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Rep. Larry Kissell's This Week in Washington: Gasoline prices
Story Date: 3/5/2012
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Source: Rep. Larry Kissell (N.C. -8), 3/2/12
In recent weeks, the intensity of the discussion about high gasoline prices and our nation’s energy policy has increased. This is an important discussion to have and it needs to be based in facts. I am concerned that the noise which is being made in Washington and elsewhere about who is at fault for these price increases is not based in reality. Loud does not equal true in this discussion of public policy and politics.
Drill for it here, sell it here
Put simply, America is awash in gasoline. In 2011, for the first time since 1949, the United States exported more gasoline, heating oil and diesel fuel than it imported. In September alone, we exported 430,000 more barrels of gasoline each and every day than we imported. These reports of record gasoline exports come at a time when prices have risen nearly every day for a month.
Oil companies are among the most profitable enterprises in the history of mankind. They do not want to increase capacity and loosen the stranglehold they have on the American consumer. Oil companies have shown no desire to ramp up production or increase refinery capacity. BP, Chevron, ConocoPhillips, ExxonMobil and Shell collectively made $137 billion in profits in 2011, even though they produced four percent less oil than the year before.
I challenge these companies to put their production where their mouths have been. They need to fully utilize the leases they hold in the United States, including the Gulf of Mexico and Alaska. They need to expand refinery capacity. And they need to sell American energy to Americans.
I stand up for working families and small businesses by supporting reasonable measures to increase responsible energy production and exploration in the United States. I support the XL Pipeline, the T. Boone Pickens plan to drastically increase the extraction and application of domestic natural gas, as well continued research into alternative energy solutions for our long-term security and stability.
Wall Street speculation drives prices up
The current surge in prices is not tied to the usual supply and demand that impacts the pricing of most commodities. Prices are skyrocketing at a time when American domestic gasoline consumption is actually on the decline. Nearly a year ago, Exxon Mobil CEO Rex Tillerson testified that oil should cost between $60 and $70 a barrel, if the price of oil were based on supply and demand. The price of oil on that day was $98 a barrel. That means that speculation adds between $28 and $38 a barrel to the price. With global oil production at its highest levels in nearly a decade, it is clear that the leap in prices has more to do with speculators than consumers. Today, with the price again hovering around $100 a barrel, between 30 and 40 percent of that price is directly due to Wall Street speculation. This practice must be stopped. Families and small businesses have suffered long enough at the hands of the alliance between Big Oil and Wall Street.
Congress helped make this mess
As with other problems facing our nation such as trade, debt and education, the ineffectiveness of our energy policy can be traced to mistakes made in the past by Washington. We all know that it is easier to break something than it is to fix it. In 2006, before I became your representative, Congress voted down a motion to remove subsidies and close tax loopholes for large, integrated oil companies that would have forced big oil companies to pay their fair share of taxes. Even earlier, in 2005, Congress approved $85 billion worth of subsidies and tax breaks for most forms of energy, including oil and gas. That very same year, Congress then failed to pass an alternative energy plan that would have brought immediate relief to consumers at the pump, increased the nation’s investment in renewable fuels and energy efficiency and cracked down on price gouging. Years of ineffective and irresponsible government action and inaction have led us to where we are today. And, with many of those who made the mess still on the political scene, it is taking longer than it should to clean up the mess they’ve made.
Big Oil has DC in its pocket
Oil companies have the favorable tax loopholes they have for one reason: they’ve bought and paid for them. Oil companies continue to get $40 billion in taxpayer handouts and are pushing for even more tax cuts. Big Oil and its allies spent over $146 million lobbying Congress last year, and made over $18 million in federal campaign contributions. At a time when some in Congress are being called out for profiting on insider trading deals, and many others invest in and take large contributions from Big Oil, it is little wonder that the industry continues to get tax breaks otherwise unavailable to small businesses.
Protecting America from shortages
America must continue to take immediate and long range steps to reduce our reliance on foreign oil and volatile markets. As we have seen in the wake of hurricanes Katrina and Rita, as well as during the Deepwater Horizon oil spill and the seemingly perpetual political instability of many oil producing nations, America’s fuel supply can be disrupted at any moment. To help prepare our nation in light of this uncertainty, I introduced The National Strategic Gasoline Reserve for Purpose of National Security Act. I wrote this legislation to help prepare for emergencies and disasters, establishing up to five National reserve sites storing up to 10 million barrels of unleaded gasoline. This legislation has yet to pass, but I will continue to fight for it and any other such measure intended to help stabilize prices during times of crisis so families and businesses are not forced to bear the burden of unexpected, rapid price hikes. The reserve would not allow the government to interfere with the normal course of business. But at times of crisis, disaster, or foreign manipulation of fuel prices and supplies, America needs to have at the ready enough refined gasoline in reserve to keep our economy moving. This is a matter of both national and financial security for the people of our nation.
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