Another reason for high gas prices

Senate Drilling Champs Opposed Fuel Economy

By Daniel J. Weiss, Sam Schiller

August 1, 2008



Conservative senators have fixated on drilling in the Outer Continental Shelf as their solution to high energy prices. These senators perpetuate the oil addiction fiction that lifting the congressional moratorium on drilling for OCS oil will end our dependence on foreign oil and reduce high oil prices. Exploiting American’s pain at the pump, these senators seek to deliver on Big Oil’s ultimate wish list: the Outer Continental Shelf and the Arctic National Wildlife Refuge. Yet drilling in sensitive places will do little to reduce high prices, and it will take a long time to do it.

Many of these same senators consistently opposed increasing fuel economy standards in 2002, 2003, and 2005 that would have led to lower oil use and prices right now. These senators also pocketed loads of campaign cash from oil and gas companies.

Expanding drilling will not address record prices or foreign oil dependence. According to the Energy Information Administration, drilling in the OCS “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.” The vast majority of America’s offshore oil and gas reserves—about 75 percent—lie in areas that are available for development in the western Gulf of Mexico. Even if more offshore leases would be granted, there is a serious shortage in drilling equipment that would stall any exploration in the region.

T. Boone Pickens, a self-proclaimed “oil man,” testified before the Senate that proponents of OCS drilling will encounter a “rude awakening” when they receive low bids from the oil industry on OCS leases because these areas have less oil compared to places already open to production. If production were ever to begin, the EIA states, “any impact on average wellhead prices is expected to be insignificant,” because prices are established on the international market, and other nations can adjust their production to keep prices high.

Al Gore stated in his speech on July 17 that, “It is only a truly dysfunctional system that would buy into the perverse logic that the short-term answer to high gasoline prices is drilling for more oil 10 years from now.” That dysfunctional system pervaded a decade of Republican leadership that blocked measures to prevent the current crisis and reduce our dependence on oil. Beginning in 1995, a rider was added to every transportation spending bill that prevented President Bill Clinton from making fuel economy standards more efficient.

Amendments were proposed to various Senate energy bills in 2002, 2003, and 2005 to increase fuel economy standards and require automakers to produce more fuel-efficient vehicles. These proposals would have saved American consumers millions of barrels of oil everyday. Senators John Kerry (D-MA) and Ernest Hollings (D-SC) drafted a provision to the 2002 energy bill that would have required the average car to get 35 miles per gallon by 2013. This regulation would have reduced oil consumption by at least a million barrels per day and saved American consumers over $48 billion in 2008.

Senator **** Durbin (D-IL) proposed amendments in 2003 and 2005 that would have raised fuel economy standards to 40 mpg for cars and 27.5 mpg for pickup trucks by 2015. These proposals would have saved the American consumer 3.1 million barrels of oil per day by 2015. Conservatives rejected these improvements in fuel economy, calling them “job-killing,” and “anti-safety.” A precious opportunity was squandered at a time when our automobile industry could have stayed more competitive and protected jobs, and consumers would have saved at the pump by using less oil. Blocking these efforts helped keep oil prices high, which was a benefit to big oil companies.

With record oil profits burgeoning alongside record prices, oil campaign contributions have flowed to senators that blocked measures to reduce oil demand at four times the rate of those senators that sought proactive measures to reduce oil use before there was a crisis. Senators that thwarted better fuel economy were generously rewarded by the oil industry. They received an average of $409,403 over the course of their career. Senators who supported slashing oil demand only received an average of $119,764—one dollar for every four received by their colleagues opposing oil saving standards.

New Senate leadership in 2007 made enhanced fuel economy standards an essential element of the Energy Independence and Security Act. This was the first increase in fuel economy standards passed by Congress since 1975. It requires the average vehicle in an auto company’s fleet to achieve 35 miles per gallon by 2020. The 2007 fuel economy provision represents the first increase in over 32 years, and will reduce oil consumption by 1.2 million barrels a day in 2020—about equal to imports from Venezuela. Had the defeated provision from the 2002 energy bill become law, this target would have been achieved in 2013 and already chiseled away millions of barrels of oil that we import from the Persian Gulf and hostile nations every day.

Calls for offshore drilling have now reached a fever pitch as senators want to follow President George W. Bush’s decision to end the executive moratorium on OCS drilling. Sen. Elizabeth Dole’s (R-NC) surrender was so swift that her website continued to call offshore drilling “harmful to our environment” and “detrimental” to the tourism industry right above a press release announcing her co-sponsorship of the so-called Gas Price Reduction Act of 2008, a bill that would lift the congressional OCS moratorium. She opposed better fuel economy standards three times and received $266,456 from big oil, including almost $100,000 in the last year.

Sen. Norm Coleman (R-MN) attempted to justify his support for offshore drilling on the false claims that “The Chinese are able to begin operating” offshore “by working with the Cubans,” and that it will “take out some of the speculation” that is driving up oil commodity prices. He also claims that there are “80 billion” barrels of oil in the OCS. All of these claims are wholly without merit. According to the EIA, there are only 60 billion barrels of oil total offshore in the lower 48 states; less than a third of this oil is in the OCS. Coleman voted against better fuel economy two out of three times and received $266,456 from the oil and gas industry.

Senator John Sununu (R-NH) also attempted to use our neighbor to the south to justify increased offshore oil production. According to Jorge Pinon, an expert in oil exploration in the Gulf of Mexico at the University of Miami, Cuba lacks the refinery capacity to turn crude oil into gasoline, and the Cuban embargo prevents the sale of oil to U.S. refineries. Yet Sununu has publicly insinuated that, “the Cubans are drilling for oil and gas sixty miles off the coast of Florida.” Sununu accepted $232,030 from the oil and gas industry and voted against fuel economy provisions two out of three times.

When oil prices hit a record $147 per barrel, there was sudden concern from conservatives about energy independence and consumer pain at the pump. But most of these senators blocked every attempt to raise fuel economy standards and reduce fuel costs for Americans. Senator Kay Bailey Hutchinson (R-TX) claimed, “I have tried ever since I have been in the Senate to get us to plan ahead, to lead our country to be self-sufficient in our energy needs.” Yet Hutchinson, a recipient of over $2 million in oil contributions, voted against raising fuel economy standards every time.

In 2002, Senator Kit Bond (R-MO) called attempts to raise fuel economy standards, “too fast, too furious.” Senator Bond received over $444,000 in oil and gas contributions, but now declares that, “American people cannot afford any further delay” on offshore drilling, which will produce a tiny fraction of the amount of oil that could have been saved by raising CAFE standards six years ago.

Not only did Senator Bond oppose every attempt at raising fuel economy standards, he also offered amendments that would have weakened existing standards and increased our oil consumption. In 2002, the Senate passed an amendment by Senators Bond and Carl Levin (D-MI) that eliminated the Kerry-Hollings 35 mpg provision in the energy bill. In 2003, Senators Bond and Levin sponsored an amendment to extend an expiring loophole that allowed automakers to make fewer high mileage cars if they made vehicles able to run on both ethanol and gasoline. But because most public gas stations do not sell “E85,” this provision would have merely increased oil dependence by 9 billion gallons of oil in 2008.

Bond and Levin introduced a similar amendment in 2005 that would have restricted the Transportation Department’s ability to set fuel economy standards and would have increased our dependence on oil by 155,000 barrels a day by this year. Although both of these amendments passed the Senate, they were dropped from the final bill. But Senator Bond did successfully speak out against any attempts to raise fuel economy standards on the “SUVs that the American consumers want.”

The Energy Independence and Security Act of 2007 will finally close the light truck loophole in 2013. This loophole protection allowed automakers to continue producing low mileage SUVs and other large vehicles with lower fuel economy standards because these vehicles are the weight of light trucks, but used as passenger vehicles. The auto companies relied on this loophole, delaying efforts to transform their fleet. Ford’s announcement of $8.7 billion in second quarter losses serves as a painful reminder of how costly this lack of foresight proved to be. Ford referenced their inability to sell SUVs and other inefficient vehicles as a primary reason for their abysmal quarter.

Senate Minority Leader Mitch McConnell (R-KY) has accused Democratic leaders of “old class warfare" on energy policy by blaming “gas prices on cigar chomping oil executives.” McConnell probably is well-acquainted with such executives as he has received $649,011 from them since 1990. Nearly one-third of this—almost $200,000—was given in the last year. He has also advanced the falsehood that there was “not a single incident of spillage” during Katrina or Rita to promote the argument that offshore drilling is perfectly safe. In fact, over 595 offshore and inland spills occurred for a total of 9 million gallons of oil, about the size of the 1989 Exxon Valdez Disaster. And as far as his claims of a “common effort” taking place on “making America energy independent,” he has voted against more efficient fuel economy standards every time.

Conservative senators have berated their opponents by blaming them for high energy prices. Yet the cries for a serious approach to energy independence ring hollow, as OCS drilling is an ineffective strategy, and its proponents have been major roadblocks to passing more efficient fuel economy standards. This explains why they are awash in six-figure oil contributions. America needs visionary leadership that can foresee the real issues at hand. In the long term, gasoline will be unaffordable at our current rate of fuel consumption. Simply drilling deeper as oil reserves get scarcer will drive up prices, break the back of our economy, and make us less prepared for the future.

There is one primary option to relieve pain at the pump in the short term and scare off the speculators that artificially drive up oil prices. We can temporarily release oil from the 98 percent full Strategic Petroleum Reserve, which in the past has reduced prices and kept them low. The two instances in recent history when oil has been released from the reserve—during the Gulf War and after Hurricane Katrina—brought oil prices down immediately, and they remained low for months afterward. The SPR oil is paid for by American tax dollars, and Americans have a right to relief in this time of crisis. The revenue from selling off SPR oil should be spent on weatherization programs to reduce utility bills for low-income households. In the long term, we must redirect incentives from expensive high-carbon fuels to abundant clean energy such as wind and concentrated solar thermal power, and electrify our transportation system by transitioning to a plug-in hybrid fleet.

Conservatives hope to base their political comeback on the quest to drill off of our Atlantic and Pacific beaches. It is essential that the public and media remember that these very same senators who are pounding on the OCS drilling panic button were the ones who blocked better fuel economy standards for nearly a dozen years, while reaping bags of oil companies’ campaign cash. Had they not stood in the way of better fuel efficiency standards to promote gas sippers from 1995 to 2006, American families would be using a lot less oil and spending a lot less money than they are today.