As gasoline prices flirt with the $4/gallon level, the Senate majority is preparing a showdown with Republicans over rescinding major producers’ oil and natural gas subsidies.
Senate Majority Leader Harry Reid (D-NV) wants to bring up 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.
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.
The bill is unlikely to clear the Senate. A similar bill was defeated last May when, due to Republican opposition, it fell short of the 60 votes needed to advance to the floor (see Daily GPI, May 19, 2011). And only last week, an amendment to the surface transportation bill to eliminate all tax subsidies for energy, not just for Big Oil, was defeated by 72-26 (see Daily GPI, March 14). The proposal was offered by Sen. Jim DeMint (R-SC).
“We believe Reid plans a ‘show vote’ before month’s end to put Republicans on the record opposing clean energy and preserving tax breaks utilized by highly profitable oil companies,” said energy analyst Christine Tezak with Robert W. Baird & Co.
“In the next few weeks, I expect Congress to vote on ending these subsidies,” said President Obama in his 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.”
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