[Congressional Record Volume 154, Number 65 (Wednesday, April 23, 2008)]
[House]
[Pages H2647-H2650]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENERGY
The SPEAKER pro tempore (Mr. Altmire). Under the Speaker's announced
policy of January 18, 2007, the gentleman from Iowa (Mr. King) is
recognized for 28 minutes, one half of the time remaining.
Mr. KING of Iowa. Mr. Speaker, I appreciate the privilege to be
recognized here on the floor.
I would ask, as a point of information, do you anticipate Democrats
coming to the floor for the next hour?
The SPEAKER pro tempore. There is one group following the gentleman.
Mr. KING of Iowa. I appreciate being recognized to address you on the
floor of the House, Mr. Speaker.
In the 28 minutes that I have been allocated, I think it's important
to address some of the issues that were raised by the gentlemen in the
previous hour, the 30-Something Group. That is that, gentlemen, you
simply cannot suspend the laws of gravity or the laws of nature, and
what goes up must come down. Water runs downhill. And supply and demand
control the prices in the marketplace.
I have fought this energy issue on this floor of Congress for some
years now. And the lamentations that I'm hearing that come from the
gentleman from Florida, his concerns about motions to recommit used to
be concerns about the Republican majority. They still remain concerns
about President Bush, and they still remain allegations about why we
have high gas prices, why it is people can't pay their bills. But the
Pelosi majority would suspend the law of supply and demand. There
wasn't any discussion about that. It was all about profiteering of the
corporations.
Well, the first point I will make is that we have got to have some
people producing energy. And let's just say, for example, if Exxon
makes $10 billion a quarter, and that adds up to 40 some billion
dollars a year, and if this Congress steps in and says we have a
different deal, we want to change the deal, we want to put some
windfall profit tax on you and every other American corporation that is
now making some profits off their investment in the oil fields, and as
this leadership on the Speaker's side has done through the farm bill in
particular, which is push to change the deal on our oil leases and
renegotiate them because of their belief that the people who signed
those contracts, those companies that are providing oil and gas and
diesel fuel for us are making too much money, Mr. Speaker, a deal is a
deal. And when the Federal Government signs a deal for oil leases and
those companies agree to pay royalties on the oil they pump out on a
per barrel basis, if the value of that barrel goes up, the Federal
Government's deal can't change, just as if the value of the oil goes
down. If it costs more to explore and find the oil and more to get it
on the market, Uncle Sam is not standing there. Speaker Pelosi is not
standing there with her checkbook saying, well, it didn't work out so
well for you; so we want to fill in the hole of the loss that you had.
No. A deal is a deal. And when you shake hands on it or you just say,
yes, that's what I agreed to, that is by definition a contract. And
when you have a congressional piece of legislation, when you have the
Federal Government negotiating a lease, you don't change that deal.
And this Congress steps in and makes noises about windfall profits
tax. And there are people sitting on the board of directors of these
energy-producing companies, these companies where the more energy they
produce, the cheaper gas gets for the American people because the law
of supply and demand commands the price. Gas gets cheaper when you have
more of it produced. And when companies make money, they invest that
profit into research and development and exploration. When they do
that, that puts more gas and more diesel fuel and more oil on the
market, not less. And that keeps the price from inflating or it lowers
the price. So if this Congress, led by this Speaker, steps in to change
the deal, the people on the board of the directors of those oil-
producing companies, if they're logical, rational people and they
control capital; so by definition they are logical and rational in my
book, some of them are going to start to discuss how they can take
those profits out of their oil company and invest them in someplace
else where they might not be so vulnerable to a windfall profits tax or
so vulnerable to a Congress that has shifted to evermore class envy,
evermore resentful about capital returning to the stockholders, and
when that happens--the mutual funds, the retirement funds, the 401(K)s,
the investment funds of America that are our pension funds that
supplement Social Security are many times invested in oil stocks and
reserves and futures. The portfolio of America's retirement is what's
being attacked by this Congress. And we have to let people and have to
let companies make a profit when they invest and take the risk. You
cannot suspend the law of supply and demand. But this Congress has. And
I think you're off in Pah-la-la-losi Land thinking that you can suspend
the law of supply and demand. You cannot.
If we have more energy on the market, the price increase will either
slow or it will diminish and be reduced. If we have less energy on the
market, the price will go up if the demand also goes up. That is the
equation that works here.
So we have high gas prices, and it's pretty easy to figure out why.
The American people that are awake tonight, Mr. Speaker, and especially
those out on the west coast and in the mountain States, they will
understand this equation, I think, fairly simply. There are three
reasons that the gas price has been increasing. One of them is the
world demand on gas and diesel fuel, on oil. That's why the per barrel
crude oil price has gone up. By any
[[Page H2648]]
measure it has gone up. The world demand has increased. We see the
Chinese increase their demand, and as the Chinese demand increases,
that puts more demand on the supply, and when the supply gets tighter,
the price goes up. U.S. consumption has not diminished. It has
marginally increased over the last few years. That uses up more.
The oil reserves are being diminished some. And we're finding also
oil in other places where we thought we couldn't produce it. There was
an announcement here last week. USGS had announced what I believe was
3.4 billion barrels of oil in an oil shale a couple of miles down, most
of it in North Dakota and some of it in Montana. That's a huge oil
find. The tar sands in Northern Alberta have a massive amount of oil,
and we're preparing to bring a pipeline down from there and build a
refinery in the Midwest if local people are willing. And if we can do
that, we can keep the gas and diesel fuel prices in America from
inflating out of sight. And, in fact, if we can bring enough supply in,
we can cause those prices to go back down. Supply and demand is one
component of this, and it's a pretty important component.
The use and consumption of more energy globally is another component
of it.
And a third component of the high gas price is a cheap dollar. This
dollar has been diminished in its price. And the commodities across the
world, it takes more American dollars to buy things overseas to
purchase into the Euro environment, the European Union, for example. It
takes more dollars to purchase in Asia. But their currency buys more.
So because their currency buys more, it takes more American dollars to
compete against that. So perhaps 35 percent of the value of this crude
oil on the marketplace is because the value of the dollar has been
diminished. If you could take 35 percent or roughly a third out of the
gas price today, you're down there near $2 a gallon.
But the point that I want to make about this in this poster, Mr.
Speaker, is this: The remarks made by the previous presenters are not
consistent with this factual information that I have in this chart. And
it works this way: On the day that George Bush was inaugurated as
President, and I mean the first day, January 20 of 2001, the average
gas price on the street was $1.49 a gallon, Mr. Speaker. That price
stayed fairly flat. It appreciated some. And by the time we got out to
2007, January of 2007, when this new Democrat majority in Congress was
sworn in and Speaker Pelosi took the gavel where you're seated, Mr.
Speaker, the gas on that day was $2.33.
Now it's been about 15 months perhaps, perhaps 15 months of this
Pelosi Congress, and gas has appreciated, gone up in price, from $2.33
a gallon to $3.51 a gallon. That's a 50 percent increase in the price
of gasoline in America in 15 months. And that isn't because President
Bush has done something to increase the price of gas. It isn't because
he hasn't been helpful and supportive and worked to try to get us more
domestic energy supplies. It's because the people on that side of the
aisle, Mr. Speaker, the people on the Democrat side of the aisle, have
blocked everything since I've been in this Congress that put more
energy on the market. They blocked everything.
And we fought this on this floor to open up ANWR for drilling, a
massive amount of oil up there. There's no environmental concern in
ANWR. We were successful in drilling the North Slope. And I will submit
that there is not an environmental spill in that part of the country
that has a lasting and damaging effect. There was a tanker, the Valdez,
that did run ashore and have a spill. But that was a matter of
transport. It wasn't a matter of drilling, and it wasn't a matter of
processing or pipelining it out of Alaska. It was after it left Alaska
that that happened. But there was not a measurable spill up north that
caused a problem. There is no environmental impact that's been a
negative up there in Alaska, and there is no rational reason to
prohibit drilling in ANWR. Yet the vast majority of the Democrats
blocked the drilling in ANWR. When we were close, when we were within a
handful of votes of being able to punch those holes up there and have
that oil flowing down in here into the domestic United States, that
would have been back when gas was, let's say, about $1.80.
{time} 2315
Today, it's $3.51 and rising because of the barrier that was put in
place by environmental extremists that do not have a rational argument
that they can put up. All they do is put a green label on a bill, and
as soon as it's green, the chicken littles on that side will run and
vote for a green bill. I had people come to me and they said, We had
the bill to drill in ANWR that allowed for, out of those millions
acres, and I think it's 19.2 or 19.2 million acres, 2,000 of them to be
used to punch holes down into the oil field. Two thousand acres. As the
vote went up on the board, Mr. Speaker, people came to me and said, You
are from Iowa; you know what an acre is. You have farms there. How much
is an acre? I said, Well, 43,560 square feet. That didn't mean a thing
to them, that is the size of a country school house lot. That didn't
mean a thing to them. How about the size of a football field? Oh. Okay.
Two thousand football fields. I think I will be a no because, after
all, it's green. It's labeled green.
Environmentalists don't want to punch holes up there. It's the best
place God could have put oil, that I can imagine. You go up there and
do it in the permafrost and you drive out on the ice. And when the
frost melts in the summertime, there's no sign that there was any
traffic there at all. The most extreme environmentalists you could come
with on that side, Mr. Speaker, I could fly them over ANWR and they
couldn't point down to an oil well. I will fly them over the north
slope. I will fly them over at 2,000 feet and they can't eyeball an oil
well in the north slope of Alaska because it's not what they imagine
and it's not drilling up there in a pristine alpine forest.
I am here to tell you there's not a single tree up there, Mr.
Speaker. Not one. Even though the Sierra Club ran adds that said we
can't disturb--well, the images on the screen were pristine alpine
forests. There's not a native caribou herd. But the one on the north
slope of Alaska, where we did drill successfully, went from 7,000 head
to 28,000 head, for those of you out there in Rio Linda. That is 28,000
caribou where there was 7,000 before because now they don't drop the
calves into the cold water on top of the permafrost, but get next to
the nice warm pipeline and have their calves and they get nice and
fresh then they gallop across the tundra.
It's been a good thing for the environment, a good thing for the oil
supply. Drilling in ANWR is a good thing. Drilling in the Outer
Continental Shelf, especially around Florida, is a good thing. These
prices would not be this high if we had been successful in those
efforts, if there hadn't been a Democrat green coalition that blocked
every effort to try to put more energy on the market, more Btus on the
market. Because the equation is this, all of our energy is all wrapped
up together. British Thermal Units ties it all together, whether gas,
diesel fuel, ethanol, biodiesel, solar, hydroelectric, whether it's
nuclear, whether it's wind energy, whether it's clean burning coal,
whether it's latent solar heat, all of those things put energy out of
the market. They are all part of the overall energy pie chart. The more
energy we can put there, the cheaper it's going to get. And the more
things that you do to take energy off the market, the more expensive
it's going to get. And your thoughts are either denying the law of
supply and demand, or the thing that I heard many of you voice, this
thing you have convinced me now is that you want to see more expensive
energy. That is what I believe. Because I hear the dialog, I hear the
debate. You want more expensive energy because somebody will park their
car and get on their bicycle and ride that instead of driving their
car. Doesn't work for grandma out there in Iowa that has got ten miles
in January to go to town. But it might work for somebody in Florida to
get on their bicycle.
More expensive energy why? Because we get more quality of life? No.
Because you have this myopic vision that you can somehow save the
planet if we had $6, $8, $10 gas. That is why you're taken by every
energy action of this Congress since Nancy Pelosi took the gavel that
has taken Btus off the market, shortened the supply, tightened
[[Page H2649]]
this thing up. The demand has gone up, the supply has gone down. The
price has gone up 50 percent in the 15 months that Nancy Pelosi has
been Speaker of the House. And I have to listen to the drivel that says
there is some other reason because what, we didn't go after the
windfall profits of the oil companies? I don't think so. That means
everybody delivering oil is a crook and everybody is fixing prices and
going along with it. It is supply and demand. That is the bottom line
on this energy piece.
As I look at my colleague from Michigan, who actually comes to the
floor with a significant amount of expertise, I would be very pleased
to yield such time as the gentleman may consume. Mr. McCotter from
Michigan.
Mr. McCOTTER. I appreciate that. Thank you. We have a fundamental
agreement and yet a disagreement. I think that everyone can see that
there are three key elements to America's energy situation: Production,
conservation, and innovation. We all agree on conservation. We'd like
to see America more energy efficient, and we differ on whether or not
what the extreme would be in terms of conservation. Republicans
generally would hope that they would be community-oriented
conservation, recognizing these tiny ripples of hope, citizen
engagement in protecting their local environment would be the most
efficacious way to deal with this situation rather than pass an
overarching bill in Washington, with no citizen participation and only
hope and more regulation, taxation, and burden upon America's industry
and upon the American people.
In the area of innovation it is a very stark difference. Our side of
the aisle believes that the free market and the genius of the American
people will come up with the innovative solutions necessary to move us
toward green fuels and a cleaner environment. The other side of the
aisle believes the government knows best, and if they just capture
enough revenues from the hardworking American people, they will then
determine what ideas will work and will not work and force them upon
the market.
But it is most noticeable in the area of production where the two
sides differ. We believe production is essential. The gentleman from
Iowa has properly laid out we live in a global economy. Supply and
demand are the keys to the crisis today. If America does not produce
more energy from its own sources, the cost will continue to go up
because the supply will remain constricted, if not finite, and the
demand will continue to grow from developing countries such as
Communist China, India, and others.
What we believe is necessary is a declaration of energy independence
which, like our own country's Declaration of Independence, recognizes
that it would not happen overnight, it would not be easy; it would
require sacrifice, and yet together we would get there.
We need to continue to produce domestic energy as we transition
through a free market-based approach to innovations that will get us to
a green energy policy and through the community-based conservation that
will help foster and perpetuate energy efficiencies within our
communities, within our homes.
Now the difference between these two policies is clear in the chart
that the gentleman from Iowa has put before us. As someone who does not
come from Iowa, but from Michigan, once known as the arsenal of
democracy, a proud manufacturing State, the State that put the world on
wheels, we see what the cost of energy does. It is not an abstract
number, it is a situation which causes an intense amount of pain and
anxiety to the constituents of my district and the constituents of my
State.
Manufacturing requires energy. We know the manufacturing sector has
been decimated by unfair trade competition and other unfortunate
policies. Yet, when you take the cost of energy on top of it, you are
almost signaling the death knell of the manufacturing base as we know
it and as we would like to preserve it, because that cost of energy, as
it rises, is put into everything the manufacturer must do. And in the
age of global competition, it becomes increasingly difficult for the
manufacturer to keep his costs down, his fixed overhead rising, and in
the end, there comes the push, especially from the tier one and tier
two suppliers, the push comes from above to either eat the cost or send
it offshore.
We also are starting to see what the government dictates in terms of
innovation with the emphasis on ethanol and others is we are beginning
to hear stories about food shortages in the United States, we are now
beginning to hear about how the cost of basic staple commodities is
rising. Again, in our economy today, which is slowing down, the cost of
energy, the cost of gasoline in particular is the cause. In my mind,
this is the cause. Because it is one important commodity that is
continuing to go up in price without any relief in sight, and it also
has spillover costs to all of the other commodities related to it.
There is nothing that does not wind up on your kitchen table that
does not require energy to produce and transport. There is nothing in
your home that you turn on, your Internet, or anywhere else, that does
not require energy. As the cost of energy goes up, the cost of
everything goes up. If we do not help increase the supply of energy,
the costs will continue to rise, the American people will continue to
suffer.
Now there will be an attempt, because evidently production
conservation and innovation in a sound way is not palatable to some in
this chamber, indeed a majority, there would be the attempt to shift
the blame for the rising costs of energy to the producers. I am no fan
of any multinational corporation. But then, again, I am not their
executioner either. Because I remember what Ronald Reagan once said,
Corporations are not taxpayers, corporations are tax collectors.
You want a windfall profits tax, you want a punitive tax on oil
companies, energy producers, you can do it. And where are these energy
producers and oil companies going to get that revenue from? They are
going to pass the cost right onto the American people at their pumps,
because Americans right now cannot survive without driving their cars
to work. They cannot survive without energy. It would seem to me that
these are simple lessons that we should have learned in our youth.
Then it occurred to me as I watch my children grow up, we have an
entire generation of voters that were not alive in the 1970s. They did
not live through the OPEC oil crisis, they did not live through
taxation upon energy producers, they did not live through the syn
fuels, where government raised taxes, put money in a fund, handed it
out and we were going to be energy independent, or when Jimmy Carter
went on TV and declared that by turning down the thermostat to 68, this
was the moral equivalent to war.
The gentleman from Iowa and I have in the past talked about our love
of history and its need to be taught in the schools. Because anyone
with a remote understanding of the 1970s would understand that the
failed policies of the 1970s are inadequate to meet the pressing energy
needs of today. What we need is a 21st century energy strategy, not a
failed 1970s Jimmy Carter policy that actually helped pave the way
toward more energy dependence in America.
So I thank the gentleman for what he is doing today, and I would
encourage my colleagues to go back and look at what was tried before
and failed and then perhaps they would be more amenable to coming
across the aisle in joining with us to try to take concrete steps to
alleviate not only the rising cost of energy but the rising cost of
everyday life that is associated with it.
I yield back to the gentleman from Iowa.
Mr. KING. I thank the gentleman from Michigan for coming down to the
floor and adding to this dialog.
Mr. Speaker, as I listen to Mr. McCotter and reflect upon his remarks
that corporations are tax collectors, that they actually don't pay
taxes, it's Ronald Reagan's position, my position, Mr. McCotter's
position. They will pass those costs along to the consumer because in
the end it's the last stop of the retail that pays the taxes. That is
the people in the end. The consumers in the end will pay the price. If
they raise the taxes, we will see the prices go up. If we make energy
more scarce, the price will go up. If we are punitive towards companies
that are producing this energy and risking their capital, their capital
will go elsewhere.
[[Page H2650]]
If that happens, then there will be less oil on the market, not more.
The price will be higher, not lower. The energy will be more scarce,
not less. Because of these policies that have come forth in the
beginning of this 110th Congress, we see the action that has taken
place here. We see what has happened from the very first day, Mr.
Speaker, of the new 110th Congress, the day that Nancy Pelosi took the
gavel, and it became clear that there was going to be an energy
scarcity policy. Gas went from $2.33 over 15 months to over $3.51 a
gallon, perhaps more than that today. That is a 50 percent increase in
just 15 months. I have stipulated the reasons for that. Energy is more
scarce, it's less certain. This economy is also in a decline.
It's interesting to me that I don't hear a lot of discussion about
the real reasons for that, Mr. Speaker. I look at it this way. When the
new hands took over and picked up the gavels here to be chairs of the
committees in Congress, in the House and the Senate, and we had the
chairman of the Ways and Means Committee, Mr. Rangel, from New York,
who a long time had waited to become chairman of the Ways and Means
Committee, we had pushed pretty hard to make the Bush tax cuts
permanent, those tax cuts that slowly the authorization expires and
will automatically kick in as dramatic tax increases in the next couple
of years. I watched as the chairman of the Ways and Means Committee
went on the talk show circuit all over television, and I presume radio
too, and he was constantly asked by the pundits, What will you do with
the Bush tax cuts? Will you make them permanent?
{time} 2330
Are there some there that you will commit right now that you will
want to save and protect of those tax cuts, or will you just simply
want to see them all expire and have that automatic, huge,
unprecedented record tax increase?
Well, the chairman didn't address that subject matter, by my
recollection, one at a time or in groups. But eventually as he did
enough of the talk show circuits, the talk hosts would ask the
question, and by a process of elimination, the capital investment in
America pretty much concluded that no part of the May 28, 2003, Bush
tax cuts would the chairman of the Ways and Means Committee want to see
made permanent.
Capital saw that and realized that by about late January-early
February of 2007, just about the time gas prices started to shoot up
here, Mr. Speaker. That is the time that the capital investment of
America understood that capital was going to be more expensive, because
the Bush tax cuts were not going to stay or be made permanent.
When capital gets more expensive and it is looking down the line, it
tightened things up. And you can go back and look at the record, Mr.
Speaker. You saw industrial investment decline indexed directly to the
period of time that Nancy Pelosi became Speaker, Charlie Rangel became
the chairman of the Ways and Means Committee, and that gas began to
shoot almost straight up here on this chart, going on to its 50 percent
increase in prices over a 15-month period of time.
At that same time, capital got more expensive, and because of that
more expensive capital, industrial investment declined. That was the
first indicator that we were going to have an economic problem on our
hands. That was the lack of investment in industry that led all of
this. Along behind it came the subprime mortgage component of it, which
in the grand scheme of things isn't as big a hit on our economy as the
higher gas prices.
Then, as Adam Smith said, there are two components to the price of
everything. One is the cost of the labor and the other is the cost of
the capital. The capital price went up, then the cost of goods and
services went up, and capital investment went down.
We can expect this decline in our economy because of a number of
things: Energy prices are skyrocketing because the policies that are
coming out of this Congress are taking energy off the market, and
capital prices are going up because the tax cuts are unlikely to be
made permanent between now and 2010. So automatically those tax
increases will kick in, and the investment markets see that.
Those are the reasons that are watching this economy decline today.
The subprime is a small part of it. But it is such a small part of it,
when you think of what the subprime really is, it is about a $150
billion loss. We will burn about 142 billion gallons of gasoline. Those
142 billion gallons of gasoline, $1 a gallon for one year would pay for
the subprime.
So let's keep our rules straight. Let's understand we can't suspend
the laws of supply and demand. Let's put some energy on the market.
That includes conservation.
____________________