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Floor Statement: Sens. Cornyn, Alexander & Kyl Discuss Energy Policy
Tuesday, July 29, 2008
Senator Alexander: I thank the President. Mr. President, $4-a-gallon gasoline is the subject before the Senate. It's been the subject since a week ago Friday. I'm very encouraged that the Majority Leader yesterday indicated that we might be able to move from talking to acting; in other words to begin to offer amendments, debate on those amendments, and come to a result which would help lower gasoline prices.
Each week for the last several weeks, I've been reading to the Senate e-mails and letters that I've received from Tennesseans who've been hurt by the high price of gasoline. For example, Jason from Friendsville, Tennessee, which is a Quaker town near where I live, is a fire fighter with the Blunt County fire department. He says five of their stations have only one person in them. They're they rely on volunteers for the rest of their support. Response from volunteers has been very small because of the price of gasoline. He's not sure how he's going to be able to keep driving across town when he can barely help himself.
Jeanne is a single mother from Elizabeth spends about $65 a week just to drive to and from work. She can barely afford groceries because everything is so expensive now. She says they've been living on noodles to get by. She's very concerned because Congress and the President are doing a lot of talking but not doing anything about the problem. She says "This country is in such a mess." William of Riceville is on disability and his wife is unable to work due to health problems. They have to choose between driving to the doctor or paying for their medicine. Tina from Nashville is a single mother struggling to support her daughter. They can't afford to go out to the movies on the weekend, she says, because gas and food prices have risen so much. She says right now she's spending about $200 a month on gas and prices keep going up but her paycheck isn't going up at all. Judy is a 61-year-old grandmother struggling to support her daughter and granddaughter who live with her. The gas to take her granddaughter to kindergarten is costing $115 each month and they're struggleing to keep her in school. Judy is scared for her family. She's never seen it this difficult just to get by.
Mr. President, as I mentioned earlier, the Senate could have, since a week ago Friday, been bringing up amendments from the Democratic side and the Republican side about dealing with $4 gasoline, and hopefully the Majority Leader and the Republican Leader are coming to the conclusion today which will permit us to start doing that. We don't expect every amendment we offer to be adopted, but we do represent millions of people who want us to try to solve the problem, and we have before this Senate a very specific proposal for bringing down the price of gasoline. It's based upon the law of supply and demand; finding more and using less.
Now, on this side of the aisle, we usually instinctively talk about finding more; that offshore drilling and oil shale -- that is, offshore drilling and oil shale. But it's important to emphasize that part of our plan is using less. The United States Of America us using 25% of all the oil in the world. The fastest way for us to bring down the price of $4 gasoline, if it depends upon finding more -- supply -- and using less -- demand -- is to use less. And what is the most promising way to reduce by a large amount the amount of oil that we use? Give big oil some competition. We believe it's plug-in electric cars and trucks. There are a great many Democrats who believe the same thing. That's part of our plan. That's what we would like to have had on this floor for the last 10 days to discuss.
The bottom line is this: major auto companies -- Ford, General Motors, Nissan, Toyota -- have told us that in 2010 they will begin selling to us cars and trucks that can be plugged into our wall sockets at home and filled up for 60 cents or so instead of filled up by gasoline for $80 or so. Now, most of these cars and trucks will be hybrids. In other words, they'll have a gasoline engine and they'll have an electric engine. And because there are new, more powerful batteries, these cars will be able to go, in effect, about 100 miles per gallon. These are not being produced by the government. These are being produced by the car people. So they're coming. And in addition to that, we've got plenty of electricity. We see a lot on television from Mr. Boone Pickens, who has a plan. It would include wind energy.
But our plan doesn't require building anything for electricity because we already have it. About half our electricity at night is idle. We are he not using it for anything. We're asleep. Our lights are off. Computers are down. We're not using a lot of our electricity. So we can plug in our cars at night. The electricity would be cheap. Run our cars on electricity instead of oil. And here would be the result. We would be trading car by car foreign oil for unused electric capacity. 98% of our transportation is oil. Just 2% of our electricity is oil. Half our electricity at night is not being used, so we could begin year by year gradually converting cars and trucks to electricity instead of gasoline made from oil.
If we converted the whole fleet of cars and light trucks -- now, that would take many years and probably we would never convert them all. But if we did, we would get rid of 10 million of the 13 million barrels of imported oil we have today. Or if we just converted half the fleet, which is a realistic assumption over a number of years, we would reduce by 40% our imported oil and cut by 25% our oil consumption. So, Mr. President, plug-in cars, which the car companies are making, and which we would like to create the environment to support, are coming. And we have the electricity. In other words, cars are coming. We've got the electricity. All we need is the cord. And that is the most promising way to reduce oil.
However, I see the Senator from Texas is here. The use less part we probably could agree on, although I don't know why we haven't been fashioning a program over the last 10 days to do that. We could have been debating whether to have tax credits, whether to have advanced battery research. But we haven't. But where we get stuck is over whether or not we need more supply. And our formula is pretty simple, offshore drilling, oil shale, and plug-in cars and trucks. I say to the Senator from Texas, it seems whe whenever we get to the question of needing more American energy, that's when we have a difference of opinion with the other side of the aisle.
Senator Cornyn: Well, I agree, Mr. President, with the Senator from Tennessee, and I think the way I've heard it expressed certainly explains my point of view. And I think the facts, as they are, is that we need all the above. We need to use less. We need to conserve, and we need to find more energy. I would ask the Senator from Tennessee - to me it seems like the problem sort of boils down into how do we generate more electricity? And then how do we come up with ways to power our vehicles and fly airplanes? And, as you point out, 98%, I believe you said, of the energy used for transportation is oil-based at present. And you've come up with, I think, a very commonsense approach, forward-looking to try to figure out a way, as the car industry has, to do more using electricity and reduce our dependency on oil.
But I think it would be helpful to look back at how we got where we are today, because not necessarily to point the finger of blame but just to point to the fact that it's not likely to get better in the future. Isn't it true that growing economies like China and India are demanding more and more access to energy, which has fueled their economic growth? And in his view, is it likely that that's going to reduce anytime soon or just get worse? In other words, is this something that's going to go away, a temporary problem? Or is this something that's just going to become more and more of a problem as time goes on?
Senator Alexander: I think the Senator is exect right. In the newspapers today and yesterday was a story about in India they're introducing a new car which will be sold for $2,500. What have you got, more than a billion people in India. And when suddenly tens of millions of people in India begin to drive cars that are powered by gasoline, what happens to the supply of oil in the country? The demand goes up and if the supply doesn't go up, the price goes up. We have the same thing in China. There is a story in "The Washington Post," a series today about how the Chinese are using more gas for status purposes like driving big cars, Hummers. There are a lot of them as well. So for our own good we know that the demand for oil and gasoline is going up around the world and we're in the world market. And so for the foreseecial future, as we move to a different kind of -- you know, a different kind of energy picture -- we're going to need at least as much oil as we have today. And Senator Cornyn, I think the question is, are we going to be sending $600 billion or $700 billion overseas to buy it or will we move to a different kind of energy economy?
Senator Cornyn: I know there are some who have suggested that we ought to demand that Saudi Arabia and OPEC actually open the spigot wider. But it seems to me that the Senator from Tennessee is exactly right. The problem is our dependency on imported oil from the Middle East and other countries around the world when we have oil reserves right here in America that can be developed but that Congress has in fact placed out of bounds. About 85% of the oil here at home that could be produced, if Congress would simply allow it by lifting the ban or the moratoria, on development of that oil in the outercontinental shelf, the submerged lands along our coastline, that that could help us.
I think Senator Domenici has talked about it as a bridge to a clean-energy future where we have more cars that run on batteries and electricity, and we wean ourselves really from our dependency not only on foreign oil but on oil, period, because with growing demand globally, the pressure -- the price pressure on that oil is going to get nothing but worse rather than better - and I would just ask the Senator from Tennessee, I know there's been a lot of commotion here on the floor over the last few weeks about whether we stay on this issue or whether we move off of it to talk about other things. And I know that this side of the aisle has insisted that this high energy, high gasoline prices is really the most pressing domestic energy facing our country today. And we have been pretty clear that we are not going to leave, and we're not going to move off of this issue to something else and leave this unresolved. I would just ask the Senator from Tennessee, does -- is that an approach that he agrees with? And do you believe that this is the single-most pressing issue facing our country from a domestic standpoint in our economy today?
Senator Alexander: Not only do I agree with the Senator but so does Jason from Friedsville. Tennesseans want us focused on $4 gasoline. I think the Senator is being generous when he says our position is that we should stay on $4 gasoline until we're finished. Our position is we'd like to get on it. I mean, we've been talking about it and we have a right to talk. But until the Majority Leader creates an environment so we can begin to offer amendments that we can then vote on and come to a result, we can't act as a Senate. Now, to his credit, yesterday he made such a proposal and I understand he's talking about it with the Republican Leader. But we could have been doing this ever since a week ago Friday.
I would say to the Senator from Texas, sometimes I hear people say, well, it won't do much go good, just to drill offshore. And the debate will probably between some of us, some will say, let's do a little more than just the option to drill 50 miles offshore in the 85% of the continental shelf where we can't drill today. By the most conservative estimates it will create about a million barrels of oil. Well, that's not very much, some say, in the whole world. Every million barrels of oil we produce here at $130 a barrel is a million times $130 that we're not sending over there to somebody else. And if the third largest producer, the United States, adds a million barrels a day to its supply, that's a significant addition on the supply side. So it seems to me that our contributions in terms of offshore drilling both would reduce our dependence on foreign oil, keep money in this country, and make a contribution to the supply side which helps it bring down price in the world.
Senator Cornyn: Mr. President, the Senator from Tennessee earlier said if we were all to make the decision in 2010 to move to plug-in hybrid it would take some time to replace the current fleet of internal combustion engine cars in the country. My point is, he said it would take some time. There are some who said if we would open up ANWR, the Arctic, the 2000 acre plot of land and 19 million acres of frozen tundra in Alaska or open up the outer continental shelf it would take years before the oil would flow in the pipeline but I want to ask the Senator from Tennessee, in his opinion, whether, if Congress were to send a message today that we were going to create or allow to be developed as much as three million additional barrels of American oil a day -- whether it's from the oil shale out west or from ANWR or from the outer continental shelf, what, in your view, would be the message to the commodities traders who trade oil as a global commodity and who buy and sell future contracts for the delivery of oil? In your opinion would that have a rather immediate impact on the price of oil and, thus, the price of gasoline?
Senator Alexander: The answer is "yes," to the Senator from Texas. I appreciate the question very much and the figure of about three million barrels a detail is realistic. You mention ANWR, the area in Alaska, which is actually the most readily available to us. The history on that is going back to 1980. President Carter agreed that 17 million or so acres would be put into the Arctic National Wildlife Refuge and off limits to any sort of drilling but 1.5 million could be drilled and then when they're finished drilling they would they would go into the refuge and that oil would come quickly because there is a pipeline there. There is never structure around the areas where we would do offshore drilling in the United States.
But the reason -- the answer is "yes." if the United States added three million to our production, that would be more than a third increase in the production capacity of the third largest producer in the world. What have we heard, Saudi Arabia would increase production by a third. The effect on buyers and sellers of oil would be instant. It would be immediate. President Reagan's former counsel of economic advisors chairman, pointed out that today's price of oil depends upon the expected supply and the expected demand of oil so if we elect as a United States government to say we will significantly increase our supply by about a third, and we're going to reduce our use of oil by about a third, even if it is overtime from the day we decide it, I believe it begins to stabilize and drive down the price of oil all of which leads us to, I see the Senator from Arizona, the issue comes up about what role speculation has in all of this.
Of course, that's what buyers and sellers of oil do, they're guessing. Will the price go up or will the price go down? My view has been that the way you deal with speculation is increase the supply or reduce the demand because the expected future price of supply and future demand affects today's price but the Senator from Arizona is an expert in taxation and financial matters. I wonder what his view is on the effect of speculation on today's oil prices.
Senator Kyl: Mr. President, if the Senator from Tennessee would allow me to answer that question, first of I'll I decline to take the's as an expert on financial matters but turn to a paper which I don't always agree and yet is one of the leading newspapers in the world who editorialized on the issue yesterday, the "New York Times" and I, therefore, would perhaps answer the question by quoting about four sentences from this July 28, "the New York Times" editorial called "Gas Price Follies." the bottom line is, they agree with the Senator from Tennessee. Here's what they said: -- quote -- "yet all evidence suggests that speculation has little to do with the rising price of crude. From rice to iron, commodity prices are all rising, even without much financial speculation due to a variety of factors including a weak dollar and growing demand from China and India." and then they go on: "a report by government agencies including the commodity futures trading Commission, the Federal reserve, and the treasury and energy departments found that speculative trades in oil contracts had little to no effect on the rise in prices over the last five years."
They conclude with this: "oil futures are financial contracts for future delivery of oil. Their price has been responding to the same factors, growing world demand in the face of stagnant supply and the expectation that this dynamic will continue." So, precisely the point the Senator from Tennessee was making. These buyers, investors on market look to see whether demand is going to be great or less than supply; if it's going to be greater, obviously the price is going to go up and that's the bet they place when they buy the futures contracts. The best single thing we can do to respond to this and drive the price down is found on the chart from the Senator from Tennessee "find more and use less." and the "New York Times" makes that point. Reduce consumption, that reduces demand but find new energy sources and we have a huge volume of that in natural gas and crude oil right here in the United States primarily off our shores which is why beth the Senator -- both the Senator from Texas and Tennessee and I support more offshore drilling to, expand the production of American energy to meet this crisis.
Senator Alexander: If supply and demand is the major way to deal with speculation I believe the Republican legislation, the gas price reduction act, does have in it a couple of legislative suggestions for how we might appropriately deal with speculation without interfering with supply and demand. The Senator from Texas may help to author that piece of legislation.
Senator Cornyn: We tried to find sort of a consensus or economic ground that we could, hopefully, agree upon and ask some of our friends on the other side of the aisle to join us and rather than talking about the issue to actually solve the problem and so we did include, as part of the "find more, use less" formulation, a title on speculation where we say there needs to be, certainly, transparency so we can see what's going on and to the extent the Commodities Futures Trading Commission needs more cops on the beat, they need more resources to be able to do their job, then we need to supply them, those analysts and those vest guards, those resources to be able to make sure abuses don't occur.
I remember when the Senator from Arizona was talking, Warren Buffet has been quoted here recently saying that speculation is not the problem. He agrees with the "New York Times," he said it's a matter of supply and demand. But T. Boone Pickens, my constituent, who has made quite a splash with his energy plan said if all you are going to do is focus on speculation, it's a waste of time. We've tried to come up with a commonsense approach to this and one that could develop a critical mass of bipartisan support. Until now, the Senate Majority Leader who controls the floor of the United States Senate has decided not to allow us that opportunity.
Now, yesterday, I agree with the Senator from Tennessee, it looked like a little bit of light in the darkness, the little hope that the Majority Leader would perhaps modify his position. I hope we don't leave here this week without doing something meaningful to help bring down the price of gasoline as we have described here. We're certainly willing to listen to the ideas if our colleagues on the other side have. I suspect if this have an opportunity to vote a number of them would agree with us and maybe they would have ideas we would agree with in an effort to build a bipartisan solution. We've got to do something and Congress has been part of the problem and we need to be part of the solution.
Senator Kyl: I wonder if the Senator from Tennessee would yield for a question? Would it be fair to characterize the Republican approach as "all of the above?" We recognize there is a role to beef up the agency that deals with speculation to make sure they can do their job, to provide as much new production as possible offshore in the oil shale, anywhere we believe we can find that production; that we also appreciate the fact that there's another side to this. It's not just transportation, it's energy production, electricity production. We're going to see our electricity costs go up and, clearly, nuclear power is a key factor in that as well as coal coalto gas liquification. We can begin this process so that the Republican view is, literally, all of the above, to have a balanced approach which recognizes that there is no one single thing but that offshore drilling would be the best, most immediate way to increase our production. Would that be a fair characterization?
Senator Alexander: That is a fair characterization. And unless we include new American sources of energy, our electric prices are going up, our gasoline prices are going up, our lights are going out, our jobs are going overseas -- we need both. And we need to do it now. The $4 gasoline price we are suffering today is the first recognition that in addition to using less we have got to use more new American energy and for us that includes offshore drill, oil shale, as well as plug-in cars and trucks.
Senator Cornyn: We just passed a massive housing bill and a $158 billion economic stimulus package because we are concerned about the economy and let's assume we are successful in dealing with those problems, do you see the rising costs of gasoline and oil and energy as big or maybe even a bigger threat, ultimately, to the economy, and that it might have the very direct effect of putting us into a bona fide recession?
Senator Kyl: If I could respond to that there was an article I believe in the "Wall Street Journal" yesterday, and the point of the article was that while we may not have technically been in a recession, the definition of which is two quarters of negative economic growth consecutive, the reality is, because of inflation, primarily falled by high fuel costs which reflects itself in everything from higher food prices to higher transportation costs which then find their way into the products that we buy, because of that inflationary pressure, the reality is that for most Americans, we are feeling the same effects as if we were in a recession and that the heart of this is the energy problem is that if we could solve this energy problem in a balanced way from the electricity production through nuclear power, through offshore, and through reducing our demand, that would have an effect on our future economic health and, obviously, on every American family in this country.
Senator Alexander: We should work across party lines to find more American energy, use less, and bring down prices. I thank the President. I thank the Senators from Arizona and Texas.
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