US Sen. Hillary R. Clinton (D-NY) has called for creation of a strategic energy fund, bankrolled by additional taxes on major oil company profits, to stimulate research and investment in clean technologies and to cut US oil imports in half by 2025.
“We need a serious commitment from government to prioritize advanced energy and a commitment from our oil companies to reinvest their unanticipated profits into our shared energy future,” she said May 23 at the National Press Club.
Noting that the top six oil companies had $113 billion of combined profits in 2005, “more than the annual income of 170 countries,” Clinton said, “I want oil companies to be part of the solution.”
When ExxonMobil Corp. Chief Executive Lee R. Raymond was asked how much the company had invested in alternative energy over the last decade after the company reported record earnings last year, she said, “His reply was, and I quote, ‘a negligible amount.’ Well, that’s inexcusable. You know, the oil industry is making $300 million/day, not because they planned on it but because of escalating world demand and therefore increasing prices for this commodity that they didn’t create in the first place.
“I think it’s time that we made sure they put a fair share of their profits toward a sound energy future.”
Clinton said a new tax could be determined by averaging the majors’ profits during 2000-04 and adding 10%. “Then you get to a point where those profits for just 2 years would be invested in the strategic energy fund,” she said.
The companies would have the option of not paying into the fund if they invested in biofuels, solar, wind, and other renewable energy forms or in new, cleaner refining capacity.
Clinton also called for repeal of tax breaks “that even the oil companies have told us they don’t need” and add that money to the fund. “With price, profits, and with these tax breaks in the fund, you could raise about $50 billion, more than enough to begin the energy revolution that we need,” she said.
More tax reforms
She said some of the money could go toward changing the federal tax code from what she said was a disincentive to an incentive to invest in clean fuels and diversified energy sources.
“We give large tax breaks for oil exploration far from our shores and limited tax breaks for installing biofuel pumps at America’s gas stations. We give consumers better tax breaks for buying Humvees than for purchasing hybrids and using clean energy,” Clinton maintained.
She called for comprehensive legislation to overhaul energy taxes to “signal the market we’re in this for the long run” by extending the production tax credit for 10 years; doubling consumer tax breaks for hybrids, clean diesel and other advanced vehicles; and creating a new tax incentive for fleet owners to buy more efficient vehicles.
Such an energy tax overhaul also could speed development of ethanol from cellulose by providing loan guarantees for the first billion gallons of commercial production capacity, by providing gasoline retailers with a 50% tax credit for the cost of installing ethanol pumps, and by extending and increasing tax incentives for homeowners and businesses who make their buildings and dwellings more energy-efficient.
“I think we’ve got to take action on this pump issue or we’re just spinning our wheels, so to speak. I propose that we have ethanol pumps at 50% of gas stations nationwide by 2015 and 100% by 2025,” Clinton said. “We should start by requiring the big oil companies to install ethanol pumps at all the stations they own. We should also provide a tax incentive to the independents and other owners to do so over the next 10 years, and then a mandate to get it done immediately.”
A bigger SPR
Clinton also endorsed an idea that she said Sen. Richard G. Lugar (R-Ind.) has promoted. “We need a new commitment to a strategic petroleum reserve. Specifically, we should increase it to hold 90 days of supply,” she said.
“We also should use mandates and incentives to ensure that distributors hold similar stocks of gasoline, heating oil, jet fuel, and other refined products. We should update the process of releasing oil from the reserve to make it transparent and responsive to short-term market swings,” Clinton said.
The US should also work with other countries to build strategic petroleum reserves in China, India, and elsewhere, she suggested. “This should be the first step of a major effort, as Sen. Lugar has proposed, to develop strategic partnerships with those countries to work cooperatively on clean coal, climate change, and other energy issues we cannot solve in isolation,” Clinton said.
Soon after she spoke, the Senate Foreign Relations Committee approved S. 1950, Lugar’s bill that would establish a cooperative energy program with India.