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Senate Committee: Big Oil Needs To Ante Up

June 19th, 2007 | by Daniel DiRito |

Could Washington actually be serious about reducing our dependence on foreign oil? In a move that seems to signal as much, the Senate Finance Committee moved forward with a bill that would impose 29 billion dollars in new taxes on the U.S. oil industry. The bill is designed to funnel money into alternative energy exploration programs.

WASHINGTON - A proposal to hit oil companies with $29 billion in new taxes advanced in the Senate on Tuesday, targeting the money to energy conservation, wind turbines, electric hybrid cars and clean coal technology.

But Sen. Chuck Grassley, R-Iowa, said, “We have entered a new era in energy markets …(that) requires a dramatic shift away from tax incentives for oil and gas production” and toward support for other energy sources and efficiency.

The tax package that emerged from the Finance Committee reflected the dramatic tilt of congressional sentiment toward renewable fuels — and away from support of oil companies — since Democrats took over control of Congress. In part, the shift stems from growing concerns about the impact of fossil fuels on global warming and motorists’ anger over soaring gasoline prices.

The measure would extend and increase taxes paid under an oil spill liability law and eliminate existing tax credits involving foreign oil production. In all, the tax changes were expected to cost the industry more than $15 billion over a decade.

Another measure, pushed by Sen. Jeff Bingaman (news, bio, voting record), D-N.M., was aimed at collected $10.7 billion in royalties the government has been unable to collect because of flawed oil leasing contracts issued by the Interior Department in 1998-99. The government would collect an excise tax on any oil taken from the Gulf of Mexico, subject to royalties not being paid.

The bill has a long way to go to become law but lawmakers are likely concerned that high gas prices may play a role in the 2008 election cycle. Given voter frustration with energy costs, record oil industry profits, and the impression that our ongoing efforts in Iraq may be partially attributed to our need for oil, politicians may be ready to abandon their long love affair with big oil and their huge lobbying apparatus. I would suggest that the shift is long overdue.

Cross-posted at Thought Theater

  1. 9 Responses to “Senate Committee: Big Oil Needs To Ante Up”

  2. By Tom Gray on Jun 19, 2007 | Reply

    Thanks for your post. The U.S. Senate is currently debating a National Renewable Energy Standard. Under an amendment sponsored by Sen. Jeff Bingaman (D-N.M.), who chairs the Senate Energy and Natural Resources Committee, electric utilities would be required to obtain a growing percentage of their electricity from renewable energy sources (biomass, geothermal, new hydro, solar, wind), with the percentage reaching 15% by 2020.

    The Senate is scheduled to vote on the Bingaman amendment tomorrow. If you support this first meaningful step to change our country’s energy policy, contact your Senator’s office through the U.S. Capitol switchboard at 202-224-3121 and let him/her know you support the Bingaman Renewable Energy Standard. Or go to powerofwind.com.

    Regards,
    Thomas O. Gray
    American Wind Energy Association
    http://www.awea.org
    risingwind.blogspot.com

  3. By SteveIL on Jun 20, 2007 | Reply

    Great idea, sure. Increase taxes on oil production (without removing the subsidies they already receive) in order to give the money to the government so that it can be redistributed to campaign contributors in supposed “renewable energy” firms. Which then will raise the price of gasoline even further than it is now, and further strap the average working family of more money. Wonderful idea.

    I keep wondering; is it part of the job description of a U.S. Senator to be a total moron or to be a thief?

  4. By manapp99 on Jun 20, 2007 | Reply

    Good point SteveIL, everytime you hear “tax big oil” you can susbtitute “tax the consumer” Tax on energy or government’s unfunded mandates to the energy companies result in a massive regressive tax hitting the working poor and middle class the hardest. If the 08 candidates are really interested in high gas prices the last thing they are going to want to do is tax “big oil” Oh wait, they will get elected talking about STICKING it to “big oil” but the people won’t feel the sting until its to late. People on the left always seem to think that the government can give them something for nothing. The dirty secret of redistribution of wealth is that when the government takes $1 from someone to give to someone else, they keep 70 cents for themselves to pay the bureaucracy and passes the 30 cents on. All the while the entity taxed raises the price of their goods and services to make up the difference to their bottom line. The result is the average Joe getting screwed

    This line of the post:

    “In all, the tax changes were expected to cost the industry more than $15 billion over a decade.”

    Really means cost the PUBLIC $30 billion over a decade as government projections always come in low and the consumer will have to cover it.

  5. By mr bigstuff on Jun 20, 2007 | Reply

    it’s great to hear from teambio’s very own oil industry lobbyists, steveill and 99. when you guys were filling up your tahoes (with the mandatory w stickers and support the troops magnets) this morning, did you happen to glance over at the folks at the next pump? did you happen to catch their eye and expound on your free market theories about the supply and demand of crude oil and how those poor ole oil execs oughta be able to keep what’s theirs free of government interference? did you tell the guy spending what used to be his disposable income on barely enough gas for one more trip to work how proud you are of $3.00/gallon gasoline? i reckon not. the resulting trip to the emergency room to have the gas pump handle removed from your g.o.p. talking points propaganda faucet would have put a real bummer on this days adventure in your w-fueled fantasy world.

  6. By manapp99 on Jun 20, 2007 | Reply

    bigstuff, first mine is a 4-runner, won’t buy the GM product. Second I filled up yesterday at 3.29 a gal just like the guy next to me. Third national gas prices are .14 a gal higher than last year. Fourth your rant has nothing to do with the original post about the measure in the senate to raise taxes on oil companies and fifth, your rant has nothing to do with the posts about how these costs get passed on to those that can least afford it. Lastly, I make my living on driving around fixing appliances and therefore am hit harder than most by high gas prices.
    It is amazing to me that the left purports to be for the poor and middle class yet is for every regressive tax that comes along. Tax booze, ciggy butts and gas and you hit the poor and middle class harder as a share of disposable income. What’s next from the compassionate left? Tax on the air that you breathe? Oh yeah, Pelosi is working on that to and will be called a “carbon tax” Another regressive tax to hit the less privilaged.

  7. By Daniel DiRito on Jun 20, 2007 | Reply

    SteveIL & manapp99,

    I hear your concerns but I would like to hear your suggestions for breaking our dependence on oil? High gas prices are already a burden on those at the lower end of the wage scale…and there is little reason to believe that big oil is suddenly going to become philanthropic.

    Perhaps I’m wrong, but at some point we’re going to have to bite the bullet and find some alternate energy sources.

    You seemingly suggest that giving money to alternative fuel programs is inferior to sitting back and watching oil companies pocket record profits. Are you telling us that we have no choices?

    When you posit that the left purports to be for the poor and middle class yet supports every regressive tax, you ignore the intended outcome. Maybe I’m missing the point of your argument, but I think I hear you saying that we ought to tell those at the low end of the totem pole to get used to their station in life. Don’t kid yourself; the status quo is no panacea.

    I suspect if those individuals were given a choice between perpetually lining the pockets of oil execs or paying a few cents more for gas in the short run in order to break free of our dependence and develop alternatives that may cost less and limit pollution, they would choose the latter. How about we let them speak for themselves?

    I’m also not a big fan of unbridled government spending…but the last time I checked it was a Republican president and congress that was spending money as if it grew on trees. I’m afraid the tax and spend liberal label has lost its luster…we’ve now adopted the GOP mantra of borrow and spend. As they say, pick your poison.

    Energy independence needn’t become a partisan jab fest. As best I can tell, the committee vote included Democrats and Republicans. Perhaps both sides realize that sitting on our hands and complaining isn’t going to change a thing?

    Thanks for sharing your thoughts and observations. I hope you will share your suggestions for addressing the issue.

    Regards,

    Daniel

  8. By manapp99 on Jun 20, 2007 | Reply

    Daniel, I believe that alternate forms of energy are on their way and will be integrated into our lives in the coming decades. I do not believe the way to achieve this goal is through punitive taxes on the existing energy companies but tax incentives on emerging energy companies. It is not incumbent on one business to pay for the technology to create its potential rival. To tax the oil companies and give it to alternate energy companies does exactly that. As far as government being the middle man for the money tranfer, this would only make the goal of alternate energy farther from reality as they would spend much of the money on the same wastefull BS they handle other funds with. By taxing any company such as oil, pharma, walmart etc, only puts higher prices right at the feet of the consumer and the consumer that can least afford the increase is the poor and middle class. When I talk about the regressive taxes on sin and oil I understand that the intention is to save the people from bad habits by making them more expensive. Maybe they will quit rather than pay $5 a pack of butts. The reality is that Mom still gets the butts but has to not get something else. The government should not be your nanny. Same with booze tax. It will be the same if they tax gas with the intent of making you drive less or taxing big oil knowing that they will pass this cost down. I believe the only role government should be playing in the alternate energy world is tax breaks for companies pursuing this. Most likely it will NOT be the oil companies and when alternate fuels are offered by rival companies the oil companies will have to respond to a loss of market share. This will be good for the average joe blow. IMHO.

    As far as the lower class and their station in life, I am saying no such thing. I am a big believer in bettering your station and having the government stay out of the way. I do not want the government to saddle the poor with more taxes and higher prices as it is hard enough as it is. This is why we need to keep an eye on how government intends to deal with global warming. The most likely thing they will do is raise carbon taxes on business which will be another tax increase on joe sixpack.

  9. By Daniel DiRito on Jun 20, 2007 | Reply

    manapp99,

    Thanks for sharing your ideas and observations. I really appreciate the dialogue.

    My first observation is how one should define “punitive”. Is taxing an industry with record profits really punitive…the same industry that has been granted numerous concessions over the years? We’ve subsidized oil exploration for years with cheap government leases and numerous other measures.

    Asking the oil industry to pay more is really a move to help Americans pay less…in the long run. Will the allocations of those added taxes bear fruit? I don’t know. Will more of the same bear fruit? I don’t think so.

    You indicate that taxing oil, pharma, etc will place those costs at the foot of the consumer…yet you acknowledge that once alternate energy is developed they will have to compete. Doesn’t that suggest that big oil isn’t currently competitive and that they are extracting more than is warranted?

    If competition will be good for the consumer, why not help that happen? We helped the oil industry. Why shouldn’t they return the favor? If they fear the competition, then they ought to invest more in developing their own alternative energy programs. Unfortunately, they have no real motivation at the moment.

    I’m not suggesting a nanny state nor do I condone sin taxes in order to extinguish behavior. I think some of the taxes you characterizing some of these taxes in that manner is an oversimplification of the underlying goal. No doubt the government taxes cigarettes to help offset the cost of medical care related to lung cancer. Is that ideal? Maybe not, but we also haven’t addressed the issues with our healthcare system.

    You suggest that you believe in people bettering themselves and that you don’t want the government to saddle them with more taxes and higher prices. Unfortunately, they’re already being saddled by numerous issues that they can’t impact and assuming that everything gets better when the government steps out of the way simply cannot be demonstrated.

    I interpret remarks of that nature to be the means to gloss over the inequities that are inherent in our system. The real question is whether everyone has the same opportunity…in other words, whether the system is structured in such a way that opportunity is available to all or if the words are just lip service to the perpetually underprivileged?

    Again, I’ll bet that if one consulted those at the lower end of the totem pole they would be willing to pay more if it offered the hope of a brighter future…even if it cost them more in the short term. We already know that those at the top of the pole aren’t willing to help out…they support a president that believes they should pay less taxes.

    If large corporations aren’t supposed to pay any more and the wealthiest need tax cuts, just what are our options to fix or fund any of the problems we face? We’re mortgaging the farm to fight the war in Iraq…would it be that bad to raise some money to break our reliance on Middle East oil. We’re already spending money we don’t have.

    Thanks again for sharing your thoughts.

    Regards,

    Daniel

  10. By mr bigstuff on Jun 21, 2007 | Reply

    99,
    gas prices are damn near 3 times as high as they were before the gasoline crooks stole the white house. the major expense in your business has increased 3 times since the onset of w and cheney, yet you still support these crooks by deriding those who seek to punish their outlandish criminal greed and find better cheaper solutions for america’s future. why, like most w supporters do you vote aganst your own interests? do you think that your support of w and cheney will one day be rewarded with a billion $ check in the mail and an invitation to their secret society? or do you harbor some deep seeded hatred of american government and the misfortunate of our society who have the unmitigated gall to expect a helping hand from the wealthiest nation on the planet? pay attention man, you work for a living and w and the gang force you to work harder and harder for less and less every day. this meaningless freshman economics debate about who taxes harm the most pales in comparision to the damage w and the crooks have inflicted on this country. it is simply a smoke screen that keeps you from thinking about how bad w and his alleged policies have fucked up everything so bad.

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