Julie

WASHINGTON — House Democrats are targeting billions of dollars in oil company tax breaks for quick repeal next year. A broader energy proposal that would boost alternative energy sources and conservation is expected to be put off until later.

Hot-button issues such as a tax on the oil industry's windfall profits or sharp increases in automobile fuel economy probably will not gain much ground given the narrow Democratic majorities in the House and Senate.

Incoming House Speaker Nancy Pelosi, in an outline of priorities over the first 100 hours of the next Congress in January, promises to begin a move toward greater energy independence "by rolling back the multibillion dollar subsidies for Big Oil."

Yet the energy plan being assembled by Pelosi's aides for the initial round of legislation is less ambitious than her pronouncement might suggest.

For the most part, the tax benefits are ones that lawmakers talked of repealing this year when Congress struggled to respond to the public outcry over soaring summer fuel prices and oil companies' huge profits.

Topping the list for repeal are:

_Tax breaks for refinery expansion and for geological studies to help oil exploration.

_A measure passed two years ago primarily to promote domestic manufacturing. It allows oil companies to take a tax credit if they chose to drill in this country instead of going abroad.

Democrats say neither tax benefit should be needed for an industry reaping large profits at today's high crude oil prices.

Over 10 years, the production tax credit saves oil companies $5 billion and the refinery measure and exploration credit a total of about $1.4 billion, according to Congressional Budget Office estimates.

Other oil tax breaks probably will go unchallenged. That includes some passed by Congress only a year ago and others already targeted for repeal this year.

For example, House Democrats have no plans to change a provision that allows oil companies to avoid billions of dollars in taxes by the way they calculate inventories. The Senate this year agreed to a repeal; the effort was abandoned amid House GOP opposition and an uproar from other industries that also benefit from the tax language.

House Democrats also are shying away from tampering with more than $1 billion worth of oil- and gas-related tax breaks, enacted last year. These breaks largely benefit small companies or gas utilities rather than the major oil companies now awash in cash.

Nevertheless, the House and Senate are expected to push legislation early to force oil companies to renegotiate flawed offshore drilling leases that have allowed the companies to avoid paying federal royalties. The loss eventually could cost the government $10 billion, according to some congressional estimates.

Other prime targets of House and Senate Democrats include:

_Alleged price gouging. Proposals to create a federal price gouging law for gasoline and other fuels probably will move quickly.

_More incentives and mandates to expand the use of ethanol and biodiesel as a substitute for gasoline. Requiring oil companies to phase in retail pumps that deliver fuel that is 85 percent ethanol.

_Requiring power companies to produce a percentage of their electricity from renewable energy sources such as wind and solar power. Such a measure is a priority of Sen. Jeff Bingaman, D-N.M., incoming chairman of the Senate Energy and Natural Resources Committee.

_Extending energy efficiency tax credits approved by Congress last year. Most are scheduled to expire at the end of next year.

_Expanding a tax break for buyers of gas-electric hybrid cars and offering more incentives for automakers to build greater numbers of the vehicles.

Rep. John Dingell, D-Mich., who will take over as chairman of the House Energy and Commerce Committee, said he plans hearings on legislation to spur further production and distribution of ethanol and biodiesel, and promote conservation.

But he suggested it will take time to produce legislation. "The process is a long one. It takes hearings, it takes fact finding," said Dingell in a telephone interview.

On the Senate side, Bingaman probably will avoid writing a single broad energy bill, preferring to push through specific legislation. Among Bingaman's other goals are new incentives to spur renewable energy development and more tax breaks for conservation.

Last spring, Sen. Charles Schumer, D-N.Y., said if the country is to reduce its addiction to oil and high energy prices it needs a "crash program" to develop more alternative energy sources, dramatically increase conservation and examine "whether or not we should break up the big oil companies."

Next year, Schumer assumes the No. 3 leadership position among Senate Democrats and will be one of the party's top strategists.

http://www.foxnews.com/wires/2006Nov...Energy,00.html

Shek

I hope the Democrats are able to pass the repeal of the refinery tax credits - I want to pay more for my gasoline in the future because of bottlenecks in the refinery process!

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Shek

I'd posted this awhile back, but Chuck Schumer is not a smart man when it comes to economics:

bonehead

Come now Shek. All we have to do is build a few refineries just inside Mexico. They have nearly non existant environmental regulations, tons of cheap labor, and they can then send gas over the border (pipeline) instead of illegals. They have more jobs to stay home for and we have no bottle necks in the refinery process. ie no artificial supply problems. Problem solved. Care to invest in Baja petroleum?

Lastly, ANY new legislation of this type has to get by Bush's veto and I don't see him turning his back on his oil buddies. For the time being you, I, and the rest of us will be lining the bloated pockets of the big oil executives with every fill-up. There will have to be a Democrat in the white house in a couple of years befor the dem's can fully run their agenda. Unless either side really drops the ball I forsee another razor close presidential election.

gunnut

Note the word play here:

1. achieve energy independence
2. more taxes on oil
3. soaring gas prices
4. huge profits

We want to achieve energy independence by research in alternative fuel. This will be funded by more taxes on oil industry. We want energy independence because oil is too expensive. Oil is expensive because oil companies make huge profits.

Let's examine that.

Gas is expensive so let's tax oil companies more. There's absolutely no way they will pass this extra cost on to the consumers.

No one ever said alternative fuel or energy independence will be cheaper than existing gas prices.

Oil companies make too much money. Let's tax them. They won't pass this on to the consumers.

There's a logical inconsistancy in their plan but I just can't put my finger on it...

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ArmchairGeneral

You need to get out of California, the gaseous liberal fumes are clouding your brain.

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-Theodore Dalrymple

Julie

If the oil giants would use those credits/incentives and build more refineries, that would be one thing. But they haven't, and that what has been the argument on Capital Hill.

Shek

Julie,
How long does it take to accumulate the money from tax credits to have the capital on hand to fund such construction? How long does the permitting process take? Therein lay the answers to the questions you failed to ask.

It doesn't happen overnight. So, are you for cheap or expensive gasoline?

Confed999

Yep, the price of the taxes will be put on the consumer. The folly of taxing business in the first place. The oil companies pay more in tax than they recieve in profit...

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Julie

Depends. Do those billions in quarterly "profits" those oil giants post...is that "less" the government incentives they receive, to be held back and used for the purpose intended. Or do they divvy that money out, along with the profits they make to the shareholders?

Anon

Hmmmm......

Democrats repeal 'tax breaks' (what YOU call a writeoff when it benefits YOU, lol).

Oil companies immediately pass off the extra cost on US, the consumer.

So this is good HOW? Ah, right....it bloats the governmental coffers so the American Socialist party- aka Democrats- can start implementing yet more social experimentation on my dime.

No thanks.

Anon

They can't. The regulations for a new refinery are utterly ridiculous, thanx to....you guessed it.....the Green left.

Idiots.

highsea

Exxon is making $100 Billion PROFIT per QUARTER! That's AFTER buybacks and dividends- some $26 Billion last year. That is an obscene amount. They HAVE the cash on hand, but no incentive to increase refining capacity, since that would reduce gasoline prices and downstream profit margins.

3/4 of that profit comes from upstream revenues. It still costs Exxon $20/bbl to get that oil out of the ground, but they sell it (to their own downstream operations) for $60.00.

The Bush energy (non)policy is an abject failure. He should have used the SPR to moderate panic in the markets when we went to war in the ME. Now it's too late.

The only solution is to:

BREAK UP THE BIG OIL COMPANIES.

Separate upstream and downstream operations. Treat upstream operations the same as the electrical grid- Gov't owned, and the oily companies (now strictly refining operations in the US) buy at gov't cost, with fixed reselling margins to prevent price gouging.

Why should oil be treated differently than hydropower? Here in the NW, BPA owns the grid, dams, and one nuclear plant, and sells electricity at cost to local utility districts. We have the cheapest electricity in the nation.

I would still let Oil companies buy oil in the ground overseas, but I wouldn't give them Gov't (US Military) protection. Let them invest in foreign oil as a business decision with the inherent risks born by the investors.

Domestic oilfields should be government owned and royalties split 50/50 with the States where the fields are located. Federal feedstocks would be sold to refineries at cost- (i.e. the Gov't entity is a non-profit corporation), and the end products would be passed on to consumers with set negotiated profit margins. Refiners could still buy as much feedstock from foreign sources as they wanted, at market prices.

Domestic exploration and production would increase dramatically, and OPEC would collapse.

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Julie

Then, so much for dependence on foreign oil.

mtnbiker

They can't. It's not the oil companies fault there have been no new refineries buildt in 20+ years. The regulations and red tape, particularly in California, have made it virtually impossible to build new refineries.