Energy Policy:

Rep. Bart Stupak says President Bush not to be trusted with CAFE standards

With the House set to advance a comprehensive energy bill later this month, lawmakers continue to debate how to approach the United States' current energy crisis. During today's OnPoint, Rep. Bart Stupak (D-Mich.) explains why he thinks U.S. automakers will suffer if fuel efficiency standards are increased for larger vehicles. The congressman also addresses issues he has with Rep. Heather Wilson's (R-N.M.) price gouging legislation and explains how his proposal differs.

Transcript

Colin Sullivan: Welcome to OnPoint. I'm Colin Sullivan. Our guest today is Representative Bart Stupak, a Democrat from Michigan and a member on the Energy and Commerce Committee. Congressman thanks for coming

Bart Stupak: My pleasure.

Colin Sullivan: I'd like to first start out with a question about corporate average fuel economy. It's in the news lately. Gas prices are pretty high. There's sort of some renewed momentum to take up a CAFE increase. In the past you've opposed raising CAFE standards, can you talk about why? And do you still think it's a bad idea at this point to raise fuel efficiency standards?

Bart Stupak: Well first of all, the president can raise CAFE standards whenever the president feels it's necessary. We did have a bill before our committee which, quite frankly, we don't trust this president to do the right thing when it comes to CAFE. For instance, in this legislation, and I asked the question, right now CAFE is combined average fuel economy. So you take your big cars, your little cars, and you put them together and come up with a combined average fleet average. And what we're afraid the president may do is break out the small cars from the big cars or SUVs. If you've set a different standard what you're really doing is hurting the Big Three in their production of small cars. If you separate all that, they have a small car standard for CAFE, a big car standard for the SUVs or I should say a lower standard for big vehicles. You really leave the domestic auto industry, GM, Ford, DaimlerChrysler, just making big vehicles and then the imports would take over the small vehicle market. And that's just too critically important for this country. There's at least seven states that are really heavily into manufacturing small cars, Michigan being one of them, so from that point of view. Secondly, I was a police officer for many years and the National Academy of Sciences said look, you can't get any more, reduce the weight of vehicles anymore. Injuries are up. Deaths are up in accidents. And from a safety point of view, be careful of what you wish for. And why are we doing all this CAFE? There are other ways to reduce the price of gas other than making smaller more compact vehicles that leads to more tragedies on the highway. So for those reasons I do not support this proposal before us.

Colin Sullivan: During an Energy and Commerce Committee markup a couple of years ago you said, quote, "In reference to raising CAFE standards, it's not what Americans want." You think that's been a mistake in terms of not forcing U.S. auto manufacturers to be more innovative?

Bart Stupak: No.

Colin Sullivan: Or do you stand by that?

Bart Stupak: No, I stand by that. In my neck of the woods, where I come from, up in the northern half of Michigan, you better have an SUV to try to get around in the winter. Look it, the SUVs, the trucks have been really selling well across America, before this latest gas crunch. And once we resolve this issue I'm sure they'll go back to their trucks and their SUVs and big vehicles. That's what America wants. That's what they're going to buy. They don't want these little compacts to pile three or four people in to try to get to the grocery store or drop the kids off at school or whatever it might be. They want the larger vehicles.

Colin Sullivan: At the same time U.S. auto manufacturers are falling behind. Sales in May for Ford Motor Co., General Motors, DaimlerChrysler, were lagging, whereas Toyota and Honda are doing quite well. A lot of people, experts have said this is mostly because sales of big pickups and SUVs have been lagging somewhat. So I guess my question is do you think it's been a disservice to the major auto manufacturers in your state that there hasn't been some sort of, a way to break the stalemate on CAFE or fuel efficiency in Congress that would help these automakers?

Bart Stupak: I think there is a way to break the stalemate, is by number one, the president just talking to the Big Three. I mean we've been going through this energy issue for the last year here. And now just recently is the first time the president has ever even sat down with the Big Three. The Big Three has offered. We, as members of the Michigan delegation, have urged them to sit down. Because it's not just the auto industry, it's the manufacturing industry that needs help in this country and there's a number of things the president can do. So, no, I don't think, you know, even if you pass something tomorrow raising the standard, it's going to be about four years before they can even retool it and get to it. They've lost some share. I mean I noticed Toyota has a Roadrunner or a 4x4 Runner they call it. All the foreign imports have gone to, even Lexus, they've all gone to four-wheel drives or SUVs, to bigger vehicles, because that's what the American market is demanding. Now we have slipped some in the whole market, auto industry, I agree, the domestic auto industry. But that has more to do with the type of vehicle you're building, the efficiency, the gadgets on the vehicle, what people think, they're getting a better bang for their dollar.

Colin Sullivan: OK, I'd like to move on to price gouging if we could. The House usually passed a bill sponsored by Representative Heather Wilson of New Mexico. It was a price gouging bill that wasn't as aggressive as a bill that you sponsored, but then you supported Heather Wilson's bill. Why did you do that and why was it important to instead take up your bill, the more aggressive approach?

Bart Stupak: Well, my more aggressive approach is the way we should go. Even today in another hearing we had on boutique fuels they said Mr. Chairman let's do a real price gouging bill. Why my bill over Heather Wilson's? Heather Wilson's bill is only, in theme only is price gouging. It does nothing. At certain points in the supply chain is where gouging can occur, at certain points. And all forms of energy should be underneath the price gouging legislation. Plus we should give the FTC, as they just asked for again in their recent report on price gouging after Hurricane Katrina, to actually give us some factors to base price gouging on. Wilson's bill was absent on all those points. Never defined price gouging, no guidelines for it, did not include all forms of energy like natural gas and propane. It did not stop at different points along the supply chain. She goes to the consumer, not to like refineries, which have increased their prices 255 percent from September '04 until September '05. Now 255 percent increase in one year, I think that's price gouging. That's where my bill would attack, where Wilson's fell short and wouldn't look at that because you don't pull into a refinery and fill up your car with gas.

Colin Sullivan: And you also want to give states more authority to intervene as well, is that correct?

Bart Stupak: Oh, absolutely.

Colin Sullivan: Or would you rather keep it to the FTC?

Bart Stupak: No, no, we actually said the state's attorney generals can use this federal statute and go into, state's attorney generals, into court, enforcing the federal statute.

Colin Sullivan: Now do you expect the Senate to take up a version more like your version of the bill?

Bart Stupak: I expect the Senate won't do anything with this legislation. Let's face it, I mean, the Republican Party is in the pockets of the big oil companies and they own the presidency, the House and the Senate and they're just not going to take up a real price gouging bill. They're not going to take up a PUMP bill which could reduce the price of a barrel of oil by 20 bucks. They won't even look at the crack spread, which is the difference or cost of taking a barrel of oil and turning it into a barrel of gas. What does that cost? How much profit should be. It should be between $5 and $8. And we know during the height of this increased prices on gasoline it was as high as $30. They don't seem to want to address these issues. Instead the oil companies have made scapegoats like boutique fuels, the environment, ANWR, that's the scapegoat. If we want to get to the solutions we have real bold initiatives to get at the price gouging, to get at the cost of energy, not just in our gas pump, but also to heat our homes and for businesses. But this Congress and this president is not interested in hearing that. They just want a scapegoat.

Colin Sullivan: So you mentioned the politics of it, just sort of tangentially.

Bart Stupak: Sure.

Colin Sullivan: Do you think Democrats have an opportunity on energy and do you think they should hit energy specifically on the campaign trail leading up to the midterms? Because it seems to me that incumbents on both sides of the aisle are just as vulnerable with gas prices being high.

Bart Stupak: My old legislation was a year ago, when I did my legislation. I was a conferee on the Energy Policy Act of 2005. Even though I was a conferee I still saw loopholes or where we can make improvements to protect the consumer. And should we make a political issue? Absolutely. It's hitting every American. It's hitting them hard in the pocketbook. It's something they didn't budget for. The days of lower gas prices, I think, are pretty much gone. And I think we need really good, thoughtful, innovative, bold initiatives, not well let's suspend boutique fuels. Let's drill in ANWR. We're not going to drill our way out of this issue. We're not going to sacrifice our environment so the oil companies can make more profits. I mean this president and this Congress has not really addressed the true issues behind the energy policy. It's fractured. There's no oversight. There's no regulation. It was interesting, oil went up near two bucks this weekend. Why? Because Rand made a little bit more noise about their nuclear, so it went up. What'd it go up on? Speculation based on fear, which leads to greed. So I do hope we make it a political issue. I know where I go I talk about it and I'll be traveling around the country on behalf of other Democratic candidates. And I'm glad to stand toe to toe with any Republican and say here's the reason why we can't reduce oil by 20 bucks, because they won't pass the PUMP Act. Here's why, when you have $5 to $8 profit, it's up to $30. Why is that? Can someone explain to me?

Colin Sullivan: You mentioned the PUMP Act. Could you give us a little more details on what that is?

Bart Stupak: Sure.

Colin Sullivan: It's another bill that you vetted.

Bart Stupak: PUMP Act is prevent unfair manipulation of prices. Basically what it says, look it, we exchange about 250 million barrels, it's traded every day in this country. Three-fourths of those trades are without any oversight or regulation by the federal government. There's an agency called Federal Commodities Trade Commission and that should be subject, all oil trade should be subject to this commission oversight and overview. Only one fourth are. So three-fourths of the 250 million barrels traded per day are off the counter. No one's looking at it. That's where you get the speculation. That's where you get a company buying from the company and then jacking up the price. This is the Enron scheme all over again. So we've been calling, for some time, bring it into oversight, just oversight, like we do for all commodities future trading. And we can't even get a hearing on the bill. I bring it up every day, like I did again today, and ask the chairman to give us a hearing, bring it forth, because that one tells us if you would do this you could reduce the price of oil by 20 bucks. And the price at the pump is directly reflected to the price in a barrel of oil. So there we could reduce that by 20 bucks. There's another thing we found out, is the crack spread. Crack spread is basically you take your barrel of oil, reduce it to gasoline. The profit should be $5 to $8. During the height of this energy problem or the high gas prices I should say, it was as high as $30 because no one's watching it. Right now it's about $20. So if it's $8, given the high end of their profit, that's 20, there's $12. Twenty off the pump price by overseeing it. That's $32 we could reduce a barrel of oil. We could save the Americans 40 to 50 percent at a gas pump today just by enacting bold initiatives. And these aren't my numbers, these are numbers that came from witnesses who testified before our committee. And witnesses who have said by using the PUMP Act, the Stupak legislation, you could reduce it by 20 bucks.

Colin Sullivan: Well we're just about out of time, but I mean when you're talking about that bill it strikes me as, I mean a lot of our viewers are very in touch with these issues, but in order to get in touch with American voters on these issues, I mean what you just explained is a fairly complicated piece of legislation. How does the Democratic Party ...

Bart Stupak: Easy, easy.

Colin Sullivan: ... take an idea like that and make it resonate in an easy way, an easily packaged message that's going to resonate with American voters?

Bart Stupak: Sure, Commodities Future Trade Commission have an oversight on all oil futures so we don't have Enron. People understand that. By doing that you save 20 bucks. Bring back the spread between the price of a barrel of oil and a barrel of gas. It should be $5 to $8. We'll give you that, not $30. People understand that. Just do it that simple.

Colin Sullivan: OK. Congressman thanks for coming. I hope you come back.

Bart Stupak: Thank you.

Colin Sullivan: This is OnPoint and I'm Colin Sullivan. Hope to see you next time.

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