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In Reply to: RE: An oil price/drilling thread posted by Awe-d-o-file on June 25, 2008 at 09:12:05
"Newsletter Update from U.S. Senator Jeff Bingaman - June 24, 2008"
"Addressing Rising Fuel Costs
Like many Americans, I am concerned about the rising price of gasoline. In my position as the chairman of the Senate Energy and Natural Resources Committee, I have been working to get a clear picture what actually is going on in oil and gasoline markets, and to find ways to reduce our nation’s reliance on imported oil.
There are many reasons why oil and gasoline prices are at all-time highs. Some of these factors have been building for a long time; others are more recent developments.
Among the more recent factors in pushing up oil and gasoline process is the weakness of our economy and the U.S. dollar. Our national economic policies have been out of touch with reality for most of the last eight years – focused on delivering large tax cuts to a few Americans, paid for with money borrowed overseas. The resulting poor economic growth and spiraling national debt have made the dollar less attractive, compared to other world currencies. As a result, we pay for oil and other world commodities with a weaker currency, which makes our pain at the pump worse.
Another new factor is the oil futures market. Many energy experts have commented on the increase in speculation that has pushed up oil and gas prices around the world. While estimates of this effect vary, it is clear that many aspects of the energy markets are poorly understood.
Finally, there are the traditional fundamental forces of supply and demand. Global energy demand is growing strongly, particularly in economies in countries that heavily subsidize the price of energy to their consumers.
Effective action to address high gasoline prices has to occur on many fronts. I have been working on a variety of steps, both long-term and short-term, that target the root causes of high energy prices.
Last December, Congress took a major step toward reducing our nation’s long-term oil consumption by requiring that vehicles become nearly 50 percent more efficient, putting overall vehicle fuel economy at 35 miles per gallon by 2020. Some experts estimate that this move will reduce our daily consumption by over 1 million barrels per day.
That same law also helped our long-term energy supply by moving us towards replacing billions of gallons of gasoline annually with homegrown biofuels, including second-generation biofuels made from switchgrass and algae.
More recently, Congress enacted legislation to end the White House’s misguided policy to remove oil from the market to fill the Strategic Petroleum Reserve, which is already 97 percent filled. By ending this diversion of oil from the open market this move adds 70,000 barrels of light, sweet crude to the market daily – a modest, but useful step in the right direction.
Because market speculation is an important contributor to the recent spike in the price of oil, I pressed the Commodity Futures Trading Commission -- which regulates the oil futures market -- to exercise its regulatory authority to ensure that markets are functioning properly. In response to my concerns, the Commission has initiated a new investigation into whether markets are being manipulated. I am strongly pushing for legislation that would give the Commission the authority to step up its role, and help make oil trading more transparent.
Over the longer term, we’ll need to keep encouraging domestic production of oil and gas. Part of that will involve increasing production in areas that are most likely to yield new supplies soon. I have consistently supported increasing onshore production through disseminating advanced technology to domestic oil and gas producers, many of whom are independent producers, and through making sure Federal agencies have the resources necessary to expedite the approval of responsible new production.
We also need to find out why companies have yet to begin producing on the millions of areas already leased – both onshore and off – that are ready for production, but remain idle. Thirty-one million of the 45.5 million acres of public lands that have been leased out are not currently being produced. Likewise, there are 33 million acres in the Outer Continental Shelf that are under lease yet no drilling has begun.
There is no doubt that the high price of gasoline is creating a substantial economic burden on American families. That is why I will continue pressing for long-term and short-term solutions that will allow our country to reduce our dependence on fossil fuels, including promoting alternative, homegrown fuels that will help achieve energy security and economic prosperity."
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