[Congressional Record (Bound Edition), Volume 151 (2005), Part 18]
[Senate]
[Pages 24285-24287]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                 ENERGY

  Mr. DORGAN. Mr. President, there is much happening in Washington, DC, 
and in our country. Picking up the periodicals, Newsweek or Time 
magazine, or the morning paper for that matter, you see stories of 
scandal and stories of controversy and all kinds of interesting things 
with respect to politics and the economy and things that affect our 
daily lives. I wanted to talk for a moment, once again, about the issue 
of energy because, while we will deal with a lot of things--this week, 
for example, something called the reconciliation bill--most people will 
deal this week with the challenge of pulling up to the gas pump and 
putting perhaps 16 or 18 gallons of gas in their tank and trying to 
find $50 to pay for it. As the chill is in the air these days in our 
country, people will begin thinking about how they will pay for the 
increased cost of natural gas to heat their homes, particularly in our 
part of the country where that will increase by 60 percent over a year 
ago. They will wonder about how they will find the money to pay for 
that cost because heating your home is not a luxury. Heating your home 
is a necessity.
  I have spoken previously about a woman named Sarah Swifthawk. She was 
a grandmother. She died in the United States of America--she froze to 
death. She was a member of the Pine Ridge Reservation in South Dakota. 
This grandmother laid down to go to sleep on a cot in a home that had 
plastic where windows should have been. At, I believe, 30 or 35 degrees 
below zero that evening, others huddled together for body warmth in 
that family, but this grandmother was laying on a cot, and the next 
morning she was dead; frozen to death--in the United States of America, 
not a Third World country, in the United States of America.
  I point that out only to say this issue of the cost of shelter, the 
cost of energy, the requirement that we find ways to keep people warm 
during cold temperatures can mean the difference between life and 
death. It did for Sarah Swifthawk.
  Now the question is, in this month, October, and then November of the 
year 2005, what do we do about the prices and the cost of energy now 
for this winter? Perhaps it is not such a big problem for people who 
serve in this Chamber or in the House of Representatives. Perhaps they 
can easily pay the monthly heating bill. But there are many in this 
country who cannot. The question is, What do we do for them?
  The oil companies will say: This is about the free market system and 
the price of oil, and therefore the price of gasoline and natural gas 
and home heating fuel, it is just a function of the free market system.
  The price of oil is to the free market system like mud wrestling is 
to the performance arts. It has no relationship at all--none. Let me 
describe why. There are three things that happen with respect to the 
price of oil. No. 1, we have this planet in which a substantial portion 
of the oil reserves are under the sand halfway around the world.
  So oil ministries from those countries get together around the table 
and decide how much they are going to produce and how much that 
production should impact prices.
  Second, the largest oil companies--much larger and bigger and 
stronger because of blockbuster mergers--decide how they are going to 
use more raw muscle in the marketplace. And believe me, they have 
plenty, given the blockbuster mergers.
  Third, the futures markets which are supposed to provide liquidity 
for trading of commodities--in this case, oil--have become orgies of 
speculation.
  So you have these three issues that together tell us now that a 
barrel of oil is worth $60 or $65.
  Let me tell you the results of all of that. The oil companies are 
filling up their treasuries, and the American consumers are emptying 
their bank accounts.
  Let me give you some examples.
  ExxonMobil last week said their profits were up 75 percent for the 
third quarter--$9.9 billion. Conoco-Phillips--by the way, ExxonMobil 
used to be two companies, Exxon and Mobil. Then they fell in love. That 
is economic talk, I guess, about mergers and acquisitions. And they get 
married. Now it is ExxonMobil.
  Conoco-Phillips used to be Conoco and Phillips, two companies. Now it 
is one company. They too had some sort of financial romance and got 
married, Conoco-Phillips, profits up 89 percent, third quarter to third 
quarter.
  Last year--I am not talking about this year's prices--the world's 10 
biggest oil companies earned more than $100 billion on sales of over $1 
trillion. This year, of course, it is going to be much higher than 
that. ExxonMobil last year had $25 billion net profit and spent almost 
$10 billion of it to buy back their stock.
  BusinessWeek asked this question. This is not some liberal journal, 
this is BusinessWeek. They asked:

       Why isn't big oil drilling more? Rather than developing new 
     fields, oil giants have preferred to buy rivals, drilling for 
     oil on Wall Street. While that makes financial sense, it is 
     not a substitute for new oil.

  Again, this is BusinessWeek. This isn't some politician, it is not 
some liberal publication someplace.

       Oil has been over $20 a barrel almost continuously since 
     mid-1990's. That should have been ample incentive for oil 
     companies to open new fields, since projects are designed to 
     be profitable with prices in the low- or mid-teens. 
     Nevertheless, drilling has lagged. Far from raising money to 
     pursue opportunities, oil companies are paying down debt, 
     buying back shares, and hoarding cash--

  And drilling for oil on Wall Street.
  Sixty-six million homes in this country are heated mainly with 
natural gas and home heating oil. Their heating bills this winter are 
going up on average 48 percent. It is going be up over 60 percent for 
those in my region of the country who are heating with natural gas.
  What have I proposed with respect to that? I proposed that if the oil 
companies are not using this additional cash--unprecedented amounts of 
cash in the history of corporate America--to explore for more oil or 
build more refineries--and oh, by the way, they are the ones that have 
been closing refineries. I know it is fashionable during political 
discussions to talk about, It is the environmentalists' fault or Calvin 
Coolidge's fault or somebody else's fault that we don't have enough 
refinery capacity. It is the energy companies that have themselves shut 
down refineries. When they have mergers, they shut down refineries.
  If they are not using these unprecedented gains in corporate America 
to explore for more oil or build additional refineries, then I believe 
they ought to be recaptured with a windfall profits tax, the proceeds 
of which should be sent back to the American consumers in the form of a 
rebate.
  I noticed last Friday that my colleague from New Hampshire, Senator 
Judd Gregg, indicated that he would support--he called it an excess 
profits tax. He would use the proceeds, at least from the press 
reports, of an excess profits tax for the purpose of providing 
additional low-income home heating fuel assistance, among other things. 
I believe we should provide additional low-income energy help for low-
income citizens in this country. We are going into a winter season. We 
don't have that adequately funded. Three times we have tried on the 
floor of the Senate, and three times we failed. We should try again--
and we will. And this Senate one day will decide that perhaps keeping 
people warm in the winter is as important as providing millionaires tax 
cuts on their yearly tax bills.
  Someone will say that is class warfare. I don't mean class warfare at 
all. I just make the point that the last two

[[Page 24286]]

tax cuts have produced $32 million a year in tax reductions for people 
whose incomes are over $1 million a year, and more. Perhaps we should 
capture a part of that $32 million. Surely those who are earning $1 
million-plus a year could give up just a little of the tax cuts they 
have received, and we could divert it to try to help those who are low-
income folks going into winter trying to figure out how they will pay a 
60-percent increase in natural gas bills to heat their homes, at a 
time, by the way, when the Exxon Corporation and others are showing the 
highest profits in their history.
  The American people who struggle to pay these bills, take a look at 
these companies: ExxonMobil, Shell-BP, Chevron-Texaco, Conoco-Phillips.
  By the way, Chevron-Texaco used to be two companies. There used to be 
Exxon, and then there was Mobil; then there was Chevron, then there was 
Texaco; then there was Conoco and then there was Phillips. They all got 
married. So now we have just a few companies--75-percent increase, 68-
percent increase, 89-percent increase. I am talking about increase in 
profits.
  At the same time this is going on, by the way, the American people 
are paying through the nose at the gas pumps, and we are setting them 
up to pay a dramatic increase to heat their homes this winter.
  Once again, one group is filling their treasury, and the other group 
is emptying their bank accounts. Guess which is which. The oil 
companies are filling their treasuries, and average Americans are 
having to empty their bank accounts to pay the price.
  Let me give you some numbers, if I might. In January of last year, 
the price of a barrel of oil was $34.50 a barrel. At that price, the 
oil companies had the highest profits in the history of the oil 
industry. Now it is almost $30 a barrel above that. That is about $7 
billion more a month in profits.
  The Shell report, which was received in my office about two months 
ago talked about their financial performance in 2004. This is last 
year, when prices averaged around $40 a barrel. The report says: We 
achieved the highest net income in our history, 48 percent higher than 
the year before, as a result of higher oil and natural gas prices. It 
goes on to say that these higher profits occurred even though the 
company produced less oil than the previous year. They produced less 
and saw a 50-percent increase in their profits. The same is true with 
other companies saying: We had higher profits, but we produced less.
  As I indicated, my colleague, Senator Judd Gregg, has indicated 
publicly that he would support an excess--I call it a windfall profits 
tax. He would use it for the purpose of providing low-income energy 
assistance.
  I personally believe that this money doesn't belong to the 
Government. I don't want to bring it in the Treasury. I want to capture 
some of that which they are not using to expand our energy supply and 
use it to give rebates to the consumers. They are, after all, the ones 
paying the price. Taking it from the consumers, putting it in the 
energy companies' treasuries, and then bringing it into the Government 
means you have taken money from the consumers to Government. I would 
just as soon provide a rebate back to the consumers.
  I know that when we talk about this, the oil industry has an 
apoplectic seizure. They get all upset. I understand that. They are 
making more money than ever. I have been supportive of the energy 
industry. I hope we find substantial new reserves. While I don't 
support opening ANWR, I believe that is one of those pristine areas 
which was set aside, not to be opened first, but to be opened last, if 
ever. I do support opening up Lease 181 in the Gulf of Mexico. I hope 
we can do that. I would like to see us vote on opening that lease area. 
We have substantial proven reserves that exist there.
  There are other things on which I do support the energy industry. 
People said: Well, if you think prices are too high, what about when 
they are too low? I was one of those who supported an $18 price and did 
support a proposal for an $18 price, including tax credits to get to 
that price for marginal wells. I have supported the energy industry in 
many areas, but I cannot support, I don't think the American people 
support, and I don't believe the Senate should support these kinds of 
excess windfall profits that far exceed anything that is reasonable and 
seeing these profits gathered at the expense of the American people 
often who can least afford it.
  There are some who, as I said when I started, make the case, Well, 
this is just the market system at work. This isn't the market system. 
That is all nonsense. The market system is fine. I used to teach some 
economics at college. I was able to overcome that afterward. I 
understand free markets and the market system. The free market system 
needs a referee from time to time. Do you know that we pay one 7-foot, 
2-inch basketball player the equivalent of 1,000 elementary school 
teachers? That is the market system. Does that make sense? Probably 
not; the market system. There is a judge on television, Judge Judy. It 
seems kind of out of sorts when I have been channel-surfing and I see 
her. I understand from a magazine article that she made $25 million in 
a year. I think the Chief Justice of the Supreme Court makes $190,000. 
Market system? Well, you know. You can take a look at the market system 
and see areas where there needs to be from time to time somebody who 
says: This isn't fair, it doesn't make any sense. The market system is 
not perfect. It is not the market system, however, that produces a $60-
plus barrel of oil.
  I mentioned before that there are three factors. I described OPEC 
ministers with substantial control over the supply of oil; the larger, 
more muscular oil companies made larger by mergers, exerting more 
muscle in the marketplace; and the futures market becoming a 
speculative bazaar, all of which then produce this remarkable price for 
energy. It has an impact on every single American. Some perhaps don't 
care. But the question is this: If we in this country are going to pay 
these prices for a barrel of oil and, therefore, gasoline and natural 
gas, if we are going to pay these prices, should they result in more 
exploration in a greater supply of energy with greater energy security 
for this country's future? Shouldn't they? That is not what is 
happening. What is happening--I described BusinessWeek--is these 
companies more and more are buying back their stock. They are hoarding 
the cash. They are drilling for oil on Wall Street where oil doesn't 
exist. That is not in the country's interest.
  I take some hope from my colleague, Senator Judd Gregg's press 
statements last Friday. I take some hope from the statements by the 
Speaker of the House. He held a press conference suggesting that the 
oil companies should be investing more in exploration. His remedy was 
the equivalent of beating them over the head with a feather. But, 
nonetheless, he was speaking out about the need to produce more energy. 
It is the case even with the majority leader of the Senate talking 
about that. I think perhaps, if not seeing the light, at least there 
are people here who are feeling the heat from drivers, from people who 
are worried about heating their homes in the winter, who take a look at 
the price and say it is unfair. The question isn't whether it is 
unfair; the question is, What do we do about it? Apparently the Speaker 
of the House, the majority leader of the Senate, and our colleague from 
New Hampshire think it is unfair.
  What do we do about it? We can sit around and mop our brow, we can 
grit our teeth, wring our hands, and we can fret. We do that petty 
well. I don't know of any body that does that better than the U.S. 
Senate. But that doesn't do much for those being hurt in this country.
  What we ought to do, in my judgment, is employ and adopt a windfall 
profits tax, gather from that windfall profits tax the revenue that is 
being taken from consumers unfairly, and use it as a rebate back to 
consumers. My proposal would be a windfall profits tax, the one I 
introduced with Senator Dodd and others; that is, if the energy 
companies are, in fact, sinking their profits back into the ground to 
explore

[[Page 24287]]

for more oil and build additional refineries above ground, they 
wouldn't be paying an excess windfall profits tax. That is not what 
they are doing with their money. Don't take it from me; take it from 
their own financial reports because that is not what they are doing 
with their money. I believe they ought to be paying a 50-percent 
windfall tax for oil above $40 a barrel, and that excise tax ought to 
be redistributed to the American consumers who are the ones ultimately 
paying the bill. It ought to be distributed to them as a rebate for 
those consumers. We will have more to talk about this week on this 
subject.
  I took some heart on Friday to hear a Member of the Senate from the 
other side of the political aisle has come to the same conclusion I 
have reached, and that is that these profits are far above that which 
is supportable or justifiable, profits far above that which would be 
created by a free market system; that the consumers are being treated 
unfairly. The Senate ought to do something about it. The question isn't 
whether we should do it. Of course we should. The question is, which 
method or which strategy do we employ? Do we decide this money grab 
goes to the Government--grab some of it and bring it here? Or do we 
decide this money comes from the consumer and ought to go back to the 
consumer in the form of the rebate?
  I make a final point. We will again be confronted with this question 
of heating fuel assistance for low-income Americans. But it is not only 
low-income Americans who are being injured, who will be hurt by these 
prices. There are a lot of working families who just get by and who 
will look at this 60-percent increase in the cost to heat their home 
this winter in my part of the country and wonder how on Earth will they 
be able to do that.
  I have described profits of the heads of the oil companies. Let me 
read total 2004 compensation for the chief executive officers: $33 
million, $64 million, $4 million, $16 million, $8 million. These are 
salaries and compensation packages for the folks who run the companies 
that are charging these prices.
  The people have a right to ask the question, how on Earth is this 
allowed? We will have more to talk about as we go along this week. I 
hope, finally, there might be some tipping point at which the Senate 
says we must address this issue.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Sessions). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GREGG. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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