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Congress battles over pain at the pump

Gas prices continue to climb and the nations patience is wearing thin. What does Congress plan to do about America's pain at the pump?
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The outrage over gas prices is fueling a major fight on Capitol Hill.  Republicans are pitching rebates for consumers, and some Democrats are demanding limits on subsidies for oil companies.  Things got so intense on Thursday that there was a filibuster for several hours. 

Senate Majority Leader Bill Frist (R-TN) joined "Hardball" guest host Norah O'Donnell to discuss the politics of rising gas prices.  This is a transcript of their conversation. 

NORAH O’DONNELL, GUEST HOST, "HARDBALL":  What can Congress do to help bring down the price of gas? 

SEN. BILL FRIST (R-TN), MAJORITY LEADER:  As most people understand, there is no silver bullet, but it is a matter of supply and demand and we’re 60 percent dependent on foreign oil, which can’t be sustained.  We have people filling up their cars and it’s costing them $40, $50, $60, $70.  People are filling up their tractors saying it’s hardly worth pulling the tractor out for the price we’re having to pay for fuel. 

What we need to do is focus on supply and demand issues.  On the supply side, we can slow down filling or pause the filling of the strategic petroleum reserve.  We have to go back and address our refinery capacity.  Right now, our refineries are down below Katrina level. 

On the demand side, we need to give the authority to the administration to be able to control and to regulate those fuel economy standards, and we need in the midterm to long-term focus on ethanol production, production from soy, biomass, alternative fuels, wind and solar. 

There's a lot we can do, and that’s why the Republicans today put out an eight point plan to look at supply, demand, make sure there’s no price gouging as well. 

O’DONNELL:  There's a feeling out there among Americans, whether fair or unfair to the oil companies, that they are profiting off Americans’ pain at the pump.  And today your colleague, Senator Ron Wyden, Democrat of Oregon, he held the floor for about four hours today saying that we should kill subsidies for oil companies. 

O’DONNELL:  Senator, why is there this big giveaway, billions of dollars, to oil companies?  Why not vote on Senator Wyden’s proposal? 

FRIST:  Well, the issues of whether the oil companies are excessively reaping profits, and we know that the profits are very high, or whether it takes making profits at a point in time in order to invest to increase the supply are ones that we’re going to continue to debate. 

Right now, we will be repealing what we call the Tax Increase Prevention Bill that we’re working out.  It's a separate bill that’s not on the floor.  The bill that’s on the floor is a spending bill that looks at supporting our troops overseas, supporting the victims of Katrina.

But in another bill called the Tax Reconciliation Bill, we will be repealing some of those tax credits, tax incentives that were given in the Energy Bill two years ago to oil companies.  The purpose of those was initially to increase supply.  It is clear that the oil companies don’t need those now, and we will be repealing a number of those. 

O'DONNELL: One of the things that the Republicans proposed today is a $100 gas rebate for millions of Americans.  You’ve attached it, however, to the very controversial drilling in the Arctic Wildlife.  Let me ask you though, is $100 really going to help Americans? 

FRIST:  Well, you know, Norah, right now to a lot of Americans, it will actually be a huge help and the whole idea is to get that relief to the American consumer today who really unexpectedly, again, has been hit by these skyrocketing gas prices. 

Does it change supply and demand?  No.  And that’s why it is important to increase exploration and domestic production in this country.  We know that China is growing, India is growing, their use of energy is increasing.  We’re 60 percent dependent on foreign sources of oil, and those sources are in unstable parts of the world right now; Nigeria, the region of the Middle East, Iran, Saudi Arabia. 

We have to increase the supply here.  We can drill for it, explore it in an environmentally-friendly way, and that’s why we are so convinced that we need to look at things like ANWR or the Alaska Wildlife Refuge. 

O’DONNELL:  Those are certainly the very big issues that need to be tackled about supply and demand and certainly our dependence on foreign oil.  But, of course, Americans are worried about today and tomorrow and the really high price of gas. 

Many people forget that there are huge taxes on our gasoline; not only state, but federal.  Why not suspend the federal gas tax, which is about 18 cents a gallon?  That would help.

FRIST:  Well, there was a debate, and the idea of having this gas holiday rebate where you get a check for $100 today or lowering that cost of gas was debated.  There was generally a feeling that those taxes that come off gasoline do go to supporting our infrastructure, our roads.  And as we look at our economy and the creation of jobs, it’s important to keep investing in that infrastructure so that businesses will continue to grow.

Thus, we did tie those receipts for that $100 rebate to you and to the American people and we did tie that rebate to new income coming from that drilling in ANWR.  There has been some adjustment in accounting procedures, so that there’s no new net cost and you’re not taking away from our very important transportation infrastructure.

O’DONNELL:  Let me ask you about Exxon profits. We learned today they’re up seven percent this quarter, that Exxon has made in terms of income, $8.4 billion in the past three months.  Of course the former head of ExxonMobil just got a $400 million compensation package.  Is that right? 

FRIST:  Well, first of all, it does require these companies, who we are totally dependent on in terms of increasing that supply, to make profits in certain years and in other years lose money because of exploration.  You don’t know if you’re going to hit a well.  You don’t know if you’re going to hit a reserve or not.

That is going to require some understanding on all of our part.  The one thing that we can have no tolerance for and the reason that Speaker Hastert and I wrote a letter to the president is that we need to make sure that the markets are fully transparent for supply and demand. That there can be absolutely no price gouging, either at the retail level or at that wholesale level and that the futures market, which ultimately determines that price and demand is not being manipulated in any way.

O’DONNELL:  Senator, you didn’t say whether you thought it was right or wrong.  Is it right or wrong to be awarded $400 million in compensation?

FRIST:  Well the compensation I think is wrong.  To allow right now in the marketplace, for companies to make a profit is very good, because if they don’t make a profit, they’re not going to be able to invest and increase the supply. 

The important thing is that market be transparent.  It has to be fully justified by the investments that they will be making.  If they say they’re going to be out there exploring, we have to make sure that those profits are invested in that exploration.

O’DONNELL:  Senator, there are a lot of pieces to this puzzle and I know certainly Congress is taking a lot of the heat on the issue about gas prices. 

O’DONNELL:  Senate majority leader Bill Frist, quick question.  Any trips planned to Iowa or New Hampshire any time soon?

FRIST:  Well no, not right now.  I’m focused right here, as you can tell looking at gas prices, securing America’s freedom, securing America’s prosperity, making these tax relief packages out there, extending them for another two years, I’ve got my hands full right here.

O’DONNELL:  You do have your hands full, your final year up there in the Senate.  Thank you.

Watch each night at 5 and 7 p.m. ET on MSNBC.