CONTENTS STATEMENTS Bingaman, Hon. Jeff, a U.S. Senator from the State of New Mexico.. Boggs, Hon. Danny J., Deputy Secretary, Department of Energy...... Griffith, Jack A., president, Griffith Petroleum, Inc., on behalf of the Petrole- Page 339 Nickles, Hon. Don, a U.S. Senator from the State of Oklahoma... Rothschild, Edwin, assistant director, Citizen/Labor Energy Coalition. Stern, Hon. Paula, Chairwoman, International Trade Commission 1 203 Sternfels, Urvan R., president, National Petroleum Refiners Association...... Steuart, Leonard P., II, president, Steuart Petroleum Co., on behalf of the Tell, William, Jr., senior vice president, Texaco, Inc........ Van Arsdall, R. Thomas, vice president, agricultural inputs and serivces, 111 IMPACT OF IMPORTED PETROLEUM PRODUCTS ON THE DOMESTIC PETROLEUM INDUSTRY TUESDAY, JUNE 4, 1985 U.S. SENATE, SUBCOMMITTEE ON ENERGY REGULATION AND CONSERVATION, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. The subcommittee met, pursuant to notice, at 9:36 a.m., in room SD-366, Dirksen Office Building, Hon. Don Nickles, presiding. Present: Senators Nickles, Warner, Evans, Johnston, Ford, Bingaman, and Rockefeller. Also present: Howard Unseem, professional staff member; and Benjamin S. Cooper, professional staff member for the minority. OPENING STATEMENT OF HON. DON NICKLES, A U.S. SENATOR FROM THE STATE OF OKLAHOMA Senator NICKLES. Good morning. Today the Subcommittee on Energy Regulation and Conservation is holding an oversight hearing to review the impact of imported petroleum products on the domestic petroleum industry. There is concern by major oil companies and independents alike that imports of petroleum products, gasoline in particular, are adversely affecting the domestic refining industry and U.S. energy security. More than 100 U.S. refineries with a capacity of over 2.5 million barrels per day have shut down since 1981, and many others are now idle or running at partial capacity. Not only has this increased our dependence on foreign refiners, it has also thrown out of work several thousands of U.S. refinery employees, many of whom are in my State of Oklahoma. I have seen several small refiners go out of business in the last several years, and it is my hope that this hearing will give us some understanding as to what the future of the domestic refining industry may entail. At today's hearing we hope to examine several issues. One, what the trends of U.S. refining capacity are. Are those refineries that have closed and potentially will close obsolete and inefficient, or are they just failing to stand up to other refineries of other countries? How much capacity do we presently need in the domestic refining industry? At what point will a decline in U.S. refinery capacity have a material impact on the energy security of our country, and what are the trends in foreign refining capacity and how (1) much is the additional new capacity for export? Additionally, we want to consider what impact will new foreign export capacity have on U.S. refiners? Also, are foreign countries subsidizing petroleum product exports? And finally, and most importantly, what, if anything, should be done to assure that the United States has an adequate amount of refining capacity? What would be the cost and benefits of such action? Considered in that would be an oil import fee, tariffs, or whether we should have some import restrictions. We have several outstanding witnesses today. I look forward to hearing their testimony. I'm also pleased that we have Senator Ford and Senator Bingaman join us today. Senator Ford, do you have any opening comments? Senator FORD. No. Let's just get on with it. Senator NICKLES. Senator Bingaman, did you have any opening comments? Senator BINGAMAN. I will submit my statement for the record. [The prepared statement of Senator Bingaman follows:] STATEMENT BY SENATOR JEFF BINGAMAN Subcommittee on Energy Regulation and Conservation The Impact of Imported Petroleum Products in the Domestic Petroleum Industry June 4, 1985 I commend the Chairman for holding this hearing today. It is an issue that has been ignored for too long and one that can have very serious future consequences. The impact of imported petroleum products raises important questions about our domestic refining industry and our nation's energy security. I know it is clear to many members of this committee that imports of petroleum products--gasoline in particular, are hurting our domestic refining capacity. The statistics show that more than 100 U.S. refineries have shut down since 1981. Many other refineries have experienced significant slow downs in production. And, at this time, our current refining capacity is barely meeting domestic demand. The future trend is towards continually declining capacity and |