Sen. John Hoeven, R-N.D.; Sen. Amy Klobuchar, D-Minn.
Recently we saw gas prices spike when refineries shut down for routine maintenance and to turn operations around for summer blends. Some of these shutdowns were planned, and some weren't, but in either case, the simultaneous shutdown of refineries across the Upper Midwest caused shortages of fuel and higher prices at the pump for consumers and businesses.
To make sure this doesn't happen again, we have worked to develop commonsense legislation that will mitigate price spikes by increasing market transparency and providing industry with more flexibility to avoid planned shutdowns at the very same time across the region.
The Gas Price and Refinery Capacity Relief Act is legislation we introduced to help reduce the impact of simultaneous refinery shutdowns on gas prices. Our bill has three parts:
Currently, refineries are prohibited from sharing proprietary information about scheduled closures with other refineries to prevent collusion within the industry. In some cases, however, that prohibition results in simultaneous shutdowns, which causes shortages and price spikes. Energy legislation passed in 2007 gives the Secretary of Energy explicit authority to make information on planned outages available to refinery operators to encourage reducing the number of refineries that are out of service at any one time.
But that didn't work because the Secretary didn't have the information from refineries necessary to make it work. Our legislation changes that by requiring oil refineries to report scheduled refinery outages to the Energy Information Administration, a part of the DOE, which can then work with refineries to better coordinate shutdowns and turnarounds to mitigate shortages. Rather than current regulations, which keep refineries and consumers in the dark, our bill will provide more transparency.
Additionally, not all outages are planned. Our legislation would have refineries notify the DOE when they are experiencing unplanned outages because the agency has authority to waive seasonal blend requirements and move product around the region more quickly.
Finally, our legislation requires the DOE to study our current capacity to store gasoline and other refined petroleum products. It also requires the energy secretary to study the feasibility of increasing the storage of gasoline in regions like the Midwest, as well as how additional storage capacity could help prevent spikes due to supply shortages from natural disasters or other refinery disruptions. That doesn't mean a permanent reserve; it just means holding adequate fuel in storage during turnarounds or maintenance periods to avoid price spikes.
Our bill is a commonsense way to streamline regulation and provide more public information in order to avoid the kind of supply disruptions and price spikes we saw this spring. Over the long term, it creates more transparency in the market and more competition to help hold prices down, and that's something all of us want.