US Senate defeats windfall energy tax bill

10 June 2008 19:45  [Source: ICIS news]

WASHINGTON (ICIS news)--The US Senate Republicans on Tuesday blocked a Democrat-sponsored bill that would have imposed a windfall profits tax on domestic oil and gas production and price controls on retail energy sales.

 

In an almost straight party-line tally, the Senate voted 51-43 to end debate on S-3044, titled the Consumer-First Energy Act.  However, 60 votes were needed to invoke cloture - meaning to end debate - so the procedural measure failed by 9 votes.

 

Only one Democrat sided with the 42 Republican senators who opposed the bill, although six Republicans voted with the 45 Democrats who sought to move the bill to a Senate vote.

 

By failing to vote cloture or end debate on the measure, the bill is effectively dead.

 

Among other provisions, S-3044 would have imposed a special 25% windfall profits tax on energy companies producing domestic oil and natural gas.

 

US petrochemical producers are heavily dependent on natgas as a feedstock. 

 

The National Association of Manufacturers (NAM), which includes chemical companies among its 14,000 member firms, had opposed the bill on grounds that the windfall profits tax would simply add to the cost of energy production, discourage domestic exploration and development and make the US even more dependent on foreign-sourced oil.

 

The US Chamber of Commerce also opposed the measure, noting that congressional studies found that the windfall profits tax imposed on domestic US energy producers in 1980-1988 reduced domestic oil production by 8% while oil imports grew 13%.

 

The bill also would have imposed federal measures meant to ensure that retail fuel sellers do not unfairly raise prices to gouge consumers.  NAM warned that this provision would have amounted to federal controls on energy pricing and would have disrupted normal market forces.

 

In addition, the bill would have eliminated sovereign immunity for member nations of the Organization of Petroleum Exporting Countries (OPEC), which would have allowed federal lawsuits against those nations for alleged price fixing.  NAM had warned that this provision would have had no impact on OPEC nations but likely would have led to retaliatory actions against the US government and American companies operating overseas.

 

Senator Kay Bailey Hutchison of Texas, one of the Republicans who opposed the bill, said on the Senate floor that S-3044 was “pure and simple, a pathetic attempt to even call itself an energy plan”.  Hutchison argued that the bill “does not produce one ounce of energy, not one ounce”.

 

Environmental groups charged on Tuesday that the Senate Republicans constitute “a reckless and obstructionist minority” that is “determined to stop progress and protect the interests of Big Oil, Big Coal and other special interests at all costs”.

 

($1 = €.64)

 

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