The tax increases would reverse incentives passed as recently as three years ago to increase domestic exploration and production of oil and gas. The change reflects a shift from the Republican focus on expanding oil production to the Democratic concern about reducing global warming.
On Tuesday, the Senate Finance Committee will take up a bill that would raise about 14 billion from oil companies over 10 years and would give about the same amount of money on new incentives for solar power, wind power, cellulosic ethanol and numerous other renewable energy sources. The bill is one of the signature issues this year for Democrats, along with immigration and the war in Iraq, and one in which they hope to clearly distinguish themselves from the Republicans.
But Senate Democrats are expected to go beyond the 14 billion in tax changes in the draft bill. Democratic officials said the committee is all but certain to adopt a proposal by Senator Jeff Bingaman of New Mexico that would raise 10 billion from companies that drill for oil and gas in federal waters but do not currently pay royalties to the government.Exxon "et al" hardly need government subsidies to convince them to extract oil and natural gas, which they are already doing, and very profitably, thank you very much. On the other hand, we know we are going to need to develop renewable energy sources to prepare for the day when the world's fossil fuel reserves are depleted.
As for global warming, the solutions are likely to be complex. But the first thing to do is stop spending public resources subsidizing the problem. Whatever else the energy bill accomplishes, this would be a significant step in the right direction.
