Big Oil digs in heels as Congress moves on tax breaks - Yahoo! News

WASHINGTON (AFP) - The US oil industry and its allies were digging in for battle after the House of Representatives voted to end big tax breaks for oil and gas companies, and channel the funds into alternative energy.
Industry leaders mobilized to stop the legislative effort in the Democratic-controlled Congress, claiming it would hurt US efforts to become more independent from foreign energy.
The bill passed by the House "would be a step backward for US energy security," said the American Petroleum Institute, which represents major oil and gas firms, in a statement this week.
"Imposing taxes on the US oil and natural gas industry is contrary to the goal of providing stable and cost-effective supplies of energy for American consumers and discourages the tremendous capital investments needed to meet the nation's growing energy needs."
ExxonMobil, the largest US energy firm, said it paid 57 billion dollars in taxes between 2001 and 2005 and that a change in tax policy would be counterproductive.
"Affordable energy requires adequate and reliable supplies, and stable tax policy is vital to that end," the company said in a statement.
"Consumers have been feeling the prices at the pump over the last year, and no change should be made to tax policy that might impact them even further."
By 264 to 163, the House voted Thursday to shift some 14 billion dollars from the fossil fuel industry into a fund for alternative and renewable energies.
The legislation reverses one of the most generous perks doled out to big industry during the dozen years of Republican rule in Congress.
The bill was the sixth and final initiative of the new Democratic leadership's agenda for first 100 hours of the 110th Congress.
"At a time when oil companies are making record profits and American consumers are being tipped upside down at the pump, we should not be giving massive subsidies and tax breaks to Big Oil," said Representative Edward Markey (news, bio, voting record), a top Democrat.
Markey said the legislation, the CLEAN Energy Act of 2007, would repeal "unnecessary and wasteful tax breaks" for big oil and gas companies.
In the Senate, no action has been taken yet. But two senior lawmakers -- Democrat Evan Bayh (news, bio, voting record) and Republican Richard Lugar (news, bio, voting record) -- have introduced bipartisan legislation aimed at breaking America's dependence on foreign oil through increased production of alcohol-based ethanol, tax incentives and other measures.
The US Chamber of Commerce meanwhile cautioned lawmakers about any dramatic change.
"Any effort ... that reduces domestic energy production forces a continued reliance on foreign oil and transfers the nation's wealth to many unstable parts of the world," Bruce Josten, the Chamber executive vice president for government affairs, said.
Oil shares showed little reaction to the news. ExxonMobil rose 1.43 percent to 72.99 and Chevron added 0.62 percent to 71.36 dollars in morning trade Friday.
AG Edwards energy analyst Bill O'Grady said the bill might hurt oil companies' record profits but added: "I don't necessarily anticipate it's going to have a huge amount of influence."