Mr. President, this morning the leader touched on a lot of problems we have before us as we come back from Easter break. I know most of us have been home and listened to the folks at home. Most of us have probably come back with more…
Mr. President, this morning the leader touched on a lot of problems we have before us as we come back from Easter break. I know most of us have been home and listened to the folks at home. Most of us have probably come back with more challenges than when we left. Here are a couple of issues.
I was glad to hear the leader bring up the situation on insurance premiums, especially for small businesses and the self-employed. Senator Enzi of Wyoming and I have been working on the small business health plans for almost a year now. That is nothing new. It is not a new idea. Ever since I joined the Small Business Committee and even under the chairmanship of my good friend from Arkansas, Senator Bumpers, prior to 1994, we were working on the same issue, but we were unsuccessful then and have been unsuccessful up until now in striking a balance. There is broad support for the approach being taken by the chairman of the HELP Committee.
If you talk with folks engaged in small business, Montana businesses with 10 employees or less have little or no leverage when it comes to buying group insurance or trying to broaden their pool to keep their insurance premiums at a minimum. I look forward to that debate when the bill comes to the floor, and I look forward to final passage and getting it to the President for his signature.
I took a drive across the State of Montana over Easter Recess, all by myself. I just jumped into my pickup and took off and talked with rural Montanans. I fight awfully hard for rural Montanans for the simple reason that, right now, they are sort of being pushed into the background when we start talking about what is happening in our economy. Even though our livestock prices are decent, the grain producers, and many other folks, still have a real problem because they cannot get their arms around this business of containing costs, and the cost of energy is their main issue.
Whenever gas and diesel prices go up, it goes up on the farm also, and the cost of putting a crop in and getting it out has increased substantially due to these high energy costs.
We are a big State. We are a mobile State. We are 147,000 square miles. Yes, we only have 900,000 people, and some could probably make the case it is getting a little crowded up there. We have to drive long distances just to do business around the State, and these energy prices are impacting all of us.
Everybody wants to stand around on the floor of the Senate pointing fingers, when we could be looking at the real case of cumulative effects--of what we have done in policy and what has to be done to produce more energy for a growing society and a growing economy.
We are driven by agriculture in my State. Farmers and ranchers are price takers; in other words, we sell wholesale, we buy retail, and we pay the freight both ways. Any time we talk about freight, whether it is delivering or receiving, energy is involved.
So we are caught in what some would think is a perfect storm. We haven't hit the $3 mark for gasoline in Montana yet, as other parts of the country have, but we are nearing it. In fact, we are so close to it that folks are afraid of what will happen if we do hit it.
I will tell you this: We have a situation in northeast Montana and northwest North Dakota called the Williston Basin. This area is quite a large producer of oil and gas. When we start quoting the price of oil on the New York Mercantile Exchange, we are not really talking about what the cash or spot price of oil is costing today. Do you realize, even though everybody is talking about the price of $73 a barrel, that market price is not being paid to our oil producers today? It is a long way from that $73. In fact, it is from $25 to $35 lower than even the spot price. Why? We are finding more oil, we are doing a better job of finding oil and lifting it, but the infrastructure of transportation-- in other words, getting the crude to the refineries--and the refineries' capacity to refine it has not kept pace even with our own production in the United States. Therein lies a problem, and it is one we have to address.
We have not built a refinery in this country for 30 years--35 years, I think, if you want to get very particular. The ability to expand refining capacity in the present-day facility is becoming very expensive and cannot be done without expanding outside the boundary.
If anybody has the idea that the refiners are making a lot of money, look at their return on investment. It is not very big. So people point their fingers at the refiners. Do they point their fingers at the big oil companies? Yes, they do, and in some cases justifiably so. We can sit here and poke holes in that argument. But our basic problem is siting and building facilities to satisfy a growing demand.
If you want to build a new refinery, or if you want to build a new pipeline to move the crude to the refining areas, I will tell you, you are going to have sticker shock when you look at what it costs just in permitting and siting for that facility. It is unbelievable. 25 percent of the estimated construction cost of a new refinery now will be eaten up in permits and siting, and all because of some laws and regulations that basically do not serve this country very well.
Am I justifying the prices today? Somewhat. But I think what we are seeing is a perfect storm of cumulative effects, of not keeping pace with our ability to produce and lift oil from the ground.
Alternative fuels and renewable fuels are also an important part of our energy program.
In 2002, we actually got a title into the agricultural bill that dealt with renewables and agriculture. We knew that we were going to have an energy bill and that title would dovetail into some of the policies that we wanted to put forward in an energy bill. We knew that an energy bill should come pretty quick. However, it did not come quickly. It came some 4 years later. After dragging and stalling and putting up all kinds of barriers, we finally got an energy bill in 2005, and we did dovetail some of the elements on renewables as it relates to agriculture.
In 2007, we will renew the Agriculture bill. And I would not be a bit surprised if we do not see energy even in the main title because we can produce renewables and we can produce alternative fuels to make sure we wean ourselves off of our dependency on foreign oil. We have to do that. We are going to get it done even though there are people who will obstruct and drag their feet in setting the policy.
I see my good friend from Utah is in the Chamber. Whenever you are producing oil at post-1970 production in the State of Montana, that means we have crude oil, like the crude oil that could go to refineries today in his State of Utah, from pipelines that are fed out of Montana, as well as to refineries in Montana and also in Colorado. Do you realize a 36-inch pipeline moves something like 86 thousand barrels a day? We can't even get on that pipeline. That pipeline is owned by Canada,
and it is full of tar sands oil moving to refineries in Utah and Colorado. Meanwhile we are actually slowing down production at wells since we can't get all the crude oil being produced in the Williston Basin area today out of the area. If we do manage to get some of the crude oil on the pipeline, it is at a discounted price of around $25 to $30 a barrel.
What is wrong with this picture? The infrastructure isn't there to move the oil. The refining capacity is not there to refine the oil. We are picking and choosing who gets the oil on the pipeline and who gets to sell their crude oil at prices that are far less than $73 a barrel. The price that is going through the roof, that we hear so much about, is the oil futures price, which is set by speculators and expectations. That is not the spot price. Americans have to understand the difference.
So we need infrastructure, but we also need this ability to produce the alternatives and the renewables and to get those energy products on line as well. And we can do just that if we don't have to chew up 25 percent of our construction costs just in permitting and selecting a site in which to do the work.
I know that high costs affect people who have to drive automobiles to get to work and have to go places to make this economy grow. Yes, the President is right on. Let's take a look at the oil companies. Let's see what is going on there. Let's get on the internal part of it and see what the prices are all about today.
But I stand here today with the appeal that we need to look at our food and fiber production across this country.
I will tell you something else I found out while driving around Montana. I would drive down the highway through a little town, and if I saw a little restaurant there, a little cafe with six or seven pickups sitting there, I would go in and have a cup of coffee. You will get some conversation going on in there, I guarantee you. When I hear of farmers cutting back on the use of fertilizer by almost a third last fall and this spring when going in with their crops, that sends a message to the rest of the country that food and fiber production is being negatively impacted by these energy costs. Yields go down, the amount of grain and food products that moves to the marketplace goes down. The producers just can't afford the fertilizer. Then they go to pay their diesel costs for putting the crop in and taking it out, and it makes for a very interesting discussion around the restaurant or the cafe in the coffee clutch. Usually those fellows have all the answers, if you will just listen. I hope most of our Members of this Senate would do that: Just take off, sit down in a restaurant, listen to what people are talking about, and then try to come up with some sort of policy that would increase our ability to move and to be mobile and to fuel an economy that supports a very mobile society.
For alternative fuels, our technology is moving right along. We have many technologies that are going to help us in ethanol production, especially the cellulosic technology that uses plant residues. What we usually throw away, the waste, can now be turned into energy.
Biodiesel is viable. Genetically improved oilseeds are being produced and can be turned into a cleaner diesel. We were in Billings yesterday and saw an experiment of what can be done with biodiesel. We are the Saudi Arabia of coal in Montana. There are ways to turn that into diesel. Basically, we haven't found any alternative to diesel in moving big loads. We have to continue our research and development and our effort to turn what we grow every year, what is renewable every year, into usable, practical renewables to fuel our every day lives.
So I hope that during this week policies which would increase production, whether hydrocarbon or renewable, could move out because there is nothing in the short term that is going to take care of it. I tell you: we have to look at the long term of where we want to be in 20 years and ask ourselves how we get there. To formulate that policy in 1 week is asking a lot from this body or any other policymaking body. Nonetheless, we have to take up that challenge and be aware of what is happening on our farms and ranches across this country because the second thing every one of us does when we get up in the morning is eat breakfast, and we know the cost of that is going to rise if we don't address this business called high energy prices.
There is a cumulative effect here. We could point fingers at one, two, three, or four different contributing factors, but it is the perfect storm of all these factors that have come together. Finally we are being sent a message that policy has to be changed in order to increase our ability to move Americans.
I thank the Chair, and I yield the floor.