Creating Long-Term Energy Alternatives For The Nation Act Of 2007

Floor Speech

CREATING LONG-TERM ENERGY ALTERNATIVES FOR THE NATION ACT OF 2007 -- (Senate - June 13, 2007)

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Mr. THUNE. Madam President, I wish to speak, if I may, to the amendment offered by my colleague from Oklahoma, Senator Inhofe. It is important that in this whole debate on the bill that we talk about the solutions that are important to this country's independence today on foreign energy and the need to get away from that and become energy independent and lessen our dependence on foreign energy and that we also talk about actions we can take that will lower energy costs for people in this country.

I appreciate the fact that the underlying bill has a number of provisions in it that are good. There are provisions in the bill I will be supporting. I have a series of amendments I will be offering that will improve the availability of renewable energy in this country.

I also wish to speak in support of amendment No. 1505 because I believe fundamentally it would greatly improve our Nation's stagnant oil refining industry, boost the development of coal-to-liquid technology, and accelerate the development of the next generation of biofuels.

As to the underlying amendment talked about by my colleague from California, first, there are no mandates in this bill. These are things the State can do. They can opt into this. Obviously, the incentives in this amendment do not go to oil companies, they go to State and local governments.

Frankly, this is an important point, that this is directed to areas that have been affected by base closures and also Indian reservations, which in my State are desperately in need of economic development. This is the type of economic development that will fit very well in a lot of places in South Dakota that qualify.

It is important this amendment be adopted. It does address a critical need in this country, and that is for more refinery capacity and the need in a lot of places, areas affected by base closure and Indian reservations, for economic development.

There are a lot of items this amendment would accomplish. It is important to point out that over the past 30 years, the petroleum industry has not added a single new oil refinery in the United States. The American public, I think, would find it startling that the largest petroleum consumer in the world hasn't seen one new refinery in the past three decades, which has created a devastating bottleneck in the delivery of transportation fuels to American consumers.

Fortunately, the Senate has an opportunity through this amendment to address that issue which is squeezing very hard the wallets of hard-working Americans across the country.

Amendment No. 1505, which is pending before the Senate, would enact important measures to boost domestic refining capacity and provide certainty for the industry and the public.

First, the amendment would set deadlines for refinery permit approval. For too long, proposed refinery projects have met slow deaths due to endless delays in the bureaucratic permit process.

Second, this amendment would provide States with much needed technical and financial resources to assist in refinery permitting. The process of refinery siting is time-consuming, complicated, and financially straining on State budgets that are already stretched thin.

This amendment also protects States rights by giving individual States the opportunity, as I said earlier, to opt in to a refinery permitting program. Contrary to what the opponents are saying, there are no mandates in this legislation. Participating States can voluntarily request the Environmental Protection Agency to coordinate all permits for construction or expansion of a refinery.

The importance of expanding refinery capacity to provide affordable and reliable supplies of transportation fuel cannot be overstated. I want to show a chart of something that was printed in BusinessWeek on May 3, 2007. This is what they said:

Because of high costs and a lack of public support, refiners haven't built an entirely new plant since 1976. While they have been expanding existing plants, the industry isn't keeping pace with growing demand.

I would also like to show another chart of something that was printed recently in the Wall Street Journal, and it said this:

The causes of higher gas prices include $65 per barrel oil caused by rising global demand and geopolitical tensions; a record high U.S. gasoline consumption of 380 million gallons a day; and refined gasoline shortages caused by Congressional rules and mandates.

Now, my constituents know this problem firsthand. Inadequate refining
capacity has a real impact at the local level, and I will give just a little anecdotal evidence here from South Dakota.

For the past month and a half, several key gasoline terminals in my home State of South Dakota were literally out of gasoline for multiple days at a time. Widespread outages were reportedly caused by limited supplies due to refinery shutdowns and routine repairs in other parts of the country. The ripple effects of this gasoline supply disruption were felt throughout the entire eastern part of my State. As the pipes ran dry and terminals emptied, gasoline wholesalers were forced to travel great distances and manage logistical bottlenecks at the few pipeline terminals with available refined product. In the meantime, gasoline prices soared at the retail level across South Dakota, and consumers in my State were forced to pay more at the pump.

The recent events in South Dakota are a prime example of the need to increase refining capacity in the United States. These events also underscore the need to move beyond petroleum for our transportation fuel needs.

The amendment offered by Senator Inhofe moves our country toward greater energy independence by providing Economic Development Administration grants for infrastructure improvements to accommodate cellulosic ethanol refineries at Base Closure and Realignment Commission sites and Indian lands.

As my fellow Senators are all well aware, the underlying bill includes a renewable fuels standard of 36 billion gallons by the year 2022. In order to meet this goal, we need to enact policies that dramatically increase the development and production of cellulosic ethanol.

By providing EDA grants that support cellulosic ethanol production in communities in need of economic development, amendment 1505 provides targeted rural and economic development and places our biofuels industry on course to reach the strengthened renewable fuels standard.

In addition to the EDA grants for cellulosic ethanol refinery development, this amendment includes a first-of-its-kind provision that may greatly enhance private sector investment in renewable fuels. This amendment will begin to assess our Nation's renewable reserves of biomass cellulosic ethanol feedstocks so that the public and energy companies have a realistic understanding of total U.S. renewable reserves. Energy companies' stock prices rise and fall depending on their declared proven reserves. This process, which has been in place since 1978, provides tremendous incentives for exploration, investment, and development of new sources of traditional hydrocarbons.

This straightforward amendment builds upon these proven market incentives by directing the Securities and Exchange Commission to research and report to Congress on the establishment of a renewable reserves classification system for cellulosic biofuels feedstocks in the United States.

The idea of a renewable reserves classification system was first discussed during an Agriculture Energy Subcommittee hearing I held in Brookings, SD, earlier this year. An expert witness from Ceres, Inc., an industry leader in the development of transgenic switchgrass seed for cellulosic ethanol production, testified that a standard means for measuring renewable reserves on a per-barrel-of-oil basis would greatly incentivize private sector investment in the next generation of advanced biofuels.

The President of Ceres, Inc., Richard Hamilton, describes the renewable classification system as:

An independent metric by which energy companies, and the market, may measure renewable reserves in barrel-of-oil equivalents just as they measure proved reserves today.

He continues by stating:

A renewable reserves classification system could well be the catalyst America's traditional providers of liquid transportation fuels require to invest in cellulosic biofuels technology and may be the Federal Government's least expensive way to hurry the cellulosic biofuels industry to maturity.

Certainly a proposal that could result in such a dramatic advancement in our biofuels industry is worthy of consideration by the Securities and Exchange Commission and is certainly worthy for inclusion in a bill that calls for a historic increase in renewable fuels production. If we are serious about advanced biofuels production, we must consider effective approaches, such as the amendment offered today by my colleague from Oklahoma, that would boost the production of advanced biofuels.

This amendment is important because, as I said earlier, it addresses a critical problem and shortage that we have in America today; that is, a lack of refinery capacity. We need more capacity. Now, frankly, it would be great if the folks I represent in South Dakota could get to their destinations by walking or riding bikes. Unfortunately, we have long distances to cover in my State. We have to drive automobiles, and we have to use fuel to power our automobiles. When you have a refinery problem like we have in America today, that limits the amount of gasoline that can be shipped through the pipeline to destinations in my State, and that drives the cost of gasoline higher and higher. Because of that shortage and because the wholesalers have to go to distant places to get it, it adds to the cost of our economy, and that affects the day-in and day-out lives of the people in my State of South Dakota and across this country who have to get to their destinations, whether it is to work or whether it is travel for recreation. The reality is that we cannot continue to abide $3.50 or $4 a gallon for gasoline, and we need to address what is causing that problem.

As I said earlier, I will be offering a number of amendments that will increase and advance the production of biofuels energy in this country because I believe so profoundly in its importance as part of our energy supply. But this particular amendment is critical as well because it addresses a fundamental problem that exists in America today; that is, a lack of capacity, refinery capacity, to make sure enough gasoline is making it to its destination, to places even as remote as South Dakota, so that the people who drive across my State can have access to affordable fuel to make sure they can get to the places they need to get to, and that the lack of affordable fuel does not choke our economy by continuing to force us to pay these exorbitant prices for gasoline.

So I support the amendment of the Senator from Oklahoma, amendment No. 1505, and I urge my colleagues here in the Senate to do so as well. It is important for a lot of reasons--because it brings economic development to areas that really need economic development, those areas which have been affected by base closures and Indian reservations--and because my State desperately needs that form of economic development and job creation. So I urge my colleagues to support this amendment.

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