House OKs New Taxes on Oil and Gas Companies

Declaring a new direction in energy policy, the House on Saturday approved $16 billion in taxes on oil companies, while providing billions of dollars in tax breaks and incentives for renewable energy and conservation efforts.

Republican opponents said the legislation ignored the need to produce more domestic oil, natural gas and coal. One GOP lawmaker bemoaned "the pure venom ... against the oil and gas industry."

The House passed the tax provisions by a vote of 221-189. Earlier it had approved, 241-172, a companion energy package aimed at boosting energy efficiency and expanding use of biofuels, wind power and other renewable energy sources.

"We are turning to the future," said House Speaker Nancy Pelosi.

The two bills, passed at an unusual Saturday session as lawmakers prepared to leave town for their monthlong summer recess, will be merged with legislation passed by the Senate in June.

On one of the most contentious and heavily lobbied issues, the House voted to require investor-owned electric utilities nationwide to generate at least 15 percent of their electricity from renewable energy sources such as wind or biofuels.

The utilities and business interests had argued aggressively against the federal renewables mandate, saying it would raise electricity prices in regions of the country that do not have abundant wind energy. But environmentalists said the requirement will spur investments in renewable fuels and help address global warming as utilities use less coal.

"This will save consumers money," said Rep. Tom Udall, D-N.M., the provision's co-sponsor, maintaining utilities will have to use less high-priced natural gas. He noted that nearly half the states already have a renewable energy mandate for utilities, and if utilities can't find enough renewable they can meet part of the requirement through power conservation measures.

The bill also calls for more stringent energy efficiency standards for appliances and lighting and incentives for building more energy-efficient "green" buildings. It would authorize special bonds for cities and counties to reduce energy demand.

Pelosi, D-Calif., said it was essential to commit to renewable energy while reducing reliance on fossil fuels. Doing so, she said, will help address global warming and make the country more energy-independent.

"It's about our children, about our future, the world in which they live," Pelosi said.

Democrats avoided a nasty fight by ignoring -- at least for the time being -- calls for automakers to make vehicles more fuel-efficient. Cars, sport utility vehicles and small trucks use most of the country's oil and produce almost one-third of the carbon dioxide emissions linked to global warming.

That issue, as well as whether to require huge increases in the use of corn-based ethanol as a substitute for gasoline, were left to be thrashed out when the House bill is merged with energy legislation the Senate passed in June.

Majority Leader Steny Hoyer of Maryland said he was confident the final bill that will go to President Bush will contain a significant increase in automobile fuel economy requirements.

"This is a historic turn away from a fossil fuel agenda toward renewable energy. It's been a long time in coming," said Rep. Ed Markey, D-Mass., in an interview. Markey abandoned efforts to get an auto mileage provision into the bill, but also expressed confidence one will be added during negotiations with the Senate. The Senate in passing energy legislation in June called for a 40 percent increase auto mileage to 35 mpg by 2020.

Republicans said the House bill did nothing to increase domestic oil and natural gas production or take further advantage of coal, the country's most abundant domestic energy resource.

"There's a war going on against energy from fossil fuels," said Rep. Ralph Hall, R-Texas. "I can't understand the pure venom felt against the oil and gas industry."

Rep. Joe Barton, R-Texas, said the bill was "a political exercise" to promote "pet projects, ... pet ideas." He predicted it "isn't going anywhere" because President Bush will veto it if it gets to his desk.

The White House indicated President Bush might veto the bill if he gets it saying it makes "no serious attempts to increase our energy security or address high energy costs" and would harm domestic oil and gas production.

The bill would repeal for oil companies a tax breaks given in 2004 to help domestic manufacturers compete against foreign companies, and another tax break pertaining to income from foreign oil production. Critics of the two tax provisions called them loopholes that the industry had taken advantage of.

The House-passed bill also includes an array of loan guarantees, federal grants and tax breaks for alternative energy programs. They include building biomass factories, research into making ethanol from wood chips and prairie grasses and producing better batteries for hybrid gas-electric automobiles.

The legislation would end a tax break for buying large SUVs, known as the "Hummer tax loophole" because it allows people who buy some of the most expensive SUVs to write off much of the cost.