[Congressional Record (Bound Edition), Volume 152 (2006), Part 11]
[Senate]
[Pages 14322-14323]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                 ENERGY

  Mr. DORGAN. Mr. President, I was in a town called Zeeland, ND, 
because we have a serious drought occurring in ranching country. We had 
ranchers and farmers--this is a town of about 120 people and 170 
ranchers and farmers showed up very concerned about how they are going 
to feed their cattle.
  We talked a lot about the drought and the devastation for ranchers 
and farmers when it doesn't rain and how they take care of their cattle 
herd and what might happen to them.
  One of the issues raised in that meeting repeatedly was--in addition 
to the lack of rain--if you are running a farm or ranch, you are a 
heavy user of energy. What has happened to the price of energy, 
particularly the price of fuel, has been devastating to those farmers 
and ranchers.
  Our State university pointed out that the average farm and ranch in 
North Dakota is confronted with about $18,000 a year in higher costs 
because of what has happened to the price of fuel.
  This morning I woke up and listened to the news, just as I did 
yesterday, and found that the price of oil is over $75 a barrel and 
continuing to go up. If we take a look at the major integrated oil 
companies in this country, we will discover the substantial increase in 
profits--this is 2005 over 2004, last year's numbers: 43-percent 
increase, 37-percent increase, 31-percent increase in profits.
  The Congressional Research Service just did an evaluation for one of 
our colleagues which says that cash reserves for the major integrated 
oil companies have grown from over $9 billion in 1999 to nearly $58 
billion now. Let me say that again. Cash reserves of the major 
integrated oil companies now stand at over $58 billion.
  It made me think about a story that was in BusinessWeek 2 years ago, 
``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 no substitute for new 
     oil.
       Oil has been over $20 a barrel continuously since 1999. Far 
     from raising money to pursue

[[Page 14323]]

     opportunities, oil companies are paying down debt, buying 
     back shares and hoarding cash.

  That was 2 years ago. It is worse now.
  Last fall, we offered a windfall profits rebate that would have 
collected from those companies that were not using their revenues to 
expand their search for additional oil. For those that were buying back 
stock or drilling for oil on Wall Street, they would pay a fee, the 
total proceeds of which would be rebated to consumers. Those who were 
building additional refineries or investing back into the ground to 
search for oil would not pay the fee; they would be exempt.
  The oil companies were very upset by that proposal, but the fact is, 
they would decide whether they would pay it. None of it would come to 
the Government; it would all be rebated to consumers. They would decide 
whether they pay it based on their decisions. Are they going to buy 
back stock with their profits? Are they going to hoard cash, drill for 
oil on Wall Street, or are they going to use those profits to expand 
the supply of energy?
  I believe given what is happening, as we know, there is no free 
market in oil. I know there is a lot of discussion on the floor of the 
Senate about free market. We have oil ministers from the OPEC countries 
sitting around a table behind a closed door talking about how much they 
are going to produce and what price they aspire to have. We have big 
oil companies married up through blockbuster mergers, and they have two 
names--ExxonMobile, PhillipsConoco; they have more raw muscle in the 
marketplace--and, third, the futures market has become an orgy of 
speculation, no question about that.
  With these three elements, there is no free market in oil. The price 
of oil is now at $75 a barrel. Almost all consumers in this country--
yes, those who drive up to the gas pumps and pay $50, $60 and more to 
fill their tanks, and especially farmers and ranchers--are struggling 
to find out: How do I buy fuel for spring planting? How do I buy fuel 
for the harvest? How do I put up hay for the cattle? How do I do all of 
that? They are the ones who bear all the pain, and in the meantime the 
major integrated oil companies are waltzing to the bank with a treasury 
that is full of money coming from consumers.
  This does not work. In the longer term, aside from the question of 
how dependent we are on offshore oil, it seems to me Congress has to 
decide that it is going to intervene if we are going to $58 billion in 
cash reserves created by the major integrated companies. Those cash 
reserves are not working. Those cash reserves are not expanding the 
supply of energy, they are not expanding the supply of oil, and 
therefore reducing prices. They are being used--as I said, in 
BusinessWeek there was one example of drilling for oil on Wall Street 
or buying back stock. That is not a way to bring prices down and 
provide some relief to consumers.
  Last fall, Senator Dodd and I offered a proposal that would have 
provided a rebate to consumers from those companies as a result of 
those companies not using those profits to reinvest in expanding the 
search for energy. We came up very short in the vote. It is our 
intention to offer that proposal once again. At $75 a barrel for oil, 
with increases particularly for farmers and ranchers in an agricultural 
State, it is reasonable to ask: What is Congress doing? Is it just 
content to observe, just watching? What is Congress doing?
  So if nothing intervenes in the coming days, Senator Dodd and I 
intend to offer, once again, that proposal. Let me underscore that the 
point of that proposal is this: That proposal will be the most 
significant incentive to expand production and expand the search for 
additional production that we could have. This is not punitive. It is 
to say: Either you are using it to expand the production of energy 
supplies and bring down prices or you are going to have to rebate some 
of it back to the consumers.
  In 2004, the oil industry had its highest profits in its history. The 
average price for a barrel of oil was $40. Now it is $75. Those major 
integrated companies haven't done anything to increase expenses or any 
other issues; they are just collecting that additional revenue.
  I want the oil industry to find additional oil and to produce in 
areas that are available to them. The best way, the most significant 
incentive I can think of is to say to them: If you are thinking about 
what to do with that cash reserve of $58 billion and deciding between 
buying back your stock or trying to do additional mergers and acquiring 
oil through mergers rather than drilling, then you would be a lot 
smarter to find a way to expand production by investment because that 
means you will not be impacted at all by the proposal we would offer.
  This proposal is about expanding investment in exploration and 
thereby expanding the supply of energy and bringing down the price of 
energy. So that is what Senator Dodd and I will, once again, attempt to 
do.
  I hope that in the coming days we will begin to see some lessening of 
the burden of these energy prices on the American consumer, farmers and 
ranchers and others. In the meantime, I don't think we ought to take a 
look at a $58 billion cash reserve by the major integrated companies, 
most of them--three of them; nearly 90 percent of them are three 
companies--and say, that is OK, it doesn't matter to us, while 
everybody else is feeling the pain and bearing the burden of these 
dramatically increasing prices.
  Mr. President, I yield the floor and make a point of order that a 
quorum is not present.
  The PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BROWNBACK. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDENT pro tempore. Without objection, it is so ordered.
  Mr. BROWNBACK. Mr. President, I believe we are in morning business.
  The PRESIDENT pro tempore. The Senate is in morning business, with 15 
minutes reserved for the majority and 15 minutes reserved for the 
minority. The minority still has 6\1/2\ minutes.
  Mr. DORGAN. Mr. President, I believe my colleague, Senator Dodd, is 
on his way to the Chamber, but let me ask unanimous consent that 
Senator Brownback proceed, with the understanding that we would reclaim 
our time on this side when Senator Dodd arrives.
  The PRESIDENT pro tempore. Without objection, it is so ordered. The 
Democratic time is reserved, and the Senator is recognized under the 
previous order.
  Mr. BROWNBACK. I thank my colleague from North Dakota for that as 
well.

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