Senate Republicans propose rebate checks to ease pain at the gas pump

WASHINGTON (AP) _ Senate Republicans advocate sending $100 rebate checks to millions of taxpayers, and a Democrat is leading the campaign for a 60-day gasoline tax holiday. <br/><br/>Either way, it seems

Thursday, April 27th 2006, 9:56 am

By: News On 6

WASHINGTON (AP) _ Senate Republicans advocate sending $100 rebate checks to millions of taxpayers, and a Democrat is leading the campaign for a 60-day gasoline tax holiday.

Either way, it seems no one in Congress wants to be without a plan, however symbolic, to attack the election-year spike in gasoline prices.

A vote is possible as early as this week on the Senate GOP approach, which calls for $100 rebate checks for taxpayers to cushion the impact of higher gasoline prices. The measure seems unlikely to prevail, at least initially, since it includes a highly controversial proposal to open a portion of Alaska's Arctic National Wildlife Refuge to oil drilling.

Senate Republicans also favor extending a tax break that manufacturers receive for each hybrid vehicle they make, and want President Bush to suspend deliveries to the nation's strategic petroleum reserve for six months.

Democrats seemed caught off guard by the GOP maneuvering, but a spokesman said they would have a plan of their own.

Sen. Bob Menendez, D-N.J., has proposed a 60-day suspension in the federal tax on gasoline and diesel, a holiday that he says would cut the cost of gasoline by more than 18 cents a gallon and reduce the price of diesel fuel by more than 24 cents a gallon.

As evidence of the angst politicians are feeling over $3-a-gallon gasoline, the Senate Judiciary Committee voted unanimously Thursday to allow the Justice Department to prosecute member nations of the Organization of Petroleum Exporting Countries for price-fixing in violation of antitrust laws.

``If companies in the United States were doing what OPEC is doing today, they could be hauled into court,'' said the bill's sponsor, Sen. Mike DeWine, R-Ohio. ``Clearly they're not acting as a government. They're in the business.''

Committee members acknowleged that the action was little more than a gesture.

``We are venting our frustration,'' said Sen. Dick Durbin, D-Ill. He said he doubted such a law would act as a deterrent to OPEC. ``They are just going to fight us in court forever,'' he said.

The Senate Finance Committee provided additional evidence of the lawmakers' scramble to respond. In a rare move, the panel requested tax returns from the country's major oil and gas companies as part of an investigation into industry profits and soaring gasoline costs.

Sen. Charles Grassley, R-Iowa, the committee's chairman, said senators were concerned about the ``record profits and significant executive compensation in the oil and gas industry.''

``I want to make sure the oil companies aren't taking a speed pass by the tax man,'' Grassley said in a statement.

With gasoline prices soaring and oil companies announcing record profits, ``it's relevant to know what the real financial picture is for this industry,'' added Montana Sen. Max Baucus, the panel's ranking Democrat.

Meanwhile, Exxon Mobil Corp., the world's largest oil company, said Thursday that higher oil prices drove first-quarter profit up 7 percent from the prior year. Net income rose to $8.4 billion, or $1.37 per share, in the January-March period from $7.86 billion, or $1.22 per share, a year ago. Oil prices actually fell Thursday after U.S. government data showed motor fuel demand weakening, apparently in response to higher pump prices.

It's highly unusual for the Senate committee to seek corporate tax records. The last time it made such a request to the IRS it involved the tax records of the bankrupt Enron Corp.

The committee announcement came as Washington scrambled to respond to public anger over soaring gasoline prices _ $3 a gallon or more in many parts of the country _ and try to contain the political fallout.

On Tuesday, Bush suspended filling of the nation's emergency oil reserve, urged the waiver of clean air rules to ease local gas shortages and called for the repeal of $2 billion in tax breaks for profit-heavy oil companies. He also urged lawmakers to expand tax breaks for the purchase of fuel-efficient hybrid automobiles.

Both Republicans and Democrats said they planned to support rescinding the $2 billion in tax breaks, which included subsidies for exploration in deep waters of the Gulf of Mexico and in geologically or politically difficult regions of the world, as well as royalty relief for certain oil and gas exploration. Executives of the major oil companies said at a recent hearing they do not need those tax breaks.

House and Senate conferees _ as part of a broader tax package _ were also considering a measure that would change accounting rules involving oil held in inventory, which would force the five biggest oil companies to pay an additional $4.3 million in taxes.

The industry and the White House oppose that measure, viewing it as a form of windfall profit tax that singles out five companies for accounting practices widely used in and out of the oil industry.

Republican leaders and tax writers said they hope to finish work on the broader tax bill this week, but it's not certain the oil inventory tax measure will survive.

Several major oil companies were expected to report sharp increases in their first quarter profits this week. On Wednesday, ConocoPhillips said its earnings rose 13 percent to $3.29 billion in the first quarter.

In a letter to the IRS, Grassley and Baucus said the tax records of the major oil companies are needed to conduct ``a comprehensive review'' of the companies' compliance with tax laws.

The senators noted not only the industry profits, but ``an extremely lucrative retirement plan by one oil and gas industry executive, benefits which may have been subsidized in part by the taxpayers.''

The retirement compensation package given by Exxon Mobil Corp. to outgoing Chairman Lee Raymond is said to total $400 million when all pension payoffs and stock options are included.

Red Cavaney, president of the American Petroleum Institute, the major oil companies Washington-based lobbying group, said Wednesday oil company profits are huge because the industry is huge.

``In the oil and natural gas business size is everything,'' Cavaney said at a news conference. ``It is critical to understand that fact when looking at the operational financial performance of our industry.''