Squabble Over Oil Taxes

Friday, August 3rd 2007, 7:43 am

By: News On 6

WASHINGTON (AP) _ A rebellion by oil-state Democrats over $16 billion in new taxes on oil companies is threatening to upend House Democratic leaders' plans to swiftly pass energy legislation.

House Speaker Nancy Pelosi remained confident she would have the votes to pass the energy package Friday ahead of Congress' monthlong summer recess, according to her aides. But she needs solid Democratic support to overcome staunch GOP opposition.

``I know they're looking for votes,'' said Rep. Gene Green, D-Texas, one of the Democrats who has balked over the oil industry tax increases.

Green said some of the ``Blue Dog'' Democrats _ moderate to conservatives, including lawmakers from oil producing states _ were threatening to withhold their support.

``I think it's too much to hit one industry with,'' Green said in an interview.

Supporters of the tax provisions said the bill only would remove some tax loopholes the oil companies have been taking advantage of, including a tax break given in 2004 to promote U.S. manufacturing and another involving income from foreign oil production.

There also was intense last-minute lobbying over a proposal to require electric utilities nationwide to produce at least 15 percent of their power from renewable energy sources such as wind turbines or biomass fuels.

The electric utilities, with support from such lobbying powerhouses as the U.S. Chamber of Commerce and National Association of Manufacturers, have argued that the federal mandate would increase electricity costs.

Environmentalists, farmers and the wind energy industry countered that the renewable fuels requirement is the best way to get power companies to use less coal, spur development of renewable energy sources and help combat global warming.

The measure is not part of the bill, but Reps. Tom Udall, D-N.M., and Todd Platts, R-Pa., will offer an amendment to get it in.

Twenty-four states already have some form of renewable fuels mandate. A proposed national requirement has been opposed most vigorously by lawmakers from the Southeast, who argue that utilities in the region would have a difficult time complying because of a lack of wind energy.

Democrats say their bill marks a new direction in U.S. energy policy away from today's heavy reliance on fossil fuels and toward greater emphasis on promoting energy efficiency and renewable energy sources.

But Republicans have denounced the measure, saying it ignores the need for more domestic production of oil and natural gas and expansion of coal use.

On Thursday, Republican leader John Boehner of Ohio and the rest of the House GOP leadership urged President Bush in a letter to veto the legislation should it pass Congress.

Boehner wrote that the bill ``undermines'' the gains made in an energy law passed two years ago to increase domestic energy production.

``This is not an energy bill. It's a fluff bill,'' Rep. Don Young, R-Alaska, declared at a news conference.

Business groups whose members have been reeling from high natural gas prices and the natural gas industry have been especially critical of provisions that they said would make it harder to get permits to develop natural gas on federal land, especially in the Rocky Mountain region.

Environmentalists have argued that actions Congress took in 2005 to streamline the drilling permitting process has prompted a rush of energy development that is jeopardizing environmentally sensitive areas of the West.

Republicans said they planned to offer proposals to expand offshore natural gas development in areas that are off limits and incentives to hasten the development of liquefied coal as a motor fuel. But GOP leaders acknowledged their chances are slim to get either of those measures approved.

Meanwhile, some of the most widely talked about measures to curtail the use of gasoline _ increases in automobile fuel economy and a requirement to produce more ethanol _ have been deferred. Both were viewed as issues that could have driven away enough Democrats to put passage of the bill in jeopardy.

The Senate already includes measures to increase both auto mileage and ethanol use. In all likelihood, these provisions will survive when the House and Senate bills are combined.