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Statements on Introduced Bills and Joint Resolutions

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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - May 01, 2008)

By Mr. CRAIG (for himself, Mr. Warner, and Mr. Inhofe):

S. 2953. A bill to provide for the development and inventory of certain outer Continental Shelf resources, to suspend petroleum acquisition for the Strategic Petroleum Reserve, and for other purposes; to the Committee on Energy and Natural Resources.

Mr. CRAIG. Mr. President, during consideration of the reauthorization of the FAA, a great deal of conversation has gone on on this floor about energy and the cost of energy. It is appropriate that we talk about it at a time when our airlines are struggling and we are attempting to reauthorize FAA. Part of the reason our airlines are struggling is the unprecedented aviation fuel prices. It is only one of the many reasons they are having difficulty today, but clearly the doubling of their costs are putting at risk their corporate structure and their ability to serve an American public.

But it is not just the airlines that are at risk. Every American consumer and every business is finding the tremendous increase in the cost of energy a significant problem. For example, just a few minutes ago, my BlackBerry buzzed. My wife Suzanne is out in Boise, ID. I got an e-mail about the temperature, which is 31 degrees in Boise this morning. At the bottom of the e-mail, she said regular gas just hit $3.53 a gallon. That is a lot of money. Now, that is not as much as others are paying across our Nation, but when an Idahoan fills their tank and they go from community to community, oftentimes they drive hundreds of miles--not just a few miles but literally hundreds of miles. Idaho is a great big Western State. Our distance is oftentimes a significant part of our commerce and our ability to conduct economic activity, and fuel prices have always been significant and important.

Idaho is also a large agricultural State. The cost of the production of foods today has gone up dramatically because of the cost of diesel, if you will, the cost of fertilizer, and all of those components that go into the production of food and the transporting of the food.

Part of the reason food is going up on the retail shelf of the supermarket today is the cost of getting it there, let alone the cost of producing and refining it. Many truckers are saying that just to fill up their truck now can be as much as $1,000. They are not able to change their freight rates to adjust as quickly to the high cost of energy, and they simply have to--this is the term--``eat it.'' Well, they cannot afford to eat it. Oftentimes, those trucks are simply turning off their motors and sitting idle.

So the impact of energy costs on our economy can be dramatic. I came to the floor yesterday to talk about it and to say that, in large part, the American consumer, in their frustration, is saying: Whom do we blame? I don't think they have to look any further than the U.S. Congress and the failure of this Congress--the House and Senate--over the last 20 years to do the things that were necessary to continue production, to ensure refinery capacity, to ensure exploration and the development of reserves, while we were doing all of the other things in conservation, in CAFE standards, assuring that we had a new form of transportation energy. But, no, we have failed to do the right things, and as a result of that, the American consumer is, in fact, paying a great deal for our failure.

What do we do to change that? Instead of just wringing our hands, there are all kinds of ideas out there about changing it.

Some would suggest that you just tax the big oil companies; if you just tax those big oil companies and put that money somewhere else, that will solve the problem. There is an old adage in economics that is quite simple: You usually get less of that which you tax. In other words, the higher you tax something, the less you are going to get from it. Do you want to, by taxation, nationalize America's independent oil companies? Is that a way to get production and more oil and gas at the pump? Remember, there are not any gas lines out there today. There aren't the kinds of lines we saw in the 1970s during the last energy crisis. There is supply. It is the cost of supply that we are frustrated about and the impact that cost is having on our economy.

Here is one of the problems we have. I talked about a Congress that failed, a public policy that failed, a policy that failed to continue to produce as demand went dramatically up--not just in this country but around the world.

The blue line on this chart is the supply line. As you can see, in the 1990s it peaked and it began to drop. That is, of course, U.S. production versus U.S. consumption. In other words, as a nation we began to produce less and less crude oil into our refineries.

Today, we are near 60 percent dependent upon other sources of energy, from outside our country, to come into our refineries and to go out of the gas pump to the consumer. In fact, you can see that the red line--demand--has gone up dramatically as our economy continued to grow over the years, as more people were driving cars, and as more cars consumed more gas.

The only way you are going to keep price down is when the supply line and the demand line are somewhat in concert, somewhat tracking each other. That simply stopped in the 1950s, as we began to grow increasingly dependent upon foreign nations.

We passed the Energy Policy Act of 2005, but it wasn't really directed at transportation fuels. Last year, we added to that and we began to address transportation fuels. We brought ethanol into the market by subsidizing that and allowing our farmers, and those who take corn from them, to produce ethanol to become increasingly effective in the market. That is working to some degree. In fact, it is estimated today that 20 cents would be put on the price of gas at the pump if it wasn't for national and rural ethanol production. Now, it has caused other problems. Some would argue that it has caused problems in the food chain, and it probably has. I think the marketplace will work that out. So there are things we have been doing.

But I think, most importantly, it is the things we have not done. It is the failure of our country to recognize the increased dependency we were developing from other countries around the world. I think that has become one of our greater frustrations. While you have some on the campaign trail today talking about taxing the big oil companies, the big oil companies don't own the oil. It is the cartels. It is the nations. It is not oil companies, it is oil countries that we have to worry about today.

I didn't coin the phrase, but I use the phrase quite often, "petro-nationalism.'' If I am a country and I am small but I am sitting on a pool of oil, I become rich overnight. The reason I become rich overnight is because Americans will come and buy my oil. If I want to form a cartel and I want to control the supply of that oil, then they will pay even more for it because Americans quit producing for themselves.

Here is a statistic that I find fascinating, and some have said that if we don't stop this in the near future, we will spend our Nation into poverty as we spend all of this money on oil. We are now spending well over $1 billion a day outside our country to buy oil. That is a phenomenal figure. Our neighbors to the north, we send them $280 million a day; to Saudi Arabia, we send $190 million a day; to Venezuela and Dictator Chavez, we send $160 million; to Nigeria, we send $140 million; to Algeria, we send $70 million. Do Venezuela and Nigeria and Algeria have our best interests in mind? I don't believe so. They have their own interests in mind. We are literally making them wealthy because we are buying their oil.

Many of us talk about energy independence, and last year when we passed that legislation I was talking about, the Energy Independence and Security Act of 2007, we did some very good things in it. As I said, we looked at increasing production by conservation, by CAFE standards, and by renewable fuels standards. We said to the automobile industry: You have to design cars that burn less, and in doing that, we will improve our overall position on dependency by dropping it significantly by 2030. But it takes a long time to redesign a car, make it efficient, produce it, and then sell it into the market.

Those are the realities of a problem where you cannot just fix this tomorrow. We cannot just change the price of gas at the pump tomorrow because we cannot fix the underlying problems instantly. But as I said earlier, if Congress is at fault, the problem in this, then Congress ought to be doing more about it. And it is not just wringing your hands and wanting to tax. It is doing things that get us back into production while we learn to conserve, while we have cleaner automobiles, while we look at alternative fuel sources, while we get more hybrid cars and electric plug-in cars in the market. That is all coming, but that is 10 years, 15 years, and 20 years out.

What do we do in the interim? I believe there is something we can do, and we ought to do. In America today and in our territorial waters we are sitting still on a lot of oil, a dramatic amount of oil. Some would argue under old U.S. Geological Survey analysis that we are sitting on at least 100 billion barrels of oil. If we are sitting on it, why aren't we using it? Once again, the politics of Congress and the politics of States enter into the debate.

A couple of years ago, I began to talk about an issue I called the no zone. What was I talking about at the time? I was talking about that area of the United States and Outer Continental Shelf of waters that we knew had large volumes of oil. But California said no. We said no in Alaska. We have said no off the east coast. We have said no around Florida. Because we have said no, the American consumer today is paying the highest price for gasoline ever. That is a fact. It is a simple reality. Our dependency on foreign nations grew. As I just expressed, over 60 percent of our oil is coming from outside the continental United States when we know there is a significant amount of oil outside the continent.

When I introduced this chart a couple of years ago and I began to talk about the no zone and there were a few folks wringing their hands, we went to work. We went to work and we looked at oil sales in the gulf and the development in the Outer Continental Shelf in the deep waters of the Gulf of Mexico.

Thanks to our effort, we did something. The American consumer needs to know we went into lease sale 181 off the coast of Florida. We looked at and found a tremendous amount of capability there and we began to develop it and we are developing it today. We have allowed other lease sales to occur. That is tremendously important. We are beginning to tap some of that oil supply that we know is out there and about which we ought to be doing more. That is what I think is important, and that is on what I think we ought to be focused.

To sit and wring our hands and tell the American people there is nothing we can do, and all we are going to do is go out and tax and tax, which will not produce--we ought to be talking about production. The legislation I have introduced today talks about production. It talks about production in a positive way.

I mentioned a few moments ago the action we took last year in lease sale 181. We were successful in bringing Florida along in their cooperation and understanding, which was phenomenally important.

We know there are millions of barrels of oil and trillions of cubic feet of gas out there. What is most significant about oil development in this region is that the infrastructure is in place. What do I mean? Refineries, pipelines, capacity. We don't have to wait 5, 6, and 7 years just to build the infrastructure. It is there, and the oil is under it. That is why we did lease sale 181. But there is a lot more we can and should do. That is why the legislation I have introduced today does just that. It doesn't start drilling, but it says a couple of things that are quite simple.

As we have heard others talk about the fact we are putting money into the Strategic Petroleum Reserve at this time, we are buying oil off the market and putting it underground in the salt domes in the South for a time of necessity, I suggest we stop doing that for the time being, and I suggest we take that money we are using for those purposes and we modernize our inventory of our known reserves, our unknown reserves, and our capacity because the true SPR--SPR means Strategic Petroleum Reserve--the greatest reserve in the world is to know what we have, where it is, and how we can access it. That is one of the most important things we can do for the consumers of America today.

I know it frustrated some of my Floridian friends when I talked about our inability because of policy to allow our companies to go in to the northern area off Cuba and drill because Cuba was allowing other countries to come in and develop. Just 90 miles--45 miles until you hit the zone--90 miles off our coast on the extreme of the Florida Keys there are foreign nations drilling oil today. India is there, and India has now discovered oil. China is there, and China has now discovered oil. We are not there today because our policy is 45 years old and still says: No, no, Americans cannot get involved with Cuba, even though we believe Cuba has phenomenal potential oil reserves. Shame on us.

America, listen up: It is Government policy today in large part that has caused you the pain at the pump, and it is very important that Government act today to reduce that pain.

The legislation I am offering would create an inventory that would do just that. It would allow us to know what our reserves are.

We have moratoriums off the coast of Florida, and yet we know there are huge oil reserves out there. Why are we not doing something about it? Well, it is local politics. It is national politics. It is green politics. It is politics. That is why we have the price of oil we have today, nothing more and nothing less but politics, and our economy is growing more fragile by the moment because of it.

Is it demagogic to say that? I don't think so. I don't think so at all. I pulled out the sign, the no zone. The no is a result of politics, whether it is the politics of the State of Florida or the politics of the State of California or whether it is the national politics of this Senate that will not allow for us to drill for the reserves in what is known as ANWR, the Alaskan national wildlife area, where we know there is phenomenal abundance.

It was all done, all of this no, this political no was all done in the name of the environment. There was some reason at the time these old ideas were put in place. We had the oil spills off the coast of Santa Barbara, and as a result of that, Americans were concerned. So California said no more drilling there, and then we followed up.

A few years ago, we had a great national tragedy in the gulf area of our country. That tragedy was called Katrina. She came rolling up and through the gulf. We know what she did in New Orleans. She did something else nobody wants to talk about today. She knocked offline hundreds of oil wells that were producing out in the gulf--knocked them off. She even set some of the drilling rigs adrift. But not a drop of oil was spilled. Why? Because modern technology today and American know-how and a concern for protecting our environment has produced one of the cleanest deepwater oil drilling industries in the world. We are producing in this area of the gulf off the coast of Texas, off the coast of Louisiana, off the coast of Mississippi, and with 181, we just brought into or soon will be bringing into production off the coast of Alabama. Why not off the coast of Florida? Why not off the coast of California? Why not off the coast of the Carolinas, Virginia, and on up where we believe there is significant gas and oil reserves?

It is old politics of the past that is caught in the ghosts of Santa Barbara of decades ago. Yet our technology today will take us there, but our politics will not take us there. That is why I have introduced the legislation I have. The least we can do is inventory with modern technology to know where our oil is.

I notice the president of Shell said in a press release the other day: If Americans sent a message to the world that we were going to start drilling our own reserves and bringing them into production, the price of gas at the pump would drop dramatically, 25 or 30 cents a gallon or more. That is significant stuff, both short term and long term, to the economy of this country.

I say to my colleagues, I say to our country, and I say to our consumers: Is it a time to act? You bet it is a time to act. While some suggest we tax the big boys out of existence, we do not produce anything by doing that, while we can create all kinds of other structures. Do we produce more, do we build refinery capacity, and do we assure the American public while we are transitioning into hybrid cars and electric cars and hydrogen cars and all of those kinds of activities that we support and are doing research and development on today that they will still have an abundant supply of energy? That is our job. That is the job we failed in doing over the last good number of years, and that is the job we ought to stop and start over and do it right and reward the States that are the boundary States to the production of the Outer Continental Shelf.

We have huge oil reserves in this country, and yet we are letting the rest of the world have our wealth. Why not keep our wealth in this country by the development of these reserves?

The first step is the legislation I have introduced today. Let's at least in the next few years do the inventory, the modern, sophisticated seismographic inventory that USGS can do to let us know how much is out there because what we know today is simply old stuff. Those efforts were done years ago. Already out at the edge of this green line in the deepest waters in the gulf under the newest drilling technologies, we are finding phenomenal oil that just a few years ago we did not even know we could get to. We are getting to it. We are producing it. It is clean, and it is environmentally sound. We ought to be doing that everywhere else.

I have joined my colleague from Louisiana who just came to the floor, who introduced legislation that says when oil gets to $125 a barrel, we ought to give the States the option to allow the development of the Outer Continental Shelf off their State. You darn bet we ought to, and those States ought to be rewarded for it.

There is so much this country can continue to do instead of standing still and wringing our hands and trying to blame somebody else for our failure over the last 20 years to continue to allow this great country to produce for its consumers.

Mr. WARNER. Mr. President, will the Senator yield for 10 seconds?

Mr. CRAIG. I will be happy to yield to the senior Senator from Virginia.

Mr. WARNER. Mr. President, I commend him for this initiative, but I hope he says "oil and gas'' because off the east coast there is an abundance of gas, as shown by the previous studies. As he says, they have to be brought up to date. Do let us invoke gas because along the beaches--and I, as the Senator knows, twice tried to get legislation through, and a collection of Senators--and I say this in a lighthearted way; I call them the beach boys--will not permit this for fear that pollution could emanate from the drilling process onto their beaches.

I suggest let's start with gas. There would not be any potential for the erosion of beaches as a consequence of an accidental spill. I do hope the Senator puts in the word "gas.''

Mr. CRAIG. Mr. President, I thank the senior Senator from Virginia. He is absolutely right. When I think oil, I think gas because, obviously, in lease sale 181 and in other areas where there is gas, there is oftentimes oil, and oftentimes where there is gas, there is no oil. We believe that to be the case off the coast of Virginia.

The Senator from Virginia has been a leader, without doubt, in that very kind of effort to allow at least the seismographic effort, the exploration that would determine for us the kinds of reserves we have and may have for the future.

I thank the Senator from Virginia for his leadership in this area.

Mr. WARNER. Mr. President, I thank my good friend from Idaho. I also emphasize that the technology to do it safely and not be the victim of a disruption by Mother Nature is there.

Mr. CRAIG. Without question it is there today, and we know that. We are the leaders of clean drilling in deep water for the world, no question.

Mr. WARNER. I thank the Senator. I wish him well. He has my support.

Mr. NELSON of Florida. Mr. President, will the Senator further yield?

Mr. CRAIG. I will be happy to yield to the Senator from Florida.

Mr. NELSON of Florida. Would the Senator mind putting up his map with the State of Florida on it?

Mr. CRAIG. I am more than happy to.

Mr. NELSON of Florida. Would the Senator recognize that the area in yellow there on the west coast of Florida that he indicates for future drilling--would he recognize almost that entire area is the largest testing and training area for the U.S. military in the world? The military is on record at all levels, of all generals and admirals, that drilling should not be done in that area to compromise our training and testing mission for the U.S. military.

Mr. CRAIG. I do recognize that. I do appreciate what our military has said.

I also understand a few years ago we took offline a naval training area in Vieques. Why? It was no longer a popular thing to do.

If there is oil under this area--and we believe there is--and it is a training area, why couldn't we train here? Or why couldn't we train over here? The reality is, what is at this time more valuable?

It is very easy to say don't do it. Or is it possible to say can we do both? There are a good many experts and professionals in the field who said that. We can have a military training area, and guess what we also can do. We can pull the oil out from under. How do you do it? Quite simply. You put a location, a location and you slant drill thousands of feet and you do not have to pepper the area with all kinds of drilling rigs.

Today's technology is amazing. It is politically comfortable, I appreciate that, and I understand the State's politics and I do not deny that--but this is not the oil of the State of Florida. This is the oil of the citizens of our country. It is the politics of Florida today that deny us the oil, not the politics of America. So it is a simple question: Should we inventory it? Should we know what it is? And should we, under modern technology, reward the State of Florida for the potential benefit?

It is ironic we did not move at all to stop drilling 45 miles off the Florida coast. We could even take a 45-mile zone here, or more, consistent with what is going on in Florida today and still protect this.

But the Senator is right. It is a military area. Guess what. I am kind of a modern guy. I believe in technology taking us where we can go and having the best of both worlds. But right now the American consumer has the worst of the world we have created for them--a scarcity of a supply that is driving costs and impacting our economy in a significant way.

I suggest the legislation I have introduced, while it will not impact the State of Florida, will give us a base and an understanding and knowledge of what we have as a reserve. We are spending millions of dollars a day to buy oil and put it in the ground when, in fact, we ought to spend a few million dollars and find out about all the oil we already have.


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