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WASHINGTON -- Big Oil is set to be a top priority for the upcoming Congressional session, according to a Reuters report. Democratic lawmakers taking over the House of Representatives have promised to roll back billions allowed through energy legislation providing tax breaks and incentives to energy corporations last year, Reuters reported.
The energy bill that was passed last year contained $2.8 billion in tax breaks and financial incentives for the oil industry. The legislation allowed the industry to quickly write off exploration and drilling costs, and immediately deduct half the cost of refinery expansions.
The repeal of the breaks would affect domestic companies such as Exxon Mobil Corp., Chevron Corp. and ConocoPhillips, in addition to companies with large investments in the U.S., including BP and Royal Dutch Shell.
Mark Kibbe, a tax policy analyst for the American Petroleum Institute, told Reuters the breaks make it affordable to do business in the U.S., rather than exploring other nation's options. By rolling back the legislation, "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.
In addition, the removal of the government's help could make some energy projects come to a halt, according to Guy Caruso, head of the federal Energy Information Administration. "The more expensive the project, the more affected they will be from a rollback in tax incentives and breaks," he told Reuters. "There are some projects I'm sure would drop off the table."
Democratic Rep. Nancy Pelosi, who is rumored to be the next speaker of the House, believes that oil companies have earned record profits through price gouging consumers at the pumps. She told Reuters that the removal of financial relief given to the industry in the Republican's energy law will be one of the six major projects Democrats will undertake in the first days of the new session in 2007.
Pelosi last week said that Democrats will urge the nation "toward energy independence, by repealing the subsidies to Big Oil and using the money for research into alternative energy resources."
To do this, the congress will target oil companies through tough laws that will stop gas price gouging and, apart from this, increase ethanol use and the number of cars that can use the fuel. Other Democrats want to impose a windfall profit tax on the industry.
"We're going to move on the agenda that we laid out," said Rep. Rahm Emanuel, who heads the House Democrats' campaign committee. "The American people are ready for a real energy policy."
However, legislation that would repeal the tax breaks would have to pass both the House and Senate, as well as obtain a signature from president George W. Bush. Bush could veto any plans, creating the possibility of a deadlock for the next two years.
"You've still got a Republican president so what can you get done?" said Robert Ebel, an energy expert at the Center for Strategic and International Studies. "It's probably going to be two years where nothing is going to happen."