INTERVIEW TRANSCRIPT
C-SPAN’S “NEWSMAKERS”
Guest: Sen. Jeff Bingaman (D), New Mexico
Reporters: Ben Geman, Environment and Energy Daily, and Stephen Power, Wall Street
Journal
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TAPE DATE: Friday, July 25, 2008
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C-SPAN/NEWSMAKERS
Host: Peter
Slen
Guest: Sen.
Jeff Bingaman (D), New Mexico
Reporters: Ben Geman, Stephen Power
PETER SLEN, HOST, C-SPAN’S “NEWSMAKERS”: Energy and energy prices continue to top the list of most surveys saying what Americans are most concerned about.
And this week on “Newsmakers,” the chairman of the Energy Committee, Senator Jeff Bingaman, a Democrat of New Mexico.
Here to question him, Ben Geman, and Stephen Power of the “Wall Street Journal.” We will start with Stephen Power.
STEPHEN POWER, ENERGY REPORTER, “WALL STREET JOURNAL”: Senator, recent opinion polls indicate that a large percentage of Americans favor increased domestic drilling. And yet, whenever Republicans have tried to offer amendments to the Interior spending bill in recent weeks to allow for increased offshore drilling, Democrats have cancelled some of those hearings.
Do you think that these proposals are worthy of having a debate on the Senate floor?
SEN. JEFF BINGAMAN, D-NEW MEXICO, CHAIRMAN, SENATE ENERGY AND NATURAL RESOURCES COMMITTEE: Oh, I think they definitely are. And I know that there’s sort of a couple of different procedural ways for that to happen.
I guess one is through the spending bill that you referred to. And I’m not on the Appropriations Committee, so I don’t really have much insight there.
The other is, of course, to consider what Senator McConnell, the Republican leader, has put forward – and I think President Bush and Senator McCain have endorsed – which is this opt-in business, or proposal, that essentially says state governors and state legislatures will be given authority to decide whether or not there’s going to be drilling in the Outer Continental Shelf off their coast, going out 200 miles.
And if they choose to do so, then they’ll get 37.5 percent of the royalty from any such production. That’s the proposal.
I think Senator Reid has indicated a willingness to go ahead and have a vote on that McConnell proposal. But we haven’t been able to get agreement with both parties to do that yet.
POWER: Are we going to see a vote, perhaps, before the August recess?
BINGAMAN: Well, I think the problem now is that, as I understand the Republican position, they’re saying they don’t want just a vote on that. They want a vote on a range of different energy proposals, and sort of an unlimited number of amendments. At least there hasn’t been agreement as to a limit that I’m aware of.
I don’t know that there’s time to do all of that in the schedule of the Senate before the August recess. You know, when we – we did the 2005 energy bill. We did the 2007 Energy Bill. In each case, it took up several weeks of Senate floor time to consider all the amendments. And frankly, there just is not that much floor time available to do those two now, to do that again on this Senate proposals.
BEN GEMAN, SENIOR REPORTER, “ENVIRONMENT AND ENERGY DAILY”: Senator – oh, I’m sorry.
SLEN: Go ahead, Ben.
GEMAN: Senator, I wanted to ask, certainly, with these elevated gasoline and oil prices, we’re seeing more sort of pressure on these existing moratoria than we’ve seen in a very long time, perhaps ever.
You know, regardless of what happens over the next couple of weeks – and it does look quite bottled up right now – if we remain in this sort of high-price environment, which a lot of people predict we will sort of directionally, are these moratoria going to be removed, and it’s just a matter of time at this point? Or do you think they will remain in the long term?
BINGAMAN: Well, I don’t know the answer to that.
You know, my position has been that, first of all, there’s a lot of the Outer Continental Shelf that is available for leasing right now, some of – a substantial amount that has already been leased. And we’ve had quite a bit of debate in the Congress about how we can encourage more development of those existing leases.
I think there’s over 30 million acres – substantially more than 30 million acres – that have been leased.
There’s also a substantially greater amount that has not been leased in the Outer Continental Shelf, but could be. I mean, it’s not subject to any moratorium. So, we’ve focused on trying to encourage that the administration proceed with additional leasing in those areas and additional production.
I’m not averse to the idea of having some relaxation of the moratorium, myself. Now, I’m not speaking for the Democrats generally.
But frankly, the proposal we’ve got, which is to say the federal government will give the authority to decide the issue to state governors and state legislatures, I think that’s terrible national energy policy.
And it’s also, if you give them – if you give these coastal states 37.5 percent of the revenue that potentially could – or the royalty, you’re talking a very major transfer of wealth, when the federal government is the one running the big deficit now. You’re talking somewhere between a half trillion and three quarters of a trillion dollars in future revenues that would be transferred to coastal states. I don’t favor that.
POWER: So, can you sketch out a little bit more what areas of the U.S. you would be willing to open up? I think you’ve said you think that there are areas in Alaska, certain areas of the Gulf.
Can you just go into a little more detail which areas you’d open up? And what are the chances that we’re going to see a compromise that could be acceptable to both parties?
BINGAMAN: Well, in the areas that are currently available for leasing – of course, all of the area around Alaska is available – some of it is scheduled for leasing.
The administration has set forth a five-year plan for the leases that they would like to proceed with. And that takes us through the year 2012. I think there are 16 lease sales scheduled as part of that.
One of the things that we are proposing in an amendment that I filed is that we ask the administration to go back and look and see if there aren’t others, other parts of the area in the Outer Continental Shelf, that could also be leased during that same period they could add to that schedule. There are a couple of those up in Alaska.
In the Gulf of Mexico, of course, two-thirds of the Gulf, roughly, is available for leasing now. And that is the western Gulf and the middle Gulf. We’ve suggested that they might have more frequent lease sales in the Gulf, because there are areas down there that are not – have not been leased, and that there’s interest in.
So, those are all areas that we think are promising. The administration does too, in the sense that they have indicated planned lease sales in those areas.
Now, one other area – this is onshore – is the National Petroleum Reserve Alaska. This is a very large area in the Gulf – or on the North Slope of Alaska, that was set aside specifically for the purpose of providing oil and gas resources. And we’re proposing in this amendment that I filed to have a lease sale there each year for the next 10 years.
I noticed that just recently the BLM announced that they’re going to have a major lease sale there this fall, which is very encouraging.
GEMAN: On this – the Democrats on the Senate side – and this has been unfolding over the last few days – have at least offered the Republicans a vote on an offshore drilling amendment, you know, I think of their choosing.
The situation is obviously quite different across the Capitol on the House side, where the Democratic leadership there is – will not – has refused to bring the offshore drilling issue up for a vote.
Should they allow at least a vote on that across, on the other side of the Capitol, in your view?
BINGAMAN: Well, frankly, I don’t pretend to know how the House functions, so, never having served there. And I don’t want to be in the position of giving them advice.
I think it’s a legitimate issue that should be debated. But let me put it in context.
We produce a lot less of the world production of oil than we consume of the world’s consumption of oil. So, our ability to influence the world price of oil is much greater on the consumption side, by reducing consumption, than it is on the production side.
We import 60 percent of what we, in fact, consume. And the truth is, production of oil in this country has been on the decline since about 1970. So, we’re a mature producing area.
And I think it’s misleading to suggest to the American people that we’re going to significantly affect the world price of oil by opening the OCS or any particular remaining area of the U.S. for drilling. That doesn’t mean we shouldn’t consider doing it. But I’m just saying it’s not the panacea that it is being sold to people as.
The much greater promise lies in our ability to reduce our consumption. And Americans are starting to do that, because they see $4.00, $4.20 gas at the pump. And they’re beginning to conserve and beginning to buy more fuel-efficient vehicles. And we’re beginning to see the ripples of that throughout the economy.
SLEN: Senator Bingaman, how much at odds are you with the Democratic Party when it comes to energy policy?
BINGAMAN: Well, I don’t think I’m at odds with the Democratic Party at all. I mean, I think there’s – you know, the Democratic Party is a big tent.
And I’m sure there are some in the party who would disagree with perhaps my general willingness to support additional production. But I don’t know that that’s the majority.
I think a lot of – the way I see these issues, I think we should do something to try to ensure a better functioning of oil and gas markets. And that’s the speculation bill that Senator Reid introduced.
I mean, if there are problems Republicans have with that bill, I think they should propose changes to it, because clearly, at least from the experts I’ve heard from, something needs to be fixed there. Speculation is influencing the price of oil on the world market to some significant extent.
We should also do something, what we can, about supply. As I indicated, I don’t think we can influence the world price of oil as much by trying to change or increase our own supply, as we can by reducing our own demand. And so, we should do supply, and we should try to reduce demand.
SLEN: This is NEWSMAKERS. Senator Jeff Bingaman, chairman of the Energy Committee is our guest.
Here to question him, Ben Geman of “Environment and Energy Daily,” and Stephen Power of the “Wall Street Journal.”
Gentleman, next question.
POWER: One area that you did not mention in your remarks is California. And apparently, there’s a lot of interest in getting access to what’s off the coast of California.
Would you be open to allowing drilling off that state’s coast?
BINGAMAN: Well, as I say, I, in the past, I have not objected to the idea of doing additional drilling off the coast, if it’s part of a national energy policy.
But the idea that we’re going to say to the governor of California, and to the legislature of California, “It’s up to you to decide; and by the way, we’re going to try to entice you or bribe you into making the decision we would like at the national level by giving away a very substantial portion of future potential revenues” – I think that’s a mistake.
And that’s the proposal we’ve got before us.
GEMAN: A moment ago, Senator, you mentioned sort of another piece of this issue, which is the speculation in oil futures markets. And, you know, it seems like the effort to address that on the Senate floor has been sort of caught up in this other issue of the offshore drilling policy.
If this issue remains stuck for this year in the Senate, trying to sort of increase transparency of these markets, how quickly would you seek to return to that in the new Congress?
BINGAMAN: Well, I think it’s important to return to it, hopefully get it fixed this year. If not, get it fixed early next year.
I think, from the testimony that we’ve had before our committee, you know, you do have a lot of folks putting money into the oil and gas commodities markets, who really have no interest in ever receiving any oil or gas, and don’t really need it in their business.
They – you know, you have index funds now, that are basically receiving substantial amounts from pensions and other investment vehicles, that are influencing what goes on in those markets. So, I think it makes sense to have some limits on the amount of investment that’s made, the positions that are taken in those markets.
And that’s what Senator Reid’s bill tries to do.
GEMAN: In discussing that bill, Senator Reid and some other lawmakers on each side of Capitol Hill have said that speculation could be accounting for 20, 30, 50 percent of the price of a barrel of oil.
And in some ways that sort of holds out this idea that, you know, if we could just address these, you know, this issue, then we would see these dramatic reductions in prices and, subsequently, dramatic reductions in prices at the pump.
Does that make sense to you? I mean, are we – you know, but for these traders playing with these terminals, would we all be paying a dollar less for gasoline?
BINGAMAN: I don’t know how much less we would be paying. But I guess the price of oil on the world market hit a high of, what, $147 a barrel. It’s not down around $120, $125 a barrel, something in that range. That’s all happened in the last three or four weeks.
So, the argument that it’s all supply and demand, I haven’t seen anything change with regard to supply or demands that would justify that kind of a swing in price in the last few weeks. So, I do think speculation and the increased investment – I mean, if you don’t want to call it speculation, call it increased investment.
One of the witnesses we had at a workshop in our Energy Committee last week referred to it as more and more money chasing a finite number of paper barrels. And index funds are required to enter the market on the long side, so they are buying these paper barrels, and they are staying invested in them.
So, I think it’s influencing it. How much, I don’t know.
I would say that fixing the functioning of these markets, or better regulating these markets, probably holds out more hope for reducing the price in the near term – the price of gas, the price of oil in the near term – than ideas about opening more areas in the OCS for drilling, when everyone recognizes that that’s, you know, that any production from any such drilling would be many years in the future.
SLEN: What kind of regulation, specifically, would you like to see?
BINGAMAN: Well, I think most of the testimony I’ve heard says that there ought to be some limits on the positions that these entities are able to take in these markets.
I think that, since you have index funds now investing in these markets, they’re not subject to any limits, as I understand it. And therefore, very large sums of money are coming into these commodity markets that were not previously there.
And that’s all happened in the last year or so – or a lot of it. I think virtually all of it’s happened in the last year or so.
POWER: This week, the CFTC issued a report that concluded that supply and demand factors offer the best explanation for why oil prices are what they are. And it sounds like you’re not entirely persuaded that they are making the right conclusion there.
Given that they are going to be the ones who enforce whatever law you pass, isn’t it possible that you might pass a measure that they don’t think is really going to be addressing the problem, and ultimately, this measure might not really have that much of an effect?
BINGAMAN: Yes, it’s possible. But, of course, you know, you’ve got a new administration coming into office. You may have a new group of people there at the CFTC in future years.
I think that all we in the Congress can do is to try to be sure that the law is there, so that if the administration wants to enforce the law, they can do so. I mean, clearly, it takes both. You have to have proper legal provisions, but you have to have a willingness to enforce them.
Now, I was encouraged, frankly. In the morning paper today, I was reading that the CFTC has brought charges against a firm for manipulating, trying to manipulate the gas markets. I think that’s encouraging. And I think it’s an admission that they recognize that people can take positions in these markets that affect the prices that people are having to pay for oil, for gas.
And that’s all we’re basically saying is, we’ve got to do a better job of monitoring this thing and regulating it to the extent that it’s appropriate.
POWER: I wanted to ask you a question about another topic, which is the debate over food versus fuels, and the extent to which U.S. biofuels policy is contributing to the run-up in food prices.
The governor of Texas, as you know, has asked the Environmental Protection Agency to relax the current mandate that calls for a big increase in biofuels production.
I know that you’ve been looking into this topic. What’s your conclusion? Have you drawn any conclusions as to the degree to which the biofuels mandate is contributing to the run-up in food prices?
BINGAMAN: Well, we asked that very question of the secretary of energy and the secretary of agriculture, jointly. And we got a response back from them, we being the Energy Committee. I think, Senator Domenici and I sent a letter, asking them to advise us on this.
I think their testimony back and their answer back was that perhaps as much as three or four percent of the price of some of the grains could be attributable to the increased demand for these grains for ethanol and biofuels.
I think, frankly, we need to see what the Department of Agriculture says the prospects are here. I think they have a report coming out – I believe it’s the 12th of August, or some period right around there – talking about their view of the current supply of grains in light of all of the flooding and everything that’s occurred in the Midwest. And at that time, depending on what they say, it may be appropriate for the EPA to look at some relaxation of the standard.
I haven’t seen anything yet that would lead me to conclude that it would make sense to change the standard, the Renewable Fuels Standard, from what the Congress provided.
GEMAN: On that point, I mean, the Renewable Fuels Standard was obviously a pretty big, sprawling piece of legislation that included different parts, both on the absolute numbers, as we’ve been discussing, but also on what types of biomaterials can be used or not used to make fuels.
Looking ahead to the new year and your committee’s agenda in the new year, are you planning any sorts of changes at all to that new mandate, either numerically or otherwise?
BINGAMAN: Well, I think we’re going to continue to look at it. I don’t know if we would want to change any aspect of it.
I do think that, you know, the final version of that Renewable Fuels Standard that was enacted was more prescriptive than the one we had earlier advocated for in the Senate. It was essentially the language the House had come up with that became law.
And we had one hearing earlier this year to try to find out what people’s reaction to it was. I think in the future, we’ll undoubtedly continue to look into it. And I, frankly, can’t tell you whether we’re going to be proposing changes or not.
SLEN: Senator Bingaman, a larger question. Since the 1970s, and even before, a lot of discussion, billions of dollars spent on solar, wind energy, talk of a Manhattan-type project to bring those on board fully.
Are you satisfied with the progress that has been made with solar and wind? And if so, why? And if not, why not?
BINGAMAN: Well, I’m certainly not satisfied with the progress we’ve made. I think there’s a great potential there.
And the first and most immediate thing we’ve got to do to realize that potential is to extend these tax credits that relate to – the production tax credit for wind power, the investment tax credit for solar power. Those are provisions that we put into law as part of the 2005 energy bill.
Unfortunately, they’re scheduled to expire at the end of this year. And we have been trying now, several times, to get the votes to go ahead and extend them into the future, and haven’t been able to get the 60 votes necessary in the Senate under our rules.
But I think that’s a very high priority this next week. Before Congress adjourns this next week, we need to extend those tax provisions. And I hope very much we can.
And then, beyond that, I hope the new Congress can come along and enact them for a substantially longer period than we have been able to enact them up until now.
I’m confident – I’m convinced that we can produce a lot more of the power that we consume in this country, from renewable sources – wind and solar being primary in that group. But we have not pursued a long-term, consistent policy the way we should have.
SLEN: Time for one more question each, gentlemen.
POWER: Would you agree that, in the long term, over the next few decades, fossil fuels are still going to play a very big role in meeting the country’s energy needs?
And how would you respond to people who look at the positions of a lot of senior members of your party who are opposed to an expansion of nuclear power, who are opposed to the construction of new coal-fired plants, and say that the party is taking lots of sources of energy that the country is going to need off the table?
BINGAMAN: Well, I don’t know which of the senior members of the party you’re referring to, but I …
POWER: Well, Senator Reid, for example, of Nevada, is very opposed to nuclear power in his state, opposed new coal-fired plants. And former Vice President Gore has also called for carbon capture and storage before any new coal plants are built. That sort of thing.
BINGAMAN: Well, I think, myself, my position – and I think, the position of most of the Democrats that I’m aware of – is that we’re going to need additional nuclear power. We’ve put into law various provisions to encourage the construction of new nuclear power plants. That was all part of the 2005 energy bill, which most Democrats voted for.
And I think there is disagreement as to how much of our future energy needs can be met with nuclear power. And that’s more for the economics of it. It’s very expensive to build a nuclear power plant.
And when you compare it to the alternatives, it’s just not clear how many more the industry is going to want to go ahead on, on coal.
I have no doubt – I guess, in answer to the first part of your question, I agree that we’re going to be dependent upon fossil fuels for a substantial period here, that we’re going to be going through a transition to try to reduce that dependence. But we’re going to continue to need coal, and continue to need oil and gas. And we need to be mindful of that.
We also have to find ways, particularly in the case of coal, to use coal in an environmentally acceptable way and deal with the greenhouse gas emissions involved. I think we can do that. The carbon capture and storage idea is the best one that is currently out there for how we can do that.
And I think it’s entirely appropriate to say that’s got to be the first order of business, is to demonstrate that we can capture and store this carbon dioxide that is produced as we produce energy from coal, and we can do it on a large enough scale that it’s going to help solve the problem.
SLEN: Ben Geman, final question.
GEMAN: Sure. As Congress winds down for the year and the new Congress is going to begin, what are going to be the sort of first things out the gate you want to address in the Energy Committee?
BINGAMAN: What are the first things in the new Congress you’re talking about?
GEMAN: Yes.
BINGAMAN: Well, I think, you know, as I’ve said several times, I think we did something constructive when we passed the energy bill in 2005. There are some very good provisions in there. I know others criticized it for various aspects. But I think, on balance, it was a good effort – 2007, the same thing. I think we passed a pretty good piece of legislation.
I hope we can do another significant piece of energy legislation in 2009, and as part of that, get the best ideas that exist on both the Democratic and Republican sides, and hopefully have a strong commitment from the new president to continue to move the country in the direction – move us from a high carbon economy to a low carbon economy.
That’s going to be a multi-decade task getting us where we need to be, but I think there’s a good chance to make a significant step toward it in 2009.
SLEN: Currently in his fifth term, Senator Jeff Bingaman is chairman of the Energy and Natural Resources Committee in the Senate.
Thank you for being on NEWSMAKERS, sir.
BINGAMAN: Thank you.
SLEN: We’ll be right back with our reporters.
(BREAK)
SLEN: We’re back with our reporters, Ben Geman of “Environment and Energy Daily,” and Stephen Power of the “Wall Street Journal.”
Gentlemen, you spent a lot of time talking with Senator Bingaman about offshore drilling. Why?
GEMAN: Well, with oil and gasoline prices so high, that’s been obviously on the minds of, I think, probably a lot of constituents of most lawmakers. And here in the Capitol, Republican lawmakers, who have long proposed for – long proposed removing limits on offshore drilling – really see an opening here, either to – you know, best case scenario from their view, probably change policy. At the very least, as I think perhaps buoyed some polling that was reported in the “Journal,” see an opportunity to at least score some political points here.
So, this issue has become very, very difficult, I think, for the Democrats in these recent weeks, because we’re seeing pressure on these existing offshore drilling bans unlike we’ve seen in a long, long time.
SLEN: And does Senator Bingaman disagree with his party, though, on this issue – the majority of his party?
POWER: Well, I think if you listen to what he was saying, it appears that he’s trying to find a middle ground in this debate. And he even said at one point, in response to one of the questions, that there are probably some in his party who don’t agree with him, and that the party is a big tent, and there is a range of views on this subject.
And, yes. I think what he’s trying to do is offer a compromise here that attempts to satisfy this demand for more access domestically to oil and gas.
He was reluctant to second guess what’s going on in the House of Representatives, where the leaders there – the Democratic leaders – have really shut down any attempts by the Republicans to allow measures that would expand or overturn the current ban on offshore drilling.
But he does seem to be looking for some middle ground in this. And one of the things that’s interesting about this issue is that it really cuts, not so much across partisan lines as across regional lines.
If you go – if you look at what the poll found that the “Wall Street Journal” reported on today – it was done with Quinnipiac University and WashingtonPost.com – it was looking at voter attitudes in four battleground states like Michigan and Wisconsin.
And in these middle sort of states, interior parts of the country, you see a lot of support for offshore drilling, not surprisingly. If you would ask people in Michigan and Wisconsin and Ohio, what do you think of raising fuel economy standards for automobiles, the response would probably be very different.
If you take the question of offshore drilling to Florida and California, you’re going to find, obviously, a very different response. And so, it’s an issue that really cuts across regional lines.
And Senator Bingaman, representing New Mexico, he’s long supported some domestic drilling, but in other areas opposed it, like with the Arctic National Wildlife Refuge. So, he’s sort of in the middle here of his party.
SLEN: Ben Geman, you asked the final question about what was the agenda of the Energy Committee. Were you satisfied with the answer?
GEMAN: I mean, I think it’s pretty clear that Senator Bingaman wants to do more with renewable energy. I mean, one – we didn’t get into this specifically – but one longstanding priority of his and of a lot of environmentalists and other, and Democrats, would be a national renewable electricity mandate. And that would essentially say, you know, by a certain year, perhaps 2020, the country will need to be generating, you know, perhaps 10, 15, 20 percent of its power from renewable sources, which is much, much more than we’re getting today.
And that has not progressed in recent years. It’s come up in the different chambers, but it’s never become law.
So, I would be looking for him to take another run at that next year, especially if there’s a Democrat in the White House.
I mean, I think he – I can’t speak for him, of course – but I would guess that he would see this as sort of a big piece of unfinished business.
SLEN: Stephen Power, final thoughts.
POWER: Yes. I think that another big issue that’s hanging over Senator Bingaman – and really, all the leaders in Congress – is this decision that’s coming up from the EPA on whether to relax the biofuels mandate. And we’re certain to see a tremendous reaction from one side or the other, no matter what the decision is.
So, it’ll be interesting to see how that plays out politically going into the fall elections.
SLEN: Stephen Power, “Wall Street Journal,” Ben Geman, “Environment and Energy Daily,” thank you.
GEMAN: Thank you.
POWER: Thank you for having us on.
END