Nick Snow
Washington Editor
WASHINGTON, DC, Feb. 28 -- The US House of Representatives passed a bill Feb. 27 that proponents said would shift $18 billion in tax breaks from major oil companies to alternative and renewable energy projects and conservation and energy efficiency programs.
HR 5351, which passed by 236 to 182 votes, was approved largely along party lines. Many Democrats tried to emphasize the potential benefits of projects which might be cancelled if funding is not extended. Others in the party said crude oil prices, which closed at $101/b/d earlier, showed that oil companies don't need tax incentives.
'Energy policy-lite'
HR 5351 opponents, who were largely Republicans, said the bill actually hurts some alternative energy programs it intends to help while discriminating against a single industry by excluding it from a tax break that other US manufacturers receive.
"This bill is not a serious solution. It is 'energy policy-lite,' and it is clearly intended to appeal more to the blogosphere than to market forces," said Rep. Phil English (R-Pa.), a Ways and Means Committee member who led the opposition during debate leading up to the vote. "The Democrats' solution to America's energy crisis is to single out what they claim are the five largest oil and gas producers for a tax increase."
"This legislation is not likely to impact oil producers' profits in any way . . . . It is also not limited to the five largest producers, as they claim," English continued. "The one thing you can be sure of is that this bill will raise prices at the pump for American consumers and create a looming sense of uncertainty, which will compound the forces increasing prices today in the marketplace."
'We have an obligation'
Ways and Means Committee Chairman Charles B. Rangel (D-NY), who led supporters, said H.R. 5351's passage was essential because it would extend tax credits that otherwise would expire at the end of 2008 for alternative sources, including wind, solar, geothermal, cellulosic ethanol, and other biofuels. "If we are to end our dangerous reliance on foreign oil and create the green-collar jobs of tomorrow, we have an obligation to find renewable energy sources," he maintained.
Other Democrats argued it was time to move tax incentives to future technologies from an industry which essentially doesn't need them because it is making record profits. "We want to take the $18 billion in tax subsidies that the Bush administration and previous Congresses gave oil companies and reinvest the money in alternative energy technologies," said Chris Van Hollen, a Ways and Means Committee member from Maryland.
But English said the bill would substantially modify the wind energy tax credit in a way which would dramatically reduce its effectiveness for some of its most successful consumers. H.R. 5351 also excludes Citgo Petroleum Corp., the US subsidiary of Petroleos de Venezuela SA, from removal of tax incentives for other large oil refiners, he charged. Finally, the bill repeals the domestic manufacturing tax deduction for US producers but allows all others to continue receiving it, including some foreign companies, he said.
"H.R. 5351 is simply not the answer. It wasn't in any of its three previous incarnations, and it isn't today. This legislation threatens America's investment, threatens Americans' jobs, threatens the American economy and puts the consumer at a disadvantage," English said.
Rep. Sander M. Levin (D-Mich.), another Ways and Means Committee member, said none of English's arguments could bear the weight of observation. "It is absolutely mysterious why, in a time of global warming, what they do on the minority side is come here with a cold shoulder . . . I stand here today wondering where you have been all of these years when you controlled this institution and the White House," he asserted.
'Shooting at Big Oil'
Ways and Means Committee member Kevin Brady (R-Tex.) said many of the bill's supporters were launching unwarranted attacks. "Make no mistake: Politicians are shooting at Big Oil, but they are hitting American energy workers and they are hitting families in the pocketbook. Whenever there is no argument left, you will hear this: Exxon Mobil is making record profits. You will hear it over and over again," he said.
"Well, politicians in Washington ought to hold a mirror up to why there are record profits. We have locked off reserves [in the Gulf of Mexico and Arctic National Wildlife Refuge]. We have locked off oil shale. We are killing coal. We are chasing American energy deeper and deeper into costly offshore areas," Brady declared.
Another Ways and Means Committee Democrat, Jim McDermott of Washington, said, "Big Oil has America over the proverbial barrel. Not only are we paying $100/bbl for oil and over $3.30/gal at the pump, and it will soon be $4. Not only are oil companies piling up record profits at $10 billion a quarter, but the American people are sending truckloads of taxpayer money to fatten Big Oil's wallet every month," he said.
"The legislation before us today will keep America on course to a sustainable renewable energy future. We can dramatically reduce the energy consumption by dramatically increasing energy efficiency. This bill does that, using tax credits and interest-free financing to partner with the American people to enable them to renovate their homes, to reduce consumption and to install efficient appliances," McDermott stated.
The bill's prospects for becoming law are not certain. The US Senate has rejected similar measures previously, and President Bush has said he will veto any bill that raises taxes or singles out an individual industry. But its chances in 2009 could improve significantly if Democrats successfully use votes this year in November elections to help increase their majorities in both the House and Senate.
Contact Nick Snow at [email protected].