Senate Democrats turn focus from global warming to oil taxes

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minority member, said on June 6 that the Democrats' energy legislation will raise gasoline prices as surely as the withdrawn global climate change bill would have.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 nicks@pennwell.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected