The autumn leaves have fallen; our clocks are turned back, and our shovels, winter coats, and sweaters are out of storage. With the coming winter, many Mainers are worried about the high cost of energy. They wonder how they will be able to afford to heat their homes. In addition, many are concerned with the increasing cost of gasoline.
In November, crude oil prices hit record highs, sending gasoline prices over $3 a gallon and home heating oil prices in Maine to their highest level ever. According to the Department of Energy, Northeastern states use nearly 80 percent of the nation’s heating oil. Combined with high gasoline prices, the high cost of oil particularly affects people in large rural, northern states like ours. Since many Mainers have little choice but to travel long distances to work, doctors’ offices, and grocery stores, high gas prices have a disproportionate impact and reduce the amount of money available to spend on other necessities like home heating oil. No one should have to choose between medicine and food, commuting to their jobs or staying warm.
There is no easy answer to the problem of rising oil and gas prices. This will require a combination of short and long-term actions. Oil prices have increased for a number of reasons, including increased world demand for crude oil, continued violence in the Middle East that threatens supply disruption, the price-fixing actions of OPEC nations, and speculative trading of energy commodities on futures markets.
The tight balance between oil supply and demand makes the United States vulnerable to market manipulations and price spikes. As Chairman of the Senate Homeland Security and Governmental Affairs Committee, I asked one of the subcommittees, the Permanent Subcommittee on Investigations, to conduct an investigation into the price of gasoline and crude oil. That investigation concluded that some energy traders in commodity futures markets contribute to rising U.S. energy prices, but that the lack of publicly available data about these independent markets makes it hard to determine exactly how much they influence the price increases. That is why I support a proposal from Senator Snowe and Senator Dianne Feinstein (D-CA) that would require energy futures markets to report their activity to federal regulators. The proposal would also increase the penalty for artificially inflating energy prices, providing a strong deterrent for those who might be tempted to game the markets for their own benefit.
With net profits of a single oil company reaching almost $10 billion in a single quarter, I also believe it is absurd to expect taxpayers to continue to subsidize the oil and gas industry. Earlier this year, I introduced a bill that would eliminate needless tax breaks for oil and gas companies. I see no reason to provide reduced tax rates for one of the world's most profitable industries at a time when so many families and small businesses are struggling. My legislation would raise nearly $10 billion to be used for tax credits for hybrid cars and alternative fueled vehicles that could make citizens less vulnerable to high oil prices.
Throughout my time in the Senate, I have fought for increased funds for the Low Income Home Energy Assistance Program (LIHEAP) fund. LIHEAP is a federal grant program that provides states with funding for home energy assistance programs. The LIHEAP program provides assistance for 48,000 low-income and elderly Mainers each year. This fall, I secured $7.2 million in contingency LIHEAP funds for Maine. I also supported a $250 million increase in LIHEAP funding in the Labor-HHS appropriations bill that recently passed the Senate. Unfortunately, the President vetoed that bill. I believe these funds should be made available to the people of Maine as soon as possible and hope a compromise on the overall bill will be reached soon.
Home heating oil prices are not the only energy cost troubling Mainers this winter. Maine also has some of the highest electricity prices in the nation. Recent price increases, piled on top of already high rates, impose an onerous burden on many Maine residents, small businesses, and manufacturers. The State of Maine was one of the first states to plunge into deregulating its electricity markets, and I am increasingly concerned that restructured electricity markets are not living up to their promise. When the Federal Energy Regulatory Commission issued an order in 1996 with the aim of restructuring electricity markets, it predicted that the nation would see "approximately $3.8 to $5.4 billion per year in cost savings." Instead, most Mainers are paying more.
To figure out exactly where the problem lies, Senator Joe Lieberman and I initiated a Government Accountability Office (GAO) investigation into electricity costs and charges. Specifically, we have asked GAO to investigate whether or not our current electricity markets include adequate incentives to minimize costs; whether or not these markets are delivering net benefits to consumers; and to identify potential impediments and/or solutions that can help reduce electricity prices. Also, I have co-sponsored a bill that would force regional electricity markets to provide reliable electricity service at the lowest reasonable cost. Currently, regional transmission organizations have two responsibilities: provide reliable transmission of electricity and to promote efficient electricity markets. The bill I support would also require the organizations to consider how to provide that service at the lowest reasonable cost to consumers. In addition, the bill requires that filings by the transmission organizations include a cost-benefit analysis justifying their costs.
In the long run, we must set a course to make significant changes to our energy infrastructure in order to increase our domestic supply of energy and decrease our demand for foreign oil, which also will help to lower energy prices. We need to provide more incentives for renewable energy and energy efficiency improvements, and these incentives should be widely available to consumers and homeowners. In addition to the provisions that I mentioned earlier, my energy bill would also provide increased tax credits for biofuels such as cellulosic ethanol and extend the tax credit up to $3,400 for consumers to purchase hybrid and lean-burn passenger vehicles to help consumers afford more fuel efficient cars. I also have sponsored tax credits for energy efficient homes and buildings, energy efficient appliances, and wind, solar, biomass and other renewable energy sources.
Another major step should be to increase corporate average fuel economy (CAFE) standards for vehicles. The 2007 Energy Bill, which passed the Senate in June, would establish a CAFE target of 35 miles per gallon for cars, lights trucks, and SUVs, by 2020. Higher CAFE standards would reduce our imports of foreign oil, reduce energy prices, and protect the environment. By raising CAFE standards, we can save more than a million barrels of oil each day.
Solving the burden of high energy costs will not be easy. Congress needs to pass a balanced energy policy that will mitigate oil price spikes in the near term and provide long-term solutions to increase supply, decrease demand, and finally begin to address our ever-growing reliance on foreign oil.
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