[Congressional Record Volume 154, Number 103 (Friday, June 20, 2008)]
[Senate]
[Pages S5928-S5930]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            MORNING BUSINESS

  Mr. DODD. I ask unanimous consent that the Senate proceed to a period 
of morning business with Senators permitted to speak for up to 10 
minutes each.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                         Oil Market Speculators

  Mr. DORGAN. Mr. President, this morning, watching television as I was 
getting ready to come to work, I heard a news report about how much 
less Americans were driving. I believe they said 4.5 billion fewer 
miles driven in our country in April, although it may have been January 
through April. I am trying to get that. But the New York Times 
yesterday had the same thing. It says: ``Driving Less: Americans 
Finally React to the Sting of Gas Prices.'' It described that in April 
of 2008, compared with the same month 1 year ago, Americans drove 1.8 
percent fewer miles on public roads. So round it up. Americans drove 2 
percent less in April, and presumably they used 2 percent less gasoline 
than 1 year ago.
  If that is the case, that gas prices are up so Americans are driving 
less and using less gasoline--then demand is down, isn't it?
  Well, demand is down--and we know that; it doesn't have to be 
confirmed by the New York Times yesterday. Demand is down. When gas 
goes to $4, people are wondering how on Earth do I pull up to the gas 
pump and afford to fill the tank? I had a tribal chairman come to the 
Senate yesterday. He described a mother who was driving her

[[Page S5929]]

daughter, who had threatened to commit suicide, to see a doctor. But 
the mother didn't have money or enough gas in the car to get back home, 
so she came to see the tribal chairman of this particular Indian tribe 
to try to get some money to put some gas in the tank to be able to 
drive home after driving her daughter to the doctor.
  We know these stories. A lot of people can't afford this, so they are 
driving less. So if demand is down, then why are gasoline prices 
staying up?
  Four of the first 5 months of this year, we have seen increases in 
crude oil inventories. Let me say that again: Crude oil inventory 
supplies in this country have increased 4 of the last 5 months. So if 
supplies are up, and demand is down, what justifies a continued 
increase in the price of oil? It is not justified. It is unbelievable 
speculation in the commodities markets.
  I want to talk about that for a moment today. But I want to also note 
that in the Washington Post this morning, Steven Pearlstein had an 
article. It says: ``On Energy: Same-Old, Same-Old.'' And he is right 
about that. Same old thing, isn't it, on energy?
  We can't live without energy. The fact is, we get up in the morning 
and flip a switch and the light goes on. We plug something in and our 
razor works. We get in the car, turn the key, and we can drive. We take 
energy completely for granted, and yet we are prodigious users of 
energy.
  But we have a problem: Part of the problem is that divine providence, 
apparently, ended up putting most of the oil under the sands way on the 
other side of the planet and most of the demand is here. So we stick 
straws in this planet of ours and suck oil out every day. Eighty-five 
million barrels of oil every day we suck out of this Earth, and one-
fourth is destined to be used in this little spot called the United 
States. We use a quarter of the oil every single day that is produced 
in this world.
  That is pretty unbelievable when you think about it. So we have big 
problems. We use a quarter of the oil, and much of it is produced 
elsewhere--Saudi Arabia, Kuwait, Iraq, and Venezuela--in troubled parts 
of the world. We need to be less dependent on finding oil from off our 
shores, which means we need to be more diligent in finding ways to 
produce more here.
  But it is not just producing oil, however. There are a lot of ways to 
produce energy. My colleagues on the other side, who have spent the 
last several days in this Chamber saying we have to drill here and 
drill there; that the only way you produce is to drill a hole 
someplace. Well, I know people like this. They are the dig-and-drill 
type. I call them ``yesterday forever.'' Digging and drilling, that is 
the only way they think you can produce energy.

  What about planting a crop in a farm field and producing ethanol? 
What about putting up a wind turbine and producing electricity by 
taking the energy from the air? What about solar? What about biomass? 
There is so much more we can and should do with respect to the 
production of energy.
  I will talk about that some more, but I want to come back to this 
issue of speculation. Right now, the price of gas is killing us. We 
have, I think, 12 airlines that have gone bankrupt in recent weeks and 
months. We have a whole lot of trucking companies that are now out of 
business because they cannot afford to continue to operate by paying 
current diesel prices to fill their trucks. We have farmers who can't 
figure out how they are going to order a load of fuel for spring's work 
and summer's work because it costs too much. We have a lot of families 
driving up to a gas pump and putting in only five gallons because they 
can't possibly afford to fill the tank.
  What is causing all that? Well, we have what is called a commodities 
market that has now been infested with hedge funds and investment 
banks. Investment banks, for the first time in history, and in recent 
years, are in this commodity market speculating. They have actually 
purchased storage capacity in order to take oil off the market. That is 
not a particularly good way to bring down prices, is it? But that is 
not the interest of some of these speculators. They think increasing 
the price is fine. It is exactly what they want.
  Will Rogers described all this years ago. He described people who buy 
things they will never get from people who never had it, making money 
on both sides. It wouldn't matter so much if the speculation on a 
commodity isn't so essential to this country. There is unbelievable 
speculation on oil and gas prices in this country, particularly oil 
prices at this point, that is damaging our economy. It is damaging our 
country, it hurts American truckers, farmers, and others, and we need 
to do something about it.
  Now, the question is, what? I am going to hold a hearing next week. I 
chair the subcommittee that funds the Department of Energy, among other 
things, and it funds the Energy Information Administration. That is the 
agency we pay in the Department of Energy to tell us what they know 
about energy. This is not a policy group, but we spend a lot of money 
on the EIA. If somebody is talking about energy and giving you some 
analysis about energy statistics, it is probably the Energy Information 
Administration, run by Mr. Caruso. Mr. Caruso is going to testify 
before my subcommittee this coming week.
  But I want to show you this chart. I am not showing this to 
demonstrate that the EIA is incompetent. That is not my allegation 
here. However, I wanted to show you what the Energy Information 
Administration has estimated each month, because they estimate what the 
price of oil is going to be. Nobody knows, so EIA makes the best 
estimate they can, because they have the best people and the experts. 
So here is what they have estimated.
  By the way, this red line is the actual price, okay? Go back here in 
May 2007, and they estimated the price of gasoline was to be about 
here. In July 2007, they said here is where we think the price will be. 
In September of 2007, here is where we think the price is going to be. 
In November 2007, we think the price will go down, actually. In January 
2008, the price is going to go down. March 2008, it is going to go 
down, and in April, it is going to go down.
  Here is what actually happened. Oil prices went straight up, like a 
Roman candle. So the best people we have in the agency instructed to do 
this analysis say, here is our estimate of oil prices--and the 
fundamentals of the marketplace should reflect supply and demand. I 
assume they probably thought people were going to drive a little less 
as prices went up so that we would have more conservation. But they 
said, we think we are going to be okay on supply and have a little less 
demand and prices will moderate. Instead, prices went like this.
  How can we be so wrong for so long? That is the question, I guess, 
for next week. But I have had a chance to ask the head of this agency 
at a previous hearing whether there is some speculation here. My notion 
is this is an unbelievable orgy of speculation, and that is what is 
happening to this market. The market is broken, doesn't work, it is 
full of speculators, and they are interested in driving up the price. 
They do not give a rip about the damage to the economy. But the answer 
from the EIA was, well, a little bit of speculation, but, you know, not 
very much. It was kind of a two-step shuffle with your hands in your 
pockets, ruminating. Wearing a gray sweater and smoking a pipe and 
ruminating: Well, maybe a little speculation.
  You know what? I think the truth is--and this chart with these lines 
demonstrates how wrong we have been for so long--that there is a 
massive amount of speculation here. There are plenty of experts around 
who say this market is like a casino, open 24/7.
  Now, what does it matter? Well, what matters is this is doing 
unbelievable damage to our economy and to our country. I would 
understand it--I wouldn't accept it, but I would understand it, if at 
least the supply and demand relationship here justified an increase in 
price, but it does not. Refineries in this country in recent months 
have actually cut back in their capacity because they have had too much 
inventory out there. Drivers are driving less, crude stocks in 4 of the 
first 5 months have been up, yet the price of oil continues to rise.
  Now, the large oil companies that are going to the bank depositing 
our money have a permanent grin. They can't stop smiling. The Saudis 
and the OPEC countries can't stop smiling either because they are 
contributing

[[Page S5930]]

even more of our money to their bank accounts. This is not bad for 
everybody. This is good for some. It is just bad for most of the 
American people and bad for the economy of this country.

  I believe that speculation is rampant and the regulatory authorities, 
the people who are supposed to wear the striped shirts and call the 
fouls, the Commodity Futures Trading Commission are largely doing 
nothing about it except for the last couple of weeks when someone has, 
apparently, lit their fuse or when the Chairman had some sort of 
epiphany overnight and said it looks as if we ought to start 
investigating this. The Chairman of the regulatory body has said 
repeatedly now, for many months: It is just the fundamentals, there are 
no problems here, the market is working fine, just fine. He said it 
last July, he said it in January, he said it in February, he said it in 
May, be happy, there is no problem here. The fundamentals of the oil 
markets are working just fine.
  Then, all of a sudden, we had a kind of tipping point. The Chairman 
of the Commodity Futures Trading Commission said: There might be 
something wrong. We are going to look at it. And oh, by the way, we 
have been looking at it for 7 months.
  It is a little confusing to me and I expect to the American people. 
Either the fundamentals were not right, or they were, back when he was 
assuring the American people everything was fine.
  Having said all of that, it is pretty clear to me what is going on 
here. We have a dramatic amount of speculation, a bunch of big 
interests running up the price of oil on the commodities market--hedge 
funds, investment banks, and others--speculating, purely speculating in 
these oil markets.
  I am going to introduce some legislation next week that addresses 
that subject. It will be the End Oil Speculation Act. It will require 
the Commodity Futures Trading Commission, which has largely been asleep 
at the switch, to use the authority it has to do what is necessary to 
separate legitimate trading for hedging purposes on the commodities 
market for oil from trading that is purely speculative. It will 
increase the margin requirement on trading that is purely speculative. 
It will do a number of other things that respond to the need to say: We 
believe this market should work. We think this market is necessary. But 
when a market is broken, the U.S. Congress has a responsibility to 
address it.
  My legislation will have time requirements and will make certain that 
the Commodity Futures Trading Commission takes the action that is 
necessary to wring the speculation out of these markets. I will 
introduce that early next week.
  I do want to say with respect to the Stephen Pearlstein article that 
I think he has it right--``same old, same old.'' He said: Somebody 
brings up offshore drilling, and immediately some say ``no,'' others 
say ``yes,'' some say ``there,'' others say ``nowhere.'' Should we do 
some offshore drilling? Sure. I supported offshore drilling in the Gulf 
of Mexico. I was one of four Senators who constructed the legislation 
that is now law that opens what was called lease 181. Substantial oil 
and natural gas are there. We ought to open much more of that on the 
eastern Gulf of Mexico. That is where the highest potential of 
recoverable oil is, in the Gulf of Mexico. We can do that safely.
  The fact is, you need to do much more. We are not going to drill our 
way out of this problem. We need much more renewable energy and more 
conservation. By far, the lowest hanging fruit in the energy issue 
would be to retrofit all buildings in America. The Mackenzie study says 
that is the quickest and easiest way to achieve substantial savings in 
energy. There is so much to do and so much available to us in renewable 
energy, in conservation, efficiency, and also the other elements that 
come together outside of just drilling and digging.
  I support some drilling and I support some digging. But that is not a 
policy, it is just a chant to say: Let's keep doing what we have been 
doing. That has driven us into a ditch. We want to get out of the 
ditch. We don't want to make the ditch deeper.
  I am going to be introducing legislation next week to address this 
problem of speculation. My hope is that all those who believe, as I do, 
that this market is not working right will support this effort. When 
you have an increase in supply of oil and you have a decrease in 
demand, you would expect that prices would begin going down, not 
continue to go up on a steep path. This market is broken, and I believe 
Congress has a responsibility to fix it. That is what I hope my 
colleagues and I will be able to do beginning next week.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Casey). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HATCH. 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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