Menendez Helps Defeat Proposal That Could Lead To Drilling Off The Jersey Shore, Helps Pass Separate Plan For Gas Price Relief

Menendez Helps Defeat Proposal That Could Lead To Drilling Off The Jersey Shore, Helps Pass Separate Plan For Gas Price Relief

Member of Energy Committee says drilling would threaten NJ environment, economy without any short-term effect on gas prices

Washington - Today, U.S. Senator Robert Menendez (D-NJ), a member of the Senate Energy and Natural Resources Committee, helped defeat a proposal in the Senate that could have led to drilling for oil up and down the U.S.'s East and West coasts, including areas near the Jersey Shore. He also helped pass a Democratic proposal to bring more immediate gas price relief by suspending the filling the Strategic Petroleum Reserve until the price of oil per barrel dips below $75.

Drilling amendment

"An oil spill that washes up on the Jersey Shore would be an environmental and economic disaster for our state," said Senator Menendez. "Those who are doing the bidding of the oil companies continue to look for a way to tap a new vein and deepen our nation's addiction to oil. I will continue to stand up to them.

"The idea that opening up the coast to oil drilling would do anything to gas prices is ridiculous. It would take well over ten years to put the infrastructure in place and the risk of jeopardizing our $50 billion coastal economy far outweighs the minimal amount of oil we could expect in 2020 or later. With gas prices sky high and with the planet in peril, the answer is not to drill ourselves into a deeper hole. The answer is to become more energy efficient, develop alternative sources of energy and keep our planet intact."

The amendment to the Flood Insurance bill would have allowed petitions for leasing activities in the Atlantic and Pacific regions of the Outer Continental Shelf in order to tap recoverable oil in those areas. Exploration would occur off the shore of a state if that state's Governor petitions to have the moratorium on exploration lifted. Thus, even if New Jersey would not allow drilling, other nearby states might, which could affect the Jersey Shore. In the past, Virginia's Governor and legislature have expressed the desire to open up their waters to drilling. Virginia's waters include areas less than 100 miles from the Jersey Shore.

Oil reserve amendment

"We have no magic wand to wave and immediately make gas prices reasonable, but this plan at least brings some short-term relief," said Senator Menendez. "The practice of putting $125 per barrel oil in the ground is absurd and should be suspended. Hopefully we will have the votes necessary to overcome a possible veto by the president.

About 70,000 barrels of oil per day are put under ground in the Strategic Petroleum Reserve. The Reserve is about 97 percent full, and oil is now at about $125 per barrel.

Yesterday, Senator Menendez took to the Senate floor to discuss these amendments and the Democratic energy plan. Below is the text of his remarks:

M. President, we are debating two very different amendments on gas prices that are up for a vote tomorrow. We have the proposal of the Minority Leader that is full of old ideas that will not work and will do absolutely nothing to affect gas prices now or in the future. In fact, the only provision in the Minority Leader's amendment that would do anything to lower gas prices is lifted directly from the Democratic Plan to lower gas prices. This is the provision to temporarily suspend filling the Strategic Petroleum Reserve. In response, the Majority Leader has offered a clean amendment to temporarily suspend filling the Strategic Petroleum Reserve. This is one of the few options we have to address the pain at the pump our constituents are facing right now.

M. President, every time my friends on the other side of the aisle decide to pay attention to our energy crisis their solution is always the same - help Big Oil. In 2005, they authored energy provisions that gave Exxon-Mobil and other Oil Giants lavish subsidies that totaled over $14 billion, and these companies are reaping the rewards with record profits announced every quarter. Exxon-Mobil recently announced $11 billion in profits over a three month period. To put that in context, this means Exxon-Mobil's yearly profit this year might well be almost twice the annual budget of the Department of Energy.

The authors of these proposals argue that if we simply shovel taxpayer money in the direction of oil companies that this money will eventually trickle its way down to the people. But as we have all seen, it does not. Gasoline prices are now over $3.70 per gallon and the specter of $4.00 per gallon gasoline is looming just around the corner. While oil companies hoard their windfall profits, the American people are suffering.

Yet, my friends on the other side of the aisle do not want real relief for this country; they only want to protect Big Oil's huge profits at any cost by opening up every environmentally sensitive area in the country to drilling. President Bush was right when he said that we are addicted to oil. But what amazes me is that the President's party is unaware that they continue to act like addicts. Instead of supporting real plans to conserve oil or even transition to sustainable fuels, they go out in search of their next oil fix.

M. President, some claim that the way to lower gas prices is to end a bipartisan twenty-six year moratoria to open up the Outer Continental Shelf to oil exploration and just drill, drill, drill. But the Energy Information Administration (EIA) projects that even if we opened up the entire Outer Continental Shelf to drilling- Off the East Coast, Off the West Coast, and opened up the entire Eastern Gulf of Mexico, nothing would happen to gas prices. Why?

First because production would not begin before the year 2017. The infrastructure to drill for oil is not just a large oil platform, but a network of hundreds of miles of pipelines to transport oil from the platform, onto land and then on to refineries. This kind of infrastructure simply does not exist on the East Coast and in only limited exceptions on the West Coast.

The second reason why opening up all our shores to oil drilling will not lower gas prices is because by the time full production actually ramped up, in 2030, drilling off all of our coasts full tilt would only result in a whopping 3% increase in domestic production.

And even in 2030 as our continent is rung all the way around by oil platforms all of this new supply will be eaten up by a 7% increase in domestic demand. The Energy Information Administration (EIA) predicts that --- and I quote --- "any impact on average wellhead prices is expected to be insignificant."

So even opening up all of our coasts to drilling, as the Minority Leader proposes, will have no impact on gas prices at all. As you can see by this chart, the federal government has been issuing more and more leasing permits for drilling, but at the same time the price of gasoline has continued to rise.

In fact, over 80 percent of the resources in the outer continental shelf are already open for exploration! Since 2001, the Bush administration has issued over 100 new leases. Many of these leases are in the eastern Gulf where the oil industry already has much of the infrastructure necessary to go into production. But only 12 of these new wells have been drilled. The industry is only developing a small fraction of the area already open for drilling. Why isn't Exxon-Mobil pumping some of its profits into developing these areas? If companies are not interested in developing the large fields already open in the Gulf of Mexico, why is it so critical to open up environmentally sensitive areas to more drilling?

M. President, one might say that it is just to be expected that those on the side of Big Oil would use this sort of rhetoric in an election year. But it's much worse than that. The McConnell Amendment could be both economically and ecologically devastating.

If you look at the picture here taken after a recent oil spill in San Francisco, this is what we could be routinely facing if we allow widespread drilling on the Outer Continental Shelf. We could see our beaches closed for business because of oil spills.

The New Jersey Shore is a priceless treasure my home state will protect at any cost, but the Shore also generates tens of billions of dollars in revenues each year and supports almost half a million jobs. It simply makes no sense to jeopardize a tourism and fishing economy worth tens of billions of dollars in exchange for a cumulative total of only a half year's supply of oil. The people of New Jersey cannot afford the risk of millions of gallons of oil washing up on our beaches.

This is not just a New Jersey problem. Florida's beaches generate billions of dollars each year. In South Carolina, Myrtle Beach alone brought in $3 billion in revenue. Do we really want oil washing up onto the pristine Cape Hatteras National Seashore? What about Virginia Beach? Can Maryland's famous blue crabs survive yet another environmental assault?

The bottom line is the Minority Leader's proposal will do nothing to lower gas prices, but it will jeopardize coastal economies all along both coasts. Is there anything we can responsibly do to ease the pain of such high gas prices? The answer is a resounding yes.

One important way to address oil prices that I hope we will be debating more fully in a couple of weeks is to better regulate oil markets. Many analysts that have testified before the relevant House and Senate committees agree that based on pure supply and demand the price of oil should be somewhere between $50-70 a barrel. So, why are we hitting $125? In part it's because of excessive speculation on futures markets. And unlike other markets, such as the commodities involving corn or soybean futures, oil is being traded around the globe with little or no oversight by the US government. If the Enron disaster teaches us anything it should be that markets cannot be allowed to operate without real oversight. In the upcoming weeks when the Senate debates the comprehensive Democratic plan to address runaway gas prices one of the most important aspects of that package will be increased regulation of oil markets so we can effectively combat excess speculation and any possible market manipulation.

Another important measure to bring short term relief to the pain at the pump is in the Majority Leader's amendment which will be voted on tomorrow. This amendment would suspend filling the Strategic Petroleum Reserve at least through December 2008. When the people of this country are suffering under almost $4 a gallon gas, when gas prices are pushing up the costs of food, when the price of oil per gallon has broken $125 a barrel, why would we be burying this precious commodity when we need it most. We should stop pouring all that oil into a hole in the ground until the price of crude oil recedes to $75 or less. This will truly help drive gas prices back down by increasing supply and offer some immediate relief to Americans.

M. President, while it is very important that we enact these short term relief proposals, we also must look the long term. The price of gasoline by itself is not really the problem, but the symptom of an even larger crisis. The crisis we face is that we are totally dependent on one type of fuel for our transportation needs. And as former CIA Director James Woolsey is fond of saying, by buying oil in such huge quanitites and at such high prices we are helping fund both sides of the war on terror.

So, what are the real long-term solutions to ending our dependence on oil and greening our transportation fleet?

The first thing we need to do is drastically improve fuel economy. In 1976, our cars and trucks got 13 miles per gallon. Because of the Arab oil crisis, we passed laws to improve the fuel economy of our passenger vehicles. From 1976 to 1981, we saw a rapid increase in fuel economy. In 1981, our fleet had improved to 21 miles per gallon. But since 1981, without the political will to improve fuel economy standards and the rising popularity of SUVs, the average fuel economy of our passenger vehicle fleet actually declined to 20 miles per gallon in 2006.

What would have happened if we had kept slowly improving the fuel economy of our vehicles from 1981 to the present? If we had increased fuel economy a modest 2% per year during that time, our new fleet of vehicles would now average 34 miles per gallon. While this is certainly a huge improvement over where we sit today, it was definitely achievable since this figure is still well below standards set in Japan which are over 40 miles per gallon.

Astonishingly, if we had followed this course, our current demand for oil would be over one-third less than it is today, down over 2 billion barrels of oil per year. Cumulatively, we would have saved over 30 billion barrels of oil. 30 billion barrels of oil is more oil than the entire proven oil reserves remaining in the United States. This means that this sensible and achievable policy could have saved us more oil than we could ever hope to gain from domestic drilling. It is commendable that we have finally raised fuel economy standards, but we must make even further reductions if we want to make up for lost time.

Of course fuel efficiency is just part of the answer to solving our addiction to oil.

We also need tax incentives to increase the production and use of super-efficient vehicles already out there - like hybrids.

We need a massive investment in cars that can run on sustainable alternative fuels like electricity or cellulosic ethanol. Once we truly have a choice of fuels, the grip of our oil addiction will finally loosen.

This country also needs to invest in our mass transit infrastructure. This weekend the New York Times reported that mass transit is up all over the country. We need a huge investment in mass transit to make sure that we all have multiple transportation options so we are not so reliant on driving.

But while most of the Democratic Party supports these sensible policy reforms, my friends on the other side of the aisle are stuck in the past advocating old positions from previous Congresses. M. President, I hope that this will be the last time I need to rise in this chamber to point out that more oil drilling in environmentally sensitive areas is not the answer to our oil addiction. It is time for an intervention.

It is time for a real cure based on a tough examination and reordering of our energy priorities - and not the tired old policies of the past.

Thank you.