Energy Policy Act of 2005

ENERGY POLICY ACT OF 2005

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MODIFICATION OF CANTWELL AMENDMENT 784

Mr. LEVIN. The amendment sets a goal for a savings of 7.6 million barrels of oil by 2025. Are there assumptions made by the amendment?

Ms. CANTWELL. This amendment is technology-neutral. It simply lays out a vision that the United States should attempt to achieve over the course of the next 20 years. The only assumption underlying this amendment is that the United States has the ingenuity and innovative spirit to reverse the rising trend of American dependence on foreign oil imports. Today, foreign oil constitutes approximately 58 percent of our domestic supply, a figure that is projected to reach 68 percent by 2025. Because of the nature of world oil markets and the geologic fact that two-thirds of global reserves are located in the Middle East, the United States is on track to become increasingly dependent on OPEC to fuel our economy; and will be competing with developing nations such as China for access to these oil supplies. Because of the economic and national security implications of foreign oil dependence, this amendment simply states that it is in the national interest of the United States to attempt to curb our appetite for imported oil. The underlying bill provides a number of tools to help this country achieve the goal established by my amendment, and there are many potential pathways to its attainment. However, none of them are specifically assumed by the Cantwell amendment.

Mr. LEVIN. Does the amendment assume an increase in CAFE standards?

Ms. CANTWELL. This amendment neither assumes nor proposes an increase in CAFE standards. In fact, some have erroneously concluded that increasing CAFE standards is the only means of achieving the goal established by the Cantwell amendment. Multiple analyses by national security-related organizations and others have concluded that increasing CAFE standards is not necessary to attain savings of 7.6 million barrels of oil a day by 2025. In addition, it is important to note that some have circulated erroneous estimates of CAFE standard increases necessary to achieve the goal in the Cantwell amendment, attributed to the Energy Information Administration, EIA. The staff of the EIA has said that these flawed estimates have no grounds in analyses performed by the EIA.

Mr. LEVIN. Does the amendment assume an increase in ethanol production and use?

Ms. CANTWELL. Because the amendment is technology-neutral and simply lays out a vision, accelerated ethanol production and use is not specifically assumed. However, there is no question that biofuels can play an important role in achieving the goal established by the Cantwell amendment, by displacing imported petroleum-based products with domestic fuel derived from plant matter. In fact, it has been estimated that increased domestic biofuels production can contribute more than half of the oil savings goal established by the Cantwell amendment. It is also worth noting that the underlying bill contains important provisions that will help accelerate the production of ethanol and other alternative fuels, including provisions I authored that would provide incentives, research, development and demonstration of processes to produce ethanol from cellulosic sources. While not specifically prescribed by the Cantwell energy security amendment, these measures would assist substantially in achieving the amendment's goal.

Mr. LEVIN. Does the amendment assume an increase in use of biodiesel fuels and technology?

Ms. CANTWELL. Again, increased use of biodiesel fuels and technology is not specifically assumed by the Cantwell amendment. However, these fuels can also help achieve the amendment's goal. It is worth noting that one of the barriers to achieving cost-effective biodiesel production is increasing the diversity of feedstocks from which biodiesel can be economically produced. The key to unlocking the potential of biodiesel is performing the research, development and demonstration of new technologies that will allow the co-production of biodiesel fuel and value-added bioproducts that lower overall costs. I was proud to add specific provisions to this underlying legislation that authorize an Advanced Biofuels Technology program, designed to accelerate the development of these processes. Again, while one of the potential tools the U.S. can use to achieve the goal, additional biodiesel production is not explicitly assumed by the Cantwell amendment.

Mr. LEVIN. Does the amendment assume an increase in the use of diesel engine technology?

Ms. CANTWELL. While advances in diesel engine technology are another potential tool for accelerating oil savings, they are not specifically assumed nor mandated by the Cantwell amendment.

Mr. LEVIN. Does the amendment assume a major increase in the use of hybrid electric vehicle technology?

Ms. CANTWELL. Because the amendment lays out a vision rather than mandating specific measures, increased hybrid use is not specifically assumed. However, some have estimated that growth in the hybrid vehicle market can achieve oil savings of up to 2 million barrels a day by 2015, 10 years before the Cantwell amendment's ultimate goal. Taken together, biofuels production and growth in the market for hybrid vehicles could provide more than two-thirds of the energy security goal established by the Cantwell amendment.

Mr. LEVIN. Does the amendment assume a major shift to use of renewable hydrogen and fuel cell vehicles?

Ms. CANTWELL. There is no question that hydrogen provides another potential pathway to achieving substantial oil savings in the United States. However, because the technology remains at a relatively early stage in its development, no specific estimates exist for the economic and energy efficiencies this technology may provide. It is not specifically assumed by the Cantwell amendment.

Mr. LEVIN. Does the amendment assume an increase in tax incentives to encourage use of advance technologies?

Ms. CANTWELL. Certainly, tax incentives can help spur the development of markets for advanced technologies, and help expand the choices available to American consumers. But these are not specified or assumed within the Cantwell amendment.

Mr. LEVIN. Does the amendment assume regulatory changes in how the CAFE system works?

Ms. CANTWELL. The amendment neither assumes nor proposes regulatory changes to the CAFE system. I view the debate regarding the efficacy of the existing CAFE program as beyond the scope of this amendment, which lays out a national vision for reducing American dependence on foreign oil imports. Certainly any changes to the CAFE system's regulatory regime would require additional legislative action, action that is not assumed in the Cantwell amendment.

Mr. LEVIN. Does the amendment assume regulatory changes that would allow for greater use of diesel technology?

Ms. CANTWELL. Certainly other nations have begun the transition to more wide-spread use of diesel technology, and initiatives or programs in this regard may ultimately be consistent with the Cantwell amendment. But they are neither specifically assumed nor required.

Mr. LEVIN. Does the amendment assume the Congress will provide other new authorities to the President?

Ms. CANTWELL. The Cantwell amendment establishes a national goal. As such, it directs the President to design and implement measures designed to help achieve the goal, and assumes that, if the President deems his existing authorities insufficient, he will propose to Congress legislation or recommendations that would help achieve the amendment's energy security target. At that time, it would be up to Congress to consider the merits of the President's proposals, via the typical legislative process.

Mr. LEVIN. Does the amendment assume that there are adequate ``existing authorities of appropriate Federal agencies'' to meet the goal of saving 7.64 million barrels of oil per day by 2025?

Ms. CANTWELL. The amendment assumes that the President has at his disposal adequate authority to develop and implement measures that will help achieve the goal of reducing imports on foreign oil. However, the amendment is technology-neutral and establishes a 20-year vision. As such, it is difficult to predict with any specificity what direction new technologies may take, and whether issues may arise that require additional legislation or Congressional action. For example, if biofuels begin to displace a significantly larger portion of petroleum-based fuels in the United States, certain infrastructure-related barriers may arise that require additional authority or Congressional action. Similarly, there are certain to be issues associated with infrastructure, interoperability and international technology standards associated with the development of hydrogen fuel cells. Because the Cantwell amendment is a call to accelerate the development of alternatives to petroleum-based fuel, yet does not purport to choose technology winners and losers, it is premature to speculate on whether additional authorities or Congressional action may be required. However, it does assume that proposals to expand the range of tools available to the President to achieve the Cantwell amendment's goal would be considered through the normal channels of Congressional debate and approval.

Mr. LEVIN. Does this amendment set a goal of reducing imported oil or reducing overall use of fossil fuel?

Ms. CANTWELL. The goal of this amendment is to reduce our foreign oil imports and exposure to the uncertainties of world oil markets. Because of the geologic realities of the way in which oil reserves are distributed across the globe, continued increased demand for oil will result in a growing dependence on imports. While the U.S. is situated on just 3 percent of the world's reserves, the Middle East is home to two-thirds, with a full quarter located in just one country, Saudi Arabia. In order to curb our growing reliance on imports, it is thus necessary to reduce demand for petroleum itself, across all sectors of the economy.

Mr. LEVIN. To achieve the one million barrels of oil a day in savings required by 2015, must the President use existing authorities, or can the President seek additional authority?

Ms. CANTWELL. There is nothing in this amendment that precludes the President from requesting additional legal authority to achieve the target for 2015. Certainly, any legislative proposal or recommendations from the President would be considered by Congress, through the typical legislative process. Rather, the provision in (c)(2)(B) is intended to make clear that this amendment, on its face, does not grant the President any broad, new additional authorities not previously contemplated.

Mr. LEVIN. If the President can seek additional authority to meet the requirement to save 1 million barrels of oil a day, would the Senator be willing to modify the amendment to make that clear?

Ms. CANTWELL. Yes.

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AMENDMENT NO. 784

The PRESIDING OFFICER. The Senator from Washington.

Ms. CANTWELL. Mr. President, I thank the Senator from New Mexico for his fine amendment. I would like to take a minute to state that I am a cosponsor of the Bingaman amendment and very much believe in the renewable portfolio standard for our electricity grid. I guess if you looked at the Northwest, particularly Washington State, you would say we are already using 80 percent renewable energy because 80 percent of our electricity grid is provided by our hydro system. So we, in the Northwest, are very big believers in renewable power.

But we also believe in the other technology that is in the underlying amendment and in the underlying bill that will help us support renewable technologies. We have a lot of wind farms. We have had a lot of discussion out here on the floor this morning about wind energy. We, in Washington State, are already employing wind energy in a variety of locations in our State and getting great response. In some areas, it is some of the best job growth we have had in rural communities. Farmers love it because, aside from providing an agricultural product, they get a second source of revenue from their land by having agriculture and wind technology on their farms. It works very well for our farmers, and the combination of hydro and wind technology works very well for Washington state and the Northwest.

But we also have solar power. We are about to have one of the first demonstrations of wave power. We, in the Northwest, are using all sorts of renewable technology to meet these goals. Certainly, I want to endorse this particular amendment as a great step forward, saying we can do more with renewable technology.

I would like to turn to the Cantwell amendment, on which we are going to have a vote I believe at 2:15, and summarize, for my colleagues who might have missed yesterday's discussion, a few points I think are important as we talk about our reliance on imported oil and the fact we want to diversify.

In the New York Times, there was an article about OPEC and their increases in quotas for various OPEC countries. It is interesting, and every day Americans want to know what is going to happen with oil futures and gas prices. You look to find out what OPEC is doing. This article, I think, brings up the very point we were trying to make yesterday; that is, that China's demand for oil continues to grow. In fact, this article says that global oil consumption climbed 2.4 or 2.5 million barrels a day in 2004, the fastest growth rate since 1978. That is world demand for energy increasing. Basically, that was a result of China's increasing energy consumption. We know what the trends are, and we know what the challenges are that are facing us.

I found it interesting, too, that the New York Times article talked about how OPEC was actually concerned that alternative fuels might affect their future price of product. They are almost telling us, yes, they are a little concerned about competition from alternative fuels.

I welcome that. I think it is about time that America make an investment in alternative fuels and about time we give consumers a choice when it comes to the demand and supply of oil in the future and not continue to be held hostage by foreign governments.

I would like to review for my colleagues what exactly the Cantwell amendment does because it is so important that we understand what the underlying bill does and what our challenges are as a country going forward.

In 1973, we were importing only 28 percent of our demand--our U.S. demand--for oil. We were importing 28 percent of what we used as a country.

Today, 2004, we are at 58 percent, a huge jump, a huge dependency by the United States on a foreign source to provide us an oil supply.

When I look at the countries involved and I look at the instability in the Middle East, I don't want to be 58 percent reliant on foreign sources of oil. I want American ingenuity to be a driver in what we can provide to the American people in driving down the cost of energy.

If we do nothing, in 2025, the United States will be importing 68 percent; nearly 70 percent of our oil supply will come from abroad. Who in their right mind thinks that 70-percent dependence on foreign oil is wise economically, to our national security, or internationally as we have to deal with international competition? Why would we want to be almost 70-percent reliant on foreign entities for something that is the backbone of our economy--energy?

I am offering a simple amendment. My amendment simply says by 2025, instead of being reliant on foreign sources for 68 percent of our supply, we bring that down to 56 percent. That is not much of a change. We are at 58 percent today, and we want to go down to 56 percent. That is a modest goal.

It is hard to achieve because our amendment assumes the growth and demand that will happen as our Nation grows. That is why we have to assume in 2025 we will be at 68 percent, and we want to see a serious reduction. That is the way my amendment is crafted.

The underlying bill says we are currently at 58 percent and let's reduce our consumption of foreign oil by 1 million barrels a day. One million barrels a day by 2015 still has us importing 60 percent of our supply from foreign sources. In 2015, instead of consuming 58 percent of our oil supply from foreign sources, we would be at 60 percent. The underlying goal in the bill does nothing to get us off our overreliance on foreign oil. It is the status quo and a bump in an increase. It is too timid in responding to what has been a gouging of the American consumer on gas prices.

This debate we have just had for the last couple of hours is interesting because a lot of my colleagues have said they refuse to support a mandate. They do not want to have a mandate in this bill. I am not proposing a mandate. It is interesting: Some Members do not support mandates. They do not even support goals. The American people deserve, on something as important as our national security and economic livelihood, to have this Senate, in transportation and energy policy, set a goal to get off our overdependence on foreign oil. Are my colleagues just giving lip service to this idea of a goal of getting off overdependence on foreign oil? Or are we willing to set a goal and do something about it?

I have pointed out that the goals we have are doable. My amendment does not say specifically how or what the mandate is. We have simply said, that from various studies, we know we can get the savings my amendment calls for in a goal. Here are a variety of sources: Fuel efficiency for tires and motor oil. The encouragement of a biofuels industry. A big chunk of this comes from alternative fuels. That is why OPEC, in today's paper, says they are very concerned about this because they know it is competition. They realize it is competition. Why don't we realize it is competition and ensure we get about making an alternative product?

Other countries certainly have this idea. One is Brazil and based on their overdependence on foreign oil they came to the same conclusions. They did not want to be in the same boat we are in today. In 1975, they were importing 80 percent of their fuel supply from foreign sources. They made a decision that was too much for them, both economically--I don't know if there are security issues--but economically they thought that was not wise so they started a process of taking steps. In 1990, they almost cut that in half. By 2003, they were down to importing only 11 percent of their fuel supply. Next year, they might achieve the great milestone of not only becoming self-sufficient but actually becoming an exporter of fuel to other countries.

They have done this because they made an investment in ethanol. They made decisions about their transportation sector so they could run on biofuel products. They have changed the economic picture of their country.

Is there something Brazil possesses that the United States cannot achieve? Are they smarter than we are? Do they have greater political will than we do? Do they have more consumers holding their politicians accountable than we do? What Brazil showed is they have a resolve because of their own national interests to get off the foreign addiction to oil. I applaud them for that.

They are only one-eighth the size of our economy, but they are proven to be smart enough to figure out how to make sugar-based ethanol in a cost-productive way, so efficient they can send it to the United States cheaper than we can produce it to the degree that some of my colleagues want to put a tax on it so that it is on a more level playing field with what sugar-based ethanol in the United States costs. To me, the Brazilians have come up with something.

I ask my colleagues, if you do not want mandates and you do not want goals and you do not want to get off our overdependence on foreign oil by setting a milestone or coming up with a goal or statement, what is it that you do want to do? The underlying bill increases our dependence by 2015 on foreign oil to 60 percent. We are at 58 percent today. It increases it to 60 percent. So we have accomplished nothing in the goal in the underlying bill.

I would like to set, primarily for international reasons, a goal to get off our dependence on foreign oil because these are our suppliers. These are the countries where the majority of U.S. oil supply comes from: Saudi Arabia sits on the largest percentage of oil reserves in the world today. I wish geography and geology had been kinder to the United States and that we sat on more than 3 percent of oil reserves. But we don't. We do not have that product. We have a very small percentage of the world reserve for oil. That is a fact of life. These are the countries and this is the State ownership of companies that are part of OPEC and have the oil supply of the future.

I didn't expect I would be in the Senate agreeing with George Shultz and James Woolsey and a bunch of neoconservatives who were espousing ideas about our national security, but I actually do agree with them that reducing our dependence on foreign oil should be a national priority and a national goal. That is why we have crafted this amendment this way.

We simply want to say to our colleagues and to the President of the United States that we believe increasing our consumption of foreign products as a way to support our economy is not a wise decision, given what growth and demand and oil prices are going to be. Yesterday, the market closed at $56.20 for oil. Economists at various Wall Street firms are saying we could easily see an oil spike of $100 a barrel. They say that oil futures have a fear premium on them; that is, there has been lots of discussion about how the price of oil futures is basically impacting the price of oil on a day-to-day basis. That is right, the speculative market about energy futures in oil basically causes the price at the pump today to increase. I find that unfortunate because the speculative price of oil futures takes into consideration those nine countries I mentioned, the fact that you could have a terrorist attack, the fact that you could have unrest in a region and that somehow supply would be diminished, thus affecting the price of oil futures.

Economists and people on Wall Street--Goldman Sachs and others--basically say there is a fear premium on the price of oil futures; that is, we are paying more for oil because we are paying for the uncertainty and the instability in the political and geographic region where oil exists. That is what I am supposed to tell Washington State residents as to why they pay some of the highest gas prices in the country?

That is why they should pay almost $2.30 a gallon for gasoline? That is why I should tell people they have lost their pensions in the airline industry because the airline industry has not passed on the high fuel costs? That is what I am supposed to tell the farmers who cannot keep their farms running because of high fuel costs, or somebody who has lost their job in a transportation-sensitive industry. I am supposed to tell them that I am going to continue to put an energy goal in legislation that makes us more dependent on foreign oil than we are today?

No. We want to reverse the trend. That is what the Cantwell amendment does. It is not a mandate. It is a goal. It says that instead of being more dependent on foreign oil in 2015, as the underlying bill directs us, let's become less dependent. Let's go from 58 percent, where we are today, down to 56.5 percent. It is a goal we can achieve. It is a goal I am willing to set as a legislator for our country because I believe in the ingenuity of Americans to achieve this goal.

There is nothing the country of Brazil can do that the United States cannot do. I guarantee you that if we set our resolve to do it as a nation, we will achieve this goal as well. The reason why we, as a government entity, need to set this goal is because the private sector is going to diversify at its own darn pace; that is, the oil companies will decide what their investment in new technology and alternative fuels is at their own pace, their own wishes, their own response to their corporate shareholders, not at the interest of individual consumers who are getting strangled by the high cost of gasoline.

It is our job to set this goal and that is why we are on the Senate floor today. We are here to say we agree with the American farmers that they can produce a biofuel product in the future that can be competitive, that we agree with neoconservatives that the security risk of being 70 percent dependent on foreign oil is too great a security risk for our Nation, that we agree with technology and research experts that American ingenuity can get us to this 56.5-percent goal.

I ask my colleagues, what is wrong with setting this goal? Let's not continue to give lip service to a goal of getting off our foreign dependence and then do nothing about it in a legislative proposal. Let's show the American people we are concerned about the economic hardship they are facing and that we believe in American ingenuity. We believe in our farmers. We believe in our technology leaders. We believe that we, as a country, can achieve this great goal. If the last generation of Americans were smart enough to put a man on the Moon in a decade, this generation of Americans ought to be smart enough to reach this goal. I ask my colleagues to have the courage to set it in a piece of legislation as a mark for us to achieve.

I yield the floor and suggest the absence of a quorum.

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