[Congressional Record Volume 146, Number 123 (Thursday, October 5, 2000)]
[Senate]
[Pages S9917-S9918]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE HEATING OIL RESERVE
Mr. MURKOWSKI. Mr. President, I think Senator Domenici will be
seeking recognition. First, I want to take 2 minutes to alert my
colleagues to what I think is a very significant issue.
Much has been made of late about the status of the Strategic
Petroleum Reserve and the recommendation by Vice President Gore that we
withdraw 30 million barrels out of the SPR so we can build up our
heating oil reserve. Let me tell you what is happening to that.
The administration forgot a very important detail when they put that
oil up to bid for the refiners. They didn't mandate that the crude oil
be refined into heating oil or that it be used to build inventories
here in the United States for the benefit of the Northeast States that
need that heating oil inventories built up.
What will happen to the crude oil or refined product? It will go into
the marketplace, and it is going to Europe because Europe is paying a
higher price for heating oil than the United States. Currently, 167,000
barrels a day of distillate is exported.
Let me tell you what came out of the Houston Chronicle, and I quote:
The buyers can do what they wish with the oil, such as sell
or swap it, said Department of Energy spokesperson Drew
Malcomb, although whoever ends up with the oil has to get it
out of storage by the end of November.
The extra crude won't result in any additional heating oil
because all the heating oil facilities already are operating
at maximum capacity, Brown said.
There you have it. You have an administration that said we had an
emergency, we had to go into SPR, address our heating oil situation,
while sending a message to the Mideast that we are reducing our savings
account. Then we find we may not build up our domestic heating oil
inventories at all with this oil, it is going up for sale into the
market and ending up in Europe because the administration didn't
mandate that if you bought the oil, you had to keep it here in the
United States.
Senator Stevens and I have experienced some demands relative to our
inability to move our oil out of our State.
It is inconsistent to me that the administration could make such a
poor business deal. We have not accomplished anything with SPR. We have
simply increased our exports of heating oil. I think it is a charade.
I thank my colleague from New Mexico. But I did want to call that to
your attention.
Mr. President, I ask unanimous consent to have printed in the Record
an article from the Houston Chronicle entitled ``Oil from Reserve in
High Demand'' and two tables on distillate exports.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Oil From Reserve in High Demand--Bidders Grab 30 Million Barrels
(By Nelson Antosh)
Trading companies and refiners looking for a good deal on
crude have snapped up all 30 million barrels that the federal
government is releasing from the Strategic Petroleum Reserve.
The Energy Department announced Wednesday that 11
companies, some of them with names little known even within
the industry, had submitted the best bids for the oil being
held underground in Louisiana and Texas.
The buyers in effect promised to return to storage 31.56
million barrels between August and November of next year,
thus paying a premium of about 5 percent.
But by using the futures market, the successful bidders
will be able to pay back with oil cheaper than what it is
today, even if the real market price for crude may be higher
by then.
``A good transaction for value,'' said Mary Rose Brown of
Valero, a San Antonio-based company that will be refining its
federal crude. The difference between Wednesday's futures and
the payback cost is $3.25 per barrel, she said.
The futures price for next October is $28.53, said Kyle
Cooper of Salomon Smith Barney in Houston, who reasons that
all the reserve sale does is ``move around crude.''
In contrast to next October, the sweet crude contract for
next month settled Wednesday on the New York Mercantile
Exchange for $31.43 per barrel.
The buyers can do what they wish with the oil, such as sell
or swap it, said DOE spokesman Drew Malcomb, although whoever
ends up with the oil has to get it out of storage by the end
of November.
Valero will be taking 1 million barrels of sour crude from
the Bryan Mound storage site near Freeport and splitting it
between its refineries in Texas City and Freeport.
That crude will be co-mingled with other supplies and be
made into a full range of products, including gasoline.
The extra crude won't result in any additional heating oil
because all the heating oil facilities already are operating
at maximum capacity, Brown said. Valero even shifted some of
its distillate output at a New Jersey refinery from premium-
priced jet fuel into home heating oil.
``The product will go where the market is,'' said Malcomb,
although he said his agency would prefer that it be refined
into heating oil and be shipped to the Northeast.
Vitol, a trading company in Houston that also owns a
refinery in Canada, will get 1.05 million barrels of sweet
crude out of a storage site in Louisiana and 550,000 sour
barrels out of Bryan Mound.
The company will apply for an export license, but logically
it is a better value if sold along the Gulf Coast, said a
Vitol employee who preferred not to be identified.
Marathon Ashland Petroleum LLC, a Houston-based venture
that is a major refiner, was the high bidder on 2.4 million
barrels of sour crude and 1.5 million barrels of sweet crude.
The DOE did not release the amounts that individual
companies promised to return to the reserve, because that
could influence any future sales.
Morgan Stanley Dean Witter of New York was the high bidder
on 2 million barrels.
Lesser known names were Euell Energy of Aurora, Colo.,
which was the high bidder on
[[Page S9918]]
3 million barrels, Burhany Energy Enterprises of Tallahassee,
Fla., also with 3 million barrels, and Lance Stroud
Enterprises of New York with 4 million barrels.
Equiva Trading, which is a Houston-based alliance between
Shell and Texaco, will get 2.5 million barrels. A spokesman
could not be reached late Wednesday.
Elf Trading, also based in Houston, is getting 1 million
barrels.
The largest quantity, 6 million barrels, was won by BP Oil
Supply Co., in Warrenville, Ill.
``Every barrel we can get into the market in the next few
weeks reduces the risk of a shortage of heating oil and
diesel fuel this winter,'' said Secretary of Energy Bill
Richardson in a news release. ``This is good for consumers
and good for our nation's long-term security,''
Some have criticized releasing oil from the Strategic
Petroleum Reserve as a political ploy to get more votes in
the Northeast, where heating oil is widely used.
TABLE 5. U.S. YEAR-TO-DATE DAILY AVERAGE SUPPLY AND DISPOSITION OF CRUDE OIL AND PETROLEUM PRODUCTS, JANUARY-JUNE 2000
[Energy Information Administration/Petroleum Supply Monthly, August 2000; in thousand barrels per day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Supply Disposition
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Commodity Unaccounted
Field Refinery Imports for crude Stock Crude Refinery Exports Products
production production oil a change b losses inputs supplied c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Crude Oil.......................... E 5,851 ........... 8,655 432 64 0 14,787 87 0
Natural Gas Liquids and LRGs....... 1,956 754 204 ........... 59 ........... 357 83 2,414
Pentanes Plus.................. 307 ........... 28 ........... 6 ........... 133 4 192
Liquefied Petroleum Gases...... 1,649 754 176 ........... 53 ........... 225 79 2,222
Ethane/Ethylene............ 746 29 23 ........... 6 ........... 0 0 791
Propane/Propylene.......... 549 597 124 ........... 8 ........... 0 60 1,201
Normal Butane/Butylene..... 163 121 13 ........... 34 ........... 120 19 125
Isobutane/Isobutylene...... 191 7 17 ........... 6 ........... 105 0 105
Other Liquids...................... 177 ........... 642 ........... 63 ........... 807 47 -98
Other Hydrocarbons/Oxygenates.. 339 ........... 62 ........... 4 ........... 367 30 0
Unfinished Oils................ ........... ........... 348 ........... 23 ........... 427 0 -102
Motor Gasoline Blend. Comp..... -162 ........... 231 ........... 37 ........... 16 16 0
Aviation Gasoline Blend. Comp.. ........... ........... 0 ........... -1 ........... -3 0 3
Finished Petroleum Products........ 218 16,146 1,282 ........... 70 ........... ........... 775 16,801
Finished Motor Gasoline............ 218 7,842 347 ........... 76 ........... ........... 109 8,223
Reformulated............... ........... 2,533 176 ........... 5 ........... ........... 1 2,703
Oxygenated................. 561 107 1 ........... -1 ........... ........... 1 669
Other...................... -343 5,202 170 ........... 71 ........... ........... 107 4,851
Finished Aviation Gasoline..... ........... 17 (s) ........... -1 ........... ........... 0 19
Jet Fuel....................... ........... 1,570 129 ........... 22 ........... ........... 27 1,650
Naphtha-Type............... ........... (s) 2 ........... (s) ........... ........... (s) 2
Kerosene-Type.............. ........... 1,570 127 ........... 22 ........... ........... 27 1,648
Kerosene....................... ........... 58 3 ........... -10 ........... ........... 1 70
Average exports per day:
Distillate Fuel Oil............ ........... 3,414 274 ........... -97 ........... ........... 152 3,634
0.05 percent sulfur and ........... 2,364 139 ........... -1 ........... ........... 35 2,469
under.....................
Greater than 0.05 percent ........... 1,049 136 ........... -96 ........... ........... 117 1,164
sulfur (Heating oil only).
Residual Fuel Oil.............. ........... 657 212 ........... 7 ........... ........... 141 721
Naphtha For Petro. Feed Use.... ........... 164 104 ........... (s) ........... ........... 0 268
Other Oils For Petro. Feed use. ........... 203 154 ........... (s) ........... ........... 0 357
Special Naphthas............... ........... 102 11 ........... -1 ........... ........... 21 94
Lubricants..................... ........... 187 14 ........... -1 ........... ........... 27 174
Waxes.......................... ........... 15 2 ........... (s) ........... ........... 3 14
Petroleum Coke................. ........... 704 1 ........... 1 ........... ........... 289 416
Asphalt and Road Oil........... ........... 508 29 ........... 75 ........... ........... 4 458
Still Gas...................... ........... 652 0 ........... 0 ........... ........... 0 652
Miscellaneous Products......... ........... 53 (s) ........... (s) ........... ........... (s) 53
--------------------------------------------------------------------------------------------------------------------
Total...................... 8,201 16,900 10,783 432 256 0 15,952 992 19,117
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a Unaccounted for crude oil represents the difference between the supply and disposition of crude oil. Preliminary estimates of crude oil imports at the
National level have historically understated final values by approximately 50,000 barrels per day. This causes the preliminary values of unaccounted
for crude oil to overstate the final values by the same amount.
b A negative number indicates a decrease in stocks and a positive number indicates an increase in stocks.
c Products supplied is equal to field production, plus refinery production, plus imports, plus unaccounted for crude oil, minus stock change, minus
crude losses, minus refinery inputs, minus exports.
(s) = Less than 500 barrels per day.
E = Estimated.
LRG = Liquefied Refinery Gas.
-- = Not Applicable.
Note: Totals may not equal sum of components due to independent rounding.
Sources: Energy Information Administration (EIA) Forms EIA-810, ``Monthly Refinery Report,'' EIA-811, ``Monthly Bulk Terminal Report,'' EIA-812,
``Monthly Product Pipeline Report,'' EIA-813, ``Monthly Crude Oil Report,'' EIA-814, ``Monthly Imports Report,'' EIA-816, ``Monthly Natural Gas
Liquids Report,'' EIA-817, ``Monthly Tanker and Barge Movement Report,'' and EIA-819M, ``Monthly Oxygenate Telephone Report''. Domestic crude oil
production estimates based on historical statistics from State conservation agencies and the Minerals Management Service of the U.S. Department of the
Interior. Export data from the Bureau of the Census and Form EIA-810, ``Monthly Refinery Report.''
THESE ARE B-B EXPORTED--AMERICAN PETROLEUM INSTITUTE, ENERGY INFORMATION
ADMINISTRATION
------------------------------------------------------------------------
Date Distillate
----------------------------------------------------------------\1\-----
January 1998............................................. 133
February 1998............................................ 79
March 1998............................................... 129
April 1998............................................... 186
May 1998................................................. 121
June 1998................................................ 149
July 1998................................................ 161
August 1998.............................................. 150
September 1998........................................... 107
October 1998............................................. 75
November 1998............................................ 54
December 1998............................................ 145
January 1999............................................. 117
February 1999............................................ 116
March 1999............................................... 159
April 1999............................................... 191
May 1999................................................. 187
June 1999................................................ 180
July 1999................................................ 123
August 1999.............................................. 130
September 1999........................................... 162
October 1999............................................. 192
November 1999............................................ 170
December 1999............................................ 212
January 2000............................................. 132
February 2000............................................ 112
March 2000............................................... 211
April 2000............................................... 178
May 2000................................................. 127
June 2000................................................ 149
July 2000................................................ 132
August 2000.............................................. 168
------------------------------------------------------------------------
\1\ Distillate fuel exports (Mbld), heating oil and diesel.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, I understand I have up to 20 minutes as
if in morning business.
The PRESIDING OFFICER. Ten minutes.
Mr. DOMENICI. I ask unanimous consent for up to 20 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. I understand Senator Sessions would like to follow me
with 5 minutes, if there is no objection.
Mr. REID. Mr. President, reserving the right to object, the Senator
from New Mexico wishes to speak for how long?
Mr. DOMENICI. Up to 20 minutes.
Mr. REID. We have the Senator from Alabama, and we have Senator Bryan
who wishes 10 minutes. I ask that, using normal procedure, we have a
Republican and a Democrat. I ask that Senator Bryan be the last speaker
for up to 10 minutes.
Mr. DOMENICI. Mr. President, I assume we need Senator Sessions'
concurrence.
Mr. SESSIONS. That is all right with me. I respect that. Senator
Bryan will be the last. I defer to him.
Will the Senator restate the agreement? The Senator from New Mexico
has 20 minutes, Senator Bryan has 10 minutes, and I have 5 minutes.
Mr. REID. That is correct.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
____________________