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Public Statements

Domestic Oil

Floor Speech

By:
Date:
Location: Washington, DC

BREAK IN TRANSCRIPT

Ms. SPEIER. Mr. Speaker, thank you very much. I will be joined during this hour by my good friend and colleague from California, Congressman John Garamendi.

I would like to just begin this discussion on oil prices by recalling that in 2008, the constant refrain that was heard in this Chamber over and over again was ``Drill, baby, drill'' by my colleagues on the Republican side. And the good news is that's precisely what we've done. In fact, in USA Today, Citigroup analysts are quoted as saying in a recent report, Energy independence ``is no pipe dream. The U.S. is already the world's fastest-growing oil and natural gas producer. Counting the output from Canada and Mexico, North America is `the new Middle East.' ''

So it's interesting to note that as much as we've been wringing our hands, there is oil being produced here in the United States. In fact, a lot of oil is being produced in the United States. And we're going to go over a few charts now to show how, in fact, things are looking a little bit better.

This first chart really shows what happened with oil production. When George Bush was still the President of the United States, the price of gas hit $4.10 a gallon. It was very high. And then gas prices hit rock bottom when President Obama took office because of the global financial crisis that hit. When President Obama took office, there were fewer than 400 oil rigs operating in the United States, falling below 200 rigs by mid 2009. Then, despite safety reviews after the BP spill, oil rigs operating in the United States quadrupled over the next 3 years. There are now more than 1,300--I repeat that, 1,300--oil rigs operating in the United States, more than all operational oil drilling in the rest of the world combined.

So in the last 3 years of the Bush administration, we were producing 1.78 billion barrels of oil; but in the first 3

years of the Obama, we have already produced 2 billion barrels of oil. The U.S. oil production has continued to increase under President Obama and is now at an 8-year high.

Jim Burkhard, who is Cambridge Energy Research Associates managing director, said in Senate testimony in February of this year, ``A `great revival' in U.S. oil production is taking shape.''

So for all the hand-wringing from my colleagues on the other side of the aisle, talking about what isn't being done, the truth is a lot is being done, and we now have more oil rigs operating in the United States--some 1,300--than all the other places in the world combined.

BP projects that the U.S. will get 94 percent of its energy domestically by the year 2030. That's going to be a huge benefit for all of us. Economists at Citigroup argue that North America can be energy independent by 2020. That's only 8 years away. We could be energy independent by 2020. Citigroup says, if that happens, we will create 3.6 million new jobs, and we will see the unemployment rate cut by 2 percent.

An interesting example is that of North Dakota. Do you know what the unemployment rate is in North Dakota today? It's 3 percent. In California, it's 11 percent. In North Dakota, it's 3 percent. And North Dakota can now boast having the lowest unemployment rate in the country, and it is now the fourth-largest oil producer in the country as well.

So we create new jobs. We reignite manufacturing and chemical businesses. And guess what. American families see a lot of savings, too. In fact, the price of natural gas has dropped substantially. And if we keep going the way we're going, it will drop some 80 percent, giving the American family a $926 a year savings.

Georgia Power is another great example. Their fuel costs dropped 19 percent. And guess what. All of their utility customers saw a decrease in their electrical costs, in their utility bills, by some 6 percent. So there is some good news in all of that.

The second chart looks at U.S. oil production versus gas volatility. World market factors are really driving up oil prices. And if you look at this particular chart, you see that the oil production stays pretty much the same. It goes up a little bit in 2010, as you can see; but, for the most part, it stays pretty consistent. But what does change and changes dramatically up and down, as if you are reading an EKG, is the price of gas in this country. So gas prices are going up and down irrespective of the production of oil.

The Associated Press conducted an investigation over the past 36 years of U.S. oil production and gas prices and found that there is no statistical correlation between how much oil comes out of U.S. wells and the price at the pump. More U.S. drilling has not changed how deeply the gas pump drills into your wallet, and we know that.

The price of oil is determined on a global market. More oil production in the United States does not mean consistently lower prices at the pump. However, if we become less dependent on foreign oil, we will see some dramatic shifts take place in the country.

So why does more drilling have so little effect on gas prices? The answer is because oil is a global commodity. The United States owns less than 2 percent of the global reserves and pays the same world market price that everyone else does.

So, with that, let me introduce my good friend, Congressman John Garamendi, from the great area of Sacramento and the Valley.

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Ms. SPEIER. The next chart that we're going to put up is one that you'll find particularly interesting. This is the Big Five oil companies and how much money they made just in 2011. As can you see, $137 billion last year--a 75 percent increase in the profits over the year before. And as you can see each of them: ExxonMobil, 31 percent increase; Shell, a 54 percent increase; BP, 114 percent increase; Chevron, 42 percent increase; ConocoPhillips, 9 percent increase.

These companies are doing extraordinarily well and yet we're still giving them $5 billion in subsidies.

I guess the question I have for you, Congressman, is one of the things that we're told by the industry often enough is that if you take away our subsidies, the cost of gas at the pump is going to go up. And what is the answer to that question?

BREAK IN TRANSCRIPT

Ms. SPEIER. So we know that we're pumping more oil out of the ground in this country right now than ever before in our history, more than is being pumped anywhere else in the world--1,300 oil rigs. We know that we are still giving the industry a huge subsidy, and we know that they're making lots of money. Right? So what is going on? Is there, in fact, speculation? Is that driving the price of gas up?

Now, Bart Chilton, who is a Commodity Futures Trading Commission commissioner, recently said that consumers are now paying what amounts to a Wall Street premium every time they fill up their car with gas. In fact, he said every time you fill up your Honda Civic, you're paying a $7.50 Wall Street tax, in effect. You're paying that because of the speculation that's going on in the market. If your car is a Ford Explorer, you're actually paying an extra $10.41. So over the course of a year, it turns into real money. You're now talking about $700 more a year that we're paying because Wall Street speculation is driving this price.

Now, we've asked the Justice Department on three different occasions, the President of the United States has asked the Justice Department on three different occasions to look into, to investigate the speculators. And we're waiting. We're waiting for that particular review to take place because what we do know is that if we can get oil down to $70 a barrel, we're going to bring gas down to $3 a gallon, which will be a huge benefit to the consumers in this country.

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Ms. SPEIER. An interesting point along the same lines, maybe 4 or 5 years ago, the percentage of speculation in the oil market was 30 percent. The speculators were involved in about 30 percent. About 70 percent were end-users that were in the market. But interestingly enough today, those numbers have just flipped so that the end-

users of gas, of gasoline, that are betting on the future are 30 percent, and it's the speculators that are 70 percent.

The other thing that the experts said this morning, I don't know if you were there at the time, they were talking about Katrina. When Katrina hit, it blew out all of those oil rigs in the gulf. It shut down oil production for a period of time. And you know what happened to the price of oil? It went from $50 a barrel to $60 a barrel for about 4 months, not from $70 a barrel to $147 a barrel. So over 4 months, it went up ever so slightly, but significantly nonetheless; and then it came down.

So this, this is ripe for an investigation, I believe, because it would suggest that there is a lot of speculation going on in the market today.

BREAK IN TRANSCRIPT

Ms. SPEIER. So let's talk about what the solution is to protect Americans from volatile gas prices and to kick our dependence on foreign oil. That becomes the secret.

I mean, by every focus, if we kick our dependence on foreign oil, we are going to be so much better off.

So let's look at this next chart. In 2005, America's dependence on foreign oil peaked at about 60 percent. Then it dropped down in 2010 to 49 percent. Then last year, it dropped down even more to 45 percent. 2010 marked the first time U.S. dependence on foreign oil fell below 50 percent in 13 years, and our dependence on foreign oil is now at the lowest level in 16 years. At this rate, the Energy Information Administration predicts that the U.S. will slash its dependence on foreign oil to as low as 36 percent in the year 2035.

The U.S. transportation sector consumed nearly 5 billion barrels of petroleum in 2009, accounting for over 70 percent of the consumption in the United States. The lion's share of that--45 percent of total consumption--was in passenger vehicles and light-duty trucks.

So, what do we do about that gas guzzling that's going on? Well, the thing we do about that is to look at how we can change how many miles to the gallon we get. To the President's credit, his administration has put in place these new corporate average fuel economy standards--known to all of us as CAFE standards--that will nearly double the efficiency of the U.S. fleet of automobiles, achieving a fleet-wide average of 54.5 miles per gallon by the year 2025.

So what does that do once we get there at 2025? Well, it means that we, as consumers, will save $1.7 trillion at the pump over the life of the program. A family that purchases a new vehicle in 2025 will save $8,200 in fuel costs when compared with a similar vehicle in 2010. So over the life of the program, the standard will save 12 billion barrels of oil and eliminate 6 billion metric tons of carbon dioxide pollution.

So the solutions are really there for us. The solutions are that we move to these CAFE standards, that we address the issues around speculation, and that we keep the robust drilling that is going on in this country right now so that we can continue to reduce our dependence on foreign oil.

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Ms. SPEIER. Well, thank you, Congressman, for your great presentation and your passion around making it in America, which should be underscored, because one of the great things that happens in my district is a lot of innovation.

Tesla, which is an electric car company that is making it in America, building it right there in Fremont, has a showroom right outside my district. And a gentleman came in to test-drive the sports--the Roadster, which has a hefty price associated with it, but very fast.

BREAK IN TRANSCRIPT

Ms. SPEIER. Yes. It goes very fast, and it's all electric.

So he took it for a little spin, came back and said, I want to buy it. The salesperson says, Well, you're the first person who has ever come in here and literally bought it after just a test-drive. The purchaser said, Well, my neighbor on one side and my neighbor on the other side have already bought one.

Now, the funny thing about that story is not the keeping up with the Joneses so much, but the fact that in terms of the grid, having three electric cars on the same block charging overnight is going to create a little indigestion. So that's one of the good problems that we're going to get as more people are driving electric cars.

BREAK IN TRANSCRIPT

Ms. SPEIER. Thank you. And I think at this point we have covered all of the issues we wanted to cover during this Special Order tonight. And I just want to leave my colleagues with this message. Again, this was quoted in USA Today. Citigroup analysts declared in a recent report, energy independence in the United States is not a pipe dream. The U.S. is already the world's fastest growing oil and natural gas producer. Counting the output of Canada and Mexico, North America is the new Middle East.

We've got many exciting things happening in the oil and gas industry.

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