[Congressional Record Volume 161, Number 114 (Tuesday, July 21, 2015)]
[Senate]
[Pages S5201-S5202]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      STRATEGIC PETROLEUM RESERVE

  Ms. MURKOWSKI. Mr. President, I have come to the floor this evening 
to speak about our Nation's Strategic Petroleum Reserve, sometimes 
referred to as the SPR. It is a national security asset that has come 
into the news of late for a host of different reasons.
  I am here this evening because of the concerns I have that others are 
potentially looking to our Strategic Petroleum Reserve--our strategic 
energy asset--as nothing more than a piggybank to fund some of the 
needs we have here in this Congress. I believe it is extremely 
shortsighted to raid our Nation's oil stockpile as an offset for the 
extension of the highway trust fund, and that is what we have had some 
conversation about today.
  We had a vote earlier about whether to move forward on the highway 
trust fund. But as we have looked to find pathways forward for a 
multiyear highway trust fund reauthorization, which is something I 
support, it is important to know that not all pots of money are equal, 
that perhaps some are truly national security assets for which perhaps 
we need to show more considered respect.
  I had an opportunity a few days ago--on Friday--to tour our Strategic 
Petroleum Reserve. I went to the Choctaw Bayou site near Baton Rouge, 
LA. It was an opportunity for me to get a firsthand look at some of the 
challenges that currently face our four Strategic Petroleum Reserves 
that we have down in the Louisiana, Texas area and to have a better 
understanding as to their operational readiness. Quite honestly, it is 
a trip I wish more of our Members were willing to take because I think 
it would become clear to many the potential mistake we would be making 
in forcing the sale of billions of dollars of our emergency oil solely 
to pay for unrelated legislation. It is akin to selling the insurance 
on your house in order to pave your driveway. It just doesn't make 
sense.
  For some, the Strategic Petroleum Reserve may be a very unknown 
national security asset. They do not really know what it is. But the 
SPR is our Nation's insurance policy against global energy supply 
disruptions. The Strategic Petroleum Reserve was established by law 
back in 1975 under the Energy Policy and Conservation Act, and its 
mission is twofold: to ensure U.S. energy security by reducing the 
impacts of potential disruptions in U.S. petroleum supplies and 
secondly to carry out U.S. obligations under the international energy 
program.
  We have about 700 million barrels of oil that are tucked away in 
underground salt caverns down in Louisiana and in Texas. We have a 
couple refined product reserves in other parts of the country, but our 
Strategic Petroleum Reserves are there in Louisiana and Texas. So if we 
have a major hurricane that takes out production in the Gulf of Mexico, 
as we saw with Hurricane Katrina back in 2005, we can turn to the SPR 
to help fill the gap. We did that in 2005. That is exactly the type of 
reason you would have the strategic asset.
  But there are other times we have turned to the SPR. If there is a 
terrorist attack or a broader war disruption that alters the ability of 
other nations to send us oil, we can again turn to the reserve for 
help. We did this in 1991 with the Iraq war and then again in 2011 with 
the Libya supply disruption. So, again, when there was an emergency and 
we needed to ensure U.S. security, we had a ready reserve fund to turn 
to.
  In the absence of policies that will allow our Nation to produce all 
of the oil it consumes every day, the Strategic Petroleum Reserve is 
really our best answer to the sudden absence of the energy we need, 
whether it is driving to work, whether it is powering our ships or our 
airplanes, moving our goods, or whatever that reason may be.
  With the discussion we had today in terms of how we pay for this 
multiyear transportation bill, we are being asked to dramatically 
diminish the size of the Strategic Petroleum Reserve based again on the 
need to pay for the extension of the highway trust fund. It is totally 
unrelated--totally unrelated.
  Those who would argue in favor of taking from the SPR, their argument 
is pretty simple. In fact, it is way too simple. They suggest that our 
international obligations require us to store enough petroleum to match 
90 days of net imports. That is true. And they will say that given the 
growth we have seen in domestic oil production, we have enough now that 
we have a surplus within the Strategic Petroleum Reserve. Some have 
even suggested that an SPR is not even necessary anymore.
  Well, I would be the first among us to suggest that changes need to 
be made to the Strategic Petroleum Reserve. Again, this was established 
back in 1975, and I think it is very fair to say the world has changed. 
It has changed dramatically since the 1970s. The global environment in 
which we are operating has changed dramatically. And the Department of 
Energy has said that today the impacts of an overall supply disruption 
of global oil markets would have the same effect on domestic petroleum 
product prices regardless of how U.S. oil import levels--or whether 
U.S. refineries import crude from disrupted countries.
  So there is a recognition that we have to get to modernizing the SPR. 
We have to ensure that we have right-sized it, that we are in alignment 
when it comes to moving oil from the Strategic Petroleum Reserve at 
those times we have determined are appropriate.
  So I think it is important to know we are not just sitting still on 
this. The Department of Energy has begun work on a comprehensive, long-
term strategic review of the SPR. We had good discussion about this 
when I was down in Louisiana on Friday with the Deputy Secretary of 
Energy, Chris Smith, talking about what this review will entail. It is 
looking at future SPR requirements regarding the size; regarding the 
composition of it; the geographic location--it has been suggested that 
perhaps there might be regional approaches; determining where we have 
chokepoints within the system in terms of distribution; how we move it; 
determining the impacts of what we see globally and what is happening 
with our own domestic production; and again being smart in how we are 
making sure we have right-sized the SPR and, in fairness, modernized 
the Strategic Petroleum Reserve.
  We have a committee, as you know, Mr. President, that likes to roll 
up our sleeves and get into the weeds on making sure our policies are 
current and are relevant.
  We need a deliberative process that will provide us with the proper 
understanding of the stakes and our options when it comes to how we 
handle our Strategic Petroleum Reserve. What we do not need--what we do 
not need--is an arbitrary process that picks a number. Right now, for 
purposes of the offset of what they are coming to the energy committee 
for, they are picking a number of--let's sell 101 million barrels of 
oil to fund a portion of the highway trust fund. Again, where is the 
connection between ensuring that we don't erode our national energy 
security assets?
  I have said many times that the Strategic Petroleum Reserve is not an 
ATM. It is certainly not the petty cash drawer for Congress. We have a 
responsibility. A decision to sell substantial volumes of oil will 
increase our vulnerability to future supply disruptions at a time when 
we are still importing oil. We are importing about 5 million barrels a 
day.
  Think about this. Think about the timing of this. It simply could not 
be worse. When you talk about volatility in the world, think about the 
news you read about today, what is happening in Iran, Iraq, and Syria. 
Now is the time for us to say that our national energy security assets 
are not that important; it is OK to nibble around the edges or worse 
and take significant amounts to put out on the market?
  Let's consider a few facts to put things into perspective. First of 
all,

[[Page S5202]]

you talk about the market. It is a buyer's market out there. The 
International Energy Agency warns of a massively oversupplied balance 
sheet. The Energy Information Administration shares that assessment in 
its latest monthly outlook, noting that production continues to exceed 
consumption across the globe. Of course, now as we are seeing the 
outcome from the negotiations with Iran, they are going to be in a 
position soon to put their oil out onto the world market.
  Oil prices are sitting right now around $50 a barrel. Think about it. 
Not all of the oil that is in the Strategic Petroleum Reserve was 
perhaps bought high, but think about it. Selling it now is the very 
definition of selling low.
  We are at $50 a barrel right now. The sales that are envisioned in 
this highway bill would shortchange taxpayers in terms of emergency 
protection because you are eroding the fund, but think about the proper 
stewardship of taxpayer dollars. Effectively, we bought high and we are 
going to sell low.
  Second, drawing down barrels from the SPR would put the Federal 
Government in a position of direct competition with domestic producers. 
That may be temporarily defensible during a severe interruption, but 
let's remember where we are right now. The midcontinent is already 
awash in crude. Our outdated ban on oil exports, which should be fully 
repealed and fully repealed soon in my view, has not been repealed yet. 
It is sitting there in place, and what it is doing is keeping oil that 
is trapped in the United States, threatening productions and jobs at 
the same time.
  What you are talking about with this proposal to sell off the oil 
from SPR is you are going to sell it first very low and then you are 
going to put it into a market that is already oversupplied.
  I was in the Gulf of Mexico this weekend at a place called Port 
Fourchon, where truly you think about the part of the country that is 
supporting an oil and gas industry, robust, ready to go to work, but 
what we saw there were supply vessels that were sidelined and drill 
ships that were waiting. You tell those hard-working men and women 
there who aren't working as hard as they would like that perhaps 
somehow it is a good idea that they should be taking money from our 
savings account--taking the oil from our savings account and dumping 
that into the market.
  Third, our Nation's energy security cannot depend on commercial 
stocks alone. They rise and fall based on market expectations, not on 
the strategic environment, and are not tethered to our Nation's energy 
security. Since the passage of the Energy Policy and Conservation Act 
in 1975, there was a bipartisan consensus that maintained that it is 
the Federal Government, not private industry, that will ensure that our 
obligations are met. Clearly, not much has changed in that calculation, 
certainly in my mind.
  Fourth, threats to global security continue to abound and they seem 
to worsen. As Iran, ISIS, and other threats destabilize the Middle 
East, some 17 million barrels per day still flow through the Strait of 
Hormuz. The Suez Canal and its accompanying pipeline carry just under 5 
million barrels per day, despite a budding insurgency that fired a 
rocket at an Egyptian Navy vessel earlier this month. Instability in 
Venezuela, which produces about 2\1/2\ million barrels per day, would 
also directly impact the major American refining center in the Gulf of 
Mexico.
  You have all of this volatility and instability, and this is the time 
again that we are going to take our insurance policy and we are going 
to erode it? We are going to make us less energy secure? It makes no 
sense.
  By way of comparison, the drawdown rate of the Strategic Petroleum 
Reserve is about 4.4 million barrels a day, probably a little bit less. 
But, seriously, any number of disruptions could arise and make those 
barrels very precious. Secretary Moniz gave a speech about a month ago, 
and he stated that the distribution rate is probably much lower than 
our drawdown capacity of 4.4. The distribution rate is compromised 
because of some of the issues we talked about earlier, which are 
changes in midstream, infrastructure, and congestions in the system. 
When you talk about our ability to respond, we are limited.
  If Congress is going to sell any oil from the SPR--and I am not 
suggesting this is a good idea--one of the things we must do is we 
should agree that any proceeds would first be used to pay for upgrading 
the reserve itself, pay for the modernization, help to ensure it has 
the ability to do that which we have tasked it to do.
  It needs significant modifications to preserve its long-term 
viability and to ensure that it can truly move the oil in the event of 
an emergency, whether it is a natural disaster or whether it is a 
terrorist threat or war. But it would be a travesty if we were to 
dramatically reduce the size of the Strategic Petroleum Reserve while 
we continue to ignore its maintenance and its operational needs.
  The Strategic Petroleum Reserve must be modernized for the 21st 
century. Its size, its geographic disposition, the quality of the oil 
it stores--right now it is about one-third to two-thirds distribution 
between sweet and sour crude--the desirability and understanding is we 
need to move more into a refined product storage or holding instead of 
the crude. These are all issues that merit further attention, but we 
need to have a deliberative process. We need the review that the 
Department of Energy is conducting. We need the review that committees 
such as ours will advance and consider. What we do not need is a spur-
of-the-moment deal that would sacrifice our energy security and perhaps 
much more.
  I know this conversation will continue about how we move a highway 
bill forward. Count me as one who wants to ensure that we are doing 
right by our highway systems. Our infrastructure is key, but we also 
have key energy infrastructure. Part of that key infrastructure lies 
with the security asset, the Strategic Petroleum Reserve that we have. 
Let's focus on that word ``strategic'' before we move too quickly and 
in a manner that is shortsighted and will jeopardize our security and 
our inability to respond.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Daines). The clerk will call the roll.
  The senior assistant legislative clerk proceeded to call the roll.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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