Senate prepares to debate modified energy bill
US Senate Democrats removed several provisions from the reworked energy bill that the House passed on Dec. 6, with an eye toward debating and passing the measure on Dec. 13.
WASHINGTON, DC, Dec. 13 -- US Senate Democrats removed several provisions from the reworked energy bill that the House passed on Dec. 6, with an eye toward debating and passing the measure on Dec. 13.
The bill's renewable portfolio standard for electric utilities was the biggest casualty. "Republicans oppose a national standard for utilities to supply clean, renewable electricity that would reduce the cost of our natural gas and electricity bills by as much as $18 billion and create many new jobs and create many new jobs. We are reluctantly removing that provision, as well as making several changes to the energy tax provisions, in the genuine pursuit of progress," Majority Leader Harry M. Reid (D-Nev.) said on Dec. 12.
Changes which would directly affect the oil and gas industry include limiting a proposed repeal of the Section 199 tax deduction for domestic producers to "major integrated oil producers, rather than to all domestic oil and gas producers," according to a Finance Committee handout. Also dropped was a provision that would have repealed favorable depreciation for gas utilities' distribution lines, while a refinery expensing provision would be extended by 2 years to Jan. 1, 2013.
But the legislation retained provisions that would move the geological and geophysical amortization period for large integrated oil companies back to 7 years; exclude majors from the Section 199 domestic manufacturing tax deduction except for petrochemicals, medicines, insecticides, and alcohols; and modify the foreign tax credit so that rules that currently apply to extraction income would apply to all foreign oil and gas earnings for US companies. The proposed federal ethanol mandate expansion also apparently survived.
One leading oil and gas industry group was not impressed. "The tweaks the Senate has made to the counterproductive House energy bill will do nothing to produce more, much needed oil and gas supplies for American consumers," the American Petroleum Institute said in a Dec. 12 statement. "The tax provisions target the oil and gas industry to pay for costly and, in some cases, unrealistic alternative energy programs. This will be at the expense of consumers who will still require significant amounts of oil and gas for decades to come," API said.
A prominent Senate Republican also reiterated his opposition to new oil and gas taxes. "As we work to finalize an energy bill, we should also realize that the current proposal on the table could actually make things worse," said Pete V. Domenici (R-NM), the Energy and Natural Resources Committee's ranking minority member, on Dec. 11. "I strongly support the elements of the bill that will lead to less oil consumption…but increasing taxes on domestic oil and gas production is the wrong thing to do right now. History tells us that these efforts lead to higher prices and make it tougher to meet increased demand," he said.
But the committee's chairman, Jeff Bingaman (D-NM), applauded the bill's provisions that aim to reduce US reliance on oil, lower gas prices, protect consumers, address global climate change, and create new jobs in the renewable energy business. "It's my hope that we can get the broad support for this bill that it deserves," he said on Dec. 12.
The Finance Committee's chairman said the new tax package would do its part. "Encouraging the development of renewable fuels, rewarding energy conservation, and requiring responsibility from today's energy producers are the right roles for tax policy to play in this country's energy future," Max Baucus (D-Mont.) maintained.
"This is an opportunity for Republicans to stand with Americans who are paying more than ever at the pump, instead of with the big oil companies who are raking in record profits," Majority Leader Reid said. "I hope that Republicans will recognize the importance of this legislation to their states and the country, and I hope that we reach the 60 votes necessary to send this bill to the House and the president before the end of the year," he said.
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