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Watch Now: Inhofe-Allard-Stevens Continue Fight to Bring Down Gas Prices
May 23, 2008

Posted by Matthew_Dempsey@epw.senate.gov (9:55 am ET)

Yesterday Senator Inhofe joined in a colloquy with Senators Allard (R-CO) and Stevens (R-AK) regarding the need to develop domestic energy resources and increase domestic refining capacity in order bring down the high price of gas at the pump. You Tube videos are now posted below. For more information, click on yesterday's press release.


Watch more Inhofe videos on the Inhofe You Tube channel.

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Inhofe Continues Fight to Bring Down Gas Prices

ALLARD URGES SENATE DEMOCRATS TO HELP AMERICANS EASE THEIR OWN 'PAIN AT THE PUMP'

 

 

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Full Remarks From the Congressional Record of the Colloquy:

ENERGY SUPPLY -- (Senate - May 22, 2008)

Mr. STEVENS. Madam President, this morning when I read the Wall Street Journal, I was interested in this article: ``Energy Watchdog Warns of Oil Production Crunch.'' This is the IEA, the International Energy Agency, that makes estimates and keeps the world informed on the status of energy supplies. The conclusion in this article is that the demand for energy throughout the world continues to rise, but the supply is flat. I think there is no question that this is a problem this country faces, the problem of supply. Too often people in the Senate are unwilling to talk about the problem of supply. As a matter of fact, in 1995, President Clinton vetoed a bill that would have opened a very small portion, about 2,000 acres, of the ANWR coastal plain, which is a million and a half acres set aside for oil exploration. It would have opened it to oil and gas development. That was shortsighted, a mistake, and it has had a devastating effect on Americans.

As this article in the Wall Street Journal points out, it predicts global demand for oil of 116 million barrels per day by 2030. Today the world's demand is only 87 million barrels a day, and we are paying $135 for each of those barrels. As the demand continues to rise--and we know it will--so will the cost. It will become higher and higher. This is what I have been trying to say now for 20 years in the Senate. We should be able to produce more of America's oil, and we import today 67 percent of our oil. During the oil embargo in the 1970s, we imported about 34 percent. We are almost totally dependent now on oil from offshore. American oil is not available to this country. The alarming fact is, the military is the largest consumer of oil in the country. It uses about 4.8 billion gallons of oil per year. The problem really is, if we had an embargo today, we could not sustain our military, let alone our essential infrastructure. Our economy could not survive another embargo.

We need to realize we can produce American energy to meet our needs. If we produce it over a period of years, the price will be stabilized. The interesting thing is, on May 1--right here on the Senate floor--the senior Senator from New York called drilling in the Arctic National Wildlife Refuge “plain wrong.” He said it was an “old saw.” He said the field's probable 1 million barrels a day would reduce gas prices “only a penny a gallon.”  Then, on May 11, the Senator from New York, Mr. Schumer, said: There is one way to get the price of oil down and it's two words--Saudi Arabia. If they were to increase 800,000 barrels per day, the price would come down probably 35 to 50 cents a gallon. That's a lot.

Now, why would 800,000 barrels of Saudi oil reduce gas prices 50 cents a gallon and 1 million barrels of American-produced oil from our State reduce the price at the pump only a penny? As a matter of fact, the Senator from New York said this extra supply from Saudi Arabia would probably reduce the price of a gallon of gas by 62 cents before it was all over. Imagine that: 800,000 barrels of oil from Saudi Arabia could bring down the price of a gallon of gasoline by 62 cents. There is an absolute inconsistency with what the Senator from New York has told the Senate. I find that appalling on a thing such as the oil supply now, in view of the price of gasoline for Americans at the pump. They are paying the price because of President Clinton. They are paying the price because of stubborn opposition to develop the resources in my State.

Now, they tell us that drilling in the arctic could harm the Arctic Wildlife Refuge. It will not. As a matter of fact, the land we are going to develop was set aside in the act of 1980, a million and a half acres in the Arctic Plain, so it could be explored. It will not be part of the Arctic Wildlife Refuge until the exploration and development of that area is over. I think there is no question we have to find a way to have the Members of this body make up their minds: What is the problem America faces today? It is supply. Our demand is increasing, like the rest of the world, but we do not have an American supply of oil. Off our shores, and in the deep water off Alaska, there is a bountiful supply of oil. We have two-thirds of the Continental Shelf of the United States, and there is only one well on that two-thirds of the Continental Shelf.

If you look over to the other side of the Bering Straits in Russia--Russia, which was a net importer of oil just 20 years ago, now is a net exporter of oil. Why? Because they developed the OCS off their shores. They now have a strong economy in Russia. Why? Because they do not export petrodollars anymore. They use money in their own country to finance development in their own country. We have to make up our minds whether we are going to face blind opposition, incorrect, and uninformed opposition, or whether we are going to take the actions needed to develop American oil to meet American demand, and whether we are going to use the deep water off our shores to produce oil as does the rest of the world. Norway produces oil off their shores. Britain produces oil off their shores. As a matter of fact, we produce oil off our southern shore, but we are prevented from producing oil off our northern shore. It is absolutely inconsistent and irrational what we are facing.

Our pipeline, at its peak, was transporting 2.1 million barrels of oil to the west coast of the United States. Today, it is producing about 700,000 barrels a day. It is two-thirds empty, in effect. It would not need a new pipeline to carry the oil that would be produced in ANWR. It is there. It could carry more than 1 million barrels a day easily. Yet it has been opposed. It has been opposed for over 20 years, by the same irrational people who come to the floor and say: Oh, oh, Saudi Arabia, produce more oil. Produce 800,000 barrels of oil a day, and we can probably expect gas prices at the pump to come down 62 cents. But if you bring 1 million barrels of oil down from Alaska, it is only going to affect the price by a penny.

I have to tell you, we have to have smarter energy solutions. I hope the time will come when we have a rational debate on this floor. I am reminded of that rational debate when we finally approved the legislation that brought about the construction of the Alaska oil pipeline in the 1970s. We waited 4 years for that pipeline to start because of stubborn opposition from the extreme environmentalists. It was finally overcome. That opposition was overcome by an act that was started right here on the floor of the Senate, which closed the courts of the United States to any further litigation over building that pipeline. We were just following the oil embargo. America realized we had to have more American oil. There was no filibuster on this floor. The vote was 49 to 49, and that tie was broken by the then-Vice President. Now, what has happened? Why should every time we bring up ANWR we have a filibuster? Why can't we bring to the American continent the resources of the continent that happen to be in our State?

Mr. INHOFE. Madam President, will the Senator yield for a question?

Mr. STEVENS. Madam President, I am happy to yield to my friend.

Mr. INHOFE. Madam President, I say to the Senator, I do not want to disrupt your line of thinking because I agree so much with you. But every time I hear people talking about ANWR, and I hear people talking about stopping any drilling or exploration in ANWR, it occurs to me, here you are, the senior Senator from Alaska. You have been here for a long time, and I have gone with you up to the area in which you are talking about drilling. I have heard people compare that to a postage stamp in a football field or something like that. It is a tiny area up there. The question I have is twofold. First of all, why is it that as near as I can determine, people who live there all want to explore and resolve this problem we have in this country by drilling and exploring in ANWR? Who are we down here to tell them up in Alaska what is best for them? That would be the No. 1 question.

Then, the second thing is, what I have observed, I say to the senior Senator from Alaska, who has been here longer than I have, is that every time this has come up--I came from the House to the Senate back in 1995--now, on October 27, 1995, we voted 52 to 47, right down party lines, to go ahead and start exploring in ANWR. All the Republicans supported it. All the Democrats opposed it. Then, again, on November 17, 1995, the same thing happened: We voted to explore, the Democrats voted against it. Then, after all that work was done, the President--then-President Clinton--on December 6, 1995, vetoed the bills that had this authority we had given them to drill. Then the same thing--I could go on and on--but in 2005, the same thing happened. The Senate voted on an amendment to the budget resolution to strike the expansion of exploration in ANWR. It failed by a vote of 49 to 51, right down party lines.

I guess the second question I would ask the Senator is, why is making us self-sufficient a partisan issue? Why do the Democrats oppose it and the Republicans support it?

Mr. STEVENS. I have to tell the Senator, that is comparatively new in terms of my time in the Senate. When I first arrived here, there was bipartisan support for producing American oil. We had a coalition with Republicans and Democrats, and we worked with the administration, whether it was Republican or Democrat, to find a way to bring more oil on line, oil produced by Americans and consumed by Americans. When the opposition started on a political basis, we were then importing about 20 percent of our oil. As the opposition has continued, as I said, we now import 67 percent. That money, which would have been spent in this country producing millions of jobs, and putting people into permanent jobs, long-term jobs, is going to all these countries throughout the world because we do not have that investment. We have now what we call petrodollars, and we have to send our exports overseas to bring that money back. This chart shows that 1 million barrels of imported oil cost the American economy 20,000 jobs, and we are importing 14 million barrels a day now. So I tell the Senator, it is a recent phenomenon comparatively, and it is partisan. It started with President Clinton.

Mr. INHOFE. Well, Madam President, I will only respond to say that is my observation. I have not been here as long as the Senator has, but every year since I have been here, we have had this vote, and the people up there want us to drill, to explore, to produce. I remember the argument against the Alaska pipeline. They said: Oh, it is going to destroy the caribou. What it has done, if you go up there, as I have been with you at any time during the summer months, the warm months, the only shade the caribou can find is the pipeline. You see them all out there. It has actually had the effect of increasing the breed. But anyway, I keep thinking, if we had followed through with what we are talking about doing back in the middle 1990s, we would now be producing our own energy, producing our own oil, and we would not have these high prices at the pumps.

Mr. STEVENS. I thank the Senator very much. I will close on this statement. Madam President, I ask unanimous consent that the article from the Wall Street Journal be printed in the Record. I would hope that the Senate would pay attention to it. There being no objection, the material was ordered to be printed in the RECORD, as follows:

[From The Wall Street Journal, May 22, 2008]

   Energy Watchdog Warns of Oil-Production Crunch

(By Neil King Jr. and Peter Fritsch)

The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought.

A pessimistic supply outlook from the IEA could further rattle an oil market that already has seen crude prices rocket over $130 a barrel, double what they were a year ago. U.S. benchmark crude broke a record for the fourth day in a row, rising 3.3% Wednesday to close at $133.17 a barrel on the New York Mercantile Exchange.

For several years, the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently. Now, the agency is worried that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day over the next two decades.

The decision to rigorously survey supply--instead of just demand, as in the past--reflects an increasing fear within the agency and elsewhere that oil-producing regions aren't on track to meet future needs.

“The oil investments required may be much, much higher than what people assume,'' said Fatih Birol, the IEA's chief economist and the leader of the study, in an interview with The Wall Street Journal. “This is a dangerous situation.”

The agency's forecasts are widely followed by the industry, Wall Street and the big oil-consuming countries that fund its work.

The IEA monitors energy markets for the world's 26 most-advanced economies, including the U.S., Japan and all of Europe. It acts as a counterweight in the market to the views of the Organization of Petroleum Exporting Countries. The IEA's endorsement of a crimped supply scenario likely will be interpreted by the cartel as yet another call to pump more oil--a call it will have a difficult time answering. Last week, the Saudis gave President Bush a lukewarm response to his plea for more oil, saying they were already adding 300,000 barrels a day to the market, an announcement that did nothing to cool prices.

At the same time, the IEA's conclusions likely will be seized on by advocates of expanded drilling in prohibited areas like the U.S. outer continental shelf or the Alaska National Wildlife Refuge.

The IEA, employing a team of 25 analysts, is trying to shed light on some of the industry's best-kept secrets by assessing the health of major fields scattered from Venezuela and Mexico to Saudi Arabia, Kuwait and Iraq. The fields supply over two-thirds of daily world production.

The findings won't be definitive. Big producers including Venezuela, Iran and China aren't cooperating, and others like Saudi Arabia typically treat the detailed production data of individual fields as closely guarded state secrets, so it's not clear how specific their contributions will be. To try to compensate, the IEA will use computer modeling to make estimates. It will also collect information gathered by IHS Inc., a major data and analysis provider based in Colorado, as well as the U.S. Geologic Survey, a smattering of oil and oil-service companies, and national petroleum councils.

SUPPLY-SIDE GLOOM

But the direction of the IEA's work echoes the gathering supply-side gloom articulated by some Big Oil executives in recent months. A growing number of people in the industry are endorsing a version of the ``peak-oil'' theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output. All of that has prompted numerous upward revisions to long-term oil-price forecasts on Wall Street.

Goldman Sachs grabbed headlines recently with a forecast saying that oil could top $140 a barrel this summer and could average $200 a barrel next year. Prices that high would add to the inflationary pressures weighing on the world economy and to the woes of fuel-sensitive industries such as airlines and autos.

The IEA's study marks a big change in the agency's efforts to peer into the future. In the past, the IEA focused mainly on assessing future demand, and then looked at how much non-OPEC countries were likely to produce to meet that demand. Any gap, it was assumed, would then be met by big OPEC producers such as Saudi Arabia, Iran or Kuwait.

But the IEA's pessimism over future supplies has been building for some time. Last summer, the agency warned that OPEC's spare capacity could shrink ``to minimal levels by 2012.'' In November, it said its analysis of projects known to be in the works suggested that the world could face a shortfall by 2015 of as much as 12.5 million barrels a day, unless there was a sharp drop in expected demand. The current IEA work aims to tally the range of investments and projects under way to boost production from the fields in question to get a clearer sense of what to expect in production flows.

“This is very important, because the IEA is treated as the world's only serious independent guardian of energy data and forecasts,” says Edward Morse, chief energy economist at Lehman Brothers. Examining the state of the world's big oil fields could prod their owners into unaccustomed transparency, he says.

Some critics of the IEA, while praising its new study, say a revision in the agency's long-term forecasting is long overdue. The agency has failed to anticipate many of the big energy developments in recent years, such as the surge in Chinese demand in 2004 and this year's skyrocketing prices. ``The IEA is always conflicted by political pressures,'' says Chris Skrebowski, a London-based oil analyst who keeps his own database on big petroleum projects and is pessimistic about supply. ``In this case I think they want to make as incontrovertible as possible the fact that we are facing a real crunch.''

U.S. FORECASTS

The U.S. Energy Department's own forecasting shop, the Energy Information Administration, has long stuck to the same demand-driven methodology as the IEA, assuming that supply will keep up with the world's growing hunger for oil. But the U.S. agency also has embarked on its own supply study, which it hopes to complete this summer. Like the IEA, its preliminary findings are somewhat gloomy: They suggest daily output of conventional crude oil alone, now about 73 million barrels, will plateau at 84 million barrels, and that it will take a significant uptick in production of nonconventional fuels such as ethanol to push global fuel supplies over 100 million barrels a day by 2030.

“We are optimistic in terms of resource availability, but wary about whether the investments get made in the right places and at a pace that will bring on supply to meet demand,” says Guy Caruso, the U.S. agency's administrator.

In Paris, analysts at IEA also fret that a lack of investment in many OPEC countries, combined with a diminished incentive to ramp up output, casts serious doubt over how much the cartel will expand its production in the future. The big OPEC producers have been raking in record profits, creating a disincentive in many countries to sink more billions into increased oil production.

Meanwhile, politics and other forces are delaying projects that could bring more oil on-stream. Continued fighting in Iraq has stymied efforts to revive aging fields, while international sanctions on Iran have kept investments there from moving forward. Rebel attacks in Nigeria and political turmoil in Venezuela have cut into both countries' output. Big non-OPEC producers such as Mexico and Russia, which have either barred or sidelined international operators, are seeing production slump. The U.S., with a legal moratorium barring exploration in 85% of its offshore waters, is struggling to keep its output steady.

The IEA study will try to answer one question that bedevils those trying to forecast future prices and the supply-demand balance: How rapidly are the world's top fields declining? The rates at which their production dwindles over time are a much-debated barometer of the health of the world's oil patch.

DEPLETION RATE

A study released earlier this year by the Cambridge Energy Research Associates, a consulting firm and unit of IHS, concluded that the depletion rate of the world's 811 biggest fields is around 4.5% a year. At that rate, oil companies have to make huge investments just to keep overall production steady. Others say the depletion rate could be higher.

“We are of the opinion that the public isn't aware of the role of the decline rate of existing fields in the energy supply balance, and that this rate will accelerate in the future,'' says the IEA's Mr. Birol.

Some analysts, however, contend that scarcity isn't the issue--only access to reserves and investment in tapping them. ``We know there is plenty of oil and gas resource in the world,'' says Pete Stark, vice president for industry relations at IHS. He says the difficulties of supply aren't buried in oil fields, but are ``above ground.''

Mr. Morse at Lehman Brothers notes that there are plenty of questions about supply yet to be answered. ``However confident the IEA may be about the data it has, they know nothing about the resources we've yet to discover in the deep waters or in the arctic,'' he says.

Mr. STEVENS. Madam President, I do thank the Chair for her patience.

Let me do one last thing.

(The remarks of Mr. Stevens pertaining to the submission of S. Res. 575 are printed in today's Record under ``Submitted Resolutions.'')

Mr. STEVENS. I thank the Chair for her patience and yield the floor.

The PRESIDING OFFICER. The Senator from Oklahoma is recognized.

Mr. INHOFE. Madam President, first of all, let me thank the Senator from Alaska. This is a frustration I have felt for so long: that it is not just that right down party lines we are not able to produce in ANWR, but also it goes offshore. We have tried, on the Republican side, to do something about increasing the supply--by drilling in Alaska, by going at the tar sands, and I am sure the Senator from Colorado will talk a little bit about shale out in the western part of his State and in my State of Oklahoma, trying to give tax incentives for the production at marginal wells, which are wells that produce under 15 barrels of oil a day.

I can give a statistic that I do not have to back up because it has never been refuted. If we had all the marginal wells flowing today that have been shut down in the last 10 years, it would amount to more than we are currently importing from Saudi Arabia. So I think it is very arrogant, when you have two hard-working Senators and one Member of the House from Alaska who want very much to do what 100 percent of the people want to do in Alaska; that is, to improve their economy by producing cheap oil for us domestically so we can bring down the price of gas, when they will not allow us to do it. Let me make one comment. I am going to be joined by the Senator from Colorado. I want to touch upon one other area.

If we had been and would be successful in being able to drill more oil domestically so we can bring down the price of gas, no matter how much we produced, it can't go into the gas tank until it has been refined. So refining capacity is something that is very critical in this country. Again, right down party lines, they have prevented us from having that refinery capacity. Three different times I had on the floor a bill called the Gas Price Act. All it was was a bill to start building refineries in America. It has been 30 years; 1976 was the last refinery we had in America. What we need to do is start building refineries. Well, with the BRAC process--and for those of you who come from States that don't have any military operations, you may not know what this is, but the BRAC process is the Base Realignment and Closure Commission. That is where you go through an independent entity to determine which of the military installations should be shut down. Of course, when you shut down a military installation, it is economically devastating to the adjoining communities.

With the Gas Price Act, what we have done is provide that if you have been shut down as a military installation, we could provide assistance through the Economic Development Administration for cities--if they are so inclined--to make applications so that they can turn these closed bases into refineries. I thought when we developed this thing that it wouldn't be a problem at all because no one should be against it. Everyone knows we have to increase our refining capacity. We offered amendments on this bill to streamline the process. Also, if people changed their minds in communities, they would be able to stop this from taking place. States have a significant, if not dominant, role in permitting existing or new refineries. Yet States face particularly technical and financial constraints when faced with these extremely complex facilities. So my Gas Price Act requires the administrator to coordinate and concurrently review all permits with the relevant State agencies to permit refineries. This program does not waive or modify any environmental law and consequently should not have had anyone in opposition to it.

Now, we brought it twice to the floor--three times to the floor and twice we had votes--and right down party lines, every Democrat voted against the Gas Price Act. All we wanted to do, along with the local governments and local communities, was to build refineries so that we could refine what will hopefully be someday an increase in capacity so we will not be reliant upon foreign countries for our ability to run this machine called America, but we would be able to produce our own energy. I think it is important that every time we talk about increasing production, which we just have to do, we also have to talk about the refining capacity. We are all ready to go, I say to my good friend from Colorado, with the Gas Price Act if we are able to move in that direction. I believe that over the Memorial Day recess, when everybody is out there driving and people are much more sensitive to the price of gas, they are going to look back and say: You know, maybe the Republicans were right all of those years; maybe we should be increasing our supply, as the Senator from Alaska put it, of gasoline and oil produced in America.

I yield the floor.

The PRESIDING OFFICER. The Senator from Colorado is recognized.

Mr. ALLARD. Madam President, I wish to thank the Senator from Oklahoma on this particular issue. I also wish to thank the last speaker, Ted Stevens of Alaska, for his leadership in making sure we have adequate energy for the American people. Right now, we are falling short. The reason for that is this Congress. It is not business where we should assert blame; it is not the stock markets we have heard blamed on this floor, or the futures market. It is simply because Congress has been tying up these reserves and not providing the incentives we need to move ahead with oil refineries and to make supplies available on the market. This is a supply-and-demand issue. The demand in this country is exceeding the supply. If we want to become less dependent on foreign oil, we need to do more than what we have done historically.

(The remarks of Mr. Allard pertaining to the introduction of S. 3062 are printed in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. ALLARD. Madam President, I yield the floor.

The PRESIDING OFFICER. The Senator from Oklahoma is recognized.

Mr. INHOFE. Madam President, first of all, I agree wholeheartedly with the comments and the legislative ideas my friend from Colorado has. Again, it is a great frustration that we have tried so hard for so many years to expand our supply here in this country. Hopefully, now, one of the benefits we will get from the high price of fuel is the recognition that we have to start producing our own energy in this country. That is what we should be doing. Hopefully, after this holiday, when we get back, enough people will have spent enough money driving around and there will be enough political pressure that we can get people to agree to start drilling in ANWR, drilling offshore, drilling in the shale area, and experimenting in some of these areas where we could become totally self-sufficient in America.

 

 





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