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Mr. DURBIN. That is right, it would be transparent.

[Page: S2395]  GPO's PDF

   I am holding in my hand the energy bill we are debating. On at least four separate occasions now, we have had the chance to do something sensible for energy security and energy independence--to lessen our dependence on Mideastern oil. We had a chance to do it with the fuel efficiency of the trucks and cars that we want to drive in America for years to come, and we failed. The special interests won. We could have done it by improving and increasing the renewable fuels used across America that are environmentally friendly, which give us a chance toward independence. The special interests opposed us. We lost.

   Now we see the battle that is being joined: Whether or not we are going to have full disclosure of these energy trades, whether we are going to have the kind of openness that Americans want. And the special interests oppose it.

   I stand in complete support of the efforts of the Senator from California, and I thank her for her leadership.

   I yield the floor.

   The PRESIDING OFFICER. The assistant majority leader.

   Mr. REID. Mr. President, my friend from Illinois and my friend from California are right in most everything they have said about the need for a good energy policy. I agree with the Senator from Illinois. I think it is too bad we did not pass fuel efficiency standards . The Presiding Officer, I hope, is going to try to rectify that and offer something in the near future to set some fuel efficiency standards .

   The Senator from Illinois is right when he speaks about the need to not drill in ANWR, but my friend from Illinois and my friend from California are wrong about transactions involving metal derivatives because they lack necessary information. The Commodity Exchange Act already requires record keeping for transactions in metal derivatives markets.

   The Feinstein amendment includes metal derivatives, citing fraud in the metals market in the past decade. In fact, my friend from California uses two specific examples of high-profile cases. She talked about the Hunt brothers in silver and Sumitomo in copper. Neither of these fraud cases would be addressed with the Feinstein amendment. It has nothing to do with the Feinstein amendment. The Feinstein amendment could already be in effect, and the Hunt problem would still be there, and that related to copper would still be there. Why do I say that?

   The attempt by the Hunt brothers in 1979 to corner the silver market involved manipulation of the physical silver market. They bought all the silver they could, which reminds me of a Nevada resident by the name of Forest Mars, of the Mars empire. He owned it. He was a great man. He died in the last couple of years. He was a wonderful man. He lived above his candy store in Las Vegas. This billionaire had a little apartment above his candy store.

   When the Hunt brothers tried to corner the silver market, he said they should have talked to him first. You cannot have a monopoly. He tried on two separate occasions. You cannot do it. Keep in mind, Mars was one of the richest men in the world. His family is still rich, with Uncle Ben's Rice and most of the candy in the world. He was very rich. He thought in his younger days they would buy all the pepper. He wanted to control pepper. He spent some time going out and buying all the black pepper he could find. He controlled black pepper in the world. But he said: In the end, I could not control the black pepper market, because people who had white pepper dyed their pepper black, and I no longer had control of the market.

   The Hunt brothers tried to corner the silver market and went out and bought all the silver. Her amendment would have nothing to do with that. The Hunt silver trading scandal involved trading on regulated exchanges, not in the over-the-counter derivatives market. The trading abuses involved the physical accumulation of more than 200 million ounces of silver. It did not involve over-the-counter derivatives in any way.

   The Sumitomo situation involved the manipulation of the copper market by a Japanese company operating through a rogue trader acting in London and Tokyo.

   The abuses occurred on a fully regulated exchange, not in the over-the-counter derivatives market. It involved manipulation of the price of copper on the London Metal Exchange, which is fully regulated by the United Kingdom's Financial Services Authority. Further, the manipulation took place overseas, not in the U.S. markets.

   I urge my colleagues to not support the motion to table that strikes metal derivatives from the Feinstein amendment. Derivatives are essential to the health of the metals market, and today they are regulated, controlled. Recordkeeping is now in place. Fraud in the metals market did not involve over-the-counter derivatives.

   With all due respect to my friend from California, using the Hunt brothers example and the Sumitomo example, they simply do not apply. I believe wherever that information came from, it was misguided and simply wrong. I suggest we would be better off going forward with her legislation, which I have indicated on a number of occasions I support. But I am saying that having the metals industry involved in this does not do anything except make the mining industry in America weaker than it is.

   Mining as an industry exports gold. It is one of the few places we have a favorable balance of trade. We should be happy about that.

   The motion to table is ill advised, based on wrong facts. It is not in keeping with what I think is the direction of the underlying Feinstein amendment. I ask for the yeas and nays on the motion of the Senate to table.

   The PRESIDING OFFICER. Is there a sufficient second?

   There is a sufficient second.

   The yeas and nays were ordered.

   Mrs. FEINSTEIN. Mr. President, I take a moment to respond to the statement of the Senator from Nevada.

   The point I was trying to make, to the Senator from Nevada, is that manipulation does occur in metals. Clearly, it did. Obviously, there was no online trading at that time. Everybody knows that. The fact is, these remain three major cases of market manipulation. It doesn't only happen in energy; it can happen in metals as well.

   The key point is, if the Reid amendment is successful, metals will be the only exemption. Why should metals be the only exemption? I don't think they should. We know you are covered if you deliver the commodity directly to another individual. We know FERC covers that. We know you are not covered if you are swapping or trading against risk. We also know there is great uncertainty as to whether, with energy, there is coverage.

   I purposely read the letters from the Swaps and Derivatives Association because they say two different things. In one statement they say these areas do remain within the CFTC jurisdiction; they turn around in a March 11 opposition letter and say exactly the opposite.

   The time has come to have certainty, to see that energy and metals are covered. Let me say once again, who can object to there being antifraud and antimanipulation oversight? No one. Who can object to saying you have to keep records of trades, online trades, even if you are not directly delivering the product, if you are swapping to hedge against risk, for example? Why shouldn't you keep a record and have an audit trail on what you are doing so that people know? Why shouldn't there be some provision for capitalization of these trades based on risk, and the CFTC would decide a level of risk and the level of capitalization?

   This past week, I was just reading another article of a company that would go down because it was swapping. There was no capitalization, Peter came home to pay Paul, and there was nothing there. So the company is going to go bankrupt. It was another major company.

   It seems to me, rather than create uncertainty, our amendment creates certainty. It says to the world, to everybody, energy and metals are not the only two that enjoy an exemption. Energy and metals, for derivative online trading, are covered by the CFTC. It is a small amendment. I have been so surprised at the amount of opposition. It convinces me more that something must be going on. There has to be a reason that people want to do this trading in the darkness. There has to be a reason that they do not want to keep records. There has to be a reason they do not want to subject themselves to any kind of capitalization requirement.

[Page: S2396]  GPO's PDF

   That was the situation with Enron. Enron went bankrupt. Enron lobbied for this amendment. Enron lobbied the House to be excluded, to have metals and energy excluded from the bill passed in 2000. Immediately after the bill passed in 2000, gas began to spike in California. That says volumes to me.

   Once again, I think we are on the side of the angels, to let consumers see what is going on. If the consumers buy through the Chicago Mercantile, there is a record. If the consumers buy through the New York Mercantile, there is a record. With any other kind of transaction, there is a record. Why should this huge, burgeoning new area of online trading have an exception and not keep these records?

   Again, let me be specific. If the product is delivered, if I buy gas from you, and you deliver that natural gas to me, we are covered by the Federal Energy Regulatory Commission. If we are trading or swapping and there is no delivery, there is no record kept.

   Why does FERC support this amendment? Why do all of the FERC Commissioners support this amendment, including the Chairman? They know this is a loophole. They know it should see the light of day.

   I control time until 3:45, if I understood correctly.

   The PRESIDING OFFICER. The time is equally divided.

   Mr. REID. I am happy to yield.

   The PRESIDING OFFICER. The Senator from Nevada controls 14 1/2 minutes.

   Mr. REID. The Senator is welcome to take some of my time.

   Mrs. FEINSTEIN. I yield the floor.

   The PRESIDING OFFICER. The Senator from Nevada has yielded?

   Mr. REID. Mr. President, it is my understanding the Senator from Louisiana wishes to speak on another amendment she hopes to offer subsequently. I think that would be appropriate. I see no one here wishing to speak. How much time does the Senator need?

   Ms. LANDRIEU. I need about 15 minutes, if I could?

   Mr. REID. We are going to vote at quarter till, but how about 10 minutes?

   Ms. LANDRIEU. Ten minutes is fine.

   The PRESIDING OFFICER. The Senator is recognized for 10 minutes.

   Ms. LANDRIEU. I thank the Senator from Nevada, and I thank the Senator from California for allowing me to interject a few thoughts on a related subject but not the same as the pending amendment.

   The subject is about energy independence. Let me put up my first chart to talk about this issue.

   Before I begin with that, let me say this: There are a lot of issues such as the issue Senator Feinstein has raised, and other issues, that I suggest are maybe not the exact heart of our problem when it comes to energy security or energy dependence. The heart of our problem is simply that we consume much more than we produce. When you consume more than you produce, and when you do not have an electric grid in this system that can move power from the places where it is produced to the places, such as California and Florida, that consume a lot--and also California does produce a great deal--you have blackouts.

   You have power shortages. You have price hikes. It is the natural end result of demand outstripping supply. It works that way every time. There is no surprise about it. It works that way today. It worked that way yesterday. It will work that way tomorrow.

   The core of this debate is energy security. We cannot have energy security in this Nation unless we have energy independence. I know people hear this and they say: Senator, it is not possible. We could never be energy independent.

   I want to say: Yes, we can. Maybe not tomorrow. Maybe not in 5 years. But if we set our mind to it and make some very wise strategic decisions in this body this week and in this Congress this year, this country most certainly could be energy independent in the next decade or so. Not in my grandchild's lifetime but in my children's lifetime, and in my lifetime, we could be energy independent. But it is going to take a lot of work.

   One of the things we are going to have to do is produce more oil and gas and fuel domestically. It is not just oil and gas. It is oil, gas, clean coal, hydro--and particularly new and exciting fuels such as solar and wind. We are not doing nearly enough with that. And we are not doing enough on the production side.

   When we think oil, we think automobiles. We think oil, we think gasoline. While oil in the transportation sector consumes most of our oil, let me name a few other things that we need oil for to produce household items: toothpaste, footballs, ink, lifejackets, tents, sunglasses, house paints, shampoos, lipsticks--maybe we could find alternative sources, some other ways to produce these items. I am sure there are scientists and researchers doing that at this time, but we need oil in this Nation to run our automobiles the way we have the engines

   structured right now, as well as to produce all these products which Americans use every single day.

   Can we reduce our consumption? Can we conserve? Absolutely. But should we continue to import 67 percent of our oil from other places in this world? I don't think so.

   Let me share with you where we are, the outstripping of production by demand. Oil consumption will continue to exceed production. This red area of this chart is our problem. It is our problem. You can see it very clearly. It is the shortfall. This is basically what we produce. This is what we consume. And this is what causes, in many instances, blackouts or shortages or high prices--this shortfall. We have to correct that. We can correct it by conserving. There are very good suggestions, mostly by Senator Bingaman, about how to do that. And we must increase our production.

   Let me show you where our production is, currently, in the United States. Our production is currently in the Gulf of Mexico and in Texas and in Alaska. Should we drill in Alaska, and more? Absolutely. Should we drill in the Gulf of Mexico? Absolutely. Should we drill in Texas more? Absolutely. Should we drill more in California and places in other States? Absolutely.

   The reason is these States consume. They need to produce. Our whole Nation consumes and we need to produce more. But we want, in America, to have a policy where we basically do not have oil wells anywhere except off the coast of Louisiana, Mississippi, and Texas. We expect this area then to supply all the needs of our Nation.

   We need to have a stronger policy about drilling domestically, and to acknowledge the States that do drill and can drill in a more environmentally sensitive way, minimizing the risk to the environment, should be compensated for the impacts that are associated. It is not always negative environmental impacts; it is infrastructure impacts.

   On each oil rig off the State of Louisiana, we have about 6,000 people. It is almost like a city out in the gulf.

   I know a lot of people have never been to an oil rig, but I have, many times. Senator Breaux and others have visited many times. These men and women consume water, they consume food, there are transportation requirements, and there are roads and bridges that need to help this offshore development.

   One of the things we can do--and I hope we will do, Democrats and Republicans, regardless of how we may vote on many of these amendments--is to cast favorable votes when it comes to more domestic drilling. It is important for us to close the gap of conservation and drilling in places where we can. We have rich reserves in Alaska, in the Gulf, and in the central part of this Nation. It is misleading to say otherwise.

   Let me also give you another reason why domestic production is so important. This is from the Sierra Club's executive director, Doug Wheeler, who said:

   The exploration and development of energy resources in the United States is governed by the world's most stringent environmental constraints, and to force development elsewhere is to accept the inevitability of less rigorous oversight.

   Let me repeat this, because this is the Sierra Club.

   The exploration and development of energy resources in the United States is governed by the world's most stringent environmental constraints, and to force development elsewhere is to accept the inevitability of less rigorous oversight.

   What we do by not allowing more drilling in the United States is exactly this: We force development elsewhere,

[Page: S2397]  GPO's PDF

   Let me make a statement. People will say Senator Landrieu just gets on the floor and talks about big oil issues. She is a supporter of big oil.

   Let me say for the record that big oil is maybe not that interested, frankly, primarily in more domestic production. Leaders of some of the environmental organizations want to push production off of our shores because they do not want production anywhere. They are absolutely totally against fossil fuels and think we can run the country and the world can run on something other than fossil fuels. I hope that happens in the future, but it is not going to happen today or tomorrow. It is in their interest to push production off the shores of the United States and use their self-interest to basically push development in places where regulations are less; where, if you do something wrong, you can't get caught, and where it is cheaper to produce.

   There is sort of an unholy alliance, if you will--I say this with great respect--between the industry and the environmental movement. I understand this is an unholy alliance that sometimes pushes us to a place we don't want to go. I will tell you why we don't want to go there. Because it is dangerous.

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