[Congressional Record (Bound Edition), Volume 151 (2005), Part 14]
[Senate]
[Pages 19483-19484]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  GASOLINE PRICES AND WINDFALL PROFITS

  Mr. DORGAN. Mr. President, I also wish to speak about a subject that 
has some relationship but an issue that the American people were facing 
before the hurricane hit. Prior to the devastating Hurricane Katrina, 
the Senate Energy Committee had scheduled a hearing on gasoline and oil 
prices. That hearing is now going on. I spent the last 2 hours 
attending it. It was scheduled before this hurricane. Obviously, when 
the hurricane hit, a number of oil refineries and a couple of major 
pipelines shut down. It has had an impact beyond that which was 
occurring prior to the hurricane.
  Prior to the hurricane hitting, oil prices had already risen $30 a 
barrel above that which existed a year and a half to 2 years ago. The 
major integrated oil companies that have become larger through mergers 
and concentration in recent years were already earning record profits.
  Last evening, a friend of mine went to a gas station and pumped 
gasoline into his car and his son's car, about 15 gallons in each car. 
The bill was $103 dollars. Every American citizen understands that 
sticker shock when they pull up to the gas pump. We are told by some: 
It is the free market.
  Here is what has happened to the profits of U.S. major oil and gas 
companies in billions of dollars from 2002, at which point they were 
$20 billion, to this year, when they are going to be over $100 billion. 
This is not a free market; this is a market with clogged arteries. It 
is OPEC pricing. It is a few countries that live on top of sand that is 
undergirded by substantial deposits of oil sitting around and deciding 
how much they are going to produce and what price they want to extract. 
So it is OPEC pricing. It is a concentrated domestic industry through 
mergers. It is rampant speculation. And it is also substantial windfall 
profits for some very profitable oil companies.
  The question is, Where is the gain and where is the pain? Here is the 
gain.
  We use 21 million barrels of oil a day. Sixty percent comes from 
outside of our country, which means we now have revenuesharing going on 
between the American drivers and consumers and the OPEC countries, 
including the Saudis, the Kuwaitis, and the Iraqis and others. It is 
forced revenuesharing. We pull up to the pump, we pay an inflated price 
for gasoline, and we send the money to the Middle East. Forty percent 
of that which we use is produced domestically by larger and larger oil 
companies, grown larger by mergers in recent years. That 40 percent has 
increased by $30 a barrel. That means the profits have increased by $7 
billion a month for the domestic producers.
  The integrated domestic producers in many cases have control of oil 
from the discovery in the ground to the gasoline pump. Eighty billion 
dollars a year in extra profits will exist in the coming year if the 
price of oil stays where it is now. That profit doesn't emerge out of 
thin air. It comes from extracting it from the consumers who drive up 
to the gas pump and take out their credit card or their currency and 
pay for a tank of gasoline.
  Something needs to be done. Tomorrow, I intend to introduce windfall 
profits rebate legislation. The bill will establish a price point for a 
barrel of oil. A portion of the windfall profits above that amount 
would be captured and sent back to the consumers who are paying the 
excess or windfall profits to the companies. I would exempt from that 
windfall profits recapture that amount of additional money that is 
being used by the companies for domestic exploration or for increasing 
refinery capacity. If it is being used for that, I say fine. At least 
we are trying to search for a better future with a greater energy 
supply. But some of the major oil companies are now buying back their 
stock with that profit. That doesn't benefit this country.
  These are windfall profits at the expense of consumers to enrich the 
larger integrated oil companies. I believe part of it ought to be 
recaptured and sent back as a rebate to the American consumer. I will 
introduce that legislation tomorrow.
  I know it is controversial. I know some people may think the best way 
to address all of this is to sit around with your hands in your pocket 
and wipe your brow and wring your hands and fret about it and 
essentially do nothing. These represent the windfall profits on 40 
percent of that which we use. Twenty-one million barrels a day. Forty 
percent of that comes from domestic producers. That has increased over 
$30 a barrel with no additional cost incurred by the major oil 
companies. It amounts to $7 billion windfall profits a month or $80 
billion windfall profits a year. I believe some of that ought to be 
collected and sent back to consumers as rebates.
  Again, I know that is controversial. I know some won't want to do 
that. The plain fact is, if we do nothing, you have a massive transfer 
of income from people who can't afford it to people who shouldn't get 
it to interests that shouldn't get it. I believe Congress should take 
action. I understand that this is a shorter term issue, but John 
Kenneth Galbraith said: In the long run, we are all dead. So let's deal 
with the short term.
  Yes, I want to shed our addiction of running gasoline through 
carburetors and fuel injectors. I wrote the provision in the Energy 
bill, signed by the President, that has a $3.7 billion title dealing 
with hydrogen and fuel cells. That ought to be our future, hydrogen and 
fuel cells. If you run on hydrogen--and hydrogen is ubiquitous, it is 
everywhere--you get water vapor out the tailpipe, and you have twice 
the efficiency of power to the wheel. That is wonderful. Put up a wind 
turbine and collect energy from the wind and use the electricity 
collected from the wind to separate hydrogen from water with 
electricity--something called electrolysis--and then put that hydrogen 
in a hydrogen fuel cell vehicle. The Energy bill has a pretty good 
title on that. I wrote that title.
  We need to shed our addiction to this oil. We need to shed our 
dependence on Middle East oil. In the meantime, in the short term, when 
you drive up to a gas pump with 2 cars and pump 15 gallons in each and 
pay $103, the question is, Who is pocketing that money and why? There 
is no justification for that kind of windfall profit.
  If the oil industry wants to have substantial profits to invest back 
into the ground or to build additional refineries, that is fine. That 
wouldn't be captured by a windfall profit. But when the oil industry is 
getting windfall profits to the tune of $7 billion a month, which they 
are doing right now, and some are busy buying back their stock, the 
American consumers deserve a break. They have had a bellyful of this. 
We have seen it all over this country where the big interests get 
bigger. They extract more from the rest, and nobody seems to care much.
  One final point, there is also a provision in the final Energy bill 
that requires the Federal Trade Commission to launch an investigation 
of oil and gas prices within 90 days. I wrote that provision as well. 
But frankly, I have minimum hope that the Federal Trade Commission is 
going to be an ambitious referee with respect to pricing. This Congress 
should take action.
  Here is what we face from now to Halloween to Thanksgiving to 
Christmas with respect to $226 million a day of windfall profits. That 
is $30 a barrel above that which existed when you already had record 
profits in the domestic industry. I believe some of it ought to be 
recaptured and given back to American consumers.
  I saw an old car with an old bumper hanging down. That car had seen a 
better day--rust in the fenders and the bumper hanging halfway on the 
right. I saw it at a stop sign near Mohall, ND, one day. The bumper 
sticker had a plaintive message. It said: We fought the gas war and gas 
won.
  The fact is, American consumers ought to be given an even break. That 
is why I am introducing this legislation tomorrow.
  The PRESIDING OFFICER. The Senator from Connecticut.

[[Page 19484]]


  Mr. DODD. Before the Senator from North Dakota leaves the floor, I 
commend him for his comments. I am prepared to share some thoughts as 
well about the events in our country over the last week or so, but the 
Senator's comments about the energy crisis are tremendously timely in 
light of what has occurred in prices over the last number of days all 
across our country. And I join him in introducing legislation at least 
by tomorrow I hope in a bipartisan effort.
  Again, he makes a very significant point that any of these resources, 
additional dollars that are pouring into the coffers of the industries 
that would go for exploration, research, refining capacity, are not 
included. In fact, we wish they would do more in developing new sources 
of energy. But if they are pocketing these resources at the expense of 
our economy, then I think it is incumbent upon us in this institution 
to respond and to not allow this gouging to occur at a time when the 
country is suffering. As someone who has paid a lot of attention over 
the years to the fuel cell industry, I do not think I am exaggerating 
when I say the capital of the fuel cell industry has been the State of 
Connecticut over the last number of years. United Technologies, to 
their great credit--aside from being a large defense contractor--has 
worked aggressively in the fuel cell area. The Senator from North 
Dakota is absolutely correct that fuel cells offer tremendous 
opportunity. It is not like inventing some new technology. It is out 
there. If we would put the resources behind it, make it a bit more 
efficient than it is today, which is not a great deal, not a very 
difficult thing to do, then we could make some giant steps forward in 
reducing our dependency on foreign countries and our dependency on 
nonrenewable sources of energy.
  I commend the Senator for his comments and his ideas.
  Mr. DORGAN. I wonder if the Senator will yield for a moment.
  Mr. DODD. I am happy to yield.
  Mr. DORGAN. There are many companies involved in hydrogen fuel cell 
technology, including United Technologies, that are very active in this 
area. The Senator is absolutely right with respect to activities in 
Connecticut. I also want to point out my point on the floor of the 
Senate is not to tarnish the oil industry. I have been a supporter of 
it in areas where I felt we should support it. We produce oil in North 
Dakota. My point is that as the major integrated companies become 
bigger and more concentrated, they in some cases work oil from the 
ground to the gas pumps with tremendous pricing capabilities. They are 
beneficiaries from the enormous amount of excess profit. If they pump 
those back into the ground or to increase refinery capacity, that is 
fine. But when they are buying back their stock, I believe they ought 
to give that windfall, ill-gained profit back to the consumers from 
where it came.
  Mr. DODD. I commend my colleague from North Dakota. I know my 
colleague from Connecticut, Congresswoman Rosa DeLauro, has offered the 
legislation in the other body. I think it was a bipartisan proposal 
that she made over there on this issue. So again my compliments to 
Senator Dorgan.

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