Media Stakeout with Senate Majority Leader Harry Reid (D-NV) and other Senators Following Senate Policy Committee Luncheon
Statement
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SEN. REID: The Bush administration's oil-friendly policies have led us down the path of the most significant energy crisis we've had in decades, if not of all time. Oil prices have quadrupled. The price of gas has more than doubled. Oil-rich countries are thumbing their noses at American consumers as they collude to fix prices.
The administration has stood by while greedy oil traders make out like bandits from reckless, unchecked speculation that drives up oil prices. Big Oil is making money hand over fist, while doing little to invest in alternative fuels, yet Bush Republicans want to keep handing them huge tax breaks.
Bush Republicans' only answer, as you've just heard, is to drill in ANWR. Drill in ANWR.
Keep in mind the United States, counting ANWR, all the offshore that you want to talk about, has less than 3 percent of the oil in the world. We cannot produce our way out of the problems that we have.
We have different priorities. Our answer is to put consumers first. That's what the legislation's all about that will be introduced later today. Our answer is to fix the root cause of high gas prices, so that solutions have a real lasting effect that strengthens our economic, energy and national security. We're standing up to OPEC. We're making Big Oil pay their fair share. We're reining in the greedy oil traders. And instead of hiding barrels of oil in the Strategic Petroleum Reserve, we're putting those barrels on the market to increase supply and lower prices.
One of the people that we look to every day for direction and guidance is the chairman of the Energy Committee, Senator Jeff Bingaman, New Mexico.
SEN. JEFF BINGAMAN (D-NM): Thank you very much, Harry. I'm glad to support the effort to move ahead with legislation to deal with these high gas prices at the pump. People are hurting, and the economic impact on families is very real.
Three provisions in this legislation that I think are particularly important is the -- are the provisions to reduce speculation in the oil markets. It's clear from the reports we've seen that a significant portion of the high price of oil is because of speculation by hedge funds, by others in these markets. We need to get the Commodity Futures Trading Commission to raise the margin requirements, have more transparency in those markets. We think this legislation will do that.
Senator Dorgan's been pushing for a long time to prevent the continued filling of the Strategic Petroleum Reserve. That's 70,000 barrels of oil that ought to be put on the market every day. That's legislation that's in here. And there are anti-gouging provisions that we've tried to pass for several years now in the Senate that are also part of the bill. Those are good provisions that will help to deal with the problem as well. So I think this is a good package, and one that I hope we can get an opportunity to move ahead with.
Thank you.
SEN. REID: (Off mike.)
SEN. : (Off mike.)
(Cross talk.)
SEN. REID: (Off mike.)
SEN. MAX BAUCUS (D-MT): This is --
SEN. REID: I wondered why he was ahead of you.
SEN. BAUCUS: Well, I wondered too. (Chuckles.)
SEN. REID: Go ahead.
SEN. BAUCUS: This is very important. The American public wants to know: Where's the Congress? As gasoline prices are so high and as other energy costs are going up so much, where's the Congress? At the same time when Big Oil's profits have quadrupled since President Bush took office, at the same time gas prices have gone up two times, where's the Congress? What's -- what are the priorities of the Congress?
We believe very, very, very deeply that the priorities have to be better aligned. That is, that Big Oil has got to be part of the solution and be not the problem.
That makes -- it makes sense, therefore, to repeal breaks, tax breaks that Big Oil gets, to include something called Section 199, includes preventing Big Oil from gaming the international tax credit. It also includes the windfall profits tax, which -- Senator Schumer will explain it here in detail.
The bottom line is that Big Oil should be part of the solution in America, should not be contributing to the problem. And we in the Congress have an obligation to and an opportunity to speak up for the American consumer and to show that we are here representing them and saying that Big Oil has got to get -- have these tax breaks repealed, so that they, in effect, are forced to be part of the solution.
SEN. REID: Senator Schumer.
SEN. CHARLES SCHUMER (D-NY): Well, you just heard from some of our Republican colleagues, and President Bush, his view how to reduce oil prices: Help the big oil companies. They're making record profits. They've strangled any attempt over the last seven years to produce alternative energy and reduce dependence on foreign oil, and they come here and say let's drill in ANWR, which Big Oil loves. We won't get any oil for 10 years, and it'll reduce the price about a penny.
Our package is aimed at delivering far more relief for the consumer and delivering it sooner. And it unifies our caucus. Under Senator Reid's leadership, everyone was pulled together, and the best ideas came forward.
The windfall profits tax is different than previous windfall profit taxes and can really work. The one that was passed by Jimmy Carter in the '70s was really an excise tax. When the price of oil went above 50 cents -- or $50 a barrel, you'd pay an excise tax. It didn't -- it only affected U.S. companies. Foreign companies weren't part of it. It didn't matter how much money they made.
Our provision focuses on profits. We take a measure of oil company profitability over the last five years, build in some room for growth and then say profits above that are windfall.
It's a 25 percent tax on all windfall profits. In 2007, it would have brought in between 12 and $17 billion. It will bring in more in 2008 and, in all likelihood, more in 2009 and onward as the price of oil goes up.
We believe that Big Oil has a responsibility. And the money that they would pay into the windfall profits tax will go to develop alternative sources of energy.
The head of Exxon told us he didn't believe in alternative energy. Well, we do. And we want to make Big Oil help pay for alternative energy and bring the price of gasoline and other petroleum products down.
SEN. REID: Senator Dorgan.
SEN. BYRON DORGAN (D-ND): Harry, thank you very much.
Let me describe a couple of issues that I've worked on in this package.
One is to stop putting oil underground in the SPR. The SPR is 97 percent filled. I think it's nuts, at $120 a barrel for oil, to put up to 70,000 barrels a day underground.
This is sweet light crude, the most valuable subset of oil. We've had testimony before the committee that says this adds up to 10 percent to the price of oil and gasoline. And we want to stop it.
And I'm going to offer it tomorrow in the supplemental in the Appropriations Committee. And I believe I'll get bipartisan support to say, stop putting oil underground. It makes no sense at all, increases gas and oil price.
Second, there's an orgy of speculation on the futures market. It makes no sense for us to watch this bubble grow. We need to burst that bubble of speculation.
Hedge funds and investment banks are neck deep speculating in the futures market. And that is adding, in my judgment and the judgment of some other experts, anywhere from 20 to $30 a barrel to the price of oil.
We believe a margin requirement of 5 to 7 percent, in the futures market, compared with 50 percent, to buy stocks on margin, we believe that margin requirement is too low. We ought to increase that margin requirement and wring the speculation out of this system and bring the price of gasoline and the price of oil back.
And the fact is, this system has the American drivers and the American consumers over a barrel.
And we aim to try to find a way to solve it.
SEN. REID: Maria Cantwell.
SEN. MARIA CANTWELL (D-WA): Democrats want to police the oil markets. Democrats gave the FTC new authority and just last Friday they issued rules on how they are going to implement that new law. We are going to have hearings and oversight to make sure that consumers' interests are protected in the development and in enforcement of that new statute.
As Senator Dorgan said, this legislation continues the effort to make sure that excessive or manipulated pricing is addressed. When we had the oil industries come to Capitol Hill and testify that oil prices should really be at $60 a barrel, that there is no supply and demand market functioning well, then we need to address that issue. And that's what this legislation does.
It gives new power to the president, as 28 states have, to declare an emergency so that during that period of emergency that excessive pricing will be also something that the FTC and others can take action against. This is legislation that's previously passed the Congress, but it's an important tool to have in the toolbox, as these 28 governors, both Republicans and Democrats, can attest to, as they have used that emergency authority to protect consumers.
SEN. REID: Finally, Senator Sanders.
SEN. BERNARD SANDERS (I-VT): Thank you, Senator Reid, Senator Schumer and others for your leadership on this issue.
What you're hearing today is there is not one single cause for the outrageously high price of oil and gas, and there's not one simple solution. And what we are doing today is beginning to bring forward a comprehensive package which says to the American people that what's going on now is unacceptable, that the price of oil and gas has got to go down.
This is Washington. Let me tell you, real world, representing a cold-weather state, a rural state -- a couple, husband and wife, are working. They write to me. Last winter, they could not afford to heat their home. Their daughter came down with pneumonia. Real world. Workers making 10 dollars an hour, traveling 50 miles to their job, 50 miles back, can't fill up their gas tanks.
The American people are looking out. They're seeing Exxon-Mobile making more profits than any corporation in the history of the world. They're looking at hedge fund managers making billions of dollars in personal profits. The time is now for Congress to begin to respond to the needs of the American people. This package begins to do that.
SEN. REID: Questions?
Q Senator Reid.
SEN. REID: Yes.
Q I want to ask you something that I asked last week when the Republicans introduced their package, which is that almost all of these provisions have been introduced and failed before.
What makes you think, possibly with the exception of the SPRO provision, that they have any chance now, especially all wrapped up together?
SEN. REID: The windfall profits that we just talked about has never been introduced before. This is new. It's different than anything we've done before. The price-gouging legislation is different. And there has not, to my knowledge, ever been anything introduced dealing with setting the margin on these speculators.
So I think that what we've done is in keeping with what we have done this entire Congress. We're looking forward. We believe there should be change. The Republicans are the status quo, as indicated, with this piece of legislation they filed, which is just more of the same that they've tried to do over the last 15 years. Theirs is old, antiquated, and won't work. Drilling in ANWR, it has been gone for some time, but they won't give it up.
Q (Off mike.)
SEN. REID: Our schedule is that we're going to introduce it sometime today and we're going to look for an opportunity to bring it up. We have, as you know, a number of things that we have to do. We don't know if the Republicans really want to do flood insurance. We hope they do. It's something that's important. But as indicated, (the FAA ?), just because it's important to the country doesn't mean they're going to let us do it. They've been in a snit since we've been in the majority, and they've just basically tried to stop us from doing anything. In spite of that, we've been able to go around a lot of the procedural hurdles they've set up and accomplish some good things for the country.
We're going to try to do that on flood insurance. We're going to try to do it on collective bargaining for public employees. We're going to try to do it with getting the conference report completed on the farm bill. We're going to have our energy package we're going to bring up. We have a budget that we need to complete. We have Department of Defense authorization we need to do. And mixed in all that, we have to do something with the supplemental, in the next two weeks.
Q (Off mike.)
SEN. REID: Pardon me?
Q (Off mike.)
SEN. REID: Well, we're looking at all of our options. We just think that what we have now is a package that will directly lower the price of gasoline, both long term and short term, and take a whack at the oil companies, who really need to be looked at very closely.
Q (Off mike) -- before the Memorial Day holiday?
SEN. REID: Sure going to try.
Q Senator, do you mind going back to the --
Q Senator -- (off mike) -- on the elections committee --
SEN. REID: What? I'm sorry. What?
Q Can you comment on the FEC --
SEN. SCHUMER: No. We'll do that later. We'll do that later.
SEN. REID: Pardon me?
Q (Off mike) -- nominees?
SEN. SCHUMER: No, we'll do that later.
SEN. REID: Well, I think what we want to do is talk about energy stuff today. You've -- I've already answered that question quite a few times today. I don't mind doing it another time or two, but let's see if we have any more energy questions.
Q There are two very different competing bills you have or had. Is there room for compromise? (Off mike) -- way that you could add to --
SEN. REID: Well, I don't think -- we are not about to compromise on ANWR, and that's basically all they have. So the answer's no. That's something that has been going on for multiple years, far more than a decade. And they should realize by now it's just simply not going to work.
Any more energy questions?
Q Thank you.
SEN. REID: Thanks very much.
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