Gasoline Prices: Causes of Volatility and Congressional Response

Congressional research reportNov 13, 2008

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Prepared for Members and Committees of Congress

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The high price of gasoline has been and continues to be a driving factor in consideration of

energy policy proposals. Despite passage of the massive Energy Policy Act of 2005 (EPACT

2005, P.L. 109-58), and the Energy Independence and Security Act of 2007 (H.R. 6, P.L. 110140), numerous other proposed initiatives came under active consideration in the Second Session

of the 110th Congress. Measures proposed included opening the Outer Continental Shelf for oil

and gas drilling, regulation of speculation in energy markets, and policies concerning the

Strategic Petroleum Reserve.

A large number of factors combined to put pressure on gasoline prices, including increased world

demand for crude oil and limited U.S. refinery capacity to supply gasoline. The war and

continued violence in Iraq added uncertainty, and threats of supply disruption added pressure,

particularly to the commodity futures markets. Concern that speculation added volatility and

upward pressure was frequently cited. In recent months, a decline in the value of the dollar

compared to other currencies increased the dollar price of oil on futures markets.

The gasoline price surge stimulated much legislative activity, but until the last year or so there

was not the sense of the extreme urgency of previous energy crises. In part, this may be due to the

fact that there was been no physical shortage of gasoline or lines at the pump, as there were after

the Arab oil embargo in 1973 and the Iranian revolution in 1979. At that time there was

expectation that prices were destined to grow ever higher, and many believed that the world’s

supply of oil was running out. Such views have been less prevalent during the current run-up. But

the continued and unrelenting increase in crude oil prices to record levels, even discounting

inflation, led many to suggest that changing world market conditions may cause permanent, or at

least chronic, shortages of petroleum production capacity. Others continued to expect that growth

in demand would moderate, and production increase to meet demand, as it did following the

shortages of the 1970s.

The continuing high prices led to a further search for legislative remedies. This report, after

analyzing factors that have contributed to high gasoline prices, describes the major legislative

initiatives and discusses the issues involved.

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Most Recent Developments............................................................................................................. 1

Background and Analysis ................................................................................................................ 1

Legislative Activities................................................................................................................. 1

Why Did Prices Go So High? ................................................................................................... 2

Crude Oil Prices.................................................................................................................. 2

Gasoline Prices ................................................................................................................... 4

Policy Options........................................................................................................................... 8

Oil-Related Legislation ............................................................................................................. 9

Reducing Consumer Impacts and Regulating Oil Markets................................................. 9

Mid- to Long-Term Supply and Demand...........................................................................11

Legislation ..................................................................................................................................... 13

Figure 1. Average Daily Nationwide Price of Unleaded Gasoline, January 2002November 2008 ............................................................................................................................ 2

Figure 2. China’s Oil Production and Consumption, 1986-2007 .................................................... 3

Figure 3. OPEC Surplus Crude Oil Production Capacity................................................................ 4

Figure 4. Average Annual Components of Gasoline Prices, 2000-2007 and JanuarySeptember 2008............................................................................................................................ 5

Figure 5. U.S. Gasoline Consumption, January 2000-October 2008 .............................................. 6

Figure 6. Nominal and Real Price of Gasoline, 1950-2007 and September 2008........................... 7

Figure 7. Consumer Spending on Oil as a Percentage of GDP, 1970-2004 ................................... 8

Author Contact Information .......................................................................................................... 14

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Gasoline and crude oil prices surged to record levels in May 2008, but as the summer driving

season ended they moderated somewhat, and then plunged as economic worries cut consumption.

(See Figure 1.) Cumulative consumption of gasoline for the first 311 days of 2008 was about 3%

less than the same period in 2007.

Despite passage in December 2007 of the Energy Independence and Security Act (H.R. 6, P.L.

110-140), the main provisions of which were an increase in the Corporate Average Fuel Economy

(CAFE) standards for automobiles and light trucks, and an increase in the requirement for the use

of renewable fuels in gasoline, the Second Session of the 110th Congress continued active

consideration of various energy proposals. When the Congress broke for the November elections,

it had passed legislation affecting oil and gas leasing on the Outer Continental Shelf (OCS),

energy taxes, and the Strategic Petroleum Reserve (SPR), but it had also considered legislation

regarding price gouging and speculation in energy futures markets, and also dealing with oil

market manipulation by the Organization of Petroleum Exporting Countries (OPEC).

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The persistence of high gasoline prices led to a broad spectrum of proposed new legislation in the

First Session of the 110th Congress. Despite passage of the major Energy Policy Act of 2005 (P.L.

109-58), many Members continued to explore a variety of measures to increase supply and reduce

demand in the short term, and to reduce the impact of high prices on consumers, as well as revisit

longer-term policies that were left behind in the process of reaching agreement on P.L. 109-58.

One such proposed policy was increasing CAFE standards for automobiles and light trucks, and

the Energy Independence and Security Act of 2007 (H.R. 6, P.L. 110-140) resolved a decadeslong debate by setting new standards and procedures for meeting them. P.L. 110-140 also

increased the requirement to use renewable fuels in gasoline, including advanced biofuels such as

cellulosic alcohol starting in 2016. However, a number of proposals included in one or more

versions of energy legislation in 2007 were dropped from the final bill, and those issues remained

of interest to the Congress during the Second Session.

With gasoline prices soaring, a new wave of legislative proposals appeared in the Congress.

Prominent among them were bills to suspend the federal gasoline and diesel transportation tax

during the summer driving season, by presidential candidates Senators McCain and Clinton.

Senator Domenici introduced a bill emphasizing U.S. petroleum production, including opening

the Outer Continental Shelf (OCS) and part of the Arctic National Wildlife Refuge (ANWR) for

oil and gas leasing and encouraging leasing of oil shale deposits. Senator Reid introduced a bill

which, among other measures, would impose a windfall profits tax on oil companies. Another tax

issue was the effort to extend tax credits for renewable energy production, and offset them by

increasing taxes on the oil companies.

Numerous bills were also introduced to deal with the possibility that speculation was

unreasonably driving up oil prices. The House passed several bills identifying and prohibiting

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price gouging. President Bush’s policy of continuing fill of the SPR was opposed in both Houses,

and a bill suspending fill became law. Proposals to sell SPR oil in an effort to moderate oil prices

were not adopted, however.

The major debate in the Second Session was the proposal by Republicans to open up the OCS for

oil and gas leasing.

This report 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.

. Average Daily Nationwide Price of Unleaded Gasoline, January 2002November 2008

Figure 1

4.50

Dollars per Gallon

4.00

3.50

3.00

2.50

2.00

1.50

'02

Ja ct

'03

Ja ct

'04

Ja ct

'05

Ja ct

'06

Ja ct

'07

Ja ct

'08

Se l

1.00

Source: Daily Fuel Gauge Report

by CRS.

Notes:

, American Automobile Association http://www.fuelgaugereport.com, compiled

Prices include federal, state, and local taxes. Last date above is November 13, 2008; $2.18.

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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 affected the price of

crude oil, and others the cost of producing and marketing gasoline.

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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. As a result, the price of crude oil is set

through the interaction of world demand and supply. Major factors in the run-up of crude oil

prices were the sharply increased consumption of imported oil by China (see Figure 2) and the

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continuing possibility of a supply disruption, either from violence or terrorism in the Middle East,

or from natural disasters like Hurricanes Katrina and Rita in 2005.

Figure 2. China’s Oil Production and Consumption, 1986-2007

8,000

7,000

6,000

Consumption

Net Imports

5,000

4,000

Production

3,000

2,000

1,000

2007

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

EIA, China Energy Profile, downloaded on May 19, 2007.

http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=CH.

Source:

Note: 2007 is the forecast value.

World demand for crude oil grew by 1.3% in 2007 to 86.0 mbd. World supply was 87.3 mbd in

March 2008, leaving relatively little excess supply to draw on if the market were disrupted by

natural or political disasters.1 When excess supply on the market is low, prices tend to rise and

become more volatile.

Some observers have suggested that speculators, who have entered the commodity markets in

large numbers looking for ways to increase their monetary investments rather than to trade in oil

and oil products, were causing an unacceptable upward pressure on prices. Another factor in

recent months was been the decline in the value of the dollar compared to other currencies. Since

world prices of oil are quoted in dollars, this would have an upward effect on market prices.

One of the major factors pushing crude prices higher is the perception that, as demand increases,

production capacity will not increase with it. Most of the spare production capacity in the world

market is located in OPEC countries, and, as Figure 3 shows, spare capacity in those countries

has been lower than average over the past several years.

International Energy Agency, Oil Market Report, April 11, 2008, p. 1.

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Figure 3. OPEC Surplus Crude Oil Production Capacity

EIA, Short-Term Energy Outlook, Figure 10, May 2008

Shaded area represents 1997-2007 average (2.5 million barrels per day).

Source:

Note:

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Higher prices for crude oil tend to translate directly into higher prices for gasoline. At the peak of

the market, crude oil accounted for about 72% of the cost of gasoline. Refining, distributing, and

marketing account for about 16% of the cost of gasoline, and taxes account for about 13%.

However, until recently crude oil’s share of the cost of gasoline has been more typically in the

range of 45% to 55%. In May 2007, for example, with gasoline at $3.15 per gallon, crude oil

contributed 46% of the cost; refining, distributing and marketing 41%; and taxes 13%.2 With the

collapse of crude prices, contribution of crude costs to the gasoline price declined somewhat. This

trend is illustrated in Figure 4.

Energy Information Administration data based on March 2008 data and a base price of gasoline of $3.24 per gallon.

See Gasoline & Diesel Fuel Update http://www.eia.doe.gov.

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Figure 4. Average Annual Components of Gasoline Prices, 2000-2007 and JanuarySeptember 2008

400

350

300

Cents per Gallon

250

Refining

Distribution & Marketing

200

Taxes

150

100

Crude Oil

2000

2001

2002

2003

2004

2005

2006

2007

2008

EIA, Gasoline and Diesel Fuel Update, November 10, 2008. Data calculated from monthly percentages

by CRS.

Note: 2008 data is for January through September.

Source:

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.3 A number of factors aggravated the pressure on gasoline prices, including 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. Perhaps most important, U.S.

demand for gasoline increased as economic growth continued, at least through 2007. However,

consumption of gasoline for the first 311 days of 2008 averaged 9.01 mbd, compared to 9.29 mbd

during the same period in 2007.4 (See Figure 5.)

The price of diesel fuel for transportation has also surged to record levels. For details on the relationship between

diesel and gasoline prices, see CRS Report RL34431, The Disparity Between Retail Gasoline and Diesel Fuel Prices,

by (name redacted) and (name redacted).

Energy Information Administration. Weekly Petroleum Status Report, November 7, 2008, p. 25.

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. U.S. Gasoline Consumption, January 2000-October 2008

Figure 5

Million Barrels per Day

9.5

8.5

7.5

Jan

'00

Jul

Jan

'01

Jul

Jan

'02

Jul

Jan

'03

Jul

Jan

'04

Monthly Averages

Jul

Jan

'05

Jul

Jan

'06

Jul

Jan

'07

Jul

Jan

'08

JulOc

Annual Averages

Source: EIA, Monthly Energy Review, October 2008, Table 3.5 and EIA, Weekly Petroleum Status Report,

November 5, 2008, Table 10.

Note: The data point for October 2008 is the average for the four week period ending on 10/31/08.

The 2004 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 had been lacking. Throughout the period, U.S. gasoline consumption continued to

rise. 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 6); that is, until Katrina pushed it toward the $3.00-per-gallon mark. Further, unlike

the earlier crises, there was no physical shortage of gasoline and there were no lines at the pump,

except in local disaster-affected areas.

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. Nominal and Real Price of Gasoline, 1950-2007 and September 2008

Figure 6

500

Cents per Gallon

400

300

Real (2000 Dollars)

200

100

Nominal

9/08

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2007

Source:

EIA, Annual Energy Review 2007, Table 5.24 and Monthly Energy Review, October 2008, Table 9.4.

As Figure 7 indicates, by the early 1990s 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, because world resources

were probably beginning to level off and would decline in the future. This view is no longer

widely prevalent, largely because world proved reserves have increased faster than production,

and are currently more than twice the level at the time of the Arab oil embargo in 1973.

At the beginning of the current crisis, the general expectation was that the price increase was a

temporary phenomenon. In part, this may be due to the fact that there has been no physical

shortage of gasoline or lines at the pump, as there were after the Arab oil embargo in 1973 and the

Iranian revolution in 1979. But the continued and unrelenting increase in crude oil prices to

record levels, even discounting inflation, is leading many to suggest that changing world market

conditions may have led to permanent, or at least chronic, shortages of petroleum production

capacity. The persistent increases in world demand for oil, despite higher prices, and the inability

or unwillingness in many parts of the world, particularly in the Middle East, to develop known

existing resources, appear to presage a continuing tight market, in which production capacity is

only slightly greater than demand. Under those conditions, temporary interruptions in production,

caused for example by local political crises or weather, are much more likely than normal to force

prices upward.

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. Consumer Spending on Oil as a Percentage of GDP,

1970-2004

Figure 7

Percentage of GDP

1970

Source:

1975

1980

1985

1990

1995

2000

2004

EIA, Annual Energy Review, 2006, Tables 3.5 and D1

Others continue to expect that growth in demand will moderate, and production will increase to

meet demand, as it did following the shortages of the 1970s. They argue that the market price of

oil appears to be much higher than production costs, and is being sustained by the expectation of

continued strong demand in the indefinite future. In addition, they point to large profits flowing to

oil producers, and political pressure to invest those profits in increased production.

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Congress has considered numerous energy policy initiatives and enacted many of them. With the

continuing pressure of rising prices, however, energy policy has once again become the focus of

attention, both in the Congress and on the campaign trail.

Policy options include efforts to ameliorate the effects of high prices in the short term, and to

attack the longer term problem. The latter options come in three major forms: to reduce

consumption by increased efficiency without having a negative effect on the economy; to

substitute alternative fuels at a cost comparable to the oil they replace; and to encourage

production of more oil, either in this country or abroad.

The choice of these options depends to a certain extent on how the future of the oil market is

viewed. Those who consider it likely that the present tightness of the market is likely to continue,

as described above, tend to support alternative fuels and increased efficiency, and to denigrate

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efforts to increase oil production as futile and ineffective compared to the growth in world

demand, which they expect to continue indefinitely. Those who view the present tightness of the

world market as an aberration that can be relieved with adequate investment in new production

capacity view any move to increase supply, anywhere in the world, as a positive signal that the

tightness and volatility of the world oil market can be eased and prices can more closely reflect

the cost of production.

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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.

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Bills introduced by Senator McCain (S. 2890) and Senator Clinton (S. 2971) would have

suspended federal gasoline and diesel transportation taxes for the summer driving season, and the

proposals were a topic in the presidential campaigns of the two candidates. Senator Obama, also

campaigning for the Democratic presidential nomination, criticized both proposals. Similar bills

were introduced in the House, but the issue was never taken up. (For details see CRS Report

RL34475, Transportation Fuel Taxes: Impacts of a Repeal or Moratorium, by (name redacted) and

(name redacted).)

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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 increased gasoline prices.

The issue reemerged in the 110th Congress as gasoline prices surged past $3.00 per gallon. On

May 23, 2007, the House passed the Federal Price Gouging Prevention Act (H.R. 1252). The bill

would have banned the sale of gasoline at “unconscionably excessive” prices during energy

emergencies declared by the president, and impose heavy fines and imprisonment for violations.

The White House complained that the bill could result in gasoline price controls, and threatened

to veto it, but the House vote of 284-141 indicated enough support to override a veto.

The Senate, in passing its version of H.R. 6, the Creating Long-Term Energy Alternatives for the

Nation (CLEAN Energy) Act of 2007 on June 21, 2007, included a price-gouging provision

similar to that in H.R. 1252. However, the provision was not included in the final version of H.R.

6, which became P.L. 110-140.

The Consumer-First Energy Act (S. 2991) contained a provision on price gouging similar to the

previously considered measures.

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The possibility that speculation has unreasonably driven up oil prices, either because of illegal

manipulation or because a speculative bubble is underway, has led to the introduction of much

legislation to increase oversight or regulate speculation. The 2008 farm bill (Food Conservation

and Energy Act, P.L. 110-234) contains provisions expanding the role of the Commodity Futures

Trading Commission (CFTC), but many other bills were considered that would have addressed

other perceived problems. On June 26, 2008, the House passed the Energy Markets Emergency

Act (H.R. 6377), which would direct the CFTC to curb excessive speculation, price distortion and

other activity that is causing major market disturbances.

In the Senate, Majority Leader Reid proposed consideration of S. 3268, the Stop Excessive

Energy Speculation Act of 2008, but disagreement on how to treat amendments on the floor

blocked action. A similar bill, the Commodity Markets Transparency and Accountability Act of

2008 (H.R. 6604), was approved by the House Agriculture Committee July 24, 2008. It failed to

get 2/3 of the vote under suspension of the rules on the House floor July 30, but passed the House

under regular rules September 18 by a vote of 283-133. (For details, see CRS Report RL34555,

Speculation and Energy Prices: Legislative Responses, by (name redacted) and (name re

dacted).)

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Authorized in 1975, SPR consists of caverns formed out of naturally occurring salt domes in

Louisiana and Texas in which nearly 700 million barrels of crude oil are stored. Its current

capacity is 727 million barrels, and it is authorized at 1 billion barrels. The purpose of the SPR is

to provide an emergency source of crude oil that may be tapped in the event of a presidential

finding that an interruption in oil supply, or an interruption threatening adverse economic effects,

warrants a drawdown from the reserve.

Program costs for the SPR in recent years have been dedicated principally to maintaining SPR

facilities and keeping the SPR in readiness should it be needed. Since FY1999, any fill of the SPR

has been with deliveries of royalty-in-kind (RIK) oil to the SPR in lieu of cash royalties to the

federal government on offshore production. Through FY2007, royalty-in-kind deliveries to the

SPR have totaled roughly 140 million barrels and forgone receipts to the Department of the

Interior are estimated to be $4.6 billion. DOE has projected deliveries of RIK oil during FY2008

of 19.1 million barrels and $1.170 billion in forgone revenues.

Continued fill of the SPR with royalty-in-kind oil became controversial in the 110th Congress.

Critics argued against adding oil to the SPR when markets are tight and prices remain high. They

argued further that the additional oil adds little to U.S. energy security. Supporters of RIK fill

argue that the fill rate is too little to have a discernible impact on markets, and that currently high

refined-product prices are sustained by factors other than crude supply, which is more than ample

at this time.

Legislation was introduced in the Second Session (H.R. 5146, S. 2598) to suspend RIK fill. The

House bill would also have mandated a sale of 13 million barrels of SPR oil during FY2008, with

the proceeds to be spent on a number of energy efficiency and alternative fuel programs. Both

bills established conditions, including a significant decline in crude oil prices, that would have to

be satisfied before RIK fill could be resumed. On May 13, 2008, the House passed, 385-25, a

similar bill, the Strategic Petroleum Reserve Fill Suspension and Consumer Protection Act (H.R.

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6022), which would have suspended SPR fill until the end of 2008 unless the price of oil dropped

below $75 per barrel. The Senate passed the bill on the same day, and it became P.L. 110-232 on

May 19.

A further move regarding the SPR was the Consumer Energy Supply Act of 2008 (H.R. 6578),

introduced by Representative Lampson. The bill would have required the President to release 70

million barrels of high-quality crude oil from the SPR over the next six months, a move which

proponents said would lower gasoline prices. The House took up the bill on July 24, 2008, under

suspension of the rules, which required a 2/3 vote in favor for passage. The vote was 268-157, not

enough to pass the bill. (For details see CRS Report RL33341, The Strategic Petroleum Reserve:

History, Perspectives, and Issues, by (name redacted)).

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Several legislative proposals, including Senator Reid’s Consumer-First Energy Act (S. 2991),

included a “windfall profits” tax on oil companies, reacting to the record profits recorded in

recent years. The provision was not passed in either house, however. (For details, see CRS Report

RL34689, Oil Industry Financial Performance and the Windfall Profits Tax, by (name redacted)

and (name redacted).)

Oil industry tax issues were indirectly involved throughout the Second Session during

consideration of a large tax measure which included, among other measures, extension of tax

credits for renewable energy. House sponsors of the tax proposals insisted on including measures

to offset the costs of various provisions, and among the offsets were reductions in tax benefits

previously granted oil and gas companies. The Senate declined to include offsets, and the tax bill

appeared unlikely to pass, but the Senate attached it to its version of the Emergency Economic

Stabilization Act of 2008 (H.R. 1424, P.L. 110-343), with only a small offset provision affecting

the oil and gas industry, and that version was finally approved and became law. (For details see

CRS Report RL33578, Energy Tax Policy: History and Current Issues, by (name redacted).)

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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.

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Corporate average fuel economy (CAFE) standards also have a long history of controversy, going

back to their establishment in the 1970s. When Congress passed the Energy Independence and

Security Act (H.R. 6, P.L. 110-140) in the First Session, the issue was largely resolved for the

time being, and did not emerge significantly during the Second Session. (For details see CRS

Report RL33413, Automobile and Light Truck Fuel Economy: The CAFE Standards, by (name red

acted) and (name redacted).)

Oil and gas exploration and development of part of the Arctic National Wildlife Refuge (ANWR)

has been controversial for many years. This was part of the early proposals for legislation that

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eventually became the Energy Policy Act of 1992 (P.L. 102-486), but was dropped in the face of

strong opposition in both houses. Support for the action grew gradually in the following years,

along with technological developments that advocates claimed would reduce the environmental

impact of development. Numerous attempts to open the region for leasing have been made, and

both the House and the Senate at various times approved measures that included leasing

provisions, but none of them have survived to become law. (For more details, see CRS Report

RL32838, Arctic National Wildlife Refuge (ANWR): Votes and Legislative Actions, 95th Congress

through 110th Congress, by (name redacted) and Beth A. Roberts.)

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A number of legislative proposals would have 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 have required the Director of the Office of Management

and Budget to develop an action plan to save 2.5 million barrels per day (mbd) in 2016, 7 mbd in

2026, and 10 mbd in 2031.

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In his January 31, 2006 State of the Union message, President Bush asserted that the United

States is “addicted to oil,” and set the goal of replacing more than 75% of oil imports from the

Middle East by 2025. The main thrust of the presidential initiative was 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.

In his next State of the Union speech, on January 23, 2007, the President went further, setting a

goal of reducing gasoline consumption by 20% in 10 years, through a combination of more

stringent fuel economy standards and setting a mandatory renewable fuels standards of 35 billion

gallons of renewable and alternative fuels by 2017, about five times the current consumption. The

Energy Policy Act of 2005 (P.L. 109-58) set a target of 7.5 billion gallons by 2012.

On June 21, 2007, the Senate passed its version of H.R. 6, the Creating Long-Term Energy

Alternatives for the Nation (CLEAN Energy) Act of 2007, including a provision requiring

production of 36 billion gallons of ethanol in 2022. The final version of the bill, P.L. 110-140, set

a modified standard that starts at 9.0 billion gallons of renewable fuel in 2008 and rises to 36

billion gallons by 2022. Of the latter total, 21 billion gallons is required to be obtained from

cellulosic ethanol and other advanced biofuels. (For more details, see CRS Report RL34265,

Selected Issues Related to an Expansion of the Renewable Fuel Standard (RFS), by (name red

acted) and Tom Capehart.)

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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 increasing controversy

during the Second Session. The moratorium was maintained both by a Presidential ban and by

provisions included in the annual appropriations measures for the Department of the Interior,

which administers oil and gas leasing on federal lands.

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On July 14, 2008, President Bush lifted the executive ban on the OCS imposed in 1990 by

President George H. W. Bush. Republicans in Congress attempted to bring up measures that

would open up some parts of the OCS for leasing, but were unable to bring their measures to the

floor either as stand-alone bills or as amendments to other bills. Appropriations Committee

Chairman Obey refused to bring the FY2009 Interior appropriations bill before the committee,

preventing Republicans from introducing OCS amendments to it.

On September 16 the House passed H.R. 6899, the Comprehensive American Energy Security

and Consumer Protection Act, which would have opened up the OCS for limited oil and gas

leasing. The bill passed by a vote of 236-189, despite objections by Republicans that it was too

restrictive. The Senate did not take up the bill.

With most of the non-defense FY2009 appropriations bills, including Interior, not considered, the

Congress took up a continuing resolution to fund those programs until March 6, 2009. On

September 24, the House passed H.R. 2638, the Consolidated Security, Disaster Assistance, and

Continuing Appropriations Act, 2009, without a provision extending the OCS leasing ban. The

bill passed the Senate September 27 and was signed by the President September 30 (P.L. 110329). (For details see CRS Report RL33493, Outer Continental Shelf: Debate Over Oil and Gas

Leasing and Revenue Sharing, by (name redacted).)

H.R. 1424 (Patrick Kennedy). Emergency Economic Stabilization Act of 2008. Includes tax

provisions including extensions of renewable energy credits, and offsets affecting the oil and gas

industry. Became P.L. 110-343 October 3, 2008.

H.R. 1596 (Ferguson). Clean and Green Renewable Energy Tax Credit Act of 2007.

H.R. 2419 (Peterson). Food Conservation and Energy Act of 2008. Contains provisions

expanding the role of the Commodity Futures Trading Commission for certain energy derivatives.

Enacted May 22, 2008, over the President’s veto (P.L. 110-234).

H.R. 2448 (Kuhl). Emergency Gas Price Relief Act of 2007.

H.R. 2638 (Price). Consolidated Security, Disaster Assistance, and Continuing Appropriations

Act, 2009. Appropriates funding for the Department of the Interior without the provision

extending the moratorium on OCS oil and gas leasing. Became P.L. 110-329 September 30, 2008.

H.R. 5146 (Lampson). Invest in Energy Security Act. Would suspend SPR fill, and sell SPR oil

to finance an Energy Independence and Security Fund.

H.R. 6022 (Welch). Strategic Petroleum Reserve Fill Suspension and Consumer Protection Act.

Passed the House and the Senate May 13, 2008. Became P.L. 110-232 on May 19, 2008.

H.R. 6349 (Marshall). Increasing Transparency and Accountability in Oil Prices Act of 2008.

H.R. 6377 (Peterson). Energy Markets Emergency Act of 2008. Passed the House June 26, 2008.

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H.R. 6578 (Lampson). Consumer Energy Supply Act of 2008. Would release oil from the

Strategic Petroleum Reserve over the next six months. On July 24, 2008, in the House, on motion

to suspend the rules and pass the bill, as amended, failed by the Yeas and Nays (2/3 required):

268-157.

H.R. 6604 (Peterson). Commodity Markets Transparency and Accountability Act of 2008. On

July 30,2008, in the House, on motion to suspend the rules and pass the bill, as amended, failed

by the Yeas and Nays: (2/3 required): 276-151.

S. 2598 (Dorgan). Strategic Petroleum Reserve Fill Suspension and Consumer Protection Act of

2008.

S. 2890 (McCain). A bill to amend the Internal Revenue Code of 1986 to provide for a highway

fuel tax holiday.

S. 2896 (Snowe). Diesel Tax Parity Act of 2008.

S. 2958 (Domenici). American Energy Production Act of 2008.

S. 2971 (Clinton). A bill to amend the Internal Revenue Code of 1986 to provide for a suspension

of the highway fuel tax, and for other purposes.

S. 2991 (Reid). Consumer-First Energy Act of 2008.

S. 3268 (Reid). Stop Excessive Energy Speculation Act of 2008. Cloture motion on the motion to

proceed to the measure presented in Senate 7/17/2008.

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(name redacted)

Specialist in Energy Policy

/redacted/@crs.loc.gov, 7-....

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(name redacted)

Information Research Specialist

/redacted/@crs.loc.gov, 7-....

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