By The Associated Press
Published: 05-08-08
Senate Democrats Seeking a Special Tax on Oil Profits
WASHINGTON (AP) — Senate Democrats on Wednesday called for a temporary special tax on oil companies’ profits and a rollback of $17 billion in oil industry tax breaks as part of an energy package.
The Democrats are also seeking federal penalties on energy price gouging and a suspension of oil deliveries into the government’s emergency reserve.
Senate Republicans strongly oppose any additional oil industry taxes which are widely viewed as unlikely to be enacted and would almost certainly prompt a veto by President Bush.
The proposed 25 percent profits tax would apply just to oil company earnings above what would be considered “reasonable” and only if those profits are not reinvested in expanding refinery capacity or renewable energy sources according to a summary of the proposals.
The tax would expire after two years.
The only section of the Democrats’ proposal that seems to have widespread bipartisan support is suspending deliveries into the government’s Strategic Petroleum Reserve until oil prices drop to $75 a barrel.
A Republican energy package offered last week would also suspend the diversion of roughly 70000 barrels of oil a day into the reserve. Mr. Bush has opposed stopping the deliveries saying that would have little impact on overall supplies and prices.
The Democrats’ made their proposals as lawmakers struggled to respond to soaring gasoline costs and crude oil prices that on Wednesday topped $123 a barrel. Democrats characterized their proposal as attacking “the root causes of high gas prices” although it was not clear how their plan would appreciably affect high oil costs set in a global market or gasoline prices edging toward $4 a gallon.
The Democrats’ announcement set off finger pointing in Congress.
“It will do nothing to lower gas prices” said Senator Pete V. Domenici of New Mexico ranking Republican on the Senate Energy and Natural Resources Committee.
The Senate Republican leader Mitch McConnell of Kentucky called the plan “predictable: more taxes more bureaucracy.”
On the Democratic side the majority leader Harry Reid of Nevada said Republicans offered “more of the same failed energy policies that brought us to this point.” The Republicans’ plan focuses on increasing domestic oil production including opening offshore waters and an Arctic wildlife refuge in Alaska to drilling.
Aside from the tax proposal the Democrats’ plan reflects largely resurrected energy proposals that have never had enough support to make it through Congress.
