"President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel," the aide told the newspaper. "They are below that now [image-nocss] and expected to stay below that."
The price of crude has fallen $100 a barrel since its record close of $145.29 on the New York Mercantile Exchange July 3. Obama had long called for using the proceeds from the proposed new tax to give American consumers an "emergency energy rebate" worth up to $500 per individual or $1,000 per married couple.
Asked whether the energy rebate plan had likewise been put on hold, the transition aide said the rebates were included in a middle-class "rescue planVbCrLf Obama released in mid-October. That plan calls for a permanent tax cut of $500 for a worker or $1,000 for a family.
On Tuesday, regular gasoline was selling for an average $1.66 a gallon in Houston, down from a record $3.96 in July, according to the paper, citing AAA's Daily Fuel Gauge Report.
The oil industry has been fighting vigorously to ward off a new windfall profits tax. The American Petroleum Institute (API) argues that a windfall profits tax enacted in 1980 cost the industry $38 billion in revenue and the nation as much as 1.3 billion barrels of domestically produced oil, as industry players moved activity overseas to avoid the tax.
"No president who wants to be successful should start with a policy that history has proved to have failed," Kevin Book, an oil and energy policy analyst with FBR Capital Markets, told the Chronicle." I think this is a positive sign about the administration being a clear-thinking one. They recognized that refining and oil extraction jobs are still U.S. jobs."
Book argues, however, that the oil industry shouldn't become complacent. He calculates various tax proposals likely to come up in the new Congress could cost the industry $28 billion to $35 billion over the next 10 years.
The change in the Obama camp's thinking came to light when officials at the Petaluma, Calif.-based American Small Business League noticed the windfall profits tax language had been removed from the transition team's website, www.change.gov, in what the group called "an unceremonious and abrupt manner."
League President Lloyd Chapman said the Obama camp also has dropped a reference to concern that federal contracts designated for small businesses were being awarded to major corporations instead-a key issue for Chapman's group. League officials question whether the omission of attention to that matter and the disappearance of the windfall tax proposal indicate that the incoming administration is already being unduly influenced by large corporations.
But industry officials hailed the move away from the windfall tax, said the report. "Certainly, the judgment to withdraw the concept of a windfall profits tax is an important recognition that developing America's oil and natural gas would be seriously damaged by such a tax policy," Lee Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA) told the paper.
Thomas Pyle, president of the free-market oriented Institute for Energy Research, said in a prepared statement: "The president-elect's decision to reverse course on imposing this Carter-era burden on those who explore for and produce American energy is a heartening development-both for consumers and an economy struggling to claw its way out of a recession."
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