White House Hopefuls to Target Oil Industry Tax Breaks
Several Senate energy bills introduced last week were meant to send a strong signal to the petroleum industry that the chamber is ready to follow suit on what has become a fast-track House priority: scaling back tax and royalty incentives for big oil companies.
Several high-profile Democrats, to include Sens. Barack Obama (Ill.) and John Kerry (Mass.), offered bills that would repeal tax incentives much like legislation the House Democratic leadership hopes to pass in floor votes scheduled for next week.
Along with Sens. Dianne Feinstein (D-Calif.) and Ron Wyden (D-Ore.), Kerry on Thursday offered legislation that would end major companies' eligibility for deductions on income from domestic manufacturing. The manufacturing deduction was contained in tax legislation passed in 2004.
Kerry also offered a bill targeting this tax break last year. Obama similarly introduced a bill last week to "suspend royalty relief, to repeal certain provisions of the Energy Policy Act of 2005, and to amend the Internal Revenue Code of 1986 to repeal certain tax incentives for the oil and gas industry."
The bills mirror several plans offered by Democrats and some GOP members last year. They are another sign that newly ascendant Democrats plan to continue pressing the issue following the Senate Democratic leadership decision last week to introduce a "marker" bill on their overall energy goals that includes a call for ending "giveaways" to big energy companies.
House Democratic leaders plan to repeal the manufacturing income tax break for big oil in an energy measure scheduled for floor action Jan. 18. The bill is also expected to strip major oil companies' eligibility for accelerated write-offs of exploration costs.
This as-yet-unveiled House measure will also aim to ensure royalties are paid on 1998 and 1999 deep water Gulf of Mexico leases mistakenly issued without clauses that suspend royalty waivers when oil prices are high.
The House measure would also steer new revenues from the incentive repeals into alternative energy development.
Baucus mulls new energy subcommittee
In another sign of the energy tax issue's prominence in the new Congress, Senate Finance Committee Chairman Max Baucus (D-Mont.) is mulling creation of a new subcommittee to address energy taxes, an aide said last week.
With energy tax policy set to run through his committee, some lawmakers hope to both repeal oil industry incentives and extend tax breaks for renewable energy production and investments. One- and two-year extensions of wind and solar credits in recent years do not create enough certainty, according to renewable energy industry groups.
Senate oil tax plans are expected to unfold more slowly than House efforts and travel through the committee process. Baucus last week indicated support for scaling back oil and gas incentives, but said he wanted to proceed with caution.
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