Senator Alan Armstrong was sworn in in March of this year. A former oil executive, he was tapped to fill the seat vacated by Homeland Security Secretary Markwayne Mullin. We asked Senator Armstrong about gas and diesel prices.
Some of your colleagues have suggested a diesel export ban.
Sounds really simple. Gee, let's just hold the diesel back for ourselves, but that's not how, you know, that's not ultimately how that would work.
And about what he thinks is wrong with the US Senate.
There's way too much winning or losing amongst a party as opposed to what's good for our country long term.
That's all coming up on this week's Capital Conversation.
And the US is considered the world's largest oil producer.
Which is amazing, by the way, that we've come that far, you know, and the technology that's been deployed here in the US has got us that far. But it's dictated by the world market, right? So how does what's happening in the Middle East? We've got the two kind of choke points, right? The Strait of Hormuz, the Bab el-Mandeb Strait. Threats to that traffic affect what we're paying here at home.
Yeah. Well, I mean, it's, you know, it's like anything, whether it's, you know, grain or anything. Things trade on a world market. The good news about being the producer of that, if you think about this, it costs a lot of money to ship those products overseas, take them into an import terminal, which costs money, and then distribute that back out in your own country. So the US has a huge advantage even in this market. We have a huge advantage over the rest of the world when we're the major supplier because everybody else is having to pay those prices to both, you know, move it across a port, transport it, and then move it across another port.
Some of your colleagues have suggested a diesel export ban to help ease some of the prices here in the United States. Is that, number one, doable? And number two, is that something that would actually help?
Well, you know, first of all, this is one of those things when you start messing with markets, you know, there's always unintended consequences. I mean, these refiners are very finely tuned for a specific grade of crude. And so you can't just say, 'Oh, I want to make more diesel today and less gasoline.' It's not the way it works. So if you cut the diesel, you're going to cut gasoline production with it. And so instead of supplying the world with more product, which is what really needs to happen, we would be holding back product here, cutting production here, cutting diesel production here. Gasoline prices would likely go higher. All the things that we pay for to have imported here to the US that use diesel and distillate fuels to get it here, those prices are going to go up. So what you need is more product on the market, not less product on the market, which is what an export ban does. So yes, there might be some temporary relief on diesel prices if you did that, but the broader cost of doing that is really, would really, I think, be a terrible step in the wrong direction.
And importantly, what you really want to see happen is you want to see refining capacity built. If you scare off people's ability to have confidence because they're going to be sitting on excess capacity that's shut in because you've done an export ban, now you're going to have excess product. Refineries are not going to be running. Who are you going to get to go make that investment to expand a refinery when you now live in a country where the government can just decide to shut down? A lot of bad consequences, you know, that would be. So, sounds really simple. Gee, let's just hold the diesel back for ourselves, but that's not how, you know, that's not ultimately how that would work.
We've talked about oil. You were in the energy industry. Now you're here in the Senate and one of your main priorities, or maybe your only priority, has been permitting reform. There is a bill. We have bill text. Can you explain what that bill would do?
Yeah, sure. So, you know, there's a lot of key elements of it, and remember that this has been joint work of both the Environment and Public Works Committee under Shelley Capito and Sheldon Whitehouse. Sheldon being the ranking member and Shelley being the chair, and then Mike Lee being the chair of Energy and Natural Resources and Martin Heinrich being the ranking member. So those four have been working on this, and importantly, their staffs have really been working on this hard for quite some time. Lots of good input have come from a number of bills. The House has done some really good work on permitting. The White House, we had a bill here in this office that we put together and we had 20 co-sponsors in addition to that. And all of those things went to inform this latest body of work, which is an amazing... I mean, if we can get this done, it is going to be so good for our country. And it's not just, you know, here's the energy exec talking about how great... Listen, this is good for renewables, it's good for getting transmission built where we need to get it built, it's good for highways, it's good for mining, for instance.
You know, Governor Moore was telling me about the effort to rebuild the bridge there, you know, outside of Baltimore. How much that's gone awry, you know, a lot of because of permitting. This would take, if you're staying within your existing right-of-way for a highway, for a power line, for a pipeline, so linear infrastructure, and you're staying within a right-of-way that doesn't expand more than 20%, you don't have to go through the major permitting exercise. So that's a huge positive.
And you have experience with this. In your previous job, you were the CEO and board chairman of Williams, an energy company. Can you walk us through sort of what happened with the Constitution Pipeline and how that would change under this bill?
Yeah, that's actually a great question. So, today, well, just to explain Constitution Pipeline, Constitution was a pipeline that was started being permitted back in 2013 or '14. And it was a gas pipeline that would take gas from some of the lowest cost natural gas, not in the nation, but in the world, in northeastern Pennsylvania, and move it to places like New England, where during the wintertime that's the most expensive gas in the world because there's a lack of pipeline capacity. Very simple, 120 miles, not complicated, not going through, you know, really difficult environmentally sensitive areas, not a hard project by normal standards. But the state of New York said, 'Well, what's in it for us? You're crossing upstate New York.' And our environmentalists who provide campaign funding to people like Governor Cuomo at the time didn't want it built and really wanted to stand in the way of it. And really, a lot of the benefit of it was going to accrue to the New England states where they were having to import natural LNG from Russia to keep the lights on in the wintertime and keep things heated there. And when they're not doing that, two years ago, it was the highest emissions location in the lower 48 because they were burning fuel oil for power generation. Instead, they could be burning gas and cut those emissions in half, but because we wouldn't allow a pipeline to get built.
So that pipeline got stopped via a veto called the Clean Water Act 401 certificate. So today under the Clean Water Act, the Corps of Engineers does a full comprehensive study of any impact you're going to do to navigable waterway, waters of the US. I won't get into the details of that right now, but waters that are under their jurisdiction. And then when you get done with the feds and you go through this incredibly complex process that says landowner doesn't want it here, they want it here. The guys from wildlife, they want it over here. The local community and the zoning wants it over here. So you're trying to find this route that everybody's happy with when you go through the EIS. And the state of New York said, 'Listen, we don't have to take part in that. When you get done with that process, come to us and then we'll take another year to look at giving you the clean water certificate.' They waited until Earth Day, which was at the very end of that year. They waited until it wasn't political, but they waited until Earth Day to announce that they were not going to issue the certificate. No real water quality issues whatsoever. They made some up, but they weren't legitimate issues. All those issues had been worked out with the Corps of Engineers in the original 404 permit that was part of the EIS process.
So the states have been put in this position to have this political football, and it's exactly what stands in the way of being able to build big interstate commerce projects. So a state standing in the way of another state having access to low-cost energy supplies. And by the way, the same thing has happened in places like Arkansas and Oklahoma for power lines where people have said, 'Well, wait a second, we have this authority we can use over here. So, never mind, you're not going to be able to build your project across our state.' Those are the kind of things that really need to be ironed out. We need to have standards. We need to make sure that there's a process for holding the agencies and the states accountable to actually being focused on clean water. And so those are some of the things that it is not stepping on any state's rights relative to if your job is to protect your state, your clean waters of your state. There's no stepping on that. It is stopping it from being a political football.
As you mentioned, there are people who say, you know, states and local areas should be able to control what's built through their jurisdiction. I take it you disagree.
No, no, no. I think they absolutely, to the degree that there's legitimate issues, and that happens in the environmental impact statement that goes on and the study and review process that's part of NEPA today, that stuff gets handled. And this is not a way of boxing out local communities, but it is a way of saying, hey, we have a process and you need to raise your concerns and your issues within this. And to the degree that we have a solution around it, you can't just block it for blocking's sake. You have an opportunity to say, here's my problem, and then the developer has the opportunity to say, okay, here's how we'll solve that problem. But you can't just keep saying, okay, well now I have another problem, okay, well now I have another problem, all the way for, you know, a decade of litigation, which is kind of the way the model is set up today. So not in any way, shape or form is this meant to, you know, stop legitimate concerns that are raised associated with infrastructure.
So, not a lot of people run for Senate or come into this elected body talking about permits, but you are in an interesting position, right? You were appointed to finish out this term, sort of a caretaker role, meaning you can't run for reelection for this seat. You will be the third senator in this term. It started with Senator Inhofe, Senator now Secretary Mullin, right? And now you. Will there be a fourth senator in this position?
You know, I think that's somewhat dependent on if we get permitting reform done and completed and put into law, because frankly, you know, once that's done, that is my primary goal of getting that done. And the fact is this appointment was to finish out the term of the 119th Congress, and the seat that Representative Hearn is running for is for the 120th Congress. I think that's pretty clear. And so a lot of the things that have been raised are as though this seat is vacant. And we've asked the Attorney General of Oklahoma to come out and opine on this, and I'm anxious to, you know, see and hear what that law is and do what's best for the state of Oklahoma. But I don't really see a fight in it. My focus right now is just making sure we get this permitting bill done and gain support in the House for getting it done as well, which is going to be critical, and really, you know, bring this all the way into law.
