[Congressional Record (Bound Edition), Volume 148 (2002), Part 4]
[House]
[Pages 4358-4361]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1700
                    MIDDLE EAST PEACE AND STABILITY

  The SPEAKER pro tempore (Mr. Culberson). Under a previous order of 
the House, the gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 
minutes.
  Ms. KAPTUR. Mr. Speaker, I wish to say this past week I have called 
on President Bush to request an emergency meeting of the United Nations 
security council for the purpose of enforcing a peacekeeping or 
enforcement action in the Middle East.
  In the past few months the world has witnessed a frightening increase 
in the level of violence in the Middle East. In this 21st century, 
which we had hoped would be a century of peace, our children have 
watched on television over

[[Page 4359]]

2,000 more people killed in this unnecessary fighting between the 
Palestinians and Israelis. We have seen lives and neighborhoods 
destroyed. We have seen children blown up and shot. We have seen the 
hope for peace diminished. Innocent Israelis and Palestinians have been 
literally caught in the crossfire of violence.
  To date, as many as 1,400 more Palestinians and 500 more Israelis 
have died. The situation is clearly out of control.
  I applaud President Bush's demands that Israel and the Palestinian 
Authority step back from one another. But the Israelis have refused to 
comply with the President's demand and the Palestinians have refused to 
comply with the President's demand.
  What happens in the Middle East is crucial to U.S. interests. What 
happens in the Middle East is crucial to the United States's war 
against terrorism. What happens in the Middle East is crucial to our 
economy. The Bush administration's initial policy of disengagement for 
almost an entire year was ill conceived. But with Secretary Powell's 
mission to the Middle East, we have some indication that the 
administration realizes how important it is to put the full weight of 
our diplomatic and foreign policy apparatus behind the search for 
peace.
  The United Nations should approve a peacekeeping or an enforcement 
action that is international in scope, because if the two sides can be 
separated and a situation created for dialogue, the world may have an 
opportunity to move forward.
  A U.N.-supported force, after bringing down the level of violence, 
could help provide for regional stability that is necessary for 
preserving the State of Israel's continuing right to exist and 
establishing an independent Palestinian state.
  Americans, I suppose, could ask, Why are we there? Is it because of 
regional stability, or is it because of our own oil interests? Let me 
reference a complicating factor and urge Americans to think 
domestically what we can do here at home also to contribute to a 
solution.
  U.S. dependence on imported petroleum remains our chief strategic 
vulnerability. We watch gas prices going up again, and we see the 
recession we are beginning to pull out of being triggered perhaps again 
because of a 20 percent increase in gas prices here at home. Too often 
our dependence on imported petroleum, including from places like the 
Middle East, have served as proxy for our foreign policy.
  I will insert into the Record this week important articles written in 
USA Today, which the headline reads, ``Gas Prices Up 20 Percent and 
Rising,'' and its relationship to what is going on in Iraq, in spite of 
the embargo, providing us with a minimum of 8 percent of the petroleum 
that we import into this country every day.
  I will also supply for the Record articles from the New York Times of 
yesterday talking about the missing energy strategy of the Bush 
administration.
  We have got to get serious here at home. Over half the petroleum we 
use is imported from very unstable places. It is time for America to 
become energy independent.
  And an article from the Times on Tuesday talking about Venezuela: 
``Venezuela Woes Worsen as State Oil Company Calls Strike.'' This is 
going to impact prices here at home as well.
  Who or what is leading our foreign policy? Are we promoting democracy 
or securing international oil interests as our primary goal? Americans 
here at home need to demand a declaring of energy independence.
  The U.S. Energy Department headed by Spencer Abraham reported this 
week that consumers can expect no relief at the gas pump before fall 
and predicted that the average price of regular unleaded gas to be 
$1.46 between now and September, and in many parts of the country it is 
higher already. In fact, prices went up 23 cents a gallon last month 
alone, the fastest monthly increase in history.
  There is a connection between what is happening internationally and 
what is happening here at home. The same insatiable appetite for 
foreign oil drives our domestic policy. We gave over $4 billion in 
taxpayer dollars to Enron folks to protect their overseas natural gas 
and oil interests. If we had spent that money over the last 10 or 15 
years on alternative fuel research and development here at home, we 
might be self-sufficient by now. And that is the direction our country 
needs to head. We need to have a Manhattan Project to the extent that 
we involve every single major research university in this country in 
helping us become energy independent and having a foreign policy again 
designed for democracy, not just oil.

                [From the New York Times, Apr. 9, 2002]

        Venezuela Woes Worsen as State Oil Company Calls Strike

                            (By Juan Forero)

       Merida, Venezuela, Apr. 8.--A six-week tussle over 
     President Hugo Chavez's management of the state oil company 
     has turned into his most serious crisis, with exports of oil 
     disrupted by a labor slowdown and a general strike called for 
     Tuesday by labor and business leaders.
       ``This can only end with the president resigning,'' 
     Humberto Calderon Berti, a former minister of energy and 
     mines, told a throng of protesting executives from the oil 
     company Petroleos de Venezuela in Carcas. ``All Venezuelans 
     from all walks of life, from all social strata, from all the 
     political and ideological sectors, must take part in the 
     stoppage. This is about him or us. It is a choice between 
     democracy or dictatorship.''
       Government ministers said today that exports of oil and 
     refined products remained normal for Venezuela, the world's 
     No. 4 exporter. But analysts and executives from Petroleos de 
     Venezuela said a five-day work slowdown among oil workers and 
     managers had forced a scaling back of operations at several 
     refineries and a cutback in production at wellheads, all of 
     which has disrupted oil shipments to the United States and 
     other countries.
       ``The reality is you don't have business as usual,'' said 
     Larry Goldstein, president of the Petroleum Industry Research 
     Foundation, an industry-supported consulting group in New 
     York. ``We believe half to two-thirds of their exports have 
     been impacted. But it is literally an hour-by-hour 
     situation.''
       Latin America's fourth-largest economy may also grind to a 
     halt on Tuesday, as dissident business leaders have promised, 
     in protest against what they see as Mr. Chavez's autocratic 
     style of governing and his treatment of oil company managers. 
     The first such stoppage took place on Dec. 10. Millions of 
     workers stayed home as part of a growing wave of protests 
     aimed at forcing Mr. Chavez from power.
       The showdown that has churned up the current crisis began 
     when Mr. Chavez, a left-leaning former army paratrooper who 
     won office in 1998, took on the management of Petroleos de 
     Venezuela, a behemoth with 40,000 employees. Calling it a 
     ``state within a state'' that sapped resources while 
     benefiting a small number of high-flying executives, Mr. 
     Chavez in February fired the company president, a general 
     whom he had appointed months earlier, and appointed five 
     board members with ties to his administration.
       For many of the company's 15,000 office workers, who had 
     long celebrated it as a meritocracy known for efficiency and 
     high standards, the president's management decision was 
     enough. The workers organized protests and slowdowns, which 
     have won the support of leaders from business and labor, as 
     well as from the local media, which report every anti-Chavez 
     protest or pronouncement with relish.
       With Mr. Chavez refusing to withdraw his appointments or 
     negotiate with dissident oil executives, the office workers 
     and production workers persisted with their slowdowns, which 
     have intensified since last week. At one drilling site on 
     Thursday, two oil workers were killed when fighting broke out 
     between government supporters and opposition party members.
       The exact impact on oil production, refining and the 
     transport of crude and oil products was unclear today.
       But analysts and executives said the Amuay Cardon refinery, 
     which processes 950,000 barrels of crude daily and is a 
     crucial supplier of finished oil products to the United 
     States, had reduced operations. At least two other 
     installations, the Palito refinery on the north-central coast 
     and Puerto La Cruz to the east halted operations, they said.
       Dissident oil executives, reading a statement outside a 
     Petroleos de Venezuela office building in Caracas, said 
     extraction of oil was slowing in the Furrial field in the 
     east while refineries and plants that produce chemicals or 
     distribute natural gas were also ratcheting down.
       ``Progressively everything is shutting down,'' said Alberto 
     Quiroz, an oil analyst and former executive at Petroleos de 
     Venezuela (which is known worldwide by its Spanish acronym, 
     Pdvsa, pronounced peh-deh-VEH-sah).
       Top government officials, among them Vice President 
     Diosdado Cabello, Energy and

[[Page 4360]]

     Mines Minister Alvaro Silva, and the oil company president, 
     Gaston Parra, have sought to minimize the effects of the 
     slow-down.
       ``Everything is normal,'' Mr. Silva told reporters. ``Go to 
     the refineries. Everything is normal. There is a small group 
     protesting, but everything is operating normally.''
       The commander of the armed forces, Gen. Lucas Rincon, 
     announced that the military was beefing up its presence at 
     refineries and oil fields, which are routinely protected by 
     the National Guard.
       Through it all, Mr. Chavez has refused to back down or 
     acknowledge that the slowdown could hurt Venezuela, whose 
     economy relies on oil for 80 percent of exports and 50 
     percent of government revenues.
       In a long nationally televised address on Sunday, the 
     president said the military could run oil production and 
     refining sites if necessary. He also took the opportunity to 
     announce that he had fired 7 dissident executives and forced 
     12 more to retire.
       Blowing a soccer referee's whistle and calling the 
     executives ``off sides,'' Mr. Chavez warned about a 
     ``subversive movement in neckties'' trying to destabilize the 
     country. But, he warned, ``I can do away with all of them,'' 
     he said.
       Rafael Sandrea, president of the oil committee of 
     Fedecamaras, a powerful business group, said Mr. Chavez's 
     uncompromising approach had only made the opposition that 
     much more defiant.
       ``The president has closed the door of reconciliation and 
     opened the doors for war,'' Mr. Sandrea said. ``That is what 
     this is now, war, between the people of PDVSA and the 
     government.''
                                  ____


                    [From USA Today, April 9, 2002]

                      Gas Prices Up 20% and Rising

              (By James R. Healey and Barbara Hagenbaugh)


     experts fear higher energy costs could put brakes on recovery

       Gasoline, blood of the economy and soul of consumers, is 
     20% more expensive than a month ago--like finding out that 
     sport-utility vehicle you want is now $30,000 instead of 
     $25,000, or that the suit you're planning to buy is $600, not 
     $500.
       That's the kind of price inflation we associate with South 
     American or Eastern European countries that supposedly lack 
     U.S. economic stability.
       The bad guys in this case aren't obvious. The big fuel-
     price climb is due mainly to a complicated switch to summer-
     blend fuel from winter blend, required by federal air 
     pollution regulations; by the routine and seasonal rise in 
     crude oil prices; and by a strike in Venezuela that's keeping 
     oil off tankers.
       Only after ticking through that list are the experts and 
     analysts--if not politicians--ready to name Iraq's just-
     announced 30-day oil-export boycott, fears that the USA will 
     invade Iraq and the Israeli-Palestinian tinderbox as 
     underlying causes. (Story, 2B.)
       Consultants, analysts and other experts think the 
     nationwide average price should peak near $1.60 a gallon, 
     perhaps within a month. The government said $1.46 Monday, 
     before the Iraqi export embargo. Experts also foresee a 
     chance of local shortages, as refineries making ingredients 
     for specific summer blends are overtaxed or have mechanical 
     problems.
       Not cheery, but not as bad as the last two summers, when 
     fuel passed $2 in some places and the Midwest ran short 
     because of refinery and pipeline problems.
       More broadly and ultimately more important: Fuel price 
     increases could blunt whatever edge the economic rebound has 
     honed, although economists and experts say it shouldn't 
     flatten the recovery.
       ``I certainly don't regard it as being helpful,'' says 
     William Poole, president of the Federal Reserve Bank of St. 
     Louis.
       Higher energy prices ``act like a tax on consumers and 
     businesses. The key is how long the rise is sustained and how 
     high it will go,'' says Richard Berner, chief economist at 
     Morgan Stanley. If they stay at today's level, it'll cut 
     economic growth 0.4 of a percentage point, which he calls 
     ``not a big deal.''
       Price of benchmark light, sweet crude oil closed at $26.54 
     a barrel Monday, and Berner says that would need to ``go 
     north of $35'' to be ``a serious concern.''
       Crystal Siembida of Columbiana, Ohio, puts a finer point on 
     it: ``I can hardly afford to pay the price of gas as it is,'' 
     and thinks she might have to switch to carpooling or 
     bicycling to work if the price keeps rising.
       Bonnie Sporn of Los Angeles drives a Jeep Cherokee SUV and 
     says she deals differently with her friends now that prices 
     are up: ``In the past, if I drove with my friends on an 
     extended trip, I did not expect them to contribute gas money. 
     Things have changed . . . . We figure out the portions we all 
     owe for gas before we get out of the car.''
       Beyond gasoline, higher oil prices also translate into 
     higher heating oil and jet fuel prices. Both have the 
     potential to hurt the recovery. But heating oil season has 
     ended, ``so it's not going to crunch household budgets'' as 
     it has the past few years, says Paul Taylor, chief economist 
     for the National Automobile Dealers Association.
       Still, price hikes will discourage some driving and car 
     buying, he says, and will push on industries such as 
     utilities that generate electricity using oil and chemical 
     manufacturing that uses crude oil.
       Jet fuel is the second-biggest cost for airlines, after 
     labor. And that fuel is up about 40% this year, 71 cents a 
     gallon Monday. Airlines, though, often contract in advance 
     for fuel at a specific price to avoid big swings. Airlines 
     and private jet operators don't appear to be buying less. 
     There's been ``a lot of fussing,'' says Ed Hayman, vice 
     president of supply for World Fuel Service to Miami, but ``we 
     haven't seen a cutback.


                             pushing costs

       A look at what's driving prices: Summer-blend gas. The 
     Environmental Protection Agency can fine a service station 
     $27,500 a day for selling winter-blend fuel after May 1, so 
     the switch has to begin now. Fuel evaporates into the air and 
     pollutes it easier in hot weather, so summer gas is made to 
     compensate.
       But there are more than 100 types of summer fuel across the 
     USA. Some, such as in the Mid-west, require ethanol--grain 
     alcohol--to support area farmers. Ethanol must be mixed 
     locally and distributed by trucks. If an ethanol plant or a 
     refinery supplying the special gas to blend with ethanol has 
     trouble, there's an immediate shortage threat, and prices 
     spike.
       Last Aug. 14, for instance, the Lemont refinery outside 
     Chicago caught fire, stopping production of fuel needed for 
     the area's unique ethanol blend. By Aug. 16, the average 
     wholesale price there jumped 12.1 cents a gallon, and pump 
     prices averaged 12 cents higher than the day before the fire.
       Crude oil prices. They rise and fall with demand. Crude oil 
     accounts for about 38% of gasoline's price. The retail gas 
     price hike ``is mostly crude and the changeover to summer 
     fuel. Everybody tries to read more into the numbers, but that 
     explains what's going on,'' says Alan Struth, oil market 
     consultant at Energy Insights.
       Venezuelan strike. Oil-market experts worried more about 
     Venezuela than about the Arab nations Monday. Workers at the 
     state-owned oil company known as PDVSA have been protesting 
     management changes mandated by President Hugo Chavez for 
     about six weeks. Venezuela is a major supplier of gasoline 
     and heating oil to the USA. If a strike there lasted a week, 
     the USA would feel the pinch, Struth says. ``It's that 
     tight.''


                          saddam makes a move

       Despite mutterings it would happen, Iraqi leader Saddam 
     Hussein's pledge to sell no oil for 30 days unless Israel 
     withdraws from the West Bank caught traders and politicians 
     by surprise Monday and sent crude prices up.
       Reassurances from the U.S. government and international 
     energy officials were prompt, but the boycott nonetheless 
     could cause disruptions. And disruptions cause oil traders 
     fits.
       Monday ``was another wild and wooly day,'' says Peter 
     Beutel of Cameron Hanover, which advises companies at risk 
     when energy prices change drastically. ``Prices shot up. They 
     did come back down, but at one point, prices did look as if 
     they would roar out of control,'' he says.
       Even before Iraq, ``the market was primed,'' Beutel says. 
     ``We are in the pre-summer urgency period. Everybody says, 
     `If I don't get it now I won't have enough,''' because summer 
     driving uses up stockpiles of gas. This summer's demand is 
     expected to be a record 8.8 million barrels a day.
       Even though other members of OPEC--the Organization of 
     Petroleum Exporting Countries--are expected to make up for 
     any Iraqi shortfall, ``there is the whole exercise of 
     flipping the switches,'' Beutel points out.
       ``Saudi Arabia can go ahead and increase production today, 
     but the oil takes three or four weeks to get out of the 
     ground and into a tanker. And the Saudis won't do that unless 
     they're sure he's serious, so there's the whole question of 
     how serious is Saddam?''
       It would be May before increases by other oil exporters 
     would show up in the USA.
       And to heck with it, anyway, says Sherry Jones Nelson of 
     suburban Minneapolis. She'll take her usual long-distance 
     driving vacation, regardless: ``We won't let any company, or 
     country, stop us.''
                                  ____


                      The Missing Energy Strategy

       The events of the past year--prominently, a power crisis in 
     California and the terrorist attacks on Sept. 11--gave the 
     nation many reasons to reexamine its energy strategy. Now 
     comes another: Saddam Hussein's decision to halt oil imports 
     to the United States, at least temporarily, in retaliation 
     for Washington's support of Israel.
       In an interview with The Wall Street Journal earlier this 
     week. President Bush warned that the recent 20 percent jump 
     in oil prices could threaten economic recovery. While Iraq 
     accounts for about 8 percent of America's imports, according 
     to Washington's estimates, there is spare oil capacity in the 
     system, and thus there should be no petroleum shortage if 
     other Middle Eastern producers refuse to follow Baghdad. Even 
     so, Mr. Hussein's action draws attention once again to 
     America's dependence on imported oil, including oil supplied 
     by the troubled countries of the Persian Gulf. It also points 
     to Washington's sorry failure to devise a balanced strategy 
     to reduce America's reliance

[[Page 4361]]

     on gulf imports and give itself greater maneuvering room in 
     the war on terrorism and other foreign policy issues as well.
       The Senate, which has resumed debate on the energy bill, is 
     the last hope for such a strategy. Admittedly, the prospects 
     are dimmer than they were a month ago, when the Senate took 
     up an imperfect but honorable measure cobbled together by 
     Jeff Bingaman of New Mexico and Tom Daschle, the majority 
     leader. The bill included a mix of incentives for new 
     production of fossil fuels, largely natural gas, along with 
     provisions aimed at increasing energy efficiency and the use 
     of renewable energy sources. As such it stood in stark 
     contrast to a grievously one-sided House bill that provided 
     $27 billion in incentives for the oil, gas and coal 
     industries and less than one-quarter that amount for 
     efficiency. The House bill also authorized the opening of the 
     Arctic National Wildlife Refuge to oil exploration and 
     drilling.
       On its first big test, however, the Senate collapsed under 
     industry and union pressure and rejected a provision 
     requiring the first increase in fuel economy standards since 
     1985. To Mr. Daschle's dismay, Democrats deserted the cause 
     of fuel conservation in droves; New York's senators, Charles 
     Schumer and Hillary Rodham Clinton, were among the honorable 
     exceptions. The only bright moment in a dismal two weeks of 
     debate and defeat was the approval of a ``renewable portfolio 
     standard'' that would require utilities to generate between 5 
     and 10 percent of their power from wind, solar and other 
     forms of renewable energy.
       There are several things the Democrats and their moderate 
     Republican allies can do to produce a respectable bill. 
     First, they must defeat any amendment aimed at opening the 
     Arctic refuge to drilling. Such an amendment is almost 
     certain to be offered by Frank Murkowski of Alaska, but the 
     facts are not on his side. Every available calculation--
     including those that accept Mr. Murkowski's inflated 
     estimates of the amount of oil underneath the refuge--show 
     that much more oil can be saved by fuel efficiency than by 
     drilling.
       Next, they must resist efforts to weaken the renewable 
     energy provision, while defending energy efficiency measures 
     that have yet to be voted on--chiefly a provision that would 
     increase efficiency standards for air-conditioners by 30 
     percent. The Senate should also preserve a useful provision 
     that would require companies to give a public accounting of 
     their production of carbon dioxide and other so-called 
     greenhouse gases. On the supply side, it can take steps to 
     improve the reliability of the nationwide electricity grid, 
     while increasing incentives for smaller and potentially more 
     efficient producers of power.
       These are modest measures, less ambitious than the Senate's 
     original agenda. But at least they point in the right 
     direction, toward a strategy that includes conservation as 
     well as production.

                          ____________________