Gas Prices

Floor Speech

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Mr. NELSON of Florida. Would the Senator believe that in the Gulf of Mexico, of all the production there, the percentage is even worse in all those acres that are under lease, which is 32 million acres.

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Mr. NELSON of Florida. Just in the gulf, 32 million acres. Guess how many acres are actually drilled and producing?

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Mr. NELSON of Florida. Six million.

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Mr. NELSON of Florida. Six. So 26 million acres are under lease in the Gulf of Mexico and are not being produced.

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Mr. NELSON of Florida. Wouldn't it suggest that they ought to use it or lose it?

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Mr. NELSON of Florida. Madam President, I came to the floor to talk about an outstanding citizen in our State. But before I do, while my colleague is here, I just want to thank him for a very well-reasoned statement.

What we need is overall income tax code reform. My colleague from Delaware and I have the privilege of sitting on the Finance Committee. Even though the prospects for Tax Code reform are very slim between now and the election, perhaps shortly thereafter we can get about the seriousness of the Tax Code, making it more fair, more simple, taking revenue that otherwise escapes the Treasury because it goes into all these tax preferences called tax expenditures, tax loopholes, and use that revenue to lower everybody's rates, including the individual rates and the corporate rates.

That is eminently common sense. The reason I want to point this out is because our friend from Delaware has just pointed out one of those loopholes in an industry that is certainly not hurting because the five top oil companies in the last quarter--that is 90 days--had profits, not revenue--the five top--north of $25 billion for five companies for 90 days--not revenue, profit.

We do not begrudge them the profit. But should there be these tax preferences that have been etched into the Tax Code over a century that, in fact, allow this industry to have tax preferences--in other words, deductions--of $4 billion a year?

I think that would be a place we could start on tax preferences. You are obviously not going to get it in the context of the politics of an election. And you are not going to get it in isolation. We are going to have to look at the overall Tax Code and start making it more fair for the American taxpayer. I daresay there are not very many American taxpayers who think that the IRS Tax Code is a fair code.

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Mr. NELSON of Florida. Or simple. And as a result I thank him for his elucidation of what is a place that we could start. It is not right or left; it is not R or D; it is common sense.

One other thing I would add to the excellent presentation of the Senator, and that is that as the cost of gas creeps higher and higher--and in parts of Florida it is now $4 a gallon, and oil is being sold on the international marketplace at something like $120 a barrel--how much of that is from speculation of people who buy and sell oil contracts for future delivery? How much is from people who are not users of the oil, such as an airline that would clearly have reason to want to lock in a fixed price for oil in the future as a hedge against that price of oil going up because they are going to use that oil as fuel in their airline? No, these are the ones who are merely flipping like hamburgers the contracts, over and over, which has a tendency to raise the price of oil.

The price of a barrel of oil as it rises then clearly is going to affect the price we pay when we go into the gas station and put gas in our gas tank.

If we would start using some common sense in our approach to these things and do it in a fair way, I think we could get along so much better and the American people would feel so much better about their Tax Code.

I thank the Senator for his presentation.

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Mr. NELSON of Florida. I thank the Senator for pulling up the chart that showed the amount of acres that are under lease and the minuscule portion of those acres--this is domestic production. We all know that domestic production has shot up in the last 3 years, considerably. Yet, of that domestic production, there still is so much capacity that is already leased out there.

I use the example of the Gulf of Mexico. In the central and the western gulf, there are 32 million acres under lease and only 6 million acres of that 32 million are actually drilled and produced.

There is ample opportunity for additional domestic energy production on top of the substantial increase of production that has occurred over the course of the last several years if we would stop fighting about this, if we would stop beating each other over the head politically with this and get serious.

Senator Carper remembers when he and I were young Congressmen, we had a good example of leadership. We had Tip O'Neill, the Speaker in the House, and we had Bob Michel, the Republican leader. The two of them would get into their fights but they were personal friends, so at the end of the day when it was time to stop talking and get together and build consensus to get a workable solution, they could do it. We need that kind of model operating in Washington, DC, and State capitals around the country.

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