WASHINGTON -- Big oil companies will be a top target of Democratic lawmakers when they officially take over the House of Representatives early next year, said the Associated Press.
Democrats picked up enough seats in Tuesday's election to win majority control of the House and have promised to roll back billions of dollars in tax breaks and other financial incentives extended to the oil industry in energy legislation Congress passed last year.
Representative Nancy Pelosi (D-Calif.), who is poised to be the next Speaker of the House [image-nocss] when the new Congress convenes in January, said oil companies have unfairly earned record profits by gouging consumers at the gasoline pump. She said taking away the financial relief given to Big Oil in last year's Republican-written energy law will be among the six major tasks Democrats plan to tackle in the first 100 hours after she slams the gavel to convene the new House.
She said Democrats will also go after oil companies by enacting tough laws to stop gasoline price gouging, and some Democrats want to impose a windfall profits tax on Big Oil. "We're going to move on the agenda that we laid out," Rep. Rahm Emanuel (D-Ill.), who heads the House Democrats' campaign committee, said on Wednesday. He said Democrats will "redirect" the billions in breaks for oil companies to programs that will move the United States "toward energy independence."
The energy bill had about $2.8 billion in tax breaks and financial incentives for the oil and gas industry. The legislation allowed companies to speed up writing off exploration and drilling expenses, and immediately deduct half the cost of large oil refinery expansions.
Legislation to repeal those tax breaks and other government financial incentives would also have to clear the Senate and then be signed by President George W. Bush. The president could veto any legislation that House Democrats propose, raising the possibility of energy policy deadlock over the next two years.
Repealing the financial relief affects domestic oil giants such as Exxon Mobil Corp., Chevron Corp. and ConocoPhillips, and large U.S. operations of foreign firms such as BP Plc and Royal Dutch Shell.
Mark Kibbe, a tax policy analyst with the American Petroleum Institute (API), said the tax breaks make it more affordable for companies to search for oil and gas in the United States, instead of looking in other countries where production costs are generally much cheaper. "You're increasing the costs of those projects and you're making U.S. companies that much less competitive in the world market," he said.
Guy Caruso, who heads the federal Energy Information Administration (EIA), warned that taking away the government's financial help could kill some energy projects. "The more expensive the project, the more affected they will be from a rollback in tax incentives and breaks," he said.
Costly projects like drilling for crude in the very deep waters in the Gulf of Mexico or developing the thick oil trapped in shale rock in the Rocky Mountain region could be shut down, said Caruso. "There are some projects I'm sure would drop off the table," he added.
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