House Democrats pass bill withdrawing oil breaks

From the Houston Chronicle:

Most House Republicans, along with four Democrats, including Rep. Nick Lampson of Stafford, voted against today's measure on grounds it would blunt domestic oil exploration and cost industry jobs, while increasing dependence on foreign energy producers.

The bill would wipe out between $5 billion and $6 billion worth of tax incentives set up in recent years by Republican-controlled congresses which supporters had said were necessary to encourage domestic exploration.

The legislation also would bar oil and gas companies from enjoying a tax deduction that would effectively reduce their corporate tax rate from 35 percent to 32 percent by 2009.

The White House opposes that provision, arguing "It is inappropriate to single out this industry from all others for punitive tax treatment."

The bill also takes aim at those oil and gas producers that have refused to renegotiate botched lease agreements signed with the U.S. Minerals Management Service during the Clinton administration in 1998 and 1999.

Those agreements failed to include language that would force producers operating in the deeper waters of the Gulf of Mexico to pay royalties to the federal government when oil and gas prices reached certain levels.

That bureaucratic bungling involving 1,032 leases already has cost American taxpayers more than $1 billion. And the Government Accountability Office has estimated the gaffe could cost more than $10 billion.

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A few observations.

First, The oil industry is currently enjoying record yearly profits counted in the billions. Withdrawing tax breaks doled out during the Bush years will most definitely not "blunt domestic oil exploration" or "cost industry jobs." I feel insulted that I even have to point that out. Further, there is now pretty much no such thing as "foreign" oil or "domestic" oil. These companies are multinational, owing no allegiance to any one nation, and often using their vast economic strength to twist a given nation's policies in a more favorable direction. Worrying about "foreign" competition is stupid from the get-go.

Second, taxes are not "punitive." Taxes are what businesses owe the state for use of the legal and economic circumstances, which it sets up and maintains, that make business possible--citizens also owe taxes for similar reasons, which have more to do with day-to-day existence than with making money. In short, taxes are like a bill for services rendered. To call them punishment is so much bullshit right-wing propaganda.

Third, these royalty, or "lease," agreements, when not "botched," are pretty close to being sweetheart deals, anyway. That is, we're practically giving this oil away in the first place. It's amazing, indeed, that Big Oil would have the balls to whine about renegotiation. I guess those are just the times in which we live.

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