Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - May 13, 2008)

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By Mr. SCHUMER (for himself, Mr. DORGAN, Mr. CASEY, Ms. KLOBUCHAR, and Mr. SANDERS):

S.J. Res. 32. A joint resolution limiting the issuance of a letter of offer with respect to a certain proposed sale of defense articles and defense services to the Kingdom of Saudi Arabia; read the first time.

Mr. SCHUMER. Mr. President, I rise to discuss rising energy prices. I remind President Bush, as he leaves for his trip to the Middle East, his ally, Saudi Arabia, holds the key to reducing gasoline prices at home in the short term.

I, along with my colleagues, Senator DORGAN of North Dakota, Senator CASEY of Pennsylvania, Senator KLOBUCHAR of Minnesota, and Senator SANDERS of Vermont plan to submit a Senate resolution that would block all four pending arms deals to Saudi Arabia, which together total $1.4 billion, unless Saudi Arabia shows that our friendship is a two-way street and increases its oil production by 1 million barrels per day above the January 2008 output levels.

Because these weapons have not yet been delivered to Saudi Arabia, Congress still has the power to block these four deals as leverage to get the world's larger oil producer to bring its production back to historical levels, an action that would have the single greatest impact of lowering gas prices in the short term.

I am very proud that we today voted to prevent continued oil going into the SPR as Senator DORGAN, the sponsor and somebody who has pushed this issue a long time and done it well, has noted that will probably reduce prices about a nickel. There is more. It is a good first step, as he would be the first to say, but we can do more.

If Saudi Arabia would increase production by 1 million barrels a day, the price of gasoline would go down 50 cents a gallon almost immediately. It is a short-term fix.

As my colleagues across the aisle and the administration continue to side with big oil, we have no other choice because, right now, it is Big Oil and OPEC that are benefitting and American families are losing. It is unfortunate we are at this point. Eight years of poor stewardship over our Nation's energy policy has left us with alternatives. And my Republican colleagues have blocked every attempt at real energy reform that would help alleviate the rising energy prices in this country.

In the 110th Congress alone, my colleagues on the other side of the aisle have blocked four different attempts by Democrats to extend the alternative tax provisions, and not only for a year or two but many.

On June 21 of last year, the extension of energy credits received 57 votes; on December 7, it received 53 votes; on December 13, it received 59 votes; and on February 6, 58 votes.

Each time, Republicans put up roadblocks requiring 60 votes in order to pass the bill. Each time the overwhelming majority of Democrats voted for the bill, the overwhelming majority of Republicans voted against.

President Bush opposed the bills because each would have ended tax breaks for big oil, as if they needed more tax breaks given their record profitability.

Meanwhile, Americans continue to spend more and more on gasoline, as prices at the pump have skyrocketed upward to record heights. Although our President was not aware that gasoline prices were predicted to top $4 a gallon this summer, American households already faced with rising fiscal burdens incurred as a result of the subprime foreclosure crisis and the financial credit crunch are being squeezed further by record-high prices at the pump.

In a sign that high prices will continue unabated, the Department of Energy recently forecasted that gasoline prices would average $3.66 per gallon across the U.S. this summer, 25 percent higher than last summer's average.

So I, along with several of my colleagues, think it is time to get the President's attention and the attention of the leaders of Saudi Arabia. The resolution we have introduced today, which Senator REID will rule to move on to the calendar this afternoon, requires Saudi Arabia to increase their oil production by 1 million barrels a day or jeopardize their $1.4 billion of pending arms deals with the United States.

One of those deals includes the sale of JDAMs, Joint Direct Attack Munitions, which makes conventional bombs into smart bombs that can be aimed through the window of a house. The administration has warned us that Saudi Arabia needs to use these weapons in their fight against terrorism.

But how are they going to use laser-guided bombs to fight terrorists in their midst? Saudi Arabia very much wants these smart bombs. So our resolution sends a strong signal to the administration and to Saudi Arabia that friendship with the United States is a two-way street. If the Saudis want to see their weapons, we need to see an increase in crude oil production within the next 30 days. As we all know, the principal cause underlying the rise in gasoline prices has been a spike in crude oil prices, now over $120 a barrel, a 100-percent increase over the crude price at this point last year. A significant portion of this price rise is due to supply decisions made by OPEC. The largest member of OPEC, Saudi Arabia, controls one-fifth of the world's crude reserves and constitutes more than 10 percent of daily production of crude oil.

In the past, Saudi Arabia has kept crude oil prices high by limiting supply, producing anywhere from 1 to 5 million barrels per day below capacity. Currently, they are producing 2 million barrels a day below capacity. Why? Why right now, when crude prices are at an historic high, are the Saudis continuing to cut back on production? Does it make any sense? It does if you are a member of OPEC. It does if you are ExxonMobil. But it doesn't if you are almost everybody else. With crude oil at the highest price ever, Saudi Arabia and other members of OPEC are making record profits, and Saudi Arabia is not alone. Last month big oil companies announced some of the best profits in recorded history. Exxon made almost $11 billion in profit last quarter. So we know OPEC has no incentive to increase their production right now, since that would decrease their profits. In fact, if Saudi Arabia were to increase its production by 1 million barrels per day, that translates to a reduction of 20 percent to 25 percent in the price of crude oil. Crude oil prices would fall by more than $25 a barrel from the current level of $126. In turn, that would lower the price of gasoline between 13 and 17 percent or by more than 62 cents off the expected summer price, if the Saudis would simply produce the amount of oil they used to produce when they were far more responsible. Yet Saudi Arabia's oil minister said there was no need to increase supplies by even one barrel of oil.

But even as they are saying no, no, no to the United States, they are saying yes, yes, yes to China. They are doubling oil production for China. This is galling. When the President goes to Saudi Arabia and acts as if the Saudi King and the Saudi leadership are our good friends, he ought to look the American family in the eye and say that and say Saudi Arabia is a loyal ally. To most Americans, a well-armed Saudi Arabia is far less important than a reasonable price for gasoline, heating oil, and all other products upon which oil is based.

The Saudis have to understand this is a two-way street. The President has to understand that the one-way street relationship with Saudi Arabia has to end. We provide them weapons. Our troops provide them protection. Then they rake us over the coals when it comes to the price of oil. Just as Saudi Arabia feels a need to protect itself with high-tech, laser-guided missiles, American consumers and our economy need protection from record high oil prices, exacerbated by OPEC's stranglehold on supply. The administration needs to use all of the leverage it has to influence the OPEC cartel to stop manipulating the world's oil supply to its member nations' own wealth advantage. It is time we stop treating a cartel that would be illegal in the United States with kid gloves. That is what our resolution does. It reminds the Saudis there are consequences for keeping oil prices high at a time when American families are hurting. It reminds Saudi Arabia that it can't take American support for granted. They can choose record oil profits or American weapons, but they can't have both.

I would like any Member of this Chamber and President Bush to look the average American family in the eye and say: There is nothing we can do to get Saudi Arabia to be responsible.

There are things we can do; we just refuse to do them. This resolution has us step to the plate. The resolution is not the final answer, of course, to the problem of rising gas prices. That is why I am a proud cosponsor of S. 2991, the Consumer First Energy Act of 2008 that we Democrats will offer on the floor before Memorial Day. That bill addresses underlying causes that are
driving up energy prices and forces big oil to reinvest some of their record-breaking profits into alternative and renewable sources of energy that are both good for the environment, the consumer, and break our dependence on foreign oil.

Our bill will also attack the broader bill's speculation, punish price gouging, and put additional pressure on the OPEC cartel. I urge my colleagues on both sides of the aisle to support it. I am hopeful we can move on this resolution as soon as possible so American consumers no longer have to carry the heavy burden of high energy prices all by themselves.

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