Energy Policy Act of 2005
ENERGY POLICY ACT OF 2005--Continued -- (Senate - June 14, 2005)
BREAK IN TRANSCRIPT
Mr. SCHUMER. Mr. President, I rise to offer an amendment which is at the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from New York [Mr. SCHUMER] proposes an amendment numbered 782 to amendment No. 779.
BREAK IN TRANSCRIPT
Mr. SCHUMER. Mr. President, I rise today in opposition to the amendment that has been put before the Senate by my good friend and colleague from New Mexico and offer a second-degree amendment to it. Now, I do so not only out of the sincere belief that the provision will hurt consumers in New York, but that it will hurt consumers throughout the country, and that it is anticompetitive and not the way a free market ought to go.
The amendment of my good friend from New Mexico is one of those amendments that, while well-intentioned, could come back to haunt every one of us. I have been in Congress for 23 years, and every so often there is an amendment that people vote for, confident on the surface that it seems like the right thing to do, and a few years later it turns out to be a big disaster. Then our constituents turn to us and say: What the heck have you done? How could you have done this?
This is one of those amendments, like a catastrophic illness. My colleagues, beware. If there was ever an amendment quietly put in a bill that should really have a skull and crossbones label on it, at least to those of us from States without a large amount of ethanol, this amendment is it.
So today I rise to join my colleague from New York, my colleagues from California and elsewhere, mainly on the coasts, but not exclusively so, to debate an unprecedented new ethanol gas tax that would be levied on the American people by the amendment we are now considering.
So many are against any kind of gas tax. I understand that. I have opposed many gas taxes, too. But why, when the gas tax comes in the form of an ethanol mandate but has the same effect--causes the price of gasoline to those under its yoke to rise--do we not oppose it?
The amendment offered by Senator Domenici does accomplish two goals that I consider very worthy and which my amendment would let stand. One is restricting the use of MTBEs, which has resulted in groundwater pollution all over the country. The second is scrapping the oxygenate mandate that led so many States to make such heavy use of MTBE in the first place.
The proposal in the amendment also provides an antibacksliding provision to require continued efforts on clean air. That is another goal that I support. The number of people who are living longer and living better because our air is cleaner is enormous. We all benefit from that. So the antibacksliding proposal is a good measure, and I applaud it.
I believe that eliminating the oxygenate requirement and letting each region meet clean air standards in the way that suits it best is smart energy policy. If that is all my friend from New Mexico did, I would be on the floor supporting his amendment and cheering it on.
But as they say, Mr. President, there is always a catch. This amendment adds an astonishing new anticonsumer, anti-free-market requirement that every refiner in the country, regardless of where they are located, and regardless of whether the State mandates it and whether the State chooses a different path to get to clean air, must use an ever-increasing volume of ethanol.
If they do not use the ethanol--and this is the most amazing part of the bill--they still have to pay for ethanol credits. If your State does not want to use ethanol because it is so expensive to transport it--there are no pipelines--on the barges and on the boats and in the trucks--so let's say it is too expensive to do that--you still have to pay for it.
If there were ever an onerous, anticompetitive, anti-free-market provision, this is it. Where else do we mandate that people pay for something when they do not use it? Why are we saying to the car drivers of America, the motorists of America, You have to pay for this stuff even though you do not use it? It is nothing less than an ethanol gas tax levied on every driver--the employee driving to work, the mom who is driving kids to school, a truck driver earning a living. Every gasoline user in this country will pay.
Now, in 2003, the United States consumed only 2.8 billion gallons of ethanol. Starting in 2006--a mere year away--they would be required to use 4 billion gallons of ethanol. Where are my friends from the free market when we need them? We hear about the free market. Is this a free market? Are we letting everyone decide how to meet a worthy clean air standard? Absolutely not. So 2.8 billion last year; in 2006, you have to use 4 billion; and by 2012, you have to use 8 billion gallons of ethanol and increase it every year by a percentage equivalent to the proportion of ethanol in the entire U.S. gas supply after 2012 in perpetuity.
If production does not happen, if we do not have enough ethanol--I don't know how the sponsors came up with 4 billion or 5 billion or 8 billion--guess what happens. We get a big price spike. At a time when gasoline is expensive enough, do you want to be accused of passing legislation that will raise the price more? I know there are corn growers in some States, and I know that Archer Daniels Midland and all these other ethanol producers are pretty powerful. But what about all the drivers and motorists throughout the country? What about them? There are many more of them than the rest, and every one of them will be at risk. Even in the Middle West where there is plenty of ethanol, if there is not enough to meet the mandate, there is going to be a price spike for everybody.
Now, there are a lot of estimates out there that try to predict what the new mandate is going to cost motorists at the pump. In some of the more conservative estimates, it is a few pennies a gallon. But others have pegged the cost significantly higher. Even though the size of the increase may be open to discussion, it is generally agreed that this mandate is going to cause an increase in the price of gasoline.
Last year when we had a bill, gasoline was about $1.60 or $1.70 a gallon. Now it is $2.25 a gallon. Do we still want to do this? Aren't gas prices high enough? The fact that we do not know how severe the increase is going to be should give us pause. As we have seen time and time again, there is not much more of an effective way to stifle an economy or place burdens on families across America than by causing a price spike, a hike in gasoline prices.
I know the supporters of this ethanol gas tax are going to argue that the claims I am making are not accurate, and the cost of forcing the entire country to use 8 billion gallons of ethanol is a mere pittance. Remember, ethanol is very hard to transport. It cannot be carried through our existing pipeline infrastructure. It must be put on a truck, a barge, sent down the Mississippi, then sent by boat all around the country, then loaded back into a truck, taken to a local refinery, and put into the gasoline. That will be the added expense passed on to the driver. That is why this is a regional proposal more than it is a party proposal.
To forecast how much a 6-year, 8-billion-gallon ethanol mandate is going to cost consumers across the country, you first have to look at the interplay of a host of complex factors--the growth in auto travel, gasoline prices, corn prices, ethanol prices, how many ethanol plants will come on line--and all of these are inextricably linked to how high the price of ethanol is going to go.
If ethanol prices are high and manufacturing ethanol profitable, the private sector will build ethanol plants. If ethanol prices are low, they will not. So I think the numbers my opponents are using make an unrealistic set of assumptions, basically that ethanol prices will be unusually low for the next 10 years, and yet at the same time the private sector will be building new plants all over the country. You can't have it both ways. If the price is high, yes, there will be more ethanol plants. If the price is low, there are not likely to be any, and the price is going to go up either way. But in truth, whether it costs a penny a gallon or a dollar a gallon, consumers should not be forced to pay an ethanol gas tax at all.
There is no sound public policy reason for mandating the use of ethanol, other than political might of the ethanol lobby. The new ethanol tax will contribute to market volatility and price spikes, especially because the ethanol industry is highly concentrated within a few large firms located in the Middle West. In fact, ADM alone controls almost 30 percent of the market, according to CRS.
My opponents also argue that the ethanol gas tax is needed to help family farms. I take these arguments seriously. I know how many of my colleagues from the Middle West want to help family farmers who are struggling. I want to help those farmers, too. I have stood by my Senate colleagues and voted for billions of dollars in agricultural subsidies to help the farmers in the South and West, even though those commodity subsidies don't help my farmers in New York. But as I have said, the ethanol gas tax money will not be going mostly into the pockets of family farmers, it will go into the pockets of ADM and the other big ethanol companies. All of a sudden, are the farmers going to get the big benefit? They don't get it for milk. They don't it for corn. They don't get it for meat. Is the beneficent rule of ADM going to give our corn growers the benefits of this or do you think ADM and the other big companies will take the benefit for themselves?
If you want to help our family farmers, take the money you are using that will cost this and give it to them, and you will spend a lot less money and help the family farmer a lot more without all the middlemen who don't need the help.
The final argument my opponents will make--and this is a cynical one--is that if New York and California and other States want to clean up their water by banning MTBEs and maintaining clean air, they should have to pay the price of an ethanol gas tax, and it is political naivete to think otherwise. My State has already banned MTBE. So have others, such as California, Colorado, Connecticut, Indiana, Illinois, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Washington. Every one of these States has enacted its own MTBE bans or taken steps to restrict its use. A number of other States are in the process of taking action as well. Because what we have learned is that MTBEs pollute the ground water.
Every one of those States that has banned MTBE is going to find itself in an impossible dilemma. Their citizens are demanding they ban MTBE, but with the oxygenate requirement in place, they can't do so. Recently, the EPA denied the application of New York and California for a waiver from the oxygenate requirement, putting States with MTBE bans between a rock and a hard place. Our citizens' health and the environment are being held hostage to the desire of the ethanol lobby to make ever larger profits. Why didn't the EPA grant the waiver? It didn't affect clean air or clean water. Raw politics, trying to suck money out of one region and put it in another. That is not fair. That is not right.
Our citizens' health and environment are being held hostage to the desire of the ethanol lobby to make ever larger profits. The administration has already gone along. Will this Senate?
It is an outrage. For Congress to tell Americans across the country that we refuse to clean up the air and water unless they pay off ADM is unconscionable. There is no public policy reason on Earth not to allow States to ban MTBEs and remove the oxygenate requirement and keep clean air standards in place without requiring them to buy ethanol.
In New York, we have been forced to for over a year and a half. Our gasoline prices are too high already, and the unnecessary ethanol requirement we face is not helping.
In conclusion, I ask my colleagues to support my amendment to strike the ethanol mandate. If you believe that Congress has the obligation to protect the health of our citizens and the environment, support banning MTBE, getting rid of the oxygenate requirement, and maintaining clean air standards. Don't support forcing American consumers to pay for ethanol in exchange. If you believe the Congress has an obligation to protect consumers and keep our free market running as efficiently as possible, then, again, I ask Members, please, do not support forcing American consumers to raise their gas prices and to pay for ethanol.
BREAK IN TRANSCRIPT
Mr. SCHUMER. Mr. President, I rise today in opposition to the amendment that has been put before the Senate by my good friend and colleague from New Mexico and offer a second-degree amendment to it. Now, I do so not only out of the sincere belief that the provision will hurt consumers in New York, but that it will hurt consumers throughout the country, and that it is anticompetitive and not the way a free market ought to go.
The amendment of my good friend from New Mexico is one of those amendments that, while well-intentioned, could come back to haunt every one of us. I have been in Congress for 23 years, and every so often there is an amendment that people vote for, confident on the surface that it seems like the right thing to do, and a few years later it turns out to be a big disaster. Then our constituents turn to us and say: What the heck have you done? How could you have done this?
This is one of those amendments, like a catastrophic illness. My colleagues, beware. If there was ever an amendment quietly put in a bill that should really have a skull and crossbones label on it, at least to those of us from States without a large amount of ethanol, this amendment is it.
So today I rise to join my colleague from New York, my colleagues from California and elsewhere, mainly on the coasts, but not exclusively so, to debate an unprecedented new ethanol gas tax that would be levied on the American people by the amendment we are now considering.
So many are against any kind of gas tax. I understand that. I have opposed many gas taxes, too. But why, when the gas tax comes in the form of an ethanol mandate but has the same effect--causes the price of gasoline to those under its yoke to rise--do we not oppose it?
The amendment offered by Senator Domenici does accomplish two goals that I consider very worthy and which my amendment would let stand. One is restricting the use of MTBEs, which has resulted in groundwater pollution all over the country. The second is scrapping the oxygenate mandate that led so many States to make such heavy use of MTBE in the first place.
The proposal in the amendment also provides an antibacksliding provision to require continued efforts on clean air. That is another goal that I support. The number of people who are living longer and living better because our air is cleaner is enormous. We all benefit from that. So the antibacksliding proposal is a good measure, and I applaud it.
I believe that eliminating the oxygenate requirement and letting each region meet clean air standards in the way that suits it best is smart energy policy. If that is all my friend from New Mexico did, I would be on the floor supporting his amendment and cheering it on.
But as they say, Mr. President, there is always a catch. This amendment adds an astonishing new anticonsumer, anti-free-market requirement that every refiner in the country, regardless of where they are located, and regardless of whether the State mandates it and whether the State chooses a different path to get to clean air, must use an ever-increasing volume of ethanol.
If they do not use the ethanol--and this is the most amazing part of the bill--they still have to pay for ethanol credits. If your State does not want to use ethanol because it is so expensive to transport it--there are no pipelines--on the barges and on the boats and in the trucks--so let's say it is too expensive to do that--you still have to pay for it.
If there were ever an onerous, anticompetitive, anti-free-market provision, this is it. Where else do we mandate that people pay for something when they do not use it? Why are we saying to the car drivers of America, the motorists of America, You have to pay for this stuff even though you do not use it? It is nothing less than an ethanol gas tax levied on every driver--the employee driving to work, the mom who is driving kids to school, a truck driver earning a living. Every gasoline user in this country will pay.
Now, in 2003, the United States consumed only 2.8 billion gallons of ethanol. Starting in 2006--a mere year away--they would be required to use 4 billion gallons of ethanol. Where are my friends from the free market when we need them? We hear about the free market. Is this a free market? Are we letting everyone decide how to meet a worthy clean air standard? Absolutely not. So 2.8 billion last year; in 2006, you have to use 4 billion; and by 2012, you have to use 8 billion gallons of ethanol and increase it every year by a percentage equivalent to the proportion of ethanol in the entire U.S. gas supply after 2012 in perpetuity.
If production does not happen, if we do not have enough ethanol--I don't know how the sponsors came up with 4 billion or 5 billion or 8 billion--guess what happens. We get a big price spike. At a time when gasoline is expensive enough, do you want to be accused of passing legislation that will raise the price more? I know there are corn growers in some States, and I know that Archer Daniels Midland and all these other ethanol producers are pretty powerful. But what about all the drivers and motorists throughout the country? What about them? There are many more of them than the rest, and every one of them will be at risk. Even in the Middle West where there is plenty of ethanol, if there is not enough to meet the mandate, there is going to be a price spike for everybody.
Now, there are a lot of estimates out there that try to predict what the new mandate is going to cost motorists at the pump. In some of the more conservative estimates, it is a few pennies a gallon. But others have pegged the cost significantly higher. Even though the size of the increase may be open to discussion, it is generally agreed that this mandate is going to cause an increase in the price of gasoline.
Last year when we had a bill, gasoline was about $1.60 or $1.70 a gallon. Now it is $2.25 a gallon. Do we still want to do this? Aren't gas prices high enough? The fact that we do not know how severe the increase is going to be should give us pause. As we have seen time and time again, there is not much more of an effective way to stifle an economy or place burdens on families across America than by causing a price spike, a hike in gasoline prices.
I know the supporters of this ethanol gas tax are going to argue that the claims I am making are not accurate, and the cost of forcing the entire country to use 8 billion gallons of ethanol is a mere pittance. Remember, ethanol is very hard to transport. It cannot be carried through our existing pipeline infrastructure. It must be put on a truck, a barge, sent down the Mississippi, then sent by boat all around the country, then loaded back into a truck, taken to a local refinery, and put into the gasoline. That will be the added expense passed on to the driver. That is why this is a regional proposal more than it is a party proposal.
To forecast how much a 6-year, 8-billion-gallon ethanol mandate is going to cost consumers across the country, you first have to look at the interplay of a host of complex factors--the growth in auto travel, gasoline prices, corn prices, ethanol prices, how many ethanol plants will come on line--and all of these are inextricably linked to how high the price of ethanol is going to go.
If ethanol prices are high and manufacturing ethanol profitable, the private sector will build ethanol plants. If ethanol prices are low, they will not. So I think the numbers my opponents are using make an unrealistic set of assumptions, basically that ethanol prices will be unusually low for the next 10 years, and yet at the same time the private sector will be building new plants all over the country. You can't have it both ways. If the price is high, yes, there will be more ethanol plants. If the price is low, there are not likely to be any, and the price is going to go up either way. But in truth, whether it costs a penny a gallon or a dollar a gallon, consumers should not be forced to pay an ethanol gas tax at all.
There is no sound public policy reason for mandating the use of ethanol, other than political might of the ethanol lobby. The new ethanol tax will contribute to market volatility and price spikes, especially because the ethanol industry is highly concentrated within a few large firms located in the Middle West. In fact, ADM alone controls almost 30 percent of the market, according to CRS.
My opponents also argue that the ethanol gas tax is needed to help family farms. I take these arguments seriously. I know how many of my colleagues from the Middle West want to help family farmers who are struggling. I want to help those farmers, too. I have stood by my Senate colleagues and voted for billions of dollars in agricultural subsidies to help the farmers in the South and West, even though those commodity subsidies don't help my farmers in New York. But as I have said, the ethanol gas tax money will not be going mostly into the pockets of family farmers, it will go into the pockets of ADM and the other big ethanol companies. All of a sudden, are the farmers going to get the big benefit? They don't get it for milk. They don't it for corn. They don't get it for meat. Is the beneficent rule of ADM going to give our corn growers the benefits of this or do you think ADM and the other big companies will take the benefit for themselves?
If you want to help our family farmers, take the money you are using that will cost this and give it to them, and you will spend a lot less money and help the family farmer a lot more without all the middlemen who don't need the help.
The final argument my opponents will make--and this is a cynical one--is that if New York and California and other States want to clean up their water by banning MTBEs and maintaining clean air, they should have to pay the price of an ethanol gas tax, and it is political naivete to think otherwise. My State has already banned MTBE. So have others, such as California, Colorado, Connecticut, Indiana, Illinois, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Washington. Every one of these States has enacted its own MTBE bans or taken steps to restrict its use. A number of other States are in the process of taking action as well. Because what we have learned is that MTBEs pollute the ground water.
Every one of those States that has banned MTBE is going to find itself in an impossible dilemma. Their citizens are demanding they ban MTBE, but with the oxygenate requirement in place, they can't do so. Recently, the EPA denied the application of New York and California for a waiver from the oxygenate requirement, putting States with MTBE bans between a rock and a hard place. Our citizens' health and the environment are being held hostage to the desire of the ethanol lobby to make ever larger profits. Why didn't the EPA grant the waiver? It didn't affect clean air or clean water. Raw politics, trying to suck money out of one region and put it in another. That is not fair. That is not right.
Our citizens' health and environment are being held hostage to the desire of the ethanol lobby to make ever larger profits. The administration has already gone along. Will this Senate?
It is an outrage. For Congress to tell Americans across the country that we refuse to clean up the air and water unless they pay off ADM is unconscionable. There is no public policy reason on Earth not to allow States to ban MTBEs and remove the oxygenate requirement and keep clean air standards in place without requiring them to buy ethanol.
In New York, we have been forced to for over a year and a half. Our gasoline prices are too high already, and the unnecessary ethanol requirement we face is not helping.
In conclusion, I ask my colleagues to support my amendment to strike the ethanol mandate. If you believe that Congress has the obligation to protect the health of our citizens and the environment, support banning MTBE, getting rid of the oxygenate requirement, and maintaining clean air standards. Don't support forcing American consumers to pay for ethanol in exchange. If you believe the Congress has an obligation to protect consumers and keep our free market running as efficiently as possible, then, again, I ask Members, please, do not support forcing American consumers to raise their gas prices and to pay for ethanol.
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