CNBC Capital Report - Transcript
CNBC News Transcripts
SHOW: Capital Report (7:00 PM ET) - CNBC
HEADLINE: Senator Charles Schumer says the federal government should tap into US oil reserves to relieve high gas prices
ANCHORS: GLORIA BORGER
BODY:
GLORIA BORGER, co-host:
And should the federal government tap into US oil reserves to relieve high gas prices? Joining me now from Capitol Hill is Senator Chuck Schumer, Democrat of New York. Senator, thanks so much for being with us. You want the administration to release oil from the Strategic Petroleum Reserve to help curb prices now, and you say you can repay in a few months. Why are you so sure that it would help ease prices?
Senator CHARLES SCHUMER (Democrat, New York): Well, we have a little experience here. I had urged President Clinton to do this. It took me a while to get him to do it, but he did in October of 2000. Prices went down anywhere between 10 percent and 20 percent, and they stayed low for a whole year. And the bottom line is very simple, Gloria. The reason that prices are through the roof, more than any other, is that OPEC has decided they should be. OPEC now dominates the market, because we import more oil and gasoline than we have before. And instead of sticking to a $28 a barrel ceiling, they've decided to let it go up, 36. Well, we have to fight fire with fire. They are not a free market force. They're a cartel. And we can go eyeball to eyeball with OPEC very simply by saying, 'Hey, you're going to constrain supply. We're going to put a little supply out there.'
BORGER: Well, Senator, if we import more oil now, why not drill in the Arctic National Wildlife Reserve, for example, so that we don't have to import as much?
Sen. SCHUMER: Well, I am for-I think those who say we shouldn't look for new sources within the United States don't make sense. I was one of the few Democrats who voted to drill in the east Gulf.
BORGER: Would you drill in ANWR, though?
Sen. SCHUMER: ANWR, no, because, one, there are big environmental concerns, but two, it's a 10-year process, and the amount of oil you'd get would be not very much. We'd be much better off looking off our shores and in certain places in the mainland. But I'll tell you, Gloria, no amount of supply is going to rectify what's happening in the world. China and India are demanding huge new amounts of oil and gasoline, and the number one thing we can do domestically is conserve. We don't pass CAFE standards, which would raise the mileage per gallon. That was the number one thing we did in the '70s, when OPEC formed in the early '80s. We don't do any conservation. Yes, there should be some increase in production. But any expert who's objective will tell you that US production is not going to solve this problem.
BORGER: What about the administration saying, though, that it needs to keep the reserves it has now in the strategic petroleum reserve...
Sen. SCHUMER: Right.
BORGER: ...just in case of an emergency?
Sen. SCHUMER: Well, we have more than we've ever had. It's 93 percent full. A year ago, it was not 85 percent full. And what we're saying is just for this period, when oil is high and when OPEC thinks they have the upper hand, do what's called a swap. Put 30 million barrels of the over 600 million we have in our reserve on the market now, and then you get a contract that someone will give you back the oil later. So within six months we'll be higher than we are now, and we will have brought the price of oil down. The government would actually make money on it to boot. I think the only reason the administration doesn't do this is they're so close with big oil and with the Saudis that they don't want to rock the boat.
Now, they may change their mind if the economy stays squooshy soft. The $400 tax rebate that we all got?
BORGER: Yeah.
Sen. SCHUMER: Well, that's all gone in gas prices by the mid-summer. So what Uncle Sam gave you with one hand, he's allowing OPEC to take away with the other.
BORGER: OK. Democratic Senator Chuck Schumer of New York, thanks so much for being with us tonight.
Sen. SCHUMER: Thanks, Gloria.