WASHINGTON -- A day after House Democrats voted down legislation to increase gasoline supplies by building refineries, an independent expert cautioned Congress that refining capacity is a major constraint on supply, according to a statement by the House Energy & Commerce Committee.
On Wednesday, 185 Democrats voted against the Refinery Permit Process Schedule Act, a bill designed to bring more refineries on line and more gasoline into the U.S. supply system. The bill, which required 290 votes to pass on a fast track, fell short when only 13 Democrats [image-nocss] joined 224 Republicans in supporting it.
One partisan argument against the refinery bill held that permit delays are a myth; another staple objection said companies were, in fact, actually shuttering their refineries as a ploy to increase demand, said Chairman Joe Barton (R-Texas).
It's true that the number of U.S. refineries has gone down by about half since the 1970s, said Daniel Yergin of Cambridge Energy Research Associates and author of The Prize: The Epic Quest for Oil, Money & Power. But many of these were the small, tea-kettle' refineries that were intended to take advantage of the small-refiner bias under the 1970s control system.
And Yergin told the Energy & Commerce Committee Thursday that the building of new refinerieshas been hampered by costs, siting and permitting.
Energy Information Administration (EIA) head Guy Caruso added that the seasonal price-spreads on gasoline have become subject to much wider swingsas excess refinery capacity has dwindled. Excess capacity in the refining industry, like that for crude oil production, has been shrinking as demand as grown.
It will be back next week, Barton predicted of the refinery capacity bill. High prices are a hardship, but dry pumps are a disaster.
The legislation, offered by Barton and U.S. Rep. Charlie Bass (R-N.H.), gives the U.S. Environmental Protection Agency (EPA) the authority to convene all the players in all U.S. government agencies responsible for issuing permits to develop a facility and help them coordinate and expedite their schedules so that decisions on permits can move efficiently. It also directs the president to suggest at least three closed military bases as suitable sites for new refineries, one of which must be designated for biofuel refining, while preserving local authority to make final siting decisions on closed bases. No agency or developer would be permitted to short-circuit environmental compliance, and private citizens are guaranteed the right to appeal a permitting process decision.
The National Petrochemical & Refiners Association (NPRA) issued a response to the House vote on the Refinery Permit Process Act. NPRA President Bob Slaughter said: Rather than engaging in a fruitless search for questionable quick-fix solutions, or taking actions that could be harmful, NPRA urges Congress and the public to exercise continued patience with the free market as the nation adjust to a volatile global energy market. We are, however, disappointed inactions in the [House]. The defeat of the Bass-Barton legislation, a proposal that would only streamline cumbersome and duplicative permit requirements while ensuring that environmental requirements and obligations are maintained, suggests that political considerations are more important than adoption of even very modest attempts to increase the supply of gasoline and diesel fuel available for consumers.
Meanwhile, the Energy & Commerce Committee has asked Exxon Mobil Corp. for detailed information about a retirement package given to former chairman Lee Raymond, calling it an "exorbitant payout" when motorists are paying $3 a gallon for gasoline, said the Associated Press. Raymond was recently given a total package of nearly $400 million including salary, bonus, stock options and a one-year $1 million consulting arrangement.
The request was made as the committee sent letters to the country's five biggest oil companies, including ExxonMobil, seeking detailed information about the companies' spending and investment priorities in light of huge profits over the past year as crude prices jumped to recent highs. It also sent letters to ConocoPhillips, Chevron, BP America and Shell.
Exxon Mobil spokesperson Russ Roberts said the criticism of the Raymond retirement package is "a distraction" when the discussion "should be focused on the fundamentals of why we have the high prices." He said the compensation package was approved by an independent board of directors without management input. He said that Exxon Mobil will provide all the information the House committee is requesting.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.