Stop Excessive Energy Speculation Act of 2008 - Motion to Proceed - Continued

Floor Speech

STOP EXCESSIVE ENERGY SPECULATION ACT OF 2008--MOTION TO PROCEED--Continued -- (Senate - July 22, 2008)

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Mr. DURBIN. Mr. President, pending before the Senate is the energy issue, and, of course, America would expect that. If I went back to my home State of Illinois--if I went to any State--and stopped the average person on the street and said: Got any problems? They would say: How about gas prices, Senator? Are you paying attention? Because if you are paying attention, you will notice that as we drive down the street in the morning on the way to work or back home from getting the kids from school, you take a look at the signs at gas stations and they are startling. They are going up all the time. When you pull in to fill up, if you can afford it, you are putting more money on the counter than you have ever done in your life. People are saying: What is going on here in America? We can't afford this anymore.

I took my little Ford pickup truck to a Shell station in Springfield, IL, a couple of weeks ago, and at the end of the day, it cost $61 to fill up that little pickup truck. I thought to myself: Glad I don't have to do this very often. But some people have to do it once a week--and sometimes more often--and it is a serious problem. It is real cash money coming out of their pockets as they are struggling to keep up with the cost of living.

What is going on here? Well, over the last several years, several things have happened. One of the things that has happened, we know for sure, and there is no question about this, the big oil companies have steadily increased their profits since President Bush and Vice President Cheney came to office, dramatically increasing them to the point where these businesses--the oil companies--are making more money than any business in the history of the United States--not just in the oil business but any business. They have broken the records in reporting these profits.

Of course, they want to explain it to us, and so they buy full-page ads, if you take the time to read them in the newspaper, explaining we are not making that much money. They compare themselves to other industries and companies, and yet the bottom line is there is pretty dramatic increases in their profit-taking. In fact, they are breaking all records. This ad, of course, was paid for by, as they say, the people of America's oil and natural gas industry--something called energytomorrow .org.

Most of these ads are being sponsored and paid for by the people who are making the money. The American Petroleum Institute is one of the major sponsors of this advertising, saying: We are not making that much money. But Americans think differently, because in addition to this chart showing the oil company profits, this one tells us what has happened to the price of gasoline since President Bush took office. It is not current because it still shows the price of gasoline below $4 a gallon. I know in my hometown of Springfield and in Chicago, the price is way over $4. It may be closer to $4.50. I wish it were not going up, but I am afraid it might.

So we have seen oil company profits rise and the price of gasoline go up as well. There are various ways to look at this. You can say to yourself: Something is wrong and I need a solution and--most people say--I need it right away because I have to fill up again next week. So what are you going to do right now to deal with it? Well, honest people, in responding to that, will tell you there is little we can do today to change the price of gasoline tomorrow. But there are things we can do in the short-term that will have an impact.

The Republican side of the aisle has one approach, the Democratic side of the aisle a slightly different approach. The Republican side of the aisle is arguing we should drill now--we need to drill for more oil, right now. The obvious argument being that if the supply should increase, prices should go down. That, of course, is their argument. They overlook what the Senator from Pennsylvania mentioned a few minutes earlier--if we decided today, if we picked out one piece of territory in the United States or off our shore and said: We think there is oil here, and so we are going to drill for it, we are going to bring it up out of the ground, take it to the refinery and turn it into gasoline and we will feel the impact on price, it would take us, the estimates are, anywhere from 8 to 14 years for that to happen.

It is a pretty massive investment to go into drilling, with all the sorts of seismological and geological testing that has to be done, and they have to secure the equipment in a market that is now kind of pushed to the limit.

It takes a long time. So to argue ``drill now'' is to say ``drill in 8 to 10 to 12 years and then hope that it makes a difference in the marketplace.''

Many people are arguing that point of view. They are arguing that we should be drilling for more oil. In fact, the same ``people of America's oil and natural gas industry'' are buying full-page ads in many newspapers around the country saying: Smart energy policies and good energy politics involve drilling more now.

So the industry that wants to benefit from the drilling, the industry that is to profit at a record level from the drilling is buying the advertising, and our Senators on the other side of the aisle have accepted this battle slogan. This is what they tell us we need to do is to drill now. But, of course, there are some realities they often overlook in making this drilling now argument. Here is one that you cannot ignore.

It is the reality that we have to be very sensitive to--it is this. This is the percentage of world oil reserves. And if you look, the country with the largest percentage is Saudi Arabia, 20 percent of known oil reserves. Then you look at the United States, 2 percent; some say 3 percent. That is an estimate of all of the possible oil we could drill, if we could drill everywhere, all the time, and do it as quickly as possible--2 to 3 percent.

Now, that is an eye opener to think that so little of the world's oil reserves are actually within the control of the United States of America. So to say drill now is to give access to 2 percent of the oil. Well, is it enough? Take a look at the oil consumption. The U.S. consumes about 24 percent, almost one-fourth of all of the oil that is produced and refined, and the rest of the world: 76 percent; 2 percent of the supply, 24 percent of the consumption. To argue that we cannot drill our way out of it is fairly clear. We do not have enough oil in the command and reach of the United States to solve our economy's needs. We are going to have to look beyond drilling for oil into other options as well.

I think that is one of the realities the other side of the aisle has not acknowledged. But there is oil available and land available to be drilled. There are 68 million acres of Federal land, controlled by our Government, by us as taxpayers, that has been leased to the oil and gas companies.

We have said to them: Would you be interested in drilling on this land for oil and gas? They have put money on the table, signed leases to have that right to 68 million acres of land. We believe that acreage could produce 4.8 billion barrels of oil. That would nearly double the total U.S. oil production. That 4.8 billion barrels of oil equals more than six times the estimated peak production of the Arctic National Wildlife Refuge, which is another thing that is brought up often.

So, currently, of the 68 million acres under lease from the Federal Government for oil and gas, the obvious question is, why are not the oil and gas companies drilling there? They believe there is oil and gas, they paid the lease to do it, but they are not using it. They have set this aside and they are not using it. They are not drilling on this land. And we have not stopped offering land to the oil and gas companies.

Just recently, since January of 2007, we made 115 million acres of Federal land available for the oil companies to bid on oil and gas companies, to drill for more oil and gas, 115 million acres offered. What is that the equivalent of?

Well, this little line represents the line of I-80 across the continental United States from New Jersey to California. And the 115 million acres is the equivalent of taking a 62-mile-wide swath along I-80 from coast to coast 62 miles wide. That is how much land we have made available to the oil and gas companies to bid on for exploration.

How much have they actually bid on? Only 12 million acres--12 million acres. When the other side argues there is not an opportunity for more oil and gas, to say, well, why did they not bid on the acres that were offered? Why are they not drilling on the acreage they currently lease, something this next map will kind of show you from a viewpoint of the Western United States what I am talking about.

All of the colored portions of this map of the Western United States represent Federal lands that are being leased for oil and gas exploration. If you will look carefully, the black sections are those that have been leased and are in production. The red, which dominates and overwhelms this map, is federally leased lands that oil and gas companies are not actively using. They have set the lands aside. So to argue that they do not have opportunity for oil and gas drilling ignores the obvious; they do.

Then they say: Well, what about the Outer Continental Shelf? This gets sensitive because there are communities along the Gulf of Mexico and the Western United States that have environmental concerns about offshore drilling.

The fact is, a lot of offshore land under the control of the Federal Government has been available for oil and gas exploration for a long time. There are 68 million acres leased to oil companies. Of that, 33.5 million are offshore. Again, the red sections are leased lands, Federal lands, leased to oil and gas companies that they are not touching, that they are leaving to sit idle as they come to Congress and argue: We need more millions of acres to explore.

These are lands they are paying to lease, and they are not exploring. This is the situation where we have a real challenge, a challenge that reflects the reality of what we are up against.

The reality is this. There are opportunities to responsibly drill for oil and gas. We think those opportunities are there now, and we can add to them in a sensible way. So exploration and production is part of the answer to the gasoline and oil prices that we face today. But it is not enough. It is not enough.

We know in this long time lag between deciding to drill and actually bringing up oil, we have to think about what we can do now to make a difference. Well, here is one idea: We have what we call the Strategic Petroleum Reserve. It is 700 million barrels of oil that we have set aside for the safety and security of the United States. We have said, if the time ever comes when something awful occurs, we cannot bring the oil from overseas that we currently need, we have this little stockpile--not so little stockpile--of strategic petroleum that is available.

We are making the suggestion that we take 10 percent of it, some 70 million barrels of sweet crude oil, and release it over a period of months on the market. The belief is, if the Federal Government sells that, first it will bring in money. That is oil that we paid less for. Now it is commanding higher prices. And, secondly, more supply on the market in the short term should bring down the price of a barrel of crude oil and the price of the products made with that crude oil, whether it is gasoline or jet fuel.

So immediately it will start bringing down prices. The Democratic side is calling for continued exploration in the millions of acres that are already available to oil and gas companies; and, secondly, selling out of the Strategic Petroleum Reserve 70 million barrels or so of oil to bring down the market price and to make gasoline and other products more affordable.

That could have an immediate impact. Is it the answer to our concerns? No. It is a temporary move, but we need it. At a time when airlines are cutting back 20 percent of their schedule and laying off 20 percent of their employees and more to follow, at a time when businesses are struggling against the possible recession, and the turnaround in our economy, we need to provide that help.

But we need to do more. We have to look beyond exploration and even the Strategic Petroleum Reserve to the real honest challenge we face; that is, coming up with an energy policy so we do not find ourselves in the predicament we are in today with the Republicans arguing, keep on drilling and do not worry about tomorrow, and others coming up with solutions that might have a temporary benefit but not a long-term benefit.

What is the long-term answer? Well, the long-term answer can be found from a number of people, one of whom is a fellow whose name you can hardly ever forget: T. Boone Pickens. Mr. T. Boone Pickens, who has made several billion dollars in the oil industry, is now spending some of his money on television advertising. You can hardly miss him if you are in Washington and other parts of the country.

Here is what Mr. Pickens recently said: I have been an oilman all of my life, but this is one emergency we cannot drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil.

What he is saying is what we all instinctively know: there are ways for us to reduce our consumption of energy and still have a strong economy and a good life in America. The changes are not going to be dramatic; they have to be thoughtful.

First, we need cars and trucks that are more fuel efficient. My wife and I bought a Ford Escape hybrid a few years ago. It is no Prius. It gets about 27 miles a gallon. That is pretty good by most standards. If you drive a Prius, you might get 45 miles a gallon, to give you a comparison. So we can do better when it comes to cars and trucks that we build, make them more fuel efficient.

I read in this morning's New York Times that Ford Motor Company has decided to get away from the SUVs and heavy trucks and start building more fuel-efficient cars and trucks. That is long overdue. If they had been moving on this before, they would not be in the situation they are in today. So making more of those vehicles available is a smart move.

Mr. Pickens believes we should have more of these vehicles fueled by natural gas. It would have less of a negative impact on the environment, it is more plentiful in the United States, and it could, in fact, fuel our economy.

There are those who argue we should move to another technology, plug-in hybrids. You come home at night, you plug in your car, your truck, it is good for 40 miles in the morning, which is all we need each day, before the gas engine kicks in, and it does not pollute. In the process, you get electricity from sources that are also clean.

Yesterday in my office was a man who is involved in wind energy. My State, which I never dreamed would be a major player when it comes to wind energy, has wind farms popping up all over, literally hundreds of those wind turbines generating electricity without polluting.

The opportunity across America is almost limitless to replicate that technology once we have made an investment in the infrastructure of transmission and distribution lines. But that is part of the overall picture.

America's energy policy involves renewable and sustainable sources of energy. We cannot talk about the energy issue without raising two other important issues. One is our Nation's security. As long as we are dependent on Saudi Arabia and the Middle East for our oil, we are going to be drawn into foreign policy choices that we do not want to face. We will be drawn into wars and challenges domestically and diplomatically that we never would have faced if we were not so dependent.

So reducing our dependence on foreign oil is a small thing from our country from a security point of view and also from the environmental side. I am one who believes in global warming. I believe it is a serious problem that is getting worse. If we do not do something about it, we are going to leave a much different world to our children and grandchildren. So as we think about our energy challenge, we need to put together with that challenge an answer which meets the environmental challenges to reduce our pollution. I think we can do that. I think we can put these things together. And in combining them into an integrated energy policy, we can find ways to reduce our energy consumption without compromising our quality of life or the growth of our country.

I have listened carefully to the other side as the Republicans have come to the floor. And there are two things which you will never hear as they get up and speak: First, they are not critical of speculators. They are not critical of those who are speculating in the energy futures market.

Many people believe, and I am one of them, that there is excessive speculation, perhaps even manipulation, in some of these markets. Our bill says, and I think we should, put more regulators in charge of the energy futures industry to make sure everyone is playing by the rules, to make sure some of the major traders are not pushing up the prices strictly for profit taking.

I cannot see what the problem is with that kind of regulation. We support that. We want more and more markets to be disclosing. I want to know who is trading in these massive amounts on energy futures and driving up the price of a barrel of oil.

Regulating that is a sensible thing to do. I want to make sure the markets are available for commercial applications so that if an airline such as Southwest, which has received quite a bit of attention--if Southwest does try to protect its future cost of jet fuel by hedging or buying futures in the oil market, that is a good thing. And the markets should be there for them. But if some wealthy investment bank decides they want to move around a couple of billion dollars and play the market on oil prices, and people across America are paying higher gasoline prices as a result, I am not sure I am going to stand by and applaud that.

I want to make sure there is a sensible market, well regulated, with reasonable limits in trading. So we believe speculation is an important part of this issue. Time and again, Republicans have come to the floor over the last several days saying: Oil speculation is not the problem. I disagree.

The second thing is, we have to address the oil companies. The profit taking that is going on there is hardly ever criticized on the other side of the aisle. It should be. The oil companies are doing quite well, at the expense of average families, businesses, and farms. So putting together a comprehensive energy package involves responsible exploration and production. It involves releasing oil from the Strategic Petroleum Reserve to bring prices down on a temporary basis.

Also, we need investments in technology and research so the cars and trucks we drive are more fuel efficient. We need ways to make sure buildings and others things we invest in are greener and more energy efficient. We need to be thinking about new technology and research that moves the Nation forward so the economy grows but not at the expense of the average person trying to pay gasoline bills and not at the expense of an environment children will need to live in to have the good life we have had in this world.

I hope we can have a comprehensive approach. We have offered Republicans one basic procedural opportunity, but I think it couldn't be fairer. We have a speculation bill. We have offered them: Bring a speculation bill before us. You can have your debate. We will face the same vote. Let's see who wins. We have an energy bill. Bring your energy bill before us. Let's have a debate. Let's have the same vote one way or the other. Let's see who wins. How much fairer could it be? They get to devise their own amendments, put what they want in, and bring it for a vote. That is fair. I hope they will accept it, and I hope this important debate will start soon.

I yield the floor.

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