The Senate Tuesday voted not to move forward with Democratic energy legislation that would revoke $17 billion in tax breaks for energy companies, impose a windfall profits tax on energy companies that don’t invest in renewable energy sources and impose federal penalties for energy price gouging (see Daily GPI, May 8).
By 51-43, the Senate voted against cloture, effectively killing the measure (S. 3044) for now. The defeat comes only a few days after Democrats failed to achieve cloture to move their climate change measure forward (see Daily GPI, June 9). The Democratic setback is a major victory for the oil and gas industry, as well as the New York Mercantile Exchange, which had serious concerns with the legislation. It also is a big win for Senate Republicans.
Sen. Pete Domenici of New Mexico, the ranking Republican on the Senate Energy and Natural Resources Committee, called the measure the “No Energy” bill. “The last time a windfall profits tax was imposed — in 1980 — it reduced domestic oil production by up to 1.27 billion bbls during a period in which dependence on foreign oil grew from three to 13%,” he said.
The legislation, sponsored by Senate Majority Leader Harry Leader Harry Reid (D-NV) and several top Democrats, would have imposed a 25% windfall profits tax on the largest oil and natural gas companies that don’t invest in renewable energy, as well as rolled back $17 billion in tax incentives for the development of renewable fuels, consumer price protection and energy efficiency technology.
The bill also sought to revive a plan already passed by both the Senate and the House of Representatives to allow the federal government to sue OPEC — source of one-third of global oil supply — for price manipulation. In addition, the legislation sought to to prevent oil market speculation and would have prevented companies that trade U.S. oil futures from routing transactions through offshore markets to evade position limits. It also required the Commodity Futures Trading Commission to boost margin requirements for all oil futures transactions.
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