WASHINGTON -- A partisan fight in a Senate committee appears to have doomed new federal incentives to increase the nation's oil-refining capacity, at least for this year, according to a report in The Wall Street Journal.
The Senate Environment and Public Works Committee deadlocked 9-9 on Wednesday over a Republican proposal to streamline federal and state permit procedures for companies that want to build refineries or expand plants.
Committee chairman James Inhofe (R-Okla.) pushed the plan as a compromise over a House-passed [image-nocss] proposal that weakened environmental standards and gave oil companies insurance against permit delays. Sen. Lincoln Chafee (R-R.I.), however, voted with the panel's eight Democrats to reject the measure.
"We should be addressing our consumption, not just demand," Chafee said, adding that he wanted to see tighter federal fuel-economy standards for U.S. cars and trucks. Democrats claimed that Republicans were giving incentives to oil companies, whose profits have climbed amid recent price increases. "We ought not to feed that greed," said Sen. Frank R. Lautenberg (D-N.J.), according to the WSJ report.
Oil-industry officials, who said increased refining capacity is needed to reduce reliance on imported gasoline and to give the nation's supply system more flexibility to handle emergencies such as the recent hurricane outages, were disappointed. "The process isn't over yet, and perhaps something will rise from the ashes," said Robert Slaughter, president of the National Petrochemical and Refiners Association.
But there is, as yet, no Senate sponsor for the House version of the measure and little time left this year to try another Senate version. Meanwhile, Democrats see political opportunities in recent announcements of high oil-company profits during the third quarter.
By enforcing party-line votes on energy issues and drawing support from Republican moderates, such as Chafee, Democrats hope to gain a slim majority for their approach, which relies heavily on conservation and environmentally acceptable "alternative" fuels, such as ethanol and oil produced from coal. Sen. Hillary Clinton (D-N.Y.) recently proposed a $20 billion "strategic energy fund" that would tax the profits of oil companies that didn't invest in new U.S. refining capacity or in production of alternative fuels.
The Energy Department reported that gasoline prices have fallen below pre-hurricane levels, partly because of a "record volume" of imported gasoline from Europe. But officials noted that the price of diesel oil remains above $3.10 a gallon because imports of diesel are relatively small and demand for the fuel remains high, driven by the need for home heating oil -- which is a similar product -- and farmers' need for the fuel to harvest crops.
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