[Congressional Record Volume 143, Number 160 (Thursday, November 13, 1997)]
[Senate]
[Pages S12657-S12658]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




EXTENDING CERTAIN PROGRAMS UNDER THE ENERGY POLICY AND CONSERVATION ACT

 Mr. BINGAMAN. Mr. President, the situation in which we find 
ourselves on this bill is a disgrace. The daily newspapers have been 
filled recently with stories of our developing political confrontation 
with Saddam Hussein. Just today, Saddam Hussein has ordered all 
American arms inspectors to leave Iraq immediately, escalating Iraq's 
crisis with the United Nations and heightening the possibility of a 
military confrontation. We may well see military action in the Persian 
Gulf before Congress convenes next year. We all know what that could do 
to oil markets. Prices might well spike up, right in the middle of the 
winter heating season. The most effective antidote to such damaging 
price fluctuations is close communication among the major oil 
consumption nations, and joint action to calm oil markets through the 
International Energy Agency [IEA]. Yet the bill before us, once again, 
fails to make the legal changes that are needed for the United States 
to continue to participate meaningfully in the IEA.
  The United States took the lead in forming the IEA after the Arab oil 
embargo of 1973, so that we would never again have to experience the 
market chaos that reigned at that time. At that time, it seemed that 
the best way to avoid a repeat of gas lines around the world was 
through mandatory allocations of world oil supplies. This was basically 
a command-and-control approach to the problem. This mandatory 
allocation mechanism was enshrined in our basic law on oil emergencies, 
the Energy Policy and Conservation Act of 1975 [EPCA], which also 
authorized the Strategic Petroleum Reserve, and which this bill would 
extend. But the world has changed since the 1970's. Oil markets have 
changed dramatically since then. And the mandatory allocation scheme 
contained in the original EPCA is a dinosaur.
  The United States has taken the lead in designing a flexible 
international response mechanism to oil supply disruptions that 
respects market forces. Our domestic oil industry played a key role in 
the planning process and has endorsed it. We convinced all of the other 
countries in the IEA to adopt it. But without statutory changes to 
EPCA, the United States is placed in the absurd position of not being 
able to participate in the international oil emergency response system 
that it designed. And all indications from the Persian Gulf are that we 
could have another emergency sometime soon.
  Why are we in such a predicament? It is not the fault of the 
administration. They have been pressing for the adoption of the needed 
legal changes for 3 years now. It is not the fault of this Body. We 
have passed the requisite legal changes in both the last Congress and 
in this Congress, and have forwarded them to the other Body. There is 
no good answer to the question of why the other Body continues to 
refuse to act on such clearly needed changes. These necessary changes 
have apparently been made a hostage to other, non-related issues. So we 
must pass the bill before us today, which is inadequate to our national 
security needs, or the President will also be without clear legal 
authorities to operate the Strategic Petroleum Reserve in case of an 
oil supply emergency.
  I will vote for this bill, Mr. President, with extreme reluctance. 
But I hope that no one is under the illusion that it advances our 
energy security. Quite the opposite. The bill sent to us by the other 
Body will likely reduce our energy security, by inflicting long-term 
damage on the International Energy Agency. This is because failure of 
the bill to allow IEA to work with U.S. oil companies threatens the 
future of the Agency. When there are severe supply shortages or market 
instability, the IEA requires real-time information about the movement 
and location of oil stocks that only these oil companies can provide. 
In such a case, this information is shared at the express request of 
the U.S. Government. But the sharing of this information is normally 
forbidden under our antitrust laws, so an antitrust exemption of cover 
information-sharing undertaken at the U.S. Government's request is both 
needed and justified.

  What is U.S. industry to make of our refusal, for a third time now, 
to make

[[Page S12658]]

the appropriate changes to EPCA? I believe that industry will see the 
passage of this legislation as a signal that the changes to U.S. law 
needed for their continued participation in the IEA will not be 
forthcoming in this Congress, if ever. None of us should be surprised, 
then, when these companies end their cooperation with the IEA and start 
to reassign the personnel who previously worked on the issues of 
emergency preparedness and coordination.
  The refusal of the other Body to act on the needed antitrust 
exemption places the two most important parts of the program of the IEA 
for 1998 in serious jeopardy. I would like to describe these planned 
activities in a little detail, which will illustrate how our energy 
security will be diminished by this bill, even if a crisis in the 
Persian Gulf does not occur while we are out of session. First, IEA was 
planning to convene a global conference next year to discuss the 
coordinated management of emergency oil stocks. For the first time, 
China, India, and other Asian countries, which will be crucial players 
in any international oil emergency, would have been represented. This 
conference will be an important opportunity to convince them to develop 
their own emergency stockpiles, and will provide a venue for them to 
learn the practicalities involved in doing so. The U.S. Government has 
contributed $50,000 towards holding this conference. Without the 
necessary antitrust exemption, though, the conference will likely be 
canceled, since the key players with expertise in creating and managing 
emergency stocks, the oil companies that operate in the United States, 
are precluded from participating under current law. I don't see how 
that serves our national interests. Second, the IEA was also planning 
to hold, in 1998, the first drill in 5 years to exercise its emergency 
mechanisms. This is important to the smooth functioning of IEA's 
mechanisms in an actual emergency. In the last 5 years, most of the 
personnel with knowledge of what actually transpired during the Persian 
Gulf war on world oil markets have left the scene. It is past time that 
we have held an exercise to test our present capabilities to handle an 
emergency. Next year's exercise would also have been the first full 
test of the revised procedures put in place since the Persian Gulf war. 
Without the antitrust exemption, this exercise either cannot be held, 
or it must be limited to exercising only the obsolete IEA procedures 
for mandatory supply allocation. Industry interest in doing the latter 
is minimal, so the exercise will in all likelihood be canceled. Such an 
avoidable development is also not in our national interest.
  If there were legitimate issues being raised by the other Body with 
respect to the broader legislation that is needed, that would be one 
thing. Such issues could be worked out in conference. But the only 
action from the other Body to our requests for the legal changes needed 
to maintain our energy security, for the past 3 years now, has been to 
wait until the end of session, to pass a short bill extending the 
expiration dates in current law, and to leave town. I believe that our 
country has been poorly served by this inattention to our national 
security interests.

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