Oil Prices
Floor Speech
OIL PRICES -- (Senate - April 24, 2008)
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 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.
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