Gasoline Prices: New Legislation and Proposals

Order Code IB10134

CRS Issue Brief for Congress

Received through the CRS Web

Gasoline Prices: New Legislation and Proposals

Updated June 2, 2006

Carl E. Behrens and Carol Glover

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

Legislative Activities

Why Are Prices So High?

Crude Oil Prices

How Oil and Gasoline Prices Are Determined

Gasoline Prices

Policy Options

Oil-Related Legislation

Reducing Impacts on Consumers

Mid- to Long-Term Supply and Demand

ANWR

Savings Goals

OCS Leasing

Refinery Revitalization

LEGISLATION

FOR ADDITIONAL READING

CRS Issue Briefs

CRS Reports

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Gasoline Prices: New Legislation and Proposals

SUMMARY

The high price of gasoline was an important consideration during the debate on major

energy legislation, which ended August 8 as

the President signed the Energy Policy Act of

2005, H.R. 6 (P.L. 109-58). However, prices

continued to surge, spiking at the end of

August when Hurricane Katrina shut down

refining operations in the Gulf of Mexico.

The continuing crisis renewed attention to

some issues that were dropped or compromised in the debate over P.L. 109-58, as well

as a number of initiatives to reduce the impact

of high prices on consumers.

on oil and gas leasing on much of the Outer

Continental Shelf (OCS). Both the Senate

Energy and Natural Resources Committee and

the House Resources Committee included

leasing ANWR in their reconciliation bill

sections. The House Resources Committee

included provisions regarding OCS leasing,

but the Senate Energy Committee did not.

ANWR leasing was included in the Senate bill

that passed on November 3 (S. 1932), but the

House leadership dropped both ANWR and

OCS provisions before its reconciliation bill,

H.R. 4241, was passed on November 18 by a

vote of 217-215. The conference report on the

bill, approved by the House but amended in

the Senate, does not contain either measure.

A large number of factors combined to

put pressure on gasoline prices, including

increased world demand for crude oil and U.S.

refinery capacity inadequate to supply gasoline to a recovering national economy. The

war and continued violence in Iraq added

uncertainty and a threat of supply disruption

that added pressure particularly to the commodity futures markets.

The gasoline price surge influenced the

debate over P.L. 109-58, but the urgency of

previous energy crises was lacking. In part,

this may be due to the fact that there has been

no physical shortage of gasoline or lines at the

pump. In addition, the expectation of former

crises — that prices were destined to grow

ever higher — has not been prevalent.

Among the issues that received new

attention were vehicle fuel economy standards, leasing on the Outer Continental Shelf,

and refinery “revitalization” provisions. The

Gasoline for America’s Security Act of 2005,

H.R. 3893, was passed by the House on October 7 by a vote of 212-210. A similar bill, S.

1772, was defeated in the Environment and

Public Works Committee on October 26 by a

tie vote of 9-9.

However, the persistence of high gasoline and oil prices into a second summer has

raised alarms over the economic consequences

of the situation, heightened following the

disastrous effects of Hurricane Katrina.

As gasoline prices surged to the $3.00

per gallon level again in spring 2006, a new

wave of legislative proposals was put forth in

Congress, including strengthening measures

regarding price gouging and profiteering,

temporarily refunding federal gasoline taxes,

and windfall profits tax measures.

The budget reconciliation process was

the vehicle for two major energy initiatives:

the opening of part of the Arctic National

Wildlife Refuge (ANWR) to oil and gas

development and the lifting of the moratorium

Congressional Research Service

˜

The Library of Congress

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MOST RECENT DEVELOPMENTS

Gasoline prices surged toward $3.00 per gallon in April and stayed there during the first

half of May. The approach of the summer driving season, and complications involving the

phasing out of the gasoline additive MTBE, were cited by some observers as behind the latest

runup.

The price move stimulated a large number of new legislative initiatives and renewed

interest in several that had been under consideration for some time. On May 3, the House

passed the Federal Energy Price Protection Act (H.R. 5253) to prevent price gouging.

The tentative schedule for the week of June 5 included possible House floor action on

H.R. 5254, the Refinery Permit Process Schedule Act of 2006, and other energy legislation.

BACKGROUND AND ANALYSIS

Legislative Activities

The continuing crisis of high gasoline prices has led to a broad spectrum of proposed

new legislation. Despite passage of the major Energy Policy Act of 2005 (P.L. 109-58) last

summer, many Members are exploring a variety of measures to increase supply and reduce

demand in the short term, and to reduce the impact of high prices on consumers. Some are

also proposing to revisit longer-term policies, some of which were passed up in the process

of reaching agreement on P.L. 109-58.

This issue brief reviews the major legislative initiatives to deal with the gasoline price

issue. To put these proposals in perspective, it first describes some of the factors that have

led to the high prices of both crude oil and gasoline.

Why Are Prices So High?

The run-up of gasoline prices that began in spring 2004 (see Figure 1) climaxed a

period of almost five years during which gasoline prices demonstrated a great deal of

regional volatility but less of an increase at the national level. In 2004 a large number of

factors combined to exert pressure on gasoline prices in all parts of the country. Some of

these factors have affected the price of crude oil, and others the cost of producing and

marketing gasoline.

Crude Oil Prices. Past energy crises have demonstrated that oil is traded in a world

market, in which events in remote areas affect the price of crude for almost everyone. In the

12-18 months leading up to the crisis, these events included the following:

!

!

Decisions by the Organization of Petroleum Exporting Countries (OPEC)

cartel, after having reduced production quotas in 2002, to raise them only

slowly and reluctantly;

Unexpected demand growth in China;

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Disruptions in oil production in major exporters, including Venezuela, Iraq

and Nigeria;

Decline in the value of the U.S. dollar, the currency in which oil is traded in

the world market, compared to other major currencies, particularly the Euro.

Uncertainty and fear of major disruptions in Iraq and Saudi Arabia, in the

context of the war in Iraq and the threat of terrorism.

Figure 1 . Average Daily Nationwide Price of Unleaded Gasoline, January

2002 - May 2006

3.20

3.00

Dollars per Gallon

2.80

2.60

2.40

2.20

2.00

1.80

1.60

1.40

1.20

ay

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Ja t

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'06

Ju

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pr

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Ja ct

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'03

A

pr

Ju

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pr

A

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1.00

Note: Prices include federal, state and local taxes. Last date above is May 15, 2006.

Source: Daily Fuel Gauge Report, American Automobile Association, [http://www.fuelgaugereport.com],

compiled by CRS.

How Oil and Gasoline Prices Are Determined. The price of crude oil is set

through the interaction of world demand and supply. World demand, at 83.6 million barrels

per day in 2005, grew by 4% in 2004, moderated to 1.3% in 2005, and is forecasted to grow

by 1.8% in 2006.1 World supply, at 84.5 million barrels per day, was less than 1 million

barrels per day more than demand, leaving relatively little excess supply to draw on if the

market was disrupted by natural or political disasters. When excess supply on the market is

low, prices tend to rise and become more volatile.

Higher prices for crude oil translate directly into higher prices for gasoline. Crude oil

accounts for about 55% of the cost of gasoline. Refining, distributing, and marketing

1

International Energy Agency, Oil Market Report, April 12, 2006. pp.4-6.

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account for about 26% of the cost of gasoline, and taxes account for about 19%.2 Whether

the crude oil a refiner processes is purchased on the open market, or is produced by the oil

company itself, higher costs for any element in the cost of gasoline are likely to be passed on

to consumers. Gasoline prices have also increased due to limited refining capacity in the

United States, the range of fuel blends required to meet air pollution requirements, and the

mandated use of ethanol as an additive.

As often happens when commodity prices are volatile, speculation in futures contracts

accentuated the upward price pressure and appeared to continue high prices longer than

would be expected as market fundamentals push toward lower prices.

Gasoline Prices. Just as a number of factors led to increased crude prices, a

combination of features in the U.S. refinery industry contributed to an increase in gasoline

prices.

!

U.S. demand for gasoline has increased as economic growth has continued

(See Figure 2).

!

Domestic refining capacity has declined, both in number of refineries —

from 324 in 1981 to 153 in 2002 — and in total capacity — from 18.62

million barrels per day (mbd) in 1981 to 16.78 mbd in 2002.

!

The structure of the refining industry has changed. In 1981 most refining

capacity was owned and operated by integrated oil companies that supplied

their own crude oil, refined it, distributed it, and marketed the products.

Refining was only one part of the company’s profit-making operation, and

frequently was not an important profit maker. Now the refining industry is

characterized more by independently owned, nonintegrated firms. When

refineries are the sole source of revenue to the owners, it becomes more

important that the operation be profitable, leading to pressure to raise prices.

!

The refining industry has been operating with lower inventories of both

crude oil and gasoline, as a means of cutting costs. The side effect has been

reduced ability to meet unanticipated demand, leading to greater price

pressure.

!

Gasoline markets are fragmented regionally because air quality requirements

have led to numerous different formulations to meet varying standards. In

meeting demand for these regional formulations, called “boutique fuels,”

refiners lose flexibility to meet local variations in demand elsewhere,

leading to increased price pressure.

!

With domestic refining capacity constraints, a greater proportion of gasoline

demand is being met with imported products. Foreign refiners typically

manufacture products designed to sell in the international market, not the

2

Energy Information Administration data based on March 2006 data and a base price of gasoline of

$2.43 per gallon. See [http://www.eia.doe.gov].

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special product “boutique fuels” demanded by a significant share of the U.S.

market.

!

Refiners have had increased costs in the past year to comply with new

requirements to limit sulfur content and to switch from the oxygenate

additive MTBE to ethanol.

These various factors pushed the nationwide average price of gasoline over $2 per

gallon in May 2004. By mid-June, Energy Information Administrator Guy Caruso was able

to note a slight decline in prices, and tell a Senate Energy Committee hearing that, “absent

major disruptions, oil and gasoline markets may be turning a corner.”3 However, persistent

high crude prices pushed gasoline prices over $2 again in October, and yet again in March

2005. By April 2005, Caruso was suggesting that increasing world demand for oil might

keep the price of crude above $50 per barrel through 2006.4 In fact, in August the price

surged close to $70.

Figure 2 . Consumption of Motor Gasoline, 2000 - April 2006

10

Million Barrels per Day

9.5

9

8.5

8

7.5

7

Jan

'00

Jul

Jan

'01

Jul

Jan

'02

Jul

Jan

'03

Monthly Averages

Jul

Jan

'04

Jul

Jan

'05

Jul

Jan Apr

'06

Annual Averages

Source: EIA, Monthly Energy Review, April 2006, Table 3.4 and Weekly Petroleum Status Report, May 10,

2006, Table 10.

3

Guy Caruso, statement before the Senate Committee on Energy and Natural Resources, June 15,

2004.

4

“EIA: Oil to remain above $50 through ‘06.” Oil Daily, April 8, 2005, p. 1. Report of a speech by

Guy Caruso at the National Press Club in Washington, DC, April 7, 2005.

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The price surge intensified discussion of energy policy and led to further calls for

passage of energy legislation. However, until the climax of the Katrina disaster, the urgency

of previous energy crises has been lacking. Throughout the period, U.S. gasoline

consumption continued to rise, although the usual summer peak in consumption appears to

have been somewhat blunted in 2004, as shown in Figure 2. In part this may be because,

although the price of gasoline in nominal terms set a record, in real terms it did not appear

to be reaching the level of the Iranian crisis years of the early 1980s (see Figure 3), again

until Katrina pushed it toward the $3.00-per-gallon mark. Further, unlike the earlier crises,

there was no physical shortage of gasoline, and no lines at the pump, except in local disasteraffected areas. Consumption of gasoline fell sharply after prices peaked. The drop was

typical of the post-Labor Day decline but more steep than in previous years.

As Figure 4 indicates, the proportion of consumer expenditures on oil and gasoline had

declined from the high levels of the 1970s and early 1980s. Data are not yet available to

indicate what effect the price run-up starting in 2004 has had on this measure. Perhaps most

important, the common view during the earlier crises was that oil prices not only were high,

but were destined to become ever higher in the coming years. This view is no longer

prevalent, and the general expectation has been that the price increase is a temporary

phenomenon, although lasting longer than expected. The current crisis has led to some

analytical speculation that world oil production has peaked, but additions to proved world

oil reserves seem to contradict that thesis. Oil industry analysts appear confident of a long

life remaining for the resource and argue that if oil is replaced, it will be because of improved

alternative technologies, not because the world is running out of oil.

Figure 3. Nominal and Real Price of Gasoline,

1973-2004 and March 2005

3

2.5

2

1.5

1

0.5

0

1973

1977

1981

1985

1989

Nominal Price

1993

1997

2001

Real Price (2004 Dollars)

Source: EIA, Monthly Energy Review, May 2005, Tables 1.6 and 9.4, calculated by CRS.

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Figure 4. Consumer Spending on Oil as % of GDP, 1970 - 2001

10

8

6

4

2

0

1970

1975

1980

1985

1990

1995

2000

Source: Calculated by CRS with data from EIA, Annual Energy Review 2005, Table 3.5. GDP from Bureau

of Economic Analysis, Department of Commerce.

As shown in Figure 5, gasoline prices historically have increased less than the general

rate of inflation, as measured by the Consumer Price Index (CPI). After the surge in 1973,

and again after the 1979-1980 run-up, gasoline prices grew very slowly and even declined,

dropping sharply in 1986. A sudden increase in 2000 was similarly followed by slow or

declining prices. During the current run-up, gasoline price increases have far outpaced the

general CPI increase.

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Figure 5. Percent Change in Gasoline Prices Compared to the

Consumer Price Index, 1973-2004

30

20

10

0

-10

-20

-30

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2004

2003

Source: EIA, Annual Energy Review 2004, Table 5.24. CPI from the Bureau of Labor Statistics. Calculated

by CRS.

Policy Options

The several energy crises of the past led to major legislative action, twice in the 1970s

and once following the 1991 Gulf War. The just-passed Energy Policy Act of 2005 differs

from the previous actions because the Congress had been considering major energy

legislation for three years before the situation became a nationwide concern. By the time the

bill finally moved through the Congress, the major issues had already been fully debated, and

the final version differed little from previous initiatives except for resolving a number of

issues that had blocked passage before.

As in previous legislative energy debates, a major policy divide existed between those

who view the gasoline-fueled automobile as a temporary necessity to be tolerated only until

a substitute fuel or alternative means of transportation can be developed, and those who

expect oil to be the same dominant transportation fuel in the indefinite future that it is at

present. Compromise agreements have been reached via a combination of measures that

enhance the development of alternatives or restrain the growth in demand for oil, on the one

hand, and those that increase production or reduce the cost of supplying that demand, on the

other. However, individual measures often carry with them complicating features that make

passage more difficult. In addition, major legislation often becomes the vehicle for measures

that typically would not find enough support to pass as individual bills, or which may be

added to gain support for the whole measure. In the legislative climate of the 108th Congress,

balancing the various interests involved proved too difficult a task, despite the influence of

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a nationwide energy crisis in an election year. Under the stimulation of continued high oil

and gasoline prices, the 109th Congress pursued the goal again, this time successfully.

However, as gasoline prices continued to surge, and damage to Gulf of Mexico oil and gas

resources and facilities by Hurricane Katrina was assessed, calls for further measures to

address the crisis were heard in Congress. Continued price pressure into the spring of 2006

has solidified the calls into specific legislative proposals.

Oil-Related Legislation

Reducing Impacts on Consumers. A number of proposals are aimed at easing

the impact of high prices on consumers, or are aimed at the oil industry’s price-making

policies.

Price Gouging. The rapid increase in gasoline prices following the Katrina disaster

led to allegations of price gouging. P.L. 109-58 included a provision requiring the Federal

Trade Commission (FTC) to conduct an investigation into price gouging in the recent

increases in gasoline prices. H.R. 3893, as passed the House October 7, includes provisions

requiring FTC to define price gouging and penalize violators.

After gasoline prices surged again in April 2006, momentum increased for various

price-gouging proposals. Several initiatives that would impose windfall profits taxes on

crude oil profits were also introduced. On May 3, the House passed the Federal Energy Price

Protection Act, H.R. 5253, by a vote of 389-34. The bill would require the Federal Trade

Commission within six months after passage to issue rules defining price gouging in crude

oil, gasoline, diesel, home heating oil, and biofuel, and would prohibit gouging so defined.

Tax Relief. On April 26, 2006, Senator Domenici proposed an amendment to the

FY2006 emergency supplemental appropriations bill (H.R. 4939) that included a $100 “Fuel

Tax Holiday Rebate.” The proposal was cosponsored by Majority Leader Frist and other

Senators. The amendment also contained provisions about price-gouging, easing restrictions

on rebates for hybrid vehicles, and approving leasing of ANWR. However, the amendment

was withdrawn May 2.

Suspending Import Duties on Ethanol. Because the latest gasoline price run-up

was attributed in part to the need to increase use of ethanol, some Members, including Senate

Foreign Relations Committee Chairman Lugar and House Energy and Commerce Chairman

Barton, have proposed suspending temporarily duties on imported ethanol, particularly from

Brazil.

“Boutique” Fuels. The Energy Policy Act of 2005 had some provisions related to

local requirements for specific blends of gasoline, but some proposed legislation is aimed at

further reducing “boutique fuels” requirements that, according to some observers, make the

national gasoline market less flexible. H.R. 3893, the Gasoline for America’s Security Act

of 2005, passed by the House October 7, 2005, by a vote of 212-210, would among other

provisions require EPA to develop a Federal Fuels List and to limit local gasoline blends to

those on the list. (For details, see CRS Report RL31361, “Boutique Fuels” and

Reformulated Gasoline: Harmonization of Fuel Standards, by Brent D. Yacobucci.) Other

boutique fuels legislation has also been proposed.

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Windfall Profits Tax. Several bills introduced would impose taxes on oil companies

in light of record profits recorded as a result of the crude and gasoline price run-up. The

context of the proposals lies in the Crude Oil Windfall Profit Tax Act (P.L. 96-223) of 1980,

as part of a compromise between the Carter Administration and the Congress over the

decontrol of crude oil prices. (For details, see CRS Report RL33305, The Crude Oil

Windfall Profit Tax of the 1980s: Implications for Current Energy Policy, by Salvatore

Lazzari.)

Mid- to Long-Term Supply and Demand. Most proposals affecting supply and

demand of crude oil and gasoline would not affect the current short-term crisis but would be

aimed at longer term trends.

CAFE. Automobile fuel economy standards also have a long history of controversy,

going back to their establishment in the 1970s. In the mid-1990s, the National Highway

Traffic Safety Administration (NHTSA) was considering a rulemaking that would result in

increased standards for light-duty trucks (including sport utility vehicles), but for several

years, Congress included in its annual appropriation for NHTSA a measure prohibiting

NHTSA from analyzing or undertaking such a ruling. That prohibition was dropped in the

FY2004 NHTSA appropriations, and a final rule issued by NHTSA in April 2003 requires

a boost in light-truck fuel economy to 22.2 miles per gallon by model year 2007. In the

summer of 2005, the Bush administration proposed new fuel economy standards for light

trucks, to take effect in the 2008 model year.

During House floor debate on P.L. 109-58, an amendment to increase fuel economy

standards to 33 miles per gallon over 10 years was defeated by a vote of 177-254. A more

general amendment to the House bill, requiring the Administration to take “voluntary,

regulatory, and other actions” to reduce oil demand in the United States by 1 million barrels

per day from projected levels by 2013 was defeated 166-262. The measure was included in

the bill passed by the Senate, but was dropped in conference.

Continued high gasoline prices have raised congressional interest in higher mandated

CAFE standards again. Among the proposals is H.R. 3762, which would require average

fuel economy of 33 miles per gallon by 2016. Other proposals would give NHTSA authority

to raise standards above the present level and would change the vehicle classifications to one

based on weight. On May 10, the House Energy and Commerce Committee ordered reported

a bill that would authorize the Secretary of Transportation to set fuel economy standards for

passenger automobiles based on one or more vehicle attributes.

ANWR. Oil and gas exploration and development of part of the Arctic National

Wildlife Refuge (ANWR) have been controversial for many years. This was part of the early

proposals for legislation that eventually became the Energy Policy Act of 1992, but was

dropped in the face of strong opposition in both houses. Support for action grew gradually

through the decade, along with technological developments that advocates claimed would

reduce the environmental impact of development; the House included a development

measure in its version of an omnibus energy bill in August 2001. A similar measure was part

of the House-passed legislation in the 108th Congress. Opposition in the Senate kept the

measure from the floor, however, and it was dropped in conference.

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In the 109th Congress, Senate supporters of ANWR development moved the issue to the

budget process, where it can be approved by a simple majority vote. On March 9, 2005, the

Senate Budget Committee issued a FY2006 budget resolution that assumes $2.4 billion of

revenue over five years from leases in ANWR. On March 16 the Senate rejected an

amendment by Senator Cantwell to strike the ANWR provisions, by a vote of 49-51. The

next day the Senate passed the budget resolution (S.Con.Res. 18). The measure was included

in the package of provisions for the budget reconciliation bill approved by both the Senate

Energy Committee and the House Resources Committee. However, the House leadership

removed the ANWR provisions from its reconciliation bill (H.R. 4241) before it was passed

on November 18 by a vote of 217-215.

Despite the failure of the ANWR provision, the Administration’s FY2007 budget

request for the Department of the Interior, submitted February 6, assumes that $8 billion can

be raised in 2008 through leasing of oil and gas resources in ANWR.

Savings Goals. A number of legislative proposals would set goals for reducing oil

consumption. An example is the Enhanced Energy Security Act of 2006 (S. 2747),

introduced by Senator Bingaman May 4, 2006, which would require the Director of the

Office of Management and Budget to develop an action plan to save 2.5 mbd in 2016, 7 mbd

in 2026, and 10 mbd in 2031.

OCS Leasing. The moratorium on oil and gas leasing in the Outer Continental Shelf

(OCS), except in the central and western Gulf of Mexico and some parts of Alaska, was

subject to much controversy during consideration of P.L. 109-58. A proposal to allow states

to voluntarily opt out of the moratorium was dropped under threat of filibuster, and even a

measure to order the Department of the Interior to perform an inventory of OCS resources

barely survived the debate.

Following the disruption of production by Katrina, momentum to lift the moratorium

increased, and some supporters suggested it might be included in the budget reconciliation

process. The House Resources Committee on September 28 marked up a bill that would

have given states the option of allowing drilling for petroleum and natural gas. In approving

the bill, the committee adopted an amendment that would lift the moratoriums on drilling the

OCS for natural gas completely. In the face of opposition to the natural gas provision,

Representative Pombo, Chairman of the Resources Committee, decided not to bring the bill

to the floor as planned.

On October 26, the Resources Committee, as part of its package of measures for the

budget reconciliation bill, included provisions that would make statutory the current

presidential moratorium on OCS leasing until 2012 but would allow individual states to opt

out of the moratorium and would allow states close to 50% of the royalties from oil and gas

production that resulted. It would also give states the option to extend the moratorium after

2012. However, the provision was removed from the bill (H.R. 4241) before it was passed

on November 18 by a vote of 217-215.

On May 10, 2006, the House Appropriations Subcommittee on Interior and the

Environment voted to lift the congressional suspension of natural gas leasing for much of the

OCS. The legislation, if approved, would leave in place the presidential moratorium on the

same region, which operates until 2012.

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Refinery Revitalization. P.L. 109-58 contained some provisions to encourage

construction of new oil refineries, but the destruction to refining facilities caused by Katrina

in the Gulf of Mexico area led to calls for further measures. On September 28, 2005, the

House Energy and Commerce Committee reported out H.R. 3893, the Gasoline for

America’s Security Act of 2005, and the House passed the bill October 7 by a vote of 212210. Among other measures, the bill would provide for presidential designation of potential

refinery sites on federal lands and military bases that are closing, and set up a process for

coordinating authorization and related environmental reviews for construction of new

refineries, to be led by the Department of Energy. It would centralize judicial review of the

process in the U.S. Court of Appeals for the District of Columbia. The bill as reported would

also have amended the Clean Air Act regarding provisions for New Source Review for

refineries and other facilities, but the measure was dropped before being brought to the

House floor. (For details, see CRS Report RS21608, Clean Air and New Source Review:

Defining Routine Maintenance, by Larry Parker.) The bill also contains measures concerning

boutique fuels (see above).

A similar bill was introduced in the Senate September 26, as the Gas Petroleum Refiner

Improvement and Community Empowerment Act, S. 1772, but the bill was rejected October

26 by the Environment and Public Works Committee by a vote of 9-9.

On May 3, 2006, the House brought up under suspension of the rules the Refinery

Permit Process Schedule Act (H.R. 5254), but the 237-188 vote was less than the two-thirds

approval required under suspension. The bill, which would require the President to appoint

a “federal coordinator” to organize the permitting of new refineries, is expected to come to

the floor under regular rules the week of June 8.

Presidential Proposals: The Advanced Energy Initiative. In his January 31

State of the Union message, President Bush set the goal of breaking the U.S. “addiction to

foreign oil” and of “replacing” more than 75% of oil imports from the Middle East by 2025.

In specifying the Middle East as the source, the proposal differed from provisions considered

in the previous year to set a goal of reducing total imports.

The main thrust of the presidential initiative is to increase funding for research in

producing ethanol from plant fiber biomass (rather than from corn), for improved batteries

for hybrid automobiles, and for hydrogen fuels. At the same time, the budget request for

FY2007 for DOE, which includes these increases, would eliminate programs for oil and gas

research.

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LEGISLATION

109th Congress

P.L. 109-58, H.R. 6

Energy Policy Act of 2005. Introduced April 18, 2005. Passed by the House April 21,

2005 (249-183). Passed the Senate June 28. Reported out of conference July 26 and passed

by both houses July 28 and July 29. Signed into law August 8, 2005.

H.R. 3893 (Barton)

The Gasoline for America’s Security Act of 2005. Introduced September 26, 2005.

Reported out by the House Energy and Commerce Committee September 28. Passed by the

House October 7 by a vote of 212-210.

H.R. 5253 (Barton)

The Federal Energy Price Protection Act of 2006. Passed by the House May 3, 2006,

under suspension of the rules by a vote of 389-34.

H.R. 5254 (Barton)

The Refinery Permit Process Schedule Act of 2006. Rejected by the House under

Suspension of the Rules May 3, 2006, by a vote of 237 yeas to 188 nays.

H.R. 3762 (Boehlert)

To require higher standards of automobile fuel efficiency in order to reduce the amount

of oil used for fuel by automobiles in the United States by 10% beginning in 2016, and for

other purposes.

S. 1772 (Inhofe)

The Gas Petroleum Refiner Improvement and Community Empowerment Act.

Introduced September 26, 2005. Rejected by the Senate Environment and Public Works

Committee October 26 by a vote of 9-9.

S. 555 (DeWine)

The No Oil Producing and Exporting Cartel (NOPEC) Act of 2005. Introduced March

8, 2005. Adopted by voice vote as an amendment to H.R. 6 in the Senate, June 21. Not

included in the final version of H.R. 6.

S. 2747 (Bingaman)

The Enhanced Energy Security Act of 2006. Introduced May 4, 2006.

S. 2748 (Bingaman)

The Enhanced Energy Security Tax Incentives Act of 2006. Introduced May 4, 2006.

CRS-12

IB10134

06-02-06

FOR ADDITIONAL READING

CRS Issue Briefs

CRS Issue Brief IB10136, Arctic National Wildlife Refuge (ANWR): Controversies for the

109th Congress, by M. Lynne Corn, Bernard A. Gelb, and Pamela Baldwin.

CRS Issue Brief IB10054, Energy Tax Policy, by Salvatore Lazzari.

CRS Reports

CRS Report RL31361, “Boutique Fuels” and Reformulated Gasoline: Harmonization of

Fuel Standards, by Brent D. Yacobucci.

CRS Report RS21608, Clean Air and New Source Reviews: Defining Routine Maintenance,

by Larry Parker.

CRS Report RS22233, Oil and Gas: Supply Issues After Katrina, by Robert L. Bamberger

and Lawrence Kumins.

CRS Report RL33021, Oil Industry Profits: Analysis of Recent Performance, by Robert

Pirog.

CRS Report RL32248, Petroleum Refining: Economic Performance and Challenges for the

Future, by Robert L. Pirog.

CRS Report RS22236, Price Increases in the Aftermath of Hurricane Katrina: Authority to

Limit Price Gouging, by Angie A. Welborn and Aaron M. Flynn.

CRS-13