Voices, Temperatures Rise Over Gas Price Reduction Plans

Published April 27, 2006

| FoxNews.com

Senate Republicans unveiled a 10-point plan Thursday that offers a $100 "gas tax holiday" rebate check to millions of taxpayers. Meanwhile, Democrats are pushing a 60-day gasoline tax holiday.

But neither effort appeared to be going anywhere as long as Democratic Sen. Ron Wyden had control of the Senate floor Thursday.

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Wyden, together with Republican Sen. Jon Kyl of Arizona, wants to suspend temporarily a Clinton-era provision that permitted the waiver of royalties from oil and gas extracted from federal land, a move that was intended to act as an incentive for drilling.

Wyden, who took control of the Senate in a filibuster that began shortly before 11 a.m. EDT and lasted until almost 5 p.m., said oil companies aren't paying for drilling on federal land. He made it clear that he wants a vote on his amendment and threatened to keep control of the floor until then.

The debate ended after Senate Minority Leader Harry Reid told Wyden that Democrats want to get to other amendments in the $106.5 billion emergency supplemental spending bill for Iraq and Hurricane Katrina.

Wyden said removing the royalties waiver will earn the government some $7 billion over five years, an estimate provided by the Government Accountability Office. In one generous estimation, the amendment could save $20 billion over 25 years.

Kyl pointed out on the Senate floor that the Bush administration asked that this practice be suspended when Congress passed its energy bill last year. Congress did not heed this request. Kyl says that's why he voted against the energy bill.

Both Republicans and Democrats have said they planned to support rescinding the $2 billion in tax breaks, which included subsidies for exploration in deep waters of the Gulf of Mexico and in geologically or politically difficult regions of the world, as well as royalty relief for certain oil and gas explorations. Executives of the major oil companies said at a recent hearing they do not need those tax breaks.

Under the proposal by Wyden, oil companies would have to pay royalties when the cost of oil is more than $55 per barrel, provided the nation is not facing an emergency, as determined by the president or secretary of the interior.

Hearing the proposal, Sen. Pete Domenici, the chairman of the Senate Energy and Natural Resources Committee, stormed onto the floor to take on Wyden. Wyden granted him five minutes to respond, having been assured his filibuster would not be broken.

Domenici fired back that Wyden and Kyl, saying the contractual errors were made in the royalties deal in 1998 and 1999, but have since been changed.

"Go read their contracts. They are not obligated to pay any because the U.S. government messed up. We didn't obligate them to pay any," Domenici said. He added that the interior secretary already suspended this program when oil was at $35 per barrel, rendering the amendment useless. Wyden would not yield, maintaining that this practice continues.

"You understand this amendment? It sets a threshold that's higher what's already established by the secretary of the interior," Domenici shouted.

While Wyden and Domenici sparred, down in Biloxi, Miss., President Bush stopped at a convenience store and gas station, where he said several changes can be made to alleviate high gas prices.

Speaking to reporters during a trip to visit the Hurricane Katrina-ravaged Gulf Coast, Bush repeated several of the proposals he made in a speech Tuesday to the Renewable Fuels Association.

Among the changes, Bush said more can be done to make sure no one gets cheated at the pump, refinery capacity should be increased, more cars can be built to run on ethanol and Congress can give him the authority to raise fuel efficiency standards.

Standing next to a man who was filling up his truck at the gas station, Bush said, "Listen, we've got people like this that are working for a living, who are paying higher prices for their gasoline — it's like a tax."

Bush spoke at a station whose gas prices matched the national average — gas was $2.95 per gallon for regular and $2.93 for diesel. Bush then boarded the fuel-inefficient Air Force One for his return trip to Washington, D.C., an irony that is frequently explained by the fact that the president must travel the country to speak to Americans face to face.

What appeared more ironic on Thursday was the decision by several House lawmakers to drive to a photo opportunity on Capitol Hill, a few blocks from Congress, to blast high gas prices.

In separate events, members of both parties arrived at the BP station on Pennsylvania Ave. in shiny fuel efficient hydrogen cars. Speaker Hastert arrived on foot after being dropped off by his big Suburbans, which parked down the street. Under the pressure of publicity, Hastert got into one of the hydrogen cars to drive back to the Capitol, but got out a block down the road to return to the Suburban. His office insisted that the speaker's security detail demanded that he drive in the gas-guzzling SUVs.

Despite the made-for-TV performances, with gas prices nearing $3 a gallon and oil prices closing at just under $71 per barrel, lawmakers are looking for any and every opportunity to reduce gas prices, even if their plans are more symbolic than substantive.

Senate Majority Leader Bill Frist, R-Tenn., introduced a 10-point proposal as an amendment to the Iraq war emergency supplemental spending bill. He said it will get to a vote next Tuesday.

The Gas Price Relief and Rebate Act aims to give millions of taxpayers a $100 rebate check to make up for the high price of gas. It also gives authority to the Federal Trade Commission to prosecute any retailer unlawfully inflating the price of gas; cuts tax incentives for big oil companies; expands tax incentives to promote the use of hybrid vehicles; and allows the secretary of transportation to update rules governing fuel efficiency standards for passenger vehicles.

The bill legislates what President Bush already announced he would do — suspend deposits to the Strategic Petroleum Reserve until the fall to increase the supply of oil available to consumers. The bill also encourages expansion of existing refineries to expand production capabilities, putting more fuel online for consumers.

"These are policies we've been advocating for years, for years and have not been able to get them passed because folks on the other side of aisle have simply said 'no' to more energy independence," said Sen. Rick Santorum, R-Pa., a supporter of the bill.

The fate of the amendment, however, is uncertain because Frist has included in his plan a provision on opening drilling in the Arctic National Wildlife Refuge. Drilling in ANWR has frequently been a poison pill for Democrats.

"Carving out exceptions for oil companies when we don’t even have a clear picture of how energy markets work is not in the best interest of American consumers. We need to figure out what’s behind these prices and work together to put stronger consumer protections on the books if we’re going to break big oil’s stranglehold on our economic future," said Sen. Maria Cantwell, D-Wash., in a written statement.

Several major oil companies have reported considerable first quarter profits this week. On Wednesday, ConocoPhillips said its earnings rose 13 percent to $3.29 billion in the first quarter. On Thursday, ExxonMobil reported a 7 percent increase, or $8.4 billion, in the first quarter. That's down from last quarter and less than what Wall Street had predicted.

Some Democrats say they want to slap big oil companies with a windfall profits tax, and Sen. Charles Schumer, D-N.Y., suggested going a step further.

“I'm proposing an amendment on the floor today or tomorrow, depends on the schedule, that will begin a full-scale investigation as to whether the oil companies should be broken up. When you only have five competitors, you don't get price competition and they're all so happy with their profits, they avoid looking for alternatives to fossil fuels," said Schumer.

The White House opposes a windfall profit tax or any legislation that singles out the five companies for accounting practices widely used in and out of the oil industry. The Tax Foundation said the last time a windfall tax was passed, in 1980, it depressed the domestic oil industry, increased U.S. reliance on foreign oil, failed to raise "even a small fraction of the tax revenue its supporters predicted", reduced domestic oil production and created a surge in foreign oil imports.

Elsewhere, Sen. Bob Menendez, D-N.J., has proposed a 60-day suspension in the federal tax on gasoline and diesel and a repeal of tax breaks to oil companies worth $6 billion. The holiday would cut the cost of gasoline by more than 18 cents a gallon and reduce the price of diesel fuel by more than 24 cents a gallon. He said it would provide immediate relief of $100 million a day for motorists.

“While ExxonMobil executives are popping champagne and celebrating their record profits, American families are popping antacids under the strain of soaring gas prices,” Menendez said. “Prices at the pump continue to jump through the roof, while oil company profits follow suit."

The Senate Finance Committee also voted unanimously Thursday to allow the Justice Department to prosecute member nations of the Organization of Petroleum Exporting Countries for price-fixing in violation of antitrust laws.

"We are venting our frustration," said Sen. Dick Durbin, D-Ill., adding that he doubted the law would act as a deterrent to OPEC. "They are just going to fight us in court forever," he said.

FOX News' Brian Wilson and Trish Turner and The Associated Press contributed to this report.

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