'There are solutions to this problem, but this isn't one of them'

Sen. James N. Inhofe (R-Okla.), in remarks on the Senate floor after Democrats introduced their energy bill as an amendment to flood insurance legislation on May 8:

"Let me respond, firstly, if I can, to the assistant majority leader. First, it is easy to point the finger at oil companies. That is the easiest 'out' because everyone has this perception that all oil companies are doing great.

"Here is the problem you have. If you were to take all profits from oil companies – let's forget about windfall profits; take it all, do not leave any at all for anything else, other than what they are putting into exploration –it would amount to 28 cents a gallon.

"If you slashed their profits in half, as they are proposing to do, that would be 14 cents. Fourteen cents does not help a lot, at least my wife says it does not. And I think you know we are kidding ourselves. There are solutions to this problem, but that is not one of them.

"Then as far as the Strategic Petroleum Reserve, we are putting about 50,000 barrels per day in there right now. If we were to halt that, over the course of a year it would equal less than one day of US consumption. That is not what I call a fix. Fourteen cents a gallon is not a fix, one day of time is not a fix.

"But there are some things we can do . . . [The Republicans' bill] would handle a lot of the problems. First, if we had all of the production out there that we needed to take care of America's needs, we still could not do anything, because we do not have the refining capacity.

"Two years ago, I introduced the Gas Price Act. I could not believe it went down right on party lines. The Democrats flat do not want to increase our refining capacity. This happened in the Environment and Public Works Committee. It was actually a pretty smart approach to it. We were taking a lot of the closed bases and using them and allowing [Economic Development Administration] grants to take place so that adjoining communities could turn those into refineries, and also streamlining the process and all of that.

"Well, it went right down on party lines. So this amendment we are going to be talking about is one that will do something about the refinery capacity. It streamlines the permitting process so there would be a maximum [period before reaching a decision] on any new refinery of 360 days on a new refinery or an expansion of 180 days.

"We have not increased our refining capacity. We have not had a new refinery in 30 years. Other countries are doing it. China is doing it. Mexico is doing it. But we are not. So that is the first thing we need to do, increase refining capacity.

"Secondly, everybody hold on, because this is something I know is very foreign to our thinking nowadays. It is an old concept called supply and demand. We have a lot of demand for [gasoline] out there. We know that. We know when we go to the pump. The problem is the supply. I hate to say it. Is there a chance? I am kind of excited that the public now has the attention of the high prices and realizes we are going to have to do something besides the gimmicks the assistant majority leader talked about.

"That would be to increase our drilling capacity. We could do it on [the Arctic National Wildlife Refuge]. People talk about the fact that this is pristine wilderness. First of all, I challenge anyone to look at this area. It is not a pristine wilderness. The main thing is, if you take that little area that we have, with huge reserves, we have been trying to do something with it. It compares as a postage stamp does to a football field. It is such a small amount. All the Natives there want it. All the Alaskans want it. It is their land. That would be the first thing we should do to increase our capacity.

"We tried this. We passed this 10 years ago. Then President Bill Clinton vetoed it. If he had not, that would be flowing today. All the people who are complaining about that are the same ones who complained about the Alaska pipeline. They said it was going to kill all the caribou. Go up there now during the summer months, and they have increased the number of caribou up there primarily because in some parts of Alaska, the only shade they can find is the Alaskan pipeline. They are all lined up there. So it is not a problem.

"The other major area of production potential would be to go offshore. It is interesting. One of the things in this amendment is to allow States to determine what they want to happen offshore. It is interesting, some of the States, such as Virginia, south of where we are standing right now, very much wants to. I have talked to Sen. John Warner. They are talking about allowing production offshore. Several other states have wanted to do that. It is a wake-up call we have right now that we are going to have to do some of these things.

"It is interesting that Canada allows offshore drilling in the Pacific, the Atlantic and the Great Lakes. Cuba is also looking to expand drilling, which could occur 45 miles off parts of Florida. If this happened, they would be doing it with technology that is much less environmentally friendly than we have right now. So we have the possibility the Cubans are going to be doing something without any emission controls, without any environmental precautions, and we would be allowing it.

"Another part of this amendment is to repeal Section 526 [of the 2007 Energy Independence and Security Act]. This is something that was actually put into the energy bill that was passed in December. Section 526 prohibits Federal agencies from contracting to produce non-conventional alternative fuels that emit higher levels of greenhouse gas emissions than conventional petroleum sources. The scope of the fuels that could be prohibited is left wide open to interpretation, including fuels such as Canadian oil sands, E-85 ethanol, the coal and natural gas-to-liquids fuels.

"This was an experiment I had something to do with in the Senate Armed Services Committee. We now have a B-52H bomber that is actually running on gas-to-liquid fuel. So we know this is something that works. We know it can help our situation.

"What I don't have time to get into because I only had five minutes, but I wish to do it later, is the ethanol mandate that came with the December 2007 bill . . . It is expensive. It is not good on engines, and it is competing. In my state of Oklahoma, our livestock people say we can't continue to have the biomass fuels competing with our feedstocks.

"Almost everything you see that is high priced now in the grocery stores you can trace back to the ethanol mandate. One of the things we will be wanting to do, and I will elaborate on it later, is to exercise the part of that bill that gives the [Environmental Protection Agency] the opportunity to be involved in a waiver of the ethanol mandate."

Contact Nick Snow at nicks@pennwell.com

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