[Congressional Record Volume 153, Number 185 (Wednesday, December 5, 2007)]
[House]
[Pages H14233-H14239]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENERGY INDEPENDENCE FOR AMERICA
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 18, 2007, the gentleman from New Mexico (Mr. Pearce) is
recognized for 60 minutes as the designee of the minority leader.
Mr. PEARCE. Mr. Speaker, I would like to address the body tonight
about what we are facing in this country as we experience higher
gasoline prices, higher energy prices. Today there is an article that I
will submit for the Record today: Dow Chemical announced it is going to
cut jobs and close plants in the United States.
Dow Chemical To Cut Jobs and Close Plants
(By Bob Sechler and Ana Campoy)
Dec. 5.--Dow Chemical Co. plans to cut 1,000 jobs and
shutter a number of underperforming plants, saying it will
put the savings into higher-growth opportunities.
The job cuts constitute about 2.3% of Dow's estimated
42,500 employees. The chemical company expects to incur a
fourth-quarter charge of $500 million to $600 million,
including costs for severance and asset write-downs.
The effort ``reflects our commitment to prune businesses
that are not delivering appropriate value and tackle tasks
more efficiently across the entire organization,'' Chief
Executive Andrew N. Liveris said in a statement.
Dow Chemical, based in Midland, Mich., has been struggling
with higher prices for natural gas and oil, the main
feedstock for chemicals, and lower prices for commodity
chemicals, or the basic building blocks for more complex
chemicals. Basic chemicals account for about 50% of the
company's revenue.
To reduce its costs, the company has been actively moving
its commodity-chemical production to places like Asia and the
Middle East, where raw materials are cheaper. It has also
worked with local companies in those regions to reduce the
amount of money it has to invest.
The company also is trying to expand its specialty-chemical
business, which is more profitable and less exposed to the
ups and downs of energy markets. Dow has been widely expected
to unveil a major joint venture or acquisition that would
reduce its dependence on low-margin commodity chemicals.
The company pegged the annual savings from the moves at
$180 million once complete.
Among the moves announced yesterday, Dow said it will exit
the auto-sealers business in North America, Asia Pacific and
Latin America, and explore options for the business in
Europe. The company will close an agricultural-sciences
manufacturing plant in Lauterbourg, France.
Now, it's not that it is cutting those jobs in the United States and
simply lowering its production worldwide. What it is doing is cutting
jobs in America in order to make more competitive changes to the
company and have those jobs overseas.
This is a significant thing that we on the Republican side have been
talking about for the last several years. It is time for us as a Nation
to fight the economic fight that we are faced with. We cannot continue
to ignore what other nations are doing and what our energy costs are or
we are going to continue to see headlines like this today with Dow
Chemical cutting jobs and closing plants.
Now, we had a precursor to this earlier this year. Dow Chemical
announced that it was going to build a plant in Saudi Arabia that cost
$22 billion, an investment that large in Saudi Arabia, and meanwhile
they are going to also start in China another plant for approximately
$8 billion, and they knew at that point that they would begin this
transfer of jobs.
Now, we have to ask ourselves is it because Dow Chemical is just a
bad corporate partner? Maybe they are just after corporate greed.
They're going to make profits at the expense of the United States,
because that's what we have heard. We have heard on the House floor
that corporations are evil, that they don't have the interests of the
country at heart.
As we look at it a little bit closer, we recognize that in the United
States just today the prices for natural gas are quoted at above the $8
range. We have at the same point, and natural gas is a very key
component of Dow Chemical's products; in other words, about 50 percent
of their costs, if I am not mistaken, come from their raw material
costs, of which natural gas is the key component. So there is a direct
correlation between the price of natural gas and jobs in this country.
Now, when we are paying above $8 for natural gas, what are they paying
in Saudi Arabia? In Saudi Arabia the price is today about 75 cents. So
almost one tenth, one tenth the cost for 50 percent of their raw
materials in Saudi Arabia versus here.
Now, you don't have to be schooled in economics. You simply have to
understand that you are not going to Wal-Mart and pay ten times the
cost for something you buy when you could go down the street and get it
somewhere else. You go to buy and get the best deal. Companies have to
have the same incentive. If Dow Chemical stays here and pays ten times
more, ultimately they become noncompetitive in the world. Someone else
will set up the plant in Saudi Arabia with one tenth the cost of raw
materials, and the jobs will come away from Dow Chemical and go to
another plant. So all that Dow Chemical is doing is saying we have
competitive forces that cause us to consider this move.
We have done nothing in this Congress to dispel those costs, to drive
[[Page H14234]]
those costs lower. And, in fact, it is this Congress that is mandating
the switch nationwide from coal production, coal-produced energy, to
natural gas-produced energy. Now, that's fine except you must realize
when we drive that demand up as a regulatory agency, as a government,
that we drive the demand up and we say you are going to convert for
clean air purposes from coal to natural gas, you have a great increase
in demand. It is simply a supply and demand problem. So we have the
outcome today. We are seeing Dow Chemical ship jobs overseas.
Now, we have to then look at what the Congress is doing. Speaker
Pelosi announced very early on that it was her desire to make this
country independent of foreign companies. I will tell you that what we
are finding now, we see this particular chart, and this is for the
summer of 2007 and moving forward, we see the predictions that we have
a 23 percent estimated increase in prices in the northwestern part of
the country; in the middle regions about 30 percent increase; 19
percent on the eastern seaboard; in Florida we are seeing 21 percent;
Texas, 32 percent; California, 29 percent. Now, when you are seeing
increasing prices, you would say that we as consumers are not seeing
this energy independence. If we are, it's not a helpful thing to us,
that, in fact, it is somewhat hurtful when we see energy prices and our
home heating increase by that much. We are told these are the forecasts
right now, so we are seeing the effects not only in jobs but also
everyday costs.
We have passed two bills, one back in January, H.R. 6, and then we
also passed H.R. 3221, and those were to deal with the problem of
higher prices, and yet they still have not come back from the Senate.
We still don't have an agreement. And I will say that in the early
stages, the things that we saw pass off this House floor were actually
penalties to energy independence. They tax American companies but they
don't tax Hugo Chavez.
Now, we must at some point ask ourselves why we have a policy that
would tax American companies and American jobs, would limit the supply
so that the cost goes up and we lose jobs. Exactly why are we doing
this as a country? Why are we suggesting passing policy off the floor
that is causing this particular effect? Those are things that we as
Americans should be asking, and we are asking, and yet we don't have a
good, clear answer.
It appears to me, because I am not involved in the conference, the
discussions between the House and the Senate, it appears to me that
special-interest groups have dominated those discussions and have said
we are going to tax those high-profit oil companies because they are
making $100 per barrel of oil, or maybe today it is only $85, but it
seems like there are strong forces out there that say we need to
penalize and punish these American companies because, according to
some, they are obviously doing things that are harmful.
I would say that the harmful effects are not to be found. The harmful
effects are not there. They're not documented. The oil companies are
simply price takers. Exxon cannot set the price of oil worldwide. They
simply take the price that's offered to them. They have a large
production. They are making quite a bit of money, but they have also
got a large investment in the offshore rigs. They have got a large
investment in onshore production, large transportation costs. Their
costs are about the same as any company worldwide. But we are not
taxing worldwide companies in each of the energy bills; we are only
taxing American companies. And we have to ask ourselves why. Why are we
driving the price of natural gas up, sending jobs overseas, and why are
we taxing American companies and not taxing Hugo Chavez?
These are the questions that we are here tonight to talk about as we
move very close to a discussion of what might be in the energy bill
when we close this week. We were told at the beginning of the week we
will have an energy bill this week; yet we have not seen it on our
side. We have said that we are going to discuss it. Tomorrow is the
last day of business for the week, to my knowledge, and yet we still
don't have a printed copy, we on the Republican side, and I don't think
many Democrats have seen a written bill. But we do have in front of us
what has been done earlier this year.
I am joined tonight by a colleague from Pennsylvania, a classmate of
mine, Congressman Tim Murphy. He has concerns also about the direction
that we are taking the energy policy in this country. We are facing
worldwide competition, increasing pressure from the large states of
China, India, the other competitive nations in the world, and at a time
when we should be all looking outward and working, Democrats and
Republicans alike, to protect the economic base of this country and
understanding that energy is a key piece of the economic base of this
country, that jobs are created around the cost of energy. At a time
when we should be focused outward together, we instead have a,
suggested policies that punish American producers, American oil and gas
companies, and they give competitive advantage to other nations and
other countries.
I would like to yield to the gentleman from Pennsylvania to talk
about the nuclear, the coal, and the natural gas industries. He is from
a coal-producing State and has good knowledge on these.
Again, I yield to the gentleman from Pennsylvania.
{time} 1845
Mr. TIM MURPHY of Pennsylvania. I thank the gentleman for yielding to
me on this critically important issue about energy. As American
families look into the next few months about how they are going to be
paying their gas bills as the cold winter sets upon us, as natural gas
prices go up, of how they will be paying their automobile costs as
gasoline prices go up, as we look at such things as jobs such as
chemical industry as was just outlined by my friend from New Mexico, it
is extremely important that as Congress looks at facing an energy bill
this week that we note not only what is in there but what we expect is
not in the bill. And unless we take on a comprehensive energy policy in
America, America will be facing more brownouts, more times when the
power is not there. And in a world where other countries, such as
China, are opening up a new coal-fired power plant every couple of
weeks without the scrubbers and environmental controls we have on, they
will be able to undercut us even further with our costs of
manufacturing. Unless Congress takes sizable action to back up energy
legislation that looks to the big picture of diversifying our energy
production and help to lower costs for consumers, our problems will
only multiply.
Now, I represent a district in Pennsylvania coal country, directly
above the Pittsburgh coal seam. It extends throughout western
Pennsylvania, Ohio, and West Virginia. Some geologists tell me that the
Pittsburgh coal seam has been the most valuable mineral deposit in the
world. It was responsible for the growth of the American steel
industry, glass, chemical industry, it has some 50,000 jobs in
southwestern Pennsylvania dependent on the coal industry, railroads,
barges, trucking, so many other industries involved. It allowed for the
development of modern railroads, river navigation networks. It remains
a valuable resource that will be able to serve us for many years to
come, perhaps 250 more years, long after the Mideast is dry in its oil
wells.
Closing the mines in Pennsylvania would be like closing the beaches
in Florida or closing the harbors in New Orleans. The country can't
afford to stop using coal, either. It is a valuable economic resource
for our region as other resources available in other parts of the
country. So we have to take advantage of every possible resource to
meet our energy demands. The messages today are quite simple. We cannot
achieve energy independence without coal. We cannot achieve energy
security without coal. And our coal must be clean coal, not the other
option of no coal at all.
Now, listen to these numbers. They are quite compelling. Over the
next 40 years or so, the electricity demand in the United States will
double. These are the demands of people in their homes. They are also
the demands of increasing jobs in this country. We will conserve, and
we will have make great strides in efficiency. But with the growth in
the population and improving quality of life, it all dictates that
electricity demands will still increase substantially.
[[Page H14235]]
Coal accounts for about 50 percent of our electricity, and nonhydro
renewables like solar and wind account for about 2 percent. We have
already built as much hydroelectric as possible, and it is doubtful
that people will want to see more large super dams built around the
country. But even if we triple the share of renewable electricity, we
will still need coal for close to half of our electricity in 2050. This
means we will still have approximately to double the available coal
capacity by 2050 just to meet demand.
Right now there are about 400 coal plants in the United States. Many
of them are old and inefficient, outdated. Most or all of them will
need to be replaced over the next 40 years. So just to maintain our
current level, we are going to need to build about 400 plants to
replace those. And then to meet the new electrical demands over the
next 40 years, we are going to have to build an additional 400. That is
800 new coal-fired power plants between now and 2050. This is twice as
many plants as have been built since the start of the Industrial
Revolution. This translates to about one coal plant every 2 to 3 weeks,
even if we start in 2010, just to maintain the current capacity. It is
a huge demand. And we can do that in a way that has clean coal
technology, zero emissions, if we will choose to make the investments.
MIT said about $8 billion or so will be needed to meet those
investments in real dollars. That seems a lot cheaper than it took us
back in the 1960s to put someone on the Moon. In the meantime, China is
adding about one or two coal plants a week and they are going to
continue. They put cheap power in the plants without scrubbers. In the
U.S., renewable technologies such as solar and wind are expanding
rapidly and will continue to do so. But they simply cannot match coal
in terms of delivered power.
Here are some examples. This past August, power from West Virginia's
largest wind farm was available only about 10 percent of the time that
it was actually needed. That is, the wind doesn't blow consistently
every day. At 10 percent availability and 3 megawatts capacity, about
3,000 windmills would be needed to equal the useful output of just one
coal plant. To completely replace coal with wind, we would need to
build 1.2 million windmills by 2050. This assumes the utilities will
actually be allowed to build all the new miles of transmission lines
they will need. And will people want all those wind towers up?
Another area, the largest solar panel array in the United States is
under construction at Nellis Air Force Base in Nevada. It is going to
cover 140 acres of desert with 70,000 solar panels, but will produce
only about 2 percent of the output of a modern coal-fired power plant.
At that rate, we would have to destroy 11 square miles of beautiful
southwestern Pennsylvania forest or consume this much valuable land
from our farmers just to avoid building one coal plant.
The truth is, we need to increase the supply of all energy, coal,
natural gas, nuclear and renewables. We can't afford to ignore any of
them unless we are willing to put up with a series of brownouts and
blackouts during times when the sun doesn't shine and the wind doesn't
blow. So the key to solving this problem includes developing clean coal
technologies with zero emissions and zero greenhouse gases.
Another option is to switch to natural gas, and what we are hearing
in the energy bill is there will be more push for doing that, as was
outlined by my friend from New Mexico. As natural gas prices continue
to soar, that is more jobs out of America that use chemical plants and
more families' gas bills going up. Natural gas provides about 19
percent of our current electricity demand, and its use will also have
to double by 2050 to maintain its current market share. About 90
percent of the electric generating capacity installed since the year
2000 has been natural gas-based, and natural gas is about three times
more expensive than coal per kilowatt of electricity generated. This
has increased the demand for natural gas and raised the price of both
gas and electricity. The increased use of natural gas for electricity
combined with our policies that place off-limits much of our domestic
gas resources has caused us to be become a gas-importing nation when we
could be a gas-exporting nation.
Congress has repeatedly made vast areas of our coastlines off-limits,
thus embargoing our own resources from ourselves, boycotting our own
resources, and all the while countries like Cuba drill closer to our
shore than we are allowed to.
We used to be self-sufficient in natural gas, but not anymore. Most
of our imported gas still comes from Canada, but this is declining.
Imports of liquid natural gas, or LNG, are increasing rapidly. Not only
does this move us farther away from independence, but it is
unsustainable because demand for liquefied natural gas throughout the
world, especially in Europe, is also increasing rapidly. Chemical
companies which use natural gas as their primary feedstock to make such
chemicals and fertilizers and other products and other industries that
depend heavily on natural gas are going to move their operations
overseas where gas is cheaper. When natural gas costs in Middle East or
Russia are $1 per unit or less compared to $6 to $12 at a fluctuating
cost line in the United States, it is easy to see why the decisions are
being made.
Already we have lost 3.2 million manufacturing jobs, almost 20
percent of the total since the year 2000. Chemical companies
consistently say that natural gas costs are far more important than
labor costs when making their decision to move overseas. Worse yet, if
greenhouse gas legislation becomes reality in its current form, natural
gas will become by default the fuel of choice for electric utilities.
The trends we have already seen will only become worse. Prices will
soar.
In the mix of which energy source is the cheapest, hydro is probably
the cheapest, but as we said before, we doubt if people will want to
build several more dams and dam up beautiful valleys across America.
Next cheapest is nuclear power followed by coal, wind, natural gas and
solar.
But let me briefly talk about nuclear. We need to decide whether
nuclear power can pick up the required electricity supply. Nuclear
plants currently provide about 19 percent of our electricity, about 30
percent in Pennsylvania. There are about 100 nuclear power plants in
operation in the United States today, but we can't just keep
relicensing them forever. They are also getting old and worn and will
need to be replaced. By 2050, we will have to replace just about all of
the existing nuclear fleet. They are long past their prime and will
need to close. This means that by 2050, we will have to build about 200
new nuclear power plants. That is 100 replacements and 100 new to meet
the expected demands of 2050. The trouble is we haven't built a single
nuclear power plant in the last 30 years, given all the delays and
costs associated with nuclear construction. It is going to be
difficult, if not impossible, to build plants in the U.S. at the rate
needed. That is about five per year, about one every 2\1/2\ months
starting in 2010. Although the operating costs for nuclear plants are
about the same or slightly cheaper than coal, the capital costs are
much higher and the lead times for construction and permitting are much
longer. The nuclear operating costs also do not include the long-term
costs of nuclear waste disposal or storage.
As with natural gas, the enactment of greenhouse gas legislation in
what we are understanding is the current form, without working to help
the nuclear is going to increase the demand for nuclear power and place
further strain on resources and increase costs. So there we are, two of
our biggest resources for producing electricity, coal and nuclear, are
areas that Congress has got to deal with seriously.
We have 250, perhaps 300 years' worth of coal in the ground.
Scientists are working on ways of making sure we have zero emissions
coal, zero greenhouse gases, massively reduce that. Right now I know in
Pennsylvania about 40 percent of our coal-fired power plants have no
scrubbers, or inadequate scrubbers. Unfortunately, the way new source
review works is if a company says let's work to improve efficiency,
let's put in new turbines or other things that improve efficiency by a
few percent, at that point, the government comes in and says, no, we
now have to review everything you do, and if you don't take care of
everything with all the scrubbers, you can't do it at all. The
companies say, well, we were
[[Page H14236]]
thinking of spending 20, or 50 or $150 million on some upgrades but we
don't have four or $500 million to take care of this one plant. So they
hold off. That is not cleaning the air. That is not taking care of our
needs.
What we have to do is look at ways of promoting the new technology,
helping private business make those investments in new technology, but
above all, meet our current and our future needs by addressing the
issues of America's abundant supplies of coal and expanding the use of
nuclear power which is clean. It is one of those areas we have to deal
with seriously.
I thank the gentleman from New Mexico for yielding me this time and
his leadership on working in these areas which is so important for
America's energy security.
Mr. PEARCE. I thank the gentleman for his comments and recognize that
we have a 15-year lead time before we build the first nuclear power
plant. China is right now currently hiring our nuclear technology
capability. They are hiring our people so that we first of all don't
have young people going into the nuclear industry, those who are
retiring are going to China because they have a commitment to build
nuclear power plants. And as the gentleman said, we face a severe
shortage of energy in the future. We are already giving up jobs. And we
are doing nothing about it.
Now, I would like to show a difference in viewpoints. Up above the
Speaker's dais is a quote by Daniel Webster. If I were to read that
quote, it says, ``Let us develop the resources of our land, call forth
its powers, build up its institutions, promote all its great interests
and see whether we also in our day and generation may not perform
something worthy to be remembered.'' It begins, ``Let us develop the
resources of our land.'' Daniel Webster.
Can we do something great that our generation might be remembered
for? Now, I would go also to a quote from earlier this year from the
chairman of our Resources Committee. Now, keep in mind Daniel Webster
said, ``Let's develop our resources,'' but the chairman of our
Resources Committee this year says, ``I see no reason, no reason
whatsoever why good public land law should be linked to the gross
national product.'' I'm sorry, the gross national product is our
capability to generate jobs. And contrasting with Daniel Webster who
says, Let's do everything we can to build a great country. Let's build
this dream of American exceptionalism and let's fight to have the hope
and opportunity that we as a country have and let's use our resources
to do it.
Contrast that to this year, this year's energy bill, ``No reason, no
reason whatsoever, why good public land law should be linked to the
gross national product.'' Just earlier this week, I authored an article
in Human Events magazine. If you want to go online, pearce.house.gov.
Be sure and spell it p-e-a-r-c-e. If you spell it p-i-e-r-c-e, there
are things on the Web site that come up on that that your mother would
not want you to see. We simply need to go and look at energy policy. If
you go to pearce.house.gov and look at the Human Events article earlier
this week, we talk about the energy bill that was passed out of the
House by the chairman who says, ``No reason why public law should be
linked to gross national product'' and what they did in that particular
bill, H.R. 3221, was they cut off 9 trillion cubic feet of natural gas
from Colorado's Roan Plateau.
{time} 1900
They cut off 2 trillion barrels of oil from shale oil. That is in
Colorado. This, by the way, is twice the reserves of all known reserves
in the world. We could be the Saudi Arabia of oil if we would simply
harness those resources down there Webster talks about, that shale oil
in Colorado.
The bill, H.R. 3221, dramatically expands the environmental study
requirements on existing oil and gas pads. This provision alone is
expected to reduce or delay onshore natural gas supply by approximately
18 percent. So at a time when Dow Chemical is investing $22 billion in
Saudi Arabia because their natural gas prices are one tenth of ours, we
are limiting supply by another 18 percent by our bureaucratic and
regulatory requirements. It just does not make sense.
There are breaches in the legitimate legal offshore energy contracts
between companies and the U.S. Government, in much the same way as Hugo
Chavez and Vladimir Putin might install. That is a quote from some of
our friends at the Washington Post earlier this year writing about H.R.
6.
It cuts off 10 billion barrels of oil from the National Petroleum
Reserve in Alaska, and it cuts off the government agency's
communication for oil and gas permitting activities, as they currently
do under law.
Now, these are things in the bill that supposedly are going to bring
us energy independence. It is a bill that we oppose. We as Republicans
and we as conservatives say that we must first take care of the
opportunity for our young people to have jobs and careers. We first
want to defend our economy against those foreign countries that would
take our living standard, that would take our jobs. And yet we are
passing a bill where the chairman says there is no reason, no reason
whatsoever, why good public land law should be linked to the gross
national product. I find that quote to be stunning.
One of the provisions in the bill that is suggested that might come
up, again, the Democrats are saying, Nancy Pelosi is saying we are
going to have an energy bill this week, and one of the provisions in
that is a provision to require renewable fuel standards.
Now, that is well and good, until one looks more closely. That part
of the renewable fuel standard is ethanol from cellulose fibers. Those
are wood fibers.
I would like to yield to the gentleman from Utah, a good friend of
mine, Representative Bishop, who heads the National Parks Public Lands
Subcommittee in the Resources Committee, is knowledgeable about
national forests and about the opportunity that we have to help lower
energy costs by using renewable fuels as the technology exists or does
not exist today.
I yield to the gentleman from Utah.
Mr. BISHOP of Utah. I thank the gentleman from New Mexico for
offering, for allowing me an opportunity of saying a few words on what
will be a significant piece of legislation that we will maybe be asked
to vote upon this week.
You know, it is only intuitive that this Nation should be energy
independent. If we were energy independent, not relying on foreign
sources of energy from obviously other places, not only would it allow
our military to have the flexibility it needs to function in whatever
situation upon which it is called to be used, but it allows our
diplomacy to be used in flexibility in any situation.
So, how do we actually replace this foreign oil that is presently
being brought in here? Everyone who understands the situation will tell
you there is no simple, single silver bullet. Multiple means have to be
used.
Energy conservation, efficiency in transportation, things we have
talked about, those are good. That is part of the mix. But only about
16 percent of our foreign oil imports could be eliminated simply by
using efficiency in transportation or energy conservation means. Other
methods have to be added to the mix as well, and one of those is
biomass.
Biomass by itself could produce 24 percent of all the foreign oil we
are importing into this country, far more than even our best efforts of
conservation or efficiency. If we combined those two together, we are
well on our way to trying to become energy independent.
For those of you like me that like technical talk, biomass is dead
trees, dead shrubs, the stuff that burns in forests if you don't remove
it first. And as much as our friends on the other side of the aisle
will continuously say they want to require biomass to be part of the
fuel standards, the renewable alternative fuel standards, the bill that
will be brought before us this week will not allow biofuels, dead
trees, to come from the one and the largest source of those dead
materials, and that is Federal lands where we have unhealthy and
overgrown forests. That is specifically prohibited as part of the
alternative energy formula.
Now, when we limit the collection of hazardous fuels from those
forests, that biomass material, what we are really doing in essence is
gutting the Healthy Forest Restoration Act, a bipartisan bill that was
passed last year, in an effort to prevent catastrophic fires,
wildfires, those fires that we have
[[Page H14237]]
seen that destroy property, that actually push more pollutants into the
air than any highway full of cars can ever do, and, more importantly,
they destroy the lives of people who are caught in the path. This act
was there to bring a new energy to people in the West and to help rural
economies recover from a collapsed timber industry forced on them by
outside sources.
This bill tries in some way to help with payment in lieu of taxes to
western counties and secure rural schools; yet at the same time, secure
rural schools are rural districts that relied upon the timber industry
and can no longer do it because of outside decisions, and therefore
they are getting subsidizations for their school systems. At the same
time this bill tries to help those schools, it prohibits them from ever
having any kind of natural recovery within those areas by prohibiting
their last source of job creation in those areas, which is recovering
the dead fuel in the forests.
Now, that is the hope, and that is eliminated in the bill that we
will have coming before us. It isn't enough that this energy bill
prevents the use of this material that is grown in those areas; it
prohibits the use that is used in private forests to maintain their
health as well.
The Democrat intents of this bill seems to be clear: If you can
prohibit the collection of biomass, the dead stuff of the forests, and
make the provisions so unworkable, then obviously no responsible
company would ever attempt to comply and go in and therefore do it. So
the essence is, like Marie Antoinette of old who said ``Let them eat
cake,'' the essence of this bill is simply let it burn. That is what
will happen to our forests, when it could be being used to help us
become energy independent and energy self-sufficient.
And it is a key and crucial element. Not only can we help our
societies by reducing wildfires, we can help have jobs in those rural
areas that need them so desperately. We can help all of society become
energy independent by using a renewable source, but it is specifically
prohibited by the language that you will find in this particular bill.
Now, once again, I am very simple, and I need to know who is going to
be hurt by this situation. I am an old schoolteacher.
We have two States in the West bordering one another, one of which
puts its emphasis on proactive energy development and the other does
not. A starting teacher in the school district that puts its emphasis
in proactive energy development makes $4,000 a year more than a fourth-
year teacher in the neighboring State will do. So who is hurt when we
prohibit and eliminate the opportunity of expanding our energy
production in the West? Well, the kids are, the school system is, the
teachers are, the road funds that you need to construct roads in those
larger western areas. Those people who actually pay taxes will be hit
higher when we don't need to do it if we simply look to the resources
we have.
As the gentleman from New Mexico clearly said, quoting Daniel
Webster, this quote that is in this Chamber, we sit and look at it
every day, very few of us actually look up the words, but, once again,
Daniel Webster said, ``Let us develop the resources of our land, call
forth its powers, build up its institutions, promote all its great
interests.'' And why? ``And see whether we also, in our day and
generation, may not perform something worthy to be remembered.''
This bill that will be before us is a bill that is not going to be
worthy to be remembered. It does not move us towards energy self-
sufficiency. It does not make us independent in our efforts. It does
not grow our energy needs and provide jobs and provide a cleaner kind
of energy for the future.
It simply doesn't make the cut on a whole bunch of areas, one of
which happens to be biomass. What could have been a great source for
energy in the future is literally shut out by provisions in this bill
that should not be there, ever. It is the wrong approach to take.
Now, I appreciate the chance of rambling on here for a minute, and I
appreciate what my good friend from New Mexico is doing to present the
concepts that are in this bill that we are glossing over in an effort
to try and rush an energy bill just before Christmas. No one is going
to have the time to look at it. No one is going to have the time to
study it. No one is going to have the time to simply sit down and say,
you know, there is a better way. We could tweak it here and there and
actually come up with a decent policy. But because we have waited and
piddled around until the very end of the session when our backs are to
the wall, we are going to be faced with an up or down vote on something
that just isn't worth it. It has too many flaws.
With that, I would yield back to the gentleman from New Mexico.
Mr. PEARCE. I thank the gentleman from Utah for his compelling
arguments.
The situation is, again, there appears that there will be a
requirement to produce ethanol from cellulose, which is a nice thing to
think about. We have had testimony, though, that no technology exists
to do that, and it could be 20 years before that technology exists.
Now, you would ask what are the circumstances in the bill that deal
with this. What if there is no technology, but there is a requirement?
That is fairly simple. There is up to $2 a gallon penalty, tax, fee, on
the companies, the refiners, if they can't produce the minimum amount
of ethanol from cellulose fibers. So, first of all, we are restricted
from going into our national forests and stopping them from burning
down. We have all seen the wildfires in San Diego and New Mexico. We
had the Los Alamos fire back in 2000. We had the Kokopelli fire up near
Ruidoso that burned 30-something houses. We have seen the devastating
effects of wildfires in the West, and yet we are prohibited now by this
law from going in and taking those fibers. One has to ask, where is the
sense in that? Why are we doing that? I would say again, it is special
interests, the extremists of the environmental movement who say we are
not going to allow the Forest Service to cut one single tree. We are
not going to allow any harvest.
We passed the healthy forest initiative back about 2004, and yet this
is the way that we gut the bills. We can say on the one hand we passed
the healthy forest initiative, and then we don't quite tell the people
of the country that the healthy forest initiative will not be
implemented. We won't keep our forests healthy because we are going to
prevent anybody from using those materials out of them. So it is going
to be a sheer cost, a cost to the government, where we could get
someone to pay the government.
Mr. Speaker, I would submit the article from the Human Events paper,
``America Does Not Need a San Francisco Energy Policy,'' for the
Record.
America Does Not Need a San Francisco Energy Policy
(By Representative Steve Pearce)
When Democrats took control of Congress last year, they
promised to do something about energy prices. They have
delivered on that promise by driving the price of oil to an
all-time high of $99 per barrel and forcing families to
tighten their budgets. Apparently unfazed by this dramatic
increase, the Democratic leadership is poised to deliver
legislation that will drive prices even higher and make us
more reliant on foreign sources of energy.
Leaving Americans in the Dark
Behind closed doors, House Speaker Nancy Pelosi (D.-Calif.)
and Senate Majority Leader Harry Reid (D.-Nev.) are piecing
together an energy bill that they plan to unfold sometime in
December. In addition to violating procedural rules they
promised to uphold, this secretive process prevents both
Republicans and Democrats from heading off offensive
provisions that would otherwise receive public scrutiny. It
appears it is not just the majority's energy plan, but also
the process that leaves Americans in the dark.
The mad scientists behind those locked doors are using the
remains of two considerably flawed energy bills that came one
each from the House and from the Senate. Every objective
analysis of both bills concludes they will hurt the U.S.
economy. A recent study conducted by a highly respected
nonpartisan business consulting firm estimated that by 2030,
the House and Senate energy bills will cause the loss of five
million American jobs, a 4% reduction in gross domestic
product annually (more than $1 trillion) and an estimated
loss of $1,788 in spending power for the average household
each year.
Bureaucratic Hurdles
The House bill, in particular, is designed to increase
bureaucratic hurdles to domestic energy production from oil,
natural gas, wind, solar and biomass and punish American
energy companies for being in the business of making energy.
Here are just a few of the worst examples of how Democrats
would make energy more
[[Page H14238]]
expensive and less available to Americans. Their plan:
Cuts off nine trillion cubic feet in natural gas from the
Colorado Roan Plateau. This is enough clean-burning natural
gas to heat four million homes for 20 years.
Cuts off two trillion barrels of oil from oil shale
resources. This is twice the total proven oil reserves
available in the world.
Dramatically expands the environmental study requirements
on existing oil- and gas-drilling pads. This provision alone
is expected to reduce or delay our onshore natural-gas supply
by approximately 18%.
Breaches legitimate legal offshore energy contracts between
companies and the U.S. government in much the same way as
Hugo Chavez and Vladimir Putin.
Cuts off 10 billion barrels of oil from the National
Petroleum Reserve in Alaska, as though derailing production
of 10 billion barrels from the Artic National Wildlife Refuge
weren't enough.
Cuts off government agencies' communication for oil- and
gas-permitting activities as they do under current energy
law.
Raises the tax on American-made oil and refined products by
as much as 9%. This tax will simply be passed on to
consumers.
Dangerous Reliance on Foreign Sources
Since their plan will make domestic energy harder and more
expensive to produce, the majority's energy future creates a
dangerous reliance on foreign energy sources. They have
repeatedly prevented the use of energy resources in ANWR and
the Outer Continental Shelf and locked up a large portion of
our public lands that are rich in energy. Without access to
domestic sources, we will become increasingly reliant on
energy from ruthless dictators such as Hugo Chavez or from
highly volatile regions of the world like the Middle East.
This is not a good time to be experimenting with San
Francisco-style energy policies. Our fastest-growing
competitors for energy around the world are China and India,
who are expected to surpass the United States in economic
output within two decades. Both countries vaulted past
America at the beginning of this year as an exporter and have
since moved at lightning speed to eclipse Germany's once
insurmountable export machine. While China and India are
using every type of energy they can get their hands on, our
leadership in Congress is trying to severely limit our energy
options.
America needs energy to survive. If we have the means to
ensure that survival, we shouldn't lock it up and throw away
the key.
Mr. PEARCE. Mr. Speaker, now we should talk about the components of
the bill that is suggested. Again, keep in mind that we are here
talking about the future of the Nation. We are talking about the
philosophical underpinning of where we are going in this country with
our jobs, with our economy, with our future. This bill is at the basis,
because the American economy is driven by affordable, cheap energy.
{time} 1915
And what are we to say about the bill? We are having to speculate. We
are told that it's coming up this week, either today or tomorrow. It's
obvious that it's not coming up today. So one would say that it must
come up tomorrow because we had that promise from the Speaker of the
House. And yet we don't have the text of the bill that is dealing with
our future as a Nation, our ability to make and create jobs, and we
know nothing tonight so that we can not really talk in anything but
speculative terms. But we feel fairly certain on those speculative
terms because we have had leaks from behind those closed doors where
this process is going on.
What are we to believe might be in that bill? First of all, there is
going to be the renewable fuel standard, the RFS, renewable fuel
standard, which says that we need to produce a certain amount of our
energy, our gasoline, from ethanol. That is a worthy and acceptable
thing if it's possible and if it doesn't stop us from implementing the
Healthy Forests Act.
The second thing that is in the bill that we feel pretty certain
about is that there will be some renewable portfolio. That is, we are
suggesting that companies should produce electricity using renewable
fuels. The only problem is that the suggestion up to now has been that
they should produce 15 percent. Now, there's a delicate problem there
because we have not yet seen the capability to produce from renewable
fuels 15 percent. Again, one has to wonder about the penalty. Every
major utility is against this provision because they know they cannot
comply.
Every single one of us wishes that we were independent of Saudi
Arabian oil and Hugo Chavez oil. But the truth is we are not. We made
the wrong decisions 30 years ago, and the wrong decisions are causing
us the problems that we have today. We did not make incentives in
renewables 30 years ago. We made it harder to invest in nuclear power
30 years ago. Today, we are making it harder to invest in coal. We are
requiring the conversion to natural gas, and that conversion to natural
gas is pushing the price of natural gas up, which is causing Dow
Chemical to say we are taking our jobs to where the price of gas is 75
cents, not over $8. It is a very simple process that we are engaged in.
So the bill, we think, is going to have a renewable fuel standard.
It's going to have a renewable fuel standard that says we cannot take
woody fibers out of our national forests, even when they are burning
down, even when the trees are dead, even when they are at threat of
burning down. There's going to be a renewable portfolio standard which
says that you have to produce more energy than what is technically
feasible right now in this country from renewable sources.
The next thing actually appears to be a good consensus from the auto
industry on the CAFE standards. If the automakers say that we can hold
American jobs and we can produce to those standards, again, we have not
seen the exact standards, but if the automakers say we can keep
American jobs, then that's one of the key pieces of the debate.
There is another thing in this energy bill that we are supposed to
bring up tomorrow but yet haven't seen. But there is a component that
we are assured is going to be there. That is $21 billion in taxes on
American companies, $21 billion, and the truth is taxes are not paid by
companies, taxes are passed along by companies. So that is $21 billion
that is going to come out of the taxpayers' pocket. Every time you fill
up with gas, $21 billion is going to come from the producer or from the
taxpayer. It's going to the government and it's going to lower the
capability for us to balance our personal budgets. So $21 billion in
taxes in this bill that will be borne by consumers.
Now, the sad thing, and this is where you really must understand that
there are elements of this tax provision that include a rollback of the
section 199 manufacturers' deduction. That was a deduction that was
passed in Congress back in 2004. It included oil and gas, but it was
specifically there to encourage increased domestic production
activities. We wanted to assure American jobs and we wanted to assure
that American jobs were competitive with overseas countries, so we had
a rollback in the 199 taxes. I'm sorry; we established the section 199
manufacturers' deduction but the bill that is coming before us, it has
leaked out that it has a rollback in those incentives for producers.
Now, the difficult thing is that the rollback hits only the top five
producers. It hits BP, Chevron, ConocoPhillips, ExxonMobil, and Shell.
Now if you are listening like I am reading, you're wondering who got
left out of the list. Who's not going to see a tax increase? Citgo.
Now Citgo is owned by Hugo Chavez. I do not know if it is by design,
but I can say that according to the information that is out right now,
there is going to be a rollback in deduction for the top five companies
so that they pay more taxes, and we are not charging Hugo Chavez any
more tax. One has to wonder about the value system that says don't
charge Hugo Chavez tax but do charge Exxon, do charge ConocoPhillips,
do charge Chevron/Texaco, do charge Shell and BP.
Now, what you have been led to believe, if you listen to the people
on the left, they want you to believe that ExxonMobil is an evil
entity; that they by themselves are driving the price of oil up that
they might profit. When we look at a world assessment of size of
companies, we realize the falseness of that argument.
Let's look at this chart which begins to look at countries and
companies. Many countries own their oil companies. Saudi Arabia by far
has the largest oil company, you can see. It has about 10.3 million
barrels per day. You go to Iran. It has a very large oil company. The
Iraqi National Oil Company is actually quite large. Qatar, Kuwait,
Venezuela, ADNOC, Nigeria. You notice we are not even yet to
ExxonMobil.
And yet Hillary Clinton says, I am going to take ExxonMobil's profits
and spend them. Nancy Pelosi has said the same thing, We are going to
take
[[Page H14239]]
ExxonMobil profits and spend them. We haven't taken yet any profits
from any of these companies, and they dwarf, they dwarf ExxonMobil. We
go all the way down to this far on the chart before we find the first
privately owned company, ExxonMobil.
ExxonMobil is owned privately by you, the shareholders, the
stockholders. You can buy it every day. ExxonMobil is going to be
charged taxes. It's going to make them less competitive worldwide. We
are going to do away with more jobs so that these companies, these
state-owned companies might have an easier time to take our jobs. I
wonder at the thought process that went into that. I wonder what
compelled policymakers here, the Speaker of the House to say we are
going to tax American consumers, we are going to tax American
companies, and we are going to let Hugo Chavez, we are going to let
Nigeria, we are going to let Kuwait, Saudi Arabia go.
We also have other considerations. In the bills that we have passed,
the bills that we have passed out of this Congress so far about energy,
we have done kind of sort of a tricky thing. There is much discussion
about Enron. That was the large power company that became synonymous
with tricky dealings, double dealings.
What did they do? One of the things they did in defrauding the
consumer, one of the things they did in defrauding the shareholders is
that they did things called round-trip sales. If they needed their
balance sheet to look better on a certain day, they would maybe buy or
sell a lot of energy, maybe a specified amount of energy, and then they
would simply buy it back, sell it to their own selves in a different
company, and buy it and sell it, buy it and sell it, round trip, so
that nobody was actually giving them money, but it looked like money
coming in, and no one could ever see their balance sheet to see that
they were actually paying out the money to themselves. It was coming
in. The sales looked really good until some day you simply have to have
the cash in hand. Those round-trip sales became synonymous with Enron
and their double dealing.
But let's look at what this Congress, the new majority, who said they
are going to do things in such an ethical fashion, let's look at what
they have done. They have used the same taxes on offshore oil and gas
in the gulf coast, the gulf region. They used those as on offset
because we in Congress say we can't spend money without providing for
it; the PAYGO provision. So they use those same taxes in H.R. 6, and,
by the way, I am calling these the Enron tax provisions because they
are kind of like those Enron round-trip sales, those ways of stating
things so you have to check both sides of the ledger before you
understand, but there's really not anything there.
So our friends on the other side of the aisle used those offshore
taxes, those 1998/1999 leases to offset, to be the PAYGO in H.R. 6.
They used it in H.R. 2419. H.R. 6 we passed back on January 18. H.R.
2419, we passed July 27. They used them again on August 4 in H.R. 3221.
And they used them again in H.R. 3058, which still has only passed
committee but yet has not passed the floor.
When we as policymakers begin to do round-trip sales, it's no wonder
that we have the reputation that only 9 or 10 percent of the American
public really trusts what we are doing. We are doing things that do not
make sense for our economy. We are doing things that are creating a
false illusion about our potential to pay for things that we are saying
we are going to do. We are watching our jobs leave and go away, all
because we in this country need affordable energy, and yet we are doing
things that hurt the chances of providing affordable energy.
Again, the point that we object to in this coming bill, the energy
bill we are talking about this week, are the renewable fuel standards
that are not achievable and keep us from implementing the healthy
forest initiative so that we don't burn down our forests. It's
objectionable that a renewable portfolio standard is being set that we
cannot reach. It's objectionable that we are raising taxes by $21
billion to American consumers. It's objectionable that we are using a
tax that is going to be punitive to American companies but will not tax
foreign oil companies, will not tax Hugo Chavez. At the end of the day
we have to ask ourselves exactly why. Why is it that this majority is
taking these stances that harm Americans so much? I don't know an
answer to that.
I would like to submit for the Record a summary of the report, the
Charles River report. In that, Charles River is suggesting that we are
going to lose jobs, almost $5 million from the energy policies that are
being suggested right now by this Congress. We are going to lose 5
million jobs. The average American household's purchasing power could
drop by $1,700 by 2030. Aggregate business investment in the U.S. could
drop by as much as $220 billion by 2030. Our gross domestic product
could decline by more than $1 trillion by 2030. The costs of petroleum
products could more than double by 2030. If you take a look at that
report, you will see the damaging effects to your future, your
children's future, and your grandchildren's future. The Charles River
report is nationally respected and says: Please, please reconsider what
you're doing in Congress, what the majority is doing in Congress right
now to affect energy prices in the wrong way. We need lower costs of
gasoline at the pump, lower costs of heating oil. We need policies
which will implement those, not drive them up. We need them to be
driven lower.
Mr. Speaker, I thank you for the time that you have yielded me
tonight. I thank my friends from Utah (Mr. Bishop) and from
Pennsylvania (Mr. Murphy). This is a very important consideration that
we are talking about tonight.
The Economic Impacts of Proposed Energy Legislation, Charles River
Associates International, November 2007
A report by a respected economic analysis firm examines the
economic impacts of seven major energy legislative provisions
being considered by Congress. If adopted, these provisions
would mandate that American families and businesses replace
proven energy sources such as oil and natural gas with
unproven high cost sources, likely leading to higher energy
costs. The study reveals the following:
Almost 5 million jobs could be lost by the year 2030. The
impact would likely be felt even sooner, with an estimate of
more than 2 million jobs lost by the year 2020, and about 3.4
million jobs lost by the year 2025. These estimates take into
account jobs that would be created by the nearly five-fold
expansion of the biofuels mandate.
The average American household's purchasing power could
drop by about $1,700 by 2030. Higher energy and non-energy
costs estimated in the study would likely mean that consumers
must spend a larger percentage of their income to maintain
their current level of consumption. This could force
Americans to make lifestyle changes, as significant
quantities of energy would be needed to produce and transport
many goods and services.
Aggregate business investment in the U.S. could drop by as
much as $220 billion by 2030. Higher energy costs place
upward pressure on manufacturing costs, and businesses have
less capital to absorb the impact. As household and business
consumption fall, demand for goods and services weakens.
Our national GDP could decline by more than $1 trillion by
2030, relative to the baseline. This estimated 4 percent
decline in GDP would be the result of energy supplies
declining and energy sources becoming more expensive. The
economy as a whole likely would suffer, but the impact would
resonate strongest in the following sectors: commercial
transportation, electric generation, motor vehicles, and
manufactured goods.
Costs of petroleum products could more than double by 2030.
The impact would likely be felt sooner, with a roughly 44
percent cost increase by 2020. In addition to refined fuels
and home heating oil, this would likely impact the many
products that have oil or natural gas components, including
toothpaste, cell phones, infant seats, and pacemakers.
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