Since President Bush and Vice President Cheney took office, gas prices have nearly tripled (approximately 180 percent increase), oil prices have quadrupled (approximately 325 percent increase), and the average family is spending a record six percent of income on gasoline. At the same time, energy prices are taking a toll on the American economy as rising costs have significantly contributed to the biggest increase in six months in wholesale prices at the same that the nation’s unemployment numbers have risen to 5.5 percent (and the largest one month loss of jobs in two decades).
Senate Democrats have aggressively pursued actions to address the failed energy policies of President Bush and Vice President Cheney. Our agenda begins with eliminating taxpayer giveaways to major oil companies, investing in renewable energy, taking steps to curb excessive speculation in the oil markets, curbing price gouging and standing up to the OPEC cartel. Unfortunately, Senator John McCain and other Bush Republicans have chosen to embrace the status quo and oppose our proposals for a more secure, sustainable and affordable energy and economic future.
Senate Democratic Efforts to Safeguard the American Dream by Making Energy More Affordable
Renewable energy investments. Senate Democrats have repeatedly proposed steps that would greatly enhance investments in renewable energy, create jobs and begin to move our country towards a cleaner and more affordable energy policy. In recent weeks, Senate Democrats have continued to argue for the need to extend the use of renewable energy and energy efficiency tax credits that will expire at the end of this year unless action is taken. Already, investors are troubled that Congress has not acted to extend them. Unfortunately, Senate Republicans have repeatedly voted to block extension of these tax credits because Democrats have chosen to be fiscally responsible by including offsets to pay for the extensions in a way that does not drive up the budget deficit and national debt. The latest and what should be non-controversial offsets Democrats have proposed would close tax loopholes currently being exploited by hedge fund managers and delayed the use of foreign tax credits. Earlier this year, and twice last year, Republicans objected to Democrats’ offset proposals for eliminating taxpayer subsidies to the major oil companies. The expiration of these tax credits could lead to:
- The denial of a $3,000 tax credit for taxpayers to purchase plug-in hybrid electric vehicles;
- The loss of new zero-interest bond issuing authority for cities and counties to finance renewable energy projects;
- Investment in biodiesel and cellulosic ethanol while demand and prices for diesel and alternative fuels skyrocket;
- Decreased investment by consumers and small businesses in energy efficiency projects in homes and buildings. In the United States, buildings are responsible for 38 percent of CO2 emissions, 40 percent of energy use, and 70 percent of electricity use;
- The loss of 76,000 jobs in the wind industry; and
- The loss of 40,000 jobs in the solar industry;
Senate Democrats remain committed to ensuring that these tax credit benefits will not be lost. But progress on these critical tax extenders will require the Republicans to join us in making energy more affordable and fiscally responsible.
Consumer protection. Senate Democrats believe that our government needs additional tools to investigate potential price gouging during energy emergencies. Senate Democrats have proposed legislation that would:
- Give the President the authority to declare a temporary national energy emergency in instances where the President determines that a threatened or existing disruption of oil, petroleum, or biofuel supplies or significant pricing anomalies constitute a danger to the health, safety, welfare, or economic well-being of the citizens of the United States. This is similar to the emergency authority provided to governors under many individual state statutes; and
- Upon declaration of an energy emergency, prohibit price gouging and increase federal civil and criminal penalties. This provision is modeled after state anti-price gouging legislation in at least 30 states. The legislation would also empower state Attorneys General with the authority to bring a civil action on behalf of citizens for price gouging during an energy emergency.
Regrettably, Bush Republicans in the Senate have blocked this legislation from becoming law and President Bush has previously threatened to veto a bill that included its provisions. Senate Democrats will continue to push Republicans in the Senate and President Bush to reconsider their objections to these provisions so that the American people will have additional protections from energy price gougers.
Curbing market speculation. The role that market speculation and oil traders are playing in the oil markets has come under increased scrutiny in recent months as many energy experts believe that these traders are unnaturally raising the price of oil. Oil experts have stated that the current supply and demand dynamics cannot explain today’s price of oil. In addition, the Acting Chairman of the Commodity Futures Trading Commission recently noted in a letter to Senator Bingaman that the:
- Share of speculative oil trading has grown approximately 70 percent of the West Texas Intermediate trading on the New York Mercantile Exchange; and
- Since 2006, almost twice as many "hedging exemptions" from New York Mercantile Exchange crude oil position limits have been granted to swaps dealers than to bona fide hedgers.
A number of Democratic Senators have cosponsored (Reid, Bingaman, Levin, Feinstein, Obama,Kerry, Dorgan, Casey, Brown, Leahy, Klobuchar, Menendez, Murray, Mikulski, and Reed) legislation authored by Senator Durbin that would allow the Commodity Futures Trading Commission to increase its staff and give Congress and the American people a far better understanding of the factors driving this unprecedented increase in the price of oil. This is especially important because the Acting Chairman of the Commodities Future Trading Commission noted that it could hire "an extra 100 people and put them to work tomorrow given the inflow of trading volume."
Standing up to OPEC. The Consumers-First Energy Act of 2008 would amend the Sherman Antitrust Act and allow the Attorney General to bring enforcement actions against any country or company that is colluding in setting the price of oil, natural gas or any petroleum product. Additionally, it would seek to address OPEC state claims that their anti-competitive behavior has sovereign immunity from U.S. courts due to a court ruling in 1979. The bill would not authorize private lawsuits against OPEC.
We Cannot Drill Our Way to Lower Prices at the Pump
The recent flip-flops by President Bush and Senator McCain to grant new access for offshore drilling comes as the Big Oil companies have spent $188 billion in stock buybacks over the last five years instead of investing significantly in increasing supply here and abroad. Meanwhile, at a recent House hearing, an ExxonMobil official testified that it was only investing $100 million over ten years on renewable energy.
The U.S. demand for oil is 25 percent of world oil supply, but our reserves are only three percent or less of the world’s oil reserves.More access to the Outer Continental Shelf (OCS) is not going to keep OPEC from setting the price of crude or impact prices. In its 2007 Annual Energy Outlook on the impacts of increased access to oil and natural gas resources in the Lower 48 Federal Outer Continental Shelf, the Energy Information Administration found that:
- "The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher-2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case. Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant."
The Fastest Way to Bring on New Production is For the Oil Industry to Develop what is already leased
- There are 44 million federal acres under lease onshore – but 31 million acres are not producing.
- There are 2,200 producing leases on the OCS and 6,300 non-producing leases.
There are 41 million acres under lease in federal waters offshore, but 33 million of these acres are not producing.
Recent Examples of Bush Republicans Support for Status Quo on Energy
- June 17, 2008: Motion to Invoke Cloture on the Motion to Proceed to H.R.6049, the Renewable Energy and Job Creation Act of 2008. Republicans blocked consideration of the bill by a vote of 52 to 44.
- June 10, 2008: Motion to Invoke Cloture on the Motion to Proceed to H.R.6049, the Renewable Energy and Job Creation Act of 2008. Republicans blocked consideration of the bill by a vote of 50 to 44.
- June 10, 2008: Motion to Invoke Cloture on the Motion to Proceed to S.3044, the Consumer-First Energy Act of 2008. Republicans blocked consideration of the bill by a vote of 51 to 43.