Complain about a product or service

House Bill Would Curb Tax Breaks for Oil Companies

By Joseph S. Enoch
ConsumerAffairs.com Congressional Correspondent

January 19, 2007
House Democrats passed a bill Thursday that hopes to curb tax breaks for big oil companies and funnel billions into a fund that will invest in renewable and alternative energy.

The bill, H.R.6, or the Clean Energy Act of 2007, would recoup about $14 billion in tax breaks. The 264-163 vote fell along party lines. Democrats said it would decrease reliance on foreign oil, Republicans said it would give foreign oil a price advantage over that produced by domestic companies.

"Big oil does not need our help!" Rep. John Lewis (D-Ga.) shouted at Republicans during the debate.

The bill aims to close loopholes for oil companies that signed leases to drill domestic oil in 1998 and 1999 when oil was cheap. Most drilling leases include provisions that the company must pay royalties should the price of oil increase tremendously. It has. Yet, for some reason, that clause was not included in those leases signed in 1998 and 1999.

H.R.6 will require the companies to either renegotiate the faulty leases or pay a hefty "conservation fee."

There is evidence and a report that claims the Department of Interior, the agency that oversees energy leasing on federal lands and offshore waters, may have known about the faulty leases for at least a year before Johnnie Burton, the agency's head, announced it last fall.

The report, compiled by Earl Devaney, the Department of Interior's inspector general, also states that officials at the Minerals Management Service, knew of the problem but tried to cover it up.

The faulty leases have initiated an even broader investigation by the Energy and Natural Resources Committee into the potential scandal involved with these leases.

Republicans say the report doesn't tell the whole story and they are defending the oil companies which had a profit of more than $96 billion dollars in 2006, more than doubling their profits of 2005.

Republicans fear that if H.R.6 becomes law, it will raise oil prices in the U.S. and increase the country's reliance on foreign oil. The GOP notes that the first line of H.R.6 says that it is "A bill to reduce our nation's dependency on foreign oil" even though it levies a tax only on domestic oil companies.

But Democrats argue that because the bill will invest billions into developing alternative energies, it will decrease U.S. dependency on foreign oil by decreasing our dependency on oil.

Although it is assumed President Bush will not sign the bill into law, it's difficult to tell from a recent White House press release that says the administration opposes tax breaks for oil companies but then says, "The Administration ... strongly opposes Section 204, which would force certain oil and gas companies to renegotiate Clinton-era 1998/1999 deepwater royalty relief leases or face either a 'conservation fee' or being barred from future oil and gas leasing in the Gulf of Mexico."

"Investigations continue into why the Clinton Administration did not include price thresholds in its 1998 and 1999 leases and therefore did not require the collection of royalties on behalf of American taxpayers," according to the release.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |