WASHINGTON – On the day that the two Senate subcommittees held a joint hearing to examine speculation in the crude oil market, U.S. Senator Pete Domenici, ranking member of the Senate Energy and Natural Resources Committee, reiterated his belief that raising taxes on domestic oil production will not help solve America’s energy challenges.
Tuesday morning, the Subcommittee on Energy of the Energy and Natural Resources Committee and the Permanent Subcommittee on Investigations of the Homeland Security and Government Affairs Committee held a joint hearing to investigate the possible role of speculation in recent crude oil prices. The hearing featured testimony from market analysts and from Guy Caruso, Administrator of the Energy Information Administration (EIA).
“It is important for us—and the American people—to understand how the price of oil is set. Oil is a global commodity, trading in markets like many others. American companies do not set the price of oil, and with 77 percent of the world’s oil reserves located outside of our country, we have little control over prices. It is therefore imperative that we focus on increasing our domestic production as part of an overall strategy to reduce consumption,” Domenici said.
“As we work to finalize an energy bill here in the Senate, we should also realize that the current proposal on the table could actually make things worse. I strongly support the elements of the bill that will lead to less oil consumption, like increased CAFE (fuel economy) standards and a Renewable Fuels Standard, but increasing taxes on domestic oil and natural gas production is the wrong thing to do right now. History tells us that these efforts lead to higher prices and make it tougher to meet increased demand. The Senate should reject these massive taxes and focus on measures that will reduce costs over the long term,” he continued.
Domenici pointed out that according to the EIA, global demand for oil is projected to rise by 1.1 million barrels per day this year and 1.5 million barrels per day next year. On the other hand, U.S. domestic production is expected to increase by just 0.3 percent in 2007, and estimates of our domestic refinery capacity over the next several years have actually been downgraded. This means that the United States is continuing to lose ground in our efforts to meet demand, making us even more dependent on foreign oil.