The nearly $3.5 trillion budget resolutions passed by the House and Senate Thursday had some moderately good news for producers — lawmakers did not include the $32.6 billion tax hike on oil and natural gas that President Obama proposed for fiscal year 2010, at least not at this stage of the budget process (see Daily GPI, April 2).

The tax hike proposals were stripped out of both budget resolutions by the House and Senate budget committees, according to spokesmen for Rep. Gene Green (D-TX) and Sen. Mary Landrieu (D-LA), who voted for the budget blueprints only after the language on the oil and gas tax increase was struck.

But the situation could change as the House and Senate “are leaving the door open for discussion” of the proposed oil and gas tax hike during conference or later on, said Green spokeswoman Brenda Arredondo. The House and Senate are expected to begin conference on their budget resolutions when they return from a two week recess on April 20.

“We fought to remove oil and gas taxes that were a direct assault on domestic drilling [and] contentious climate change legislation…These initiatives were bad policy and should not be fast-tracked through the Senate. They could have hurt the businesses that drive our state’s economy,” said Landrieu, who worked with Senate Budget Chairman Kent Conrad (D-ND) to carve out the oil and gas taxes.

The budget resolution cleared the Senate by a vote of 55-43, while the House voted 233-196 in favor of the Democratic budget proposal.

“They [budget resolutions] don’t have presumptions about any oil and gas taxes, and no reconciliation instructions” on how to finance the president’s renewable energy priorities, said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, which represents independent producers. These are good signs for producers, he noted.

“But we’re still a target certainly and will continue to work aggressively to explain [to lawmakers] the impact” that such taxes would have on independent producers, Fuller said.

The Senate Thursday defeated a budget amendment, offered by Landrieu, that sought to expand offshore revenue sharing for a small number of coastal states that allow oil and gas development off their shores. It also proposed making the sharing of revenues with coastal states budget-neutral, meaning that Congress would not have to raise taxes or cut spending to pay for it.

“I have always found the thought of taking resources from the OCS [Outer Continental Shelf] — which is owned by all Americans and which is not part of any state — and dedicating the revenue to just a handful of states to be unfair,” said Sen. Jeff Bingaman (D-NM), who voted against the amendment.

And “to make additional OCS revenue sharing budget-neutral, we would have to either raise taxes on all American or cut worthwhile programs. That makes this proposal even more unpalatable to me and my colleagues.”

Prior to last fall, when Congress let the ban on OCS drilling expire, the sharing of offshore revenues was scored as new fiscal revenues and thus did not need to be offset. But now OCS revenue sharing must be offset with either increased taxes or cuts to entitlement programs.

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