Mr. President, I have listened for the past 20 minutes or so to the narrative on the floor of the Senate. My colleague from Idaho and I have introduced legislation last year dealing with expanding production in the Eastern Gulf of Mexico…
Mr. President, I have listened for the past 20 minutes or so to the narrative on the floor of the Senate. My colleague from Idaho and I have introduced legislation last year dealing with expanding production in the Eastern Gulf of Mexico and in Cuban waters. We do not disagree on the issue of whether we should expand production in this region. In fact, we agree on that issue. But I have heard several of my colleagues come to the floor to create false choices this afternoon, and I want to talk about those false choices.
We are witnessing a time when it is very hard for people to figure out how to scrape enough money together to put $70 worth of gas in their tank when it is near ``e'' on the gauge. It is fascinating and very disappointing to me how it's possible to fill your farm tank in order to harvest your crop, how an airliner is going to be able to afford fuel, or how is a family going to be able to afford enough money to put gas in their tank to go to work. These decisions are being made at a time when we face oil prices bouncing between $120 and $140 a barrel and gasoline at $4, $4.50 a gallon. When that ought to invoke and spark cooperation on the floor of the Senate, there is none.
My colleagues come to the floor of the Senate and say: Let's open up the entire Outer Continental Shelf. The Energy Information Administration carried out an assessment that shows what production would look like without lifting the moratorium and with lifting the moratorium. What it shows is that we get some extra production in the year 2020. I understand talking about next week, next decade. What is the impact going to be to families, to truckers, to farmers, to airlines, and others if someone comes out here and says: You know what, we have a real serious problem right now, but here is a solution for 2020.
Sign me up for the solution in the long term, although I might have a different approach to it. I hope by 2020 we are not quite as addicted to oil, particularly foreign oil from the Saudis, the Kuwaitis, Iraqis, or Venezuelans. Maybe we can shed the some of that addiction in 10 years. Maybe that ought to be our strategy. Maybe we ought to do game changing. The way to do away with our addiction is not to do more of the same so that we are still addicted. That makes precious little sense to me.
I will be happy to yield.
Mr. President, it appears a Federal agency has arisen from the dead. Good for the CFTC. I have been talking a long while about the CFTC being dead from the neck up. This is, after all, the regulatory agency that is supposed to wear the striped shirts, blow the whistle, and call the fouls.
This apparently is manipulation of the market. We are talking about manipulation. Good for them, if they have risen from the dead, if they are taking action against someone manipulating the marketplace.
The acting CFTC Chairman, whom the Senator from Illinois described, spent the last seven months saying there is no problem with the marketplace, it is working fine. The doubling of the price of oil and gas in the past 12 to 14 months has been because of supply and demand, he says. About a month ago, the acting Chairman had an epiphany. He must have had a good night's sleep, woke up from his dream saying: OK, I have been saying supply and demand justifies the doubling in price, but, in fact, we have been doing an investigation for seven months.
So which is it? Here is what it is. In the year 2000, 37 percent of the trades in the oil futures market were speculation trades, having nothing to do with hedging a physical product between consumers and producers; 37 percent of the trades by speculators. Today 71 percent of the trades are by speculators. They don't have any interest in buying oil, taking delivery of oil, carrying a 5-gallon can of oil, or putting a quart of oil in their car. They don't have the foggiest interest in oil. They have interest in buying and selling contracts and making big profits. They have taken over this marketplace and broken the market.
The proposition on the floor of the Senate is to try to wring out this excessive, relentless speculation in this market. My colleagues come to the floor of the Senate, and they have developed another narrative of more
drilling because they don't want to tackle this issue of speculation. I said before, 47 Members of the Senate in the minority have all indicated, in one form or another, that speculation is a problem. If you believe that, help us get this bill to the President. Yet, they come to the floor of the Senate and say we need more drilling.
As I described in the year 2020, we will have more to bring on more supply. I don't disagree with that point. Let's talk about it; offer some amendments. In fact, the majority leader has offered to the minority to bring your amendment to the floor. We will have a vote on it.
But what about next month? What about 6 months from now? How about let's do some things that are game changing in this country? How about the next decade? Between now and then, let's work to change the game.
I said two days ago that, in the 1960s, John F. Kennedy did not say: I would like to have us try to go to the Moon. I think we should think about going to the Moon. I think we should make an effort to go to the Moon. He didn't say that. He said by the end of the decade, we are going to put a man on the Moon, and we did just that.
The plan of all of those who have come to the floor of the Senate diminishing this legislation, degrading this legislation, saying we shouldn't deal with speculation and getting this market right. We shouldn't spend time on that. Let's instead focus on drilling. If that is the only thing they focus on, then that is what I call a yesterday forever strategy. If you want to wake up 10 years from now and keep the same position, good for you. I don't.
I think what we ought to do is this: Let's at least address something that has broken the marketplace and has doubled the price of oil and gas in the last year, something that experts have come to the Congress to testify about and some have said up to 40 percent of the current price of oil is not and cannot be justified by the fundamentals of supply and demand. It is because speculators have taken over this marketplace.
Don't take it from me. Take it from the CEO of Royal Dutch Shell. Here is what he said in April:
The [oil] fundamentals are no problem. They are the same as
they were when oil was selling for $60 a barrel.
If that is the case, what is the problem? The problem is, as I described in the chart, this market has been taken over by the speculators.
My colleague comes and says: NYMEX and ICE, describes all that is going on, what an aggressive regulator we have. You know what, this regulator has been sending out no action letters. Isn't that a wonderful thing to perfectly describe a regulatory agency that wants to take no action for anything? It said: Let me be willfully blind and not see what is happening. By the way, because of these no action letters, I can't see what is happening in the over-the-counter market, the intercontinental exchange, and all of the unregulated trades because I have decided I don't want to see it. Then let me go to the Congress and testify, and with a straight face--I am sure suppressing a grin--at least with a straight face say, I don't see anything that represents anything other than supply and demand.
My question to them was: I understand you don't see that. Is it the case you see very little because you have chosen, through no action letters and other limitations, to decide you don't want to see it all?
We brought a bill to the floor of the Senate that says we have a lot of problems. First and foremost, let's set this market straight, putting pressure downward and preserving the oil futures market for that which was intended in 1936. It was for the hedging of a physical product between consumers and producers. That is what it was for. It has now been taken over by the carnival of greed. Speculators control these markets, have driven up the price despite the fact there has been no change in the fundamentals.
My colleagues on the other side of the aisle say drill. I have had a bill in for a year and a half to say drill more in the eastern Gulf of Mexico and allow U.S. companies to produce in Cuban waters. I am also one of the four Senators who opened up lease 181 in the Gulf of Mexico for drilling. I support that. I am fine with drilling. But if drilling is your only answer, boy, that, in my judgment, is a pretty pathetic future. Here is what Boone Pickens says. Boone Pickens and I have disagreed on a lot of things, but he came to Congress this week:
I've been an oil man all my life, but this is one emergency
we can't drill our way out of. But if we can create a new
renewable energy network, we can break our addiction to
foreign oil.
Think of this. What if between now and 2020, if we start now we can actually have a new barrel of oil by 2020, and you say to somebody down the block: Cheer up, things are going to be better in 12 years--that is one position to take, I guess.
What if the other position is as Mr. Pickens suggests? What if we did this: We are going to produce oil. We want to be less dependent, however, on the Saudis, Kuwaitis, Venezuela, and so on, because if we didn't get their oil for some reason, we would be flat on our back as an economy. This makes our country vulnerable. We have to be less dependent on them. We are going to use oil we produce.
How about if we decide to do something dramatically different? How about in the wind belt from Texas to North Dakota where we produce a massive quantity of wind and have the capability of taking the energy from the wind and producing electricity? And how about in the Sun Belt where we move dramatically to solar energy and create a superhighway of transmission lines to be able to move that energy all around this country? How about if we do that for a decade and then say: You know what, all that natural gas we are using for coal-fired generating plants, we can displace a fair amount of that with wind and solar and a superhighway of transmission lines, and we can dramatically change America's energy future.
We need more conservation and energy efficiency and dramatic increases in renewables. There are so many exciting things we can do to change America's future. Yet, my colleagues come to the floor of the Senate for a different pursue. They plant their flag, and say: We want our future to be the same as our past, and every 10 or 15 years, they will be content to come here and say: Yes, we have an urgent problem and what we ought to do is more of the same. That is not a future that makes much sense to us.
Again, coming back to this issue, we are saying with this legislation on the floor of the Senate requires that we do first things first. We should do a lot of things, we agree with that. Senator Bingaman is introducing a bill I fully support as a cosponsor. It deals with a whole range of other issues with which we have to deal. First things first. At least let's address this issue of excess speculation that has broken the commodity futures market for oil.
To my colleagues who say, you know what, this is all about drilling, I say to them: Come to the floor of the Senate and tell me what has happened in the last year, what has happened in supply and demand that justifies a doubling of the price of oil. They will not come and cannot come because they don't have an answer to that.
I can give them a partial answer. If anything would have been expected to happen to the price of oil and gas, it should have gone down because we have driven nearly 6 billion fewer miles in America than we did in the previous 6 months. So we are using less energy and less gasoline. So one would expect, if you are using less, you would put some downward pressure on prices. But that is not the case. Prices go up like a Roman candle, double in a year.
The only conceivable reason given us is by the experts who don't have a vested interest in this issue of the oil futures markets, and they say that the market is now broken. Fidel Gheit has been an Oppenheimer analyst for 30, 35 years--the top energy analyst for Oppenheimer--and he says: Look, this is like a casino, open 24/7, like a highway with no speed limit, he said, and no cops, and everybody is going 120 miles an hour.
Is that really what we are willing to allow an oil futures market to be, if it drives up the cost of oil and gas, doubles it in a year, and imposes this kind of burden and financial penalty on every American family and every American business; imposes this kind of burden on some of our major industries, such as airlines and trucking
companies and farmers and others? That is a back breaker. Are we really willing to stand on the floor of the Senate and say: Yeah, that is OK. It is OK. Let's do something that will increase the production of a barrel of oil in 2020.
That seems to me to be a false choice that we are being offered. I think it was Will Rogers who once said:
It is not what he knows that bothers me, it's what he says
he knows for sure that just ain't so.
I think about that as I hear this debate on the floor of the Senate; all this assertiveness about one answer. Do something now so we have more oil in 2020. What about tomorrow, next week, or next month? What do you want to do about that? What about a market that is broken; do you ever care about fixing it? What about the fact that investment banks and hedge funds have marched right directly into the oil futures market?
The Wall Street Journal writes about investment banks that are actually purchasing oil storage so they can purchase oil and keep it off the market. Pension funds--CalPERS and others--are moving money into the oil futures market as if it is just another share of stock. That is just pure speculation. That massive quantity of money flooding into this market has dramatically changed the market.
Now, I have had a lot of people come and see me about these issues because some are very upset with what we are trying to do. They like the speculation in the marketplace because a lot of people made a lot of money by speculating in this marketplace. I think this marketplace needs to exist. You have to have a market that represents a place for legitimate hedging of a physical product. But when the market is broken, you also have to have a regulator with the strength, the capability, and the willingness to stand up and do what is necessary to fix it.
The current regulator at the Commodity Futures Trading Commission has not done that, has not demonstrated a willingness to do that, and it seems to me Congress must. Our legislation does a couple of things. It says to the Commodity Futures Trading Commission: You determine who is trading out there and distinguish between them. Those who are engaged in legitimate hedging of a physical product between consumers and producers, that is fine. That is what the market was created for. All others are pure speculators, and we establish strong position limits on those speculators to try to shut down that speculation, that excess speculation in the marketplace. Relatively simple. But it does cause a firestorm of protest by those who are making a lot of money having broken this marketplace.
I suppose there is room--I shouldn't say I suppose. There is room for disagreement. I respect those who disagree. But it seems to me that this country will pay a very high price if we don't understand the need to cooperate. There is no Republican or Democrat label on the fuel gauge on a car. There is just ``full'' and ``empty.'' And all too often these days it is empty because of what has happened to prices. I think the American people expect and demand we do something that addresses these issues.
The first step--the first step and most important step, in my judgment--is to set this market straight and to distinguish between excess speculation and legitimate hedging and establish position limits in order to put downward pressure on gas and oil prices. We are told by some very distinguished people who have testified before our committees that we could see as much as a 40-percent decrease in the price of oil and gas just by wringing the oil speculators out of the futures market.
If we did that, it would be a good thing, a good thing for our country. Then, yes, we have much yet to do. I don't disagree at all with that, and some of it is drilling. But as I said before, if our future is just to continue down that road, without understanding the need for a game-changing, moon-shot plan to make us less dependent on the Saudis, less dependent on foreign oil, this country will have missed an enormous opportunity and put its future in jeopardy.
I remain hopeful. It is now Thursday, and we have been largely at parade rest most of the week. The minority has required us, in effect, to spend 30 hours postcloture--30 hours postcloture--doing nothing, which makes precious little sense. I think the country senses some emergency here, but some of my colleagues in Congress sense no such emergency. So we spend 30 hours largely doing nothing, and then we will come to a cloture vote to shut off debate to see if we can perhaps get to a vote to end this relentless speculation.
My hope is we will have sufficient votes to do that.
Mr. President, how much time have I consumed?
Mr. President, I believe a couple of my colleagues are coming, so I will reserve the remainder of my time.
Mr. President, I ask unanimous consent to have printed in the Record for Senator Durbin a story that he described on the floor titled ``Traders Manipulated Oil Prices.''
Mr. President, I yield the floor, and 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 believe the majority leader is coming over, but I would like to speak until he arrives, at which point I will continue later.
Mr. President, we had a hearing yesterday before the Senate Appropriations Committee that I had requested. That followed a hearing that I had conducted on the Democratic policy committee, the 17th hearing I have conducted and chaired, looking into the issue of contractor irregularities and waste, fraud, and abuse involving contractors with respect to the war in Iraq.
I want to talk just for a moment about what is happening with respect to these contractors.
We are shoveling money out the door. Three-quarters of $1 trillion has been spent, and much of it ends up in the pockets of contractors, and much of the work by contractors not only fleeces the American taxpayer, but it represents, I think, the greatest waste, fraud, and abuse in the history of this country. I think it is also the case that it endangers the lives of American soldiers.
So what I would like to do for a moment is to describe the hearing that I held recently and show a photograph of Cheryl Harris and her son, SSG Ryan Maseth.
Ryan Maseth was an Army Ranger and a Green Beret. He was killed in Iraq. He wasn't killed by an insurgent or killed by enemy fire. He was killed because he was electrocuted while he was taking a shower at the Army base. He was electrocuted while taking a shower.
It turns out the contractor that wired that particular area didn't know how to wire and didn't properly attach ground wires. So when this Army Ranger reached up and touched a pipe, he was electrocuted and died.
The Army initially told Cheryl they thought perhaps her son had taken an electrical appliance into the shower and, therefore, was electrocuted. Not true. It is not true. Halliburton--or Kellogg, Brown & Root, its former subsidiary--had been given the contract for wiring these facilities at Army bases and were hiring, among others, third- country nationals who had very little electrical experience. Two people who were electricians and working there in Iraq and Afghanistan for Kellogg, Brown & Root came and testified and said the work done by KBR was the most shoddy, unbelievably sloppy work.
Thirteen people have been electrocuted in Iraq as a result of these kinds of things. So I don't understand the recent order by the Defense Contract Management Agency, and announced by General Petraeus, that the Pentagon is going to have the same contractor that caused some of these problems--the contractor that has in a number of instances failed to fix faulty wiring--do a comprehensive review of these problems throughout U.S. military installations in Iraq. It makes precious little sense to me that would be the case.
This is Larraine McGee. Her son was killed as well. Larraine McGee's son was killed while power washing a humvee. He was killed not by an enemy combatant but power washing a humvee vehicle. Again, improper wiring and grounding meant this soldier was electrocuted.
How do these things go unfixed? What kind of work is done by contractors, and who cares about all this? We had testimony from Debbie Crawford, who was an electrician who worked for the contractor in Iraq. She described work by people who were not qualified. She described KBR supervisors who said: Well, this is not the United States. There is no OSHA here.
Mr. Jeffrey Bliss, an electrician for KBR, said there was pervasive carelessness and disregard for quality electrical work at Kellogg, Brown & Root.
Again, I say to you that we are told, with the news of all of these problems, with 13 people, 11 of them soldiers, being electrocuted in Iraq because of shoddy wiring by contractors, the Pentagon has asked the same contractor to go out and review the work. It is nearly unbelievable to me.
Mr. President, there are so many problems in Iraq contracting that I am going to try to come tomorrow and talk about the 17 hearings I have held and how much money the American taxpayers have been charged for such shoddy work. It is not just fleecing the American taxpayers, it is also injuring American soldiers when we have contractors not doing the job for which they were contracted to do.
Again, this is a photograph of Larraine McGee, who is Sergeant Everett's mother, and Sergeant Everett, as I indicated, was electrocuted as a result of improper grounding. Ms. McGee learned from a newspaper that 10 other soldiers were electrocuted in Iraq due to faulty electrical grounding and faulty wiring. So she came to Congress pleading for help, pleading that somebody do something. She said:
Anger has now taken over my grief. I plead with you to do
something to bring an end to this unnecessary cause of death
to our soldiers. They should not have to worry about stepping
into a shower or using a power washer in the safety of an
established base.
As I indicated, the Pentagon ordered there be a comprehensive inspection of electrical installations at the Army bases in Iraq, but it hired the same company to do the inspections, the same company who had hired two electricians who came to this Congress to say the electrical work was unbelievably shoddy and done, in some cases, by people who didn't have the foggiest idea what they were doing.
I sent a letter to General Petraeus last Friday, signed by Senators Casey, Cantwell, Klobuchar, and Whitehouse, urging him to replace KBR in these inspections. The inspections should be done by objective, qualified electricians. KBR has shown itself to be incapable of fixing electrical hazards that had been known for years. It is an insult to the memory of these soldiers that KBR has now been assigned to conduct the inspections.
There is more to this story. I will, tomorrow, visit about a wider range of these issues.
I yield the floor.