TIME TO HOLD OPEC NATIONS ACCOUNTABLE -- HON. BENJAMIN A. GILMAN (Extensions of Remarks - September 25, 2000)

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HON. BENJAMIN A. GILMAN OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Monday, September 25, 2000

Mr. GILMAN. Mr. Speaker, while our nation is suffering from a severe energy crisis, the American people are losing the battle on two fronts--they are being held hostage by OPEC and its policies, and they are the victims of the current Administration's inability to formulate a coherent, strategic, prospective, short and long term energy policy. With oil prices at record levels and rising towards 40 dollars per barrel, the time for ``quiet diplomacy,'' as Energy Secretary Richardson refers to the Administration's dealings with OPEC, is over! This crisis comes at a time when total U.S. reserves are at a 24-year low of 1.53 million barrels from 1.63 million barrels a year ago, according to the Energy Information Agency.

With the recent decision by the Administration to release 30 million barrels in the Nation's Strategic Petroleum Reserve it is hopeful that we are at long last beginning to take the first steps needed to achieve this much-needed policy overhaul.

It is imperative that the Administration more effectively address these issues. Our hard working people are being strangled, not only by oil prices, but by overall energy prices. There is not a person or a business in our
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country that is not affected, or is going to be affected, by the outrageous, prohibitive costs of energy in the coming months.

In its ``Short Term Energy Outlook for September'', The Energy Information Agency reports, ``Unless the winter in the Northeast is unusually mild and/or world crude oil prices collapse, substantial price gains for heating oil and diesel fuel are highly likely.'' What the Agency is saying to the American people is we should hope that oil prices, that are at 10 year record levels will collapse, which is highly unlikely, and wish for a mild winter--and that is absurd!

Once again, it appears that mother nature dictates the Administration's energy policy, rather than the Administration being pro-active, creating and implementing both a short and long term energy policy that takes and plans for winter weather rather than hoping for mild weather. Our nation deserves better!

The United States imports 55 percent of its crude oil. OPEC produces 40 percent of the world's oil supply. In 1999, more than 50 percent of the crude oil imports into the United States came from OPEC members. This places the United States in the precarious position of relying on foreign powers to fulfill our crude oil requirements. Many of the oil producing nations are ``states of concern,'' whose national interests run counter to our own. In a recent publication of the Clean Fuels Development Coalition, former director of the Central Intelligence Agency R. James Woolsey believes that our dependence on foreign oil is one of the three major threats to the national security of the United States. The American people must find this as troubling as my colleagues in the Congress do.

Ten years ago, our nation, sacrificing American blood and resources, intervened in the Persian Gulf to quell the invasion of Kuwait by Saddam Hussein's Iraqi forces. At that time the price of oil rose to the record levels we see today!

Today, our nation is under attack from OPEC. While the cartel promised to increase oil production by 800,000 barrels per day commencing on October 1st, there is no way we can verify what they are actually producing. There must be more transparency and accountability in OPEC's dealings with the United States.

Furthermore, with all the saber rattling over the latest dispute over oil between Iraq and Kuwait, the next time we are asked to intervene in the Persian Gulf, perhaps we may not act with the same timing or speed as we did ten years ago to prevent that aggression!

OPEC is aware of the gravity of the situation as evidenced by OPEC President, Venezuela's Oil Minister, Ali Rodriguez' statement, [that] ``we are approaching a crisis of great proportion because oil production capacity is reaching its limit.'' The cartel is fully aware that an increase by 800,000 barrels is not enough--by half--to bring down the price of crude oil to a reasonable level for both consumers and producers alike. It is regrettable that by the time additional measures are taken by OPEC, it will be too late to bring down the price of oil for this winter when the cost of heating oil, a distillate of crude oil, is already 51 percent higher than the average cost for last fall and winter, (The New York Times (9/12/00).

While we are under attack from OPEC, and with the Administration standing by, I introduced two bills that hold the OPEC nations liable and accountable. My foreign Trust Busting Act (H.R. 4731), will allow lawsuits to be brought against foreign energy cartels, where previously, courts threw out these lawsuits because such suits would impede the carrying out of the President's foreign policy program, and would embarrass the administration. My International Energy Fair Pricing Act (H.R. 4732), directs the President to make a systematic review of its policies and those of all international organizations and international financial institutions, such as the IMF and the World Bank, to ensure that they are not directly or indirectly promoting the oil price fixing activities, policies and programs of OPEC. If they are, the U.S. representative would not support any loan, support of a project or program, or to any financial support. Furthermore, along with my colleagues I co-sponsored the following legislation: H. Con. Res. 273, urging President Clinton to release the Strategic Petroleum Reserve (SPR) to mitigate the high heating oil and gas prices; H.R. 3608, the Home Heating Oil Price Stability Act; H.R. 2884, Energy Policy and Conservation Act, which authorizes the Department of Energy to establish, maintain, and operate a Northeast home heating oil reserve; and to the Sanders-Shays-Markey-LoBiondo-Strickland Amendment to the Interior Appropriations to establish a home heating oil reserve.

As a direct result of the work and hearings on the oil/gas crisis that the Congress undertook this past winter, the Secretary of Energy at the direction of the President, announced on July 10, 2000, that a heating oil component of the Strategic Petroleum Reserve (SPR) is to be established in the Northeast to protect the American people from the possibility of fuel shortages in the upcoming winter.

In addition, I have called upon the President, the Secretary of Energy and the Secretary of State, urging them to intervene and put an end to this crisis, now! I have been pursuing this point in meetings with representatives of the OPEC nations in the United States. I intend to continue to pursue a strategic, coherent energy policy by this Administration that makes sense for the American people.

We need a pro-active Administration rather than a reactive one. Since the beginning of the Clinton-Gore Administration domestic oil production is down 17%, while the U.S. dependency on foreign oil is at an all time high. We need to be exploring alternative energy sources, the use of coal, the use of hydroelectric power, of biomass, geothermal, photovoltaic, solar thermal and wind, utilizing ethanol, creating a system of electric reliability, increasing the exploration and supply of natural gas, and retrofitting or building cost efficient oil refineries. In addition, we need to utilize government land for responsible oil and natural gas exploration. The API advocates that an effective national energy policy, must at a minimum allow for all of the above.

For their part, the American people must harness their creative spirit by car pooling, using mass transportation where available, contacting their local utilities to find out how to become more energy efficient, and by demanding that the Administration develop and implement a coherent, strategic, and prospective, short and long term energy policy. Such a policy in the short term must include taking heed to bi-partisan calls for a release of the Strategic Petroleum Reserve to mitigate the outrageous and prohibitive cost of oil. Additionally, the Administration must meet bi-laterally with representatives of OPEC member nations, and tell them to end this crisis--and to do it now!

Mr. Speaker, I submit into the RECORD the two recent letters that I sent to President Clinton regarding OPEC and the oil crisis:

Congress of the United States, House of Representatives,

Washington, DC, September 8, 2000.
President WILLIAM J. CLINTON,

The White House, Washington, DC.
DEAR MR. PRESIDENT:
The United States imports 55 percent of its crude oil. OPEC produces 40 percent of the world's oil supply, placing the United States in a precarious position of relying on foreign powers to fulfill our crude oil requirements. Many of these oil producing nations are ``states of concern'' and have national interests that run counter to our own. In a recent publication of the Clean Fuels Development Coalition, former director of the Central Intelligence Agency, R. James Woolsey believes that our dependence of foreign oil is one of the three major threats to the national security of the United States.
By September 8, 2000, it will be 20 days that oil prices are above $28 per barrel and will trigger OPEC's price band mechanism. This mechanism mandates that OPEC produce an additional 500,000 barrels per day. Regrettably, this additional production will do little to reduce, and contribute to stabilizing crude oil prices. In fact, in its Short-Term Energy Outlook, the EIA projects that imported crude oil will remain above $28 per barrel for the remainder of the year. Even if OPEC agrees to increase its production at its meeting on September 10th, the EIA reports that ``only Saudi Arabia, Kuwait, and, to a lesser degree, the United Arab Emirates will have significant capacity to expand production.'' Analysts report that if OPEC increases total production by one-million barrels per day, the oil would not be available to consumers until mid-November, 2000, and will do little to prevent further spikes in imported oil prices this year.
Mr. President, while you have expressed concern and encouraged OPEC to raise output at the United Nations Millennium Summit, I urge you to use the full powers and resources of your office to mitigate this crisis with the OPEC 10 before its meeting on September 10, 2000. Thank you for your urgent attention to this matter of grave concern to the people of our country and to the national security of the United States.
Sincerely,

Benjamin A. Gilman,

Member of Congress.

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Congress of the United States, House of Representatives,

Washington, DC, September 13, 2000.
President WILLIAM J. CLINTON,

The White House, Washington, DC.
DEAR MR. PRESIDENT:
OPEC is aware of the gravity of the situation, as evidenced by OPEC President and Venezuela's oil minister Ali Rodriguez' statement, ``[that] we are approaching a crisis of great proportions because oil production capacity is reaching its limit.'' In the midst of this crisis, OPEC's increase will not even go into effect until October 1st. OPEC agreed to meet again on November 12th to reassess ``market conditions,'' with full knowledge that its increase was a trivial gesture towards reducing prices of imported crude oil. As reported in The New York Times (9/12/00), heating oil is at record levels, its highest price in a decade--now 51 percent higher than the average for last fall and winter. Some analysts believe that imported crude oil may further spike at $40 dollars per barrel. Conservatively, it will take a minimum of 6 weeks to ship the increased oil to the United States and another week to 10 days to refine it. Mr. President, we are looking at early December before the oil (and its by-products) will be available to consumers. In real terms, OPEC's increase is too little, too late to alleviate the astronomical and nearly prohibitive cost of home heating oil that confronts the hard working people of our country.
Parts of Europe are in a state of paralysis over this crisis, and in England, Prime Minister Blair authorized the use of the military to quell protesters. In our own country Mr. President, this crisis is grave enough that there are calls to release oil from the Strategic Petroleum Reserve (SPR) which is maintained for use during wartime and national emergencies. This crisis comes at a time when total U.S. reserves are at a 24-year low of 1.53 million barrels from 1.63 a year ago according to the Department of Energy's Energy Information Agency (EIA).
Mr. President, this grave crisis calls for strong measures in dealing with OPEC, and therefore it is imperative that you use the full powers and resources of your office in showing OPEC that its good faith gesture, is not good enough for the people of our country. Mr. President, I will welcome any plans that the Administration is developing to resolve this oil crisis, and I thank you for your urgent attention to this matter.
Sincerely,

Benjamin A. Gilman,

Member of Congress.

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