[Congressional Record Volume 158, Number 50 (Tuesday, March 27, 2012)]
[Senate]
[Pages S2048-S2054]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
REPEAL BIG OIL TAX SUBSIDIES ACT--MOTION TO PROCEED
The PRESIDING OFFICER. Under the previous order, the Senate will
resume consideration of the motion to proceed to S. 2204, which the
clerk will report.
The legislative clerk read as follows:
Motion to proceed to S. 2204, a bill to eliminate
unnecessary tax subsidies and promote renewable energy and
energy conservation.
Mr. REID. Mr. President, I ask unanimous consent the time until 3:30
today be equally divided between the two leaders or their designees;
that at 3:30 p.m. today the Senate adopt the motion to proceed to S.
2204, and then the Senate vote on the motion to invoke cloture on the
motion to proceed to Calendar No. 296, S. 1789.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Florida.
(The remarks of Mr. Nelson of Florida are printed in today's Record
under ``Morning Business.'')
Mr. NELSON of Florida.
I yield the floor.
The PRESIDING OFFICER. The Republican leader is recognized.
Mr. McCONNELL. Mr. President, what we are seeing in the Senate this
week is exhibit A in what the American people just don't like about
Congress. Gas prices have more than doubled under President Obama and
the Democratic control of the Senate. This is an issue that affects
every single American and drives up the cost of everything from
commuting to groceries.
What is the Democratic response? Well, it is legislation that even
they admit won't do a thing to lower the price of gas at the pump. We
have seven Democratic Senators on record saying this bill doesn't do a
thing to lower gas prices. One of them has actually called it
laughable. Yet that is what they are proposing here this week
[[Page S2049]]
at a time when gas prices are at a national average of nearly $4 a
gallon. This is what passes for a response to high gas prices for
Washington Democrats--a bill that does nothing about it. I cannot think
of a better way to illustrate how totally out of touch and
irresponsible the Democratic majority has become.
Look, Democrats know they have to say something about this issue, so
what they are doing is taking a page out of the President's playbook
and blaming somebody else. That is what this entire exercise is about--
blaming somebody else--and, frankly, the American people are tired of
it.
If Democrats don't want to do anything to lower gas prices, just go
ahead and admit it. If Senate Democrats don't have any interest in
lowering gas prices, then just say so, but don't waste the public's
time by using the Senate floor to talk up a piece of legislation the
only purpose of which is to convince people that you do. If the
President doesn't want the Keystone Pipeline, why doesn't he just admit
it? But don't insult the public by showing up for a ribbon cutting--for
one part of it that you had nothing to do with while lobbying against
the most important part at the same time.
Americans are tired of the political games and double-talk on this
issue. They are tired of the constant campaign. They sent us here to
actually fix problems, not to avoid them, and on this issue there is a
lot we could be doing to make things a whole lot better. So Republicans
are happy to use this opportunity to talk about some of those things.
Who knows. Maybe more Democrats will decide it is long past time they
joined us in actually supporting and approving some of these proposals.
But we are never going to solve the problems we face if Democrats
insist on using the Senate to make some political point instead of
actually making a difference in the lives of working Americans at a
moment of urgency like this. And we are certainly not going to make a
difference if we keep sort of flitting from one issue to another.
We are now hearing that the Democrats want to move off this tax-hike
legislation--maybe it didn't make the intended political point as
forcefully as they wanted--to move on to postal reform. Evidently, the
Senate schedule is driven not by the needs of the public but by the
Democrats' perceived political needs, which seem to change from minute
to minute around here.
I would suggest that the Democrats learn to prioritize. Let's stick
with one thing and actually do something. As I said, there is much we
could do to address gas prices. Why don't we stick with that? This is
something that matters to every American. Postal reform is important,
but we all know nothing is going to get done on it until after we
return from the Easter recess anyway. Let's make that the pending
business when we return and put first things first.
We were sent here to solve problems, not avoid them, and the refusal
to come together on commonsense solutions such as the ones we are
proposing on gas prices is precisely the kind of thing people detest
about Washington, and they are perfectly right to do so. So I would
suggest that our friends on the other side rethink this strategy of
theirs and join us. Why don't we just try doing the right thing.
I yield the floor.
The PRESIDING OFFICER (Mr. Franken). The Senator from Minnesota.
Ms. KLOBUCHAR. Mr. President, I ask unanimous consent that I be
allowed to speak for 2 minutes, Senator Boxer for 8 minutes, and then
Senator Murkowski for 10 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Surface Transportation Act
Ms. KLOBUCHAR. Mr. President, I rise today to stress the critical
infrastructure needs across our Nation and urge the House of
Representatives to act quickly and pass the surface transportation
reauthorization bill that we passed in the Senate with an overwhelming
bipartisan vote. The fact is that we have neglected the roads, bridges,
and mass transit that millions of Americans rely on for far too long. I
know that. A bridge collapsed just a few blocks from my house. It
wasn't just a bridge, it was an 8-lane highway, and 13 people died and
dozens of cars were submerged in the river. A bridge just doesn't fall
down in America--well, it did that day--and I am committed to passing
this highway bill. This bill is important for jobs, and it is important
for drivers who sit in congestion. Americans spend a collective 4.2
billion hours a year stuck in traffic at a cost to the economy of $78.2
billion.
So what is the solution? Pass this highway bill. It reduces the
number of highway programs from over 100 down to around 30, defines
clear national goals for our transportation policy, and it streamlines
environmental permitting.
I spoke to 75 highway contractors today, and they are ready to go.
They want this bill to pass. Companies such as Caterpillar, which
employs 750 people at its road-paving equipment facility in Minnesota--
I visited that company in August. Caterpillars' employees are the kinds
of people who are out there on the front lines of American industry.
They want to build these roads and are the ones who are building the
products when we talk about ``Made in America.''
With the short construction season for winter States such as
Minnesota--my friend from California may not quite have the same
situation--we cannot delay, delay, delay on this highway bill. We
cannot stop these construction projects in their tracks.
It is time to pass the Senate highway bill. It has bipartisan
support, with 74 out of 100 Senators voting for this bill. I ask that
the House of Representatives quickly pass this bill and get this done
without delay. It means jobs, it means safety, and it means a future
for America.
I thank the Chair.
I yield the floor.
The PRESIDING OFFICER. The Senator from California.
Mrs. BOXER. Mr. President, I would like to thank my friend from
Minnesota. Her leadership when she was on the Environment and Public
Works Commission was amazing. We miss her leadership there. She is
working so hard on other committees, but she still carries in her heart
the great understanding that if anything is bipartisan around here, it
is the highway bill and the transportation programs. We proved it here.
So I thank the Senator.
I wish to talk a little bit about Big Oil and this crying about Big
Oil by my Republican friends here, and then I am going to segue to the
battle to pass a transportation bill and the 3 million jobs that hang
in the balance.
First, I have to say that I listened very hard to the Republican
leader, Senator McConnell, talk about what a useless thing it is to try
to say to Big Oil, which has had these big subsidies for so long,
decade after decade, starting when they were young companies--what a
terrible thing it would be to take away those subsidies, billions of
dollars, when they are making multibillion dollars and they are robbing
us at the pump, pocketing the profit. We would like to see that money
be used for alternative fuels, for energy-efficient cars so that we
don't have to worry so much if the price of gas goes up a penny. If we
are getting 50 to 60 miles to a gallon--I drive a hybrid car, and I
don't visit the gas station that often because we get about 50 miles to
the gallon, so the shocks that come with the increase in gas are a
little bit muted.
But here is the story. Americans have made sacrifices. They are
paying more at the pump. They are told by Big Oil: We are so sorry that
Americans have to pay more at the pump because there is instability in
the world. Americans have to pay more at the pump because our
refineries are down, and we are really sorry.
What they don't say is that they are exporting the oil they find in
America to other countries. What they don't tell us is that they are
pocketing the profits we are paying for. They are pocketing the
profits. In 2010 the five biggest oil companies made $80 billion among
them. In 2011 they made $140 billion among them. So no one can stand
here--not even the esteemed Republican leader--and tell me that Big Oil
is making sacrifices just like ordinary Americans. The people who are
running away with our money that we are paying at the pump are Big Oil
and the speculators on Wall Street who are playing around with the
instability in the Middle East on commodity futures trading.
[[Page S2050]]
So if you want to do something, let's take away those subsidies from
these big oil companies that are making life miserable for the American
people. But, no, our friends on the other side put up a fight, and they
cite a couple of folks on our side who agree with them because they
come from big oil States. I understand that. Let's stand up for the
American people.
Another way we can stand up for the American people is to speak with
one voice and ask the House to take up the Senate bipartisan
Transportation bill that passed this Senate overwhelmingly. The clock
is ticking toward a shutdown, and extensions are dangerous. So my story
on the Transportation bill is a beautiful story of compromise, working
together here in the Senate, and a very ugly story about what the House
is doing, which is dithering around, playing with fire. And I am
telling everyone that extensions are death by a thousand cuts. They
think they can just send over an extension and feel they have done
their job.
Well, let me say that what we found out today from the American
Association of State Highway and Transportation Officials, AASHTO--
these are folks who are on the ground in our States. Today I spoke to
the departments of transportation from North Carolina, Nevada,
Maryland, and Michigan. I think most people know I represent
California, and I will be back with all of the details. Senator
Feinstein is talking to the transportation officials today. But the
reason I am talking about these four States is because they have
already calculated the job losses that have already begun because the
House is dithering and will not pass our bipartisan Transportation
bill.
North Carolina, which is not a blue State--I spoke to Gene Conti, the
secretary of the North Carolina Department of Transportation today, and
what he said was that he has delayed the remaining 2012 project awards,
which total $1.2 billion in projects and employ 41,000 people.
The House is right down the hall. I had the honor of serving there. I
hope they are hearing this while they debate an extension. An extension
of this program is not benign. An extension of this program is
damaging. An extension of this program means job losses--41,000 in
North Carolina.
I spoke with Scott Rawlins today, who is the deputy director and
chief engineer of the Nevada Department of Transportation. He said he
is holding up advertising for federally funded projects until there is
a reauthorization bill committing Federal funds. He is required to slow
down the development of future projects. He will not execute consultant
agreements without reauthorization. And right now, today, AASHTO, the
American Association of State Highway and Transportation Officials,
tells me that 4,000 jobs are at risk in Nevada.
What the Nevada people tell me is that in the good old days when they
were in a boom, the State could come forward and take these extensions
in stride. They had the funding to front-load their projects and not
worry about the Federal reimbursement. They thought that reimbursement
would come. A, they are very worried about reimbursement, and B,
because of the recession that has hit some of our States very hard
because of the construction slowdown in housing, they do not have the
funds to fast-forward any of these projects.
So North Carolina has 41,000 jobs at risk, and Nevada has 4,000 jobs
at risk.
I spoke to Caitlin Rayman in Maryland. She talked about the
uncertainty, and she went into four or five different things she is
trying to do now that she cannot do. It is because the House is
dithering and they won't take up the bipartisan Senate bill and pass
it. So 4,000 jobs are at risk in Maryland because projects are being
delayed.
I spoke to the director in Michigan, Kirk Steudle. He said several
large construction projects have to be delayed.
The PRESIDING OFFICER. The Senator has consumed 8 minutes.
Mrs. BOXER. I ask unanimous consent for 30 more seconds, and then I
will turn it over to my friend.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. BOXER. So in Michigan it is the same story: 3,500 jobs.
So I am saying to the House today--and I encourage my colleagues to--
and I know the Senator from New Hampshire is here and she is going to
speak a little bit later about this--come to the floor with stories
about their States.
These extensions are dangerous and they will lose jobs. Tell the
House to pass the bipartisan Senate bill.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alaska.
Ms. MURKOWSKI. Thank you, Mr. President. This is a good discussion on
the floor today. I join with my colleague from California in urging
that the House move to the Transportation bill. But that is not why I
rise this afternoon.
I wish to speak on the legislation that is before us. This is the
Menendez proposal to raise taxes--raise taxes on American energy
companies and I think inevitably prices to American consumers. It has
been described as something else, but I suggest to my colleagues any
effort to increase taxes on the energy companies that are providing a
resource to us is nothing more than a tax on our energy companies. As
we tax those energy companies, it is sure not going to make them
produce things that are more affordable, more abundant. In fact, it
will have the resultant effect: to impact prices to American consumers
negatively.
This legislation before us is not a new idea. This is something we
have seen before. I think the numerous times we have rejected it leads
me to the conclusion that it still remains a bad idea. It is a
messaging bill that has failed over and over, and I think it deserves
to see that same fate again.
This very Congress, just a little less than a year ago, rejected this
same tax hike. Anybody who is curious to see what it is we did back
then just needs to look up vote No. 72, which was back in May of last
year, just to see how all 100 Members of the Senate voted.
Some have accused Republicans of using this opportunity, when gas
prices are high, to push our cause, if you will, for increased supply
and that somehow we welcome the aspect of higher gasoline prices. It
was actually the President himself who said some see a political
opportunity to call for greater domestic energy production.
With oil sitting at over $100 a barrel, I think we all recognize
there is impact out there. But I can tell my colleagues for a fact that
my constituents don't view this as a political opportunity.
I get a weekly summary of what is happening with gas prices around my
State. Right now the average price of a gallon of unleaded in the
United States is just a little shy of $4. Well, in my hometown of
Anchorage, we are paying $4.14. In Juneau, which is our State capital,
we are paying $4.24. In Barrow, the top of the world, they are at
$5.75. Bethel is paying $6.33. They long for the day they could be
paying closer to $4. We are so far beyond the national average, they
don't view higher gasoline prices as any kind of a political
opportunity. What they are asking for is that they do more. In fact,
there is an imperative that we in Congress do more to address prices.
I believe there is no question--there is no question--that we can
bring additional resources on line, that we can bring several million
additional barrels of American resources to market. There is no
question but what it would do. It is going to help to create jobs. We
know that for a fact. It will absolutely generate revenues. It will
better insulate our Nation from the instability we have with the global
price markets. We know that is what is happening right now. Every time
Iran is mentioned, everything gets a little shaky out there.
We know so much of this is due, in effect, to the fact that there is
little spare capacity in the global markets. So let's look closer to
home. What do we have closer to home?
The President has suggested time and time again we only have 2
percent of the world's reserves. Well, in fact, this myth about the
U.S. oil scarcity is just exactly that. We talk about proven reserves.
In fact, it is a much smaller piece of the pie: 20.6 billion barrels of
proved reserves. But what needs to be understood and, unfortunately,
doesn't make a good bumper sticker is that we have, as a nation,
demonstrated incredible national reserves: 5.6 billion barrels of
technically recoverable resources. We don't even count the 800-
[[Page S2051]]
plus billion barrels of oil shale that are out there.
So one asks the question: Why are we not going after the rest of the
pyramid, the part in blue. So much of what we are facing is that so
much of this is put off-limits. It is not accessible, and it is not
accessible because of our government policies.
I recognize there is more to it when it comes to an energy policy
than just drilling, just increased domestic production. But it must be
part of the solution, and it must be a significant part of the solution
if we are going to talk about true North American energy independence.
We must do more when it comes to conservation and efficiency. We need
to build out toward the renewable energy sources of the future. If we
want to have a bumper sticker, it is, ``Find More, Use Less.'' It is
pretty simple.
The chart lets us know we truly can find more here. But what we are
facing with the Menendez bill that is in front of us takes us in a
completely different direction. What the President and the Democratic
leadership are proposing cannot by its own definition reduce our gas
prices. If anything, we are just going to see them pushed higher, and
my constituents back home just can't afford to see them pushed higher
when they are paying above $5, above $6 per gallon at the pump.
We know pretty basic economic principles are at play. Taxing
something does not make it cheaper and more abundant. We know from past
experience. Due to a failed experiment with the windfall profits tax
that harmed domestic fuel production and collected far fewer revenues
than what was expected, we know this is taking us in the wrong
direction.
Again, our problem is high fuel prices and their effect on average
Americans. I have yet to hear anyone explain to me how raising taxes is
going to lower prices. Even when we look at the subsidies that are
extended in the Menendez bill, not even half of these are related to
the transportation fuels.
The first section in his bill is extension of credit for energy-
efficient existing homes. Well, I am all for that, but tell me how this
ties in somehow to our Transportation bills. In terms of costs, it is
even more unbalanced. So I am left at a loss to understand how
permanent tax increases for oil and gas producers, in exchange for
another year of subsidies for efficiency and renewable energy, is going
to make any kind of a meaningful difference. It kind of says to the
American people: Well, that $4 you are paying at the pump, too bad
about that. But how about a government-subsidized dishwasher? That just
doesn't work.
Some will also come here to argue that increasing taxes will have no
effect on production. In response to that, I ask unanimous consent to
have printed in the Record at this point two news stories from last
week.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From Oilgram News, Mar. 22, 2012]
UK Offers New Tax Breaks for Remote Fields
(By Robert Perkins, Jillian Ambrose, and Nathan Richardson)
London.--The UK government March 21 pledged new tax breaks
to boost the development of some remote, deepwater fields and
remove doubts over offshore decommissioning costs as part of
a package of measures to support the country's declining oil
and gas industry.
Presenting his 2012 budget to Parliament, UK Finance
Minister George Osborne said the government would create new
tax breaks worth GBP3 billion ($4.75 billion) to cover large
and deepwater fields off the west of the remote Shetland
Islands in the Atlantic margin.
``We are introducing new allowances . . . for large and
deep fields to open up West of Shetland, the last area of the
basin left to be developed. A huge boost for investment in
the North Sea,'' Osborne told Parliament.
The area to the west of the Shetland Islands is still
largely underdeveloped and could contain up to 20% of the
UK's remaining gas reserves, according to the government.
The government said it also plans to increase existing tax
breaks for developing small fields and promised support for
investment in existing fields and infrastructure.
As expected, Osborne also said the government plans to
enter into contracts with oil companies over future
decommissioning tax relief, helping to end the uncertainty
over the massive costs of decommissioning old oil and gas
production infrastructure in the North Sea.
UK oil producers applauded the decommissioning move,
estimating it could spur an extra GBP40 billion of new
investment in UK waters and result in the recovery of an
additional 1.7 billion barrels of oil and gas equivalent
``over time.''
``We see today's action by the Treasury as a turning point
for the UK's oil and gas industry--toward a more stable
future fostered by constructive collaboration between the
government and industry to ensure that the recovery of the
country's oil and gas resource is maximized,'' UK offshore
operators association Oil & Gas UK head Malcolm Webb said in
a statement.
The new tax moves could result in further investment of
over GBP10 billion and the production of ``hundreds of
millions of barrels'' of oil and gas, the association said.
The tax measures, which were widely anticipated, extend an
olive branch to an industry that has placed some of the blame
for last year's record 18% decline in UK oil and gas output
on a tax hike in the governments 2011 budget.
Last year, the UK government unveiled a surprise tax
increase on offshore producers in a bid to tap the higher
earnings of oil companies due to rising oil prices.
UK offshore operators said the move, which took an extra
$3.2 billion out of oil companies' pockets last year, would
damage confidence in the UK oil industry and hamper
investment plans.
Under the decommissioning initiative, the government said
it plans to introduce legislation in 2013 giving it the
authority to sign contracts with oil companies operating in
the UK to provide assurance on the relief they will receive
when decommissioning assets.
The government said it would consult further on the details
of the new contracts in the coming months.
``Confirmation that the government intends to enter into
contractual agreements on tax relief for decommissioning
costs improves the fiscal stability of the UK Continental
Shelf, while the targeted incentives for particular types of
fields will go some way in increasing the attractiveness of
areas currently starved of investment,'' Derek Leith, the
head of oil and gas taxation at Ernst & Young, said in a
statement.
The UK oil industry has been lobbying the government over
the need for greater certainty around future decommissioning
costs for some years.
In 2010, UK industry body Decom North Sea estimated the
total cost of decommissioning the UK's oil and gas production
assets had risen to around $46 billion.
Under the contractual arrangement, every North Sea
participant would sign a contract with the government
guaranteeing that, if decommissioning tax relief falls below
50% in the future, the government would pay back the
difference.
Currently, new North Sea entrants might have to post
security of as much as 150% of its share of the expected
decommissioning costs.
If the industry were confident that the 50% tax relief on
costs now available would continue into the future, the new
entrant could post a lower security, effectively only 75% of
the expected costs.
However, the industry has not yet been prepared to accept
securities at the lower rate because there is uncertainty
over whether tax relief would continue in future governments.
In steps to mitigate the tax hike impact on North Sea
operators last year, the UK government said it would consider
introducing a new category of oil or gas field which would
qualify for field tax allowances.
It said, however, tax relief for decommissioning spending
will be restricted to the existing 20% rate to avoid
accelerated decommissioning.
In addition to decommissioning costs, UK oil and gas
players also have been talking to the government on
allowances to boost specific projects, or categories, where
investment is marginal.
In 2009, the UK introduced a new field allowance for small
fields and challenging HPHT--or high-pressure, high-
temperature--and heavy oil fields, providing them an
allowances to offset against tax, reducing the rate of tax
paid once in production.
In January 2010, the allowance was extended to remote,
deepwater gas fields to the west of Shetland.
Osborne said the government also plans to increase the
allowance for small fields to GBP150 million, introduce
legislation this year to support investment in existing
``brown fields'' and continue to look at further allowances
for HPHT fields.
In documents supporting its 2012 budget, the finance
ministry said it expects its tax revenues from the oil and
gas industry to slip by 14% in the 2012 13 tax year as
declining production levels in the North Sea offset higher
expected oil prices.
Oil prices are expected to average $118/b in the coming tax
year, up from $111/b in the 2011 12 period, the ministry said
without saying if the estimate is based on Brent or WTI crude
futures.
Including a record 20% slump in gas production in 2011 due
to weak demand and a warmer than average winter, total oil
and gas output slumped 18% on the year. Over the previous
five years, the UK's mature North Sea fields had seen decline
rates average 6%.
UK oil production peaked at about 2.6 million b/d in 1999
and gas output peaked in 2000. The UK became a net importer
of both commodities in 2006 and 2004 respectively.
[[Page S2052]]
____
[From the Wall Street Journal, Mar. 21, 2012]
U.K. Plans Oil Sector Tax Relief
(By Alexis Flynn)
London.--Oil and gas firms operating in the U.K. North Sea
will be guaranteed tax relief for the costs of retiring old
rigs and platform and be given fresh tax allowances totaling
K3.5 billion ($5.55 billion) for harder-to-access deep water
fields.
The move comes as the U.K. seeks to spur renewed investment
in its energy sector, Chancellor of the Exchequer George
Osborne said Wednesday in his annual budget speech to
lawmakers.
The measure ends months of uncertainty among the region's
oil producers and comes after intense talks between
government and industry over possible measures to aid
investment in the North Sea.
The move extends an olive branch to the industry, which was
incensed by a surprise hike in the windfall tax on oil and
gas profits last year. A record 18% decline in oil and gas
production in 2011 was blamed in part on the tax increase.
Mr. Osborne said Wednesday the government will sign
contracts with companies such as Premier Oil and Apache Corp.
guaranteeing tax relief for the lifetime of a project. The
ironclad government assurance on decommissioning could pave
the way for at least K17 billion of new investment over the
life of the North Sea basin, said Mr. Osborne.
In addition, it will provide tax allowances for companies
investing in fields located in the deeper waters west of the
Shetland Islands that are much harder to reach and require
greater amounts of capital investment.
Mr. Osborne said the fresh allowances for this harder-to-
reach exploration and production would total some K3.5
billion.
Under current rules, the government covers between half and
three-quarters of the costs of dismantling old fields by
making them tax deductible, but there are fears among many
companies--and the banks that lend to them--that these rules
could change.
An entire production facility needs to be removed once a
reservoir has been exhausted, with its wells plugged and the
site returned to as natural a state as possible. The process
is expensive and complicated, and poses a number of
environmental and safety challenges.
Decom North Sea, a nonprofit organization jointly funded by
the industry and the government, expects the cost of
decommissioning efforts to reach about K30 billion by 2040.
The issue is particularly acute for the smaller independent
firms that are leading much of the next wave of investment in
the North Sea, wringing out the last drops of oil from many
of the older fields that were sold off by majors like Exxon
Mobil Corp. and BP PLC.
These companies have been hamstrung by the legal
requirement to provide security, usually letters of credit or
large cash deposits, against future decommissioning costs. A
tougher economic environment means these companies are
finding their access to capital restricted and lenders less
willing to issue letters of credit against a backdrop of
fiscal uncertainty and declining North Sea production.
Ms. MURKOWSKI. Mr. President, these are news stories, not editorials.
One is from Platts Energy; the other is from the Wall Street Journal.
Both detail an announcement from the British Government that it is
going to reverse its own taxes on the oil companies.
Last year, England decided to do essentially what is being proposed
with the Menendez bill. They were responding to high oil prices, and so
they moved to increase taxes on the industry. Well, the result is not
going to come as a surprise. When the government made it less
economical to produce oil by hiking their tax rates, companies stopped
producing and they were making their investments elsewhere.
In the years since Great Britain imposed its tax hikes, its
production decline has tripled from 6 percent to 18 percent. Let me
repeat that. In the year since Great Britain imposed tax increases on
oil producers, production decline accelerated from 6 percent a year to
18 percent a year. Now Britain is in the process of doing an absolute
about face. They are likely going to offer $5.5 billion in tax relief
to the oil companies to try to bring the production back.
I am sure some here would refer to that tax cut as a subsidy and
ignore the inconvenient fact that higher tax levels lead to lower
production. They don't lead to cheaper fuel; they lead to lower
production. Yet even in the face of high fuel prices and compelling
empirical evidence, the proposal in front of us is going to take us
down the exact same path that Great Britain went down last year. It
would make the clear mistake of driving production away when I think we
need it most. The outcome in England just helps prove this is a
seriously defective idea and a dangerous one. So we just need to look
at what has happened across the pond.
If the Senate were really serious about addressing gasoline prices,
we would be taking long-overdue steps.
The PRESIDING OFFICER. The Senator has consumed 10 minutes.
Ms. MURKOWSKI. Mr. President, I don't see anyone in the queue, if I
may have another minute to wrap up.
The PRESIDING OFFICER. Without objection, it is so ordered.
Ms. MURKOWSKI. If we are really serious in the Senate about what we
are doing in terms of increasing our long-overdue requirement to up our
oil resources, our oil production and supply, we know how. We have
opportunities from our neighbors to the north in Canada with the
Keystone Pipeline. We clearly have opportunities in Alaska from the
Outer Continental Shelf, from the Rocky Mountain West. We still import
about half of our oil supply and about half of that is from OPEC.
One last chart, if I may. Right now, about 47 percent is OPEC; non-
OPEC is 53 percent. If we were to add to our mix in this country what
we could get from Keystone, which is the middle pie, but look where we
would be as a nation. If we were to plus up our activity with domestic
production, bring on Keystone, and with our existing resources, our
imports from OPEC are reduced to a minimal amount. We talk about North
American energy independence, and we truly could be in that position
where we are not vulnerable--not vulnerable to the volatility of the
markets, not vulnerable to the volatility that comes from OPEC setting
the prices as they do, not in a situation where we are spending
millions and billions of dollars to import a resource we need but that
we have as a nation.
I can't fathom why the Congress would want to drain our economy by
raising taxes on the very businesses that help minimize our foreign
dependence, help create good-paying jobs for our families, and truly
help to make a difference to Americans around the country in the long
run.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from California.
Mrs. BOXER. Mr. President, I am going to yield in just 2 minutes
because I know Senator Sanders is here. I really feel I need to respond
because it is very important to note that under the leadership of
President Obama--for decades we did not drill as much as we have
drilled now. We have more wells pumping than at any time in recent
memory. I think it is an important point.
Of course, we are not going to drill off the coast of some of our
precious areas because we have to support the fishing industry, we have
to support the recreation industry, the tourism industry. But all this
argument about drill, baby, drill and we will solve everything does not
work because we threaten jobs when we go to certain areas that are
pristine and very important sources of economic income for our States.
Plus, if you ask my colleagues on the other side, they will not support
keeping the oil in America--they will not--and we are exporting more
oil than we ever have before.
So this thing gets very interesting when we look at it. Still, in
all, the big oil companies--as we all make our sacrifices at the pump--
are bringing in record, record, record profits. They ask us to make
sacrifices because there is instability in the world, but they are
pocketing those increases. Yet our Republican friends cry bitter tears
because we want to suggest that subsidies they got decades ago--kept on
undisturbed billions of dollars--we would like to see those funds go
into making it easier for America's families to be able to buy more
fuel-efficient cars, to be able to find alternative fuels, et cetera,
et cetera.
When I come back to the floor after this discussion on the postal
reform, I am going to talk more about the highway bill. The House is
about to vote on a 60-day extension. Let me tell you, that is
dangerous. I hope colleagues over there will not do that because, I
have to tell you, every day we extend the highway trust fund for a
short period of time, we lose jobs, and we need certainty.
I am happy to yield the floor at this time.
The PRESIDING OFFICER. The Senator from Vermont.
[[Page S2053]]
Postal Service Reform
Mr. SANDERS. Mr. President, later this afternoon--actually, in a
fairly short while--we are going to be voting on whether to proceed
with the Postal Service reform bill, and I hope we vote yes. I hope we
have a strong bipartisan vote to go forward. I will tell you why.
About 9 or 10 months ago, the Postmaster General came up with a
proposal for the Postal Service. In my view, that proposal from the
Postmaster General is an unmitigated disaster for our country and
especially for rural America.
This is what his original proposal outlined: What he proposed was the
shutting down of more than 3,600 mostly rural post offices. If one
lives in a rural State such as mine, one knows how important rural post
offices are, and their function is beyond being just a post office. In
many small communities throughout this country, post offices are the
center of the town. It is where people come together. It is what
develops a sense of community. In some cases, it is what that small
rural town is all about. If we shut down that rural post office, in
some instances we are literally shutting down that town.
We should also understand, in the midst of the serious financial
problems facing the Postal Service, shutting down 3,600 mostly rural
post offices would save the Postal Service one-quarter of 1 percent of
their budget. So the original plan--which has since been modified--was
to shut down 3,600 rural post offices, and I would suggest whether one
is a conservative Republican or a progressive Independent, that is not
good for their State, not good for America.
In addition, the Postmaster General's original proposal talked about
shutting down some 220 mail processing facilities all over this
country. That is approximately one-half of the mail processing plants.
If he did that, that would end overnight delivery standards for first-
class mail.
At a time when the Postal Service is facing extreme competition from
e-mail and the Internet, in my view, the last thing we would want to do
is to slow down mail service. I think I speak for many Members of the
Senate who say, if we move in that direction, making mail delivery
slower, we are beginning the death spiral for the Postal Service. Many
businesses, many consumers will be saying: Sorry, I am going to look
elsewhere to get my packages, get my mail delivered.
Furthermore, the original proposal from the Postmaster General was to
shut down Saturday mail delivery and, in the process, reduce the
workforce of the Postal Service--in the midst of the worst recession
since the Great Depression--by over 200,000 jobs.
Senators Lieberman and Carper, Senators Collins and Scott Brown, the
ranking members of the committees, came together and put together a
bill which was significantly better than what the Postmaster General
had proposed, no question about it.
Some of us felt the Lieberman-Carper-Collins-Brown bill did not go
far enough, and we have been working with the chairmen of the
committees to try to improve that bill, and I think we have made some
success. I think if we look at the managers' amendment, we will see
stronger guarantees to make sure we are not shutting down rural post
offices all over America; that if we shut down processing plants, it
will be a significantly smaller number than was originally proposed,
and that also we would maintain strong mail delivery standards--if not
as strong as I would like, at least stronger than what the Postmaster
General originally proposed.
Here is my fear: The Postmaster General is raring to go. If he
perceives and the board of postal commissioners perceive the Congress
cannot act, they are going to go forward and bring forth a proposal
which will not be as strong in protecting post offices and workers and
the American people as we can do. So what we managed to do back in
December was get a 5-month moratorium to prevent the shutting down of
rural post offices and processing plants. That expires on May 15.
I think it is terribly important we begin the process, we vote to
proceed within the next hour, we bring that bill to the floor, there is
an open process by which people, including myself, will bring forth
amendments to make the bill even stronger than it is right now.
I would point out to my colleagues, in terms of the financial
problems facing the Postal Service, clearly, they have to deal with the
serious problem, the very real problem that first-class mail has gone
down very significantly, being replaced by e-mail. There is no question
that is a real, legitimate problem.
But what is not a legitimate problem is that the Postal Service
uniquely in America--not in local governments, State governments,
Federal agencies or the private sector--the Postal Service alone is
being asked to put $5.5 billion every single year into their future
retiree health benefits program. According to the inspector general of
the U.S. Postal Service, given the fact there is some $44 billion in
that fund already, with interest rates accruing, we do not need to put
more money into that fund. There is widespread agreement the Postal
Service has overpaid into the Federal Employees Retirement System some
$10 billion or $11 billion; into the Civil Service Retirement System,
at least a couple billion dollars and perhaps a lot more.
The bottom line is this: If we are serious about protecting rural
America, if we are serious about protecting 3,600 rural post offices,
if we believe the post office must continue being an important part of
what America is about--so important to our economy and to small
businesses--and we do not want to delay mail service, slow down mail
service, we do not want to shut down half of the mail processing plants
in this country, I think it is important we begin that debate and vote
for cloture.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from Connecticut.
Mr. LIEBERMAN. Mr. President, I rise to urge our colleagues to vote
for cloture to proceed to the Postal Service bill. I will speak very
briefly.
This a great American institution, right there from the founding of
our country. In fact, it is in the Constitution to provide post
offices. It is an institution that is today in trouble. Last year, it
lost almost $10 billion. Why? Part of it is the economic recession, but
the real explanation is that mail volume has dropped 21 percent in the
last 5 years, and mostly that is because people are using the Internet
and e-mail instead of traditional mail. Yet the Postal Service not only
itself provides a great service, but it facilitates various sectors of
our economy that employ 7 million people--mailers, mail order catalogs,
and the like.
Our committee, when confronted with this crisis--and the statement
from Postmaster General Donahoe that if nothing was done, he would have
to begin curtailing operations sometime this year because he would
essentially run out of enough money to operate the Postal Service as it
is--tried to get together and work on a balanced program. We reported
out a bipartisan bill. Some people said it was too much; some people
said it was too little. We think it was just about right.
There has been a lot of dialog with Senator Sanders and others,
people on both sides of the aisle. When we take this up--and I sure
hope it is ``when'' and not ``if'' because I do not know how we could
just turn away from this problem and essentially say to the Postmaster:
We are not going to provide you any help; you are going to have to
handle this. What he is going to do is close a lot of post offices, in
my opinion, close a lot of mail processing facilities, raise prices to
the extent he can under existing law.
This is a balanced program. It creates some protections for small and
rural post offices before they can be closed. It creates new standards
in the delivery of mail so the Postmaster will, in his wisdom, be able
to thin out employment at some of the mail processing facilities,
perhaps close some of them but nowhere near what he wanted to do
earlier.
The Postmaster asked us for authority to go from 6 days of delivery
of mail to 5 days of delivery of most mail, and we essentially said:
You may have to do that, Mr. Postmaster, but do not do it for 2 years.
See if the other things we are authorizing you to do enable you to get
the Postal Service back in fiscal balance. But if not, after the 2
years, with the process we ordained, they will have to go to 5 days of
delivery.
Here is the bottom line: We are trying everything we can to save this
great institution. It is not a relic. It is
[[Page S2054]]
a fundamental part of the modern economy, and it has some great
resources. First is its presence all over the country. One of the
things we are doing--we worked on this with Senator Sanders and
others--in the substitute, we will create an advisory commission, a new
commission which will be charged with the responsibility of not only
reviewing the operations of the Postal Service to make sure it is being
managed and run most efficiently but for looking for a new business
model, for new ways to use the great assets of the Postal Service--one,
that it is all over the country in the post offices; and, two, that no
one else can cover the last mile of delivery to everybody's house or
business in the country regardless of where you live, including the
iconic burros that help deliver the mail in the Grand Canyon and the
mailmen on snowshoes who deliver it in rural parts of Alaska. Right
now, FedEx, UPS, and others use that service of the last mile to
complete their delivery to their customers.
We want to see if we can figure out how the Postal Service can make
more money so it can stay alive. This is a great American institution
which I believe has a great future, but it is not going to have it
unless we help.
So here we are challenged again. Are we going to fall into
ideological rigidity or partisan conflict and let this great
institution slide and fall into a deep crisis or are we going to work
together, as I believe our committee has, to present a bipartisan
solution which will guarantee, in a very different time in American
history, that the post office--the U.S. Postal Service--can play as
vital a role as it has throughout all the rest of our history.
I yield the floor.
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. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Under the previous order, the motion to proceed to S. 2204 is agreed
to.
____________________