[Congressional Record (Bound Edition), Volume 146 (2000), Part 9]
[Senate]
[Pages 12166-12168]
[From the U.S. Government Publishing Office, www.gpo.gov]



                        GAS PRICES AND GAS TAXES

  Mr. MURKOWSKI. Mr. President, I rise to talk a little bit about a 
topic that is in the newspapers today and that has been all week; that 
is, the crisis concerning energy and our gasoline price structure 
currently prevalent throughout the country.
  I think it is fair to go back and evaluate what has happened over the 
last 8 years in the Clinton/Gore administration.
  I think it is obvious to all that the answer to our energy shortage 
by the Clinton administration is pretty much to put our economic 
destiny in the hands of the foreign oil price-fixing cartel because 
their answer to the shortage has been to increase oil imports and 
decrease domestic production.
  The first time we saw this crisis coming was a few months ago. The 
reaction of the administration was to send the Secretary of Energy, 
Secretary Richardson, almost with a tin cup, to beg OPEC to increase 
their oil production. That was the answer.
  The success of that effort is somewhat limited when you recognize 
that there is more pressure throughout the world to utilize oil. A 
consequence of that, of course, is the realization that the Asian 
economy is coming back, which is putting more pressure for oil in that 
part of the world. We found our reserves substantially lower as a 
consequence of the cold winter and an inadequate supply of heating oil. 
While we had this situation developing, it was quite evident what was 
going to happen behind the supply and demand curve. The demand was 
greater than the supply. We were pulling down our reserves faster than 
we were replacing them.
  It is kind of interesting to see the ``blame game'' that is going on 
in Washington.
  The administration is blaming the price increase on the oil 
companies, and on the refiners--on anyone but themselves; on anyone 
other than recognizing that the Clinton/Gore administration has not 
really had an energy policy that has been identifiable.
  The first graphic explanation is going back to a time a few years ago 
when the Vice President came to the Chamber and broke a tie vote to 
establish a 4.3 cent-per-gallon gas tax. That, I think, can certainly 
be reflected on as the ``Gore gas tax.''
  Following that, we saw a series of activities by the administration 
that hardly would relieve the coming shortage that was evident, even at 
that time.
  The administration has taken vast areas of the Rocky Mountain 
overthrust belt off limits to energy exploration. These are areas where 
there is a high potential for oil and gas discoveries--Colorado, 
Wyoming, and Montana. And other States were simply taken off limits. It 
is estimated that 64 percent of those areas have been removed.
  There are areas in the Continental Shelf that they put off limits to 
energy exploration.
  Furthermore, the Vice President, in a statement made in Louisiana, 
stated that if he were elected President, he would pursue a policy of 
no more leases if anyone even attempted to thwart existing leases that 
have been issued.
  During that timeframe, the administration vetoed legislation to open 
up the small sliver of the Arctic Coastal Plain where reserves had been 
estimated as high as 16 billion barrels. That is just in my State of 
Alaska. It is estimated that if indeed the potential reserves were 
there, it would replace our current imports from Saudi Arabia over a 
period of 30 years.
  Further, the administration has put domestic energy reserves off 
limits through a unilateral designation of new national monuments under 
the Antiquities Act.
  It is a pretty simple equation. Domestic production is down 17 
percent, and imports are up 14 percent.
  We talk about rising gasoline prices in various areas of the country. 
We have talked about the refineries, and why they can't address this 
and continue with an uninterrupted supply at a relatively low price.
  What the administration doesn't tell you is the reality--that the 
Environmental Protection Agency, through mandates, has caused a 
significant increase associated with the mandate for reformulated 
gasoline.
  Who pays the price associated for this reformulated gasoline?
  Why is it so high?
  It is kind of interesting. When you go through the State of Illinois 
and the State of Wisconsin, you are made aware that as of June 1 there 
was a mandate by the Environmental Protection Agency that reformulated 
gasoline containing ethanol replacing MTBE be established. That costs 
roughly 50 cents more a gallon. You cannot use the same gasoline in 
Springfield, IL, that you would use in Chicago, IL, because of the 
policies of the EPA.
  I am not going to debate the merits of the regulation. But I will 
debate the reality that these regulations cost money because they 
require customizing, if you will, of the gasoline and the refining 
process.
  It is kind of interesting to also note that we have lost 36 
refineries in this country in the last decade. They haven't built a new 
refinery in almost 25 years. Why not? Obviously, it is not a very 
attractive business to get into, or the oil companies would be moving 
into it. They are moving out of them. The reason: It takes decades; in 
some cases not that long, but several years to get permits. The 
permitting process is legitimate. But if you can't basically get there 
from here, you are going to have very little interest in pursuing 
refineries.
  I think it is fair to say that the administration's overzealous 
policies are responsible for closing some 36 regional refineries. The 
fact that no new ones have opened during the 8 years under the Clinton/
Gore administration is a valid, understandable, legitimate reason as to 
why we are seeing gasoline

[[Page 12167]]

prices in regional areas mandated by new policies from EPA prevail. The 
Vice President can try to shift the blame to the oil companies for 
higher prices, but let's not forget that he personally cast the tie-
breaking vote in the Senate for higher gasoline prices.
  To attempt to counteract that, we have a firm policy that is 
introduced in legislation which is the Republican energy production 
proposal for the year 2000. We recognize what has happened in this 
country. Today, the average price of gasoline is $1.68 per gallon. In 
the Midwest, the average is $1.87. The only way to address this 
responsibly is through a series of incentives that not only stimulate 
domestic production by opening up the overthrust belt, by opening up 
areas in the coastal OCS area, opening up areas in the arctic where we 
are likely to find significant discoveries, but have a goal in the 
legislation. The goal is to reduce dependence upon imports to less than 
50 percent in a 10-year period of time. In the Vice President's book 
``Earth in the Balance,'' on page 73, he identifies ``higher taxes on 
fossil fuels . . . is one of the logical first steps in changing our 
policy in a manner consistent with a more responsible approach to the 
environment''; that is, taxing higher fuels to discourage people from 
using fuels.
  He further says it ought to be possible to establish a coordinated 
global program to accomplish the strategic goal of completely 
eliminating the internal combustion engine over, say, a 25-year period. 
The implications of that, of the Vice President encouraging high costs 
to address perhaps the elimination of the internal combustion engine, 
or his belief, if indeed it is his belief, that higher taxes on fossil 
fuel is one of the first steps in changing our policies, certainly is 
occurring.
  However, let's be realistic and recognize in this country our 
transportation system depends on oil. Don't expect modest OPEC 
increases to bring prices down at the pump. As we have seen in this 
last announcement by an increase in OPEC of 700,000 barrels a day, the 
market sophistication has already made a judgment. The judgment is that 
prices are going to continue to rise. Right after this announcement, 
west Texas medium crude rose 72 cents Wednesday on the New York 
Mercantile Exchange, up an additional 28 cents by the afternoon, where 
contracts for August delivery were $31.65 a barrel. Last year at this 
time, oil was selling for about $12 to $14 a barrel.
  If there are those who were misled by the assumption that energy was 
going to substantially be increased by this OPEC announcement, remember 
that 700,000 barrels a day does not come to the United States alone. 
Our share of that is 15 percent. That is only 109,000 barrels a day. In 
the District of Columbia, we consume 121,000 barrels a day, to give a 
comparison. The last OPEC production increase in March, which was to 
produce a 1.7 million-barrel increase, may have yielded roughly 500,000 
barrels due to cheating on production overquota.
  As we look to the future, it is amusing to recognize that the 
administration has now come out with what it referred to as a detailed 
blueprint for congressional action. Mind you, they are asking, now, for 
congressional action. The President has called on Congress to pass a 
proposal to encourage more stripper well production.
  First, we don't have a proposal. There is no legislation set up. We 
have in the Republican package, a proposal to increase stripper well 
production. But now the President is saying we need to get some of 
these American wells back in operation.
  Where has he been? We have been trying to encourage the 
administration to support legislation that would put in place a foreign 
ceiling. They have not proposed any. And now he is saying he has a 
program. Where is it, Mr. President? He says we need to get some of 
these things back in operation.
  He further states that Congress is not reauthorizing Strategic 
Petroleum Reserve. He went into the Strategic Petroleum Reserve the 
other day as a consequence of an accident on the Mississippi River to 
keep refinery production going. He didn't ask us for authority. He has 
the authority. He knows he has the authority. This is another 
smokescreen.
  We look at his concern over the supply in the Northeast corridor this 
coming winter. What has he done about the supply to increase it? 
Absolutely nothing. He has no plan, no proposal, no increased 
production. The President or the Vice President or his advisers simply 
do not understand the reality that this is a supply and demand issue. 
Unless we increase the supply, we are going to have shortages. That is 
evident by what we are seeing in the paper. We have $2.33, $2.40, and 
$2.49 a gallon for gasoline in this country. This particular headline 
suggests that the gas price rise shakes Democrats. The reason it shakes 
the Democrats, and the reason this is a partisan issue, is because the 
Democrats and the administration simply have no plan and have not had a 
plan associated with the energy shortage that is occurring in this 
country today.
  As I come to the Senate floor today to address this matter and 
reflect on how we are going to correct it, the simple response is that 
we are going to have to increase our supplies, and we will have to do 
it dramatically and in a timely manner. If we don't do that, we are 
going to continue to see an increase in the price of oil, and an 
increased dependence on imports. One of the frustrating things about 
the continued dependence on imports is from where those imports are 
coming.
  Last year, we imported about 300,000 barrels of crude oil from Iraq. 
This year we are importing about 750,000 barrels from Iraq. A lot of 
people perhaps have forgotten we fought a war over there in 1991 and 
1992. We lost 147 lives. We had roughly 427 wounded, 23 were taken 
prisoner.
  Today, what we are doing, and this is where I am critical of our 
foreign policy, for all practical purposes, we are buying his oil, 
sending him our dollars, taking his oil, putting it in our airplanes, 
and going over and bombing. What kind of a foreign policy is that? It 
is just about that simple. Not very complex.
  He is making a press release every time we bomb saying, here is how 
many people Americans killed in my country. He waves that around and 
generates more support. The dollars we are paying go to the Republican 
Guards for his safety and protection. And he is smuggling oil out, in 
addition to that which is under the auspices of the United Nations. 
What is he doing with the generation of funds from the smuggling of the 
oil? He is building up his arsenal, his capability with missiles, his 
capability with the biological weaponry. Here is a very bad man out 
there. And we are supporting his regime because we are becoming more 
dependent on him as a source of oil.
  What does that do to strengthening stability in the Middle East? It 
is pretty hard to say, but it certainly represents a threat against 
Israel. It is well known, the disposition of Iraq and Saddam Hussein 
relative to the threat against Israel and the peace we all hope will 
come to the Middle East.
  I could go on at great length. I see other Senators desiring to 
discuss various matters. It is my intention as chairman of the Energy 
and Natural Resources Committee to put together in this next week a 
chronology of certain portions of our negative exposure, if you will. 
One is on gasoline prices, one is on refinery operations, one is on the 
availability and continued uninterrupted supply of natural gas.
  The other is the delivery system within our electric power industry 
and our transmission grids. It is appropriate we start preparing 
ourselves for a train wreck that is going to come. We are seeing it in 
gasoline prices as a consequence of shortage of crude oil. We are going 
to see it spread, as we see in the northeastern part of the Nation 
which is so dependent on oil for the generation of electricity, as the 
summer warms up.
  Last year they were paying $10 and $11 a barrel for oil. This year 
they are going to be paying over $30. The electrical rates in the 
Northeast corridor are going to go up dramatically. They thought they 
had higher rates for fuel oil last year. They have not seen anything 
yet. We are going to have brownouts this year because the capacity of

[[Page 12168]]

the transmission lines, for all practical purposes, is just about at 
their maximum in certain areas.
  Why haven't we built more transmission lines? FERC has been sitting 
for 3 years on a rate case, a rate case that is going to make a 
determination of whether or not it is financially beneficial for the 
investment in transmission lines in the sense they can recover their 
investment.
  What about natural gas? The electric industry is moving into the area 
more and more and converting to natural gas, but while the supply of 
natural gas is abundant, we are now pulling down our reserves. Last 
year, our reserves were about 160 trillion cubic feet; this year, they 
are about 150. We are using more gas than we are finding. We are using 
currently about 20 trillion cubic feet. The estimate is about 30 to 35 
in the next 10 years. We are not finding a replacement. So we are going 
to have a crunch in natural gas, and natural gas is going to go up.
  It is estimated the industry is going to have to spend $1.5 trillion 
to put in new infrastructure for delivery into various parts of the 
country. From where is the capital going to come? It is only going to 
come if they get an adequate return on their investment; otherwise, 
they are not going to build the pipelines.
  This whole thing is coming to a head. The American people are 
beginning to wake up a little bit. The administration is beginning to 
point the blame to industry, to Congress, to the refiners, to anybody 
but themselves, because this administration has not had an energy 
policy of any consequence, as evidenced by the President's statement 
that suddenly he is concerned and suddenly he sends something to 
Congress--if we can identify just what this is he sent up--calling on 
Congress to pass a variety of administrative proposals. They do not say 
what the proposals are. He is a little late. It is like somebody 
fiddling while Rome burned.

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