Congress scrambles as oil earnings pile up - East Valley Tribune: Business

Congress scrambles as oil earnings pile up

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Posted: Friday, April 28, 2006 6:32 am | Updated: 3:57 pm, Fri Oct 7, 2011.

Congress considered billions of dollars in new taxes on oil companies Thursday, looking for ways to punish the cash-rich industry and soothe growing anger over high gasoline prices.

House Republicans balked at supporting billions of dollars in new taxes on oil companies as lawmakers in both parties looked for ways to soothe election-year rage over high gasoline prices.

Senate Republicans proposed a $100 fuel-cost rebate for millions of taxpayers. Democrats discussed a two-month suspension of the 18.4-cent per gallon federal gasoline tax.

Despite the jockeying for political advantage, economists and energy experts generally agreed that the federal government has few, if any, immediate powers to drive pump prices down from their $3-plus perch.

‘‘Unfortunately there’s nothing, really, that can be done that’s going to affect energy prices or gasoline prices in the very short run,’’ Federal Reserve Chairman Ben Bernanke told a congressional hearing.

Meanwhile, oil prices fell for the fourth straight day on Thursday, dipping below $71 a barrel after China sought to cool its economic growth by raising a key interest rate and the World Bank tentatively resolved a dispute with Chad, which had threatened to shut off an oil pipeline.

Still, strong global demand for crude, limited spare production capacity and geopolitical uncertainty have conspired to put a high floor underneath oil prices, which are about 38 percent higher than a year ago.

Nonetheless, lawmakers scrambled to put together legislation they hoped would show their sympathy for motorists and their willingness to stand up to big oil companies.

The GOP-run House, in a largely partisan vote, failed 190-232 to instruct its tax bill negotiators to support a Senate proposal that would have required oil companies to pay about $5 billion more in taxes. Only four Republicans voted for the proposal; nine Democrats were against it.

Senators have voted to require oil companies to pay more taxes on their inventories, rescind favorable tax treatment for exploration in difficult areas and remove tax credits for taxes paid overseas.

Despite the House vote, the proposals are ‘‘still on the table,’’ said Sen. Charles Grassley, R-Iowa, the lead Senate negotiator.

Senate Democratic leader Harry Reid of Nevada said the tax breaks are ‘‘unnecessary and unwarranted’’ when oil companies are reaping billions of dollars in profits.

The industry says the change would amount to a windfall profits tax.

Lawmakers’ election-year anxiety deepens each time a major oil company announces huge first-quarter profits. Exxon Mobil Corp. said Thursday it made more than $8 billion during from January through March — the fifth largest quarterly profit ever for a public company.

‘‘While Exxon Mobil executives are popping champagne and celebrating their record profits, American families are popping antacids under the strain of searing gas prices,’’ said Sen. Bob Menendez, D-N.J.,

Menendez proposed a 60-day suspension of the 18.4-cent gasoline tax and 24-centa-gallon diesel tax. Revenue lost to the government, as much as $6 billion, would be made up by removing some oil company tax breaks, he said.

Senate Republicans released a 10-point response to high fuel costs that included giving millions of taxpayers $100 checks. They also proposed a federal law against price gouging.

The rebate check would go out at the end of August to taxpayers with adjusted gross incomes of no more than $145,950 for single filers and $218,950 for married couples, according to the Senate Finance Committee.

‘‘It’s a bold package to help consumers . . . to help ease the pain,’’ said Majority Leader Bill Frist, R-Tenn. He promised a vote on the measures by Tuesday.

‘‘We are going to ease the burden,’’ said Sen. Pete Domenici, R-N.M., chairman of the Senate Energy and Natural Resources Committee.

Democrats criticized the GOP proposal because it linked attempts at short-term relief with oil drilling in an Alaskan wildlife refuge; the exploration idea has divided the Senate for decades.

‘‘It’s designed to protect Big Oil while mistakenly believing that drilling in the Arctic National Wildlife Refuge will solve America’s energy problems,’’ said Reid’s spokesman, Jim Manley.

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