Repeal Big Oil Tax Subsidies Act-- Motion to Proceed

Floor Speech

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Ms. MURKOWSKI. Thank you, Mr. President. This is a good discussion on the floor today. I join with my colleague from California in urging that the House move to the Transportation bill. But that is not why I rise this afternoon.

I wish to speak on the legislation that is before us. This is the Menendez proposal to raise taxes--raise taxes on American energy companies and I think inevitably prices to American consumers. It has been described as something else, but I suggest to my colleagues any effort to increase taxes on the energy companies that are providing a resource to us is nothing more than a tax on our energy companies. As we tax those energy companies, it is sure not going to make them produce things that are more affordable, more abundant. In fact, it will have the resultant effect: to impact prices to American consumers negatively.

This legislation before us is not a new idea. This is something we have seen before. I think the numerous times we have rejected it leads me to the conclusion that it still remains a bad idea. It is a messaging bill that has failed over and over, and I think it deserves to see that same fate again.

This very Congress, just a little less than a year ago, rejected this same tax hike. Anybody who is curious to see what it is we did back then just needs to look up vote No. 72, which was back in May of last year, just to see how all 100 Members of the Senate voted.

Some have accused Republicans of using this opportunity, when gas prices are high, to push our cause, if you will, for increased supply and that somehow we welcome the aspect of higher gasoline prices. It was actually the President himself who said some see a political opportunity to call for greater domestic energy production.

With oil sitting at over $100 a barrel, I think we all recognize there is impact out there. But I can tell my colleagues for a fact that my constituents don't view this as a political opportunity.

I get a weekly summary of what is happening with gas prices around my State. Right now the average price of a gallon of unleaded in the United States is just a little shy of $4. Well, in my hometown of Anchorage, we are paying $4.14. In Juneau, which is our State capital, we are paying $4.24. In Barrow, the top of the world, they are at $5.75. Bethel is paying $6.33. They long for the day they could be paying closer to $4. We are so far beyond the national average, they don't view higher gasoline prices as any kind of a political opportunity. What they are asking for is that they do more. In fact, there is an imperative that we in Congress do more to address prices.

I believe there is no question--there is no question--that we can bring additional resources on line, that we can bring several million additional barrels of American resources to market. There is no question but what it would do. It is going to help to create jobs. We know that for a fact. It will absolutely generate revenues. It will better insulate our Nation from the instability we have with the global price markets. We know that is what is happening right now. Every time Iran is mentioned, everything gets a little shaky out there.

We know so much of this is due, in effect, to the fact that there is little spare capacity in the global markets. So let's look closer to home. What do we have closer to home?

The President has suggested time and time again we only have 2 percent of the world's reserves. Well, in fact, this myth about the U.S. oil scarcity is just exactly that. We talk about proven reserves. In fact, it is a much smaller piece of the pie: 20.6 billion barrels of proved reserves. But what needs to be understood and, unfortunately, doesn't make a good bumper sticker is that we have, as a nation, demonstrated incredible national reserves: 5.6 billion barrels of technically recoverable resources. We don't even count the 800-plus billion barrels of oil shale that are out there.

So one asks the question: Why are we not going after the rest of the pyramid, the part in blue. So much of what we are facing is that so much of this is put off-limits. It is not accessible, and it is not accessible because of our government policies.

I recognize there is more to it when it comes to an energy policy than just drilling, just increased domestic production. But it must be part of the solution, and it must be a significant part of the solution if we are going to talk about true North American energy independence. We must do more when it comes to conservation and efficiency. We need to build out toward the renewable energy sources of the future. If we want to have a bumper sticker, it is, ``Find More, Use Less.'' It is pretty simple.

The chart lets us know we truly can find more here. But what we are facing with the Menendez bill that is in front of us takes us in a completely different direction. What the President and the Democratic leadership are proposing cannot by its own definition reduce our gas prices. If anything, we are just going to see them pushed higher, and my constituents back home just can't afford to see them pushed higher when they are paying above $5, above $6 per gallon at the pump.

We know pretty basic economic principles are at play. Taxing something does not make it cheaper and more abundant. We know from past experience. Due to a failed experiment with the windfall profits tax that harmed domestic fuel production and collected far fewer revenues than what was expected, we know this is taking us in the wrong direction.

Again, our problem is high fuel prices and their effect on average Americans. I have yet to hear anyone explain to me how raising taxes is going to lower prices. Even when we look at the subsidies that are extended in the Menendez bill, not even half of these are related to the transportation fuels.

The first section in his bill is extension of credit for energy-efficient existing homes. Well, I am all for that, but tell me how this ties in somehow to our Transportation bills. In terms of costs, it is even more unbalanced. So I am left at a loss to understand how permanent tax increases for oil and gas producers, in exchange for another year of subsidies for efficiency and renewable energy, is going to make any kind of a meaningful difference. It kind of says to the American people: Well, that $4 you are paying at the pump, too bad about that. But how about a government-subsidized dishwasher? That just doesn't work.

Some will also come here to argue that increasing taxes will have no effect on production. In response to that, I ask unanimous consent to have printed in the Record at this point two news stories from last week.

There being no objection, the material was ordered to be printed in the Record,

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Ms. MURKOWSKI. Mr. President, these are news stories, not editorials. One is from Platts Energy; the other is from the Wall Street Journal. Both detail an announcement from the British Government that it is going to reverse its own taxes on the oil companies.

Last year, England decided to do essentially what is being proposed with the Menendez bill. They were responding to high oil prices, and so they moved to increase taxes on the industry. Well, the result is not going to come as a surprise. When the government made it less economical to produce oil by hiking their tax rates, companies stopped producing and they were making their investments elsewhere.

In the years since Great Britain imposed its tax hikes, its production decline has tripled from 6 percent to 18 percent. Let me repeat that. In the year since Great Britain imposed tax increases on oil producers, production decline accelerated from 6 percent a year to 18 percent a year. Now Britain is in the process of doing an absolute about face. They are likely going to offer $5.5 billion in tax relief to the oil companies to try to bring the production back.

I am sure some here would refer to that tax cut as a subsidy and ignore the inconvenient fact that higher tax levels lead to lower production. They don't lead to cheaper fuel; they lead to lower production. Yet even in the face of high fuel prices and compelling empirical evidence, the proposal in front of us is going to take us down the exact same path that Great Britain went down last year. It would make the clear mistake of driving production away when I think we need it most. The outcome in England just helps prove this is a seriously defective idea and a dangerous one. So we just need to look at what has happened across the pond.

If the Senate were really serious about addressing gasoline prices, we would be taking long-overdue steps.

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Ms. MURKOWSKI. If we are really serious in the Senate about what we are doing in terms of increasing our long-overdue requirement to up our oil resources, our oil production and supply, we know how. We have opportunities from our neighbors to the north in Canada with the Keystone Pipeline. We clearly have opportunities in Alaska from the Outer Continental Shelf, from the Rocky Mountain West. We still import about half of our oil supply and about half of that is from OPEC.

One last chart, if I may. Right now, about 47 percent is OPEC; non-OPEC is 53 percent. If we were to add to our mix in this country what we could get from Keystone, which is the middle pie, but look where we would be as a nation. If we were to plus up our activity with domestic production, bring on Keystone, and with our existing resources, our imports from OPEC are reduced to a minimal amount. We talk about North American energy independence, and we truly could be in that position where we are not vulnerable--not vulnerable to the volatility of the markets, not vulnerable to the volatility that comes from OPEC setting the prices as they do, not in a situation where we are spending millions and billions of dollars to import a resource we need but that we have as a nation.

I can't fathom why the Congress would want to drain our economy by raising taxes on the very businesses that help minimize our foreign dependence, help create good-paying jobs for our families, and truly help to make a difference to Americans around the country in the long run.

With that, I yield the floor.

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