- The Washington Times - Tuesday, May 11, 2004


Stung by high gasoline prices, the Senate by a wide margin voted its approval yesterday of a $14 billion package of tax breaks that supporters said were designed to spur U.S. energy production and hold down prices.

Democrats joined Republicans as senators with an 85-13 vote turned back an attempt by Sen. John McCain, Arizona Republican, to strip the energy provision from a corporate-tax bill. Mr. McCain called the energy subsidies a “shameless scam” to benefit the oil and gas industries and other energy interests.

Supporters of the tax provisions argued that with gasoline prices soaring beyond $2 a gallon across much of the country, Congress must take action to stimulate domestic energy production.

Lawmakers have acknowledged, however, that most of the tax incentives are aimed at long-term production and would have little impact on high prices for gasoline, natural gas and crude oil this year.

Nevertheless, actions are needed to persuade industry “to get back into the business of producing,” said Sen. Larry E. Craig, Idaho Republican, as he urged senators to reject Mr. McCain’s amendment, which would have killed the energy package.

The provisions are part of a massive corporate-tax bill that senators approved last night.

The bill includes $9 billion in tax incentives for the oil and gas industry, plus billions more to encourage development of clean coal technology and renewable fuels. It also contains measures aimed at energy conservation and development of renewable energy sources.

The bill would encourage construction of a $20 billion pipeline to carry natural gas from Alaska’s North Slope by guaranteeing a price support if the price of gas falls below a certain level and includes other favorable tax treatment for the proposed project.

Also wrapped in the measure were tax breaks for building more energy efficient homes, buying more energy efficient appliances and a tax credit of up to $2,000 for the purchase of increasingly popular gas-electric hybrid automobiles that have reached showrooms.

Mr. McCain knocked the tax provisions as “a Christmas tree of goodies” to get profitable energy companies to do what they could do on their own, from developing more environmentally friendly use or coal to finding ways to exploit Alaska’s huge reserves of natural gas.

The bill’s tax breaks for developing coal-bed methane — a growing source of natural gas from the Rocky Mountain region — “makes a very profitable industry more profitable,” Mr. McCain complained.

Sen. Pete V. Domenici, New Mexico Republican, strongly endorsed the tax provisions, but he acknowledged they represented only a “half loaf” of an energy policy.

Mr. Domenici offered a broad yet slimmed-down energy bill two weeks ago, but it was rejected. He and other Republicans put the tax package into the corporate-tax legislation hoping that if it passes, there might be increased incentive for lawmakers to pass the broader legislation.

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