[Congressional Record Volume 154, Number 95 (Tuesday, June 10, 2008)]
[Senate]
[Pages S5399-S5410]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONSUMER-FIRST ENERGY ACT OF 2008--MOTION TO PROCEED
The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will resume the motion to proceed to S. 3044, which the clerk
will report.
The assistant legislative clerk read as follows:
Motion to proceed to S. 3044, a bill to provide energy
price relief and hold oil companies and other entities
accountable for their actions with regard to high energy
prices, and for other purposes.
The ACTING PRESIDENT pro tempore. The Senator from New York.
Mr. SCHUMER. Mr. President, as I understand it, there is 1 hour
divided equally.
The ACTING PRESIDENT pro tempore. There is 40 minutes divided
equally.
Mr. SCHUMER. And the addition of leader time. I ask that I be given
7\1/2\ minutes of our time.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. DOMENICI. Mr. President, will the Senator yield?
Mr. SCHUMER. I will be happy to yield to the Senator from New Mexico.
Mr. DOMENICI. Mr. President, I ask unanimous consent that Senator
Hutchison be the leadoff speaker and she be allowed 7 minutes, and that
I follow her with 15 minutes, and then we will see where it goes from
there.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. SCHUMER. Mr. President, we all know that gas prices and the high
price of oil and all oil products is the No. 1 issue in America.
Everywhere we go--Legion halls, parades, weddings--this is all people
bring up, and they demand action.
Today, we in the Democratic majority are stepping to the plate with
two comprehensive bills--one dealing immediately with the issue of gas
prices and the oil companies and the speculation in the market and the
second dealing with changing our tax policies so that we encourage
alternative fuels. We are stepping to the plate because we know the
problem America faces: $4-a-gallon gasoline. That is 267 percent higher
than it was when President Bush took office in 2001. And we cannot pass
any legislation?
We want to debate this legislation now. We have our ideas. The other
side has its ideas. But we wish to move forward and debate the issue
and finally get something done, and the other side, the minority leader
said vote no. He is telling the American people that he and his party
want to do nothing. They don't even want to debate it. That is an
incredible statement at a time when America is crying out for action.
The bottom line is, we have had a White House, we have had a
Republican minority that has taken zero proactive steps to reduce our
dependence on foreign oil for 7 years. If it wasn't for this new
Democratic Congress to pass along an overdue small increase in fuel
efficiency standards, President Bush would leave the White House with a
record he would consider spotless, committing no sins against big oil
or against OPEC.
We on this side are not afraid to go after big oil when they are not
doing the right thing, and we are not afraid to go after OPEC because
they are a cartel that squeezes us. We are not afraid to do some
strong, tough things that will, some in the short run and some in the
longer run, bring down the price, the all-too-high price of gasoline.
We are hurting as a country. We are hurting individually as
Americans. We are hurting as an economy, as people do not have the
ability to spend on other things. We are hurting in our foreign policy
as every day we send over $1 billion to people we do not like, such as
leaders of Iran, Venezuela, and other places. And we are hurting as a
globe as we continue to send carbon dioxide into the air. And the other
side says: Do nothing. Don't even debate the issue.
[[Page S5400]]
I have heard some people talk about some things on that side. What
about ANWR, Alaskan oil, which was defeated in a bipartisan way a while
ago? We will debate ANWR. Nobody thinks it is going to do anything for
7 years. I, for one, and many of us on this side supported drilling in
the east gulf. It is beginning to happen because it would produce more
oil and gas more quickly and do something about the price.
So we are not against any domestic oil production or exploration or
gas production or exploration if it is going to make some sense. But we
cannot drill our way out of the problem. If we do not do conservation,
if we do not do alternative energy, and if we do not tell the big oil
companies they can no longer run energy policy in America, we will not
succeed; plain and simple. We are finally telling them.
There are many provisions in this bill, but there are four major
provisions. One goes after OPEC, one goes after speculation, but the
one that I helped write, along with the chairman of the Finance
Committee, goes after the windfall profits of oil companies. They are
making record profits, and we say take some of those record profits and
require them to be placed into alternative energy.
When the head of ExxonMobil came before the Judiciary Committee a
couple of years ago, he said he didn't believe in alternative energy.
Well, most Americans do. And unlike my colleagues on the other side of
the aisle, we don't believe ExxonMobil should dictate our energy
policy. They are doing great, but we, the American people, are not.
If you want to get immediate production, do something about Saudi
Arabia. They could in a minute increase supply by 1 million, 2 million
barrels a day. This is not Alaska. A lot of people on the far right are
saying: How can Schumer say increase Saudi production when he is not
for Alaska production? Hello. One would pump oil into the system
immediately and do something immediately if we could force the Saudis
to do it. Some of us advocate not giving them arms until they do. One
would take 7 years and, by many estimates, not do much to change the
price because it is so long into the future.
It is appalling. I am profoundly surprised by the other side seeking
to block this bill. I ask my colleagues to support it.
Might I ask the Chair how much time I have?
The ACTING PRESIDENT pro tempore. The Senator has 10 seconds.
Mr. SCHUMER. I ask unanimous consent for 30 additional seconds.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. SCHUMER. The windfall profits tax part of this bill, which I
helped write, is a different windfall profits tax. It says when the
level of profitability is very high, take that money and require that
it be used for alternative energy. That is not too much to ask of
ExxonMobil or of Chevron, Texaco, or any of these newly merged oil
firms. It will not do all the things my colleague from Kentucky said
but instead will force the oil companies that are not sacrosanct to
start doing something to help get us out of this mess instead of just
profiting from it.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Texas.
Mrs. HUTCHISON. Mr. President, the bill before us is, pure and
simple, a pathetic attempt to even call itself an energy plan. The
American people are looking for leadership from the Congress. They are
looking for something that will help small businesses not be eaten up
with energy costs, the American family not be eaten up with the cost of
gasoline at the pump, and what do they get in response? They get a bill
that does not produce one ounce of energy. Not one ounce.
This bill does three things: It enacts a windfall profits tax, it
suggests that we sue OPEC, and it forms a commission to investigate
price gouging. What the American people are looking for is lower
gasoline prices at the pump and lower electricity costs in their small
businesses.
The Republican plan that was put forward so well by Senator Domenici,
the ranking member of the Energy Committee, is a balanced plan that
will produce results. What it does is what we have done in America for
the last 200 years when we had a problem and that is use our ingenuity,
use our natural resources, use our creativity, and come together to
meet and beat our problems. That is what the Domenici plan does.
We have passed legislation that gives incentives for renewable
energy--wind energy and solar power--and those are great things. They
are small, but they are great things. We wish to continue that. We wish
to promote conservation, which we have done in past Energy bills. We
wish to also expand nuclear power. We haven't had a nuclear powerplant
open in this country in 25 years. So the Energy bill we passed under
Senator Domenici's leadership does have incentives for investment in
nuclear power because we know it can be done clean, it can be done
efficiently, and it will bring down the cost of electricity.
We have expansion of refineries in the bill that was passed 2 years
ago, again under the leadership of Senator Domenici. We have to have
expanded refineries because the problem in this country today is we
don't have enough supply. Our refineries are running at full capacity,
but we have not had expansion of our refineries because the regulatory
environment has kept any sound management and business plan from being
operative for an expanded facility. But we did pass legislation to
expand facilities, again with environmental safeguards to do it right
and expand the amount of energy we would have in our country.
Our plan also creates a State option, so States will have the ability
to explore off their Outer Continental Shelf and get a reward for it,
get a royalty. That could produce as much as we import from Venezuela,
and that is a modest suggestion of what we might be able to get. It
could be much more.
ANWR. Senator Reid said: Forget ANWR, we are not going to do that. It
is not going to pass here. Well, no, it is not going to pass. As long
as we have no leadership from the majority in the Senate, it would not
pass. But it did pass. It did pass in 1995. If President Clinton hadn't
vetoed it, we would be pumping almost the same amount of oil that we
import from Saudi Arabia every day, and we would not have $4-a-gallon
gasoline at the pump for hard-working Americans. So it can pass with
leadership.
We are talking about ANWR. In an area the size of the State of South
Carolina, the area that would be drilled is 2,000 acres, the size of
Washington National Airport. It is a grassy plain. It gets to 70
degrees below zero in the wintertime. It is not part of the beautiful,
pristine wilderness of ANWR. Yet it could bring gasoline prices down at
the pump. Oil shale in Colorado and Wyoming. We have a balanced
approach that will produce energy.
What does the bill before us do today? Well, let us talk about the
windfall profits tax. In 1980, Congress passed one. What happened? It
increased imports, it increased our reliance on foreign oil for our
energy needs, and it made America more reliant on foreign sources of
energy for our country. That is wrong for our national security, and it
is wrong for our economy. It exported jobs overseas. It was such an
abject failure that Congress repealed it. Why would we be going
backward to something that has been proven to take jobs from America
and increase our dependence on foreign sources?
OPEC. They say OPEC should be increasing its output. This is
ludicrous. First, it ignores that OPEC could retaliate; that they are
not going to abide by American law. At the same time the Democrats are
saying we should sue OPEC for not producing more, they do not pass
anything that would produce more of our own energy in our own country.
Does anyone think OPEC is going to think that is a credible position
for the Congress to take? Yet that is the position that is in the bill
before us today.
It is almost laughable that every proposal we put forward that would
increase our output is defeated by Congress. Yet they want to sue OPEC
for not increasing their supply. You cannot have it both ways. We don't
want to drill here, but we want to drill there. It is the old ``you do
it, we will talk about it'' mentality that will not work.
What about forming another commission to investigate price gouging?
We have had commissions on price
[[Page S5401]]
gouging, and they have turned up nothing. This is a bad bill. We should
reject it, and we should look for leadership, bipartisan leadership, to
solve this problem with our ingenuity.
I yield floor.
The ACTING PRESIDENT pro tempore. The Senator from Vermont.
Mr. SANDERS. Mr. President, I ask unanimous consent for 5 minutes
from the Democratic side.
The ACTING PRESIDENT pro tempore. The Senator is recognized.
Mr. SANDERS. Mr. President, do we need a windfall profits tax? You
bet we do. The American people are sick and tired of paying $4 for a
gallon of gas. In the Northeast, we are worried about how people are
going to stay warm in the winter, while at the same time ExxonMobil has
made more profits than any company in the history of the world for the
past 2 consecutive years, making $42 billion last year alone.
But ExxonMobil is not alone. In the first quarter of this year, BP
announced a 63-percent increase in their profits. Shell's first-quarter
profits jumped by 25 percent, to over $9 billion, and ConocoPhillips'
profits increased by over 16 percent in the first quarter, to over $4
billion. As a matter of fact, the five largest oil companies in this
country have made over $600 billion in profits since George W. Bush has
been President. Do we need a windfall profits tax? You bet we do.
Let me say a word about what some of these oil companies are doing
with these outrageous profits. In 2005, Lee Raymond, the former CEO of
ExxonMobil, received a total retirement package of at least $398
million. Yes, you heard that right, $398 million in a retirement
package for the former CEO of ExxonMobil. But he is not alone. Let us
not just pick on ExxonMobil. In 2006, Ray Irani, the CEO of Occidental
Petroleum, received over $400 million in total compensation. Oh, yes,
we don't need to do a windfall profits tax. These guys are just
investing their money ever so significantly.
The situation is so absurd and the greed is so outrageous that oil
company executives are not only giving themselves huge compensation
packages in their lifetimes, but they have created a situation, if you
can believe it, where they have carved out huge corporate payouts to
their heirs if they die in office. I am not making this up. According
to the Wall Street Journal, the family of Ray Irani, the CEO of
Occidental Petroleum, will get over $115 million if he dies while he is
the CEO. The family of the CEO of Neighbors Industries, another oil
company, will receive $288 million if he dies while he is the CEO.
If this were not so pathetic, if so many people all over our country
were not hurting, it would be funny. But it is not funny, it is tragic,
and we have to deal with this reality. Let me be clear, however. I
believe oil companies should be allowed to make a reasonable profit,
but they should not be allowed to rip off the American people at the
gas pump, and that is why we need to pass a windfall profits tax, which
is included in this legislation.
We should understand that a windfall profits tax alone is not going
to solve all our problems. Since 1988, the oil and gas industry has
spent over $616 million on lobbying, and since 1990, they have made
over $213 million in campaign contributions. In other words, if this
Congress is going to stand up to the oil companies, it is going to take
a lot of courage. These people have enormous power, and they have spent
an enormous amount of money on lobbying and campaign contributions. But
I think we owe it to the American people to represent their interests
rather than just the interests of big money.
Imposing a windfall profits tax is not the only thing we should be
doing. We must address the growing reality that Wall Street investment
banks, such as Goldman Sachs, Morgan Stanley, and JPMorgan Chase, and
many hedge fund companies as well, are driving up the price of oil in
the unregulated energy futures market. There are estimates that 25 to
50 percent of the $134-a-barrel cost of oil is attributable not to
supply and demand, not to the cost of production, not to the decline in
the dollar but to the unregulated speculation which is currently taking
place on oil futures. That is an issue we must address as well, and
this legislation begins to do that.
Mr. President, I yield the floor.
The ACTING PRESIDENT pro tempore. Who yields time?
Mr. DOMENICI. Mr. President, Parliamentary inquiry: How much time
remains and who has time before the vote?
The ACTING PRESIDENT pro tempore. The Senator has secured 15 minutes
for his own use, which would consume all the minority's time at this
point, except for the leader's balance of that time.
Mr. DOMENICI. So that means I would use the remaining time, and there
would be no time for anyone else before the first vote?
The ACTING PRESIDENT pro tempore. The majority still has 7 minutes.
Mr. DOMENICI. That was my question. I didn't pose it right.
The ACTING PRESIDENT pro tempore. Plus, the majority leader or his
designee's time.
Mr. DOMENICI. Mr. President, I yield myself 10 minutes and see how it
works out. The Senator from Pennsylvania wanted some of my time. I
don't know if I have enough to give him, but I will try, and I thank
him for coming down so early in the morning.
First of all, let me say to my fellow Senators but most of all to the
American people that the Senate has a bill before us today we will call
the Reid bill, named after the majority leader, and I think it deserves
a simple little nickname. It should be the Democratic Party's ``No
Energy Energy bill.'' It doesn't produce one ounce of energy. Clearly,
the American people are looking to us to see how we can suggest that
the price of oil might be stabilized or brought down.
We are told by most experts we are going to be using crude oil for 30
or 40 years to come, and we call that the bridge, the bridge between
now and the future, where we are going to have to use crude oil. If we
are going to have to use crude oil, then America should look to itself
and see where and how can we produce oil that belongs to us so this
bridge, this 30 or 40 years when we are going to have to use crude oil
to get by, that we will have as much of ours as possible.
It is a shame the majority party in the Senate is not looking to
American resources, does not have a bill, will not let us vote on a
bill, will not let us amend a bill that would produce more energy from
the coastal waters off the shores of the United States, upon which we
have put a moratorium. That moratorium says we cannot drill. Everybody
knows there are literally billions of barrels of oil that belong to us.
We could do whatever we would like. We could say 50 miles out is where
we start, so it will harm no one, but let's open it and explore for
American oil where there is an abundance.
In addition, let's go ahead and convert coal to crude oil, coal to
diesel. We know how to do that. Let's get on with it so we can send the
right signal to the world.
Let's take the moratorium off oil shale and get on with a 5- or 10-
year program to produce oil from those properties that belong to
Americans that are laden with oil and are in the States of Colorado,
Utah, and Wyoming.
That is what we are looking for, not a bill that attempts to levy a
windfall profits tax which everybody associated with that tax--
including those who helped put it on during the regime of President
Carter--now comes over and joins us, saying: Don't do that. It will do
nothing but raise the price of crude oil.
Why do we want to pass a tax increasing the cost of crude oil when
the American people are asking us to do the opposite? The majority here
in the Senate believes the major oil companies--there are not very many
left that are American oil companies. There are just a few of them
left, and all the rest of the oil is owned by countries--not companies,
by countries. They own it. We have five or six American companies. We
ought to be grateful we have them. They are the only ones out there
capable of competing with these countries to get oil and produce more.
Yet the Democrats would like to make life onerous for those companies,
would like to make it harder for them to produce oil, and try to let
the American people think that if we tax them enough, somehow or
another that will produce more oil.
From my standpoint, this is a very simple debate. The Democrats have
no
[[Page S5402]]
energy bill before us, in terms of producing energy. So they have a
``no energy'' bill. We ought to say we don't want to debate that
because it doesn't amount to anything. Then the House sent us a bill
that imposes taxes. That is all it is. They impose taxes in order to
put on a kind of energy stimulus for wind and the like. They want to
tax in order to pay for it. We have never paid for it before. We have
imposed those various incentives. They are good. We passed them 88 to 8
one time. We are for doing that again, but we are not for doing that in
the manner suggested by the legislation from the House which came over
here. It is our second vote. We ought to just say no to that and say we
are ready to extend those tax credits and we are ready to do that in
exactly the way we have done it before, with no taxes added to the
American people or to anyone--just go ahead and do those tax extenders,
which we desperately need.
Let me repeat. One of the most important things we need is an
extension of those tax extenders. We do not need a tax bill that will
pay for those extenders because we have already done it without taxes.
We ought to do that again, nice and clean and quick. That would be a
very good start toward an alternative energy policy or a continuation
of one.
Mr. President, I wish to yield 3 minutes to the distinguished Senator
from Pennsylvania at this point.
Mr. SPECTER. Mr. President, I thank the distinguished Senator from
New Mexico.
I have sought recognition to state my reasons for opposing the motion
to proceed to cloture because this bill has too many facets. It was my
hope that the majority leader would have separated this bill into the
component parts. I cannot support legislation which would impede
exploration for oil, which is what part of this bill is. But there are
parts of this bill which are very important, and they ought to be taken
up separately--for example, the legislation that defines and
establishes penalties for price gouging by the oil and gas industry. It
increases regulation of oil futures markets, and it includes the
provision to eliminate the antitrust exemption for OPEC countries.
It does not have to be said on the floor of the Senate that
enormously serious problems exist today with the price of oil and with
the price of gasoline at the pump. The newspapers are full of it. It is
an atrocious situation that is happening, and we desperately need
relief.
There are very substantial indicators that a good bit of this problem
is caused by price gouging. The legislation ought to be separated out
so that we act on that. There are significant indicators that the oil
futures market is causing speculators to jack up the price of oil.
There ought to be regulation on that. We ought to take it up
separately. When it comes to the antitrust exemption for the OPEC
countries, it is atrocious. A few of these countries get together in a
room, they lower production, and that increases prices. That bill was
passed by the Senate with 70 votes. It has been passed by the House of
Representatives. We ought to be taking that up separately. If we took
up these measures separately, we would have an opportunity to give some
relief to the American people.
Candidly, it is incomprehensible to me why we are not taking up the
cost of oil and the cost of gas at the pump, to try to alleviate the
pressure on the American people--and for that matter, worldwide. If we
were to eliminate the OPEC antitrust exemption--to which they are not
entitled; it is not a sovereign immunity issue, it is a commercial
transaction--we have the authority to do that. One Federal judge has
already upheld that approach. If we worked on the approach, if we
worked on what the traders are doing on speculation, we would have some
real effect. We are not too busy to take up this issue, aside from a
few minutes on the Senate floor. There is no reason it has to be joined
with what is obviously a poison pill, where you talk about acting
against the oil and gas industry to discourage exploration. We know
exploration is vitally necessary, so I cannot support this legislation
in its present form, but it ought to be divided. We ought to take up
the antitrust exemption separately.
We ought to move ahead on a matter of pressing importance. There is
nothing more important for the American people, for the people of the
world. I urge the majority leader, who sets the schedule, to reconsider
and separate these bill so we can act in a meaningful and important
way.
Mr. DOMENICI. Mr. President, I yield the floor at this time.
The ACTING PRESIDENT pro tempore. The Senator from New Jersey is
recognized.
Mr. MENENDEZ. Mr. President, every day Americans are watching the
price of oil and gas shoot up higher and higher, and are watching as it
gets harder and harder to make ends meet.
This week, the national average price of gasoline broke the $4 per
gallon mark. When George Bush took office, gas cost just $1.46 a
gallon. This dramatic increase in oil prices has brought prices for
food up along with it, and American families are faced with a painful
financial choice when it comes time to fill-up--do they fill up their
gas tank or do they forgo a gallon of gas to buy a gallon of milk?
Businesses are cutting jobs. Families have already eliminated
nonessentials and are now cutting back on meals. Some Americans are
even contemplating quitting their jobs because they can't afford the
gas to get there. It has become painfully clear: We are in an oil
crisis. And we had better start taking action to get out of this mess.
Fuel efficiency, alternative fuels, and mass transit are the long-
term answers that I will soon discuss, but consumers need immediate
help, and the Consumer-First Energy Act will provide that relief.
The first thing the Democratic bill will do is make sure that our
commodities markets are functioning fairly. The supply and demand
equation is roughly the same as it was 2 years ago and yet we have seen
prices go through the roof.
We all remember the damage Enron did to our Nation's economy by
manipulating unregulated electricity markets. The Consumer-First Energy
Act will make sure that oil is traded on well-regulated, transparent
markets which are free from manipulation. It requires Commodities
Futures Trading Commission oversight, sensible margin requirements, and
standard participant disclosures.
By making the oil futures market conform to usual standards and
practices, we can combat excessive speculation and insure that the
markets are free from manipulation.
The Consumer-First Energy Act also makes sure that oil companies are
not taking advantage of American consumers. The Bush energy policy was
written by energy companies for energy companies. And while it has
worked well for energy companies, it has completely failed the American
public. The major oil companies made $124 billion in profits last year
and will earn even higher profits this year.
Are the oil companies using these enormous profits to give consumers
a break at the pump? No. Are they using those profits to invest in new
refineries or develop alternative fuels? No. Despite what my friends on
the other side of the aisle might claim, big oil is not looking out for
the American driver. Big oil is looking out for itself. Our colleagues
on the other side offer more of the same.
Yet, despite the fact that big oil is doing all it can to reap record
profits at the expense of our economy, big oil is in line to receive
over $17 billion in tax breaks.
The Consumer-First Energy Act will fix this problem and make sure
that big oil is paying its fair share of taxes, and isn't profiteering
at the expense of American consumers. It includes a windfall profits
tax which would raise revenue to invest in sustainable, domestic
sources of energy and to provide relief to consumers suffering under
high energy prices.
We must act now to provide immediate relief to American families. But
in addition to relief and protections included in the Consumer-First
Energy Act, we also need to think about what we can do to reduce
consumption and rein in costs in the long term.
My friends on the other side of the aisle do not want to address this
oil crisis. Indeed, they want to exploit it to try to provide even more
Government help for their big oil supporters. They tell their
constituents that the answer to our oil addiction is to drill,
[[Page S5403]]
drill, drill. But feeding the addiction by tapping another vein just
drills us into a deeper hole.
The fact is that the world's largest remaining oil reserves are in
the hands of foreign governments. That means it is difficult if not
impossible for us to control our supply of oil. But the one thing we
can control is our demand. In the long term, we need to invest in
alternative energy, mass transit, and increasing fuel efficiency.
While we work to make alternative fuel technologies more affordable
we need to drastically improve fuel economy. If we had increased fuel
economy a modest 2 percent per year since 1981, our fleet would now
average 34 miles per gallon. This alone would have cut our demand for
oil by 30 percent while saving over 30 billion barrels of oil. 30
billion barrels of oil. According to the Energy Information Agency that
is more than the proven oil reserves remaining in the United States. It
is commendable that we finally raised CAFE standards this year, but we
are going to have to make our vehicles a lot more efficient to make up
for lost time.
We also need tax incentives for hybrids and plug-in hybrids, and need
to support advanced battery research. Once our transportation
infrastructure can run on alternative fuels like electricity or
cellulosic ethanol, consumers will finally have a choice. We will be
able to choose not to buy oil, and that will force gas prices back to
Earth.
The last, but perhaps most important, long-term solution to our
current oil crisis is an immediate and substantial investment in mass
transit. More people are taking commuter trains, buses, and even
ferries now than in the past 50 years.
For millions, having the option to use alternative transportation
modes has been essential to getting to work affordably. It is time we
finally fully funded mass transit at the level it deserves.
It is time for a real cure, not the tired old policies of the past.
This bill gives the American people what they need right now, to get
through the immediate problem and start us down the path to real,
sustainable, long-term solutions to our energy crisis.
I hope our colleagues seize the moment, vote for the motion, and move
us to the type of relief Americans are looking for.
I yield the floor.
The PRESIDING OFFICER (Mr. Sanders). Who yields time?
The Senator from New Mexico.
Mr. DOMENICI. Mr. President, am I correct in assuming that I have 2
minutes, plus the leader's time?
The PRESIDING OFFICER. The Senator is correct.
Mr. DOMENICI. I yield myself 5 minutes and will reserve the
remainder.
Mr. President, the American people are clamoring for relief at the
pump. In 1 year we have seen a 16-point increase in the percentage of
Americans who seek more exploration and production of oil and gas in
this country.
Today, according to a recent Gallup poll, 57 percent of Americans are
seeking more exploration and production of oil and gas here at home. I
do not know what percentage of Americans would like to see higher
taxes, increased prices, and greater imports, but I suspect it would be
very low. But according to the independent Congressional Research
Service, that is what the people will get if the Reid tax increase is
enacted into law. They will get exactly what they do not want, because
the bill will raise taxes, increase imports, and contribute to a
pattern of sending more than half a trillion dollars overseas to
hostile regions.
I will oppose the motion to proceed this morning. I wish to start by
looking at the windfall profits tax contained in this bill. The
nonpartisan Congressional Research Service found a windfall profits tax
could have several adverse effects and could be expected to reduce
domestic oil production and increase the level of imports. This group
is not alone in their estimate. The Wall Street Journal predicts a
windfall profit tax is a sure formula ``to keep the future price of gas
higher.''
It is not simply these two views that warn against a windfall profits
tax. Former officials from both the Carter and Clinton administrations
have spoken. The Under Secretary of Commerce in the Clinton
administration recently said:
A new windfall profits tax, however emotionally satisfying
it may seem, also harms most people saving for their
retirement or living on retirement savings. More than 40
percent of that cost would fall on tens of millions of
seniors and retirees who own oil stock directly or indirectly
through their pension plans and retirement accounts.
An individual named Phil Verleger, the individual responsible for
implementing the tax during the Carter years, recently called a
windfall profits tax ``a terrible idea today.''
There seems to be a consensus everywhere that the windfall profits
tax is a bad idea, except in the halls of Congress and within the
Chavez administration in Venezuela. It is not only conjecture that
leads us to the conclusion that this is a bad idea but, rather, an
understanding of history. Between 1980 and 1986 when the last windfall
profits tax was in place, domestic oil production was reduced by as
much as 8 percent and our imports rose from 32 percent to 38 percent.
Revenues for the tax came in well below what was originally estimated,
and the tax came to be called an administrative nightmare that stunted
economic growth. It was a bad idea then and it is a bad idea now, and
it should be rejected. About that I am certain.
How much time remains?
The PRESIDING OFFICER. The Senator has 1 minute 10 seconds remaining.
Mr. DOMENICI. On the time I yielded to myself?
The PRESIDING OFFICER. Yes.
Mr. DOMENICI. I want to try to raise a concept and see if we can get
this where more people would begin to discuss this idea. In a hearing
about 8 days ago, a crude oil expert made the statement that we would
be using oil as a bridge to the future for more than 30 years. Let me
repeat. We will be using crude oil as a bridge to the future for more
than 30 years, this expert said, perhaps 40 years or more.
That is kind of common sense. Crude oil is used to make gasoline and
things such as gasoline, and those are used in the importation
industry. We cannot get rid of that quickly.
The PRESIDING OFFICER. The Senator is now using leadership time.
Mr. DOMENICI. I will use 1 minute and then I will sit down. Let me
repeat so everybody will get this. For something like 40 years, we will
be using crude oil, our own or others, because we cannot get rid of the
current mode of transportation any quicker. Cars will be cars, and we
will be using them because we cannot wean them off the scene. As we
move to a better era of a better life where we do not have to use crude
oil in our daily lives so much, we will have to use the bridge which
will be crude oil.
Now, why do I talk about this? I do because it is important we
understand that if we have any cards, playing poker, if we have any
aces in our hands, we better go ahead and play them, and the aces are
crude oil we might produce some way that is ours. We ought to go ahead
and play the card. I submit that we do have a lot of aces. We have got
a huge amount of crude oil that is in the Outer Continental Shelf that
we ought to be exploring for forthwith. We ought to take the moratoria
off and start at 50 miles out across this land. If we did that and sent
that message for starters, it would be received in a terrific way. Take
the moratoria that were put in the bill that has been referred to as
the Domenici bill for production, and believe it or not, we would send
a signal that America is coming back to life, and during that bridge
time we are going to produce more oil on our own.
Nothing will help us more in reducing the price and cost to our
consumers than that idea we implemented. We must try to do it even if
the Democrats do not want us to. We have got to try to force a vote so
that people understand what we are trying to do.
I reserve the remainder of my time and I yield the floor.
The PRESIDING OFFICER. Is the Senator seeking to preserve the
leader's time?
Mr. DOMENICI. Yes.
The PRESIDING OFFICER. Is there objection?
Mrs. McCASKILL. I object.
The PRESIDING OFFICER. Objection is heard.
Mr. DOMENICI. Mr. President, I assume the Chair is telling me that I
cannot reserve any of the leader's time, so
[[Page S5404]]
I can sit down and take it at a later time?
The PRESIDING OFFICER. That requires consent. Consent was not
granted. The Senator has 4 minutes remaining.
Mr. DOMENICI. All right. I will use it now.
Now, Senators today should have been--under anyone's understanding of
the dilemma we are in with the price of oil scaring the American people
to death, the amount of money we are sending out of our country to meet
our energy needs, it is going to reach $600 billion a year. With the
escalating price of crude oil, that is what it looks like next year. It
will be what a full year will cost us, $600 billion. I would think with
that in mind, there would be on the floor of the Senate some real
proposals by the Democratic leadership and the majority party.
Instead, what do we get? We get what I call a ``no-energy energy
bill.'' It is a no-energy energy bill because it does not produce an
ounce of energy; it raises the cost instead of lowering the cost of
crude oil; it produces less rather than more crude oil. That is why
there is nothing going on on the floor, because there is nothing
exciting. The Democrats have offered nothing.
We are begging them to try something. We are begging them to try
something that would produce more American oil or oil substitutes. We
know what they are. The distinguished Senator from Colorado knows what
they are. We know that offshore, deepwater exploration around the
shores of America could be put in effect by raising the moratorium, and
we would have literally billions of reserves of oil and trillions of
cubic feet of natural gas readily made available.
We need to take off the moratorium that we put on ourselves, take it
off and say to the people: Let's produce it. It would take a few years.
But the signal would be positive. We would have the oil shale in your
State and Utah, your sister State, if we said we are ready to set the
final guidelines so the oil companies can invest. Someone down here
prior to my speech said the oil companies will not do anything to help.
Yes, indeed they will. One of them is investing $8.5 billion in oil
shale and tar sands up in our neighboring country of Canada. Some
people think that is terrible, because they did not want them to
produce that kind of oil. But I do not think it is terrible, because it
eliminates the potential for gouging, for prices being too high.
Because if you have these great inventories of resources and they are
yours and you can use them, you ameliorate the increasing price of oil,
and we ought to be doing that.
Instead of that, we are down here talking about a second bill. The
second bill is a bill passed by the House, sent over here to us that is
full of tax increases to pay for a series of tax incentives that we
should pass without the tax increases. We have done it before, we ought
to do it.
That bill ought to be defeated, no question about it, because we
ought to pass it. We need the incentives, but we do not need the tax
increases. We have done it without tax increases twice before, and
somehow or other the House keeps getting it put in their head if they
send it over here with other tax increases, different ones, we will go
for it. I think it is pretty clear we will not.
So it is an interesting day. Instead of being here with some positive
things we are going to do, we will be here defending some old ideas
that are not going to help one bit, and we are saying, let's try them
anyway.
I yield the floor.
Mr. LEVIN. Mr. President, day after day record-high oil and gasoline
prices are causing immense harm to millions of American consumers and
businesses. Unless something is done to make energy more affordable,
these record-high prices will continue to damage our economy,
increasing the prices of transportation, food, manufacturing, and
everything in between. Skyrocketing energy prices are a threat to our
economic and national security, and the time is long past for action.
My Senate Permanent Subcommittee on Investigations has conducted four
separate investigations into how our energy markets can be made to work
better. Most recently, last December, we had a joint hearing with the
Senate Energy Subcommittee on the role of speculation in rising energy
prices. As a result of these investigations and hearings, I have been
advocating a variety of measures to address the rampant speculation and
lack of regulation of energy markets which have contributed to sky high
energy prices:
First, put a cop--a regulatory agency--back on the beat in the energy
markets to prevent excessive speculation and manipulation. That
includes closing the Enron loophole and the London loophole and taking
other steps to strengthen market oversight.
Second, develop alternatives to fossil fuels to reduce our dependence
on oil.
Third, impose a windfall profits tax on oil companies that have
profited from the massive price runup and use the money to help
consumers, boost domestic energy supplies, improve energy technologies,
and strengthen our energy markets.
One of the major causes of our energy crisis is the failed policies
of the current administration. The chickens have come home to roost on
7 years of a business-as-usual energy policy, paired with fiscal and
foreign policies that have pushed our growing energy problem close to a
breaking point. Because the administration has proved itself unable and
unwilling to take the necessary steps to provide affordable energy
supplies to the American people, it is up to the Congress to try to
jump-start a comprehensive solution to skyrocketing energy prices.
Congress already has taken two important steps this year--we have
closed the Enron loophole and we have stopped the administration's
misguided program to keep on filling the SPR despite record-high
prices--but more can and should be done. That is why I support
enactment of the Consumer-First Energy Act now before us and will be
voting for cloture on this bill.
Last week the price of crude oil reached a record high price of about
$139 per barrel. Sky-high crude oil prices have led to record highs in
the price of other fuels produced from crude oil, including gasoline,
heating oil, diesel fuel, and jet fuel. The national average price of
gasoline is at a record high of just over $4 per gallon. The price of
diesel fuel, which is normally less expensive than gasoline, has soared
to a record high of nearly $4.60 per gallon.
Rising energy prices increase the cost of getting to work and taking
our children to school, traveling by car, truck, air and rail, and
growing the food we eat and transporting it to market. Rising energy
prices increase the cost of producing the medicines we need for our
health, heating our homes and offices, generating electricity, and
manufacturing countless industrial and consumer products. The
relentless increase in jet fuel prices, which have added nearly $75
billion to our airlines' annual fuel costs, has contributed to airline
bankruptcies, mergers, fare increases, and service cuts. ``If fuel
continues to go up, this industry cannot survive in current form,'' the
president of the Air Transport Association said recently. Rising diesel
prices have placed a crushing burden upon our Nation's truckers,
farmers, manufacturers, and other industries. To make matters worse,
our energy costs are rising much more quickly than energy costs in
other countries, directly threatening our global competitiveness.
In January 2001, when President Bush took office, the price of oil
was about $30 per barrel. The average price for a gallon of gasoline
was about $1.50. Since President Bush took office, crude oil prices
have more than quadrupled, natural gas prices to heat our homes have
almost doubled, gasoline prices have nearly tripled, and diesel fuel
prices have more than tripled.
It doesn't have to be this way. Just 7 years ago, at the end of the
Clinton Administration, energy supplies were plentiful, and gasoline
and other forms of energy were affordable. Once the Bush administration
took office, however, it didn't take them long to eliminate the budget
surplus by cutting taxes mainly for the wealthiest among us, creating a
huge annual budget deficit, and driving up the national debt. This
fiscal mismanagement has contributed significantly to a steep decline
in the value of the dollar and soaring commodity prices. Because
American currency is worth less, it takes more of them to buy the same
barrel of oil. American consumers and businesses are forced to spend
more and more of their hard-earned dollars to buy the same amount of
energy.
[[Page S5405]]
During the last years of the Clinton administration, the United
States ran a budget surplus, totaling nearly $560 billion. But over the
past 6 years of the Bush administration the annual deficits have
totaled nearly $1.7 trillion, not counting the amount by which the Bush
administration has been draining the Social Security and Medicare trust
funds. When this is counted, under this administration the total
outstanding debt has increased by a whopping $3.2 trillion.
When President Clinton left office, the dollar was worth more than
the Euro. In January 2001, it took only about 90 cents to buy one Euro.
Today, it takes about $1.60 to buy one Euro--a record low for the
dollar. The fall in the value of the dollar is a result of a weakened
U.S. economy, a high trade deficit and a worldwide lack of confidence
in the Bush administration's ability to manage our Nation's economy and
foreign policy.
As long as this administration continues to insist on irresponsible
fiscal practices--including tax cuts for people with the highest income
and an open-ended conflict in Iraq that is costing $12 billion a
month--the dollar will likely continue to decline in value. The
marketplace has rendered a clear ``no confidence'' in this
administration's fiscal competence.
Besides the weak dollar, there are other factors at work that account
for soaring energy prices. Some are beyond our control; others we can
do something about. In global markets, for example, the combination of
increasing demand from developing countries, coupled with a variety of
political problems in supplier countries, has contributed to price
increases. Growing demand for oil and gas in China, India, and other
developing countries is contributing to an overall increase in global
demand for crude oil. On the supply side, many oil producing countries
are politically unstable and have not been fully reliable suppliers.
For example, in Nigeria, which is a major oil-producing country, for
several years tribal gangs have been sabotaging production and
pipelines.
While we can't do much about growing demand in China and India, other
causes of high prices can be addressed. For example, one key factor in
energy price spikes is rampant speculation in the energy markets.
Traders are trading contracts for future delivery of oil in record
amounts, creating a paper demand that is driving up prices and
increasing price volatility solely to take a profit. Overall, the
amount of trading of futures and options in oil on the New York
Mercantile Exchange has risen sixfold in recent years, from 500,000
outstanding contracts in 2001, to about 3 million contracts now.
Much of this increase in trading of futures has been due to
speculation. Speculators in the oil market do not intend to use crude
oil; instead they buy and sell contracts for crude oil just to make a
profit from the changing prices. The number of futures and options
contracts held by speculators has gone from around 100,000 contracts in
2001, which was 20 percent of the total number of outstanding
contracts, to 1.2 million contracts currently held by speculators,
which represents almost 40 percent of the outstanding futures and
options contracts in oil on NYMEX .
There are now 12 times as many speculative holdings as there was in
2001, while holdings of nonspeculative futures and options are up but 3
times.
Not surprisingly, this massive speculation that the price of oil will
increase has, in fact, helped fuel the actual increase in the price of
oil to a level far above the price that is justified by the traditional
forces of supply and demand.
The president and CEO of Marathon Oil recently said, ``$100 oil isn't
justified by the physical demand in the market. It has to be
speculation on the futures market that is fueling this.'' Mr. Fadel
Gheit, oil analyst for Oppenheimer and Company, describes the oil
market as ``a farce.'' ``The speculators have seized control and it's
basically a free-for-all, a global gambling hall, and it won't shut
down unless and until responsible governments step in.'' In January of
this year, as oil hit $100 barrel, Mr. Tim Evans, oil analyst for
Citigroup, wrote ``the larger supply and demand fundamentals do not
support a further rise and are, in fact, more consistent with lower
price levels.'' At the joint hearing on the effects of speculation held
by my subcommittee last December, Dr. Edward Krapels, a financial
market analyst, testified, ``Of course financial trading, speculation
affects the price of oil because it affects the price of everything we
trade. . . . It would be amazing if oil somehow escaped this effect.''
Dr. Krapels added that as a result of this speculation, ``There is a
bubble in oil prices.''
A fair price for a commodity is a price that accurately reflects the
forces of supply and demand for the commodity, not the trading
strategies of speculators who only are in the market to make a profit
by the buying and selling of paper contracts with no intent to actually
purchase, deliver, or transfer the commodity. As we have all too often
seen in recent years, when speculation grows so large that it has a
major impact on the market, prices get distorted and stop reflecting
true supply and demand.
Last month, Senator Jack Reed and I wrote a letter asking President
Bush to appoint a high-level task force to evaluate how speculators are
driving up prices through manipulative or deceptive devices. The task
force should also evaluate whether there are adequate regulatory tools
to control market speculation and prevent manipulation. Hopefully the
President will act quickly to convene this task force.
Excessive market speculation is a factor that we can and should do a
better job of controlling. There are other long overdue actions as well
that, if taken as part of a comprehensive plan, can combat rising
energy prices.
As to reining in speculation, the first step to take is to put a cop
back on the beat in all our energy markets to prevent excessive
speculation, price manipulation, and trading abuses. In 2001, my Senate
Permanent Subcommittee on Investigations began investigating our energy
markets. At the time, the price of a gallon of gasoline had spiked
upwards by about 25 cents over the course of the Memorial Day holiday.
We subpoenaed records from major oil companies and interviewed oil
industry experts, gas station dealers, antitrust experts, gasoline
wholesalers and distributors, and oil company executives. We examined
thousands of prices at gas stations in Michigan, Ohio, California, and
other States. In the spring of 2002, I released a 400-page report and
held 2 days of hearings on the results of the investigation.
The investigation found that increasing concentration in the gasoline
refining industry, due to a large number of recent mergers and
acquisitions, was one of the causes of the increasing number of
gasoline price spikes. Another factor causing price spikes was the
increasing tendency of refiners to keep lower inventories of gasoline.
We also found a number of instances in which the increasing
concentration in the refining industry was also leading to higher
prices in general. Limitations on the pipeline that brings gasoline
into my home State of Michigan were another cause of price increases
and spikes in Michigan. The report recommended that the Federal Trade
Commission carefully investigate proposed mergers, particularly with
respect to the effect of mergers on inventories of gasoline.
The investigation discovered one instance in which a major oil
company was considering ways to prevent other refiners from supplying
gasoline to the Midwest so that supply would be constricted and prices
would increase.
In March 2003, my subcommittee released a second report detailing how
the operation of crude oil markets affects the price of not only
gasoline but also key commodities like home heating oil, jet fuel, and
diesel fuel. The report warned that U.S. energy markets were vulnerable
to price manipulation due to a lack of comprehensive regulation and
market oversight.
Following this report, I worked with Senator Feinstein on legislation
to put the cop back on the beat in those energy markets that had been
exempted from regulation pursuant to an ``Enron loophole'' that was
snuck into other legislation in December 2000. For 2 years we attempted
to close the Enron loophole, but efforts to put the cop back on the
beat in these markets were unsuccessful, due to opposition from the
Bush administration, large energy companies, and large financial
institutions that trade energy commodities.
In June 2006, I released another Subcommittee report, ``The Role of
Market
[[Page S5406]]
Speculation in Rising Oil and Gas Prices: A Need to Put a Cop on the
Beat.'' This report found that the traditional forces of supply and
demand no longer accounted for sustained price increases and price
volatility in the oil and gasoline markets. The report determined that,
in 2006, that a growing number of energy trades occurred without
regulatory oversight and that market speculation had contributed to
rising oil and gasoline prices, perhaps accounting for $20 out of a
then-priced $70 barrel of oil.
The subcommittee report I released in June 2006 again recommended new
laws to increase market oversight and stop market manipulation and
excessive speculation. I again coauthored legislation with Senator
Feinstein to improve oversight of the unregulated energy markets. Once
again, opposition from the Bush administration, large energy traders,
and the financial industry prevented the full Senate from considering
this legislation.
In 2007, my Permanent Subcommittee on Investigations addressed the
sharp rise in natural gas prices over the previous year and released a
fourth report, entitled ``Excessive Speculation in the Natural Gas
Market.'' Our investigation showed that speculation by a single hedge
fund named Amaranth had distorted natural gas prices during the summer
of 2006 and drove up prices for average consumers. The report also
demonstrated how Amaranth had traded in unregulated markets to avoid
the restrictions and oversight in the regulated markets and how the
price increases caused by Amaranth could have been prevented if there
had been the same type of oversight in the unregulated markets as in
the regulated markets.
Following this investigation, I introduced a new bill, S. 2058, to
close the Enron loophole and regulate the unregulated electronic energy
markets. Working again with Senators Feinstein and Snowe and with the
members of the Agriculture Committee in a bipartisan effort, we finally
managed to include an amendment to close the Enron loophole in the farm
bill that was then being considered by the Senate. The Senate
unanimously passed this amendment to close the Enron loophole last
December. The final farm bill that was passed by the House and Senate
last month included language nearly identical to what the Senate had
passed. Although President Bush vetoed the entire farm bill, both the
House and Senate have overridden his veto. Our 5-year quest to close
the Enron Loophole has finally been successful.
The CFTC is now in the process of implementing the close-the-Enron-
loophole law. Among other steps, it is charged with reviewing the
contracts on previously unregulated energy markets, like the
Intercontinental Exchange or ICE, to determine which contracts have a
significant effect on energy prices and must undergo daily oversight.
Once that process is complete, the cop will be back on the beat in
those markets for the first time since 2000.
Closing the Enron loophole is vitally important for energy market
oversight as a whole, and for our natural gas markets in particular,
but it is not enough. Because over the last 2 years, energy traders
have moved a significant amount of U.S. crude oil and gasoline trading
to the United Kingdom, beyond the direct reach of U.S. regulators, we
have to address that second loophole too. I call it closing the London
loophole.
There are currently two key energy commodity markets for U.S. crude
oil and gasoline trading. The first is the New York Mercantile Exchange
or NYMEX, located in New York City. The second is the ICE Futures
Europe exchange, located in London and regulated by the British agency
called the Financial Services Authority.
The British regulators, however, do not oversee their energy markets
the same way we do; they don't place limits on speculation like we do,
and they don't make public the same type of trading data that we do.
That means that traders can avoid the limits on speculation in crude
oil imposed on the New York exchange by trading on the London exchange.
It also makes the London exchange less transparent than the New York
exchange. My original legislation to close the Enron loophole would
have required U.S. traders on the London exchange to provide U.S.
regulators with the same type of trading information that they are
already required to provide when they trade on the New York Mercantile
Exchange. Unfortunately, this provision was dropped from the close-the-
Enron-loophole legislation in the farm bill.
The Consumer-First Energy Act, S. 3044, which the majority leader and
others introduced recently to address high prices and reduce
speculation, includes at my request a provision to curb rampant
speculation, increase our access to foreign exchange trading data, and
strengthen oversight of the trading of U.S. energy commodities no
matter where that trading occurs. This provision would require the
Commodity Futures Trading Commission, CFTC, prior to allowing a foreign
exchange to establish direct trading terminals located in this country,
to obtain an agreement from the that foreign exchange, such as the
London exchange, to impose speculative limits and reporting
requirements on traders of U.S. energy commodities that are comparable
to the requirements imposed by the CFTC on U.S. exchanges. I believe
this issue is so important that I have introduced this section of the
package as a separate bill, which is numbered S. 2995. Senator
Feinstein is a cosponsor of that bill.
Following the introduction of our legislation, the CFTC finally moved
to address some of the gaps in its ability to oversee foreign exchanges
operating in the United States. Specifically, the CFTC, working with
the United Kingdom Financial Services Authority and the ICE Futures
Europe exchange, announced that it will now obtain the following
information about the trading of U.S. crude oil contracts on the London
exchange:
Daily large trader reports on positions in West Texas
Intermediate or WTI contracts traded on the London exchange;
information on those large trader positions for all futures
contracts, not just a limited set of contracts due to expire
in the near future; enhanced trader information to permit
more detailed identification of end users; improved data
formatting to facilitate integration of the data with other
CFTC data systems; and notification to the CFTC of when a
trader on ICE Futures Europe exceeds the position
accountability levels established by NYMEX for the trading of
WTI crude oil contracts.
These new steps will strengthen the CFTC's ability to detect and
prevent manipulation and excessive speculation in the oil and gasoline
markets. It will ensure that the CFTC has the same type of information
it receives from U.S. exchanges in order to detect and prevent
manipulation and excessive speculation.
However, in order to fully close the London loophole, better
information is not enough. The CFTC must also have clear authority to
act upon this information to stop manipulation and excessive
speculation.
That is why I have been working with the sponsors of the Consumer-
First Energy Act to include additional language to ensure that the CFTC
has the authority to act upon the information it will obtain from the
London exchange, in order to prevent price manipulation and excessive
speculation. This new provision, which I helped author, would make it
clear that the CFTC has the authority to prosecute and punish
manipulation of the price of a commodity, regardless of whether the
trader within the United States is trading on a U.S. or on a foreign
exchange. It would also make it clear that the CFTC has the authority
to require traders in the United States to reduce their positions, no
matter where the trading occurs--on a U.S. or foreign exchange--to
prevent price manipulation or excessive speculation. Finally, it would
clarify that the CFTC has the authority to require all U.S. traders to
keep records of their trades, regardless of which exchange the trader
is using.
It is my understanding that this new provision will be included in a
substitute amendment that will be offered today or in a future debate
on this bill, if cloture is not invoked today. I thank the bill
sponsors for accepting this language to ensure that the CFTC has full
enforcement authority over traders within the United States who are
trading on a foreign exchange, just as the CFTC has over traders who
are trading on a U.S. exchange. This clarification of the CFTC's
enforcement authority over traders in the United States, together with
the earlier provision setting standards for foreign boards of
[[Page S5407]]
trade wishing to place trading terminals in the United States, will
fully close the London loophole.
There is another problem with our energy markets that Congress has
finally acted on. In 2003, a report issued by my Subcommittee staff
found that the Bush administration's large deposits of oil into the
Strategic Petroleum Reserve, SPR, were increasing crude oil prices
without improving overall U.S. energy security. We found that in 2002,
the Bush administration, over the repeated objections of its own
experts in the Department of Energy, had changed its policy and decided
to put oil into the SPR regardless of the price of oil or market
conditions. By placing oil into the SPR while oil prices were high and
oil supplies were tight, the administration's deposits into the SPR
were reducing market supplies and boosting prices, with almost no
benefit to national security, given the fact that the SPR is more than
95 percent filled. The DOE experts believed that in a tight market, we
are better off with keeping the oil on the market rather than putting
it into the ground where it cannot be used.
Following the issuance of this report, in early 2003, I asked the
Department of Energy to suspend its filling of the SPR until prices had
abated and supplies were more plentiful. DOE refused to change course
and continued the SPR fill without regard to market supplies or prices.
After DOE denied my request, I offered a bipartisan amendment with
Senator Collins to the Interior appropriations bill, which provides
funding for the Strategic Petroleum Reserve program, to require DOE to
minimize the costs to the taxpayers and market impacts when placing oil
into the SPR. The Senate unanimously adopted our amendment, but it was
dropped from the conference report due to the Bush Administration's
continued opposition.
The next spring, I offered another amendment, also with Senator
Collins, to the budget resolution, expressing the sense of the Senate
that the administration should postpone deliveries into the SPR and use
the savings from the postponement to increase funding for national
security programs. The amendment passed the Senate by a vote of 52 to
43. That fall, we attempted to attach a similar amendment to the
homeland security appropriations bill that would have postponed the SPR
fill and used the savings for homeland security programs, but the
amendment was defeated by a procedural vote, even though the majority
of Senators voted in favor of the amendment, 48 to 47.
The next year, the Senate passed the Levin-Collins amendment to the
Energy Policy Act of 2005 to require the DOE to consider price impacts
and minimize the costs to the taxpayers and market impacts when placing
oil into the SPR. The Levin-Collins amendment was agreed to by the
conferees and is now law.
Unfortunately, passage of this provision has had no effect upon DOE's
actions. DOE continued to fill the SPR regardless of the market effects
of buying oil, thereby taking oil off the market and reducing supply by
placing it into the SPR. In the past year, no matter what the price of
oil or market conditions, DOE consistently found that the market
effects are negligible and no reason to delay filling the SPR.
Most recently, at the same time the President was urging OPEC to put
more oil on the market to reduce supplies, the administration was
continuing to take oil off the market and place it into the SPR. Until
recently, the DOE was depositing about 70,000 barrels of crude oil per
day into the SPR, much of it high-quality crude oil ideal for refining
into gasoline. It defies common sense for the U.S. Government to be
acquiring oil at $120 or $130 per barrel, in a time of tight supply,
taking that oil off the market, and putting it in the SPR. That is why
I cosponsored Senator Dorgan's bill to suspend the SPR fill, as well as
a similar provision in the Consumer-First Energy Act.
Finally, Congress had had enough of this senseless policy. The
provision to stop the continuous filing of the SPR was pulled from the
Consumer-First Energy Act and offered in the House and Senate as a
stand alone bill. Congress enacted into law by an overwhelming vote. In
response, the President finally called a halt to his policy and stopped
filling the SPR. It is about time.
The SPR fill policy, by the way, exacerbated yet another problem in
our oil markets--the fact that the standard NYMEX futures contract that
sets the benchmark price for U.S. crude oil requires a particular type
of high quality crude oil known as West Texas Intermediate, WTI, to be
delivered at a particular location, Cushing, OK. The standard NYMEX
contract price, in turn, has a major influence on the price of fuels
refined from crude oil such as gasoline, heating oil, and diesel.
Because the price of the standard contract depends upon the supply of
WTI at Cushing, OK, the supply and demand conditions in Oklahoma have a
disproportionate influence on the price of NYMEX futures contracts.
That means when the WTI price is no longer representative of the price
of U.S. crude oil in general, the prices of other energy commodities
are also thrown out of whack. In other words, we have an oil futures
market that reflects the supply and demand conditions in Cushing, OK,
but not necessarily the overall supply and demand situation in the
United States as a whole.
I have long called for reform of this outdated feature of the
standard NYMEX crude oil contract. In 2003, the PSI report recommended
the CFTC and NYMEX to work together to revise the standard NYMEX crude
oil futures contract to reduce its susceptibility to local imbalances
in the market for WTI crude oil. The subcommittee report suggested that
allowing for delivery at other locations could reduce the volatility of
the contract. It is truly disappointing that since our report was
issued no progress has been made for allowing for delivery at other
places than Cushing, OK. As the price of oil has increased, the
distortions and imbalances caused by the atypical nature of the
standard contract have gotten worse. It is essential NYMEX repair its
crude oil contract.
Putting the cop on the beat in our energy markets, strengthening
oversight of U.S. energy commodities traded on foreign exchanges,
stopping the SPR fill, and fixing the NYMEX crude oil contract all
focus on problems caused by rising energy prices. These consistently
rising gas prices also underscore the need to develop advanced vehicle
technologies and alternative energy sources that will significantly
reduce our dependence on foreign oil.
I have long advocated advanced automotive technologies such as hybrid
electric, advanced batteries, hydrogen and fuel cells and promoted
development of these technologies through Federal research and
development and through joint government-industry partnerships. We need
a significant infusion of Federal dollars into these efforts to make
revolutionary breakthroughs in automotive technologies. Such an
investment will make technologies such as plug-in hybrid vehicles
affordable to the American public and reduce our dependence on oil and
reduce prices at the pump.
We need an equally strong investment in development of alternative
fuels that can replace gasoline. I have strongly supported efforts to
increase our production of renewable fuels and to do that in a way that
will also reduce our greenhouse gas emissions. We need a strong push
toward biofuels produced from cellulosic materials, which requires a
significantly greater Federal investment in biofuels technologies.
Cellulosic ethanol has enormous potential for significant reductions in
greenhouse gas emissions, but additional Federal support is required to
make this technology financially viable. We need expanded Federal
research and development grants as well as increased tax incentives and
Federal loan guarantees to make cellulosic ethanol a viable replacement
for gasoline. The Federal Government must do its part first to develop
these technologies so that they will then in turn be within reach of
the American public.
One more point. The burden of higher energy prices is not being
shared equally. To the contrary, it is falling hardest upon those who
can least afford it. Large oil companies are reaping record profits at
the expense of the average American who ultimately bears the full
burden of these price increases. At the same time that average
Americans are having to devote a greater and greater portion of their
income to pay for basic necessities, such as gasoline, household
utilities, and food, the major oil companies are reporting record
profits and
[[Page S5408]]
their executives are taking home annual paychecks of hundreds of
millions of dollars. Many of these profits have been generated without
any additional investments into energy production. Rather, these
companies have seen their profits rise with the flood of speculation.
What is a high tide of profits for the oil companies, though, is a
tsunami that is overwhelming millions of Americans.
And what are these oil companies doing with these record profits? Are
they investing in new technologies? The answer is that the oil
companies are not increasing their exploration and development
investments by nearly as much as their profits are increasing. Instead,
they are devoting large amounts of their profits to acquiring other
companies and buying back their own shares. On May 1 of this year, the
Wall Street Journal reported that in the first quarter of 2008
ExxonMobil spent $8 billion to buy back company shares, which ``boosted
per-share earnings to stratospheric levels,'' whereas it spent less on
exploration and actually reduced oil production.
For these reasons, we need to institute a windfall profits tax on the
oil companies. We should incentivize big oil companies to invest their
windfall profits into things that will increase our own domestic energy
production by reducing the amount of the tax for such investments. If
they don't make these investments, a portion of that profit should be
recouped by the public to help offset the outrageous prices they are
facing at the pump.
I have supported a windfall profits tax numerous times when we have
voted on it in the Senate. The Consumer-First Energy Act, imposes a 25
percent tax on windfall profits of the major oil companies. Windfall
profits invested to boost domestic energy supplies would be exempt from
the tax, which would encourage investments in renewable facilities and
the production of renewable fuels such as ethanol and biodiesel. It
would also encourage oil companies to increase their domestic refinery
capacity. Proceeds from the tax would be put toward measures to reduce
the burdens of rising energy costs and increase our energy independence
and security.
Sky-high energy prices are causing immense financial pain to working
families and businesses throughout this country and tying our already
weak economy in knots. Congress cannot just stand by; we must act now
to stop the pain. Immediate steps include putting the cop on the beat
in all of our energy markets to prevent price manipulation and
excessive speculation, strengthening oversight of U.S. energy
commodities traded in London, fixing the key NYMEX crude oil contract,
investing in advanced vehicle technologies and alternative energy
sources, and imposing a windfall profits tax on the oil companies.
Longer range steps include fixing the fiscal policies undermining the
strength of the U.S. dollar, including by eliminating tax cuts for the
wealthiest among us, reducing the $12 billion a month spending bill in
Iraq, and closing outrageous tax loopholes than enable tax dodgers to
use offshore tax havens to avoid payment of taxes in the range of $100
billion each year.
We can fight back against exorbitantly high energy prices. But it
will take all our energy--and determination--to do it.
Mr. FEINGOLD. Mr. President, I am very disappointed that a minority
of Senators blocked the Consumer-First Energy Act of 2008, which puts
American consumers ahead of big oil companies and other corporate
interests.
This bill would prevent price gouging and market manipulation from
driving up the price of gas. The anti-price gouging language, based on
Senator Cantwell's bill that I cosponsored, would protect consumers
from price gouging by sellers and distributors of oil, gasoline, or
petroleum distillates during natural disasters and abnormal market
disruptions. As a cosponsor of the Oil and Gas Traders Oversight Act, I
also strongly support closing loopholes that allow traders using
overseas markets to secretively bid up the price of oil and saddle
Americans with the price at the gas pump.
Today's vote on the Consumer-First Energy Act of 2008 was an
opportunity to stand up to the OPEC cartel and force big oil to pay
their fair share. I have long supported the efforts of the senior
Senator from Wisconsin to make oil-producing and exporting cartels
illegal and make colluding oil-producing nations liable in U.S. court
for violations of antitrust law. Our oil companies can also be part of
the solution. This bill would have encouraged them to invest in clean,
affordable, and domestically produced renewable alternative fuels,
expanded refinery capacity and utilization, and renewable electricity
production.
Last year's Renewable Fuels, Consumer Protection, and Energy
Efficiency Act of 2007 put our Nation's energy policy on a new path:
one that encourages renewable energy, conservation of the resources we
have, and American innovation. But we have more work to do, and today's
vote is a step back in those efforts.
I will continue to support both short- and long-term solutions to our
Nation's energy needs that protect American consumers while working to
invest in renewable and alternative energies and break our addiction to
oil.
The PRESIDING OFFICER. The Senator from Missouri.
Mrs. McCASKILL. Mr. President, how much time is remaining on our
side?
The PRESIDING OFFICER. The Senator has 10 minutes.
Mrs. McCASKILL. I will speak for 5 minutes. I would appreciate it if
you would let me know when I have 1 minute.
Mr. President, you know this is not complicated. You would have to
not be walking around in the United States of America to not feel
incredible pressure at this moment. I feel so lucky to be in the
Senate, and I feel such a responsibility to communicate the pressure we
are all feeling from people who are hurting.
Let me run through a few facts.
Since 2002, profits for the five largest oil companies have
quadrupled. Let me say that again. Since 2002, profits have quadrupled.
Last year, ExxonMobil made $83,000 a minute in profit--$83,000 a
minute.
Now, are they using all this profit to invest in alternative fuels?
How about increasing refinery capacity? Oh, no, no. They have their
hand out to us. This is the nerve. Insanity is doing the same thing
over and over and thinking you are going to get a different result.
We are paying oil companies right now. This is the largest package of
corporate welfare this country has ever delivered. What nerve does it
take for us to give oil companies $17 billion in taxpayer money with
those kinds of profits?
This is like the ``twilight zone.'' This cannot be real. We cannot
honestly be standing here and saying to the American people: It is a
great idea for us to keep giving them your money when they are making
$83,000 a minute.
I was reading the paper this morning, and nothing is more expensive
than ads in the New York Times. I ask unanimous consent to show an ad
in the New York Times this morning.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. McCASKILL. OK. This is it: a two-page spread. Do you know what
this costs you? A half a million dollars. A half a million dollars
Exxon spent this morning. And guess what. They spent it yesterday
morning, and they are going to spend it tomorrow morning. It is a
series--all about what a great job they are doing for the American
people.
They are spending $2.5 million in the New York Times this week, while
Missourians in rural Missouri are scared they cannot go to work
anymore. They have no bus they can take. They have no metro they can
take. They are trying to figure out how they can drive to and from
work, how they can put food on the table, and these guys are spending
$2.5 million on PR. It is unbelievable.
We have given big oil, in 2004 and 2005, tax breaks worth over $17
billion over the next decade. What does the other side say? We need to
give them more. We have to pay them to increase refinery capacity.
Excuse me? We have to pay them--the taxpayers of this country? I do not
know how out of touch we could be. We are not asking for a lot. Just
take away the taxpayer money. We do not begrudge people profit.
Now, here is what is unbelievable. I do not know how this bill would
turn out if we debated it----
The PRESIDING OFFICER. That Senator has used 4 minutes.
[[Page S5409]]
Mrs. McCASKILL. Thank you, Mr. President.
I do not know how this bill would turn out if we debated it honestly,
but I do know one thing. We have a choice in about 5 minutes. We can do
nothing or we can work as hard as we know how to do something. If the
choice--if the choice--is to do nothing, then I hope the people of this
country rise up and scream like they have never screamed before. How
dare us do nothing.
That is what they are about getting ready to vote on. They are going
to say: We are not going to even let you proceed to try to do something
about this problem. It takes a lot of nerve. It takes a lot of nerve.
Mr. President, I yield the remainder of the time.
The PRESIDING OFFICER. The Senator from Montana.
Mr. TESTER. Mr. President, I thank you.
I thank the Senator from Missouri for her comments. They were right
on.
I rise today to call for action by the Senate on an urgent problem
facing this country, facing the State of Montana: gas prices.
The national average now, we just found out last weekend, is $4 a
gallon. I remember when gas was $1.46. It was not that long ago. It was
before the Bush administration took over. That was before the war in
Iraq, before speculators and market manipulators spiraled out of
control, before that $17 billion Bush tax cut for our Nation's biggest
oil companies.
These gas prices hurt. They especially hurt hard-working people in
Montana and across rural America. In my State, nearly everybody has to
drive to work. There are not other options. We do not have a subway
system. We do not have other means of mass transit. Whether it is on a
tractor or behind the wheel of a truck, a lot of folks rely on
horsepower and the fuel to supply that horsepower to get their work
done.
Of course, high gas prices means high prices for consumer goods. It
means fewer jobs. Middle-class families are getting pinched hard by
these high gas prices. For low-income folks, high gas prices are
unbearable. They do not need to see headlines like in Newsweek this
week to know our economy is in trouble. People are already feeling it.
Yet we have seen no solutions from this administration.
I am not even convinced this administration considers rising gas
prices a problem. Earlier this year, a reporter asked President Bush
what advice he had to consumers facing $4 a gallon gas. He was visibly
surprised and asked the reporter where he had heard that.
Well, working folks and small businesses have felt the pain for some
time now. Our farmers all over rural America have known it for quite a
while. Our trucking and transportation industry has felt it hard for a
long time. The cost of diesel fuel that powers our tractors, our
combines, and our trucks that take food to the grocery stores hit $4
back in April. It is closing in on $5. Every working family and small
business and farmer and trucker is taking a hit--a big hit--on these
fuel prices.
That is why I am supporting these two packages today that go to the
root of the problems of high gas costs. They offer some solutions.
The Consumer-First Energy Act will go after commodity speculators who
are manipulating the market. It needs to be done. It will let the
Justice Department go after the illegal OPEC oil cartel in court. It
needs to be done. It will put a stop to the big tax giveaways the last
Congress gave to big oil, which needs to be done. It will protect
consumers from price colluders and price gougers. This needs to be
done.
This bill will immediately put a stop to the financial gimmicks that
have driven up the cost of oil past the laws of supply and demand. If
you do not think speculators are playing with the markets, and they are
having a big impact, let me remind you of the Enron collapse, the dot-
com bust, and the demise of the housing market. It is all happening in
oil right now.
When Wall Street investment banks faced trouble a couple months ago,
the Bush administration swiftly took action. But when American
consumers have to tap into their savings or run up their credit card
debt just to pay the price at the pump, the administration is nowhere
to be seen.
The Consumer-First Energy Act is about solutions. They are solutions
we need to invest in right now. We have the opportunity in the United
States to drill for oil in places that make sense--eastern Montana, the
western Dakotas, the Bakken field. And wouldn't you know, it is the
smaller companies--not the big companies--that are going after those
reserves. It is the smaller companies innovating, investing in the
future, boosting domestic oil production right now, working with the
folks in those regions, boosting rural economies.
My colleague, Senator Baucus, has again brought forward an energy tax
package that will help extend some of the most successful and effective
tax credits that are driving alternative energy development. He brought
a similar package forward last year, only to have it narrowly defeated.
I hope we have a different outcome this time because our future
energy system depends on new solutions, not old solutions. We have the
ideas and the ambition, but we need to get on with new innovations in
the marketplace.
It is time to resolve these energy costs and take a step toward
solving our energy problems. We have to work together, and I am
confident we can work together to find solutions to bring the costs
back down.
Thank you, Mr. President. I yield the floor.
The PRESIDING OFFICER. All time is yielded back.
Cloture Motion
Under the previous order, pursuant to rule XXII, the Chair lays
before the Senate the pending cloture motion, which the clerk will
state.
The legislative clerk read as follows:
Cloture Motion
We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
hereby move to bring to a close debate on the motion to
proceed to S. 3044, the Consumer-First Energy Act of 2008.
Harry Reid, Barbara Boxer, Charles E. Schumer, Sheldon
Whitehouse, Robert P. Casey, Jr., Patty Murray, Debbie
Stabenow, Benjamin L. Cardin, Daniel K. Akaka, Jack
Reed, Claire McCaskill, Christopher J. Dodd, Amy
Klobuchar, Patrick J. Leahy, Barbara A. Mikulski, Frank
R. Lautenberg, Carl Levin.
The PRESIDING OFFICER. By unanimous consent, the mandatory quorum
call is waived.
The question is, Is it the sense of the Senate that debate on the
motion to proceed to S. 3044, the Consumer-First Energy Act of 2008,
shall be brought to a close?
The yeas and nays are mandatory under the rule.
The clerk will call the roll.
The bill clerk called the roll.
Mr. DURBIN. I announce that the Senator from West Virginia (Mr.
Byrd), the Senator from New York (Mrs. Clinton), the Senator from
Massachusetts (Mr. Kennedy) and the Senator from Illinois (Mr. Obama)
are necessarily absent.
Mr. KYL. The following Senators are necessarily absent: the Senator
from South Carolina (Mr. Graham) and the Senator from Arizona (Mr.
McCain).
The ACTING PRESIDENT pro tempore. Are there any other Senators in the
Chamber desiring to vote?
The yeas and nays resulted--yeas 51, nays 43, as follows:
[Rollcall Vote No. 146 Leg.]
YEAS--51
Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Brown
Cantwell
Cardin
Carper
Casey
Coleman
Collins
Conrad
Dodd
Dorgan
Durbin
Feingold
Feinstein
Grassley
Harkin
Inouye
Johnson
Kerry
Klobuchar
Kohl
Lautenberg
Leahy
Levin
Lieberman
Lincoln
McCaskill
Menendez
Mikulski
Murray
Nelson (FL)
Nelson (NE)
Pryor
Reed
Rockefeller
Salazar
Sanders
Schumer
Smith
Snowe
Stabenow
Tester
Warner
Webb
Whitehouse
Wyden
NAYS--43
Alexander
Allard
Barrasso
Bennett
Bond
Brownback
Bunning
Burr
Chambliss
Coburn
Cochran
Corker
Cornyn
Craig
Crapo
DeMint
Dole
Domenici
Ensign
Enzi
Gregg
Hagel
Hatch
Hutchison
Inhofe
Isakson
Kyl
Landrieu
Lugar
Martinez
McConnell
Murkowski
Reid
Roberts
Sessions
Shelby
Specter
Stevens
Sununu
Thune
Vitter
Voinovich
Wicker
[[Page S5410]]
NOT VOTING--6
Byrd
Clinton
Graham
Kennedy
McCain
Obama
The ACTING PRESIDENT pro tempore. On this vote, the yeas are 51, the
nays are 43. Three-fifths of the Senators duly chosen and sworn not
having voted in the affirmative, the motion is rejected.
Mr. REID. Mr. President, I enter a motion to reconsider the vote by
which cloture was not invoked on the motion to proceed to S. 3044.
The ACTING PRESIDENT pro tempore. The motion is pending.
Mr. REID. Mr. President, because the subway was broken, it made it
difficult for some Senators to make it here in time. We had to extend
the vote for quite a long period of time.
I have spoken to the Republican leader. I think we would be well
served by having the vote on the next cloture motion. We will vote only
on one of the judges now. We will come back after lunch and do the
others. I will work the time out with the Republican leader. Hopefully,
the first business we will conduct will be the votes on the other two
district court judges. We won't have time to do them this morning. I
will work with the Republican leader and we will come up with a time
and give everybody ample notice about when the next vote will occur.
I ask unanimous consent that we have the vote on the first judge, the
judge from Virginia, now, and that we then have the vote on the two
subsequent judges at a time to be determined by the majority leader in
consultation with the Republican leader.
The ACTING PRESIDENT pro tempore. Is there objection?
Without objection, it is so ordered.
____________________