SENATOR COLLINS ANNOUNCES TEN-POINT PLAN TO ADDRESS ENERGY CRISIS

April 22, 2008

In a speech on the Senate floor today, Earth Day, U.S. Senator Susan Collins outlined her ten-point plan to address the current energy crisis.  Following is the full text of her speech.

Mr. President, our nation faces record high energy prices affecting almost every aspect of daily life. The prices of gasoline, home heating oil, and diesel are creating tremendous hardships for American families, truckers, and small businesses. High energy prices are a major cause of the economic downturn.

It is clear that we need a dramatic change in our energy policy to protect ourselves from rapid increases in oil prices without sacrificing our environment for future generations. We must rally around a national effort to achieve energy independence for our economic, environmental and national security.

I am proposing a 10-point plan to get us started on this important effort. It is a plan that includes both actions we can take in the short term to mitigate high prices as well as actions to achieve energy independence in the long term.

Many causes appear to have contributed to the sharp rise in oil prices: the timing of government purchases for the Strategic Petroleum Reserve, speculative trading on futures markets, increased global demand for crude oil, instability in the Middle East and Venezuela, supply decisions of the OPEC cartel, insufficient U.S. refining capacity, and the declining value of the dollar. We will always use oil for part of our energy needs, but we need to decrease our reliance on foreign oil and be smarter about managing our supplies.

1. TERMINATE PURCHASES FOR THE STRATEGIC PETROLEUM RESERVE

The Administration’s decision to fill the Strategic Petroleum Reserve (SPR) when oil prices are so high defies common sense. The SPR is an emergency stockpile of oil that already contains 700 million barrels. In 2005, the Senator Levin and I joined forces on a bipartisan amendment directing the Department of Energy to better manage the Strategic Petroleum Reserve by requiring the Department to avoid purchases when prices are high so as not to drive up prices further by taking oil off the market. I don’t believe the Department of Energy is abiding by this law.

I have called on the President to stop filling the SPR until prices drop. It simply does not make sense for the Department of Energy to be purchasing oil for the Reserve at a time when oil prices exceed 100 dollars per barrel. The federal government is taking oil off the market and thus driving up prices at a time when consumers are struggling to pay their fuel bills.

The Energy Information Administration has estimated that the impact on gas prices is between four and five cents a gallon. Other experts believe it is considerably higher. At a hearing before the Permanent Subcommittee on Investigations, one energy expert, Philip Verleger, said “DOE’s actions added between five and 20 percent to the price of oil.” It is a bad deal for taxpayers for the Department of Energy to be purchasing oil when prices are so high.

2. EXTEND FEDERAL REGULATION TO OIL FUTURES

Excessive speculation on futures markets may well be another factor pushing up oil prices. Unfortunately, there is a lack of publicly available data to track the effect of speculation on prices, and manipulation can go undetected on certain electronic markets that are unregulated. Experts testifying before our Investigations Subcommittee all agreed that greater transparency and better reporting of trades could help prevent abuses such as occurred in the natural gas markets in 2006. One witness, Fadel Gheit from Oppenheimer and Company, said he believes “the current high oil prices are inflated by as much as 100 percent... driven by excessive speculation.” That is why I support expanding the authority of the federal government to provide greater regulation and transparency to guard against price manipulation.

The Commodity Futures Trading Commission regulates trading in many commodities such as agricultural products. It should oversee electronic energy futures markets as well. This would not prevent futures markets from performing their important risk-hedging functions, but it could help regulators spot, and act upon, evidence of deliberate attempts to distort prices.

3. CURTAIL TAX BREAKS FOR MAJOR OIL INDUSTRY COMPANIES AND DIRECT FUNDS TO CONSUMERS AND ALTERNATIVE ENERGY

With net profits of a single oil company reaching almost 10 billion dollars in a single quarter, we should not expect taxpayers struggling to pay their bills to continue to subsidize the oil and gas industry. Congress should repeal unnecessary tax breaks for big oil companies and use the billions of dollars instead to fund the remaining proposals in my 10-Point Energy Plan.

During consideration of this year’s Budget Resolution, I offered an amendment with my colleague from Michigan, Senator Levin, which provided for the rescission of needless tax breaks for major oil companies. Our proposal would redirect that revenue to support renewable energy and energy efficiency initiatives. Our amendment was accepted as part of the Senate-passed Budget Resolution. We need to continue that momentum and quickly take up legislation to enact this proposal.

4. FULLY FUND AND RESTRUCTURE LIHEAP

One program with an immediate impact is the Low-Income Home Energy Assistance Program, or LIHEAP. LIHEAP is a federal grant program that provides vital funding to help low-income and elderly citizens meet their home energy needs. Nationwide, over the last four years, the number of households receiving LIHEAP assistance increased by 26 percent from 4.6 million to about 5.8 million, but during this same period, federal funding increased by only 10 percent. The result is that the average grant actually declined from $349 to $305. Since crude oil prices have soared from around 60 dollars per barrel in August 2007 to over 100 dollars per barrel today, a grant buys less fuel today than it would have just months ago.

This large, rapid increase, combined with less LIHEAP funding available per family, imposes hardship on people who use home heating oil to heat their homes. While it is spring here in Washington, in Maine temperatures are still in the thirties at night. Low-income families and senior citizens living on limited incomes in Maine and many other states faced a crisis in staying warm this winter. We must fully fund LIHEAP at $5.1 billion.

For the long term, we also should explore changes to LIHEAP the make it more flexible to allow states to take a regional approach to low-income energy issues, or to better balance direct energy bill assistance with grants for longer-lasting energy efficiency improvements, such as winterizing the homes of low-income families.

5. IMPROVE ENERGY EFFICIENCY

Now, let me discuss six steps toward the goal of energy independence. The first long-term tactic in my 10-Point Energy Plan is to make more efficient use of the energy we use to heat and power our homes and offices.

I have introduced legislation, S. 1554, which would double funding for the Department of Energy Weatherization Program, reaching 1.4 billion dollars by 2010. On average, weatherizing a home reduces heating bills by 31 percent and overall energy bills by 358 dollars per year.

My bill also would provide predictable funding for the valuable Energy Star Program, which helps consumers buy energy efficient appliances, and would extend the renewable electricity tax credit through 2011 and the residential investment tax credit for solar and energy efficient buildings through 2012.

My energy legislation also includes an Energy Efficiency Performance Standard for utilities. This provision requires utilities to achieve energy efficiency improvements. According to the Alliance to Save Energy, an Energy Efficiency Performance Standard could save consumers 64 billion dollars in net savings, and avoid the need to build 400 power plants, preventing 320 million metric tons of carbon dioxide emissions. Making buildings, appliances and utilities more energy efficient can dramatically reduce our use of oil and save money for consumers at the same time.

6. IMPLEMENT A RENEWABLE ELECTRICITY STANDARD

Another component in my 10-Point Energy Plan would revamp the way we produce electricity in this country. We need a national renewable electricity standard that would require utilities to generate at least 15 percent of their electricity from environmentally sound renewable energy sources by the year 2020. This would boost the production of renewable energy, provide jobs in new industries, and save an estimated 13 to 18 billion dollars on electricity and natural gas bills by 2030. It would move us away from reliance on coal and natural gas for electricity, and diversify our energy supply to provide more price stability.

In enacting this standard, we also must ensure that the benefits of this renewable electricity reach rural areas by building adequate transmission capabilities. Twenty-eight states, including Maine, already have a renewable electricity standard. We should follow their lead and establish a national renewable electricity standard.

7. INVEST IN CELLULOSIC ETHANOL AND RENEWABLE FUELS

We must ensure that as we make these dramatic changes to our energy supply and infrastructure, we do not inadvertently cause more harm than good. That is why I have proposed to expand existing tax credits for ethanol to include cellulosic biomass, but at the same time ensure such fuels will have a smaller life cycle environmental footprint than traditional fuels. While there has been a great deal of focus on using corn-based ethanol in order to decrease our reliance upon foreign oil, there are other renewable, plant-based energy sources that are far more environmentally friendly and have greater potential to reduce greenhouse gas emissions. Cellulosic ethanol also avoids the market distortions that have resulted from corn-based ethanol. I am very concerned that the heavy subsidy for corn-based ethanol is driving up the cost of many foods.

Researchers at the University of Maine have been at the forefront of developing commercially-viable technologies to produce ethanol from cellulosic sources. The Forest Bioproducts Research Initiative at the University aims to augment the pulp and paper and building products industries with new revenue streams of profitable products like ethanol, as well as new sources of energy. Best of all, these bioproducts would leave a smaller, lighter ecological footprint.

In addition to cellulosic ethanol, my 10-Point Energy Plan calls for expansion of other sources of clean, renewable energy. During the height of the oil crisis in the 1970s, many Maine families turned to wood as an affordable way to heat their homes. With oil prices soaring today, wood is again the fuel of choice for an increasing number of consumers.

Unfortunately, many of the wood stoves purchased three decades ago are outdated and inefficient, wasting fuel and contributing to air pollution. The emissions from these old wood burning stoves present a serious health concern, contributing to such respiratory ailments as asthma and bronchitis.

New wood and wood pellet stoves, which have been certified as clean-burning by the U.S. Environmental Protection Agency can cut emissions by more than 70 percent and use as much as a third less firewood for the same amount of heat.

Making the change from an old, dirty, and inefficient wood stove to a modern, clean and safe stove is, however, an expensive undertaking, one that is especially difficult for many families today. I am pleased that the authors of the Foreclosure Prevention Act agreed to include a $300 tax credit for consumers to purchase these new clean-burning stoves.

Wood is a renewable resource, and its increased use for home heating is inevitable in these times of high oil prices. We have the technology to make its use better for the environment and for human health, as well as safer and more affordable.

8. PROMOTE TIDAL, GEOTHERMAL, SOLAR AND WIND ENERGY

Other clean, renewable energy sources include the tides in ours oceans and the moderate temperatures under our land. The U.S. wave and tidal energy resource potential that reasonably could be harnessed is about 10 percent of national energy demand. In my state, a consortium of the University of Maine, Maine Maritime Academy and industry is positioned to become a key testbed site for tidal energy devices.

Tidal energy technologies are still much more costly than traditional electricity production. Thus, we need to invest research and development funding, like the marine research program authorized by the 2007 energy bill. This research will improve the technologies and make them cost competitive with other sources of renewable energy.

Devices like geothermal heat pumps can reduce energy consumption for heating, cooling, and water heating over 40 percent compared to air-source heat pumps, and over 70 percent compared to fossil fuel heating systems. These systems take advantage of the constant moderate temperature just a few feet under the ground’s surface to heat and cool buildings and homes. To encourage broader use, the Congress should provide tax credits for businesses and homes to install geothermal heat pump systems.

In addition, we must continue to promote wind and solar energy. The tax incentives for renewable energy sources like wind and solar are set to expire at the end of this year. It is imperative that Congress pass an extension of these tax incentives to continue to spur investments in these technologies.

9. IMPROVE VEHICLE EFFICIENCY AND ALTERNATIVES TO GASOLINE

We must provide more efficient transportation options. Last year, Congress enacted and the President signed a long overdue increase in fuel economy standards for automobiles, SUVs and light trucks that will save one million barrels of oil a day. This is a good start, but we can do even more.

Gasoline used in transportation is 9.2 million barrels a day, almost half of our national consumption of 20 million barrels of oil each day. Currently, we import about 12 million barrels of oil a day. Reducing consumption of oil products for transportation purposes would go a long way toward reducing our reliance on foreign oil and decreasing overall energy prices for consumers. Flex fuel vehicles and plug-in hybrid vehicles can help meet this challenge. Flex fuel vehicles can accept any mix of ethanol or gasoline (up to 85 percent ethanol). We should extend existing tax credits for alternative fuel vehicles, and provide a tax credit for consumers who modify their existing vehicles to be flex-fuel capable.

Also, we should put more money into research on plug-in hybrid vehicles and expand tax credits for these vehicles. Plug-in hybrids hold great promise – if all new vehicles added to the U.S. fleet for the next 10 years were plug-in hybrids, an additional 80 billion gallons (almost 2 billion barrels) of gasoline could be saved each year.

As I have proposed in S. 1554, we should extend the tax credit for hybrid vehicles, which is scheduled to sunset at the end of 2010.

We must do more to help existing vehicles be as energy efficient as possible. My energy legislation would direct the Department of Transportation to create a National Tire Fuel Efficiency Program that would include tire testing and labeling, energy-efficient tire promotions through incentives and information, and the creation of minimum fuel economy standards for tires. These standards would establish the maximum technically feasible and cost-effective fuel savings without adversely affecting tire safety or average tire life.

Heavy-duty vehicles move our economy. My energy legislation would keep them on the move while helping to reduce both fuel consumption and emissions. It would require DOT to develop a testing and assessment program to determine what is feasible to improve the efficiency of heavy vehicles, and then to develop the appropriate fuel-economy standards. Additionally, we should provide a federal tax credit for the purchase of idling reduction technology for heavy vehicles. This could save a trucker about 1,600 dollars in fuel costs and 2,000 dollars in maintenance costs each year.

10. SUPPORT PUBLIC TRANSPORTATION

Public transportation is one of the most effective ways we can get more passenger miles per gallon gasoline. My energy legislation would promote the development and use of public transportation by subsidizing fares, encouraging employers to assist their employees with fares, and authorizing funding to build energy-efficient and environmentally friendly modes of transport, such as clean buses and light rail.

It would direct the Department of Transportation to designate 20 Transit-Oriented Development Corridors in urban areas by 2015, and 50 by 2025. These TOD Corridors would be developed with the aid of grants to state and local governments to construct or improve facilities for motorized transit, bicycles, and pedestrians.

Mr. President, in these time of high energy prices, we must rally around a national effort to achieve energy independence. We should establish a bold goal of energy independence by the year 2020. It is vital our economic, environmental and national security.