[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[Senate]
[Pages 19329-19331]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 19329]]

                                 ENERGY

  Mr. MURKOWSKI. Mr. President, I rise to address the Energy bill which 
has been introduced by Senator Lott. We have had a good deal of 
discussion about this country's continuing dependence on imported 
petroleum products, particularly crude oil, to the point that currently 
we are about 58-percent dependent.
  As a consequence of the concern over the lack of adequate heating oil 
supplies, particularly in the eastern seaboard, the President, on the 
recommendation of the Vice President, made a determination to release 
about 30 million barrels from the Strategic Petroleum Reserve. That is 
a significant event.
  I question the legality of that action. I question the meaning or 
significance of that action, but we can get into that a little later in 
my comments. I am also going to touch on our realization of the high 
price of natural gas, following our recognition of our dependence on 
imported oil.
  Oftentimes, we do not see ourselves as others see us. I am going to 
read a paragraph from the New York Times article of September 26 called 
``Candidate In The Balance.'' It is by Thomas L. Friedman.
  I quote:

       Tokyo. It's interesting watching the American oil crisis/
     debate from here in Tokyo. The Japanese are cool as cucumbers 
     today--no oil protests, no gas lines, no politicians making 
     crazy promises. That's because Japan has been preparing for 
     this day since the 1973 oil crisis by steadily introducing 
     natural gas, nuclear power, high-speed mass transit and 
     conservation, and thereby steadily reducing its dependence on 
     foreign oil. And unlike the U.S., the Japanese never wavered 
     from that goal by falling off the wagon and becoming addicted 
     to S.U.V.'s--those they just make for the Americans.

  I think there is a lot of truth to that. As we reflect on where we 
are today, I think we have had an acknowledgement at certain levels 
within the administration that they have been ``asleep at the wheel'' 
relative to our increasing dependence on imported oil.
  This did not occur overnight. This has been coming on for some time. 
We can cite specifics over the last 7 or 8 years, and in every section, 
U.S. demand is outpacing U.S. supply.
  We saw crude oil prices last week at a 10-year high--$37 a barrel--
twice what they were at this time last year.
  It is rather interesting to note the Vice President's comments the 
other day that the high price of oil was due to profiteering by big 
oil. That is certainly a convenient political twist, isn't it--
profiteering by big oil. There was no mention that last year big oil 
was very generously making crude oil available at $10 a barrel. You 
think they did that out of generosity? Who sets the price of oil? Does 
Exxon? British Petroleum? Phillips?
  Big oil isn't the culprit; it is our dependence on the supplier. Who 
is the supplier? The supplier is OPEC, Saudi Arabia, Venezuela, Mexico. 
They have it for sale. We are 58-percent dependent, so they set the 
price.
  With crude oil at a 10-year high, gasoline prices are once again 
above $1.57, $1.59, in some areas $2 a gallon.
  Natural gas--here is the culprit, here is what is coming, here is the 
train wreck--$5.25 to $5.30 for deliveries in the Midwest next month. 
What was it 9 months ago? It was $2.16. Think of that difference.
  Utilities inventories are 15-percent below last winter's level. How 
many homes in America are dependent on natural gas for heating? The 
answer is 50 percent, a little over 50 percent; that is, 56 million 
homes are dependent on natural gas in this country. How many on fuel 
oil? Roughly 11 million.
  What about our electric power generation? Fifteen percent of it 
currently comes from natural gas. What is the increasing demand for 
natural gas? We are consuming 22 trillion cubic feet now. The 
projections are better than 30 trillion cubic feet by the year 2010.
  The administration conveniently touts natural gas as its clean fuel 
for the future, but it will not allow us to go into the areas where we 
can produce more.
  I remind my colleagues, I remind the Secretary of Energy, and I 
remind the Vice President and the President, there is no Strategic 
Petroleum Reserve for natural gas. You can't go out and bail this one 
out, Mr. President. The administration has placed Federal lands off 
limits to new natural gas exploration and production.
  More than 50 percent of the overthrust belt--the Rocky Mountain area, 
Montana, Wyoming, Colorado--has been put off limits for exploration. We 
have a Forest Service roadless policy locking up an additional 40 
million acres; a moratorium on OCS drilling until the year 2012. The 
Vice President said he would even consider canceling existing leases.
  You have a situation with increased demand and no new supply. What 
does this add up to? Higher energy prices for consumers this winter--a 
train wreck. This is going to happen. Yet the administration sits idly 
by and hopes the election can take place before the voters read their 
fuel bills.
  So there we are. We now have situations in California, in San Diego, 
of electricity price spikes. We have possible brownouts. The reason is, 
there is no new generation. You can't get permits for coal-fired 
plants.
  It takes so long to get new generation on line.
  Heating and fuel oil inventories, as I have indicated, are at the 
lowest level in decades, leaving us unprepared for winter. It is a lack 
of overall energy policy.
  As to nuclear energy, 20 percent of the total power generated in this 
country comes from it. We can't address what to do about the waste. 
This body stands one vote short of a veto override to proceed with the 
commitments that we made to take that waste from the industry, waste 
that the consumers have been paying for the Federal Government to take 
for the last two decades.
  Consumers have paid about $11 billion into that fund. The Federal 
Government was supposed to take the waste in 1998. It is in breach of 
its contract. The court has ruled that the industry can recover, and 
they can bypass anything but the Court of Claims. That is how far that 
has gone.
  Let's look at crude oil and SPR.
  With crude oil prices on the rise again, the administration has had 
to go back to OPEC time and time again to ask for more foreign oil. The 
assumption is, if they ask for 800,000 barrels, we get 800,000 barrels. 
We get 17 percent of that. That is about 130,000 barrels. That is our 
portion. Everybody gets some of OPEC's increased production.
  Foreign imports into this country in June were 58 percent. Compare 
that with 36 percent during the 1973 Arab oil embargo. Recall the 
gasoline lines around the block at that time. The public was outraged. 
They blamed everybody, including Government. Sounds familiar, doesn't 
it?
  Ask Tony Blair from Great Britain how he feels about the protests in 
England and everywhere else in Europe. It is threatening some 
governments.
  To ensure we have a supply to fall back on, in 1973, 1974, 1975, we 
created the Strategic Petroleum Reserve or SPR. That was our response 
to the Arab oil embargo. We have about 571 million barrels of storage 
in SPR. SPR was set up to respond to a severe supply interruption, not 
to manipulate consumer price for a political effect.
  We can only draw down about 4.1 million barrels per day from SPR. 
Remember something a lot of Americans, a lot of people in the media, do 
not understand: The Strategic Petroleum Reserve is not full of heating 
oil or gasoline or kerosene. It is full of crude oil. The crude oil has 
to be transported to a refinery. Our refineries are running at 96 
percent of capacity.
  The Vice President wants to release 30 million barrels from SPR to 
``lower prices'' for consumers. I question the legality of that at this 
time because a drawdown can only occur if the President has found that 
a severe energy supply interruption has occurred. The Secretary 
released oil without any

[[Page 19330]]

such finding. His excuse is that this is not a drawdown; it is a swap 
or an exchange.
  This is the largest release of oil from SPR in its 25-year history, 
larger than during the gulf war.
  Secretary Richardson stated today that the 30 million barrels of 
crude released from SPR may produce 3 to 5 million barrels of new 
heating oil. The U.S. uses 1 million barrels of heating oil per day.
  So the obvious increase is 3, 4, 5 days' supply. That is not very 
much, is it? The Secretary's action regarding SPR may have an impact on 
price but may not have a significant impact on the supply of heating 
oil. That is just the harsh reality.
  What about others? Well, Secretary of the Treasury Summers has 
indicated it is bad policy. He felt so strongly, he wrote a letter to 
Alan Greenspan. We have a copy of the memorandum that went from Mr. 
Summers, Secretary of the Treasury, to Alan Greenspan. I will refer to 
it in a moment.
  Releasing SPR now weakens our ability to respond later to real supply 
emergencies. That is obvious to everyone. But I do want to enter into 
the Record this letter, a memorandum of September 13 from Lawrence H. 
Summers, Secretary of the Treasury, to the President. The memorandum is 
entitled ``Strategic Petroleum Reserve.'' Page 2, top paragraph:

       Using the SPR at this time would be seen as a radical 
     departure from past practice and an attempt to manipulate 
     prices. The SPR was created to respond to supply disruptions 
     and has never been used simply to respond to high prices or a 
     tight market.

  I don't think there is any question about the intent of that 
statement. It is bad policy. Alan Greenspan has indicated an agreement, 
or at least that is the impression we get.
  The action that I indicated was illegal is illegal because it 
requires a Presidential finding. It is contrary to the intent of the 
authority for the transfer. And besides, we have not reauthorized the 
Strategic Petroleum Reserve. It is held up in this body by a Senator on 
the other side who is objecting to the reauthorization of EPCA, which 
contains the reauthorization for the Strategic Petroleum Reserve. 
Releasing SPR oil now, as I indicated, weakens our ability to respond 
later to real supply emergencies.
  Where were we 7 years ago with regard to SPR? We had an 86-day day 
supply of crude oil in SPR. Today, we have a 50-day supply. The 
administration has previously sold almost 28 million barrels. They sold 
it at a loss of $420 million, the theory being you buy high and you 
sell low. I guess the taxpayers foot the bill by making it up with the 
increased activity. I don't know what their logic has been, but that is 
the history.
  Earlier this year, the Vice President stated: Opening SPR would be a 
compromise on our national energy security. He made that statement. 
Obviously, he has seen fit to change his mind. Everybody can change 
their minds, but nevertheless I think it represents an inconsistency. 
What we need is a real solution, reducing our reliance on foreign oil 
by increasing domestic production and using alternative fuels, 
incentives, conservation, weatherization. I could talk more on that 
later.
  Also, it is interesting to note that the Vice President indicated his 
familiarization with SPR, that he was instrumental in the setting up of 
it. As we have noted, he was not in the Senate under the Ford 
administration when it was established. That is kind of interesting 
because it suggests that he is happy to get aboard on the issue and, 
again, may have had a significant role, but it is pretty hard to find 
the record showing him having an active role.
  Another point is our increased dependence on Saddam Hussein and the 
threat to our national security in the sense that we are now importing 
about 750,000 barrels of oil from Iraq a day. Just before this 
administration, we carried out Desert Storm, in 1991-1992. We had 147 
Americans killed, 460 wounded, 23 taken prisoner. We continued to 
enforce, and continue today to enforce, a no-fly zone; that is, an 
aerial blockade. We have had flown over 200,000 sorties since the end 
of Desert Storm. It is estimated to cost the American taxpayer about 
$50 million. Yet this administration appears to become more reliant on 
Iraqi oil.
  What we have is a supply and demand issue. Domestic production has 
declined 17 percent; domestic demand has gone up 14 percent. Iraq is 
the fastest growing source of U.S. foreign oil--as I said, 750,000 
barrels a day, nearly 30 percent of all Iraq's exports. We have been 
unable to proceed with our U.N. inspections in Iraq. There is illegal 
oil trading underway with other Arab nations; we know about it. Profits 
go to development of weapons of mass destruction, training of the 
Republican Guard, developing missile delivery capabilities, biological 
capabilities.
  This guy is up to no good; there is absolutely no question about it. 
The international community is critical of the sanctions towards Iraq. 
But consider this: Saddam Hussein is known to put Iraqi civilians in 
harm's way when we retaliate with aerial raids. Saddam has used 
chemical weapons against his own people in his own territory. He could 
have ended sanctions at any time--by turning over his weapons of mass 
destruction for inspection; that is all. Yet he rebuilds his capacity 
to produce more. He cares more about these weapons than he apparently 
cares about his own people. That he is able to dictate our energy 
future is a tragedy of great proportion. Still, the administration 
doesn't seem to get the pitch. Saddam gets more aggressive. His every 
speech ends with ``death to Israel.'' If there is any threat to 
Israel's security, it is Saddam Hussein.
  He has a $14,000 bounty on each American plane shot down by his 
gunnery crews. He accuses Kuwait of stealing Iraqi oil--here we go 
again--the same activity before he invaded Kuwait in 1990. Saddam is 
willing to use oil to gain further concessions. The U.N. granted Kuwait 
$15 billion in gulf war compensation. Iraq has retaliated and said it 
will cut off exports. OPEC's spare capacity can't make up the 
difference.
  He has the leverage. We really haven't focused in on that. The U.N. 
postpones compensation hearings until after U.S. elections for fear of 
the impact on the world market. He is dictating the terms and 
conditions. He says: You force me to pay Kuwait and I will reduce 
production. We can't stand that because that is the difference between 
roughly the world's capacity to produce oil and the world's demand for 
that oil. And Saddam Hussein holds that difference.
  I ask unanimous consent to proceed for another 7 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MURKOWSKI. I thank the Chair.
  I will try this approach because I think it references our foreign 
policy. If I get this right, we send him our dollars, he sells us the 
oil, we put the oil in our airplanes and go bomb him. Have I got that 
right? We buy his oil, fill our planes, and go bomb him. What kind of a 
foreign policy is that? He has us over a barrel, and it is a barrel of 
oil.
  Another issue that is conveniently forgotten is refinery supply. 
Supply of crude oil is not the only issue. Even if we had more, we 
don't currently have the capacity to refine it. That is what is wrong 
with releasing oil from SPR. We don't have the ability for our 
refineries to take more product currently. That is unfortunate, but it 
is a reality.
  We had a hearing this morning. The industry said they are up to 
maximum capacity with refinery utilization at 96 percent. We haven't 
built a new refinery for nearly a quarter century. We have had 36 
refineries closed in this country in the last 10 years. This is due to 
EPA regulations.
  We have the issue of reformulated gas. We have nine different 
geographical reformulated gasolines in this country. The necessity of 
that is the dictate from EPA. I am not going to go into that, but fuels 
made for Oregon are not suitable for California; fuels made for 
Maryland can't be sold in Baltimore; Chicago fuels can't be sold in 
Detroit. We are making designer gasoline. The result: Refiners do not 
have the flexibility to move supplies around the country or respond to 
the shortages.

[[Page 19331]]

  The administration's response? Well, it is pretty hard to identify. 
They are trying to duck responsibility, hoping this issue will go away 
before the election takes place and the voters get their winter fuel 
bills. They are trying to keep this ``train wreck'' from occurring on 
their watch. They blame ``big oil'' for profiteering.
  Think this thing through. Big oil profiteering: Where was big oil 
when they gave it away at $10 a barrel last year? Who sets the price? 
Well, it is OPEC, Saudi Arabia, Venezuela, and Mexico, because they 
have the leverage; they have the supply. I think the American people 
are too smart to buy the issue of big oil profiteering. And the issue 
related to the industry is that during the time that we had $10 oil, we 
weren't drilling for any gas. We lost about 57,000 gas wells, and I 
think 136,000 oil wells were taken out of production. Many were small.
  So if we look at the areas where we get our energy, it is pretty hard 
to assume that there is any support in the area of domestic production 
and exploration because there is a reluctance to open up public land.
  We have seen 17 percent less production since Clinton-Gore took 
office. They oppose the use of plentiful American coal. EPA permits 
make it uneconomic. We haven't had a new coal-fired plant in this 
country in the last several years. They force the nuclear industry to 
choke on its own waste. Yet the U.S. Federal Court of Appeals now says 
the utilities with nuclear plants can sue the Federal Government 
because it won't store the waste. That could cost the taxpayer $40 
billion to $80 billion. They threaten to tear down the hydroelectric 
dams and replace barge traffic on the river system by putting it on the 
highways. That is a tradeoff? They ignore electric reliability and 
supply concerns, price spikes in California, no new generation or 
transmission. They claim to support increased use of natural gas while 
restricting supply and preventing new exploration.
  The Vice President indicated in a speech in Rye, NH, on October 21, 
1999, he would oppose further offshore leasing and would even look to 
canceling some existing leases. Where are we headed? Downhill. It means 
higher natural gas prices, higher oil prices, higher gasoline and fuel 
oil prices, plus higher electricity prices. That equals, in my book, 
inflation.
  We have been poking inflation in the ribs with higher energy prices, 
driving all consumer prices higher. One-third of our balance of 
payments is the cost of imported oil. We are a high-tech society. We 
use a lot of electricity for our activities--computer activities, e-
mail, and everything else. All this boils down to the makings of a 
potential economic meltdown.
  What we need is a national energy strategy which recognizes the need 
for a balanced approach to meeting our energy needs. We need all of the 
existing energy sources. We have the National Energy Security Act 
before us on this floor. We want to increase energy efficiency, 
maximize utilization of alternative fuels/renewables, and increase 
domestic oil supply and gas production. We want to reauthorize EPCA, 
reauthorize the Strategic Petroleum Reserve. Our bill would increase 
our domestic energy supplies of coal, oil, and natural gas by allowing 
frontier royalty relief, improving Federal oil/gas lease management, 
providing tax incentives for production, and assuring price certainty 
for small producers.
  We want to allow new exploration. Twenty percent of the oil has come 
from my State of Alaska in the last two decades. We can open up the 
Arctic Coastal Plain safely, and everybody knows it. The reason is that 
we want to promote new clean coal technology, protect consumers against 
seasonal price spikes, and foster increased energy efficiency.
  Regardless of how you say it, American consumers really need to 
understand that this train wreck is occurring and it is occurring now. 
We have to develop a balanced and comprehensive energy strategy, one 
that takes economic and environmental factors into account at the same 
time, and one that provides the prospect of a cleaner, more secure 
energy in the future.
  We have this energy strategy. We have it proposed. It is on the floor 
of this body. This administration does not. They are just hoping the 
train wreck doesn't happen on their watch. The consequences of over 7 
years of failed Clinton-Gore energy policies are now being felt in the 
pocketbooks of working American families. Mr. President, we deserve 
better.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois is recognized for up 
to 1 hour.

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