Wednesday, December 12, 2007

Senate Energy Bill Showdown Expected Tomorrow

According to reports, Senate Democrats plan to press ahead this week with an energy bill that maintains a substantial renewable energy tax package. Democratic leaders have dropped plans for a 15% renewable energy portfolio standard, but believe that they can pass a revised version of the bill which still includes portions of the $21 billion renewable energy tax package passed by the House last week.

The original House version of the bill stalled in the Senate on Friday when it failed to gain enough support to survive a Republican filibuster threat. E&E Daily reports (subscription required) that a cloture vote on the revised energy bill is expected tomorrow:
The Senate will vote as soon as tomorrow on a revised energy bill that Democrats have altered to win more support. They have jettisoned a controversial renewable electricity mandate and altered some tax provisions.

But the bill is expected to retain higher oil company taxes to help fund renewable energy incentives. Plans to push ahead with a tax plan -- which increases taxes on oil companies by more than $13 billion -- are prompting conflicting predictions about whether the bill can overcome a GOP-led filibuster. And if it does, a White House veto threat looms.

The central provisions of the energy bill, which enjoy wider support, are increased auto mileage standards, an expanded biofuels mandate, and a host of conservation measures such as phasing out inefficient light bulbs.
Over at Gristmill, Bill Becker, Executive Director of the Presidential Climate Action Project, takes a closer look at the oil & gas industry's arguments against the renewable energy tax package:
One of the potholes the bill has encountered is its $13 billion take-back from Big Oil. The bill proposes to repeal tax breaks given to the industry by the Republican-controlled Congress in 2004-2005 and to close some tax loopholes that allow oil companies to game the system when they report income from foreign oil and gas extraction.

Predictably, the oil industry and the White House complained about a tax increase and warned of higher prices at the pump -- two time-tested themes to trigger knee-jerk opposition from the public.

Let's break it down.

First, rolling back a tax break isn't the same as raising a tax. It's the equivalent of having the oil industry return a gift it doesn't need or deserve, rather than picking its pockets.

Second, while oil companies might use the rollback as an excuse to raise gasoline prices, it wouldn't be the fault of the energy bill. The U.S. Energy Information Administration says that subsidies in this range are "too small to have a significant effect on the overall level of energy prices and consumption in the United States." In other words, subsidies at this scale don't lower energy prices, and their repeal won't raise them.

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