Katrina Relief Spending Accountability and Securing Our Energy Future

Hi. This is Senator Barack Obama and today is Wednesday, September 14th, 2005. Welcome to first time listeners to my podcasts and thank you to my returning visitors for taking the time to listen to me.

In the wake of Hurricane Katrina-- all of us are still shell shocked and trying to get a sense of how we move forward as the waters recede, as the bodies are recovered, as people are placed in temporary housing, there are a lot of questions that have to be asked about issues of poverty, about the competence of our disaster relief efforts, how FEMA is structured, how the Department of Homeland Security is structured. But there are two topics in particular that I think deserve immediate attention that I want to focus on today.

The first is the issue of financial accountability in the relief efforts. Some of you are aware that immediately after the Hurricane we allocated 10.5 billion dollars for Hurricane relief. That was spent in about a week. We then came back and initiated an additional 50 billion dollar emergency supplemental to the budget. 50 billion dollars. It's expected that relief efforts overall may cost upwards of 200 billion dollars, which is the cost of 2 or 3 years of our efforts in Iraq. It promises to blow a hole through our budget. I think that the American people realize that we are going to have to do whatever we need to do to get the Gulf Coast back on its feet. We all have a stake in that. But, one of the things that we are going to also have to make certain of is that this money is well spent.

These past couple of weeks have indicated the enormous generosity of the American people and our desire to help those of us in need. But what we also want to make certain is that this money is not wasted. Right now there are no mechanisms, it appears, to insure that the money is not wasted and I'm reminded of the process that has taken place with respect to the reconstruction in Iraq. Some of you remember stories of the nine billion dollars missing during the provisional authorities efforts to reconstruct Iraq. That money has never been identified in terms of how it was adequately spent. Were already getting stories. There was a report recently in the Wall Street Journal indicating that all the contracts that FEMA is issuing right now are no-bid contracts, that Davis-Bacon, the rule ensuring prevailing wages are paid to workers during the reconstruction process has been suspended by the President, as has rules governing making certain that minority businesses and women-owned businesses are able to compete for these various contracts. Halliburton has already received significant contracts and apparently is in line for much larger contracts in the future.

This all raises the important need to institute basic provisions of accountability. So, as a consequence this week working with Oklahoma Senator Tom Coburn, I will be introducing legislation to make sure that we have a comptroller in place, a Chief Financial Officer, whose job it is to watch how this money is spent and to work with the various departments who are involved in the relief effort to make sure that this money is not wasted and that contracts are appropriate to the job that needs to be done. It also requires that the General Accounting Office, the GAO, a bi-partisan organization set up by Congress, audits and reviews how money is spent. As I said, the American people want to make sure that our money is spent properly on Hurricane relief and not simply making contractors wealthy. And so I think that's an immediate need that we are going to be pursuing this week.

The second issue I want to talk about is the issue of energy. We've had a slow moving crisis that predates Hurricane Katrina, but after the storm it's clear how vulnerable we are. In the moments before the Hurricane hit, Gulf refineries that made up one eighth of our country's total capacity were evacuated and shut down. 95 percent of oil production was immediately suspended in a region where we find over a quarter of America's oil and gas prices that were already at record highs shot up even further all over the country, reaching six dollars a gallon in some places. They're still hovering over three dollars a gallon, something that most of you know. A price that experts say will remain for the rest of the year. Now, it would be one thing if this storm had struck at a time of stability, but the fact is that over the last several years limited supplies and an unprecedented growth in demand have sent the global oil market teetering towards the edge of disaster. Our own energy department tells us that U.S. demand for oil will jump 50 percent over the next 15 years. Meanwhile, countries like China and India are adding millions of cars to their roads. There is no way that the price of oil is not going to continue to rise over the long term. The days of running a 21th century economy on 20th century fossil fuels are numbered and we need to realize that before it's too late. As a Chinese official noted about his country's plans to move away from an oil economy, "If you pump oil, you have to fight wars over it." And the fact of the matter is that even if we are willing to fight wars, it's not clear that we can control the world oil market, despite being the world's sole superpower. We have national security interests as well as economic interests in making sure we are energy independent. And that's why I'm interested in making certain that as we move forward from the immediate aftermath of Katrina, that we use this as an opportunity to reflect on the steps that we could be taking immediately to reduce our dependence on foreign oil.

The truth is an oil future is not a secure future for America. We know this, but even though the technology to move away from an oil economy is at our fingertips, it remains beyond our reach because we haven't found the political will to get it done. We don't have to accept the wait and see attitude of Washington anymore. It flies in the face of our history and our founding principles. If countries like China and Japan can create jobs and reduce oil consumption by churning out millions of fuel efficient cars, why can't we? This should be the great American project for the 21st century. It's going to take time, but the technology already exists for us to take the basic first steps. The energy bill we just passed in Washington takes a few small steps in the right direction by investing in renewable homegrown bio-fuels that could turn out to be some of the most promising alternatives to oil. Already other countries are realizing the potential. Brazil, a nation that once relied on foreign countries to import 80 percent of its crude oil, will now be entirely self-sufficient in a few years because they've invested in bio-fuels. By getting more ethanol in the market and equipping their cars with the flexible fuel tanks that allow them to run on this fuel, Brazil succeeded in securing its energy supply while still giving consumers a break at the pump. We can be doing the same thing here in the United States, but we're going to have to get serious about it.

In the short term, this probably means that we'll need to build more refinery capacity and create not just a strategic petroleum reserve, but also a strategic gasoline reserve so we can deal with the type of shortages that we saw from Katrina. It also means that we'll need to invest in the clean technology that will allow us to burn more coal, our countries most abundant fossil fuel, and it means that we should continue to encourage the use of renewable fuels by insisting that they make up 20 percent of our energy use and make sure every car in America has a flexible fuel tank by 2010. But we need to do more than that. We are going to have to find solutions that strike at the very heart of our dependence on oil. The largest consumer of oil in this country are the cars we drive. If we built cars that got 40 miles per gallon it would save us 1 billion barrels of oil a year and save consumers up to $5,000 at the pump over the life of their cars. If we could do this we could reduce our dependence on foreign oil 20 percent by 2020. The reason we haven't done it; we're concerned of the impact it would have on Detroit. Those are legitimate concerns. The fact of the matter is that our automakers are burdened by huge health care costs. It is hard for them to compete and revamp and retool in order to compete with Japanese automakers.

But, the fact is we don't have a choice. China now has higher fuel economy standards than we do and it's got 200,000 hybrids on its roads. Japan's Toyota is doubling production of the popular Prius to sell 100,000 in the U.S. next year and is getting ready to open a brand new plant in China. If American car companies hope to be a part of that future, if they hope to compete, then they're going to have to make the necessary adjustments so that they can start building these cars too and we're going to have to help them do it. So we can get started by having Washington make a deal with Detroit. We'll raise fuel economy standards in this country by three percent a year over the next 15 years. But, to help our auto industry make the transition, we'll pay for part of the biggest cost they face a year, retiree health care. If we strike a bargain like that not only are we going to put our car makers on sound footing, but we're also going to be able to secure our energy future for years to come.

At the dawn of the internet age, Andy Grove of Intel famously said that there are two kinds of businesses, those that use e-mail and those that will. Today there are two kinds of car companies, those who make fuel efficient cars and those that will. We can't follow the world anymore, we have to lead. And if we don't act now, the economic and societal benefits that have always been the hallmark of American innovation will find a home somewhere else.