Home Energy Assistance Today Act

Mr. President, I ask unanimous consent to speak in morning business for 20 minutes.

Mr. President, this is a very important subject. My colleague from Arizona speaks of the issue of energy. The price of gasoline is skyrocketing. The price of oil has doubled in a year. It has an impact on everything and everybody in this country. It is important as we discuss this issue, however, that we not create false choices.

It is a false choice for anybody to suggest that, because we do one thing, we cannot do another. It is a false choice to suggest that because we take the first needed step, we are ignoring subsequent steps. We ought to do a lot of things here.

I mentioned yesterday that we had a witness come to a hearing and describe this situation. If you have someone being hauled into a hospital emergency room who is grossly obese and also suffering a heart attack, do you think some doctor who meets the gurney at the emergency room is going to look at this grossly obese person suffering a heart attack and say: All right, let's start working on a diet. We have to work on this obesity. No, of course not. He will say: Let's take emergency action to deal with the heart attack.

Now, my point is this: We have very serious energy problems. One part of it is a gross amount of excess speculation in the commodity market that has driven up--actually doubled--the price of crude oil in the past year, for which there is no justification in the supply and demand of the commodity. It seems to me, at least as a first step, we ought to address this excess speculation.

My colleagues then say you have to drill. I don't disagree with that. In 2006, I was one of four Senators who cosponsored the legislation that resulted in the law that opened lease 181 for oil and natural gas production. This is 8.3 million acres in a portion of the eastern Gulf of Mexico that is now open for drilling. Senators Bingaman, Domenici, Talent, and I were the people who first introduced that bill. It is now law. So that is fine.

But if the only answer is to drill then I would ask those who say that, how many airlines do you think will be serving this country if we wait for 5 or 7 years until somebody gets all the permits, undertakes the testing, builds a drilling rig up in an area and pumps new oil out of the ground? How many airlines will be serving this country? I tell you, a number of them have already gone bankrupt. Several are out of business, and others will follow quickly. How many small-mom-and-pop trucking firms that can't afford to pay for the diesel in their saddle tanks are going to be out of business in the next 5 or 7 years before this notion of drilling, which is going to produce the additional supply they are talking about, will be effective? How many fewer farmers are going to be around? How many people will be around trying to figure out: How on Earth do I afford to fill my gas tank in my car in order to get to work next week because I don't have the money for the gas?

My point is, we need to do a lot of things. Yes, we need to produce more, and we need much greater conservation. By far, the most effective achievement of additional oil production is to save a barrel of oil. We are such prodigious wasters of oil and energy in this country. It is unbelievable. There is so much to be gained by conservation and energy efficiency. In everything we use from our lights, better doors and windows, insulation, virtually every appliance, hot water heaters, refrigerators, and stoves, conservation and energy efficiency are a very significant part of this issue.

So, too, is a renewable energy future. We need game-changing approaches. I want to go from here to 10 years from now in a game- changing way that says: I don't want us 10 years from today to be so dependent on Saudi oil. My colleagues, all they talk about is drilling. I am for drilling. But if that is all you are for, that is a yesterday forever strategy. Good for you. But every 10 or 20 years you are going to have exactly the same debate--drill more. You are not going to change this country's energy future at all.

So my proposition is this: How about working together on steps, a step at a time, doing a lot of things and doing them right. How about the first step? We just had testimony this morning in the Energy Committee from someone that cited a recent report from the CFTC which indicated that more than 73 percent of those trading in the commodity futures market have nothing at all to do with hedging a physical commodity. That is not what they are interested in. They are speculators. He called them investors, but they are speculators. In fact, he said speculators. He said I actually called them investors.

But if 73 percent of that market for the oil futures is now devoid of people who are actually trying to hedge a physical product between consumers and producers, then that market is broken. That market has gone far afield of what it was created to do.

The market was created in 1936. When it was created, Franklin Delano Roosevelt warned about excess speculation when he signed the bill. And the bill itself had a provision dealing with excess speculation because of concern that speculators could take over a market and ruin the market.

The proposition is this: What has happened in the last 14 months that has allowed that market to price oil to double in price? What has happened with respect to the fundamentals of oil supply and demand that would justify that? The answer is: Nothing. Nothing. It has been pure, relentless, excess speculation moving massive quantities of money into this marketplace speculating on crude oil futures.

I have mentioned many times the description of Will Rogers about speculation because it is not new to America. It happens. When it happens and markets are broken, we have a responsibility to take some action. Will Rogers described it as someone buying things they will never get from people who never had it. You can add, in this day and age, with money they don't possess.

So what we had is unbelievable excess speculation in the marketplace. There are some who scoff and say that is not happening. One of my colleagues this morning said what is happening is supply and demand. Well, I ask my colleagues to come to the floor and describe to me the events that have occurred in the last 14 months or so that would justify doubling the price of gasoline or oil. They will not come to the floor because they can't. The knowledge of the significant change in supply and demand in the last 14 months does not exist.

This is not about supply-and-demand fundamentals. Go back 2 or 3 years and ask yourself: What do we know about the desire of the Chinese or Indians to drive more cars? What do we know about all those factors that might, in the longer term, increase demand for gasoline or diesel? Did we not know them a year ago? Is that new knowledge? Not at all.

The fact is, nobody is going to come to this Chamber and tell us there is something that has happened to supply and demand that justifies the doubling of the price of gasoline and oil because it does not exist. This doubling existed because, in my judgment, of excessive, reckless speculation in the futures markets for oil. We have a responsibility to do something about it.

Now, the legislation that we introduced yesterday is the Stop Excessive Energy Speculation Act of 2008. Let me say that again: Stop Excessive Energy Speculation Act of 2008. I worked with Senator Reid and others on the legislation. It is not brought here, as my colleague from Arizona just suggested, to

do this and nothing else. That is a false choice, and it is being presented on the floor of the Senate every chance they get. If we do this, it means we don't want to do anything else. I say let's do this and everything else.

Now, I am not suggesting, as some perhaps would, that we drill in the Grand Canyon or drill in the Everglades. There are certain areas where we ought not drill. We have a substantial amount of area that is available for drilling. And when they say: Well, we are not drilling. Why don't you go north of Kidder, ND, and take a look at a rig right now. We have about 70 to 80 of them in North Dakota, and they are drilling right now in something called the Bakken shale.

Some may not understand, but in the last 2 months, the U.S. Geological Survey put out an assessment that said the Bakken region has the largest assessment of recoverable oil ever recorded in the lower 48 States. This is 3.6 billion barrels to 4.3 billion technically recoverable barrels, and they are pulling oil out of that formation. There are drilling rigs all over western North Dakota and eastern Montana.

So when someone suggests we are not drilling, that's nonsense. Get a car and drive around a little. I will show you where the rigs are. We are drilling onshore and offshore. We have, in fact, opened lease 181, a portion of the Gulf of Mexico that was not previously opened until 2006. We don't see a lot of activity there at the moment, but we did that because there are substantial oil and gas reserves there.

I will make one additional point. There are a half million barrels that can be potentially produced off the coast of Cuba. Spain, Canada, India, and others are interested. But U.S.-based companies are not able to get involved in leasing off the coast of Cuba because we have an embargo against Cuba, among other things. President Bush doesn't want us to be involved in this region.

So it is not a case where those who come to the floor suggesting that we drill, drill, drill, would want us to drill everywhere. In fact, the legislation they brought to the floor of the Senate that touts drilling conveniently left out a substantial portion of the eastern Gulf of Mexico because a Member on their side doesn't support that. So they left that out of their proposal. Oh well. I guess one doesn't have to be consistent to come to the floor to make presentations.

The issue is this: Let's do something together because this country's economy is being damaged. American families are being injured, and farmers, truckers, and airlines are getting killed with these prices. Let's do something together to address it.

What would make sense? What is the first step, or at least a sensible first step? Does it make sense to say let's do something that will provide some relief in 7 years? That will be great to tell Aunt Millie: I know you won't be able to pay your fuel bill this winter, but 7 years from now, just wait, we will have another field in production someplace.

What about taking first steps first? What about stopping excessive energy speculation with the bill we introduced yesterday? Now, how does the bill do that? It requires the Commodity Futures Trading Commission, which has been a regulatory agency that I have had fairly strong words about recently, to actually stand up, put on striped shirts, blow the whistles and be the referees for this marketplace. They have been an abysmal failure, in my judgment. They have an acting chairman, who says: What, me worry? The only thing going on here is the market demands and the fundamentals are working. It is just supply and demand.

In fact, the Commodity Futures Trading Commission has been issuing over the years what are called ``no action letters.'' Boy, that is a fitting tribute to this agency--no action letters--that have said, essentially: We are not interested in seeing what is going on. In fact, we will be willfully blind to what is going on, and here is a letter that demonstrates we are interested in that position.

So what we say in the bill is: Look, there is a regulatory agency here, and we believe it ought to function and we require it to function in a certain way. No. 1, we say it ought to distinguish between groups of traders. There are those who are hedging their risk, the consumers and producers of a physical product, because that is the purpose for which this market was established and all others. All the others are speculators.

And this bill would impose substantial position limits on what are the nonlegitimate hedge trading transactions. Again, very specific. Within 30 days, we would require the regulator to impose very specific and strong position limits on all non-legitimate hedge trading. What that does is to take some of the air out of this balloon and put some downward pressure on oil and gas prices.

Now, I have shown this chart many times, but it is worth going over some of the things we have heard here in the Congress, and it is worth it because of those who come to the floor to say: What speculation? There is no speculation.

I had Fidel Gheit, an interesting guy, testify in front of our committee before, and I have talked to him by phone, and here is what he says:

There is no shortage of oil. I'm convinced oil prices

shouldn't be a dime above $55 a barrel.

And he said, talking of the futures market:

I call it the world's largest gambling hall. It is open 24/

7. Unfortunately, it's totally unregulated. It's like a

highway with no cops and no speed limits and everybody going

120 miles an hour.

Energy Secretary Bodman, who is one of these people who says there is nothing going on with respect to these marketplaces and this speculation, says:

There is no evidence that we can find that speculators are

driving futures prices for oil.

He says he can't find the evidence. Well, let me find evidence that indicates the opposite. Here are at least two examples. First, the House Subcommittee on Oversight and Investigations released a report showing that speculators in the oil futures market went from 37 percent to 71 percent. It seems to me that is some pretty substantial evidence. Second, testimony this morning before the Energy Committee revealed that speculators represented 73 percent of the market--almost identical.

So I would say to the Secretary: If you can't find the evidence, I can. If you have the right evidence, maybe you could search for the right solution.

Our Energy Information Administration--the EIA--doesn't do anything with respect to policy. We spend $100 million for this agency, and it is supposed to simply provide the best information available. Here is the information they have provided: In May 2007, they said here is where we think the price of oil will be--right across here, about a straight line. In July 2007, they said: Here is where the price of oil will be. In September 2007 and in November 2007, they said here is what we think. Now, in March 2008, here is where we think it will be.

Well, guess what. These lines were so far off, I mean it is almost laughable. Here is where the price of oil went. Why is that? I assume these folks were taking a look at supply and demand and the normal relationship that determines a price, and they didn't understand that what has happened is that this market is perverted and broken as a result of excess speculation. The price went just like a Roman candle.

There is no way to describe this as anything that is rational. We are not off not by a mile, but by a country mile.

I had a hearing on this subject. Of course they couldn't answer the question of why they were off so far.

The senior vice president of ExxonMobil:

The price of oil should be about $50 to $55 per barrel.

The same with the president of Marathon Oil, same answer.

My sense is that we ought to do everything, but we have folks coming to the floor of the Senate to say: You can't do anything unless you do drilling first.

We are doing drilling right now, but we will not allow you to do anything unless you do something that is going to affect something 5 or 7 years from now.

It doesn't make much sense to me. It seems to me, if this is an opportunity to move forward, you address the hurdles that are in front of you. The first hurdle, it seems to me, is to set this market straight. I believe the market we have with respect to the futures

market is broken. There is reason to debate that. I respect those who disagree, but I think the evidence is not on their side.

What I think we should do is decide we have a very serious problem, and we should address it three steps. The first step would be to tackle this speculation issue. We introduced that legislation last Tuesday. That legislation brings everything under the control of the Commodity Futures Trading Commission so they can see all of it, including the over-the-counter trades on foreign exchanges. It requires strong position limits. The fact is, it requires that a distinction be developed between legitimate hedgers and just pure speculators. We should do that. So that is step No. 1.

Step No. 2, it seems to me we should develop a broader position with the six or eight things we need to do as a country in a much more aggressive way that increases additional production, conservation, and energy efficiency measures because all of these opportunities in the future.

For step three, we ought to do something that is game changing because we come here every 10 years or so, every 20 years, and the drillers come in and say: The only way to solve our energy problem is to drill. As I said, that is a yesterday forever policy. That is fine if you are comfortable coming back to the same debate and putting our country in the same position. But the game-changing approach, in my judgment, is to say there are a lot of ways for us to develop renewable sources of energy, a lot of ways for us to develop renewable sources of energy in a way that really changes our energy future significantly.

Those are the three things I think we ought to do and do them in that order and fairly close order, and I believe we ought to do it understanding that this is an emergency.

If all we do is just to deny that this market is broken and deny that there is excess speculation, then we will just be talking past each other. If that is all we do, I wonder how many airlines will be left in this country 5 or 7 years from now, if that is the time period in which maybe you get some additional drilling up and get some additional production? How many trucking firms are going to be operating out there? How many mom-and-pop firms go belly-up in the next 6 months or year or 2 years? How will the folks who are trying to fill their tanks and figure out how they are going to pay gas prices go to work? How will they fill that tank to get to work next week or next month or next year?

I think there is an urgency. One of the things to respond to with respect to that urgency is the first challenge in front of us. That urgency is to set straight the excess speculation in this marketplace. We can do that. There is nothing Republican or Democratic about that. It is just to look at this with a level head and say: Here is a problem, let's address it. The underlying law that created the futures market was created in 1936. It has a provision dealing with excess speculation.

I will make one final point. The regulatory authority here has been an abysmal failure, but that is not just in this case. We face a lot of challenges today. We face challenges with respect to banking. We face challenges with respect to the subprime scandal and a whole range of other things, and you can trace it right back to the root that so many people felt regulation was a four-letter word. They decided we want to have regulators who decided not to regulate. That is certainly the case with this market. It is the case with other issues as well.

I think we have a Congress that has the responsibility and opportunity to set it straight.

I yield the floor.

Yes.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I am here once again because the price of oil remains at a historic high. It has come down slightly today, and I hope that will continue. As a matter of fact, I hope people listen to what we are saying so it will come down because I do think this drop has something to do with the fact that everybody is talking about speculation.

There is no question that my people, Alaskans, are paying more for fuel oil and gasoline and petroleum products than anyone in the country despite the fact that we produce almost a million barrels of oil a day. We don't have any gasoline refineries. We have refineries for jet fuel because we have such an enormous traffic, through our State, of commercial cargo planes. Of course, during the summertime we have enormous tourist traffic to our State by the airlines.

It is a great problem for us right now because we have less than a million people spread out over an area that is more than twice the size of Texas. We are absolutely fuel-intensive in terms of our lifestyle because 70 percent of our cities can be reached only by air year round. We really have to deal with the problems that are presented by this energy crisis.

I applaud the President lifting the offshore drilling ban. I do think it sent a signal to the country that it is a very serious thing. After all, his father placed that in effect, and it has been there, and it really is something that has to be dealt with.

The difficulty is that even with the ban lifted and even with full approval of the Congress, we are going to the Outer Continental Shelf now to determine how much we can produce. We know we can produce a great amount, but how much we can produce from the Outer Continental Shelf? Two-thirds of the Outer Continental Shelf is off our State, and there is only one oil well there now. There are hundreds of thousands of wells in the other one-third, but because of the constant opposition of those who oppose exploration and development in our State, we are stymied.

Take for instance the leases on the Chukchi Sea, which is the area off the northwest coast of Alaska, some 70 miles off the coast. The oil industry has obtained leases there to explore for and develop that area for its oil and gas potential. That has been, now, tied up for over a year by a series of lawsuits. One of them is claiming that oil and gas exploration would harm the polar bear. I want the Senate to know that just a week ago, the ice at that area was 17 feet deep. The ice is not disappearing the way people say it is, particularly in the period of time when the polar bears are there. But beyond that, the difficulty is there is a whole series of things that--these people who are against exploration and development in my State have caused wildlife to be listed as endangered or at least threatened, and they are using those findings in order to delay the development of new facilities to bring us the new production we need, the new production the Government needs.

It reminds me of the time I spent here on the floor--almost 4 years-- in the seventies when the first group litigated again and again to delay the oil pipeline. Finally, we reached the stress point where we had to ask the Senate to do something it had never done before and hasn't done since, and that is to close the courts of the United States to this constant delay in building that pipeline. We finally brought that amendment to the floor. It was debated at length for 4 days, and it ended up with a tie vote--the only tie vote at

the time of the then Nixon administration. Vice President Agnew broke the tie. It was 49 to 49.

Think of what that means. At that time, there was a paradigm that the Senate would not filibuster anything that involved national security. The availability of oil to meet our needs is a matter of national security, but we faced a filibuster ever since then, in terms of trying to develop the Arctic.

One of the things we ought to look to today, though, is the letter that has been sent by almost all the airlines in the United States. AirTran, Alaska Airlines, American Airlines, Continental, Delta, Hawaiian, JetBlue, Midwest Airlines, Southwest, United, and U.S. Airways, all joined in sending a letter to the holders of their frequent flier programs dealing with the problem of the skyrocketing oil and fuel prices and what they are doing to destroy the capability to provide air transportation to the United States.

I read before and let me read again this one paragraph. I think it is absolutely something everyone should understand. I am quoting now from this letter signed by all the presidents and heads of these companies.

Mr. President, I ask again to have it printed in the Record following my remarks.

The letter says:

Twenty years ago, 21 percent of oil contracts were

purchased by speculators who trade oil on paper with no

intention of ever taking delivery. Today, oil speculators

purchase 66 percent of all oil future contracts, and that

reflects just the transactions that are known. Speculators

buy up a large amount of oil and then sell it to each other

again and again. A barrel of oil may trade 20-plus times

before it is delivered and used; the price goes up with each

trade and consumers pick up the final tab. Some market

experts estimate that the current prices reflect as much as

$30 to $60 per barrel in unnecessary speculative costs.

If those pieces of paper that represent future delivery of oil are purchased by people who are just speculating and that purchaser ends up, after selling the paper, acquiring it again, to me, that is absolute proof of a criminal conspiracy in this country.

I think this speculation has to stop. We have to start talking more about it, and we have to do something about it. What I would do is make sure it is a criminal matter if someone acquires the same piece of paper dealing with futures in oil and has no ability to use the oil. I really do not think there is any reason--I can understand a company might buy ahead for 2 or 3 years in oil and buy futures and hedge against the price, that, in fact, it might go up, but people who buy those pieces of paper solely to manipulate the price--and that is what happens when someone not involved, these institutional investors, buys a piece of paper to buy oil in the future and then sells it to another institutional investor and then another one. If that piece of paper ends up in the same hands the second time, to me, that is a criminal conspiracy, and it is time we looked at that and understood it. This letter sets it forth.

Believe me, any Member of the Senate who ignores this letter ignores the fact that every single frequent flier person in the country has it in their hands. I don't know about the rest of you, but I am getting thousands of letters from people who are sending me this letter and saying: What are you going to do about it? I say what we have to do about it is send a signal to these speculators to take notice that Congress is serious about speculators.

I know there is a difference of opinion out here on the floor of the Senate, there is no question about it, but in the last 5 years, investments in commodity index funds jumped from $13 billion to $260 billion. That means institutional investors have gone from owning $13 billion worth of oil futures to $260 billion in oil futures.

Now, someone tell me that is not a conspiracy.

Let me put up this chart. This chart represents the so-called NYMEX oil futures. The red on the chart represents the price of oil; the gold represents the volume of trading. The volume of trading has gone up, but the price has gone up more than twice as much as the volume.

There is only one thing that can drive up a spike like that. That is speculation, it is not demand. Someone told me not to try to understand supply and demand in the oil business. I think I know something about oil demand in the oil business, because we tried to meet that demand in terms of our State. We had a better chance of satisfying the demand of the United States than any State. But to have this situation go along I think is wrong, to go forward I think is wrong.

I have personally talked to one of the economists. I must say he does not share my feelings that we ought to make this a crime immediately, because, it is my understanding, he does not believe we have seen evidence of criminal conduct yet.

But I say it is criminal conduct if someone owns one of those pieces of paper twice. There is no reason to sell a future in oil and then turn around and buy it later at a higher price. They are actually being acquired and turned over more than 20 times before the oil is delivered. That ought to be something the Justice Department and the CFTC should have notified us on before it took the time of all of these presidents of these companies to send this letter to their customers so they can send it on to us. These people have told their customers to contact us. Well, this is one time I hope all of us listen to what they are saying. Because there is no question that we have to find some way to restrict this trading to those who need oil in the future, those who legitimately hedge to try and save their customers money, not to cost them more money but to save money. A true hedge would save money for the customers of the particular person who acquired the futures.

I think the legislation Senator Feinstein and I introduced some time ago represents an important step toward breaking this bubble. The position limits we would place on institutional investors would be very minimal and would make them stay away from market manipulation.

If we can see these investments shift away from the energy commodities and back to the stock markets the way we have in the last few days, I think the stock market would recover.

I thank my friend from New Hampshire for letting me use part of his time. But I say, we cannot stop at mandating transparency. We have to do something to put these people in fear before they will stop this action of driving this price up.

Exhibit 1

An Open letter to All Airline Customers:

Our country is facing a possible sharp economic downturn

because of skyrocketing oil and fuel prices, but by pulling

together, we can all do something to help now.

For airlines, ultra-expensive fuel means thousands of lost

jobs and severe reductions in air service to both large and

small communities. To the broader economy, oil prices mean

slower activity and widespread economic pain. This pain can

be alleviated, and that is why we are taking the

extraordinary step of writing this joint letter to our

customers. Since high oil prices are partly a response to

normal market forces, the nation needs to focus on increased

energy supplies and conservation. However, there is another

side to this story because normal market forces are being

dangerously amplified by poorly regulated market speculation.

Twenty years ago, 21 percent of oil contracts were

purchased by speculators who trade oil on paper with no

intention of ever taking delivery. Today, oil speculators

purchase 66 percent of all oil futures contracts, and that

reflects just the transactions that are known. Speculators

buy up large amounts of oil and then sell it to each other

again and again. A barrel of oil may trade 20-plus times

before it is delivered and used; the price goes up with each

trade and consumers pick up the final tab. Some market

experts estimate that current prices reflect as much as $30

to $60 per barrel in unnecessary speculative costs.

Over seventy years ago, Congress established regulations to

control excessive, largely unchecked market speculation and

manipulation. However, over the past two decades, these

regulatory limits have been weakened or removed. We believe

that restoring and enforcing these limits, along with several

other modest measures, will provide more disclosure,

transparency and sound market oversight. Together, these

reforms will help cool the over-heated oil market and permit

the economy to prosper.

The nation needs to pull together to reform the oil markets

and solve this growing problem.

We need your help. Get more information and contact

Congress by visiting www.StopOilSpeculationNow.com.

Robert Fornaro, Chairman, President and CEO, AirTran

Airways; Bill Ayer, Chairman, President and CEO, Alaska

Airlines, Inc.; Gerard J. Arpey, Chairman, President

and CEO, American

Airlines, Inc.; Lawrence W. Kellner, Chairman and CEO,

Continental Airlines, Inc.; Richard Anderson, CEO,

Delta Air Lines, Inc.; Mark B. Dunkerley, President and

CEO, Hawaiian Airlines, Inc.; Dave Barger, CEO, JetBlue

Airways Corporation; Timothy E. Hoeksema, Chairman,

President and CEO, Midwest Airlines; Douglas M.

Steenland, President and CEO, Northwest Airlines, Inc.;

Gary Kelly, Chairman and CEO, Southwest Airlines Co.;

Glenn F. Tilton, Chairman, President and CEO, United

Airlines, Inc.; Douglas Parker, Chairman and CEO, US

Airways Group, Inc.

Mr. President, let me say on the point my friend from Illinois made, while there may well be room for dealing with speculation as part of the overall approach to our energy crisis today, it is clear that speculation cannot be the only or even a major piece of it. Without new production, we are destined to continue to rely on foreign sources for our oil and very high oil prices.

We will be interested in getting into the debates about the relative merits of different approaches to speculation. But let me talk about a little different angle to this than has been discussed so far, and that is not only the fact that people, when they go to the gas pump, find themselves paying very high prices for oil, which hurts their family budgets and, in many cases, businesses that have to rely on fuel, but also that it is a national security problem for the United States because of our undue reliance on these other countries.

The point I want to make today is this: A lot of these countries have the ability to actually increase the price because of the instability they can create around the world. I think of the Iranians, for example. Everyone knows that we get a great deal of our oil from the Persian Gulf region, that the Strait of Hormuz is the very narrow area

through which about 40 percent of all the oil has to go. Forty percent of the world's oil tankers have to exit the Strait of Hormuz as they are picking up their oil from the Emirates, Saudi Arabia, Iraq, Iran, and so forth. That creates an opportunity for mischief, and the Iranians have been very good at exploiting that. Whenever they rattle their saber, whenever they engage in a naval exercise in that area, or when, recently, they shoot off missiles to show everybody they can be tough guys and throw their weight around in the world, that gives the markets a lot of jitters, and we saw what happened: The price of oil shoots up.

Ironically, countries that are no friends of the United States would create great mischief if they could have an additional reason for this belligerent behavior. It drives up the cost of oil, which is where they make all their money. So they literally have the ability to help dictate the price of the commodity that sustains their economy.

Iran is not the only country. Russia actually produces more than Saudi Arabia. The United States is third. But Russia, as the world's largest oil producer--about 9.84 million barrels per day--has produced about a fourth of the non-OPEC crude oil since 2007. At today's prices, that would be about $1.4 billion per day--think about that--and over $500 billion for the year; almost $1.5 billion a day into Russia's Treasury.

As a result, Russia has been able to do some things that are not in the interests of the United States. They are rearming their military with oil dollars. That is how they are able to afford all of the new things they are doing in terms of their nuclear program, their missile program, and all of the other things they are doing that are antithetical to United States national security interests.

Moreover, they have shown no reluctance to use their oil and natural gas production as a weapon as well. When countries next to them or even far away that rely on Russian natural gas or oil do something the Russians do not like, they simply cut off the supply. And they have done this numerous times. It has much of Europe, which relies on Russian natural gas, very jittery because if you make the Russian bear mad, he cuts off your source of natural gas and, in some cases, oil. This creates a very unstable and very difficult situation for these countries, and also has the effect of driving up the price of oil and natural gas.

Because both of these products are fungible; that is to say, they can be produced all around the world and everybody around the world buys them, there is a world market for them. So even though the jitters are in the Persian Gulf or in Europe, for example, the price is reflected all around the world, and the United States ends up having to pay more at the gas pump because these countries can affect the price of the commodity they rely on to fund their government.

Recently, it happened to be that Russia shut off oil to the Czech Republic. They have shut off oil or natural gas to other countries in Eastern Europe, especially when they did not agree with the Russian position on something. They have shut off natural gas supplies during the dead of winter to countries in Eastern Europe that wanted to join NATO. Russia says: We don't like that so we will shut you off.

The Czech Republic decided it wanted to help the United States and itself to be protected against missiles. So they are helping to establish a missile defense base in the Czech Republic. Russia doesn't like it, so half of what is sent from Russia to the Czech Republic is cut off.

This is the problem of relying on other countries, not to mention a country such as Venezuela. The United States gets a good deal of its oil from Venezuela. We all know the head of Venezuela, Hugo Chavez, has done everything he can to undermine United States influence in Central and South America and does everything he can to get in the face of the United States. If he wants to affect the price of oil, all he has to do is rattle his saber as well.

In each of these cases, we have a situation where the price of the product and the availability of the product is dependent upon positions over which we not only have no control but countries that have interests very inimical to ours, and the end result is it costs more for people in the United States for a very necessary product, namely, the oil and natural gas product we use to fuel our economy. This is one of the reasons why I say it is a national security issue as well as affecting the price at the pump.

It is one of the reasons why the United States has to begin to rely less on the oil produced in foreign countries and more on oil we can produce right here in the United States. It is not well known, but the United States is the third largest producer of oil in the world, after Russia and Saudi Arabia. We have huge reserves here of which we are not taking advantage. This is one of the reasons why Republicans are insisting that any legislation that comes to the floor dealing with this energy crisis include taking advantage of the resources we have. Let's free up these resources. We have them. They can be obtained in a very environmentally sensitive way, and they can help not only to reduce the cost of gas in the United States or natural gas but also to reduce the ability of other countries around the world to influence behavior in a bad way, such as shutting off the oil or natural gas for customers of theirs or driving up the cost of oil for everybody else.

I got to thinking about this in terms of the taming of the West. One of the reasons the United States became such a great country so rapidly was that we bought land with the Louisiana Purchase. We explored the West. We took advantage of natural resources that were in this country, and we quickly became a very strong power economically. We had natural gas, we had oil, we had minerals--copper and gold and all of the rest. We took advantage of the resources that we had to become a wealthy and powerful country.

One hundred years ago, we didn't mine in a very environmentally safe way, but no one can deny that the way we produce our wealth today is with great environmental sensitivity. Everyone agrees with that. It is not any longer hurting the environment. All of this production can be done, for example, offshore or in the deep waters of the gulf in a very environmentally sensitive way. We are hoping the same thing can be done with oil shale.

So when our friends say we need to be able to deal with the commodity markets here and that is going to make a big difference, the answer is, there is a lot of dispute as to whether it will make any difference at all. But we do know something that will make a difference but it will not make a difference just in the long run, it will make an immediate difference. The decision to explore and produce right here in the United States where we know we have the resources, where we are not dependent on other people, where they cannot drive up the price because they can rattle their sabers in the Strait of Hormuz or cutting off oil and natural gas supplies as Russia has done, we can stop all of that by simply producing more in the United States where we know we have it and we can produce it safely and in an environmentally sound way.

It is like the settlement of the West, as I said, in taking advantage of our natural resources. We have always been a can-do nation. We have always said we can take care of ourselves. We don't want to be dependent on others. What we have learned today is that for depending on others, we pay a very high price, and I don't mean just a high price at the gas pump but a high price in terms of our national security as well. That is the reason we are insisting on removing some of these moratoria, strictly illegal moratoria. It is a moratorium from being able to explore for energy off our coasts or in the deep waters in the gulf or on Federal lands.

There is a big up side to the Federal Government in terms of revenue royalties, as well as to States as a result of this action. So instead of paying money to foreign countries, we can be gaining some of that wealth right here in the United States.

Bear in mind that other countries are the recipients of the payments for oil around the world, not oil companies as is the case primarily in the West. We send more than $1 billion a day, not to some oil company abroad but to foreign governments. They control the oil in Russia, in Iran, in Iraq, and so on. Let's get off of sending our money to foreign governments that are working against our interests and that can affect the price of the commodity simply

by their bad actions and rely more on the resources we have in the United States, that we know we can extract in an environmentally sensitive way, that can reduce the price immediately. That is the last point I wanted to make.

Martin Feldstein had an interesting piece in the Wall Street Journal about 2 weeks ago in which he made the point that there will be an immediate downward effect on oil prices if we simply announce that we are going to go after these resources in the United States. As a result, I urge my colleagues, when the opportunity arises and we debate this issue over the next week or so, that we support increased production in the United States for the benefit of American citizens.

Mr. President, I am introducing two pieces of legislation today, S. 3280 and S. 3281. In one bill I join with my colleagues in proposing legislation to open new development in ANWR, offshore, the Rocky Mountain oil shale, and preserves access to development in the Canadian tar sands. It also contains my Gas PRICE Act, which streamlines, implements deadlines, and offers EDA grants to communities to encourage development of refineries involved in coal liquification or coal to liquids processing, renewable fuels, and crude oil and other petroleum products. It also includes accelerated depreciation for cellulosic biofuel plant property for facilities and equipment used to produce switchgrass and other dedicated energy crop seed for the developing cellolosic biofuels industry. Finally, it includes a third title which I am also introducing as a free standing bill, the Drive America on Natural Gas Act.

The Drive America on Natural Gas Act expands RFS Definitions.

The bill expands the definition in the Renewable Fuels Standard to allow the use of CNG and LNG fuels to meet the mandates.

The current corn based ethanol mandate is overly aggressive with mounting questions surrounding ethanol's effects on world food prices, livestock feed prices, its economic sustainability, its transportation and infrastructure needs, its water usage, and numerous other environmental issues.

By broadening the scope of the Renewable Fuels Standard to include natural gas, we encourage the use of a proven, clean, and economical alternative fuel and also make the current RFS mandates achievable.

Additionally, it sends a signal to the Nation's automakers and fuels industries that natural gas is a competitive option as a mainstream transportation fuel.

GM, Ford, and Chrysler already make natural gas powered vehicles, yet they don't sell them in the States. GM alone already makes 18 different NGV models. But, Honda is the only current manufacturer which sells a natural gas vehicle in America--the Honda Civic GX.

Broadening the RFS will encourage more auto manufacturers to sell these vehicles domestically which will help our struggling auto manufacturing industry.

The bill broadens the Alternative Vehicle Tax Credit to include bi- fuel vehicles.

Currently only ``dedicated'' vehicles or vehicles which solely run on natural gas qualify for this credit. This narrow definition actually discourages the sale of bi-fuel vehicles--those which can run on both conventional fuels and natural gas fuels.

Americans need the flexibility to use conventional gasoline as a back-up if there are no natural gas refueling stations in a given area.

By encouraging bi-fuel natural gas vehicles, less gasoline and diesel would be consumed. How?

Today, the largest hurdle facing the NGV industry is the lack of natural gas refueling stations available to the public. However, a device is now manufactured and sold, called the Phill, which allows a person to fill up their natural gas powered cars at home.

Installed in one's garage, the Phill is connected to a home's natural gas line.

Once plugged into a CNG car, it slowly compresses natural gas into the car's tank.

Similar to the idea of plug-in hybrids, the Phill allows consumers to refuel at home. Unlike plug-in hybrids, this technology is not a few years away--it is here today.

By encouraging bi-fuel vehicles, more Americans will be comfortable purchasing natural gas powered cars which can also run on conventional gasoline for that occasional long distance trip from home.

Expanding the Alternative Vehicle Tax Credit to include bi-fuels will greatly incentivize the use of NGV's and give consumers the flexibility they require.

The bill establishes a Natural Gas Vehicle Research, Development, and Demonstration program.

Several years ago, the Department of Energy had a robust Natural Gas Vehicle Research Development and Demonstration program. This bill once again establishes that program to research, improve and develop the use of natural gas engines and vehicles.

The program will assist manufacturers in emissions certification, will develop and improve nationally recognized safety codes and standards, will examine and improve the reliability and efficiency of natural gas fueling station infrastructure, and will study the use of natural gas engines in hybrid vehicles.

Additionally, it requires the Department of Energy and the EPA to coordinate with the private sector to carry out the program.

The bill directs the EPA to establish a State demonstration program to streamline the regulations and certifications currently required for the conversion of vehicles to natural gas.

Today's regulatory burdens are daunting for those in the business of converting vehicles to run on CNG or LNG. Currently, the EPA imposes virtually the same certification requirements on NGV aftermarket conversion systems as they require on automakers.

Since NGV systems are inherently cleaner than gasoline systems, these regulations impose huge unnecessary costs on these conversion system makers.

This bill directs EPA to establish a State demonstration program to streamline the current certification process for NGV conversions. It also directs EPA to waive unnecessary requirements for the continual recertification of conversion kits and to waive emission certification for conversion of older vehicles.

Most importantly, the Drive America on Natural Gas Act doesn't dictate that consumers, businesses, or States must use natural gas as a transportation fuel.

To the contrary, this bill actually adds more flexibility to the current RFS mandates.

It removes the disincentives for auto manufacturers to produce bi- fuel vehicles.

It streamlines and eliminates the government bureaucracy and red tape on the conversion of vehicles to operate on natural gas.

The Drive America on Natural Gas Act will allow natural gas to compete on its own merits. Americans can ultimately choose whether natural gas powered vehicles are right for their own individual and business needs.

The promise of natural gas as a mainstream transportation fuel is achievable today, not 15 or 20 years from now.

Currently, over 25 different manufacturers produce nearly 100 models of light-, medium- and heavy-duty vehicles and engines for the U.S. market. However, only Honda sells a domestically available CNG car.

Over 10,000 transit buses in the U.S. are natural gas powered and the market is growing; nearly one-in-five new transit buses on order is specified to be natural gas powered.

There are over 7.5 million NGVs on the road worldwide--more than double the number in 2003. The International Association of NGVs forecasts that, by 2020, there will be 65 million NGVs worldwide.

In April, the Department of Energy reported that the average nationwide price of a gallon of gas equivalent of CNG was just $2.04 per gallon.

In some regions of the country prices are even lower--CNG costs in Rocky Mountain states average just a $1.26 per gallon.

Many state and local governments, businesses, and consumers have cut their fuel bills by more than half when utilizing natural gas as a transportation fuel.

In my hometown of Tulsa, OK a person can refuel their CNG powered cars for just 90 cents per gallon. Regular gas currently costs $3.95. That's more than a $3 savings per gallon.

Just last month I was pleased to visit Tom Sewall of Tulsa Natural Gas Technologies, Inc. As a small business owner who installs natural gas refueling stations, he is one of the most knowledgeable and vocal leaders in this growing industry.

America has a huge natural gas supply base. In 13 of the last 14 years, the amount of new natural gas discovered in the U.S. has exceeded the amount that has been extracted.

Raymond James Equity Research recently reported a ``bearish outlook for U.S. natural gas prices.'' After examining the future supply of domestic production, they released a May 19, 2008 energy report which concluded ``we continue to see unprecedented growth in U.S. gas production that will eventually overwhelm the U.S. gas markets.''

Thanks to advancements in oil and gas exploration, drilling, and production technologies, America is producing huge amounts of natural gas from tight shales, coalbed methane and tight gas plays, in areas such as: The Barnett Shale in North Central Texas; the Marcellus and Huron Shales, which run through West Virginia, Pennsylvania, Ohio, and New York; the Haynesville Shale in Northwest Louisiana; the Fayetteville Shale in central Arkansas; the Woodford Shale in southern Oklahoma; the Pinedale Anticline and Jonah field in Wyoming; and the San Juan Basin CoalBed Methane play in northern New Mexico.

These and numerous other emerging gas plays promise to deliver decades of abundant domestic natural gas supply.

From compressed natural gas--CNG--powered cars, to 18-wheelers running on liquefied natural gas--LNG--no other commercially viable fuel burns cleaner.

The American Council for an Energy Efficient Economy has rated the natural gas powered Honda Civic GX as ``America's Greenest Car'' for the past 5 consecutive years--even greener than any available hybrid.

On a well-to-wheels basis, NGVs produce 22 percent less greenhouse gas than comparable diesel vehicles and 29 percent less than gasoline vehicles.

In 2007, NGVs displaced 250 million gallons of petroleum in the U.S. In the next 17 years, the industry's goal is to grow that to 10 billion gallons.

NGVs are the pathway to a hydrogen transportation system. Every NGV fueling station is a potential hydrogen fueling station. Every auto garage or maintenance facility that has been made NGV-compatible can quickly and cheaply be made hydrogen-compatible.

The medium-germ solution to today's gas price crisis is to explore and produce oil from ANWR, the Outer Continental Shelf, the Rocky Mountain oil shales, and preserve our access to the Canadian oil sands. That is why my comprehensive bill includes opening all these areas for exploration, along with a program to increase our refining capacity.

But, in the mean time the best way to bring down the price at the pump immediately is to pass this bill and run more cars on natural gas. Of course, the democrats have objected to increasing supplies of oil and gas for decades. They don't want more supply. There should be no objection from the democrats, and frankly I cannot think of any justification for opposing my Drive America on Natural Gas Act.

I wish to join my distinguished colleague from West Virginia, Senator Rockefeller, who has been a champion on this issue from its creation and continues to be a champion to preserve the health care for some of the most vulnerable children in our society.

I appreciate his leadership, and I am privileged to join with him in this effort along with Senator Baucus, the chairman of the Senate Finance Committee; my colleague from New Jersey, Senator Lautenberg, who has tried time and time again through the appropriations process; Senator Snowe, who has been a champion on this issue as well. We understand the consequences.

Eleven months ago today, the Bush administration decided to jeopardize health coverage for hundreds of thousands of children across the country. The Centers for Medicare and Medicaid Services sent a letter to all State health officials announcing that 1 month from today, States will be pressured to cover a much narrower range of families. They based their directive on an unfair financial standard that would exclude hundreds of thousands of children in the most difficult economic circumstances of our time. The result of that directive would be unconscionable. It would mean hundreds of thousands of terrible stories--a child with diabetes that goes undiagnosed, a child with a cleft palate she has to live with for the rest of her life, missed tetanus shots, untreated allergies, asthma, and hundreds of thousands of small, painful situations that would add up to a wave of tragedy too immense to imagine.

Many of us in this Chamber decided we were not going to sit back and watch this happen. We sent letters. We introduced legislation. We shouted as loudly as we could. But the President did his best to ignore us and keep his back turned on these children.

In 1 month, this unbelievably harmful rule is set to come into effect. In 1 month, States will have to overcome seemingly insurmountable hurdles if they want to cover children above 250 percent of the poverty level. In 1 month, the strength of our values will be seriously called into question.

If it weren't for this program, these children would fall between the cracks. They are not in dire enough poverty to qualify for Medicaid, but their working parents still don't have enough to afford private coverage. The families we seek to cover work hard every day, in some of the toughest jobs, but they work at jobs that offer no health care. These families certainly don't make enough money to afford private coverage. The State Children's Health Insurance Program is their last resort. That is why I am still shocked at the nerve of this administration when they unilaterally issued this harmful, coldhearted directive on children's health. Where are those values I have heard the administration talk about? This really boils down to a different set of priorities. It is yet another example of placing some of the wealthiest above our working families.

If the President's directive takes effect, he is effectively saying tough luck to these families; go ahead and roll the dice with your daughter's health care. Let's think about what that says about our values. That kind of sentiment is completely out of line.

But that is not the only reason this directive should be overturned. The directive is not just a violation of our values, it is a violation of the law. The administration bypassed Congress and violated the Congressional Review Act when issuing this directive. The Government Accountability Office and the Congressional Research Service have issued legal opinions stating as much. The opinions conclude that the directive is not merely a clarification of existing SCHIP rules, as CMS has maintained, but, rather, a marked departure from well-settled policy that first should have been reviewed by Congress. That is why we are introducing this resolution of disapproval regarding the August 17 CHIP directive.

The President cannot be allowed to get away with this destructive backdoor policy. If we can't convince him on moral grounds, if we can't make him see the benefits of providing health care to children--and by the way, in New Jersey we have letters from the administration that not only gave us the authority to do this in the first place, to cover these children, but then also lauded our program and said it should be a model for the country; if it is a model for the country and you gave us the legal authority, how can you just take all those children off the rolls--then we call him out on procedural grounds. And the administration's procedure was, quite simply, illegal.

When this resolution passes into law, the August 17 directive will be nullified. That is my ultimate goal, to protect the health of our Nation's children and, certainly, the many children in New Jersey affected by this directive. The goal we strive for should be to

cover more, not fewer, children. I believe we have a responsibility, a moral, financial, and professional responsibility to ensure that in the greatest country in the world, no child goes to bed at night without proper health care and treatment. That means we must provide them with health coverage. If we don't, what are these families supposed to do? In these tough economic times, now more than ever, we need to support States that offer options for affordable coverage to hard-working parents and their children.

It is not just the health of our Nation's children but the health of our values that is at stake. I hope our colleagues, when this resolution comes up for a vote, will give it an overwhelming level of support, and we will send the right set of messages as to our values as well as how much we appreciate our children as the future of our country and the health that is associated with them that will be necessary for them to achieve their God-given potential.