WASHINGTON -- Defying a threat of a presidential veto, House Speaker Nancy Pelosi intends to push ahead with a $21 billion tax package, including repeal of tax breaks for major oil companies, as part of an energy bill, aides to the speaker said Tuesday.
Democratic leaders circulated a summary of the legislation that includes the new taxes as well as a requirement for a 40% increase in automobile fuel efficiency, a huge increase in the use of ethanol as a motor fuel and a mandate for utilities to use renewable fuels, said the Associated Press.
Republicans earlier this year blocked Senate attempts to pass new energy taxes, contending they would hinder domestic oil and gas production. Democratic supporters of the taxes said that with oil hovering near $90 a barrel and the industry making large profits, the tax breaks aren't needed.
The White House has said repeatedly that if the energy legislation singles out the oil companies for new taxes, advisers would recommend that President Bush veto the bill.
Energy Secretary Samuel Bodman reiterated the administration's opposition to such taxes in a meeting with reporters Tuesday. "It is wrong to single out an industry, the oil industry or any industry" for new taxes, Bodman said at an energy event sponsored by Platts.
The House draft bill, expected to come up for a vote as early as Thursday, calls for repealing $13.5 billion in tax breaks given to major oil companies in 2004 and 2005 and another $7.5 billion in various non-energy tax increases and adjustment to raise revenue needed for the new energy programs, aides said.
They spoke on condition of anonymity because a final bill was still being crafted. "We are repealing tax breaks for profit-rich oil companies so that we can invest in clean renewable energy" a summary notice to Democratic lawmakers said.
Drew Hammill, a spokesperson for Pelosi, confirmed that the energy package will include the sizable tax provision. "It's in there," he said.
The new tax revenues would be used to spur development of renewable fuels including multiyear extensions of solar and wind energy tax credits; tax credits for conservation an energy efficiency, and to recoup lost gasoline tax revenues because of the increased auto fuel efficiency.
The Congressional Budget Office in November projected the gasoline tax revenue losses from a 40% increase in auto fuel economy at $2.2 billion as motorists bought less fuel, although other estimates had put it as high as $3 billion.
The American Petroleum Institute (API), which represents the major oil companies, said the tax increases, if enacted, will divert funds away from expanding oil and gas production and the ethanol requirements will create "a crazy quilt of boutique biofuels" that will strain the distribution system.
There has been speculation for days that House Democratic leaders would back away from the tax provisions, which have been strongly opposed by many Republicans in both the House and Senate and were the focus of an intense lobbying campaign by the oil companies and other industry groups.
Pelosi has called the legislation, worked out during weeks of discussions between Senate and House Democrats, "a new direction" in U.S. energy policy away from support of fossil fuels, especially oil, and toward spurring production of renewable energy, conservation and efficiency.
Republican leaders have ridiculed the legislation as "a non-energy energy bill" because it doesn't do anything to develop domestic oil or natural gas.
As its centerpiece, the bill would require automakers to increase fuel efficiency for cars, pickup trucks and SUVs to an average of 35 miles per gallon by 2020, the first increase in the federal auto fuel economy standard in 32 years. It also would require a huge rampup in the use of ethanolboth from corn and cellulosic material such as prairie grass and wood chipsover the next 15 years to 36 billion gallons a year by 2022, a sevenfold increase from today.
The Ohio Petroleum Marketers & Convenience Store Association (OPMCA) has issued a Special Alert urging members to call their representatives in Congress and tell them to oppose the legislation.
The group said that the revised H.R. 6 will likely:
"Raise pump prices, not lower them." Impose retail and wholesale price controls on gasoline, diesel and heating oil during emergencies. Authorize state attorney general investigations of retailer pricing during emergencies and subject retailers to costly civil fines. Establish a national biodiesel minimum blending mandate. Require a national heating oil/biodiesel blending mandate. Impose a massive and impractical national ethanol blending mandate.Click here to view the alert.
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