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WYDEN STATEMENT
ON THE ADMINISTRATION'S “BUNGLED” HANDLING OF GASOLINE
SUPPLY AND PRICING
April 24, 2006
Washington, DC – Unofficial
transcript of U.S. Senator Ron Wyden (D-Ore.) statement follows:
MR. PRESIDENT, THE SAME BUSH ADMINISTRATION
THAT SO TRAGICALLY BUNGLED THE RESPONSE TO HURRICANES KATRINA
AND RITA, HAS NOW BUNGLED ITS WAY TO $3 PER GALLON GASOLINE.
UNLESS YOU WERE A HERMIT LIVING IN
A CAVE LAST SUMMER, YOU COULDN'T MISS HOW MISERABLY THE ADMINISTRATION
HAS FAILED IN ITS APPROACH TO NATURAL DISASTERS. NOW IT'S CLEAR
TO ANYONE WHO FILLS UP AT A GAS PUMP THAT THIS ADMINISTRATION
IS ALSO FAILING IN ITS APPROACH TO ENERGY. IN BOTH CASES, MR.
PRESIDENT, THE ADMINISTRATION HAD ADVANCE NOTICE THAT A MAJOR
PROBLEM WAS IMMINENT, AND IN BOTH CASES THE ADMINISTRATION FAILED
THE TAKE ACTION TO HEAD OFF THE PROBLEM BEFORE IT BECAME A MAJOR
CRISIS FOR THE AMERICAN PEOPLE.
FOR HURRICANE KARINA, DISASTER EXPERTS
HAD TESTING THAT PREDICTED IN THE SPRING WHAT COULD HAPPEN, BUT
THE ADMINISTRATION IGNORED THE WARNINGS OF ITS OWN EXPERTS AS
THE MAJOR HURRICANES WERE HEADING TOWARDS THE GULF COAST. ANYTHING
THE ADMINISTRATION'S FAILURE TO TAKE ACTION TO PREVENT GAS SHORTAGES
AND PRICE SPIKES IS EVEN MORE INDEFENSIBLE BECAUSE THEY HAD MORE
ADVANCED WARNING AND GREATER CERTAINTY THAT THE PROBLEM WAS COMING.
THE BUSH ADMINISTRATION KNEW LAST SUMMER, ALMOST NINE MONTHS AGO,
THAT GASOLINE SHORTAGES AND PRICE SPIKES WOULD HIT HARD THIS SPRING.
IF EVER THERE WAS A TIME TO BE WATCHFUL
ABOUT OIL MARKETS, IT'S BEEN DURING THE PAST MONTHS AS MARKETS
HAVE GYRATED VIRTUALLY NONSTOP WITH ONE INTERNATIONAL CRISIS AFTER
ANOTHER. NIGERIA HAS LOST A QUARTER OF ITS OUTPUT. IRAQ'S OIL
PRODUCTION HAS FALLEN BELOW PRE-WAR LEVELS TO ITS LOWEST POINT
IN A DECADE. IRAN SAYS SOMETHING WAR-LIKE ABOUT ITS NUCLEAR PROGRAM
AND OIL PRICES SHOOT UP $10 PER BARREL, AND TODAY VENEZUELA AND
ANNOUNCES THAT IT WILL MOVE TOWARDS NATIONALIZING ITS OIL INDUSTRY
AND WILL CUT OUTPUT, WHICH SHOULD PUT EVEN MORE PRESSURE ON SUPPLY
AND DEMAND.
YET EVEN WITH ALL OF THIS TURMOIL
IN WORLD OIL MARKETS, THE KEY WATCHDOGS AT THE ENERGY DEPARTMENT,
AT THE ENVIRONMENTAL PROTECTION AGENCY AND THE COMMODITIES FUTURE
TRADING COMMISSION ARE ALL ABSENT WITHOUT LEAVE. NO ONE IS HOME
MINDING THE STORE WHEN IT COMES TO OUR OIL AND GASOLINE MARKETS.
NEVER BEFORE, MR. PRESIDENT, HAS
THERE BEEN AN ADMINISTRATION WITH SO MUCH EXPERTISE IN THE OIL
INDUSTRY. THE PRESIDENT AND THE VICE PRESIDENT, OF COURSE, KNOW
A GREAT DEAL ABOUT THE OIL SECTOR. THE SECRETARY OF STATE WAS
A DIRECTOR OF CHEVRON AND ACTUALLY HAS AN OIL TANKER NAMED AFTER
HER. THE LIST GOES ON AND ON.
BUT NONE OF THIS EXPERTISE SEEMS
TO BE BEING USED TO HELP OUT CONSUMERS AT THE GAS PUMPS. THE ADMINISTRATION'S
RECENT INACTION IN THE FACE OF SOARING PRICES IS ONLY THE LATEST
IN A LONG LINE OF FAILURES. IN WHAT IS A VIRTUAL RIGHT OF SPRING,
GAS PRICES TYPICALLY SPIKE AS REFINERIES SHUT DOWN FOR MAINTENANCE
TO SWITCH OVER TO SUMMERTIME GASOLINE BLENDS. THAT'S HAPPENED
EACH OF THE LAST SEVERAL YEARS, AND IN EACH INSTANCE, THE ADMINISTRATION
HAS DONE NOTHING TO HELP CONSUMERS AT THE PUMP.
BUT THIS YEAR THE ADMINISTRATION
HAD GOOD REASON TO KNOW THAT A PERFECT ENERGY STORM WOULD HIT
THE CONSUMER THIS SPRING. AND IT WAS CLEAR THAT SPIKES WOULD BE
EVEN WORSE THAN PRIOR YEARS. FOR EXAMPLE, MR. PRESIDENT, THE "WALL
STREET JOURNAL" REPORTED ON AUGUST 2, 2005 -- AND I QUOTE
-- "A PROVISION IN THE MASSIVE ENERGY BILL THAT CLEARED CONGRESS
LAST WEEK IS LIKELY TO SHRINK THE NATION'S GASOLINE SUPPLIES NEXT
SPRING AND COULD BOOST PRICES L -- 8 CENTS A GALLON OR MORE. THE
"WALL STREET JOURNAL" WENT ON THE DESCRIBE THE LIKELY
IMPACTS OF ELIMINATING THE REQUIREMENT TO USE CLEANER-BURNING
ADDITIVES IN GASOLINE SAYING -- AND I QUOTE -- "U.S. GASOLINE
PRODUCTION WILL FALL SHORT OF USUAL LEVELS BY ABOUT 258,000 BARRELS
A DAY, THE EQUIVALENT OF LOSING OUTPUT FROM FOUR MAJOR REFINERIES."
THE "WALL STREET JOURNAL" QUOTED AN OFFICIAL FROM VALERO
ENERGY CORPORATION, THE NATION'S LARGEST REFINER WHO SAID, "THE
PRICE OF GASOLINE WILL DEFINITELY GO UP ESTIMATING THE POTENTIAL
RISE AT 8 CENTS PER GALLON."
BECAUSE OF THE NEW REGULATIONS FOR
GASOLINE, THERE WOULD NOT ONLY BE REDUCED SUPPLY BUT ALSO LOTS
OF NEW HASSLES IN SUPPLYING FUEL AT THE LOCAL LEVEL. GASOLINE
ADDITIVES WOULD NO LONGER BE ADDED AT THE REFINERY AND TRANSPORTED
IN PIPELINES. INSTEAD ETHANOL WOULD HAVE TO BE SHIPPED SEPARATELY
AND BLENDED LOCALLY CREATING NEW CHALLENGES, NEW LOGISTICAL HURDLES
FOR GETTING FUEL TO AMERICA'S GASOLINE STATIONS. WITH ALL OF THIS
DISRUPTION AND ALL OF THESE NEW CHALLENGES TO ADDRESS, IT WAS
CLEAR TO THE OIL INDUSTRY THAT THE ENERGY EQUIVALENT OF ANOTHER
CATEGORY FIVE HURRICANE WOULD BE HITTING GASOLINE CONSUMERS AROUND
THIS TIME OF THE YEAR. IT SHOULD HAVE BEEN CLEAR TO THE BUSH ADMINISTRATION,
AS WELL.
BUT FOLLOWING THE SAME GAME PLAN
THEY'VE USED FOR LAST YEAR'S HURRICANES, THE ADMINISTRATION WAITED
UNTIL AFTER THE STORM HIT TO RESPOND. IN FACT, GASOLINE CONSUMERS
ARE STILL WAITING FOR HELP AT THE PUMP.
THE TWO MAJOR HURRICANES THAT HIT
THE GULF COAST LAST SUMMER ONLY MADE THIS SPRING'S SUPPLY SITUATION
WORSE BECAUSE THOSE STORMS SHUT DOWN A NUMBER OF REFINERIES AND
REDUCED OIL AND GAS SUPPLY. COMING IN THE WAKE OF THESE STORMS,
THE IMPACT OF THE NEW GAS RULES WOULD ONLY TIGHTEN FURTHER WHAT
WAS ALREADY A TIGHT MARKET FOR GASOLINE, AND IT SHOULD HAVE BEEN
CLEAR TO THE WATCHDOGS IN THE BUSH ADMINISTRATION FOR MONTHS AND
MONTHS.
NOW, THE RECORD IS CLEAR AS TO WHAT
THE FACTS WERE THAT THE ADMINISTRATION HAD SOME TIME AGO. FIRST,
IF THE ADMINISTRATION HAD READ ITS OWN REPORTS, IT WOULD HAVE
KNOWN THAT GULF COAST OIL AND GASOLINE PRODUCTION WOULD NOT BE
FULLY RESTORED BY THIS SPRING. CONGRESS KNOWS THIS BECAUSE THE
ADMINISTRATION SENDS WEEKLY REPORTS TO THE CONGRESS WITH UPDATES
ON THE SITUATION, AND YET AGAIN THE ADMINISTRATION FAILED TO TAKE
ANY ACTION TO HEAD OFF THE PROBLEMS BEFORE CONSUMERS GOT HIT AGAIN.
IF THE ADMINISTRATION HAS READ ITS
OWN REPORTS, IT ALSO WOULD HAVE KNOWN THAT THE IMPACT OF THE NEW
GASOLINE RULES WOULD BE SUBSTANTIAL, EQUIVALENT TO 2% OF THE NATION'S
GASOLINE SUPPLY OVERALL AND 10% OF THE SUPPLY IN AREAS WITH SMOG
PROBLEMS. THIS INFORMATION HAS BEEN AN ENERGY DEPARTMENT REPORT
-- HAS BEEN IN ENERGY DEPARTMENT REPORTS, AS WELL.
ONCE AGAIN THERE WAS NO RESPONSE
FROM THE ADMINISTRATION. FINALLY, IF THE ADMINISTRATION HAD READ
ITS OWN REPORTS AND PUBLICATIONS, THE ADMINISTRATION WOULD HAVE
KNOWN THAT FINDING ALTERNATIVES TO REPLACING THESE SUPPLIES WOULD
NOT BE EASY. IN FACT, A STUDY BY THE U.S. DEPARTMENT OF ENERGY
ESTIMATED THAT IT WOULD TAKE FOUR YEARS FOR REFINERS TO FIND SUBSTITUTES
FOR THE MOST COMMONLY USED GASOLINE ADDITIVE KNOWN AS M.B.T.E.
IN FACT, THE NEW RULES ARE LIKELY TO BE A DOUBLE WHAMMY FOR CONSUMERS.
THEY TIGHTEN NOT ONLY DOMESTIC SUPPLIES,
BUT ALSO THE AVAILABILITY OF IMPORTS
THAT WERE SO CRUCIAL FOR SUPPLYING U.S. CONSUMERS FOLLOWING LAST
YEAR'S HURRICANES. THAT MEANS THE IMPACTS WILL BE SIMILAR TO LAST
YEAR'S HURRICANES, BUT THE SAME SOLUTION TO ADDRESS THE PROBLEM
WON'T BE AVAILABLE THIS YEAR.
AS THE PRESIDENT OF THE PETROLEUM
INDUSTRY RESEARCH INSTITUTE POINTED OUT LAST SUMMER, IN THE PAST
THE U.S. HAS IMPORTED GASOLINE FROM EUROPE TO DEAL WITH THIS PARTICULAR
ISSUE AND PREVENT SHORTAGES. BUT AT THIS POINT, WE MAY NOT BE
ABLE TO DO THAT SINCE EUROPEAN REFINERS USE M.T.B.E.
WHEN YOU ADD IT ALL UP, THE ADMINISTRATION'S
RECORD OF BUNGLING ON GAS SUPPLY AND PRICES IS EXTRAORDINARY.
THEY'VE KNOWN SINCE LAST SUMMER THAT THERE WOULD BE A BIG PROBLEM
FOR CONSUMERS THIS SPRING. THEY KNEW THAT THE PROBLEM HAD GOTTEN
EVEN BIGGER SINCE THE HURRICANES LAST FALL. THEY KNEW THAT IT
WAS GOING TO TAKE A LONG TIME TO SOLVE THE PROBLEM AND THAT WHAT
WAS DONE LAST FALL TO INCREASE SUPPLY AFTER THE HURRICANES MIGHT
NOT BE AN OPTION THIS SPRING.
BUT YET WITH ALL OF THE ADVANCED
WARNINGS AND RED LIGHTS FLASHING, THE ADMINISTRATION STILL SAT
ON ITS HANDS. AT A MINIMUM THE ADMINISTRATION SHOULD HAVE CONVENED
THE NATIONAL PETROLEUM COUNCIL TO SEEK ADVICE AND COUNCIL ON WHAT
OPTIONS MIGHT BE AVAILABLE TO HELP CONSUMERS IN OUR GASOLINE STATIONS
THIS SPRING.
BUT AS WE'VE SEEN ALL TOO OFTEN,
THE ADMINISTRATION DOESN'T LOOK TO OUTSIDE ADVICE AND EVEN MORE
RARELY DOES IT LISTEN TO IT. THERE IS LITTLE REASON TO BELIEVE
THAT THE MAJOR OIL COMPANIES WHO HAVE SUCH A VOICE IN AMERICAN
POLITICS WOULD URGE THE ADMINISTRATION TO TAKE ANY KIND OF SIGNIFICANT
STEPS TO HELP THE CONSUMERS. SO WHAT CAN BE DONE NOW THAT PREDICTED
GASOLINE SHORTAGES AND PRICE SPIKES ARE UPON US? WHAT MIGHT WELL
HAVE BEEN PREVENTED OR CERTAINLY OUT OF THIS KIND OF PERIOD HELPED
TO MINIMIZE THE HARM THAT CONSUMERS ARE FACING, THOSE STEPS WEREN'T
TAKEN AND THE CHALLENGE IS TO PUT IN PLACE THE BEST POSSIBLE STEPS
NOW TO TRY TO AMELIORATE A VERY BAD SITUATION THAT COULD HAVE
BEEN MINIMIZED.
FIRST, THE ADMINISTRATION SHOULD
GRANT WAIVERS OF REQUIREMENTS TO USE ETHANOL IN GASOLINE IN AREAS
WHERE IT'S CONTRIBUTING TO SHORTAGES OR PRICE SPIKES AT THE GAS
PUMP. SECTION 1501 OF LAST YEAR'S ENERGY BILL PROVIDES THE ADMINISTRATION
WITH THIS AUTHORITY IN CASES WHERE THERE IS INADEQUATE SUPPLY
OR WHERE THE MANDATE WOULD SEVERELY HARM THE ECONOMY. BOTH OF
THESE CRITERIA HAVE ALREADY BEEN MET IN A NUMBER OF AREAS ON THE
WEST COAST OF THE UNITED STATES AND ELSEWHERE IN OUR COUNTRY.
FOR EXAMPLE, MY HOME STATE OF OREGON
ISN'T REQUIRED TO HAVE ETHANOL IN OUR GAS TO MEET AIR QUALITY
STANDARDS. WE ALSO HAVE LITTLE IN-STATE ETHANOL PRODUCTION, SO
ETHANOL HAS TO BE TRANSPORTED INTO OREGON LARGELY FROM THE MIDWEST
FOR BLENDING INTO OUR GAS SUPPLY. WAIVING THE REQUIREMENT TO HAVE
ETHANOL IN OREGON GAS WOULD ALSO FREE UP SUPPLIES FOR OTHER PARTS
OF THE COUNTRY. THAT REDUCES DEMAND AND BY SIMPLE SUPPLY AND DEMAND,
MR. PRESIDENT, THAT CAN SERVE TO REDUCE PRICES AROUND THE COUNTRY.
IT WOULD ALSO HELP TO BRING DOWN THE COST OF GASOLINE IN OREGON
BY ELIMINATING THE TRANSPORTATION COSTS OF SHIPPING ETHANOL FROM
THE MIDWEST. SECOND, THE ADMINISTRATION SHOULD TAKE STEPS TO GO
AFTER THOSE WHO ARE SPECULATING RIGHT NOW IN OUR COUNTRY'S OIL
MARKETS. IN THE PRESS, FOR EXAMPLE, SPECULATION IS CONTINUALLY
CITED
FACTOR IN HIGH OIL AND GASOLINE PRICES.
FOR EXAMPLE, IN LAST WEEK'S "WALL STREET JOURNAL," THERE
WAS A REPORT -- AND I QUOTE -- CRUDE OIL CLOSED ABOVE $70 A BARREL
FOR THE FIRST TIME, HIGHLIGHTING A PHENOMENON RESHAPING THE PETROLEUM
WORLD. INVESTMENT FLOWS INTO OIL FUTURES ARE SUPPLANTING NITTY-GRITTY
SUPPLY AND DEMAND DATA AS PRIME DRIVERS OF PRICES. LAST FALL FORMER
EXXONMOBIL CHAIRMAN LEE RAYMOND -- I GUESS HE'S THE $600 MILLION
MAN -- HE TESTIFIED BEFORE THE SENATE ENERGY COMMITTEE THAT SPECULATION
IN OIL MARKETS WAS INFLATING PRICES BY $20 PER BARREL./ THAT INFLATED
OIL PRICE IN TURN RAISES GASOLINE PRICES AT THE PUMP BY 50 CENTS
A GALLON. YET, THE ADMINISTRATION HAS DONE LITTLE TO INVESTIGATE
SPECULATION OR TO STOP THIS ACTIVITY.
TO THE CONTRARY, ON THIS QUESTION
OF SPECULATION IN THE OIL SECTOR, MR. PRESIDENT, I QUESTION THE
BUSH ADMINISTRATION'S WITNESS FROM THE COMMODITIES FUTURES TRADING
COMMISSION LAST SEPTEMBER. I ASKED SPECIFICALLY WHAT THE COMMODITIES
FUTURE TRADING COMMISSION WAS DOING TO INVESTIGATE REPORTS OF
OIL TRADERS MAKING EXTRAORDINARY PROFITS IMMEDIATELY FOLLOWING
HURRICANES KATRINA AND RITA. MY QUESTION WAS ABOUT REPORTS --
AND I QUOTE -- "THERE ARE TRADERS WHO MADE SO MUCH MONEY
THAT WEEK THAT THEY WON'T HAVE TO PUNCH A TICKET FOR THE REST
OF THE YEAR." HERE'S WHAT THE WITNESS REPRESENTING THE COMMODITIES
FUTURE TRADING COMMISSION SAID FROM THE BUSH ADMINISTRATION. QUOTE
-- "GRANTED A NUMBER OF THEM MADE MONEY, AND THAT IS HOW
THEY DO THEIR JOB, THAT THEY YOUR-- THAT THEY EARN A RETURN FOR
PROVIDING THIS SERVICE."
SO THE RESPONSE TO REPORTS FOR TRADERS
TAKING ADVANTAGE OF THE WORST NATIONAL DISASTER IN OUR COUNTRY'S
HISTORY TO MAKE EXTRAORDINARY PROFITS IS, WELL, THEY WERE JUST
DOING THEIR JOBS. IF THAT'S THE MARKET AT WORK, THEN CLEARLY,
MR. PRESIDENT, IT IS NOT WORKING FOR THE AMERICAN PEOPLE, WHO
SAW GASOLINE PRICES SHOOT UP ABOVE $3 PER GALLON AFTER LAST YEAR'S
HURRICANE AND AGAIN THIS SPRING. THE REGULATORS OF OIL AND GAS
MARKETS NEED TO REIN IN SPECULATION, NOT DEFEND IT. ANOTHER STEP
THAT COULD HELP ADDRESS SPECULATION WOULD BE TO HAVE GREATER TRANSPARENCY
IN OUR OIL MARKETS.
FOR EXAMPLE, PENSION FUNDS AND OUR
INSTITUTIONAL INVESTORS ARE BUYING OIL AS PART OF THEIR PORTFOLIOS
AND THIS CREATED ADDITIONAL PRESSURE ON SUPPLY AND PRICES. INSTITUTIONAL
MONEY MANAGERS HOLD BETWEEN $100 BILLION AND $120 BILLION IN COMMODITIES
INVESTMENTS, AT LEAST DOUBLE THE AMOUNT THREE YEARS AGO AND UP
FROM $6 BILLION IN 1999. MORE TRANSPARENCY ABOUT THESE TRANSACTIONS
WOULD HELP BOTH THE AMERICAN CONSUMER AND THE INVESTORS BY REDUCING
VOLATILITY WHILE STABILIZING PRICES. FINALLY, FOR THE LONG TERM,
THE CONGRESS SHOULD REPEAL OIL TAX BREAKS, BREAKS THAT THE INDUSTRY
EXECUTIVES TOLD ME WHEN I QUESTIONED THEM IN AN OPEN HEARING,
MR. PRESIDENT, THEY SAID THEY DIDN'T EVEN NEED. AND THOSE UNNEEDED
OIL TAX BREAKS SHOULD BE REPLACED WITH INCENTIVES TO USE BIOFUELS
THAT CAN REPLACE SUPPLY LOSS FROM ELIMINATING MTBE FROM GASOLINE.
THESE ACTIONS WOULD ADDRESS THE IMMEDIATE
SUPPLY AND PRICE PROBLEMS THAT THE ADMINISTRATION HAS FAILED TO
ADDRESS SINCE LAST SUMMER. IT WILL GIVE THE BIOFUELS MARKET INCENTIVES
TO DO MORE RESEARCH AND INCREASE PRODUCTION OF CLEANER ALTERNATIVES
TO REPLACE MTBE IN THE GASOLINE SUPPLY. MY GUESS IS, MR. PRESIDENT,
AND I'M HAPPY TO SEE MY FRIEND HERE WHO HAS AN ENORMOUS AMOUNT
OF EXPERTISE ON THIS ISSUE, THAT ON THE SENATE FLOOR OVER THE
NEXT FEW WEEKS, WE'RE GOING TO HEAR A LOT OF DEBATE ABOUT PRICE
GOUGING, EXPLOITATION AND THE LIKE. AND THERE'S NO QUESTION IN
MY MIND THAT THERE'S CERTAINLY PEOPLE WHO ARE TRYING TO EXPLOIT
THE SITUATION AND TO TRY TO TAKE ADVANTAGE OF THESE EXTRAORDINARY
CIRCUMSTANCES WE SEE IN OUR ENERGY MARKETS.
BUT WHAT I COULD TELL YOU IS THAT
A SIGNIFICANT PART OF THESE PROBLEMS, SUCH AS THE CHANGE FROM
MTBE TO ETHANOL, PROBLEMS THAT WE KNEW ABOUT A YEAR AGO, THAT
THE "WALL STREET JOURNAL" WAS REPORTING ON, COULD HAVE
BEEN MINIMIZED IF THOSE FOLKS IN THE BUSH ADMINISTRATION AT THE
DEPARTMENT OF ENERGY, AT THE ENVIRONMENTAL PROTECTION AGENCY,
AT THE COMMODITIES TRADING COMMISSION, IF THEY HAD BEEN ON DECK
DOING THEIR JOB TO STAND UP FOR THE AMERICAN PEOPLE, THESE PROBLEMS
WOULD NOT BE SO SERIOUS TODAY. YET, THE SAME PEOPLE WHO BUNGLED
THE RESPONSE TO THOSE HURRICANES LAST SUMMER ARE BUNGLING AMERICA
ON ITS WAY UP TO $3 PER GALLON GASOLINE. I DON'T THINK THAT OUGHT
TO BE ACCEPTABLE TO ANY UNITED STATES SENATOR ON A BIPARTISAN
BASIS. WE CAN FORCE THOSE WATCHDOGS IN THE BUSH ADMINISTRATION
TO GET BACK TO THEIR POST AND STAND UP FOR THE PUBLIC. MR. PRESIDENT,
I YIELD THE FLOOR. MR. PRESIDENT, I'D ALSO NOTE THE ABSENCE OF
A QUORUM.
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