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Price of Gasoline

Location: Washington, DC

Mr. Speaker, with all the issues that we deal with here in Congress, the American people deal with other issues at home. Some of those issues are connected, and some of those issues they don't see the connection. But they do wonder about something.

They wonder about the fact that gas prices in some places in this country January of 2009, when the President came into office, were unleaded $1.32 a gallon; mid-range, $1.42; super range, $1.52. Gas prices in April of 2011 over here somewhere in this country, looks like it could be Texas because our numbers are about there, $3.99 for regular, $4.09 for mid-range, $4.19 for the super, the ethyl, as they used to say in the old days.

So since the President has taken office, something that affects every life in this country: the price of gasoline. Because whether we like it or not, whether we come up with alternative energy sources or not, whether we have new ideas about high-speed trains, subways, elevated railways, buses, the majority of the people in the United States move around by automobile; and the majority of those automobiles are driven using one of two fuels, either gasoline or diesel.

Now, neither one of these charts shows a diesel price; but amazingly enough, back when I was a youngster, diesel was the cheapest fuel we had available. But diesel prices are no longer cheap. Diesel prices are competitive, usually around the mid-range price of gasoline. But there are people who have good reasons to drive diesel vehicles. And so whether we like it or not, whether it fits our congressional legislative program or not to have gasoline and diesel being the fuel that moves people around this country, it is a fact. And you may think otherwise all you wish, but it is a fact.

There are no wind cars where you hook a sail up and hope that the wind is blowing towards Washington, DC tomorrow morning at 8 o'clock so everybody can get to work. It is not happening.

So everybody gets up and everybody goes out, and most everybody, unless they have one of the brand-new electric cars, starts their vehicle with gasoline or maybe diesel, and they go to work or they go on vacation or they travel to see their relatives, or whatever the purpose of their trip.

So let's be frank. Until we come up with alternative sources that move people from point A to point B in the United States of America, we are bound to gasoline and diesel. And in the 3-year track record of this administration, we have seen, I understand it is reported, the highest gasoline prices in the history of the country, even higher than the famous Jimmy Carter days when Jimmy Carter had us waiting in long, long ration lines and paying extremely high gasoline prices. At $4 a gallon, I think we topped even the numbers that came under President Carter almost two decades ago.

So here we are, we have gone full circle in a Democrat Presidency, and here we are back with the issue of gas prices.

Now, why are gas prices so important to people? Because it is how we get where we are going to go. If you are taking your kid to soccer game or to baseball practice or football practice or lacrosse up here in the East, or track and field, or whatever your young people are doing, you have got to get them there; and in most instances they can't walk and they can't ride a bike. They have to go in an automobile. And when you move them from game to game, they go in automobiles. And when they go to take their tests for entry into college, they have to go to an independent location. Many times they travel there by automobile.

You have to pick up the laundry. You have to pick up the groceries. You have to do a million things; get the kids to school on time, get the kids home from school, take the wife out on a date. Unmarried people are dating, and that's part of their date costs. And at a time when we have some of the highest unemployment in modern times, we bumped back above 9 percent, I understand now, so there is a lot of people out of work.

Those people who are out of work, some of them are drawing unemployment, and some of them are just trying to figure out a way to make do until they can find another job. And to have a roughly $3 increase per gallon in the cost of their fuel to move them around the country, people feel that immediately. It is literally sticker shock to go in and start filling up your tank.

I have a fairly small tank in my car. My wife's got a little larger tank, so more of a sticker shock. I drive a hybrid, so I'm getting some pretty good gas mileage. But still, I watch that thing go up to $54 to fill up my tank and watch my wife's go up to $65, $70 to drive.

I have a daughter who is working part time and going to college. Sometimes she has to go for testing; in fact, today she went for testing in a town about 40 miles from where we live to take a test, and it is a full tank of gasoline up there and back for her in the little car she drives, or almost. And she works hard. She will work all day and maybe 2 days at her job to pay for a tank of gasoline. So it immediately affects your budget.

But it is not just the cost of this fuel to the individual. It is the fact that it is killing the recovery in this country, this new increase in gasoline costs and fuel costs.

Now, we move goods from one place to the other. In Texas we are blessed to have the Rio Grande Valley where we produce wonderful fruits and vegetables, and we compete around the country with our fruit and vegetable crops. But the prices of those things are going up, and they are going up very quickly. All of a sudden, you are seeing tomatoes are $2.50 a pound.

Now, you say how do you know this? One of the great questions they always like to ask a Congressman is, what is the price of bread in your town? What is the price of milk? Because they think that we don't know. Well, I can assure you, my wife will back me up on this, I have shopped for our family in the grocery store since the day I got married, and I continue to do so.

We live away from town, and usually I would be leaving my work in town and it was easier for me to grab the groceries than for my wife to drive 8 or 10 miles from where we live out in the country into town. So I can honestly say I watched avocados go from $1 apiece to $2 apiece in 2 days in Round Rock, Texas, at one of the better stores where the prices are kept low where we regularly shop. I'm fortunate enough to have a job, but there are people who don't. And avocados may be a luxury to some people. That's just an example that I noticed because it shocked me to see them double in price in a 48-hour period, and so I thought about it.

But that's not all. The price of everything is going up. Now, why is that? Transportation costs. We move our products to market and we move our products to wholesalers, retailers, and it all takes transportation, and that transportation has now almost trebled in costs in a very short period of time.

People say, why? We hear from our Democrat colleagues here in the Congress, the ``why'' is the evil oil companies, the evil major oil companies, and they name names; ExxonMobil, ConocoPhillips, Chevron. I will not use all the names. There are a bunch of them, and they get used every day in this Congress. They are making horrendous profits and they are the cause of gasoline going up. But the price of oil is going up, and that is part of why prices go up.

The thing is we don't know. We all speculate to some extent. But I think it is a pretty easy, commonsense position to take that the more supply we have with the demand, and we are the demand capital of the world on burning gasoline and diesel. We outshine anybody else on the face of this globe in the use of those products. And we have relatively cheap prices as compared to the other countries, especially those countries that have no production. They can get very expensive very quickly.

Until very recently, there was no oil or gas at all to amount to anything in what we now call Western Europe. Today, there is. They have found it offshore. They have found it on the land in Holland, in Norway and other places. Norway is, I think, something like the third biggest producer of offshore oil in the world now. They are doing extremely well and running their economy in a very frugal manner. They are very smart people and they should be commended. We should do so well.

I happened to go to Norway with Chairman Obey with the Appropriations Committee when the Democrats were in control, and we went to see the offshore production in Norway. They are doing a good job. But the prices for gasoline are probably three times as much in Europe as they are here, and in other places even more.

But it makes sense that the law of supply and demand always works. It's kind of like gravity, the law of gravity. If you drop something, it's going down. Well, the law of supply and demand has been proven over and over and over to be what drives the market for anything. So if we have the opportunity to increase our supply in this country and we have the demand, then why wouldn't that have an effect on our price? I think that is a reasonable thing to talk about.

The Obama administration has, I would say, a dismal record in assisting us in finding oil and gas. Of course, we are all familiar with the fact that we had a bad oil leak in the gulf, and nobody in any way is saying that was good. In fact, that was a terrible, terrible thing to our environment, a terrible thing that panicked the country to some extent, especially some of the southern States that border on the Gulf of Mexico, and it messed up some beaches pretty nastily and probably had some effect on the wildlife and sea life in the ocean. We will probably be learning in the future how much.

As a result of that, we put a moratorium on drilling in the Gulf of Mexico. But oil and gas is found in the Gulf of Mexico, especially oil, but to some extent natural gas, in abundance in some places, and many of those places are deepwater. Deepwater drilling is extremely expensive. The rigs are $1 billion, with a ``b,'' piece of equipment, and the cost of drilling those wells is very expensive. But they are successful. We have had wells, even the BP well that blew out was putting out a phenomenal amount of oil. If that had been sealed and that production had been put into play, it would have had an effect on the availability of oil in the United States. Just that one well would have had an effect. But they put a moratorium on that, and the decrease in oil production from this decreased the amount of production by 360,000 barrels of domestic oil per day.

The Obama administration has leased less offshore and onshore acres for energy production than any other President since Ronald Reagan. In 2009, the administration indefinitely delayed leases for oil shale in the West, which kept these resources off limits. Over 2 trillion barrels of oil from oil shale are currently sitting idle due to these delays. The Obama administration has kept all new offshore exploration off limits until at least 2017. That is over 80 billion barrels of oil in the Atlantic, Pacific, Alaska and Gulf of Mexico.

The Trans-Alaska Pipeline System, which could be transporting 2.2 million barrels of oil per day, is running at less than one-third capacity because companies cannot get permits to produce oil in Alaska. The administration has essentially shut down production in the State by withholding the necessary permits. The Keystone XL pipeline, which could eventually bring 1.5 million barrels of oil per day to America, is being prevented by endless delays by the State Department.

America is the third largest oil producing Nation in the world. The above actions are a clear sign to the world that we are closed for business. If we are closed for business and we are number three, then how much more valuable does that make the product that number two and number one and those behind us are producing, therefore driving up the cost of that product? The less you have in the market, the higher the cost, if there is a demand, and there is clearly a demand worldwide.

In fact, one of the things you are seeing on the price of oil is the fact that at one time we were the biggest market by far. In fact, the Europeans really didn't even come close to being the market for oil and gas that the United States is. But today these booming new upcoming economies, China, the fastest growing economy in the world right now, do you think they can have that fast growing economy without energy? Of course not.

Energy is the driving force behind manufacturing. It is the driving force behind development of a nation. Those folks need to get where they need to go just like everybody else does, and they have many of the innovative things that America is starting to talk about today.

The Secretary of Transportation has just let out a bunch of money to build some high-speed rail. China already has high-speed rail, the highest speed rail in the world. They have speeds of up to 250 miles per hour. We are not even going to come close to that on our rail projects. But they are still now the biggest competitor for trying to make forward purchases. They are trying to buy future purchases so they can ensure they have the fuel they need in the future to meet their demands.

We have a product that we sell for that. They are called ``futures'' on the exchange, and you are buying oil to be delivered at a later time at a set price. And when futures become in big demand and when the price of oil in the future is looked at by countries and by industries to make these purchases ahead of time to get cheaper fuel to run your industry, then it drives up the costs in the market. The market goes up. Something is in demand and the market needs it not only today, but sees a projection to need it in 6 months, in a year, in 5 years and in 10 years, and they are willing to pay for the right to purchase it at a certain price, the prices go up.

That's the market. So I think that, first off, we're not ever going to get anywhere if we don't have an energy plan that is about all energy in the United States. And I would argue that with the use of the regulations and the failure to lease and the failure to lift moratoriums, and even after you lift moratoriums, failure to give drilling permits, all the things that this administration has done, it has been an anti-oil and gas industry--and I'm sure coal, also--and anti-hydrocarbon administration. They don't deny that at all. They are anti-hydrocarbons. They don't like coal. They don't like oil and gas. They are opposed to them. And through regulations and through failure to do the necessary leasing they are keeping closed natural resources that are available to Americans. And, hey, let's get this straight. Before the Middle East; before Russia, and the Soviet Union prior to that; before offshore Norway, before onshore Holland; before the North Sea; before the Gulf of Mexico; before Indonesia; before all these places where we now produce oil and gas, we started out by producing oil in Pennsylvania. We later made a huge gigantic oil find in Texas. And Texas is now defined by oil and gas by many.

We are the pioneers of oil and gas in the world, the United States of America. All the improvements in drilling procedures and in closing down wells, in saving oil without blowouts, in fighting oil fires, in any category you can come up with to do with oil and gas, the United States of America has led, as it usually leads in all things, but it has led in the oil and gas industry. We are the experts. In fact, when we went to Norway and asked the Norwegians what they would do if they had a blowout like the British Petroleum blowout, they said, We'd call the experts; the people in the United States. The companies that are drilling the wells, they're the experts, not us. Then why all of a sudden in this administration have we decided that a major industry in this country is of no consequences because you want to change the way the American people get around, and you want to change the way we do business in this country? So you hold votes on the floor of this House, whether it's something called cap-and-trade, and it fails--passes the House; can't get through the Senate. Dies. So you do it with regulations. Just get the regulators to shut them down and that will do just as good as passing cap-and-trade.

You want to know what this does to you folks that are looking for a job. Well, Texas, at one time in the very near past, within the last year, had the lowest unemployment in the Nation until we shut down drilling offshore and along the gulf coast, and we lost tens of thousands, possibly hundreds of thousands of people, that are connected with this industry. And it's not just the greasy drillers that drill the oil wells. It's the food service people that bring it out there. It's the helicopter people that transport people. It's the shipping industry that transports the fuel. It's the pipeline industry that puts it in the pipeline and delivers it. It's the refining industry. All of these people are affected when you shut down the local source, which is what this administration has done. And then we say to ourselves, Why has the price of gasoline gone up? Well, it seems to me part of the problem has got to be an administration hostile to this very industry. It's awfully hard when the regulators, EPA and others, have painted a target on your back to prevent you from producing.

We've made a phenomenal natural gas find in this country. We have found, which if I had told you this 4 years ago that we would bust up rocks and find natural gas, you would say that I needed to have some serious psychiatric examination, because it makes no sense to anybody that you can bust up rocks and produce natural gas. But we've discovered shale gas. And now, although we've got shale gas in Texas--and we're mighty proud of it--this shale gas now touches multiple States in this country. It goes right up through the South, right up through the Midwest, right up into Pennsylvania, where they have already done some serious shale oil work. And I know there's some up in New York State, although they don't seem to be interested in producing it.

So a belt of product stretches all the way across our country. Natural gas. And yet immediately there's some people who are telling you, I can smell that gas in my water well. Well, I've got news for you. Natural gas doesn't smell. So if you smell that gas in your water well, you've got a city gas line leaking someplace in your house, because you put the smell in the gas when you sell it to the retail customer so you can smell the gas if it's leaking in your house. But there's no smell of natural gas. But people have come up here to Congress and said, They drilled a well right around the corner from me, and now my water smells like natural gas. It doesn't make sense because natural gas doesn't smell. I can tell you that from personal experience it does not smell because I have dug up the machine on a job I had that smells. That was one of the nastiest jobs I ever had, because you got that smell all over you, but that's a different story. We need an energy policy that works, not an anti-energy policy.

Let's look at an anti-energy policy. Year One, 2009. February 4, 77 Utah oil and gas lease areas withdrawn from development. One of the things we talk about is Alaska, we talk about Texas, we talk now about Pennsylvania, we talk about many other places where there is now production. But what we don't talk about because we haven't been able to get in there to do it is the basin which Utah sits in the middle of, but it goes up into Idaho, it goes over into Wyoming, it goes up into Montana. There's a large potential field and discovered field in North Dakota of oil and gas. But the Utah oil leases were withdrawn from development. February 10. These were all actions of the administration. Offshore leasing plan delayed for 6 months.

February 25, shale oil research and development leases delayed in Colorado, Wyoming, and Utah. March 30, 3 million acres of Federal land removed from energy production by Omnibus Public Lands Management Act passed by a Democratic Congress. June 29, 29 million acres of Federal land removed from solar energy development plans, leaving just 670,000 solar acres. So even the so-called clean energy is having roadblocks by this administration.

Uranium mining blocked for 2 years on 1 million acres of land in Arizona. That was in July. August, 24,000 acres in Wyoming oil and gas leases withdrawn. September, new Outer Continental Shelf lease plan postponed until 2012. October, 60 of the 77 Utah oil and gas leases permanently canceled. November, Obama administration found to have approved the least oil and gas leases annually ever recorded in the United States history. So in the first year of this administration they started out with a clear policy of getting rid of our energy, not going after our energy. Even solar.

Year Two. January 6, new regs issued to restrict oil and gas development on Federal lands. January 26, Virginia offshore leases delayed.


Reclaiming my time for just a moment, a lot of people don't realize that, when you're talking about the production of oil and gas, there is much more to putting up a rig on a piece of land than just driving out there and putting it up. You build roads. You build fences. Road builders don't drill a single drop of oil or gas, but they build the roads. That's a job. That's multiple jobs. In Louisiana, in the marshy parts of the country, they used to build wooden roads to get out to these rigs. All this creates jobs for all the side industries of the oil and gas industry. Just like any other industry, there are side industries that feed the big industry, and they all create jobs in a country that dropped below 9 percent but has now jumped back this month above 9 percent again, after one of the longest stretches of high unemployment in the country. I'll just use my family as an example.

My daddy was born in Kentucky, and my mother was born in Tennessee. In fact, where my mother lived may be pretty close to being underwater right now. In fact, she lived right close to the river in Tennessee. In the Great Depression, there were no jobs in their part of the country, but there were jobs in Texas because of the oil industry, so they both came down to Texas to get jobs in the oil industry. Now, they both ended up in the oil industry, but they started out where my mother was in the secretarial pool for business and my daddy was a teacher, an accounting professor; but they got jobs in the oil business, and it was always good to our family.

I don't lay any bones about it. I was raised in an oil and gas family, and my dad was a gas man. I've seen it make our State prosper, and of all the producing States that I've ever visited, they've prospered. Look at what it has done for Alaska. Look at Louisiana. Look at New Mexico and Oklahoma and what it has done for those States and those economies. To take and target an industry and go after that industry the way this administration has done--but not only that, I don't even understand the Yucca Mountain deal. I don't understand the no uranium leases. Now the President, in a couple of speeches, said we'll switch to nuclear. I think that may have changed now since the Japan disaster.

But we can't do it without uranium. There's a new process, you maybe could, but that's a different story. Historically, you can't do without uranium. You've got to have the location to store spent fuel. Americans need to wake up and say, wait a minute, we need energy.

I just was talking to people today that said the EPA was going to try their best to shut down wood-burning fireplaces. My gosh, I mean, how are we going to get warm? You guys up north, how are you going to get warm in the winter time if you're going to take away your coal and your natural gas and the price of oil is going to be through the roof and you can't afford that? You can't even burn wood in your own fireplace? What's wrong with this picture?


Because of the burdensome rules we've come up with and the fact that we can't permit them. So they look at refining capacity and they look at the other issue, and they say, wait a minute, if there's not a shortage now, there's going to be, and they run the price up. Then when that opens up, hey, the market gets back to normal again, and every time that happens the driving public of America suffers. They're suffering today, and they're suffering on top of the highest unemployment, longest period of high unemployment in modern times just about.

This is one of those what we call kitchen-table issues, when the family gathers around the kitchen table to figure out how they're going to make the budget work especially if Mom or Dad are laid off. One of the things they're looking at is the cost of that fuel, fuel to heat their homes or cool their homes. Down where we come from, we want it cool. They look to see how much it's going to cost them to get to and from school, to and from work, how they're going to conserve energy, maybe they're going to car pool. They're making these kinds of decisions, and yet the government seems to be making these gigantic decisions to shut off supply and then wonder why we have an energy crisis in this country.

This is not rocket science. This is the law of supply and demand. We have the biggest demand. If we can't meet our demand, we've got to go to foreign oil. If there's a fight in Libya, we may not use much of that foreign oil right now, but somebody else does; and if it's at risk, then they are going into another market to get their oil and that makes our market go up. It's all worldwide market in our oil and gas.

I don't understand why people think they're gouging you. They're making excessive profits, and I understand the payment on CEOs and I am not defending any payment on CEOs in any industry. It's not just the oil industry that pays big bucks for CEOs; but if you look at the history of the oil and gas industry, their percentage on investment is lower than most average manufacturing facilities, somewhere between 6 and 8 percent return on their investment. And you say what investments? Well, I think I said earlier, those offshore drilling rigs that drill in the Gulf of Mexico and now have all been moved off the coast of Africa, Indonesia and off the coast of Brazil, those rigs cost $1 billion, and they can cost you operational-wise in a 24-day period almost $1 million to operate. They are expensive. And if you hit nothing but dust when you get down to the bottom of that well, you have blown a whole lot of money out the door, and that's just lost. Then you drill the next well to try to get it back. We've gotten better at looking for it and finding it, but it's still a gambler's business when you get down to it.

But this is caused by the government to a great extent. You can't create an environment of uncertainty in any market, I don't care what the market is. If you create the idea of uncertainty, it affects the market. It also affects the psyche of the people, and that's kind of what I don't think they're getting.

So their solution is to tax it. If it moves, tax it. The problem with that is do you really think the CEO of Exxon is going to pay the taxes if we increase taxes on the oil and gas industry? No. You and I are going to pay those taxes when we fill up our tank. If you go and ask the question, they will tell you at your local filling station. They used to publish it in Texas on the pump how much of a gallon of gasoline was taxed. It's a whole bunch. Direct and indirect tax make up a large amount of the cost of gasoline, always have, and I come from a time where we used to have 19 cents a gallon gasoline in Texas. Try that on for size. I could go buy a dollar's worth of gas and drive all week.

I yield to the gentleman.


Reclaiming my time, I agree with you 100 percent. It's the same thing when we took over this House floor 3 years ago in the dark because they turned out the lights on us, turned off the mics, and we talked for about 2 or 3 weeks on, what we want is all of the above. We are for every energy resource that is available, but we want that energy resource to be as available as possible to be competitive in the market. I mean, everybody's got their own little bailiwick. And corn farmers love ethanol, but it's got to compete. Sun has to compete. Wind has to compete.

They invariably call us oil and gas guys ``anti-wind people.'' Wrong.

Within the last 3 years, I have met two different individuals--one of them very recently--who have a scientific plan to refine garbage at your garbage dump, solid waste, normal throw-it-in-your-garbage-can stuff, go out there and, through a multiple process, produce gasoline and capture all the CO

2 to be used--in Texas we take CO

2, put it back down in the ground in old wells, and reenergize those wells to bring more oil to the surface. And the leftovers, after this burning process to create the gasoline, refine the gasoline out of garbage, leaves an ash that is good to plow into fields in certain parts of the country to refurbish the fields.

That's the kind of thinking we want. That's great. That's a good idea. And because we're talking energy and we're having energy policy, those good ideas come to the fore. That's what we want. That's how we're going to solve this problem. But we're not going to solve it by shutting down what we have now in hopes that there is going to be this miraculous overnight discovery that's just going to make everything great, like we find some kryptonite or something, and it runs the whole country. Wrong. It ain't going to happen.

This is a frustrating time for those of us that are in energy-producing States because we have people that literally don't like the production of energy, but they complain about the production of energy. They want to tax it.

By the way, the majors, the big boys, they don't get subsidies on their stuff. That's for wildcatters. They drilled, but most of their production is overseas. And we, to some extent, by having bad energy policy in the United States, we have driven people to the benefit of other people in the world. Nobody thought about drilling off the coast of Australia or drilling off the coast of Indonesia, which is a very unstable volcanic area over there, until they were kind of pushed out of American waters. And then they started looking in places like the North Sea, off the coast of Africa, Nigeria, Indonesia; and these are now major production fields. They've benefited from our lack of foresight under some administrations to continue to enhance our native industry. More power to them. That's good for them. But we have it here too.

I still think there is plenty of oil in Alaska and lots of it. And they haven't even started looking for natural gas up there. They probably have got as much natural gas as anybody. There's an international thing going on; most people don't even know about it. I learned it from the Coast Guard. Because of the receding ice from the North Pole--and I won't get off into global warming here today, if that's it--whatever it is, because it's receding, there is now a waterway. There is now a northwest passage across the top of North America. You can sail from the Atlantic to the Pacific.

Also, if that water stays open, you can drill for natural resources there. The unclaimed international water gets claimed by who puts the most activity in that water. And one of the questions is, the Russians are pouring in ships and trawlers and other things into that whole area up there, the part we claim is so much. The Canadians claim so much. But there is a lot more that seems to be developing. And why are they after it? It's not for fish, my friend. It's oil and gas.

I thank my friend from Pennsylvania for joining me.


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