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Public Statements

Working to Address High Gas and Energy Prices


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Working to Address High Gas and Energy Prices

I have heard from many of my constituents about the hardships they face because of the high cost of energy. From a single mother who is working two jobs just trying to make ends meet and support her children to the commuter who is squeezed financially, the rise in gas prices has been difficult for many to manage. There are similar stories across our country. As the price of gas impacts other sectors of the economy more Americans also find themselves having to deal with higher food costs as well as higher prices at the pumps.

This energy crisis has broad implications for our economy and highlights that we are too dependent on oil. We use oil to drive our cars, transport our goods, heat our homes, fly our planes, and run our machinery. This situation is especially troublesome as most of the oil we use is imported. In fact, since 2001, America's dependence on foreign oil has increased from 56% to 65%.

The United States experienced its first major energy crisis back in the 1970s, when the Organization of Petroleum Exporting Countries (OPEC) placed an oil embargo on the United States, leading to a shortage of oil and government rationing of supply. That incident was a wake up call for Americans, as energy efficiency and conservation measures began to take place. However, those strategies did not last; instead, we, as a nation, reverted back to our extensive reliance on oil. It's worth noting that the viable alternatives to oil we have through technology were not as apparent then as they are today. And, while America continues to consume roughly 25% of all oil and produces only 10%, rapidly emerging economies such as China's have increased the worldwide demand for oil. This is happening as oil fields around the world are reaching the end of the line on oil production. There is enough blame to go around for those energy policies of the past that have led us to this situation today and we ought to be conscientious to not repeat them.

In light of our current energy situation, we must look at immediate and short-term solutions to help families at the gas pump and also longer-term policies to ensure that we do not find ourselves in these circumstances again. To lower gas prices right now, Congress has passed legislation to stop filling the Strategic Petroleum Reserve (SPR), keeping 70,000 barrels of oil on the market each day. After initially threatening to veto the measure, President Bush signed it into law in May. Further, House Democrats voted to pass a measure that would have released 10% of oil from the SPR (Consumer Energy Supply Act), and thus increasing current market supplies. The SPR, which is currently 97% full, has been tapped or suspended before in 1991, 2000, and 2005 - in each instance, the price of oil immediately dropped. It isn't a long term solution to our energy problem but it is an effort to deal with the energy price spikes. Unfortunately, the bill failed to receive the two-thirds votes necessary to pass under suspension of the rules.

One way Americans everywhere are combating record oil prices is by conserving energy - it is the fastest tool we have to deal with energy prices. And, as I write this, oil prices are dropping in large part because of decreased demand caused by a reduction in driving as a result of high gas prices.

Further, companies, like Adobe in San Jose, are recognizing the cost-saving possibilities of conservation. Adobe has retrofitted its San Jose offices to become more energy efficient, implementing conservation techniques such as motion sensors to turn off lights and HVAC equipment when spaces are unoccupied. Within five years, the company has cut its electricity consumption by 35% per occupant and has actually paid back its investment and more in energy savings. If the entire commercial sector in the United States were to reduce their energy use by just 10% (as is targeted by the Energy Star Challenge), the sector would save $20 billion and the equivalent of 91.7 million barrels of oil a year.

We can all do our part in conserving energy. For instance, people are driving less these days, doing all of their errands on one trip rather than taking multiple trips. In June 2008, Americans drove 12.2 billion fewer miles than the same month last year, a 4.7% decrease. Many are also using more public transportation. To help these transit-users and mass transit systems, I voted for and the House passed H.R. 6052, the Saving Energy Through Public Transportation Act, which gives grants to mass transit authorities to reduce public transit fares.

In 2000, the rules were changed relative to the sale and purchase of oil as a commodity. Under the old rules, the biggest financial speculators held 140,000 oil contracts. After the rule change, which explicitly exempted energy products from regulation, the number of oil contracts held by speculators jumped to 1.8 million today, including a three-fold increase since 2006. It appears that market speculation has contributed to the rapid escalation of the price of oil. On the heels of a credit crunch and the subprime mortgage crisis, speculators may also have turned to the oil commodity markets to turn a profit. Congress has worked to rein in the out-of-control speculation in the energy commodities market that has driven oil prices up. I voted for and the House overwhelmingly passed the Energy Markets Emergency Act, which directs the Commodity Futures Trading Commission (CFTC) to use all its authority, including its emergency powers, to immediately curb the role of excessive speculation in energy markets. I have also co-sponsored the Consumer Oil Price Protection Act. This bill would prevent excessive speculation in the energy commodities by limiting participation in those markets to those who are capable of producing, manufacturing, or taking physical delivery of the commodities. The bill thus allows legitimate trading of oil commodities while stopping speculators from manipulating the energy markets and increasing the price of oil. It is currently awaiting action in the House Committee on Agriculture.

In the next several years, we must work on increasing energy efficiency, and this Congress has started the necessary steps to get us in the right direction. In December 2007, the Energy Independence and Security Act (EISA) was signed into law. EISA made a substantial commitment to reducing our dependence on oil. The law increased vehicle fuel economy standards for the first time in 32 years, raising current rates to 35 miles per gallon by 2020. This new standard will save American families $700 - $1,000 a year at the pump and will slash U.S. oil consumption by more than four million barrels per day by 2030. The bill also sets new energy efficiency standards for lighting and consumer appliances, such as dishwashers, clothes washers, refrigerators and freezers, to reduce energy costs to consumers.

These energy efficiency measures will be achieved, in large part, through innovation and technology - much of which is happening right here in San Jose. For example, semiconductor chips used in commercial settings are also used in a wide range of consumer products, from cell phones to televisions to refrigerators to hybrid cars. Advancements in chip technology, such as digital signal processors and high-performance analog power supply controllers, could help those electronic goods achieve energy conversion efficiencies of nearly 90%. These energy-saving technologies have widespread applications. Light emitting diodes, or L.E.D.s, are a type of semiconductor, and they can last up to 20 years and require only 15% of the energy needed to light a standard bulb. The L.E.D.s are already being used in traffic signals around the nation and even in the Times Square New Year's Eve ball. If all outdoor and street lightings were to switch to L.E.D.s, the United States would save the equivalent of 83 million barrels of oil each year, or 7 large electric power plants. These are the type of innovations that we need to encourage to help us consume less energy. By becoming more energy efficient, we can reduce our dependence on oil.

As a long-term goal, we need to transition our economy away from one that relies on finite resources, like fossil fuels and coal, to sustainable and renewable energies. In order to reach that goal, we, as a country, have to make a commitment to invest in the continued development of those alternatives. For instance, the House has passed the Renewable Energy and Job Creation Act. The bill would extend and expand tax credits designed to encourage the production and investment of wind, solar, geothermal, and other renewable energies. The current credits expire at the end of this year. If they are allowed to expire, 116,000 jobs in the solar and wind jobs and $19 billion in investments will be lost. This would be a major setback not only for our economy but also our energy policy.

Other countries that have made a commitment to renewable energies are showing that it is possible. In Germany, fourteen percent (14%) of all electricity generated in the country comes from renewables, including wind and solar power. The European Union has actually made a commitment that renewable energy should account for 20% of the EU's final energy consumption by 2020. That goal would increase their renewable contribution by nearly 12% from 2005. This is the sort of commitment that the United States needs to make to developing sustainable energy. If we do not make this commitment to developing alternatives to oil now, as we perhaps should have done back in the 1970s, we will lose our spot as a world leader.

I also want to address the recent calls for additional offshore drilling. The experts advise that if we approved this today, we would not see additional oil in the marketplace for many years and that the positive impact on gasoline would amount to less than 4 cents per gallon. It is also important to note that oil companies already have 68 million acres of land leased for energy production that they are not using. House Democrats have proposed legislation that would require oil producers to drill on those leases they already have or relinquish them to another company to produce oil on them. I voted for the DRILL Act, but it failed to receive the two-thirds vote required to pass under suspension rules. Encouraging drilling in these areas will bring oil to the market sooner than the proposed offshore oil drilling.

However, even in the face of these realities, some in Congress have forcefully advocated for offshore drilling. Even though it is a fact that we cannot drill our way out of our current energy crisis, I believe that it may be necessary to compromise with Congressional offshore drilling proponents to secure their support for efforts that would actually have a positive impact on our energy situation. I expect that Speaker Pelosi will propose a comprehensive plan that includes a compromise on offshore drilling soon. Now is not the time to insist on just one approach; it is a time for working together in the best interests of our nation and our people.

Some have also proposed increasing nuclear power plants and oil refineries. It is important to understand that there is no prohibition on building nuclear power plants or new refineries today. However, the private sector has not acted to build such facilities. There is concern about nuclear waste produced by nuclear energy plants. The Department of Energy has said that even without any new nuclear power plants, getting rid of our country's nuclear waste will cost $96.2 billion. I think that additional research efforts should be undertaken in the effort to discover more efficient means of dealing with the nuclear waste issue. If intensive research were undertaken on this subject starting today, we might yield available new technologies by the time new nuclear plants come on board should energy companies be willing to initiate construction. It takes many, many years from start to opening in the development of a new nuclear power plant.

Our current energy situation needs to be dealt with, but it must be handled correctly. We cannot make the same mistakes as we did in the past, letting another opportunity to reduce our dependence on oil slip by as we did in the 1970s.

Although it has not been linked in the public discussion, it is important to emphasize that continued reliance on fossil fuels is the major contributor to global climate change. As we witness the melting of the ice caps and the shrinking of the Greenland ice shield it's worth remembering that there are some things even worse than high gas prices: environmental damage to the earth that makes it uninhabitable for human kind.

We need a "Manhattan Project" size effort to pivot from a fossil fuel economy to one based on clean, reliable, renewable energy. We need that effort for economic reasons and for foreign policy reasons but also to pull the planet back from the massive climate change catastrophe that we face.

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