In a surprising move Monday, Senate Republicans called Democrats’ bluff, voting to proceed with debate on a Democratic bill to repeal billions of dollars of oil and natural gas tax breaks for the major producers.

The Senate invoked cloture by a vote of 92-4, with most Republicans voting to move forward with a debate of the bill (S 2204). Prior to the vote Sen. Robert Menendez (D-NJ), sponsor of the measure, revealed the Republican strategy.

“I hear my colleagues may vote for debate today,” but in the end they will vote against the legislation, he said. This vote “starts the process of which side are you on.”

Sen. Majority Leader Harry Reid (D-NV) scheduled the vote as a “show vote,” to pressure Republicans to reveal their support for tax breaks for big oil in an election year, while opposing incentives for clean energy (see Daily GPI, March 22). The Democrats want Republicans to have to explain to their constituents why they support tax breaks for producers that make millions in profits.

The U.S. Chamber of Commerce expressed its reservations about the bill. “While the Chamber supports the extension of certain energy extenders, such as the wind production tax credit and percentage depletion for oil and natural gas from marginal wells, it strongly opposes the punitive tax provisions in S 2204 aimed at major integrated oil producers,” it said.

It noted that the “denial and limitations of the Section 199 deduction for oil and gas companies could discourage energy investment, result in lost jobs and ultimately decrease domestic supply and increase energy costs for American business and families. [In addition] the proposed modification of the foreign tax credit rules for U.S. oil and natural gas companies would place domestic firms at a competitive disadvantage to foreign oil and gas producers.”

Instead of the Menendez legislation, “the Chamber urges the Senate to begin work on legislation that expends domestic energy production — including coal; onshore and offshore oil and natural gas production; nuclear; and renewables.”

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