Hoeven Cosponsors Legislation to Reduce Refining Constraints, Lower Gas Prices, Calls on EPA, DOE to Complete Fuel Supply Study

Senator Addresses Fuel Supply and Gas Price Issues on Senate Floor

WASHINGTON – Senator John Hoeven Thursday announced he is cosponsoring a bill that would give the Environmental Protection Agency (EPA) authority to waive fuel requirements in order to help increase supplies and reduce the cost of gasoline at the pump for consumers. In a separate but related action, Hoeven and other Senate and House members have signed a letter calling on the EPA and Department of Energy (DOE) to complete a study Congress asked for in 2005 with an eye toward simplifying the nation’s varying fuel standards to help reduce volatility and bring down prices at the pump.  

The Senator discussed these and other initiatives to reduce the cost of fuel for consumers in comments he delivered Thursday on the floor of the U.S. Senate. 

“Fuel prices in America are subject to the same economic forces as any other commodity – supply and demand,” Hoeven said. “When we restrict or restrain supply, prices go up, and when we remove those restraints, prices go down. That’s why the Boutique Fuel Reduction Act and the Fuel Harmonization Study that the EPA and DOE were asked to complete more than five years ago are so important. They can help to reduce the cost of gasoline by addressing the root cause, which is constraints in the supplies of fuel.”

Boutique Fuel Reduction Act of 2011

The Boutique Fuel Reduction Act of 2011 would give the EPA Administrator the flexibility to waive certain agency requirements pertaining to the use of specialty or boutique fuels when the Administrator deems, and the Secretary of Energy concurs, that extreme or unusual distribution problems are limiting supply.  

Currently, the increased use of different types of fuel in different parts of the country is causing instability in retail markets and higher prices at the pump for consumers, but the agency can waive the requirements only during natural disasters. A 2002 Energy Information Administration study reported that one of the factors affecting gas price volatility is the increased use of different types of fuel in different parts of the country. The prohibition against using certain kinds of fuel in certain areas makes it difficult or impossible to meet demand when one variety is in short supply.  

Congress Calls on EPA and DOE to complete Fuel Harmonization Study 

Separately, Senator Hoeven and other U.S. Senators and House members have sent a letter calling on the EPA to complete the Fuel Harmonization Study, which Congress asked the agency to complete more than five years ago. It was due in 2008. The study would examine the effects of the nation’s varying fuel standards on retail prices, and also assess the feasibility of developing national or regional standards to reduce the number of varieties required by the EPA.  

Having fewer varieties of fuel would make more fuel available during shortages or reductions in supply, thereby putting downward pressure on prices at the pump. It would give refineries more options to meet demand and help stabilize the retail cost of gasoline. In their letter, Hoeven and the other Congress members asked the EPA to respond specifically to two questions: 

  • Will EPA and DOE conduct the Fuel Harmonization Study that was required by Section 1509 of EPACT of 2005? If so, when can Congress expect to see the final report?
  • Since the demand for oil continues to increase, and the price of gasoline continues to rise, as the country recovers from the economic recession, does EPA not see the utility in conducting a study to aid in the simplification of our fuel delivery system? 

“The global supply and demand factors affecting the price of oil paired with our heavy reliance on foreign sources of oil leaves us susceptible to price volatility when that oil is refined into gasoline and sold on the open market,” the Senators wrote. “Increasing the domestic exploration for our American energy is one important way to decrease our dependence on foreign oil and make us less vulnerable to price spikes and volatility.  

“Another way to achieve this goal is to simplify our nation’s increasingly complex gasoline supply to resolve the distribution issues that would otherwise lead to potential gasoline price spikes. We expect EPA and DOE to follow the congressional intent that was outlined in EPACT of 2005 and conduct the Fuel Harmonization Study as soon as possible, to better inform us on how the reduction of unnecessary domestic energy constraints caused by the proliferation of boutique fuel use will affect the price of gasoline.”