[Congressional Record Volume 152, Number 60 (Tuesday, May 16, 2006)]
[Extensions of Remarks]
[Pages E845-E846]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              ENERGY LEGISLATION (H.R. 5253 AND H.R. 5254)

                                 ______
                                 

                          HON. BETTY McCOLLUM

                              of minnesota

                    in the house of representatives

                         Tuesday, May 16, 2006

  Ms. McCOLLUM of Minnesota. Mr. Speaker, I rise today in support of 
the Federal Energy Price Protection Act (H.R. 5253). By protecting 
consumers at the gas pump, this legislation takes an important step 
towards a more responsible federal energy policy.
  H.R. 5253 bans price gouging in the sale of fuels, permits states to 
bring price gouging lawsuits against wholesalers or retailers and sets 
meaningful penalties for those convicted. After nearly a year of 
opposing these consumer protections, Republicans have finally realized 
this is a necessary and appropriate action to addressing rising gas 
prices. However, this is only a first step--it is what we do next that 
really matters.
  We should not expect our energy situation to change until Congress 
gets serious about tackling our oil dependence. With the booming 
economies of China and India squeezing global oil supply, and political 
instability among key oil producing countries like Iran, Venezuela, 
Nigeria and Iraq, it is likely that world oil prices will remain 
volatile and could continue rising for some time to come. 
Unfortunately, the Republicans are proposing to meet this serious 
challenge with an ill-conceived policy of distraction.
  The Refinery Permit Process Schedule Act (H.R. 5254) is a cynical 
attempt to relieve public pressure for new energy policies and divert 
attention away from meaningful solutions. It empowers the Secretary of 
Defense to evade state environmental laws and overrule the wishes of 
local communities by ``streamlining'' siting and permitting of new 
refineries on closed military bases. I strongly oppose this bill, which 
blames state environmental regulations for rising gas prices and would 
undermine local control in a misguided attempt to ease them. H.R. 5254 
is another attempt by the Republican majority to sell Americans the 
false promise of easy answers.
  With families burdened with gas at $3 per gallon, it is time for real 
leadership, vision and commitment from Washington to make the smart 
investments that will protect our BNation's economic security and our 
planet's future. A clean energy future that addresses oil dependence 
and environmental concerns such as climate change is achievable. It 
starts by rescinding the billion of dollars in subsidies for oil and 
gas companies and with investments in research and extending incentives 
for alternative energy sources such as wind, biomass and biofuels that 
keep energy costs down, create jobs and make us more competitive in the 
global economy. As Robert Samuelson stated in today's Washington Post, 
the United States has the energy policy it deserves but not the one it 
needs. It's time for real solutions.

                [From the Washington Post, May 3, 2006]

                       How We Got to $3 a Gallon

                        (By Robert J. Samuelson)

       The United States has the energy policy it deserves, 
     although not the one it needs. Having been told for years 
     that their addiction to cheap gasoline was on a collision 
     course with increasingly insecure supplies of foreign oil, 
     Americans are horrified to discover that this is actually the 
     case. But for all the public outcry and political hysteria, 
     high gasoline prices haven't significantly hurt the economy--
     and may not do so. Since 2003 the economy has grown about 3.6 
     percent annually. It's still advancing briskly. That may be 
     the real news.
       But first, how did we get to $3 a gallon? The basic story 
     is simple enough. Oil was cheap in the 1990s. From 1993 to 
     1999, crude prices averaged about $17 a barrel. Low prices 
     discouraged exploration and encouraged consumption. China 
     emerged as a big user. In 1995 global demand was about 70 
     million barrels daily; now it's almost 84 million barrels 
     daily.
       Spare production capacity slowly vanished, meaning that now 
     any supply interruption--or rumor of interruption--sends 
     prices up sharply. An Iraqi pipeline is attacked; prices 
     jump. Nigerian rebels menace oil fields; prices jump.
       These pressures get transmitted quickly to the pump, 
     because there are few fixed-price contracts in the oil 
     business. At each stage of distribution--from producers to 
     refiners, from refiners to retailers--prices are adjusted 
     quickly. They're often tied to prices on major commodities 
     exchanges, where oil and other raw materials are traded.
       ``A gas station will get a delivery every four to eight 
     days at a different price,'' says Mary Novak of Global 
     Insight. Even between deliveries, station owners may push 
     prices up because they know that ``for my next tankload, I'll 
     have to pay the market price.''
       Of course, profits have exploded. Production and refining 
     costs haven't risen in tandem with prices. To the extent that 
     oil companies have their own crude reserves--as opposed to 
     buying from producing nations--they've reaped a bonanza. From 
     2002 to 2005, profits for most U.S. oil companies more than 
     quadrupled, to almost $140 billion a year, the American 
     Petroleum Institute reports. But the really big winners are 
     the oil-producing countries. In 2005 their oil revenue 
     exceeded $750 billion, up from $300 billion in 2002. (Crude 
     oil and taxes represent about three-quarters of the retail 
     price of gasoline; refining, distribution and marketing 
     account for the rest.)
       It's conventional wisdom that big increases in oil prices 
     usually trigger a recession--or at least a sharp slowdown. 
     Why haven't they? One oft-cited reason is that the economy 
     has become more energy-efficient. True. Compared with 1973, 
     Americans use 57 percent less oil and natural gas per dollar 
     of output; compared with 1990, the decline is 24 percent. 
     Cars and trucks have gotten more efficient, though not much 
     more so since 1990. New industries (software programming, 
     health clubs) use less energy than the old (steelmaking, 
     farming). But there's a larger reason: The conventional 
     wisdom is wrong.
       Big oil price increases in the past (1973-74, 1979-80 and 
     1990-91) did not cause recessions, though recessions occurred 
     at roughly the same time. The connection has been repeated so 
     often that most people probably accept it as gospel. But much 
     economic research has concluded that it's a myth. These 
     recessions resulted mainly from rising inflation--inflation 
     that preceded higher oil prices--and the Federal Reserve's 
     efforts to suppress it. Higher oil prices merely made matters 
     slightly worse. In 1980, for example, consumer prices rose 
     12.5 percent; excluding energy prices, they increased 11.7 
     percent.
       This may explain the economy's resilience. One hopeful 
     sign: most nonenergy companies aren't yet passing along 
     higher energy costs to their customers. ``Businesses have had 
     wide profit margins,'' says Mark Zandi of

[[Page E846]]

     Moody's Economy.com. ``They may be willing to eat the higher 
     costs.'' In 2006, he expects the economy to grow 3.5 percent, 
     with average unemployment of 4.7 percent.
       Indeed, he thinks oil prices may retreat to about $50 a 
     barrel, from today's levels of about $70, later this year. 
     Higher prices will slightly dampen demand, and added supplies 
     will create some spare production capacity. Naturally, he 
     could be wrong. Energy economist Philip K. Verleger Jr. 
     thinks oil could be headed for $100 a barrel, with inflation 
     going to 5 percent and inducing a recession. Continuing 
     strong oil demand will collide with rigid supply (both 
     production and refining). The conventional wisdom--wrong in 
     the past--could be right in the future.
       Whatever happens, the larger question is how Americans 
     build on this episode. It may feel good to vilify the major 
     oil companies and the oil cartel. But that won't help. We now 
     import 60 percent of our oil; large imports will continue 
     indefinitely. So far, we've escaped a true calamity. We may 
     not be so lucky in the future. We could minimize our 
     vulnerabilities to supply interruptions and price increases. 
     We could open up more acreage (including Alaska) to drilling. 
     We could orchestrate--through tougher fuel economy standards 
     and a gradually rising energy tax--a big shift toward more-
     efficient vehicles. Once again, we've been warned. Will we 
     contine to ignore it?