House Approves Fees, Taxes on Oil Companies

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House Approves Fees, Taxes on Oil Companies; Plans to Use Money for Renewable

Fuels

January 19, 2007 — By H. Josef Hebert, Associated Press

 

WASHINGTON -- The House rolled back billions of dollars in oil industry

subsidies Thursday in what supporters hailed as a new direction in energy policy

toward more renewable fuels. Critics said the action would reduce domestic oil

production and increase reliance on imports.

 

The energy legislation was the last of six high-priority issues that House

Speaker Nancy Pelosi, D-Calif., had pledged to push through during the first 100

hours of Democratic control. The bill passed by a 264-163 vote.

 

The bill's prospects are uncertain the Senate, where Democrats hold a narrow

majority. The top Republican on the tax-writing Senate Finance Committee, Sen.

Charles Grassley of Iowa, said the bill was " another pig in the poke " that

targets incentives necessary to promote domestic drilling.

 

The legislation would impose a " conservation fee " on oil and gas taken from deep

waters of the Gulf of Mexico; scrap nearly $6 billion worth of oil industry tax

breaks enacted by Congress in recent years; and seek to recoup royalties lost to

the government because of an Interior Department error in leases issued in the

late 1990s.

 

Democrats said the legislation could produce as much as $15 billion in revenue.

Most of that money would pay to promote renewable fuels such as solar and wind

power, alternative fuels including ethanol and biodiesel and incentives for

conservation.

 

" The oil industry doesn't need the taxpayers' help. ... There is not an American

that goes to a gas pump that doesn't know that, " said Majority Leader Steny

Hoyer, D-Md. Pump prices topped $3 per gallon last year as the oil industry

earned record profits.

 

The bill, Hoyer said, " starts to move our nation in a new direction " on energy

policy.

 

The bill's opponents accused the Democratic majority of grandstanding and said

the legislation was unnecessary.

 

" We do not need a tax on domestic energy production and development, " said Rep.

Dennis Hastert, R-Ill., the former House speaker. " Increasing taxes on our

nation's energy industry means one thing -- more reliance on foreign oil and

gasoline. "

 

Added Rep. Don Young, R-Alaska: " If you want to do things right, let's tax

foreign oil. "

 

Young, who had on a bright red shirt, made reference to it when he said, " It's

the color of this bill we're debating -- Communist red. " The legislation

" amounts to a taking of private property " by forcing oil companies to

renegotiate leases they view as valid contracts, he said.

 

The bill would bar companies from future lease sales unless they agree to

renegotiate flawed leases issued in 1998-99 for deep-water drilling in the Gulf

of Mexico.

 

Because of a government error, the leases did not contain a trigger for

royalties if prices soared -- as they have in recent years. As a result, the

companies have avoided $1 billion in royalties so far and stand to avoid an

additional $9 billion over the life of the leases, the Interior Department says.

 

The White House said it strongly opposes the new production fees and future

lease bans. Those steps could reduce domestic production, according to the

administration. It views the repeal of the tax break for oil companies as

unfairly singling out an industry.

 

That break, aimed at helping U.S. manufacturers compete against imports, has

saved oil companies $700 million a year, House Democrats say.

 

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On the Net:

 

Information on the bill, H.R. 6, can be found at http://thomas.loc.gov/

 

Source: Associated Press

 

 

What gets us into trouble is not what we don't know, it's what we know for sure

that just ain't so.

- Mark Twain