Energy Bill Would End Oil Company Tax Breaks

Wrapping up the Democratic leadership's "first 100 hours" agenda of major legislation, the House of Representatives on Thursday will probably pass a bill ending billions of dollars in tax incentives to oil companies, while increasing the royalties those companies pay on Gulf of Mexico oil leases. Under the terms of the bill, the government must use the extra money -- estimated at $13 billion a year -- to expand renewable energy research and production.

The bill (H.R. 6), would mainly impact the oil "giants," including Texaco, Exxon-Mobil and Conoco-Phillips, by eliminating current rules allowing them them to claim accelerated depreciation on production costs. Also cut would be provisions of a 2004 law that allowed oil and natural gas companies to shelter more of their earnings from taxes.

Look for the Senate to modify the House-passed bill, while also considering its own energy bill co-sponsored by Sen. Barack Obama (D-Illionois). Obama's bill would require increasing the nationwide production of ethanol and biodiesel fuel from about 5 billion gallons per year to 30 billion gallons by 2020 and to 60 billion gallons by 2030. The bill would also give the big oil companies 10 years to retrofit one-half of their gas stations to be able to pump 85 percent ethanol gasoline.

While any bill ending tax breaks for oil companies may seem to be just the kind of bill President Bush would be likely to veto, he may not. As reported in Bloomberg, oil executives, in what may be the world's biggest understatement, testified to Congress last year that they really did not need tax breaks to get by. The probably don't considering that Exxon-Mobile alone turned a $36 billion profit in 2005.

Photo courtesy US Department of Energy

Also See:
Exxon Mobil Profits While Consumers Pay (Environment)
Summer Gas Prices 2006: Harder to Believe
House Begins the 'First 100 Hours' of New Congress