Consumer First Energy Act of 2008--Motion to Proceed--Continued

Floor Speech

CONSUMER-FIRST ENERGY ACT OF 2008--MOTION TO PROCEED--Continued -- (Senate - June 10, 2008)

BREAK IN TRANSCRIPT

Mr. THUNE. Mr. President, like a lot of Members of the Senate, I also heard from my constituents last weekend about high energy prices. I do not know how any Member of Congress can go back into their congressional district and their State and not be inundated by people who are very concerned about the impact high fuel prices are having on their pocketbooks and on our economy.

In fact, in my State of South Dakota, the studies bear this out. I think it has a disproportionate impact because it is a rural area. In rural areas, we are very energy dependent. We drive long distances. We are very agriculturally dependent in terms of our economy. Tourism is a big thing in our economy in rural areas. We also, in most cases, have lower incomes relative to the incomes of people in other parts of the country. In fact, there are some studies out that suggest that 15 percent, 16 percent on average of a person's income in a rural area is spent just paying the energy bill. Now, that is something that ought to concern everybody across this country because even though it might disproportionally impact rural areas today, it is clearly going to impact all Americans and continue to impact our economic activities in this country as time goes on if we do not get our arms around these escalating and daily increasing energy costs.

I had someone in my office today who said that he has a small refinery. He
said if the cap-and-trade bill we debated last week had been enacted or passed, immediately they would have seen a 38-cent increase in the price per gallon of gasoline.

There is a proposal to build a powerplant in my State of South Dakota, a coal-fired powerplant. I was visiting with some folks last week in my State who informed me that if, in fact, that cap-and-trade proposal had passed, it would have tripled the cost to construct that powerplant, something that is necessary to provide base load energy for the energy demands and requirements we have in the upper Midwest.

So here we are talking about high energy prices, high fuel prices, and the only solutions our colleagues are putting on the floor are solutions that would actually increase fuel costs. The cap-and-trade proposal last week, by any estimate--and there were 11 studies that were done of the five cap-and-trade proposals put before or introduced in the Senate, one which was put before the Senate last week. All 11 studies concluded that if enacted, that proposal would increase fuel costs, it would increase electricity costs, and it would lead to negative gross domestic product growth. The question was not if, it was how much would it increase costs. By as much as a dollar a gallon for gasoline. There were a number of studies conducted that suggested that it would cost the economy up to $6 trillion in GDP, negative GDP, as a result of that cap-and-trade proposal.

So here we are on the floor of the Senate. Everyone, I assume, is hearing the same thing I am hearing, when they go back to their respective States, from their constituents: We have high energy prices; we need some action; we need you to do something about that. And everything that has been put before the Senate last week and this week by the Democratic leadership does one thing: increases energy costs.

We had a vote today on an ``energy bill.'' What did it do? It imposed new taxes on energy. That was tried. That was tried back in the 1980s, the windfall profits tax. It led to reduced energy production in this country. The other thing that was talked about today was, well, let's sue OPEC, let's sue OPEC; that will somehow drive down the cost of energy.

There is not anything in any of those proposals that does anything to address the problem because you cannot address this problem, you cannot fix the energy crisis in this country unless you address the issue of supply. There is not anything in any of those bills that have been put forward, that have been put forward by the other side, that addresses the fundamental issue of supply. I believe the American people understand that. They understand full well that you do not raise taxes to get more of something; if you raise taxes, you are going to get less of something. They realize that we cannot just sort of unilaterally decide to sue an oil cartel and expect that is going to lead to additional energy supply in this country.

There is one thing and one thing only that we can do to lower gasoline prices for people in this country; that is, increase homegrown domestic energy supplies so that we do not have to rely upon other nations around the world for our energy.

I wish to share a couple of statics that I think are important in this debate. One is that 60 percent of our oil comes from outside the United States. That means that on any given day we are getting 60 percent of our energy to fuel our automobiles and to keep our economy going from countries around the world, many of which are run by petro-dictators who have nothing but hostile and ill intentions toward the United States. Sixty percent of our oil supply is coming from outside the United States.

We use 140 billion gallons of gasoline every year in this country. I point that out because I want to use that to get to another point; that is, we are generating about 8 billion gallons of renewable energy or ethanol on an annual basis. At the end of this year, we will be generating 1 billion gallons in my State of South Dakota alone. But the studies that have been done have suggested that that 8 billion gallons of ethanol, out of the 140 billion gallons of fuel we use in this country, of gasoline we use in this country, has reduced energy prices by about 15 percent--price per barrel of oil, price per gallon of gasoline reduced by about 15 percent by the contribution that 8 billion gallons of ethanol is making to our overall fuel supply.

In today's gasoline prices, 15 percent would be about 50 cents, 60 cents on the gallon. So we have lower fuel prices today than we would otherwise have as a result of adding to our supply of energy, homegrown energy, through the hard work and production of our farmers across the country who raise the corn that is converted into ethanol.

I suggest perhaps the way to address this problem, if, in fact, 8 billion gallons of ethanol has helped reduce gasoline prices by 50 cents a gallon, maybe what we ought to be doing is looking at ways we can grow additional energy supply. We don't need less biofuels, we need more. We are going to be moving now from corn-based ethanol into cellulosic ethanol that can be made from other forms of biomass. We hope that technology will be progressing quickly enough that it will enable us to meet the targets we have of 36 billion gallons called for in the renewable fuels standard. That is what we are doing in the area of biofuels.

I say that because if we look at what we have in terms of domestic resources, whether that is biofuels or oil, if we could get some of that oil into the pipeline, we could do a lot to impact prices people are paying for a gallon of gasoline. Back in 1995, President Clinton vetoed a bill passed by Congress that would have allowed for exploration on the North Slope of Alaska. We have somewhere between 6 and 16 billion barrels of oil on the North Slope underneath the ground. With modern technology and in an environmentally friendly way, directional and horizontal drilling, with a minimal imprint on the surface, we can get access to somewhere between 6 and 16 barrels of oil. What does that translate into? That translates into 1 million barrels a day coming into this country--1 million barrels a day. And you figure a barrel translates into 42 gallons, and of that about half can be refined into gasoline, a million barrels a day would translate into about 7 billion gallons of gasoline a year or roughly equivalent to what we are generating in ethanol. And the 8 billion gallons in ethanol is reducing the price of gas by about 50 cents a gallon. So if you do the math, more energy, more supply at the margin is going to lead to lower cost. That is the fundamental economic rule of supply and demand that most people understand.

Any of my constituents in South Dakota, if I went home and told them that the Democratic leadership has put a bill on the floor that is going to allow us to file lawsuits against OPEC or that is going to impose new taxes on oil exploration, a windfall profits tax, they would say: What does that do to affect the law of supply and demand? Get more supply in the marketplace so that we can do something about reducing the price per gallon of gasoline?

This problem gets addressed when America gets serious about domestic energy supplies. We have tried again and again to get a vote on exploration on the North Slope. We have tried again and again to get a vote on deep sea exploration for energy--all of which has been blocked in the Senate.

We have even tried to get legislation moved that would expedite the permitting process for new refineries because we have a shortage of refining capacity. These are all things that we could be doing that would help address the supply problem.

I suggest when we get to what we are focusing on that we can do, there are pieces of legislation on which there is broad agreement. We passed a bill a couple weeks ago that Senators Ensign and Cantwell offered of tax extenders that would help promote more investment in renewable energy. It passed out of the Senate by a vote of 88 to 8, broad bipartisan support. Why are we not focusing on those things we can do rather than spending our time having the Democrats throw out solutions that impose new taxes, new regulations, new bailouts to trial lawyers, which was included in this bill, an earmark for the Senator from New York at $1.2 billion, all of which we know are not going to pass?

We aren't going to get the votes to get that sort of thing through. But there are things we can be doing, such as extending the production tax credit
for wind, which was included in the Energy bill to which I just referred. Those are the things we ought to be looking at. What can we do to add to the supply of electricity, to add to the supply of fuels so that we don't have to get 60 percent of our energy from outside the United States, so we are actually doing something that will in a positive way impact the price our constituents pay for a gallon of gasoline?

This impact is going to be felt all across the economy. Look at the statistics on airlines. We are using actually less fuel on airlines today, if we look at this green line, than we were going back even to 2000 and 2001. But look at the fuel costs of the airlines. They are exploding. We have airlines facing bankruptcy, making service cutbacks, not serving smaller communities, laying off employees because of high fuel costs. There is no end in sight.

It is $4 today. What is to stop it from going to $5? If Ahmadinejad and Chavez decide they want to get $200 for a barrel of oil, what is to stop them, if we have no leverage? We need to be taking steps in the United States that will increase our domestic supply of energy so we don't have to rely upon those other countries for our energy supply. We have those resources here. We have oil. We have biofuels. We need new refineries. We can build new nuclear plants. All are being blocked.

Let's focus on what we can do to affect the fundamental rule of supply and demand that will lead to lower energy costs, that will increase the amount of energy we have relative to demand. That is how we can impact in a positive way the price our constituents are paying for a gallon of gasoline. Until we get serious about that, all this other stuff done for optics because it is an election year and to gain some political upper hand to go back to a constituency saying, we did this or we are going to beat up the oil companies, raise taxes, regulations and lawsuits and litigation, those sorts of things don't solve the fundamental problem. We don't have enough domestic supply. Until we address that fundamental problem, we will continue to be held over a barrel and be at the mercy of these foreign countries telling us what the price per barrel of oil and price per gallon of gasoline is going to be.

I hope we can focus on that. We have some great solutions. My State is a good example of what we have done with renewables. The Senator from Iowa has a lot of great examples in his State of what we are doing with renewable energy and wind. We have the resources to get this done. It is high time we did it.

I yield the floor.

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