Statement of Senator Barack Obama Vote against the Gulf of Mexico Energy Bill

August 1, 2006

Every one of us in Congress has heard from our constituents about the high cost of gas. A gallon is now $3 or more in most parts of the country, and there is every reason to believe that figure will continue to climb throughout the rest of the summer.

Americans are asking their members of Congress to help lower some of these costs. And we should do that. But let's not kid ourselves. This is a problem that was decades in the making, and short-term political solutions - whether it's a tax rebate or more legislation to stop price gouging - aren't going to be the complete answer.

To be sure, most of these proposals would do no harm, and many would provide Americans some temporary relief at the pump. But in the long term, we can't rely solely on quick fixes designed to placate an anxious public.

We need solutions designed to permanently lessen our dependence on foreign oil. Unfortunately, both Congress and the White House have been unwilling to take the politically difficult steps necessary to confront one of the most pressing economic and national security challenges of the 21st century.

A perfect example is the bill before us. It does do some good things: it marginally increases the supply of oil, and it provides a financial boost to Gulf Coast states that could use the help.

But fundamentally, the bill only focuses on part of the problem - our inadequate supply of oil. Unfortunately, increasing supply can't be our only answer. Even if we opened up every square inch of this country for drilling, America only has 3% of the world's oil reserves. With our own Energy Department telling us that our demand for oil will jump 40% over the next 20 years and countries like China and India adding millions of cars to their roads, this means that if we truly hope to solve this problem, we must focus on reducing demand.

Members on both sides of the aisle have suggested some innovative ways to do this. Senator Lugar and I introduced the America Fuels Act to increase the production of homegrown biofuels. And Senator Bunning and I have worked on a bill to produce liquid fuels from coal.

Unfortunately, we're not going to have a debate this week on how to reduce the demand for oil, because we weren't allowed to add any amendments to this bill that would focus on that problem. Because contrary to the judgment of every credible person who has examined our nation's energy woes, the Republican leadership in the Senate believes we can solve our energy problems by just drilling more. That's not only dishonest -- it's a disservice to our constituents who want us to work together to solve this crisis.

I'd like to spend a few minutes today discussing two of the proposals that should have been part of this energy debate - two proposals that could have made this bill worthwhile.

First, we need to start producing cars that use less oil. Thirty-three years ago, this nation faced an energy crisis that affected every American. In the shadow of a war against Israel, the Arab nations of OPEC chose to embargo shipments of crude oil to the West. The shocks were felt in national economies worldwide. Washington lawmakers responded by creating daylight savings time and a national speed limit. A new Department of Energy and a Strategic Petroleum Reserve was established. And Congress enacted Corporate Average Fuel Economy - or CAFE - standards, the first-ever requirements to reduce petroleum consumption in the vehicles we drive.

As a result, the gas mileage of cars doubled from 14 miles per gallon in 1976 to 27.5 mpg for cars in 1985. Today, CAFE saves us about 3 million barrels of oil per day, making it among the most successful energy-saving measures ever adopted. But that decade's worth of fuel consumption improvements ended more than 20 years ago, because CAFE standards are the same today as they were in 1985 - 27.5 mpg for cars.

To address this problem, I have joined with Senator Lugar and a bipartisan coalition of senators to propose the Fuel Economy Reform Act, which we have also filed as an amendment to the OCS bill.

This amendment would establish regular, continual, and incremental progress in fuel economy, but still preserve the expertise and flexibility of the National Highway Traffic Safety Administration - or NHTSA - to determine how to meet those targets.

Under this proposal, CAFE standards would increase by 4 percent every year unless NHTSA can justify a deviation in that rate by proving that the increase is either technologically unachievable, would materially reduce the safety of automobiles, or is not cost-effective. For too long, the presumption has been that the public would have to prove to the auto industry why it should raise fuel economy standards. This proposal would flip that presumption by asking the auto industry to prove why it can't raise those standards.

Under this system, if the 4 percent annualized improvement occurs for ten years, we would save 1.3 million barrels of oil per day - an astounding 20 billion gallons of gasoline per year. If gasoline is just $2.50 per gallon, consumers would save $50 billion at the pump in 2018. By 2018, we would be cutting global warming pollution by 220 million metric tons of carbon dioxide equivalent gases.

And yet, auto executives are right when they say that transitioning to more fuel-efficient automobiles would be costly at a time of sagging profits and stiff competition, and that's precisely why the federal government shouldn't let the industry face these challenges on their own.

The Fuel Economy Act provides tax incentives to retool parts and assembly plants. But we should do more than that. We need to help the Big Three automakers with one of their largest expenses, namely, retiree health care costs, which ran almost $6.7 billion just last year. For GM, these health care costs represent $1,500 of the price of every GM car that's made, which is more than what they pay for the steel.

To that end, I also have filed an amendment to this bill based on the Health Care for Hybrids Act that I introduced last year. That proposal would set up a voluntary program in which automakers could choose to receive federal financial assistance towards their retiree healthcare costs. In return, the automakers would be required to reinvest these savings into developing fuel-efficient vehicles.

With the American consumer demanding more hybrid vehicles - and that demand currently being filled by foreign automakers - this proposal could jumpstart the Big Three to commercialize new technology. More American hybrid cars also ensure that there is competition in this growing market, and would help keep car prices affordable.

If we had adopted these two proposals decades ago, when the call for energy independence was first issued in this country, today we wouldn't be nearly as beholden to the whims of oil-rich dictators and surging gas prices. And if we don't take these steps now, we will someday look back on today's $3 per gallon gasoline as the good old days. At that point, no amount of drilling on the Outer Continental Shelf will solve our problems.

We could have taken these common-sense steps now to reduce the demand for oil. We have the need, we have the technology, we have the resources - but with this bill, we refused to find the political will to get it done. We still owe it to the American public to find that will.

Unfortunately, this bill sends the wrong message. Instead of making tough political decisions about how to reduce our insatiable demand for oil, this bill continues to lull the American people into thinking that we can drill our way out of our energy problems. We can't, and for that reason, I plan to vote against this bill.