Hatch's bill targets high gasoline prices

Sen. Orrin Hatch unveiled Thursday his second in a series of three bills meant to push gas prices down in the long run.

Hatch's latest effort, added to his CLEAR Act that gives tax credits for buying cars that use alternative fuels, aims to encourage investment in the U.S. refining industry, an area that limits the practical oil supply.

"It's widely understood that by increasing capacity, you can decrease the price of gas at the pump," Hatch, R-Utah, said at a news conference in front of a Sinclair service station in Salt Lake City.

The bill responds to the reality that although the United States continues to push for oil from foreign sources, prices will still remain high if the country doesn't have the resources to refine the oil.

And according to a recent report from the National Petroleum Council, it doesn't. The council found that refineries declined in number from 300 in 1980 to 149 today, with the last refinery built in 1976. As possible explanations, it found low profit margins and large investments needed to adhere to government regulations.

The Gas Price Reduction Through Increased Refining Capacity Act of 2005 would increase incentives for U.S. refineries to open and expand, and would scale back at least one governmental roadblock to profit.

The bill would shift the depreciation schedule for refineries from 10 years to five years, saving taxes as refining equipment ages and bringing oil refiners in line with the rules for most other manufacturers. It would also allow a complete year's tax write-off for new refining equipment and facilities begun before 2007 and completed before 2011.

"I believe it (the tax break) will capture the attention of decision-makers in the refining industry," Hatch said.

Bob Slaughter, president of the National Petrochemical and Refiners Association, said in addition to the practical benefits of the bill, it would also help the industry by reassuring the public.

"If people are concerned about supply, prices go up," he said. "So we need policies that encourage supply."

In addition to the refinery legislation, Hatch promised to introduce his third energy-related bill within the next few weeks to push for development of tar sands and oil shale reserves in Utah, Colorado and Wyoming.

"I find it disturbing that Utah imports oil from Canada tar sands," he told the Senate Committee on Energy and Natural Resources last month, "even though we have a larger tar sands resource within our own boundaries that remains undeveloped."

The tar sands and oil shale reserves have been estimated to contain over a trillion barrels of oil, more than all the recoverable oil in the Middle East, Hatch said. But up to now, the oil has been seen as too expensive to extract.

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E-mail: dhinckley@desnews.com