Senate Republicans on Tuesday blocked a Democratic bill that would have repealed about $2 billion in annual tax breaks for the five biggest oil companies, though Democrats say they’ll push for the measure during negotiations to increase the nation’s debt limit.
Meanwhile, a GOP bill aimed at ramping up offshore oil production is scheduled for a vote Wednesday, though it too is expected to fail.
Democrats say it’s wrong to subsidize big oil companies when they are making record profits while the price of gasoline has skyrocketed.
“They’re doing just fine at almost every level of their business, and we’re giving them a taxpayer subsidy at a time when we have record deficits,” said Sen. Charles E. Schumer, New York Democrat. “Give me a break.”
But Republicans said the bill would unfairly punish oil companies and that it wouldn’t help lower the price of gas at the pump.
Minority leader Sen. Mitch McConnell, Kentucky Republican, said the bill was nothing more than a Democratic smokescreen to disguise their lack of a plan to deal with rising gas prices.
“Blame this crisis on somebody else - and then see if they can’t raise taxes while they’re at it,” Mr. McConnell said. “They’ve been so shameless, in fact, that they haven’t even pretended they’re doing anything to lower gas prices.”
A procedural vote on the bill secured the support of 52 senators while 48 rejected it, falling eight votes shy of the 60 needed for the measure to proceed toward a final vote. Democratic Sens. Mark Begich of Alaska, Mary L. Landrieu of Louisiana and Ben Nelson of Nebraska voted against their party and rejected the bill. Maine’s two moderate GOP senators - Susan M. Collins and Olympia J. Snowe - supported the measure.
Democrats control 53 of the Senate’s 100 seats.
The Close Big Oil Tax Loopholes Act called for the repeal or revision of several tax rules that allow oil companies to deduct a portion of their costs for such endeavors as oil exploration and drilling. The savings would have been used to help reduce the deficit.
The measure also was aimed at closing a tax loophole that lets U.S. oil companies disguise royalty payments to foreign governments as foreign taxes, thus allowing them to lower their tax bills in the United States.
The administration strongly supported the bill, whose main sponsor was Sen. Robert Menendez, New Jersey Democrat.
Officials from the five oil companies - Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp. - defended the tax breaks at a Senate hearing last week, saying they just want the same tax advantages enjoyed by other industries.
The national average for a gallon of gas on Monday was $3.96 - up about $1.10 from the same time last year, according to the U.S. Energy Information Administration. Several parts of the country have reported average gas prices in excess of $4.
Mr. Schumer said he supports including the proposal to end tax breaks for oil companies in ongoing bipartisan negotiations to reduce the deficit and increase the nation’s $14.294 trillion debt ceiling, which the government hit on Monday.
The Senate will turn its attention Wednesday to a scheduled vote on a GOP measure designed to increase oil production. The bill would direct the Interior Department to conduct previously scheduled but stalled offshore lease sales in the western and central Gulf of Mexico, and offshore Virginia and Alaska.
The GOP-controlled House in the past two weeks also passed a pair of bills aimed at ramping up offshore oil production. The Senate is unlikely to pass either of the measures, which the White House also opposes.
President Obama on Saturday announced plans to extend existing drilling leases in the Gulf of Mexico and off Alaska’s coast and hold more frequent lease sales in a federal petroleum reserve in Alaska.
Also Tuesday, Sen. Claire McCaskill, Missouri Democrat, spearheaded a letter from Senate Democrats to the Federal Trade Commission urging an investigation into potential price fixing by the oil companies. The senators complained that the companies have continued to increase the price of gas while decreasing production at oil refineries.