Senate to vote on bill to eliminate oil and gas tax breaks

The Senate is scheduled to vote late this afternoon on legislation that would eliminate what Democratic sponsors say are tax subsidies for the highly profitable oil and gas industry. The proposal is likely to fall short of the 60 votes needed to move the bill forward.

It will, however, give both parties a political issue for the fall elections, with Democrats likely to accuse Republicans of protecting major oil and gas companies while Americans pay very high prices for gasoline. Republicans likely will counter that the Democratic bill would have further increased already high pump prices.

"People I talk to in New Jersey want to know why they're stuck paying close to $4.00 for a gallon of gasoline while these companies rake in billions of dollars in subsidies and record profits," said Sen. Robert Menendez, D-N.J., the bill's lead sponsor. "And they want to know why these oil companies should continue to enjoy billions of dollars in subsidies when we could be using that savings to invest in alternatives to oil and lower the deficit."

Over the last 10 years, the Big 5 oil companies have made $1 trillion in profits, while retaining tens of billions of dollars in taxpayer subsidies, Menendez said. Last year, the five companies -- BP, ExxonMobil, Shell, Chevron and ConocoPhillips -- reported $137 billion in profits.

Menendez said his bill would use the $4 billion in savings to continue subsides for alternative energy sources and to pay down the federal deficit.

In addition to canceling some oil and gas tax breaks, the legislation would make it harder for speculators to drive up the price of oil by limiting how much future trading any investor could do in a single day.

Louisiana two senators, Democrat Mary Landrieu and Republican David Vitter, oppose the bill, as would be expected for a member from an oil producing state.

"The bill from Sen. Menendez is a wrong-headed approach that pits sectors of the energy industry against one another in an effort to assign blame for high gas prices, instead of promoting the all of the above energy strategy our country needs," Landrieu said. "I support alternative renewable energy, but the advance of this sector cannot come at the expense of the oil and gas industry that powers our nation and supports more than 9 million jobs in the United States and more than 375,000 in Louisiana."

Vitter said the Democratic bill would have the "wrong sort of impact.

"It would drive the price even higher than it is now," Vitter said.

The American Petroleum Institute has been running advertisements urging Congress not to increase energy taxes. Says an API radio ad: "It's another bad idea from Washington.

President Barack Obama and Senate sponsors of the legislation to cancel some oil industry tax breaks said that many oil tax breaks were intended to provide incentives for domestic drilling when prices are low. With prices well over $100 a barrel, companies shouldn't need incentives to explore for oil.