Addressing High Gas Prices
Floor Speech
ADDRESSING HIGH GAS PRICES -- (Senate - June 12, 2008)
BREAK IN TRANSCRIPT
ENERGY
Mr. SANDERS. Madam President, a few months ago I asked my constituents in the State of Vermont, and it turns out people around the country, a very simple question. We sent out an e-mail and said: Tell me, what does the decline of the middle class mean to you personally? Not in great esoteric terms, not in academic terms--What is going on in your life? Frankly, in my State we expected to receive a few dozen responses. We ended up receiving over 700 responses.
Then I asked people in Vermont and also around the country: Tell me what these high gas and oil prices mean to you. We received 1,100 e-mails that came in, 90 percent from Vermont but some from around the country.
I want to do two things this afternoon. I want to read, in the words of ordinary people, what these high gas and oil prices are meaning, in terms of how they impact their lives; and what the decline of the middle class means in the words of people who are in the midst of that decline.
For many years I have been very angry about the Bush administration talking about how strong the economy was, how robust the economy was. That is like the operation being a success except that the patient died. The economy has been so great except that the working people in the economy are seeing a decline in their standard of living. What we are seeing, generally speaking, in the economy is poverty increasing, the middle class shrinking, while the people on top have never had it so good since the 1920s.
Let me read some e-mails that came to my office within the last several months, mostly from Vermont but occasionally from other parts of the country. This is what we heard recently:
I am a single mother with a 9-year-old boy. We lived this past winter without any heat at all. Fortunately, someone gave me an old wood stove. I had to hook it up to an old unused chimney we had in the kitchen. I couldn't even afford a chimney liner--the price of liners went up with the price of fuel. To stay warm at night my son and I would pull off all the pillows from the couch and pile them on the kitchen floor. I would hang a blanket from the kitchen doorway and we would sleep right there on the floor.
State of Vermont, United States of America, 2008.
Another letter:
My 90-year-old father in Connecticut has recently become ill and asked me to visit him. I want to drop everything I am doing and go visit him, however I am finding it hard to save enough money to add to the extra gas I will need to get there. I am self-employed with my own commercial cleaning service and money is tight, not only with gas prices but with everything.
In other words, here is an instance where a 90-year-old father is ill and a son cannot even visit him because of the high price of gas.
Another story:
My husband and I are retired and 65. We would have liked to have worked longer but because of injuries caused at work and the closing of our factory to go to Canada, we chose to retire earlier. Now with oil prices the way they are we cannot afford to heat our home unless my husband cuts and splits wood--which is a real hardship as he has had his back fused and should not be working most of the day to keep up with the wood. Not only that, he has to get up two or three times each night to keep the fire going.
Another story:
I, too, have been struggling to overcome the increasing cost of gas, heating oil, food, taxes, et cetera. I have to say this is the toughest year financially that I have ever experienced in my 41 years on this Earth. I have what used to be considered a decent job. I work hard, pinch my pennies, but the pennies have all but dried up. I am thankful my employer understands that many of us cannot afford to drive to work 5 days a week. Instead, I work 3 15-hour days. I have taken odd jobs to try to make ends meet.
Another story:
I am 55 years old and worse off than my adult children. I have worked since age 16. I do not live from paycheck to paycheck, I live day to day. I can only afford to fill my gas tank on my payday. Thereafter, I put $5, $10, whatever I can. I cannot afford to pay for the food items that I would. I am riding around daily to and from work with a quarter of a tank of gas. This is very scary as I can see myself working until the day that I die.
Another story:
I am a working mother of two young children. I currently pay, on average, about $80 a week for gas so that I can go to work; $80 a week just to go to work. I see the effects of the gas increase at the grocery stores and at the department stores. On average I spend about $150 per week at the grocery store. And, trust me, when I say I do not buy prime rib, I buy just enough to get us through the week, and I cannot afford to make sure that we have seven wholesome meals to eat every night of the week. Some nights we eat cereal and toast for dinner because that is all that I have.
Another story. This is an interesting story because I am sure it applies all over the country:
As the chief of a small ambulance service, I have seen the impact of rising costs. As the service is made up of primarily volunteers, we have seen our numbers decline. When soliciting for volunteers in the community, we have been told that they are unable to put the time in due to the need to work more to pay their bills.
Our costs associated with running an ambulance
--this is a volunteer ambulance service--
have also risen in the last few years. When discussing with our supplier fuel prices, they play a large part in the increase both to the manufacturer and to transport.
Here is another story. This is just incredible. It reminds us of all of the ways that this increase in gas and oil is impacting our people and our communities. Here is this story:
My story involves my capacity as an oncology social worker working with cancer patients in an outpatient clinic. I also run an emergency fund through the Cancer Patient Support Program which provides funds to cancer patients in need during their cancer journey, including the initial diagnosis, surgery, and treatment period in which they experience a significant decrease in income during a medical leave.
This is an oncology worker at a hospital.
I cannot describe how devastating it has been for these folks who need to travel great distances to get to and from their cancer treatment and followup care with the way gas prices have been. Many of these folks need to travel on a daily basis to radiation therapy for several weeks, while others come from surrounding counties every 1 to 2 weeks for chemotherapy. The high price of gas has had a tremendous impact on our ability to provide the financial assistance to our emergency fund to all of those in need.
Imagine someone living in a rural area dealing with cancer, dealing with chemotherapy, dealing with radiation, sick as a dog, worried about the future, and then having to worry about how they can afford to get to the hospital to get the treatment they need.
Another letter:
First of all, I am a single mother of a 16-year-old daughter. I own a condominium. I have worked at the hospital for 16 years and make a very good salary, in the high $40,000 range. I own a 2005 Honda Civic. I filled up my gas tank yesterday, April 1. It cost me almost $43; that was $3.22 per gallon. That was on April 1. If prices stay at that level it will cost me $160 per month to fill up my gas tank. A year ago it cost me under $20 to fill up my tank.
On and on it goes. I think the message is that high gas and oil prices are having a devastating impact on tens of millions of Americans in every aspect of their lives and on our economy. As bad as it is all over this country, it is especially bad in rural areas where people have to travel long distances to work, and it is especially devastating in cold States where people have to spend a huge amount of money for home heating oil.
It seems to me it is absolutely imperative that we get our act together and that we do everything we can to lower the price of gas and oil. In that regard, let me talk a little bit about some of the events that have taken place on the floor of the Senate in the last couple of days.
I think it is interesting that many Americans have already given up on any belief that the Bush-Cheney administration even understands the problem, let alone is prepared to do anything about it. It is amazing that no one even looks to the White House for leadership on this issue, and for appropriate reasons; that is, because Bush-Cheney, from the day they have been in office, have been much more concerned about the profits of large multinational corporations, including the oil companies, than the needs of ordinary Americans.
There are a few points that I want to focus on at this time. First, it is a national obscenity that at a time when oil prices are off the wall, when people are paying over $4 for a gallon of gas, at exactly this same moment the major oil companies are enjoying recordbreaking profits and are giving their CEOs outrageous compensation packages.
It seems to me that while there are multiple causes for why oil and gas are soaring, one of the reasons certainly has to do with the greed of these huge oil companies. And the time is long overdue for the Congress to say enough is enough and stop ripping off the American people.
During the last 2 years, ExxonMobil has made more profits than any company in the history of the world, making over $40 billion in profits last year alone--$40 billion, one company.
But it is not only ExxonMobil; Chevron, ConocoPhillips, Shell, and BP have also been making out like bandits. For example, in the first quarter of this year, BP announced a 63-percent increase in their profits--a 63-percent increase in their profits--and people are paying over $4 for a gallon of gas.
As a matter of fact, the five largest oil companies, the five largest companies in this country, have made over $600 billion since George W. Bush has been President; 7 years, $600 billion in profits.
Let me mention what these large oil companies have been doing with some of their profits. In the year 2005, Lee Raymond, who was then the CEO of ExxonMobil, received a retirement package of $398 million. Let me repeat that. Former CEO leaves his position, retirement package of $398 million.
Workers all over this country, as indicated in the letters that I have read, are finding it harder and harder to fill their gas tank and get to work.
In 2006, Ray Irani, who is the CEO of Occidental Petroleum--that is the largest oil producer in the State of Texas--received over $400 million in total compensation, one of the biggest single-year payouts in U.S. corporate history.
People here tell us, often my friends on the other side of the aisle say: Well, we have to trust the oil companies. They really are concerned about the American people.
I do not think so. I think one has to be very naive to believe companies in the midst of this energy crisis, when people are struggling with these very outrageously high prices, when these companies are giving hundreds of millions of dollars in compensation packages to their CEOs, and then they tell us that the oil companies are concerned about the American people. I do not think so. I really do not.
The situation is so absurd that there was an article the other day in the Wall Street Journal. Not only are these companies giving huge compensation packages to their CEOs, they now have a deal that if the CEO dies while he is CEO, their heirs and families will receive huge compensation packages.
According to the Wall Street Journal a couple of days ago, the family of Ray Irani, the CEO of Occidental Petroleum, will get over $115 million if he dies while he holds that job. The family of the CEO of Nabors Industries, another oil company, will receive $288 million.
Meanwhile, in the northeastern part of this country people are saying: How am I going to stay warm this winter? Prices of home heating oil are soaring.
We need a windfall profits tax on the oil industry. We need to tell them: Enough is enough. The windfall profits tax on the oil industry is not the only thing that we should be doing. We need to take a hard look at speculation that is taking place in the industry.
As you well know, as I think the American people increasingly know, there are estimates out there that as a result of the activities of major financial institutions, such as Goldman Sachs, Morgan Stanley, JP Morgan Chase, and others, there are estimates that between 25 and 50 percent of the cost of a barrel of oil today has to do with speculation in oil futures.
Earlier last week, George Soros told the Commerce Committee that rampant speculation in oil and gas futures is ``intellectually unsound and distinctly harmful in its economic consequences.''
We have had representatives in the oil industry themselves who have told us that speculation is one of the reasons oil prices are so high. Mark Copper with the Consumer Federation of America told the Commerce Committee last week that the speculative bubble in the price of oil has cost the U.S. economy over a half trillion dollars over the past 2 years and has cost U.S. families an average of a $1,500 increase in gasoline and natural gas costs.
So I think those are two areas at which we have to take a hard look. Now, in terms of speculation, people say: Well, this sounds like a conspiracy theory. Well, let's talk about some recent history. In 2000 and 2001, as the American people well know, especially the people on the west coast, Enron successfully manipulated the electricity markets and drove up prices by 300 percent.
Now, what was interesting is during the debate over this terrible tragedy on the west coast, what was Enron saying? They were saying: The reason that prices are going up is supply and demand. It is the natural forces of the market. Do not blame us.
That is what they said. I guess that is what some of the guys who are now in jail, after being convicted for massive fraud, told the public.
It was not supply and demand, it was excessive manipulation. But it was not only Enron in 2000 and 2001, in 2004, energy price manipulators moved to the propane gas markets. That year the Commodity Futures Trading Commission found that BP artificially increased propane prices by purchasing ``enormous quantities of propane and withholding the fuel to drive prices higher.'' That was the Commodities Future Trading Commission.
By the end of February of 2003, BP had almost 90 percent of all propane delivered on a pipeline that stretches from Texas to Pennsylvania and New York. BP's cornering of the propane market caused prices to increase by 40 percent during the month of February 2004. And as a result of their illegal actions, our friends at BP paid a $303 million fine.
So we have Enron, those guys are in jail, having caused severe economic damage on the west coast. We have BP, a major oil company, paying a $303 million fine.
But it goes on. In 2006, 2 years ago, energy manipulators moved to the natural gas market, when Federal regulators described that the Amaranth Hedge Fund was responsible for artificially driving up natural gas prices.
Amaranth cornered the natural gas market by controlling as much as 75 percent of all of the natural gas futures contracts in a single month. The skyrocketing cost of natural gas cost American consumers an estimated $9 billion. I should point out that the Amaranth hedge fund eventually collapsed, as a result of their illegal activity.
When people say, let us take a hard look at speculation, this is not conspiracy theory. This is based on some very real economic realities which have taken place in the last few years.
Today, the price of oil has more than doubled over the past 14 months. We need to find out who is manipulating oil and gas prices. Right now, oil and gas futures are largely traded on unregulated markets and enormous conflicts of interest exist between investment bank analysts, energy traders, and employees involved with oil and gas infrastructure.
The Commodity Futures Trading Commission has the authority and responsibility to prevent fraud, manipulation, and excessive speculation in U.S. commodity markets. Unfortunately, this authority and responsibility has largely been abdicated through the use of over-the-counter energy derivatives that are largely unregulated and by foreign boards of trade that have received no action letters from the CFTC to operate terminals inside the United States, trading U.S. commodities to U.S. investors free from regulatory oversight. It is pretty complicated stuff. But the bottom line is, huge amounts of money in oil futures are being traded in an unregulated, below-the-radar-screen market, and we don't know who is controlling what.
Congress needs to end what some have referred to as the ``Wild West'' of energy trading by requiring anyone operating a trading terminal in the U.S. trading U.S. commodities to U.S. investors to register with the CFTC and be subject to CFTC oversight. We also need to substantially increase margin requirements for these trades to make it harder for speculators to manipulate oil prices.
In addition, major conflicts of interest exist in the commodities markets. Goldman Sachs and other large financial institutions seem to have a corner on virtually every sector of this market. When Goldman Sachs and Morgan Stanley predict the price of oil will go up, so do their profits in the oil futures market. When ExxonMobil wants to sell or buy oil in the futures market, they go to Goldman Sachs or other large financial institutions. When Sovereign Wealth Funds, pension funds, or smaller dealers want to invest in energy derivatives, Goldman Sachs and other investment banks facilitate those trades. Goldman Sachs, Morgan Stanley, BP and other major institutional investors even co-founded the InterContinental Exchange that now trades West Texas Intermediate crude oil to U.S. investors free of U.S. regulatory oversight.
And when Morgan Stanley and other investment banks need insider knowledge of the heating oil market to benefit their traders, they physically purchase large quantities of heating oil for storage and delivery. This is an issue that I am paying particular attention to. Heating oil prices right now are skyrocketing. Right now, fuel dealers in my State have told me that the residential price for heating oil would cost about $5 a gallon. If heating oil prices keep climbing there are a large number of my constituents who are in danger of freezing to death. We cannot let that happen.
I want to know why heating oil prices are high right now and if Morgan Stanley or others are manipulating these prices through excessive speculation. We have got to get heating oil prices to go down before winter.
We need to end these massive conflicts of interest in the energy markets. There are a number of ideas that I am exploring on this issue, but for starters, I strongly believe that the commodities market should have similar laws prohibiting insider trading that our securities market currently has.
Further, we must once and for all begin to break up OPEC. OPEC is an illegal price-fixing cartel that is clearly in violation of international trade rules. The high price of oil is expected to increase OPEC's crude oil export earnings by more than $300 billion this year to a record of over $1 trillion. That is an astronomical figure.
The time has come for the President to file a complaint with the World Trade Organization and demand the dismantling of OPEC. The ending of collusion with regard to oil production will result in increased production and lower oil prices.
Finally, and perhaps most importantly, over the long term we need a strong program to break our reliance on fossil fuels once and for all. That means transitioning electricity generation away from fossil fuel power and demanding automobiles that get substantially more miles per gallon. Plug-in hybrid prototypes currently get in the range of 150 miles per gallon. We need to get them out of the laboratory and onto the roads. We also have to invest heavily in mass transit, including rail and rural bus transportation. These steps can help break the power of the big energy companies, reduce damage to our environment, and create millions of good-paying, green-technology jobs across the country.
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, and ExxonMobil, greedy speculators, and OPEC are allowed to make out like bandits pushing oil and gas prices higher and higher. The time for action is now. We need to lower gas prices.
That is something we must address, if the Congress is going to gain, perhaps once again--hopefully regain the confidence of the American people that we understand what is going on in their lives, we understand the absolute necessity of addressing this crisis of high gas and oil prices, that we understand the necessity of transforming our energy system away from foreign oil and our dependence on foreign oil, away from fossil fuels which is causing so many problems in terms of global warming, that we understand that the potential for moving toward energy efficiency, toward sustainable energy such as wind, solar, geothermal, biomass is sitting there right in front of us.
Yesterday there was a conference right here in Washington where people were talking about plug-in hybrids that get 150 miles per gallon. These are the kinds of developments we need. There has been a lot of discussion about a so-called Manhattan project. I believe in it. I think if we focus and are aggressive and are prepared to transform our energy system, take on the big, powerful special interests, we can not only create millions of good-paying jobs, we can reverse global warming. We can address environmental concerns. That is what we have to do.
The challenge we face is to understand that the oil industry and the coal industry have put hundreds of millions of dollars into lobbying, campaign contributions, advertising. They are very formidable folks. They want the status quo. We have been represented by the people, presumably not by the special interests. Our job is to represent ordinary people. I hope we can do that. If we do the right thing, I believe not only can we lower gas and oil prices today, we can transform our energy system and create a much better tomorrow for our kids and grandchildren.
I yield the floor and suggest the absence of a quorum.
BREAK IN TRANSCRIPT
Source