Mr. President, this is a very interesting series of statements we have heard in the last 15 minutes, half hour, statements basically trying to lead Americans to believe that this Finance Committee tax package, as well as the provisions of…
Mr. President, this is a very interesting series of statements we have heard in the last 15 minutes, half hour, statements basically trying to lead Americans to believe that this Finance Committee tax package, as well as the provisions of the tax package to pay for incentives so we can wean ourselves away from OPEC, away from all these countries, is going to result somehow in some cataclysmic event; namely, gasoline prices are going to go up, according to statements we have heard. We have also heard that we are going to reduce domestic exploration and development of American oil companies; we are putting ourselves in the hands of foreign countries. The fact is, the exact opposite is the case. These statements are amazing. It is good political rhetoric, but it has nothing to do with the facts.
First, it is more important that people understand that the amendment offered by the Senator from Arizona, Mr. Kyl, basically delegates to the Secretary of Energy whether $30 billion worth of tax provisions will be enacted. I am astounded that anybody in the Senate wants to delegate that decision to the Secretary of Energy instead of the U.S. Congress deciding whether the tax needs to be imposed.
The Kyl amendment basically says that unless the Energy Secretary can determine that the effect of this will not increase the price of gasoline at the pump, that he, the Energy Secretary, or she, the Energy Secretary--whoever the Energy Secretary is--will automatically be forced to rescind the pay-fors in this bill. That is astounding. It is basically delegating to the Energy Secretary a policy which should be made by the Congress, and that is a huge dereliction of responsibility. I am appalled that anybody would dare suggest it. But that is a fact.
Second, if we look at the whole bill, the Finance Committee package in the Energy bill and also the Kyl amendment, several things are striking. The first is the major underlying Finance Committee bill is designed to accomplish the objective that the Senator from Idaho is complaining about. The Senator from Idaho is complaining that this amendment transfers power to Venezuela or to Saudi Arabia, other countries. The whole point of this bill is the exact opposite. It is to wean ourselves away from OPEC, wean ourselves away from those countries, so that we Americans are in a better position to determine our own destiny, in a better position to get more energy production here in America.
How do we do that? The committee bill does that through all kinds of incentives. It reduces taxes in lots of different ways for alternative energy, renewable energy, cellulosic development, encouraging more American clean coal technology so we can tap into our vast reserves of coal. It has lots of ways we could help America be more self-sufficient and wean ourselves away from these very high gasoline prices we are forced to pay partly because OPEC is forcing us to pay those prices; the truth is, partly because the major oil companies are charging whatever the market will bear. That is why they are charging such high prices to the American consumer. What evidence do I have of that? It is very simple and direct.
I was stunned because of the candor of the CEO of ExxonMobil when he made this statement. This was last year at a Judiciary Committee hearing. I was not there; I was watching on C-SPAN. At that hearing, the exchange was essentially between the Senator from Wisconsin, Mr. Kohl, and the CEO of Exxon. I think Senator Kohl asked the question. This was an open hearing.
He said: Sir, why are gasoline prices so high now?
The answer: Well, Exxon has to pay more because OPEC is charging us more. So we to have pay more, and we transfer those price increases down to the American consumer.
The Senator from Wisconsin asked the head of ExxonMobil: Explain this to me, please. At the same time, your profits have exploded. They have gone up about $35 billion this year. Your profits have expanded.
Senator Kohl said: I am a businessman. Ordinarily, if my costs go up, my profits go down. Please explain to me why you would say your costs are going up because OPEC is charging you more and yet your profits are going way up. Why?
His answer was very illustrative of the point here. He said, in all candor: Senator, my responsibility is not to the American consumer; my responsibility is to my stockholders. I will charge whatever the market will bear because I have a duty to protect my stockholders and get whatever I can for my stockholders. I am going to charge whatever I can.
That is why profits are so high, because Americans can't put milk in their car or their truck. They can't put in water. They have to put in diesel fuel or gasoline. Americans are stuck. The majors are passing on through their distribution system these very high gasoline prices because they can get away with it and because it fattens profits and because they are beholden to stockholders, not the American consumers.
What about these provisions which the Senator from Arizona wants to strike. There are three of them. It is very simple, and there is a reason why they are there and why they will not have the disastrous effect the Senator from Arizona claims.
The first one is to rescind a tax break we gave to the five major oil companies back in 2004. It is called section 199.
We gave that tax break, frankly, to all American domestic manufacturers, including the oil companies. It was as a response to a WTO ruling a year or two earlier which said our American tax laws-- which gave incentives for American products to be exported--were WTO illegal. So we came up with a backup plan. The backup plan was basically section 199 in the code, enacted in the 2004 Jobs Act, which says, OK, we will give an extra little break to domestic production in the United States. If they export the products, fine; if they do not, that is fine. We will still give them a break. That is what that is.
What has happened to domestic oil production in the United States since that was enacted in 2004? Well, one would think it probably increased a little bit because the major oil companies get a little tax break. The fact is, the exact opposite has happened.
Let me quote a couple statistics. In 2004, when that provision was put in effect, domestic production was about 170 million barrels a month. It was 170 million barrels a month in 2004. Well, you would think it would go up because of that tax break for domestic production. Oh, no, that is not what happened. It actually went down. It is down to about 160 million barrels.
Look at the price of oil. Back in 2004, the price of oil was $40 a barrel. Now it is about $65 a barrel. Well, gee, you would think--that is more money in the oil companies' coffers--they would want to use that for more exploration, more development. No. Again, there is less domestic production, even with the price of oil so high over that period of time and even though they have had a tax break. I might add, too, the price of gasoline at the pump back then was about $2 a gallon. Today, it is above $3 a gallon. So that did not help.
So, gee, we thought: We will take that away. It did not help, so we will take it away. So, therefore, it seems to me it is not going to cause an increase in the price of gasoline at the pump.
I might say, the statistics cited by the Senator from Arizona are based on the Heritage Foundation. I am not going to get into the question of who financed that study--I have an idea who financed that study; and, therefore, it drove the results they would like to get--but that is the same organization that said Iraqi oil is going to pay for Iraq reconstruction too. They were dead wrong then, and they are dead wrong now. They are an organization which, frankly, I think is not the most objective, independent organization in the world. That is the first one. That is why we made that first change.
The second provision in the Finance Committee bill the Senator's amendment wants to strike is a loophole closer. We are trying to close a loophole. The Joint Committee on Taxation said--that is a bipartisan organization, the Joint Committee on Taxation, which serves both the House and the Senate, Republicans and Democrats--their independent study shows there is a big loophole the major oil companies take with respect to foreign tax breaks in this area; that is, ordinarily a company gets to reduce its income taxes in the amount of the foreign taxes that company pays to a foreign country.
Now, the law is different between exploration costs and distribution downstream costs. The companies game the system. They offset one against the other. Joint Tax saw this big loophole. Let's close it. That is the second provision. Also, I do not see how anybody could argue against that. It is a big loophole closer. It makes the Tax Code more fair.
Then we get to the third provision. This is the so-called confiscatory excise tax on the oil produced in the Gulf of Mexico. Let's be honest. First of all, the President of the United States, himself, believes there is insufficient revenue paid to Uncle Sam on these OCS leases. The best evidence: The President of the United States, himself, has enacted a 6\2/3\-percent royalty on all new leases in the gulf. He thinks they are not paying enough. He has increased the current royalty--it was 12 percent. The bill has a 13-percent severance tax. The President, himself, has enacted a whole new higher royalty provision on new leases in the gulf. He thinks they are undertaxed. Right now it is about a 12-percent royalty. This provision in our Finance Committee bill says a 13-percent severance tax.
Clearly, Congress has the power to enact a tax. The royalties paid by any company are credited against the 13 percent, and so it is a net lower than what the President thinks the amount should be in revenue paid by the oil and gas companies in the gulf.
I might also say the General Accounting Office has done a study of how much America taxes oil and gas compared with how other countries tax oil and gas. What is the result of the GAO study? The result of the GAO study is we Americans basically tax oil and gas less than other jurisdictions around the world--or other States. The State of Alaska is taxing more. Other countries tax more now. We Americans are pretty easy and soft compared to other countries on how much we tax oil and gas revenues.
So this argument that somehow, oh, my gosh, America is going to tax oil and gas companies with these provisions--that it is confiscatory; they are going to go overseas--it is just nonsense. It is just total nonsense because, already, oil and gas revenue in the United States is not taxed as much as it is in other jurisdictions. It seems to me, therefore, it is not unfair to enact this provision.
The main point is if the Kyl amendment passes, then the Finance Committee tax title of this bill is dead because we are not paying for it, effectively. That is because the Energy Secretary, under the Kyl amendment, probably would rule that maybe prices might go up at the pump, given the politics of it all, and that means we do not have a bill anymore.
Therefore, I urge Senators to say: OK, let's do what is right. Let's start to wean ourselves from OPEC. Let's start to give some incentives to American domestic producers of alternative fuels, renewable fuels, and have more conservation measures to help America again take control of our own destiny.
This is not a perfect bill. Nothing is perfect. But it is a good bill. It is a very good bill. It helps put America back on track, helps America turn the corner toward more energy independence, and enhances our national security so we are less reliant upon OPEC, less reliant upon those countries to which some Senators say this bill gives a break. It does not. This bill does the exact opposite. It helps America become America again.
Mr. President, I yield 5 minutes to the Senator from Iowa.
Mr. President, I yield 7 minutes to the Senator from New Mexico, Mr. Bingaman.
I yield 1 minute to the Senator from New Mexico.
Mr. President, I very much thank the chairman of the Energy Committee who I think has put together a very good energy bill. I thank him very much for his instructive comments here. They are very helpful.
Mr. President, I yield 3 minutes to the Senator from Oregon.
Mr. President, how much time is remaining on each side?
Mr. President, how much time is remaining on each side?
Mr. President, I yield 2 minutes and--how many seconds?
I yield 2 minutes 10 seconds to the Senator from Vermont.
Mr. President, I will take the remaining 2 minutes. This whole debate boils down to something pretty simple and basic; that is, do we as Americans want to begin to become more self-sufficient in our energy production? Do we want to be less reliant on OPEC? Do we want to give incentives to new clean energy industries to develop in America-- not just renewables and alternatives but also clean coal technologies and other ways to help America be more self-sufficient?
Congress, for many years, has provided some very significant tax incentives to the oil and gas industry to help America be strong, to make sure we as Americans have a strong industrial base and a strong energy base to fuel our industries. That was probably the right thing to do over the years from 1926, and the various provisions that have helped America. I think the time has come for us to give incentives to other industries, alternative energy, renewable fuels, clean coal technologies, cellulosic, and so forth--the same kinds of incentives that the oil
and gas industry have enjoyed for decades and decades.
We are not taking away these incentives from the oil and gas industry at all. We are just saying the time has come for us to give incentives to make America more self-sufficient in the production of energy. This bill helps accomplish that result, and the way we do that is very fair and balanced. It will not have the horrible results that are claimed here. I urge our colleagues to begin to take--we will still have huge breaks for the oil and gas, but we give help on the margin to new independent energy sources in America.
Mr. President, I ask unanimous consent to have printed in the Record a letter to Senator Bingaman regarding a study by professors of law John Leshy and Brian Gray.
Mr. President, I raise a pay-go point of order that the pending Kyl amendment would worsen the deficit, in violation of section 201 of S. Con. Res. 21, the concurrent resolution on the budget for fiscal year 2008.