Press Conference with Sen. Mitch McConnell (R-KY); Sen. Wayne Allard (R-CO); Sen. John Barrasso (R-WY); Sen. Kay Bailey Hutchinson (R-TX); Sen. James Inhofe (R-OK); Sen. Jon Kyl (R-AZ); Sen. Lisa Murkowski (R-AK); Sen. Jeff Sessions (R-AL); Sen. Ted Stevens (R-AK) - Gasoline Prices
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SEN. MCCONNELL: Let me first apologize for my voice. It's the second day of recovery from laryngitis.
Senator Schumer said yesterday that 500,000 barrels more of oil per day would bring relief at the pump. We agree with that. We think we should produce American energy right here at home to bring gas prices down.
We've heard a lot of talk over the last several months about, quote, "Talk is cheap but gas is not." Speaker Pelosi even announced the Democrats had a common-sense plan to address high gas prices. Now that was two years ago. We're still waiting for it.
We believe that we have a comprehensive proposal here that we're about to describe that would actually have an impact -- no games, no gimmicks -- would actually have an impact.
To describe the proposal, I want to call on our leader on energy, Senator Domenici.
SEN. DOMENICI: Thank you very much, Mr. Leader.
Let me say to everyone, when you get the list in the bill, you'll find that almost everything we've done -- almost everything, not everything -- but almost everything is -- causes us to produce oil or gas on American-controlled oil or gas. Almost everything is production.
And so there's lots of other things that are being thrown around that you might ask us about. If they're not production, they're not seriously considered by us in putting the package together.
I'm going to start by saying that one of the presidential candidates referred to this time of year as "silly season." He was talking about the presidential primaries, but the same moniker might apply every year when gas prices start to rise here in the United States Congress. We're seeing the prices soar higher and higher, and it's an election year.
For some, honest talk about energy is there and it's real. But for many, honest talk and high prices are not a very good combination. But that's what we should do today. That's what I've done for the time I've been in the Senate. And it's served me well.
I want to tell you that we're going to produce jobs, American jobs. Renewable energy sources, like wind and solar energy, we have already produced and done what we could on. We've invested billions of dollars and provided tax credits and passed legislation to reduce our consumption of oil.
And for years now, we've been trying to develop more domestic production of oil and gas, with one exception, in the Gulf of Mexico. Everything I've tried, on behalf of whichever senators I've tried, has been blocked for political reasons, no doubt about it, political reasons.
There is oil and gas to be had. They have been blocked by political reasons. Consumers are paying the price for those years of obstruction.
Today, we're unveiling a domestic or American energy production act. This bill says that we can start taking advantage of the billions of barrels of domestic oil that we are not using and begin to reverse the cycle of dependence on foreign oil.
If enacted, this legislation has the potential to provide America with up to 24 billion barrels of oil. At current levels of consumption, just think of it: That would be five years of total consumption of oil by the United States. And that doesn't include billions more barrels of fuel through oil shale and coal-to-liquids, which is also in this bill.
This legislation will help us lower prices and it will let us become more reliant upon oil and natural gas that is American. This bill, and I will quickly coast through it, allows the states to petition to open restricted areas for leasing for responsible oil and gas exploration in the Atlantic and Pacific.
Already we know that the Commonwealth of Virginia is open to exploration and that this could boost domestic production in a relatively short period of time. The revenue sharing in this bill would ensure that the states get 37-1/2 percent. That's the new part. That would make -- would entice some states to join.
Our bill will open parts of the Arctic National Wildlife (sic), we want you to know. It's essential for us, we think, that America do this. This bill has been vetoed once. If it would have been passed when it was vetoed, American people would have been today getting 1 million barrels of oil a day from the Arctic. It would be American- owned and delivered to -- by Americans to America. It would already be accomplished. We lost that by one vote, and then it was -- we won it by one vote, and then it was vetoed. We're going to use 2,000 acres out of 19 million, so everybody will know. The time has come to do that when the price of oil is as high as it is.
This bill would repeal a $4,000 drilling fee on domestic oil and gas production which encourages -- or discourages companies from drilling. That was put on in an appropriation bill. We think we shouldn't add to the cost, we should subtract from the cost, if we can, so more will be produced.
This bill establishes a coal-to-liquid fuel mandate to produce 6 billion gallons of coal-derived fuel by 2022, but it will be gradually getting to that point, so it will start producing much sooner. We'd be glad to answer questions about that from any of you who are worried about the pollution aspects of it. We think there will be no pollution add-on if it's done the way we plan.
And since there hasn't been any new refinery in America for 30 years, and we will offer incentives to existing refineries to expand operating capacity, I think it's really time to do that. We are told by those who deliver to us foreign oil that clearly America is short of the kinds of production capacity, called refineries, that we were so well known for over the years.
The potential for over 2 trillion barrels of oil exists in the oil shale of Western America. Somehow last year in an appropriation bill a moratorium was put on that, if you can imagine. We just got started. A company planned to invest $4 billion to develop it, and along comes someone and puts a moratorium on the final regulation. This proposes to take that off and encourage the development of that, which could by itself be one of the greatest things to happen to the United States of America.
So I would suggest that when we add all this up, we have a tremendous American bill, producing American oil and natural gas in large quantities.
I'd now like to yield to the senator from Texas. I thank all the senators who are here for joining us.
SEN. HUTCHISON: Well, I thank Senator Domenici for leading this effort.
Instead of talking, he is -- he's put together a package that would really make a difference in the supply of oil for our country, and it's from our country, so it's not where we depend on foreign sources.
Part of this bill that I think is important is the Strategic Petroleum Reserve. I have resisted efforts in the past to put a freeze or a moratorium on the Strategic Petroleum Reserve investments, but I think today, at $120 a barrel, the time has come for us to have a moratorium. The Department of Energy is going out now for contracts between now and August, or between August and December, that would put 13 million more barrels into the SPRO. I think if we could put a freeze on what we put into SPRO, it would send a signal to the commodities markets and the hedgers in the commodities markets that we're going to do something, that we're going to take a stand to try to keep these prices from going any higher. And that, in itself, would begin to bring the price down.
So hope that this part of the bill, which is a little different from the production side, but it's just saying this is not the time for us to be paying these prices for oil in the Strategic Petroleum Reserve. We are over and above our international commitment for oil reserves. We have over a three-month supply for all of the energy that we would need in our country in the reserves right now. So it is a healthy reserve. Now is the time to acknowledge that we have a problem in this country, that people are paying too much at the pump, and Congress is going to do something about it.
SEN. DOMENICI: Thanks, Kay.
SEN. KYL: Two years ago, Speaker Pelosi said that if Democrats were given the majority, they would introduce a common-sense plan to reduce the price of gasoline. Well, ever since they did take the majority, January the 4th, 2007, you can see what's happened to the price -- average price of a gallon of gasoline. And frankly, we're tired of waiting and I think the American people are tired of waiting for that solution.
And so we're offering our solution, thanks to the leadership of Senator Domenici and all of us here today, who believe that while Congress has enormous authority but has frankly not acted or has -- when it has acted, has actually obstructed access to America's vast natural resources. The one law that Congress can't affect is the law of supply and demand. And while we've seen competition for that fixed supply increase because of the rising economies of China and India and just increased consumption here at home, unless we're going to increase the supply, we're going to see prices continue to go through the roof, at $120 a barrel on up.
If, in fact, we were to open up the Arctic National Wildlife Refuge, the Outer Continental Shelf, we could have oil that would cost roughly 55 to $63 a barrel to produce, and not the $120 that we're paying today.
And if you add up the difference between what gasoline cost on January the 4th, 2007, when Speaker Pelosi and her party took charge of Congress, and what the prices are today, you'll find that the average American family has been hit with a $1,400 increase in their cost of living, not in the quality of their lifestyle but just simply a cost of living, as a result of congressional inaction and obstruction.
So we're here today to say that it's time to act. And thanks to Senator Domenici and his leadership, we're prepared to act in the best interests of the American people.
SEN. STEVENS: Thank you.
I'll echo the concepts about drilling in Alaska's Arctic. That was set aside, a million-and-a-half acres were set aside, in 1980 for the purpose of examining to see if they could produce oil or gas. We know that there is a substantial amount of oil and gas there.
The problem is, in the '70s, when we had an embargo, we were importing just a little over 30 percent of our oil. Now we're importing over 60 percent of our oil, roughly $530 billion a year going out of the country to buy oil. A million barrels a day would be about 20,000 jobs in the United States.
Now, opening up our area for oil and gas is, in and of itself, an economic stimulus for this country. ANWR alone would represent about 60,000 jobs. It's true, it will take a few years. But remember, we did pass the bill once. And Bill Clinton vetoed it.
I don't like to see Schumer stand up and say that, you know, it would take 5, 10 years to get oil from Alaska. It will but it shouldn't have. We should have that oil here today. But if we start now, we could really return to the concept of producing at least a substantial portion of our own oil, and restore our economy as we do it.
SEN. ALLARD: Thanks, Pete, for carrying this piece of legislation.
One area that people don't recognize we have huge reserves of oil in is in the -- is what we call unconventional fuels. There's about 3.7 trillion barrels in what we call unconventional fuels. This is the oil that's in the tar sands that you hear about in Canada, and it's in the oil shale in Colorado and Utah and Wyoming. And it's anticipated that -- and that there's about 1.7 trillion barrels in Colorado, Utah and Wyoming. And about 1 trillion of that, we believe, can be pulled out of the ground and utilized.
What kind of a product do you get out in the process that's being developed now is you get a jet fuel that needs to be further refined to remove the nitrogen and the sulfur. Other than that, you have a high-quality fuel.
And so this is something that Senator Domenici talked about, where in the last appropriation bill, there was -- it was stopped dead because of language that was in that bill. We need to move forward on that. It's a very reasonable -- it's environmentally sensitive. You can only develop 1 percent of the total area in -- around the oil shale in the -- what the Roan Plateau, in that area, at one time. And before you can move on, you have to rehabilitate the 1 percent. So it's a rolling figure. And so it's very environmentally insensitive (sic). There's no reason why we shouldn't move forward on this huge reserve that's available to us.
SEN. : Thanks, Wayne.
SEN. DOMENICI: Thank you very much.
SEN. BARRASSO: Thank you very much, Chairman Domenici. I appreciate all you're doing with this.
I want to talk specifically about the clean coal provisions of this bill, which I support very much. Coming from Wyoming, where we have abundant sources of coal, enough to help this country for the next 250 years, I will tell you that coal is the most available, affordable, reliable, secure source of energy that we have right now in the United States. And with so many people feeling the pain at the pump, never before has it been as important to focus on coal and what the technology can bring to clean coal.
I will tell you that that -- this is a source of energy which will power our nation for centuries, and we need to do all that we can to continue to be reliant on this wonderful source of energy, coal.
SEN. DOMENICI: Jim Bunning.
SEN. BUNNING: Well, first of all, I want to thank my ranking member on the Energy Committee. He's been working tirelessly since he was here.
Thirty-four years ago we had a unbelievable shot across the bow, and for 34 years in the Congress of the United States, we have absolutely done nothing to relieve the pain. It's time. The time has come. America, just look what's going on, and it's because we've been held hostage.
This year, as Senator -- where is my friend?
The senator from Alaska mentioned the fact that we send over $500 billion to the Middle East for crude oil. Every dollar invested in a process called Fischer-Tropsch, that South Africa uses on a daily basis, could produce aviation fuel and diesel fuel. 40 percent of all their fuel is produced from coal-to-liquid process. It was used during the Second World War. That's how reliable the process is.
Is there a carbon problem? Not really, since the product that is coming from that fuel is more efficient and less pollutants than the fuel that we get out of current petroleum from the Middle East. The coal-to-liquids fuel is one of the big puzzles, pieces of the puzzle we leave out every time we talk about the need for Americans' reliability.
The U.S. Army, Air Force recognizes it. They have been using it for over one year in aviation fuel that they do on a pilot program. The Department of Defense is in our office very often on diesel fuel to make sure that we don't use our flexibility on a resource that we develop here in the United States of America.
It's time we moved on. And that is it.
SEN. INHOFE: Thank you very much.
The technology that Jim Bunning was talking about, Fischer- Tropsch, is something that we experimented with. We're now running all the engines on one experimental B-52 today. So it's something that works. People can't say the technology isn't there.
You know, we passed an energy bill a little while ago. There's no energy in the energy bill. Having served as the chairman of the Environment and Public Works Committee for four years, I can tell you, they're dancing around this thing a little bit. It's the Democrats who have stopped this from -- our self-sufficiency.
Every time we try to expand our drilling capacity, they stop it right down party lines. Every time we try to expand our refining capacity, such as the gas price act of last year, it died right down party lines.
And so we're going to have to get to the point where we understand one basic concept, that has been true in this country for a long time, called "supply and demand."
It really works. What we're talking about here is increasing the supply. We know where the demand is. And this is the only way I can think of that we can bring down the price at the pumps.
SEN. MCCONNELL: Thank you. Jim, then Lisa, then Jeff.
SEN. DEMINT: Thank you very much, Pete, Mitch.
Folks, it's time to get real about energy. American families are suffering too much. Democrats in Congress have, for the entire time I've been up here, followed an energy policy known as NIMBY -- not in my backyard. Everybody wants affordable energy, but just don't drill it or don't explore for it or don't refine it where I live. As a result, that and the veto by President Clinton in 1995 of the budget resolution that would have allowed the opening of ANWR to exploration development, which would probably be bringing us a million barrels a day of oil from Alaska, means -- or more -- means we are short of the demand.
Now, what happens when you have more demand than supply? We're short on supply. We're long on demand. It's time that we did something about this. It's time that we said, no more NIMBY policy, let's move ahead in an environmentally sound way to explore and develop the oil resources, the coal resources, the technology, nuclear power, conservation. We have to do everything, friends, because we don't have enough supply to meet our energy needs.
SEN. MCCONNELL: Lisa?
SEN. MURKOWSKI: Thank you, Pete, for your leadership on this issue that is so key in all corners of the country.
I mean, coming from Alaska, we're a producing state. We want to be able to provide more for this country in terms of meeting our energy needs. We've got the resource. We've just got to have the policies that allow us to develop this resource. And that's what this legislation is about. We're talking about the production side of the energy puzzle right now. Think back to what we did with the Energy Act of '05 and the Energy Act of '07. There was a real focus, certainly in the '07, on the conservation and the efficiency pieces of how we meet our energy needs. We focused on the renewables, gave great, great emphasis in those areas.
But the one thing that we really have failed to do in our comprehensive energy policy is to address the production piece, the supply side of it.
And that's what today's conversation is about.
This is how we meet this ever-growing demand. And we can do it in an environmentally sensitive way. And that's not just a nice buzzword, a nice catchphrase.
We need to be doing it right. And what we demonstrate in this country is that with the technologies that we have, we can do it. But we have been saddle by the way that we used to do business.
Well, I can tell you, come up to my state of Alaska; come up to the oilfields. Look at how we did business in Prudhoe Bay 30 years ago. The technology was different then.
What we're doing today with directional drilling, going down under the surface, not disturbing the surface area, not affecting the wildlife or the waterfowl that may be there, allowing those who live on the land to continue to live on the land, to not add any degree of spoilage in an area that we want to keep as environmentally sound as we possibly can.
Allow us to use the technologies that we have in place. So when we're asking finally for permission to open up ANWR, we're saying, hey, we're willing to take the safeguards; we're willing to restrict it to 2,000 acres of impacted area. We're telling you that we will only explore in the wintertime, using the ice roads that will allow us to keep this area looking like you never saw man's footprint there.
Allow us to use the technologies that this country has pioneered to develop a resource that this country needs. And it's not just in the oilfields. It's what we can do with our natural gas. It's what we can do with OCS.
Think about what happened after Hurricane Katrina and Rita out in the Gulf. With all those rigs out there, did you see the news stories about the spills in the Gulf? No, you didn't, because we've got the technology that has allowed us to produce there and provide this country with a level of resource at a level of environmental protection.
We've got to give ourselves credit for what we do right. We've got to be allowed to produce domestically, to produce for America. And that's what this legislation allows us to do with great technologies.
SEN. SESSIONS: Ted talked about $550 billion leaving our country every year to purchase 60 percent of the oil that we utilize.
T. Boone Pickens, a former oil man himself, entrepreneur, called it the greatest wealth transfer in the history of the world. That is occurring right now in our country, and it does not have to be so. And you've heard remarks here today.
One thing I believe that Pete was able to put in this bill that I think cam make a big difference, and I'm very curious about why we haven't moved further in this direction, is the utilization of diesel fuel. Fifty percent of the automobiles in Europe are diesel. Only 3 percent of our automobiles are diesel. Diesel fuel should be cheaper than gasoline, although it is more expensive in the United States at this time.
And according to a January Popular Mechanic article, the new generation of clean diesel engines -- and they are -- our diesel fuel is cleaner than that mandated in Europe -- runs approximately -- get this -- 38 percent farther on a gallon than a similar hybrid automobile goes. In other words, it gets better gas mileage than hybrids.
So we're going to require the Department of Energy, as part of this legislation, to examine whether or not we could have a 30 percent or more decrease in utilization of liquids in this country that go in our automobiles just by converting more to diesel, as Europe has.
SEN. MCCONNELL: Okay. We'll take questions. And Senator Domenici will be our -- .
SEN. DOMENICI: I do want to make one last observation that none of us mentioned. One of the things we have to do in our country on the production side is improve the batteries. So we do have a very major battery development effort in here because if we can develop the batteries, then we can have many more plug-in cars and that will take us many steps ahead in terms of gasoline use. So that's one of ours, and it's a must.
We'll take a couple of questions, either of me or of any member that's here. Yes?
Q This is for Senator Domenici and Senator McConnell. You mentioned most of the provisions in this bill -- the ANWR, the offshore drilling, the coal-to-liquid -- have all failed at some point previously. What makes you think that there is any chance that any of this would pass in this Congress or that there's any support on the other side?
SEN. DOMENICI: Let me say, ma'am, none of those failed when oil was $112, $115. Oil was -- a number of those failures, it was $25 and $30, and some of them were even $12.
The American people are absolutely fed up with these prices. They know that we can do better. And some of these issues have to be voted on again, and while the people look in on us, saying it doesn't matter what the price is; we're just not going to let you develop American oil for American use. We think we deserve that opportunity. Let's see what the people think. It might affect senators.
Q Do you hear -- (off mike) -- from the other side of the aisle on any of these issues?
SEN. DOMENICI: Well, we haven't had a chance. We don't know what their people are telling them. And of course if you're telling your people that it's somebody else's fault, not yours, maybe you won't hear from them.
But we're going to tell them. It -- the fault is that we haven't done what we can do with American production. And that's what we're talking about here. If you voted against it before, take another look. When oil is $115 a barrel, it's just -- you know, what's happening to our great country is money is leaving here in such large quantities and going to other countries, that truly our economy is suffering in ways we really don't understand. It's so mammoth. The sending of our money overseas for oil is too big for America, even a big America, to handle.
We've got to break the mold, and the way is to do the -- what we're doing here.
Any other questions? Yes?
Q This is for Senator Stevens. When you brought up Senator Schumer -- I'm going to also throw a quote at you from the other day. He said that, you know, when the president brought the old saw out of ANWR as a solution, he said, you know, that ANWR is 10 years -- if we start drilling there, it won't produce on drop of oil, and it's estimated that if they drill there, in 20 years it would reduce the price by one penny. What -- is that accurate?
SEN. STEVENS: Well, he's absolutely wrong. Won't take that long to begin with.
But beyond that, he doesn't even understand the situation. In the long term, supply and demand does affect the pump. In the short term, it doesn't. For the long term, it does.
If we start producing our own oil in this country, we will reduce the price of the imported oil, because we have oil to compete with it. Today we have to pay whatever the foreigners want. There is no oil to really compete with it. When we used to send 2 million barrels a day down the West Coast, the price of gasoline in California was the lowest in the country. Now it's the highest in the country. Why? They don't -- have to bid for their oil. We are an entirely different -- other than that, Schumer ought to look at his own stock exchange.
A lot of the price of gas is reflected by the misuse of the hedge funds in New York City.
SEN. DOMENICI: Well, remember, somebody around said a million here, a million there; it adds up. Or a billion here, whichever it is -- that's the truth. A million -- a million barrels here, a million barrels there, it truly makes -- adds up, and that's what we're talking about here.
SEN. SESSIONS: It creates jobs, and Alaska's part of the United States. And they're (taxpayers ?). (Laughter, cross talk.) They pay taxes --
SEN. DOMENICI: Yes, sir.
SEN. SESSIONS: They pay taxes if they've got good-paying jobs, which this will create, instead of spending our wealth abroad.
Q Well, let's say Congress was able to pass this by Memorial Day, send it to the president, and he signed it. Is there anything -- would there be any immediate effect on price?
SEN. DOMENICI: Of this bill getting passed?
SEN. DOMENICI: Well, I believe it would, not -- because it's not just how much you're going to produce next week, but this would show a tremendous change in the willingness of the American people -- of American leadership to do something for themselves with American oil. It would send a -- just the -- it would send a shock wave to those who sell us so much oil that we are finally going to break the ice and do some real things for ourselves. So I think it would bring them down quickly. But over the long run, it would stabilize them or bring them down, without any question.
Q This is for Senator McConnell. On a slightly different topic, Democrats are planning to bring forth in a war supplemental bill that's going to have a domestic spending items and war policy prescriptions. Are you going to hold that up to the Senate floor, or are you going to let that go to the president, who's sure to veto --
SEN. MCCONNELL: No, what we're going to do today is talk about energy. And if you'd like to talk about another subject, just check with Stu (sp), and we'll get back to you.
Q Would you support the halting of SPR fill if the new production that you're requiring is not disallowed? So would you continue to support the SPR halting if your other provisions are voted down?
SEN. DOMENICI: Senators feel differently about that. We're just saying that in our overall bill we have it -- we're not suggesting what senators would do if it's taken up by itself. Some will vote for it, and some against. In this bill, we have broad support as a package.
Any other questions? Yes, sir?
Q Do you think these oil companies are doing enough to plow their record profits back into exploration and production?
SEN. DOMENICI: Well, I have sent a letter about four days ago to all of the chief executives of the six big oil companies asking that they detail for us their expenditures -- expenditures of their cash flow into new production or alternative fuels.
We should have that within the next three days or four. We will share it with everybody then.
I believe they are, but I'd like to prove it by showing how many billions they're investing, and in what, to make sure that that money that they're getting is being used for the good of the American people ultimately.
Q One thing that's not in the bill is ethanol. There have been some who have suggested that ethanol is contributing to higher food prices.
Do you guys think that, senators think that, ethanol is a solution or a problem right now, when it comes to our energy needs?
SEN. DOMENICI: Listen, I think that's another subject, but I would say this. I've asked Senator Bingaman to have some hearings on that. I think we ought to go into it in-depth. There are pros and cons about it, and we're not really sure.
It's clear that it's the only real source of new petroleum product that we have added to help alleviate the dependence. It's doing that. Is it doing bad things and negative things? We'll find out in due course and then we'll act.
Thank you all very much.