[Congressional Record Volume 155, Number 67 (Monday, May 4, 2009)]
[Senate]
[Pages S5080-S5081]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

       By Mr. BINGAMAN:
  S. 967. A bill to amend the Energy Policy and Conservation Act to 
create a petroleum product reserve, and for other purposes; to the 
Committee on Energy and Natural Resources.
  Mr. BINGAMAN. Mr. President, I am pleased to introduce The Strategic 
Petroleum Reserve Modernization Act of 2009. This bill will ensure that 
the Strategic Petroleum Reserve will continue to fulfill the goal that 
its creators envisioned for it in 1975, which is to protect Americans 
from the economic consequences of oil supply disruptions.
  This bill includes two key provisions. First, it creates a refined 
petroleum product component within the existing SPR. The Department of 
Energy is required to hold at least 30 million barrels of the total 1 
billion barrel SPR inventory in refined petroleum products, such as 
gasoline and diesel fuel.

[[Page S5081]]

  In the 1970s, the U.S. was vulnerable to supply disruptions in crude 
oil, as it was a significant and growing importer of crude oil. In 
1973, major oil exporting nations embargoed oil exports to the United 
States in retaliation for U.S. support for Israel during that year's 
Arab-Israeli War. The embargo and resulting oil price spikes wreaked 
havoc on the U.S. economy. Preventing a recurrence of this kind of 
geopolitical oil supply disruption was the primary goal of the SPR. 
Because the country then held significant surplus refinery capacity, 
SPR managers decided to hold only crude oil in the SPR.
  In 2009, our domestic oil market has changed. While we are more 
dependent on imported crude oil than ever before, we also import more 
refined petroleum products and have considerably less spare refinery 
capacity. When U.S. refinery operations are disrupted, we require 
imported products from other countries to fill the gap.
  We have also learned in the last 34 years that weather-related events 
are the most frequent source of oil supply disruptions. In history, the 
SPR has been used in connection with only on geopolitical event, during 
the 1990-1991 Iraqi invasion of and removal from Kuwait, while it has 
been used several times in response to hurricanes or other weather 
events, such as dense fog halting tanker traffic in the Houston Ship 
Channel.
  These more frequent weather events are usually as disruptive, if not 
more disruptive, to U.S. refinery operations as to crude oil production 
and imports. Hurricanes Gustav and Ike in September 2008 took much of 
the U.S. Gulf Coast infrastructure offline, and shortages of gasoline 
and diesel were experienced throughout the Southeast through October of 
that year. The SPR was of limited use in mitigating these shortages 
because the refineries affected by the storms were not able to process 
SPR crude oil into gasoline and diesel.
  Including a small volume of refined petroleum products in the SPR, as 
required by The Strategic Petroleum Reserve Modernization Act of 2009, 
would provide a cushion to affected markets while damaged 
infrastructure were brought back online, or until imported gasoline and 
diesel could arrive to service the area.
  The second key provision included in the Strategic Petroleum Reserve 
Modernization Act of 2009 authorizes the Secretary of Energy to release 
emergency oil from the SPR. Under current law, only the President of 
the United States can authorize an emergency sale of SPR oil. Experts 
believe that this requirement creates a disincentive to use SPR oil for 
the purposes for which it is intended, as the President does not want 
to alarm the public by announcing that the country is in an oil supply 
emergency.
  Moving the SPR drawdown authority to the Secretary of Energy would 
allow SPR policy decisions to be made closer to the oil markets that 
the SPR serves. I believe that many of my colleagues share my 
disappointment that recent discussions about when and how to use the 
SPR have become so political that sound decisions, based on the reality 
of our country's oil market, have not been possible.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 967

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Strategic Petroleum Reserve 
     Modernization Act of 2009''.

     SEC. 2. PETROLEUM PRODUCT RESERVE.

       (a) Strategic Petroleum Reserve.--Section 154(a) of the 
     Energy Policy and Conservation Act (42 U.S.C. 6234(a)) is 
     amended by striking ``1 billion barrels of petroleum 
     products'' and inserting ``1,000,000,000 barrels of petroleum 
     products (including at least 30,000,000 barrels of refined 
     petroleum products)''.
       (b) Plan.--Title I of the Energy Policy and Conservation 
     Act is amended by inserting after section 154 (42 U.S.C. 
     6234) the following:

     ``SEC. 155. PLAN.

       ``Not later than 180 days after the date of enactment of 
     this section, the Secretary shall submit to the President 
     and, if the President approves, to Congress, a plan to 
     include refined petroleum products in the Strategic Petroleum 
     Reserve, including a description of--
       ``(1) the disposition of refined petroleum products that 
     shall be stored in the Reserve, which shall be selected--
       ``(A) to alleviate shortages that might be expected to 
     result from hurricanes, earthquakes, or other acts of nature; 
     and
       ``(B) to minimize the number of different kinds of refined 
     petroleum products that shall be stored;
       ``(2) the method of acquisition of refined petroleum 
     products for storage in the Reserve, which shall--
       ``(A) be intended to minimize both the cost and market 
     disruption associated with the acquisition; and
       ``(B) include--
       ``(i) an analysis of the option of exchanging crude oil 
     from the Reserve for refined petroleum products; and
       ``(ii) the anticipated time requirement for building the 
     inventory of refined petroleum products;
       ``(3) storage facility options for the storage of refined 
     petroleum products, including the anticipated location of 
     existing or new facilities;
       ``(4) the estimated costs of establishment, maintenance, 
     and operation of the refined petroleum product component of 
     the Reserve;
       ``(5) efforts the Department will take to ensure that 
     distributors and importers are not discouraged from 
     maintaining and increasing supplies of refined petroleum 
     products; and
       ``(6) actions that will be taken to ensure quality of 
     refined petroleum products in the Reserve, including the 
     rotation of products stored.''.
       (c) Drawdown and Sale.--Section 161 of the Energy Policy 
     and Conservation Act (42 U.S.C. 6241) is amended--
       (1) by striking subsection (d) and inserting the following:
       ``(d) Limitation on Drawdown and Sale.--
       ``(1) In general.--The drawdown and sale of petroleum 
     products from the Strategic Petroleum Reserve may not be made 
     unless the Secretary determines that--
       ``(A) the drawdown and sale are required by--
       ``(i) a severe energy market supply interruption; or
       ``(ii) obligations of the United States under the 
     international energy program; or
       ``(B) in the case of the refined petroleum product 
     component of the Reserve, a sale of refined petroleum 
     products will mitigate the impacts of weather-related events 
     or other acts of nature that have resulted in a severe energy 
     market disruption.
       ``(2) Severe energy market disruption.--For purpose of this 
     subsection, a severe energy market supply disruption shall be 
     considered to exist if the Secretary determines that--
       ``(A) an emergency situation exists and there is a 
     disruption in global oil markets of significant scope and 
     duration;
       ``(B) a severe increase in the price of petroleum products 
     has resulted, or is likely to result, from the emergency 
     situation; and
       ``(C) the price increase is likely to cause a major adverse 
     impact on the national economy.''; and
       (2) in subsections (h)(1) and (i), by striking 
     ``President'' each place it appears and inserting 
     ``Secretary''.
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