Senator Dick Durbin's Solution to the Oil Crisis

A message from Senator Dick Durbin's Washington DC office regarding Offshore Drilling...

Dear Mr. Moehlenhof:

Thank you for contacting me about increasing domestic energy production. I appreciate hearing from you.

Record high fuel prices have sparked increased interest in opening additional areas in the outer continental shelf (OCS) and the Arctic National Wildlife Refuge (ANWR) to oil and gas leasing. I share your interest in addressing our nation's energy needs and support safe and environmentally responsible oil production. But I also recognize that an energy policy based primarily on drilling will not meet the needs of American consumers.

Large areas of our onshore and offshore oil and gas reserves already have been made available for leasing and development, yet prices remain at unprecedented levels. The Minerals Management Service estimates that 79 percent of recoverable offshore oil and 82 percent of offshore natural gas is already open to drilling. Onshore, the numbers tell a similar story. Roughly 72 percent of oil and 84 percent of natural gas resources are leased or open for exploration pending the completion of land-use planning or environmental reviews. The oil companies continue to demand the right to drill on federal lands and on our coastline, but they are failing to produce on lands currently under lease.

According to the Energy Department's Energy Information Administration providing increased OCS access in the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic oil and gas prices before 2030. An analysis released by the Energy Department in May 2008 projected that at peak production oil from ANWR could reduce the price per barrel of oil by $0.40 to $1.44 on the global market, an amount equal to one percent or less of the price of crude oil. This would amount to a savings of just a few pennies per gallon for consumers. We cannot drill our way out of our energy troubles

It would be at least 20 years after opening ANWR before oil production reaches its peak of 750,000 barrels per day. In comparison, the fuel economy standards passed by Congress in last year's energy bill are expected to save between 2 million and 2.5 million barrels of oil per day by 2025.

Others in the oil industry blame short supplies on federal refinery laws. However, the industry itself reduced its refinery operations and capacity over the past decade, closing many competitive, independent refineries. Meanwhile, domestic utilization of operable refinery capacity is lower than it has been in years, averaging just over 85 percent during the first four months of 2008.

I am deeply concerned about the effects of high fuel prices on Illinois residents. Increases in energy costs affect consumers in countless ways. High prices at the pump drive up food prices and further deplete the savings of consumers who in many cases are struggling just to pay for the necessities of life.

Several factors continue to put significant pressure on gasoline prices. Since the price of oil is quoted in dollars, a weak U.S. dollar has triggered a rise in world crude oil prices. Increased world demand for crude oil and lasting concerns about the threat of supply disruptions have contributed to an increasingly volatile market.

Many experts have suggested that today's high fuel prices cannot be fully explained by the market interplay between supply and demand. Excessive speculation and manipulation in energy commodity markets may be a significant factor in higher prices, and the Commodity Futures Trading Commission (CFTC) does not have the resources or the authority to fully address this risk.

For this reason, I introduced the Increasing Transparency and Accountability in Oil Prices Act of 2008 (S. 3130). My legislation would promote greater transparency in the trading of energy commodities and provide the CFTC with increased resources so that it can better monitor energy markets and prevent traders from engaging in price manipulation and excessive speculation.

I will keep your thoughts in mind as I continue to work for legislation to set our country on a path toward a more stable energy supply and a more secure energy future.

Thank you again for writing. Please feel free to keep in touch.


Sincerely,
Richard J. Durbin
United States Senator
RJD/hw

McCain's Plant to Suspend Gas Tax & Drill Offshore

McCain announced this week his plan to drill for Oil in Alaska and offshore in order to give relief for folks at the gas tank.

McCain also suggested a National Gas Holiday, that would help ease the pain at the gas pump for most Americans. Obama has come out against the proposal citing that relieving the gas tax would give into big oil companies and would cut into revenues for the government.

Let me ask one thing of Obama, who is he looking out for, families or the government. Obama of course would argue that he's looking out for families because its Big Oil faults for rising gas prices. I think he may want to analyze that position again.

You see....its government's fault for the rising oil prices. Let me spell the reason out for you.

I-N-F-L-A-T-I-O-N....yes folks. Our dollar is as weak as ever. A week dollar means something will probably be more expensive. In economic terms...which for many political junkies may be hard to understand, the nominal price (or price in terms of real dollars) has been steady for a number of years. However, just a small shift in the nominal price of oil will raise the price tremendously during times of inflation...which we are experiencing right now.

Even better yet... Wall Street analysts are blaming it on oil futures. Yeah a big word isn't it.

Oil is bartered and sold at auction everyday on commodity markets. Oil futures are commodity future that batter for oil. Barrels of oil are then bought by oil refineries such as Exxon Mobil, Shell, BP, Texeco, ect, and they process these barrels of oil into gasoline. (In Illinois, we use environmental additives mandated by law, which makes the oil burn cleaner and its better for mother nature)

Question is why isn't Obama not lifting the Federal gas tax. As an libertarian economic conservative, less taxes mean lower prices and less pressure for Americans to meet ends meet. Families are squeezed to the limit already, and they simply cannot afford the essentials to meet their ends.

Taxes hurts Americans. When you tax oil, you tax the families directly whenever they fill their gas tank, the products that they buy, and generally inflation rises again. These sorts of taxes really are double, triple taxation on families and Americans because when taxes are imposed on businesses and operations, they buck must fall on the consumer.

Drilling offshore means we don't need to deal with OPEC. They have been a headache already, and I am a believer of less bureaucracy. Lets cut to the chase and start drilling.