North Dakota saw record high gas prices in May due to refinery outages while our neighbors to the west stayed lower.
Prices have since dropped to a state average of $3.60 per gallon of unleaded gasoline, but legislators are suggesting communication, more refining capacity and more storage capacity as solutions to prevent future increases.
"Price spikes are hard on people and they're hard on businesses," Sen. John Hoeven, R-N.D.
Under current law refiners are not allowed to tell each other about planned outages to prevent them from manipulating the market. They are able to inform the U.S. secretary of energy and the U.S. Energy Information Administration.
"I'm all for refineries being able to communicate with one another," said Dave Froelich of Missouri Valley Petroleum, a fuel distributor based in Mandan.
Legislation introduced by Hoeven would require further communication of outages and increased fuel reserves to balance prices during shortages. It also would create a public posting of outages on the EIA website.
"The legislation duplicates current law regarding planned outages and would add little value by gathering information on unplanned ones," Tesoro spokeswoman Tina Barbee said in a email. "The legislation also fails to adequately define what is and what is not a 'planned' or 'unplanned outage' — the current draft could be construed in many different ways."
Ron Ness of the North Dakota Petroleum Council said the last thing a refiner wants is to be down because when they're down they're not making money.
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"Unplanned outages are generally what cause supply, and thus pricing, fluctuations because they cannot be anticipated," Barbee said in an email. "Markets typically sort themselves out in a rational manner."
Ness said for that same reason of losing money it also would be "pretty hard" to require them to hold more inventory.
"With increased investment carries increased risk," he said.
"We don't want government dictating when refineries come down," said Sen. Heidi Heitkamp, D-N.D., criticizing the legislation.
Hoeven contends that, "This is about trying to work with the industry ... not more government regulation."
The Hoeven-Klobuchar Gas Price and Refinery Capacity Relief Act is in committee. Hoeven said he hopes to attach it to another energy bill in order to get a Senate floor vote when the topic of energy is taken up by the Senate.
Heitkamp said she thinks building more refineries will be a better long-term solution to the problem by increasing supply and competition.
Ground has been broken on two new diesel refineries in North Dakota this year. Ness said it will be up to the market to dictate if more refineries are needed.
Hoeven said another solution might be to extend the period refineries have to switch from winter to summer blends of fuel if necessary. He said decreasing the number of blends used across the nation also could help. Each state has its own blends it allows, limiting the market they can be sold in during a shortage. No legislation has been introduced containing these measures yet this session.
Reach Jessica Holdman at 701-250-8261 or email@example.com.