As gasoline prices flirt with the $4/gallon level, the Senate majority is preparing to square off with Republicans over stripping major producers' oil and natural gas subsidies.
Senate Majority Leader Harry Reid (D-NV) has scheduled a cloture vote late Monday (March 26) on legislation, sponsored by Rep. Robert Menendez (D-NJ), that seeks to repeal billions of dollars of tax preferences for major integrated oil and gas companies before the Senate breaks at the end of the month. The savings would be used to pay for expiring or expired energy efficiency and alternative energy tax incentives.
The bill (S. 2204) would need 60 filibuster-proof votes to advance to the floor, which it is unlikely to get. A similar bill was defeated last May when, due to Republican opposition, it fell short of 60 votes (see NGI, May 2, 2011). And only earlier this month, an amendment to the surface transportation bill to eliminate all tax subsidies for energy, not just for Big Oil, was defeated by 72-26. The proposal was offered by Sen. Jim DeMint (R-SC). In the current congress it's a rare substantive bill that gets through both houses, or even one.
"We believe this bill... faces an uphill climb in the Senate, [and] is likely dead on arrival in the House," said.energy analyst Christine Tezak with Robert W. Baird & Co.
Monday's vote will essentially be a "show vote," which will "put Republicans on the record opposing clean energy and preserving tax breaks utilized by highly profitable oil companies," she said. Democrats want to make energy an issue in this election year, with Republicans having to explain to their constituents why they are supporting tax breaks for oil and gas.
"In the next few weeks, I expect Congress to vote on ending these subsidies," said President Obama in a recent weekend radio address. "And when they do, we're going to put every single member of Congress on record [in this election year]: They can either stand up for oil companies, or they can stand up for the American people. They can either place their bets on a fossil fuel from the last century, or they can place their bets on America's future."
While the Democrats say the bill is aimed at repealing tax breaks for Big Oil, such as ExxonMobil Corp., BP plc and Chevron Corp., some of the tax breaks that the bill would rescind -- intangible drilling costs, percentage depletions, tertiary injectants deductions and the domestic manufacturing deduction allowances -- would apply to smaller independent oil and gas producers as well.
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