Democrats reject US oil subsidies

The new Democrat-controlled US House of Representatives has voted to reverse one of President George Bush's key awards to the oil industry.

The bill would remove billions of dollars in subsidies to US oil firms.

Its supporters praised it as a new direction in energy policy which would benefit the environment.

But opponents claim the measures would harm domestic oil production and increase the nation's dependence on imports from unreliable countries.

The energy legislation would cost big US oil companies like Exxon Mobil and Chevron as much as $14bn (£7bn) over the next 10 years.

It removes tax breaks from the oil industry which the Bush administration granted to all manufacturers.

And it forces companies to pay huge royalties they have avoided through faulty drilling leases.

Bush veto?

The bill's Democratic supporters, who now control Congress, say the oil industry does not need taxpayers' help, and the money should go to promote renewable energy like wind and solar power instead.

But Republican opponents said it would hurt American consumers and lead to greater reliance on imported oil and gas.

The bill has yet to pass the Senate where Democrats have a slim majority, and the president, who opposes the measures, could refuse to sign it into law.

Mr Bush is expected to make his own proposals for a new energy policy in his State of the Union speech next week.