LIHEAP

Floor Speech

LIHEAP -- (Senate - July 25, 2008)

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ENERGY

Mr. DODD. Mr. President, I rise today to speak on S. 3268, the Stop Excessive Energy Speculation Act. I thank the majority leader for his leadership on this issue, which addresses one of the most critical problems facing our Nation today--the problem of high oil and gas prices. I am deeply disappointed that our Republican colleagues chose to block the Senate from taking action on this bill, despite including provisions to address speculation in their own proposal.

Energy is an economic issue. As every American has been reminded over and over in recent weeks and months, virtually everything we do requires energy--whether it is driving to work, cooking dinner for our families--or cooling our homes in the hot summer months. And when the cost of that energy goes up, our quality of life goes down.

And feelings across the country are raw right now. Whether it is the crisis in our housing markets, skyrocketing health care costs, rising unemployment, or soaring energy costs, people are hurting--people are angry and frustrated, as circumstances completely beyond their control prevent them from taking care of their families--and they want their elected leaders to do something to get this economy moving again.

But, we simply cannot drill our way to lower gas prices. President Bush's Energy Information Administration has said that not a drop of oil from the Outer Continental Shelf would be produced until 2017, and we would not reach peak production until 2030. Even then, this increased production will never be enough to lower world oil prices--we only have 2-to-3 percent of the world's oil reserves.

President Bush and Republicans in Congress are demanding we open up more areas--yet oil companies are sitting on 68 million acres that they have already leased but refuse to explore. That is 3 out of every 4 acres these companies have under lease.

That is why Senators FEINGOLD, MENENDEZ, and I have introduced legislation that denies new leases to companies that leave the areas they lease unused. We have also introduced the Responsible Ownership of Public Lands Act that forces companies to pay a penalty on areas they have leased but not put into production. These fees would be used to help bring clean, domestic, renewable sources of energy online. We had hoped to offer both of these proposals as amendments to the legislation before us; unfortunately, obstruction by the Republicans will prevent us from doing so.

The message is simple: instead of continuing to pad the coffers of oil executives while American families struggle, we are telling these companies they can either ``use it or lose it.'' I hope my colleagues will join us in pursuing this legislation as an amendment to the pending bill.

I also strongly support efforts to rein in excessive speculation in energy markets. Over the last several months there have been numerous congressional hearings and reports from experts across many fields--oil industry executives, airline industry leaders, financial analysts, and others. Jeroen van der Veer, the CEO of Royal Dutch Shell, was quoted in the Washington Post on April 11 saying that ``the ..... fundamentals are no problem. They are the same as they were when oil was selling for $60 a barrel, which is in itself quite a unique phenomenon.'' Representatives of Exxon-Mobil, the Petroleum Marketers Association of America, and others have all expressed similar views. Yet the price of a barrel of oil has doubled in the last year.

Indeed, expert economists have estimated that speculators in energy markets are responsible for anywhere from 25 percent to 50 percent of the price of a barrel of oil. Even the Japanese government's Ministry of Economy, Trade, and Industry has concluded that speculation has played a significant role in driving up oil prices.

This bill is supported by a broad coalition of airlines, trucking associations, labor groups, and environmental groups because it takes important steps that will help eliminate the ``speculative premium'' on each barrel of oil. The dramatic increase in oil prices is hurting American families and threatens to cripple countless American businesses.

This important legislation closes the ``London loophole'' by treating oil traders using a foreign exchange as if they were trading in the U.S. for regulatory purposes, in order to stop traders from manipulating prices and speculating excessively by routing oil trades away from U.S.-based exchanges. In addition, the bill requires the CFTC to convene a working group of international regulators to develop uniform reporting requirements, require the CFTC to collect data on index traders to ensure they are not adversely impacting the price discovery process, and authorize the CFTC to hire at least 100 additional full-time employees.

At the same time, I feel that some areas of the bill can be improved. In particular, I am concerned that section 6 may cause unintended disruptions for financial institutions with over-the-counter hedging transactions and unnecessarily increase costs for operating companies that are trying to manage their energy costs through hedging. In addition, it appears that some aspects of section 7 and other sections may be unclear or have unintended consequences. I hope we have another opportunity to address the issue of speculation, and I look forward to working with the majority leader on ways to address some of these concerns.

Mr. President, I am disappointed that this bill will not have a chance to become law. I recognize that addressing the issue of speculation will not solve our energy crisis. This crisis is too big of an issue with too many root causes. But speculation is part of the problem, and curbing speculation must be part of the solution. This bill would have achieved that goal.

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