[Congressional Record Volume 154, Number 77 (Monday, May 12, 2008)]
[Senate]
[Pages S4023-S4025]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           OIL AND GAS PRICES

  Ms. KLOBUCHAR. Mr. President, despite a little snow the last few 
weeks, spring is finally arriving in Minnesota. In fact, we had our 
fishing opener this weekend. It is the time of year when people start 
going up north. They have their cabins up there. It is not exactly 
extravagant, but that is their vacation place and that is where they 
spend a lot of their summer.
  A lot of my constituents have been calling our office saying they 
don't know if they can afford to go up north this summer. Worse than 
that, we have had many people who drive trucks for a living, who have 
long commutes to work, who are concerned about even keeping up with 
their jobs. You can see why. The oil and gas prices have tripled since 
2002: Minnesota, $3.49 per gallon; in the United States, gas prices are 
at $3.66 per gallon. You can see why the truckers are upset with diesel 
at $4.15 per gallon and oil at $122 per barrel.
  I have to pause for a moment to say I have been coming to the Senate 
floor to address the price of oil for a number of weeks now and it 
continues to astound me that every time I speak, the prices have gone 
up even more, and there appears to be no relief in sight. We look at 
the skyrocketing gas prices in Minnesota where they have gone from 
about $2.90 up to $3.62 in only 3 months. This is astonishing, and it 
is even more astonishing that this administration continues to do 
nothing; that the attitude seems to be this is what is happening, this 
is what the market says.
  I believe there are things we can actually do, of course, in the long 
term but also in the short term. I don't believe we can continue to do 
business as usual. I have heard from farmers who are having a hard time 
making ends meet, even with the high commodity prices, because the cost 
of their inputs such as diesel fuel for their farm equipment and 
fertilizer made from natural gas have spiraled out of control. I have 
heard from people who are having a hard time heating their homes and 
going on with their lives.
  The high price of energy has inflated the price of everything from 
groceries to transportation to home heating. We had a hearing in the 
Joint Economic Committee a few weeks ago about the price of food. There 
are a number of factors at play there, including the low value of the 
dollar and the export market; including the weather; including some of 
the demand for biofuels, although that was put as a relatively small 
factor. But one thing that was mentioned time and time again was the 
cost of transportation.
  In cold northern States such as Minnesota, where people have to pay 
off large heating bills, this is the time of year they do it. Some of 
them put it off until now. They are too afraid of thinking about paying 
their bills for next winter. Middle-class families are struggling with 
the high cost of health care and college education, and they can't 
afford the price of gas, especially in our rural areas. You look at the 
fact that there really haven't been any wage increases or the wages 
have been stagnant and, in fact, have been going down; you add that to 
the increasing expenses with the price of gas up about $1,000 or $2,000 
a year, depending on how much you drive. For a middle-class family, 
health care is up something like $1,500 a year; appliances are up, 
telephone service is up. It comes to about $5,000 extra a year that the 
middle-class families are expending in the last 8 years.
  Not a day goes by that I don't hear about this kind of struggle from 
my constituents, so it is hard for me to understand how our President 
seemed so taken aback recently when someone asked him about $4-a-gallon 
gas. This was on February 28, 2008, not too long ago, and the President 
said:

       You're predicting $4 a gallon gasoline? That's interesting. 
     I hadn't heard that.

  The fact is it is not just interesting to the people of my State; it 
is, in fact, a budget buster for too many people in my State. This 
administration has failed to provide Americans with a meaningful energy 
policy that would provide relief from high gas and energy prices.
  This country needs a bold energy policy for the future--not little 
gimmicks, not little ideas that maybe give you an extra 20 bucks. This 
country needs something more than someone who is going to say it is 
interesting. We need a policy that will stabilize prices and give 
consumers more alternatives, reduce our dependence on foreign oil, and 
provide us with the next generation of home-grown biofuels.
  Brazil has achieved energy independence. They have done it with 
sugarcane. It is easier to do, but they have done it. They basically 
leapfrogged our country because their government had the foresight to 
put a policy in place that pushed the development of biofuels. They 
have their own oil, but mostly they have their own biofuels.
  We can do this; we just need the will. We need to pursue a forward-
looking energy policy with the same sense of urgency we used to put a 
man on the Moon nearly 40 years ago.
  In the long term, that is going to mean making strategic decisions in 
research on hybrid cars, new solar technology, cellulosic ethanol, and 
other forms of energy from biomass. It is just around the corner. We 
know that. Chevy is coming out with the Chevy Volt which gives you 30 
miles, by plugging your car in every day and then it converts over to 
biofuels. That is 2 years away. We have new solar technologies. We have 
cellulosic ethanol right at the University of Minnesota where 
groundbreaking research is being done. We can do this.
  We need better fuel efficiency for our cars and trucks. As the 
Presiding Officer knows, this Congress was the first Congress since I 
was in junior high to increase the gas mileage standards for new cars 
and trucks by 10 miles per gallon. We can do more. We also need a 
renewable energy standard such as we have in Minnesota where we simply 
basically are going to provide 25 percent of our energy, our 
electricity, from renewable sources by the year 2025. That was a 
bipartisan agreement in our State--the Republican Governor, Democratic 
legislature, nearly unanimous, supported by our biggest electricity 
company itself, which took even a higher standard--30 percent--for 
itself.

[[Page S4024]]

  These are long-term solutions. I believe very strongly they are 
important and they are the future and we need to pass them. But there 
are also things we can do in the short term about high gas prices that 
could bring immediate relief to the families in my State and across 
this country. That is why I am proud to cosponsor the Consumer First 
Energy Act, which Majority Leader Reid introduced last week. There are 
20 cosponsors, 20 Senators who are already on this bill. The bill 
attacks high gas prices from five different angles, all of which are 
achievable in the short term.
  The first thing, and the thing I have heard most about when I talked 
to people in this business, is the role that market speculation is 
playing in today's price of gas. The administration likes to tell us 
high gas prices are just a simple case of supply and demand, and more 
people are driving, so the price of gas goes up. But that answer 
doesn't hold true any longer. Look at what the oil executives have been 
saying. On October 30, 2007, the CEO of Marathon Oil said:

       $100 oil isn't justified by the physical demand in the 
     market.

  That is the CEO of Marathon Oil on October 30, 2007. I think he might 
know what he is talking about. Then a more recent quote, on April 11 of 
this year, by the CEO of Royal Dutch Shell, who said:

       The [oil] fundamentals are no problem. They are the same as 
     they were when oil was selling for $60 a barrel.

  On April 1 of this year, senior Vice President of ExxonMobil said:

       The price of oil should be about $50 to 55 per barrel.

  If oil should be roughly at $50 or $60 a barrel, given market 
fundamentals, why is it trading at $118 per barrel? If supply and 
demand doesn't explain the high price of gas, what does? According to 
the experts, there is a frenzy of unregulated market speculation in the 
oil futures market that is driving prices to record highs.
  I wish to share a quote from an energy market analyst with 
Oppenheimer, who recently was named by Bloomberg as a top-ranked energy 
analyst in the country. He said:

       I am absolutely convinced that oil prices should not be a 
     dime above $55 a barrel. Oil speculators include the largest 
     financial institutions in the world. I call it ``the world's 
     largest gambling hall.'' It is open 24/7. It is totally 
     unregulated. This is similar to a highway with no cop and no 
     speed limit and everybody is going 120 miles per hour.

  That will be reassuring to the people calling our office because they 
cannot afford to go up to the lake this summer. ``The world's largest 
gambling hall.'' Why are these trades in a commodity as vital as oil--
at a time when we are in a very fragile situation internationally and 
we are doing business with countries we would rather not deal with, why 
is this commodity, oil, unregulated? In 2000, there was a provision 
inserted into the Commodity Futures Modernization Act that exempted 
electronic energy trades from Federal regulation. In the absence of 
oversight, what was once a small niche market became a booming 
industry, attracting a rampant speculation from hedge funds and 
investment banks, the largest financial institutions in the world. Oil 
and natural gas prices became volatile.
  That provision has come to be known as the ``Enron loophole'' because 
it made possible the many abuses that triggered the western energy 
crisis and cost the economy $35 billion and nearly 600,000 jobs.
  The Federal Government has a critical role to play in conducting 
aggressive oversight of changing energy markets. Any prosecutor--and 
the Presiding Officer knows from his past work as a prosecutor--can 
tell you that good laws are not enough; you need good enforcement. 
History has shown us that when enforcement is lax, consumers ultimately 
pay the price. The Consumer First Energy Act addresses the problem of 
market speculation by stopping traders from routing transactions 
through offshore markets in order to get around limits on speculation 
put in place by U.S. regulators. Specifically, the Intercontinental 
Exchange, or ICE, in London allows trading in American oil futures, 
gasoline and home heating oil, with far less stringent reporting 
requirements than what is required here at home. This has driven a lot 
of speculation offshore and out of reach of our regulators.
  This bill will make those foreign trades in American oil and gasoline 
futures subject to reporting requirements so we can have a proper paper 
trail and keep track of what is occurring.
  This bill would also require the Commodity Futures Trading Commission 
to increase the margin requirement for oil trades. A margin 
requirement, as you know, is the amount of money you have to put down 
if you want to buy and sell oil futures. The margin requirement is 
currently set by the exchanges themselves, which is like the fox 
guarding the henhouse. They have set the requirements so low it has led 
to this rampant speculation.
  Some people believe this occurred because many speculators have taken 
money out of subprime mortgages, or the mortgage market, and put it 
into oil. The people in Minnesota want to know the people in Washington 
are looking out for them. I think the way we do that is by reining in 
some of this rampant speculation with this bill.
  The bill also has requirements that will allow us to push on OPEC so 
they provide the oil they should provide. They are keeping it at an 
artificially low level. They are colluding to do that.
  Yet, at the same time, our country is doing business with many of 
these countries. This has to stop, and we have to use the leverage we 
have to push OPEC to produce more oil.
  Another part of the bill would ask that we temporarily halt putting 
oil into our Strategic Petroleum Reserve. This is estimated by energy 
analysts to bring in about 3 to 5 cents per gallon. They are 97 percent 
full. Yet our Government is purchasing oil at this incredibly high 
rate. This bill puts a temporary halt on that so we can put more oil on 
the market and, at the same time, not burden our country by buying it 
at this incredibly high rate.
  Finally, this bill does something we have been trying to do for 
years: It takes the oil giveaways and puts them in the hands of those 
who can actually produce renewable energy. As you know, we came so 
close to doing this in the past. We were one vote short of blocking the 
filibuster--a tool the other side has used 68 times now, a record 
number. We were one vote short of taking $17 billion, over a 10-year 
period, and putting it into the hands of basically the people of this 
country, to say there is a better way. Instead of investing in the 
sultans of Saudi Arabia, we can put our investments in the farmers and 
workers of this country. If Brazil can do it with sugarcane, we can do 
it with residue from logging or hybrid cars or with hydrogen fuel 
cells. We can do it with cellulosic ethanol, the next generation of 
biofuels--but not if we are unwilling to talk about how we do it, which 
is put our money where our mouth is, which is to take the giveaways the 
oil companies have been enjoying for so many years, while seeing record 
profits, and putting it in the hands of the future.
  That is what we are asking this Senate to vote on tomorrow. I can 
tell you that if you ask the people in Minnesota--whether they are 
Democrats, Republicans or Independents or whether they are from the 
Twin Cities or the Iron Range of Minnesota or southern Minnesota--they 
want to go the next step. They are bold. They figure if we can put a 
man on the Moon, we can do this. This is why I support this bill. This 
is our future.
  I am very proud to be a sponsor of the bill, and I hope this Chamber 
is willing to do something tomorrow different than what we have done in 
this area of energy before. We have taken steps and increased the gas 
mileage standards, but this is our opportunity to be bold and to 
respond to the people of this country who are not looking for gimmicks 
but they are looking at us to do something. We know we can do a long-
term solution, research and development, and the transitioning to green 
jobs. We can do the transition to cellulosic ethanol and put the money 
there.
  In the short term, we need to get rid of this idea that Government 
should put up our hands and let this keep going, while the rampant 
speculation goes on and on. We need to place stronger limits on market 
speculation; temporarily suspend deliveries of oil into the Strategic 
Petroleum Reserve; put a stop to the oil company giveaways; enact the 
windfall profit tax, which I know is different than proposals in the 
past. It kicks in when oil

[[Page S4025]]

companies are not truly investing in renewables or adding to its 
refineries and production. And then we have to put that pressure on 
OPEC.
  These are the kinds of short-term, bold measures the people of this 
country are looking for. So tomorrow we have our chance. I implore my 
colleagues to join us. Let's get this done and do something real for 
the people of this country.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Ms. KLOBUCHAR. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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