Senate Republicans proposed a $100 rebate check for millions of taxpayers Thursday to counter high gasoline costs, but linked the assistance to drilling in an Alaska wildlife refuge, assuring the measure would face stiff opposition from most Democrats.
Majority Leader Bill Frist of Tennessee called the proposal “a bold package that will give consumers some relief” from gasoline prices that have passed $3 a gallon in many parts of the country.
“We are going to ease the burden,” added Sen. Pete Domenici, R-N.M., at a GOP news conference unveiling the measures. Frist said he hoped for a Senate vote next Tuesday.
But Democrats said the GOP proposal favored big oil companies.
“It’s designed to protect Big Oil while mistakenly believing that drilling in the Arctic National Wildlife Refuge will solve America’s energy problems,” said Jim Manley, a spokesman for Democratic leader Harry Reid of Nevada. A price-gouging measure in the GOP package focuses on “mom and pop” operators and not the major oil companies, said Manley.
The GOP plan also repeals some recently enacted tax breaks for oil companies, eases permitting for refinery expansion, provides tax breaks for development of gas-electric hybrid cars, and gives authority for the Transportation Department to increase auto fuel economy, although it does not require such increases.
Democrats propose tax suspension
Democrats, meanwhile, were assembling their own package of measures, including a proposal offered by Sen. Bob Menendez, D-N.J., for a 60-day suspension of the 18.4 cent federal gasoline tax and the 24-cent a gallon diesel tax. He said it would provide immediate relief of $100 million a day for motorists.
With growing public outrage over high gas prices and another round of huge profit announcements this week by the major oil companies, it seems no one in Congress wants to be without a plan, however symbolic, to respond to people’s election-year concerns.
As evidence of the angst politicians are feeling over $3-a-gallon gasoline, the Senate Judiciary Committee voted unanimously Thursday to allow the Justice Department to prosecute member nations of the Organization of Petroleum Exporting Countries for price-fixing in violation of antitrust laws.
Committee members acknowledged that the action was little more than a gesture.
“We are venting our frustration,” said Sen. Dick Durbin, D-Ill. He said he doubted such a law would act as a deterrent to OPEC. “They are just going to fight us in court forever,” he said.
The Senate Finance Committee also scrambled to respond. In a rare move, the panel requested tax returns from the country’s major oil and gas companies as part of an investigation into industry profits and soaring gasoline costs.
Sen. Charles Grassley, R-Iowa, the committee’s chairman, said senators were concerned about the “record profits and significant executive compensation in the oil and gas industry.”
“I want to make sure the oil companies aren’t taking a speed pass by the tax man,” Grassley said in a statement.
With gasoline prices soaring and oil companies announcing record profits, “it’s relevant to know what the real financial picture is for this industry,” added Montana Sen. Max Baucus, the panel’s ranking Democrat.
Exxon reports profits
Meanwhile, Exxon Mobil Corp., the world’s largest oil company, said Thursday that higher oil prices drove first-quarter profit up 7 percent from the prior year. Net income rose to $8.4 billion, or $1.37 per share, in the January-March period from $7.86 billion, or $1.22 per share, a year ago. Oil prices actually fell Thursday after U.S. government data showed motor fuel demand weakening, apparently in response to higher pump prices.
It’s highly unusual for the Senate committee to seek corporate tax records. The last time it made such a request to the IRS it involved the tax records of the bankrupt Enron Corp.
Both Republicans and Democrats said they planned to support rescinding $2 billion in tax breaks, which included subsidies for exploration in deep waters of the Gulf of Mexico and in geologically or politically difficult regions of the world, as well as royalty relief for certain oil and gas exploration. Executives of the major oil companies said at a recent hearing they do not need those tax breaks.
House and Senate conferees — as part of a broader tax package — were also considering a measure that would change accounting rules involving oil held in inventory, which would force the five biggest oil companies to pay an additional $4.3 million in taxes.
The industry and the White House oppose that measure, viewing it as a form of windfall profit tax that singles out five companies for accounting practices widely used in and out of the oil industry.