Oil tax package advances in Senate
WASHINGTON – A proposal to hit oil companies with $29 billion in new taxes advanced in the Senate on Tuesday, targeting the money to energy conservation, wind turbines, electric hybrid cars and clean coal technology.
The massive tax package, double what Democrats had discussed as recently as last week, is “designed to promote clean and sustainable energy,” said Sen. Max Baucus, D-Mont., chairman of the Finance Committee that approved the measure by a 15-5 vote.
It is expected later this week to be added to energy legislation being considered by the full Senate.
Senators meanwhile considered a string of amendments Tuesday to the broader energy bill as Democratic leaders hoped to finish the legislation this week. But that remains an uncertain prospect as Republicans showed signs of balking on the tax package and a fight over auto fuel economy also was likely.
Senators on Tuesday added to the bill authority for the Justice Department to sue OPEC over oil production quotas. Sen. Herb Kohl, D-Wis., author of the amendment, said it would give notice “that we too have recourse” and can respond to price fixing by the OPEC cartel.
Sen. Jeff Bingaman, D-N.M. called it “a feel good amendment” that would have little purpose. But it passed, 70-23.
The tax package that emerged from the Finance Committee reflected the dramatic tilt of congressional sentiment toward renewable fuels – and away from support of oil companies – since Democrats took over control of Congress. In part, the shift stems from concerns about the impact of fossil fuels on global warming and motorists’ anger over soaring gasoline prices.
Sen. Jon Kyl, R-Ariz., said the taxes on the large oil companies – most of the provisions exempt smaller producers – “will almost certainly lead to gas price increases” as oil companies pass on the added cost. “You can’t raise taxes … by $29 billion and not expect gas prices to increase,” he said.
The American Petroleum Institute, the oil company trade group, said in a statement that the taxes “will discourage new domestic production, discourage new investments in refinery capacity and would lead to the loss of good-paying U.S. jobs.”
Baucus said he expects the oil companies to complain, but he doesn’t believe the taxes “will substantially change these companies’ incentives to produce energy.”
The bill would funnel about $11 billion over 10 years into development of renewable fuels such as ethanol, biodiesel and power from wind turbines in a combination of extensions of existing tax breaks and new tax benefits. An additional $18 billion in tax breaks – from tax credits to clean and renewable energy bonds – also were approved.