- The Washington Times - Tuesday, March 3, 2009

The drive to impose a windfall-profits tax on oil companies, once the focus of many Democratic lawmakers, has stalled as gasoline prices have fallen.

Democrats who previously championed the tax now have no plans to reintroduce the measure, which would impose an extra federal levy on oil-and-gas income deemed to be excessive.

And congressional observers doubt that a profits tax will be a major option on Capitol Hill this year, even as lawmakers debate how to ratchet back incentives for Big Oil.

Sen. Bernard Sanders, Vermont independent and a member of the Senate Committee on Environmental and Public Works, and Sen. Byron L. Dorgan, North Dakota Democrat, were vocal proponents of the issue when it was brought before Congress last summer. Now they say the tax is not on their immediate agendas.

Sen. Patrick J. Leahy, Vermont Democrat and co-sponsor of last summer’s bill, also is not pushing the tax again, a spokesman said.

In the House, inaction is the watchword on the profits tax. “Nothing is scheduled at this time,” said Matthew Beck, spokesman for the Ways and Means Committee, the tax-writing panel in the House.

In June, Senate Republicans voted to block the Consumer-First Energy Act, which would have imposed a 25 percent tax on unpredicted high profits for big oil companies. With oil now hovering around $45 a barrel - about $100 below last year’s peak - talk about a similar tax has gone quiet in Congress.

The tax, for instance, was not included in President Obama’s budget plan last week, even though Mr. Obama had proposed it during his campaign for president. Mr. Obama said last year that he would tax oil profits when prices rose above $80 a barrel and use the extra revenue to fund a $1,000 energy rebate for American families.

He dropped the idea as gas prices plummeted.

Other fees were proposed by the White House and are sure to be seriously considered by the Democrat-controlled Congress. The budget calls for new fees and taxes on oil companies that drill on federal lands, and for ending tax credits for which the industry currently qualifies - a step the administration says would raise about $30 billion over a decade.

Beginning in 2011, Mr. Obama also would assess a new excise tax on oil and gas production in the Gulf of Mexico to close what his aides say are loopholes that have given companies “excessive royalty relief.”

In the meantime, several consumer and environmental groups said they are not giving up the fight on the windfall-profits tax.

Steve Kretzmann, executive director of the clean-energy advocacy group Oil Change International, said a windfall-profits tax should be passed now because its revenues could help the government pay for the infrastructure and energy investments proposed by Mr. Obama.

“It makes a lot of sense right now, given the need for more cash to help with the stimulus package,” he said. “We’d love to see a windfall tax as a way to pay for our energy future.”

Tyson Slocum, director of the energy program at the consumer advocacy group Public Citizen, said a tax on oil profits would create incentives for energy companies to invest in alternative fuels.

Following the enactment of the economic-stimulus bill, Mr. Obama called for an energy bill to be taken up by Congress before its spring recess. Mr. Slocum said he is talking to lawmakers and working to make sure a windfall-profits tax is included in that bill.

“Given the dire economic conditions facing Congress, raising money from the oil industry is going to be a very attractive prospect,” he said. “We just want to encourage a policy that returns something to the American people.”

Opponents say a windfall-profits tax only increases the country’s dependence on foreign oil. According to a recent study commissioned by the American Petroleum Institute, a trade organization for the oil and natural gas industries, a windfall-profits tax would reduce domestic oil production by 1 percent and increase imports by 18 percent by 2030.

Nonetheless, Sanders spokesman Michael Briggs said the tax has lost steam because fixing the economy is simply a more pressing issue right now.

“I think the America who has seen prices go to $4 a gallon understands the volatility of oil prices,” Mr. Sanders said. But for now, “We have breathing room.”


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