May 5th, 2009
As part of the energy legislation that Senate Energy Committee is developing, Chairman Bingaman has introduced S. 967, the Strategic Petroleum Reserve Modernization Act of 2009 to create a refined petroleum product reserve that would contain at least 30 million barrels of transportation fuels like gasoline and diesel. The new reserve will be part of the nation’s 1-billion-barrel Strategic Petroleum Reserve (SPR).
Sen. Bingaman: “Our domestic oil market has changed and we must have a more sophisticated strategy to react to disruptions in our oil supply. While we are more dependent on imported crude oil than ever before, we also import more refined petroleum products. When U.S. refinery operations are disrupted, imported products from other countries are required to fill the gap. This legislation would provide a needed cushion while damaged infrastructure is repaired.”
In the 1970s, when SPR was set up, the U.S. was vulnerable to supply disruptions, as the nation was a significant and growing importer of crude oil. However, the country then had plentiful refining capacity and did not import large volumes of refined products such as gasoline and diesel. Therefore, SPR managers decided to stockpile only crude oil.
Since then, history has shown that severe weather, not geopolitical events, is the most frequent cause of supply interruptions. For example, Hurricanes Gustav and Ike last September halted much of our nation’s refining operations, and that resulted in fuel shortages in parts of the U.S. (mainly in the Southeast). The SPR was of limited use in easing these outages because the refineries affected by the storms were not able to process the crude oil from the reserve into fuels.
Both the bill text and a one-page summary have been posted to the Senate Energy website. The committee will have a hearing on the legislation next Tuesday at 2:30 p.m. in Dirksen 366.
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