Gas Prices
Floor Speech
GAS PRICES -- (Senate - July 24, 2008)
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Mr. ENZI. Madam President, I am disappointed to be here and to have to give this speech today. I am disappointed because I am, once again, on the Senate floor discussing the fact that the majority leader has decided to use the Senate parliamentary tactic to stop members from offering amendments and to close off debate.
We are going to spend until tomorrow morning or whatever time tomorrow we decide to have another vote on another cloture motion doing nothing. While we can raise issues, we cannot get any votes on any issues. This is all valuable time that we could be voting on issues for the American people, issues that would actually solve some of the gas price problems I hear about all over Wyoming and all over the country. It is the No. 1 concern in this country right now.
The majority leader has a rain delay that has put a halt to this match, but this game will get played. We will debate alternative energy, finding more oil on American soil, deep sea exploration, nuclear energy, oil shale. You cannot stop us forever because the American people have told us the most important issue on their mind is the issue of energy.
The majority leader has told the world's most deliberative body we cannot have a real debate about this issue. But the American people are telling him something else. Hopefully, soon he will listen. It is no wonder Congress has an approval rating that is less than 10 percent.
Rather than working on the issues that are important to our constituents, we continue to play ``gotcha'' politics. It is not getting us anywhere. It is certainly not improving our Nation's energy situation. This brand of nonlegislating that the majority continues to peddle is not making a gallon of gas cheaper.
When will the leaders let us put real proposals on the table? This body will take some and this body will leave some, but we should be taking action. What we have now is not action, it is acting, acting in the dramatic sense. We evidently think that if we can place blame on speculators and get a vote on that and be done, we can check that box off and say that we took care of energy for America. Americans are smarter than that.
The majority leader is preventing a vote on an amendment that would increase production on the Outer Continental Shelf. We cannot vote on an amendment that will allow for more production of diesel fuel from our Nation's most abundant energy source, coal. We cannot vote on extending the wind production tax credit. We cannot vote on extending tax credits for solar energy.
The majority leader has said we need to get an agreement on amendments. Our side has agreed we need to work on energy amendments because this is an energy debate. We have been willing to put aside all the other kinds of amendments. But, no, that is not enough. We want to be able to read each of them and decide whether they are meritorious before they are put on the table.
I am not sure why that is the case. It does not match up with our historical energy debates or, for that matter, any of our debates.
The Senate considered the Energy Independence and Security Act last year. At that time, gas was $3.06 a gallon. I talked a little bit about that bill because I called it the anti-energy bill and said there was not anything in that that was going to bring down the price of gas. Obviously, I was right. The price is up another dollar from that. But even on that one, there were 331 amendments that were filed. Of those, 49 amendments were agreed to, and 16 amendments received rollcall votes.
The Senate considered the Energy Policy Act of 2005, that is the previous bill to the anti-energy bill. Gas was $2.26 a gallon then. There were 235 amendments that were filed and, of those, 57 amendments were agreed to and 19 amendments received rollcall votes.
The crisis is even greater now. So there ought to be amendments being debated, considered. We should not have the parliamentary tactic that keeps us from doing amendments.
Anytime a bill comes in here, and it is a take-it-or-leave-it proposition, this body leaves it. So if you want to get something done, want to be able to check off the box, we need to be able to do some amendments.
Now, not only were both those bills fully amendable but both received significant floor consideration. We spent 15 days on the floor on one of them and 10 days on the other. Why? Because they are serious issues that deserve serious debate. We wanted to make sure ideas from both sides were considered.
As I recall, both sides lost some. But that is how it works. I have an amendment that relates to State mineral royalties. That amendment would encourage States to allow for energy production on their land by giving them their fair share of mineral royalties. We are not going to get to consider that. There are a number of other amendments that I would support relating to energy development on the Outer Continental Shelf in the States that want energy production and only those States that want it.
I would support an amendment to improve our Nation's energy situation by accelerating the development of coal-to-liquid fuels. That could be coal to diesel and coal to jet fuel. Those are the most expensive fuels in the United States right now. Those are the ones that have some great potential for decreased costs using our most abundant energy source.
We have more Btu's in coal--in fact, we have more Btu's in the clean coal in northeastern Wyoming than Saudi Arabia has in oil. It is an old technique from World War II, from converting that to, say, diesel, and also to convert it to jet fuel. Our military needs jet fuel. It can be done from coal.
Unfortunately, the majority leader has stopped me from doing so by using parliamentarian tactics to cut off the debate. He has also stopped me from voting against a number of bad ideas I am sure we would see. I will not have a chance to vote against lowering the speed limit to 55 miles an hour. Why is that a bad idea? It actually led to higher traffic fatalities.
When we were talking about eliminating the 55-mile-speed limit, the argument was, if we do that, the number of fatalities in the United States would go up. Well, we raised the speed limit. We went back to where it was before.
Do you know what. Traffic fatalities went down. In Wyoming, the reason they went down is we eliminated a lot of those single-car accidents from driving the huge distances across our State at very slow speeds.
My dad traveled on the road. He said: At 55 miles an hour, you could watch a flower come up, grow, bloom, and wither before you got by it. So he started reading while he drove. But it kept him awake. So he did not have one of those single-car accidents where you roll your car.
Now, believe it or not, I agree with the majority party on some steps we could make to help this country be more energy independent. Wind tax credits are one example. By restricting Senators' participation, stopping them from representing those who put them in office is not going to get us any further than an empty gas tank, and that is what this bill in its current form is.
The bill before us blames speculators for our energy situation. It might be worth taking a moment to discuss exactly what speculators do. We have turned that into a cuss word. Oil speculation is two people or companies or organizations guessing what the price will be in the months to come. One of those entities thinks the price will be higher in the months to come, and so they buy the commodity now. Another entity thinks the price will be lower, so they sell the commodity now. The one who is right will make money; the one who is wrong will not. You can't have this kind of a transaction without two people who believe the exact opposite. Both are speculators. Both think they can make money based on their knowledge of the world and the gas supply at the current time.
What kind of entities do this? An airline might think the price of oil will be higher in the months to come, and, to stabilize their fuel costs, they will purchase oil futures for the next couple of months. If the prices go up, they will have stabilized their fuel costs and saved money. If they go down, of course, it will cost them what they bid it at, and they will lose money compared to what they could have gotten it for. But in order for them to have that market, there has to be somebody willing to bet against them, willing to say: Yes, I think the price is going to go down, and I am going to make that differential. Those are speculators. Without the speculator part of the deal, the airline doesn't have a deal. The airline cannot lock in a price for what they are willing to pay to make sure they will know in the future what their costs are going to be. That is speculation.
The market is a place where you anticipate what the cost will be in the months to come so that you can have certainty for what you are going to pay. Sometimes you guess right and you are paying below market value. Sometimes your guess is wrong, and you end up paying more than market value. What is commonly ignored in the debate about oil speculators is that for every dollar made, a dollar is lost by someone who would be called a speculator but without whom the market doesn't work.
Oil is not the only commodity that is traded. We speculate on the price of wheat, pork bellies, gold and silver, cattle--a number of other things. Speculation allows producers and consumers of these products the opportunity to manage the risk they have on buying and selling products that don't have a set price. This helps prevent wild fluctuations of price each and every day. That keeps major market failures from happening.
Earlier this week, I spoke about how the majority leader's energy speculation bill could have significant unintended consequences for institutional investors accessing commodities, futures, and capital markets. Today, America's largest pension funds wrote to me stating their concern.
The American Benefits Council wrote:
The Council is very concerned that the serious implications of S. 3268 on retirement plan participants have not been sufficiently evaluated. We are concerned that legislation relating to energy policy could unintentionally harm the long-term security of American workers and families.
I ask unanimous consent to have the letter printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
AMERICAN BENEFITS COUNCIL,
July 24, 2008.
Re: Adverse Retirement Plan Implications of Energy Speculation Legislation (S. 3268)
Hon. EDWARD M. KENNEDY,
Chairman, Committee on Health, Education, Labor and Pensions, U.S. Senate, Washington, DC.
Hon. Michael B. Enzi,
Ranking Minority Member, Committee on Health, Education, Labor and Pensions, U.S. Senate, Washington, DC.
Hon. Max Baucus,
Chairman, Committee on Finance, U.S. Senate, Washington, DC.
Hon. Charles E. Grassley,
Ranking Minority Member, Committee on Finance, U.S. Senate, Washington, DC.
Dear Chairmen Kennedy and Baucus and Ranking Members Enzi and Grassley: I am writing today on behalf of the American Benefits Council to express concerns about the implications of S. 3268, the Stop Excessive Energy Speculation Act of 2008, on employer-sponsored retirement plans and the tens of millions of American workers and retirees who rely on these plans for their retirement security. The American Benefits Council (the ``Council'') is a public policy organization representing principally Fortune 500 companies and other organizations that assist employers of all sizes in providing benefits to employees. Collectively, the Council's members either sponsor directly or provide services to retirement and health plans that cover more than 100 million Americans.
The Council is very concerned that the serious implications of S. 3268 on retirement plans and retirement plan participants have not been sufficiently evaluated. We are concerned that legislation relating to energy policy could unintentionally harm the long-term financial security of American workers and families.
Employer-sponsored retirement plans are long-term investors that invest in a wide range of asset classes in order to diversify plan investments and minimize the risk of large losses, both of which are central to employers' fiduciary obligations to act prudently and solely in the interest of plan participants. As you know, fiduciaries are subject to extremely demanding legal obligations under the Employee Retirement Income Security Act (ERISA) but have flexibility to select the investments that will allow them to carry out their mission of providing retirement benefits to employees. Commodities are one of the broad range of asset classes upon which fiduciaries rely. Specifically, commodities serve as a modest but important element of the investments held by employer-sponsored defined benefit pensions because commodity returns are uncorrelated with stocks and bonds and because they provide an important hedge against inflation. For the same reasons, commodities are used in many of the diversified ``single fund'' solutions (lifecycle funds, target retirement date funds) that have been developed to simplify investing for the tens of millions of Americans participating in defined contribution plans such as 401(k)s. These single fund solutions, which policymakers have encouraged through legislation and regulation, make investing easier while giving workers access to professionally managed, diversified portfolios.
The restrictions imposed on commodities investing under S. 3268 would greatly restrict the ability of employer-sponsored defined benefit and defined contribution plans to use this important asset class. The result will be less ability to diversify investments, manage investment volatility and be a buffer against inflation. Unfortunately, it is the employees and retirees who depend on employer retirement plans for their income in retirement who will ultimately suffer. We hope, with this in mind, that the implications for retirement plans and plan participants will be examined more fully before S. 3268 is considered further.
We sincerely appreciate your consideration of our views on this important matter. Please let us know if we can provide additional information or address any questions you may have.
Sincerely,
James A. Klein,
President.
Mr. ENZI. I also ask unanimous consent to have an article on statistics on the 55-mile-an-hour speed limit printed in the RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
[From the Wall Street Journal, July 24, 2008]
The Insanity of Drive-55 Laws
(By Stephen Moore)
It didn't seem possible that politicians could think up a sillier energy proposal than Barack Obama's windfall profits tax on oil companies, but Republican Sen. John Warner of Virginia has done just that.
Earlier this month, Mr. Warner suggested a return to the federal 55-mile-per-hour speed limit on America's highways, as a way to save on national gasoline consumption. ``I drive over 55 miles an hour, ..... sometimes 65,'' he said on the Senate floor. ``But I am willing to give up whatever advantage to me to drive at those speeds with the fervent hope that modest sacrifice on my part will help those people across this land ..... dealing with this financial crisis.''
Meanwhile, environmental groups across the country are also pushing a lower national speed limit to reduce greenhouse gas emissions. The notion here is that if people simply lift the pedal off the metal on the highways, they will help avert an environmental apocalypse.
Mr. Warner may be willing to drive slower to save gas. The vast majority of Americans surely are not. The original 55 mph speed-limit law, enacted in October 1974 after the OPEC oil embargo as a way to save energy, was probably the most despised and universally disobeyed law in America since Prohibition. In wide-open western states, driving at 70 mph or even 80 mph on miles upon miles of straight, flat, uncongested freeways is regarded as a God-given right. In the 1970s and '80s, the federal speed limit was a daily reminder of the intrusiveness of nanny-state regulation.
States were bullied into complying. If they didn't, they risked losing federal highway money--which came from the gas taxes paid in part by their own residents. The law--``double nickel,'' as it was called--was so hated in Montana that the state legislature passed a law capping speeding tickets at $5. In Wyoming, the highway patrol told speeders to hold on to the tickets they issued because they were good for the whole day.
In 1995, the newly ascendant Republican Congress repealed the 55 mph limit. Most states acted quickly to allow speeds of up to 65 mph or even 75 mph on their interstates, and for good reason. As an energy saving policy, the double nickel was a bust. The National Motorists Association reports that about 95% of American drivers regularly exceeded the federal speed limit. Does it make sense to resurrect a law that 19 out of every 20 Americans disobeyed?
In the first few years when the law was strictly enforced, according to the Congressional Research Service, gasoline consumption was reduced by about 167,000 barrels a day. But over time the law was increasingly ignored, and average speeds on the highway fell by only a few miles per hour. The National Research Council estimated in 1984 that Americans spent one billion additional hours a year in their cars because of the speed limit law.
Mr. Warner repeats the myth that a lower federal speed limit will increase traffic safety. Back in 1995, Naderite groups argued that repealing the 55 mph limit would lead to ``6,400 more deaths and millions more injuries'' each year. In reality, National Highway Traffic Safety Administration data reveal that in the decade after speed limits went up (1995-2005), traffic fatalities fell by 17%, injuries by 33%, and crashes by 38%. That's especially significant because in 1995 far fewer drivers were gabbing on their cell phones or text messaging while driving.
In a study for the Cato Institute in 1999, I compared the fatality rates in states that raised their speed limits to 70 mph or more (mostly in the South or West) with those that didn't (mostly in the Northeast). There was little difference in safety. Of the 31 states that raised their speed limits to 70 mph or more, only two (the Dakotas) experienced a slight increase in highway deaths. The evidence is overwhelming that traffic safety is based less on how fast the traffic is going than on the variability in speeds that people are driving. The granny who drives 20 mph below the pace of traffic on the freeway is often as much a safety menace as the 20-year-old hot rodder.
Retail gasoline stores report that Americans have already reduced their gas purchases by about 5% this year--presumably by driving less and buying more fuel-efficient cars. At $4.59 a gallon, motorists don't need to be lectured by politicians on the financial savings from cutting back. Those who want to stretch their dollars can drive 55 mph on their own (though they are well advised to stay in the right lane).
But many liberal and green do-gooders want the double nickel precisely because they want to force everyone to share in the sacrifice required. As an egalitarian friend once told me, he loves traffic jams because they are the ultimate form of democracy.
To the left, fairness means we all suffer equally together. In light of this alleged moral imperative, it doesn't matter if a lower speed limit means Americans would spend two billion extra hours on the road, or that, according to the Labor Department, assuming a $15 per hour average wage means the speed limit could cost the economy between $20 billion and $30 billion a year in lost output.
Calls for a 55 mph speed limit--and for that matter most other government energy conservation plans, such as urging people to ride a bus or a bicycle rather than driving a car--reflect a mindset that oil and gasoline are more valuable than human time.
But America is not running out of energy. We have potentially hundreds of years of oil and natural gas and coal supplies in America alone, if Congress would only let us drill for it. What is in short supply--the only truly finite resource, as the late economist Julian Simon taught us--is the time each of us spends on this earth. And most of us don't want to spend it sitting longer than we have to in traffic.
Mr. ENZI. I also have heard from other pension fund and institutional investor representatives that the provisions in the majority leader's bill have not been sufficiently vetted. Rather than pass a flawed bill on energy speculation, we should wait until we read the Commodity Futures Trading Commission's and the Interagency Task Force on Commodity Markets' report due out later this year. This issue is too important for us to act without all of the facts.
Few serious economists believe that this bill will do anything substantial to decrease energy prices. Warren Buffett, the Nation's wealthiest Democrat, doesn't think that it will make a difference. Neither does oilman T. Boone Pickens. Even the Federal Reserve Chairman, Ben Bernanke, believes that this bill will have little impact on the price of gasoline. And yet we are still prohibited from offering amendments. We are still prohibited from voting on amendments that will have a real impact on the price of gasoline.
It is unfortunate that the debate is turning out this way, because I agree that there should be more transparency in the market. That is why I am the cosponsor of a bill that allows for more oversight by the Commodities Futures Trading Commission. But in addition to that, the bill does something more. The Gas Price Reduction Act includes a provision to open up coastal waters in States where they want energy production. It ends the ban on the development of promising oil shale in Wyoming, Colorado, and Utah. At the same time it encourages increases in supply, it promotes the development of better technology so that we use less energy.
We should have the opportunity to vote on these proposals. We should have the opportunity to have a real debate on energy. Instead, we are going wrap up this debate and begin playing the blame game. It is disappointing that the Senate is working this way, and I hope we can stop playing politics and have a real debate in the near future. This issue is too important for the Senate to ignore.
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