Dems Take Aim at Oil Industry Tax Breaks

Incoming House Speaker Nancy Pelosi of Calif., flanked by incoming House Democratic Caucus Chairman, Rep. Rahm Emanuel, D-Ill., left, and incoming House Majority Whip James Clyburn of S.C., meets reporters on Capitol Hill in Washington, Thursday, Nov. 16, 2006 where the new Democratic House leadership was announced. AP Photo/Dennis Cook) (Dennis Cook - AP)

House Democrats also are shying away from tampering with more than $1 billion worth of oil- and gas-related tax breaks, enacted last year. These breaks largely benefit small companies or gas utilities rather than the major oil companies now awash in cash.

Nevertheless, the House and Senate are expected to push legislation early to force oil companies to renegotiate flawed offshore drilling leases that have allowed the companies to avoid paying federal royalties. The loss eventually could cost the government $10 billion, according to some congressional estimates.

Other prime targets of House and Senate Democrats include:

_Alleged price gouging. Proposals to create a federal price gouging law for gasoline and other fuels probably will move quickly.

_More incentives and mandates to expand the use of ethanol and biodiesel as a substitute for gasoline. Requiring oil companies to phase in retail pumps that deliver fuel that is 85 percent ethanol.

_Requiring power companies to produce a percentage of their electricity from renewable energy sources such as wind and solar power. Such a measure is a priority of Sen. Jeff Bingaman, D-N.M., incoming chairman of the Senate Energy and Natural Resources Committee.

_Extending energy efficiency tax credits approved by Congress last year. Most are scheduled to expire at the end of next year.

_Expanding a tax break for buyers of gas-electric hybrid cars and offering more incentives for automakers to build greater numbers of the vehicles.

Rep. John Dingell, D-Mich., who will take over as chairman of the House Energy and Commerce Committee, said he plans hearings on legislation to spur further production and distribution of ethanol and biodiesel, and promote conservation.

But he suggested it will take time to produce legislation. "The process is a long one. It takes hearings, it takes fact finding," said Dingell in a telephone interview.

On the Senate side, Bingaman probably will avoid writing a single broad energy bill, preferring to push through specific legislation. Among Bingaman's other goals are new incentives to spur renewable energy development and more tax breaks for conservation.

Last spring, Sen. Charles Schumer, D-N.Y., said if the country is to reduce its addiction to oil and high energy prices it needs a "crash program" to develop more alternative energy sources, dramatically increase conservation and examine "whether or not we should break up the big oil companies."

Next year, Schumer assumes the No. 3 leadership position among Senate Democrats and will be one of the party's top strategists.