WATCHING WASHINGTON DIFFERING VIEWS ON THE BTU TAX

Treasury Sec. Lloyd Bentsen says the Clinton administration plans no further changes in its BTU tax proposal.

Bentsen defended the tax in a "strange bedfellows" type of appearance before the Senate finance committee.

He chaired the panel until a few months ago. And he likely would oppose the BTU tax if he were still a Texas senator.

BENTSEN VS. API

Bentsen went on the attack against the American Petroleum Institute, which is doggedly battling the tax.

He said API is composed of some of the world's largest oil companies, and they have most of their reserves and a good deal of production overseas.

"Their opposition is understandable since our program will reduce oil imports."

Later he said the BTU tax will reduce oil imports 400,000 b/d for API members. "I'm sure this disturbs them."

Bentsen said, "This energy tax is an important part of our overall plan to reduce the deficit, create conditions to restore long term growth to our economy, and create jobs and income growth Americans want.

He said the tax is fair geographically and will increase manufacturing production costs only 0.1%.

"It will be more costly in a few energy intensive industries. But if we had exempted them, it would have required higher taxes on other energy users, and it would have undermined our objectives of increasing energy efficiency and energy security."

Victor Beghini, Marathon Oil Co. president, testified for API. He said the higher tax rate on petroleum products, 2 1/3 times the rate on competing fuels, will hurt refiners.

"Where our products-resid, heavy oil, and petroleum coke-compete directly with natural gas and coal, refiners will either never fully recover the tax or will lose market share to the competing fuels.

"The surtax, in combination with imposition of the tax at the refinery gate, will result in increased gasoline and other light end imports."

Beghini said there would be less market distortion if the tax were imposed at the terminal rack, where the federal gasoline tax is collected.

HELPING THE HOMEFRONT

Eugene Ames, Independent Petroleum Association of America chairman, agreed on the tax collection point. He stressed the BTU tax should not be levied on energy used to produce oil and gas, or thousands of marginal wells will be shut in.

Ames said, "More than 90,000 of Oklahoma's 101,000 operating wells are on artificial lift, and most use electricity for that purpose."

"The president is proposing aid to save Russia's collapsing petroleum industry, and we should do no less for our own collapsing industry."

Several senators complained the BTU tax will hurt oil and gas producers or farmers.

The administration was due to send the final language of its BTU plan to Congress late this week.

Legislators are likely to change the plan even more-probably not to the full liking of the oil industry.

Copyright 1993 Oil & Gas Journal. All Rights Reserved.