I voted in favor of the Gasoline for America's Security (GAS) Act and the Energy Policy Act of 2005. These are two major actions Congress has taken to address the concerns of high gas prices and our nation's energy future. The Energy Policy Act became public law in August 2005, however the Senate has not yet approved the GAS Act. Both bills are highlighted below.

Why are gasoline prices so high right now?

     Changing gasoline blends are disrupting the supply chain. Switching from winter to summer seasonal blends traditionally causes price spikes this time of year. The Energy Policy Act of 2005 ends the federally mandated oxygenate requirement for some gasoline blends beginning May 5. Fearing exposure to MTBE lawsuits, refiners are turning to ethanol instead.

     Addtion of ethanol to gasoline. The Energy Information Agency estimates that the switch from MTBE to ethanol is responsible for about an additional 5 cents a gallon in cost. Tariffs on ethanol imports, which companies say they are relying on in greater quantities, add 54 cents to a gallon of ethanol. Reports forecast that we might need an additional 2 billion gallons of ethanol this year alone.

     Dependence on the Gulf Coast region. Tight supplies mean even one unscheduled refinery shutdown can drive up gasoline prices. Right now, 22.7 percent of Gulf Coast oil production is still shut down so we have 340,438 fewer barrels of domestic oil available on any given day.

     Supply and demand and global concerns. Our need for oil has grown, we face new competition from emerging economies like China and India, and domestic production and refining capacity haven’t kept pace. In addition, threatening talk from Iran has caused crude oil prices to rise.

     Lack of domestic crude oil production. We are going to need much more oil before we ever kick our addiction to it. Unfortunately, current law leaves nearly 100 billion barrels of oil out of reach in Alaska and off our East and West coasts. Until that changes, American families will continue to pay more than they should for gasoline. At a time when we import most of our crude oil and, increasingly, gasoline, these restrictions also undermine the nation’s security and prop up authoritarians.

     Some in Washington have delayed relief. These problems took decades to develop and some environmental extremists have made matters worse.

     Had President Clinton not vetoed ANWR 10 years ago, we could be domestically producing 1 million barrels of oil today. More importantly, we would have a more diverse supply of oil production.

     The House passed a comprehensive energy policy to increase production and conservation four times before it was finally enacted last summer.

The House is working to lower the cost of gasoline over the mid- and long-term.

Here’s what the government is doing now:

     Dedicating $3.7 billion for fuel-cell research with a goal of putting low-emission hydrogen-powered cars on the road by 2020.

     Requiring 7.5 billion gallons of “renewable” fuel be available by 2012, primarily ethanol cooked out of corn, grass and agricultural waste.

     Supporting research to lengthen battery life and other technology for use in traditional and plug-in hybrid cars. In 10 years, some say, your 30-mile commute could be gasoline-free.

     Offering tax incentives to build new ethanol, hydrogen and other alternative fuel stations.

What individuals can do:

Small changes can save gasoline (from AAA and Consumer Reports):

Keep tires inflated at the proper pressure. According to the EPA, a tire that is underinflated by only 2 pounds per square inch can cause a 1 percent increase in fuel consumption.

Avoid quick starts and sudden stops. A car’s gas mileage decreases rapidly at speeds above 60 mph.

Buy gasoline during coolest time of day or late evening and don’t top off your tank.

Keep windows closed when traveling at highway speeds. Open windows cause air drag, reducing your mileage by 10 percent.    

The Gasoline for America’s Security (GAS) Act, approved by the House October 7, 2005

In brief this bill:

•   Increases U.S. fuel supply
•   Encourages new refineries through regulatory relief.
  
•   Reduces the number of “boutique fuels” around the country from approximately 17 to 6.
  
•   Promotes conservation through carpooling and a fuel-efficiency awareness campaign
  
•   Bans price gouging
  
•   Requires an FTC study into credit card company processing fees, which may inflate consumer costs
  

 

Gasoline for America's Security Act of 2005 Highlights

•   Encourages new refineries to increase supply and address soaring gasoline prices.
  
•   Reforms cumbersome siting procedures for projects at the request of a state’s governor or on presidentially designated federal lands.
  
•   Requires the president to designate sites on federal lands, including at least three closed military installations that are appropriate for   thepurposes of siting a refinery.
  
•   Authorizes the president to enter into contract to have a refinery permitted, constructed and operated to make petroleum products for   military consumption.
  
•   Removes regulatory road blocks: Implements a Clinton administration recommendation to allow a city or region to apply for an extension   of clean air deadlines if local leaders can demonstrate downwind pollution from another area is to blame.
•   Limits “boutique fuels” that have propped up gasoline prices by artificially limiting supply. Requires the EPA administrator to     identify a total of six gasoline and diesel fuels for a Federal Fuels List, down from approximately 17 today that make excess fuel from one   part of the country unusable where shortages occur.
•   Promotes new pipelines to get new crude oil and refined product to consumers at lower prices.
•   Reforms siting requirements for pipelines and for pipeline expansions.
  
•   Encourages expeditious construction of the Alaska Natural Gas Pipeline by sunsetting loan guarantee on the Alaska Natural Gas   Pipeline within two years of enactment of the GAS Act of 2005 if the state of Alaska has not entered into an agreement regarding   construction of the pipeline.
  
•   Requires the DOE secretary to study whether crude oil or refined petroleum product pipeline facilities significant to the nation’s supply   needs have sufficient backup power to ensure availability of product.
  
•   Requires Outer Continental Shelf “gathering” companies to provide key information to FERC to help prevent monopolistic practices that   can increase costs for consumers.
•   Promotes conservation through carpooling.
  
•   Directs the DOE secretary to establish and carry out a program to encourage the use of carpooling and vanpooling to reduce the   consumption of gasoline. The secretary may make grants to state and local governments for carpooling or vanpooling projects.
  
•   Requires the EPA administrator to evaluate and assess carpool and vanpool projects funded under the Congestion Mitigation and Air   Quality program to reduce consumption of gasoline; determine the direct and indirect impact of the projects on air quality and congestion   levels; and ensure the effective implementation of the projects under such program.
  
•   Requires the secretary to establish a public-private group to create a multimedia public education campaign to inform drivers how to   conserve fuel.
•   Bans price gouging in gasoline or diesel fuel sales. 
•   Outlaws price gouging, as defined by the Federal Trade Commission (FTC), in gasoline or diesel fuel sales; requires the FTC to   promulgate a standard for price gouging within six months of the legislation’s enactment. The federal ban does not affect anti-gouging   measures already in place in a number of states.
  
•   Requires the Federal Trade Commission to draft a report on the price of refined petroleum products on the New York Mercantile   Exchange.
•  
•  Permits the DOE secretary to and sell petroleum products from the Strategic Petroleum Reserve (SPR) to finance construction of the   additional capacity needed to fill the SPR to 1 billion barrels.
  

America’s Need for New Refineries

Lack of U.S. refineries drives up costs at the pump.

No new refinery has been constructed in the United States since 1976. There are 148 operating refineries in the United States, down from 324 in 1981. For the first seven months of 2005, total capacity at operating refineries was 17 million barrels per day, while total United States demand averages nearly 21 million barrels per day. This growing gap is met by an increasing amount of imports of refined products from foreign sources. Refined petroleum product imports are expected to grow from 7.9 percent to 10.7 percent of total refined product by 2025.

U.S. refineries are too concentrated in gulf states vulnerable to natural disasters.

About 47 percent of our refining capacity is in the Gulf states and 28 percent of our oil production is concentrated offshore in the Gulf of Mexico. Any change can cause supply constraints and price spikes. Refining utilization rates are currently at 95 percent of operating capacity and at peak times of the year, even higher. By comparison, other industries average an 82 percent operating capacity.

•   Hurricanes Katrina and Rita brought oil production and refining in the Gulf to a stand still, driving up prices
  
•   Within a week of Hurricane Katrina’s landfall, the national average retail price for motor vehicle gasoline rose by 46 cents to $3.069 per   gallon. Prices of other refined fuels also rose quickly in response to the hurricane.
  
•   In the immediate aftermath of Katrina alone, U.S. refining capacity was reduced by more than 2 million barrels per day.
  
•   According to economic analysis, households are conservatively estimated to spend an average of $1,948 this year on gasoline, up 45   percent from three years ago and households with incomes under $15,000 (20 percent of all households) this year will spend, on   average, more than 10 percent of their income just on gasoline.
  
•   Supply constraints have an even bigger impact on rural Americans. It is estimated that rural Americans will spend $2,087 on gasoline.   Rural Americans are paying an estimated 22 percent more for gasoline than their urban counterparts because they must drive longer   distances.
•   
•   Refineries aren’t being built due, in part, to a permitting process that is overly cumbersome and capital intensive.
  
•   Refiners are subject to significant environmental and other regulations and face several new Clean Air Act requirements over the next   decade. New Clean Air Act requirements will benefit the environment but will also require substantial capital investment and additional   government permits.
  
•   There is currently a lack of coordination in permitting requirements and other regulations affecting refineries at federal, state and local   levels. There is no consistent national permitting program for refineries, compared with the Federal Energy Regulatory Commission’s   (FERC) lead agency role over interstate natural gas pipelines, liquefied natural gas and hydroelectric power and the Nuclear Regulatory   Commission’s role over nuclear plants. More regulatory certainty and coordination is needed for refinery owners to stimulate investment   in increased refinery capacity.

Our national security is threatened by a growing reliance on foreign sources of refined petroleum products. It serves the national interest to increase refinery capacity for gasoline, heating oil, diesel fuel and jet fuel wherever located within the United States, to bring more supply to the markets for use by the American people.

Energy Policy Act of 2005

Introduction

In 1973, America imported 30 percent of its crude oil needs. Today, that number has doubled to more than 60 percent. The Energy Policy Act of 2005 contains a balanced package of production and conservation measures that will help America reduce its dependence on unstable foreign oil while meeting its energy needs well into the 21st century.

The Energy Policy Act of 2005 encourages more domestic production of oil with incentives such as a streamlined permit process; promote a greater refining capacity to bring more oil to market; and increases the gasoline supply by stopping the proliferation of expensive regional boutique fuels. To scale back demand for oil, the proposal encourages vehicles powered by hydrogen fuel cells and increases funding for Department of Transportation work to improve fuel-efficiency standards.

This legislation was the result of six years of work to develop a national comprehensive energy policy. While it won’t lower prices overnight, it will put us on a path to produce more oil here at home and foster greater conservation and efficiency – boosting supply and lowering demand.

The Energy Policy Act of 2005 Highlights:

•   Strengthens current supply
  
•   Allows new domestic oil and gas exploration and development.
  
•   Removal of the 2 percent oxygenate standard provides refiners the flexibility in producing supply.
  
•   Requires the Department of Interior to inventory oil and gas resources on the Outer Continental Shelf to enable the federal government to   better assess the extent of these resources.
  
•   Expedites commercial leasing to access the more than 2 trillion barrels of oil in oil shale deposits scattered across the nation.
  
•   Encourages building new refineries and expanding existing refineries.
  
•   Authorizes expansion of the Strategic Petroleum Reserve’s capacity to 1 billion barrels.
    Includes $2.9 billion for fossil energy research to ensure more efficient exploration and development of oil, gas and coal, while   decreasing the environmental impact of fossil energy production and use.
•   Increases conservation
  
•   Increases funding to $17.5 million over five years for the Department of Transportation to continue its work on improving Corporate   Average Fuel Economy (CAFE) standards, which set fuel emission standards for cars and light trucks sold in the United States.
  
•   Increases funding for the Department of Energy’s “Clean Cities” program, which provides grants to state and local governments to   acquire alternative fueled and fuel cell vehicles, hybrids and ultra low-sulfur diesel vehicles.
  
•   Includes a study, to be done by the National Highway Traffic Safety Administration (NHTSA), to look into alternatives to the CAFE   program and examine the amount of fuel consumed by automobiles.
  
•   Provides tax credits for the purchase of hybrid, fuel cell, advanced lean burn diesel and other alternative power vehicles. The size of the   credit varies depending on the weight class of the vehicle and the rated fuel economy.
  
•   Provides a 30 percent credit (up to $30,000) for investments in alternative fuel refueling stations. Qualifying fuels include E-85, natural   gas, hydrogen and biodiesel, among others. The credit expires after Dec. 31, 2007.
  
•   Expands the small ethanol producer credit to producers with annual production capacity of 60 million gallons (up from 30 million gallons   under current law). In addition, creates an equivalent credit for producers of agri-biodiesel through Dec. 31, 2008.
  
•   Extends the income and excise tax credits for biodiesel through Dec. 31, 2008. Allows “renewable diesel” to claim similar income and   excise tax credits at the $1.00 rate applicable to agri-biodiesel.
•   Embraces new fuel choices
  
•   Authorizes $3.7 billion for a hydrogen fuel-cell program with a goal of launching hydrogen fuel-cell cars on the road by the year 2020.   Hydrogen energy can be produced from nearly any energy source, is virtually emission-free and has the potential to be a nearly limitless   fuel for America.
  
•   Requires 7.5 billion gallons of renewable fuel to be included in all gasoline sold in the United States by 2015. This will reduce crude oil   imports by more than 2 billion barrels.
  
•   Allows production of renewable fuel from such traditional sources as corn and other crops or from plants, grasses, agricultural residues   and waste products. The bill includes incentives for the production of renewable fuel from these “non-traditional” sources, allowing greater   credits for ethanol derived from cellulosic biomass or waste.
  
•   Includes $3 billion dedicated to developing affordable, efficient renewable energy technologies and promoting their widespread use.
  
•   Requires “dual-fueled” vehicles acquired under the Energy Policy Act of 1992 to be operated on alternative fuels, includes certain low-  speed electric vehicles in the Energy Policy Act of 1992, provides additional credits for medium and heavy duty alternative fuel vehicles,   and increases incentives for the purchase and use hybrid vehicles and for investment in alternative fuel infrastructure. Also provides an   alternative compliance mechanism based on petroleum displacement and includes new provisions on lease condensates.
  
•   Promotes clean and renewable fuels, by providing incentives for clean coal technology and renewable energies such as biomass, wind,   solar and hydroelectricity.
  
•   Extends the renewable electricity production credit through Dec. 31, 2007 for the following qualified facilities: wind, closed-loop biomass,   open-loop biomass, geothermal, small irrigation power, landfill gas and trash combustion.
  
•   Authorizes the issuance of $800 million of tax-credit bonds before Dec. 31, 2007 to support renewable investment by municipal power   authorities, rural cooperatives and others.