Speeches & Floor Statements

Floor Remarks of U.S. Senator Lamar Alexander (R-Tenn.) on “Gas Price Stories and the New Supply and Demand”

Posted on June 18, 2008

I have invited Tennesseans to send me e-mails or to write letters about how high gas prices are affecting their daily lives. I am hearing from a lot of them. Pat Taylor of Morristown, TN, who is the director of the local Meals on Wheels program, tells me the drivers travel 1,100 miles a day to deliver meals, but food and gasoline prices could force many meal recipients into retirement homes if something is not done. Mileage reimbursements are not sufficiently covering the expenditures of drivers. Dr. Kathryn Stewart, of Winchester, TN, tells me that the school nutrition director has had to raise school lunch prices 50 cents per meal to compensate for the rise in gas and food prices, but they will still lose money this year. She worries about the future of her business there. Abbie Byrom, of Johnson City, TN -- that is in the eastern part of our State -- is a third-year medical student at East Tennessee State University. She lives on loans through the school system. But, she says, cost-of-living loans do not cover expenses on traveling to all the area hospitals and medical centers. She says most of her fellow students are living by maxing out their credit cards. Jerry and Judy Wilson, of Monterey, TN, run a weekend concessions business, but sales have been cut in half because of rising gas prices. They say: “People can't come to the events because of fuel prices.” Joshua Yarbrough, of Franklin, TN, moved his family with three children to a larger house in Franklin, outside Nashville, 4 years ago, and is now having trouble paying his mortgage because of rising gas prices. So, given the extraordinary impact of $4 a gallon gasoline on the people of Tennessee and the people of this country, they are looking to us in the Senate and the Congress to do something about this. I noticed there are some interesting new professors of economics on the Democratic side of the aisle who seem to be trying to repeal the law of supply and demand. I have been studying this strange development, and I am trying to trace the source of it. It would appear that maybe the source of it is the young new chairman of the department of economics on that side of the aisle, because the New York Times reports this morning that Senator Obama opposes drilling in Alaska, and says he is "not a proponent," in his words, of nuclear power, which provides 20 percent of our electricity today and 70 percent of our clean carbon-free electricity. He would consider banning new coal plants without clean coal technology. Coal produces 45 percent of our electricity today. In 2006, he voted against further exploration in the Gulf of Mexico for oil and gas, in a portion of the Gulf known as Lease 181. More than 70 Senators from both sides of the aisle voted for it, which, so far as I can tell, leaves Senator Obama with not much more than a national windmill policy, as opposed to a national energy policy, for this great United States of America, which consumes every year 25 percent of the energy in the world. Of course, it leaves these new professors of economics with the demand part of the supply-and-demand equation. Now, we Republicans also believe in demand. We are for green buildings. We believe most of the new buildings ought to be green buildings. That is probably the easiest way to save electricity. Japan has discovered over the last several years that most of its failure to reach the Kyoto standards it was trying to achieve came from the inefficiency of buildings. Half of us on the Republican side voted for the fuel efficiency standards in December. That has to do with the demand side of the equation -- using less oil, less energy. The Oak Ridge National Laboratory scientists told me that the single most important thing we could do as a Congress would be to increase the fuel efficiency standards by 40 percent. That means the cars and trucks in America should average 35 miles per gallon by the year 2020. We voted to do that in a bipartisan way here. So we agree on that part of demand as well. Then we Republicans, as well as many Democrats, I am sure, are ready to give strong support to the idea of plug-in electric cars and trucks. I was in Nashville on Monday with Congressman Bud Cramer, who is a Democratic Congressman from Alabama. He and I co-chair the TVA Congressional Caucus. The question we presented for the hearing was, Will electric plug-in cars and trucks help lower $4 gas prices? I believe the answer is yes, and so did a lot of the people who came to see the cars. One of the vehicles there was a plug-in electric car made by the A123 company in Boston. It is a Toyota Prius, of which there are now a million on the road, and the A123 company had converted the Prius, which is a 40-miles-per-gallon car, into an electric plug-in vehicle, and it is now a 100-miles-per-gallon car. All they did was replace the car’s smaller rechargeable battery with a larger rechargeable battery, and they put a cord on the back of it and the driver plugs the cord in at night at his house in a wall socket and he charges it up for 60 cents. So instead of filling it up for $70, he is charging it up for 60 cents. According to the General Motors Company witness who testified at our hearing on Monday, 75 percent of us drive fewer than 40 miles a day. I know I drive less than 40 miles a day going back and forth when I’m in Washington, so if I were driving that electric plug-in car, I would be using no gasoline whatsoever. So plug-in cars and trucks are a real prospect and a real important part of the demand part of the supply-and-demand law we strongly support on this side of the aisle, and so do many Democrats as well. It is 100 percent American energy. GM, Toyota, Nissan, Ford -- all are going to be selling these cars to Americans in the year 2010, which is a model year that is about a year and a half away. Sixty cents is the cost of the charge for a 30-mile drive. It is about the same amount of electricity it takes to use your water heater for 1 day. It doesn't require new powerplants because the Tennessee Valley Authority chairman who was at the hearing told us that they have plenty of extra electricity at night when our lights are off, so we can plug in at night. This involves trucks too. There were FedEx delivery truck witnesses at the hearing. They are already using hybrid delivery trucks, and they are planning to use that technology for big trucks. If we were to electrify half our cars and trucks in America over time –- which is 120 million, since we have about 240 million cars and trucks in this country –- we could cut in half the amount of oil we import. That would cut from $500 billion to $250 billion the amount of money we are sending overseas to people, many of whom are funding terrorists who are trying to kill us. It would strengthen the dollar. It would certainly lower fuel costs for those who are plugging in their cars instead of driving them -- or plugging them in instead of filling them with gasoline -- and it would reduce the demand for oil so much that it would surely reduce the price of gasoline as well. Plug-in electric cars and trucks would lead us to support a number of other initiatives: Smart meters so that in our homes we could pay TVA -- or whoever our electric utility is -- a little more in the afternoon for electricity used at peak power, but at night we would have cheap power for our plug-in vehicles. Battery research. The additional cost of such a plug-in vehicle is determined primarily by how rapidly we can develop batteries that will take a charge to allow 40, 60, 80, 100, or even more miles each time because we will be running coal plants at night to provide this electricity. We would need to clean up our coal plants, but we should be doing that anyway, whether they are in Pennsylvania or Tennessee or Ohio. We need to get rid of the sulfur and the nitrogen and the mercury, and we need a crash program to find a practical way to recapture the carbon from coal plants if we are serious about dealing with climate change. So there are a number of policy changes we on the Republican side of the aisle are ready to make to lower gas prices and to honor the law of supply and demand. But the problem is the new professors of economics on that side of the aisle, led by Senator Obama, are trying to take the word "supply" out of the law of supply and demand. If we are going to drive plug-in electric cars and trucks, we are going to need a supply of electricity, so we need to be building five or six nuclear powerplants a year. But the professors on that side say they are not proponents of that; they don’t think it’s part of the solution. Well, it has to be a part of the solution in a country that uses 25 percent of all of the electricity in the world. It would be embarrassing to say that France is ahead of us in this, but they are. Eighty percent of the electricity in France is from nuclear powerplants. It is clean -- no mercury, no sulfur, no nitrogen, no carbon. They meet the climate change standards today, and if they shift in France to driving electric cars and trucks, they will have no problem. They can plug them in at night to recharge them. They will have no pollution problems. They will reduce their dependence on oil. They will save money in their pockets. They won't be exporting money to Middle Eastern countries or to others that may be funding terrorists. They will be ahead of us if we don't advance the technology we invented and begin to build five or six new nuclear plants a year for the foreseeable future. We also need to take the ill-advised moratorium off oil shale. We have plenty of oil shale in the ground and new environmentally sound ways to get it out of the ground. That is a part of supply as well. Most of that is in our Western States. We also need to give other States the opportunity to do what Texas, Louisiana, Alabama, and Mississippi already do, which is to explore 50 miles offshore for oil and gas. We have plenty of that. We could be producing an extra million barrels a day of oil and gas from offshore exploration, and by adding to the supply we’d be reducing the price of gasoline and bringing it down below $4. We need to change the law and do that. Senator McCain says we need to do it. What would it involve to give states that option? Virginia's Legislature, for example, has said they would like to explore off the coast of Virginia, at least for natural gas. So we need to lift the Federal moratorium and the Presidential Executive order that keeps them from doing that offshore. If I were the Governor of Virginia, I would certainly want to do it. I would put the rigs 50 miles out where no one could see them. We know we can do it in an environmentally clean way. We heard a lot of bad things as a result of Hurricane Katrina, but we didn't hear of one oil spill from any of the oil and gas rigs that are all in the Gulf of Mexico. So we know how to drill cleanly. The oil spills we have are from cargo freighters that are bringing oil from overseas to us. That is where the problem is. If we were exploring offshore for our own oil and gas, we would not only be lowering our gas prices, but we’d be providing states and the federal government with additional revenue as well. Under the formula we passed in 2006 for Lease 181 in the Gulf of Mexico, Virginia would get 37.5 percent of the dollars. Now, what would that do for Virginia? Well, they already have a good higher education system, but I think if I were the Governor, I would say: Let's put a lot of that in a trust fund for higher education and make the Virginia colleges and universities the best in the world without raising taxes. Let's put some of it to nourish the beaches of Virginia. Let's maybe use some of it for roads or for health care or for lowering taxes. They could do all of that with their three-eighths of those revenues. We also said that one-eighth of the money from that offshore exploration in Lease 181 would go to the State side of the Land and Water Conservation Fund for city parks and greenways and open spaces in Pennsylvania and Tennessee and all across this country, which we have been trying to do for 40 years. The whole idea of the Land and Water Conservation Fund enacted in the 1960s was to say: We will fund it up to $900 million a year from money from offshore oil and gas exploration; we recognize that exploration is an environmental burden, so we will turn part of it into an environmental benefit. We have never fully funded the Land and Water Conservation Fund, and this is a way to do that. There are other ideas -- Senator Salazar, Senator Kyl, and I join in this as well -- to take some of the excessive money from offshore drilling and fully fund the National Park Centennial Initiative that President Bush has proposed to celebrate the 100th anniversary of our National Park System. I know of the excitement around the Great Smoky Mountains National Park as we have added 55 new park personnel to that park and a lot of new private funding for park projects simply because of this Centennial Initiative the President has proposed. We need to fund it, and this would be a way to fund it. So we need a supply of electricity if we are going to drive electric cars. We need oil shale if we are going to continue to produce oil, from which gasoline is made. We need offshore exploration -- another way to increase the supply of oil. I believe, as do many others on our side of the aisle, that we should also be exploring in Alaska. Jay Leno said the other night that the Democrats objected to that because they said it wouldn’t produce any oil for 10 years. Well, as Jay Leno said, that is what the Democrats said 10 years ago. Presidents and Senators are supposed to look ahead, to look down the road. If we can add a million barrels of oil a day from Alaska; if we can add a million barrels of oil a day from offshore exploration; if we can add 2 million barrels of oil a day from oil shale, which we can do; if we can build five or six nuclear plants a year and help us create carbon-free, clean energy so we can electrify our cars and trucks and reduce our demand for oil, then we will have lower gas prices because we will be honoring the immutable law of supply and demand which says find more and use less. The difference between us is that on this side of the aisle we believe in the law of supply and demand: find more and use less. On that side of the aisle, they seem to believe in a different economics, which is use less. They want to repeal supply and only insist on demand. So there is a fundamental difference. I am glad Senator McCain must have gone to a different college of economics than the one I think I sense on the other side of the aisle. He has suggested that we do both, that we increase our supply and we reduce our demand by finding more oil and using less oil. He has specifically supported offshore drilling if States want to do that. He has specifically said we should lift the moratorium on oil shale and proceed in an environmentally responsible way to explore for that. He has said as well that we need to move ahead with five or six nuclear powerplants a year, and he has been a strong advocate for green buildings, for fuel efficiency, and for plug-in electric vehicles. At the same time, he has said he believes we need to take steps to deal with climate change, emphasizing the importance of nuclear power because that provides 20 percent of all of our electricity but 70 percent of our carbon-free power. So I look forward to the debate over the next few months. It is beginning to come into shape. Two different views of economics: an attractive young head of the department from that side of the aisle who wants to change the law of supply and demand to only include demand, which apparently would leave us with a national windmill policy; or a more grizzled Senator who apparently went to a different college of economics who believes in the old-fashioned law of supply and demand and would like to focus on both. This will be a debate worthy of the Senate. It will be important to all of those Tennesseans who are writing me wanting that $4 per gallon price to go down. My recommendation to them is to vote for Senators and vote for Presidents who will both increase our supply and reduce our demand –- who will find more, use less, and not try to invent a new theory of economics which will leave us with our lights off and our gas prices high. Thank you, Mr. President. I yield the floor.