Senate Democrats seek to tax oil companies
By H. JOSEF HEBERT – 1 hour ago
(This is why I am mostly invested in Canadian listed energy stocks!)Kipp
WASHINGTON (AP) — Senate Democrats on Wednesday called for a temporary windfall profits tax on oil companies and a rollback of $17 billion in oil industry tax breaks as part of an energy package. The proposal also would impose federal penalties on energy price gouging and calls for stopping oil deliveries into the government's emergency reserve.
Senate Republicans strongly oppose any additional oil industry taxes, which are widely viewed as having little chance of being enacted. Even then, they would almost certainly prompt a veto by President Bush.
The proposed 25 percent profits tax would apply only to windfall oil company earnings above what would be considered "reasonable" and only if those profits are not reinvested in refinery capacity expansion or renewable energy sources, according to a summary of the proposals.
The windfall tax would expire after two years.
The energy proposals also seek to halt deliveries of oil into the government's Strategic Petroleum Reserve until oil prices drop to $75 a barrel.
This is the only section of the Democrats' proposal that seems to have widespread bipartisan support. A GOP energy package, offered last week, also includes halting the roughly 70,000 barrels a day that are diverted into the government reserve.
Bush has opposed stopping the deliveries, saying the amount of diverted oil has little impact on overall supplies and prices.
The Democrats' energy proposals come as lawmakers struggle to respond to soaring gasoline costs and crude oil prices that on Wednesday topped $123 a barrel.
Democrats characterized the proposal as attacking "the root causes of high gas prices," although it wasn't clear how today's high oil costs — set in a global market — or gasoline prices edging toward $4 a gallon would be appreciably affected.
"It will do nothing to lower gas prices," declared Sen. Pete Domenici of New Mexico, the ranking Republican on the Senate Energy and Natural Resources Committee.
The Democrats' proposal prompted a barrage of finger pointing.
Republican leader Mitch McConnell of Kentucky called it "predictable, more taxes, more bureaucracy."
But Senate Majority Leader Harry Reid, D-Nev., chided Republicans for offering "more of the same failed energy policies that brought us to this point." A GOP energy package unveiled last week focuses on increasing domestic oil production including opening offshore waters and an Arctic wildlife refuge in Alaska to drilling.
"With this bill Democrats are protecting consumers," argued Reid. "Instead of helping Big Oil make more money at the expense of average Americans, we are forcing oil companies to change their ways."
Sen. Charles Schumer, D-N.Y., said the oil companies are "racking up obscene profits left and right" and the windfall tax will force them to "spur innovation" by directing some of that money into expanded production and development of alternative energy sources.
Aside from the windfall tax proposal, the Democrats' plan reflects largely resurrected energy proposals that have advanced in the past, but never had enough support to make it through Congress.
A proposal to end $17 billion in tax breaks for the largest oil companies passed the House, but was taken out of a broad energy bill last fall because Democrats couldn't get the 60 votes needed to overcome a GOP filibuster.
A measure that would impose stiff penalties for energy price gouging previously passed the House and Senate in separate forms, but was stripped out of the energy bill signed into law by Bush last December.
Proposals that would give new authority for federal regulators to address market manipulation in electronic energy trading — the so-called Enron loophole — also has been proposed before. Enron Corp., the infamous energy company that went bankrupt after an accounting scandal, convinced Congress seven years ago to exempt certain electronic trading from federal jurisdiction.
A proposal that would open the way for the Justice Department to pursue antitrust actions against the OPEC oil cartel also is not new, having been offered before, only to fall by the wayside.
