Dems Take Aim at Oil Company Tax Breaks
Sunday, November 19, 2006; 3:54 AM
WASHINGTON -- House Democrats are targeting billions of dollars in oil company tax breaks for quick repeal next year. A broader energy proposal that would boost alternative energy sources and conservation is expected to be put off until later.
Hot-button issues such as a tax on the oil industry's windfall profits or sharp increases in automobile fuel economy probably will not gain much ground given the narrow Democratic majorities in the House and Senate.
Incoming House Speaker Nancy Pelosi, in an outline of priorities over the first 100 hours of the next Congress in January, promises to begin a move toward greater energy independence "by rolling back the multibillion dollar subsidies for Big Oil."
Yet the energy plan being assembled by Pelosi's aides for the initial round of legislation is less ambitious than her pronouncement might suggest.
For the most part, the tax benefits are ones that lawmakers talked of repealing this year when Congress struggled to respond to the public outcry over soaring summer fuel prices and oil companies' huge profits.
Topping the list for repeal are:
_Tax breaks for refinery expansion and for geological studies to help oil exploration.
_A measure passed two years ago primarily to promote domestic manufacturing. It allows oil companies to take a tax credit if they chose to drill in this country instead of going abroad.
Democrats say neither tax benefit should be needed for an industry reaping large profits at today's high crude oil prices.
Over 10 years, the production tax credit saves oil companies $5 billion and the refinery measure and exploration credit a total of about $1.4 billion, according to Congressional Budget Office estimates.
Other oil tax breaks probably will go unchallenged. That includes some passed by Congress only a year ago and others already targeted for repeal this year.
For example, House Democrats have no plans to change a provision that allows oil companies to avoid billions of dollars in taxes by the way they calculate inventories. The Senate this year agreed to a repeal; the effort was abandoned amid House GOP opposition and an uproar from other industries that also benefit from the tax language.