The Silly Season has arrived earlier than usual in Washington—undoubtedly because gasoline prices have soared, and many members of Congress feel their constituents' pain more than usual because it's an election year.
Committee leaders begin gasoline price hearings by declaring there are no quick fixes. Then they ask experts who have been invited to testify if they can think of any. Some federal lawmakers arrive with their own answers, and bark "just answer yes or no" when a witness tries to explain.
Nuance is routinely lost amid the obvious political posturing. It fortunately can be found in some witnesses' written testimony, which becomes part of the written record.
There are real questions, for example, about whether refineries on the US East and West coasts will have access to growing crude oil supplies from Alberta's oil sands and US tight oil formations beyond the Bakken in North Dakota and Montana.
The difference between North American and North Sea Brent crude prices is enough to have influenced decisions to close or sell several East Coast and Caribbean refineries. Operators of West Coast facilities that process crude from Alaska's North Slope, meanwhile, view declining volumes moving through the Trans-Alaska Pipeline System with growing concern.
"Right now, there is no non-US, non-Canadian oil in the middle of the US," Lucian Pugliaresi, president of Energy Policy Research Foundation Inc., said during a Mar. 21 House Natural Resources Committee hearing. "It's the East and West coasts which rely heavily on waterborne transportation. If we could solve that, the situation would be improved."
Jones Act waiver?
Some have suggested that it might be necessary to waive the Jones Act requirement that US-flagged vessels be used to transport any goods between US ports. The American Maritime Partnership, in a Mar. 14 letter to the US Energy Information Administration, noted that EIA's February report on refinery activity and northeastern oil product markets underestimated US tank vessel capacity by more than half.
"The report addressed only American tankers but not all tank vessels, including tank barges, which are a primary means of transporting petroleum products in the US," it said. "We believe that once all Jones Act tank vessel capacity is considered, EIA will find that there is ample American vessel capacity to address changes in petroleum product markets as result of Northeast refinery closures."
Additional pipeline capacity to move products from the Gulf Coast, where refineries are expanding instead of closing, is a more permanent solution, as EIA's initial report suggested. Policies to encourage more domestic crude production and increase imports from Canada would be even better than simply seeking some quick (and politically expedient) fix.
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