[Congressional Record Volume 146, Number 72 (Monday, June 12, 2000)]
[Senate]
[Pages S4969-S4970]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            GASOLINE PRICES

  Mr. DORGAN. Madam President, this afternoon, according to the news 
accounts released earlier today, the Environmental Protection Agency is 
calling on major oil refiners to meet in Washington, DC, to explain the 
price hike phenomenon, as it is called. This is not a phenomenon. It is 
a pain in the wallet what is happening with respect to the price of 
gasoline.
  I want to talk a little about that, and talk a little about the 
problems that may be causing it.
  It is not lost on the American people that when they drive to the gas 
pumps these days they are discovering, once again, another price spike 
in the cost of gasoline.
  In North Dakota, for example, the North Dakota Petroleum Marketers 
Association provided me with current gasoline prices in North Dakota: 
Minot, $1.79 a gallon today; Fargo, $1.64 a gallon; Devil's Lake, 
$1.69; Bismarck, $1.68 a gallon. Interestingly enough, the current 
price in Bismarck of $1.68 is nearly a 30-cent-per-gallon increase in 
just the last couple of weeks since the previous price spike. Earlier 
this year, the price of petroleum spiked up and came back down. Now it 
has spiked up again, a nearly 30-cent-per-gallon increase in a very 
short period.
  The EPA is asking for a meeting with the major oil refiners to 
evaluate what is happening with respect to the price of gasoline. Some 
indicate an EPA rule that describes the base fuel that must be used in 
certain cities in the country with respect to oxygenated fuel or 
ethanol as a circumstance where certain base fuels are kind of a narrow 
commodity and are not readily available and so it is pricing gasoline 
very high. That may be one case. I don't know the answer to that. I 
assume the EPA and the refiners will have that discussion. It is quite 
clear there are other things at work.
  No. 1, this country gets a substantial amount of its energy from the 
OPEC countries. In a global economy, the OPEC countries are producing 
an ever-increasing amount of the energy the United States needs. Does 
this put us at the mercy of the supply coming from the OPEC countries? 
Of course it does. When the OPEC countries cut supply, as they did, and 
then increase it marginally, but not increase it to the level where 
they had previously been producing, that is going to have some 
dislocation in this country. The result is an increase in gasoline 
prices.
  It is probably also the case, from hearings I have been involved 
with, that the refiners in this country were refining heating fuel for 
much longer than they normally would have and probably didn't switch 
over to gasoline quite quickly enough. Therefore, we are going to 
continue to see these price spikes. The news reports talk about 
volatility. Well, volatility is a euphemism for the price spikes that 
are jumping up and around with respect to the price of gasoline when we 
don't

[[Page S4970]]

have sufficient supply of crude stock coming into this country which 
refiners need to produce and turn into gasoline.
  What we have are three possibilities. The most obvious is, we are 
seeing an ever-increasing dependence on the OPEC countries. They cut 
back supply, then increased it some, but not nearly enough. The result 
is increased prices for petroleum products in this country.
  It ought to be a wake-up call for all of us. We are too dependent on 
foreign source energy. We ought to make certain we have a national 
energy policy that includes incentives for producers here at home, 
includes additional incentives for renewable energy. There isn't any 
reason we ought not be doing much better with respect to renewable 
energy in this country. The other possibility, aside from the OPEC 
industry, as I mentioned, is the potential of EPA recommendations or 
requirements that have created dislocation in certain markets in terms 
of the base supply that can be used with respect to ethanol.
  I don't know what the outcome of this meeting will be, but I will be 
very interested to see what the EPA has done, whether that has caused 
some dislocation and some price spikes as well.
  Third, it is not unlikely and certainly wouldn't be without precedent 
to have had the petroleum industry play some of their own games with 
respect to supply, the movement of supply and the pricing of supply. 
Some would say: Gosh, how could you think that? Well, history would 
bear out how I might be able to think that would be the case. We ought 
to look at all of these issues and evaluate exactly what is causing 
this price spike and what impact it is having and what we can do about 
it.
  I come from a State that is 10 times the size of Massachusetts. North 
Dakota is a big old State. It takes a lot of driving to get around my 
State; 640,000 people live in a land mass that is equivalent to 10 
times the State of Massachusetts. Our predominant industry is farming. 
In order to seed a crop in the spring, it takes a lot of fuel. In order 
to get the crop off the fields in the fall, it takes a lot of fuel. 
Those family farmers, with the kind of depressed grain prices we have 
seen in this country, don't need further increases in input costs 
placed upon them by these increases in gas prices.

  We have to get some answers from the EPA, the petroleum refiners, the 
major oil companies, and from those who are supposed to be involved in 
the development of an energy plan for this country to answer what kind 
of dependence do we have on the OPEC countries and what could the 
consequences be in the longer term, if those countries decided to have 
a much tighter supply of petroleum going to Western nations, including 
the United States.
  I was reading a briefing memo this morning about this issue. I 
thought a couple of pieces of information were interesting. OPEC 
officials contend that prices are only marginally above the stated ban 
and ``the price rise is more due to a tight gasoline market in the 
United States where new environmental regulations are reducing 
volume.'' That is according to OPEC. OPEC is saying: It's not us.
  The fact is, OPEC cut supply, increased it some but not nearly back 
to where they had originally been producing.
  The Saudi Arabia oil minister also pegged the recent price movement 
on tight oil products markets; that is, oil products markets, not a 
shortage of crude oil itself. One source indicated that the increase in 
prices on certain world oil markets, notably in the U.S., has no 
relation to the volume of international crude output. That is an 
interesting theory. That would stand all logic on its head. Prices in 
the United States with respect to crude oil have no relationship to 
international crude oil production. I think that is not likely to be 
something that would be believed by anyone who is thinking.
  The point is this: This is a significant and important issue to many 
areas of our country. We need to understand the consequences of it, 
what is causing it, and what we can do about it. I hope all of us 
working together can rely on not only the Energy Department, the EPA, 
but the Congress itself to evaluate all three of the suggestions I have 
just made.

                          ____________________