[Congressional Record Volume 154, Number 129 (Thursday, July 31, 2008)]
[Senate]
[Pages S7971-S7973]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SANDERS (for himself, Mr. Obama, Mrs. Clinton, Mr. 
        Kennedy, Mr. Brown, Ms. Mikulski, Mr. Casey, Mrs. Boxer, Mr. 
        Durbin, and Mr. Inouye):
  S. 3413. A bill to achieve access to comprehensive primary health 
care services for all Americans and to improve primary care delivery 
through an expansion of the community health center and National Health 
Service Corps programs; to the Committee on Health, Education, Labor, 
and Pensions.
  Mr. SANDERS. Mr. President, today there is some good news and some 
bad news. The bad news is that oil is at $123 a barrel and working 
people are paying $4 for a gallon of gas, and this coming winter 
residents of the Northeast could be paying over $5 for a gallon of 
heating oil.
  But, there is some good news. Today, the CEOs of ExxonMobil, Shell, 
BP and ConocoPhillips are celebrating. They're feeling pretty good. 
And, they have good reason to feel that way.
  ExxonMobil reported today that it made over $11.68 billion in profits 
over the 2nd quarter alone, breaking its own record for the largest 
quarterly profit of any American company in the history of the world.
  But, ExxonMobil is not alone. Shell's 2nd quarter profit jumped by 33 
percent to $11.56 billion; and BP's 2nd quarter profit jumped by 28 
percent.
  As a matter of fact, since George W. Bush and Dick Cheney have been 
in office, the five largest oil companies have made over $640 billion 
in profits. This includes $212 billion for ExxonMobil; $157 billion for 
Shell; $125 billion for BP; $80 billion for ChevronTexaco; and $66 
billion for ConocoPhillips.
  Believe it or not, the Big 5 oil companies made more profits during 
the 2nd quarter, than they did during the entire year of 2002.
  Now, with the exception of my Republican friends here in Congress, 
there are very few people in this country who believe the oil companies 
give one hoot about the well-being of the American people. Our 
Republican friends are saying that if we just give these huge oil 
companies more acres offshore to drill for oil, they will certainly do 
the right thing, as they always have, for the American people. Let's 
just trust those big oil companies because they are really staying up 
day after day, night after night, worrying about the well-being of the 
American people. That is what their full-page ads in the New York Times 
and all their ads on television are telling us.
  Well, it is good to see there are at least some people in America who 
believe that. I don't, but apparently my Republican colleagues do.
  Let me tell you, big oil companies are so concerned about Americans 
paying high prices for gas and oil that this is what they are doing 
with their profits:
  In 2005, ExxonMobil gave its CEO, Lee Raymond, a $398 million 
retirement package--one of the richest compensation packages in 
corporate history. They weren't going out looking for new land to drill 
on, they weren't building more refineries, and they weren't working on 
energy efficiency. They gave their CEO a $398 million retirement 
package.
  In 2006, Occidental Petroleum, gave its CEO, Ray Irani, over $400 
million in total compensation.
  The situation is so absurd and the greed of the oil companies is so 
outrageous that these companies are not only giving their executives 
huge compensation packages during their life here on earth, but they 
have also created a situation, if you can believe it, where these oil 
companies have carved out huge corporate payments to the heirs of 
senior executives if they die in office. I guess this is what happens 
when you have more money than you know what to do with.

[[Page S7972]]

  According to the Wall Street Journal, if the CEO of Occidental 
Petroleum dies in office, his family will get $115 million. The family 
of the CEO of Nabors Industries, another oil company, would receive 
$288 million. This would be funny if it were not so pathetic in the 
sense of the impact this type of spending has on the American people.
  Not only are huge oil companies using their record-breaking profits 
on big compensation benefits for their CEOs, but they are also spending 
large sums of money buying back their own stock. In other words, when 
they are making these very large profits, they are not going out 
drilling for more oil, as our Republican friends are suggesting.
  In fact, While Americans are struggling to pay for the skyrocketing 
price of gasoline; big oil companies are having an entirely different 
problem. For the past seven years, big oil companies are struggling to 
figure out what they are going to do with all of their windfall 
profits.
  Let me quote from a headline taken from the front page of the Wall 
Street Journal way back on July 30 of 2001, ``Pumping Money: Major Oil 
Companies Struggle to Spend Huge Hoards of Cash.'' According to this 
2001 article, ``Royal Dutch/Shell Group said it was pumping out $1.5 
million in profit an hour and sitting on more than $11 billion in the 
bank.'' That was in 2001. Since that time Shell's profits have more 
than tripled.
  On April 18, 2005, Fortune Magazine published an article with the 
Headline ``Poor Little Rich Company,'' referring to ExxonMobil. 
According to this article, ``ExxonMobil CEO Lee Raymond, suddenly has a 
new anxiety: how to spend the windfall wrought by $55 a barrel oil. By 
the end of April [of 2005], Exxon will have a cash hoard of more than 
$25 billion. . . . At a time when domestic energy production is 
declining and drivers are paying a record $2.15 a gallon [remember, 
this was in 2005], American consumers, not to mention politicians, are 
likely to start focusing on whether Exxon is spending enough to find 
oil and gas. While Exxon is returning more money to shareholders via 
dividends and buying back more of its stock, its spending on drilling 
and other development activities actually declined in 2004--even though 
crude prices jumped by a third.'' That was when the price of oil was 
$55 a barrel and gas was $2.15 a gallon. Today oil is over $123 a 
barrel and gas is about $4 a gallon.
  What is happening today? Big oil companies are spending even more on 
stock buybacks and CEO compensation and less on trying to produce more 
oil.
  For example, ConocoPhillips recently announced that it plans to give 
all of the $12 billion in profits it made last year back to 
shareholders, paying more than $3 billion in dividends and spending the 
rest to buy back shares of its own stock. To put this in perspective 
the money that ConocoPhillips is spending on stock buybacks and 
dividends is enough to reduce the price of gas by 9 cents a gallon 
throughout the entire United States.
  Now, I want my Republican friends to listen closely. They have been 
saying over and over again that big oil desperately needs all of these 
windfall profits to drill for more oil.
  But, guess what? According to the CEO of ConocoPhillips, James Mulva, 
``We like the discipline of the share repurchase. If we find that we 
have more cash flow, it's not really going to be going toward capital 
spending.'' In other words, ConocoPhillips won't use their windfall 
profits to drill for more oil, or invest in renewable energy, or 
explore for new sources of oil discoveries no matter how much their 
profits rise.
  Overall, since 2005, the five biggest oil companies have made $345 
billion in profits and spent over $250 billion buying back stock and 
paying dividends to shareholders.
  Last year, ExxonMobil spent 850 percent more buying back its own 
stock than it did on capital expenditures in the United States.
  The $38 billion in windfall profits that ExxonMobil gave back to 
shareholders last year could have been used to reduce gas prices at the 
pump throughout the United States by 27 cents a gallon for the entire 
year.
  Mr. President, let's not kid ourselves. One of the major reasons as 
to why Americans are getting ripped-off at the gas pump has to do with 
the tremendous power and influence that big oil companies have in the 
Congress. As a matter of fact, since 1998, the oil and gas industry has 
spent over $616 million on lobbying activities.
  Who have they hired? Well, on April 8 of this year, The Hill reported 
that Chevron hired former Majority Leader Trent Lott, a Republican; 
former Senator John Breaux, a Democrat; their sons Chester Trent Lott, 
Jr. and John Breaux, Jr.; and Trent Boyles, who was Lott's Chief of 
Staff to lobby Congress on issues relating to trade, climate change, 
and energy taxes.
  ExxonMobil has hired former Senator Don Nickles, a Republican from 
Oklahoma, who served in this body for 24 years, to lobby Congress on 
behalf of their issues.
  These are just a few of the hundreds of lobbyists that big oil and 
gas companies have hired to influence Congress, many of them former 
Senators, former Congressmen, and former Congressional staffers.
  That is one of the reasons why, among many other reasons, this 
Congress, in recent years, has decided to give some $18 billion in tax 
breaks to oil companies despite their record-breaking profits.
  In addition, since 1990 big oil companies have made over $213 million 
in campaign contributions. And that is a simple fact.
  Lo and behold, what we are hearing today--just coincidentally, no 
doubt--is that the most important thing we can do in terms of the 
energy crisis is to provide more land offshore for the oil companies to 
drill at a time when they already have some 68 million acres of leased 
land, which they are not drilling on today.
  The American people want action, and there are some things we can 
do--not in 15 or 20 years but that we can do right now.
  First, we need to impose a windfall profits tax on big oil companies 
so that they would be prohibited from gouging consumers at the gas 
pump.
  Unfortunately, instead of taking away big oil's windfall profits and 
giving it back to the American people, Republicans want to provide even 
more tax breaks to big oil. In fact, Sen. McCain has a plan that would 
give ExxonMobil a $1.5 billion tax break.
  Now, we have heard Republicans give three reasons as to why they are 
opposed to a windfall profits tax.
  First, Republicans claim that the last time Congress enacted a 
windfall profits tax in 1981 it had the effect of increasing our 
dependence on foreign oil. Wrong. Mr. President, when Congress repealed 
the windfall profits tax in 1988, the U.S. was importing 7.4 million 
barrels of oil a day. Today, the U.S. is importing over 13.4 million 
barrels of oil a day. We are far more dependent on foreign oil today 
without a windfall profits tax than we were 20 years ago when we had a 
windfall profits tax.
  Secondly, my Republican friends tell us that the windfall profits tax 
didn't work because Congress repealed it in 1988. That is also wrong. 
While I would have structured it differently, the fact of the matter is 
that from 1981 until 1988 when the windfall profits tax was repealed, 
the price of oil fell from $35 a barrel to less than $15 a barrel. In 
addition, gas prices at the pump fell from $1.35 a gallon to 90 cents a 
gallon--a drop of 45 cents a gallon. And the Federal Government 
collected over $80 billion in revenue.
  The reason why the windfall profits tax was repealed was due to low 
oil and gas prices, which makes perfect sense. If oil and gas prices 
are low, big oil companies are not making windfall profits and there is 
no need for a windfall profits tax. If gas prices at the pump were only 
90 cents a gallon, I would be one of the first Senators to say we don't 
need a windfall profits tax. But, they are not. They are over $4 a 
gallon.
  Finally, Republicans claim that big oil companies need to keep their 
windfall profits so that they can increase production and build more 
refineries. That particular argument is laughable.
  Big oil companies have been making windfall profits for over seven 
long years--and they are not using these profits to build more 
refineries and they are not using it to expand production. Instead, 
they are using this money to buy back their own stock, increase 
dividends to their shareholders,

[[Page S7973]]

and enrich their CEOs, as I have explained earlier.
  Not only do we need to impose a windfall profits tax on these 
extremely powerful oil corporations, but we also have to address what I 
perceive is a growing understanding that Wall Street investment banks, 
such as Goldman Sachs, Morgan Stanley, JPMorgan Chase, and hedge fund 
managers are driving up the price of oil in the unregulated energy 
futures market. In other words, they are speculating on energy futures 
and driving up prices.
  There are estimates that 25 to 50 percent of the cost of a barrel of 
oil is attributable to unregulated speculation on oil futures. We have 
heard from some leading energy economists, and we have heard from 
people in the oil industry themselves who tell us that 25 to 50 percent 
of the cost of a barrel of oil today is not due to supply and demand or 
the cost of production but is due to manipulation of markets and 
excessive speculation. In essence, Wall Street firms are making 
billions as they artificially drive up oil prices by buying, holding, 
and selling huge amounts of oil on dark unregulated markets.
  Some of my Republican friends claim that the increase in the price of 
oil has nothing to do with speculation, but it is interesting to me 
that we have had executives of major oil companies--major oil 
companies--who have come before Congress and who are saying, ``Why is 
oil $125, $130, and $140 a barrel?'' Do you know what they say? The CEO 
of Royal Dutch Shell testified before Congress and said: ``The oil 
fundamentals are no problem. They are the same as they were when oil 
was selling for $60 a barrel.''
  This is not some radical economist. It is not some left-winger. This 
is a guy who is the head of Royal Dutch Shell.
  The CEO of Marathon Oil recently said: ``$100 oil isn't justified by 
the physical demand in the market.''
  I know my Republican friends have a lot of respect for the oil 
industry, a great competence in them. They love them and give them huge 
tax breaks. So maybe they should listen to what some of these guys are 
saying in terms of oil speculation.
  For those who believe that excessive speculation is not causing oil 
prices to climb higher, let me just say this. Over the past 7 years, 
Enron; BP; and Amaranth were caught redhanded manipulating the price of 
electricity; propane; and natural gas. Each time, supply and demand was 
to blame and each time the pundits were proven wrong. Excessive 
speculation; manipulation and greed were the cause. Enron employees are 
in jail for manipulating the electricity market in 2001; BP was forced 
to pay a $300 million fine for manipulating propane prices in 2004; and 
the Amaranth hedge fund collapsed after manipulating natural gas prices 
in 2006.
  The Stop Excessive Speculation Act introduced by Majority Leader Reid 
begins to seriously address this problem. We need to pass this bill as 
soon as possible.
  The bottom line is that it is time for the United States Senate to 
say no to big oil companies and greedy hedge fund managers and yes to 
the American people.

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