[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[Senate]
[Pages 18674-18677]
[From the U.S. Government Publishing Office, www.gpo.gov]



                                 ENERGY

  Mr. SESSIONS. Mr. President, I see the Senator from Alaska is here. I 
will just say this: Senator Murkowski understands the failure of this 
administration's energy policy. He understands their desperate attempt 
to blame it on everyone but themselves.
  The plain fact is, for almost 8 years, this administration has, 
through a myriad of ways--the chairman of the Committee on Energy and 
Natural Resources well knows--reduced American production of energy, 
leaving us more and more dependent on foreign oil. Now they have gotten 
together, created their cartel strength again and driven up the price 
of a barrel of oil in a matter of months from $13 a barrel to over $30, 
maybe $35. We are feeling it in every aspect of the American 
Government. It was done not on the basis of a free market supply and 
demand but because of the political acts of the OPEC nations. This 
administration needs to do something about it.
  I am glad to see Chairman Murkowski here this morning. I know he will 
be speaking about this important issue.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. MURKOWSKI. Mr. President, may I ask how much time I am allotted 
under the standing order?
  The PRESIDING OFFICER. The Senator may have 13 minutes of the time 
remaining of the Senator from Alabama.
  Mr. MURKOWSKI. I thank the Chair, and I thank my good friend from 
Alabama.
  He indicated that the price of oil had risen. The price of oil 
yesterday rose to

[[Page 18675]]

an all-time 10-year high, $37 a barrel. This is a very serious matter 
that is not receiving enough attention by this body, nor this 
administration. To give my colleagues an idea, from the Washington Post 
yesterday there was a quote that the price of crude oil contracts on 
the futures market on the New York Mercantile Exchange rose above $37 a 
barrel for the first time.
  Here is the more significant point. Analysts predicted that the price 
jumps, 2.7 percent yesterday and a total of 44 percent for this year, 
could continue indefinitely. I repeat--could continue indefinitely, 
especially with the uncertainty connected with Iraq's Saddam Hussein 
and his accusations that Kuwait was drilling near the Iraqi-Kuwaiti 
border and stealing Iraq's oil.
  Doesn't this sound a little like what happened in 1991 prior to the 
Persian Gulf war where we had the muscle demonstration by Saddam 
Hussein and later the implications of that war?
  This is serious business. If you don't believe it is serious, ask 
Tony Blair because the stability of the British Government is very 
shaky right now as a consequence of the price of energy, a 10-year 
high, expectations for the price of oil go as high as $40 per barrel 
and beyond in the near future.
  Why are we in this mess and why should American consumers care? I 
will discuss one segment of this today because Saddam Hussein has the 
world over a barrel. It is over a barrel of oil.
  Why should American consumers care? Well, Iraq is now in a position 
to set the market price of oil--and therefore, what you pay at the 
pump, what you pay to heat your homes, what you pay at the grocery 
store, and what the Northeast Corridor residents are going to be paying 
in this country this winter for fuel. God help us if we have a cold 
winter. Iraq is using its profits illegally for weapons of mass 
destruction. They are threatening the peace and stability of the entire 
Mideast region. They represent a threat to the security of Israel 
without question.
  Let us look at a little history on how this administration has 
basically failed to address this threat. Just before the Clinton-Gore 
administration came in, we carried out a very successful mission in 
Desert Storm. That mission was not without American casualties. We lost 
147 Americans; 467 were wounded; 23 were taken prisoner.
  Since that time, we have continued to enforce a no-fly zone. We have 
flown over 200,000 sorties since the end of Desert Storm, at a cost to 
the American taxpayer of about $50 million per month. Yet here we are 
today more reliant on Iraqi oil. We are addicted to the imported oil. 
We are addicted to oil. In any event, as a consequence of our decline 
in domestic production, which has been 17 percent since the Clinton 
Administration took office, and a 14-percent increase in domestic 
demand during the same period, we are now 58-percent dependent on 
imported oil.
  During the Arab oil embargo--some remember this period of time, 
1973--we had gas lines around the block at filling stations. The public 
was outraged. They were blaming everybody, including Government. That 
was 1973 when we were 36 percent dependent on imported oil; now we are 
at 58 percent.
  Today Iraq is the fastest growing source of U.S. foreign oil, 750,000 
barrels a day, nearly 30 percent of all Iraqi exports. We fought a war 
over there in 1991. Here we are dependent on Iraq. It makes us 
powerless to respond. Weapons inspections are unable to proceed. We are 
concerned about it, but we don't do anything. Illegal oil trading is 
underway with other Arab nations. We know it, we enforce a blockade in 
the air, we don't enforce any kind of a blockade for the illegal oil 
shipments that are going out of Iraq. Profits go to development of 
weapons of mass destruction, training of the Republican Guards to keep 
Saddam Hussein alive.
  The international community is becoming increasingly critical of 
sanctions towards Iraq. But consider this: Saddam Hussein puts Iraqi 
civilians in harm's way when we go over and bomb his targets. Saddam 
has used chemical weapons against his own people in his own territory. 
Saddam could have ended sanctions at any time. All he had to do is turn 
over his weapons of mass destruction; that is basically all. Yet he 
rebuilds his capacity to produce more. He cares more about these 
weapons, obviously, than he cares about his own people.
  That he is able to dictate our energy future is an absolute tragedy 
of great proportion. Still, the administration refuses to act. What 
happened?
  Saddam is getting more aggressive. His rhetoric in every speech at 
the conclusion is ``death to Israel.'' That is what he says. What is 
the threat to Israel's security? It is Iraq. He has announced a $14,000 
bounty on any American plane shot down, for the anti-aircraft crew that 
is responsible. Now he is accusing Kuwait of stealing Iraqi oil. Here 
we go again.
  That is the same thing that was done in 1990 shortly before he 
invaded Kuwait. Saddam is willing to use oil to gain further 
concessions. This is rather interesting, to show you the leverage he 
has because of his oil production. The U.N. was set to approve a $15 
billion compensation measure for Kuwait as a result of damages from the 
Gulf war. That vote was set to take place next week. Iraq has 
retaliated and said: No, we are not going to pay that compensation. If 
you make us pay, we will reduce our output of oil. Now reports are that 
the U.N. has postponed that vote.
  That is their leverage. There is likely not enough spare capacity in 
OPEC to make up the difference if Iraq pulls back it's production. Here 
is the Wall Street Journal headline: ``Iraqi Pumps Critical Oil and 
Knows It.'' That is the leverage of Saddam Hussein today, and his 
leverage is growing each and every hour.
  This article says:

       European oil executives familiar with Iraq say the U.N. 
     sanctions against trading with Iraq are breaking down in the 
     region. Turkey, Jordan, Qatar, Dubai, and Oman are still 
     openly trading with Iraq. Sanctions aren't working. Now he is 
     strong arming the U.N.

  They have put off enforcing him to make compensation to Kuwait for 
the loss of damages associated with his invasion of that country. And 
his leverage is, hey, I will cut my oil production. The world can't 
afford to have that happen. Even if we took military action, we would 
need Saddam Hussein's oil to fuel our planes and bomb him.
  I would ask that the full text of the Wall Street Journal article 
from September 19, 2000 be printed in the Record.
  The PRESIDING OFFICER. Without objection.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

             [From the Wall Street Journal, Sept. 19, 2000]

                 Iraq Pumps Critical Oil, and Knows It

                 (By Bhushan Bahree and Neil King Jr.)

       Paris.--An international pariah for the past decade, Iraqi 
     leader Saddam Hussein now has the world over a barrel.
       Iraq exports about 2.3 million barrels a day of crude oil 
     into a world market so thirsty for oil that prices have 
     soared recently spurring an international wave of consumer 
     backlash. The Iraqi exports are significantly more than the 
     combined spare production capacity of all other producers at 
     this time. So the world now depends on Iraqi oil, right?
       ``You're damned right,'' snapped Amer Rasheed, Iraq's oil 
     minister, during an interview after a ministerial meeting of 
     the Organization of Petroleum Exporting Countries in Vienna 
     last week.
       Mr. Rasheed wouldn't answer whether Iraq is likely to use 
     its oil weapon--threatening to halt oil exports--to seek an 
     end, for instance, to United Nations sanctions imposed a 
     decade ago.
       Saddam has played this game before. Late last year, Iraq 
     shut its oil taps in a dispute over the sanctions, and oil 
     prices surged.
       No sooner had Mr. Rasheed returned to Iraq last week than 
     he accused Kuwait of stealing oil from Iraq's southern oil 
     fields through wells drilled horizontally across the border. 
     The accusation seemed ominous since it was the same charge 
     Iraq leveled against its neighbor before invading Kuwait in 
     1990. Mr. Rasheed said Iraq would take unspecified action to 
     protect its oil riches.
       Yesterday, the Iraqi press reported that Saddam told a 
     cabinet meeting Sunday that even Saudi Arabia, the world's 
     largest oil exporter, didn't have enough spare capacity to 
     relieve the world of worries about an impending oil shortage.
       ``This is one of those serious times when the threat of a 
     suspension of Iraqi [oil] exports needs to be taken 
     seriously,'' said Raad

[[Page 18676]]

     Alkadiri, country analyst at Petroleum Finance Corp. in 
     Washington.
       Nobody knows just what the Iraqi leader may decide to do 
     with his oil power. Some diplomats and industry officials 
     figure Saddam may seek some gains by using the threat of a 
     halt in oil exports, while others say he may reckon that 
     things are going his way anyway, with support for the 
     longstanding U.N. sanctions growing increasingly weak.
       There is little doubt that Iraq is getting more assertive. 
     An Iraqi fighter jet two weeks ago flew over part of Saudi 
     Arabia for the first time in a decade, leading U.S. officials 
     to warn that Washington would strike back if Baghdad provoked 
     neighboring Kuwait or Saudi Arabia. U.S. officials have also 
     warned against thinking they are too distracted by 
     presidential politics to react.
       Yet diplomats at the U.N. acknowledge that any concerted 
     effort to get arms inspectors back into Iraq won't advance 
     until after the U.S. presidential election. Hans Blix, head 
     of the new inspection team, made the same point to reporters 
     yesterday, saying ``nothing serious will happen'' until U.S. 
     voters go to the polls Nov. 7.
       No one at the U.N. suggests that the Clinton administration 
     has put a hold on Iraqi diplomacy. But a spike in tensions 
     with Iraq, especially if it led to steeper gas prices, could 
     easily ripple through the presidential campaign.
       European oil executives familiar with Iraq, meanwhile, say 
     the U.N. sanctions against trading with Iraq are breaking 
     down in the region. Turkey, Jordan, Qatar, Dubai and Oman are 
     all openly trading with Iraq, says one senior European oil 
     executive. ``There is a feeling that except for bombing 
     [against radar sites], the U.S. is turning a blind eye'' to 
     these transgressions, he says.
       Western diplomats and industry officials say one potential 
     flash point is a Sept. 26 meeting in Geneva of the U.N. 
     Compensation Commission, which was set up after the Gulf War 
     to decide on claims on losses resulting from Iraq's invasion 
     of Kuwait. The body's governing board is scheduled to 
     consider a claim of some $16 billion by state-owned Kuwait 
     Petroleum Co., a claim that irks Iraq and may have provoked 
     the counterclaim that Kuwait has been stealing Iraqi oil.
       The commission has already paid out more than $8 billion to 
     claimants. The U.N. supervises Iraqi exports of oil and 
     directs 30% of the receipts from such sales to fund the 
     commission and finance the awards. Depending on oil prices 
     and Iraqi export levels, the commission is getting some $400 
     million every month from the Iraqi oil sales. Claims on Iraq 
     total more than $320 billion. Though the commission's awards 
     are expected to be significantly below that, Iraq has long 
     argued that it wouldn't pay damages for decades to come.
       If there is a political flare-up now that results in Iraq 
     halting exports, the consequences could be serious at a time 
     when supplies are tight, oil prices already are at 10-year 
     highs of more than $36 a barrel (see article on page C1), and 
     consumers have been protesting across Europe. ``It would be 
     devastating * * * the price of a barrel would double,'' the 
     European oil executive said.
       Most OPEC countries are producing flat out to meet strong 
     world demand for oil. Kuwait, for instance, has made clear 
     that it can't even meet the latest quota increase it was 
     allocated as part of last week's OPEC agreement to raise the 
     group's output by 800,000 barrels a day. The increase was 
     aimed at helping to cover world demand, which is running at 
     some 76 million barrels a day.
       Iran's output actually declined in August, perhaps because 
     of production difficulties at its fields. Exporters that 
     aren't members of OPEC also are producing as much as oil as 
     they can. Norway and Mexico, for instance, have both said 
     they are producing to capacity.
       That's not to say that the rest of the world would be 
     helpless. Saudi Arabia and the United Arab Emirates could 
     produce some extra oil to offset at least part of any 
     shortfall from Iraq. Saudi Arabia's exact surge capacity--the 
     ability to produce extra volumes for a short period of time--
     isn't precisely known. But given its huge capacity base of 
     more than 10 million barrels a day, the kingdom could produce 
     at a much higher rate for a short period. It also could try 
     to increase its capacity, which would take at least some 
     months.
       Meanwhile, the U.S. and other industrial countries that 
     have strategic reserves of petroleum could release them. The 
     U.S. alone has some 570 million barrels of oil stored at salt 
     caverns, and U.S. officials say they are prepared to tap the 
     reserves immediately should Iraq cut off its oil exports.
       ``We could cover all Iraqi production for a year if we had 
     to,'' one senior U.S. official said.
       Altogether, industrial-country members of the Paris-based 
     International Energy Agency have some 112 days of net import 
     coverage through stocks that can be released in case of a 7% 
     decrease in supplies from the average levels of the previous 
     year.

  Mr. MURKOWSKI. Think about the simple equation of Saddam's influence 
over the world right now. You don't have to be a mental giant to reach 
any other conclusion, but we buy Saddam Hussein's oil. We send him the 
money. He pays his Republican guards and builds up his biological and 
chemical weapons capability. We take that oil, put it in our airplanes 
and fly over and bomb him. And the process starts all over again. What 
kind of a foreign policy is that?
  How do we get back on course? Well, there is a solution. We have to 
reduce our dependence on foreign oil. We need to go through some 
avenues to do this. We need to increase our efficiency and maximize our 
utilization of alternative fuels and renewables. But we also have to 
increase domestic oil and gas production in this country. We have vast 
resources in areas like the overthrust belt in Wyoming, Colorado, and 
other States where we produce oil. We can produce more. But 64 percent 
of the public land has been withdrawn from exploration. Increased 
domestic supply is needed to lower prices, reduce volatility, and 
ensure safe and secure energy supply.
  My State of Alaska has been producing about 20 to 25 percent of all 
the total crude oil produced in this country in the last 20-some years. 
We can produce more. We have the technology and we can do it safely. 
Give us an opportunity. Let us show the American can-do spirit. Let us 
meet the environmental concerns with technology, not rhetoric.
  We must increase our domestic energy supply of oil to lower prices, 
reduce volatility, and ensure safe and secure energy supply. We have 
legislation to do it. Senator Lott and I and others introduced the 
Energy Security Act of 2000, S. 2557. If enacted, It would guide us 
toward rolling back our dependence on foreign oil to below 50 percent. 
That is a goal, an objective of the bill.
  To meet that goal, our bill would, among other things, increase 
domestic energy supplies of oil by allowing frontier royalty relief; 
improving Federal oil lease management; providing tax incentives for 
production, and assuring price certainty for small producers; allow new 
exploration in America's Arctic, in the Rocky Mountain States, and 
along the OCS areas for those States that want it; protect consumers 
against seasonal price spikes, especially with regard to Northeast 
heating oil users; foster increased energy efficiency, and provide new 
tax incentives for renewable energy to replace foreign oil.
  The bottom line is, the Clinton-Gore energy policy and our increased 
dependence on Saddam Hussein is a travesty on the American people, the 
American mentality, and the American memory. We fought a war in Iraq, 
and now we are dependent on their resources and unable, or unwilling to 
do anything about it. Saddam is leveraging the issue by his dictate to 
the U.N. that he is not going to give them compensation. If they make 
him, he will simply cut his production, and the world can't afford to 
have that happen.
  Finally, more U.S. dependence on foreign oil gives more leverage to 
Saddam Hussein to threaten regional stability. The administration seems 
powerless to respond for fear of cutting back on Iraqi exports. We are 
in a period almost as if it was during the last year of the Carter 
administration. Remember that time? We were being held hostage, if you 
will. We had hostages in our embassy in Iran. This time we have a 
country, a nation held hostage by Saddam Hussein.
  What will the effect be? It is going to be at the gas pump and in 
your heating oil bill. I haven't even talked about natural gas, and I 
will not do that today. I want to remind my colleagues that we have 
been talking about oil today. Tomorrow we are going to talk about 
natural gas. Natural gas, a year ago, was $2.16. Today it is $5.40 for 
deliveries in October. The GOP energy plan would defuse Saddam 
Hussein's threat. The Clinton-Gore plan wants to stand by until the 
election is over. They hope they get away with it.
  That concludes the amount of time allotted to me. Tomorrow I will 
talk about the price of natural gas and the effect it will have on the 
economy, your heating bills, and your electric bills.
  I yield the floor.

[[Page 18677]]

  The PRESIDING OFFICER. The Senator from California is recognized, but 
the Senator doesn't have any time.
  Mrs. BOXER. Mr. President, I ask unanimous consent that I may use 5 
minutes of Senator Durbin's time, to be followed by Senator Graham and 
then Senator Dorgan.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________