Gas Prices

Floor Speech

GAS PRICES -- (Senate - July 24, 2008)

BREAK IN TRANSCRIPT

Mr. SCHUMER. Mr. President, I rise to speak on two issues, both pending before us, both vitally important to the economy. One is energy, one is housing.

We all know the pain Americans experience. We all know the price of gasoline. In New York, people are already anticipating, with fear in their hearts, the price of home heating oil to heat their homes in winter. Everywhere else the costs of energy are driving prices higher, creating a middle-class squeeze.

We had a hearing at the Joint Economic Committee yesterday. Elizabeth Warren, a professor at Harvard, outlined that squeeze. The average middle-class person is hurting. They have built up a good life for themselves. Now they are hurting because, on the one hand, their income is not going up--productivity is but income is not--and at the same time their costs are going much higher than the rate of inflation. So they are caught in a vise--income declining, prices increasing.

This Friday night, there will be millions of Americans who, after dinner, husband and wife, will be sitting around the table talking about the things they care about, their children and their futures, their health. But probably the No. 1 topic will be, how the heck are we going to pay the bills.

Democrats are here to try and finally, after 7 1/2 years of being dominated on the energy debate by oil, oil companies, oilmen in the White House, change the debate. The other side has a simple solution. It gets modified every couple of years, but it is basically the same. Do what big oil wants. When the price is low, give them subsidies. When the price is high, make sure they don't pay much in taxes. All throughout, focus our energy economy on oil, because that is what the big oil companies want.

Rex Tillerson, the head of ExxonMobil, came before the Judiciary Committee a year and a half ago and said: ExxonMobil does not believe in alternative energy. I guess if I were ExxonMobil, I wouldn't either. Because as demand goes up and supply stays relatively flat, the price goes up and the profits go up. I have been asking, what do the big oil companies do with their profits. A huge percentage goes not into new exploration. They say they want to explore, but a majority of the money, in some cases, and a plurality, in most, goes to buying back their stock to raise the share price for themselves and their shareholders. This idea that oil companies are eager to explore is belied when we look at their financial statements. They are buying back their stock. It doesn't create one drop of oil. For the limited number of people who have ExxonMobil stock, that is a godsend. For the rest of us, it squeezes us even more. Chevron does it. BP does it. They all do it, with billions and billions of dollars. I believe last year ExxonMobil took $29 billion to buy back their stock.

I challenge my colleagues on the other side of the aisle, if they are so eager for exploration, why aren't they putting that $29 billion into exploration? But they are not. Again, we have the answer from the other side: Big oil today, big oil forever.

The American people know we are not going to drill our way out of this crisis. Even if the oil companies wanted to--and statistics show they do not--we don't have enough oil to prevent the price from going up, because demand worldwide is dramatically increasing, in China, in India, in the Middle East. The number of new cars in China and India in a short while will exceed the total number of cars in America, in 10 years, 15 years. Imagine that, new cars in China and India competing with us to buy gasoline. Obviously, the price will go up.

When our majority leader repeats over and over that we have 3 percent of the reserves and 25 percent of the consumption, there is no way to reduce prices significantly in the long term other than to get off our dependency on oil. So drilling is not the answer. Yes, in certain places, it may help. We are not opposed to that. I proudly went to the Republican majority, got Democrats to vote for drilling in the gulf. But it is not going to solve our problem. It will ameliorate it a tiny little bit in certain places, if you drill in the gulf and places near refineries.

The answer is to ween our dependence from foreign oil and tell OPEC and Chavez in Venezuela and Iran to take a hike because we don't need them anymore. They can't have their hands around our necks any longer--economically, politically, or geographically.

The good news is, we can do that. We can do that on both sides of supply and demand. That is what we Democrats are attempting to do. We are attempting to help get an electric car. Electric cars, no gasoline, will ride as smoothly and as well but much more cheaply than our present cars. They are not these little golf carts you drive around. You can have a big SUV with a battery that goes 250, 300 miles, same as a tank of gasoline, and drives with the same speed and the same power and the same torque. We are not too many years away from that, if we help create the battery. They have the battery. It just has to be mass produced. We need some research to get that done in a cheap enough way so that the price of cars stays the same while the price of fueling the cars goes down.

Senator Bingaman will be here shortly. He put one of my proposals in the Democratic proposal for housing conservation when you build. Forty percent of our energy is consumed not driving cars but cooling and heating homes, air conditioning and heating. If we were to adapt conservation measures, that could dramatically drop. One State has done it, California. California's energy consumption is lower than just about any other State, even though they are a car culture. Why? Because in 1978, under Governor Jerry Brown, whom many regarded as ``Governor Moonbeam,'' this was an excellent idea that has proven successful; they put conservation in building standards for homes and offices. Now, in terms of buildings, their per capita consumption of energy is about what Denmark's is. Why don't we do it nationwide?

Then there is alternative energy. There was an op-ed in the Washington Post by an oilman, someone I know named Jim Tisch, who said that now it is profitable to do wind power, solar power and other kinds of power and take our dependency off oil and gas.

We can both increase supply and decrease demand, reduce the price, if we embark now on a program of change. When we have tried to do this, our colleagues on the other side of the aisle have said no. Why? The big oil companies don't like it. Some of the big utilities don't like it. The big special interests don't like it. But they are doing great. It is the average middle-class person who needs the help.

The equation is simple. I will put it in stark terms, but I think it has to be put that way: Republicans, big oil, the past; Democrats, alternatives, the future. Let me repeat that. Republicans, big oil and the past; Democrats, alternatives and the future. Every American knows which side we want to be on.

I am sorry they have decided not to accept Majority Leader Reid's generous offer and take their proposal and our proposal and debate them. We will do that any day of the week. I am sure Senator Obama is eager to debate Senator McCain, who is following in the big oil footsteps of George Bush and DICK CHENEY.

The PRESIDING OFFICER. The Senator has 10 minutes remaining.

Mr. SCHUMER. I thank the Chair.

I am sure he is eager to have that debate. When you ask people in polling, should we drill, they say sure. Then when you ask, can we drill our way of the problem, they know we can't. We are going to continue to push. I hope and pray we don't have to wait for the next President to do this. I would like to see it done now, because we have waited 7 years. We have had bills on the floor in the past: bills to raise mileage standards of cars, stopped by the auto companies; bills for alternative fuels, stopped by the oil companies; bills to make sure utilities are more efficient, stopped by the utilities. When the price was low, no one paid much attention. But now we are all paying the awful price. Let us change once and for all. There are short-term solutions, whether with the SPR or tamping down speculation. But the only long-term, real answer is to reduce our dependence on oil, move to alternatives and conserve more, consume more efficiently. I hope my colleagues will do that. I hope we will look forward to the future and not delay the future any longer and not look back at the past.

HOUSING

The other bill that is before us now and upon which we will vote shortly is the housing bill. I urge my colleagues to support it. Unlike the energy issue, I think we do have broad bipartisan support. I was delighted to hear yesterday that the President changed his view and will now support the bill Chairman Dodd and Congressman Frank have put together. I am very glad of that. It is a good bill. I have had some significant input into it, for which I thank both of them.

Housing is at the nub of the recession. Housing prices go down and people don't have the money to do other things. That hurts. Homes are foreclosed upon and neighborhoods suffer. Even if you keep your home and even if your housing price is flat, mortgage rates go up. Since so many people have adjustable rate mortgages, that hurts us as well. But housing has been the bull's-eye of the economic crisis. For too long, Washington has twiddled its thumbs, despite the efforts of those on our side who want to do something and who have smart, rational, and targeted plans. But now finally, because the crisis is screaming at us, the President has agreed to support our legislation, and many on the other side, hopefully, will vote for it, as they did last week.

The housing bill has many important components. It has a plan that will set a floor for some home prices. It is not a panacea, but it will help reduce the decline in home prices in many places, which is desperately needed, and reduce the rate of foreclosure for several hundred thousand homes, which is also desperately needed. I would have liked to have seen that part of the bill be stronger. I would have liked to have seen the bankruptcy provisions put in there which would have been a club and made them work a little better. They are not there, but this is still good.

We also have in the proposal CDBG money. We held a hearing of the Joint Economic Committee where, from the community in Slavik Village, people testified how empty and vacant homes were killing their neighborhood. I don't know what entity Slavik Village is in, what town, whether it is Cleveland or somewhere else, but no local community has the ability to deal with all these foreclosed homes. The only entity that can is the Federal Government.

The CDBG money, which, thank God, now the President has dropped his opposition to, will buy up those homes and prevent the market from getting worse and communities from deteriorating. Because when you have an abandoned house and some vandals come in and pull out the plumbing and electricity, and then it becomes a haven for drug dealers and criminals, it ruins the whole neighborhood. The person living down the street, who has paid his or her mortgage and does not even have a mortgage anymore, suffers as well.

So this CDBG money, as well as the whole program we are putting together, is not simply aimed at those who cannot pay their mortgages. It is actually aimed at the millions of homeowners who are hurt because even though they pay their mortgages, and even though they may have finished paying their entire mortgage, their home prices decline because there are foreclosures in the community.

Then there is the part about Fannie Mae and Freddie Mac. I think this is necessary. It is unfortunate we are at this stage but necessary. Fannie and Freddie are at the center of our housing market, and the housing market is at the center of our declining economy. If you are simply going to say: Well, let Fannie and Freddie fail, let's learn the moral hazard, you are hurting tens of millions of innocent people along the way as you teach that lesson. That is why I do not think we should do it.

Do we need tougher regulation for Fannie and Freddie? Yes. And in the bill is a much strengthened regulator. I supported that from the get-go. But to allow Fannie and Freddie to deteriorate, and deteriorate as dramatically as they might have without a possible Government backstop, would do far more damage than the Government backstop itself. The odds are, we will never have to use it. And when you add to that the odds that we will use it but it will not cost all that much, they are overwhelming. But the alternative, the risk of looking into the abyss and letting the economy roll down--because if Fannie and Freddie were to go under, Lord knows what would happen in this economy--is not worth it.

I have spoken at length to Secretary Paulson and Chairman Bernanke, both appointees of the President, and they believe this is desperately needed. I was surprised so few of our House colleagues voted for this proposal. Ideologs do not usually solve problems. They have a narrow way of looking at things. So if you say Government is always the answer, you are going to mess things up. But just as equally, if you say Government is never the answer, you will mess things up as badly. We have a whole lot of people, at least in the House, who said: Don't get the Government involved at all. Let people suffer. That is for their overall good.

It reminds me of the old days when the Adam Smith theory said: Well, let anyone sell any medicine they want, and if it is a bad medicine, and you die from it, your family will learn from it and you won't buy it again. It is an awfully harsh view of the world, and not a view most Americans agree with.

In a somewhat less serious but serious note, this is the same thing with housing. If you let the housing market go in the tank, so much suffering will occur that the risk is not worth it. So this is a good package. Is it what we would have done? No. Is it what Mr. Paulson would have done on his own? No. But it is a fair and workable compromise, and unlike the Energy bill, it is a place where we can all come together and do something for the good of the economy.

I also do want to mention there is more money for mortgage counselors. The Senator from Washington, you, I say to the Presiding Officer, the Senator from Pennsylvania, and I have been working hard to get more mortgage counselors in the bill, and there is $180 million more for that, as well as $10 billion in mortgage revenue bond authority, which will help States and localities to develop refinancing programs--very important in my State. It is something the Presiding Officer has supported, and I am glad it is in the bill.

In conclusion, Mr. President, on energy, let's look forward to the future. Let's hope some of our colleagues will join us and not cling to the answer: oil today, more oil tomorrow. We do not have it, given the increase in demand.

On housing, let us move this bill forward quickly. Both are vital to the future prosperity of our country, and both ought to become law without further delay.

Mr. President, I yield the floor.

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