Oil Cos. Can't Get a Break

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Oil Cos. Can't Get a Break

WASHINGTON -- It seems that oil companies can not get a reprieve from criticism lately, whether its record profits, accusations of environmental ignorance, or with the recent repeal of billions of dollars in oil industry subsidies by the House of Representatives last week.

Supporters regard the decision as a new direction in energy policy toward renewable fuels, while critics said the action would reduce domestic oil production and increase the nation's dependence on foreign oil, BusinessWeek reported.

The legislation, which passed by a 264:163 vote, was the final measure of six high-priority issues that House speaker Nancy Pelosi pledged to push through during the first 100 hours of Democratic control, the report stated.

The bill would impose a "conservative fee" on oil and gas produced from the Gulf of Mexico. In addition, the bill throws out $6 billion worth of oil industry tax breaks that were enacted by Congress in prior years, as well as reimbursement from government royalties lost because of an administrative error by the Interior Department in the late '90s. The bill bars future oil production leases from being signed until oil companies agree to renegotiate the flawed leases signed in 1998 and 1999, the report stated.

The legislation could produce as much as $15 billion in revenue for the promotion of renewable fuels such as wind and solar power and alternative fuels including ethanol and biodeisel, as well as incentives for conservation, according to Democrats.

"The oil industry doesn't need the taxpayers' help. ... There is not an American that goes to a gas pump that doesn't know that," said Democratic majority leader Steny Hoyer of Maryland. He added that the bill will move the nation in a new direction on energy policies.

Opponents stated that the bill was unnecessary. "We do not need a tax on domestic energy production and development," Republican senator Dennis Hastert, former House speaker, told BusinessWeek. "Increasing taxes on our nation's energy industry means one thing -- more reliance on foreign oil and gasoline."

"If you want to do things right, let's tax foreign oil," added Republican representative Don Young, of Alaska.

The bill's future remains in the air, as Democrats in the senate hold a slim majority. Republican senator Charles Grassley, who is also on the Senate Finance Committee, said the bill was "another pig in the poke" that targets necessary incentives for the promotion of domestic drilling.

The White House administration stated that it opposed some of the bill's contents, including the new production fees and future lease bans. The steps may lead to a reduction in domestic production, the administration warned. It also stated that the repeal of the tax break on oil companies as unfair, as it singles out that industry, BusinessWeek reported.