NPRA Testifies Before the Senate Committee on Energy and Natural Resources on the Impact of Hurricane Katrina and Issues Affecting Fuel Supply

Business Wire, Sept 6, 2005

WASHINGTON -- Bob Slaughter, President of NPRA, the National Petrochemical and Refiners Association, today testified on behalf of the association before the Senate Committee on Energy and Natural Resources regarding the devastating impact of Hurricane Katrina. He expressed sympathy for those who suffered loss of life among family, neighbors and friends as well as loss of homes and livelihood. He pointed out that this tragedy occurred in America's energy heartland, and that many energy company employees and their families are among those affected by the catastrophe. Mr. Slaughter said, "We share both the sense of dismay and increased humility felt by all Americans before this latest reminder of nature's power to devastate and confound the best efforts of human beings. The association offers our sympathy and prayers to those who have suffered the loss of loved ones as well as to those who have lost much or all of their personal assets or livelihood in this worst U.S. natural disaster."

The testimony went on to thank the Administration for actions taken thus far to address fuel supply concerns. Specifically, NPRA praised the decision to loan SPR oil to affected refiners, the granting of temporary waivers to allow greater flexibility in fuel specifications to help get product to affected areas, and the temporary waiver of the Jones Act to help address fuel distribution problems. NPRA pointed out that these actions appear to have significant bipartisan support in Congress.

The testimony went on to describe the impact of Hurricane Katrina on energy production, refining and pipelines that are crucial to America's supply infrastructure. NPRA explained that, for several days "the major supply lines of refined products to the Southern and Eastern states were unavailable for shipment, in whole or in part, during the initial period after the storm...This led to reduced supplies of gasoline, diesel and other products in parts of the country often far removed from the Gulf area." NPRA pointed out that these product pipelines are now operating at or near full capacity.

Focusing on refineries, Slaughter pointed out that it is difficult to determine when all the refineries affected by the hurricane will return to full operation: "although some of the affected refineries may restart and return to capacity or near-capacity levels this week, there are indications that several facilities may be out of service for a longer period." He stressed the industry's commitment to restoring operations as soon as possible.

NPRA's testimony discussed the significant role the industry is playing in humanitarian efforts in the Gulf area, noting that much good is being accomplished through the cooperation of government and industry. NPRA noted that substantial progress is being made to restore the energy supply network, but "despite this hopeful news, our nation faces a disruption of the fuel supply system that should not be understated." The testimony went on to explain the importance of relying on market forces to balance supply and demand during this difficult period and to remind the committee about the nation's ten-year experiment with market intervention that went so far wrong in the 1970s.

As for reports of price gouging during the current crisis, Slaughter pointed out that federal and state laws prohibit such actions. Slaughter urged that "Each alleged situation should be thoroughly investigated by the appropriate state and federal authorities and prosecuted when the law has been broken."

The testimony went on to recommend that Congress give renewed attention to energy supply problems by encouraging refinery capacity additions by building on language in the recently-passed energy bill. NPRA also recommended that increasing oil and gas supply should become a number one priority of national policy. Slaughter urged that restrictions on offshore production of U.S. oil and natural gas reserves be lifted. "Policymakers have restricted access to much-needed offshore oil and gas supplies in the eastern Gulf and off the shores of California and the East Coast. These areas must follow the example of Louisiana and many other states in sharing these energy resources with the rest of the nation because they are sorely needed," Slaughter added. NPRA's testimony ended by stating that the association and its members look forward to working with Congress and the Administration as the nation continues to recover from the damage caused by Hurricane Katrina.

NPRA is a national trade association with more than 450 company members, including virtually all U.S. refiners and petrochemical manufacturers.