[Congressional Record Volume 151, Number 111 (Thursday, September 8, 2005)]
[Senate]
[Page S9821]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                THE WINDFALL PROFITS REBATE ACT OF 2005

  Mr. DORGAN. Mr. President, yesterday I introduced legislation called 
the Windfall Profits Rebate Act of 2005 that attempts to address the 
spiraling cost of oil and gasoline. Let me explain why I introduced 
this measure.
  I come from a State of 642,000 citizens spread out in a landmass 10 
times the size of Massachusetts.
  As a result of being a large Northern Great Plains State with a small 
population and being a predominately agricultural State, we use a 
substantial amount of energy, specifically gasoline.
  In fact, North Dakota uses twice as much gasoline per capita than New 
York does. Though these price spikes hurt all Americans, they are 
especially devastating to citizens who live in rural States.
  Let me say first that the tragedy that we are witnessing on the Gulf 
Coast is devastating. The effects of Hurricane Katrina will be felt by 
the people of Louisiana, Mississippi and Alabama for a long time to 
come and my prayers go out to them in this time of need. The people in 
the gulf region have lost so much.
  It is also the case that the hurricane has affected America's energy 
supply in the short term. A number of refineries were shut down. A 
couple of major pipelines were unable to operate and there has been and 
will be an impact on our energy supply and marketing as a result of 
this hurricane.
  But it important to understand that the price spikes we have seen 
with the price of oil and gasoline cannot be blamed exclusively on this 
hurricane.
  We were headed down this road long before Hurricane Katrina hit.
  In fact, since the beginning of 2004, we have seen the price of oil 
double from $35 a barrel to nearly $70 a barrel and that has resulted 
in consumers having to pay more than $3 a gallon for gasoline in many 
parts of the country.
  It is important to point out that at $35 a barrel, the energy 
industry was making record profits. Now the oil industry claims that 
these higher prices are a result of supply-and-demand issues and that 
they need these additional profits for exploration.
  However, I believe that the extra $30 per barrel that is tacked on to 
a barrel of oil these days represents a windfall or excess profit to 
the major integrated oil companies, and I propose that we recapture 
part of that with an excise tax and rebate it to consumers who are 
paying these inflated gas prices.
  Here are some numbers to remember: We use 21 million barrels of oil a 
day in this country. Forty percent of that comes from domestically 
produced oil. The major integrated oil companies are larger and have 
more economic clout than they have had previously. They are 
experiencing the $30-a-barrel increased price above the $35 price that 
existed in January 2004, and that means they are reaping $7 billion a 
month in windfall or excess profits. That is $80 billion a year in 
excess or windfall profits. That is being paid by consumers who drive 
up to the service station and now receive the sticker shock of paying 
an arm and a leg for a tank full of gas.
  A friend of mine gassed up his car and his son's car with 15 gallons 
in each car the other day and paid $103.00 at the gas pump.
  In addition to the windfall profits being gathered by the major 
integrated oil companies in our country, it is also the case that 60 
percent of that which we use comes from off our shore. That has become 
a type of forced revenue sharing from American consumers to the Saudis, 
Kuwaitis, and others. There is not much we can do about that in the 
short term except to implement policies that try to wean us away from 
the addiction we have to foreign oil.
  However, with respect to domestic companies and domestic production 
and domestic pricing, we can do something.
  My legislation calls for a 50-percent excise tax on crude oil profits 
over $40 a barrel when those prices are earned by the largest oil 
companies with the most ability to control the overall price. These are 
companies that, in many cases, move oil from the ground to gas pumps 
and control all of the processes in between. The revenue that would be 
collected from this excise tax would be used to provide a rebate to 
American consumers to help them offset the burden of higher energy 
costs that they are now forced to pay.
  But my legislation also has a very important exemption. If the oil 
company is using the revenue from the extra $30 a barrel they are 
receiving to increase exploration, or make investments to search for 
additional sources of energy, or to increase refining capacity, or to 
pursue investments in other renewable forms of energy, then that money 
would be exempt from this windfall profits tax.
  In other words, these large companies would decide themselves whether 
they pay this tax. If they are buying back their stock or hoarding cash 
with which to engage in mergers and acquisitions, then they would be 
paying the excise tax and the consumers would be receiving the benefit 
of that excise tax.
  I am not trying to hurt the oil companies or put them out of 
business. I want additional robust domestic exploration that would be 
exempt from the windfall profits tax.
  However, American consumers should not pay these inflated prices just 
to fatten the corporate treasury of the major integrated oil companies.
  The substantial rise in the price of oil and gas has produced both 
pain and gain. The pain is for American consumers and the gain has been 
for the major integrated oil companies and OPEC countries, and I think 
Congress ought to weigh in on behalf of American consumers. That is 
what my bill attempts to do.
  And with its exemption for investment in exploration, it does not 
attempt to help consumers by punishing oil companies.
  I hope Congress will immediately consider adopting this measure and 
provide some help to American consumers at a time when gasoline prices 
are providing sticker shock every single day.

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