March 7, 2006

INHOFE INTRODUCES ENERGY PRICE REDUCTION AMENDMENT
“Increasing the funding for today’s LIHEAP without acting to reduce the price of energy tomorrow is not an acceptable solution.”

 

WASHINGTON, DC – Sen. James M. Inhofe (R-Okla.), Chairman of the Environment and Public Works Committee, last evening introduced the Energy Price Reduction Amendment to S. 2320, legislation currently under consideration in the Senate that would make available funds included in the Deficit Reduction Act of 2005 for the Low-Income Home Energy Assistance Program for fiscal year 2006. Additional funding alone will not solve the problem of artificially high prices for the future. Senator Inhofe’s amendment to S. 2320 provides a solution by increasing supplies of LIHEAP-relevant fuel sources, gas and home heating fuel.

 

“Each year proponents of LIHEAP funding complain that energy prices have increased and therefore more assistance is needed,” Senator Inhofe said in remarks on the Senate floor. “Yet subsidizing high prices does nothing to lower prices. Increasing the funding for today’s LIHEAP without acting to reduce the price of energy tomorrow is not an acceptable solution. …

 

“Bipartisan Members of this body, from the senior Senator from Maine to the senior Senator from New York, interested stakeholders from the AARP to the National Conference of Black Mayors, have all expressed their concern over how high energy prices are hurting their constituents. Members, voting for this amendment means you are voting to lower those prices. A vote for this amendment means you are voting to help the LIHEAP beneficiaries.”

 

The full text of Senator Inhofe’s statement on the Senate floor appears below.

 

 

Statement by Senator James M. Inhofe

Energy Price Reduction Amendment to S. 2320 (SA 2898)

March 6, 2006

 

Mr. President, this is simply what I have called the Energy Price Reduction Amendment. Each year proponents of LIHEAP funding complain that energy prices have increased and therefore more assistance is needed. Yet subsidizing high prices does nothing to lower prices. Increasing the funding for today’s LIHEAP without acting to reduce the price of energy tomorrow is not an acceptable solution.

 

Home energy prices are excessively high because of two simple facts, two critical reasons: First, the demand for energy has increased along with the economic output. However, because natural gas is regarded as an environmentally preferable fuel, demand for natural gas has increased dramatically as more of it is used for electricity generation. We have gone through this with coal-fired plants. We have tried to have major advancements in clean coal technology, which we are doing right now. But right now, the one thing that is environmentally pure is natural gas and, for that reason, the demand is up. Second, with the rise in demand, the market should have responded with a corresponding increase in supply.

 

I have here a chart, and this is from the Energy Information Administration. Domestic production of natural gas has actually declined. Not many people understand this, that the supply has actually declined. So not only do we have an increase in demand, but the supply has reduced, as is pointed out in this chart. I want my colleagues to recognize that I am reporting clear facts. I am ignoring partisan rhetoric, relying on recognized, unbiased experts from the EIA, not from The New York Times, not from the industry representatives. The EIA’s consumer guide, “Residential Natural Gas Prices: What Consumers Should Know,” states that:

 

One of the most significant factors why prices are so high is due to weak production, noting that production decreased by only .6 percent in 2004, declining below the 2002 level and reaching the lowest production levels since 1999.

 

The fact is that demand has increased and production levels have not. As a result, our constituents--the very same residents desperate for LIHEAP assistance--are facing artificially high natural gas prices.

 

This chart is from the EIA. It illustrates how much residents of each of our States are paying for natural gas. Now I would encourage my colleagues to look and see what it is, and look at one of the higher elevations. It is from $16 in those regions there, all the way down to--I can’t read it from here, but you can see it. It is such a disparity as you go around the Nation, and I think people need to know what their constituents are being forced to pay.

 

EIA data has shown that production of natural gas has decreased dramatically. The National Petroleum Council, which is a nonpartisan entity charged by the Secretary of Energy, concluded that significant gas resources were effectively off limits for various reasons.

 

The American Gas Association, a strong supporter of increased LIHEAP funding, came to the same conclusion. Both entities called for a better, more efficient process for producing natural gas.

 

My amendment provides a more certain process for energy-related decision-making on public lands. It requires the Secretary to act on an energy-related application within 120 days. If the application is not approved, then the Secretary must inform the applicant as to the reasons and allow the applicant to modify its application.

 

What is happening here is that these applications to produce on these lands, public lands, sit there and there is never any decision. Certainly it should be shorter than 120 days, but that should be adequate.

 

Further, it clarifies existing practice and requires that a reviewing court accord a rebuttable presumption to the Secretary’s determination that an energy project as mitigated does not have a significant environmental impact. The recently enacted Energy bill included significant energy efficiency improvements. In fact, it included so many that EIA modified its energy projections in some ways to incorporate the new law.

 

My amendment would improve natural gas efficiency through the EPA’s Natural Gas Star Program. This is a good program. It works, and it is being voluntarily complied with. Under my language, the EPA would be authorized to provide grants to identify and use methane reduction technologies, and the Administrator would be required to conduct a series of methane emission reduction workshops in oil and gas-producing States. The less gas that is leaked means more gas is available to consumers. It is a no-brainer.

The lack of sufficient domestic refining capacity has received significant media attention. The public understands that tight capacity translates to higher prices of motor fuels.

 

Yet some LIHEAP proponents might not realize that home heating oil, which the Northeast desperately needs, as you can see on this chart, is a middle distillate along with diesel fuel. Therefore, according to the Congressional Research Service:

 

Because the residential and transportation sectors are in potential competition for the same part of the barrel, any unusual circumstances affecting the price and supply of one of these fuels affects the supply and price of the other.

 

Increasing refining capacity not only lowers the price of motor fuels but reduces the price of home heating oil as well.

 

Although States have a significant role in permitting existing or new refineries, they face particular technical and financial constraints when faced with these extremely complex facilities. It wasn’t long ago that I authored the Gas Price Act, and it was one that never even made it out of my committee. Yet it would have dramatically reduced the cost of refining. Right now we are at 100-percent refining capacity in America. Yet nothing is being done about it. Quite frankly, those individuals who are feeling the heat the most, who are not getting the heat the most in the Northeast are the ones who objected to the Gas Price Act.

 

This amendment does not have the same provisions as the Gas Price Act; it merely establishes a Governor opt-in program that requires the EPA Administrator to coordinate and concurrently review all permits with the relevant State agencies. This program does not waive or weaken the standards under any environmental law that seeks to assist States and consumers by providing greater certainty in the permitting process.

 

In fact, the Environmental Council of the States--an organization representing the State environmental directors--stated in a letter of support for similar language that the language:

 

Does not weaken the standards and allows each State to choose its best course.

 

This improved process does more than just increase the process for production of heating oil; it also redefines one’s idea of a refinery. My amendment provides Federal assistance to States for the permitting of ethanol plants or bio refineries, as well as facilities to produce ultraclean diesel or jet fuel from coal.

 

Assisting the expansion of bio refineries and coal-to-liquids facilities provides even more slack in the system that will lead to lower home heating oil prices in the future.

 

In its consumer guide, EIA points out that prices could even increase if there were disruptions to liquefied natural gas pipeline delivery systems, two very real points, especially to my friends in the Northeast. Keep in mind that if you divide the country up into sectors, the Northeast uses 31 percent--31 percent of the people residing in the Northeast use home heating oils, that in contrast with the Midwest, 3.2 percent; the South, 2.1 percent; and the West, 0.7 percent. That is a huge disparity. They are the ones who are opposing the various things that we can do to refine the home heating oils as well as diesel fuel.

 

Something has to be done. You can’t say we want to have cheaper energy, we want to have a LIHEAP program to make it more affordable for people in the Northeast, and yet the legislators in the Northeast oppose consistently any major changes in our refining capacity. As I said, we are already 100-percent refining capacity now, and that was before Katrina, I might add.

 

On the subject of liquefied LNG, I was astonished to learn that two members of the Massachusetts House delegation inserted a provision in the transportation bill in the dark of the night--I know this, I was the author of that bill--it happened in the middle of the night before it was taken up the next morning, to the detriment of the Northeast region. They slipped in a provision that blocks the construction of an already approved LNG terminal by maintaining an old bridge scheduled for demolition because it has been classified as a navigational hazard. This short-sighted stunt by a few Members means that the Northeast region will be deprived of supply that would reduce wholesale natural gas prices by up to 20 percent--up to 20 percent. It was an LNG already accepted terminal in Massachusetts.

 

My amendment repeals that offensive provision so harmful to the entire Northeast. Bipartisan Members of this body, from the senior Senator from Maine to the senior Senator from New York, interested stakeholders from the AARP to the National Conference of Black Mayors, have all expressed their concern over how high energy prices are hurting their constituents.

 

Members, voting for this amendment means you are voting to lower those prices. A vote for this amendment means you are voting to help the LIHEAP beneficiaries. This is something that makes so much common sense and something that is hard to understand here in Washington, DC. We have to do something about increasing the supply of natural gas as well as home heating oils through the refining capacity as well as doing something to affect the supply.

 

Mr. President, I yield the floor, and I suggest the absence of a quorum.