Domestic Energy Production Act of 2008

Floor Speech

DOMESTIC ENERGY PRODUCTION ACT OF 2008 -- (Senate - May 08, 2008)

BREAK IN TRANSCRIPT

Mr. CORNYN. Mr. President, I thank the Senator from Oklahoma and the Senator from Wyoming for their excellent remarks on the energy crisis. I want to focus attention on a couple of numbers this morning.

The first number is $3.65. This is the average price of a gallon of gasoline now for sale across America. Contrast that with the figure of $2.33. That shows how much the price of gasoline has gone up across the country since January 4, 2007. If we extrapolate what that means for the average American family, they have seen a decrease in their standard of living or an increase in their cost of living by roughly $1,400 a year as a result of this increase in gasoline prices.

Another figure I wish to mention is the figure 745. That was 745 days ago, when Speaker Nancy Pelosi, before she was Speaker, said that if she and her fellow Democrats were given the majority, they would come up with a commonsense plan to reduce gas prices. That was 745 days ago. Notwithstanding the fact that they announced a plan yesterday--I will talk about that in a minute--we are still waiting for a commonsense plan to bring down gas prices at the pump.

Here is the quote:

Democrats have a commonsense plan to help bring down skyrocketing gas prices.

This was the Speaker of the House, April 24, 2006. As I said, we are still waiting for that plan.

You heard both the Senator from Oklahoma and the Senator from Wyoming talk about some aspects of the legislation, the so-called Domenici amendment, which we will vote on, on Monday, and of which I am a proud cosponsor. But let me focus on the plan announced by Majority Leader Reid and the Democratic leadership yesterday. First, we will find some very familiar elements to this plan rolled out by the Democratic leadership. It bears some remarkable resemblance to previous plans they have rolled out. The No. 1 element is it produces not one single drop of additional oil or gas or energy, not one drop. The other characteristic it bears a remarkable resemblance to in terms of past proposals is that they basically suggest we tax, we litigate, and we investigate our way to greater energy independence. This is a formula which, although familiar, is one that has not shown itself effective, obviously, in bringing down the pain at the pump, the price of gasoline.

First, they said: We are going to investigate price gouging by the oil and gas industry. We have seen investigations by the Federal Trade Commission. We have had numerous hearings that have found basically no substantiation for so-called price gouging. In fact, the cost of oil and gasoline has been related to unrest around the world in dangerous parts of the world where the supply may be in question, whether it is the Middle East or elsewhere.

They found that the failure of Congress to remove the regulatory burden to construction of new refinery capacity has led to a bottleneck when it comes to refinery capacity where that oil is then transformed into gasoline that we burn in our gas tanks.

Then, of course, there is the fact that we cannot repeal the law of supply and demand, and that unless we are going to do something about increasing the supply of oil, that if we fix the amount of oil available worldwide because we refuse to open America's own natural resources in order to expand that supply, that rising demand for oil by countries such as China and India--which have more than a billion people each who want the kind of prosperity and enjoy the sort of economic vitality the United States has--they are going to place greater demands on that fixed supply of oil so they can benefit, as America has, from having access to low-cost--relatively low-cost--energy for a long, long time.

So price gouging is something for which we have had investigations in the past. We have had hearings in the Senate Judiciary Committee, on which I am proud to serve. The Federal Trade Commission has investigated it until they were blue in the face and found no real evidence of price gouging but, rather, a deficit of supply when it comes to increasing demand as the most likely cause.

Now, the second element of the Democratic leadership's so-called energy policy is litigation. In other words, we are going to sue the Organization of Petroleum Exporting Countries.

Now, I have heard some of our colleagues talk about another context: We need to engage countries such as Iran and Venezuela and talk to them directly about geopolitical matters and about security matters.

This is the first time, really, I have heard them talk about suing countries such as Iran and Venezuela and the Organization of Petroleum Exporting Countries. The irony of it is, what are we going to sue them for? We are going to sue them for, presumably, more oil or make them turn the spigot open even wider, ironically forcing us to become more dependent on imported oil from dangerous regions across the globe and from people who are not our friend--President Ahmadinejad in Iran, head of an Islamic extremist government on the terror watch list of the State Department as a state sponsor of international terrorism in the Middle East; and then there is Hugo Chavez in Venezuela, somebody who is not our friend, somebody who harbors narcoterrorists in the FARC and other organizations in his country. These are the kinds of people we are going to continue to depend more and more on by somehow filing a lawsuit against them and forcing them to sell us more of their oil? How is that going to make us more energy independent? How is that going to enhance our national security and our economy?

Well, then there is the other answer we have heard in the Democratic leadership plan they proposed--this one, again, is a familiar solution, or I should say a nonsolution--and this has to do with the so-called windfall profits tax.

Well, I think we ought to learn from history or else we will be condemned to relive it. Over the entire 1980 to 1986 period, in which the U.S. Government
had a windfall profits tax, it, in fact, reduced domestic production from between 320 million barrels and 1,268 million barrels. That is almost 5 percent of overall production. If you think about it, there is an easy way to understand that. If you put an increased tax on American producers--because, of course, we cannot put an increased tax on OPEC, on Venezuela, on Iran, and these state-owned oil companies--the fact is, we put an increased tax burden on our own domestic producers.

Of course, we find that the Congressional Research Service has found that last time we tried a windfall profits tax, it decreased our domestic oil production. Why in the world would we want to do that? How does that help increase the supply of America's natural resources, which can help ameliorate some of this pain at the pump by increasing supply and thus bringing down, hopefully, the cost of a barrel of oil and then the refined product of gasoline?

Well, the last suggestion has to do with the strategic oil reserves. That is a final answer, by eliminating the 70,000 barrels a day that we put into the strategic oil reserves. Now, I think there may be a case for reducing or eliminating the 70,000 barrels of oil a day that go into the Strategic Petroleum Reserve. But I have to tell you, the world consumes roughly 85 million barrels of oil a day--85 million barrels of oil a day. What effect is 70,000 barrels a day that would not go into the Strategic Petroleum Reserve, what impact would that have on reducing the price of oil globally or bringing down the price at the pump? Well, my calculation is that by reducing the amount of oil going into the Strategic Petroleum Reserve, we could bring down gas prices maybe 2 cents or 5 cents per gallon. Maybe that would be welcomed but hardly adequate to deal with the high gas prices we have sustained and are experiencing today.

But I want to take that one step further. If our Democratic friends believe reducing the amount of oil that goes into the Strategic Petroleum Reserve by 70,000 barrels a day is a good idea because that might reduce, although infinitesimally, the cost of gasoline, how much more sense would it make to explore and develop the million-barrel-a-day capacity that is located in Alaska in the Arctic National Wildlife Refuge? If you take the million barrels of oil a day that could be produced from ANWR, then you are talking about--according to the same calculation I just used on the Strategic Petroleum Reserve--reducing the pricing of gasoline, by an additional million-barrel supply of American oil a day, by 85 cents to $2.14 a gallon. Now, that would be a real impact, to be able to bring down the price of gasoline by 85 cents to $2.14 a gallon.

I just mentioned the ANWR reserves. But it is estimated if we were actually to open not only Alaska to environmentally responsible development of those oil and gas reserves located there and produce an additional million barrels a day of oil, that if we were also to leave up to the States--States such as Virginia and other States, Alaska--the option to open their Outer Continental Shelf to oil reserves, to further production, if we were to open some of the oil shale and oil sands out in the West to production, we could develop another 3 million barrels of oil capacity right here in America without having to depend more and more on foreign sources of oil.

If you take the same argument our friends have offered on the impact of reducing deposits of oil in the Strategic Petroleum Reserve and that that would actually have an impact on price, how much more would it have a beneficial impact on lowering the price if, in fact, we were to open up America's natural resources here at home?

We will have an important vote on Monday where the so-called Domenici amendment--which I am proud to join--will be offered for a vote, where the Senate can go on record in showing where they stand when it comes to this effort to help bring down the price at the pump, which Speaker Pelosi announced 745 days ago. The highlights, as I have already mentioned, of that bill are opening portions of the Outer Continental Shelf, as we have the Gulf of Mexico 300 miles offshore from the State of Texas. I tell you, you cannot even see the drilling activity out there 300 miles offshore. Indeed, the drilling activity could occur in the Outer Continental Shelf beyond the horizon in a way that is not even visible to people on shore.

I mentioned the Arctic National Wildlife Refuge. Tapping into that oil and gas, which we know is there, would immediately produce--once it is done--huge volumes of oil that could help relieve our dependence on imported oil.

We know that building additional refineries would help relieve some of that bottleneck when it comes to refining the oil into gasoline. Of course, 70 percent of the price of gasoline is the price of oil, but another part of it is the burden we put on the permitting process for the construction of new refineries or expanding refinery capacity.

My colleague from Wyoming talked about coal, and I agree with him that we ought to use good, old-fashioned American ingenuity in our research and scientific ability to figure out, how do we use this coal--we are the ``Saudi Arabia'' of coal--how do we use it in a way that is compatible with a good environment? The technology has already been demonstrated, things such as coal-to-liquids technology, coal gasification, which can capture the carbon, deal with the environmental concerns, and yet provide us access to energy which can help drive our economy and help make us less dependent on imported oil and gas from other parts of the world.

So, Mr. President, I hope our colleagues on the other side of the aisle will come forward with additional ideas. I have explained how the proposals they have made would have no impact, would provide no supply but would really just rehash old, tired themes which have been shown not to work in the past. But I think the debate is an important one, and I look forward to continuing it.

Mr. President, I yield the floor.

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