The status of the U.S. refining industry is a very important and complex topic that certainly deserves the Committee's attention. Because of its complexity, it is a topic that demands a thorough understanding and full record before any attempt is made to legislate. On that note it is indeed regrettable that we find ourselves here holding a hearing some two weeks after the Republican leadership took two bills to the House floor - one on refineries and the other on boutique fuels - without the benefit of a single hearing or markup. This backwards style of legislating reflects poorly on this Committee, and I hope we do not repeat it in the future.

Gas prices have been at record highs for several months now and while the Energy Information Administration (EIA) reports that the increases have abated somewhat to a national average of $1.89 per gallon, statistical drops in the price of gas are little comfort to the consumers in my State who continue to pay more than $2.00 per gallon. While crude oil prices dipped from their June high of $42 per barrel down to $35, EIA states they are on the rise again and as of yesterday were hovering at $40. I asked the Bush Administration some months ago to aggressively jawbone OPEC to open the spigots but it seems that they have chosen to ignore that advice.

Of course, refinery capacity has some effect on the ultimate price to consumers. It is a well-known fact that the number of U.S. refineries declined steadily from the early 1980s through the 1990s. We should examine this development, as well as the fact that despite the decline in the number of refineries, our refinery capacity has increased and is projected to continue doing so, and refinery utilization has increased, as well.

The fact remains that the refining industry operates in a very tight market of its own making in order to maximize profit and minimize underused capacity. From the industry's perspective this is simply good business. Whether it is good for consumers is another matter. I note that the GAO will be testifying today concerning its findings that mergers and acquisitions in the refining industry have led to increased market concentration and higher prices.

The decline in the number of refineries was the principal reason cited for bringing H.R. 4517 to the floor without regular order. That bill would have nullified the three decades of expertise that the EPA has acquired regarding environmental permitting and transferred that function to the Secretary of Energy, under the theory that we would see an increase in refinery re-openings. On June 22nd, I wrote to EPA Administrator Levitt to determine the number of permits that were being delayed that would re-open closed refineries, but I have yet to receive a response. We have a witness from the EPA here today, so perhaps he will provide one for us. At this point I ask unanimous consent that my letter be inserted in the record, along with EPA's response when received.

I also have long been concerned about our balkanized fuel supply and the effect that it has on the fungibility of gasoline and the prices consumers pay at the pump. While the issue of boutique fuels needs examination, we must remind ourselves that these fuels can provide important environmental benefits that none of us want to see eliminated.

I look forward to a complete hearing today and again thank the Chairman for holding it.