High Gas Prices
Floor Speech
HIGH GAS PRICES -- (Senate - July 29, 2008)
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Mr. CORNYN. I agree, Mr. President, with the Senator from Tennessee. The way I have heard it expressed, it certainly explains my point of view, and I think the facts, as they are, are that we need all of the above. We need to use less, we need to conserve, and we need to find more energy.
I ask the Senator from Tennessee: To me, it seems as though the problem sort of boils down to how do we generate more electricity and then how do we come up with ways to power our vehicles and fly airplanes. As the Senator points out, 98 percent, I believe he said, of the energy used for transportation is oil-based at present. The Senator from Tennessee has come up with a very commonsense approach--forward-looking--to try to figure out a way, as the car industry has, to do more using of electricity and to reduce our dependency on oil.
It would be helpful to look back at how we got where we are today, not necessarily to point the finger of blame but to point to the fact that it is not likely to get better in the future.
I ask the Senator from Tennessee, isn't it true that growing economies, such as China and India, are demanding more and more access to energy which has fueled their economic growth and, in his view, is it likely that is going to reduce anytime soon or just get worse? In other words, is this something that is going to go away--a temporary problem--or is this something that is going to become more and more of a problem as time goes on?
Mr. ALEXANDER. I think the Senator is exactly right. In the newspapers today and yesterday was the story of how in India they are introducing a new car which will be sold for $2,500. Now, there are more than a billion people in India. They have a middle class that is bigger than the whole population of the United States of America. When suddenly tens of millions of people in India begin to drive cars that are powered by gasoline, what happens to the demand for oil in that country? The demand goes up, and if the supply doesn't go up, too, the price goes up.
We have the same thing in China. There is a story in the Washington Post today, which is part of a series, about how the Chinese, actually, for status purposes, like driving Hummers. They like big cars. Here we Americans are going to small cars and the Chinese are going to big cars and there are a lot of them as well. We know the demand for oil and gasoline is going up around the world, and we are in the world market. So for the foreseeable future, as we move to a different kind of economy--a different kind of energy picture--we are going to need at least as much oil as we have today.
I say to the Senator, I think the question is: Are we going to be sending $600 billion or $700 billion overseas to buy it, or are we going to be paying ourselves to use it during the next 10, 20, 30 years while we are moving to a different type of energy environment?
Mr. CORNYN. Mr. President, I know there are some who have suggested we ought to demand that Saudi Arabia and OPEC actually open the spigot wider, but it seems to me the Senator from Tennessee is exactly right. The problem is our dependency on imported oil from the Middle East and other countries around the world, when we have oil reserves right here in America that can be developed but that Congress has, in fact, placed out of bounds. About 85 percent of the oil here at home could be produced, if Congress would simply allow it, by lifting the ban or the moratoria on development of that oil in the Outer Continental Shelf and the submerged lands along our coastline, and that could help us. I think Senator Domenici has talked about it as a bridge to a clean energy future, where we have more cars that run on battery electricity and we wean ourselves from our dependency--not only on foreign oil but on oil, period, because with the growing demand globally, the price pressure on that oil is going to get nothing but worse, rather than better.
I say to the Senator from Tennessee, I know there has been a lot of commotion on the floor over the last few weeks about whether we stay on this issue or whether we move off it to talk about other issues. I know this side of the aisle has insisted that high energy prices and high gasoline prices is the most pressing domestic issue facing our country today. We have been pretty clear that we are not going to leave, and we are not going to move off this issue to something else and leave this unresolved.
I ask the Senator from Tennessee: Is that an approach he agrees with, and does he agree that this is the single most pressing issue facing our country from a domestic standpoint in our economy today?
Mr. ALEXANDER. Not only do I agree with the Senator from Texas, but so does Jason from Friendsville, TN, and Gina from Elizabethton and William from Riceville and Tina from Nashville. Tennesseans want us focused on $4 gasoline. I think the Senator is being generous when he says our position is that the Senate should stay on $4 gasoline until we are finished.
Our position is we wish to get on it. We have been talking about it. We have a right to talk, but until the majority leader creates an environment so we can begin to offer amendments we can then vote on and come to a result on, we cannot act as a Senate. To his credit, yesterday he made such a proposal. I understand he is talking about it with the Republican leader. But we could have been doing this ever since a week ago Friday.
I say to the Senator from Texas, sometimes I hear people say, well, it won't do much good to drill offshore. The debate will probably be between some senators who will say let's do a little more drilling where we already allow ourselves to drill, in the 15 percent, and those of us who will say let's give States the option to drill 50 miles offshore in the 85 percent of the Outer Continental Shelf, where we can't drill today. By most conservative estimates, that will create over time about a million barrels of oil a day. Some say that is not very much in the whole world, but I think of it this way: Every million barrels of oil we produce here at $130 a barrel is 1 million times $130 we are not sending over there to somebody else. If the third largest producer, the United States, adds 1 million barrels a day to its supply, that is a significant addition on the supply side. So it seems to me that our contribution, in terms of offshore drilling, both would reduce our dependence upon foreign oil, keeping money in this country, and make a contribution to the supply side, which helps bring down the price in the world.
Mr. CORNYN. Mr. President, the Senator from Tennessee said earlier if we were all to make the decision in 2010 to move to hybrid plug-in vehicles, it would take some time to replace the internal combustion cars in this country. Some said if we were to open up ANWR, the 2000-acre plot of land in a 19 million-acre frozen tundra in Alaska, or if we were to open up the Outer Continental Shelf, it would take years before the oil would flow into the pipeline.
I ask the Senator, if Congress were to send a message today that we were going to allow the development of as much as 3 million additional barrels of American oil a day, whether it is from the oil shale out West, or from ANWR, or from the Outer Continental Shelf, what in your view would be the message to the commodities traders who trade oil as a global commodity, and who buy and sell futures contracts for the delivery of oil? In your opinion, would that have a rather immediate impact on the price of oil and, thus, the price of gasoline?
Mr. ALEXANDER. The answer is yes. I appreciate the Senator's question very much. His figure of about 3 million barrels a day is realistic. He mentioned ANWR, the area in Alaska, which is actually the most readily available to us. The history on that is going back to 1980, when President Carter agreed that 17 million or so acres would be put in the Arctic Refuge and off limits to any sort of drilling, but that 1 1/2 million could be drilled. When they were finished drilling, they would go into the refuge. So that has been in place for a long time. There is a pipeline there. Also, one well is there. So that oil would be coming quickly. There is infrastructure around many of the areas where we would do offshore drilling in the United States. But the answer is yes to the Senator's question. If the United States added 3 million barrels to our production, that would be more than a third of an increase in the production capacity of the third largest producer in the world. What if we heard that Saudi Arabia was going to increase production by a third? The effect on buyers and sellers of oil would be immediate. Martin Feldstein, a former chairman of President Reagan's Council of Economic Advisers, pointed out that today's price of oil depends upon the expected supply and demand of oil. So if we elect, as the U.S. Government, to say we are going to significantly increase our supply by a third, and we are going to reduce our use of oil by about a third, over time, from the day we announced that new energy policy, I believe it begins to stabilize and drive down the price of oil.
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Mr. ALEXANDER. If supply and demand is the major way to deal with speculation, I believe the Republican legislation, the Gas Price Reduction Act, has in it a couple of legislative suggestions for how we might appropriately deal with speculation, without interfering with supply and demand. The Senator from Texas helped to author that piece of legislation.
Mr. CORNYN. The Senator knows we tried to find a consensus or common ground we could hopefully agree upon and asked some of our friends on the other side to join us and, rather than talking about the issue, actually try to solve the problem. So we did include, as part of the ``find more, use less'' formulation a title on speculation, where we say there needs to be certainly transparency so we can see what is going on; and to the extent the Commodity Futures Trading Commission needs more cops on the beat, more resources to do their job, then we need to supply those analysts, investigators, and resources to be able to make sure abuses don't occur.
I remember when the Senator from Arizona was talking about this. Warren Buffett has been quoted recently as saying that speculation is not the problem. He agrees with the New York Times. He says it is a matter of supply and demand. T. Boone Pickens, my constituent, who has made quite a splash with his energy plans, said if all you are going to do is focus on speculation, that is a waste of time.
So we tried to come up with a commonsense approach to this and one that could develop a critical mass of bipartisan support. Until now, the majority leader, who controls the floor in the Senate, has decided not to allow us that opportunity. Yesterday--I agree with the Senator from Tennessee--it looked as though there was a little speck of light in the darkness; a little hope was there that the majority leader would perhaps modify his position.
I hope we don't leave here this week without doing something meaningful to bring down the price of gasoline. We are certainly willing to listen to the ideas our colleagues on the other side of the aisle have. I suspect that if they have the opportunity to vote, a number of them would agree with us. Maybe they would have ideas we would agree with, in an effort to build a bipartisan solution. We have to do something and, frankly, Congress has been part of the problem. We need to be part of the solution.
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Mr. CORNYN. May I ask the Senator from Tennessee and the Senator from Arizona one question. We passed a massive housing bill, a $158 billion economic stimulus package, because we are all concerned about the economy. Let's assume we are successful in dealing with those problems. Do you see the rising costs of gasoline and oil and energy as a big--or maybe even a bigger--threat ultimately to the economy, and that it might have the very direct effect of putting us into a bona fide recession?
Mr. KYL. Mr. President, if I may respond briefly, there was an article in the Wall Street Journal, I believe, yesterday. In any event, the point of the article was that while we may not have technically been in a recession, the definition of which is two quarters of negative economic growth consecutively, the reality is that because of inflation, primarily fueled by high fuel costs, which reflects itself in everything from higher food prices to higher transportation costs, which find their way into the products we buy--because of that inflationary pressure, the reality is that for most Americans, we are feeling the same effects as if we were in a recession, and at the heart of this is the energy problem.
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