[Congressional Record Volume 151, Number 148 (Wednesday, November 9, 2005)]
[Senate]
[Pages S12608-S12609]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL:
  S. 1979. A bill to provide for the establishment of a strategic 
refinery reserve, and for other purposes; to the Committee on Energy 
and Natural Resources.
  Mr. KOHL. Madam President, I rise today to speak briefly about an 
amendment Senator Jeffords and I had hoped to offer to the Defense 
authorization bill. I understand it is not considered relevant, so we 
won't get a vote. That is unfortunate. I cannot imagine what is more 
relevant to the defense of our Nation than an amendment that would do 
something concrete about high energy prices, about national security, 
and about economic security--all with one vote.
  Our amendment, which we are introducing today as a freestanding bill 
along with Senator Feinstein, would authorize the Department of Energy 
to build enough refining capacity to meet the energy needs of the 
Federal Government--primarily the Department of Defense--and also to 
supply the private market in times of shortages and price spikes.
  There is bipartisan agreement that increasing refining capacity in 
the United States would help avoid the kinds of energy price spikes we 
have seen in the last few months. There also seems to be clear evidence 
that, despite generous incentives from the Government and soaring 
profits, the oil companies are not interested in building the new 
refineries we need. And in a free market, of course, that is their 
choice.
  But in a democracy, we in Congress are charged with making a 
different choice. We need to do what is best for our national and 
economic security. And, in this case, that would be to stop begging and 
bribing the oil companies. By building our own refining capacity, we 
would be able to supply the fuel needs of the Federal Government at 
what it actually costs to make that fuel. And we would also be able to 
hold in reserve refining capacity that we could access to bring down 
the cost of gas in times when shortages raise prices.
  Today, the Senate is holding important hearings on energy. I am 
concerned, however, that instead of offering answers and solutions, the 
oil companies will blame OPEC for the high price of gasoline, diesel 
fuel, and home heating oil. We should not let them get away with that 
because OPEC is only part of the story.
  While the price of gasoline rose to record levels in recent months, 
the oil companies were earning increasingly high profits on each gallon 
of gasoline. One measure is the ``domestic spread,'' the retail 
gasoline pump price minus the cost of crude oil and taxes. During the 
1900s, the domestic spread was about 40 cents per gallon for regular 
gas. This number has grown sharply since 2000. The domestic spread 
averaged above 50 cents per gallon between 2000 and 2004, and has 
reached as high as over 70 cents per gallon in recent months. In other 
words, the oil companies are earning much more today for a gallon of 
gas, even factoring in the higher price of crude oil.
  Growing oil company profits also demonstrate this point: Oil industry 
profits, after tax, increased by $100 billion in the 5 years from 2000 
to 2004, as compared to the previous 5-year period. ExxonMobil's 
earnings for the first 9 months of 2005--over $25 billion--already 
exceeded its full-year earnings for all of 2004. So obviously, these 
companies are doing much more than just passing along higher crude oil 
prices to customers.
  One major reason for these soaring prices and profits is the oil 
industry's failure to increase refining capacity in the face of rising 
demand for refined petroleum products. A new refinery has not been 
built in the United States since the 1970s, and many oil refineries 
have been closed. In 1985, refining capacity equaled daily consumption 
of petroleum products. By 2002, daily consumption exceeded refining 
capacity by almost 20 percent.
  As domestic supply falls short of domestic demand, three very 
dangerous

[[Page S12609]]

things happen: 1, we are forced to rely on more imports. 2, we pay 
higher and higher prices for our fuel. And, 3, our economy is 
increasingly vulnerable to disasters and disruptions--like those we saw 
in the wake of Hurricanes Katrina and Rita.
  The bill we are introducing would authorize the Department of Energy 
to create a refining capacity equal to 5 percent of current domestic 
consumption. These refineries would supply the Federal Government's 
need for petroleum products, estimated to be roughly 2 percent of U.S. 
consumption. The extra 3 percent of capacity would be available for 
emergencies and market disruptions.
  This ``Strategic Refining Reserve'' would have a direct effect on 
energy prices to the consumer. It would get the Federal Government out 
of the private market where its huge demand for energy drives up 
prices. And it would increase the amount of oil that can be refined in 
this country in times when the oil companies' refining capacity is 
tapped out.
  We have a duty to protect consumers, our economy, and our national 
security from an industry that often seems focused only on the short-
term bottom line. We have a duty to respond with concrete help for the 
families and businesses that tell us daily of the enormous financial 
threat posed by soaring energy prices. And we have a duty to make sure 
our military has access to a steady, affordable supply of domestically 
refined fuel.
  Though we will not be able to offer this proposal as an amendment to 
the DOD authorization bill, we have introduced it as a bill, and we 
plan to continue to look for opportunities for a vote. We need to take 
sole control of fuel prices away from the oil companies. We need to 
take charge and bring the price of fuel down by building this 
``Strategic Refinery Reserve.''
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1979

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. STRATEGIC REFINERY RESERVE.

       (a) Establishment.--
       (1) In general.--The Secretary of Energy shall establish 
     and operate a Strategic Refinery Reserve (referred to in this 
     section as the ``Reserve'') in the United States.
       (2) Authorities.--To carry out this subsection, the 
     Secretary of Energy may contract for--
       (A) the construction or operation of new refineries; or
       (B) the acquisition or reopening of closed refineries.
       (b) Operation.--The Secretary of Energy shall operate the 
     Reserve--
       (1) to provide petroleum products to--
       (A) the Federal Government (including the Department of 
     Defense); and
       (B) any State governments and political subdivisions of 
     States that opt to purchase refined petroleum products from 
     the Reserve; and
       (2) to provide petroleum products to the general public 
     during any period described in subsection (c).
       (c) Emergency Periods.--The Secretary of Energy shall make 
     petroleum products from the Reserve available under 
     subsection (b)(2) only if the President determines that--
       (1) there is a severe energy supply interruption within the 
     meaning of the term under section 3 of the Energy Policy and 
     Conservation Act (42 U.S.C. 6202); or
       (2)(A) there is a regional petroleum product supply 
     shortage of significant scope and duration; and
       (B) action taken under subsection (b)(2) would directly and 
     significantly assist in reducing the adverse impact of the 
     shortage.
       (d) Locations.--In determining the location of a refinery 
     for inclusion in the Reserve, the Secretary of Energy shall 
     take into account--
       (1) the impact of the refinery on the local community, as 
     determined after requesting and reviewing any comments from 
     State and local governments and the public;
       (2) regional vulnerability to--
       (A) natural disasters; and
       (B) terrorist attacks;
       (3) the proximity of the refinery to the Strategic 
     Petroleum Reserve;
       (4) the accessibility of the refinery to energy 
     infrastructure and Federal facilities (including facilities 
     under the jurisdiction of the Department of Defense);
       (5) the need to minimize adverse public health and 
     environmental impacts; and
       (6) the energy needs of the Federal Government (including 
     the Department of Defense).
       (e) Increased Capacity.--The Secretary of Energy shall 
     ensure that refineries in the Reserve are designed to provide 
     a rapid increase in production capacity during periods 
     described in subsection (c).
       (f) Implementation Plan.--
       (1) In general.--Not later than 180 days after the date of 
     the enactment of this Act, the Secretary of Energy shall 
     submit to Congress a plan for the establishment and operation 
     of the Reserve under this section.
       (2) Requirements.--The plan required under paragraph (1) 
     shall--
       (A)(i)(I) provide for, within 2 years after the date of 
     enactment of this Act, a capacity within the Reserve equal to 
     5 percent of the total United States daily demand for 
     gasoline, diesel, and aviation fuel; and
       (II) provide for a capacity within the Reserve such that 
     not less than 75 percent of the gasoline and diesel fuel 
     produced by the Reserve contain an average of 10 percent 
     renewable fuel (as that term is defined in 211(o)(1)(C) of 
     the Clean Air Act (42 U.S.C. 7545(o)(1)(C)); or
       (ii) if the Secretary of Energy finds that achieving the 
     capacity described in either subclause (I) or (II) of clause 
     (i) is not feasible within 2 years, include--
       (I) an explanation from the Secretary of Energy of the 
     reasons why achieving the capacity within the timeframe is 
     not feasible; and
       (II) provisions for achieving the required capacity as soon 
     as practicable; and
       (B) provide for adequate delivery systems capable of 
     providing Reserve product to the entities described in 
     subsection (b)(1).
       (g) Coordination.--The Secretary of Energy shall carry out 
     this section in coordination with the Secretary of Defense.
       (h) Compliance With Federal Environmental Requirements.--
     Nothing in this section affects any requirement to comply 
     with Federal or State environmental or other laws.

     SEC. 2. REPORTS ON REFINERY CLOSURES.

       (a) Reports to Secretary of Energy.--
       (1) In general.--Not later than 180 days before permanently 
     closing a refinery in the United States, the owner or 
     operator of the refinery shall provide to the Secretary of 
     Energy notice of the closing.
       (2) Requirements.--The notice required under paragraph (1) 
     with respect to a refinery to be closed shall include an 
     explanation of the reasons for the closing of the refinery.
       (b) Reports to Congress.--The Secretary of Energy shall, in 
     consultation with the Secretary of Defense, the Administrator 
     of the Environmental Protection Agency, and the Federal Trade 
     Commission and as soon as practicable after receipt of a 
     report under subsection (a), submit to Congress--
       (1) the report; and
       (2) an analysis of the effects of the proposed closing 
     covered by the report on--
       (A) in accordance with the Clean Air Act (42 U.S.C. 7401 et 
     seq.), supplies of clean fuel;
       (B) petroleum product prices;
       (C) competition in the refining industry;
       (D) the national economy;
       (E) regional economies;
       (F) regional supplies of refined petroleum products;
       (G) the supply of fuel to the Department of Defense; and
       (H) energy security.
                                 ______