2007: PELOSI’S DREAM, OIL’S NIGHTMARE

Democrats Seek to use Oil Cash for Renewables
December 27, 2006 (AFX News via RIGZONE)
- House Democrats in the first weeks of the new Congress plan to establish a dedicated fund to promote renewable energy and conservation, using money from oil companies. That's only one legislative hit the oil industry is expected to take next year as a Congress run by Democrats is likely to show little sympathy to the cash-rich, high-profile business.

- Whether the issue is rolling tax breaks -- some approved by Congress only 18
months ago -- pushing for more use of ethanol and other biofuels instead of gasoline, or investigations into shortfalls in royalty payments to the government, oil industry lobbyists will spend most of their time playing defense.
- Details of a renewable fuels fund…the initiatives the House will take up during its first 100 hours in session in January…At least some of the money -- revenue gained by rolling back some tax breaks -- will go to a program to support research into making ethanol from sources other than corn…
- The Interior Department has been trying to get more than 50 companies to rework 1998-99 drilling leases that allow the companies to avoid paying billions of dollars in royalties because of a government mistake in writing the leases…Pelosi calls the royalty avoidance from the 1998-99 leases the biggest oil industry subsidy issue she intends to tackle early. Congressional estimates have put the potential royalty loss at as much as $10 billion over the life of the leases…

- House Democrats also are targeting a handful of oil industry tax breaks for repeal. Both Republican and Democratic lawmakers say there is unlikely to be an attempt to push more sweeping measures such a new tax on the oil industry's windfall profits…At the top of the hit list is a tax break that was aimed at promoting U.S. manufacturing but has provided a windfall for the oil industry as well. The provision reduces the corporate tax rate on profits from products made in the United States…Rep. Jim McDermott, D-Wash…estimates that oil companies are saving as much as $700 million in taxes a year because of it.
- Democrats also are targeting other benefits for refinery investments and for expenditures for certain types of oil and gas exploration. Those measures, passed by Congress last year as part of a broad energy bill, are estimated to cost the government about $1.3 billion over 10 years…Executives of the largest oil companies have said they don't need those tax breaks and do not oppose their repeal…Oil lobbyists, however, are preparing to fight another proposal that would raise taxes on their inventories, a change that could cost oil companies billions of dollars…

- The White House is not opposed to rolling back some of the tax breaks that Congress approved last year…But the administration is opposed to tinkering with some of the other tax rollbacks…
- Oil industry lobbyists also expect a Democratic push to further expand production of ethanol as a gasoline additive and don't see that as a threat to their business. A more contentious issue will be attempts to require large oil companies to make available…E-85…