[Congressional Record Volume 151, Number 121 (Monday, September 26, 2005)]
[Senate]
[Pages S10419-S10420]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               OIL PRICES

  Mr. DORGAN. Mr. President, I introduced a piece of legislation a few 
weeks ago with my colleagues, Senator Dodd and Senator Boxer, dealing 
with the issue of a windfall profits tax on the major integrated oil 
companies in this country. The proceeds of this profits tax would be 
used to give rebates back to consumers who are now paying extraordinary 
prices to fill up the tank of their car and will be paying 
extraordinary prices this winter for things such as natural gas and 
home heating fuel.
  Well, this proposal for a windfall profits tax in order to capture 
some of that windfall or excess profits and move it back to consumers 
has drawn a fair amount of criticism from, of course, one of the 
largest and wealthiest industries in our country. I expect that and 
understand that.
  An op-ed piece this past weekend by James Glassman is typical of 
that. James Glassman is a fellow at the American Enterprise Institute, 
and he wrote an article that said:
  Look, the free market is working. The markets are working, he says. 
He is very critical, of course, of the legislation I have introduced. 
``The markets are working.''
  Well, I decided I would bring this over. This is the James Glassman, 
by the way, who wrote the book in year 2000, ``Dow 36000.'' He was 
predicting the Dow Jones Industrial Average was going to go to 36,000. 
It did not quite work so well. But among the pundits here in 
Washington, DC, there is no such thing as trying to track back to find 
out who is right or wrong, you just keep writing. The Dow at 36,000? 
Yeah?
  The oil markets are working? Sure they are.
  Let me show you what is happening with these markets.
  First, this was in the Washington Post yesterday. It shows there is a 
46-percent increase in the price of a gallon of gasoline for the crude 
oil producer since last September.
  That is for the producers. It shows a 255-percent increase for 
refiners over the past year. Incidentally, in most cases these are the 
same companies. Because of the behemoth mergers of the 1990s, giant oil 
companies were formed. Many of these are integrated companies that do 
everything from pulling oil from the ground to putting it in the car.
  What has happened? Well, let me give you some statistics.
  The 10 largest oil companies earned revenues last year of over $1 
trillion and had net profits of over $100 billion. These are last 
year's numbers. Exxon Mobil, the world's largest publicly traded oil 
company, earned more than $25 billion last year and spent $9.9 billion 
of it to buy back its stock. In addition, it has kept $18.5 billion in 
cash. Profits for the largest 10 oil companies jumped more than 30 
percent last year over the year before.
  Now, there is an exception to this, because these profits are going 
to look minuscule as compared to the profits they are getting this 
year. The price of oil has gone up another $30 a barrel. It is $30 a 
barrel above the record profits the major oil companies had last year.
  So while people drive to the gas pump and pay through the nose, this 
notion of ``fill 'er up'' no longer just pertains to the gas tank on 
the car, it pertains to the treasuries of the major oil companies. And 
are they being filled up.
  Now, what is happening with all of that money? Well, let me read a 
BusinessWeek article that says: ``Why Isn't Big Oil Drilling More?'' 
Interesting. One would expect, as Mr. Glassman argues: Gosh, if the oil 
companies can just get rich, they'll look for more oil. Everybody wins. 
Right?
  BusinessWeek: ``Why Isn't Big Oil Drilling More?''
  Well, the answer in the article was:

        . . . by cutting the number of rivals, mergers have made 
     it easier for them to get away with that reluctance to spend.
       Far from raising money to pursue opportunities, oil 
     companies are paying down debt, buying back shares, and 
     hoarding cash.
       Rather than developing new fields, oil giants have 
     preferred to buy rivals--``drilling for oil on Wall Street,'' 
     as they call it.

  So you have a massive amount of money that is going to the treasuries 
of the big oil companies. And they are ``drilling for oil on Wall 
Street.''
  Well, I have news for them. There ain't no oil on Wall Street. The 
megamergers of the 1990s, the creation of these behemoth organizations 
now have us in a situation where they are getting extraordinarily 
wealthy with, in my judgment, windfall or excess profits.
  The American consumer is paying through the nose, and these companies 
are profiting beyond that which we have ever seen in corporate America.
  Now, the Federal Trade Commission head says she doubts new laws 
dealing with profiteering would be effective. It is not surprising to 
me. The Federal Trade Commission, as a result of a provision I put in 
the new energy bill that was signed by the President, is required by 
law to investigate the pricing of oil and gas. But do any of us think 
this tiger without teeth called the Federal Trade Commission is very 
interested in doing that? No.
  And if you wonder, take a look at the writer's article of 22 
September 2005. Before they have even taken a hard look at all these 
things, the chairman of the Federal Trade Commission is taking the 
typical probusiness line.
  Let me say this: The proposal we have offered for a windfall or 
excess profits tax, and using it to provide a rebate to consumers, is 
one that makes a lot of sense. This is not the old windfall profits tax 
of a couple decades ago.
  This says: If the excess profits that integrated oil companies are 
getting for selling a barrel of oil above $40 are being invested back 
into the ground to develop the nation's energy supply or invested to 
build refineries, then they will not bear the burden of this recapture. 
Our proposal is simple: There will be no recapture and no tax if this 
windfall profit is being used to explore for more oil or to increase 
refinery capacity.

  But I read to you the BusinessWeek article describing what they are 
doing. What are they doing? They are using this extra money to buy back 
their shares of stock, to pay down their debt, to hoard cash--in 
Exxon's case, in excess of $15 billion. Of course, that is a ready 
reserve with which to take a look at new companies to buy. That is the 
reference to ``drilling for oil on Wall Street.''
  Well, I suppose there are many in this Congress, perhaps in this 
Senate, who share Mr. Glassman's views. After all, he comes from the 
American Enterprise Institute. They hand out a lot of paper and kill a 
lot of trees to dispense information here in the Senate about the 
market system. But there is no free market in oil. What you have

[[Page S10420]]

with respect to oil are a few OPEC countries in the Middle East whose 
ministers sit around a big table and talk about production and price.
  In addition to that, you now have behemoth oil companies that have 
the capability to exercise much more impact on market prices and 
supply. In addition to that, you have futures markets which are 
supposed to provide liquidity but which now are playgrounds for 
speculators. You have speculators. You have bigger oil companies. You 
have the OPEC countries. And we have free marketers talking about a 
free market? What are they smoking? There is no free market here.
  What is happening is the American consumer is being taken advantage 
of. They are paying extraordinarily high prices for gasoline. While 
people go to the gas pump and put 15 gallons of gas in their tank, and 
pay $50 for it, and people this winter will have a 70-percent increase 
in natural gas prices for heating their home, we have some of the 
largest corporations in this country profiting in an unusual, 
unwarranted way.
  I say simply this: If these oil companies are using those profits to 
find more oil, that is one thing. If they are not--and they are not; to 
wit, the article from BusinessWeek--then, in my judgment, some of that 
excess or windfall profit ought to be recaptured and sent back to 
consumers.
  Let me say, my State produces oil. So I have some people in my State 
who are a little cranky about what I proposed. I do not aim to hurt the 
oil industry. If, in fact, there was a free market I would not be here. 
But it is also true that consumers in my State are bearing the pain.
  Let me describe my consumers in North Dakota. We drive exactly twice 
as much per person as New Yorkers do. We use twice as much gasoline per 
person than the average New Yorker. Why is that the case? Well, in New 
York, if they are going to see an aunt or an uncle in New Jersey, it is 
a big trip. You pack an emergency kit. You go get your car serviced. 
You talk about it for several months and then drive 40 miles to see the 
relatives. That is a big deal out East.
  Not in the Midwest, not in the northern Great Plains. Forty miles is 
nothing. People drive 200 miles one way for a meeting, and then drive 
200 miles back in the same day. That is why in our part of the country, 
in a State such as North Dakota that is 10 times the size of the State 
of Massachusetts in land mass with 640,000 people spread out over that 
land mass--we drive twice as much as New Yorkers.
  What does that mean? Well, when the price of gasoline doubles, it 
hurts us twice as much as it does those in States where they do not use 
gasoline as much as we do.
  So I recognize the oil industry would like to keep all this going: 
$3, $3.50 a gallon. By the way, this all started before there was any 
hurricane. I saw on the news last night a sophisticated news report 
about all this, and it was linking the price of oil to the hurricanes. 
The fact is, the price of oil was up over $30 a barrel above last 
year's price--at which point you had record profits in the industry--
long before Hurricane Katrina. So this is not about hurricanes.
  The question is, will Congress care? Will Congress do something about 
it? We spend a lot of time on things that do not have much of an impact 
on the American people. I wonder if for a moment we can spend some time 
on something that does. There is a tendency around here to treat 
serious things way too lightly, and then to treat light things way too 
seriously. This is a serious issue. A whole lot of folks cannot afford 
to pay this. They cannot pay the cost of $3-a-gallon gasoline or have a 
70-percent increase in natural gas prices or have a 40-percent increase 
in the price of home heating fuel to keep warm in the winter.
  The question is, does Congress care? Does the Senate care? We will 
have people come here in blue suits saying: This is a free market. This 
is not a free market. Again, if this were a free market, I would not be 
on the floor talking about it. This is a market with clogged arteries, 
clogged in a manner that is horribly unfair to the average American, 
and clogged in a way that provides handsome profits, unparalleled 
profits, to the oil industry.
  But let me say, once again, lest others misrepresent what we are 
proposing, if that industry is using these profits to find oil in the 
ground, or above ground on refineries to process oil, they would not be 
affected by a windfall profits tax. But if they are not--and they are 
not, in most cases--then they would bear the burden of a recapture of a 
portion of these windfall or excess profits, and they would be sent 
back to the consumers in this country, as a matter of basic fairness.
  Mr. President, I yield the floor.

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