Washington, DC—Senate Majority Leader Harry Reid and Senators Jeff Bingaman, Max Baucus, Charles Schumer, Byron Dorgan, Maria Cantwell and Bernie Sanders held a press conference today to unveil the Consumer-First Energy Act of 2008, a bill that addresses the root causes of high gas prices. Seven years of the Bush Administration’s disastrous energy policies have enriched Big Oil and market speculators at the expense of American consumers. Democrats are committed to providing relief to consumers and strengthening our economic, energy and national security.
“Even as it costs Americans more every day to fill up their gas tanks, Bush Republicans only offer more of the same failed energy policies that brought us to this point,” Reid said. “But with this bill, Democrats are protecting consumers. Instead of helping Big Oil make more money at the expense of average Americans, we are forcing oil companies to change their ways. We will hold them accountable for unconscionable price-gouging and force them to invest in renewable energy or pay a price for refusing to do so.”
Said Bingaman: “Startling gasoline prices are making it harder and harder for working American families, farmers and small businesses to make ends meet. At a minimum, Senate Democrats are determined to take the short-term steps necessary to send the right signals to energy markets, and to ensure that proper safeguards are in place to protect American consumers.”
“Repealing tax breaks for Big Oil will stop these companies from running away with more taxpayer cash while they’re already high on the hog,” Baucus said. “And the money saved will help to build a real energy future for this country – one not dependent on foreign oil and fuels that won’t last forever.”
Said Schumer: “Oil companies are racking up obscene profits left and right while American families are stretched to the limit by skyrocketing gas prices. It’s time for Big Oil to pay its fair share so Americans can see a little relief. The windfall profits tax will do just that, and help spur innovation in the process.”
“Gas prices are nearing four dollars a gallon and a barrel of oil is around $120 per barrel, yet this President is refusing to take action to put downward pressure on gas prices,” Dorgan said. “We need to immediately stop putting oil underground into the Strategic Petroleum Reserve, and start addressing the fundamental issue of these sky-high prices by cracking down on the rampant speculation that’s driving up the price of energy.”
Said Cantwell: “We need a cop on the beat to patrol the markets for any illegal activity or manipulation and help ensure Americans are paying prices that are not just fair, but based on supply and demand fundamentals. Now it’s time for Congress to pursue vigilant oversight over these markets to ensure Americans aren’t the victims of a few rogue traders manipulating energy markets. By taking these steps, we may be able to burst the energy price bubble that is dragging down our economy.”
“If we don’t act boldly, the economic situation for millions of middle-class families and working Americans will continue to deteriorate,” Sanders said. “Record-breaking oil and gas prices are a crisis not only for commuters going to work, especially in rural areas, but also for family farmers, small businesses, truckers, airlines, grocery stores, restaurants, hotels, tourists and indeed every sector of our economy. The bottom line is this: Congress and the President can no longer sit idly by while Americans are getting ripped off at the gas pump, the economy deteriorates, and Exxon Mobil, greedy speculators, and OPEC are allowed to make out like bandits pushing oil and gas prices higher and higher.”
Summary of the Consumer-First Energy Act
The cumulative impact of disastrous Bush Administration policies and priorities has created an energy and economic crisis that is now plaguing consumers at the gas pump and damaging our national security. Since President Bush came to office, gas prices have more than doubled, the Big Oil companies have made more than half a trillion dollars in profits and the United States is even more dependent on oil. Democrats are providing solutions that address the root causes of high gas prices, hold the Big Oil companies accountable and put consumers first.
The Consumer-First Energy Act Addresses the Root Causes of High Gas Prices, Holds Big Oil Accountable and Puts Consumers First
Roll Back Tax Breaks for Oil Companies and Invest in Renewable Energy – In 2004 and 2005, the Big Oil companies received tax breaks worth $17 billion over 10 years. The Consumer-First Energy Act will roll back $17 billion in tax breaks for oil and gas companies and instead invest those taxpayer dollars to improve consumer price protection, renewable energy development and energy efficiency technology through a designated Energy Independence and Security Trust Fund.
Force Big Oil to Pay Their Fair Share through a Windfall Profits Tax – Since the Bush Administration came into office, the five biggest oil companies have made over half a trillion dollars in profit. The Consumer-First Energy Act creates a 25 percent windfall profits tax on companies that fail to invest in increased capacity and renewable energy sources. This provision would not apply to the profits those companies reinvested in clean, affordable, domestically produced renewable fuels, expanding refinery capacity and utilization, or renewable electricity production. The proceeds of the tax will be invested in consumer price protection, renewable energy development and energy efficiency technologies through a designated Energy Independence and Security Trust Fund.
Halt Government Purchases of Oil for the Strategic Petroleum Reserve – The Administration continues to place between 70,000 and 80,000 barrels of oil a day underground in the Strategic Petroleum Reserve (SPR), which is 97 percent full. The Consumer-First Energy Act calls for suspending through December 2008 oil purchases for the SPR. Filling could resume when the 90 day average price of crude oil recedes to $75 or less. Energy officials have stated that by halting purchases for the SPR, the price of gasoline can be reduced 2 to 5 cents per gallon.
Protect Consumers from Price Gouging – The Federal government’s authority and enforcement actions are inadequate to protect consumers from artificially created spikes in retail gas prices are inadequate. The Consumer-First Energy Act would give the President the authority to declare an energy emergency should there be a shortage, disruption or significant pricing anomalies in the oil market. Once an emergency is declared, setting an “unconscionably excessive price” during such an emergency would be deemed unlawful and subject to civil penalties.
Stop Market Price Speculation – The Administration’s failure to regulate the oil futures market has lead to exorbitant speculation. The Consumer-First Energy Act establishes two key limitations on speculation. First, the bill prevents traders of U.S. crude oil from routing transactions through off-shore markets to evade speculative limits and sets forth reporting requirements. The bill also requires the Commodities Futures Trading Commission to set a substantial increase in the margin requirement for all oil futures trades, contracts or transactions. Recently, one oil company executive indicated crude oil prices could be inflated due to speculation in the futures market.
Stand Up to OPEC – OPEC’s near-monopolistic control over oil prices has lead to record oil prices which have driven up the cost Americans pay at the pump. The Consumer-First Energy Act allows the U.S. Attorney General to bring an enforcement action against any country or company that is colluding to set the price of oil, natural gas, or any other petroleum product. Enacting this provision will make it clear to nations that participate in the oil cartel that engaging in conduct designed to fix the price of oil is illegal under U.S. law. As such, nations concerned with maintaining good diplomatic relations with the U.S. will likely be reluctant to blatantly act in a way that is counter to U.S. law.