High Gas Prices

Floor Speech

HIGH GAS PRICES -- (Senate - July 29, 2008)

Mr. ALEXANDER. Mr. President, $4 gasoline is the subject before the Senate. It has been the subject before the Senate since the week before last. I am very encouraged that yesterday the majority leader indicated we might be able to move from talking to acting; in other words, to begin to offer amendments, debate on those amendments, and come to a result which would help lower gasoline prices.

Each week, for the last several weeks, I have been reading to the Senate e-mails and letters I have received from Tennesseans who have been hurt by the high price of gasoline.

For example, Jason from Friendsville, TN, which is a Quaker town near where I live, is a firefighter with the Blount County Fire Department. He says that currently five of their stations have only one person in them. They rely on volunteers for the rest of their support, but since gasoline is so high, response from volunteers has been very small, and they have to allow other jurisdictions to respond. He is not sure how he is going to be able to keep driving across town to help other people when he can barely help himself.

Gina from Elizabethton is a single mother who is spending about $65 each week to drive to and from work. She can barely afford groceries because everything is so expensive. She says they have been living on noodles to get by. She is very concerned that Congress and the President are doing a lot of talking but not doing anything about the problem, and she says, ``This country is in such a mess.''

William of Riceville is on disability and his wife is unable to work due to health problems. Rising gas prices have made them choose between driving to the doctor or paying for their medicine.

Tina from Nashville is a single mother struggling to support her daughter. They can't even afford to go out to the movies on the weekend, she says, because gas and food prices have risen so much. She says that right now she is spending about $200 each month on gas and prices keep going up, but her paycheck isn't going up at all.

Judy from Joelton is a 61-year-old grandmother struggling to support her daughter and granddaughter who live with her. The gas to take her granddaughter to kindergarten is costing $115 each month, and they are struggling to keep her in school. Judy says she is scared for her family. She has never seen it this difficult to get by.

Mr. President, I ask unanimous consent that following my remarks, these letters and e-mails from constituents in Tennessee be printed in the Record.

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.

(See exhibit 1.)

Mr. ALEXANDER. Mr. President, as I mentioned earlier, the Senate could have, since the week before last, been bringing up amendments from the Democratic side and the Republican side with proposals for dealing with $4 gasoline. Hopefully, the majority leader and the Republican leader are coming to a conclusion today which will permit us to start doing that. We don't expect every amendment we offer to be adopted, but we do represent millions of people who want us to try to solve the problem.

We have before this Senate a very specific proposal for bringing down the price of gasoline. It is based upon the law of supply and demand: finding more and using less. Now, on this side of the aisle, we usually instinctively talk about finding more; that is, offshore drilling and oil shale, but it is also important to emphasize that part of our plan is using less.

The United States of America uses 25 percent of all the oil in the world. The fastest way for us to bring down the price of $4 gasoline, if it depends upon finding more--supply--and using less--demand--is to use less. What is the most promising way to reduce, by a large amount, the amount of oil we use? Give Big Oil some competition. We believe it is plug-in electric cars and trucks. There are a great many Democrats who believe the same thing. That is part of our plan. That is what we would like to have had on this floor for the last 10 days to discuss.

The bottom line is this: major auto companies--Ford, General Motors, Nissan, Toyota--have told us that in 2010, they will begin selling to us cars and trucks that can be plugged into our wall sockets at home and filled for 60 cents or so instead of filled with gasoline for $80 or so.

Now, most of these cars and trucks will be hybrids; in other words, they will have a gasoline engine and they will have an electric engine. Because there are new, more powerful batteries, these cars will be able to go, in effect, about 100 miles per gallon. These are not being produced by the Government; these are being produced by the car people, so they are coming.

In addition to that, we have plenty of electricity. We see a lot on television from Mr. Boone Pickens, who has a plan, and it would require building a lot of new, large wind turbines for electricity, which might be a good plan. Our plan doesn't require building anything for electricity because we already have it. About half our electricity at night is idle. We are not using it for anything. We are asleep. Our lights are off. Computers are down. We are not using a lot of our electricity, so we can plug in our cars at night--the electricity would be cheap--run our cars on electricity instead of oil, and here would be the result: We would be trading, car by car, foreign oil for unused electric capacity.

Ninety-eight percent of our transportation is oil. Two percent of our electricity is oil. Half our electricity at night is not being used. So we could begin, year by year, gradually converting cars and trucks to electricity, instead of gasoline made from oil. If we converted the whole fleet of cars and light trucks, that would take many years and probably we would never convert them all, but if we did, we would get rid of 10 million of the 13 million barrels of imported oil we have today. Or, if we converted half the fleet--which is a realistic assumption over a number of years--we would reduce by 40 percent our imported oil and cut by 25 percent our total oil consumption.

So plug-in cars, which the car companies are making and which we would like to create the environment to support, are coming, and we have the electricity. In other words, the cars are coming, we have the electricity; all we need is the cord, and that is the most promising way to reduce oil.

I see the Senator from Texas is here. The use less part is something that both sides of the aisle probably can agree on, although I don't know why we haven't been fashioning a program over the last 10 days to do that. We could have been debating whether to have tax credits, whether to have advanced battery research, but we haven't. Where we get stuck is over whether we need more supply.

Our formula is pretty simple: Offshore drilling, oil shale, and plug-in cars and trucks. I say to the Senator from Texas, it seems that whenever we get to the question of needing more American energy, that is where we have a difference of opinion with the other side of the aisle.

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.

I see the Senator from Arizona here. The issue often comes up about what role speculation has in all of this. Of course, that is what buyers and sellers of oil do. They are guessing: Will the price go up or go down?

My view always has been that the way you deal with speculation is increase the supply or reduce the demand, because the expected future price, supply, and future demand affects today's price.

The Senator from Arizona is an expert on taxation and financial matters. I wonder what his view is on the effect of speculation on today's oil prices.

Mr. KYL. Mr. President, I will answer that question, but I will decline to take the position as an expert on financial matters. I will turn to a paper with which I don't always agree and yet it is one of the leading newspapers in the country. The New York Times editorialized on this issue yesterday. Therefore, I will perhaps answer by quoting about four sentences from this July 28, New York Times editorial, called ``Gas Price Follies.'' The bottom line is they agree with the Senator from Tennessee:

Yet all evidence suggests that speculation has little to do with the rising price of crude. From rice to iron, commodity prices are all rising, even without much financial speculation, due to a variety of factors, including a weak dollar and growing demand from China and India.

They go on:

A report by government agencies--including the Commodity Futures Trading Commission, the Federal Reserve and the Treasury and Energy Departments--found that speculative trades in oil contracts had little to no effect on the rise in prices over the last five years.

They concluded with this:

Oil futures are financial contracts for future delivery of oil. Their price has been responding to the same factors: growing world demand in the face of stagnant supply and the expectation that this dynamic will continue.

So it is precisely the point the Senator from Tennessee was making. These buyers, investors on the market, look to see whether demand is going to be greater or less than supply. If it is going to be greater, the price is obviously going to go up. That is the bet they place when they buy futures contracts.

The best single thing we can do to respond to this and drive the price down is found on the chart of the Senator from Tennessee: find more and use less. The Times makes that point, by the way. If we can reduce consumption, that will reduce demand, but, far and away, the biggest answer is to find American energy sources to solve the American energy crisis. We have a huge volume of both natural gas and crude oil right here in the United States, primarily off our shores, which is why both the Senator from Texas, the Senator from Tennessee, and I, and most of my colleagues here support more offshore drilling to expand the production of American energy to meet this crisis.

Mr. ALEXANDER. Mr. President, how much time do we have remaining?

The ACTING PRESIDENT pro tempore. There is 6 minutes 45 seconds.

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.

Mr. KYL. Would the Senator yield for a question?

Mr. ALEXANDER. Yes.

Mr. KYL. Would it be fair to characterize the Republican approach to this as, in effect, all of the above, and that we recognize there is a role to beef up the agency that deals with speculation and make sure they can do their job, and to provide as much new production as possible offshore or oil shale--anywhere we believe we can find that production--and that we also appreciate the fact that there is another side to this, not just transportation, which is energy production, electricity production. We are going to see our electricity costs go up and, clearly, nuclear power is a key factor in that, as well as, potentially, coal liquification or gasification. As part of all of these--the ``use less'' part, which is to try to eventually convert at least our automobiles to battery-powered vehicles--obviously, it would be more difficult to do that with jet planes and our shipping right now. But we could begin that process.

So the Republican view is literally all of the above--to have a balanced approach that recognizes there is no one single thing but that offshore drilling would be the best, most immediate way to increase our production. Would that be a fair characterization?

Mr. ALEXANDER. I thank the Senator from Arizona. That is a fair characterization. Unless we include new American sources of energy, our electric prices are going up, gasoline prices are going up, and our jobs are going overseas. We need both--to find more and use less--and we need to do it now. The $4 gasoline price we are suffering from today is the first recognition that in addition to losing less we have to use more new American energy. For us, that includes offshore drilling, oil shale, as well as plug-in cars and trucks.

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.

If we could solve the energy problem in a balanced way, from electricity production, through nuclear power, and offshore drilling, and reducing our demand, that would affect our future economic health and every American family in this country.

Mr. ALEXANDER. We should work across party lines to find more American energy, use less, and that would bring down prices.

I thank the Senators from Arizona and Texas who yielded.

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