American Housing Rescue and Foreclosure Prevention Act of 2008

Floor Speech

AMERICAN HOUSING RESCUE AND FORECLOSURE PREVENTION ACT OF 2008 -- (Senate - June 19, 2008)

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GAS PRICES

Mr. SANDERS. Madam President, every American understands that we now have a national crisis in terms of the outrageously high price that we are paying for energy. In Vermont and all over this country, workers are wondering how they can afford to fill their gas tanks. Truckers using diesel are going out of business. Senior citizens and others are worried with dread what happens to them next winter when the cost of home heating oil is off the roof. As a result of high oil and gas prices, the cost of food and other products is also rising, and our entire economy--and, in fact, the world economy--is suffering.

The question that millions of people are now asking is pretty simple. They want to know what this Congress can do now--not in 10 years or in 20 years but now--to lower the outrageously high price of oil and gas. Further, they want to know what we can do long term to make sure our country is energy independent; that we don't continue to import huge amounts of oil from the Middle East or elsewhere. They want to know what we are going to do in the midst of all of this to address the crisis of global warming and the droughts and the severe weather disturbances and the floods that we are seeing as a result of global warming.

Lastly, they want to know in the midst of all of this, long term, how do we make sure that the cost of energy is affordable. These are the issues the Congress has to address.

But let's be very clear. These issues will not be debated in an intellectual realm where we are just trading ideas. This debate is going to be clouded by the enormous power and money of special interests.

Since 1998, the oil and gas industry has spent over $600 million on lobbying--$600 million on lobbying--and since 1990, they have made over $213 million in campaign contributions. So they are extremely powerful. They have an unlimited supply of cash. They are using that power and that money to influence this debate. Anybody who doesn't understand that is very naive, indeed.

If we are serious about lowering oil and gas prices today in a significant way, it seems to me we have to address two fundamental issues. First, the reality is that the American people are getting sick and tired of paying over $4 for a gallon of gas at exactly the same time as the major oil companies are making record-breaking profits and providing their CEOs with outrageous compensation packages. Enough is enough. The greed of the oil industry apparently has no end, which is why Congress must impose a windfall profits tax and use some of that money to give back to people through rebate checks.

In the last 2 years alone, ExxonMobil has made more profits than any corporation in the history of the world, making over $40 billion last year alone. But ExxonMobil is not alone. Chevron, ConocoPhillips, Shell, and BP have also been making out like bandits. Last year, BP, for example, announced a 63-percent increase in their profits for the first quarter of this year. As a matter of fact, the five largest oil companies in this country have made over $600 billion in profits since George W. Bush has been President, while working people are paying $4, $4.20 for a gallon of gas. That is unacceptable.

What have they been doing with these huge profits? One of the things they have been doing is to make sure that the CEOs of their companies are extremely well compensated. In 2005, Lee Raymond, the former CEO of ExxonMobil, received a total retirement package of over $398 million. People in Vermont and around America are wondering how they are going to stay warm next winter. The former CEO of ExxonMobil receives a retirement package of $398 million.

In 2006, Ray Irani, the CEO of Occidental Petroleum--the largest oil producer in Texas--received over $400 million in total compensation. That is going on all over the industry: the heads of these corporations who are making record-breaking profits receiving huge compensation packages.

The situation is so absurd and the greed is so outrageous that oil company executives are not only giving themselves huge compensation packages in their lifetimes, but they have also created a situation, if you can believe it, where they have carved out huge corporate payouts to their heirs if they die while they are on the job. It never ends.

Let's be clear. Oil companies have a right to make a profit, but they do not have a right to rip off the American people.

Some of my Republican friends claim that big oil needs to keep these huge windfall profits so they can increase production and build more refineries. They are going to take this money and they are going to use it to create more oil for the benefit of the American people. That particular argument does not hold water. Big oil companies have been making windfall profits for over 7 long years, and they are not using these profits to build more refineries or to expand production. Instead, they are using this money to buy back their own stock, increase dividends to their shareholders, and, as I just mentioned, pay outrageous compensation packages to their CEOs.

Since 2005, the five largest oil companies have made $345 billion in profits, but they have spent over $250 billion out of the $345 billion buying back stock and paying dividends to their shareholders. That is where their profits are going, not investing in future oil production. Last year, ExxonMobil spent 850 percent more buying back its own stock than it did on capital expenditures in the United States.

Here is my final point on that issue: The $38 billion in windfall profits that ExxonMobil gave back to shareholders last year could have been used to reduce gas prices at the pump throughout the United States by 27 cents a gallon for the entire year.

Dealing with the greed of the oil companies is one immediate issue that we have to address. The second one deals with the growing reality that Wall Street investment banks, such as Goldman Sachs, Morgan Stanley, and J.P. Morgan Chase, and greedy hedge fund managers are driving up the price of oil in the unregulated energy futures market. There are estimates that a number of committees in the Senate have heard from different experts who testified that the price of a barrel of oil today is 25 to 50 percent higher than it should be because of excessive manipulation of oil futures markets and excessive speculation. This is an issue that must be dealt with.

Some people say: Well, we don't know anything about this. This has never happened before. Wrong. As I think most Americans understand and remember, manipulation of energy markets is nothing new. It is recent history. Everybody remembers that in 2000 and 2001, Enron successfully manipulated the energy markets on the west coast, driving up prices by 300 percent. During the midst of that controversy, they were saying: Oh, it is not us, it is supply and demand. It was them, and some of those guys are now in jail for the fraud they committed on the people of this country. That was Enron. But it is not just Enron.

In 2004, energy price manipulators moved to the propane market. That year, the CFTC found that BP artificially increased propane prices by purchasing enormous quantities of propane and withholding the fuel to drive prices higher. BP was fined $303 million for manipulating propane prices. Again, this is not a new concept; that is what they do.

In 2006, energy price manipulators moved to the natural gas market when Federal regulators discovered that the Amaranth hedge fund was responsible for artificially driving up natural gas prices. Amaranth cornered the natural gas markets by controlling as much as 75 percent of all of the natural gas futures contracts in a single month.

Amaranth eventually went out of business, went bankrupt, and the price of natural gas went down. So if you are looking at Enron, BP, Amaranth, why would anybody be shocked that today there are financial institutions manipulating the oil markets as we see it?

The Commodity Futures Trading Commission has the authority and the responsibility to prevent fraud, manipulation, and excessive speculation in U.S. commodity markets. Unfortunately, this authority and responsibility has largely been abdicated through the use of over-the-counter energy derivatives that are largely unregulated and by foreign boards of trade that have received no-action letters from the CFTC to operate terminals inside the United States, trading U.S. commodities to U.S. investors free from regulatory oversight.

That is an issue we must deal with and we must deal with now. If we are serious about lowering oil and gas prices today, we have to deal with the greed of the oil companies and with the speculators. Long term, of course, we have to move this country away from foreign oil, away from fossil fuel, to energy efficiency, to sustainable energy, and the potential there is enormous. That will help us deal with greenhouse gas emissions, in terms of global warming and, in the process, we can create millions of good-paying jobs.

Let me conclude by saying that if this Congress, in the very short term, does not deal with these issues, there are going to be people who are going to go cold this winter, not only in the Northeast but all over the Northern tier of this country. That is why I am going to do my best in this bill, and/or as soon as possible, to bring forth an amendment to substantially increase funding for LIHEAP.

The National Governors Association supports over $5 billion for LIHEAP. They are exactly right because, as the price of home heating oil and other fuels explodes, we are going to simply need to substantially increase funding for LIHEAP if we are going to make sure people don't go cold this winter. I look forward to working on this issue in a bipartisan manner.

Bottom line: Short term, going after the oil companies and dealing with speculation. Long term, we need to transform our energy system away from fossil fuels to sustainable energy. We must substantially increase funding for LIHEAP.

I yield the floor.

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Mr. SANDERS. Yes. I wish to raise an issue. And it is my intention at the appropriate time to offer an amendment which I hope we can get a vote on because this is an amendment of huge consequence; that is, with the price of heating fuel soaring, if we do not significantly expand LIHEAP funding, there are going to be people who will go cold, people who will die this winter.

We have heard about a number of national emergencies out there. I am certainly sensitive to the crisis taking place in Iowa and as to the remnants of Hurricane Katrina in Louisiana. But I want Members of this body to understand that if we do not substantially increase LIHEAP funding, there will be people in the northern tier of this country who will go cold this winter because they cannot afford to pay the outrageously high prices of home heating fuels that they are going to be asked to pay.

At the appropriate time, I will bring forth an amendment to increase funding by $2.53 billion for fiscal year 2008.

Madam President, the Northeast Coalition of Governors has made that request and that is the number I am going to be bringing forth.

I wish to have printed in the Record the letter that was written by the Coalition of Northeastern Governors which is demanding that we have at least $5.1 billion--which is what, as I understand, the authorized level is--that that be, in fact, appropriated.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

COALITION OF NORTHEASTERN GOVERNORS,

Washington, DC, June 18, 2008.

Hon. DAVID OBEY,
Chairman, Committee on Appropriations,
House of Representatives, Washington, DC.
Hon. JERRY LEWIS
Ranking Member, Committee on Appropriations,
House of Representatives, Washington, DC.
Hon. JAMES WALSH,
Ranking Member, Subcommittee on Labor, Health and Human Services, and Education, Longworth House Office Building, Washington, DC.

DEAR CHAIRMAN OBEY, RANKING MEMBER LEWIS AND RANKING MEMBER WALSH: As the Subcommittee begins consideration of the FY2009 Labor, Health and Human Services, and Education appropriations bill, the Coalition of Northeastern Governors (CONEG) urges you to support funding the Low-Income Home Energy Assistance Program (LIHEAP) at the $5.1 billion level authorized by the Energy Policy Act of 2005. We recognize the considerable fiscal challenges that face the Appropriations Committee this year and we deeply appreciate the Subcommittee's continued, strong support for the LIHEAP program. However, increased LIHEAP funds are urgently needed in the face of continually rising energy prices (particularly for delivered fuels) and the increasing number of households in arrears to energy utilities. Funding the LIHEAP block grant program at the $5.1 billion level, and providing it in a manner that will ensure additional funding to all states, will help restore some of the purchasing power of the program and enable states across the nation to provide meaningful assistance to citizens struggling to pay unaffordable home energy bills.

The low-income households targeted by the LIHEAP program are hit particularly hard by soaring energy prices, especially home energy prices. An increasing number of households are in arrears to energy utilities. For the households who depend upon delivered fuels such as heating oil and propane, the outlook is particularly troubling since they lack the benefit any utility assistance program. These households are concentrated in the Northeast, where almost 32 percent of LIHEAP recipient households rely upon delivered fuels, compared to 12 percent nationally or approximately 4 percent in many warm weather states. Even before the price of crude oil reached its recent record level, EIA estimated hat households heating primarily with home heating oil will pay approximately $2,000 to heat their homes this year. Without an adequate LIHEAP benefit that can meet the minimum livery requirement, these households face the prospect that a dealer will not make a delivery or will require a surcharge, further reducing the purchasing power of LIHEAP assistance.

The demand for this highly effective program continues to increase even as the purchasing power of the LIHEAP dollar plummets, and the average LIHEAP benefit decreases. If federal funding remains level or declines as home energy prices continue to rise, states face the difficult decision of serving fewer households or reducing the level of already stretched benefits. States in the Northeast have already incorporated various administrative cost-savings to deliver the maximum program dollars to households in need. In spite of these efforts to stretch federal and state LIHEAP funds, the need for the program is far too great.

Increased, predictable and timely federal funding is vital for LIHEAP to assist the nation's vulnerable, low-income households faced with exorbitant home energy bills. With an appropriation at the $5.1 billion authorized level, distributed to ensure that additional funding is provided to all states, the program can offer meaningful assistance to more households in need, lessen the need for emergency crisis relief, and make optimum use of leveraging and other cost-effective programs.

On behalf of all the CONEG Governors, we urge you to support funding for LIHEAP at the $5.1 billion level in the FY2009 Labor, Health and Human Services, and Education appropriations bill.

Regards,

Jim Douglas,
Chair, Governor of Vermont.

David A. Paterson,
Vice-Chair, Governor of New York.

John Lynch,
Lead Governor for LIHEAP, Governor of New Hampshire.

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