Remarks By John McCain On Energy Security
June 17, 2008 - Thank you all very much. Governor Perry, Lieutenant Governor Dewhurst, and other distinguished guests, I appreciate
your joining us today. And thank you all for the warm welcome to Houston.
Among its other distinctions, this great city is known as the oil capital of America. But people in Houston and all of
Texas understand as well as anyone that the high price of oil and gas today is causing great harm all across our
economy. People are hurting, small farmers, truckers, and taxi drivers unable to cover their costs, small business
owners struggling to meet payroll, the cost of living rising and the value of paychecks falling. All of this, in large
part, because the price of oil is too high, and the supply of oil too uncertain. These citizens believe their government
has a duty to finally assure the energy security of this country, and they are right.
I first addressed this issue at the outset of my primary campaign. And in just that time -- a little more than a year --
the price of a barrel of oil has more than doubled. And the price of a gallon of gas in America stands at more than four
dollars. Yesterday, a barrel of oil cost about 134 dollars. And various oil ministers and investment firms have
confidently informed us that soon we can expect to pay 200 dollars for every barrel, and as much as seven dollars for
every gallon of gas. That may come as good news in Moscow, Riyadh, or Caracas, where economic growth and rising oil
prices are more or less the same thing. But their oil prosperity is our energy vulnerability. And the jobs, family
budgets, and futures of the American people should not depend on the whims of foreign powers. Oil and gasoline are the
most vital of all commodities in a modern economy. Their price affects the cost of things even more basic and essential.
America's dependence on foreign oil is a matter of large and far-reaching consequences -- none of them good.
Whoever controls oil controls much more than oil. And in our time, much of the world's oil supply is controlled by
states, regimes, and a cartel for which America's well being is not exactly a priority. Many occupy a violent part of
the world -- a region all the more violent for the influence of oil wealth. Their opinion of America runs the full
spectrum from indifference to hatred. And yet these regimes are today the masters of the oil market.
Somehow the United States -- in so many ways the most self-reliant of nations -- has allowed and at times even
encouraged this state of affairs. This was a troubling situation 35 years ago. It was an alarming situation twenty years
ago. It is a dangerous situation today. And starting in the term of the next president, we must take control over our
own energy future, and become once again the master of our fate.
The next president must be willing to break with the energy policies not just of the current Administration, but the
administrations that preceded it, and lead a great national campaign to achieve energy security for America. So in the
days ahead I plan to return to the subject in a series of discussions to explain my reform agenda. And I will set forth
a strategy to free America once and for all from our strategic dependence on foreign oil.
Energy policy has enormous implications for America's economic security, our environmental security, and, above all, our
national security. Each one of these challenges demands our concentrated consideration. And each one requires that we
look beyond the special interests that too often dominate energy policy. We need to draw on the best ideas of both
parties, and work together for the common good.
As in other challenges that confront our nation, we must shape events, and not simply manage crises. We must steer far
clear of the errors and false assumptions that have marked the energy policies of nearly twenty Congresses and seven
presidents. There are dangers in the long term and dangers in the short term. Some tasks will be the work of decades,
and some the work of years. And they all will begin in the term of the next president.
Among these is a challenge we hardly even understood back when America first learned to associate the word "energy" with
"crisis." We now know that fossil fuel emissions, by retaining heat within the atmosphere, threaten disastrous changes
in climate. No challenge of energy is to be taken lightly, and least of all the need to avoid the consequences of global
warming.
In the face of climate change and other serious challenges, energy conservation is no longer just a moral luxury or a
personal virtue. Conservation serves a critical national goal. Over time, we must shift our entire energy economy toward
a sustainable mix of new and cleaner power sources. This will include some we use already, such as wind, solar,
biofuels, and other sources yet to be invented. It will include a variety of new automotive and fuel technologies,
clean-burning coal and nuclear energy, and a new system of incentives, under a cap-and-trade policy, to put the power of
the market on the side of environmental protection.
But to make the great turn away from carbon-emitting fuels, we will need all the inventive genius of which America is
capable. We will need as well an economy strong enough to support our nation's great shift toward clean energy. And this
gives us only further incentive to protect ourselves from the sudden shocks and ever-rising prices that come with our
dependence on foreign oil.
Up to a point, these sudden rises in the price of oil are explainable in the terms of basic economics. When demand
exceeds supply, prices always rise, and this has happened very dramatically in the demand for oil. Two powerful forces
in the oil market today are China and India, nations in which a third of humanity is suddenly entering the industrial
era -- with all the cars, construction, and consumption of oil that involves.
There is the further problem of speculation on the oil futures market, which in many cases has nothing to do with the
actual sale, purchase, or delivery of oil. When crude oil became a futures-traded commodity in the 1980's, the idea was
to afford a measure of protection against the historic volatility of oil pricing. It takes several weeks to ship oil
from the Arabian Peninsula to the offshore port of Louisiana. And for the buyers, it helps to know that the price will
not suddenly fall while the oil is in transit. A futures contract assures importers that they can sell the oil at a
profit.
That's the theory, anyway. But we all know that some people on Wall Street are not above gaming the system. When you
have enough speculators betting on the rising price of oil, that itself can cause oil prices to keep on rising. And
while a few reckless speculators are counting their paper profits, most Americans are coming up on the short end --
using more and more of their hard-earned paychecks to buy gas for the truck, tractor, or family car.
Investigation is underway to root out this kind of reckless wagering, unrelated to any kind of productive commerce,
because it can distort the market, drive prices beyond rational limits, and put the investments and pensions of millions
of Americans at risk. Where we find such abuses, they need to be swiftly punished. And to make sure it never happens
again, we must reform the laws and regulations governing the oil futures market, so that they are just as clear and
effective as the rules applied to stocks, bonds, and other financial instruments. In all of these markets, reform must
assure transparency, prevent abuse, and protect the public interest.
Of course, with the formation of the OPEC cartel, and the oil embargo of the early 70's, we already left behind pure
economics in the oil market, and we entered a new era of power politics. No longer was crude oil simply a commodity.
Now, suddenly, it was a strategic weapon.
At the time of OPEC's oil embargo, we imported roughly a third of our oil. Now we import two thirds. At that time, every
day, we produced more than nine million barrels of oil domestically. Now America produces five million barrels a day.
Five million barrels sounds like a lot until we compare the number with the oil we use, which comes to 20 million
barrels, or a quarter of all the oil used every day across the earth.
Of that total, a little more than half comes from Canada, from Mexico, and from our own domestic production. That's a
heavy reliance on these two nations. But there is a world of difference between relying on two democratic neighbors and
partners in NAFTA, and relying on often hostile and undemocratic regimes in the Middle East and elsewhere. When critics
of trade talk about unilaterally renegotiating NAFTA, as my opponent has done, that's one more concern they might want
to keep in mind.
It takes a very short leap in logic to wonder why we produce less and less crude oil, while we use more and more of it,
or why politicians talk so much about promoting alternative energy sources, but often do so little to promote these
alternatives. A reasonable observer, presented only with these numbers of consumption and production, might draw the
conclusion that America has accepted this fate because we have no choice in the matter, or because we have no resources
of our own. But just the opposite is true: We do have resources, and we do have a choice.
In oil, gas, and coal deposits, we have enormous energy reserves of our own. And we are gaining the means to use these
resources in cleaner, more responsible ways. As for offshore drilling, it's safe enough these days that not even
Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and
Houston. Yet for reasons that become less convincing with every rise in the price of foreign oil, the federal government
discourages offshore production.
At the very least, one might assume, America had surely been building new refineries to achieve a more efficient
delivery of gasoline to market, and thereby to lower the prices paid by the American people -- especially in the summer
season. But the policymakers in Washington haven't got around to that, either. There's so much regulation of the
industry that the last American refinery was built when Jerry Ford was president.
As for nuclear energy -- a proven energy source that requires zero emissions -- we haven't built a new reactor in 31
years. In Europe and elsewhere, they have been expanding their use of nuclear energy. But we've waited so long that
we've lost our domestic capability to even build these power plants. Nuclear power is among the surest ways to gain a
clean, abundant, and stable energy supply, as other nations understand. One nation today has plans to build almost 50
new reactors by 2020. Another country plans to build 26 major nuclear stations. A third nation plans to build enough
nuclear plants to meet one quarter of all the electricity needs of its people -- a population of more than a billion
people. Those three countries are China, Russia, and India. And if they have the vision to set and carry out great goals
in energy policy, then why don't we?
So, taking stock of our energy situation, it is time we draw a few sensible conclusions of our own. In their sum effect
on the American economy, the policies of our government could hardly have left us more dependent had they been designed
to do precisely that. This vulnerability is clear in many ways, and never more than when American leaders are reduced to
supplicating for lower prices before the sheiks and princes of OPEC. Of course, they are unmoved by our troubles. They
regard even the need to ask as a sign of weakness. And in the end, they take their cues not from our entreaties for
relief, but from our failure to diversify and to produce.
Quite rightly, I believe, we confer a special status on some areas of our country that are best left undisturbed. When
America set aside the Arctic National Wildlife Refuge, we called it a "refuge" for a reason.
But the stakes are high for our citizens and for our economy. And with gasoline running at more than four bucks a
gallon, many do not have the luxury of waiting on the far-off plans of futurists and politicians. We have proven oil
reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy
exploration and production. And I believe it is time for the federal government to lift these restrictions and to put
our own reserves to use.
We can do this in ways that are consistent with sensible standards of environmental protection. And in states that
choose to permit exploration, there must be an appropriate sharing of benefits between federal and state governments.
But as a matter of fairness to the American people, and a matter of duty for our government, we must deal with the here
and now, and assure affordable fuel for America by increasing domestic production.
We should set the highest goals for ourselves for the years and decades to come, and I am a believer in the technologies
that one day will free us from oil entirely. But to get there at all, a more pragmatic approach will serve us better. In
the short term, we must take the world as it is and our resources where they are -- even as we press on with new and
cleaner sources of energy. We must be bold in our plans to break our strategic dependence on oil, and over the next two
weeks, I'll be offering a vision that will be bold. But we must also address the concerns of Americans, who are
struggling right now to pay for gasoline, groceries, and other necessities of life.
What is certain in energy policy is that we have learned a few clear lessons along the way. Somehow all of them seem to
have escaped my opponent. He says that high oil prices are not the problem, but only that they rose too quickly. He's
doesn't support new domestic production. He doesn't support new nuclear plants. He doesn't support more traditional use
of coal, either.
So what does Senator Obama support in energy policy? Well, for starters he supported the energy bill of 2005 -- a
grab-bag of corporate favors that I opposed. And now he supports new taxes on energy producers. He wants a windfall
profits tax on oil, to go along with the new taxes he also plans for coal and natural gas. If the plan sounds familiar,
it's because that was President Jimmy Carter's big idea too -- and a lot of good it did us. Now as then, all a windfall
profits tax will accomplish is to increase our dependence on foreign oil, and hinder exactly the kind of domestic
exploration and production we need. I'm all for recycling -- but it's better applied to paper and plastic than to the
failed policies of the 1970's.
Oddly enough, though, Senator Obama doesn't want to lower the gas taxes paid by consumers, which would be the most
direct and obvious way to give Americans a break at the gas station. Even in tough times for our economy, when folks are
struggling to pay for gas and groceries, tax relief just isn't change he can believe in.
Along with the harm that America's dependence on foreign oil has inflicted on our economy, there remain other costs that
are even greater and harder to count. The massive wealth we have spent over the years on foreign oil is not flowing to
the most upstanding citizens of the world. When trillions of dollars are transferred to other nations in exchange for
oil, the consequences are serious and pervasive. But they can be understood in three simple ways.
The first takes the form of a current accounts deficit that has drained vast sums out of the American economy. We are
borrowing from foreign lenders to buy oil from foreign producers. In the world's capital markets, often we are even
borrowing Saudi money for Saudi oil. For them, the happy result is that they are both supplier and creditor to the most
productive economy on earth. For us, the result is both dependency and debt. Over time, in interest payments, we lose
trillions of dollars that could have been better invested in American enterprises. And we lose value in the dollar
itself, as our debt portfolio undermines confidence in the American economy.
As bad as all that is, the second consequence is worse by far. Oil revenues are enriching the enemies of the United
States, and potentially limiting our own options in containing the threat they present. Iran alone receives more than 66
billion dollars a year from oil sales, even as that regime finances terrorists, threatens Israel, and endangers the
peace of the world with its designs on nuclear weapons. Moreover, by relying upon oil from the Middle East, we not only
provide wealth to the sponsors of terror -- we provide high-value targets to the terrorists themselves. Across the world
are pipelines, refineries, transit routes, and terminals for the oil we rely on -- and Al Qaeda terrorists know where
they are. Osama bin Laden has been quite explicit in directing terrorists to attack the oil facilities on which so much
of America's economy depends. They have come close more than once. And we are one successful at tack away from an
economic crisis of monumental proportions.
Even if our economy were somehow immune to this threat, the vast wealth we shift to the Middle East, Venezuela, Angola,
and elsewhere would still have a third harmful and perverse effect. It would continue to enrich undemocratic, unjust,
and often corrupt regimes. Some of the most oil-rich nations are also the most stagnant societies on earth. And among
the many luxuries their oil wealth affords them is the luxury of ignoring their own people. In effect, our petrodollars
are underwriting tyranny, anti-Semitism, the brutal repression of women in the Middle East, and dictators and criminal
syndicates in our own hemisphere.
We cannot allow the world's greatest democracy to be complicit in such corruption and injustice. America's most vital
interests call us to the mission of energy security, and so does our sense of honor. And the straightest, swiftest path
to energy security is to produce more, use less, and find new sources of power -- so that no commodity can determine our
security, and no crisis can undermine our economy.
This will require great ingenuity and resolve of the American people, and these are not in short supply. Americans like
to say that there is no problem we can't solve, however complicated, and no obstacle we cannot overcome if we meet it
together. I believe this about our country. I know this about our country. And now it is time to show those qualities
once again.
Thank you.
ENDS