WASHINGTON, March 21, 2012 -New Senate Democratic legislation repealing tax benefits for the oil and gas industry while extending several renewable energy tax credits is on the Senate calendar with a vow by Senate Majority Leader Harry Reid, D-Nev., to bring it up for a vote before the upper chamber adjourns for its Easter recess at the end of next week.
It’s unlikely the measure will get the 60 votes required by Senate rules for passage. A similar measure fell eight votes short in May, 2011 when a few conservative Democrats joined all but two Senate Republicans in voting against the measure. However, the legislation is seen as a means by which Democrats can characterize Republicans as doing the oil companies’ bidding at a time when gas prices are approaching $4 per gallon.
With its partisan thrust, the latest bill, from Sen. Robert Menendez, D-N.J., is expected to overshadow a measure introduced last week by a bipartisan group of lawmakers, headed by Sen. Chuck Grassley, R-Iowa, that would extend a narrower package of tax benefits for renewable energy technologies.
The Grassley bill would extend through the end of 2014 the wind-energy production tax credit (PTC) set to expire Dec. 31, as well as a PTC for several other technologies set to expire at the end of 2013. The measure would extend a tax deduction of 2.2 cents per kilowatt-hour to developers of wind and closed-loop biomass systems. A 1.1-cent/kWh tax credit would be extended to those developing open-loop biomass, geothermal, landfill gas, municipal solid waste, hydropower and marine and hydrokinetic facilities. The credits would apply to projects coming into service before 2015.
The Menendez bill picks up most of the renewable energy tax credits and programs that were part of an amendment to the surface transportation bill last week from Sen. Debbie Stabenow, D-Mich. Her amendment failed on a 49-49 tie vote, short of the 60 votes needed for passage.
Among the items common to both the Stabenow amendment and, now, the Menendez measure, is an extension of the "Section 1603" Treasury Department Program offering grants in lieu of tax credits to provide solar and biomass developers more liquidity in a tight credit market, while stabilizing investment. The Menendez bill reportedly also includes the $1-per-gallon biodiesel production tax credit that expired last year, a measure not included in the Grassley bill.
The contentious political clamor over energy was underscored today when Democrats blasted the 2013 budget proposal from House Budget Committee Chairman Paul Ryan, R-Wis., claiming that the spending outline, which would make major cuts to federal energy spending and remove bans on coastal drilling, preserved “taxpayer giveaways to oil companies.”
Republicans have been in attack mode against White House support for renewable energy programs that funded projects like Solyndra, citing costs at the expense of focusing on conventional energy sources they say can help reduce gas prices. The GOP has been particularly critical of White House disapproval of plans to run the Keystone XL pipeline that would carry oil from Canadian tar sands oil deposits south to terminals in Texas.
In response, President Obama points to the increase in U.S. oil production over the years since he occupied the White House. He argues that there is no “silver bullet” for remedying the rise in gasoline prices and called for an increased focus on domestically produced renewable energy sources that he says can reduce U.S. dependency on oil and the volatile prices that come with it.
Meanwhile, the American Petroleum Institute (API) launched a new website and advertising campaign that calls for increased domestic fossil-fuel development. The oil industry has long contended that eliminating its tax breaks would raise gas prices even higher. However, a Congressional Research Service report issued last May said the repeal of an even wider range of oil tax credits proposed last year would have a negligible effect on gas prices.
Original story printed in March 21, 2012 Agri-Pulse Newsletter.
For more news visit: www.Agri-Pulse.com