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Debate Continues in Congress About Fixing Big Oil

May 2, 2006 at 6:10 PM EST
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TRANSCRIPT

JIM LEHRER: The congressional debate over gas prices was back today big time. Both parties attacked the other’s plans in dueling news conferences and questioned what would best help consumers.

We take it all up now with two senators who are involved in the debate: Rick Santorum, Republican of Pennsylvania, and Maria Cantwell, Democrat of Washington State.

Senate deal collapses

Sen. Maria Cantwell
D-Wash.
[W]hat consumers really want to know is that we have a long-term solution and that being over-dependent on countries like Iraq, Iran, Saudi Arabia and Venezuela is not in our country's long-term interest.

Senator Santorum, your Republican $100 rebate plan is still alive?

SEN. RICK SANTORUM (R), Pennsylvania: Well, just want to clarify. That was one of eight points that we put forward last week in response to a Democrat amendment that was floated on the floor that called for a gas tax holiday.

And so, in response to the gas tax holiday idea, we thought a better alternative would be, instead of a gas tax holiday -- which frankly wouldn't -- in fact, in the past has proven not to float down to the consumer and not to give them very much benefit -- we decided that an alternative would be to do a tax credit, which would obviously go the consumer.

So that was just one part of everything that included things from an anti-gouging provision, to repealing tax incentives for oil companies, to drill at high prices -- we don't need to provide those incentives anymore -- to providing tax incentives for people who buy hybrid vehicles, to stop filling of the Strategic Petroleum Reserve, to exploring for oil and gas on the north slope of Alaska, to incentivize the building of new refineries.

So it was a long list of things, and that was one provision that was in response to a Democratic tax holiday provision.

JIM LEHRER: But is it still alive, that one?

SEN. RICK SANTORUM: Well, you know, it doesn't seem to be gathering a lot of support, in all candor. To suggest it's still alive...

JIM LEHRER: So it's dead?

SEN. RICK SANTORUM: ... it's probably -- if it is, it's on life support. But, look, I think the idea of providing some break to the consumer is something we should be considering, and we'll certainly look for alternative ideas.

JIM LEHRER: Senator Cantwell, do you think it's still -- what's your reading of the life and death of the rebate plan tonight?

SEN. MARIA CANTWELL (D), Washington: Well, I think we've heard a lot from consumers that what they want is a serious plan for our country to move forward and get off our over-dependence on foreign oil and I would say, even as the president said in his State of the Union, off of oil in general.

So what they want is to know that relief is going to come in the near term and in the long term. And, of course, they do want to make sure that prices at the pump, that they aren't being gouged, and we should pass strong federal legislation.

But what consumers really want to know is that we have a long-term solution and that being over-dependent on countries like Iraq, Iran, Saudi Arabia and Venezuela is not in our country's long-term interest.

JIM LEHRER: Did you support the Republican rebate plan?

SEN. MARIA CANTWELL: You know, I didn't, but the issue is that I think, as Senator Santorum is starting to articulate and understand, is that we don't know how high prices are going to go. And we have analysts speculating that we could see up to $100-a-barrel oil prices.

So, at this point in time, what consumers want is us to fix the problem. And what they want is a better path for America in which we aren't so beholding to these interests.

Right now, Iran as a country has 10 times the world reserves of oil that Exxon, the biggest U.S. company, has. So there is no way we're going to get out of this situation if we continue to depend on foreign oil.


Taxing big oil

Sen. Rick Santorum
R-Penn.
To wean ourselves away from foreign oil is a great concept, but you've got to do it by meeting the demand here in this country.

JIM LEHRER: Senator Santorum, the rebate plan, or the financing of the rebate plan, as put out first last week was tied to a change in the rules that would essentially tax the oil companies more. You heard what Senator Reid said today. We had it in our news summary just now. He says that that was pulled as a result of pressure from the oil companies. True or false?

SEN. RICK SANTORUM: False. We're going to move forward with the removal of the incentives for energy companies, based on the fact that there really isn't any need for incentives anymore when you see gasoline prices and crude oil prices at this level. So, no, Senator Reid is wrong on that.

What Senator Reid is also wrong on is that they have not put forward a proposal that does what Senator Cantwell has suggested they need to do, and that is they have not put forward any proposal to create more supply in this country.

To wean ourselves away from foreign oil is a great concept, but you've got to do it by meeting the demand here in this country. And we have put forward things like opening up the Parcel 181 in the Gulf to gas exploration. We'd like to do some more off-shore exploration. We'd like to do exploration of the -- in the north slope of Alaska.

The Democratic Party has opposed every single one of those things. We'd like to do more coal. We'd like to do a lot of other things that have been opposed consistently over the years.

JIM LEHRER: Let me go back to the specific area. Senator Cantwell, I just want to clear this up.

SEN. MARIA CANTWELL: OK.

JIM LEHRER: Senator Frist said you're pulling this incentive thing back. Are you saying, no, that's not so? I mean, the thing that the oil -- it provides $10 billion, and it would cause the oil companies to pay $10 billion more in taxes. It was in your original plan. Senator Frist said, no, we're going to take that back; did I miss something here?

SEN. RICK SANTORUM: You did, because it's certainly our intention to move forward with provisions that will remove some of the tax incentives for the energy companies. And I believe that, at the prices that we're seeing right now, those incentives do not need to be in place.

JIM LEHRER: Senator Cantwell, what do you read about what's going on here on this thing?

SEN. MARIA CANTWELL: Yes, Jim, I'm confused, like you are, because I see on the other side of the Senate, having passed legislation that said, "Let's repeal some of these tax breaks that are given to the industry."

In fact, we had a hearing where some of the industry people suggested that they may not even need all those. So the Senate passes a bill saying that we are going to repeal some of those tax breaks.

The industry gets about $13 billion over a five-year period of time, so about $2.5 billion every year. I would argue that it's better to start incenting, not a mature industry like the fossil fuel industry, but better to incent technology on alternative fuels that are going to help our country move forward.

But you're right, this has reemerged, and Republicans are saying that they are going to offer language to strike that particular provision that we've already passed out of the Senate. So I don't know if everybody is on the same page, if it's some Republicans and others are going in a different direction.

But, right now, $2.5 billion every year is -- you know, for a company that's making record profits on Standard and Poor's is not what the American people expect.

JIM LEHRER: I want to come to you quickly, Senator Santorum, then back to Senator Cantwell on another thing. But can you clear -- is she right? Is she reading this right, that you're talking for yourself and some Republicans, Senator Frist is talking about for other Republicans? What's going on here?

SEN. RICK SANTORUM: I think what Senator Frist was talking about is pulling back on the $100 rebate idea; I don't think he was talking about pulling back on the provisions to eliminate the tax incentives for geological -- and that's the thing that the president had talked about.

In fact, I anticipate that that provision is going to be included in the tax bill that's going to be coming out of conference here shortly. So, no, that's something that we're moving forward with, and I know that's something that Senator Frist supports.

So there is no -- I think you're just -- you're linking these two bills together, and they actually are not linked together.

JIM LEHRER: Well, it's not me. In all due respect, Senator, this was on the front pages of all the major newspapers in America today. And I'm just reporting what we reported in our news summary. It's been confirmed by spokesmen for the Senate majority leader's office, so...

SEN. RICK SANTORUM: I think you'll find that the provisions that the president talked about, with respect to the tax incentives for the energy companies, is going to be included in the tax bill and that will be repealed.

Are oil companies price gouging?

JIM LEHRER: So back to you, Senator Cantwell, you used the term "gouging" by the oil companies. Senator Santorum did, as well. What do you mean by gouging? Are you suggesting that the oil companies are now gouging the American consumer and that's why they're making so much money?

SEN. MARIA CANTWELL: Well, I want to make sure that -- the president wants an investigation, and I applaud him for wanting an investigation, but I want an investigation with real teeth.

And that's why last November we passed -- well, we had 57 votes in the Senate for a federal provision that would say that the FTC and the Department of Justice would have the tools they need and the transparency in energy markets to make sure that price gouging wasn't happening. So that's, I think, a very important provision.

I think that Senator Santorum actually supported that provision, so I want to make sure that now, as more light has come to this issue, that we make sure a couple of things aren't happening: that oil is not being exported out into the country for a cheaper price just to decrease supply here in the United States and, thereby, raising price. That's something that we want to make sure is there.

JIM LEHRER: Is there evidence that that sort of thing is, in fact, happening or is it strictly a suspicion at this point?

SEN. MARIA CANTWELL: Well, there was a court case in Oregon which found that a previous FTC found that that activity was happening. And there's been some speculation. We actually asked some of the oil company executives -- although they weren't under oath -- about this.

So what we want to do is give the American consumer the confidence that we have a tough federal law that, when the president says he wants an investigation, that you'd actually have some remedies in place, like fines and penalties, to stop any kind of activity that may be transpiring.

JIM LEHRER: Senator Santorum, is it your view that the oil companies are the villains in this, that they are responsible for this rise in gasoline prices at the pump?

SEN. RICK SANTORUM: No, it's not my view that they are the villains here. I think this is clearly driven mostly by supply and demand; that doesn't mean that there aren't isolated cases where this is a problem, and I think Maria is right in the sense that we need to make sure that there are federal remedies.

But, as you know, most states' attorneys generals have the authority right now to go after price gouging. And to date, we haven't seen any major cases that have been successful and even been brought against oil companies.

But that doesn't mean that we shouldn't have laws in place to make sure there's transparency in the market; I support that; I strongly support it.

But, at this point, it seems to me that most of this is driven by the fact that we are simply not producing enough energy in this country. And for years we have been trying to get production in place, whether it's in Alaska or offshore, or whether it's through our coal production, turning that into liquid fuels, or gasification.

We did put in place a number of incentives last year for ethanol, and biodiesel, and wind power with the energy bill of last year. A lot of that capability is going to be coming online here by the end of this year, particularly ethanol. And I think you're going to see some relief as a result of that, but it's not going to help us this summer.

Looking elsewhere

JIM LEHRER: Senator Cantwell, do you agree in general with Senator Santorum that the solution to this is for the United States to figure out ways to generate more energy on its own?

SEN. MARIA CANTWELL: Well, certainly Brazil is a great example of a country that actually basically consumes less gasoline today than it did in the late 1970s, but they've done that by switching to a sugar-based ethanol product and getting cars that can run on either gasoline or on this ethanol product.

And, to me, they have achieved energy independence by reducing that consumption of foreign oil, which is a great milestone for them to achieve, and they've done it by also lowering the amount of gasoline overall that they consume.

So the United States ought to get busy about that prospect and that opportunity. And we ought to live in an exciting time, where America is striving to be an energy leader and an energy technology solution provider, and looking at countries like China and India as markets, instead of fearing their demand growth on energy needs, so we need to get busy on that.

But just to be clear, back to this issue about the markets, and transparency, and manipulation, because we have heard from attorney generals across the country that they don't have all of the tools that they need, that they have done many investigations, and that they actually have a great deal of concern about the level of supply and the companies switching from what has been called -- you know, been switching to a system called just-in-time inventory, which allows them to have a lot less supply in the system.

So we want to make sure that markets are functioning and that consumers are protected, and we want to move forward on a very aggressive, bold vision that really does give competition at the price pump for something other than fossil fuel.

JIM LEHRER: Something other than fossil fuel, Senator Santorum?

SEN. RICK SANTORUM: Well, again, we provided in the last energy bill a whole variety of incentives for ethanol. We, in fact, put a mandate in place for the use of ethanol.

We are developing with switchgrass and biodiesel, soy diesel. We're taking coal and turning that into liquid fuels. There's a plant that's going to be built in Pennsylvania that I've been very instrumental in making happen.

So we're doing a lot of that alternative fuels, but that does not mean that we don't have to use the resources that we have here in this country. And the other side of the aisle has been opposed to any further exploration for drilling in either gas or oil, and I think that's really why we're in the situation we're in today.

SEN. MARIA CANTWELL: Well, I don't think that we've been all opposed to drilling of gas and oil. The issue is whether we're going to have 60 percent of the incentives go to an industry that is so mature, making billions of dollars of profit.

SEN. RICK SANTORUM: I'm not talking about incentives; I'm talking about just the permission to do it.

JIM LEHRER: Senators, thank you both very much.

SEN. MARIA CANTWELL: Thank you.

SEN. RICK SANTORUM: Thank you.