Bill Targets Oil Firms and OPEC
Thursday, May 8, 2008
Democratic leaders in Congress unveiled energy legislation yesterday targeting big oil companies and members of the Organization of the Petroleum Exporting Countries. The package drew sharp criticism from Republicans, oil firms and foreign policy experts.
The legislation, dubbed the Consumers First Energy Act, features a 25 percent windfall profits tax on oil companies operating in the United States, a rollback of existing tax breaks for oil and gas companies worth $17 billion over 10 years, and an authorization for the U.S. attorney general to bring price collusion charges against OPEC members.
The bill would suspend additions to the Strategic Petroleum Reserve until the price of crude oil, now $123.53 a barrel, fell back to $75. It also would target price gouging and speculation.
Republicans countered with their own proposals for boosting U.S. oil production by opening protected areas on the Outer Continental Shelf and in Alaska to oil and gas drilling.
"Americans don't need more taxes and more investigations. They need more oil and lower prices," said Sen. Pete V. Domenici (R-N.M.), the ranking member of the Senate Energy and Natural Resources Committee. "Yet nothing in the Democrats' plan will produce a single drop of oil."
House Speaker Nancy Pelosi (D-Calif.) said the Republicans and Bush administration were pursuing a "drill and veto policy." She said the Democrats' bill would "hold OPEC accountable for price fixing."
"With analysts predicting $150-per-barrel oil by fall, efforts to rein in price gougers, speculators and OPEC couldn't come at a better time," said Dan Weiss, director of climate strategy at the Center for American Progress.
But William L. Kovacs, vice president of the U.S. Chamber of Commerce, said the Democrats' package could "have unintended consequences" for U.S. companies doing business in Saudi Arabia and other OPEC countries. And Chas W. Freeman, former U.S. ambassador to Saudi Arabia, criticized the idea of prosecuting OPEC countries, an idea also supported by Sen. Hillary Rodham Clinton (D-N.Y.) on the presidential campaign trail.
"It would probably result in OPEC dumping the dollar as the unit of account for the oil trade and throw the dollar into a collapse," he said. "It could well produce an oil embargo and much higher prices. And it would have no support internationally, where it would be seen as the epitome of unilateralism that people criticize the Bush administration for."
Tony Cudmore, a spokesman for Exxon Mobil, said that "in the past, windfall profit taxes have undermined capital investments in the U.S. oil and gas industry and reduced domestic energy supplies." He said that "imposing punitive taxes on companies, which already pay record taxes, would discourage the sustained investments needed to safeguard U.S. energy security."