Tester: Cracking down on speculators and hedgers = lower gas prices
Senator says measure is first step in ‘common sense’ plan for energy independence
(WASHINGTON, D.C.) – Cracking down on out-of-control oil speculators and hedgers is the first step toward lowering gas prices, Senator Jon Tester said today during a major speech on Capitol Hill.
The Senate today is debating the Stop Excessive Energy Speculation Act. The measure would prevent Wall Street traders from making a "quick buck" by buying and selling barrels of oil they never actually use. Many analysts say such trading leads to artificial supply and demand, resulting in skyrocketing gas prices.
"Well-regulated speculation can help markets set a fair price for a commodity," Tester said. "Unfortunately under this administration, speculation and hedging have gotten way, way out of hand, driving up the price of oil to record heights and squeezing the American consumer like never before."
Tester, a member of the Senate Energy Committee, said the Stop Excessive Energy Speculation Act is "only the beginning." He said it's part of a "common sense" plan that includes renewable energy, conservation, and drilling for more oil "where it makes sense in America."
"One of those places it makes sense to drill for oil is the Bakken formation in eastern Montana and North Dakota," Tester said. He added that the area holds as many as four billion barrels of recoverable oil, which will provide good-paying jobs at home. "All you need is a strong back, a calloused hand, a good work ethic and a clean record, and you can find jobs that start at $25 an hour."
But, Tester said, anyone who says America can drill its way out of the energy crisis "is not shooting straight."
Tester emphasized the need for investing in renewable energy like biofuels and wind power. That's why he supported raising mileage standards "for the first time in a generation" last year. And it's why Tester added a provision to the recently passed Farm Bill giving incentives to farmers who grow camelina, a plant whose oil can be converted to biodiesel.
However the low-hanging fruit, Tester said, is energy conservation and efficiency, which he says is the "easiest and cheapest thing that we can do to keep energy costs down."
"Folks, a hundred years ago the Model T got 25 miles per gallon," Tester said. "Now a car gets 28 miles per gallon. Since that time we've split the atom, sent men to the moon, developed computers, mapped the human genome, but we get the same fuel efficiency? Come on. That's not right."
Tester's floor speech, as prepared for delivery, is below.
U.S. Senator Jon Tester
July 24, 2008
Prepared for delivery
Mr. President, I rise today to call on the Senate to pass common sense legislation to lower gas prices in America.
This week, the Senate will vote on legislation that will create more oversight on the financial markets that are helping to drive up the cost of oil. I hope my colleagues will join me in voting to pass it. It is the first step toward energy independence, but certainly not the last.
In my home state of Montana, folks are hurting. The average price of a gallon of gas in Montana is about $4.20. Diesel now costs on average $4.67 a gallon in the Big Sky State. My constituents need and deserve effective action from their national leaders to provide relief from this energy crisis.
Across Montana, desperate times are producing desperate measures. Driving to work or between cities is not a choice. It's a necessity. Snow is on the ground for a good part of the year, and you need wheels to get around. Folks are paying with credit cards at the pump, or getting second and third jobs to get by. They're cancelling vacations, driving less and buying smaller cars. But it's not enough.
The Senate must provide relief at the pump. And there's no silver bullet. It's going to take a few common sense ideas – and a lot of hard work – to diversify our portfolio.
I support a three-pronged plan:
1) Crack down on energy speculators manipulating the marketplace for a quick buck;
2) Produce more fuel by drilling for oil where it makes sense in America, and investing in renewable energy;
3) Encourage energy conservation for long-term energy sustainability. That's the low-hanging fruit.
The Senate will soon vote on a common sense plan to crack down on oil market speculators and hedgers who break the rules. We've seen these guys before with Enron and the housing bust. Folks on Wall Street who manipulate the market and give themselves raises while gas prices are choking regular folks. It's time to put a stop to this unfair manipulation.
Let me be clear about two points. First, not all speculation is bad. Well-regulated speculation can help markets set a fair price for a commodity. Unfortunately, under this administration, speculation and hedging have gotten way, way out of hand, driving up the price of oil to record heights and squeezing the American consumer like never before.
But when the price of oil skyrocketed this summer, it was not because of a sudden new increase in demand. Nor was it because OPEC suddenly decided to pump less. It was because of trading on Wall Street by folks who never intended to own a barrel of oil.
We owe it to every family struggling to meet rising gas bills, every farmer filling up his tractor, every trucker buying fuel to move product—to make sure that this trading is fair and on the level.
Folks in Montana don't have a problem with anyone making a buck. We believe in the American dream. We will not put up with folks who gain the system.
I call on my Senate colleagues – Democrats and Republicans – to join together and pass the Stop Excessive Energy Speculation Act. This bill will strengthen the Commodity Futures Trading Commission to crack down on Wall Street speculators in the oil market.
More watchdogs and more transparency will stop people from gaining the system and artificially and unnecessarily driving up prices at the pump.
We need this bill.
But when it comes to getting control of high gas prices, this is only the beginning.
Beyond speculation, we need to drill for more oil in the places that make sense—right here in America. And production of renewable fuels must go hand-in-hand with drilling for more oil.
One of those places it makes sense to drill for oil is the Bakken formation in eastern Montana and North Dakota. The Bakken Field is a place you're going to hear about again and again.
New technology is allowing smaller producers to extract more oil. There's more than four billion barrels of oil in the Bakken Field. It's hard work. But these are good jobs. And the salaries are good too. And they're right here at home. All you need is a strong back, a calloused hand, a good work ethic and a clean record, and you can find jobs that start at $25 bucks an hour.
The Bakken Field isn't the only place where drilling makes sense. Just last week the Interior Department finally opened up two million acres in the Alaska National Petroleum Reserve. And it is about time.
It's all part of the puzzle to free America from the grip of foreign oil and lower the price of gas at the pump.
But Mr. President, anybody who tells you that we can drill our way out of this problem is not shooting straight.
Congress has been debating whether to extend tax credits for wind, solar and other renewable energy sources. And we ought to start by extending the Production Tax Credit on a decade basis—not an annual basis. It will result in long-term tax credits and long-term planning for wind generation in this country.
Over the long haul, we all know that we cannot simply drill out of this problem. We must invest in conservation and sustainable energy like biofuels.
It's all part of the puzzle to free America from the grip of foreign oil, and lower prices of gas at the pump.
Earlier this summer, Congress passed the Farm Bill over the President's veto. That bill included hundreds of millions of dollars for advanced biofuels. The Farm Bill also contains a provision I was able to offer to encourage the production of camelina.
Camelina is a crop grown in Montana and other places that can be processed into biodiesel to run tractors, combines farm equipment and diesel engines. The by-product of camelina makes a nutritious feed for livestock. Camelina truly is a win-win solution for renewable energy. We need to encourage more of these common-sense kinds of solutions—answers to the energy crisis.
Finally, conservation must play a significant role in solving our nation's energy crisis. If we are ever going to free America from the grip of foreign oil, we must find real ways for consumers to use less fuel. Last year, Congress increased auto fuel efficiency standards for the first time in a generation.
But it took 20 years of fighting and eventually a Democratic Congress to get it passed. Those new standards will save 1.1 million barrels of oil a day by 2020 or about as much produced by the state of Texas.
Folks, a hundred years ago the Model-T got 25 miles per gallon. Now a car gets 28 miles per gallon. Since that time we've split the atom, sent men to the moon, developed computers, mapped the human genome, but we get the same fuel efficiency? Come on. That's not right.
Conservation is the easiest and cheapest thing that we can do to keep energy costs down. Part of the energy tax package will help homeowners and businesses make those savings themselves.
A bipartisan majority of the Senate supports that bill. But a small minority keeps us from getting it done.
The State of Montana recently announced an initiative to help citizens increase insulation in preparation for next winter's high heating bills. These are all steps in the right direction, but we have more work to do to reduce energy consumption.
The United States is the largest single consumer of energy in the world. We cannot continue on this unsustainable path. To do so would be to forfeit our national security to countries like Russia, Venezuela, Nigeria and Saudi Arabia. That would be a tragic legacy to leave to our kids.
We need a comprehensive approach to bring down gas prices and address this energy crisis. We need to crack down on illegal speculation and greedy hedging to manipulate the oil markets. We need to increase production of fossil fuels where it makes sense and develop renewables for the long haul. And we need innovative solutions to reduce overall energy consumption.
Mr. President, some people think the economic pressure on the middle class is all in their heads.
Folks in Montana know that this energy crisis is real and it's bad. The Senate must act now to pass constructive legislation to begin to bring down the price of energy at the pump. And it all stops with passage of the Stop Excessive Energy Speculation Act.
Mr. President, I yield the floor.