[Congressional Record Volume 146, Number 122 (Wednesday, October 4, 2000)]
[Senate]
[Pages S9825-S9827]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   ENERGY POLICY AND CONSERVATION ACT

  Mr. MURKOWSKI. Mr. President, my understanding is that the leader 
requested unanimous consent to bring up the Energy Policy and 
Conservation Act, referred to as EPCA, and there was objection raised. 
I wonder if the----
  The PRESIDING OFFICER. The Senator is correct.
  Mr. MURKOWSKI. Mr. President, I would hope that my colleagues who 
have raised an objection to the Senate taking up this legislation would 
reconsider. This is a very important piece of legislation. It is the 
reauthorization of the Energy Policy and Conservation Act.
  Senator Bingaman, who is the ranking member of the Energy and Natural 
Resources Committee, and myself, as chairman, have worked closely to 
come together with this compromise legislation. We have worked with the 
administration.
  It is my understanding that the administration supports this 
legislation, and for good reason: Because the Energy Policy and 
Conservation Act, initially passed in 1975, deals with issues at hand, 
issues that are affecting the energy supply in this country, issues 
that are affecting the price of energy in this country; and issues that 
the administration has mandated pass the Congress of the United States, 
specifically, this body because these issues deal with the domestic oil 
supply and conservation and the Strategic Petroleum Reserve and the 
International Energy Program, or IEP, as the agreement stands.
  Certain authorities for the Strategic Petroleum Reserve, or SPR, and 
U.S. participation in the International Energy Program expired in March 
of this year. The legislation before us would extend these 
authorizations through September 30, 2003.
  I think it is rather ironic that we are out of compliance in the 
sense of having both these significant issues expire at a time when we 
have an energy crisis and we have not acted upon them.
  I would like to point out several facts about the legislation before 
us and the need for that legislation.
  We have seen a lot of publicity given to the Strategic Petroleum 
Reserve and the emphasis put on the significance of that as kind of a 
savings account for oil in case we have an interruption from our supply 
from overseas, a supply which currently is about 58 percent of our 
total consumption.
  Title I of EPCA provided for the creation of SPR, the Strategic 
Petroleum Reserve, and set forth the method and circumstances for its 
drawdown and distribution in the event of a severe energy supply 
interruption or to fulfill U.S. obligations under the IEP agreement.
  The SPR currently contains approximately 570 million barrels of oil 
and has a total capacity of about 700 million barrels, with a daily 
drawdown capacity of about 4.1 million barrels per day. At its peak, 
the SPR contained 592 million barrels of oil. Currently, the SPR 
contains about 570 million barrels of oil, so there has been a 
drawdown.
  We have seen the action by the President in transferring 30 million 
barrels out of the SPR to be turned into heating oil. It is rather 
interesting to note that the formula doesn't necessarily relate to 30 
million barrels of heating oil. We will actually get somewhere between 
4 and 5 million barrels of heating oil out of 30 million barrels of 
crude oil, about a 2- to 3-day supply.
  As a consequence of the President's action, there is a legitimate 
question of whether the President had the authority to transfer that 
oil out of the SPR since the authorization for the Strategic Petroleum 
Reserve expired March 30 of this year. In any event, there is 
absolutely no reason why it shouldn't be authorized, regardless of 
individual attitudes on the appropriateness of drawing the SPR down.
  It was created in response to the difficulties faced in 1973, when we 
experienced the Arab oil embargo. Many of us remember that time. We 
were outraged. We had gasoline lines around the block and the public 
was indignant. They blamed everybody--the Government. How could it 
happen in the United States that we had run out of gasoline? The 
concept was simple. At that time, most of us believed America should 
not be held hostage again to Mideast oil cartels and that this would 
act as our protection against cutting off our supplies. Unfortunately, 
we find ourselves in a situation today where our domestic policies have 
led us to being held hostage by another tyrant. That tyrant in the 
Mideast is one Saddam Hussein.
  Clearly, we are becoming more and more dependent on Saddam Hussein. 
Currently, 750,000 barrels a day of Saddam Hussein's oil come to the 
United States. It is even more significant that Saddam Hussein has 
taken a pivotal role in the oil issue worldwide, because the difference 
between production capacity and consumption is a little over 1 million 
barrels a day. In other words, we are producing a little over 1 million 
barrels more than we can consume, but that is the maximum production. 
Out of that, Saddam Hussein is contributing almost 3 million barrels a 
day. So you can see the leverage that Saddam Hussein has. He has 
already threatened to cut production. He went to the U.N., when they 
asked for specific programs for repayment of damages associated with 
his invasion of Kuwait. He said: If you make me do this now, what I am 
going to do is simply put off any further plans to increase production, 
and I very well may reduce production.
  You can see the leverage he has if he reduces production. What is the 
world going to do? The price is going to go up, and they are going to 
pay the price.

  So what we have seen today is the reality that the world is consuming 
just slightly less oil than we are producing. Because of this, we have 
not been able to build up our supply of inventory against any 
unexpected supply interruption, which very well could occur. The 
Mideast is still an area of crisis and controversy.
  Here we are, as we approach the fourth quarter of the year, and we 
have the difference between supply and demand, the knowledge that it is 
going to tighten even further, and this leads, as I have indicated, to 
a volatile worldwide oil market.
  It is troubling in the United States because we have allowed 
ourselves to become 58-percent dependent on imported oil, and this has 
grown dramatically in the past few years. What disturbs me most is the 
fact that we have become even more dependent on Iraq. As a consequence, 
it is fair to recognize that with Saddam Hussein now calling the shots 
in the world energy markets and the United States allowing him to do 
so, we have basically put in danger the security of Israel.
  Make no mistake about it. Every speech he concludes, he concludes 
with: Death to Israel. It is kind of ironic. Maybe I am oversimplifying 
our foreign policy, but it seems as though we buy his oil, put it in 
our airplanes and go over and bomb him. We have had

[[Page S9826]]

flown over 200,000 sorties since the Persian Gulf war, where we go over 
and enforce what amounts to an air blockade. As a consequence, we are 
in a situation where we are supplying the cash-flow for his Republican 
Guard as well as the development of his missile and delivery capability 
and his biological capability. This is a mistake.
  Because of this, it is imperative that we continue to place the focus 
of the Strategic Petroleum Reserve on a defensive weapon against severe 
supply interruptions and that we do not use it as an offensive weapon 
to manipulate market forces. We have debated that issue on the floor 
before. I think this bill achieves a balance.
  What we have in this bill is very important because many Members are 
from the Northeast, and this bill covers heating oil reserves. The 
legislation contains language authorizing the Secretary of Energy to 
create a home heating oil reserve in the Northeast.
  Several points about this: First, I have personal concerns about the 
establishment of such a reserve. A reserve could actually act as a 
disincentive to marketers to keep adequate supplies of oil on hand for 
fear that the price could drop out of their market at any time. That is 
a possibility, with the Government going into competition.
  A government-operated reserve of 2 million barrels could actually tie 
up storage capacity that private marketers would fill and deplete 
usually four or five times a season. The reserve could create an 
unworkable, rather elaborate regulatory program used to implement it.
  Second, I was most concerned about the trigger mechanism included in 
the House language that seemingly gave the Secretary total 
discretionary authority to release oil from the reserve. I believe we 
have addressed the majority of the problems associated with the 
creation of such a reserve by clarifying the trigger mechanism.
  The mechanism we have in this bill allows the Secretary to make a 
recommendation for release if there is a severe supply interruption. 
This is deemed to occur if, one, the price differential between crude 
oil, as reflected in an industry daily publication such as Platt's 
Oilgram Price Report or Oil Daily, and No. 2 heating oil, as reported 
in the Energy Information Administration's retail price data for the 
Northeast, increases by more than 60 percent over its 5-year rolling 
average; and second, the price differential continues to increase 
during the most recent week for which price information is available. 
We have this mechanism in this legislation, and it has been agreed to 
by virtually every Member of this body.

  As to EPCA reauthorization, the bill extends the general authority 
for EPCA through September 30, 2003.
  On the Strategic Petroleum Reserve, the authorities for SPR are 
extended through September 30, 2003. It strengthens the defense aspects 
of SPR by requiring the Secretary of Defense to affirm that a drawdown 
would not have a negative impact on national security. That was an 
important provision Senator Bingaman and I negotiated.
  We also have stripper well relief, the small stripper wells that we 
are so dependent on that were threatened the last time we had a price 
downturn. The amendment retains the provision contained in the House 
bill that would give the Secretary of Energy discretion to purchase oil 
from marginal--that is 15 barrels of production daily or less--wells 
when the market price drops below $15. Otherwise, these wells will be 
lost. The cost of production to get them back up is such that they 
would never go on line again. This would give some certainty to these 
producers that we really value, the strippers, as the true strategic 
petroleum reserve, and an operational one, in this country.
  This provision would hopefully offset the loss of some 600,000 b/d of 
lost production that occurred because of the dramatic price decrease in 
1999.
  This amendment also allows the Secretary to fill the SPR with oil 
bought at below average prices.
  We have weatherization. It strengthens the DOE Weatherization program 
by expanding the eligibility for the program and increases the per-
dwelling assistance level.
  The Summer Fill and Fuel Program authorizes a summer fill and fuel 
budgeting program.
  The program will be a state-led education and outreach effort to 
encourage consumers to take actions to avoid seasonal price increases 
and minimize heating fuel shortages--such as filling tanks in the 
summer.
  The Federal Lands Survey directs the Secretary of Interior, in 
conjunction with the Secretaries of Agriculture and Energy, to 
undertake a national inventory of the onshore oil and gas reserves in 
this country and the impediments to developing these resources.
  This will enable us to get a better handle on our domestic resources 
and the reasons why they are not being developed.
  The DOE Arctic Energy Office establishes within the Department of 
Energy an Office of Arctic Energy.
  Most of the energy in North America is coming from above the Arctic 
Circle.
  The office will promote research, development, and deployment of 
energy technologies in the Arctic.
  This provision is critical as the Arctic areas of this country have 
provided for as much as 20% of our domestic petroleum resources--have 
more than 36 TCF of proven reserves of gas, and an abundance of coal, 
as we look at future energy needs of this country.
  It might surprise members to know that the Department of Energy 
employs no personnel in Alaska!
  There is a 5 megawatt exemption that allows the State of Alaska to 
assume the licensing and regulatory authority over hydro projects less 
than 5 megawatts.
  This will expedite the process and cost of getting this clean source 
of energy in wider use in Alaska.
  The Senate has already passed this provision.
  The justification is that there is no way a small community, a small 
village, can put in a small hydrobelt wheel on a stream that has no 
anadromous fish and generate power to replace dependence on high-cost 
diesel, much of which is flown in, and still meet the requirement of 
the FERC, which licenses these small operations. And, as a consequence, 
we have not been able to utilize them in many of the areas to replace 
the high cost of diesel.
  We have royalty-in-kind.
  This provision allows the Secretary of the Interior more 
administrative flexibility to increase revenues from the government's 
oil and gas royalty-in-kind program.
  Under current law, the government has the option of taking its 
royalty share either as a portion of production, usually one-eighth or 
one-sixth, or its equivalent in cash.
  Recent experience with MMS's royalty-in-kind pilot program has shown 
that the government can increase the value of its royalty oil and gas 
by consolidation and bulk sales.
  Under royalty-in-kind, the government controls and markets its oil 
without relying on its lessees to act as its agent. This eliminates a 
number of issues that have resulted in litigation in recent years and 
allows the government to focus more directly on adding value to its oil 
and gas.
  Finally, the FERC relicensing study requires FERC to immediately 
undertake a review of policies, procedures, and regulations for the 
licensing of hydroelectric projects to determine how to reduce the cost 
and time of obtaining a license.
  I remind colleagues that this is a bipartisan piece of legislation 
that has been developed between Senator Bingaman and myself on the 
Energy Committee. It has been cleared, as I understand it, by our side 
unanimously. It is my understanding that there still remains objection 
on the other side, although we have had assurances that we are willing 
to work and try to address the concerns of those on the other side who 
have chosen to place a hold on this legislation.
  In view of the heightened emotions associated with our energy crisis 
in this country, this is very responsible legislation that is needed 
and is supported by the administration. It is timely, and it is 
certainly overdue in view of the fact that we are down to the last few 
days of this session. I hope we can come to grips with meeting the 
obligation we have to pass the Energy Policy and Conservation Act out 
of this body.
  I yield the floor.
  Mr. REID. Before the Senator from Alaska leaves the floor, I of 
course recognize the expert on our side of the

[[Page S9827]]

aisle dealing with this legislation is the Senator from California, 
Mrs. Boxer. I want to say this because I am the one who objected to 
this. Following what the Senator from Alaska has said--and I have the 
greatest respect for him, and we work together on many issues--it seems 
to me we can resolve this very quickly. There is a companion bill, H.R. 
2884, which already passed the House. We can bring it up here as it 
passed the House. It would go through very quickly. We believe that 
would take care of the immediate problems facing us--the home heating 
oil reserves and the Strategic Petroleum Reserve.
  The problem we have, and the reason for the objection, is that to 
H.R. 2884 my friend from Alaska added some very--from our perspective--
very controversial oil royalties, among other things. So we believe if 
the home heating oil reserve is as important as we think it is--and we 
believe it is extremely important--and if the Strategic Petroleum 
Reserve is as important as we think it is, we should go with the House 
bill. We can do that in a matter of 5 minutes.
  Mr. President, I ask unanimous consent that under the time reserved 
to the minority on the continuing resolution, Senator Durbin, who has 
been waiting patiently all afternoon, be recognized for 10 minutes, 
Senator Boxer be recognized for 30 minutes, Senator Graham for 30 
minutes, Senator Harkin for 15 minutes, Senator Feingold for 10 
minutes, and Senator Wellstone for 5 minutes.
  Mr. MURKOWSKI. Senator Bingaman and I have worked in a bipartisan 
manner on this legislation. I am sure Senator Bingaman would want to 
express his views. I encourage him to avail himself of that 
opportunity. It is my understanding that the administration supports 
the triggering mechanism in our bill as opposed to the one in the House 
bill specifically, and, as a consequence, we have worked toward an 
effort to try to reach an accord.

  We are certainly under the impression on this side that we worked 
this out satisfactorily to the administration. But objections may be 
raised. Senators are entitled to make objections, but I hope they are 
directed at issues that clearly address environmental improvements.
  I have nothing more to say other than this legislation is needed. We 
have a crisis in energy, and we had best get on with it. Otherwise, I 
think the problem is going to suffer the exposures, particularly since 
we won't have authorization.
  I thank the Senator.
  I see the Senator from California, who may be able to shed some light 
on this.
  The PRESIDING OFFICER. Is there objection to the time agreement as 
proposed by the Senator from Nevada?
  Without objection, it is so ordered.
  Mr. REID. Mr. President, I don't think we need unanimous consent. The 
time is under our control. We can allocate it any way we desire.

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