[Congressional Record (Bound Edition), Volume 146 (2000), Part 14]
[Senate]
[Pages 20890-20892]
[From the U.S. Government Publishing Office, www.gpo.gov]



                        THE HEATING OIL RESERVE

  Mr. MURKOWSKI. Mr. President, I think Senator Domenici will be 
seeking recognition. First, I want to take 2 minutes to alert my 
colleagues to what I think is a very significant issue.
  Much has been made of late about the status of the Strategic 
Petroleum Reserve and the recommendation by Vice President Gore that we 
withdraw 30 million barrels out of the SPR so we can build up our 
heating oil reserve. Let me tell you what is happening to that.
  The administration forgot a very important detail when they put that 
oil up to bid for the refiners. They didn't mandate that the crude oil 
be refined into heating oil or that it be used to build inventories 
here in the United States for the benefit of the Northeast States that 
need that heating oil inventories built up.
  What will happen to the crude oil or refined product? It will go into 
the marketplace, and it is going to Europe because Europe is paying a 
higher price for heating oil than the United States. Currently, 167,000 
barrels a day of distillate is exported.
  Let me tell you what came out of the Houston Chronicle, and I quote:

       The buyers can do what they wish with the oil, such as sell 
     or swap it, said Department of Energy spokesperson Drew 
     Malcomb, although whoever ends up with the oil has to get it 
     out of storage by the end of November.
       The extra crude won't result in any additional heating oil 
     because all the heating oil facilities already are operating 
     at maximum capacity, Brown said.

  There you have it. You have an administration that said we had an 
emergency, we had to go into SPR, address our heating oil situation, 
while sending a message to the Mideast that we are reducing our savings 
account. Then we find we may not build up our domestic heating oil 
inventories at all with this oil, it is going up for sale into the 
market and ending up in Europe because the administration didn't 
mandate that if you bought the oil, you had to keep it here in the 
United States.
  Senator Stevens and I have experienced some demands relative to our 
inability to move our oil out of our State.
  It is inconsistent to me that the administration could make such a 
poor business deal. We have not accomplished anything with SPR. We have 
simply increased our exports of heating oil. I think it is a charade.
  I thank my colleague from New Mexico. But I did want to call that to 
your attention.
  Mr. President, I ask unanimous consent to have printed in the Record 
an article from the Houston Chronicle entitled ``Oil from Reserve in 
High Demand'' and two tables on distillate exports.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

    Oil From Reserve in High Demand--Bidders Grab 30 Million Barrels

                           (By Nelson Antosh)

       Trading companies and refiners looking for a good deal on 
     crude have snapped up all 30 million barrels that the federal 
     government is releasing from the Strategic Petroleum Reserve.
       The Energy Department announced Wednesday that 11 
     companies, some of them with names little known even within 
     the industry, had submitted the best bids for the oil being 
     held underground in Louisiana and Texas.
       The buyers in effect promised to return to storage 31.56 
     million barrels between August and November of next year, 
     thus paying a premium of about 5 percent.

[[Page 20891]]

       But by using the futures market, the successful bidders 
     will be able to pay back with oil cheaper than what it is 
     today, even if the real market price for crude may be higher 
     by then.
       ``A good transaction for value,'' said Mary Rose Brown of 
     Valero, a San Antonio-based company that will be refining its 
     federal crude. The difference between Wednesday's futures and 
     the payback cost is $3.25 per barrel, she said.
       The futures price for next October is $28.53, said Kyle 
     Cooper of Salomon Smith Barney in Houston, who reasons that 
     all the reserve sale does is ``move around crude.''
       In contrast to next October, the sweet crude contract for 
     next month settled Wednesday on the New York Mercantile 
     Exchange for $31.43 per barrel.
       The buyers can do what they wish with the oil, such as sell 
     or swap it, said DOE spokesman Drew Malcomb, although whoever 
     ends up with the oil has to get it out of storage by the end 
     of November.
       Valero will be taking 1 million barrels of sour crude from 
     the Bryan Mound storage site near Freeport and splitting it 
     between its refineries in Texas City and Freeport.
       That crude will be co-mingled with other supplies and be 
     made into a full range of products, including gasoline.
       The extra crude won't result in any additional heating oil 
     because all the heating oil facilities already are operating 
     at maximum capacity, Brown said. Valero even shifted some of 
     its distillate output at a New Jersey refinery from premium-
     priced jet fuel into home heating oil.
       ``The product will go where the market is,'' said Malcomb, 
     although he said his agency would prefer that it be refined 
     into heating oil and be shipped to the Northeast.
       Vitol, a trading company in Houston that also owns a 
     refinery in Canada, will get 1.05 million barrels of sweet 
     crude out of a storage site in Louisiana and 550,000 sour 
     barrels out of Bryan Mound.
       The company will apply for an export license, but logically 
     it is a better value if sold along the Gulf Coast, said a 
     Vitol employee who preferred not to be identified.
       Marathon Ashland Petroleum LLC, a Houston-based venture 
     that is a major refiner, was the high bidder on 2.4 million 
     barrels of sour crude and 1.5 million barrels of sweet crude.
       The DOE did not release the amounts that individual 
     companies promised to return to the reserve, because that 
     could influence any future sales.
       Morgan Stanley Dean Witter of New York was the high bidder 
     on 2 million barrels.
       Lesser known names were Euell Energy of Aurora, Colo., 
     which was the high bidder on 3 million barrels, Burhany 
     Energy Enterprises of Tallahassee, Fla., also with 3 million 
     barrels, and Lance Stroud Enterprises of New York with 4 
     million barrels.
       Equiva Trading, which is a Houston-based alliance between 
     Shell and Texaco, will get 2.5 million barrels. A spokesman 
     could not be reached late Wednesday.
       Elf Trading, also based in Houston, is getting 1 million 
     barrels.
       The largest quantity, 6 million barrels, was won by BP Oil 
     Supply Co., in Warrenville, Ill.
       ``Every barrel we can get into the market in the next few 
     weeks reduces the risk of a shortage of heating oil and 
     diesel fuel this winter,'' said Secretary of Energy Bill 
     Richardson in a news release. ``This is good for consumers 
     and good for our nation's long-term security,''
       Some have criticized releasing oil from the Strategic 
     Petroleum Reserve as a political ploy to get more votes in 
     the Northeast, where heating oil is widely used.

                 TABLE 5. U.S. YEAR-TO-DATE DAILY AVERAGE SUPPLY AND DISPOSITION OF CRUDE OIL AND PETROLEUM PRODUCTS, JANUARY-JUNE 2000
                         [Energy Information Administration/Petroleum Supply Monthly, August 2000; in thousand barrels per day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Supply                                                  Disposition
                                    --------------------------------------------------------------------------------------------------------------------
             Commodity                                                      Unaccounted
                                        Field       Refinery     Imports     for crude      Stock        Crude       Refinery     Exports      Products
                                      production   production                  oil a       change b      losses       inputs                  supplied c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Crude Oil..........................      E 5,851  ...........        8,655          432           64            0       14,787           87            0
Natural Gas Liquids and LRGs.......        1,956          754          204  ...........           59  ...........          357           83        2,414
    Pentanes Plus..................          307  ...........           28  ...........            6  ...........          133            4          192
    Liquefied Petroleum Gases......        1,649          754          176  ...........           53  ...........          225           79        2,222
        Ethane/Ethylene............          746           29           23  ...........            6  ...........            0            0          791
        Propane/Propylene..........          549          597          124  ...........            8  ...........            0           60        1,201
        Normal Butane/Butylene.....          163          121           13  ...........           34  ...........          120           19          125
        Isobutane/Isobutylene......          191            7           17  ...........            6  ...........          105            0          105
Other Liquids......................          177  ...........          642  ...........           63  ...........          807           47          -98
    Other Hydrocarbons/Oxygenates..          339  ...........           62  ...........            4  ...........          367           30            0
    Unfinished Oils................  ...........  ...........          348  ...........           23  ...........          427            0         -102
    Motor Gasoline Blend. Comp.....         -162  ...........          231  ...........           37  ...........           16           16            0
    Aviation Gasoline Blend. Comp..  ...........  ...........            0  ...........           -1  ...........           -3            0            3
Finished Petroleum Products........          218       16,146        1,282  ...........           70  ...........  ...........          775       16,801
Finished Motor Gasoline............          218        7,842          347  ...........           76  ...........  ...........          109        8,223
        Reformulated...............  ...........        2,533          176  ...........            5  ...........  ...........            1        2,703
        Oxygenated.................          561          107            1  ...........           -1  ...........  ...........            1          669
        Other......................         -343        5,202          170  ...........           71  ...........  ...........          107        4,851
    Finished Aviation Gasoline.....  ...........           17          (s)  ...........           -1  ...........  ...........            0           19
    Jet Fuel.......................  ...........        1,570          129  ...........           22  ...........  ...........           27        1,650
        Naphtha-Type...............  ...........          (s)            2  ...........          (s)  ...........  ...........          (s)            2
        Kerosene-Type..............  ...........        1,570          127  ...........           22  ...........  ...........           27        1,648
    Kerosene.......................  ...........           58            3  ...........          -10  ...........  ...........            1           70
Average exports per day:
    Distillate Fuel Oil............  ...........        3,414          274  ...........          -97  ...........  ...........          152        3,634
        0.05 percent sulfur and      ...........        2,364          139  ...........           -1  ...........  ...........           35        2,469
         under.....................
        Greater than 0.05 percent    ...........        1,049          136  ...........          -96  ...........  ...........          117        1,164
         sulfur (Heating oil only).
    Residual Fuel Oil..............  ...........          657          212  ...........            7  ...........  ...........          141          721
    Naphtha For Petro. Feed Use....  ...........          164          104  ...........          (s)  ...........  ...........            0          268
    Other Oils For Petro. Feed use.  ...........          203          154  ...........          (s)  ...........  ...........            0          357
    Special Naphthas...............  ...........          102           11  ...........           -1  ...........  ...........           21           94
    Lubricants.....................  ...........          187           14  ...........           -1  ...........  ...........           27          174
    Waxes..........................  ...........           15            2  ...........          (s)  ...........  ...........            3           14
    Petroleum Coke.................  ...........          704            1  ...........            1  ...........  ...........          289          416
    Asphalt and Road Oil...........  ...........          508           29  ...........           75  ...........  ...........            4          458
    Still Gas......................  ...........          652            0  ...........            0  ...........  ...........            0          652
    Miscellaneous Products.........  ...........           53          (s)  ...........          (s)  ...........  ...........          (s)           53
                                    --------------------------------------------------------------------------------------------------------------------
        Total......................        8,201       16,900       10,783          432          256            0       15,952          992       19,117
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Unaccounted for crude oil represents the difference between the supply and disposition of crude oil. Preliminary estimates of crude oil imports at the
  National level have historically understated final values by approximately 50,000 barrels per day. This causes the preliminary values of unaccounted
  for crude oil to overstate the final values by the same amount.
b A negative number indicates a decrease in stocks and a positive number indicates an increase in stocks.
c Products supplied is equal to field production, plus refinery production, plus imports, plus unaccounted for crude oil, minus stock change, minus
  crude losses, minus refinery inputs, minus exports.
(s) = Less than 500 barrels per day.
E = Estimated.
LRG = Liquefied Refinery Gas.
-- = Not Applicable.
 
Note: Totals may not equal sum of components due to independent rounding.
 
Sources: Energy Information Administration (EIA) Forms EIA-810, ``Monthly Refinery Report,'' EIA-811, ``Monthly Bulk Terminal Report,'' EIA-812,
  ``Monthly Product Pipeline Report,'' EIA-813, ``Monthly Crude Oil Report,'' EIA-814, ``Monthly Imports Report,'' EIA-816, ``Monthly Natural Gas
  Liquids Report,'' EIA-817, ``Monthly Tanker and Barge Movement Report,'' and EIA-819M, ``Monthly Oxygenate Telephone Report''. Domestic crude oil
  production estimates based on historical statistics from State conservation agencies and the Minerals Management Service of the U.S. Department of the
  Interior. Export data from the Bureau of the Census and Form EIA-810, ``Monthly Refinery Report.''


[[Page 20892]]


THESE ARE B-B EXPORTED--AMERICAN PETROLEUM INSTITUTE, ENERGY INFORMATION
                             ADMINISTRATION
------------------------------------------------------------------------
                           Date                              Distillate
----------------------------------------------------------------\1\-----
January 1998.............................................            133
February 1998............................................             79
March 1998...............................................            129
April 1998...............................................            186
May 1998.................................................            121
June 1998................................................            149
July 1998................................................            161
August 1998..............................................            150
September 1998...........................................            107
October 1998.............................................             75
November 1998............................................             54
December 1998............................................            145
January 1999.............................................            117
February 1999............................................            116
March 1999...............................................            159
April 1999...............................................            191
May 1999.................................................            187
June 1999................................................            180
July 1999................................................            123
August 1999..............................................            130
September 1999...........................................            162
October 1999.............................................            192
November 1999............................................            170
December 1999............................................            212
January 2000.............................................            132
February 2000............................................            112
March 2000...............................................            211
April 2000...............................................            178
May 2000.................................................            127
June 2000................................................            149
July 2000................................................            132
August 2000..............................................            168
------------------------------------------------------------------------
\1\ Distillate fuel exports (Mbld), heating oil and diesel.

  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I understand I have up to 20 minutes as 
if in morning business.
  The PRESIDING OFFICER. Ten minutes.
  Mr. DOMENICI. I ask unanimous consent for up to 20 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. I understand Senator Sessions would like to follow me 
with 5 minutes, if there is no objection.
  Mr. REID. Mr. President, reserving the right to object, the Senator 
from New Mexico wishes to speak for how long?
  Mr. DOMENICI. Up to 20 minutes.
  Mr. REID. We have the Senator from Alabama, and we have Senator Bryan 
who wishes 10 minutes. I ask that, using normal procedure, we have a 
Republican and a Democrat. I ask that Senator Bryan be the last speaker 
for up to 10 minutes.
  Mr. DOMENICI. Mr. President, I assume we need Senator Sessions' 
concurrence.
  Mr. SESSIONS. That is all right with me. I respect that. Senator 
Bryan will be the last. I defer to him.
  Will the Senator restate the agreement? The Senator from New Mexico 
has 20 minutes, Senator Bryan has 10 minutes, and I have 5 minutes.
  Mr. REID. That is correct.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.

                          ____________________