Transportation Equity Act: A Legacy for Users

TRANSPORTATION EQUITY ACT: A LEGACY FOR USERS

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Mr. GRASSLEY. Mr. President, it should be quite obvious from America's increasing dependence on foreign sources of oil that it has now reached a very critical threshold which calls for immediate action. This bill before us is part of our immediate action, as it has some things in it to increase our availability of domestic supplies of energy. Global oil prices and supplies remain beyond our reach, just as surely as our own demand here at home will remain constant. Abroad, oil prices and supplies are at best in a state of flux, very unpredictable. At worst, you could say that things are beyond our control.

Our obvious goal in a lot of our energy legislation--some of it is part of this bill and part of the debate we had 2 years ago on the highway bill--is to get some of this under our control by having less dependence upon foreign sources of oil.

In China, for instance, the competition for oil is unprecedented. So determined is China to protect itself and its burgeoning growth against global uncertainty, they have recently secured supplies from both Canada and Venezuela and are actively seeking oil from producers upon whom the United States has traditionally relied. Some experts suggest that we have now reached our global supply limits, perhaps even that we have exceeded them.

If they are correct--and of course we hope they are not--we face more shortages and rising prices. The answer to these very real and vexing questions about the global security of supply and price for America's oil demands are far beyond this Senator and indeed even beyond this legislation before the Senate.

However, I believe, with this amendment as part of the managers' package, we will go a long way toward reducing our domestic dependence upon oil dedicated to our transportation sector. We are gulping vast amounts of imported oil in an increasingly futile attempt to quench our thirsty addiction to petroleum. Today, our transportation sector accounts for two-thirds of the total United States demand. This forces us to import a whopping 60 percent of our petroleum needs.

I remember a time when we thought it was inconceivable America would ever exceed even 50-percent reliance upon foreign oil. Yet, we have, and then we exceeded even that, until here we are today at more than 60 percent. What can we do now to alleviate the problem? How can we do so here at home?

The President pointed something out when he spoke last week about the pressing needs to develop and implement comprehensive national energy policy, and I think it bears repeating if only through paraphrasing. President Bush indicated that technology would provide our Nation with the means to reduce our demand for petroleum-based fuel, thus reducing the high price of gasoline. The President also stressed we must embrace domestic alternative fuels as a critical midstep on the pathway toward hydrogen, which may well prove to be our ultimate fix. But the simple fact remains that a sustainable, affordable hydrogen program is still decades away. Transitioning America away from our entrenched dependency on foreign petroleum fuels to cleaner, cheaper domestic alternatives is occurring right now here at home. We should not be oblivious to it. I agree with the President that these domestic alternatives need to be embraced and encouraged. To that end, therefore, as chairman of the Finance Committee, I have developed a proposal entitled the ``Volumetric Excise Tax Credit for Alternative Fuels.'' It would be just like VEETC for ethanol and biodiesel that we passed last year, only extended to alternative fuels. This proposal would help significantly accomplish that goal of being less dependent upon foreign sources of energy.

The VEETC proposal would provide for the expansion and modification of the Volumetric Excise Tax Credit for Alternative Fuels. Our proposal will expand last year's excise tax formula, as it relates to ethanol, to include an excise tax credit for all domestic alternative fuels which would displace imported petroleum. This is how it would work. Some fuels, such as natural gas, presently pay a partially reduced rate of excise tax into the highway trust fund.

However, because these motor vehicles exact the same amount of damage to our roads and highways, my amendment would have them pay an increased rate of Federal excise tax into the highway trust fund. With this mechanism, the President's objective of displacing as much imported oil as possible is met. As importantly, the increased excise tax payments would go a long way toward increasing revenue into the highway trust fund for the near term and well into the foreseeable future.

This is not a new concept. Congress passed, and the President signed into law, a similar provision last year providing the same treatment for ethanol and biodiesel. In an effort to further encourage other domestic alternative fuels, this new VEETC amendment that we will be taking up which enjoys broad bipartisan support, it constitutes a simple expansion on the part of the framers to include other alternative fuels which displace imported petroleum-based fuels. Adoption of the VEETC for alternative fuels would constitute a win-win. It puts more money into the highway trust fund, while at the same time promoting domestic sources of motor fuel.

I yield the floor.

Mr. GRASSLEY. Mr. President, it should be quite obvious from America's increasing dependence on foreign sources of oil that it has now reached a very critical threshold which calls for immediate action. This bill before us is part of our immediate action, as it has some things in it to increase our availability of domestic supplies of energy. Global oil prices and supplies remain beyond our reach, just as surely as our own demand here at home will remain constant. Abroad, oil prices and supplies are at best in a state of flux, very unpredictable. At worst, you could say that things are beyond our control.

Our obvious goal in a lot of our energy legislation--some of it is part of this bill and part of the debate we had 2 years ago on the highway bill--is to get some of this under our control by having less dependence upon foreign sources of oil.

In China, for instance, the competition for oil is unprecedented. So determined is China to protect itself and its burgeoning growth against global uncertainty, they have recently secured supplies from both Canada and Venezuela and are actively seeking oil from producers upon whom the United States has traditionally relied. Some experts suggest that we have now reached our global supply limits, perhaps even that we have exceeded them.

If they are correct--and of course we hope they are not--we face more shortages and rising prices. The answer to these very real and vexing questions about the global security of supply and price for America's oil demands are far beyond this Senator and indeed even beyond this legislation before the Senate.

However, I believe, with this amendment as part of the managers' package, we will go a long way toward reducing our domestic dependence upon oil dedicated to our transportation sector. We are gulping vast amounts of imported oil in an increasingly futile attempt to quench our thirsty addiction to petroleum. Today, our transportation sector accounts for two-thirds of the total United States demand. This forces us to import a whopping 60 percent of our petroleum needs.

I remember a time when we thought it was inconceivable America would ever exceed even 50-percent reliance upon foreign oil. Yet, we have, and then we exceeded even that, until here we are today at more than 60 percent. What can we do now to alleviate the problem? How can we do so here at home?

The President pointed something out when he spoke last week about the pressing needs to develop and implement comprehensive national energy policy, and I think it bears repeating if only through paraphrasing. President Bush indicated that technology would provide our Nation with the means to reduce our demand for petroleum-based fuel, thus reducing the high price of gasoline. The President also stressed we must embrace domestic alternative fuels as a critical midstep on the pathway toward hydrogen, which may well prove to be our ultimate fix. But the simple fact remains that a sustainable, affordable hydrogen program is still decades away. Transitioning America away from our entrenched dependency on foreign petroleum fuels to cleaner, cheaper domestic alternatives is occurring right now here at home. We should not be oblivious to it. I agree with the President that these domestic alternatives need to be embraced and encouraged. To that end, therefore, as chairman of the Finance Committee, I have developed a proposal entitled the ``Volumetric Excise Tax Credit for Alternative Fuels.'' It would be just like VEETC for ethanol and biodiesel that we passed last year, only extended to alternative fuels. This proposal would help significantly accomplish that goal of being less dependent upon foreign sources of energy.

The VEETC proposal would provide for the expansion and modification of the Volumetric Excise Tax Credit for Alternative Fuels. Our proposal will expand last year's excise tax formula, as it relates to ethanol, to include an excise tax credit for all domestic alternative fuels which would displace imported petroleum. This is how it would work. Some fuels, such as natural gas, presently pay a partially reduced rate of excise tax into the highway trust fund.

However, because these motor vehicles exact the same amount of damage to our roads and highways, my amendment would have them pay an increased rate of Federal excise tax into the highway trust fund. With this mechanism, the President's objective of displacing as much imported oil as possible is met. As importantly, the increased excise tax payments would go a long way toward increasing revenue into the highway trust fund for the near term and well into the foreseeable future.

This is not a new concept. Congress passed, and the President signed into law, a similar provision last year providing the same treatment for ethanol and biodiesel. In an effort to further encourage other domestic alternative fuels, this new VEETC amendment that we will be taking up which enjoys broad bipartisan support, it constitutes a simple expansion on the part of the framers to include other alternative fuels which displace imported petroleum-based fuels. Adoption of the VEETC for alternative fuels would constitute a win-win. It puts more money into the highway trust fund, while at the same time promoting domestic sources of motor fuel.

I yield the floor.