[Congressional Record (Bound Edition), Volume 154 (2008), Part 5]
[Senate]
[Pages 6851-6854]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               OIL PRICES

  Mr. SANDERS. Madam President, this country faces many problems. All 
over this country people are worried about decent-paying jobs, the high 
cost of college education, and a disintegrating health care system. 
They are worried about the growing gap between the very rich and 
everybody else. But on Saturday, I held three town meetings around the 
State of Vermont: one in Norwich in the morning, one in Radford in the 
afternoon, and one in a small town in northern Vermont in Danville in 
the evening.
  To nobody's surprise, the issue that is paramount on people's minds 
today is the outrageously high price of gas and home heating oil. 
Vermont is a rural State, which means people very often have to travel 
long distances to work. When they pay $3.50 for a gallon of gas, it 
essentially means in most cases that any wage increase they might have 
gotten over the last year goes right into that gas pump. People are 
hurting. Wages, in fact, are often not going up. So the end result is 
that people are working longer hours for lower wages.
  I have talked to many people who say: We used to go places. We used 
to travel. We can't afford to do that anymore. Also, obviously, in a 
State such as Vermont, where the weather gets very cold in the 
wintertime, the cost of home heating oil is a real burden. There are 
many people in my State and all over the country who are worried about 
how they are going to be able to heat their homes next winter.
  We have a national crisis. It is a crisis that is not only impacting 
on gas prices at the pump or home heating oil prices. It impacts food 
and every other product we purchase because as oil prices go up, prices 
on so many of the products we buy are going to go up as well. This is a 
national crisis.
  The time is long overdue for the White House and for Congress to 
begin to move forward in a comprehensive way. I would be less than 
honest if I told you I have a lot of confidence that the Bush-Cheney 
administration is going to do what is right. Just a month ago, 
President Bush, when asked about the high price of gas at the pump, was 
very surprised to learn, in fact, that it was going up.
  Vice President Cheney, who was the former CEO of Halliburton, deeply 
involved in the oil industry when they first came into power, met with 
representatives of the oil industry. They are representing, 
unfortunately, the oil industry. They are not representing the 
consumers of this country or working families. So it is incumbent on 
the Congress now in a comprehensive way to start moving forward.
  This is a complicated issue. I don't think anyone believes there is 
one single cause for the rapid increase in oil prices, nor does anybody 
believe there is one single solution. But we do know some of the causes 
and what we have to do to lower the price of oil. If we are going to 
protect middle-class Americans, working Americans, that is exactly what 
we have to do.
  While oil prices are soaring, what we should acknowledge is that the 
profits of huge oil companies are also soaring to recordbreaking 
levels. We know hedge fund managers make billions speculating on oil 
futures, and we know OPEC continues to function as a price-fixing 
cartel in violation of the World Trade Organization.
  The average price for a gallon of gas recently hit a recordbreaking 
$3.53 a gallon, which has more than doubled since George W. Bush has 
been President. The price of diesel fuel is now averaging over $4 a 
gallon, and the price of oil is hovering at close to $120 a barrel. 
These prices say it all. We have a national emergency on our hands. The 
time is now for this Congress, this Senate, to act boldly to protect 
consumers.
  Recordbreaking oil and gas prices at the pump are posing a crisis not 
only to commuters going to work, especially in rural areas, but family 
farmers, consumers, small businesses, truckers, airlines, grocery 
stores, restaurants, hotels, tourists, and every sector of our economy.
  High oil prices are one of the reasons we are moving toward a serious 
recession which will impact not just this country but the entire world.
  The national oil emergency we are currently experiencing demands both 
a short-term and a long-term solution. Long term, we must reduce our 
dependency on fossil fuel, we must move to energy efficiency, we must 
move to sustainable energy--and the potential there is enormous. It is 
enormous. We can save huge amounts of energy when we have a 
transportation system that enables us to drive hybrid cars, to get cars 
that get 70, 80 miles per gallon, where we have a mass transportation 
system. There is enormous potential in terms of solar thermal plants, 
which produce huge amounts of electricity. There is enormous potential 
in terms of wind, other forms of solar. We have to focus and invest in 
those technologies.
  But over the short term, today, we have to understand that while we 
move forward in transforming our energy system, we must respond to the 
pain and the distress and the fear Americans are feeling today as gas 
prices soar.
  While this is a complicated issue, there are a number of ways I 
believe Congress can act to lower the price of oil. Let me mention a 
few ideas I believe we should be pursuing.
  First, we need to impose a windfall profits tax on the oil and gas 
industry. The American people do not understand--I do not understand--
why they are paying recordbreaking prices at the gas pump, while 
ExxonMobil has made more profits than any other company in the history 
of the world for the past 2 consecutive years. The price at the pump: 
$3.50 a gallon; ExxonMobil making more profits than any company in the 
history of the world.
  Last year alone, ExxonMobil made $40 billion in profits, and rewarded 
its CEO, Rex Tillerson, with $21 million in total compensation. Now, 
you may think that is a lot of money. But a few years ago, they 
rewarded their former CEO, Lee Raymond, with a $400 million 
compensation package when he retired.
  Outrageously high prices for oil and gas and CEOs at ExxonMobil with 
huge compensation packages. But ExxonMobil is clearly not alone. 
Chevron, ConocoPhillips, Shell, and BP have also been making out like 
bandits. In fact, the five largest oil companies in this country have 
made over $595 billion in profits since George W. Bush has been 
President.
  Let me be very clear. I believe oil companies should be allowed to 
make a reasonable profit, but they should not be allowed to rip off the 
American people. Enacting a true windfall profits tax would not raise a 
dime in revenue but would lead to significantly lower gas prices at the 
pump--something we need to do today. The reason for that is quite 
simple. There would no longer be an incentive for the big oil companies 
to gouge consumers at the pump because they would not be able to keep 
any of their windfall profits.
  Imposing a windfall profits tax will not be easy. Since 1998, the oil 
and gas industry has spent--this is quite amazing--over $600 million on 
lobbying. Since 1998, a 10-year period, they have spent over $600 
million on lobbying. They own the law firms. They are former Republican 
leaders, former Democratic leaders, besieging Congress to do everything 
we can to protect the big oil companies rather than people who are 
getting ripped off at the gas pump.
  Since 1990, these very same oil and gas companies have made over $213

[[Page 6852]]

million in campaign contributions. So the folks back home may get an 
understanding of why we are not as a body aggressively standing up to 
these people, that has to do with huge amounts of money in lobbying, 
huge amounts of money in campaign contributions.
  But the time is now for the Congress to have the courage and for the 
President of the United States to say no to the oil and gas lobbyists 
and their outrageous campaign contributions and yes to consumers who 
simply cannot afford to pay these outrageously high prices for gas and 
oil.
  While it is true oil companies and their executives are making out 
like bandits, it is also true that is not the only cause of the 
problem. What we are seeing today is that wealthy speculators and hedge 
fund managers have also been making obscene profits--billions and 
billions of dollars, in some cases going to individuals--by driving up 
the price of oil in unregulated energy markets with no Government 
oversight.
  That is why Congress must act to rein in these greedy speculators who 
often have nothing to do with oil at all. They do not care what they 
are speculating on. They are just making money by driving up profits, 
and we must act by closing what has been referred to as the ``Enron 
loophole,'' the loophole that enabled Enron to do disastrous things in 
California some years ago and on the West Coast.
  This loophole was created in 2000 as part of the Commodity Futures 
Modernization Act. At the behest of Enron lobbyists, a provision in 
this bill was inserted in the dark of night and with no congressional 
oversight, no congressional hearings. Specifically, the Enron loophole 
exempts electronic energy trading from Federal commodities laws. 
Virtually overnight, the loophole freed over-the-counter energy trading 
from Federal oversight requirements, opening the door to excessive 
speculation and energy price manipulation.
  Since the Enron loophole has been in effect, crude oil prices have 
jumped from $33.39 a barrel, in 2000, after adjusting for inflation, to 
over $117 a barrel today.
  Last January, a veteran oil analyst at Oppenheimer has estimated 
there is as much as a $57 a barrel ``speculative premium'' on the price 
of oil. Others have estimated that speculators are driving up the price 
of oil by about 20 to 30 percent.
  Closing the Enron loophole would subject electronic energy markets to 
proper regulatory oversight by the Commodity Futures Trading Commission 
to prevent price manipulation and excessive speculation.
  I would like to thank Senators Levin and Feinstein for introducing 
legislation to close this loophole. It should be passed and signed into 
law as soon as possible.
  In addition, the Bush administration must stop the flow of oil into 
the Strategic Petroleum Reserve and immediately release oil from this 
Federal stockpile to reduce gas prices.
  At a time of record-high prices, it simply makes no sense to continue 
to take oil off the market and put it into the SPR. But do not take my 
word for it. Even the staff at the Strategic Petroleum Reserve 
recommended against buying more oil for SPR in the spring of 2002. Let 
me quote from what they had to say about this 6 years ago:

       Commercial inventories are low, retail prices are high and 
     economic growth is slow. The Government should avoid 
     acquiring oil for the Reserve under these circumstances.

  If that advice was relevant in the spring of 2002, it is even more 
relevant today. Yet that is exactly the policy the administration is 
following. Even though there are over 700 million barrels of oil in the 
Reserve, the administration has plans of putting an additional 13 
million barrels of oil into our Nation's stockpile.
  There is another issue out there that we must address, and that is 
beginning to understand that OPEC is a cartel whose function in life is 
to control oil production and artificially drive up the price. It is my 
view that OPEC is operating in violation of World Trade Organization 
rules.
  The President of the United States should begin action to break up 
OPEC. Yesterday, I signed a letter, as I believe the Presiding Officer 
did, demanding that Saudi Arabia--one of the key OPEC nations; the 
largest oil-producing country in the world--increase their production.
  Amazingly, Saudi Arabia is producing less oil today than they were 
several years ago. There are experts who believe they can be producing 
1.8 million barrels a day more, which would have a significant impact 
on driving oil prices down. We have to remind Saudi Arabia that in 
1991, when Saddam Hussein's army was going to overrun that country and 
take their oil, soldiers from the United States of America put their 
lives on the line--died--defending Kuwait, defending Saudi Arabia. That 
was their time of need. Today it is our time of need. It is the world 
economy's time of need.
  Saudi Arabia wants to buy sophisticated aircraft from the United 
States of America. Well, I say to them, as many of my colleagues say: 
Friendship is a two-way street. Increase your production. Drive down 
the prices of oil.
  Lastly, we must give the President the power to impose temporary 
price caps to stabilize oil prices when markets are being manipulated.
  Today, the Federal Energy Regulatory Commission, FERC, has the 
authority to impose temporary price caps on electricity. When it used 
this authority to deal with the California energy crisis created by 
Enron, electricity prices fell dramatically. The President should have 
similar authority over gas prices.
  These are a few of the ideas that are out there. Other people have 
good ideas. My view is we should bring these ideas together in a 
comprehensive way. If we do that, and if we stand together in a 
bipartisan way--if the President of the United States decides to 
represent the consumers of this country rather than just the oil 
companies--we can keep faith with the American people. We can lower 
prices. We can deal with the very severe national crisis this country 
is now facing.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Ms. CANTWELL. Madam President, I thank the Senator from Vermont for 
his comments about what is a growing national crisis: the price of oil 
and the price of gasoline at the pump. I congratulate him for making 
many important points relating to this issue and where the Senate needs 
to go in trying to address it. So I look forward to working with him on 
his ideas and many of the other ideas my colleagues have to try to give 
consumers some relief at the pump.
  I think many consumers already have either turned on their 
televisions or seen through the impact of going to the gas station 
themselves that at $118 a barrel for oil, they are paying at least 
$3.56 a gallon for gasoline and more for diesel.
  But what is important to understand about this is that oil futures--
which is an indication of the price of oil and impacts the physical 
market's price of oil--are going to be over $100 for several years, 
including probably until 2015. That is, the marketplace has already 
decided it is buying oil at over $100 until 2015. So that is going to 
keep the price of oil high at over $100 and it is going to continue to 
have a significant impact and it is something we need to take into 
consideration.
  Now, we have heard a lot of debate on the floor this morning about 
this issue and what the cause of it was. There have been a lot of 
accusations by a lot of different people saying: Here is what we think 
the problem is.
  Well, I wish to go through a couple things I want to make sure our 
colleagues understand is not the problem or not the solution.
  First of all, we had people talking about how this was all about more 
supply, and that if Democrats had not opposed drilling in the Arctic 
Wildlife Refuge, somehow today we would not have this problem, we would 
be sitting here without any kind of oil problem.
  Well, I wish to remind people that the Energy Information 
Administration--our own Federal Government agency--did an analysis of 
drilling in the Arctic National Wildlife Refuge and said that:


[[Page 6853]]

       Drilling in the Arctic National Wildlife Refuge would only 
     reduce gasoline prices by a penny per gallon, and only in 
     twenty years when drilling is at or near peak production.

  That would be when it was at peak capacity. So hardly where we are 
today--at $118 a barrel--would that have had a significant impact on 
the prices we have today.
  We also heard people say this was about environmental regulations, 
that somehow environmental regulations had caused this problem.
  Well, let's hear from the oil company executives themselves. This 
one, Shell's CEO, said:

       We are not aware of any environmental regulations that have 
     prevented us from expanding refinery capacity or siting a new 
     refinery.

  So here are oil company executives saying they do not know of any 
environmental regulations. I think this was testimony before the 
Senate--one of our committees. So, obviously, their oil company 
executives are saying that is not what the problem is.
  They also said environmental regulations are not stopping refinery 
expansions. So they were clear, testifying, again, before the Senate:

       At this time, we are not aware of any projects that have 
     been directly prevented as a result of any specific Federal 
     or State regulation.

  So you cannot stand on the floor of the Senate and blame regulations 
or environmental issues for not doing something that would impact the 
price of oil today. It is not true. These are CEOs, these are people in 
the business, and they are basically saying: No, that is not the 
effect.
  We have one more from BP who said that it also was not stopping them 
from doing anything:

       We do not believe that any Federal or State environmental 
     regulations have prevented us from expanding refinery 
     capacity or siting a new refinery.

  So here is the oil industry itself saying that is not what the issue 
is, that is not what the problem is. They have not been back since this 
time period to claim any kind of Federal regulation or environmental 
issue.
  So let's look at the other issue people talk about: inventory. Oh, 
there must be inventories related to that issue of the fact that you 
wouldn't allow us to drill in the Arctic Wildlife Refuge or that it is 
about these environmental restrictions and we couldn't build 
refineries.
  Here is someone who is an oil analyst who on March 10 had this to say 
about inventories:

       Gasoline inventories are higher than the historical average 
     at this time of the year, so there is really no need to worry 
     about supply being too tight.

  So this is an oil analyst talking about the marketplace and basically 
saying: You can't say this is about tight supply as it relates to the 
fundamentals of supply and demand.
  So is this just about supply and demand? Is it about that? Well, one 
individual from the Truckers Association basically just said a few 
weeks ago:

       The oil market is no longer functioning on supply-and-
     demand fundamentals.

  I don't blame the Truckers Association for saying that because they 
are on the front line of out-of-control diesel prices. When they see $4 
a gallon for their diesel, it takes over $1,000 to fill up a typical 
tractor trailer, and they can't make enough money when they are paying 
that kind of a price. This year, they will pay $22 billion more--$22 
billion more--for diesel fuel than last year's high prices. So don't 
think it is not costing Americans and costing industries that are based 
on transportation and profit margins that are very low.
  We know there is more to this issue than what people have talked 
about here on the floor this morning. But let's look at what is really 
going on and whether this price is justified. Let's look at that.
  Again, I think a great source to understand whether this price is 
justified--that is, whether there is something else going on in the 
marketplace--is the oil company executives themselves because if they 
are saying oil shouldn't be at $100 a barrel, then why should it be at 
$100 a barrel? If those in the industry are even claiming it shouldn't 
be at this price, then something must be wrong and we should act to 
correct it.
  But here is the CEO of Marathon Oil who basically said:

       $100 oil isn't justified by the physical demand in the 
     market.

  That is an oil company executive owning up to that, just saying right 
upfront that it is not about the fact that oil should be at $100 a 
barrel.
  Let's look at what some other CEO said, this one the CEO of Royal 
Dutch Shell, who just recently, on the 11th of this month, basically 
said that oil fundamentals are no problem, meaning that is not what the 
issue is. It isn't basically supply and demand. They are the same as 
they were when oil was selling for $60 a barrel. What he is saying is 
that the fundamentals in the market are the same as when they were $60 
a barrel, so there is no problem with supply and demand.
  Let's look at another executive from an energy company. I like this 
because he actually just recently testified before the House of 
Representatives and just spit it right out. He just said it plain and 
simple. He said that the price of oil should be about $50 to $55 per 
barrel. That is an oil company executive this month testifying before a 
House committee saying that is what the price of oil should be.
  Now, I ask my colleagues, what are we going to do about this 
situation when even the oil company executives are testifying--in this 
case, under oath before Congress--and basically saying there is no 
justification for this price? What are we going to do? Are we going to 
just sit by and do nothing? We have people in the marketplace who are 
urging us to do something.
  This is from an energy analyst who basically was just quoted as 
saying: Unless the U.S. Government--the U.S. Government--steps in to 
rein in speculators' power in the market, prices will just keep going 
up. That is an oil industry analyst. That is what he is saying.
  Everybody wants a functioning market. Functioning markets mean there 
is transparency, there is not manipulation, it is working well, people 
can trust the outcome, and people can make investments knowing that 
someone isn't gaming the system. That is what a functioning market is. 
It is clear that this individual is saying they are not sure there is a 
functioning market, and they are basically saying that unless the U.S. 
Government steps in to rein it in, we are going to have a problem.
  We have seen this before. We saw this with the Western energy crisis 
in electricity. We saw the market go crazy and people stand by and say: 
Oh, you know what, you didn't build enough capacity; the 
environmentalists stopped it; this and this was wrong, and that is what 
the problem was. Well, during that time period, guess what happened. We 
lost nearly 600,000 jobs, and there was a $35 billion drop in economic 
product. For us in the Northwest, it cost our economy billions of 
dollars, and we are still recovering from it. So now is not the time to 
sit and point fingers that this is about some PAC environmental problem 
or regulation or ANWR; this is about taking testimony from individuals 
and standing up and deciding what we are going to do to protect our 
consumers.
  My colleague from Vermont mentioned a few things, and I wish to 
mention a few things, also, because I think there are four or five 
things we should be doing right now to help consumers. This is a 
crisis. It demands a response by the Federal Government. Some of these 
powers exist within the Federal Government now, some of them we are 
working on, but we need to be aggressive about protecting our 
consumers.
  The first one my colleague from Vermont mentioned was closing the 
Enron loophole. Now, many people may not understand what closing the 
Enron loophole is, but just to give my colleagues a little refresher, 
this debate has been going on basically since shortly after 2000 when 
Congress gave a loophole to electronic trading of energy. Basically, 
what that loophole meant is they didn't have to have the same kind of 
transparency; that is, we don't have the ability to look at the

[[Page 6854]]

books and see whether somebody manipulated the price or was doing 
something untoward in the marketplace. We gave them an exemption.
  Since that time, Senator Feinstein and then more recently Senator 
Levin, myself, and others have been trying to close that Enron 
loophole. We have been trying to close that Enron loophole for over 4 
years now. If anybody wants to say there is any responsibility here 
about what Congress hasn't done and it has impacted the price of 
energy, then people ought to look at their voting record and see 
whether they voted to close the Enron loophole because that is part of 
this problem.
  In addition, we should require oversight of all oil futures; that is, 
why are we saying oil futures somehow are less important than any other 
commodity we trade on the futures market for NYMEX or for the Chicago 
Mercantile Exchange? They have reporting requirements. Federal 
investigators can go and look at their books and see whether somebody 
can manipulate the market. They have that. But, no, we are letting some 
of these oil futures which impact the price of today's oil--as I said, 
from now until 2015, people are purchasing oil futures at over $100 a 
barrel, which means that is going to be a market indicator for what the 
physical price will be. We need to be having oversight of oil futures.
  We had a very interesting hearing about a year ago where a professor 
from American University, I think, came to testify, and he said: Is 
hamburger any more important than oil in America? Because he said that 
when you look at beef and how it is regulated and beef futures, there 
are things they have to report. There are transparencies in the 
marketplace. We require all of this of them, but oil, which is 
essential to our economy, we basically have given exemptions to. So we 
need to require oversight of all oil futures.
  The third thing we need to do is have the Federal Trade Commission 
write rules for a law that we passed in 2007. This body did something. 
That is what people should be holding up today--holding up the fact 
that we did something to protect consumers. We wrote a new Federal 
statute basically which said that manipulation of oil markets was a 
Federal crime, that you couldn't have any manipulative devices or 
contrivances that manipulated the price of oil. Now we are sitting 
around waiting for the FTC to implement that rule.
  Now, some people think: Well, maybe there is not manipulation in the 
marketplace. I want to give three examples which have happened 
recently, all in the last few years. They have been the result of 
having new statutes on the books, but we certainly need to have this 
regulation implemented. One of those examples was British Petroleum. 
The company must now pay approximately $373 million in part for 
conspiring to corner the market and manipulate the price of propane 
carried through the Texas pipeline. So there is an example of where 
regulators got on the job. Similarly, in 2006, a manipulative scheme to 
game a natural gas market by a now defunct hedge fund cost consumers 
upwards of $9 billion, and in July of last year, Marathon Oil agreed to 
pay a $1 million fine to settle charges that Marathon Petroleum 
Company, a subsidiary, attempted to manipulate the crude oil prices in 
2003.
  So these are incidents of manipulation happening. We have an industry 
that is saying it is not about supply and demand and the price should 
really be anywhere from $50 to $60 a barrel; it shouldn't be at this 
price. We need the Federal regulators to do their job.
  The fourth thing we need to do: Having gone through this with the 
incredible crisis of electricity, we learned we have various agencies 
with various oversight, and the Department of Justice did something 
very wise during that time period. It created the Enron Task Force. It 
created an Enron Task Force to coordinate all the agencies that could 
help them in the investigation of the manipulation and corruption and 
fraud that was perpetrated by that company. It worked well. That 
President's corporate task force on fraud exists within the Department 
of Justice today.
  My colleague from Washington, Congressman Inslee, and myself wrote to 
the Department of Justice and President Bush on Monday calling for a 
Department of Justice oil market fraud task force. We believe it is 
time to bring DOJ into the picture to be aggressive in working with the 
CFTC, the FTC, the SEC, the Federal Energy Regulatory Commission, and 
any other Federal agency to be the policeman on this beat and make sure 
oil markets are not being further manipulated.
  The last thing we need to do is to make sure price gouging is also 
not occurring. Now, we had language in the 2007 Energy bill on this 
issue. I like this language because it is based on language that 28 
States have now that in the case of an emergency, when prices have gone 
out of control, it gives the President the ability to declare an 
emergency and to deal with those prices. We may be getting to that 
point. We may be getting to the point where we listen to these oil 
analysts who are saying these prices are going to just keep going up 
unless the Federal Government does something, and then I think we are 
going to have to do more than this. But at least we need to do these 
four things--and I say hopefully pass this fifth one as well--to make 
sure we are giving all the tools to the administration to protect 
consumers.
  My colleague from Vermont said it well. This is about what are we 
going to do to protect consumers. There are a lot of things that have 
been happening since our economy took this more significant downturn. I 
would say it is a significant downturn because no one can sustain these 
oil price impacts across our economy. Yes, there are other things such 
as housing, but this is having a significant impact. But if you look at 
some of the solutions we have done so far, whether we are talking about 
housing or in the banking industry, we have done a lot for the big 
organizations. This is about doing something to protect consumers on 
price.
  I hope my colleagues will take this list seriously as we propose 
legislation, and I hope all of my colleagues will join in the 
Department of Justice starting this investigation. If you look at their 
Web site, they will tell you when they started the President's 
corporate task force on fraud, particularly relating to Enron, and they 
started making sure traders and others knew they were going to lose 
their livelihood and their profession if they manipulated the market, 
people started getting serious about their actions.
  At $118 a barrel, we have to send a message by the enforcement 
agencies of the Federal Government that we are going to get serious 
about challenging manipulative activity as it relates to oil prices and 
that we are going to do our job and we are going to demand that the 
Federal Government have a cop on the beat when it comes to high oil 
prices.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Whitehouse). The Senator from Mississippi 
is recognized.

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