or import competitive sectors. The U.S. economy is creating 
domestic service jobs only, and that cannot create real wealth.
  The 280,000 private sector jobs created in April break out as 
follows: over half were in temporary work. As the prior Special Order 
had to do with health insurance, believe me, there are no health 
benefits associated with temporary work. There were 34,000 American 
hired, but as waitresses and bartenders, lucky to make the minimum wage 
and lucky if they have any health insurance at all.
  Since January 2001, the United States has lost nearly 3 million jobs. 
We can tick them off, and we will submit them for the record: in wood 
products, 50,000 lost jobs; in computer and electronic products, which 
was supposed to save us, over 536,000 jobs; in transportation 
equipment, similar losses; in petroleum and coal products, another 
10,000 more lost jobs. And the service jobs that are partly trying to 
replace them simply cannot replace the hundreds and hundreds of 
thousands of jobs lost in tradeable services, including 
telecommunications, computer services, bookkeeping, architecture, and 
engineering. This leaves the U.S. economy with 2.2 million fewer 
private sector jobs at the end of April, this year than existed 3 years 
ago.
  Once free trade was a reasoned policy, hopefully based on sound 
analysis. But today it is an ideology that hides labor arbitrage. 
Because of the low cost of foreign labor, U.S. firms produce offshore 
for U.S. customers, bring their products in here, and then wipe out 
U.S. jobs. Where does this leave Americans? It leaves them in the 
lowest paid domestic service jobs.
  Mr. Speaker, these types of trade deficits are sapping America's 
wealth and our strength. It is time to change the policies, starting 
here in Washington, D.C., and begin to move free trade into fair trade, 
or the American people are going to continue to suffer the hemorrhage 
of wealth and jobs out of this society.
  So, here we go again. Sometimes it feels like a broken record. The 
administration touts trade deals. The president negotiates more deals 
in secret. The Congress gets an up or down vote. The agreement goes 
into effect. Trade surpluses turn to deficits. More good jobs are lost. 
Small deficits reach record deficits. When are we going to learn?
  The American people have learned and, unfortunately, they are paying 
the price. Since this President took office, 2.74 million people have 
lost their jobs. Not many of those are corporate executives. When THEY 
go, they go with massive severance packages. What are we giving to 
America's working families? Record trade deficits, budget deficits, 
unemployment and soaring prices at the gas pumps. That does not sound 
like a fair trade. Sounds like we are trading away our economic 
independence.
  Let's just take a look at three of our trading partners. Before NAFTA 
we had a trade surplus with Mexico and a small deficit with Canada. 
After the signing of NAFTA, companies skipped town from U.S. cities to 
exploit the workers across the border. Who wins? Not the working 
families of the U.S. with little hope for the future. Not the families 
forced off their land in Mexico only to crowd into the cities and 
maquiladora zone. In fact, companies are skipping right over the 
Mexican workshops for the next lowest common denominator--China.
  Boy did we hear great promises about the Chinese marketplace and its 
one billion consumers. Strangely enough, the most recent trade 
statistics put China's trade deficit for one month at over $10 billion. 
That is just for one month. What is the administration doing to shore 
up our economic security? Are they pursuing limits on China's 
manipulation of currency? No. Are they willing to stand up for workers 
in the U.S. and China by officially pressing the government of China to 
address atrocious workplace conditions? No. They have grand plans of 
talking to the Chinese. All of that talking has taken us to record 
setting deficits. That is not what most Americans would call a plan for 
economic independence.
  When it comes to oil, there is not much of a difference--unless you 
count the media reports that the Saudis have promised to lower the 
price of oil in time for the elections. Are we going to stake our 
energy independence on the whims of the Saudis? Does not sound like a 
good idea to me.
  The Department of Commerce today issued a release that announced 
``The deficit increased $3.8 billion from February to $46 billion in 
March as imports increased more than exports.'' Fairly typical jargon 
from this Administration. What they fail, and I repeat fail to mention 
is that the trade deficit related to petroleum has grown by $1.3 
billion since February. The new record trade deficit increased by one 
third due to our trade deficit related to petroleum. Let me repeat 
myself because this is the key, the new record trade deficit increased 
by one third due to our trade deficit related to petroleum. That is 
$1.3 billion more that was drained out of our nation and sent to the 
nations of OPEC.
  The $5.6 billion trade deficit with oil-producing countries, 
including Saudi Arabia and Venezuela, is the highest on record. For 
every dollar that an American spends at the gas pump 54.49 cents goes 
out of the country, Saudi Arabia gets 7.35 cents of that dollar, Mexico 
6.57 cents, Canada 6.52 cents, Venezuela 6.26 cents, Iraq 4.96 cents, 
and 1.03 cents go to Kuwait.
  Today our trade deficit for petroleum is over $12.5 billion a month. 
That is an increase of over $1.3 billion from the previous month. The 
average price of imported crude oil rose to $30.64 a barrel in March, 
the highest since February 1983, today the price of crude peaked at 
$40.92, this is only 23 cents less than the all time record.

  The United States annually consumes roughly 7,171,885,000 barrels of 
petroleum. (164 billion gallons of vehicle fuels and 5.6 billion 
gallons of heating oil) In 2001, 55.4 percent of these fuels were 
imported, part of a

[[Page H2899]]

total $358.2 billion trade deficit with the rest of the world. Since 
1983, the United States importation of petroleum and its derivatives 
has nearly quadrupled, rising from 1.21 billion barrels in 1983 to 4.65 
billion barrels in 2003.
  In 2003 the total deficit for trade of petroleum between the United 
States and the rest of the world totaled $120.5 billion. Our total 
trade deficit for 2003 was only $489.9 billion. That means if we as a 
nation were energy independent we would cut our trade deficit by one 
quarter annually. If we were truly energy independent it would mean we 
would have the creation of jobs, be a step closer to a trade surplus, 
real urban revitalization and rural development, and wealth being 
generated right here at home as opposed to increasingly exporting our 
jobs, capital and wealth.
  Becoming energy independent here at home would yield the strongest 
job creation this Nation has experienced since we landed a man on the 
moon. Just focusing more effort in agricultural fuels production would 
produce growing economic security here at home.
  Continued dependence upon imported sources of oil means our Nation is 
strategically vulnerable to disruptions in our oil supply. Renewable 
biofuels domestically produced directly replace imported oil.
  Increased use of renewable biofuels would result in significant 
economic benefits to rural and urban areas and also reduce the trade 
deficit.
  According to the Department of Agriculture, a sustained annual market 
of 100 million gallons of biodiesel alone would result in $170 million 
in increased income to farmers.
  Farmer-owned biofuels production has already resulted in improved 
income for farmers, as evidenced by the experience with State-supported 
rural development efforts in Minnesota where prices to corn producers 
have been increased by $1.00 per bushel.
  Biofuels hold the potential to address our dependence on foreign 
energy sources immediately. With agricultural surpluses, commodity 
prices have reached record lows; concurrently world petroleum prices 
have reached record highs and are expected to continue rising as global 
petroleum reserves are drawn down over the next 25 years. It also is 
clear that economic conditions are favorable to utilize domestic 
surpluses of biobased oils to enhance the Nation's energy security.
  In the short term, biofuels can supply at least one-fifth of current 
United States fuel demand using existing technologies and capabilities. 
Additional plant research, newer processing and distribution 
technologies, and placing additional acres under cultivation can yield 
even greater results.
  Biofuels can be used with existing petroleum infrastructure and 
conventional equipment.
  The use of grain-based ethanol reduces greenhouse gas emissions from 
35 to 46 percent compared with conventional gasoline. Biomass ethanol 
provides an even greater reduction.
  The American Lung Association of Metropolitan Chicago credits 
ethanol-blended reformulated gasoline with reducing smog-forming 
emissions by 25 percent since 1990.
  Ethanol reduces tailpipe carbon monoxide emissions by as much as 30 
percent. Ethanol reduces exhaust volatile organic compounds emissions 
by 12 percent. Ethanol reduces toxic emissions by 30 percent. Ethanol 
reduces particulate emissions, especially fine-particulates that pose a 
health threat to children, senior citizens, and those with respiratory 
ailments.
  Biodiesel contains no sulfur of aromatics associated with air 
pollution.
  The use of biodiesel provides a 78.5 percent reduction in CO2 
emissions compared to petroleum diesel and when burned in a 
conventional engine provides a substantial reduction of unburned 
hydrocarbons, carbon monoxide, and particulate matter.
  Mr. Speaker, I submit herewith for the Record the article I referred 
to earlier:

                  Disaster Lurks In April Jobs Numbers

                        (By Paul Craig Roberts)

       There is no good news in the April payroll data released 
     last Friday by the Bureau of Labor Statistics. Disaster lurks 
     in the jobs numbers: the U.S. labor market is becoming Third 
     World in character.
       The April jobs data show a continuation of the troubling 
     pattern established in recent years. Despite a massive trade 
     deficit that pours $500 billion annually into foreign hands, 
     the U.S. economy cannot create jobs in the export or import-
     competitive sectors of the economy. The U.S. economy can only 
     create jobs in non-tradable domestic services-jobs that 
     cannot be located offshore or performed by foreigners via the 
     Internet.
       The 280,000 private sector jobs created in April break out 
     as follows: 104,000 were hired as temps and in administrative 
     and waste services, 34,000 were hired as waitresses and 
     bartenders, 30,000 were hired in health care and social 
     assistance, 29,000 in wholesale and retail trade, 21,000 in 
     manufacturing (half of which are in fabricated metal 
     products), 20,000 plumbers, electricians and specialty 
     contractors, 10,000 hired by membership associations, 10,000 
     in legal, architectural and engineering services, 8,000 in 
     management and technical consulting, and 4,000 in real 
     estate.
       The vast majority of these jobs do not require a college 
     degree. One can only wonder what will become of the June 
     graduating class.
       Since January 2001, the U.S. has lost 2.7 million 
     manufacturing jobs. Job loss by sector: wood products 50,000, 
     nonmetallic mineral products, 61,000, primary metals, 
     145,000, fabricated metal products, 272,000, machinery 
     300,000, computer and electronic products, 536,000, 
     electrical equipment and appliances 136,000, transportation 
     equipment 209,000, furniture and related products 97,000, 
     misc. manufacturing 79,000, food manufacturing 53,000, 
     beverages and tobacco products 13,000, textile mills 128,000, 
     textile product mills 33,000, apparel 172,000, leather and 
     allied products 18,000, paper and paper products 90,000, 
     printing and related support activities 137,000, petroleum 
     and coal products 10,000, chemicals 79,000, plastics and 
     rubber products 125,000.
       Since January 2001, financial activities created 247,000 
     jobs, and nontradable domestic services (education services, 
     healthcare and social assistance, leisure and hospitality, 
     and membership associations) created 2,026,000 jobs.
       These service jobs were offset by 302,000 lost jobs in 
     retail, 261,000 lost jobs in transport and warehousing, 
     124,000 lost jobs in management of enterprises, and 1,222,000 
     lost jobs in tradable services such as telecommunications, 
     ISPs, search portals, and data processing, accounting and 
     bookkeeping, architecture and engineering, computer systems 
     design, and business support services.
       That leaves a net increase of 488,000 jobs in domestic 
     services created during the past 3 and one quarter years. 
     Offsetting these jobs with 2.7 million lost manufacturing 
     jobs, leaves the U.S. economy with 2.2 million fewer private 
     sector jobs at the end of April 2004 than existed in January 
     2001.
       Once free trade was a reasoned policy based in sound 
     analysis. Today it is an ideology that hides labor arbitrage. 
     Because of the low cost of foreign labor, U.S. firms product 
     offshore for their U.S. customers. The high speed Internet 
     permits people from all over the world to compete against 
     Americans for knowledge jobs in the U.S. Consequently, the 
     ``New Economy'' is being outsourced even faster than the old 
     manufacturing economy.
       Where does this leave Americans? It leaves them in low-pay 
     domestic services. As the BLS 10-year job forecast made 
     clear, 7 of the 10 areas that are forecast to create the most 
     jobs do not require any university education--definitely not 
     the picture of a high-tech economy.
       Why then will Americans attend universities? Will Wal-Mart 
     require an MBA to stock its shelves? Will nursing homes want 
     their patients bathed by engineers?
       Obviously, education and retraining are not answers to job 
     loss from US employers substituting foreign labor for 
     American labor.
       One does not have to be an economic genius to understand 
     what is happening. Capital is most productive where labor is 
     most abundant, and labor is most productive where capital is 
     most abundant.
       Thus, we see US capital flowing to Asia where labor is 
     cheapest, and Asian labor flowing via the Internet to the US 
     where capital is abundant.
       US labor loses both ways. Products Americans used to make 
     are now made offshore, and the Internet lets foreigners 
     compete against Americans in the US labor market.
       An engineer in Boston, Seattle, Atlanta, or Los Angeles 
     cannot compete with an Internet hire in India, China, or 
     Eastern Europe, because the cost of living in the US is much 
     higher. The Boston engineer cannot work for the Indian 
     salary, because his mortgage debt and grocery prices will not 
     adjust downward with the salary.
       The man in the street has no difficulty comprehending this 
     simple fact, but for ideologues, free trade is a virtue--
     regardless of the harm done to American labor and the US 
     economy.

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