Madam President, I want to switch gears and talk a little about gas prices. Madam President, I don't know what kind of vehicle you drive most of your miles in while in New Hampshire. The vehicle I drive most of my miles in, and have been driving in Delaware for 11 years now, is a Town and Country Chrysler minivan. When I stepped down as Governor in 2001, my old Chevrolet Corsica was about 12 or 13 years old, and my wife said: Don't you think it is about time to get something new? So I took my oldest son Christopher, who was about 12 at the time, and I said: Let's go out and shop for a new car. I thought it would be a man thing, a dad and son thing.
So we went out and drove Porsches, we drove Ferraris, and we bought a 2001 Chrysler Town and Country minivan, which he laments to this day. Anyway, fast-forward 11 years, and we had a meeting yesterday morning, as you know, with the CEO of Chrysler-Fiat, and I mentioned at the meeting that we bought this vehicle when I stepped down as Governor, and 11 years later--later this week--the odometer will reflect the numbers 300,000 and counting. It will have over 300,000 miles. We are going to go over 300,000 miles. So it was built to last. What a great car, built in this country, a terrific vehicle. But when I stopped and got gas last weekend, we paid about $3.81, and the prices continue to go up--mostly up, sometimes down, and then back up again.
What I would like to do is talk a little about high gas prices and how it puts pressure on all budgets, including the budget of my own family. We drive that vehicle a whole lot and, hopefully, will drive it a few more miles before it is ready do sit more in the driveway and take a rest.
I want to begin by acknowledging that I go home just about every night and talk to people literally almost every day, morning or evening, in Delaware. I will cover the State this weekend and for the next week or two during our recess, so I hear a lot directly from the folks I am privileged to represent about their concerns about gas prices at the pump and the kind of pressure it puts on the budgets within their own families.
I understand gas prices are at their peak. Actually, they have been higher than this. I think they were a little over 4 bucks during part of the Bush administration, but this is as high as they have been for some time. It puts a strain on American families and American businesses, and it threatens to impede or slow down our economic recovery, which is actually moving at a pretty good pace. Unfortunately, the solution is not as simple as some would suggest. If it were, we would not be having this discussion every year or two around the same time.
I am asked sometimes: Why don't we just drill more in this country? Some assume high gas prices at the pump must mean we have slowed down or stopped drilling at home.
Many are surprised by the answer, and the answer is we are drilling more in America. In fact, I believe--correct me if I am wrong--but we are drilling more in this country than we have for at least the last 8 years. Because we are drilling more, the United States is now a net oil exporter, not a net oil importer. This country, which for years we said we are the Saudi Arabia of coal, is now on its way to becoming the Saudi Arabia of natural gas. As we have opened for drilling additional acres onshore, offshore, off Alaska, and the gulf, we are in a position to become a net oil exporter.
The Obama administration has made available millions of acres for oil and gas exploration in the last year or two, approving more than 400 drilling permits since the new safety standards were put in place. These safety standards, we may recall, were implemented to make sure we didn't have a repeat oilspill disaster such as the BP oilspill that occurred almost 2 years ago today.
We have been joined on the floor by Senator Nelson of Florida, who remembers all too well the oil that washed up in places such as Pensacola, where I did basic training on my way to becoming a naval flight officer. But since we got that straightened out and put in place tighter restrictions for drilling safeguards, 400 or so new drilling permits just since then have been put in place with stronger safety standards.
As a result, we have a record number of oil rigs operating right now, more working oil and gas rigs than the rest of the world combined. Let me say that again. With the changes that have been made, the increases in permitting in a year or two, we now have a record number of oil rigs operating right now, more working oil and gas rigs than the rest of the world combined--combined. Yet of the millions of acres our government has allowed for oil and gas development, only 25 percent of those acres are being used for production.
We have a chart that demonstrates that rather graphically. If you will, think of all this as the millions of acres that are available for oil and gas development in this country. Of all these in the orange, we have the percentage that are producing acres, that actually have permits and the oil and gas companies could be drilling; 25 percent of these are producing acres and 75 percent of these are nonproducing acres. It is not because people are drilling and coming up with dry holes; it is because, in many cases, they are not drilling.
Keep that picture in mind. You know the old saying, a picture is worth a thousand words. This is worth at least 500, maybe even more than that.
Would the Senator yield for that point?
I would be happy to yield.
Would the Senator believe that in the Gulf of Mexico, of all the production there, the percentage is even worse in all those acres that are under lease, which is 32 million acres.
Just in the gulf?
Just in the gulf, 32 million acres. Guess how many acres are actually drilled and producing?
Six. So 26 million acres are under lease in the Gulf of Mexico and are not being produced.
I thank the Senator for that.
Wouldn't it suggest that they ought to use it or lose it?
It certainly would. I thank the Senator for sharing that point with us.
So here we are, more drilling in America, onshore and offshore. We are no longer a net oil importer. We have 75 million acres that are leased and have yet to be tapped, and a lot of those are down in the gulf, as Senator Nelson suggests. Yet American consumers are still paying more at the pump.
All the while, the five largest oil companies, BP, Chevron, ConocoPhillips, ExxonMobil, Royal Dutch Shell Group did pretty well. They made about $137 billion last year. To top it off, these companies received billions of dollars in taxpayer subsidies to drill for oil and gas, even as they are making very healthy--I think recordbreaking--profits.
This doesn't make a whole lot of sense to me, but let me stop. I wish to be clear on this point. I don't think any of us should begrudge the oil and gas companies their success. They have a fair amount at risk when they drill for oil or gas, and it is not a business without risk. But this is also a business with enormous payoffs and enormous rewards for assuming those risks.
But I do question giving away billions of taxpayer dollars in drilling subsidies at a time when we are running record Federal deficits to established and successful industries that I don't think need a whole lot of financial incentive to drill more in this country. If they can make 100 or 110 bucks a barrel or so, that is pretty good incentive, at least in my mind.
Why? Because at the end of this day, it is not the solution. We can't drill our way out of the situation we are in.
I am told that, today, America consumes some 19.5 million barrels every day. The primary reason that amount is so high is because Americans have very little choice at the pump; and until recently, we had very little choice in the automotive showrooms. That has changed rather dramatically in 5 years, and it is going to change a whole lot more. But we can choose between oil and oil most of the time when we pull into a gas station to fill up. Basically, every American driver's dollars are a foregone conclusion to the oil industry.
What do we need to do about this? How about some choice. Maybe we can give Americans a choice. In the chart we have, we have solar. Some of the new vehicles that are being made actually have solar panels on their roofs.
Here we have wind. We are harnessing a lot of wind around the country. Hopefully, before long we will harness it off the east coast, maybe from North Carolina up to Maine, to provide electricity. It will help provide the juice they need for these hybrid electric vehicles that are being made more and more. We have nuclear. We have a lot of nuclear in the mid-Atlantic and the Northeast that can provide electricity, if you will, the juice, for these hybrid electric vehicles.
Here, we have companies such as DuPont in our State working with BP to actually create--not corn ethanol but ethanol, cellulosic ethanol out of corn stovers. What is a corn stover? That is the cornstalk, that is the corncob, that is the leaf of the corn--and create a fuel called biobutanol that we will hear more about in the years to come that has better energy density than corn ethanol. It mixes better with gasoline than corn ethanol. It actually travels through pipelines. Corn ethanol doesn't do that. It is like all the things corn ethanol is not.
That is the kind of stuff we ought to be doing. We need to be incentivizing--not only being involved in the R&D of that stuff but also encouraging its being used, and I think market forces will take it from there, whether the choice is natural gas, converting large diesel vehicles into using natural gas, electricity from clean energy or biofuels or nuclear.
For the first time in 30 years, the Nuclear Regulatory Commission has just approved the construction of two nuclear powerplants. We went 30 years without building a new nuclear powerplant. Two are underway right now down in Georgia. They use a new design called the AP 1000, also just approved by the Nuclear Regulatory Commission. The new design is one that literally shuts down a nuclear plant. If we have a hurricane or if we have an earthquake or if we have a tsunami, basically it shuts itself down. We don't have to worry about the problems they had in Fukushima, where they lost communication, where they lost the pumping system, where all this and that happened, everything that could go wrong went wrong. These systems under the AP 1000 basically shut down by themselves. It is a much smarter approach, and it is the way the two new powerplants in Georgia are going to be built. That is part of the solution as well.
But we need investments in new fuels and investments in new vehicles and new infrastructure to use these new American-made alternative fuels. We already have vehicles that can run on biofuels and natural gas and electricity. We had the folks from the U.S. Navy in the other day, including some people from down in Florida, and they are flying Navy airplanes, Air Force airplanes, using a 50 50 mixture of jet fuel and biofuel and with no degradation in performance. We need to make those vehicles--whether they are aircraft or cars, trucks, and vans--make those vehicles and the fuels for those vehicles more available to the American people, in this case our Armed Forces. We need a choice. We need a greater choice than what we have had, and the bill offered by Senator Menendez actually starts to give us that choice.
I am getting close to the end, so let me just say that instead of giving billions of dollars to oil companies to continue what they are already doing, why don't we put some Federal dollars in to work to allow real choices at the pump? It turns out that some of the folks who are doing some cutting-edge work in this turn out to be some of these oil companies. Some of the best biofuels work is being done by, I think, outfits like BP and Shell. Rather than incentivize them just to drill more, why don't we incentivize them to come up with alternative and biofuels and other kinds of renewable forms of energy? They shouldn't be cut out of that. They are energy companies. They are not just oil and gas companies. Let's incentivize them to create energy.
I wish to go back a couple years. I wish to go back to 2002. I am told that from 2002 to 2010, Chevron spent something like roughly $4.5 billion globally; from 2002 to 2010 they did it on research and development for renewables and alternatives including geothermal, biofuels, advanced batteries, wind and solar, as well as on energy-efficient measures. That is about $4.4 billion.
In 2010 alone, ExxonMobil invested about $67 million in research and development in oil alternatives, mainly in algae research. That same year, BP spent $284 million. ConocoPhillips spent something like $34 million on research and development and demonstrations in alternative fuels.
Again, the idea is these oil companies are doing R&D. Why don't we incentivize them to do R&D for renewable fuel, not oil and gas. Oil and gas, at $100 a barrel, $90 a barrel, they don't need a whole lot in terms of incentives to drill. Let's incentivize them to do the renewable fuels.
I wish to be mindful of our time and be mindful of my colleague waiting. Let's close by saying let's put Federal dollars into choices at the pump that are developed in America. I will say that again.
We are taking money from the Treasury. We are using that money to incentivize the creation of more energy--in some cases more fuel. Rather than just incentivizing creation of traditional fuel that comes out of the ground, the oil, why don't we incentivize some of those same oil companies and a bunch of folks that aren't oil companies to create renewable fuels, the kind I just mentioned, that will be produced in America, that will help us lower our costs and create jobs while they are doing it?
If we want an apple today, when is the best time to plant a tree? The best time to plant a tree is probably 10 years ago, perhaps 6 years ago, if we nurture and care for that tree. That is what we are dealing with today. We need to start investing today for the choices in lower utility costs at the pump tomorrow.
As to building of the Keystone Pipeline, which is supported by some, opposed by others--the southern part of that is actually underway. The rest is going to be going through an approval process and should be worked out within the next year--is not going to solve the price at the pump today. What we need is what we call an all-of-the-above approach--an all-of-the-above approach--which includes nuclear, includes offshore wind, onshore wind, includes biofuels, solar, natural gas in big diesel vehicles that we transform to take natural gas--all of the above.
That is what we need to do. We need to nurture new investments for alternative fuels so we can see the economic gains sooner rather than later. I think Senator Menendez's legislation does that. That is why I am calling on my colleagues to support that kind of approach, whether it is this particular approach or something similar to that.
That pretty much wraps up what I want to say. I want to thank my friend from Florida for being a voice of reason on this subject. This is a guy who is good on just using some common sense.
My dad was a naval chief petty officer for 30-some years. He used to say to my sister and me: Just use some common sense. We must not have had much as kids because he sure said it a lot. But I think the commonsense approach is an all-of-the-above approach. We need to do all of the above, and we need to incentivize the oil companies and a lot of other folks not just to drill for oil but actually to make sure there are good alternatives to that.
With that I yield to my friend and colleague and bid you adieu.
I thank the Chair.
The Senator from Florida.
Madam President, I came to the floor to talk about an outstanding citizen in our State. But before I do, while my colleague is here, I just want to thank him for a very well-reasoned statement.
What we need is overall income tax code reform. My colleague from Delaware and I have the privilege of sitting on the Finance Committee. Even though the prospects for Tax Code reform are very slim between now and the election, perhaps shortly thereafter we can get about the seriousness of the Tax Code, making it more fair, more simple, taking revenue that otherwise escapes the Treasury because it goes into all these tax preferences called tax expenditures, tax loopholes, and use that revenue to lower everybody's rates, including the individual rates and the corporate rates.
That is eminently common sense. The reason I want to point this out is because our friend from Delaware has just pointed out one of those loopholes in an industry that is certainly not hurting because the five top oil companies in the last quarter--that is 90 days--had profits, not revenue--the five top--north of $25 billion for five companies for 90 days--not revenue, profit.
We do not begrudge them the profit. But should there be these tax preferences that have been etched into the Tax Code over a century that, in fact, allow this industry to have tax preferences--in other words, deductions--of $4 billion a year?
I think that would be a place we could start on tax preferences. You are obviously not going to get it in the context of the politics of an election. And you are not going to get it in isolation. We are going to have to look at the overall Tax Code and start making it more fair for the American taxpayer. I daresay there are not very many American taxpayers who think that the IRS Tax Code is a fair code.
Or simple. And as a result I thank him for his elucidation of what is a place that we could start. It is not right or left; it is not R or D; it is common sense.
One other thing I would add to the excellent presentation of the Senator, and that is that as the cost of gas creeps higher and higher--and in parts of Florida it is now $4 a gallon, and oil is being sold on the international marketplace at something like $120 a barrel--how much of that is from speculation of people who buy and sell oil contracts for future delivery? How much is from people who are not users of the oil, such as an airline that would clearly have reason to want to lock in a fixed price for oil in the future as a hedge against that price of oil going up because they are going to use that oil as fuel in their airline? No, these are the ones who are merely flipping like hamburgers the contracts, over and over, which has a tendency to raise the price of oil.
The price of a barrel of oil as it rises then clearly is going to affect the price we pay when we go into the gas station and put gas in our gas tank.
If we would start using some common sense in our approach to these things and do it in a fair way, I think we could get along so much better and the American people would feel so much better about their Tax Code.
I thank the Senator for his presentation.
If my friend would yield to me for one more minute, a lot of people go out this time of year and they buy new cars, trucks, and vans. Traditionally the spring is when people shop for vehicles. Go back a couple of years, to 2007. In 2007 we sold 16 million cars, trucks, and vans in this country. In 2009, as we had fallen into the great recession, car sales and truck sales fell to 9 million units; from 16 million to 9 million in less than 24 months.
That has changed now. We are on our way. The CEO of Chrysler was here yesterday and said they are on their way to record profits. They paid back the rest of the money we invested in them as taxpayers. But people are starting to buy vehicles again. The average life of vehicles people own in this country is 11 years, like my Chrysler Town and Country minivan. But this is the time people will start to trade in vehicles or buy something more energy efficient.
Unlike 5 years ago, people can go into a Ford, Chrysler, GM dealership, and foreign labels as well, and buy vehicles that get 30, 35, 40 miles per gallon and more. And finally, the availability of credit has come back. I say to people who have that ability, thinking about trading and trading up, this is a great time to do it--great vehicles, great quality and much better efficiency, and that is part of the solution as well.
I thank the Senator for pulling up the chart that showed the amount of acres that are under lease and the minuscule portion of those acres--this is domestic production. We all know that domestic production has shot up in the last 3 years, considerably. Yet, of that domestic production, there still is so much capacity that is already leased out there.
I use the example of the Gulf of Mexico. In the central and the western gulf, there are 32 million acres under lease and only 6 million acres of that 32 million are actually drilled and produced.
There is ample opportunity for additional domestic energy production on top of the substantial increase of production that has occurred over the course of the last several years if we would stop fighting about this, if we would stop beating each other over the head politically with this and get serious.
Senator Carper remembers when he and I were young Congressmen, we had a good example of leadership. We had Tip O'Neill, the Speaker in the House, and we had Bob Michel, the Republican leader. The two of them would get into their fights but they were personal friends, so at the end of the day when it was time to stop talking and get together and build consensus to get a workable solution, they could do it. We need that kind of model operating in Washington, DC, and State capitals around the country.
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