Nick Snow
Washington Editor
WASHINGTON, DC, June 10 -- Days after withdrawing global climate change legislation, US Senate Democrats prepared to bring to the floor an energy bill that would reimpose a windfall profits tax on major oil companies and repeal several of their financial incentives.
Senate bill S. 3044, which also includes provisions aimed at alleged price gouging, energy commodities speculation, and the Organization of Petroleum Exporting Countries, is scheduled to come to a debate authorization vote the morning of June 10, with a cloture vote possible in late afternoon.
The bill's floor schedule was announced as the US Energy Information Administration reported that on June 9 US retail gasoline prices averaged $4.039/gal, 6.3 cents more than a week earlier and 96.3 cents more than a year earlier. The nationwide average retail diesel fuel price averaged $4.692/gal, down 1.5 cents from the week before but $1.90 more than a year earlier.
Democrats said June 9 that the bill's provisions aim to transfer the pain of higher prices from consumers to producers, oil cartels, and commodity speculators. "Tomorrow morning, we're going to vote on a Democratic bill that addresses the root causes of these high oil prices," said Sen. Patty Murray (D-Wash.).
"Everywhere I've been in my home state, people ask what Congress is going to do about this. Democrats want to do something but Republicans keep blocking us. They forget the real reason for this crisis: the misguided policies of this administration. But the American people won't forget. They're tired of seeing special interests put before consumers," she continued.
'A terrible idea'
But Sen. Pete V. Domenici (R-NM), the Energy and Natural Resources Committee's ranking minority member, said on June 6 that the Democrats' energy legislation will raise gasoline prices as surely as the withdrawn global climate change bill would have. S. 3044, he said, "imposes a costly 25% windfall profits tax on American oil companies and seeks to raise exploration and development costs for oil companies doing business overseas—a terrible idea when gasoline is $4/gal."
Although the bill will likely be dropped soon after debate begins, Domenici noted that it also contains a provision to suspend crude oil purchases for the Strategic Petroleum Reserve which has been enacted already. "The American people deserve more careful attention to our energy policy than including already-enacted laws into new legislation," he said.
"The Democrats' bill does not offer a single measure that will increase production, in contrast to the legislation I offered which would provide 24 billion bbl of oil, enough to keep American running for 5 years with no foreign imports," Domenici continued.
Another Republican, Sen. Jeff Sessions (Ala.), said on June 9 that Congress needs to find common ground on energy. The US Department of Energy should be doing more, he maintained. "They have more experts than we do. [DOE] should step forward, make proposals, and do what it can to lower energy prices," he said.
"With prices at record levels, the American people can be excused for wondering what Congress is doing. Business-as-usual policies crafted to help specific constituencies aren't going to help solve this problem," Sessions said.
The bill's provisions
Specifically, S. 3044 would deny to major oil companies producing at least 500,000 b/d of oil the manufacturing tax deduction other US industries receive to help offset government subsidies their foreign competitors receive. It also would change the foreign tax credit, impose a windfall profits tax, and apply new tax revenues to a new energy independence and security trust fund.
The provision aimed at stopping oil product price gouging would make it illegal for a supplier to sell crude oil, gasoline, distillates, or biofuels "at an unconscionably excessive price in an area for which the [US] president declares that an energy emergency exists." It also would give the Federal Trade Commission authority to enforce this provision.
In addition, the bill would give the president authority to declare a federal energy emergency "if the well-being of US citizens is at risk because of a shortage or imminent shortage of crude oil, gasoline, distillates, or biofuel because of (1) a disruption in the national distribution system, or (2) significant pricing anomalies in the national energy markets for such products." It also authorizes state attorneys general to bring civil actions under the act and sets forth civil and criminal penalties for violations.
S. 3044 also incorporates the "No Oil Producing and Exporting Cartels" (NOPEC) proposal giving the US Department of Justice authority to prosecute any foreign government that colludes with another foreign government to limit oil and gas production, set and maintain prices, or otherwise act to restrain trade. The provision would deny such foreign states sovereign immunity or act of state doctrine protections.
Effort to curb speculation
Finally, the bill would amend the Commodity Futures Act to require the US Commodity Futures Trading Commission to determine that foreign boards of trade subject to CFTC jurisdiction regulate and provide information on offshore oil trading and greatly increase margin levels for all oil futures trades, contracts, or transactions.
The windfall profits tax provision attracted some of the heaviest criticism. Domenici said that the last time such a levy was imposed—in 1980—domestic production fell by as much as 1.27 billion bbl while US dependence on foreign oil grew by up to 13%.
Imposing new taxes on the US oil and gas industry will not help provide stable supplies or jobs for American workers, said the American Petroleum Institute in a June 9 statement.
"Instead, these taxes could reduce our nation's energy security by discouraging new domestic oil and gas production, discouraging new investments in refinery capacity, and actually tilting the competitive playing field for global energy resources against US-based oil and natural gas companies," it continued. "Moreover, new taxes of any kind are particularly detrimental during a slowing economy.
"Americans would be better served if our elected leaders made real, long-term energy policy instead of promoting oil ideas that have failed to increase our energy future," API's statement added. "Increasing access to our resources could make us more secure at home, generate more American jobs, and put millions of dollars into federal and state coffers,"
Contact Nick Snow at [email protected].
