Saved by Senate Republicans, big oil companies dodged an attempt on Tuesday to slap them with a windfall profits tax and take away billions of dollars in tax breaks in response to the record gasoline prices that have Americans fuming.
Republican senators shoved aside the Democratic proposal, arguing that punishing Big Oil would do nothing to lower the US$4 a gallon price of gasoline that is sending economic shock waves across the country. High prices at the gas pump are threatening everything from summer vacations to Meals on Wheels deliveries to the elderly.
The Democratic energy package would have imposed a 25 percent tax on any “unreasonable” profits of the five largest US oil companies, which together made US$36 billion during the first three months of the year. It also would have given the government more power to deal with oil market speculation, opened the way for antitrust actions against countries that belong to the OPEC oil cartel and made energy price gouging a federal crime.
“Americans are furious about what’s going on,” Democratic Senator Byron Dorgan said.
He said they wanted Congress to do something about oil company profits and the “orgy of speculation” on oil markets.
Republican leaders countered that the Democrats’ plan would do harm rather than good, and they kept the legislation from being brought up for debate and amendments.
On world markets, oil prices retreated a bit on Tuesday but remained above US$131 a barrel. Gasoline prices edged even higher to a nationwide record average of US$4.04 a gallon.
At the Capitol, Democratic leaders needed 60 votes but got only 51 senators’ support, including seven Republicans who bucked their party leaders. Senator Mary Landrieu of Louisiana, a state tied closely to the oil industry, was the only Democrat opposing the bill. Senate Majority Leader Harry Reid voted in favor of the measure, but for procedural reasons changed his vote to “no” so that he could bring it up again.
“We are hurting as a country. We’re hurting individually as Americans ... and the other side says, ‘Do nothing. Don’t even debate the issue,’” Democratic Senator Charles Schumer said.
“Average citizens are scratching their heads and saying, what’s wrong with Washington,” he said.
Republicans argued that little was to be gained by imposing new taxes on the five US oil giants: Exxon Mobil Corp, Chevron Corp, Shell Oil Co, BP America Inc and ConocoPhillips Co.
While these companies are huge, they do not set world oil prices and raising their taxes would discourage domestic oil production, the Republicans said of the Democrats’ plan.
Republican leader Mitch McConnell called the Democrats’ proposal “a gimmick” that would not lower gasoline prices and only hold back domestic oil production.
“The American people are clamoring for relief at the pump,” Republican Senator Pete Domenici said, but “they will get exactly what they don’t want” under the Democrats’ plan: higher prices and increased oil imports.
The bill’s supporters argued that their proposal was different from the windfall profits taxes of the early 1980s, which thwarted domestic production and led to a rise in imports. The oil companies could avoid the tax by using their “windfall” to push alternative energy programs or refinery expansions, they said.
Shortly after the oil tax vote, Republicans blocked a second proposal that would have extended tax breaks that have either expired or are scheduled to end this year for wind, solar and other alternative energy development and for the promotion of energy efficiency and conservation. Again Democrats could not get the 60 votes to overcome a Republican filibuster, unending debate to prevent a vote.
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