Byron Dorgan

Mr. DORGAN

Mr. DORGAN. Madam President, let me make a couple of points. No. 1, this legislation is real. I know people who look at the Congress and look at Washington, DC, and its Government and say, they have not done one thing to address this issue or that issue. This is one thing, and I think a significant thing, that could address the issue of the prices of oil and gas that have doubled in a year, with no justification for that doubling relating to supply and demand. This is one thing. My hope is, in a Chamber that disagrees so often--my hope is that on this issue of national importance we could agree on this one thing. I was sitting here thinking about when I was growing up. We raised some livestock and lived in a very small town. My father also had a gas station that he managed. So as a young man, I worked at that gas station. I pumped a lot of gas. People have told me my occupation may not have changed very much. But the fact is, back in those days when gasoline was priced at a very low price and plentiful, the supplies of energy were plentiful, people did not think much about where is the energy going to come from. Near my little hometown, they decided to drill an oil well. I had never seen an oil well. I remember as a little boy going out about 1 mile from town, looking at the oil well. There was not much to do in that small town. So you drive out and look at the lights on that drilling rig and stare. How exciting it was. And then it turned out to be a dry hole. Well, 2 weeks ago, I was in western North Dakota where they are drilling in what is called the Bakken shale. When my colleagues talk about drilling, let me remind them that I asked for an assessment of what is called the Bakken shale formation. The U.S. Geological Survey completed it 2 months ago. It turns out they estimate there is 3.6 to 4.3 billion barrels of oil recoverable in the Bakken shale formation in eastern Montana and western North Dakota. The 3.6 to 4.3 billion is just in the North Dakota portion. The fact is, we have nearly 80 drill rigs right now drilling in that area, producing a great amount of additional oil. So I support that, my colleagues support that. We do support additional production. That additional production is ongoing and happening right now. It will be good for this country. But the fact is, we are in a situation where we have an urgent need to deal with something that is happening in this country that is damaging our economy. The price of oil has doubled in the past year, and there is no justification in the marketplace for it related to the supply or demand--in fact, demand is going down in this country. We drove 5 or 6 billion fewer miles in the 6-month period than a comparable period before. Today, we saw another monthly description of inventory going up. So the fact is, there is no justification for prices to have doubled. Now, to do nothing about this issue of speculation, which has run up the price double in a year, is to ignore the obvious. I mean, some might be content to ignore the obvious, not me. Let's say someone who is grossly obese is brought to the hospital on a stretcher having a heart attack, and a doctor takes a look at this grossly obese patient having a heart attack and says: Well, what we need to do, we need to work first on the weight problem. Let's prescribe a diet. No, that is not what they would do. They would deal with the heart attack first. That is what we need to do with respect to energy. We need do a lot of things, but first and foremost, we have to find a way to make this futures market work and wring the speculation out of that market and bring down prices. Now, we have people who talk about the ``free market.'' Well, I am a big fan of markets. I do not know of a better allocator of goods and services than the marketplace. I am a big fan. I used to teach economics in college ever so briefly. The marketplace is something I admire. I want the free market to work. But sometimes the market is broken. Sometimes the arteries to the market are clogged and do not work. That is certainly the case with oil. How do you make the market in oil? Well, you have the OPEC countries. They formed a cartel. It would be illegal and prosecutable in this country. OPEC forms a cartel. They all close and lock a door and have a suggestion about how much they want to produce and what price they are going to extract for it. That is the front end. Second, you have oil companies, bigger and stronger through mergers. All of them now have two names: ExxonMobil, ConocoPhillips, they all have two names because they decided to get together and get hitched. So they did mergers. They are all more powerful and have more muscle in the marketplace. You have OPEC, bigger oil companies with more muscle in the marketplace, and at the other end you have this futures market that has become an orgy of speculation, unbridled speculation. I showed a chart a bit ago that showed over 70 percent of the trades in the oil futures market are not by people who ever want to see a can of oil or carry a 5-gallon can of oil or see a 30-gallon drum of oil. They are people who want to trade contracts and make money. That might be fun for them. They might be the most satisfied people in the world traipsing back and forth to put our money in their bank accounts in the last year. God bless them. But if we have our way on the floor of the Senate, that is going to end. Because what is happening when you run up the price of oil--and gasoline doubled--and do the kind of damage that exists in this country today, airlines declaring bankruptcy, cities losing their airlines, family truckers who have been working for 30 years saying they cannot go on because they cannot afford to fill their tanks with diesel fuel, farmers and families trying to figure out: How do I scrape up enough money to fill my tank to be able to drive to work? The fact is, it does not work for us to allow this to continue. This market is broken. We have a right, it seems to me, to restore the market to its original purpose. Go back and look at the legislation that created the oil futures market. The purpose was to have normal hedging to hedge risk between producers and consumers of a physical product, a perfectly reasonable and necessary thing to do. But what has happened is the market is taken over now by other interests. Those interests are described by a Wall Street Journal article many months ago that piqued my interest in what was going on: investment banks, hedge funds, pension funds, running deep into these futures markets driving up prices. Investment banks buying oil storage capability to buy oil and take it off the market. That is not the way a market should work or should be expected to work. When a broken market damages this country's economy, we have a right and, in fact, we have a responsibility, in my judgment, to address it. There will be those who disagree very strongly with that which I say. They will be surrounding Capitol Hill with substantial effort to say: This legislation that we introduced last evening will be destructive and damaging. I say to them: I know what is destructive and damaging, it is doubling the price of oil and gasoline in the last year. That is destructive and damaging to this country, to the families in this country, and to a good many businesses in this country that cannot fly through that storm. So my hope is we will be able to get some bipartisan support for a piece of legislation that begins to shut down the excess speculation in the market that is damaging this country's economy. I yield the floor and I suggest the absence of a quorum.

Mr. DORGAN

Mr. DORGAN. Mr. President, my colleagues have described it well. This is a very important vote. I think the reason we have gotten to this point shows how difficult it is to get anything done in this Chamber. I come from a State that is first in the Nation in the number of people 80 years old or older as a percentage of our population. I think we are in the top five or six, of people 65 years of age or older as a percentage of our population. Medicare is so unbelievably important to the folks who live in my State. Does anybody think it serves the interests of this Medicare program to say: Well, let's decide on provider cuts--in this case physician cuts--of 10.6 percent? Let's take a big whack, a 10.6-percent whack out of the reimbursements and it would not matter; it would not affect the program. It doesn't make any sense to me at all that we would do that. What we need to do is strengthen this program, and that is what the underlying bill does. We have had an awful time trying to pull it through the Congress. We finally got it through the Congress, and then we had the President veto the bill. We had a colleague come out of his sick bed and fly to Washington, DC, to cast the 60th vote, after which the other side collapsed and we got 9 other votes. This is very important. This is about who we are as a country, what we decide to invest in. It is said that 100 years from now we will all be dead. I guess that is not just said; it is a fact. Only historians will take a look at our value system. They can take a look at what we decided to do as a Congress: How did we decide to spend money? What did we invest in? What did we think was important? What were our value systems? Did we believe the Medicare Program--providing health care to America's elderly--was a successful program, or did we decide we wanted to begin to take it apart? That is what this vote is about. I don't understand at all why the President decided to veto this. This passed the House of Representatives by a margin of 6 to 1 and got 69 votes in the Senate, and the President decides to exercise his veto. It is unfathomable to me how much money we shovel out of this building and how much the President recommends when we spend overseas: $170 billion, $180 billion this year in emergency funding for Iraq and Afghanistan and all these programs to replenish all these accounts; contractor abuse. Somehow that doesn't matter so much. All of a sudden we want to make an investment in the Medicare Program, and that is not something that is valuable to us, the President suggests. It makes no sense to me. In this bill, we have also tried to address the problem of disparate reimbursements for the various States. Some of the smallest States in this country--mine included--receive reimbursements under the Medicare program for providing health care that are dramatically different than reimbursements in other areas. Without fixing that, there will be a degradation of medical services and the delivery of services. This bill addresses part of that. That is why this bill is so critically important. I hope we will have a resounding vote overriding the President's veto this evening at 6 o'clock.

Mr. DORGAN

Mr. DORGAN. Mr. President, I would like to announce that the Committee on Indian Affairs will meet on Thursday, July 17, at 10:00 a.m. in room 562 of the Dirksen Senate Office Building to conduct an oversight hearing entitled ``Tracking Sex Offenders in Indian Country: Tribal Implementation of the Adam Walsh Act.'' Those wishing additional information may contact the Indian Affairs Committee at 224-2251.

Mr. DORGAN

Mr. DORGAN. Mr. President, I suggest the absence of a quorum.

Mr. DORGAN. I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DORGAN

Mr. DORGAN. Mr. President, my colleague, the Senator from Nevada, just described a series of challenges we face. I don't know that I have seen a more daunting time in this country in some long while than the time before us. The issues today of the credit crisis--the subprime loan scandal, bank failures, the threat of bank failures--these are serious issues. I am convinced the quick action by the Federal Reserve Board and the Secretary of the Treasury this weekend was necessary. But on top of that, there is a fiscal policy that is way off track. We are engaged in a war in which none of the cost of the war is paid for. We have a President who insists the entire cost of the war be added to the debt, and an attempt by Congress to change that would result in a Presidential veto. It is a fiscal policy that is way out of balance. The President requests a budget to the Congress of roughly $420 billion in yearly deficits, but that, of course, is not the deficit. The deficit is how much we have to borrow. This President's fiscal policy is off track by the tune of $600 billion to $700 billion a year because that is, in fact, what has to be borrowed. He doesn't include in his budget request the cost of the Iraq war, which is very expensive. We have the subprime loan scandal, the problems in the credit market, the fiscal policy that is off track, a trade policy that means we are running a deficit of over $2 billion a day every single day by importing more than we are able to export. Then, add to those issues what is happening to energy, particularly the price of oil running up like a Roman candle, $140 to $145 a barrel, and suggestions by some big investment banking firms that it may reach $200 a barrel. What does all of this mean? What do we do about it? I have mentioned before a trip late one evening over the Pacific Ocean in what was the previous Air Force One, that big, old airplane. I believe it now sits at the Reagan Library in California, a 707. It was the Air Force One that brought John F. Kennedy's body back to Andrews Air Force Base in 1963. It was the Air Force One used by Presidents up until George Bush, the senior, and then it was replaced. One of the last flights of that airplane was one I was on to Asia, to China, Japan, and Vietnam. A number of my colleagues were on that flight--the majority leader, Senator Daschle. My colleague from Ohio, John Glenn, was also on the flight. It was late at night flying over the Pacific that I had a chance, for the first time, to ask Senator Glenn a lot of questions about the time he rode around this planet in a little space capsule called Friendship 7 by himself orbiting the Earth. I was a very young person at the time of the flight, but I remember vividly the reports on the radio and television about John Glenn lifting off as the first American to orbit the Earth and how excited I was. So that evening, as a U.S. Senator, with my colleague, John Glenn, sitting there, I began peppering him with questions about that spaceflight. One of the questions I asked was, I had remembered that the city of Perth, Australia, decided to welcome this astronaut flying alone by, when he came to the dark side of the Earth, turning on all the lights. Every light in Perth was on that night. They lit up this city called Perth, Australia, and I asked John Glenn that evening: Did you see the lights of Perth as you reached the dark side of the Earth up there in space alone? Did you see that shining light of Perth? He said: I did. The only evidence of human life that existed on the planet below were the lights shining up, a product of energy. It was perhaps not a surprise to him to understand that product of energy affects our lives every day in every way. Energy is critical to our lives. We get up in the morning, virtually every one of us who is within listening distance, and we flick a switch. That means a light goes on, the product of energy. It means perhaps you brush your teeth with an electric toothbrush, and thus battery energy. It means you shave with an electric razor, perhaps, and use electric energy. You heat up some coffee, electric energy. You take a shower and a hot water heater that runs on either gas or electric energy produces hot water. Then you get in the car to go to work, and you put a key in the ignition and turn it. You use energy, in most cases from gasoline. Energy affects almost everything we do, and we don't give it a second thought until one day when the lights go out and electricity is gone for 4 days and an entire neighborhood is up in arms. How on Earth can we live without electricity? Or until at some point when gasoline is not available and, therefore, your car is of little value. It happens from time to time. Now what has happened to our country and to the world with respect to energy policy is, we have a big appetite for energy. We are seeing the price of oil, which is a very important part of our energy appetite, go up, up, up, like a Roman candle, $140 to $145 a barrel, and gasoline prices follow suit. A whole lot of folks at this point aren't able to afford to fill the tank with gas. A whole lot of trucking companies can't afford to buy the gas or diesel for their saddle tanks on those big trucks. A lot of airlines can't afford to put jet fuel in the wings these days. So we have a good many airlines going into bankruptcy, and more out of business. The question is, Why is the price of oil where it is? What has happened? Let me describe a couple things that have happened that lead me to believe we have to take action now, and very aggressive action as well. In the last 12 to 14 months, the price of oil has doubled. Has anything happened in the last year with respect to supply and demand that would justify the price of oil doubling? I can't think of anything, except perhaps there is less demand for gasoline at the moment. Our country is driving less. We have driven something close to 5 or 6 billion fewer miles in this 6-month period than the previous 6- month period. So demand for gasoline is actually down. One would think if that is the case, prices should abate or come down. But they didn't. They went straight up. Here is what is happening: Explosive growth of speculation in the oil futures market. Speculators in the year 2000 were 37 percent of that market. In 2008, 71 percent of the people in this market are speculators. That is, they are not interested in owning oil. They are interested in contracts for oil with which they can buy and sell and trade and make a profit. Will Rogers described it decades ago: People buying things they will never get from people who never had it, making money on both sides of the trade. So what about speculators? Are they causing price increases? Let me share some comments from some people who might know. The senior vice president of ExxonMobil, in April of this year: The price of oil should be about $50 or $55 per barrel. Another comment: Experts, including the former head of ExxonMobil, say financial speculation in the energy markets has grown so much over the last 30 years that it now adds up to 30 percent or more to the price of a barrel of oil. Energy Secretary Bodman takes a different view. He says: There's no evidence we can find that speculators are driving futures prices [for oil]. Let me give you a couple different views. The CEO of Marathon Oil: $100 oil isn't justified by the physical demand in the marketplace. This is from Clarence Cazelot, CEO of Marathon Oil. From a chart I have used previously, Mr. Fadel Gheit, who was for 30 or 35 years the top analyst for Oppenheimer & Co., he said: There's no shortage of oil. I'm convinced that oil prices should not be a dime above $55 barrel. I call it the world's largest gambling hall. It's open 24/7. Unfortunately, it is totally unregulated. This is like a highway with no cops and no speed limit, and everybody is going 120 miles an hour. I want to go back to the Energy Secretary's notion that there is really no speculative role. Here is the Washington Post, July 7, a week or so ago: The wave of investment dollars has flooded commodity markets in recent years and critics say contributed to the runup in prices. Here is the point: Investors, including pension funds and Wall Street speculators, have sharply increased their commodity allocations since 2003, from $13 billion to $260 billion. This has made financial actors an even larger force on these markets than farmers, airlines, trucking firms, and companies that buy and sell the physical goods to run their businesses. For decades, trading commodity contracts were considered taboo by most pension funds because the market is so volatile and risky. That has all changed. Now we have the California pension fund, CalPERS, and other pension programs that are shoving money into the commodities futures. It doesn't mean they want to own oil. They want to speculate. Walter Lukken is the Acting Chairman of the Commodity Futures Trading Commission. This is the Commission that is supposed to be the referee, the Federal regulator wearing a striped shirt and blowing a whistle when they call the fouls. Markets work, in most cases, but when markets don't work, you have to have a referee. Walter Lukken, the referee for us, says the price of oil is going up because demand is outstripping supply, strong fundamentals are at play. Apparently, he misses the fact from 2003 until now, $13 billion to $260 billion, that is an additional $247 billion have gone into this market driving up the price of oil, having almost nothing at all to do with supply and demand. There is a need, it seems to me, for the Congress to address this issue of excess speculation. Those that need a commodities market are the airlines, trucking companies, farmers, and others so they can hedge risks. There is a legitimate function of hedging risks, and that is what the market was created for. A consumer and producer hedges risk with respect to a physical product, a perfectly legitimate function. But the fact is, those interests that are most concerned about the Congress taking action to address a market that is broken are those who need the markets to hedge risks--airlines, trucking companies, farmers and others--because they know this market is broken. They know this is a market that is supposed to work for them to hedge risk, but now it is completely broken, taken over by speculators. There is a columnist in the Washington Post this morning who does his usual--he does about two pages of research and then he skips the next five pages, so he never quite gets to the truth. He says this speculation stuff, that is made up. He doesn't use the word ``populace.'' He says they are a bunch of ne'er-do-wells who don't have the foggiest idea what they are talking about. It is not a surprise to me that there are those who believe the current system is working. It certainly works for some, doesn't it? The OPEC countries must love walking to the bank with our money and making a deposit in their account. The oil companies must love making deposits of our money into their accounts. I understand why some of the investment banks and other market players who are engaged in neck-deep speculation and have been making a lot of money love the status quo. They love what has happened here. It doesn't bother them a bit where the price of oil is, as long as they make money over all this speculation. What I think we should do is pass legislation similar to that which I have introduced. It is called the End Oil Speculation Act. End oil speculation--how do you do that? You do it through a couple of approaches. No. 1, you take the oil futures market and you require the referee, the Commodity Futures Trading Commission (CFTC), to distinguish between legitimate hedging--that is, those who want to, between a consumer and a producer, hedge their risk with a physical product. You must distinguish between those interests and all other interests who are just in this market to speculate. With respect to those who are in this market just for pure speculation, establish significant position limits. We can wring the speculation out of this system and should. I am talking about the excess speculation. This oil commodity futures market was created in 1936, and when President Roosevelt signed the bill, he warned about excess speculation. In fact, the bill itself had a provision dealing with excess speculation. Now we find ourselves, all these decades later, with a dramatic amount of speculation that is wrecking this market. Should we do something? The answer is we must. We don't have a choice. Of course, we should. My hope is--as the majority leader indicated, we are going to be able to address this issue later this week. My hope is we will be able to take legislation to the floor of the Senate, and if a regulator cannot regulate effectively--and this CFTC apparently cannot--and the head of the regulators has already made a judgment, a judgment he has stated four or five times since January: This market is working fine. This is not about speculation. This is about the fundamentals of supply and demand. What, me worry? Things are fine. Don't worry. Then, at the end of last month, the Chairman apparently had some sort of epiphany, a dream and woke up the next day and said: We have actually been investigating this for 7 months. One of those statements is not true: Supply and demand at work; don't worry, be happy; or we have been worried for 7 months. It is not clear what position represents the position of the Chairman of the CFTC, but they are positions at dramatic odds with one another. Let me say in addition, we hope this week we can address some legislation that will bring down the price of gasoline and put downward pressure on oil prices. Even doing that doesn't address, in the long term, what we need to address. All of us understand that. But it does address, in the short term, what we have to do to put some downward pressure on these prices. I don't think there is any question that the price of oil and gas and the runup is hurting the economy of this country, hurting key industries in this country, certainly hurting American families, and we can do something about it, I believe, in the short term. In the longer term, some of our colleagues will say: We have to drill. I support that. I don't support drilling everywhere. But it is interesting, the minority party put together a proposal that talks about drilling. But they forgot to include all this area off the coast of Florida. Isn't it interesting, I know why they didn't include it. Because one of their caucus does not want to drill off the coast of Florida, does not want to drill in these eastern waters off the Gulf of Mexico. They also know President Bush does not want to allow U.S. companies to drill off the coast of Cuba, so these were included in their proposals. They are all big drilling advocates, except they don't want to drill where most of the oil exists. This is a chart of the technically recoverable oil. Let me show where it is. This is the Outer Continental Shelf of the Pacific, this is Alaska, this is the Outer Continental Shelf of the Atlantic, and this is the Gulf of Mexico. We can see where the bulk of the technically recoverable oil is. I was one of four Senators--Senators Bingaman, Domenici, and then-Senator Talent--who offered the legislation to open lease 181. Lease 181, which is now 8.3 million acres in the gulf, was opened in 2006. That is an additional 8.3 million additional acres opened for oil and gas leasing. I have also introduced legislation that opens all this additional area in the eastern Gulf of Mexico and off Cuban waters. So do I support drilling? I do. It is just that the minority side does not support it quite as much as they pretend to support it. Let me describe this chart. These are the waters off Cuba open for leasing. There is half a million barrels of oil a day that could come into production, and our U.S. companies cannot go in there to compete against other nations to drill for it. Spain is there. Canada is there. India is there. China is there. They all have a desire to drill in that water. We cannot go there because our companies are told by President Bush: No, we have an embargo against Cuba; you can't go after this 500,000 barrels of oil a day in these waters because of our embargo against Cuba. That is absurd, absolutely absurd. I have said often on the floor of the Senate, we stick little straws in this planet as we circle the Sun and we suck out about 86 million barrels of oil a day. We use one-fourth right here on this little place on the planet called the United States. We have a prodigious appetite for oil. That reflects in many ways the economy we built. We have built a wonderful economy. This is a great place to live. There is no place like it on Earth. But divine providence did some strange things. Most of the oil is under the sands halfway around the world in the Persian Gulf, and most of the demand is in the United States. There is more and more demand ahead of us with respect to China and India. We understand that. We knew that 12 to 14 months ago. So that is not what is causing the runup in prices today. But we all know, if we look ahead, we need to leapfrog to other technologies, even as we search for additional oil. We will drill for more oil in the right places. Obviously, the chart I showed for the Gulf of Mexico has far more than my friends in the minority would aspire to achieve in other regions. In addition to drilling in an appropriate way, we need much more conservation. Conservation is the easiest and by far the least expensive way to produce energy because we are such unbelievable wasters of energy. So conservation is, first and foremost, the best place to get additional energy. Second is efficiency. It doesn't matter what you use--a hot water heater, a furnace, an air-conditioner--it doesn't matter what you use. The dramatic increase in efficiency of every appliance everybody uses, including these light bulbs, can substantially reduce our need for energy. The incandescent light bulb is on its way out. It will not be too many years when we will not find one in this country because we can light America's houses and commercial facilities with about 80 percent savings of what we have been using in the past. Finally, and most importantly, in my judgment, as we look forward some years, we have to, as a country, decide to get dramatically involved in renewable energy. We are not nearly there yet. We have some movement toward renewable, but we are not doing what we should do. The debate in the Congress has been about whether we should increase the production tax credits, tax incentives by 1 year. That is pathetic. We ought to say we are going to do this for a decade. America, you can count on where we are headed. In the next decade, we are going to build substantial capability for wind, solar, biomass, and more. We ought to say here is where America is headed for 10 years. We are nibbling around the edges talking about a 1-year extension of this and that. It is not that we have not tried. We had a longer extension on the floor of the Senate, but regrettably, the minority side largely blocked it. In fact, they have blocked these extensions three times. Our hope is that we as a country will be able to say our policy is conservation, efficiency, yes, drilling in the right places, but our policy is especially to move forward with substantial and dramatic amounts of new renewable energy. I know the American people look at the Congress from time to time and wonder if anything can get done. There certainly is an urgency with respect to the policies I described--the fiscal policy that is way off track, a trade policy that is producing $800 billion a year in trade deficits, a policy that has allowed the subprime loan scam to exist and develop right under the nose of regulators who apparently were dead from the neck up. All these things are urgent needs for this country to address. But none is more urgent at the moment than trying to find a way to put some downward pressure on gas and oil prices that have risen out of sight, in my judgment, disconnected to the supply-and-demand fundamentals of where a market ought to be. Every American is affected by this runup in prices, and our country is being irreparably damaged by what it costs for us to send all this massive money every single day overseas in search of oil that is produced outside our country's borders. We need a short-term urgent plan and a long-term thoughtful plan to find our way through this situation and put America on a better course for energy. I yield the floor and suggest the absence of a quorum.

Mr. DORGAN

Mr. DORGAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DORGAN. Mr. President, I have noticed that late this afternoon a number of speakers have come to the floor of the Senate decrying the fact that there is not oil drilling here or there or elsewhere and suggesting that they and they alone have the answer to our energy problems. I wish to respond by saying this issue of drilling for oil is an important issue. I, along with my colleagues, Senator Bingaman, Senator Domenici, and Senator Talent, introduced the bill in the Senate that opened what is called Lease 181 in the Gulf of Mexico. That is now law. We now have companies exploring for oil and gas in Lease 181 in the Gulf of Mexico. Why? Because I think it makes sense to do that. If you take a look at the oil reserves in Outer Continental Shelf, in the Gulf of Mexico, off the west coast, and off Alaska, by far the majority of the available reserves are in the Gulf of Mexico. But having said all that, we are already drilling in a lot of areas-- including in North Dakota. I asked the U.S. Geological Survey to do an assessment of oil resources in what is called the Bakken Shale formation in North Dakota. I asked them to perform the assessment about 2 years ago. They completed their report a couple months ago, and they estimated that there is 3.6 to 4.3 billion barrels of recoverable oil using today's technology in eastern Montana and western North Dakota. So now we have nearly 80 drilling rigs drilling in western North Dakota. I don't know how many are in Montana, but there is a substantial amount of drilling activity, which I strongly support. This is the largest assessment of recoverable oil ever made in the lower 48 States. Let me say that again. The U.S. Geological Survey just completed its assessment that there is up to 4.3 billion barrels of recoverable oil using today's technology and we have oil companies there drilling and I support it. We are drilling in this country, in North Dakota, eastern Montana, and we have other oilfields. This happens to be a brand new one, the biggest assessment ever made in the lower 48. It is exciting, in my judgment. As I indicated, we have activity happening now in Lease 181 in the Gulf because we opened that. Off of Cuba, it is estimated that there is a half million barrels a day that is available for leasing by the Cubans. Many countries have leases there--Spain is there, Canada is there, India is there, and Venezuela is there. They are very interested. But our companies can't secure the leases because the Bush administration says, no, we can't drill in Cuban waters. We have this embargo with respect to Cuba. So there is a half million barrels that our oil companies can't produce. I say to my colleagues: You want to drill? Let's allow our companies to go access some of that off the coast of Cuba. China wants to be there, and India wants to be there, but we can't be there. The fact is we need to do a lot of things and do a lot of things well if we are going to address this energy issue. Now, the price of oil is bouncing around at $140, $144 a barrel. My understanding is that in the last 4 or 5 minutes of trading today, it went up, I was told, $4 or $5 a barrel. There is unbelievable, relentless, in my judgment reckless, speculation going on in the oil futures market. Now, it wouldn't matter so much if these were future markets dealing with something that wasn't so essential to the economic well-being of our country, but our country desperately needs oil. We run on oil. The fact is we use a prodigious amount of it. I have described before, on many occasions, the way this works. We have a substantial amount of oil halfway around the world under the sands. That is where there is a lot of the oil. The largest reserve is in Saudi Arabia, second and third is either Iran or Iraq, depending on how you count reserves in those two countries. So the largest reserve is in Saudi Arabia, then Iran and Iraq. But where is the largest demand? Well, here in the United States. We suck out 86 million barrels a day from this planet. Of that 86 million barrels of oil we suck out from these little straws called drilling rigs and pumps, we use one-fourth of it here in this spot on the planet called the United States of America. We are big users of energy. So what do we do to address this issue when oil prices spike like Roman candles to $140 a barrel, and it does enormous damage to our country, to our economy, and injures farmers, families, truckers, and airlines? What do we do? We do a lot of everything, it seems to me. I described that we are drilling exciting new wells in our region of the country. We are going to be drilling in Lease 181 in the Gulf of Mexico. But in addition to drilling, we need to do a lot more. We need substantial, aggressive conservation. We need significant efficiency and conservation. Everything we use throughout the day--if we turn a switch, push a button, dial a knob, turn a key--everything we do all day long has to do with energy. We get up in the morning and we want light, in the closet, in the bedroom. We use our finger to flip a switch, not understanding, of course, so much--because we take it for granted--that is energy. Perhaps we use an electric razor, then heat a pot of coffee, then put a key in the ignition of a vehicle. Every one of those actions is using energy, and we never give it a second thought. Now, all the things we have--yes, including air-conditioners and refrigerators--can be made much, much, much more efficient. We are getting rid of the incandescent light bulb. It will not be long until you will never see another one because we can find ways to produce light for all our manufacturing facilities and our homes all across this country with 80 percent less electricity than we now use. So we need to engage in conservation, efficiency, and then renewables. Now, renewables represent something our country ought to say to the world: Here is where we are headed. Yes, we are going to drill some and do all these things. We are going to conserve and develop more efficient methods of using all this electricity. But it is also the case that renewables represent a significant opportunity. Renewables, with respect to wind energy and solar and biomass and biofuels. You know what we have done for renewables? Well, in 1992, the Congress put in place something called the production tax credit--a tax incentive for renewables. But it was short term and not very deep. So we have extended it five times, short term. By the way, the production tax credit will expire at the end of this year. We have extended it five times, and we let it expire three times. So anybody interested in investing in renewables will take a look at this country and say: You don't have much of a commitment to renewables. Look what you have done, stutter, start, stop. That is not a commitment. Here is what we did for oil. In 1916, we put in place tax incentives--big, juicy, fat tax incentives--and we said: We want you to go look for oil and gas. If you find them, good for you because that is good for our country, and you get big tax incentives. We put the incentives in place in 1916 and they have stayed forever. What did we do for renewables? Well, in 1992 we gave them a tax credit, which has gone through the phases of start, stop, start, stop, expire. That is a pathetic, anemic response by a country that acts like it doesn't care very much. I have introduced legislation in this Congress that says: You know what, we ought to put in place a production tax credit for renewables for 10 years. We ought to say to the world: Here is where we are headed, and you can count on it. Here is what we believe in, and you can count on it. This country is making a significant concerted effort for renewable energy, to be less dependent on the Saudis, the Kuwaitis, the Venezuelans, and others. That is what our country has a responsibility to do. So we need to do a lot of things. At the moment, however, I wish to concentrate on not the myriad of things we must do and do well, but I wish to talk about the urgent need to do something that addresses this spike, this unbelievable spike in oil prices and, therefore, gasoline prices that has happened in the last 12 to 14 months. There is nothing in the supply and demand of oil that justifies this kind of a price spike. Nothing. In fact, if anything, demand is down. Today's newspaper describes that we are using 2 percent less gasoline here in this country. The first 4 of 5 months in this country we had increased inventory of crude oil stocks. Inventory is up, demand is down. What happens to price? It goes straight up. Why? Because there is excess speculation in the futures market. Those futures markets were designed for a specific purpose and that was to allow producers and consumers to hedge risk of a physical product--perfectly legitimate and an important thing to do. It has now, in my judgment, been taken over by excess speculation. Franklin Delano Roosevelt warned about that in 1936, when he signed the legislation that created this market. Now we have unbelievable speculation in this market. The new pension funds and others that have come into this marketplace in a few short years have spiked from investing somewhere around $13 billion to $260 billion. Are the people flooding into this marketplace wanting to hold a 5-gallon can of oil? No, these interests never want to touch oil. They never want to own oil. They want to do what Will Rogers talked about 80 years ago: They want to buy what they will never get from people who never had it and make money on both sides. And then walk around with a permanent grin, walking into the bank with our money to make their deposits. Yes, the OPEC countries do that and so do these speculators as they have driven up the prices. The problem is it injures this country's economy. It is devastating, for example, to various industries--the trucking industry, the airline industry, and farming to have such high oil prices. It's also devastating to ordinary consumers, trying to figure out how on Earth do I scrape up the money to fill my gas tank to be able to drive back and forth to work. How do I do that? Now, I think we have a responsibility to address this excess speculation. When markets are broken, we have a responsibility to address it. I have often said I taught economics ever so briefly in college. I taught a little economics, and I kid people by saying I was able to overcome that experience. Economics is psychology pumped up with a little helium. People think: Well, we know this produces that, there is an action and a reaction--supply and demand. We all understand that. The problem is, at the moment, if you take a look at this country, its economy, and what the psychology of the American people is as they look at what is happening in this country, there is a pretty good reason to be very concerned about the future and a pretty good reason to believe we need action that is urgent, important action that actually has some grip and some teeth. We have been through a subprime loan scandal. The credit markets were frozen. The fact is we had an orgy of greed in these credit markets and a lot of problems still exist. In fact, some of the resets on some of these bad mortgages are still in front of us. So take a look at that kind of a credit crisis and the subprime loan scandal and then combine that with the issue of the deficits, dramatic Federal budget deficits because we are fighting a war the President will not pay for. He says everything we use for this war, I want to borrow, and he has borrowed almost three-quarters of a trillion dollars for it. He refuses to pay for it. I will send the soldiers to war, and I ask the American people to go shopping, he says. The subprime loan scandal, unbelievable fiscal policy recklessness, a trade policy out of balance over $700 billion a year. You can't do that. Then, on top of that, the price of oil going to $144, and we think this economy is able to withstand that? This is a resilient economy, the American people are resilient people, but they expect and demand appropriate action by this Congress. Now, we have people who view themselves as a set of human brake pads. Their only role in life is to come to the floor of the Senate and say: Oh, no, no, no. You can't do that. We are going to dig in our heels and prevent anyone from doing anything. That is not public policy we should be proud of. We are trying very hard to construct some public policy in all these areas that give us a chance to move forward. I know there are reasons for some to object to certain activities. But we have seen, in the last 5 or 6 months, a steady stream of people coming to this floor and saying: My goal is to stop anything from happening. Meanwhile, all these issues pile up in a way I think is a danger to this country's future and a danger to our economy. It is starting with this issue of energy, as I began the discussion today. We have a responsibility in the short term, and I know the majority leader and others believe it as well. We have a responsibility to at least tackle excess speculation and the relentless dangerous speculation of this commodity futures market that is driving up the price of oil and injuring this country's economy. I have introduced legislation to do that. I hope to talk about it tomorrow. Some others have also introduced legislation. We ought to take the best of the legislation that exists and move forward to address this country's problems. I yield the floor and suggest the absence of a quorum.

Mr. DORGAN

Mr. DORGAN. Mr. President, I wish to speak in morning business, and I ask unanimous consent to use the remaining time in morning business.

Mr. DORGAN

Mr. DORGAN. Mr. President, I wish to speak about the issue of energy. I understand the urgency of the need to get our energy policies right. We have a very serious problem, I think, in a range of areas. Energy policy is something that affects everybody. They pull up to the gas pump to fill their tanks and wonder how they are going to be able to afford it. If you try to run an airline, you try to stop the hemorrhaging of red ink because of the enormous cost of jet fuel. If you have a trucking company, you are trying to avoid going bankrupt because of the cost of diesel fuel. If you have a family farm, you are trying to get the money together to fill your fuel tanks for the summer and fall harvests. There is so much that is damaging our economy, as the price of gasoline has gone to $4-plus a gallon and the price of oil is bouncing around $140 a barrel. I wish to talk about that. I understand, as a Member of this body, that old saying is that ``when all is said and done, more is said than done.'' I understand how people feel about that. Democracy is painfully slow and, yet, in this case, we face something that is urgent and needs, I think, some haste and speed. I know there are others who look at the legislative bodies, or politics generally, and see windbags in blue suits, and they think there is a lot of discussion and precious little action. I will talk a bit about this issue of the need for action. We get up in the morning and we, generally speaking, reach for a switch and turn it on and there is light. We might--those of us who need to--plug in an electric razor and shave in the morning. We might decide to have breakfast and turn on a stove and fry some eggs. We could go out to the car and put a key into the ignition and start the engine. There are so many different things we do every single moment of the day that we don't think about, but it represents the consumption of energy--an unbelievable amount of energy, in the form of oil, natural gas, electricity, and coal. Now, let me describe for a moment where we find ourselves. This great country of ours--and there is nothing like it on the face of the Earth--has an unbelievable appetite for oil. Sixty to seventy percent of our oil comes from outside our country. We stick straws in the Earth and suck out oil from the planet every day. We suck 85 million barrels a day out of the planet Earth, and 21 million, or one-fourth, is destined to be used in the United States of America. That describes to you how much of an appetite we have for oil. We use a substantial amount of the Earth's oil. Seventy percent of the oil that we use is used in vehicles. So that consumes a substantial amount of our oil. The runup in price has had such a dramatic impact on this economy and on American families. I want to describe a bit about that today. Some would say the price of oil has increased because it is supply and demand. Right? Greater demand, less supply; therefore, a higher price. But that is not true. I would like someone to name for me one thing that has happened in the past year with respect to supply and demand that justifies a doubling of the price of oil. You can't do it. I will stand here for 3 days. You can't do it. Nothing has happened in the last year with respect to supply and demand that justifies doubling the price of oil. If anything, exactly the opposite should have been the case. We are using less fuel in the United States right now than we did in the equivalent period a year ago. We drove about 5 billion fewer miles. That means demand is down. Supply is up. The closing month inventory of crude oil for the first 5 months of this year has supplies increasing. If supplies are increasing and demand is down, what should happen to price? It should go down. But the fact is, the price has gone up like a Roman candle, just up, up, straight up. As I have indicated, the OPEC countries are blissfully happy going to the bank to deposit our money in their bank accounts. The big oil companies have a permanent grin. They love depositing our money into their bank accounts. Everybody loves it except the consumer who is paying through the nose for gasoline--$4, $4.50 a gallon for regular gasoline. There are a lot of things that need to be done in energy. We need to produce more, yes. We need to conserve more, certainly. We need more efficiency in all the appliances we use. We certainly do that. And we ought to have a national commitment toward renewable energy sources. We ought to do that, all of that. I support drilling offshore. I am one of four Senators who helped open what is now lease 181 in the Gulf of Mexico. That is now open, and that is good. Hurricane Katrina came through the gulf--we are never going to have a bigger wind than that through the gulf--and those offshore platforms withstood. There was no oil leakage in the gulf as a result of that hurricane. We can get those resources, in my judgment. Some say the hood ornament is ANWR. We have to drill in ANWR in Alaska. It is one of the few pristine areas put away for future generations in legislation signed by Dwight Eisenhower. In any event, that is not where the major oil deposits are. The major deposits are in the Gulf of Mexico, and we ought to drill more there. I support that. We ought to conserve more, much more. That includes more fuel-efficient vehicles. In fact, we did that, the first time in 27 years we required a 10-miles-per-gallon increase in the efficiency of vehicles in 10 years. There is so much we can and should do to solve this problem. But what has happened in the last year with respect to energy prices is, in my judgment, largely unconnected to what I just described. Let me tell you what I think is happening. There is an unbelievable amount of speculation in the oil futures market. Let me describe it. This is the growth of speculation in the oil futures market. In the year 2000, 37 percent of the trades in the oil futures market was by speculators. Today it is 71 percent. That market has largely been taken over by speculators or, as Will Rogers described 80 years ago, people buying things they will never get from people who never had it and, by the way, buying it with money they never had. This is an unbelievable amount of excess speculation driving up prices. This morning in the Washington Post there was a well-written story by a journalist named David Cho. The story was: ``Pension Funds Boosted By Oil: While Stocks Fall, Commodity Bets Are Paying Off.'' This was a story about CalPERS and other pension funds moving billions and billions of dollars into the futures market. In fact, investors, including pension funds and Wall Street speculators, have increased their investments in the futures market from $13 billion in 2003 to $260 billion today. Think of that. From 2003 to 2008, you go from $13 billion to $260 billion moving into this marketplace, which is not a particularly large marketplace. We produce 85 million barrels a day coming out of the Earth, and we trade 22 times that amount every single day. We have these dramatic amounts of additional speculation, especially by pension funds coming into this marketplace. Then we have brain-dead people walking around saying: What speculation? We don't think there is any excess speculation. This is simply the market working. Nonsense. That is unbelievable nonsense. The article says: For decades, trading commodity contracts was considered taboo by most pension funds because the market is so volatile and risky. All of the sudden risk doesn't matter so much, I guess. Just jump in with both feet right smack into the oil futures market, grab a bunch of it, and see what happens. I don't understand that. Where do we find all the cards with which to build this house of cards? Walter Lukken, acting chairman of the Commodity Futures Trading Commission-- By the way, they are the regulators. They are the referees, the ones wearing the striped shirts carrying the whistles and supposed to call the fouls-- Walter Lukken, acting chairman of the Commodity Futures Trading Commission, said the price of oil and other goods is going up simply because demand is outstripping supply. ``It's our proposition that strong fundamentals are at play, driving higher commodity prices across the board.'' That is our regulator saying: What, we worry? I don't see anything happening. Let me remind everyone again of the amount of speculation that has gone up in 5 years. This market was 37 percent speculators. It is now 71 percent speculators. That is a study that was done by the House Subcommittee on Oversight and Investigations. So the head of the regulatory authority says: You know what. I don't think anything is going on. I am blissfully happy here, going to work in the mornings, and I am perfectly willing not to see what exists. Let me describe a chart I think is one of the most interesting charts with respect to oil prices. I put this chart together to show the Energy Information Agency--we spend $100 million on this agency. They are an agency that is not about policy. They are to give us information on energy and give us their best judgments on energy prices, among other things. Here is what they have said. The yellow line shows the following: In May of last year, they said: Here is where we think the price of oil is going to go. And in July, they said: It is going to be higher than that. Here is where we think it is going to go, up to 2009. Then in September, they made another estimate a little higher: Here is where we think it is going to go. Last November: Here is where we think the price of oil is going to go in the next year. January: Here is where we think it is going to go. Can you imagine that? This is the best agency we have, the Energy Information Administration, with which to make judgments, and how did they make judgments that were so unbelievably wrong? I had the head of this agency before my subcommittee the week before we left for the recess. He couldn't answer the question. This must be an embarrassing chart for the smartest guys in the room. I said: Let me answer it for you. If you can't answer it, let me answer it for you. I taught economics in college ever so briefly but enough so I think I can answer this chart. The reason our agency has been wrong, so consistently wrong all the time every time they made an estimate--here is where the price of oil is going to go, instead it went like this, straight up--is because this market has been taken over not by supply-and-demand relationships but by speculators. They are up to their necks deep in speculation. So this line, the red line, could not possibly be determined by an agency that is looking at supply-and-demand fundamentals because this does not relate to anything except an orgy of speculation by people who want to get into the market and make big bucks so we deposit our money into their bank accounts. The senior vice president of ExxonMobil in April said the price of oil should be about $50 or $55 a barrel. I suppose he is looking at things such as supply and demand. Fadel Gheit came to the Congress--this guy worked for 30, 35 years for Oppenheimer Company. He was their resident expert on energy. Here is what he said: There is no shortage of oil on the world market today. I'm convinced that oil prices shouldn't be a dime above $55 a barrel. I call it the world's largest gambling hall, open 24/ 7. Unfortunately, it's totally unregulated. This is like a highway with no cops, no speed limit, and everybody going 120 miles an hour. Then the Energy Secretary, a man I like, a good guy, said: There is no evidence that we can find that speculators are driving the futures prices for oil. This apparently is the new master narrative. Just say nothing is happening and then hope nobody can discover something that is happening. The problem is, every hour of every day the American people drive up to the gas pumps and discover what politicians--at least some of them-- are insisting doesn't exist. It is unbelievable to me. In every circumstance where there has been dramatic excess speculation in the market and the market becomes broken, it is the responsibility of the Congress to set it right. I have introduced legislation, and there are half a dozen pieces of legislation around here to try to address this issue. I understand we will have discussions all of July about this situation, and I understand the inclination, perhaps, by some will be to decide we ought to do something without teeth. If we can just do something and say we did something and it has no grip or bite, we can all go home, thumb our suspenders, and even puff on a cigar for those who smoke, and say: We did it, the United States Senate, good for us. It is not good for us unless it is something that has an impact on a market that is broken. Let me describe the legislation I introduced. It is called the End Oil Speculation Act of 2008. That describes exactly what it would do. It requires the regulator, the Commodity Futures Trading Commission, to separate trades in the futures market for oil. One set of trades would be trades between consumers and producers of a physical product for the purpose of hedging risk. That is precisely what the market was established to do. That is exactly what the market is about. It is why we have a futures market. A futures market is necessary and is there because it is needed to hedge risks of a physical commodity. We would require the Commodity Futures Trading Commission to separate those trades. Other trades then are defined as speculative trades, and a 25-percent margin requirement would be applied to those non- legitimate hedge trades. Why that? The fact is, if you are going to speculate in stocks on margin, you have to put up 50 percent of the money. If you want to control oil on margin, put up 5 percent or 7 percent maximum. Let's quintuple that to 25 percent and see if we can wring the speculators out of this market. If you are engaged to speculate on one side or another of a legitimate hedge for the trading of a physical commodity, as far as I am concerned, that is what the market is about. You should not be subject to this new requirement. But if you are just out there trying to figure out how to play bingo with this oil market, despite the fact you do not even know what oil looks like, you couldn't lift a 5-gallon can if your life depended on it, don't want to see oil, don't want to store it, you have no interest in oil--what you are interested in is making money, then this increased margin requirement should apply to you. We have hedge funds and investment banks that are up to their necks in these markets. They have no interest in oil. We have hedge funds for the first time in history buying oil storage in order to buy it, take it off the market, store it, so that it becomes more valuable later, and they sell it and make a profit. The problem with all of this is the country's economy is being damaged, and we have a responsibility, I believe, to try to fix these kinds of problems when they exist. I know that we will have a discussion this week and this month about four or five different approaches. And I know they will all have great labels. When I grew up, my neighbor, Herman, an old man--he had rheumatism, he wore suspenders and never traveled much off his front porch. And he had a dog. His dog was a three-legged, one-eyed dog with fleas. He called him Lucky. I thought: That name doesn't fit a three- legged dog with one eye with fleas. But Lucky actually answered to the call of ``Lucky.'' We do that with legislation around here, some of us. I shouldn't say ``us'' because I try not to do it. They package legislation and label it as if it is going to do something. The only issue at the end of the day in the Senate in terms of dealing with this energy urgency--and I believe it is urgent--the only issue is have we done something that has some bite and grip and starts to fix a market that is broken? Have we decided to wring some of this speculation out of this market and put energy prices back where they ought to be? Let me point out once more that, according to the House Subcommittee on Oversight and Investigations, who did an evaluation of this, 71 percent of the trades in the oil futures market is now speculative-- pure speculation--as opposed to the non-speculators who are using that market for the purposes which it was intended. I say to all those who say: You know, speculation--what speculation? I see nothing, hear nothing, know nothing. Well, I say: Look at this EIA chart again and try to figure out what this line means. Most Americans understand exactly what this line means. It is what they have to pay at the pump every time they take the gas cap off their tank. And they know where it is going. A fair amount of that is going to OPEC. By the way, enough of that spills from the barrel to fund some terrorism. In addition to all that, a substantial amount is going to the major integrated oil companies. I might observe here that some say: Well, that is important, because they need to invest in additional exploration. The largest oil company in this country spent twice as much last year buying back its stock as it did drilling for oil. That is all you need to know about that. The American people need this Congress to address this issue now, in the month of July. This country's economy is in substantial difficulty for a lot of reasons. We have a lot of speculation, a lot of risk created in a whole range of areas. Take a look at the subprime loan scandal. Evaluate what has happened as a result of the collapse of home values and the subprime loan scandal--all these issues together--and what it has done to our economy. And put on top of that this dramatic runup in energy prices, and on top of that look at the President's budget where he says: Oh, by the way, I want you to pass a budget that has a $420 billion deficit. Except that is not what the deficit is. The deficit is not what the President says it is. It is how much the President says we have to borrow to keep the Government going this year, which is over $700 billion. We have a fiscal policy off the trail, with $700 billion a year, and we will borrow $800 billion because of our trade policy this year, due to trade deficits. So $700 billion, $800 billion, and that is $1.5 trillion in 1 year of red ink, with a $14 trillion economy. That is slightly more than 10 percent of this entire economy's value represented by red ink. That is unsustainable. It doesn't work. Look, I am an optimist. I believe we can fix all this. I believe we can put this country back on track, with a sound fiscal policy that says let's pay for that which we use. If we are going to spend money, let's pay for it. We can say if we are going to send soldiers to war, we can at least ask the American people to pay for the cost of the war. We can decide to crack down on oil speculators, and mortgage sharks who are peddling bad mortgages around the country. In all cases, whether it is the oil futures market or whether it is the financial area, it requires regulators who are not brain dead and who are willing to come to town to have effective regulation and make sure that markets work. I believe we can fix all of these things, but we don't have a lot of time. This economy, I think, is a fragile economy. It is strong and resilient. But you lay these four things on top of it, and it becomes a fragile situation that requires action by us. I know that because I was in North Dakota all of this past week. I saw a letter to the editor today saying: Well, the problem with all of this is the Democrats. The Democrats are causing all this. That is such sheer nonsense. Going back to 2001--talking about oil, the subprime mortgage scandal, and others--we had regulators coming to town who said: You know, we don't even like Government, and we would love to be a regulator to say we are not very interested in regulating. In fact, we don't need to put on a striped shirt. We don't have a whistle. We want to come here and say things are going to be better. We won't look. I chaired the hearings in the Commerce Committee on the Enron scandal. I had Ken Lay come in front of my committee, raise his hand and take the oath, and then take the fifth amendment. He is now dead, but there are a number of those he worked with who are now in prison, because part of that was a criminal enterprise and the regulators weren't willing to look. Now, I am not alleging that is the case with the futures market, but I am alleging this market is broken and causing dramatic injury to every American family. This country's economy and the American people can and should expect us to take action. My hope is that in the coming week or two we can pass some legislation. I hope that legislation will closely resemble the End Oil Speculation Act, in which we require the regulatory body to use its existing authority to do two things: Separate the legitimate hedging that occurs, and should occur in this marketplace, from excess speculation, and then wring out the excess speculation in order to begin to put some downward pressure on prices. The American people deserve the right to expect that from their Government. I hope my colleagues and I can overcome what has been for too long in this Chamber a dramatic amount of stalling and obfuscation by those who dig their heels in and don't want to make any progress on anything. So my hope is that perhaps in the coming month we will be able to make some progress. Mr. President, I yield the floor, and I suggest the absence of a quorum.

Mr. DORGAN

Mr. DORGAN. I thank the gentleman from New York for the question. There are several projects in the Office of Science and in the Department of Energy that are in various stages of planning, design, and construction. Like the National Synchrotron Light Source II project, these other projects may also be impacted if a long-term continuing resolution is enacted. I very much appreciate my colleague's concern about the project at Brookhaven National Laboratory and will work with him to attempt to address these issues if a long-term continuing resolution becomes a reality.

Mr. DORGAN

Mr. DORGAN. Mr. President, I ask unanimous consent that following my presentation, if there is a Republican speaker on the floor, they be recognized next, as has been the course, and that Senator Brown of Ohio be recognized as the next Democratic speaker.

Mr. DORGAN. Mr. President, yesterday, there was a hearing in the Congress, on the House side, dealing with someone I have spoken about on the floor at some length, and I wish to talk about that hearing and what it means. Then, following that, I wish to speak about the bill I introduced yesterday dealing with the price of gas and oil and oil speculation. First, let me talk about the hearing yesterday and what we learned about the Defense Department and the State Department and others dealing with this man. This man's name is Efraim Diveroli. He is 22 years old and the president and chief executive officer of a firm that was awarded $300 million in contracts by our Federal Government. So this is a guy who took over a shell corporation that his dad had, and he was awarded $300 million in Defense Department contracts. He was the president of the company at age 22. He had a vice president, though. It is not as if the company was understaffed. This is a photograph of his 25-year-old vice president, who is a massage therapist--David Packouz. He was called a masseur, or massage therapist. So these two guys ran a company in Florida that had an unmarked office door. At one point, Mr. Diveroli, the CEO, says he was the only employee and at another point it was he and his vice president, the massage therapist. They got $300 million from the Federal Government, from the Defense Department, and they were to provide weapons and ammunition to the Afghan fighters because our Defense Department wanted to help the Afghan fighters take on the Taliban in Afghanistan. Well, here is what these folks provided to the fighters in Afghanistan--40-year-old Chinese cartridges which came in boxes that were all taped and falling apart--this is an example. They were made in China in the mid-1960s. It is pretty unbelievable. The fighters in Afghanistan said this was junk coming from this company that got $300 million in contracts from the Defense Department. Now, I had the three-star general come to my office. I am on the Appropriations Subcommittee on Defense, and we shovel a lot of money out the door for a lot of these Defense needs, some legitimate, some not, and I had a lengthy meeting with the three-star general who was in charge of this. I said: How on Earth could you have given a contract to a company run by a 22-year-old, who had very little experience, running a shell company his dad owned, a company where his vice president was a massage therapist? This is a joke, except it is not a joke when the American taxpayers are fleeced. He gave me a hundred excuses, this three-star general did. But all he would have had to do is go to MySpace. Pull this man up on MySpace, the president of this company, and here is what he says on MySpace. I like to go clubbing, go to a movie. I have taken a really liking towards fine Scotch whiskey. I have had problems in high school, so I was forced to work most of my teen years. He probably grew up a little fast. Got a decent apartment. Am content for the moment. Go to MySpace. Is this the CEO of a company you want to give $300 million in contracts to? This is an outrage. So a hearing was held yesterday, and here is what the hearing disclosed. There was a watch list at the State Department. This company--these guys--had small contracts with the State Department, and the State Department had compiled a watch list of 80,000 individuals and companies suspected of illegal arms transgressions and other things, including this company. Well, the fact is, the Defense Department never checked the State Department. Contracts have been pulled from this little company, but the Defense Department never checked, so they give them a $300 million contract, or a series of contracts, worth $300 million. The reason they say it didn't show up is because they don't check on contractors that maybe are bad contractors if the contract is less than $5 million. That is, apparently, an asterisk. I mean, I don't understand this at all. Government officials failed to review several of these contracts from this little company that had been canceled or delayed. They never raised red flags because they fell under the $5 million contract value that was the warning threshold. The contracting officer with the Army Sustainment Command had overruled a contracting team that raised concerns about this company. They said there was substantial doubt, but nonetheless the company got the contracts. Listen, this is shameful. We ought to do--and, yes, we in the Senate as well--ought to do a detailed investigation. We should bring people here under subpoena, if necessary, to find out who made these judgments and why they are still working for the Federal Government. Why aren't they long ago gone from the Federal payroll? This is not the end of it or all of it. I have spoken about dozens and dozens of contracts that are similar to this. At any rate, yesterday, this hearing occurred in the House. I commend Congressman Waxman, who has been doing some of the most significant work in the Congress in investigating this. We need to investigate this on the defense spending side as well, those who appropriate this funding. This is shameful, and I think everybody involved in it ought to be embarrassed. We are shoveling money out the door to support the war in Iraq and Afghanistan. I have shown pictures on the floor of the Senate of one-hundred dollar bills wrapped in Saran Wrap the size of bricks, and the guy distributing that cash in Iraq said he told contractors our motto was: We pay in cash, you bring a bag. It was like the Wild West, he said. You think money isn't wasted? You think there isn't stolen money over there, when you are distributing money out of the back of a pickup truck and we are airlifting one-hundred dollar bills on C-130s, flight after flight, full of cash? This is unbelievable what is happening with this contracting abuse, and this is one, small example. I think all those involved in it ought to be brought before congressional committees and that we demand answers from them. Who is responsible, who is accountable on behalf of the American taxpayer? If they can't answer, they ought not be on the public payroll. That takes care of my need for therapy to talk about this issue. It is almost unbelievable that the American taxpayer, en masse, is not gathering outside this Capitol saying, when we hear this kind of thing, we are outraged. So let me be outraged on behalf of them and say this cannot be allowed to continue. Speculating on Oil and Gas Mr. President, I came to the floor to talk about the issue of the price of gasoline. I had a guy in my office the other day that was the president of one of the larger corporations and this company was engaged in trading and all these issues. He was a fast talker. I mean, it was unbelievable to me. When he finished talking, I was out of breath. He was one of these guys who talked and talked and talked. His point was: Look, everything is working fine. The price of oil, the price of gas, that is what the market says it is. I said: Well, it appears to me there are substantial amounts of speculation. Over a period of time in this world we have seen some dramatic growth in speculation in certain areas. When it happens, the markets break and you have to come back and herd the speculators out and have markets available for the legitimate transactions. This person said: Speculation, are you kidding me? These are normal transactions on the commodities market, the futures market for oil, as an example. There is supply, demand, and people are involved. I said: Well, tell me this, if you would: What has happened in the last 15 months? Tell me what has happened with respect to supply and demand that justifies doubling the price of oil in the futures market? Can you tell me? Then he spoke for 45 minutes, almost uninterrupted, and had not answered the question. I said: That makes my point. At the end of this meeting, you can't answer the question because nothing has happened in the last 15 months that demonstrably alters the supply-and-demand relationship or that justifies what has happened with the price of oil. Nothing justifies doubling the price of oil in the last 15 months. The only conclusion you can come to--and many have and I certainly have--is that we have a carnival of speculation in the futures market by a lot of big-time speculators interested in making money. They do not want to own oil or take possession of oil. They do not want to use oil. They wouldn't be able to recognize oil at first blush. They wouldn't even be able to lift a 30-gallon drum of oil. They just want to make money speculating on oil. So if we have a bunch of speculators in this carnival of greed who rush into these markets and drive up prices well beyond what the fundamentals would justify, it breaks the market. If the market is broken, we have a responsibility to set it right. When the commodities market for oil was established in 1936 by legislation, Franklin Delano Roosevelt said we have to be careful to have the tools to stop the speculators from taking over these markets. There is a specific piece in the 1936 act that talks about excessive speculation. There is excessive speculation in the marketplace now, and it is running up the price of oil and gas. It is hurting every single American family, it is damaging this economy, it is dramatically injuring industries--such as airlines, truckers, farming, and others. The question is, What should we do about it? Should we sit here somewhere in a crevasse between daydreaming and thumbsucking and decide to do nothing? Or should we finally decide we have to take some action when a market is broken? Let me go through a couple charts. I have used them before so it is repetitious, but it seems to me it is useful repetition in describing a very serious problem. Here is what has happened to the price of oil. There is no event in here that suggests this should be the price of oil. You double the price. There is nothing in here that justifies doubling the price. The fact is, people are driving less in this period. There were 4.5 or 5 billion fewer miles driven in this country in a 6-month period; 4.5 to 5 billion fewer miles driven, less gasoline used. That means lower demand. At the same time, in the first 4 or 5 months of this year, we saw crude inventory stocks rise, not fall. If inventory is going up and demand is going down, what is happening to the price of oil and gasoline? It is going up? That doesn't make any sense. That is not logical. That is a market that is broken. Let me analyze what all that means. This is what a commodity exchange looks like. This is the New York Mercantile Exchange, called NYMEX. There are a bunch of folks who trade. They come to work and do a legitimate job. They are trained to do this job, and they are trading on behalf of others. But what has changed is, instead of it being just a legitimate market for hedging between those who produce and those who consume, wanting to hedge a physical commodity, we have now people in this market who have no relationship to this commodity. Will Rogers described it a decade ago. He described people who buy things they will never get from people who never had it, making money on both sides. That is speculation. Here is what some folks have said about these issues. Let me describe, first, before I describe what some other folks have said about it, the 1935 act. It says, this is the commodities act that establishes this-- This bill authorizes the Commission . . . to fix limitations upon purely speculative trades and commitments. Hedging transactions are expressly exempted. The point is the underlying bill authorizes the regulator, the Commodity Futures Trading Commission, to fix limitations on purely speculative trades. That is exactly what the Commission is supposed to do. But the Commission has largely taken a vacation from reality. It seems to have no interest in regulating. I am talking especially about the chairman and those who control the Commission. Here is Fadel Gheit, 30 years as the top energy analyst for Oppenheimer & Co. He testified before our committee. I have spoken to him a couple times by phone. Here is what he says: There is absolutely no shortage of oil. I'm convinced that oil prices should not be a dime above $55 a barrel. I call it the world's largest gambling hall. . . . It's open 24/7. . . . Unfortunately, it's totally unregulated. . . . This is like a highway with no cops on the beat and no speed limit and everybody's going 120 miles an hour. I encourage my colleagues, if you want to understand what is happening in this market, call Mr. Gheit. He has been involved as an energy trader with the large companies. He will give you an earful. I have had the opportunity to hear him not only in committee, but I called him as well and had a conversation about speculation. The president of Marathon Oil Company: ``$100 oil isn't justified by the physical demand of the market.'' I am going to have a hearing this afternoon with the head of the Energy Information Administration, EIA. I fund this agency in my appropriations subcommittee--Mr. Caruso heads it. I wish to show what the EIA has projected on all these occasions for the price of oil and gasoline. In May of last year, they projected this yellow line. That is where the price would go. In July of last year, they projected this yellow line. In September, they projected this. Do you see what the momentum is? In terms of what they are projecting, in every case they are demonstrably wrong--not just wrong by a little, wrong by a lot. We spend over $100 million for this agency to get the best and brightest, to determine as best they can what is going to happen to the price of oil. They have always believed the price is essentially going to remain about the same or go down. The price, however, has gone way up. Why? Because unbridled speculation exists in this market with speculators driving up these prices. Despite that, the EIA testifies and has testified repeatedly: They see some speculation but not very much. If they believe this represents the fundamentals in the marketplace, how on Earth could the best estimators in an agency we spend $100 million a year on--how could they be this wrong? There is something fundamentally wrong with that piece. Finally, 2 days ago, the House released a report that was done by a House subcommittee that talked about the explosion of speculation on the futures market. It went from 37 percent speculative trades in 2000 to 71 percent of the trades now that are ``speculation.'' I describe all that to say I have introduced legislation. I am talking to Republicans and Democrats in the Senate, hopeful of garnering cosponsors to move this legislation that addresses this issue by saying to the Commodity Futures Trading Commission: You have the authority to do the following, and you should do the following, just going back and reading the underlying law that created you. No. 1, identify those trades that represent legitimate hedging trades between a producer and a consumer with a physical product in which they wish to hedge risk. That is precisely what the market was established for. Distinguish that kind of trading from all other trading which represents nonlegitimate hedging, or speculation. Once you have determined what body of trading represents speculative trading--and it has been a carnival of greed, in my judgment, rushing and pushing up the amount of speculative trading, as I have shown--once you have done that, I suggest we impose a 25-percent margin on the speculative trading that is going on, in order to try to wring some of that excess speculation out of this market. No. 2, I suggest the regulator have the opportunity to use their authority to either revoke or modify all their previous actions, including their ``no action'' letters, in order to shine the light on and see and regulate all the transactions that have to do with American products or trading in this country. Strangely enough, the Commodity Futures Trading Commission itself said, for example, the Intercontinental Exchange, largely owned by American interests, that trades in London--that you can come here, you can set up an office in Atlanta, you can trade on computers in Atlanta, and we will decide of our own volition that we will not regulate you and you will be outside the purview of our sight. That is an unbelievably bad decision, and it needs to be revoked--not just that decision but so many others similar to it. It would be nice if we would have a regulatory body that says our job is to regulate. We pay for regulatory bodies for the purpose of wearing the striped shirts; they are the referees, they call the fouls. I think, having taught some economics in college, that the best allocator of goods and services in this country that I know of is the marketplace. Markets are wonderful. I am a big supporter of markets. But when markets are broken, the Government has a responsibility to act. We have a regulator that has been oblivious to open markets, in fact has accelerated and actually helped break them. I believe our responsibility at this point is to set this regulator straight and decide here are the conditions by which we own up to the responsibilities of the original act--allowing for legitimate trading and hedging but trying to shut down the speculation that has driven up the price of gasoline and that injures every family and every business in this country and damages the American economy. My hope is, in the coming couple days and weeks, that Congress, and the Senate especially, will be able to consider the bill I have authored. There are other good ideas as well. I welcome all of them. But I think this is not a circumstance in which one of the options for the Congress is to do nothing. The American people expect more and deserve more and I think should get more from this Congress. I have spoken to Senator Reid and many others, who are also very interested in moving on these issues. I hope it will be bipartisan. I am very interested in having Republicans and Democrats work on perfecting these issues so we can take action very soon. I yield the floor.

Mr. DORGAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DORGAN

Mr. DORGAN. Mr. President, I rise to introduce a piece of legislation on behalf of myself, Senator Nelson of Florida, and Senator Carper dealing with the subject of energy speculation. I want to run through a couple charts, and I want to describe the reason for the introduction of this legislation. This chart shows the price of oil and what has happened to the price of oil. The price of oil has nearly doubled in a year. There is no justification for it, no fundamentals of supply and demand that explain what has happened to the price of oil. These commodity contracts, by and large, are traded in this country on something called the commodity exchange--NYMEX, it is called. This is what it looks like. They trade back and forth, and there are legitimate reasons to trade on the exchanges. Those reasons to trade on the exchanges are for legitimate hedging for actual physical petroleum products for future delivery. The problem is, with respect to the oil markets, the legitimate hedging has become a smaller part of what is traded. There is now this unbelievable speculation going on in the commodity markets. That speculation has perverted the market, broken the market, causing the price of oil and gasoline to be well above that which is justifiable. We have an organization in the Government called the Energy Information Administration, the EIA. They are the ones who know what there is to know about energy issues. As shown on this chart, here is what they have told us. Back in May of 2007--last year--here is where they said the price of oil would be. Back in July, they said it would be on this line, as shown on this chart; back in September, on this line. I hope they were not buying any commodities on the basis of their advice--they would be flat broke in a month. Here is what happened to the price. It went straight up. All the while, the EIA did not seem to have the foggiest notion of where the price was going to go. Why? Because the fundamentals do not justify what is happening. Now I have the EIA coming down to testify before my subcommittee this week. I want to ask them these questions. They insist there is very little speculation in this marketplace. But most experts insist this has become an unbelievable spectacle of speculation that injures America's drivers and consumers, injures our industry, and causes great damage to our economy. A House study, just in the last few days, from the House Subcommittee on Oversight and Investigations, said here is what has happened to the commodities market with respect to oil. As to the oil futures market: 37 percent used to be speculators in that market. Now it has gone to 71 percent. The speculators have taken over that market. When the Commodity Exchange Act was passed by the Congress in the 1930s, here is what the congressional report said: This bill authorizes the Commission--the Commodity Futures Trading Commission; that is supposed to be the regulating body--to fix limitations on purely speculative trades and commitments. Hedging is exempted. But for purely speculative positions, we provided the authority to the Commodity Futures Trading Commission to deal with that because we did not want this market to be taken over by speculators. I have used these charts many times. This one has to do with Fadel Gheit, the top energy analyst for Oppenheimer & Co. Here is what he says: There is absolutely no shortage of oil. I'm convinced that oil prices shouldn't be a dime above $55 a barrel. I call it the world's largest gambling hall. . . . It's open 24/7. . . . Unfortunately, it's totally unregulated. . . . This is like a highway with no cops on the beat and no speed limit and everybody's going 120 miles an hour. I will not show all the charts I have shown in the past, but the CEO of Marathon Oil says: $100 oil isn't justified by the physical demand in the market. It was recently reported Americans drove 4.5 to 5 billion fewer miles in the last 6 months than in the previous 6 months. So we are driving 4 or 5 billion fewer miles, using less energy. Four of the first 5 months of this year, crude oil inventories were up--not down, up. So if the supply of the product is going up and the use of the product is going down, the marketplace would have you believe--or at least you would expect--the price would come down. Instead, the price has gone up, which demonstrates this is not about market fundamentals. It is about an unbelievable orgy of speculation in the marketplace that is not justified. Now the question is, Will Congress do something about it or will it just apply some lip gloss? Is this just something where we act as if we are doing something or are we going to drive the speculators out of this market? I am introducing legislation that is tough and real and will address this issue. The regulating body here is the Commodity Futures Trading Commission. It has acted like most regulating bodies in recent years. Most of them are run by people who came to the Government not liking Government and not wanting to regulate. It all goes back to Mr. Pitt, back in 2001, in which he said: The Securities and Exchange Commission is going to be a business-friendly place. Well, we have seen a lot of these agencies that are business friendly. They just get out of the way and pretend they are in a deep Rip van Winkle sleep, and they are not going to see anything and they are not going to know anything and they are not going to care much about anything. This agency is not much different--the Commodity Futures Trading Commission. The fact is, it has been asleep on its feet, just dead from the neck up. It is time for us to say to this agency: It is your job to regulate. The fact is, Franklin Delano Roosevelt, when he signed this legislation some 70, 80 years ago, said: It should be our national policy to restrict, as far as possible, the use of these exchanges for purely speculative operations. Franklin Roosevelt knew it. Why doesn't this Commodity Futures Trading Commission know it? The legislation I am introducing today does a couple things. No. 1, it demands the Commodity Futures Trading Commission by date certain to distinguish between that which represents normal hedging transactions between producers and consumers of a physical product and the rest, which is speculation. It says this market is designed for normal hedging of risks between producers and consumers of a physical product. Others who are engaged in excess speculation are going to be slapped with a higher margin--a 25-percent margin requirement--that is either quadruple or quintuple the current requirement, depending on what is assessed between the 5- and 7-percent rate. But this essentially says to speculators: It is going to cost you more to speculate in this marketplace if you are one of these folks who just want to speculate to make a lot of money. Will Rogers talked about this long ago. He talked about people buying things they will never get from people who never had it. That is what is going on with investment banks, hedge funds, and a lot of others who are neck deep in this marketplace. They have never seen a barrel of oil. They don't want a barrel of oil. All they want to do is speculate and make a bundle of money. The problem is, it is damaging this country. My legislation, No. 1, requires the separation of legitimate traders verses speculators. It puts an increased margin requirement on the speculators to try to wring some of that speculation out of the market. No. 2, it requires position limits that are significant, imposed by the Commodity Futures Trading Commission. No. 3, it requires the Commodity Futures Trading Commission to revoke or modify any previous actions they have taken in which they have prevented themselves from being able to regulate and see the transactions that exist in this futures market. Unbelievably almost, the Commodity Futures Trading Commission, which is the regulator, decided, on its own volition, that it would allow, for example, a London exchange, largely owned by American interests, to come in and trade on computer terminals in Atlanta, GA, and pretend they are not American. So the Commodity Futures Trading Commission said: Do you know what, we will do a letter of no action so we can't regulate and can't see it. That is unbelievable, in my judgment. It is an unbelievably irresponsible position for a regulator to have taken. It is taken, I suppose, by those who believe ``regulations'' is a four- letter word. It is not. If ever we wonder about that, take a look at what has happened to the price of oil and gas in a situation where speculators have taken over. The Commodity Futures Trading Commission is a regulator of this market. It has done a miserable job. It has nearly all the authority it needs to do the right thing. What I propose to do with the Commodity Futures Trading Commission is wring the speculators out of this market. They have distorted the market, broken the market, and we end up in a situation now where the price of gasoline is devastating this economy. The price of oil is not justified by supply and demand. When that happens, there is a responsibility for this Congress to act. It is an urgent responsibility, in my judgment, now for this Congress to say what is happening is wrong, it is hurting this country's economy, it is hurting industries and the American people, and we need to do something about it. The best start, in my judgment, would be to pass this legislation I am introducing today. One final point. I am reaching out to Democratic and Republican offices in the hopes that this will be a bipartisan piece of legislation that will address a very serious issue on an urgent basis and begin to do something that moderates the price of oil and gas that many experts have told us is 20, 30, and in some cases 40 percent above that which is justified by the marketplace. We should not stand for it. We do not have to. We ought to pass this legislation soon.

Mr. DORGAN

Mr. DORGAN. Mr. President, the Senate is not in a quorum call, I expect.

Mr. DORGAN. Mr. President, I ask unanimous consent to speak for 10 minutes and that 10 minutes be applied to the 30 hours postcloture.

Mr. DORGAN. Mr. President, I yield the floor.

Mr. DORGAN

Mr. DORGAN. Mr. President, I rise to introduce a piece of legislation on behalf of myself, Senator Nelson of Florida, and Senator Carper dealing with the subject of energy speculation. I want to run through a couple charts, and I want to describe the reason for the introduction of this legislation. This chart shows the price of oil and what has happened to the price of oil. The price of oil has nearly doubled in a year. There is no justification for it, no fundamentals of supply and demand that explain what has happened to the price of oil. These commodity contracts, by and large, are traded in this country on something called the commodity exchange--NYMEX, it is called. This is what it looks like. They trade back and forth, and there are legitimate reasons to trade on the exchanges. Those reasons to trade on the exchanges are for legitimate hedging for actual physical petroleum products for future delivery. The problem is, with respect to the oil markets, the legitimate hedging has become a smaller part of what is traded. There is now this unbelievable speculation going on in the commodity markets. That speculation has perverted the market, broken the market, causing the price of oil and gasoline to be well above that which is justifiable. We have an organization in the Government called the Energy Information Administration, the EIA. They are the ones who know what there is to know about energy issues. As shown on this chart, here is what they have told us. Back in May of 2007--last year--here is where they said the price of oil would be. Back in July, they said it would be on this line, as shown on this chart; back in September, on this line. I hope they were not buying any commodities on the basis of their advice--they would be flat broke in a month. Here is what happened to the price. It went straight up. All the while, the EIA did not seem to have the foggiest notion of where the price was going to go. Why? Because the fundamentals do not justify what is happening. Now I have the EIA coming down to testify before my subcommittee this week. I want to ask them these questions. They insist there is very little speculation in this marketplace. But most experts insist this has become an unbelievable spectacle of speculation that injures America's drivers and consumers, injures our industry, and causes great damage to our economy. A House study, just in the last few days, from the House Subcommittee on Oversight and Investigations, said here is what has happened to the commodities market with respect to oil. As to the oil futures market: 37 percent used to be speculators in that market. Now it has gone to 71 percent. The speculators have taken over that market. When the Commodity Exchange Act was passed by the Congress in the 1930s, here is what the congressional report said: This bill authorizes the Commission--the Commodity Futures Trading Commission; that is supposed to be the regulating body--to fix limitations on purely speculative trades and commitments. Hedging is exempted. But for purely speculative positions, we provided the authority to the Commodity Futures Trading Commission to deal with that because we did not want this market to be taken over by speculators. I have used these charts many times. This one has to do with Fadel Gheit, the top energy analyst for Oppenheimer & Co. Here is what he says: There is absolutely no shortage of oil. I'm convinced that oil prices shouldn't be a dime above $55 a barrel. I call it the world's largest gambling hall. . . . It's open 24/7. . . . Unfortunately, it's totally unregulated. . . . This is like a highway with no cops on the beat and no speed limit and everybody's going 120 miles an hour. I will not show all the charts I have shown in the past, but the CEO of Marathon Oil says: $100 oil isn't justified by the physical demand in the market. It was recently reported Americans drove 4.5 to 5 billion fewer miles in the last 6 months than in the previous 6 months. So we are driving 4 or 5 billion fewer miles, using less energy. Four of the first 5 months of this year, crude oil inventories were up--not down, up. So if the supply of the product is going up and the use of the product is going down, the marketplace would have you believe--or at least you would expect--the price would come down. Instead, the price has gone up, which demonstrates this is not about market fundamentals. It is about an unbelievable orgy of speculation in the marketplace that is not justified. Now the question is, Will Congress do something about it or will it just apply some lip gloss? Is this just something where we act as if we are doing something or are we going to drive the speculators out of this market? I am introducing legislation that is tough and real and will address this issue. The regulating body here is the Commodity Futures Trading Commission. It has acted like most regulating bodies in recent years. Most of them are run by people who came to the Government not liking Government and not wanting to regulate. It all goes back to Mr. Pitt, back in 2001, in which he said: The Securities and Exchange Commission is going to be a business-friendly place. Well, we have seen a lot of these agencies that are business friendly. They just get out of the way and pretend they are in a deep Rip van Winkle sleep, and they are not going to see anything and they are not going to know anything and they are not going to care much about anything. This agency is not much different--the Commodity Futures Trading Commission. The fact is, it has been asleep on its feet, just dead from the neck up. It is time for us to say to this agency: It is your job to regulate. The fact is, Franklin Delano Roosevelt, when he signed this legislation some 70, 80 years ago, said: It should be our national policy to restrict, as far as possible, the use of these exchanges for purely speculative operations. Franklin Roosevelt knew it. Why doesn't this Commodity Futures Trading Commission know it? The legislation I am introducing today does a couple things. No. 1, it demands the Commodity Futures Trading Commission by date certain to distinguish between that which represents normal hedging transactions between producers and consumers of a physical product and the rest, which is speculation. It says this market is designed for normal hedging of risks between producers and consumers of a physical product. Others who are engaged in excess speculation are going to be slapped with a higher margin--a 25-percent margin requirement--that is either quadruple or quintuple the current requirement, depending on what is assessed between the 5- and 7-percent rate. But this essentially says to speculators: It is going to cost you more to speculate in this marketplace if you are one of these folks who just want to speculate to make a lot of money. Will Rogers talked about this long ago. He talked about people buying things they will never get from people who never had it. That is what is going on with investment banks, hedge funds, and a lot of others who are neck deep in this marketplace. They have never seen a barrel of oil. They don't want a barrel of oil. All they want to do is speculate and make a bundle of money. The problem is, it is damaging this country. My legislation, No. 1, requires the separation of legitimate traders verses speculators. It puts an increased margin requirement on the speculators to try to wring some of that speculation out of the market. No. 2, it requires position limits that are significant, imposed by the Commodity Futures Trading Commission. No. 3, it requires the Commodity Futures Trading Commission to revoke or modify any previous actions they have taken in which they have prevented themselves from being able to regulate and see the transactions that exist in this futures market. Unbelievably almost, the Commodity Futures Trading Commission, which is the regulator, decided, on its own volition, that it would allow, for example, a London exchange, largely owned by American interests, to come in and trade on computer terminals in Atlanta, GA, and pretend they are not American. So the Commodity Futures Trading Commission said: Do you know what, we will do a letter of no action so we can't regulate and can't see it. That is unbelievable, in my judgment. It is an unbelievably irresponsible position for a regulator to have taken. It is taken, I suppose, by those who believe ``regulations'' is a four- letter word. It is not. If ever we wonder about that, take a look at what has happened to the price of oil and gas in a situation where speculators have taken over. The Commodity Futures Trading Commission is a regulator of this market. It has done a miserable job. It has nearly all the authority it needs to do the right thing. What I propose to do with the Commodity Futures Trading Commission is wring the speculators out of this market. They have distorted the market, broken the market, and we end up in a situation now where the price of gasoline is devastating this economy. The price of oil is not justified by supply and demand. When that happens, there is a responsibility for this Congress to act. It is an urgent responsibility, in my judgment, now for this Congress to say what is happening is wrong, it is hurting this country's economy, it is hurting industries and the American people, and we need to do something about it. The best start, in my judgment, would be to pass this legislation I am introducing today. One final point. I am reaching out to Democratic and Republican offices in the hopes that this will be a bipartisan piece of legislation that will address a very serious issue on an urgent basis and begin to do something that moderates the price of oil and gas that many experts have told us is 20, 30, and in some cases 40 percent above that which is justified by the marketplace. We should not stand for it. We do not have to. We ought to pass this legislation soon.

Mr. DORGAN

Mr. DORGAN. Mr. President, I would like to announce that the Committee on Indian Affairs will meet on Thursday, June 26, at 9:30 a.m. room 562 of the Dirksen Senate Office Building to conduct an oversight hearing on Access to Contract Health Services in Indian Country. Those wishing additional information may contact the Indian Affairs Committee at 224-2251.

Mr. DORGAN

Mr. DORGAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DORGAN. Mr. President, this morning, watching television as I was getting ready to come to work, I heard a news report about how much less Americans were driving. I believe they said 4.5 billion fewer miles driven in our country in April, although it may have been January through April. I am trying to get that. But the New York Times yesterday had the same thing. It says: ``Driving Less: Americans Finally React to the Sting of Gas Prices.'' It described that in April of 2008, compared with the same month 1 year ago, Americans drove 1.8 percent fewer miles on public roads. So round it up. Americans drove 2 percent less in April, and presumably they used 2 percent less gasoline than 1 year ago. If that is the case, that gas prices are up so Americans are driving less and using less gasoline--then demand is down, isn't it? Well, demand is down--and we know that; it doesn't have to be confirmed by the New York Times yesterday. Demand is down. When gas goes to $4, people are wondering how on Earth do I pull up to the gas pump and afford to fill the tank? I had a tribal chairman come to the Senate yesterday. He described a mother who was driving her daughter, who had threatened to commit suicide, to see a doctor. But the mother didn't have money or enough gas in the car to get back home, so she came to see the tribal chairman of this particular Indian tribe to try to get some money to put some gas in the tank to be able to drive home after driving her daughter to the doctor. We know these stories. A lot of people can't afford this, so they are driving less. So if demand is down, then why are gasoline prices staying up? Four of the first 5 months of this year, we have seen increases in crude oil inventories. Let me say that again: Crude oil inventory supplies in this country have increased 4 of the last 5 months. So if supplies are up, and demand is down, what justifies a continued increase in the price of oil? It is not justified. It is unbelievable speculation in the commodities markets. I want to talk about that for a moment today. But I want to also note that in the Washington Post this morning, Steven Pearlstein had an article. It says: ``On Energy: Same-Old, Same-Old.'' And he is right about that. Same old thing, isn't it, on energy? We can't live without energy. The fact is, we get up in the morning and flip a switch and the light goes on. We plug something in and our razor works. We get in the car, turn the key, and we can drive. We take energy completely for granted, and yet we are prodigious users of energy. But we have a problem: Part of the problem is that divine providence, apparently, ended up putting most of the oil under the sands way on the other side of the planet and most of the demand is here. So we stick straws in this planet of ours and suck oil out every day. Eighty-five million barrels of oil every day we suck out of this Earth, and one- fourth is destined to be used in this little spot called the United States. We use a quarter of the oil every single day that is produced in this world. That is pretty unbelievable when you think about it. So we have big problems. We use a quarter of the oil, and much of it is produced elsewhere--Saudi Arabia, Kuwait, Iraq, and Venezuela--in troubled parts of the world. We need to be less dependent on finding oil from off our shores, which means we need to be more diligent in finding ways to produce more here. But it is not just producing oil, however. There are a lot of ways to produce energy. My colleagues on the other side, who have spent the last several days in this Chamber saying we have to drill here and drill there; that the only way you produce is to drill a hole someplace. Well, I know people like this. They are the dig-and-drill type. I call them ``yesterday forever.'' Digging and drilling, that is the only way they think you can produce energy. What about planting a crop in a farm field and producing ethanol? What about putting up a wind turbine and producing electricity by taking the energy from the air? What about solar? What about biomass? There is so much more we can and should do with respect to the production of energy. I will talk about that some more, but I want to come back to this issue of speculation. Right now, the price of gas is killing us. We have, I think, 12 airlines that have gone bankrupt in recent weeks and months. We have a whole lot of trucking companies that are now out of business because they cannot afford to continue to operate by paying current diesel prices to fill their trucks. We have farmers who can't figure out how they are going to order a load of fuel for spring's work and summer's work because it costs too much. We have a lot of families driving up to a gas pump and putting in only five gallons because they can't possibly afford to fill the tank. What is causing all that? Well, we have what is called a commodities market that has now been infested with hedge funds and investment banks. Investment banks, for the first time in history, and in recent years, are in this commodity market speculating. They have actually purchased storage capacity in order to take oil off the market. That is not a particularly good way to bring down prices, is it? But that is not the interest of some of these speculators. They think increasing the price is fine. It is exactly what they want. Will Rogers described all this years ago. He described people who buy things they will never get from people who never had it, making money on both sides. It wouldn't matter so much if the speculation on a commodity isn't so essential to this country. There is unbelievable speculation on oil and gas prices in this country, particularly oil prices at this point, that is damaging our economy. It is damaging our country, it hurts American truckers, farmers, and others, and we need to do something about it. Now, the question is, what? I am going to hold a hearing next week. I chair the subcommittee that funds the Department of Energy, among other things, and it funds the Energy Information Administration. That is the agency we pay in the Department of Energy to tell us what they know about energy. This is not a policy group, but we spend a lot of money on the EIA. If somebody is talking about energy and giving you some analysis about energy statistics, it is probably the Energy Information Administration, run by Mr. Caruso. Mr. Caruso is going to testify before my subcommittee this coming week. But I want to show you this chart. I am not showing this to demonstrate that the EIA is incompetent. That is not my allegation here. However, I wanted to show you what the Energy Information Administration has estimated each month, because they estimate what the price of oil is going to be. Nobody knows, so EIA makes the best estimate they can, because they have the best people and the experts. So here is what they have estimated. By the way, this red line is the actual price, okay? Go back here in May 2007, and they estimated the price of gasoline was to be about here. In July 2007, they said here is where we think the price will be. In September of 2007, here is where we think the price is going to be. In November 2007, we think the price will go down, actually. In January 2008, the price is going to go down. March 2008, it is going to go down, and in April, it is going to go down. Here is what actually happened. Oil prices went straight up, like a Roman candle. So the best people we have in the agency instructed to do this analysis say, here is our estimate of oil prices--and the fundamentals of the marketplace should reflect supply and demand. I assume they probably thought people were going to drive a little less as prices went up so that we would have more conservation. But they said, we think we are going to be okay on supply and have a little less demand and prices will moderate. Instead, prices went like this. How can we be so wrong for so long? That is the question, I guess, for next week. But I have had a chance to ask the head of this agency at a previous hearing whether there is some speculation here. My notion is this is an unbelievable orgy of speculation, and that is what is happening to this market. The market is broken, doesn't work, it is full of speculators, and they are interested in driving up the price. They do not give a rip about the damage to the economy. But the answer from the EIA was, well, a little bit of speculation, but, you know, not very much. It was kind of a two-step shuffle with your hands in your pockets, ruminating. Wearing a gray sweater and smoking a pipe and ruminating: Well, maybe a little speculation. You know what? I think the truth is--and this chart with these lines demonstrates how wrong we have been for so long--that there is a massive amount of speculation here. There are plenty of experts around who say this market is like a casino, open 24/7. Now, what does it matter? Well, what matters is this is doing unbelievable damage to our economy and to our country. I would understand it--I wouldn't accept it, but I would understand it, if at least the supply and demand relationship here justified an increase in price, but it does not. Refineries in this country in recent months have actually cut back in their capacity because they have had too much inventory out there. Drivers are driving less, crude stocks in 4 of the first 5 months have been up, yet the price of oil continues to rise. Now, the large oil companies that are going to the bank depositing our money have a permanent grin. They can't stop smiling. The Saudis and the OPEC countries can't stop smiling either because they are contributing even more of our money to their bank accounts. This is not bad for everybody. This is good for some. It is just bad for most of the American people and bad for the economy of this country. I believe that speculation is rampant and the regulatory authorities, the people who are supposed to wear the striped shirts and call the fouls, the Commodity Futures Trading Commission are largely doing nothing about it except for the last couple of weeks when someone has, apparently, lit their fuse or when the Chairman had some sort of epiphany overnight and said it looks as if we ought to start investigating this. The Chairman of the regulatory body has said repeatedly now, for many months: It is just the fundamentals, there are no problems here, the market is working fine, just fine. He said it last July, he said it in January, he said it in February, he said it in May, be happy, there is no problem here. The fundamentals of the oil markets are working just fine. Then, all of a sudden, we had a kind of tipping point. The Chairman of the Commodity Futures Trading Commission said: There might be something wrong. We are going to look at it. And oh, by the way, we have been looking at it for 7 months. It is a little confusing to me and I expect to the American people. Either the fundamentals were not right, or they were, back when he was assuring the American people everything was fine. Having said all of that, it is pretty clear to me what is going on here. We have a dramatic amount of speculation, a bunch of big interests running up the price of oil on the commodities market--hedge funds, investment banks, and others--speculating, purely speculating in these oil markets. I am going to introduce some legislation next week that addresses that subject. It will be the End Oil Speculation Act. It will require the Commodity Futures Trading Commission, which has largely been asleep at the switch, to use the authority it has to do what is necessary to separate legitimate trading for hedging purposes on the commodities market for oil from trading that is purely speculative. It will increase the margin requirement on trading that is purely speculative. It will do a number of other things that respond to the need to say: We believe this market should work. We think this market is necessary. But when a market is broken, the U.S. Congress has a responsibility to address it. My legislation will have time requirements and will make certain that the Commodity Futures Trading Commission takes the action that is necessary to wring the speculation out of these markets. I will introduce that early next week. I do want to say with respect to the Stephen Pearlstein article that I think he has it right--``same old, same old.'' He said: Somebody brings up offshore drilling, and immediately some say ``no,'' others say ``yes,'' some say ``there,'' others say ``nowhere.'' Should we do some offshore drilling? Sure. I supported offshore drilling in the Gulf of Mexico. I was one of four Senators who constructed the legislation that is now law that opens what was called lease 181. Substantial oil and natural gas are there. We ought to open much more of that on the eastern Gulf of Mexico. That is where the highest potential of recoverable oil is, in the Gulf of Mexico. We can do that safely. The fact is, you need to do much more. We are not going to drill our way out of this problem. We need much more renewable energy and more conservation. By far, the lowest hanging fruit in the energy issue would be to retrofit all buildings in America. The Mackenzie study says that is the quickest and easiest way to achieve substantial savings in energy. There is so much to do and so much available to us in renewable energy, in conservation, efficiency, and also the other elements that come together outside of just drilling and digging. I support some drilling and I support some digging. But that is not a policy, it is just a chant to say: Let's keep doing what we have been doing. That has driven us into a ditch. We want to get out of the ditch. We don't want to make the ditch deeper. I am going to be introducing legislation next week to address this problem of speculation. My hope is that all those who believe, as I do, that this market is not working right will support this effort. When you have an increase in supply of oil and you have a decrease in demand, you would expect that prices would begin going down, not continue to go up on a steep path. This market is broken, and I believe Congress has a responsibility to fix it. That is what I hope my colleagues and I will be able to do beginning next week. I yield the floor, and I suggest the absence of a quorum.

Mr. DORGAN

Mr. DORGAN. Mr. President, I ask unanimous consent that the Committee on Homeland Security and Governmental Affairs be authorized to meet during the session of the Senate on Friday, June 20, 2008, at 10 a.m.

Mr. DORGAN

Mr. DORGAN. Madam President, I wish to talk some about energy. I know the President, this morning, my colleague, Senator McCain, and others have talked a lot today about additional production. I am one of the four Senators who initiated in this body several years ago, along with Senator Bingaman, Senator Domenici, and Senator Talent, the legislation that is now law that opened lease 181 in the Gulf of Mexico, where there are substantial oil and gas reserves. We opened that up on a bipartisan basis. In addition to cosponsoring that legislation, I have also introduced legislation that would open more of the eastern Gulf of Mexico. I think it is a smart thing to do. Let me say that the refrain today coming from the President and some others is: Just drill, drill, drill--believing the only way to produce more energy is to sink a hole someplace. There are a lot of ways to produce energy in addition to drilling. We do need more production. We need more conservation. We need efficiency. We need renewable forms of energy. We need all of those things. But the discussion today is: Well, if we could just drill in ANWR--one of the pristine areas of our country that was set aside in legislation signed by Dwight D. Eisenhower as President of the United States--that 10 years from now we may have some oil, I guess. Let me make another suggestion. How about allowing U.S. companies access for drilling off the coast of Cuba? India is interested in doing that. Canada is there. Spain is there. But U.S. companies are banned from there. There's potentially more than 500,000 barrels of oil that could be produced in these Cuban waters, available for leasing by oil companies. Our oil companies cannot do it because this administration is obsessed with the embargo against Cuba. So I say to the President: You want to drill, drill, drill, and drill? How about drill down in this blue area, as shown on this map? Spain is there. Canada is there. China is looking at it. India is there. But, no, you have decided we are embargoed from having our oil companies look where there is potentially more than half a million barrels of oil a day. Or how about the eastern gulf? I have legislation in on this. But it is interesting--the minority side, when they introduced their proposal to produce more energy by drilling more, they left this out of their proposal. Why? Because a member of their caucus does not want this to happen. So, therefore, it is not a part of their proposal. So in my judgment, enough about drilling and drilling and drilling. If our solution to the energy issue is to drill and to dig, that is just yesterday forever. That is not a policy. Now, here is what has happened to oil prices. Oil prices have doubled in a year. Now, I do not have to tell anybody that. If you drive your car to the gas pump, you figure that out. If you are a farmer ordering a load of fuel, you understand that. If you are a trucker trying to figure out whether you are going to be able to run your trucking business next week because you cannot afford the fuel, you know this problem. If you are one of nine airlines that have gone bankrupt in recent times, you know this issue. Here is what has happened to the price of oil. Here is what has happened to speculation in the oil markets. It looks a lot like the price of oil, doesn't it? Speculation. This has nothing to do with people who want to buy oil. They want to buy paper back and forth and speculate. Look at what has happened to speculation. It looks like the same line with oil production. Will Rogers talked about speculators some nine decades ago. He talked about people who buy things they never get from people who never had it, trying to make money on both sides of the transaction. We have a futures market in energy because you must have a futures market. There are legitimate commercial reasons to hedge fuel prices, but when that market is broken and taken over by speculators, then it seems to me the Congress has a responsibility to deal with the broken market. I am going to talk about what we should do about this speculation in a moment, but first I wish to talk about this response to drill as the only response to produce additional energy. It is interesting that in 1916 this country decided to encourage people to drill for oil and gas. If you could find oil and gas, we wanted to give you a big fat tax break in 1916. We made it permanent. I wasn't here at the time. We made it permanent and said, if you go looking for oil and gas and find it, God bless you. We are going to give you a large tax break. Compare that with what America has done with renewable energy; wind, for example, and solar energy. We put in place a tax incentive for people to produce electricity from wind energy--a production tax credit, it is called. It was put in place in 1992, a short term, kind of a shallow tax incentive. It was extended five times, all short term. It was allowed to expire three times. So it has been stutter, step, start, stop. It is a pathetic, anemic, and thoughtless approach for a country to say to those who are producing renewable energy: We are behind you. We ought not do that. We did almost a century's worth of permanent tax incentives for people looking for oil and gas. To those who are trying to do wind and biomass and solar and all of the renewable forms of energy, we said: Well, we are not going to tell you whether we are going to keep providing these incentives. I have a piece of legislation on energy production incentives that says let's decide to tell people that for the next decade, here is where America is going. Here is America's policy. We believe in wind energy. We believe in renewable energy. Count on it, because this is America's policy. That is what we ought to do. We have people who stand up here in the Senate all day today--and the President at the White House--who say, the only production that matters is production by drilling a hole. Well, I am all for drilling holes where there is oil and raising some oil. But what about being less dependent on oil and especially less dependent on imported oil? Seventy percent of our oil now comes from off our shores. What about being less dependent on that? How about deciding there are other ways to produce? Yesterday we had a cloture vote and that cloture vote would have extended--not by enough, in my judgment, but nonetheless would have extended--the tax incentives for renewable energy. Almost every Member of the minority voted against it. Why? Because it would have raised funds to pay for it by plugging a loophole that allows big hedge fund operators who get a billion dollars or a half a billion dollars a year in compensation to park that money overseas in a deferred account and avoid paying taxes to our country. So we were going to plug that loophole and the other side has an apoplectic seizure. It is unbelievable to me. We are about production. We are trying to say here are the tax incentives necessary to produce more energy. Yes, it is renewable energy. It is an important part of our production need. And the other side says no, we don't support that because you are trying to make hedge fund managers pay their taxes as everybody else does. Well, not quite pay their taxes as everybody else. We were trying to plug the loophole that allows them to defer paying their taxes. But even if they had to pay them on time, many are paying a 15-percent tax rate on their earnings called carried interest. That is another story. They are paying less than the receptionist in their office, which is pretty unbelievable. But my point is simple. We fought out here yesterday on the floor of the Senate to provide the tax incentives that will produce more energy, and all the way along, the minority is objecting. It is like a bicycle built for two. We are pedaling uphill and they are sitting on the backseat with their foot on the brake. Then they come out the next day complaining that somehow not enough is being produced and they get the President to say the same thing out of the White House. They try to get people to think that somehow by waving a wand and drilling a hole some place they are going to solve the problem of $4 a gallon gasoline or $140 for a barrel of oil. It is not going to happen. Production is not just drilling. I support drilling. In fact, the U.S. Geological Survey just issued a recoverable oil assessment in my state--because I had requested that 2 years ago they do a survey. They completed their work and announced the largest survey or assessment of recoverable oil they have ever found in the lower 48 States: 3.6 billion barrels of recoverable sweet light crude. It is not as if we are not producing. We are. This is a new field called the Bakken shale field. But we are not doing enough with respect to renewables because of the attitude of the President and others in this Chamber who think the only way you produce energy is to try to sink a drill bit some place. There are a lot of ways to produce energy and we ought to be doing all of them. Instead we have dramatically shortchanged renewable energy. I wish to turn for a moment to a solution of this issue of what is happening in the market that has caused the runup in price. There is nothing in the fundamentals of supply and demand of oil that justifies what has happened to double the price of oil--nothing. Oh, I suppose you could make the case that we have a perverted market someplace where people talk about free market. There is no free market. What an absurdity. In oil? Are you kidding me? First you have the OPEC countries sitting around a table in a closed room with their ministers making decisions about production and price. Then you have the oil companies with two names because they romanced and got married: Exxon romanced Mobil and now it is ExxonMobil; Phillips liked Conoco, so they got married and now they have two names. Bigger, stronger, more muscle in the marketplace. Then there is the futures market which has become an unbelievable amount of speculation. So there is no free market. Let me quote some folks who have come to the Congress. This is Fidel Gheit, a 30-year veteran of the Oppenheimer Company. He is the top energy trader at Oppenheimer, a very respected organization. Here is what he says: There is no shortage of oil. I am absolutely convinced that oil prices shouldn't be a dime above $55 a barrel. I call it the world's largest gambling hall. It is open 24/7. Unfortunately it's totally unregulated. This is like a highway with no cops and no speed limit, everybody's going 120 miles an hour. If you don't believe Mr. Gheit, how about Mr. Clarence Cazalot, CEO of Marathon Oil: $100 oil isn't justified by the physical demand on the market. Steven Simon, senior vice president of Exxon: The price of oil should be about $50-$55 per barrel. So what has gone haywire here? What is the problem? Well, we have a regulatory agency called the Commodity Futures Trading Commission. They are supposed to be the regulators. We have a lot of people in regulatory bodies these days who think regulation is a four-letter word. They came to their jobs with an Administration that said, ease up. Soften up. We don't want you to regulate very much. So we have the Commodity Futures Trading Commission. The Acting Chairman of Commodity Futures Trading Commission testified yesterday. He doesn't have the foggiest idea of what percentage of the contracts being traded in these energy markets are contracts he can't see or can see, but he has already made a conclusion that excessive speculation is not the problem. Surprise, surprise. Well, here is what Mr. Lukken has said, the acting head of the Commodity Futures Trading Commission. This is the guy who is supposed to wear the striped shirts and call the fouls and be the referee: Based on our surveillance efforts to date, we believe energy futures markets have been reflecting the underlying fundamentals of these markets. July of last year. What is going on with the price of oil? ``Oh, it is just the fundamentals.'' That is what the head of the regulatory body says. In January, 6 months later, one word difference. He said: Based on our surveillance efforts to date, we believe that energy futures markets have been largely reflecting the underlying fundamentals. Nothing there, I guess, not from the acting head of the regulatory agency. In February: We are confident that the futures exchanges and clearinghouses are functioning well, especially during these turbulent times. No problem there. Be happy. Everything is working fine. Oh, the price of oil is doubling. We have an unbelievable amount of speculation going on, but don't worry, sleep well. On May 7 he says: We can say with a high degree of confidence that people are not manipulating the energy markets. Then at the end of May, this man had an epiphany. I don't know whether it was during his sleep or perhaps a staff meeting. He decided there might be something wrong: I am not willing to say there is speculation, but there might be something haywire here and oh, by the way, we have been investigating it for 7 months. I don't know. It is kind of hard if someone has been saying for 7 months nothing is wrong and then says oh, by the way, we have been investigating it for 7 months. A curious way, for someone who is paid to be a regulator, to describe to the American people their regulatory responsibilities. I think the evidence is pretty substantial that there is something going wrong in this marketplace, and when markets don't work--and sometimes they don't--there is a responsibility to take some action. I used to teach a bit of economics. I think the market system is the best allocator of goods and services I know of. There are times, however, the market system breaks. It doesn't work. That is what has happened here. There is a bubble that has occurred with a wave and a rash of speculation into these markets that has driven up the price well beyond that which can be justified by the quantity of oil or the demand for oil. The fact is this: In 4 of the first 5 months of the year, crude oil stocks in this country--the inventory of crude oil stocks increased. In 4 to 5 months, we actually had more inventory of crude oil stocks. At the same time, demand was beginning to dampen. There was less demand, more supply, so one would think prices would come down. It didn't happen. Prices continued to skyrocket. Something is broken in this marketplace. I am going to introduce legislation, I hope early tomorrow--and I hope with bipartisan support. My legislation is called the ``End Oil Speculation Act of 2008.'' It is a rather simple piece of legislation that deals with a complicated area. It would be designed, as we have written it, to eliminate manipulation and excess speculation of the futures petroleum market. By the way, existing law already has a provision with respect to excess speculation. But one would not expect, in my judgment, the current Commodity Futures Trading Commission's chairman to take action to address that, at least based on what he has been saying, that there is nothing at all wrong. This proposal would restore the petroleum futures market to its original purpose and intent as a place for hedge transactions by commercial producers and purchasers involving actual, physical petroleum products for future delivery and their direct counterparts. That is legitimate hedge trading. I support it. That is as distinguished from trading that goes well beyond that; that is, people who are not interested in taking physical possession, people who are not in the oil industry but they are interested in trading paper based on a speculative interest in making money. I suggest we revoke or modify all prior actions that fail to eliminate or discourage all non-legitimate hedge trading by, for example, applying position limits to all non-legitimate hedge trading. This legislation will require the Commodity Futures Trading Commission to segregate the kind of trading that exists, the kind of trading for which the market was established--typical commercial hedging--and the trading that has nothing to do with that at all but is simply and purely speculative trading. To distinguish between legitimate hedge trading and all other trading is necessary for a piece of legislation such as this to work. It will require that the Commodity Futures Trading Commission do so and do so by a time certain. It would also provide that there would be regulation of all persons-- to the extent possible--who are engaged in trading in petroleum futures wherever the market is located unless and until there are regulations that are substantially identical to the Commission's regulations and that are fully and effectively enforced. The proposal would provide an increased margin requirement that I spell out in the bill for the non-legitimate hedge trading, and that increased margin requirement would be designed to try to soak out the speculation in these markets and make it more difficult for the speculators. The American people need some help here. They are the victims of a market that has the American consumer bobbing around at the bottom, watching these prices they can't afford go right to the top, day after day after day. How many more people are going to go to the gas pump and try to figure out how much can I put in and still buy the groceries I need? We had a man come to a meeting I held today who talked about the fact that a mother brought her daughter to his office because she was talking about committing suicide. She brought her daughter in to get some medical help, but she didn't have enough gas to get back home. The mother had enough gas to get in with her daughter to see a doctor, but didn't have enough gas to get home. The mother stopped in the office of Ron His Horse is Thunder who is the tribal chairman of the Standing Rock Sioux Tribe to ask for some gas to be able to drive back home. The story is much sadder because the young lady then committed suicide some weeks later. But think of the people around this country who are wondering, how can I afford the gas to go see the doctor, or to get to my job? Think of the owners of the trucking company that is trying to get by, which has been around for 30 years, but is thinking now that they can't continue. How about an airline that is struggling to make it and can't possibly afford to pay these jet fuel costs? Does any of this matter to anybody? It does to me. If a significant part of the problem results from speculation, it seems to me we have a responsibility to deal with it. When markets are broken, we have a responsibility to address it. My legislation will do just that. I don't claim that it is perfect or that it will be easy, but I do claim that it is not enough to come to the Chamber and talk about what we need to do is open ANWR. Ten years from now, good for us, we will have opened something that was one of the most pristine areas that we have set aside. Do you want to drill? There is a lot more oil in the Gulf of Mexico than in ANWR. So let's not use a hood ornament called ANWR to describe America's current problems with respect to oil development. It is not accurate, and it is not, in my judgment, thoughtful. There are other ways for us to address this issue. Mr. President, I am going to speak tomorrow, as well, as I introduce the legislation. I yield the floor.

Mr. DORGAN

Mr. DORGAN. Mr. President, I would like to announce that the Committee on Indian Affairs will meet on Thursday, June 19, at 9:30 a.m. in room 562 of the Dirksen Senate Office Building to conduct a business meeting to consider pending legislative issues, to be followed immediately by a hearing to receive comments on a discussion draft bill to address law and order in Indian Country. Those wishing additional information may contact the Indian Affairs Committee at 224-2251.