Press Conference with Schumer, Dorgan, Sanders, Casey, Klobuchar - Arms Deals with OPEC and Oil Production
Statement
Press Conference with Schumer, Dorgan, Sanders, Casey, Klobuchar - Arms Deals with OPEC and Oil Production
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SEN. SCHUMER: Okay, good morning, everybody. And I am delighted to be joined by my colleagues -- Senator Dorgan, Senator Klobuchar, Senator Sanders and we're expecting Senator Casey as well.
Now, with regular gasoline prices in states like New York already over $3.50 a gallon, with over $4 a gallon in many other states and with the national average threatening to surpass $4 a gallon this summer, Americans are outraged as they hear about the record profits for members of OPEC, such as Saudi Arabia. Gasoline prices are 66 cents higher than last year, more than double in the time since President Bush took office, and they show no intention of slowing down.
Shockingly, at the end of February, President Bush responded to a question about the likelihood of $4 a gallon gasoline by saying, "You're predicting $4 a gallon gasoline? That's interesting. I hadn't heard that." Well, Mr. President, we hope you hear us now, because gas is at $4 a gallon already, and it's only going higher.
The only people who are happy about $4 gasoline are the Big Oil companies and OPEC in the Middle East. The Saudis have to understand that their relationship with America is a two-way street. We provide them with weapons, our troops provide them protection and then they rake us over the coals when it comes to the price of oil and gas. The Saudis and Big Oil companies are in cahoots and this administration has coddled them both for far too long.
The bottom line is that the whole Bush tax cut for middle-class families this year will line the pockets of OPEC. The stimulus check families receive in the mail next month will probably go to pay eye- popping gas and grocery bills this summer alone.
The Bush tax cut is exceeded by increase in the rise of price of gasoline and petroleum products. In other words, the average American will pay more to OPEC and Big Oil than they got back from the Bush tax cut. That's the sad state that we're in. It's galling to think that the stimulus checks that will go out in a few weeks will be lining the pockets of OPEC and not making Americans any better off.
Just last week, Saudi's oil minister said there was no need to increase supplies by even one barrel of oil. However, just as they're saying no, no, no to U.S consumers, they're planning to double oil production to China. Despite record-building profits, it seems the big oil producers like Saudi, United Arab Emirates and Kuwait are willing to turn a blind eye to the supply demands and leave Americans with skyrocketing prices at the bump.
And listen to this, the maximum Saudi production was in 2005. It was lower in 2006 than it was in 2005, and it's not lower in 2007 than it was in 2006. So they're not even keeping production steady. They are reducing it which raises the price even more.
So we are sending a letter to President Bush, and we are saying that the countries that are putting profits straight into their pockets and we in return are demanding that the Bush administration jawbone Saudi Arabia, the UAE and Kuwait to increase oil supplies or risk that Congress blocks their lucrative arms deals while they stick it to American consumers at the pump. This administration, as you know, has proposed selling $14 billion in the most technologically updated arms to Gulf countries that are members of OPEC.
It's clear if we don't use our leverage and without pressure from this administration, oil prices go up as countries like like Saudi Arabia will continue to reap the reward of high prices.
Congress has the authority to block these arms deals, and we want to put the administration on notice that if they fail to deal aggressively with OPEC countries that are not producing at their full capacity, we will seriously consider blocking this and other arms deals.
On their face, I question the merit of some of these deals, but it's especially egregious when Americans are paying through the nose to put money in the pockets of administration friends in the Middle East. OPEC nations may have to protect themselves with these weapons systems, but American consumers and our economy also need protection from high oil prices exacerbated by OPEC's stranglehold on supply.
Senator Dorgan.
SEN. DORGAN: Well, Chuck, thank you very much.
The American people are asking: What on earth is going on with oil and gas prices? If ever we need a demonstration of how dangerous it is for us to be as vulnerable as we are to oil from off our shores and especially oil from a cartel in the OPEC area, this ought to be a demonstration.
Now, there are a lot of reasons for what's going on, and we're working on a lot of different approaches. I think there's excess speculation in the futures markets. I'm trying to do legislation that would increase the margin requirements. We ought to stop the administration putting 70,000 barrels of oil underground every single day. I have a bill on that.
But let me describe this other issue that my colleague Senator Schumer has talked about. We are very dependent on foreign sources of oil. Saudi Arabia, in the year 2005, on a daily basis produced 9.5 million barrels of oil. In 2007, on a daily basis, it produced 8,700,000 barrels of oil. That's almost 800,000 barrels of oil a day reduction from 2005 to 2006 to 2007.
Now, we are told that we have a strategic partnership with the Saudis and others. Well, even as they have reduced production at a time when oil is up around $120 a barrel, their spare capacity in OPEC has also increased. They're reducing production. Their spare capacity is increasing. And we are seeing $120 a barrel for oil and dramatic increases in the price of gasoline, probably heading to $4 a gallon.
Now, we're told we have a strategic partnership with the Saudis, but it seems to me a partnership works two ways. The Saudis want to purchase sophisticated weapons from our country. I have a lot of trouble believing that we should be arming the Middle East to the teeth, and we've been the world's largest arms merchant. But if there are certain things that the Saudis need from us for their security, and that's part of an agreement that we have with them, they should understand there are certain things we need from them as well.
We have an economy that's dependent, at this point -- far too dependent, but nonetheless dependent on the production from OPEC countries and the production from the Saudis, and they have reduced that production by 800,000 barrels a day.
And that has had a significant impact on the price of gasoline and the price of oil, and I must say it has produced great damage to the American economy. You don't have to guess at that. The Saudis can see it; we can see it. This is very damaging to our economy, from drivers, from families to business to truckers to airlines. You take a look at the carnage of $120 a barrel oil. You see it everywhere.
Now our point to the Saudis and the OPEC countries is this: If we have strategic partnerships, partnership works both ways. And you have things you want from us. We have things we want and expect from you. We hope in the not-too-distant future we won't need to be asking you for your oil, but we do now. And we're not going to sit idly by and have our economy dramatically damaged by circumstances where they reduce production by 800,000 barrels a day and then say to us, "Oh, by the way, we need your help on some strategic weapons programs." That is not the way a partnership works. That's the message from my colleagues, and I share it.
SEN. SCHUMER: Senator Sanders.
SEN. SANDERS: Let me thank Senator Schumer for his leadership on this issue.
I come from a rural cold-weather state, and workers in the State of Vermont have to travel long distances, often, to get to their jobs. And any increase that they may have gotten in their wages is now going right into the gas tank. This issue of $3.50 gallon gas is killing our state. It is causing a national economic crisis.
Number two: In Vermont there will be a major problem next winter with high home heating oil prices. There will be people who are going cold. This is an issue that must be dealt with, and it's time that the president of the United States and Vice President Cheney woke up to the reality of what is going on.
As my colleagues have already said, there are a number of things that we have got to do to address this crisis. Speculators are making billions of dollars speculating on oil futures while people are going cold and workers can't afford the price of a gallon of gas. Oil profits are sky-high while our economy suffers.
One of the areas that we have got to address right now is to tell Saudi Arabia and OPEC nations that they must increase production for oil, that at a time when -- in 1991, American troops put their lives on the line defending the Saudi Oil fields. We went in when Saddam Hussein's army had occupied Kuwait, was going to take over the oil fields of Saudi Arabia.
Our soldiers put their lives on the line to defend Saudi Arabia.
Well, now is our time of need. And today, the demand must be that it is unacceptable, for Saudi Arabia and other OPEC countries, to cut back on oil production. The truth of the matter is that OPEC itself is a cartel, which is in violation of World Trade Organization rules, which presumably require competition and free enterprise. The function of OPEC is to limit oil supplies.
So the demand right now is, President Bush, tell your friends in OPEC; tell your friends in Saudi Arabia; they have got to significantly increase oil production to drive down prices in this country. And if they are not prepared to do that, if they are not prepared to extend the hand of friendship to the United States, I think we've got to think about an appropriate response, which certainly includes making sure that they do not get weapons that we have supplied them with in the past.
Thank you.
SEN. CASEY: I want to thank my colleague Senator Schumer and Senator Dorgan, Senator Sanders and Senator Klobuchar for their work on this.
In Pennsylvania today, the price of gasoline is more than $3.50, 3.52, 3.53, depending on what day or hour you're looking at it. So this is a national problem, which I've seen firsthand in Pennsylvania. And a lot of people are terribly worried about this.
This is a stress, an economic stress on their lives, that it's hard to even describe. And when I see this statement by the president, he says, that's interesting. Well, that's not interesting; it's devastating to families across America.
So this reminder to the president, that he's not doing nearly enough to have an impact on and to push the Saudis to do their part, is very, very important. It's important that we remind the American people, and remind the president what he's not doing to directly address the price of gasoline and the economic impact it has.
I want to look at it from another perspective, which is, I think, very relevant. One is, what is Saudi Arabia doing to help us in Iraq, in addition to some of our other -- some of the other neighbors that surround Iraq. I put forth a resolution -- that's Senate resolution 494 passed this week by the Senate Foreign Relations Committee, Senator Corker worked and I on that together -- and it's basically a very simple resolution that says that it is the sense of the Senate that Iraq's neighbors in other countries as well have to do their part for reconstruction work in Iraq.
Now, our country -- here's what we've done. We've already spent more than $18 billion and another $5.5 billion has been planned for. So we're going to be in -- just in terms of reconstruction dollars, this country is going to be in for almost $25 billion. And here's what the Saudis pledged for reconstruction and they haven't done it yet. As of October '07, a GAO report released in December but the -- as of October '07, the Saudis had pledged $500 million. Now, in the context of what they make every day in oil, that's not a lot of money; $500 million -- they've only paid up 87 (million dollars) of that. So just on Iraqi reconstruction dollars, the Saudis haven't nearly enough. They're 413 million (dollars) short.
The United Arab Emirates pledged 215 (million dollars), have only kicked in 77 (million dollars.) So at the same time our gasoline prices are going up, the Saudis aren't helping us nearly enough in Iraq, at reconstruction work in Iraq, and they're not doing nearly enough to justify the expenditure of our tax dollars to help them militarily, as Senator Schumer and others pointed out today. So this is a critically important reminder to the administration -- they're not doing nearly enough to have an impact -- a positive impact on the pocketbooks of the American people by pushing their Saudi friends to do the right thing and pay up.
SEN. SCHUMER: Senator Kobucher?
SEN. KOBUCHER: Thank you, Senator Schumer, thank you everyone for being here. This is the time of the year in Minnesota where the snow has finally stopped and people are opening up their cabins, they're putting their boats out on the water. Well, a lot less people are going to be doing that in our state this year, and that is because of these burgeoning gas prices.
It's also affecting people -- especially in rural areas. When you have less disposable income and a longer way to drive to work, it's much harder to get to work. And so when I was home this past weekend, I heard over and over and over again that this isn't just some annoyance for them anymore. For middle class families who have just taken it over and over again, with health care and other things. This is really hurting them, and it has to change.
Now, to me, the answers are -- first of all, a long-term change in policy. You know, Brazil is now energy independent. They do it. It's easier for them, they've got sugar cane. And we're not? What's wrong with that that picture?
This administration has failed to advance a bold energy policy which would mean -- and which I'm hopeful a new president will do -- a focus on -- enormous focus on research for electric cars, hybrid cars, enormous focus on the next generation of biofuels, cellulosic, ethanol, and moving to biomass and other kinds of ethanol. We can do this as a country. We have to have the same kind of urgency that we had when we put a man on the moon, and I am convinced that we can do this.
Secondly, Senator Dorgan brought up the issue of speculation in the way the oil and gas markets work, and we are all joining together to work on that issue. In fact, in the farm bill that is -- we hope will becoming up very soon, there's not only provisions in there to advance towards more cellulosic ethanol, with incentives for that, there are also in that bill the anti-Enron measure, the speculation measure that Senator Levin and Senator Feinstein have worked on. So look at that. It's another way of getting at these problems with speculation in the market.
And then finally, the issue that we're raising today is our relationship with these other countries. You know, I believe that instead of spending $200,000 a minute on foreign oil in these oil cartels in the Mideast, we should be investing in the farmers and the workers of the Midwest. And we should not be rewarding countries that are not fair with us in our business dealings. And we've got to stand up to this and say, you know, you're not going to be getting a bunch of arms from us and some kind of deals with us if you're not dealing with us fairly.
We need to get our priorities in order. You look at the same thing wit Iraq. We're spending $12 billion a month in Iraq, yet the Iraqi government earned $70 billion in oil revenues so far this year. This is about a fair shake and a fair deal, and the fact that if we're going to be making deals with them, they've got to be making better deals for us.
Thank you.
SEN. SCHUMER: Ready for your questions. Yes, ma'am?
Q A question for Senator Klobuchar. Because a long-term policy -- and of course, (you're a ?) supporter of a cap-and-trade measure which is coming up for debate in June, and pretty much every study has shown that if you're to cap CO2, the first effect that that would have is at least a short-term rise in fossil fuel prices. And the long term is that ultimately it would you know, reduce demand and stimulate alternatives. But how do you square that with --
SEN. KLOBUCHAR: Well, first of all, a major part of that bill is going to be making sure that there are resources there to help people who are going to have trouble affording things if the prices do go up. And I think there's some dispute about what will happen with prices, not only for gas but also for electricity.
But the longer term is that the only way we're going to get out of this mess is to start investing in research to have more fuel- efficient cars -- we've already done that with our 10-mile-per-gallon increase; we have to do even more. And also, as I've just mentioned, having our own fuel -- developing our own fuel in this country.
And we can get there many ways. We can get there with portfolio of standards for electricity, which the Democrats on our side of the aisle want to get through. We can get there by the climate change bill and pushing that. And we can also get there -- remember, we were one vote short -- one vote short -- of taking those oil giveaways and putting it in the hands of investing in renewables and furthering that.
I just question why a country like Brazil is able to go -- leapfrog us in terms of becoming fuel independent. That was a government policy. They focused on a new direction. And that's what our government needs to do.
Q Senator Schumer, could you walk us through exactly how this would work?
SEN. SCHUMER: Yeah.
Q (Off mike) -- leverage? And what sort of --
SEN. SCHUMER: There is a resolution to --
Q -- (off mike)?
SEN. SCHUMER: Okay.
There is a resolution to disapprove any arms deal that, if we introduce, would have to have a hearing within 10 days in the Foreign Relations Committee. We're not introducing that resolution yet. We're waiting to see the response of the administration and of OPEC. But it's a resolution that could come to the floor within about a month.
Q I take it, Senator Schumer, that kind of sense of the Senate resolution --
SEN. SCHUMER: It's --
Q -- (off mike) -- binding?
SEN. SCHUMER: It's not. It's a sense -- I believe it's a sense of the Senate, but there has to be a hearing within 10 days, and then it can come to the -- it has to come to the floor within, I think, a month.
Q So the White House could just run that off, if they wanted to?
SEN. SCHUMER: I'm not sure they can. I think the sense of the Senate in this regard would be binding. I think they need -- it's resolution of disapproval of an arms deal. And it would be binding.
Q Do you actually think that it would be productive? The Saudis are going to say, "Okay, no problem; we'll increase production"?
SEN. SCHUMER: Saudis have --
Q But do you think that it might actually exacerbate foreign relation tensions with Saudi Arabia and push them towards China to do other arms deals --
SEN. SCHUMER: Okay. Ask the average person in Minnesota, Pennsylvania, New York. Their number-one concern is high energy prices. And we have coddled the Saudis for a long time. I believe that if they learned that the relationship was truly a two-way street, they would not retreat from our umbrella. They need it. But they'd be much more amenable to us on oil prices.
Q But then you do think it's going to be productive?
SEN. SCHUMER: I do.
Q What leverage do you have if it seems like it would hurt U.S. companies to cut off arms sales to the Middle East? And then secondly, you said $14 billion in deals. Can you provide any --
SEN. SCHUMER: Yeah, we'll get you a list of the deals. But the major deal are these laser-guided missiles that can be shot from planes that are highly technological and highly prized and very important.
I think 200 senators -- not -- 200 congressmen, without even this oil issue, have asked that it not go forward. They've signed a letter, I believe, and they would need -- I don't know the rules of the House, but they have close to a majority.
On the first, my guess -- any one of these companies that sells this stuff, in the long run, probably pays more for higher oil prices that the profits they'd make on this deal.
Q Would it be better for the Middle East countries to be getting those weapons from the United States, where there are checks and balances, or from a country like China or Russia, where perhaps there's a bit more --
SEN. SCHUMER: They don't have -- on the arms deal I mentioned, China or Russia doesn't have the technology that we have.
Q McConnell -- (off mike) -- to the floor this morning, criticizing you guys for criticizing them years ago when they were in control for not having a plan. Now that the tables have turned, do you guys plan to have any short-term --
SEN. SCHUMER: Yes. We have an energy -- we have -- we just introduced as part of the housing bill, and it passed the Senate, an energy plan to reduce dependency on oil and increase research and tax breaks for non-oil energy. We have many, many different items, some of the things that Senators Casey and Klobuchar mentioned: conservation, which failed by one vote; we got 59. Changing the way electricity is generated to require it to be far more friendly to non- fossil fuels, that failed by one vote.
We have -- energy is not one of those -- you know, health care, there's not a broad consensus on exactly what to do. Energy, there is. There is a way. What this body has not had is the will because the president and most of the people from the other side of the aisle have blocked anything, and their basic view seems to be, "Let's do what the oil companies want."
Well, Rex Tillerson told one of the committees I sit on -- I think it was Judiciary; it may have been Finance -- but he came and testified, and he said, "Exxon doesn't believe in alternative energy." Well, if you're going to do what Exxon wants, we're going to have $5 a barrel. They're happy with that. Look at their profits.
Q Don't you undermine your own argument for not opening up domestic production when you call for another country to increase production?
SEN. SCHUMER: We want domestic production. First, we want mainly non-fossil fuel increases in domestic production, and those are the bills I mentioned. But a good number of us -- I voted and led Democrats to vote to open up some of the East Gulf for production. And it is being opened up now. I think we had about eight or 10 Democrats vote for it. It was before both of them got here, but -- so we believe in reasonable domestic production.
Oil and gas -- there is not enough domestic production, so you have two choices: increased reliance on these countries and increased prices or getting off the dependence as much as we can -- which is a long-term proposition, can't be done like that -- on fossil fuels.
But people are demanding action now, and this -- the best -- the thing that could most -- in the short run, the thing that would most reduce oil prices is for the Saudis to say, "We're going back to the 2005 level." And not only would the 800,000 barrels a day be huge, in terms of the oil markets, but the oil markets, as you know, work at the margins.
And if they think demand goes up, and supply stays flat or goes down, it goes up more than it should. But the inverse can happen as well.
SEN. KLOBUCHAR: And I just think -- let me echo that. This is short term versus long term. And that's why these things are consistent. The short term is to say to the -- (phone rings) -- that must be the sultans of Saudi Arabia calling in right now.
The short term is to say, to the sultans of Saudi Arabia, now, you need to give us a fair deal if you want a fair deal from us. The long term, because we know we're not going to be able to develop an electric car in one month, the long term is to get those incentives in place.
And when you look at what they've been saying on the floor today, this is the first Congress that increased the gas mileage standard. It didn't happen since I was in junior high, since I was in junior high.
And so the point of it is, we are moving in the right direction. We're blocked repeatedly by the filibuster when we tried to put the oil giveaways in the hands of the renewables. But we will continue to fight for that long-term policy. But in the short term, we have to do something for these middle-class families.
SEN. SCHUMER: Thank you.
And you get the last one.
Q (Off mike.)
SEN. SCHUMER: Yeah. Well, this is another thing that's happened. Senator Reid has asked the various committees to put together a large plan, that hopefully will include some of the things we've talked about today as well, and get it on the floor relatively soon.
This has become a major concern. It's always been a major concern for us. But we're just tired of being blocked. And we're just going to go at it and at it and at it again.
Thanks.
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