SPRINGFIELD, Ill. -- As reported last week in CSP Daily News, U.S. Senator Dick Durbin (D-Ill.) recently announced new legislation that he said is intended to help channel record oil company profits back to American families. Durbin has released additional details on the proposal.
Durbin's Windfall Profits Tax bill would impose an excise tax on integrated oil and gas companies equal to 50% of their profits over a baseline price of $40 per barrel of oil. The $40 baseline was established by taking the average price of oil in the year 2004. In 2004, oil [image-nocss] and gas companies were already realizing record profits.
The revenue would be used to fund a consumer rebate, provide additional resources to fully fund the Low Income Home Energy Assistance Program, provide for a manufacturers incentive to improve the fuel efficiency of automobiles and provide additional revenue to the Highway Trust Fund to improve roadways.
The Washington Post recently reported that refineries have recognized a 255% increase in the profits they realize from the sale of one gallon of gasoline, Durbin said. Last year, refiners received 27 cents for every gallon of gasoline purchased by Illinois consumers, but this year, they are profiting nearly one dollar for every gallon, he added.
Oil companies are swimming in windfall profits and American consumers are sinking. My bill takes a portion of the big oil companies' unprecedented profits and returns the revenue to the consumers who have been on the losing end of the recent run-up in gas prices, said Durbin.
Durbin's Windfall Profits Tax bill would distribute revenue as follows:
Consumer rebate. The bill provides for a $150 consumer rebate in the first year. In subsequent years, the amount of the tax rebate would be more or less depending on the price of crude oil, based on 60% of the revenue generated from the Windfall Profits Tax. LIHEAP funding. The bill creates a LIHEAP trust fund to help low-income families pay their heating bills. In the first year, revenue from the Windfall Profits Tax would be transferred into the trust fund equal to $3.1 billion, the emergency amount sought by 50 senators in a recent vote. In subsequent years, the amount of revenue transferred into the trust fund would be 7.5% of the revenue generated. These funds would supplement annual appropriations to LIHEAP by Congress from the general treasury. Fuel efficiency standards. The legislation provides $1 billion annually to fund an auto manufacturing tax incentive for the production of advanced technology vehicles that improve fuel efficiency. Manufacturers could receive up to 50% of their qualified investments made in each taxable year, as long as they keep making fuel efficiency improvements, concluding with a 50% increase in the company's average fuel economy over 10 years. Additionally, vehicle component manufacturers would qualify for a tax incentive if they make approved, higher-efficiency components. Revenue for Highway Trust Fund. The remainder of the revenues available from the Windfall Profits Tax will be transferred into the Highway Trust Fund. This extra money would be made available to states to help fund highway improvements based on the current Highway Trust Fund formula, with 18 percent used for transit programs. States would not be required to use match money they receive from these resources.While I will introduce the Windfall Profits Tax bill to capture some of the enormous profits oil and gas companies are pulling in, in the long term, we need to reduce our dependence on foreign oil. Consumers must demand more and better fuel efficient vehicles. At the same time, I will continue to fight for my CAFE standards legislation that is designed to get us back on track toward a cleaner, more efficient and less oil-dependent energy future, Durbin said.
For the third time in a matter of four years, Durbin has proposed setting what he said is an ambitious and attainable fuel efficiency standard of 40 miles per gallon by 2015 for cars and certain light trucks, including sport utility vehicles (SUVs).
Durbin said that the average fuel economy of our nation's cars and trucks has steadily declined since 1985 when the last fuel efficiency requirements ended. In 1975, when American cars were averaging 14 miles a gallon, Congress passed the Corporate Average Fuel Economy (CAFE) law, which required manufacturers to double the fuel economy of their vehicles to nearly 28 miles a gallon in 10 years.
He noted that many of the same arguments against new fuel efficiency standardsmore expensive cars, impossible technical hurdles, loss of car making jobswere raised back in 1975. I believe the auto industry and its engineers can meet this challenge. We made great strides toward energy efficiency more than 25 years ago when the first fuel efficiency standards became law. Detroit made safer cars with better technology. I believe they can do it again now, said Durbin.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.