- The Washington Times - Thursday, February 28, 2008

The House yesterday rolled back nearly $18 billion in oil company tax breaks to pay for renewable energy incentives and energy conservation rewards — a move that Republicans say will lead to higher gas prices.

With oil prices rising to $100 a barrel and gasoline selling for more than $3 a gallon, Democrats say it”s time to spur the development of renewable energy sources such as wind, solar and biofuels and to bolster national security by weaning the country off foreign oil.

The energy tax package “invests in the clean, renewable energy that will put us on a path toward energy security and energy independence in a fiscally responsible way — by repealing subsidies only to big oil companies already making record profits,” said House Speaker Nancy Pelosi, California Democrat.

The measure passed by a vote of 236-182, but shy of the two-thirds majority that would be needed to override a threatened Bush administration veto. Eight Democrats voted against the measure, while 17 Republicans supported it.

Republicans say that penalizing oil companies at a time of record fuel prices will hurt consumers and that the measure does nothing to encourage an increase in oil production.

“Gas prices are already 40 percent higher today than they were when Speaker Pelosi took the gavel, [so] today, House Democrats told the American people that they don”t believe gas prices are high enough,” said House Chief Deputy Minority Whip Eric Cantor, Virginia Republican. “At a time of economic uncertainty, today”s vote by House Democrats only further increases the burden facing middle-class families.”

The $18 billion from the repeal of the tax breaks would be collected over 10 years.

The White House said that the “targeted tax increase would reduce the nation”s energy security rather than improve it” and that “industries should be taxed on a level playing field and that field should be leveled by lowering rates, not by raising them.”

The oil industry called the bill “discriminatory” and would hurt consumers, threaten U.S. jobs and penalize the millions of retirees and workers whose pension funds are invested in oil and natural gas stocks.

“The U.S. oil and natural gas companies pay considerably more in taxes as a percentage of their income than do all U.S. manufacturing companies,” the American Petroleum Institute said.

House Democratic leaders say the tax breaks are unnecessary because the oil industry reported record profits for 2007, including oil giant Exxon Mobil Corp., which earned $40.6 billion.

Democrats added that when the tax breaks were initiated in 2004 and 2005, the oil companies didn”t pass along the savings to consumers.

“Do these companies need and deserve these taxpayer subsidies?” said House Majority Leader Steny H. Hoyer, Maryland Democrat. “The answer, of course, is no.”

Mr. Hoyer added that although the proposals wouldn”t reduce gas prices in the short term, they may lead to lower prices in future years.

The bill would direct more than $8 billion to bolster investment in wind, solar, biomass and geothermal energy development, extending many of the tax credits for these industries that have either recently ended or are scheduled to expire at the end of this year.

It would provide tax breaks for certain energy conservation programs, including a $300 credit for people making their homes more energy efficient, and would provide a $4,000 credit for the purchase of a “plug-in” gas-electric hybrid vehicle.

Almost $2 billion would go toward establishing energy conservation bonds for environmentally beneficial community programs.

A similar measure passed the House last year but was blocked in the Senate by Republicans. Senate Democratic leaders said they are considering advancing the House bill under fast-track procedure related to the budget, a process that would not permit an indefinite Republican stall.

This article is based in part on wire service reports.

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