[Congressional Record Volume 150, Number 70 (Tuesday, May 18, 2004)]
[Senate]
[Pages S5560-S5562]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                 ENERGY

  Mr. THOMAS. Mr. President, I appreciate the opportunity to take some 
time in morning business to talk about one of the things that impacts 
us all, that we all see as we come to work each day or whatever we do 
in our day, and that is the cost of energy, particularly gasoline. It 
has an impact on all of us, certainly, something that affects not only 
you and me in our cars trying to get to work, but also the cost of 
other services and merchandise we buy, because there is an additional 
cost to development of all those things when gas is as high as it is 
right now.
  It is a difficult thing to deal with because it is an item that over 
time we have expanded in our use, and we have begun to use a good deal 
more than we have in the past. We have increased our consumption, but 
we have not done the same thing with the kind of support facilities 
necessary to meet those increased demands. Again, one of the issues is 
not only gas or electricity, but it is the whole issue of energy in a 
broad sense, certainly, and energy policy that has to do with the long-
term availability of energy to meet the demands we have.
  Again, I point to the fact we have not been able to move an energy 
policy in the Senate in order to deal with the future. We will hear a 
lot of complaints, probably today, about something that ought to be 
done. The real important thing is, we ought to do something about the 
policy so over time we can make some of the changes that need to be 
made to change the whole situation with energy over time. Obviously, 
there are a number of activities that need to be done.

  A lot of factors affect fuel price and supply. One of them, 
obviously, is the cost of oil. Crude oil is at historic highs right 
now. In the past, we were accustomed to seeing crude oil at about $22 a 
barrel. We talk about it when we make plans. It is now nearly $41. It 
has increased a great deal over the last several months. It is very 
important to understand that the cost of oil represents almost 50 
percent of the cost of gas at the pump. There are other costs, of 
course, but this is the major cost.
  Interestingly enough, the cost of crude oil, plus the taxes, 
represents a little over 70 percent of the cost of gasoline. So when we 
talk about these costs, of course, that has to be one of the factors.
  Also, there are less refined gasoline imports, as gas, not as oil, 
because of sulfur regulations. Over the years, we have had a reduction 
in the number of refineries. It seems strange, doesn't it; as demand 
has gone up substantially, the number of refineries has gone down. It 
is true that capacity has not changed that much because the refineries 
have gotten larger, but they have not increased the capacity over time. 
In the late eighties, we were using about 85 percent of capacity of 
refineries. Now it is about 94 percent of capacity being used, and the 
demand, of course, has gone up over that time. There has been a 
continual closure of refineries over the last 23 years, and so the 
system is now very tight.
  In addition to capacity, we have had a lot of different regulations 
and different kinds of additions to gasoline in different parts of the 
country so that refining has been made much more expensive and much 
more difficult to market in that they have to have this kind of 
reduction here and another one for this State and so on. It has been 
very difficult. The reality is that there are a number of components to 
the price of gasoline. We have to review those in context.
  We will be hearing probably soon that the Government ought to be 
taking oil out of the Strategic Petroleum Reserve, which is there to be 
a reserve and has been put together over a period of time. The fact is 
that the daily input into the Strategic Petroleum Reserve is about 
170,000 barrels a day, and the consumption in this country is almost 9 
million barrels a day. It is a relatively small amount. There may be 
some merit in diverting the daily input into this reserve, but I 
certainly think it would not make a lot of sense to extract from it. It 
will be interesting to see what happens with respect to this issue.
  The fact is that the current price, when adjusted for GDP or growth 
in the economy and inflation, is not at a record high. In the 1980s, as 
a matter of fact, given the same economics, the price of gas was higher 
than it is today.

[[Page S5561]]

However, since it has gone up from $1.50 to $2, that is a sudden 
impact. The 1981 price, if it is measured against today's economy, 
would be over $3. We have to be realistic about where we are.
  The most significant factor, of course, that affects gasoline prices 
is the cost of crude oil. As I mentioned, it represents almost 50 
percent of the cost of a finished gallon of gasoline. Crude oil prices 
have increased about 60 percent since April a year ago. That is a great 
increase.
  The other point is that we have become more dependent on imported 
crude oil as opposed to domestic production. We have, interestingly 
enough, less control over that production.
  The high demand in Asia and the U.S., plus OPEC activities, has 
restrained production over the years. It is the most important factor 
affecting prices.
  Another key factor is increased gasoline demand, and that continues 
to go up. We can see that each day on the street in the number of cars 
and SUVs that are using more gasoline per mile than they did in the 
past. It is interesting; as we are moving in one direction in use and 
consumption, we are moving in another direction in providing the 
supply.
  We have had a crazy arrangement. We have had very little growth in 
the U.S. in refining capacity. Currently, there are 149 refineries with 
a capacity of 16.8 million barrels a day. In 1980, there were 321 
refineries with a capacity of 18.6 million barrels per day. That has 
been a conflict in our situation. Of course, there are a number of 
reasons for that situation. There have been no new refineries built 
since 1976, and unlikely due, of course, to political considerations, 
including siting costs, environmental requirements, industrial 
profitability, and, most importantly, the ``not in my backyard'' 
attitude which we seem to see in energy. We have over here demand and 
consumption, we want this service, but over here we say: Oh, yes, but 
we do not want refineries in our midst, we do not want transmission 
lines, we do not want the things that are elements of energy, but at 
the same time we want more of the product. These are some of the 
problems. They are not easy to resolve, but they are resolvable.
  We need to take a look at a policy for the future and begin to 
provide incentives to do what needs to be done, to take another look at 
some of the environmental controls we have put in place. That is not to 
say we do not want to protect the environment, but there are ways to do 
it that are less intrusive on production. There is no doubt that 
environmental regulations have played a part in increasing the cost of 
fuel. No one believes we ought to sacrifice the environment. That is 
not the issue. The question is how can we do it in a more 
environmentally secure way without putting limitations on production.
  The environmental and energy policies are interlinked. We must 
remember, when we are considering new regulations and policies, what 
impact it is going to have on the result. We do not seem to consider 
those two issues at the same time. We put on regulations saying we are 
going to help the environment, not thinking about what impact it has. 
Now we are at the point where the impact is affecting us, and we say: 
My gosh, what have we done? What happened here? Why do we have these 
increased costs?
  It is pretty clear we need to do some things that are different from 
what we have done in the past.
  It is fair to say that many of the folks from the Northeast and 
California complain about the high prices; however, their delegations 
over time have supported unilateral disarmament of our energy security 
by refusing to accept the balance that has to be created. They have 
opposed offshore drilling, coal-fired plants, nuclear-fired plants, the 
development of ANWR, leasing and development of minerals on public 
lands, and hydro relicensing--just a few of the things that have to do 
with domestic production and transportation of energy.
  I guess we have to ask, Where do they think energy fuel comes from? 
It does not come out of the sky. We have to produce it. It is kind of 
like that attitude that one thinks milk and eggs just come from 
Safeway. There are some animals behind it.
  We have to consider the consequences when the Federal Government 
mandates a certain environmental equation such as a 2-percent oxygenate 
that is put into gas. We have to be sensitive and realize the 
consequences so that the decisions we make with regard to those issues 
have to be balanced with what we need.
  I hear all of this complaining about it but then we do not seem to 
recognize the link between Federal regulations and the higher price of 
gas: the phase-out of MTBE, the tier II gasoline sulfur standards, 
diesel standards, regional haze. All of these Clean Air Act 
requirements are going to raise the price of gasoline.
  There are some things we can do. We have to do something about 
conservation. We have to find ways that we can use energy more 
efficiently, and that is possible. It is starting to happen even in 
automobiles.
  I come from a State where SUVs are necessary. Sometimes we need a 
four-wheel drive to get to my house. Where I stay in northern Virginia, 
pickups and SUVs are all over the place. I do not think they need four-
wheel drives very often, but that is fine. We can still make those more 
efficient. We can take a look at it.
  We have to do some things over time to fuel cars with other things--
hydrogen, for example. In our energy policy we have the opportunity to 
take a look at more research and more opportunities to provide 
alternatives. Gas and oil are not going to be there forever at the same 
degree they are now. They will be for a good long time if we treat them 
properly, but there comes a time when we have to look at other kinds of 
things, and that is what this policy is about. That is why we need to 
be looking at more than just next week or next year. We have to take a 
look at what we are going to be doing. We have to modernize our energy 
structure to make it more efficient than it is now. We have to talk 
about renewables, whether it be electricity, wind energy, or Sun 
energy.
  These are things we need to be doing. We know how to do them in small 
amounts now, but we have to find out how to do them in volume. We have 
to find out how to do them in a reasonable and bearable cost, but we 
can do that if we focus on doing it.
  At the same time, we can protect the environment. My home State is 
one of the States where we have a great deal of energy production. We 
are the No. 1 producer of coal, for example. Well, in order to do that, 
we have to change things somewhat. We have to do some more research to 
find out how we can have clean burning coal, because it is the largest 
fossil fuel available to us.
  We also are a producer of oil and gas. We have natural gas, of 
course, which has many uses as energy but we ought to be using coal or 
nuclear for the electric generation because natural gas is much more 
fluid. It can be used in other ways and for many other things, where 
coal cannot.
  The point I am trying to make is that these are things that are out 
there in the future but they will not come about until we decide we are 
going to emphasize a policy with regard to energy and the impact it 
will have on us over the years.

  The bill that we have is available to do these things. Unfortunately, 
we have had some problems of obstruction in getting it done. We need to 
work on that and acknowledge where we are and where our consumption is. 
Right now, it is reaching beyond where we are in terms of having a 
product to provide.
  So it seems to me it is pretty clear that is the direction we need to 
move and it is the direction we can, indeed, move. We have a greater 
opportunity to do that now.
  I will now take a second to look at some of the highlights of the 
energy policy bill that we do have. As far as oil and gas, we 
permanently authorized the Strategic Reserve. We have incentives for 
producing from marginal wells. As my colleagues can imagine, when wells 
produce a great deal of product each day everyone is interested in 
that. When they become marginal, there needs to be some incentives to 
continue to do that.
  We have some royalty relief for deep water wells and for our greatest 
opportunity for these products offshore. We need to take into account 
the environmental status that we want there. We

[[Page S5562]]

have to do something about a gas pipeline from Alaska where some of our 
greatest reserves of energy are.
  I already mentioned clean coal and certainly there are opportunities 
for us to ensure that the largest resource, fossil fuel, is available 
without being harsh on the environment. Indian energy, we have not 
allowed the tribes to be doing something on the reservations, which 
many of them would like to do. A lot of people resist nuclear energy. 
The fact is, we want clean generated electricity. Nuclear is probably 
the best opportunity that we have to do that.
  The section is also there on renewables so, again, we can make some 
progress in terms of being able to utilize some renewable energy 
sources that will take some of the pressure off of the kind of 
production that we have now.
  We have a great challenge. I think it is a challenge to this body to 
move forward on an energy policy and stop finding reasons to not have 
one and object to having one. It is the same people who complain about 
not having affordable energy, and that is kind of where we are. We can 
indeed change that.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. I ask unanimous consent that when the time for the 
Democrats comes, Senator Dorgan be recognized for 10 minutes and 
Senator Durbin for 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Georgia.

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