Mr. Speaker, I appreciate the privilege to be recognized here on the floor. I would ask, as a point of information, do you anticipate Democrats coming to the floor for the next hour? I appreciate being recognized to address you on the…
Mr. Speaker, I appreciate the privilege to be recognized here on the floor.
I would ask, as a point of information, do you anticipate Democrats coming to the floor for the next hour?
I appreciate being recognized to address you on the floor of the House, Mr. Speaker.
In the 28 minutes that I have been allocated, I think it's important to address some of the issues that were raised by the gentlemen in the previous hour, the 30-Something Group. That is that, gentlemen, you simply cannot suspend the laws of gravity or the laws of nature, and what goes up must come down. Water runs downhill. And supply and demand control the prices in the marketplace.
I have fought this energy issue on this floor of Congress for some years now. And the lamentations that I'm hearing that come from the gentleman from Florida, his concerns about motions to recommit used to be concerns about the Republican majority. They still remain concerns about President Bush, and they still remain allegations about why we have high gas prices, why it is people can't pay their bills. But the Pelosi majority would suspend the law of supply and demand. There wasn't any discussion about that. It was all about profiteering of the corporations.
Well, the first point I will make is that we have got to have some people producing energy. And let's just say, for example, if Exxon makes $10 billion a quarter, and that adds up to 40 some billion dollars a year, and if this Congress steps in and says we have a different deal, we want to change the deal, we want to put some windfall profit tax on you and every other American corporation that is now making some profits off their investment in the oil fields, and as this leadership on the Speaker's side has done through the farm bill in particular, which is push to change the deal on our oil leases and renegotiate them because of their belief that the people who signed those contracts, those companies that are providing oil and gas and diesel fuel for us are making too much money, Mr. Speaker, a deal is a deal. And when the Federal Government signs a deal for oil leases and those companies agree to pay royalties on the oil they pump out on a per barrel basis, if the value of that barrel goes up, the Federal Government's deal can't change, just as if the value of the oil goes down. If it costs more to explore and find the oil and more to get it on the market, Uncle Sam is not standing there. Speaker Pelosi is not standing there with her checkbook saying, well, it didn't work out so well for you; so we want to fill in the hole of the loss that you had. No. A deal is a deal. And when you shake hands on it or you just say, yes, that's what I agreed to, that is by definition a contract. And when you have a congressional piece of legislation, when you have the Federal Government negotiating a lease, you don't change that deal.
And this Congress steps in and makes noises about windfall profits tax. And there are people sitting on the board of directors of these energy-producing companies, these companies where the more energy they produce, the cheaper gas gets for the American people because the law of supply and demand commands the price. Gas gets cheaper when you have more of it produced. And when companies make money, they invest that profit into research and development and exploration. When they do that, that puts more gas and more diesel fuel and more oil on the market, not less. And that keeps the price from inflating or it lowers the price. So if this Congress, led by this Speaker, steps in to change the deal, the people on the board of the directors of those oil- producing companies, if they're logical, rational people and they control capital; so by definition they are logical and rational in my book, some of them are going to start to discuss how they can take those profits out of their oil company and invest them in someplace else where they might not be so vulnerable to a windfall profits tax or so vulnerable to a Congress that has shifted to evermore class envy, evermore resentful about capital returning to the stockholders, and when that happens--the mutual funds, the retirement funds, the 401(K)s, the investment funds of America that are our pension funds that supplement Social Security are many times invested in oil stocks and reserves and futures. The portfolio of America's retirement is what's being attacked by this Congress. And we have to let people and have to let companies make a profit when they invest and take the risk. You cannot suspend the law of supply and demand. But this Congress has. And I think you're off in Pah-la-la-losi Land thinking that you can suspend the law of supply and demand. You cannot.
If we have more energy on the market, the price increase will either slow or it will diminish and be reduced. If we have less energy on the market, the price will go up if the demand also goes up. That is the equation that works here.
So we have high gas prices, and it's pretty easy to figure out why. The American people that are awake tonight, Mr. Speaker, and especially those out on the west coast and in the mountain States, they will understand this equation, I think, fairly simply. There are three reasons that the gas price has been increasing. One of them is the world demand on gas and diesel fuel, on oil. That's why the per barrel crude oil price has gone up. By any
measure it has gone up. The world demand has increased. We see the Chinese increase their demand, and as the Chinese demand increases, that puts more demand on the supply, and when the supply gets tighter, the price goes up. U.S. consumption has not diminished. It has marginally increased over the last few years. That uses up more.
The oil reserves are being diminished some. And we're finding also oil in other places where we thought we couldn't produce it. There was an announcement here last week. USGS had announced what I believe was 3.4 billion barrels of oil in an oil shale a couple of miles down, most of it in North Dakota and some of it in Montana. That's a huge oil find. The tar sands in Northern Alberta have a massive amount of oil, and we're preparing to bring a pipeline down from there and build a refinery in the Midwest if local people are willing. And if we can do that, we can keep the gas and diesel fuel prices in America from inflating out of sight. And, in fact, if we can bring enough supply in, we can cause those prices to go back down. Supply and demand is one component of this, and it's a pretty important component.
The use and consumption of more energy globally is another component of it.
And a third component of the high gas price is a cheap dollar. This dollar has been diminished in its price. And the commodities across the world, it takes more American dollars to buy things overseas to purchase into the Euro environment, the European Union, for example. It takes more dollars to purchase in Asia. But their currency buys more. So because their currency buys more, it takes more American dollars to compete against that. So perhaps 35 percent of the value of this crude oil on the marketplace is because the value of the dollar has been diminished. If you could take 35 percent or roughly a third out of the gas price today, you're down there near $2 a gallon.
But the point that I want to make about this in this poster, Mr. Speaker, is this: The remarks made by the previous presenters are not consistent with this factual information that I have in this chart. And it works this way: On the day that George Bush was inaugurated as President, and I mean the first day, January 20 of 2001, the average gas price on the street was $1.49 a gallon, Mr. Speaker. That price stayed fairly flat. It appreciated some. And by the time we got out to 2007, January of 2007, when this new Democrat majority in Congress was sworn in and Speaker Pelosi took the gavel where you're seated, Mr. Speaker, the gas on that day was $2.33.
Now it's been about 15 months perhaps, perhaps 15 months of this Pelosi Congress, and gas has appreciated, gone up in price, from $2.33 a gallon to $3.51 a gallon. That's a 50 percent increase in the price of gasoline in America in 15 months. And that isn't because President Bush has done something to increase the price of gas. It isn't because he hasn't been helpful and supportive and worked to try to get us more domestic energy supplies. It's because the people on that side of the aisle, Mr. Speaker, the people on the Democrat side of the aisle, have blocked everything since I've been in this Congress that put more energy on the market. They blocked everything.
And we fought this on this floor to open up ANWR for drilling, a massive amount of oil up there. There's no environmental concern in ANWR. We were successful in drilling the North Slope. And I will submit that there is not an environmental spill in that part of the country that has a lasting and damaging effect. There was a tanker, the Valdez, that did run ashore and have a spill. But that was a matter of transport. It wasn't a matter of drilling, and it wasn't a matter of processing or pipelining it out of Alaska. It was after it left Alaska that that happened. But there was not a measurable spill up north that caused a problem. There is no environmental impact that's been a negative up there in Alaska, and there is no rational reason to prohibit drilling in ANWR. Yet the vast majority of the Democrats blocked the drilling in ANWR. When we were close, when we were within a handful of votes of being able to punch those holes up there and have that oil flowing down in here into the domestic United States, that would have been back when gas was, let's say, about $1.80.
Today, it's $3.51 and rising because of the barrier that was put in place by environmental extremists that do not have a rational argument that they can put up. All they do is put a green label on a bill, and as soon as it's green, the chicken littles on that side will run and vote for a green bill. I had people come to me and they said, We had the bill to drill in ANWR that allowed for, out of those millions acres, and I think it's 19.2 or 19.2 million acres, 2,000 of them to be used to punch holes down into the oil field. Two thousand acres. As the vote went up on the board, Mr. Speaker, people came to me and said, You are from Iowa; you know what an acre is. You have farms there. How much is an acre? I said, Well, 43,560 square feet. That didn't mean a thing to them, that is the size of a country school house lot. That didn't mean a thing to them. How about the size of a football field? Oh. Okay. Two thousand football fields. I think I will be a no because, after all, it's green. It's labeled green.
Environmentalists don't want to punch holes up there. It's the best place God could have put oil, that I can imagine. You go up there and do it in the permafrost and you drive out on the ice. And when the frost melts in the summertime, there's no sign that there was any traffic there at all. The most extreme environmentalists you could come with on that side, Mr. Speaker, I could fly them over ANWR and they couldn't point down to an oil well. I will fly them over the north slope. I will fly them over at 2,000 feet and they can't eyeball an oil well in the north slope of Alaska because it's not what they imagine and it's not drilling up there in a pristine alpine forest.
I am here to tell you there's not a single tree up there, Mr. Speaker. Not one. Even though the Sierra Club ran adds that said we can't disturb--well, the images on the screen were pristine alpine forests. There's not a native caribou herd. But the one on the north slope of Alaska, where we did drill successfully, went from 7,000 head to 28,000 head, for those of you out there in Rio Linda. That is 28,000 caribou where there was 7,000 before because now they don't drop the calves into the cold water on top of the permafrost, but get next to the nice warm pipeline and have their calves and they get nice and fresh then they gallop across the tundra.
It's been a good thing for the environment, a good thing for the oil supply. Drilling in ANWR is a good thing. Drilling in the Outer Continental Shelf, especially around Florida, is a good thing. These prices would not be this high if we had been successful in those efforts, if there hadn't been a Democrat green coalition that blocked every effort to try to put more energy on the market, more Btus on the market. Because the equation is this, all of our energy is all wrapped up together. British Thermal Units ties it all together, whether gas, diesel fuel, ethanol, biodiesel, solar, hydroelectric, whether it's nuclear, whether it's wind energy, whether it's clean burning coal, whether it's latent solar heat, all of those things put energy out of the market. They are all part of the overall energy pie chart. The more energy we can put there, the cheaper it's going to get. And the more things that you do to take energy off the market, the more expensive it's going to get. And your thoughts are either denying the law of supply and demand, or the thing that I heard many of you voice, this thing you have convinced me now is that you want to see more expensive energy. That is what I believe. Because I hear the dialog, I hear the debate. You want more expensive energy because somebody will park their car and get on their bicycle and ride that instead of driving their car. Doesn't work for grandma out there in Iowa that has got ten miles in January to go to town. But it might work for somebody in Florida to get on their bicycle.
More expensive energy why? Because we get more quality of life? No. Because you have this myopic vision that you can somehow save the planet if we had $6, $8, $10 gas. That is why you're taken by every energy action of this Congress since Nancy Pelosi took the gavel that has taken Btus off the market, shortened the supply, tightened
this thing up. The demand has gone up, the supply has gone down. The price has gone up 50 percent in the 15 months that Nancy Pelosi has been Speaker of the House. And I have to listen to the drivel that says there is some other reason because what, we didn't go after the windfall profits of the oil companies? I don't think so. That means everybody delivering oil is a crook and everybody is fixing prices and going along with it. It is supply and demand. That is the bottom line on this energy piece.
As I look at my colleague from Michigan, who actually comes to the floor with a significant amount of expertise, I would be very pleased to yield such time as the gentleman may consume. Mr. McCotter from Michigan.
I thank the gentleman from Michigan for coming down to the floor and adding to this dialog.
Mr. Speaker, as I listen to Mr. McCotter and reflect upon his remarks that corporations are tax collectors, that they actually don't pay taxes, it's Ronald Reagan's position, my position, Mr. McCotter's position. They will pass those costs along to the consumer because in the end it's the last stop of the retail that pays the taxes. That is the people in the end. The consumers in the end will pay the price. If they raise the taxes, we will see the prices go up. If we make energy more scarce, the price will go up. If we are punitive towards companies that are producing this energy and risking their capital, their capital will go elsewhere.
If that happens, then there will be less oil on the market, not more. The price will be higher, not lower. The energy will be more scarce, not less. Because of these policies that have come forth in the beginning of this 110th Congress, we see the action that has taken place here. We see what has happened from the very first day, Mr. Speaker, of the new 110th Congress, the day that Nancy Pelosi took the gavel, and it became clear that there was going to be an energy scarcity policy. Gas went from $2.33 over 15 months to over $3.51 a gallon, perhaps more than that today. That is a 50 percent increase in just 15 months. I have stipulated the reasons for that. Energy is more scarce, it's less certain. This economy is also in a decline.
It's interesting to me that I don't hear a lot of discussion about the real reasons for that, Mr. Speaker. I look at it this way. When the new hands took over and picked up the gavels here to be chairs of the committees in Congress, in the House and the Senate, and we had the chairman of the Ways and Means Committee, Mr. Rangel, from New York, who a long time had waited to become chairman of the Ways and Means Committee, we had pushed pretty hard to make the Bush tax cuts permanent, those tax cuts that slowly the authorization expires and will automatically kick in as dramatic tax increases in the next couple of years. I watched as the chairman of the Ways and Means Committee went on the talk show circuit all over television, and I presume radio too, and he was constantly asked by the pundits, What will you do with the Bush tax cuts? Will you make them permanent?
Are there some there that you will commit right now that you will want to save and protect of those tax cuts, or will you just simply want to see them all expire and have that automatic, huge, unprecedented record tax increase?
Well, the chairman didn't address that subject matter, by my recollection, one at a time or in groups. But eventually as he did enough of the talk show circuits, the talk hosts would ask the question, and by a process of elimination, the capital investment in America pretty much concluded that no part of the May 28, 2003, Bush tax cuts would the chairman of the Ways and Means Committee want to see made permanent.
Capital saw that and realized that by about late January-early February of 2007, just about the time gas prices started to shoot up here, Mr. Speaker. That is the time that the capital investment of America understood that capital was going to be more expensive, because the Bush tax cuts were not going to stay or be made permanent.
When capital gets more expensive and it is looking down the line, it tightened things up. And you can go back and look at the record, Mr. Speaker. You saw industrial investment decline indexed directly to the period of time that Nancy Pelosi became Speaker, Charlie Rangel became the chairman of the Ways and Means Committee, and that gas began to shoot almost straight up here on this chart, going on to its 50 percent increase in prices over a 15-month period of time.
At that same time, capital got more expensive, and because of that more expensive capital, industrial investment declined. That was the first indicator that we were going to have an economic problem on our hands. That was the lack of investment in industry that led all of this. Along behind it came the subprime mortgage component of it, which in the grand scheme of things isn't as big a hit on our economy as the higher gas prices.
Then, as Adam Smith said, there are two components to the price of everything. One is the cost of the labor and the other is the cost of the capital. The capital price went up, then the cost of goods and services went up, and capital investment went down.
We can expect this decline in our economy because of a number of things: Energy prices are skyrocketing because the policies that are coming out of this Congress are taking energy off the market, and capital prices are going up because the tax cuts are unlikely to be made permanent between now and 2010. So automatically those tax increases will kick in, and the investment markets see that.
Those are the reasons that are watching this economy decline today. The subprime is a small part of it. But it is such a small part of it, when you think of what the subprime really is, it is about a $150 billion loss. We will burn about 142 billion gallons of gasoline. Those 142 billion gallons of gasoline, $1 a gallon for one year would pay for the subprime.
So let's keep our rules straight. Let's understand we can't suspend the laws of supply and demand. Let's put some energy on the market. That includes conservation.