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Energy

Floor Speech

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Date:
Location: Washington, DC


ENERGY -- (Senate - July 17, 2008)

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Mr. CHAMBLISS. Madam President, I rise to talk about the issue of gas prices. As I have done over the last several weeks, I wish to read a couple of letters I have received from Georgians. I know everybody in here is similar to me. You have thousands and thousands of these. But this shows how critically important this particular issue is to every single American.

Scott Needling of McDonough, GA, writes:

Senator Chambliss: I'm fed up with Congress ignoring the will of the American people. Stop playing politics, and act on the will of the people. We have been demanding that you drill and use our 3 trillion barrels of oil. We need other resource avenues that the last three administrations [have not] addressed. Stop the partisan politics and pass the will of the people. The American people do not want a socialistic society, period. Fix the problem.

That is a very frustrated constituent.

Robin Lasseter of Tifton, GA, writes:

Senator Chambliss: Please do something about the gas prices. I am a stay at home mom and with raising a family on one income, the price of gas is cutting us short on our needs. Something needs to be done soon. We are having to cut corners in a lot of different places in order to afford gas to and from work. Everything is increasing except wages. We both have a college education and drive fuel efficient cars, but the money we bring in just isn't stretching far enough.

This is a sample of the issues facing real people out there and they are looking to Congress for relief. I just left an Energy Committee hearing or roundtable discussion. The Presiding Officer was also there. There were two energy experts there. I wish to read several bullet points that were mentioned by these individuals who deal with this issue every single day and have a long history of studying it.

The first gentleman said, at the bottom line, supply and demand is the cause of the increase in prices today, but it is a complex issue. It ranges from the Iranian risk factor, all the way to the markets. He also said the cost of exploration has doubled in the last 4 years. The reason is a shortage of labor, a shortage of engineers, and a shortage of steel. In the markets, while speculation is a hot topic and transparency is a good thing, why have commodities risen? His answer was: First of all, the value of the dollar; secondly, oil is a good investment, and it is a good hedge against inflation.

The second gentleman said that between 2003 and 2005, there has been a shock of increased demand and decreased supply. As a result of that, the excess capacity of oil on hand by oil-producing countries has been exhausted. He said there are fears that new fields are not coming online. There are fears there is disruption in the marketplace. Between 2004 and today in the market, there has not been enough supply. There is barely an increasing amount of supply each and every year. He said oil is now a financial asset, that this happened sometime not in recent weeks or months but back in 2006 and that the primary driver of the increase in oil prices is the value of the dollar, just like the first speaker commented. He said people are looking for a place to invest. Pension funds are looking for a place to invest. They are looking for a way to hedge against the value of the dollar. Lastly, the increase in demand, which we have seen in the United States over the last couple years, is not being met by our global partners.

I say this to indicate to the American people how complex this problem is. We, as policymakers, have to take our time to make sure that we get it right with respect to whatever type of policy we set with legislation.

I think there are four issues we have to think about with respect to trying to find a solution to gas prices.

First of all, I do not think there is any question that we have to have more domestic production of oil. Today, we depend upon foreign imports for 62 percent of our petroleum needs. That has gotten way out of bounds. So it is imperative that we look for additional resources inside the United States. We have those resources. The resources are available from different assets. Some are controversial. Some are not controversial. We as policymakers have an obligation to find those areas for domestic exploration that we can get done in the short term and make sure we move that balance away from 62 percent to certainly something that is much lower and much more reasonable.

Secondly, from a gas supply standpoint--not oil supply, a gas supply standpoint--we simply have to have more gas refined in this country. There may be some oil companies that do not have excess capacity. They may be producing all they can produce. We need to make sure there are incentives out there, as we have on the books today, to incentivize additional production. If they do not have excess capacity, we need to make sure they are able to build new refineries. We have not seen a refinery built in the United States in the last 25 years. Certainly, we know what has happened with demand for gasoline in the last 25 years.

The third thing we need to do is continue down the road of research and development of alternative fuels, alternative fuels such as ethanol and biodiesel. These, again, are not the total answer to the problem, but we have taken steps in this body to make sure we have an increase in the supply of alternative fuels, particularly ethanol, over the next several years.

In my home State--which has never been an ethanol-producing State; thus, we have never been an ethanol user--we now have two ethanol production plants under construction. In the farm bill we just passed, we greatly expanded the energy title. I am very proud of that energy title we put in place in the current farm bill because here is what it does: We recognize that we need more production of ethanol in this country. We also recognize that, with the mandates we have put in place over the last couple of years, we have had some unintended consequences that have arisen.

We have 101 ethanol-producing facilities in this country today. We have an additional 100 that are either under construction or are on the drawing board to be completed within the next 14 to 16 months. All but two of those ethanol-producing facilities are resourced with corn. So, as a result of the mandates we have put in place, the demand for corn has risen for the production of ethanol, to the point where we are now seeing food prices increase.

The price of food at the grocery store today, based on the increase in commodity prices, is truly not reflected yet. The increase in food prices we are seeing today, in my opinion, is solely the result of additional transportation costs or energy costs. This fall, when our manufacturers of food products start taking in new commodities at the new prices, that is when you are really going to see an increase in the cost of food.

As a result of that, in the farm bill, when we looked at this issue, we said: We don't need to incentivize the additional production of alternative fuels from corn-based ethanol-producing facilities. What we need to do is to incentivize the production of ethanol from alternative sources, such as cellulosic products.

In Georgia, we cannot grow corn in the quantities they do in the Midwest. We have a hotter climate, a longer growing season. Our soil is not quite as rich, and we do not have the dependable rain resource they have. But there is one thing we can grow like nobody else in the country; that is, a pine tree.

The two exceptions to the 201 facilities I mentioned earlier--one located in Colorado, one located in my home State of Georgia--are going to be manufacturing ethanol from cellulosic products. In our case, in Georgia, it is going to be from pine trees. That is the type of innovation and creation we have provided for in the farm bill, and it is part of the equation we need to have in place as we move forward.

There is one other area, and that is the area of conservation. We simply have to move down the road of making sure we have alternative vehicles available for those individuals who really want to implement conservation measures from a personal household perspective. Electric cars, battery-operated cars--those types of vehicles need to be available.

We have a bipartisan effort underway to help solve this problem. I look forward to continuing to work with Republicans and Democrats to see a resolution of this issue regarding gas prices.

Mr. President, I yield back.

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