Energy Policy Act of 2005

ENERGY POLICY ACT OF 2005

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Mr. DOMENICI. I wonder if the Senator would watch the floor for me while I leave for 10 minutes.

Mr. WYDEN. Absolutely. It is my intent to speak on this amendment I offer with Senator Dorgan and then lay it aside. My hope is we can work something out. I know Senator Collins and Senator Levin are working on something and desire to work with you, as well. If we bring it up now, we can start the discussion on it and work something out.

I see Senator Bingaman. He has been so thoughtful throughout the process as well.

Mr. President and colleagues, the reason I have come to the floor today is because oil prices per barrel are now at an all-time record high. If you scour this legislation, it is hard to find anything in it that would provide relief to the American consumer any time soon. It is my hope as we go forward with this debate, at a time when prices are in the stratosphere, that we work in a bipartisan way and at least provide some help in this legislation for the consumer who is getting clobbered by these historically high costs.

What especially concerns me is it seems to this Member of the Senate that the Federal Government actually makes the problem of high oil and gasoline prices worse every day. Every single day, the Federal Government, through its policies, is compounding the problem the consumers are seeing at the pump because it has been the policy of the Federal Government to fill the Strategic Petroleum Reserve at the worst possible time--when prices are at record-high levels.

When the prices are at a record-high level, it seems to me this is not the time to be taking oil out of the private market and putting it in the Government reserve. It just does not make economic sense to add more pressure to what is already a very tight oil supply. Reducing the supply of oil on the market, of course, leads to higher oil prices. That is simply supply and demand. Because oil accounts for 49 percent of the cost of gasoline, that means higher prices for consumers at the pump. For the life of me, I do not see how it makes sense for consumers, who are already paying sky-high prices at the pump, to then have their Government force them to pay higher prices by taking oil out of the private market and putting it into the Strategic Petroleum Reserve. So it does not make sense for the consumer, and, in my view, it does not make sense for taxpayers as well, who have to pay record-high prices for the oil that is taken off the market.

Now, this is not just my opinion. The Senate Energy Committee heard testimony last year by experts who said the policy with respect to filling the Strategic Petroleum Reserve when prices are so high jacks up costs. I asked John Kilduff, senior vice president of energy risk management at Fimat USA, whether the SPR fill rate of 300,000 barrels per day was contributing to oil price increases. Before the committee that day, which the distinguished Senator from New Mexico, Mr. Domenici, chairs, and our friend, Senator Bingaman, is the ranking minority Member, when we were all in our committee, the expert witnesses said they do believe these policies are contributing to oil price increases. Mr. Kilduff specifically stated:

A fill rate of 100,000 represents, obviously, 700,000 barrels for a week. At 300,000 it is 2.1 million barrels. A 2.1 million barrel increase in U.S. commercial crude oil inventory in a particular weekly report would be a big build for the particular week and would help with downward pressure on crude oil prices.

So I would say to colleagues that this notion that this is something the Senate can just let the Secretary of Energy do what he wants is belied by the expert testimony we have had before the Senate Energy Committee where experts specifically said that a fill rate of several hundred thousand barrels per day is contributing to oil price increases.

As far as I can tell, under the policy we are now seeing at the Energy Department, it does not matter how high the prices are, they are just going to keep filling the Strategic Petroleum Reserve. They will continue to take oil off the private market no matter how high the prices get.

I would just like to say, Mr. President and colleagues, I am not talking about taking oil out of the Reserve. I know people very often bring that up. I am just saying it does not make sense to have the same fill rate when you are talking about historically high prices because that very high cost of filling it at that point directly hurts the consumer at the pump.

On Friday, and again today, when the price of oil skyrocketed to the highest price ever recorded on the New York Mercantile Exchange, our Government has continued to fill the Strategic Petroleum Reserve. Earlier this spring, when gasoline prices set an all-time record high of $2.28 for a gallon of gas, the Energy Department continued to fill the Strategic Petroleum Reserve. So I say to those who have reservations about what I am advocating, I would simply ask, how high do prices have to go before we stop pursuing policies that drive the prices even higher? At some point, there should be some limit when it comes to the Federal Government actually compounding the difficulties consumers are having at the pump.

Under the language currently in the bill, there are no limits. There seems to be some language about ``excessive'' costs, but there is nothing that actually blocks our Government from filling the Strategic Petroleum Reserve if the price goes even higher than the current record price of $59.23 per barrel. So I want to repeat that. Even if the price goes to $60 or $70 or $80, there is nothing that would force our Government to change its policy of filling the Strategic Petroleum Reserve at these very high prices. So with no restrictions in sight, I guess the Government can just continue indefinitely to fill the Reserve with these record prices.

To address this problem, my amendment directs that the Secretary of Energy suspend the filling of the Strategic Petroleum Reserve when the prices go above the record-high level in the market and stay above that record-high level for 10 consecutive trading days. The suspension of filling would continue until the price of oil falls back down for 10 consecutive days.

I also note the House of Representatives at least is trying to move in the direction of a bit of consumer protection because they have included a prohibition against continuing to fill the Strategic Petroleum Reserve until the price drops below $40 per barrel. Under my amendment, current SPR filling could go forward. But additional filling would be halted when prices are at record-high levels unless there is some consumer protection for our citizens.

The bottom line is we cannot continue to allow filling of the Strategic Petroleum Reserve when our economy suffers due to high gas and oil prices without providing some safety valve. Unless this amendment is adopted or unless we can work out a compromise with Senator Collins and Senator Levin and other colleagues who worked on this--unless we can get some legislation in place--there will be no standard for action or any certainty there will be some consumer protection for our citizens when oil prices are out of control.

Now, some may argue there should not be these kinds of price triggers for the Strategic Petroleum Reserve. I guess that argument is: Let's just leave it to the Secretary of Energy. Well, there are parts of this bill, such as section 313, that do not leave matters to the Secretary's discretion, such as when you are talking about price relief, royalty relief for oil and gas producers. Section 313 of the legislation has clear price levels for when the oil companies get a break from the normal royalty policy.

So what we have here is a double standard. There are price levels to protect oil and gas producers when it comes to their royalties but absolutely no protection for the consumer who is getting clobbered at the pump and who could get some relief if the Government simply did not fill the Strategic Petroleum Reserve at a time when prices are at a record-high level.

The last point I would make is suspending the fill of the Strategic Petroleum Reserve when prices are at a record-high level will not hurt this country's energy security. The Reserve already has more than 693 million barrels now in storage. That is the highest level in history. The Strategic Petroleum Reserve is expected to be filled to its current authorized capacity by the end of the summer.

What is more, a 2003 study by the Senate Permanent Investigations Subcommittee found that increased filling of the Strategic Petroleum Reserve when prices were high did not increase overall U.S. oil supplies. Instead, because of the higher prices, oil companies took oil out of their own inventories rather than buy higher priced oil on the market. That does not increase our overall oil supply or our Nation's energy security.

So what we have is record prices for the consumer, record costs in terms of filling the Strategic Petroleum Reserve, and the Federal Government, in effect, providing free oil storage for high-priced oil in the Strategic Petroleum Reserve so oil companies can reduce their own inventories and storage costs. That is not energy security; that is just pounding the consumer and taxpayers once more.

For these reasons, I strongly urge colleagues to place some limits on when the Energy Department can fill the Strategic Petroleum Reserve. When prices are at an all-time high, it seems that to do otherwise denies consumers a fair shake and taxpayers a fair shake. It is my view the Senate can take pressure off the price of a barrel of oil and off consumers who are getting squeezed at the pump without compromising our national security. One way to do it is along the lines of the amendment I propose this afternoon.

Mr. President, I yield the floor.

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