Conoco Senior Managers Conference Remarks

Monday, February 25, 2002 - 7:00pm

Scottsdale, AZ
February 26, 2002

Introduction

Thank you, Archie, for inviting me here.

Archie has been a driving force behind the Alliance for Energy and Economic Growth, which you probably know is a broad-based coalition of nearly 1,400 energy producers and users in support of a comprehensive, national energy strategy.

Without Archie's hard work in bringing together a wide mix of people and organizations, we never would have scored a victory on an energy bill in the House last year, nor is it likely the Senate would be debating a bill now.

It's good to see senior managers of an organization come together to share information and ideas, to create a vision, and to chart a course for the future.

Conoco is a unique company, but you face challenges and opportunities that are common to all types of businesses, not just those in the energy industry.

Like thousands of other businesses in this country, you want to expand your global presence and tap foreign markets that hold tremendous promise for growth, but you find that our own government is holding you back.

You want to help produce a reliable and abundant supply of energy for this country—and you want affordable energy available to you—but again, the government is making it difficult for you with regulations and restrictions that are not based on science, are not cost-effective, and flat out just don't make sense.

And finally, you wonder if a class-action trial lawyer is going to show up at your doorstep notifying you of a lawsuit that could destroy your business.

Today, I'd like to talk about some of these issues and what the Chamber is doing to bring about pro-growth, pro-business polices in Washington.

Energy

First, let's take a look at where we stand on an energy bill.

The Chamber and Conoco, working within the Alliance for Energy and Economic Growth, have greatly advanced the cause for increased domestic energy production and conservation through a coordinated effort that began nearly a year ago.

At that time, we held the first national energy summit at the Chamber building in Washington.

The California energy crisis was fresh in people's minds, and there was public outrage over high prices at the pump and high home heating bills.

A dip in energy prices, the events of September 11th, and the ensuing war on terrorism and focus on homeland security has changed the debate since then—but it hasn't changed this country's need for increased energy production.

In the next 20 years, total energy consumption in the U.S. will increase by 32%, while domestic production of crude oil is expected to increase by just a fraction of that.

We've reduced our crude oil production by 14% since its peak in 1970 and shut down one-half of all oil refineries since 1981. Heck, we haven't built a new major oil refinery in more than 25 years.

And natural gas. We need to add 38,000 miles of new interstate natural gas pipelines to meet an expected 30% jump in demand over the next decade.

Getting a good energy bill through the Senate and onto the president's desk is one of the Chamber's top priorities.

We are working to ensure that—after all the wheeling and dealing is done, and after the more than 200 amendments are dealt with—the final product contains three important components.

First, we must see to it that the bill is not weighed down with excessive requirements for greater conservation and improved efficiency at the expense of increased production.

History shows that market competition and consumer demands—not heavy-handed government mandates—are the best ways to achieve improved efficiency and a cleaner environment.

So that's why we are fighting newly proposed government-imposed auto fuel efficiency standards that would raise prices and reduce safety and consumer choices while doing little to improve the environment.

Second, the bill must allow for environmentally sensitive exploration in the Arctic National Wildlife Refuge, or ANWR.

As many as 16 billion barrels of oil exist in ANWR's coastal plain, which would replace oil imports from the Persian Gulf region for 10 years, or imports from Iraq for 50 years.

Even by the lowest estimates, ANWR would still be the second-largest oil field ever discovered in North America.

ANWR oil exploration and extraction is the central component of a smart national energy policy…the key to creating an America that is less dependent on the Saddam Husseins of the world for its energy supply.

But, sadly, we're being denied a valuable resource by extreme environmentalists whose arguments against ANWR development just don't add up.

Number one, companies like Conoco have developed the technology to explore and produce sources of energy faster, safer, cleaner and more efficiently than before—with little or no harm to wildlife and natural habitat.

And two, we're talking about a very small sliver of land. Only about 2,000 acres of coastal plain would be disturbed by development, leaving almost 19 million acres of ANWR untouched.

The third critical issue in the energy debate is the use and safe storage of nuclear energy.

Nuclear energy supplies a fifth of our nation's electricity and is proven to be safe, reliable, efficient and clean.

But the power plants that produce nuclear energy were never meant to permanently store nuclear waste, and that's why we need to move forward with a federal nuclear waste disposal site at Yucca Mountain, Nevada.

Yucca Mountain is the most studied, analyzed piece of real estate in the country, if not the entire world.

For twenty years extreme environmentalists and their allies have insisted on more and more scientific research on Yucca Mountain, and for twenty years they've kept getting answers they don't want to hear.

Every scientific study every conducted on Yucca Mountain has supported its selection as a permanent storage site.

It now appears that after two decades of obstruction and delays, the current administration is serious about moving forward on Yucca Mountain, and we will continue to push for development of this site every step of the way.

Trade

Let me move to another top Chamber priority: getting the Senate to pass presidential Trade Promotion Authority, or TPA.

TPA would give the president greater flexibility to negotiate free trade deals by requiring Congress to give an up-or-down vote on a negotiated deal, instead of being able to kill deals with a steady stream of amendments.

Congress' knack for undoing trade deals scares away many potential trading partners. And we can't blame them.

As anyone in business knows, you don't negotiate with people whose authority and decisions could be undermined by others.

As some of you may know, TPA passed the House last year by a single vote, which means that the Chamber needed every single one of the more than 500 face-to-face meetings we held with Congressmen and their staffs, every advertisement, and every pro-trade event we held in the country to come out a winner in that debate.

We're putting forth the same effort in the Senate, which we expect to take up TPA in the very near future.

Our challenge is to produce a "clean" TPA bill that is not overloaded with controversial labor and environmental provisions.

Without TPA, the U.S. is falling behind its competitors in the free trade arena. The numbers tell a compelling story.

There are 130 regional free trade agreements in force around the world, and the U.S. is a party to just three of them.

Our Western European competitors have negotiated more than 900 bilateral investment treaties; the U.S. just 43.

All of this means that there are places in the world where you are not allowed to operate, but where your competitors are creating partnerships with foreign companies…pumping for gas and oil.

U.S. businesses can no longer afford to be stuck on the sidelines while our competitors strike deals with one another.

We have to make TPA a reality, and we're counting on your continued support to help make it happen.

The Chamber is also fighting to dismantle an array of unilateral economic sanctions currently imposed by the U.S. on more than 70 countries around the world.

Protectionists and isolationists believe that cutting off trade with a country is the best way to express moral disapproval of that country's policies.

But history has taught us a lesson they refuse to acknowledge: The U.S. has rarely, if ever, benefited or achieved its objective by cutting off contact with another country.

We need only look 90 miles off the coast of South Florida to find the poster child for a failed embargo.

In 1959, the U.S. imposed sanctions against Cuba believing they would isolate and destabilize Fidel Castro and drive his socialist and undemocratic regime out of power.

But more than four decades and 10 U.S. presidents later, Castro remains firmly in place, supported by some number of Cuban citizens.

And American businesses and workers are still dreaming about all of those economic opportunities they were never allowed to have.

September 11 is yet another illustration of why sanctions don't work.

Years and years of U.S. sanctions on countries like Afghanistan, Iraq, Sudan, Libya, Iran, and others have done nothing to bring about positive change in those countries or quell terrorist activities.

Creating positive change in the world requires engagement, not isolation. Because only through engagement do we expose the world's population to America's democratic values and economic prosperity.

To win the battles over TPA, unilateral sanctions and other pieces of trade legislation, we must win the larger philosophical debate on globalization.

You and I know that globalization means more growth, jobs, prosperity and opportunity.

But others see the growing interdependence of the world's economies as somehow harmful to developing countries, harmful to the world's workers, and harmful to the environment in general.

So the business community has a job to do. We must tell the story that increased trade and investment boosts incomes and living standards everywhere, but especially in the poorest countries.

Open trade and investment have helped raise more than 100 million people out of poverty in the just the last decade alone.

Studies show that during the 1990s, in developing countries with high trade and investment flows, per capita incomes grew by more than 5% while more isolated countries saw their incomes decline.

So, those who point to American prosperity as proof that globalization favors advanced, Western industrialized nations aren't seeing the big picture.

And those in our country who say that increased trade also hurts U.S. workers haven't got their facts straight, either.

Trade directly supports some 22 million U.S. jobs, and the wages of workers in jobs supported by exports are as much as 18% higher than the national average.

NAFTA and the Uruguay Round alone have saved the average American family between $1,300 and $2,000 each year through the combined effect of income increases and lower prices for imported goods.

That's $40 billion to $60 billion of increased national income a year.

For the average family, that's a year's tuition at a community college; or a year's supply of gasoline; it's more than two months of full-time daycare; and more than three months of groceries.

We must also take issue with the environmental extremists who claim that globalization harms the environment.

For openers, let's put one thing on the table: we're all "green." There's not one of us in this room that doesn't want to live in a society with clean air, clean water, clean neighborhoods.

But let's get our facts straight, too.

America is the world's largest exporter and its largest importer. We also happen to have one of the cleanest environments of any industrialized nation in the world.

So what's the connection? It's simple: Prosperity – in part created by trade – pays for the ever-cleaner environment that we have come to expect.

American business spends $200 billion to $300 billion a year cleaning our nation's air, land and water.

That's remarkable – and it's the right thing to do . . . if a country has the ability to do it.

But, sadly and understandably, countries trapped in absolute poverty often are compelled to give priority to job creation, basic health, literacy and other pressing social concerns, rather than dedicating scarce resources for pollution prevention and cleanup.

The bottom line in this debate is simple: for countries in Eastern and Central Europe, Africa, Asia, Latin America or the Middle East, higher environmental and labor standards will come only with deeper integration into the world trading system and further economic development. In other words, globalization!

So we hope that you join the Chamber in spreading the good story of trade in your communities here in the U.S., and in those communities around the world where you do business.

Legal Reform

We hope also that you'll join the Chamber in the fight for legal reform. Our system of justice has been hijacked by a small group of class action trial lawyers intent on destroying entire legitimate industries.

I'm not one to tell lawyer jokes or engage in lawyer bashing. I don't have anything against the vast majority of the one million lawyers in this country.

My son is one, and we employ lots of them at the Chamber.

But I do have a problem with the 3,000 or so class-action trial lawyers who are out to ruin industry and are getting rich doing it.

Flush with billions of dollars in fees from tobacco and asbestos litigation, this small group of trial lawyers is bankrolling new legal attacks on deep-pocketed businesses and greatly expanding its influence over state courts, politics and the legislative process.

Class-action lawsuits over the past decade have exploded by 1000% at the state level and more than 300% at the federal level. A new lawsuit suit is filed in America every two seconds.

We at the Chamber are challenging these class action lawyers at every turn.

Our goal is to reform the legal system and free it from frivolous and excessive lawsuits so that the truly injured can receive speedy and fair justice—and their fair share of any economic damages that may result.

We will challenge class action lawyers through the legislative process—hearings on a class-action reform bill occurred in a House committee earlier this month—and, more importantly, through the political process.

In an unprecedented effort, the Chamber's Institute for Legal Reform endorsed state judicial and attorney general candidates during the 2000 elections, supported get-out-the-vote efforts, and educated voters in these races through television ads, telephone and mail.

Twelve-out-of-15 pro-legal reform candidates won. Last year, we got involved in races in Pennsylvania, Louisiana and Virginia.

Three-out-of-three pro-legal reform candidates won.

So we have a pretty darn good track record, and we will build on that success in this year's state supreme court and attorney general races, which will be a part of our much larger program to elect pro-business congressional candidates.

Enron

Though Congress should be dealing with energy, trade and legal reform, the predictable media and political frenzy surrounding the Enron situation has distracted it.

Conoco, merely by its status as an energy company based in the same city as Enron, probably has been drawn into the frenzy more than it deserves.

There are several important things to keep in mind on the Enron situation.

First, what happened at Enron is not a reflection of either the values or the conduct of most business people.

It was wrong and we are as angry and outraged as the rest of the nation.

Second, if objective, nonpartisan inquiries into the Enron affair produce reasonable proposals that strengthen pensions and 401(k) plans, and increase the clarity and transparency of financial reporting, we will support them.

We understand that investor confidence and trust are critical to the success of the free enterprise system.

Third, companies now voluntarily provide 401 (k) plans to some 42 million Americans and pensions to 90 million. And Conoco offers one of the most generous matching contributions in the country.

Lawmakers and regulators must be persuaded to act with great caution and resist ill-advised measures that would keep companies from offering these benefits.

The Chamber is a leader in the new "Coalition on Employee Retirement Benefits," which is designed to unite business and employee-benefit groups behind the goal of a measured approach to reform and to fight any political temptation to overcorrect in this election year.

Fourth, while the Enron affair must be fully investigated, we must not allow Congress to be distracted from addressing the critical issues I've talked about today.

Business opponents are already trying to use Enron as a rationale to defeat our efforts to stop excessive regulations and lawsuits - and we can't let them get away with it!

Fifth, we must not overlook the fact that the American economy has more transparency, safeguards and integrity than any economy on the face of the earth.

That's a big reason why investment dollars from Europe to Asia continue to pour into our country. Even with our flaws, U.S. standards of corporate governance are models for the global economy.

Can we learn from the Enron mess and make a good system even better? We can and we will.

Unlike government - which learns about problems in its areas of responsibility (such as Social Security, public education and public housing) and takes decades or longer to act - the business community will move swiftly and decisively to correct problems brought to light by Enron.

Positive change and improvements can come from this. They are already happening.

For the most part, reform will not come from politicians flapping their wings on Capitol Hill, but from the business community itself.

Our system will be improved because investors, customers, banks, commercial partners and the affected industries themselves will demand it.

Conclusion

Ladies and gentlemen, we are faced with a most challenging business environment.

We are trying to create jobs and grow the economy against the backdrop of an ongoing war, a recession, an evenly divided Congress, and yes, an election year, when political posturing is always more popular than substance.

It's going to take an extra strong effort from the business community to enact the policies we need to grow the economy and create jobs.

The U.S. Chamber, with the support of Conoco, is leading this effort. Thank you very much.