TheWeekInCongress.com
Week Ending June 18, 2004
HR 4517 US Refinery Revitalization Act of 2004
BRIEF
The bill aims to establish incentives to increase oil refinery capacity in the US. The plan would be to establish Refinery Revitalization Zones where there has been mass manufacturing layoff. Another RRZ would be established where there is an idle refinery (Defined as a refinery that has been idle since June 1, 2004) and the unemployment rate is at least 20% above the national average.
Congress concerns itself that environmental regulations would stall investment in new refineries. Only one environmental review document of the proposed plant would be required from Dept. of Energy.
The Department of Energy would be the lead agency on the matter.
Sponsor: Representative Joe Barton (R-TX)
Vote: Passed House 239 – 192, (RC 246)
Cost to the taxpayer: No discernible cost at this time.
MORE INFORMATION
The Secretary of Energy is directed to designate as a Refinery Revitalization Zone (RRZ) any area that has experienced mass layoffs at manufacturing facilities or contains an idle refinery; and has an unemployment rate of at least 20 percent above the national average, as set forth at the time of designation as a RRZ.
The Department of Energy (DOE) would be the Lead Agency for coordinating Federal authorizations and related environmental reviews of establishing the refinery location and operation of the refinery in a RRZ. Directs DOE to prepare a single environmental review document to be used as the basis for all decisions on the proposed project.
The Secretary and the appropriate heads of Federal agencies would be directed to enter into Memoranda of Understanding that would ensure timely, coordinated review and permitting of refinery facilities within a RRZ. Interested Indian Tribes and State and local agencies would be allowed to enter into such Memoranda as well.
The legislation came forth as gasoline prices practically doubled in a few months and comments from a Saudi Arabia official concluded that the price rises were due to no new refineries being built in America since 1976 and a regular increase in demand by American consumers. Naturally, increasing supply would lower prices, therefore the bill.
Congress finds that it serves the national interest to increase refinery capacity for gasoline, heating oil, diesel fuel, and jet fuel wherever located within the United States, to bring more supply to the markets for use by the American people. Forty-eight percent of the crude oil in the United States is used for the production of gasoline, they say, and production and use of refined petroleum products has a significant impact on interstate commerce.
Congress agrees that the US demand for refined petroleum products, such as gasoline and heating oil, “currently exceeds our domestic capacity to produce them” and calculated that, “by 2025, United States gasoline consumption is projected to rise from 8,900,000 barrels per day to 13,300,000 barrels per day.” (Editor’s Note: Close to a fifty percent increase in 21 years) Equally in demand by 2025 would be diesel fuel and home heating oil. Increases in air travel and so jet fuel consumption is projected to be 760,000 barrels per day higher in 2025 than today.
Congress concludes that the US refinery industry is operating at nearly 100 percent of capacity during the peak gasoline consumption season and is producing record levels of needed products at other times. Consequently, the excess demand has recently been met by increased imports. 153 refineries operate in the United States, down from 324 in 1981. Almost 25 percent of our Nation's refining capacity is controlled by foreign ownership.
Easily restored capacity at idled refineries amounted to 539,000 barrels a day in 2002, or 3.3 percent of the total operating capacity. No new refineries have been built in the United States since 1976. Most refineries are located on century-old sites. Congress says that refiners have met growing demand by increasing the use of existing equipment and increasing the efficiency and capacity of existing plants. But refining capacity has begun to lag behind peak summer demand.
According to Congress the US is importing 7 percent of its refined petroleum products but few foreign refiners can produce the clean fuels required in the United States.
Refiners are subject to significant environmental and other regulations and face several new Clean Air Act requirements over the next decade, the bill says. “New Clean Air Act requirements will benefit the environment but will also require substantial capital investment and additional government permits. Heavy industry and manufacturing jobs have closed or relocated due to barriers to investment, burdensome regulation, and high costs of operation, among other reasons.”
Congress concludes that more regulatory certainty for refinery owners is needed to stimulate investment in increased refinery capacity. Required procedures for Federal, State, and local regulatory approvals need to be streamlined to ensure that increased refinery capacity can be developed and operated in a safe, timely, and cost-effective manner.## All Rights reserved. No reproduction or distribution without written permission from TheWeekInCongress.com