Senate Demos seek to tax oil companies

WASHINGTON — Senate Democrats on Wednesday called for a windfall profits tax on oil companies and a rollback of $17 billion in oil industry tax breaks as part of an energy package.

The proposal also would impose federal penalties on energy price gouging and calls for stopping oil deliveries into the government's emergency reserve.

Senate Republicans strongly oppose any additional oil-industry taxes, which are widely viewed as having little chance of being enacted. Even then, they would almost certainly prompt a veto by President Bush.

The proposed 25 percent profits tax would apply only to windfall oil-company earnings above what would be considered "reasonable" and only if those profits are not reinvested in refinery capacity expansion or renewable energy sources, according to a summary of the proposals.

The Democrats' energy package ignores recent calls by presidential candidate Sen. Hillary Rodham Clinton for a gasoline-tax holiday to ease motorists' fuel costs. A fact sheet released by the Democratic leadership said "that can't be our first answer" and that the aim was to focus on longer-term solutions.

The Democrats called for a halt in deliveries of oil into the government's Strategic Petroleum Reserve until oil prices drop to $75 a barrel.

This is the only section of the Democrats' proposal that seems to have widespread bipartisan support. A GOP energy package, offered last week, also includes halting the roughly 70,000 barrels a day that are diverted into the government reserve.

Bush has opposed stopping the deliveries, saying the amount of diverted oil has little impact on overall supplies and prices.

The Democrats' energy proposals come as lawmakers struggle to respond to soaring gasoline costs and crude oil prices that on Wednesday topped $123 a barrel.

Democrats characterized the proposal as attacking "the root causes of high gas prices," although it wasn't clear how today's high oil costs — set in a global market — or gasoline prices edging toward $4 a gallon would be appreciably affected.

"It will do nothing to lower gas prices," declared Sen. Pete Domenici of New Mexico, the ranking Republican on the Senate Energy and Natural Resources Committee.

The Democrats' proposal prompted a barrage of finger pointing.

Republican leader Mitch McConnell of Kentucky called it "predictable, more taxes, more bureaucracy."