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Klobuchar Proposes Action Plan to Reduce High Oil and Gas Prices

Outlines solutions to help consumers as oil companies post record profits

April 29, 2008

Washington, D.C. – With gas prices soaring to an average of $3.58 per gallon and oil companies announcing record profits, U.S. Senator Amy Klobuchar today called for action to bring relief to American consumers and long-term solutions to reduce America’s dependence on foreign oil.

“Middle class family budgets are being stretched to the breaking point with the struggling economy, rising health care costs, and skyrocketing gas prices,” said Klobuchar. “I am hearing from Minnesotans who are cost-cutting on everything they can and still finding it hard to make ends meet.  Addressing soaring energy prices will require a bold energy policy that will stabilize prices today and give consumers alternatives for the future.”

In remarks on the Senate floor, Klobuchar outlined four steps the government could take immediately to bring down gas prices:

- Temporarily stop adding oil to the federal government’s Strategic Petroleum Reserve. Diverting 50,000 barrels of oil every day into the reserve puts upward pressure on world oil prices. Klobuchar recently joined Senator Byron Dorgan (D-ND) in writing the Administration to ask for a temporary suspension of new additions to the reserve until oil prices come down.
- Demand that OPEC increase production in order to bring down prices and stabilize world oil markets.
- Close the “Enron Loophole’’ that exempts electronic energy trades from regulation by federal commodities regulators. What was once a niche market in energy trading has become a booming industry that attracts rampant speculation on oil futures by hedge funds and investment banks and makes oil and gas prices more volatile.
- Establish a task force to investigate if speculation and market manipulation are driving prices higher. In recent Congressional hearings, two oil industry executives and several state Attorneys General have testified that ordinary market fundamentals cannot explain the recent spike in oil and gas prices. Klobuchar has joined with Senator Maria Cantwell (D-WA) in asking the U.S. Department of Justice to establish an Oil and Gas Market Fraud Task Force.

“If the oil company CEOs and industry experts tell us that oil should be selling at $50 or $60 a barrel given market fundamentals, why is it trading at $118?’’ Klobuchar asked. “We have a responsibility to make sure that markets are working honestly and efficiently so that middle-class families are not the victims of market manipulation or price-gouging.’’

In addition to short-term relief on gas prices, Klobuchar said the country needs a long-term change of direction in its strategic energy policy, including steps to reduce America’s dependence on fossil fuels and foreign oil.

Last December Klobuchar fought to make sure that the 2007 Energy Bill included an increase in national vehicle fuel-efficiency standards, which had not been raised since the 1970s. The new “CAFÉ’’ standards approved by Congress in December call for average vehicle fuel efficiency to rise by 40 percent, to 35 miles per gallon, by 2020.

Klobuchar said it is also time to end lease giveaways to energy companies and make sure that oil companies pay appropriate royalties to the American people when they drill for oil on public land, a proposal that failed by just one vote last year. This would raise revenue that could be reinvested to advance research into renewable fuels such as cellulosic ethanol and cutting-edge technology for fuel-efficient vehicles.

“Brazil has achieved energy security. With all of our resources and all the ingenuity in this country, why haven’t we?’’ Klobuchar said. “The answer is we can. We just need the will.’’

Just today, Royal Dutch Shell and BP announced record first quarter profits of $9.08 billion and $7.6 billion respectively.  Last week, Conoco Phillips announced a 17 percent increase of 17% in their first quarter profit for a total of $4.14 billion.

For audio and video of Klobuchar’s speech click here.

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