Oil Trading Transparency Act

Mr. President, day after day record-high oil and gasoline prices are causing immense harm to millions of American consumers and businesses. Unless something is done to make energy more affordable, these record-high prices will continue to damage our economy, increasing the prices of transportation, food, manufacturing, and everything in between. Skyrocketing energy prices are a threat to our economic and national security, and the time is long past for action.

My Senate Permanent Subcommittee on Investigations has conducted four separate investigations into how our energy markets can be made to work better. Most recently, last December, we had a joint hearing with the Senate Energy Subcommittee on the role of speculation in rising energy prices. As a result of these investigations and hearings, I have been advocating a variety of measures to address the rampant speculation and lack of regulation of energy markets which have contributed to sky high energy prices:

First, put a cop--a regulatory agency--back on the beat in the energy markets to prevent excessive speculation and manipulation. That includes closing the Enron loophole and the London loophole and taking other steps to strengthen market oversight.

Second, develop alternatives to fossil fuels to reduce our dependence on oil.

Third, impose a windfall profits tax on oil companies that have profited from the massive price runup and use the money to help consumers, boost domestic energy supplies, improve energy technologies, and strengthen our energy markets.

One of the major causes of our energy crisis is the failed policies of the current administration. The chickens have come home to roost on 7 years of a business-as-usual energy policy, paired with fiscal and foreign policies that have pushed our growing energy problem close to a breaking point. Because the administration has proved itself unable and unwilling to take the necessary steps to provide affordable energy supplies to the American people, it is up to the Congress to try to jump-start a comprehensive solution to skyrocketing energy prices. Congress already has taken two important steps this year--we have closed the Enron loophole and we have stopped the administration's misguided program to keep on filling the SPR despite record-high prices--but more can and should be done. That is why I support enactment of the Consumer-First Energy Act now before us and will be voting for cloture on this bill.

Last week the price of crude oil reached a record high price of about $139 per barrel. Sky-high crude oil prices have led to record highs in the price of other fuels produced from crude oil, including gasoline, heating oil, diesel fuel, and jet fuel. The national average price of gasoline is at a record high of just over $4 per gallon. The price of diesel fuel, which is normally less expensive than gasoline, has soared to a record high of nearly $4.60 per gallon.

Rising energy prices increase the cost of getting to work and taking our children to school, traveling by car, truck, air and rail, and growing the food we eat and transporting it to market. Rising energy prices increase the cost of producing the medicines we need for our health, heating our homes and offices, generating electricity, and manufacturing countless industrial and consumer products. The relentless increase in jet fuel prices, which have added nearly $75 billion to our airlines' annual fuel costs, has contributed to airline bankruptcies, mergers, fare increases, and service cuts. ``If fuel continues to go up, this industry cannot survive in current form,'' the president of the Air Transport Association said recently. Rising diesel prices have placed a crushing burden upon our Nation's truckers, farmers, manufacturers, and other industries. To make matters worse, our energy costs are rising much more quickly than energy costs in other countries, directly threatening our global competitiveness.

In January 2001, when President Bush took office, the price of oil was about $30 per barrel. The average price for a gallon of gasoline was about $1.50. Since President Bush took office, crude oil prices have more than quadrupled, natural gas prices to heat our homes have almost doubled, gasoline prices have nearly tripled, and diesel fuel prices have more than tripled.

It doesn't have to be this way. Just 7 years ago, at the end of the Clinton Administration, energy supplies were plentiful, and gasoline and other forms of energy were affordable. Once the Bush administration took office, however, it didn't take them long to eliminate the budget surplus by cutting taxes mainly for the wealthiest among us, creating a huge annual budget deficit, and driving up the national debt. This fiscal mismanagement has contributed significantly to a steep decline in the value of the dollar and soaring commodity prices. Because American currency is worth less, it takes more of them to buy the same barrel of oil. American consumers and businesses are forced to spend more and more of their hard-earned dollars to buy the same amount of energy.

During the last years of the Clinton administration, the United States ran a budget surplus, totaling nearly $560 billion. But over the past 6 years of the Bush administration the annual deficits have totaled nearly $1.7 trillion, not counting the amount by which the Bush administration has been draining the Social Security and Medicare trust funds. When this is counted, under this administration the total outstanding debt has increased by a whopping $3.2 trillion.

When President Clinton left office, the dollar was worth more than the Euro. In January 2001, it took only about 90 cents to buy one Euro. Today, it takes about $1.60 to buy one Euro--a record low for the dollar. The fall in the value of the dollar is a result of a weakened U.S. economy, a high trade deficit and a worldwide lack of confidence in the Bush administration's ability to manage our Nation's economy and foreign policy.

As long as this administration continues to insist on irresponsible fiscal practices--including tax cuts for people with the highest income and an open-ended conflict in Iraq that is costing $12 billion a month--the dollar will likely continue to decline in value. The marketplace has rendered a clear ``no confidence'' in this administration's fiscal competence.

Besides the weak dollar, there are other factors at work that account for soaring energy prices. Some are beyond our control; others we can do something about. In global markets, for example, the combination of increasing demand from developing countries, coupled with a variety of political problems in supplier countries, has contributed to price increases. Growing demand for oil and gas in China, India, and other developing countries is contributing to an overall increase in global demand for crude oil. On the supply side, many oil producing countries are politically unstable and have not been fully reliable suppliers. For example, in Nigeria, which is a major oil-producing country, for several years tribal gangs have been sabotaging production and pipelines.

While we can't do much about growing demand in China and India, other causes of high prices can be addressed. For example, one key factor in energy price spikes is rampant speculation in the energy markets. Traders are trading contracts for future delivery of oil in record amounts, creating a paper demand that is driving up prices and increasing price volatility solely to take a profit. Overall, the amount of trading of futures and options in oil on the New York Mercantile Exchange has risen sixfold in recent years, from 500,000 outstanding contracts in 2001, to about 3 million contracts now.

Much of this increase in trading of futures has been due to speculation. Speculators in the oil market do not intend to use crude oil; instead they buy and sell contracts for crude oil just to make a profit from the changing prices. The number of futures and options contracts held by speculators has gone from around 100,000 contracts in 2001, which was 20 percent of the total number of outstanding contracts, to 1.2 million contracts currently held by speculators, which represents almost 40 percent of the outstanding futures and options contracts in oil on NYMEX .

There are now 12 times as many speculative holdings as there was in 2001, while holdings of nonspeculative futures and options are up but 3 times.

Not surprisingly, this massive speculation that the price of oil will increase has, in fact, helped fuel the actual increase in the price of oil to a level far above the price that is justified by the traditional forces of supply and demand.

The president and CEO of Marathon Oil recently said, ``$100 oil isn't justified by the physical demand in the market. It has to be speculation on the futures market that is fueling this.'' Mr. Fadel Gheit, oil analyst for Oppenheimer and Company, describes the oil market as ``a farce.'' ``The speculators have seized control and it's basically a free-for-all, a global gambling hall, and it won't shut down unless and until responsible governments step in.'' In January of this year, as oil hit $100 barrel, Mr. Tim Evans, oil analyst for Citigroup, wrote ``the larger supply and demand fundamentals do not support a further rise and are, in fact, more consistent with lower price levels.'' At the joint hearing on the effects of speculation held by my subcommittee last December, Dr. Edward Krapels, a financial market analyst, testified, ``Of course financial trading, speculation affects the price of oil because it affects the price of everything we trade. . . . It would be amazing if oil somehow escaped this effect.'' Dr. Krapels added that as a result of this speculation, ``There is a bubble in oil prices.''

A fair price for a commodity is a price that accurately reflects the forces of supply and demand for the commodity, not the trading strategies of speculators who only are in the market to make a profit by the buying and selling of paper contracts with no intent to actually purchase, deliver, or transfer the commodity. As we have all too often seen in recent years, when speculation grows so large that it has a major impact on the market, prices get distorted and stop reflecting true supply and demand.

Last month, Senator Jack Reed and I wrote a letter asking President Bush to appoint a high-level task force to evaluate how speculators are driving up prices through manipulative or deceptive devices. The task force should also evaluate whether there are adequate regulatory tools to control market speculation and prevent manipulation. Hopefully the President will act quickly to convene this task force.

Excessive market speculation is a factor that we can and should do a better job of controlling. There are other long overdue actions as well that, if taken as part of a comprehensive plan, can combat rising energy prices.

As to reining in speculation, the first step to take is to put a cop back on the beat in all our energy markets to prevent excessive speculation, price manipulation, and trading abuses. In 2001, my Senate Permanent Subcommittee on Investigations began investigating our energy markets. At the time, the price of a gallon of gasoline had spiked upwards by about 25 cents over the course of the Memorial Day holiday. We subpoenaed records from major oil companies and interviewed oil industry experts, gas station dealers, antitrust experts, gasoline wholesalers and distributors, and oil company executives. We examined thousands of prices at gas stations in Michigan, Ohio, California, and other States. In the spring of 2002, I released a 400-page report and held 2 days of hearings on the results of the investigation.

The investigation found that increasing concentration in the gasoline refining industry, due to a large number of recent mergers and acquisitions, was one of the causes of the increasing number of gasoline price spikes. Another factor causing price spikes was the increasing tendency of refiners to keep lower inventories of gasoline. We also found a number of instances in which the increasing concentration in the refining industry was also leading to higher prices in general. Limitations on the pipeline that brings gasoline into my home State of Michigan were another cause of price increases and spikes in Michigan. The report recommended that the Federal Trade Commission carefully investigate proposed mergers, particularly with respect to the effect of mergers on inventories of gasoline.

The investigation discovered one instance in which a major oil company was considering ways to prevent other refiners from supplying gasoline to the Midwest so that supply would be constricted and prices would increase.

In March 2003, my subcommittee released a second report detailing how the operation of crude oil markets affects the price of not only gasoline but also key commodities like home heating oil, jet fuel, and diesel fuel. The report warned that U.S. energy markets were vulnerable to price manipulation due to a lack of comprehensive regulation and market oversight.

Following this report, I worked with Senator Feinstein on legislation to put the cop back on the beat in those energy markets that had been exempted from regulation pursuant to an ``Enron loophole'' that was snuck into other legislation in December 2000. For 2 years we attempted to close the Enron loophole, but efforts to put the cop back on the beat in these markets were unsuccessful, due to opposition from the Bush administration, large energy companies, and large financial institutions that trade energy commodities.

In June 2006, I released another Subcommittee report, ``The Role of Market

Speculation in Rising Oil and Gas Prices: A Need to Put a Cop on the Beat.'' This report found that the traditional forces of supply and demand no longer accounted for sustained price increases and price volatility in the oil and gasoline markets. The report determined that, in 2006, that a growing number of energy trades occurred without regulatory oversight and that market speculation had contributed to rising oil and gasoline prices, perhaps accounting for $20 out of a then-priced $70 barrel of oil.

The subcommittee report I released in June 2006 again recommended new laws to increase market oversight and stop market manipulation and excessive speculation. I again coauthored legislation with Senator Feinstein to improve oversight of the unregulated energy markets. Once again, opposition from the Bush administration, large energy traders, and the financial industry prevented the full Senate from considering this legislation.

In 2007, my Permanent Subcommittee on Investigations addressed the sharp rise in natural gas prices over the previous year and released a fourth report, entitled ``Excessive Speculation in the Natural Gas Market.'' Our investigation showed that speculation by a single hedge fund named Amaranth had distorted natural gas prices during the summer of 2006 and drove up prices for average consumers. The report also demonstrated how Amaranth had traded in unregulated markets to avoid the restrictions and oversight in the regulated markets and how the price increases caused by Amaranth could have been prevented if there had been the same type of oversight in the unregulated markets as in the regulated markets.

Following this investigation, I introduced a new bill, S. 2058, to close the Enron loophole and regulate the unregulated electronic energy markets. Working again with Senators Feinstein and Snowe and with the members of the Agriculture Committee in a bipartisan effort, we finally managed to include an amendment to close the Enron loophole in the farm bill that was then being considered by the Senate. The Senate unanimously passed this amendment to close the Enron loophole last December. The final farm bill that was passed by the House and Senate last month included language nearly identical to what the Senate had passed. Although President Bush vetoed the entire farm bill, both the House and Senate have overridden his veto. Our 5-year quest to close the Enron Loophole has finally been successful.

The CFTC is now in the process of implementing the close-the-Enron- loophole law. Among other steps, it is charged with reviewing the contracts on previously unregulated energy markets, like the Intercontinental Exchange or ICE, to determine which contracts have a significant effect on energy prices and must undergo daily oversight. Once that process is complete, the cop will be back on the beat in those markets for the first time since 2000.

Closing the Enron loophole is vitally important for energy market oversight as a whole, and for our natural gas markets in particular, but it is not enough. Because over the last 2 years, energy traders have moved a significant amount of U.S. crude oil and gasoline trading to the United Kingdom, beyond the direct reach of U.S. regulators, we have to address that second loophole too. I call it closing the London loophole.

There are currently two key energy commodity markets for U.S. crude oil and gasoline trading. The first is the New York Mercantile Exchange or NYMEX, located in New York City. The second is the ICE Futures Europe exchange, located in London and regulated by the British agency called the Financial Services Authority.

The British regulators, however, do not oversee their energy markets the same way we do; they don't place limits on speculation like we do, and they don't make public the same type of trading data that we do. That means that traders can avoid the limits on speculation in crude oil imposed on the New York exchange by trading on the London exchange. It also makes the London exchange less transparent than the New York exchange. My original legislation to close the Enron loophole would have required U.S. traders on the London exchange to provide U.S. regulators with the same type of trading information that they are already required to provide when they trade on the New York Mercantile Exchange. Unfortunately, this provision was dropped from the close-the- Enron-loophole legislation in the farm bill.

The Consumer-First Energy Act, S. 3044, which the majority leader and others introduced recently to address high prices and reduce speculation, includes at my request a provision to curb rampant speculation, increase our access to foreign exchange trading data, and strengthen oversight of the trading of U.S. energy commodities no matter where that trading occurs. This provision would require the Commodity Futures Trading Commission, CFTC, prior to allowing a foreign exchange to establish direct trading terminals located in this country, to obtain an agreement from the that foreign exchange, such as the London exchange, to impose speculative limits and reporting requirements on traders of U.S. energy commodities that are comparable to the requirements imposed by the CFTC on U.S. exchanges. I believe this issue is so important that I have introduced this section of the package as a separate bill, which is numbered S. 2995. Senator Feinstein is a cosponsor of that bill.

Following the introduction of our legislation, the CFTC finally moved to address some of the gaps in its ability to oversee foreign exchanges operating in the United States. Specifically, the CFTC, working with the United Kingdom Financial Services Authority and the ICE Futures Europe exchange, announced that it will now obtain the following information about the trading of U.S. crude oil contracts on the London exchange:

Daily large trader reports on positions in West Texas

Intermediate or WTI contracts traded on the London exchange;

information on those large trader positions for all futures

contracts, not just a limited set of contracts due to expire

in the near future; enhanced trader information to permit

more detailed identification of end users; improved data

formatting to facilitate integration of the data with other

CFTC data systems; and notification to the CFTC of when a

trader on ICE Futures Europe exceeds the position

accountability levels established by NYMEX for the trading of

WTI crude oil contracts.

These new steps will strengthen the CFTC's ability to detect and prevent manipulation and excessive speculation in the oil and gasoline markets. It will ensure that the CFTC has the same type of information it receives from U.S. exchanges in order to detect and prevent manipulation and excessive speculation.

However, in order to fully close the London loophole, better information is not enough. The CFTC must also have clear authority to act upon this information to stop manipulation and excessive speculation.

That is why I have been working with the sponsors of the Consumer- First Energy Act to include additional language to ensure that the CFTC has the authority to act upon the information it will obtain from the London exchange, in order to prevent price manipulation and excessive speculation. This new provision, which I helped author, would make it clear that the CFTC has the authority to prosecute and punish manipulation of the price of a commodity, regardless of whether the trader within the United States is trading on a U.S. or on a foreign exchange. It would also make it clear that the CFTC has the authority to require traders in the United States to reduce their positions, no matter where the trading occurs--on a U.S. or foreign exchange--to prevent price manipulation or excessive speculation. Finally, it would clarify that the CFTC has the authority to require all U.S. traders to keep records of their trades, regardless of which exchange the trader is using.

It is my understanding that this new provision will be included in a substitute amendment that will be offered today or in a future debate on this bill, if cloture is not invoked today. I thank the bill sponsors for accepting this language to ensure that the CFTC has full enforcement authority over traders within the United States who are trading on a foreign exchange, just as the CFTC has over traders who are trading on a U.S. exchange. This clarification of the CFTC's enforcement authority over traders in the United States, together with the earlier provision setting standards for foreign boards of

trade wishing to place trading terminals in the United States, will fully close the London loophole.

There is another problem with our energy markets that Congress has finally acted on. In 2003, a report issued by my Subcommittee staff found that the Bush administration's large deposits of oil into the Strategic Petroleum Reserve, SPR, were increasing crude oil prices without improving overall U.S. energy security. We found that in 2002, the Bush administration, over the repeated objections of its own experts in the Department of Energy, had changed its policy and decided to put oil into the SPR regardless of the price of oil or market conditions. By placing oil into the SPR while oil prices were high and oil supplies were tight, the administration's deposits into the SPR were reducing market supplies and boosting prices, with almost no benefit to national security, given the fact that the SPR is more than 95 percent filled. The DOE experts believed that in a tight market, we are better off with keeping the oil on the market rather than putting it into the ground where it cannot be used.

Following the issuance of this report, in early 2003, I asked the Department of Energy to suspend its filling of the SPR until prices had abated and supplies were more plentiful. DOE refused to change course and continued the SPR fill without regard to market supplies or prices.

After DOE denied my request, I offered a bipartisan amendment with Senator Collins to the Interior appropriations bill, which provides funding for the Strategic Petroleum Reserve program, to require DOE to minimize the costs to the taxpayers and market impacts when placing oil into the SPR. The Senate unanimously adopted our amendment, but it was dropped from the conference report due to the Bush Administration's continued opposition.

The next spring, I offered another amendment, also with Senator Collins, to the budget resolution, expressing the sense of the Senate that the administration should postpone deliveries into the SPR and use the savings from the postponement to increase funding for national security programs. The amendment passed the Senate by a vote of 52 to 43. That fall, we attempted to attach a similar amendment to the homeland security appropriations bill that would have postponed the SPR fill and used the savings for homeland security programs, but the amendment was defeated by a procedural vote, even though the majority of Senators voted in favor of the amendment, 48 to 47.

The next year, the Senate passed the Levin-Collins amendment to the Energy Policy Act of 2005 to require the DOE to consider price impacts and minimize the costs to the taxpayers and market impacts when placing oil into the SPR. The Levin-Collins amendment was agreed to by the conferees and is now law.

Unfortunately, passage of this provision has had no effect upon DOE's actions. DOE continued to fill the SPR regardless of the market effects of buying oil, thereby taking oil off the market and reducing supply by placing it into the SPR. In the past year, no matter what the price of oil or market conditions, DOE consistently found that the market effects are negligible and no reason to delay filling the SPR.

Most recently, at the same time the President was urging OPEC to put more oil on the market to reduce supplies, the administration was continuing to take oil off the market and place it into the SPR. Until recently, the DOE was depositing about 70,000 barrels of crude oil per day into the SPR, much of it high-quality crude oil ideal for refining into gasoline. It defies common sense for the U.S. Government to be acquiring oil at $120 or $130 per barrel, in a time of tight supply, taking that oil off the market, and putting it in the SPR. That is why I cosponsored Senator Dorgan's bill to suspend the SPR fill, as well as a similar provision in the Consumer-First Energy Act.

Finally, Congress had had enough of this senseless policy. The provision to stop the continuous filing of the SPR was pulled from the Consumer-First Energy Act and offered in the House and Senate as a stand alone bill. Congress enacted into law by an overwhelming vote. In response, the President finally called a halt to his policy and stopped filling the SPR. It is about time.

The SPR fill policy, by the way, exacerbated yet another problem in our oil markets--the fact that the standard NYMEX futures contract that sets the benchmark price for U.S. crude oil requires a particular type of high quality crude oil known as West Texas Intermediate, WTI, to be delivered at a particular location, Cushing, OK. The standard NYMEX contract price, in turn, has a major influence on the price of fuels refined from crude oil such as gasoline, heating oil, and diesel.

Because the price of the standard contract depends upon the supply of WTI at Cushing, OK, the supply and demand conditions in Oklahoma have a disproportionate influence on the price of NYMEX futures contracts. That means when the WTI price is no longer representative of the price of U.S. crude oil in general, the prices of other energy commodities are also thrown out of whack. In other words, we have an oil futures market that reflects the supply and demand conditions in Cushing, OK, but not necessarily the overall supply and demand situation in the United States as a whole.

I have long called for reform of this outdated feature of the standard NYMEX crude oil contract. In 2003, the PSI report recommended the CFTC and NYMEX to work together to revise the standard NYMEX crude oil futures contract to reduce its susceptibility to local imbalances in the market for WTI crude oil. The subcommittee report suggested that allowing for delivery at other locations could reduce the volatility of the contract. It is truly disappointing that since our report was issued no progress has been made for allowing for delivery at other places than Cushing, OK. As the price of oil has increased, the distortions and imbalances caused by the atypical nature of the standard contract have gotten worse. It is essential NYMEX repair its crude oil contract.

Putting the cop on the beat in our energy markets, strengthening oversight of U.S. energy commodities traded on foreign exchanges, stopping the SPR fill, and fixing the NYMEX crude oil contract all focus on problems caused by rising energy prices. These consistently rising gas prices also underscore the need to develop advanced vehicle technologies and alternative energy sources that will significantly reduce our dependence on foreign oil.

I have long advocated advanced automotive technologies such as hybrid electric, advanced batteries, hydrogen and fuel cells and promoted development of these technologies through Federal research and development and through joint government-industry partnerships. We need a significant infusion of Federal dollars into these efforts to make revolutionary breakthroughs in automotive technologies. Such an investment will make technologies such as plug-in hybrid vehicles affordable to the American public and reduce our dependence on oil and reduce prices at the pump.

We need an equally strong investment in development of alternative fuels that can replace gasoline. I have strongly supported efforts to increase our production of renewable fuels and to do that in a way that will also reduce our greenhouse gas emissions. We need a strong push toward biofuels produced from cellulosic materials, which requires a significantly greater Federal investment in biofuels technologies. Cellulosic ethanol has enormous potential for significant reductions in greenhouse gas emissions, but additional Federal support is required to make this technology financially viable. We need expanded Federal research and development grants as well as increased tax incentives and Federal loan guarantees to make cellulosic ethanol a viable replacement for gasoline. The Federal Government must do its part first to develop these technologies so that they will then in turn be within reach of the American public.

One more point. The burden of higher energy prices is not being shared equally. To the contrary, it is falling hardest upon those who can least afford it. Large oil companies are reaping record profits at the expense of the average American who ultimately bears the full burden of these price increases. At the same time that average Americans are having to devote a greater and greater portion of their income to pay for basic necessities, such as gasoline, household utilities, and food, the major oil companies are reporting record profits and

their executives are taking home annual paychecks of hundreds of millions of dollars. Many of these profits have been generated without any additional investments into energy production. Rather, these companies have seen their profits rise with the flood of speculation. What is a high tide of profits for the oil companies, though, is a tsunami that is overwhelming millions of Americans.

And what are these oil companies doing with these record profits? Are they investing in new technologies? The answer is that the oil companies are not increasing their exploration and development investments by nearly as much as their profits are increasing. Instead, they are devoting large amounts of their profits to acquiring other companies and buying back their own shares. On May 1 of this year, the Wall Street Journal reported that in the first quarter of 2008 ExxonMobil spent $8 billion to buy back company shares, which ``boosted per-share earnings to stratospheric levels,'' whereas it spent less on exploration and actually reduced oil production.

For these reasons, we need to institute a windfall profits tax on the oil companies. We should incentivize big oil companies to invest their windfall profits into things that will increase our own domestic energy production by reducing the amount of the tax for such investments. If they don't make these investments, a portion of that profit should be recouped by the public to help offset the outrageous prices they are facing at the pump.

I have supported a windfall profits tax numerous times when we have voted on it in the Senate. The Consumer-First Energy Act, imposes a 25 percent tax on windfall profits of the major oil companies. Windfall profits invested to boost domestic energy supplies would be exempt from the tax, which would encourage investments in renewable facilities and the production of renewable fuels such as ethanol and biodiesel. It would also encourage oil companies to increase their domestic refinery capacity. Proceeds from the tax would be put toward measures to reduce the burdens of rising energy costs and increase our energy independence and security.

Sky-high energy prices are causing immense financial pain to working families and businesses throughout this country and tying our already weak economy in knots. Congress cannot just stand by; we must act now to stop the pain. Immediate steps include putting the cop on the beat in all of our energy markets to prevent price manipulation and excessive speculation, strengthening oversight of U.S. energy commodities traded in London, fixing the key NYMEX crude oil contract, investing in advanced vehicle technologies and alternative energy sources, and imposing a windfall profits tax on the oil companies. Longer range steps include fixing the fiscal policies undermining the strength of the U.S. dollar, including by eliminating tax cuts for the wealthiest among us, reducing the $12 billion a month spending bill in Iraq, and closing outrageous tax loopholes than enable tax dodgers to use offshore tax havens to avoid payment of taxes in the range of $100 billion each year.

We can fight back against exorbitantly high energy prices. But it will take all our energy--and determination--to do it.

Mr. President, George Bernard Shaw once said: ``If all economists were laid end to end, they would not reach a conclusion.''

Sometimes I feel the same about legislation to extend expiring tax provisions. Sometimes it feels as though that process never reaches a conclusion. Regrettably, Tuesday, the Senate failed to invoke cloture on the motion to proceed to the House-passed renewable energy and tax extenders bill.

Today, we must begin anew the march to a conclusion for the tax extenders package.

Next week, the Senate will face a choice. We'll vote again on getting to the tax extenders bill. We'll vote on allowing the Senate to get to the substitute amendment, the text of which I introduce today. I think that it's a pretty easy choice.

We need to decide whether we will develop new jobs and new medications.

Or, we can continue to allow hedge fund managers to defer, without limitation, their compensation for investing other people's money.

The choice is easy. We must pass this package of expiring provisions. We must reach a conclusion.

Last month, the House passed its renewable energy and tax extenders package, by a vote of 263 to 160. It came over to the Senate last week. My Colleagues on the other side of the aisle objected to moving to the House bill, for which I was prepared to offer a substitute amendment.

Today, I am introducing that substitute amendment as a stand-alone bill. This extender package is fully paid-for. These offsets are fiscally responsible. And these revenue-raising provisions are also sound tax policy.

The first revenue-raising provision is an extension of the effective date of the worldwide allocation of interest. The bill would delay application of the new rule.

This section of the code is scheduled to take effect in 2009.

Many of the companies that will benefit from this provision told me that they would rather have business extenders, including R&D, active financing, and CFC look-through. They prefer those important extenders to a 2009 application of the world wide allocation of interest.

These companies want a conclusion. And, they realize that to get a conclusion, they, along with Congress, must be fiscally responsible and pay for these provisions.

This provision allows Congress to be fiscally responsible and to pay for the priorities of the business community.

The second revenue-raising provision addresses offshore deferred compensation. This provision prevents hedge fund managers from deferring income. This is not an increase in tax on hedge fund managers. Rather, it is a change in the timing of when they have to pay their income tax.

We need to make decisions about our priorities. Is the ability of hedge fund managers to defer taxation of their compensation more important than spurring research and development?

This bill has a solid energy-tax package. It has about $17 billion in incentives for alternative energy, efficiency, and clean coal. This package is important for our environment and energy security. And it's important to facilitate the transition to a carbon-controlled economy.

I have been working to get the Congress to pass a good energy-tax package for the better part of a year. At the beginning of last year, the Finance Committee conducted several hearings. Last June, the Committee marked up a bill to bolster investment in clean energy, efficiency, and clean coal. Our bill--a roughly $30 billion package-- passed the Finance Committee with a 15-to-5 vote.

The bill included a 5-year extension of the credit for production of renewable electricity. That credit enjoys strong bipartisan support.

It included 8-year extensions of credits for solar power. Solar power still needs significant subsidies to compete with fossil-based energy.

It included $4 billion in new funds for clean coal tax credits. These credits are needed to demonstrate that coal--which accounts for half of this Nation's electricity--can be burned cleanly.

The bill included a new consumer credit for plug-in hybrids. Already prototypes of plug-in hybrids can go a hundred miles on a gallon of gas.

The bill included a new credit for cellulosic ethanol. Some experts predict that cellulosic ethanol will become the fuel of the future.

Last June's Finance Committee package was largely financed by reducing tax benefits for oil and gas companies. We proposed repealing the manufacturing deduction for oil and gas firms. That raised about $9.4 billion for the package.

We proposed a tax on production in the Gulf of Mexico, with credit for the tax provided to companies paying royalties on that production. This raised more than $10 billion.

We also proposed tightening the rules on tax credits received by oil and gas companies that pay taxes to overseas jurisdictions. This proposal raised about $3.2 billion.

Taken together, these tax changes would have financed about two- thirds of the roughly $30 billion energy-tax package. We argued that the oil and gas offsets were justified, in part because of record-high oil prices. Recall that in 2005, President Bush said, ``With $55 (a barrel) oil we don't need incentives to oil and gas companies to explore.''

When the Finance Committee passed this energy-tax bill, oil traded at $69 a barrel.

After moving the bill through the Finance Committee, Senator Grassley and I offered that measure on the Senate floor. We offered it as an amendment to the energy policy bill.

But our amendment got 57 votes on the floor, 3 shy of the 60 votes that we needed to break a filibuster.

The objections, almost entirely from the other side, were that the bill would increase energy prices. They argued that our bill unreasonably targeted the oil and gas industry. They argued that the package was simply too big.

So we went back to the drawing board. In negotiations with the House, we cut the size of the energy package by about a third. We dropped the $10 billion tax on Gulf production. We retained repeal of the manufacturing deduction for large oil and gas firms, and the provision to tighten loopholes on foreign tax credits for oil and gas companies. And we also included nearly $7 billion in offsets from President Bush's own budget proposal.

That's right. About one-third of the package that came to the Senate floor in December was offset by items taken directly from proposals offered by President Bush in his 2008 budget.

Even though we cut the package by about a third, the bill still maintained meaningful support for alternative energy and efficiency. It included extension of the renewable energy production credit. It included long-term extensions of credits for solar power. It included $2 billion for clean-coal projects. And it included a new consumer incentive for plug-in hybrid cars.

It was not as ambitious as the June 2007 Finance Committee bill. But the compromise product that came to the Senate floor in December was a very good package.

Nonetheless, the President issued a veto threat on the bill. And 40 Senators followed his lead. On December 12, 2007, the compromise package failed in the Senate by a vote of 59 to 40, just one shy of 60 needed to break yet another filibuster.

Faced with the choice of maintaining tax breaks for oil and gas companies and investing in a fledgling alternative energy industry, the Senate minority chose to protect the oil and gas companies.

Faced with the choice of investing in green-collar jobs or maintaining the status quo on energy, the minority chose the status quo.

Remember the President's assertion that tax breaks were not needed when oil traded at $55 a barrel? Well, when the Senate voted on the energy package on December 13, 2007, oil cost more than $92 a barrel.

So where are we now? Vital new energy-tax provisions--such as incentives for plug-in hybrid vehicles--have not become law. Existing incentives--such as those for energy-efficient appliances--have lapsed. And in less than 7 months, many others will lapse, including the renewable energy production credit, solar credits, incentives for efficient buildings, and credits for biofuels.

So what do we do about it? To paraphrase Thomas Edison, ``I have not failed. I've just found two ways that won't work.''

I hope that this attempt will work. The bill that I introduce today, and on which I hope the Senate can vote next week, includes a robust energy package. It is very similar to that negotiated with the House last year. It is very similar to the one that got 59 votes in the Senate.

Like last year's bills, this package includes long-term extensions of renewable energy credits. It includes major funding for clean coal projects. It includes a new incentive for plug-in hybrids. And it includes extensions of vital incentives to promote energy efficiency.

This $17 billion energy package is slightly smaller than last December's. But it's still critically important to our Nation's energy future.

There is a key difference between this year's package and last year's: the offsets. In response to criticisms of the oil and gas offsets and the President's veto threat, we have dropped proposals to repeal oil and gas tax breaks.

Instead, we have included two offsets that have nothing to do with oil and gas. In fact, they have nothing to do with energy. They are simply good policy. And they have broad support.

The bill also extends provisions that offer tax benefits to individuals and businesses. One such provision is the teacher expense deduction.

Our schools are in desperate need of repair. Our students don't have the books or supplies they need. Some teachers have taken it upon themselves to use money from their own pockets to provide classroom supplies for their students.

In 2005 alone, more than 3.4 million families took the teacher expense deduction. The average salary for a teacher is about $38,000.

This says a lot about this profession's dedication to educating America's youth. These teachers work diligently to make sure that America stays competitive in this global economy by educating our children. And yet they pay out of their own pockets for supplies. The least we can do is to help share the cost.

Another provision that is important to American families is the qualified tuition deduction. Tuition costs have long been increasing faster than inflation. Parents and students worry about how to cover these escalating costs.

4.4 million families took the qualified tuition deduction in 2005. But the provision expired at the end of 2007.

The bill that I introduce today has other important benefits. Millions of families get tax relief from these expiring provisions and will suffer without this legislation.

Businesses will also suffer if Congress does not act. Many of the business provisions contained in the extenders package are crucial in allowing U.S.-based multinational corporations to compete effectively in a global economy.

America accounts for a third of the world's spending on scientific research and development, ranking first among all countries. This is impressive. But relative to the size of our economy, America is in sixth place. And the trends show that maintaining American leadership in the future depends on increased commitment to research and science.

Asia has recognized this. Spending on research and development has increased by 140 percent in China, Korea, and Taiwan. In America, it has increased by only 34 percent.

Asia's commitment is already paying off. More than a hundred Fortune 500 companies have opened research centers in India and China. I have visited some of them. I was impressed with the level of skill of the workers I met there.

There are workers in other countries who seek coveted research positions. Ireland, Poland, and other European countries would like American corporations to shift their R&D operations to their countries. Some of these countries offer incredible tax and non-tax benefits.

Yet our R&D tax credit expired on December 31. American corporations are at a competitive disadvantage. They are unsure if they will be able to obtain the benefit of the credit this year. And they need to plan for the future.

We need to pass an extenders package that allows American companies to take the credit as soon as possible.

American businesses need the R&D tax credit to compete in a global economy. The R&D tax credit gives companies an incentive to begin or continue research here in America. These jobs pay well and result in the creation of intellectual property.

We want these jobs. And we want the intellectual property to be created in our country.

American financial services companies successfully compete in world financial markets. We need to make sure, however, that the U.S. tax rules do not change that.

This legislation will extend the active financing exception to Subpart F. This provision preserves the international competitiveness of American-based financial services companies. This provision also contains appropriate safeguards to ensure that only truly active businesses benefit.

The active financing exception applies to active financial service income earned abroad by American financial services companies or American manufacturing firms with a financial services operation. The exception makes sure that this income is not subject to U.S. tax until that income is brought home to the U.S.

This provision will put the American financial services industry on an equal footing with foreign-based competitors who are not taxed on active financial services income.

There are several other provisions in this bill that encourage businesses to invest in this country. There are provisions that will help American businesses compete in a global economy. We must extend these provisions as soon as possible.

Finally, my bill will provide an AMT patch for 2008. The provision is not offset, because we recognize the reality of the budget constraints we face. We need to get this done. This is an important provision to the American families.

The patch will hold the number of people subject to the AMT at 4.2 million. As a result, over 20 million taxpayers will avoid the AMT next year.

The choice is easy. We should continue to support teachers, families and schools. We should continue to support the creation of jobs and intellectual property. That is why I urge my Colleagues to support this fully offset package.

Which is more important, Mr. President? 11 million families who take the state and local tax deduction, or a few hundred hedge fund managers?

Which is more important? 3.5 million teachers who pay out of their pocket for school supplies, or a few hundred hedge fund managers?

4.5 million families who struggle to pay for college tuition, or a few hundred hedge fund managers?

It is time to reach a conclusion. You can lay all the extenders bills end to end. But I submit that the best conclusion is the extenders package that I introduce today and that the Senate will try to get to next week. I urge my Colleagues to support the motion to invoke cloture on the motion to proceed.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, will the Senator yield?

Mr. President, I ask unanimous consent that Senator Hutchison be the leadoff speaker and she be allowed 7 minutes, and that I follow her with 15 minutes, and then we will see where it goes from there.

Mr. President, Parliamentary inquiry: How much time remains and who has time before the vote?

So that means I would use the remaining time, and there would be no time for anyone else before the first vote?

That was my question. I didn't pose it right.

Mr. President, I yield myself 10 minutes and see how it works out. The Senator from Pennsylvania wanted some of my time. I don't know if I have enough to give him, but I will try, and I thank him for coming down so early in the morning.

First of all, let me say to my fellow Senators but most of all to the American people that the Senate has a bill before us today we will call the Reid bill, named after the majority leader, and I think it deserves a simple little nickname. It should be the Democratic Party's ``No Energy Energy bill.'' It doesn't produce one ounce of energy. Clearly, the American people are looking to us to see how we can suggest that the price of oil might be stabilized or brought down.

We are told by most experts we are going to be using crude oil for 30 or 40 years to come, and we call that the bridge, the bridge between now and the future, where we are going to have to use crude oil. If we are going to have to use crude oil, then America should look to itself and see where and how can we produce oil that belongs to us so this bridge, this 30 or 40 years when we are going to have to use crude oil to get by, that we will have as much of ours as possible.

It is a shame the majority party in the Senate is not looking to American resources, does not have a bill, will not let us vote on a bill, will not let us amend a bill that would produce more energy from the coastal waters off the shores of the United States, upon which we have put a moratorium. That moratorium says we cannot drill. Everybody knows there are literally billions of barrels of oil that belong to us. We could do whatever we would like. We could say 50 miles out is where we start, so it will harm no one, but let's open it and explore for American oil where there is an abundance.

In addition, let's go ahead and convert coal to crude oil, coal to diesel. We know how to do that. Let's get on with it so we can send the right signal to the world.

Let's take the moratorium off oil shale and get on with a 5- or 10- year program to produce oil from those properties that belong to Americans that are laden with oil and are in the States of Colorado, Utah, and Wyoming.

That is what we are looking for, not a bill that attempts to levy a windfall profits tax which everybody associated with that tax-- including those who helped put it on during the regime of President Carter--now comes over and joins us, saying: Don't do that. It will do nothing but raise the price of crude oil.

Why do we want to pass a tax increasing the cost of crude oil when the American people are asking us to do the opposite? The majority here in the Senate believes the major oil companies--there are not very many left that are American oil companies. There are just a few of them left, and all the rest of the oil is owned by countries--not companies, by countries. They own it. We have five or six American companies. We ought to be grateful we have them. They are the only ones out there capable of competing with these countries to get oil and produce more. Yet the Democrats would like to make life onerous for those companies, would like to make it harder for them to produce oil, and try to let the American people think that if we tax them enough, somehow or another that will produce more oil.

From my standpoint, this is a very simple debate. The Democrats have no

energy bill before us, in terms of producing energy. So they have a ``no energy'' bill. We ought to say we don't want to debate that because it doesn't amount to anything. Then the House sent us a bill that imposes taxes. That is all it is. They impose taxes in order to put on a kind of energy stimulus for wind and the like. They want to tax in order to pay for it. We have never paid for it before. We have imposed those various incentives. They are good. We passed them 88 to 8 one time. We are for doing that again, but we are not for doing that in the manner suggested by the legislation from the House which came over here. It is our second vote. We ought to just say no to that and say we are ready to extend those tax credits and we are ready to do that in exactly the way we have done it before, with no taxes added to the American people or to anyone--just go ahead and do those tax extenders, which we desperately need.

Let me repeat. One of the most important things we need is an extension of those tax extenders. We do not need a tax bill that will pay for those extenders because we have already done it without taxes. We ought to do that again, nice and clean and quick. That would be a very good start toward an alternative energy policy or a continuation of one.

Mr. President, I wish to yield 3 minutes to the distinguished Senator from Pennsylvania at this point.

Mr. President, I yield the floor at this time.

Mr. President, am I correct in assuming that I have 2 minutes, plus the leader's time?

I yield myself 5 minutes and will reserve the remainder.

Mr. President, the American people are clamoring for relief at the pump. In 1 year we have seen a 16-point increase in the percentage of Americans who seek more exploration and production of oil and gas in this country.

Today, according to a recent Gallup poll, 57 percent of Americans are seeking more exploration and production of oil and gas here at home. I do not know what percentage of Americans would like to see higher taxes, increased prices, and greater imports, but I suspect it would be very low. But according to the independent Congressional Research Service, that is what the people will get if the Reid tax increase is enacted into law. They will get exactly what they do not want, because the bill will raise taxes, increase imports, and contribute to a pattern of sending more than half a trillion dollars overseas to hostile regions.

I will oppose the motion to proceed this morning. I wish to start by looking at the windfall profits tax contained in this bill. The nonpartisan Congressional Research Service found a windfall profits tax could have several adverse effects and could be expected to reduce domestic oil production and increase the level of imports. This group is not alone in their estimate. The Wall Street Journal predicts a windfall profit tax is a sure formula ``to keep the future price of gas higher.''

It is not simply these two views that warn against a windfall profits tax. Former officials from both the Carter and Clinton administrations have spoken. The Under Secretary of Commerce in the Clinton administration recently said:

A new windfall profits tax, however emotionally satisfying

it may seem, also harms most people saving for their

retirement or living on retirement savings. More than 40

percent of that cost would fall on tens of millions of

seniors and retirees who own oil stock directly or indirectly

through their pension plans and retirement accounts.

An individual named Phil Verleger, the individual responsible for implementing the tax during the Carter years, recently called a windfall profits tax ``a terrible idea today.''

There seems to be a consensus everywhere that the windfall profits tax is a bad idea, except in the halls of Congress and within the Chavez administration in Venezuela. It is not only conjecture that leads us to the conclusion that this is a bad idea but, rather, an understanding of history. Between 1980 and 1986 when the last windfall profits tax was in place, domestic oil production was reduced by as much as 8 percent and our imports rose from 32 percent to 38 percent. Revenues for the tax came in well below what was originally estimated, and the tax came to be called an administrative nightmare that stunted economic growth. It was a bad idea then and it is a bad idea now, and it should be rejected. About that I am certain.

How much time remains?

On the time I yielded to myself?

I want to try to raise a concept and see if we can get this where more people would begin to discuss this idea. In a hearing about 8 days ago, a crude oil expert made the statement that we would be using oil as a bridge to the future for more than 30 years. Let me repeat. We will be using crude oil as a bridge to the future for more than 30 years, this expert said, perhaps 40 years or more.

That is kind of common sense. Crude oil is used to make gasoline and things such as gasoline, and those are used in the importation industry. We cannot get rid of that quickly.

I will use 1 minute and then I will sit down. Let me repeat so everybody will get this. For something like 40 years, we will be using crude oil, our own or others, because we cannot get rid of the current mode of transportation any quicker. Cars will be cars, and we will be using them because we cannot wean them off the scene. As we move to a better era of a better life where we do not have to use crude oil in our daily lives so much, we will have to use the bridge which will be crude oil.

Now, why do I talk about this? I do because it is important we understand that if we have any cards, playing poker, if we have any aces in our hands, we better go ahead and play them, and the aces are crude oil we might produce some way that is ours. We ought to go ahead and play the card. I submit that we do have a lot of aces. We have got a huge amount of crude oil that is in the Outer Continental Shelf that we ought to be exploring for forthwith. We ought to take the moratoria off and start at 50 miles out across this land. If we did that and sent that message for starters, it would be received in a terrific way. Take the moratoria that were put in the bill that has been referred to as the Domenici bill for production, and believe it or not, we would send a signal that America is coming back to life, and during that bridge time we are going to produce more oil on our own.

Nothing will help us more in reducing the price and cost to our consumers than that idea we implemented. We must try to do it even if the Democrats do not want us to. We have got to try to force a vote so that people understand what we are trying to do.

I reserve the remainder of my time and I yield the floor.

Yes.

Mr. President, I assume the Chair is telling me that I cannot reserve any of the leader's time, so

I can sit down and take it at a later time?

All right. I will use it now.

Now, Senators today should have been--under anyone's understanding of the dilemma we are in with the price of oil scaring the American people to death, the amount of money we are sending out of our country to meet our energy needs, it is going to reach $600 billion a year. With the escalating price of crude oil, that is what it looks like next year. It will be what a full year will cost us, $600 billion. I would think with that in mind, there would be on the floor of the Senate some real proposals by the Democratic leadership and the majority party.

Instead, what do we get? We get what I call a ``no-energy energy bill.'' It is a no-energy energy bill because it does not produce an ounce of energy; it raises the cost instead of lowering the cost of crude oil; it produces less rather than more crude oil. That is why there is nothing going on on the floor, because there is nothing exciting. The Democrats have offered nothing.

We are begging them to try something. We are begging them to try something that would produce more American oil or oil substitutes. We know what they are. The distinguished Senator from Colorado knows what they are. We know that offshore, deepwater exploration around the shores of America could be put in effect by raising the moratorium, and we would have literally billions of reserves of oil and trillions of cubic feet of natural gas readily made available.

We need to take off the moratorium that we put on ourselves, take it off and say to the people: Let's produce it. It would take a few years. But the signal would be positive. We would have the oil shale in your State and Utah, your sister State, if we said we are ready to set the final guidelines so the oil companies can invest. Someone down here prior to my speech said the oil companies will not do anything to help. Yes, indeed they will. One of them is investing $8.5 billion in oil shale and tar sands up in our neighboring country of Canada. Some people think that is terrible, because they did not want them to produce that kind of oil. But I do not think it is terrible, because it eliminates the potential for gouging, for prices being too high. Because if you have these great inventories of resources and they are yours and you can use them, you ameliorate the increasing price of oil, and we ought to be doing that.

Instead of that, we are down here talking about a second bill. The second bill is a bill passed by the House, sent over here to us that is full of tax increases to pay for a series of tax incentives that we should pass without the tax increases. We have done it before, we ought to do it.

That bill ought to be defeated, no question about it, because we ought to pass it. We need the incentives, but we do not need the tax increases. We have done it without tax increases twice before, and somehow or other the House keeps getting it put in their head if they send it over here with other tax increases, different ones, we will go for it. I think it is pretty clear we will not.

So it is an interesting day. Instead of being here with some positive things we are going to do, we will be here defending some old ideas that are not going to help one bit, and we are saying, let's try them anyway.

I yield the floor.

Mr. President, I rise today to introduce the Economic Recovery Act of 2008. I think it is evident our economy is struggling to overcome the twin effects of record-high energy prices and a steep downturn in the housing market.

Earlier this year, this Congress acted to provide rebates to taxpayers to help them cope with the effects of the downturn in the economy. The hope was also that the impact of these rebate checks would be to stimulate the economy.

It is evident much more needs to be done, so the legislation I am introducing today is aimed at reinvigorating our economy. It is my proposal for a second economic stimulus package.

Over the course of the past several years, we have seen the price of oil climb by more than 400 percent, from about $30 per barrel in 2003, to more than $133 per barrel this morning. This escalation in energy costs threatens to plunge our economy into a recession, and it is imposing a tremendous hardship on middle-income and low-income families, on our truckdrivers, our farmers, our fishermen, our schools, virtually everyone.

Big factories and mills, as well as small businesses, have also been harmed by high energy prices. In fact, a week ago we learned a mill in Millinocket, ME, is going to be forced to shut down because it can no longer afford the oil that is essential to the operations of that paper mill.

We are working with Governor Baldacci to try to find alternatives. But it is a prime example of the tremendously harmful impact high energy prices are having on the economy of our State and indeed States throughout the Nation.

Gasoline is already topping $4 a gallon 2 weeks into the summer driving season. Maine families fear the cost of staying warm next winter because home heating oil prices have reached record highs.

At the same time, the cost of diesel fuel is pushing some of America's independent truckers to the brink of bankruptcy. Consider this astonishing fact. In 1999, a Maine truck driver could go from Augusta, ME, all the way to Albuquerque, NM, on $500 worth of diesel. Today, $500 worth of diesel will not get that truck driver to Altoona, PA. What a difference a few years makes.

Of course, with diesel prices continuing to increase, the problem is only getting worse. Meanwhile, weaknesses in the housing market are making it impossible for millions of Americans to get the financing they need to stay in their homes when their adjustable rate mortgages reset. Many of these families are being forced into foreclosure, leaving behind vacant properties and creating a ripple effect that is pulling down home values even further. This problem hurts communities across the Nation, and it requires an effective Federal response.

The legislation I am introducing today would provide much-needed help to Americans who are struggling with high energy costs and the weak housing market. Let me outline the provisions of the economic stimulus package I am proposing.

First, the Economic Recovery Act proposes a series of initiatives to promote increased energy efficiency that would help consumers save money on their energy bills, and help advance the goal of energy independence for our Nation.

Second, the bill provides relief from truck weight regulations that are injuring truckers in the State of Maine.

Third, it proposes a new program to finance transportation infrastructure that is based on the model of the Build American Bonds Bill.

Fourth, it would increase funding under the Workforce Investment Act so we can help displaced and unemployed or underemployed workers.

Fifth, it proposes tax incentives designed to help America's small businesses.

And, sixth, it would help to restore stability in the housing market by expanding the FHA Secure Program, which would help homeowners refinance mortgages that are in danger of foreclosure.

We have focused a lot on the housing problems and the turmoil in the housing and financial markets. Indeed, that is an important factor in the decline of our economy. As I have indicated, I think more needs to be done. But I am convinced high energy prices are an even greater cause of the economic downturn.

We must act to protect ourselves from rapid increases in oil prices and in the long term achieve energy independence. One way to help achieve both those goals is to encourage greater efficiency. My bill would double the funding for the Department of Energy's Weatherization Program, reaching $1.4 billion by the year 2010.

The bill would also provide $112 million each year for the valuable Energy Star Program, which helps consumers choose energy-efficient appliances, and would extend the renewable electricity tax credit through 2011 and the residential investment tax credit for solar and energy-efficient buildings through 2012.

My bill also includes a $500 credit to consumers who replace their old wood-burning stove with a new, cleaner-burning model using wood or wood pellets. This complements a proposal I introduced in February.

We must take action to address the impact rising diesel prices are having on the trucking industry, which is struggling. The rapid increase in the price of diesel is making it more difficult for our Nation's truckers to stay on the road.

It is also increasing the cost of delivering goods that communities throughout our country rely on. We can help trucks to operate more efficiently if we ease Federal trucking regulations that prohibit trucks that carry more than 80,000 pounds from traveling on the Federal interstate system.

My bill includes a provision that would create a 2-year pilot project that would permit trucks carrying up to 100,000 pounds, which is the weight level that is permitted on Maine's highways, to travel on the Interstate Highway system when diesel prices are at or above $3.50 a gallon. The savings on fuel consumption will benefit the trucking industry, the consumer, and our Nation at a time when we are looking for ways to decrease our dependency on foreign oil.

Let me tell you, the current system simply makes no sense at all. In Maine, the trucks that have 100,000 pounds of cargo are forced to leave the Interstate in Augusta, ME, a road that is built to accommodate the heaviest trucks, and instead are forced to go on secondary roads through towns and villages, stopping at railroad crossings. That wastes fuel, and is less safe than keeping them on the Interstate. The trip takes much longer because they are on secondary and slower roads that often are not the most direct routes to the destination. So that simply makes no sense at all.

Any proposal to stimulate the economy should help to fund transportation infrastructure projects. They are a proven means of fostering economic growth and are a lasting investment; an investment we need.

This past winter has been so difficult and so hard on the roads in Maine. I do not think I have ever seen so many frost heaves and so much wear and tear that the very difficult cold and snowy winter has had on our roads and highways as I have seen this spring in Maine. The legislation I have introduced calls for a $50 billion investment through new transportation bonds for roads, bridges, transit, rail, and waterways.

Now, I wish to give credit where credit is due. This proposal which I put into the economic stimulus package was first introduced by Senator Wyden. I was very pleased to be a cosponsor of his bill. I have included our proposal as part of this broader package. Not only will this funding serve as the catalyst for thousands of good jobs today, we all know construction jobs are good jobs, but it also will improve our transportation infrastructure, which is critical to economic development over the long term.

This is an investment that makes sense. Many of these transportation projects are ready to go. They only need the funding. We must also act to provide assistance to those who have lost their jobs in this economic downturn. Now, that means extending unemployment compensation benefits. I hope we are going to do that soon. But in addition, we need to invest in our workers.

In the last 4 months, we have seen 340,000 jobs lost across the country. Today, we have more than 1.6 million additional unemployed workers, compared to 2001; 800,000 more than a year ago. The national unemployment rate has jumped to 5.5 percent. In my home State, 33,600 Mainers are looking for work.

In view of this increase in unemployment, it makes no sense whatsoever that the President's budget actually proposes another cut in the Workforce Investment Act. In fact, overall, the President's budget would cut $1.5 billion from the Department of Labor's workforce programs.

We must invest in America's workforce. Yet since fiscal year 2001, funding for the Workforce Investment Act programs has been reduced by nearly $1.7 billion in real terms. My bill would provide $1 billion in additional Workforce Investment Act funding that would enable us to train nearly 300,000 additional workers.

The bill would also increase funding for the Dislocated Workers program and for Youth and Adult training programs. Support for job training, investing in our workers is critical, but it is also important that we provide relief to the job creators in our economy, and that is our small businesses. The fact is, small businesses create 80 percent of the net new jobs in America. During economic downturns, however, they struggle with cash flow and they must forgo investments they need to grow and remain competitive. That is why I am proposing some tax incentives to help small businesses.

First, we should make the Section 179 expensing limit for small companies permanent so they can count on it. Second, we should renew a provision of tax law that allows restaurant owners to depreciate their equipment more quickly, over 15 years.

Finally, we must take action to steady the housing market. More than 50 million Americans hold mortgages at present and, fortunately, most of them are current with their payments. But 7 million of these mortgages are so-called subprime loans, and most of them are adjustable rate mortgages that reset to higher, often unaffordable rates after only 2 or 3 years of very low introductory rates. What we are finding is a lot of first-time homeowners simply did not understand the risk they were taking with subprime loans. As a result, approximately 1.3 million of these 7 million subprime mortgages are delinquent and could soon be in foreclosure. This number is expected to rise as more mortgages reach the reset date.

I am not interested in bailing out speculators, people who took a gamble that housing prices were going to increase. What I am talking about are homeowners who were peddled an unsuitable mortgage product. We need to help them. Foreclosures inflict losses all around--on the families who lose their homes; on the neighborhoods where values fall as empty houses proliferate; on borrowers who face tighter requirements and higher costs, as perceptions of lending risk increase; and on those who work in the construction or real estate industry, dependent on a strong housing market.

One source of help--and this is what I am proposing in my bill--would be to bolster the FHASecure program administered by the Federal Housing Administration. This program allows eligible homeowners to avoid foreclosure by assisting them with refinancing so they can afford to make their mortgage payments. My bill would expand this program to make it easier for lenders to accept voluntary write-downs of distressed mortgages and allow borrowers whose incomes are not sufficient to meet the terms of their existing mortgages to refinance their homes on terms they could afford. My bill also grants the FHA expanded authority to adjust insurance premiums, depending on the individual borrower's risk profile, to ensure the solvency of the FHA insurance fund. These provisions could help FHA reach hundreds of thousands of additional homeowners by the end of the year, and to do so without taxpayer subsidies.

The legislation I am introducing today includes comprehensive proposals that, taken together, would go a long way toward addressing the two factors truly harming our economy--high energy prices and a weakening housing market. I urge my colleagues to work together in a bipartisan way, to look at the ideas that I and others have proposed so we can work together on a second stimulus package to address these concerns and to help restore and strengthen our Nation's economy.

Mr. President, today I am introducing, along with Senators Feinstein, Durbin, and Dorgan, the Close the London Loophole Act. This legislation would ensure that the Commodity Futures Trading Commission, CFTC, has the same authority to detect, prevent, and punish manipulation and excessive speculation for traders in the United States who trade crude U.S. oil or other energy commodities on foreign commodity exchanges as the CFTC has for traders who trade on U.S. exchanges.

Today, U.S. crude oil and gasoline futures are traded primarily on exchanges in New York and London. While the CFTC--our cop on the beat-- has clear authority to go after trading abuses on the New York exchange, its authority is less clear when it comes to U.S. energy commodities traded on the London exchange. The bill we are introducing today would close the London loophole by ensuring the CFTC has all the information and authority it needs to stop price manipulation or excessive speculation involving U.S. energy trades on foreign exchanges.

Under current law, the CFTC obtains the information it needs to detect price manipulation and excessive speculation involving U.S. energy trades on foreign exchanges only through voluntary data-sharing agreements it arranges with the relevant foreign regulators. In many instances, the CFTC can take action against a U.S. trader on a foreign exchange to prevent manipulation or excessive speculation only with the cooperation and consent of the foreign regulator.

Our bill would strengthen CFTC oversight by providing the CFTC with clear legal authority, as well as a clear legal obligation, to obtain trading data from foreign exchanges operating in the United States through direct trading terminals. In addition, the bill would enable the CFTC to act on its own authority and initiative to prevent manipulation or excessive speculation by U.S. traders directing trades through foreign exchanges. This new authority would ensure that our own government has the information and ability to protect American markets from manipulation and excessive speculation, no matter where U.S. energy commodities are traded. U.S. traders will no longer be able to avoid the cop on the beat by routing their trades through a foreign exchange.

This legislation would complement a recent legislative initiative I have long worked on to ensure that U.S. commodity markets are free from manipulation and excessive speculation. Last month the Congress passed, over the President's veto, legislation to close the Enron loophole. This loophole, enacted into law in 2000 at the behest of Enron and other commodity traders, had allowed large traders to buy and sell energy commodities on U.S. electronic markets without CFTC oversight. The legislation passed last month as part of the farm bill gave the CFTC the authority and mandate to police U.S. electronic exchanges to stop price manipulation and excessive speculation. No longer will these electronic commodity exchanges be able to operate in the dark, as they had under the Enron loophole.

Closing the Enron loophole is a major advance in U.S. energy market oversight as a whole, and for our natural gas markets in particular, but it is not enough. Because over the last two years, energy traders have begun trading U.S. crude oil, gasoline, and home heating oil on the London exchange, beyond the direct reach of U.S. regulators, we have to address that second loophole too. I call it closing the London loophole.

There are currently two key energy commodity markets for U.S. crude oil, gasoline, and heating oil trading. The first is the New York Mercantile Exchange or NYMEX, located in New York City. The second is the ICE Futures Europe exchange, located in London and regulated by the British agency called the Financial Services Authority.

British regulators do not oversee their energy markets the same way we do. They don't place limits on speculation like we do, they don't monitor trader positions like we do, and they do not require the same type of data to be reported to regulatory authorities. That means that traders can avoid U.S. crude oil speculation limits on the New York exchange by trading on the London exchange. It also makes the London exchange less transparent than the New York exchange. The legislation I introduced last year to close the Enron loophole would have required U.S. traders on the London exchange to provide U.S. regulators with the same type of trading information that they are already required to provide when they trade on the New York Mercantile Exchange. Unfortunately, this provision was dropped from the close-the-Enron- loophole legislation in the farm bill.

The Consumer-First Energy Act, S. 3044, which the Majority Leader and others introduced recently to address high prices and reduce speculation, included at my request a provision to curb rampant speculation, increase our access to foreign exchange trading data, and strengthen oversight of the trading of U.S. energy commodities no matter where that trading occurs. This provision would require the CFTC, prior to allowing a foreign exchange to establish direct trading terminals located in this country, to obtain an agreement from that foreign exchange to impose speculative limits and reporting requirements on traders of U.S. energy commodities comparable to the requirements imposed by the CFTC on U.S. exchanges. This issue is so important that I introduced this section of the package as a separate bill, S. 2995, along with Senator Feinstein.

Following the introduction of our legislation, the CFTC finally moved to address some of the gaps in its ability to oversee foreign exchanges operating in the United States. Specifically, the CFTC, working with the United Kingdom Financial Services Authority and the ICE Futures Europe exchange, announced that it will now obtain the following information about the trading of U.S. crude oil contracts on the London exchange: daily large trader reports on positions in West Texas Intermediate or WTI contracts traded on the London exchange; information on those large trader positions for all futures contracts, not just a limited set of contracts due to expire in the near future; enhanced trader information to permit more detailed identification of end users; improved data formatting to facilitate integration of the data with other CFTC data systems; and notification to the CFTC of when a trader on ICE Futures Europe exceeds the position accountability levels established by NYMEX for the trading of WTI crude oil contracts.

These new steps will strengthen the CFTC's ability to detect and prevent manipulation and excessive speculation in the oil and gasoline markets. It will ensure that the CFTC has the same type of information it receives from U.S. exchanges in order to detect and prevent manipulation and excessive speculation on the London exchange.

However, in order to fully close the London loophole, better information is not enough. The CFTC must also have clear authority to act upon this information to stop manipulation and excessive speculation.

That is why I have been working with the sponsors of the Consumer- First Energy Act to develop additional language to ensure that the CFTC has the authority to act upon the information obtained from the London exchange to prevent price manipulation and excessive speculation. This new provision would make it clear that the CFTC has the authority to prosecute and punish manipulation of the price of a commodity, regardless of whether the trader within the United States is trading on a U.S. or on a foreign exchange. It would also make it clear that the CFTC has the authority to require traders in the United States to reduce their positions, no matter where the trading occurs--on a U.S. or foreign exchange--to prevent price manipulation or excessive speculation in U.S. commodities. Finally, it would clarify that the CFTC has the authority to require all U.S. traders to keep records of their trades, regardless of which exchange the trader is using.

This new provision is included in the bill we are introducing today. I hope that it will also be included in the Consumer-First Energy Act when Senate debate is allowed to go forward on that bill.

In closing the London loophole, we will ensure there is a cop on the beat for all U.S. energy commodity traders, no matter whether they are trading on an exchange in New York or in London. It will ensure that our regulators have the information and the tools to detect, prevent, and punish manipulation and excessive speculation.