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Mr. MURKOWSKI. Mr. President, I rise to share with my colleagues the plight of our independent truckers who are here in Washington, many of them, expressing their frustration as a consequence of the high increase in the cost of diesel oil. These are individuals who own their own trucks, for the most part, and supply this country with untold tons of food and various other supplies, virtually everything we need.
This is a mobile society and we are dependent on energy to move us. The price of that energy has increased dramatically.
I have yet to hear from the administration expressing any of their concerns, as a consequence of this demonstration by the independent truckers who are trying to bring a focus to what kinds of relief the administration is proposing because every indication is we are going to see higher oil prices, higher energy prices. There are some reasons for this. One of them is we have an increased dependence on imports of oil. We are currently 55-percent dependent on import oil. Most of these imports are coming from the Mideast.
In the world of the oil market, the United States is certainly a giant consumer but, a bit player. The Organization of Petroleum Exporting Countries really calls the tune, and the U.S. generally has to pay the piper. That organization is known by all of us as OPEC. There are 11 countries that make up OPEC, and they produce more than 40 percent of the world's oil and possess three-fourths of the world's proven reserves. The United States, as I indicated, imports 55 percent of the oil we use, or about 10.5 million barrels out of the 19.3 million barrels of oil consumed in the Nation in each and every day.
The point I want to make is this is not just a one-time incident. If you go back to 1973, some of you will remember the lines around the block at the gas station. At that time, we had an Arab oil embargo. However, at that time, we were 36-percent dependent on imported oil, and we created the Strategic Petroleum Reserve. We said we would never expose ourselves to near 50-percent dependence on foreign oil. Today, we are 55-percent dependent, as I have indicated, and growing. It is our own Government's policies, or lack of policies, both local and national, that have handicapped our domestic industry. The result is consumers from New York to Oregon are paying the price. The truckers who are in Washington today, are paying the price, but not without some loud howls, seeking some Government relief. Several of these self-imposed handicaps are correctable if we would only wake up to a few realities.
On the production side, we have banned oil exploration off a good portion of our coastline, including California and Florida, because a majority of these States oppose it. They have every right to oppose it, and we should honor it. However, we refuse to consider exploration in many areas where clearly it is supported, such as in some areas of Texas, Mississippi, Louisiana, and my State of Alaska.
We should, in these areas where the public supports exploration, get an aggressive leasing plan and proceed to open up these areas, using the advanced technology we have and getting on with the task of lessening our dependence on imported oil.
The Arctic National Wildlife Refuge in my State of Alaska has often been mentioned as a potential for major oil discovery. From the standpoint of my State of Alaska, we have supplied this country with nearly 20 percent of the total crude oil produced in the last 27 years. We have done it through a pipeline and a development process that has been safe. The tragic accident of the Exxon Valdez was a tanker accident that had nothing to do with the production or transportation of oil by pipeline.
The Arctic National Wildlife Refuge consists of 19 million acres. The assumption is that the entire 19 million acres is going to be open for exploration. That is not correct. Congress has set aside 8 million acres of that tract in wilderness in perpetuity that can never be disturbed. Another 9.5 million acres have been
set aside in a wildlife refuge. No development is allowed or is going to be allowed. The remainder of that 19 million acres is 1.5 million acres which geologists have identified as holding as much as 16 billion barrels of oil which would or could replace Saudi oil coming into the United States for the next 30 years. It is not a drop in the bucket by any means.
Where is this administration going with regard to lessening our dependence on imported oil? It wants to raise taxes on the oil companies, saying the royalty valuation in the past has been unfair. Is that an incentive for exploration? I think not.
The President's current proposal in his budget calls for more than $400 million in new taxes on the oil industry. Who is going to pay those taxes? It is going to be the American consumer.
The consequences are evident. Since the Clinton administration assumed office, U.S. crude oil production has fallen by 17 percent, and during that period U.S. consumption of oil has gone up 14 percent. Why? Some people drive bigger cars than they used to. Some people like air-conditioning. Some people get on that jet airplane.
What has happened to the industry? Our drilling rigs have gone from 532 active rigs operating in 1990 to 133 rigs operating in 2000.
What is our policy? Our policy is to become more dependent on imports.
On the downstream side, domestic policy really is not any better. Some of my New York colleagues have concerned themselves about the high price of heating oil. I am sympathetic with those who are dependent on that energy source, but while I sympathize on the one hand, I also point out that a good portion of this is self-inflicted. Prices are high because stocks are low.
The State of New York itself reports that the petroleum bulk storage capacity has declined over the past 5 years by more than 15 percent, and the heating oil storage capacity has declined nearly 20 percent, largely due to environmental regulations. Those regulations may be well-founded, but the fact is they do not have either the storage for crude nor the storage they once had for heating oil. Of course, it has been a cold winter. When the heating oil supply is tight, many of my colleagues search for an excuse, while the answer is right in their backyard.
Moving over to suggested relief that has been proposed by opening up the Strategic Petroleum Reserve, which is our petroleum reserve in case of a national emergency, there is a suggestion that if we were to release that, somehow this would address the concerns we have over the high price of heating oil. Let me walk you through that scenario.
First of all, the SPR is for supply disruption emergencies. It is a crude oil supply in salt caverns in Louisiana. As a consequence, it has a limited capacity to get out that crude.
It is not heating oil. It is crude. So it has to be moved from SPR to refineries, be refined, and then go into the market.
The difficulty with this is the refineries have crude supplies. So if you bring in SPR crude, you are going to have to offset that with the crude they have at the refinery already. The difficulty is in the mix of what the refineries make. As a consequence of low stocks going into this winter, based on the assumption this would not be a cold winter, those inventories were low. Coupled with the reduction in the storage supply for the fuel oil--and then later we did have a colder winter; we all saw the Coast Guard breaking ice in the Hudson River--as a consequence of that, we could not meet the demand for heating oil, and the price went up to nearly $2 a gallon. That was indeed unfortunate.
Relief. The refiners continued to produce more heating oil. The weather
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The point I want to make is, SPR is not the answer because the simple reality is, you do not displace one type of crude oil with another. That does not relieve the problem. It is the mix within the refineries.
Now we have an administration that is petitioning them to still produce large volumes of heating oil even though there are indications the inventories are now adequate. The real threat is that they should be producing gasoline soon for the summer market. We could see a shortage of gasoline this summer and perhaps retail price increases in the neighborhood of nearly $2 a gallon.
We did a little comparison on the west coast, which is the area where I am from. We did a comparison for retail prices in three Western States and Alaska. We found California's regular gasoline was $1.38 per gallon; for Oregon's regular gasoline, it was $1.42 per gallon; for Washington's regular gasoline, it was $1.35 per gallon; and for my State of Alaska, it was $1.35 per gallon.
But when we talk about self-inflicted problems, we need to look at the taxes imposed on each gallon of gas within the four States.
California's tax burden is about 46.4 cents on the gallon; for Oregon, it is 45.4 cents per gallon; for Washington State, it is about the same. The taxes include Federal, State, and local taxes in the three States. California includes a sales tax, as well, and has the added burden of 5 to 8 cents a gallon its residents must pay for reformulated gasoline.
Oregon is a little different. It adds to its cost by banning self-service as an option at the pumps. In other words, you do not fill up your car in Oregon. Somebody does it for you. You pay for it. The estimated additional cost is about 15 cents a gallon.
But in Alaska, my State, the combined taxes are only 26 cents. Without taxes, my State of Alaska actually pays the highest price for gasoline of the four States; yet we produce it all--or a good portion of it.
Gasoline prices. If you take off gas taxes, take off the cost of additives, take off the cost in relation to whether or not somebody fills your tank, then you begin to be able to identify what the true costs are to the consumer for a gallon of gasoline.
My State of Alaska supplies 46 percent of the current stock to the west coast. But barrels of oil from Alaska are beginning to decline. We are producing little more than a million barrels a day. Virtually all of that is shipped to Washington and California; significant portions go from Washington to Oregon.
California's Senators object to any development in the Arctic. But without new development, the production will continue to decline, and it will be necessary for the west coast and their west coast constituents to purchase more oil from even more expensive sources, such as the Mideast. How are they going to get the oil in? In foreign tankers owned by foreign companies that clearly have more of an environmental exposure than our own domestic fleet.
Common sense tells us we should stop handicapping our industry. We should do this by encouraging exploration, development of our reserves, and not increasing taxes on this industry.
Oil development in my State can be done right. It is environmentally sound. It keeps land disturbance to a minimum.
To give you some idea, out of the 19 million acres of ANWR that we talked about, of the million and a half acres that Congress has the authority to open up--and I add, this body voted to open it up; and the President vetoed it a number of years ago--the footprint is estimated to be no larger than the footprint of the Dulles International Airport, assuming the rest of Virginia were wilderness. That is to give you some idea of the magnitude of what the footprint is. It is relatively small.
Again, I remind you that the estimates are that the ANWR area could produce more than 16 billion barrels of oil, which would equate to about what we bring in from Saudi Arabia over a 30-year period. Yet this administration would rather bolster the oil output of Saddam Hussein by lifting oil production limits in Iraq, which is what they have done. Should we really be placing our energy security on OPEC decisions?
The administration pursues policies that discourage investment within our borders, driving investment overseas, and our jobs overseas. If we are going to participate in this energy race, we are going to need to get in the game. If we choose to continue to drive oil production offshore, then we will have no room--or little room--to complain about the high price of that decision, or the insecurity of our future oil supplies.
There is no question in my mind that our national energy security is very much at risk. We still do not seem to get it. We do not understand the vulnerability of increasing our dependence on imports.
If we look over our shoulders at world crude markets, since 1997, we have gone from a low of $10 a barrel to $30 a barrel. To some extent, we have explained that this was due to the slowdown of the Asian economy, mild winters, and increased Saudi and Venezuela production. Then we have also seen OPEC kind of get its act together with self-discipline. It cut production 6 percent. They decided they would rather sell less oil but sell it higher than sell more oil and sell it lower.
Then we saw the Asian economy rebound. Winters in the U.S. got colder even with global warming. The thought from OPEC was: Wait a minute. We are going to hold off for a little while. We saw the low stocks as a result of this.
Of course, we have discussed the heating oil situation and SPR and OPEC and ANWR. But when we get back to what the administration is doing about it, we are still stuck with the reality that they are throwing more taxes at us--$400 million. They are not encouraging the industry to go out and drill, as evidenced by the reduction in drilling rigs.
Some of them say: We will simply go out and hook up to natural gas. The National Petroleum Council report indicated that is not going to be a viable alternative. They said that we consume about 20 trillion cubic feet of gas today. We will be consuming about 31 trillion cubic feet in the next 10 years. We do not have the infrastructure in to meet that demand. It is going to have to be an expenditure of about $1.5 trillion. Gas will not be cheap.
The Secretary of the Interior, Mr. Babbitt, won't make public lands available to produce natural gas. The Federal Energy Regulatory Commission puts up environmental roadblocks to building new gas pipelines to the Northeast. Where is the power going to come from?
Some would say hydroelectric. We have already seen the proposal by the Secretary of the Interior. He wants to tear down four dams in the Pacific Northwest. Now a FERC Commissioner, Commissioner Hoecker, claims that FERC has the authority to tear these dams down.
Moving over to coal, the administration is proposing to take a number of plants down through EPA decisions. Those were plants that were grandfathered in under the Clean Air Act, with the assumption that they would operate for a period of time. As the power industry has attempted to maintain those plants, they have been subjected to criminal prosecution by the EPA for extending the life of the plants. I am not debating the issue of, if you stay within your permit by continuing to maintain your plant at a level that you have to, whether you are extending the life of that plant or not. But that is the dilemma for the coal industry.
We have already debated for days the reality and role of the nuclear industry, the fact that it contributes 20 percent of the power in this country. The administration does not want to address a solution on its watch. It would just as soon let the industry choke on its own waste. While we had 64 votes the other day, we were still a few short of a veto override, and the President threatened to veto the legislation that would address, temporarily, relief so our nuclear industry could continue to produce power.
With the attitude of the administration, it is evident that in the area of nuclear, coal, hydroelectric, there are simply no alternatives being proposed. I suggest to the Senate that is an irresponsible attitude. It seems all this administration wants to do is to hang on until it is over--and I can't wait--in
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It is going to get more serious. OPEC would like to see oil at somewhere between $20 and $25; that is good for OPEC. I suppose now that it is $30, it might be good for the United States.
OPEC is having a meeting in March, but some economists suggest it is too late. We are going to be increasingly exposed to increased gasoline prices this summer. Some suggest we are going to be subjected to $40 oil, if Saddam Hussein chooses to cut off his supply in protest of United Nations sanctions. Here we are in the United States, dependent on what Saddam Hussein might do to his oil production that could affect our price of energy. Incredible, Mr. President, incredible, but nevertheless true.
As I have indicated, the past year alone, oil has tripled in cost to $30 from less than $11; heating oil, nearly $2 a gallon; our airline tickets, $20 surcharge. One of these days when you go to fill up that sports utility vehicle, it is going to cost you $60 to fill your gas tank.
People in this technological age wonder what the role of oil is. Is oil energy king? Well, let's look at inflation. We hear Chairman Greenspan worry about inflation, about oil prices increasing. The Secretary of Energy, in the meantime, tours six oil-producing nations. He says he can't ignore the potential for oil to have an impact on inflation. He says what OPEC does matters, and it sure does. I think we are at a point of reckoning where oil has reemerged as a political and economic threat to our
economy.
Now, here we are, looking at dependence on Mideast oil-producing countries, and we are asking them to change their cash-flow to accommodate us and increase production. I wonder if they will be inclined to do that.
If we look at some of the realities associated with inflation, I think we have to look over our shoulder and recognize what happened in the past. Many people don't remember the gas lines in 1973. December of 1980, inflation in this country was 11 percent; the prime rate was 20.5 percent. People started to wake up. Are they waking up now? The signs are there. Is OPEC willing to sacrifice windfall oil profits to help keep economic growth on track in the United States, Europe, and Asia at their own expense? I happen to believe that charity begins at home. We have become dependent on OPEC. Can we be dependent on them increasing the supply of oil?
A source of information from the International Energy Agency says that OPEC will have to increase by 10 percent just to keep up with world demands. If they don't want to keep up with world demands, the price goes up, doesn't it? That will increase production somewhere between 4.5 and 12 percent, or between 1.2 and 3.1 million barrels per day.
A lot of people don't realize how long it takes for a barrel of oil from the Mideast to reach their gas station. It is roughly 6 weeks. If we go into this summer with the current forecast we are getting, we will see gasoline at $2 a gallon. We depend on oil to keep us warm, for travel, for our homes, sport utility vehicles, on and on, and we are concerned about prosperity. We are concerned about inflation.
There was an article by Daniel Yergin with the Cambridge Energy Research Association, an expert on oil. He indicated there are three things that can get people concerned about inflation and spook the stock market. When I highlight them, you will agree they are here.
It is the price and availability of labor. It is the cost of money or interest rates that are on the rise. And it is the increased price of oil.
We are starting to move. Mark my words, the Organization of Economic Cooperation and Development has estimated that every $10 rise in the price of oil lifts inflation by 1/2 percentage point and reduces economic growth by 1/4 percent. If that isn't what is happening right now, I will trade places with the President of this body. Oil prices have accounted for the doubling of inflation, to 2 percent from 1.1 percent in the last year.
I quote Chairman Greenspan:
I've been through too many oil shocks to not take them seriously. If price changes, it impacts the economy.
These are a few of the highlights of where the United States is, why the truckers are circulating in Washington, DC.
What is this administration doing about it? They are kowtowing to the Arab world. They are wringing their hands. They have no positive suggestions. Least of all, they have not made one single statement to encourage domestic exploration and production in this country. One wonders what you learn by history; some people say ``not much.'' If you look over your shoulder at where we were in the early 1970s with the Arab oil embargo, where we are today--and, of course, in the interim we fought a war over oil in Iraq and Kuwait. Today, we are right back there, only we are more dependent on the Mideast. If we don't take the steps now to reduce that dependence, this is going to happen again.
Keep in mind that, for the time being, it isn't over. We are just starting into this crisis. This administration must be held accountable for the lack of an energy policy in this country. There is no energy policy on nuclear power, no energy policy on coal, no energy policy on gas, no energy policy on oil. It kind of drifts out there. And they are well-meaning, but some extreme environmental groups basically propel the direction of this administration. It is no direction at all because there is no energy policy.
So as we look at the increased price of energy, we look at the frustration of the truckers in Washington, DC, and we look at what the administration is doing to address it, we have to come to the conclusion that the administration's efforts--if you can identify them at all--are limited to pleading with the Mideast oil barons to simply produce more oil. That is inadequate. They are simply exporting jobs and dollars. We are going to have to turn this around in the Congress of the United States. The administration won't stand up and recognize the reality that charity begins at home. We have the resources in this country, we have the technology, we have the capital, and we can relieve our dependence on imports if given the support of the Clinton administration.
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