Energy and Power Subcommittee Examines Legislative Solutions to Soaring Gas Prices

March 28, 2012

WASHINGTON, DC - The House Energy and Commerce Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), held a hearing today to discuss a pair of bills designed to hold the administration accountable for its energy policies and promote solutions. The panel reviewed legislation to protect Americans from EPA's regulatory overreach that is hitting refineries particularly hard, and also looked at a measure to ensure the responsible use of America's emergency oil reserves and development of domestic energy resources.
The Gasoline Regulations Act, authored by Chairman Whitfield, will shed light on the costs associated with the spools of red tape that are choking domestic refiners and energy producers and are contributing to higher gasoline prices. The bill directs an interagency committee to study the cumulative effects of EPA rules and actions on fuel prices and the economy. It also prevents the agency from finalizing three such measures -its Tier 3 standards, NSPS standards for petroleum refineries, and new ozone standards -until after the study is completed and policymakers have time to assess the consequences. EPA's proposed Tier 3 standard alone is expected to increase refining prices as much as nine cents per gallon. "It's a look-before-you-regulate approach that makes good sense no matter what the price of gasoline is," said Whitfield.
Rep. Cory Gardner (R-CO) put forward a draft of the Strategic Energy Production Act to protect the Strategic Petroleum Reserve and strengthen America's long-term energy security if these emergency reserves are tapped in the short term. As gas prices have climbed, members of the Obama administration have suggested tapping the reserves that are only to be used in case of a major supply emergency. The legislation will require the administration to look to long-term domestic supply solutions instead of quick fix political gimmicks. Under the legislation, if the president orders drawdown from the SPR, he must also order his administration develop a plan to open additional federal lands for oil and gas exploration and production. Despite the president's assertions that he supports more domestic production, only three percent of federal lands are currently leased for energy development.

"Many in this administration and beyond have suggested that tapping the SPR is the way to bring down prices. While this may be politically expedient during an election year, this is a one-time, short-term political fix to an enduring problem. What baffles me is that the federal government has resources to alleviate the problem but it refuses to use them," said Gardner.

Gardner also pressed Robert Abbey, Director of the Bureau of Land Management at the Department of the Interior, to explain the shortcomings of the administration's failed energy policies, pointing to independent statistics which show fewer leases under President Obama's leadership and a recent production decline on federal lands. Watch that exchange here

While witnesses from the Obama administration refused to endorse the committee's legislative proposals and denied any responsibility for high energy prices, industry analysts and stakeholders praised the bills as sensible policy solutions to America's energy challenges.

Matt Smorch, Vice President of Strategy for Countrymark Cooperative, an American-owned oil refining and marketing company, testified about the challenges small refineries face in complying with new regulations and government mandates, and stressed the need for greater certainty in the regulatory process. "It is critical to understand what the cumulative effects of regulations and mandates are on the business and the timeline over which they will occur. Capital and expense that is spent on regulatory compliance cannot be spent on growth opportunities that lead to higher employment. If these costs cannot be absorbed or passed on to the consumer, refiners will shutdown. Either way, costs will increase in the long term as refining capacity is rationalized."

Energy consultant Jack Coleman said the federal government should be focused on long-term supply solutions, like Gardner's bill, which encourage the development of domestic oil and gas resources and reverse federal policies that have kept valuable energy supplies locked away. "No other country has more recoverable oil and natural gas than we do. Yet, with current national policies, a large portion if not a majority of those resources will never be produced. We have failed to do our part to produce oil resources so that world supply and demand will stay in balance. We have known for decades that undeveloped countries were growing much faster than we are and that great pressure would be placed on oil supplies. But our national policy actions have not responded adequately to that knowledge," said Coleman.

Niger Innis, Co-Chairman of the Affordable Power Alliance and National Spokesman for the Congress on Racial Equality, gave compelling testimony that demonstrated the devastating impacts high energy prices have on the poor. "Rising energy prices discriminate against the poorest and most disadvantaged among us. As far as government energy assistance programs go, working class Americans don't want energy welfare, they want affordable energy," said Innis. "And absolutely nobody wants high prices based on artificial scarcity caused by bureaucratic bans and regulations...The legislation before this subcommittee today will help America produce affordable and reliable energy for all its citizens."

"Both of these bills have a commonsense approach. Although these bills will not solve rising gas prices in the short-term, they go a long away in helping to hold down and even reduce prices in the long-term. I look forward to working constructively with my colleagues on these two measures," said Whitfield.