[Congressional Record Volume 150, Number 75 (Wednesday, June 2, 2004)]
[Senate]
[Pages S6302-S6303]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            ENERGY SECURITY

  Mr. DOMENICI. Mr. President, over the weekend, the world witnessed 
the

[[Page S6303]]

horrible hostage-taking situation in Saudi Arabia, where terrorists 
attacked foreign oil workers and their families. I think we all know 
that foreign workers have been an integral part of the workforce that 
produces oil and maintains the infrastructure for oil in Saudi Arabia. 
These cowards did not attack refineries or terminals or pipelines this 
time. Those hard assets are supposed to be well guarded and could be 
replaced. I am not sure they are so well guarded. Instead, the 
terrorists chose human targets to cripple the world's access to oil 
supply. Thank God that about 50 of the hostages were rescued, but we 
mourn the more than 20 lives lost in this terrorist attack.
  In the short run, this attack on foreigners and office facilities 
does not affect physical supply, but it can harm future output and 
expansion. Investment will be eroded if there is instability.
  These terrorist attacks are a frightening warning that terrorists may 
be only steps away from destroying significant Saudi or other Middle 
East production facilities. I believe America should be more worried 
about that than anything else affecting our economic well-being.
  It is actually a shame that we sit around and talk and do nothing to 
make America better prepared. Does anybody doubt that the terrorists, 
if they can get in and destroy an office full of people, are not 
prepared to do some real damage to the oil supply and the 
infrastructure, the tankers, and all the other things? I believe they 
are.
  Terrorists' actions intensify concerns about the vulnerability of oil 
markets to supply disruption. We saw the price jump $2.45 following the 
weekend attack, and there are indicators in the future market that 
those who invest in that market are investing in it heavily, which 
means they are gambling in a forthright and intelligent way that oil 
will go up even more.

  Instead of oil coming down because of good economic realities, the 
one thing that is happening is oil is going up. We saw that jump, and 
before the weekend attack, oil prices were back under $40, seemed to be 
moving a bit down in anticipation of the OPEC meeting on June 3.
  Daniel Yergin, chairman of Cambridge Energy Research Associates, 
remarked that the signs of increased OPEC production were calming the 
market, but the weekend attack has again increased a sense of risk and 
nervousness that has done so much to propel the prices to $40.
  Fears and worries of terrorist sabotage attacks and political unrest 
have translated into a risk premium of $7 to $10 per barrel. This so-
called risk premium is one of the reasons why the prices are as high as 
they are today.
  Given that we live in a world of increased risk, particularly with 
mounting security worries in the Middle East, it is imperative that we 
take responsible steps to ensure our energy security today and in the 
future. Today, our energy security requires an emergency supply of oil 
in the event of severe disruption. Saudi Arabia is the largest OPEC 
producer and the OPEC country with the largest extra capacity to 
increase supplies. A major disruption of Saudi oil that we cannot 
respond to with the SPR would harm our energy security and the economy 
far more than $40 a barrel of oil.
  The President is right to preserve the Strategic Petroleum Reserve 
for times of dire need, not as a political gesture to abate high 
prices. And, yes, while prices are high today and they do hurt, today's 
prices are still below the energy prices America has borne in past 
years.
  The SPR is designated and designed to be a national security asset, a 
national security blanket. It is not there to deal with supply and 
demand imbalance, which is the true source of higher prices.
  What we have today is a long-coming trend of tightening supply and 
increasing demand. Changing our treatment of SPR cannot fix that 
problem. I fear that changing SPR policy will actually end up hurting 
us. What do my colleagues think OPEC would do if we suddenly changed 
SPR policy? From their standpoint, they could easily solve that by 
changing their output response. It would not take much, just a little 
bit, and they would negate any significant positiveness that comes from 
releasing SPR oil.
  We have 660 million barrels of oil in SPR. We import 11.5 million 
barrels a day. About 5 million of those 11.5 million barrels a day are 
from OPEC. That means we have about 60 days' supply if there is a 
complete disruption to our imports and about 120 days' supply if only 
OPEC supplies were interrupted. SPR is not there just to deal with 
potential Middle East supply problems.
  Weather forecasters predict an intense hurricane season for the 
Atlantic and gulf coasts, which would affect domestic and natural gas. 
As I see it, it is a shame that we are not ready to produce an energy 
bill and that we are still debating what this Senator likes, what that 
Senator likes, what the Democrats like. We have tried very hard to 
accommodate, but we cannot. SPR is our insurance policy against natural 
disasters as well as supply interruptions. We need SPR full and ready 
to serve in the event of an emergency. Past experience has taught us 
that trying to use it as a price control does not work. The bottom line 
is that changing our treatment of SPR does not lead to quick fixes in 
the market.
  The energy bill that I have been fighting to pass in the Senate is 
about future energy security. The energy bill is not about quick fixes 
to the oil and gasoline market; it is a policy plan to move us into the 
future with a broader portfolio of resources and improved supply and 
demand balance. The energy bill will increase natural gas and domestic 
oil production that helps balance supply with growing demand.
  The Energy bill will remove the 2-percent oxygenate mandate, which 
will make it easier to refine and easier for refineries to make 
gasoline that can be traded between regional markets. It is clearly 
very positive for America.
  The Energy bill addresses the proliferation of boutique fuels. There 
are a number of State-specific gasoline formulations that have made 
refining more challenging and market efficiency poorer. The Energy bill 
will promote further research in hydrogen power that is the potential 
future for transportation. We have to get started. The longer we wait, 
the more we risk being blamed for an American disaster.
  I will keep coming to the Senate floor to drive home the point that 
we need to pass an energy bill. Someone called today's energy situation 
``a crude awakening.'' It is, indeed. It is time for us to wake up and 
do something about it. The American public deserves action. They 
deserve an energy policy that takes care of them today and in the 
future.
  I believe there is a real probability that those who lead our country 
today, including the Senate--perhaps excluding those who have tried, 
those who have voted for a new policy--but I believe there is a chance 
that the leaders of today will be blamed for the disasters of tomorrow. 
They will not be little disasters if, in fact, we cannot stop the 
terrorists from their activity. I believe the leaders of Iraq are 
optimistic, and I am glad because they want terrorists out of that 
country. But terrorists are everywhere. Believe you me, they are in 
Saudi Arabia. Believe you me, that is fragile. Believe you me, they are 
looking at the fragileness of the Saudi situation. I believe they can 
almost do what they like. They are close. I understand they know what 
is going on in the oil patch of Saudi Arabia. I am very worried. 
Frankly, I don't want to go down in history, when this event happens, 
and have it said we did nothing. I will continue to try. Many in this 
body will continue to try to make America's energy portfolio more 
diverse, with different uses so we can face the future with a little 
more hope.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.

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