Senate Democrats turn their focus from global warming to oil taxes

Days after withdrawing global climate change legislation, US Senate Democrats prepared to bring to the floor an energy bill which would reimpose a windfall profits tax on major oil companies and repeal several of their financial incentives.

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. A cloture vote could occur late that afternoon.

The bill's floor schedule was announced as the US Energy Information Administration reported that US retail gasoline prices averaged $4.039/gal on June 9, 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 on 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-N.M.), 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minority member, said on June 6 that the Democrats' energy legislation will raise gasoline prices as surely as the withdrawn global climate change bill would have.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 it is likely to be dropped soon after debate begins, Domenici noted that the bill 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.

"It should be noted that 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 five 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. It 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 major oil companies producing at least 500,000 bbl of oil a day 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.

The bill also 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 which would give the US Department of Justice authority to prosecute any foreign government which 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 substantially 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 up to 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, the American Petroleum Institute said in a statement on June 9.

"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. Moreover, new taxes of any kind are particularly detrimental during a slowing economy," it continued.

"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. 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," API's statement concluded.

Contact Nick Snow at nicks@pennwell.com

Related Articles

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Production ramps up from Sunrise oil sands project

07/06/2015 Husky Energy Inc., Calgary, reported that 25 well pairs are now on production at its Sunrise oil sands project in northeastern Alberta. Steaming is...

South Africa’s Enref refinery due maintenance

07/06/2015 Engen Petroleum Ltd. will shut down its 125,000-b/d Enref refinery in Durban, South Africa, for planned maintenance beginning on July 9, the compan...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...

AGL Energy to scale back upstream gas operations

07/06/2015

Gas retailer AGL Energy Ltd., Sydney, says it will exit the oil business and massively scaling back its upstream gas operations.

Woodside lets contracts for Browse LNG project

07/06/2015 Woodside Petroleum Ltd. has let more contracts for the Browse floating LNG project offshore Western Australia. The contracts, awarded to a Technip-...

Macondo settlement seen ‘positive’ for BP

07/06/2015 BP Exploration & Production Inc.’s recent agreement to settle federal and state claims related to the 2010 Macondo blowout and spill improves t...
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


Driving Growth and Efficiency with Deep Insights into Operational Data

When Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST



On Demand

OGJ's Midyear Forecast 2015

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

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


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


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