Mr. President, it has been nearly 3 years since gas prices were as high as they are now. Back in July 2008, they peaked at about $4 per gallon. We are approaching $4 per gallon for gas today. The average price in Minnesota is $3.94 per gallon, and the peak driving season is right around the corner.
Back in 2008, I heard from many Minnesotans--from seniors who couldn't afford to drive to their pharmacies to pick up their prescription drugs, from workers who couldn't afford to drive to work, from middle-class moms and dads who had to cancel their summer vacations--who couldn't go up north because gasoline was just too high for their budgets.
Although it wasn't the only factor, these high fuel prices of 3 years ago helped to push our economy into a deep recession. We don't want that to happen again. One of the things we learned 3 years ago is that rising oil prices were not simply the result of supply-and-demand market factors. In fact, the dramatic runup in gas prices was due in part to rampant price speculation by people who had no business being in the oil market.
These were not airlines or trucking companies or other businesses that actually need and use oil and gas and who trade in futures in order to protect their businesses against volatility in the oil market. No, the most frenzied price speculation was by Wall Street traders and hedge fund managers who would never actually touch a drop of oil. They would never use it in their businesses. To them it was just numbers on a computer screen. They were trying to game the system to make some quick profits and then take the money and run, all at the expense of those people in Minnesota or Ohio who are standing there at the gas pump watching those numbers add up.
It is interesting; if we take a look at the gas prices in Minnesota back in 2008--we can, in fact, find it on MinnesotaGasPrices.com--between July and the end of the year, prices dropped from $4 to $1.60 per gallon. Numerous experts have concluded that underlying supply-and-demand fundamentals can't account for the sharp rise or decline in prices.
For example, in the first 6 months of 2008, U.S. economic output was declining while global supply was increasing. But when we look at the cost of oil during that time, it just doesn't match up.
In June of 2007, oil cost $65 per barrel. A year later, in June of 2008, it reached $147 per barrel. It was down to $30 in December of 2008 and back up to $72 in June of 2009. Even if supply and demand were, over the long run, pushing up the price of oil, that alone couldn't explain the massive volatility in the market.
Looking back, we now know much of the dramatic decline in oil prices was the result of Wall Street speculators fleeing the oil market because the spotlight had finally been put on them. In other words, the heat was on, and it got too hot for them to stay.
But here we are today, 3 years later, and the price of a gallon of gas is nearly $1 higher than it was 10 months ago. Once again, I am hearing from Minnesotans who are being squeezed by high prices--families, farmers, and businesses large and small.
There is no doubt some of these prices can be attributed to reduced production from countries such as Libya and Egypt. There is no doubt we can increase domestic production of oil, whether in North Dakota, our neighboring State, where they literally have doubled their production of oil over the last few years, or in Louisiana. Increased domestic production takes time and, in any case, the impact on prices would not necessarily change things--nowhere near what we are seeing right now due to speculation.
That is why a few months ago I wrote to Commodity Futures Trading Commission Chairman Gary Gensler urging him to make swift and strong implementation of speculation limits that were included in the Wall Street reform legislation we passed last year. This legislation authorizes the commission to impose limits on the size of speculative positions in oil futures markets by investors who are not bona fide oil traders. These ``position limits'' are designed to limit market manipulation and make sure the oil market is operating fairly according to supply and demand. We don't want to see Wall Street speculators further drive up oil prices in the coming months.
We also know short-term solutions will only go so far. That is why I have been focused on a long-term energy strategy, a strategy that will provide incentives for our innovators, investors, and entrepreneurs to invest in solutions for our energy future.
In 2008, I helped push through the Commerce Committee, along with a number of my colleagues, the first update to our fuel economy standards in decades. These rules, which are now in place, are expected to save 1.8 billion barrels of oil, about three times as much as Libya produces every year. I am also continuing to work on policies that will increase our homegrown energy production.
It is important to note that studies suggest that biofuels can provide relief at the pump. A recent study from the University of Iowa indicates that from 2000 to 2010 competition from ethanol reduced wholesale gasoline prices by an average of 25 cents per gallon, saving American consumers an average of $34.5 billion each year.
During the gasoline price runup in 2010, the impact of ethanol on gasoline prices was substantially larger, reducing gasoline prices by a national average of 89 cents per gallon and by $1.37 per gallon in the Midwest. Biofuels are the largest and best alternative to imported oil. In fact, we produce more biofuels in this country than we import gasoline from Canada, our largest source of foreign imports.
That is why in March I introduced new legislation with Senator Tim Johnson that would significantly boost our Nation's biofuels production and biofuels infrastructure while also providing long-term standards for increasing renewable energy production and major energy efficiency improvements.
First, our bill would provide consumers with more choices at the gas pump by expanding biofuels infrastructure and increasing alternative fuel vehicles. Specifically, it would expand the availability of blender pumps that are capable of dispensing different blends of ethanol and gasoline. It would provide loan guarantees to build new biofuels pipelines and would also require half of the cars produced in 2015 to be flex-fuel vehicles--natural gas-powered, electric-powered, or hybrid vehicles.
Second, to help offset costs, the bill would phase down and eventually phase out the ethanol tax credit. This credit is serving its purpose of helping to reduce the price of gasoline and reducing our dependence on foreign oil by providing consumers choices at the gas pump. But it won't be necessary forever.
Lastly, the bill would create the first national standards for renewable energy and energy efficiency along the lines of Minnesota's 25-percent-by-2025 standard and a 1-percent annual improvement in efficiency.
If I could note, our State has an unemployment rate that is significantly below the national average--two points below the national average. A lot of that has to do with our farm economy, a lot has to do with our innovative companies, but we have done it all with a renewable standard in place--25 percent by 2025. We have done it all with a significant push on ethanol and biofuels and wind and solar. So I say this can be a model for the rest of the country.
Our Nation as a whole has an unemployment rate of 8.8 percent. Gas prices are approaching record levels. We continue to send $730 million a day to foreign countries--many of which have been known to funnel money to terrorists--to meet our basic fuel needs. That is $730 million a day for fuel that we send to other countries. I think we should be investing in the farmers and the workers of the Midwest instead of the oil cartels of the Mideast. But whether it is biofuels plants in the Midwest, electric car factories across this country, electric car battery factories in the Chair's home State of Ohio, that is the future. It is not continuing to send millions of dollars a day to the Mideast.
Each of the provisions in this bill have some support from both Republicans and Democrats, and I am hopeful the bipartisan spirit of this bill can help advance a serious bipartisan discussion about thoughtful solutions to rising gas prices. The key is that everyone needs to realize that inaction is not an option; that bumper sticker slogans will only result in our kicking the can down the road. This is about putting sensible limits on speculation that doesn't affect legitimate companies that are legitimately hedging their risks. This is about a comprehensive energy plan for the future that includes drilling in Minnesota and other parts of the country but also includes natural gas, includes hydro, includes geothermal and wind and solar and biofuels. That is what this is about.
If we learned anything from Japan--and I support nuclear energy in this country, and I think that should be in the mix as well--it is that we don't want to rely too much on any one source of energy. This idea of looking regionally and looking across the country at different sources of energy is key as we go forward.
During these challenging economic times, we can no longer put our heads in the sand and pretend this isn't happening. Talk to anyone who is filling up their car at the pump now. Talk to anyone who wants to go to their cabin in northern Minnesota for the summer every weekend. They will tell you it does matter. Now is the time to act.
Mr. President, I yield the floor.