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AS PRESIDENT BUSH PREPARES TO MEET WITH SAUDI KING ON FRIDAY.
IN FLOOR SPEECH, SCHUMER PUSHES TO BLOCK $1.4B IN ARMS DEAL UNTIL SAUDIS INCREASE OIL SUPPLY BY 1 MILLION BARRELS PER DAY
Resolution Blocking Deal Will Be Placed On Senate Calendar Today-Could Receive Vote As Early As Next Week
Production Increase Would Save U.S. Consumers Over 50 Cents Per Gallon
WASHINGTON, D.C. -U.S. Sen. Charles E. Schumer (D-NY) urged action on a joint Congressional resolution that would block pending arms deals with Saudi Arabia until that country increases its oil production by one million barrels per day, a rise that Schumer said would save American consumers at least 50 cents per gallon of gasoline.
In a speech on the Senate floor today, Schumer said Saudi Arabia is producing oil at two million barrels per day below its capacity. As President George W. Bush departs for a Mideast trip that includes a meeting with the Saudi king on Friday, Schumer said the administration ought to use all possible leverage to press the Saudi government to deliver more oil to the market.
"The administration needs to use all the leverage it has to influence the OPEC cartel to stop manipulating the world's oil supply to its member nations' own wealth advantage. It's time we stop treating a cartel that would be illegal in the U.S. with kid gloves," Schumer said.
"Our resolution sends a strong signal to our Administration and to Saudi Arabia that friendship with the United States is a two-way street. If the Saudis want to see their weapons, we need to see an increase in crude oil production within the next 30 days," he added.
The Bush administration has approved four arms deals that would provide Saudi Arabia some $1.37 billion worth of weapons systems in the coming months and years. The resolution introduced today would block all four deals, the oldest of which dates back to October 2007, unless and until Saudi Arabia increases oil production by one million barrels per day above its January 2008 output level. Because the weapons have not yet been delivered, Congress can act to block the transaction if the resolution disapproving the deals passes both chambers. The resolution would require the President's signature, or, in the event of a veto, a veto override by Congress.
The text of Schumer's floor speech, as prepared for delivery, appears below.
U.S. Senator Charles E. Schumer
Floor Speech on Reducing U.S. Energy Costs
May 13, 2008
Mr. President, I rise today to discuss rising energy prices and to remind President Bush, as he leaves for his trip to the Middle East that his ally, Saudi Arabia, holds the key to reducing gas prices here at home.
I, along with my good colleagues Senator Dorgan, Senator Casey, Senator Klobuchar and Senator Casey plan to submit a Senate Resolution that would block all four pending arms deals to Saudi Arabia, which together total almost $1.4BN, unless Saudi Arabia increases its oil production by 1 million barrels per day above its January 2008 output level.
Because these weapons have not yet been delivered to Saudi Arabia, Congress still has the power to block these four deals as leverage to get the world's largest oil producer to bring its production back up to historical levels - an action that would have the single greatest impact on lowering gas prices in the short term.
It's a short-term fix, but we have no other choice, as my colleagues across the aisle and this Administration continue to side with Big Oil at the expense of American families.
It is unfortunate that we are at this point. Eight years of poor stewardship over our nation's energy policy has left us with few alternatives. And my Republican colleagues have blocked every attempt at real energy reform that would help alleviate the rising energy prices in this country. In the 110th Congress alone, the my colleagues on the other side of the aisle have blocked four different attempts by the Democrats to extend the alternative tax provisions - and not just for a year or two, but many years. On June 21 of last year, the extension of the energy credits received 57 votes; on December 7, it received 53 votes; on December 13, it received 59 votes; and on February 6 of this year, it received 58 votes.
Each time, Republicans put up roadblocks requiring 60 votes in order to pass the bill. Each time, the overwhelming majority of Democrats voted for the bill; the overwhelming majority of Republicans voted against. President Bush opposed the bills because each would have ended tax breaks for Big Oil.
Meanwhile, Americans continue to spend more and more on gasoline, as prices at the pump have skyrocketed upward to record heights. Although our President was not aware that gasoline prices are predicted to top $4 a gallon this summer, American households, already faced with rising fiscal burdens incurred as a result of the subprime foreclosure crisis and the financial credit crunch, are being squeezed further by record high prices at the pump.
In a sign that high prices will continue unabated, the Department of Energy recently forecasted that regular gasoline prices would average $3.66 per gallon across the United States this summer, 25 percent higher than last summer's average price. However, just last week the US average price for regular gasoline was up to $3.72/gallon! And we haven't even hit the summer driving season yet. So, I along with several of my colleagues, think that its time to get the attention of our President and the leaders of Saudi Arabia.
The resolution that we have introduced today, which Senator Reid will Rule 14 to move onto the Senate calendar later this afternoon, requires Saudi Arabia to increase their oil production by 1 million barrels a day or jeopardize their $1.4 billion of pending arms deals with the United States.
And one of these deals includes the sale of Joint Direct Attack Munitions, called "J-DAMS," which makes conventional bombs into so-called "smart bombs" that can be aimed through the window of a house. The Administration has warned us that Saudi Arabia needs to use these weapons in their fight against terrorism. But how are they going to use laser-guided bombs to fight terrorist in their midst?
Saudi Arabia very much wants these smart bombs. So our resolution sends a strong signal to our Administration and to Saudi Arabia that friendship with the United States is a two-way street. If the Saudis want to see their weapons, we need to see an increase in crude oil production within the next 30 days.
As we all know, the principal cause underlying the rise in gasoline prices has been the spike in crude oil prices, now selling for over $120 per barrel, almost a 100 percent increase over the crude price at this point last year and the highest price ever in inflation-adjusted terms.
Because American gasoline refiners purchase crude oil on the world market, the price they pay and ultimately pass on to consumers is highly sensitive to the level of crude oil production.
And a significant portion of this price rise is due to the supply decisions made by OPEC, the group of oil-rich nations that have controlled the world crude oil markets since 1973, effectively determining the price of petroleum.
The largest member of OPEC, Saudi Arabia, controls one-fifth of the world's crude reserves and constitutes more than 10 percent of world daily production of crude oil, making it one of the most critical suppliers influencing this market.
In the past, Saudi Arabia has kept crude prices high, by limiting supply, producing anywhere from 1 to 5 million barrels per day below capacity. Currently, they are producing nearly 2 million barrels per day below capacity.
Why right now, when crude oil prices are at their historic high" Does that make any sense" Well, it does if you are a member of OPEC. With crude oil at its highest price ever, Saudi Arabia and the other members of OPEC are making record profit. And Saudi Arabia is not alone - last month the Big Oil companies announced some of the best profits in recorded history. Exxon made almost $11 billion in profit in the last quarter.
So we know that OPEC has no incentive to increase their production right now - since that would decrease their profits. In fact, if Saudi Arabia were to increase its production by 1 million barrels per day that translates to a reduction of 20 percent to 25 percent in the world price of crude oil, and crude oil prices could fall by more than $25 dollar per barrel from its current level of $126 per barrel.
In turn, that would lower the price of gasoline between 13 percent and 17 percent, or by more than 62 cents off the expected summer regular-grade price - offering much needed relief to struggling families. Yet Saudi Arabia's oil minister said there was no need to increase supplies by even one barrel of oil. But even as they are saying "no, no, no" to U.S. consumers, they are saying "yes, yes, yes" to China - they are planning to DOUBLE oil production for China.
Mr. President, The Saudis have to understand this is a two-way street. We provide them weapons, our troops provide them protection, and then they rake us over the coals when it comes to the price of oil.
Just as Saudi Arabia feels a need to protect itself with high-tech, laser-guided, American consumers and our economy also need protection from record-high oil prices exacerbated by OPEC's stranglehold on supply.
The administration needs to use all the leverage it has to influence the OPEC cartel to stop manipulating the world's oil supply to its member nations' own wealth advantage. It's time we stop treating a cartel that would be illegal in the U.S. with kid gloves.
And that's what our resolution does - it reminds the Saudis that there are consequences for keeping oil prices high at a time when American families are hurting. And it reminds Saudi Arabia that it can't take American support for granted. They can choose record oil profits or American weapons but they can't have both.
This resolution is not the final answer to the problem of rising gas prices. That is why I'm proud to cosponsor S. 2991, the Consumer-First Energy Act of 2008 that Democrats will offer on the floor before Memorial Day.
This bill will address the underlying causes that are driving up energy prices and force Big Oil to reinvest some of their record-breaking profits into creating alternative and renewable sources of energy that are both good for the environment, the consumer, and break our dependence on foreign oil.
Our bill will also attack speculation, punish price gouging, and put additional pressure on the OPEC cartel. I urge my Republican colleagues to support these efforts and enact effective reforms that will bring down gas prices.
I am very hopeful that we can move to a vote on that bill as soon as possible, so that American consumers no longer have to carry the heavy burden of high energy prices.
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