FAA Reauthorization Act of 2007--Motion to Proceed

Floor Speech

FAA REAUTHORIZATION ACT OF 2007--MOTION TO PROCEED -- (Senate - April 28, 2008)

BREAK IN TRANSCRIPT

ENERGY POLICY

Ms. KLOBUCHAR. Mr. President, Spring is finally arriving in Minnesota, even though we had snow last week. Spring does get to our State a little later than in Washington. This is the time of year when people start thinking about putting their boats in the water and start thinking about making a trip to their cabins. We call it the lake season. It is also the time of year when farmers are preparing to put their crops in the ground.

But this year is going to be different. The average price of gas just hit $3.45 a gallon in Minnesota, and it is $3.56 per gallon nationally. The price of diesel fuel is at $4.14 per gallon nationally. Of course, the price of crude oil is at an unbelievable $118 per barrel.

People cannot afford to do the things they used to do. I don't think people usually think of going up to a small lake cabin as a luxury, but it becomes one when gas is this expensive.

I have heard from constituents who are having to cancel their family road trips or their summer vacations up north because they cannot afford the gas they need to get there. I have heard from farmers who are having a hard time making ends meet, even in spite of the high commodity prices, because the cost of their inputs--diesel fuel for farm equipment and fertilizer made from natural gas--has spiraled out of control. Of course, it is particularly hard on middle-class and low-income families because when they have less disposable income and gas goes up to these levels, it is very difficult for them to get by.

The high price of energy has inflated the price of everything from groceries to transportation to home heating, as the occupant of the chair knows, as he is from Vermont. It has impacted every sector of our economy, from manufacturing, to forestry, to farms and small businesses.

In cold northern States such as Minnesota, Spring is when a lot of people--especially senior citizens living on their own--are trying to pay off their natural gas bill from the winter. They are too afraid to think about how they are going to pay their heating bills next winter, if this trend continues.

Middle-class families are struggling with the high cost of health care and a college education already, and they cannot afford this increase in the price of gas. I just heard an expert a few weeks ago talk about, if you look at the past 8 to 10 years, a regular, average middle-class family--their costs for everything from daycare, to home heating, to gas has gone up about $8,000 to $10,000 a year. But their wages have not gone up. They don't have a choice, Mr. President, about how they are going to get to work. In my State, many don't have a choice. They have to drive. They have to get to work, get to school, and they have to get to the doctor. Any wage increase they may have gotten last year goes straight into their gas tanks. And more often than not, there haven't even been any wage increases.

Not a day goes by when I don't hear about the struggle from my constituents in Minnesota. So it is hard for me to understand how recently the President seems taken aback when someone asked him about $4 gas. The President said--remember, this was February 28. The President said:

You're predicting $4 a gallon gasoline? That's interesting. I hadn't heard that.

To the people in my State, $4 a gallon for gas isn't ``interesting.'' It is a budget-buster for many middle-class families in our State.

The fact is, this administration has failed to provide Americans with a meaningful energy policy that would provide relief from high gas and energy prices.

This country needs a bold energy policy for the future, a policy that will stabilize prices and give consumers more alternatives, reduce our dependence on foreign oil, and provide us with the next generation of home-grown biofuels.

Brazil has already achieved this energy security. They have leapfrogged in front of our country. They can do it with sugarcane. We don't have that much sugarcane here, and we have to go to the next generation of biofuels, cellulosic, switch grass--many different things. But we have to put the reserve and incentives into place. We can do this, but we need the will, and we need to pursue a forward-looking energy policy with the same sense of urgency we used to put a man on the Moon nearly 40 years ago.

In the long term, this is going to mean strategic investments in research on hybrid electric cars, new solar technology, cellulosic ethanol, and other forms of energy from biomass.

We should be investing not in the oil cartels of the Middle East but in the farmers and workers of the Midwest. We need better fuel efficiency standards in our cars. We already have a start on that with the Energy bill and the 10-mile-per-gallon increase in fuel efficiency standards. We need to do more. We also need a renewable energy electricity standard, a portfolio standard for the Nation, like we have in Minnesota where the requirement is 25 percent of our electricity will come from renewables by 2025. It has spurred investment in wind. We are third in the country in wind now because we have been willing to take that step.

There is also much that we need to do in the short term, Mr. President. We can put a stop to oil company giveaways by ending the giveaways and tax breaks going to the oil companies and putting them into a futuristic energy policy focused on renewables. We tried to do that in the Energy bill, and we were one vote short of blocking the filibuster. I still believe we can do it.

We also have to look at the Strategic Petroleum Reserve. We can stop diverting 50,000 barrels of oil every day into that Strategic Petroleum Reserve. Of course, we need to have a petroleum reserve to protect our country in times of emergency. But the time to fill it is not when oil prices are at record highs.

Here is what the staff at the Strategic Petroleum Reserve had to say on the subject 6 years ago, in 2002:

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 this was true in 2002, it is doubly true today. Maybe I should say it is triply true because gas prices are more than triple what they were then. That is why I was proud to join with my colleague, Senator Dorgan of North Dakota, and others in sending a letter to the President asking him to halt inputs into the Strategic Petroleum Reserve to provide some relief for consumers.

Next, OPEC. Another area where we can take immediate action is in our dealings with the OPEC nations. OPEC is a cartel of oil-producing countries that meets and decides how much oil to produce and thereby control prices. They make no pretense of having a free market system. They don't obey the laws of supply and demand. They gather together and set production, which determines prices.

As a former prosecutor, I call that kind of behavior ``collusion.'' It is illegal in our country. But the members of OPEC are foreign governments and so far they have gotten away with it.

As oil exporting nations, the members of OPEC could provide us with some relief. They have the spare capacity to increase production of oil and ease the pain being felt by American consumers and businesses. But OPEC recently met, as you know, and decided not to increase production, at least until the fall, after the summer driving season.

Not only that, Saudi Arabia has actually decreased production since 2005. So I have joined with my colleagues, Senators SCHUMER, DORGAN, and you, Mr. President, in calling on the President to demand that OPEC nations increase their oil production to provide American consumers and businesses with much needed relief.

Think about it: This country spends $600,000 every minute on imported oil. That is money leaving the pockets of American drivers going into the coffers of foreign countries. By refusing to step up production, OPEC nations are saying we don't think prices are too high yet; we want them to go even higher.

I don't think that is right. It is time this administration stepped up and did something about it. If we are going to be doing business with Saudi Arabia and some of these countries, this administration should have the leverage to push for more oil from OPEC.

Another short-term solution: Current prices are simply not justified by supply and demand. The administration likes to tell us nothing can be done, that it is a case of supply and demand. But that answer does not hold true any longer. Listen to what the oil company executives themselves have to say about this matter.

On October 30, 2007, the CEO of Marathon Oil said:

$100 oil isn't justified by the physical demand in the market.

That is exactly what he said:

$100 oil isn't justified by the physical demand in the market.

Let's look at what another CEO said. Here we have the CEO of Royal Dutch Shell. The CEO of Royal Dutch Shell said:

The oil fundamentals are no problem. They are the same as they were when oil was selling for $60 a barrel.

On April 1, a senior vice president of ExxonMobil testified before the House that the price of oil should be about $50 to $55 per barrel. He said:

The price of oil should be about $50 to $55 per barrel.

That was April 1, 2008. I note that is April Fool's Day, but he did say the price of oil should be about $50 to $55 per barrel. Why is it trading at $118? If supply and demand doesn't explain the high price, what does?

According to the experts, there is a frenzy of unregulated market speculation in the oil futures market that is driving prices up to record highs. I would like to share a quote from an energy market analyst with Oppenheimer who was recently named by Bloomberg as the top-ranked energy analyst in the country. He said:

I'm absolutely convinced that oil prices shouldn't be a dime above $55 a barrel ..... Oil speculators include the largest financial institutions in the world. I call it the world's largest gambling hall ..... It's open 24/7 ..... It's totally unregulated. . . . This is like a highway with no cops and no speed limit, and everybody's going 120 miles per hour.

That makes you feel good. It makes the people filling up their gas tanks paying that nearly 4 bucks a gallon feel good, like a gambling hall.

Why are these trades in a commodity as vital as oil unregulated? Back in 2000, a provision was inserted into the Commodity Futures Modernization Act that exempted electronic energy trades from Federal regulation. In the absence of oversight, what was once a small niche market became a booming industry, attracting rampant speculation from hedge funds and investment banks. Oil and natural gas prices became volatile. The provision has become known as the Enron loophole because it made possible the many abuses that triggered the Western energy crisis and cost the economy $35 billion and nearly 600,000 jobs.

The Federal Government has a critical role to play in conducting aggressive oversight of changing energy markets. History has shown us that when enforcement is lax, consumers ultimately pay the price.

Simply put, we need to close the Enron loophole and strengthen Federal oversight of energy trading. I am pleased to say my colleagues, Senators FEINSTEIN and LEVIN, have succeeded in including this provision in the farm bill. It is another reason we need to get the farm bill done.

I commend my colleagues, Representative COLLIN PETERSON, from Minnesota, and Senator Harkin and Senator Conrad for getting this provision done.

A final short-term solution. After the collapse of Enron, the President formed a Corporate Fraud Task Force at the Department of Justice. The task force has since produced more than 1,000 convictions by aggressively pursuing corporate fraud under existing law. What this shows us is good laws in and of themselves are not enough. We need enforcement. We need a cop on the beat. Any prosecutor can tell you that. That is why I joined my colleague, Senator Cantwell, in calling on the President to establish a new division of the Corporate Fraud Task Force specifically to apply to energy markets. This new Oil and Gas Market Fraud Task Force would allow us to focus combined efforts of the Department of Justice, FTC, SEC, and the Federal Energy Regulatory Commission.

In conclusion, the cost of energy is hurting Americans from all walks of life and businesses. I don't think we need one silver bullet. As we say in my State, we need a silver buckshot. We need a bold energy policy, first of all, in the short term, that focuses on temporarily suspending deliveries of oil into the Strategic Petroleum Reserve, that pressures OPEC nations to increase oil production, that closes the Enron loophole to eliminate that speculation, and to establish the DOJ Oil and Gas Market Fraud Task Force.

Then we need for the long term--Mr. President, you know this well we need to increase vehicle fuel efficiency, make a national commitment to generate electricity from renewables and invest in research in cutting-edge technologies for alternative fuel vehicles and renewable energy sources. This is what we need to do.

The time is now for Congress to take strong steps toward creating that bold energy policy. Americans are depending on us.

I yield the floor.

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