New Mexico News
| Dems Unveil Oil Bill |
| Posted by () on May 22 2008 at 1:18 PM |
WASHINGTON— Senate Democrats, under pressure to stem rising gasoline prices, on Wednesday proposed a new tax on oil companies and a crackdown on Wall Street speculators.
The so-called windfall profits tax unveiled by Majority Leader Harry Reid would place a 25 percent levy on oil company profits above a "reasonable" level that aren't reinvested in developing new energy sources or expanding refining capacity.
Sen. Jeff Bingaman, the New Mexico Democrat who chairs the Senate Energy and Natural Resources Committee, stood alongside Reid for the announcement. Bingaman said he agreed with some provisions of the proposal but not the windfall profits tax.
Sen. Pete Domenici, the ranking Republican on the energy committee, was more critical. He labeled it a "do-nothing" package.
The proposal also would take away about $17 billion in tax breaks the largest U.S. oil companies— such as Texaco and Exxon Mobil Corp.— already receive. The money would be redirected to research and development of clean energy.
"Big Oil is making money hand over fist while doing little to invest in alternative fuels, yet Bush Republicans want to keep handing them huge tax breaks," Reid told reporters.
Bingaman said the proposal could be useful as a place to start discussions.
"I'm not endorsing everything," he said.
Specifically, Bingaman said the windfall profits tax is bad policy because it creates "inconsistencies" in the commodities markets.
"It's very difficult to determine what's a windfall profit and what's not," Bingaman said. "It's very arbitrary."
The Democratic legislation comes on the heels of a Senate Republican proposal by Domenici to spur more domestic oil production, in part by opening the Arctic National Wildlife Refuge in Alaska. Most Democrats, including Bingaman, oppose that.
Domenici said the Democrat bill "looks like it's no production, so I think it's going down the wrong road."
Neither Republican nor Democratic senators could guarantee passage of their energy bills in the narrowly divided, Democrat-controlled Senate.
Meanwhile, gasoline prices— fueled by skyrocketing global demand— continue to take a big bite out of U.S. household budgets. The national average for a gallon of regular unleaded gasoline was $3.61 on Wednesday, while New Mexicans paid $3.57, according to AAA.
Bingaman and Domenici have said growing global demand is the main reason for soaring gasoline prices and that Congress can't do anything to provide dramatic, short-term relief.
But the price at the pump is hurting American families and Congress should do what it can to help, Bingaman said.
"Clearly people are feeling the economic squeeze and we ought to try to get to it (debating legislation) as soon as possible," he said.
The American Petroleum Institute said the oil profits tax would send prices higher.
"New taxes targeting the U.S. oil and gas industry would discourage investment in domestic fuel production, hurt consumers, threaten U.S. jobs, and penalize millions of retirees and workers whose pension funds, IRAs and 401Ks are invested in oil and natural gas company stock," the group said.
Bingaman said he supports an initiative in the Democratic bill to suspend U.S. oil deposits into the Strategic Petroleum Reserve until the 90-day average price for a barrel of oil— which reached $123.53 per barrel on Wednesday— is $75 per barrel or less. This action could reduce gas prices from two to five cents per gallon by increasing global supply, Democrats said. The reserve is about 97 percent full.
Bingaman also supports a provision to help control the oil futures market. The bill would prevent U.S. crude oil traders from routing transactions through off-shore markets to evade speculative limits. It also requires the commission that regulates trading to boost the margin requirement for oil futures.
Bingaman and other energy policy leaders have said oil speculators are culprits in rising gas prices.
Bingaman said he was unsure when Reid might bring the legislation to the Senate floor. Some Democrats and Republicans agree on certain elements of the other party's proposals, such as halting deposits in the Strategic Petroleum Reserve and drilling near the outercontinental shelf off both U.S. coasts.
Proposals with at least some consensus support could be threaded into a compromise bill Congress might pass, he said.
"That would be ideal— if we could get the provisions we could all agree upon and pass those," Bingaman said. "I don't know if that will be possible."
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