Oil industry may face huge tax bill

WASHINGTON — A proposal to hit oil companies with $29 billion in new taxes advanced in the Senate on Tuesday, targeting the money to energy conservation, wind turbines, electric hybrid cars and clean coal technology.

The massive tax package, double what Democrats had discussed as recently as last week, is "designed to promote clean and sustainable energy," said Sen. Max Baucus, D-Mont., chairman of the Finance Committee that approved the measure by a 15-5 vote.

It is expected later this week to be added to energy legislation being considered by the full Senate.

Senators acknowledged that oil companies would howl over the new taxes.

But Sen. Chuck Grassley of Iowa, the Finance Committee's top Republican, said, "We have entered a new era in energy markets (that) requires a dramatic shift away from tax incentives for oil and gas production" and toward support for other energy sources and efficiency.

Senators, meanwhile, considered a string of amendments Tuesday to the broader energy bill as Democratic leaders still hoped to finish the legislation this week. But that remains an uncertain prospect as some Republicans showed signs of balking on the tax package, and a fight over auto fuel economy also was likely.

Senators added to the bill a provision that would give the Justice Department authority to sue OPEC over oil production quotas. Sen. Herb Kohl, D-Wis., author of the amendment, said it would give notice "that we too have recourse" and can respond to price fixing by the OPEC cartel.

Sen. Jeff Bingaman, D-N.M., called it "a feel-good amendment" that would have little purpose. But it passed, 70-23.

The Senate rejected two proposals aimed at accelerating the development of liquefied coal for use as a substitute for diesel and jet fuel. Environmentalists contend liquefied coal produces more than twice the greenhouse gases of conventional diesel.

Supporters argued that coal is America's most abundant energy resource. "It would be downright foolish not to take advantage of this resource," said Senate Minority Leader Mitch McConnell, R-Ky.

A proposal by Sen. Jim Bunning, R-Ky., that would have required the use of 6 billion gallons of liquefied coal a year by 2022 was rejected, 55-39. A second measure that would have authorized $10 billion in federal loans to help build coal liquefaction plants, offered by Sen. Jon Tester, D-Mont., was turned back 61-33.