Statement of Senator Michael B. Enzi
July 23, 2008
I rise today to also discuss the No. 1 issue that is facing our Nation. That issue is the rising price of energy. Everyone out there whom this affects knows who they are: It is anyone who rides or drives or eats. While I am glad the Senate is finally considering energy legislation, I am disappointed by the scope of that legislation. I hear from my constituents each and every day that the Senate needs to do something about energy prices. I couldn't agree more. We need to put aside partisan politics in order to pass legislation that will address the energy situation we are facing.
Today, the Senate is considering S. 3268, the energy speculators bill. This bill is kind of like a hearty meal of meat, bread, and potatoes but without the meat--oh, and without the bread--and it doesn't really have potatoes in it either. This bill deals only with the issue of oil speculation. It does not deal with the issue of supply and demand. It does not deal with the need to encourage conservation. It does not deal with the extension of important tax credits to promote renewable energy.
Instead, the bill seeks to extend the long arm of the law to reach out and strike down those “speculators” who are supposedly driving the price of oil faster and higher than a rocket ship. I ask my colleagues now, why would we in the Senate want to strike down teachers, civil servants, and farmers? The bill does not recognize that that is who the so-called speculators are. Speculators are oftentimes pension fund investors who protect the retirement of teachers and civil servants. The “evil” speculators are American farmers who want to save money on their supplies and fertilizer and on airlines that want to cut fuel costs by locking in a price that will make the customer's plane tickets cheaper.
This legislation does not recognize that futures markets and the investors who trade in them are crucial to getting the best price for the product and attracting investment in the United States. Cities such as Dubai and countries such as India and China are the places that will benefit from this bill. They would benefit because many of the jobs that would be in New York or Chicago--jobs that are currently American--would no longer be.
I am the ranking member of the Senate committee that handles pensions, so let's get back to the people who have pensions and how this bill impacts them. These people are the employees of most of our largest companies and include airline, trucking, automotive, manufacturing, education, and public civil servant employees. This bill would hurt them. I am alarmed the bill could declare portions of our financial markets off limits to institutional investors, including pension funds, endowments, and foundations.
Laws we have passed say that pension money should be vested in a prudent manner. We in Congress have long insisted pension plans diversify their assets so they don't have “all their eggs in one basket.” However, if we start down the slippery slope the majority leader has set before us in his bill, then we will limit the ability of pension plans and other institutional investors to diversify their investment strategies. This bill takes away baskets that they could put their eggs in. If the pension plans are prudently invested and well-managed, there is no reason they should be barred from any segment of the commodities, futures, or capital markets.
The majority contends that this legislation will bring down the price of gas. Let's see, this bill will not result in the production of any more gas, nor will it result in any less demand for gas.
I tend to agree that many of the Nation's brightest minds who suggest that “speculators” have little to do with the increase in energy prices are right. Warren Buffett, the nation's wealthiest Democrat, does not believe speculators are the cause. T. Boone Pickens, who has been in the news for his efforts to end our Nation's dependence on foreign oil and who addressed Democrats at their weekly caucus lunch, has said that speculators play a minimal role. Federal Reserve Chairman Ben Bernanke made his views clear at a hearing before the Senate Banking Committee on July 15 when he stated:
“If financial speculation were pushing oil prices above the levels consistent with the fundamentals of supply and demand, we would expect inventories of crude oil and petroleum products to increase as supply rose and demand fell. But in fact, available data on oil inventories show notable declines over the past year.”
“This is not to say that useful steps could not be taken to improve the transparency and functioning of futures markets, only that such steps are unlikely to substantially affect the prices of oil or other commodities in the longer term.”
Chairman Bernanke's statement should provide us with a starting point for any legislation, and I am a cosponsor of legislation that begins the process of having a sensible energy policy. The Gas Price Reduction Act addresses the need for more transparency in our markets and more oversight by the Commodities Futures Trading Commission. However, that is not the focus of the legislation. While the transparency is important, the larger problem we face is a lack of supply and an increase in demand. The majority leader's bill is like the novel an unwise motorist reads while driving down the highway. The novel is the wrong focus and while you pay attention to that you could get sideswiped by something you should be paying attention to--in our case, no supply and a whole lot of demand.
We need to find more American oil from American soil at the same time that we use less, and we need to look at alternative fuels. [Page: S7105]
The Gas Price Reduction Act includes provisions to open coastal waters in States that want energy production. It ends the ban on the development of promising oil shale in Wyoming, Colorado, and Utah. At the same time, it encourages increases in supply. It promotes the development of better technology so that we use less energy, and it explores alternative sources. The supply and demands issues are not addressed in the majority leader's oil speculation bill.
The majority leader's bill also ignores the important role that coal can play in securing America's energy future. It ignores the need to streamline the process for permitting new refineries. It ignores the need to increase the use of nuclear as a clean energy source.
You will notice that a lot of these things are also not in the Republican bill that I mentioned. That bill is a compilation of items that everybody here ought to be able to support. The items that have been controversial have been left out. We can use my 80/20 rule. We can agree on 80 percent of the issues 80 percent of the time. If we stick to that and leave the rest to the pundits, it will work out well. Sometimes we try to do things that are too comprehensive because one amendment will pull
off 3 votes and another one might pull off 10 votes and another might pull off 15 votes. Then you don't have a majority to pass a bill. I am not sure that is what the other side is hoping for.
I hope we can keep this simple and get something done--something besides just speculation. I hope we are able to have an open debate over the next 2 weeks. I hope we are allowed to offer energy amendments and have up-or-down votes. If we can have that real debate, I am confident the Senate can come up with a package that could be signed into law, and both sides will get credit. Believe it or not, I actually agree with the majority party on some steps that would help to make this country more energy independent. Wind tax credits are one example. But restricting Senators' participation, stopping them from representing those who put them in office, is not going to get us any further than an empty tank of gas. That is what this bill will do in its current form.