At this hour, as crude oil futures are trading below $50 per barrel for the first time since May 2005, the U.S. House of Representatives is voting on a controversial bill that targets the oil industry with higher taxes, fees and royalties. The bill is expected to pass the House with ease. “Power Lunch” covered all the bases of the proposed legislation, hosting a debate between Sterling Burnett of the National Center for Policy Analysis and Karen Wayland of the Natural Resources Defense Council.
Before we get into the debate – a few notes on the proposed bill: first: it would effectively prohibit oil companies from receiving an income tax deduction – one that was enacted in 2004 for the domestic manufacturing sector. It also requires Big Oil to renegotiate leases issued in error in 1998 and 1999 for drilling rights in the Gulf of Mexico. If they refuse to renegotiate, they must instead pay a fee. The bill imposes another fee on all non-producing oil and gas leases in the Gulf of Mexico.
Also in the bill is $14-15 billion earmarked for the exploration and development of alternative energy.
Burnett believes we should actually “put the brakes” on alternative energies like ethanol, corn and soy diesel because of the collateral damage it creates for the poor. He points to the doubling of the price of corn in the last year as an example of how this can hurt consumers – especially the lower class.