[Congressional Record Volume 151, Number 64 (Monday, May 16, 2005)]
[Senate]
[Pages S5224-S5225]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 1039. A bill to amend the Internal Revenue Code of 1986 to modify 
the treatment of depreciation of refinery property; to the Committee on 
Finance.
  Mr. HATCH. Mr. President, I rise today to introduce the Gas Price 
Reduction through Increased Refining Capacity Act of 2005, S. 1039.
  This bill provides tax incentives to encourage increases in oil 
refining capacity in the United States. By increasing domestic refining 
capacity, we will increase supply of refined oil products, thus 
decreasing the price of gasoline at the pump.
  This bill is the second in a package of three bills I am proposing to 
promote long-term solutions to our Nation's energy needs.
  Our nation needs clean, affordable sources of energy, and we should 
increase our energy security by focusing on those sources of energy 
that can be developed domestically.
  Two weeks ago I introduced the CLEAR ACT, which provides market 
solutions to promote breakthroughs in the use of alternative fuels and 
technologies in our transportation sector.
  The third bill, which I will introduce in the near future, will focus 
on increasing U.S. energy independence through the development of our 
nation's gigantic, untapped oil shale and tar sands reserves.
  Both Republicans and Democrats recognize that increasing our domestic 
supplies of crude oil is not an effective solution unless we can 
increase our capacity to refine it. This is the genesis of the Gas 
Price Reduction Through Increased Refining Capacity Act.
  Refining capacity in the United States cannot keep up with demand. In 
fact, there has not been a new refinery built in the United States 
since the 1976.
  But that is only part of the story.
  The fact is that the economics of refining are so tough that we have 
actually lost about 200 refineries since the last one was built. So 
now, our powerful Nation is down to only 149 overworked refineries.
  Technological improvements at existing refineries have brought some 
increase to capacity, but these increases have fallen far short of 
demand. As a result, we now meet the gap in demand by importing more 
and more oil products that have already been refined, which makes us 
all the more dependent on foreign suppliers.
  Every day, I hear from Utahns who are burdened by rapidly rising gas 
prices. Let me quote from just a portion of a letter from one of my 
constituents, Richard Decker of West Jordan, Utah:

       ``I am interested in knowing the progress or status of 
     planning to protect Americans from the continually rising oil 
     prices . . . I am just a normal guy with a tiny family. Given 
     salaries, inflation, lack of fuel efficient automobiles at a 
     decent price, I worry if I and others will be able to make a 
     decent life here--not just in Utah but in America. 
     Personally, I wish I had the option of a hydrogen-powered 
     vehicle that would completely rid us of the dependence on 
     foreign oil imports.
       However, this isn't likely soon, so can we work on the gas 
     prices? Do you have any suggestions? . . . Keep up the good 
     work. Best Regards, Richard Decker''

  My answer to Richard is that we hear him, and we are trying to 
respond.

[[Page S5225]]

  We have a serious problem.
  It is easy to point a finger at the energy companies for high gas 
prices, but the reality is that government rules and regulations 
combined with a complete lack of a national energy policy and 
unfriendly tax rules have kept our refining capacity far short of our 
need. There are no silver bullets that will bring price relief 
immediately, but we can act now to start meeting this need.
  Last year, Secretary of Energy Spencer Abraham asked the National 
Petroleum Council to make recommendations to improve our oil supply and 
to increase our nation's oil refining capacity. Among the Council's 
recommendations was a call to adjust the depreciation schedule for new 
refining equipment from 10 years to five years to make refineries 
consistent with other manufacturers in the U.S.
  I believe that the 10-year depreciation schedule is unwarranted, and 
that it has contributed to a hostile economic environment for 
refineries. Leveling the playing field on depreciation is long overdue, 
and the Gas Price Reduction Act would accomplish that goal.
  But it is also important that we see this new refining capacity as 
soon as possible. So, I have added a provision in my bill aimed at 
pushing refining companies to act quickly to increase capacity. For 
refiners that can commit to starting construction on new refining 
equipment before 2007 and have new facilities built by 2011, the bill 
would allow a complete write-off for their new equipment in the first 
year. This is a powerful incentive, and I believe it will capture the 
attention of decision-makers in the refining industry.
  Again, the goal of the Gas Price Reduction Act is to get results as 
soon as possible, and I believe my legislation will make a difference. 
This bill will not bring immediate relief at the pump. But it will 
begin to put the brakes on escalating prices in the next few years and 
increase our nation's control over our energy future.
  There are other good reasons to support this bill.
  As part of my three-pronged approach to meeting our Nation's energy 
needs, it is in accord with the President's energy plan.
  It does not provide a windfall to oil companies but puts refineries 
on an equal footing with other industries in the manufacturing sector, 
which already have a five-year depreciation.
  It is important to note that S. 1039 does nothing to weaken our 
strong environmental laws and regulations; rather, it would lead to 
cleaner technologies as refineries upgrade equipment.
  This bill is also an essential part of our strategy to increase 
domestic production. When we begin to realize the potential of our vast 
oil shale and tar sands reserves we will need domestic refining 
capacity to handle any increase in domestic crude oil production.
  Finally, I must point out that, in the long run, this bill will not 
have any cost, since refineries are allowed to change the timing of the 
depreciation of their equipment, but not the amount.
  I urge my colleagues in the Senate to join me in this important 
effort to increase our refining capacity, lower gas prices for our 
citizens, and provide for our Nation's security through increased 
energy independence.
                                 ______