Republican News

Republican News

Jun 02 2004

CHAIRMAN DOMENICI SUPPORTS ADMINISTRATION'S POSITION ON SPRO

Urges Democrats to Stop Politicking Energy and Participate in the Solution

Chairman Domenici just finished speaking on the Senate floor in support of President Bush’s position on the Strategic Petroleum Reserve. He noted that the terrorist attack in Saudi Arabia this weekend against western oil workers – and the murder of 22 workers – underscores terrorist’s determination to strike at global oil supply. The attack prompted an immediate, sharp rise in the price of crude oil. Now, more than ever, the United States must conserve SPR oil to protect our national security and our commerce should we face a disruption in global oil supply. Chairman Domenici again urged Senate Democrats to stop politicking energy and join Republicans in passing comprehensive energy legislation that increases energy supplies and stabilizes soaring energy prices. The text of his remarks is below: June 1, 2004 Over the weekend, the world witnessed the horrible hostage taking situation in Saudi Arabia where terrorists attacked foreign oil workers and their families. These cowards did not attack refineries or terminals or pipelines – those hard assets are supposed to be well-guarded and could be replaced. Instead, these terrorists chose human targets to try to cripple the world’s access to oil supplies. Thank God that about 50 hostages were rescued, but we mourn the more than 20 lives lost in the attack. In the short run, this attack on foreigners and office facilities does not affect physical supplies, but it can harm future expansion of output. Investment will be eroded if there is instability. This terrorist attack is a frightening warning that terrorists may be only steps away from destroying significant Saudi or other Middle East production facilities. Terrorist actions intensify concerns about the vulnerability of the oil markets to a supply disruption. We saw the price of oil jump $2.45 following the weekend attack. Before the weekend attack, oil prices were back just under $40 and seemed to be moving a bit down in anticipation of the OPEC meeting scheduled for June 3rd in Beirut. Daniel Yergin, chairman of the Cambridge Energy Research Associates, remarked that the signs of increased OPEC production were calming the market down, but the weekend attack has again increased the sense of risk and nervousness that has done so much to propel prices over $40. Fears and worries of terrorist sabotage attacks and political unrest have translated into a risk premium of $7 to $10 per barrel. This so-called risk premium is one of the reasons why oil prices are as high as they are today. Given that we live in a world of increased risk – particularly with mounting security worries in the Middle East – it is imperative that we take responsible steps to ensure our energy security today and in the future. Today, our energy security requires an emergency supply of oil in the event of a severe disruption. Saudi Arabia is the largest OPEC oil producer and the OPEC country with the largest extra capacity to increase supplies. A major disruption of Saudi oil that we cannot respond to with the SPRO would harm our energy security and economy far more than $40 barrel oil. The President is right to preserve the Strategic Petroleum Reserve for times of dire need – not as a political gesture to abate high prices. And YES while prices are high today and they do hurt – today’s prices are still below energy prices America has born in the past. The SPRO is designed to be a national security asset. It is not there to deal with supply and demand imbalance – which the true source of high prices. What we have today is a long-coming trend of tightening supply and increasing demand. Changing our treatment of SPRO cannot fix that problem. I fear that changing our SPRO policy will actually end up hurting us. What do you think OPEC would do if we suddenly changed our SPRO policy – they would change their output in response. We have 660 million barrels of oil in the SPRO. We import about 11.5 million barrels of oil a day. About 5 million of those 11.5 million barrels a day are from OPEC. That means we have about 60 days of supply if there is a complete disruption to our imports and about a 120 day supply of oil if only OPEC supplies were disrupted. SPRO is not just there to deal with potential Middle East supply problems. Weather forecasters predict an intense hurricane season for the Atlantic and Gulf coasts, which could affect domestic oil and natural gas production.    If a storm hits a major refining center like Houston, it could send already $2 a gallon pas prices even higher. About 12% of the nation’s gasoline – enough to fill more than 2 million cars a day – is refined in Houston. The SPRO is our insurance policy against a natural disaster that could disrupt supply. We need the SPRO full and fully ready to serve us in the event of an emergency. Past experience has taught us that trying to use it as a price control does not work. The bottom line is that changing our treatment of SPRO will not lead to quick fixes in the market place. SPRO is about energy security today. The Energy Bill that I have been fighting to pass in the Senate is about our energy security future. The Energy Bill is not about quick fixes to the oil and gasoline market – it is a policy plan to move us into the future with a broader portfolio of resources and improved supply and demand balance. The Energy Bill will increase domestic oil and natural production – that helps balance supply with our growing demand. The Energy Bill will remove the 2% oxygenate mandate - that will make it easier on refineries to make gasoline that can be traded between regional markets. The Energy Bill addresses the proliferation boutique fuels –there are a number of state specific gasoline formulations that have made refining more challenging and marketing inefficient. The Energy Bill will promote further research in hydrogen power – that is the potential future for our transportation needs. I will keep coming down to this floor and keep driving the point that we need to pass the Energy Bill. Someone called today’s energy situation a Crude Awakening. It is indeed and it is time for us to WAKE UP and does something about it. The American public deserves action and they deserve an energy policy that takes care of them today and in the future.