US House Democrats intend to bring back their proposal to create a strategic refining reserve as an alternative to a Republican bill aimed at simplifying refinery construction permit application processes.
“CEOs of major oil companies have testified that state permitting is not a barrier. Last week’s bill is not the answer,” said Rep. Rick Boucher (D-Va.) in his opening remarks at an Energy and Commerce Committee hearing on gasoline prices, supplies, and specifications.
He indicated that he and Rep. John D. Dingell (D-Mich.), the committee’s chief minority member, plan to introduce the measure later this week.
Boucher said that the approach for refining would be similar to what was used to create the Strategic Petroleum Reserve. The refining reserve would be used only when extraordinary occurrences such as last year’s Gulf Coast hurricanes significantly interrupt oil product distribution systems, he said. “This is a measure that’s based on a proven model that has worked. We would welcome a bipartisan effort to use the same means we used to solve crude oil disruptions for refined products disruptions,” Boucher said.
Republicans said they were disappointed that the refinery permitting measure proposed by Rep. Charles F. Bass (R-NH) did not get more support from Democrats when it came to a vote last week on the House floor.
“We have a right to be frustrated that some folks oppose a balanced energy bill and still have time to decry high prices. They oppose the ability of refineries to expand and eliminate a product supply bottleneck. They even oppose renewable energy projects offshore,” said Rep. Charles W. Norwood (R-Ga.).
Others maintained that increasing domestic refining capacity is only part of the answer. “America is not making full use of its own oil supply. Allowing access to the billions of barrels of oil in [the Arctic National Wildlife Refuge] and off our coasts would be a good start,” said Rep. Joseph R. Pitts (R-Pa.). But other Democrats suggested that oil industry consolidation has helped integrated companies and larger downstream independents increase their refining profits.
“I know the industry will continue to push its refinery bill, but the issue is not local permitting but that the industry has not wanted to build more refineries. It has consolidated to a remarkable degree and this has affected concentration, I believe, in a very negative way,” said Rep. Lois Capps (D-Calif.).
Rep. Jan Schakovsky (D.-Ill.) added, “We know that between 2004 and now, refiners marked their prices up by 255%. Creating a national refinery reserve would help, but the legislation has been rejected. We need a windfall profit tax that would tax profits when prices are above $40/bbl, adjusted for inflation, so they can be returned to consumers.
Rep. Henry A. Waxman (D-Calif.) said that the committee needed to call major oil company executives and independent refiner-marketers in and ask them why downstream operations have grown more profitable. “Instead of investigating the oil industry, there’s a concerted effort here in Congress to blame everyone else. Last week, there was a hearing that blamed state and local officials. Next week, there may be one that blames environmental regulations. We should stop defending the oil industry and demand answers,” he said.
Dingell suggested that the committee should invite state and local officials to discuss refinery permitting processes before the House votes on the Republicans’ bill again. He repeated his charge that the administration of George W. Bush has not moved quickly enough to implement provisions in the 2005 Energy Policy Act, particularly the Environmental Protection Agency, which was supposed to compile a list of US specialized gasoline blends.
“Prices have risen to their highest levels since the hurricanes struck. Consumers will spend $1,264 more for gasoline than they would have at January’s price levels. This is a significant amount for many consumers who have already paid high winter heating bills,” said Dingell.
“At this late date, the ability of Congress to have an immediate impact on gasoline prices is very limited,” he observed.
