Most bills that lack bipartisan support in the U.S. Senate die by filibuster, but senators voted overwhelmingly yesterday to move forward with debate on a bill that would end tax breaks for oil companies.  

Last May, Senator Chuck Grassley helped Republicans block consideration of a bill to end tax breaks for the five largest oil companies. However, yesterday Grassley and Iowa Democrat Tom Harkin were part of the 92 to 4 majority supporting the motion to proceed with considering S. 2204, “A bill to eliminate unnecessary tax subsidies and promote renewable energy and energy conservation.”

The White House supports the bill, which strongly resembles last year’s legislation. S. 2204 would extend several renewable energy tax credits set to expire later this year and “repeal $24 billion in tax deductions for the largest oil companies over the next decade.” Most of the renewable energy provisions have substantial bipartisan support, but Republicans claim that ending the oil subsidies would drive up gasoline prices. Ben Geman and Andrew Restuccia reported yesterday for The Hill,

Senate Minority Leader Mitch McConnell (R-Ky.) said on the floor Monday that “common sense and basic economics” show that raising industry taxes will send gasoline prices even higher.

“This is the Democrat response to high gas prices,” he said ahead of the vote.

“And frankly, I can’t think of a better way to illustrate how completely out of touch they are on this issue. And that’s why Republicans plan to support moving forward on a debate over this legislation, because it’s a debate the country deserves,” McConnell said. […]

Opponents of stripping the incentives have highlighted a March 2011 Congressional Research Service report that says a wide-ranging repeal of oil industry tax breaks could raise oil prices “on what would likely be a small scale.”



But a separate May 2011 Congressional Research Service report that analyzed legislation similar to the Menendez bill found that the repeal of five key oil industry tax breaks would have little to no impact on gasoline prices.

That May 2011 report is available here (pdf). Bleeding Heartland posted excerpts here.

According to Josiah Ryan, “the upper chamber is poised to debate [S. 2204] for at least most of Wednesday and possibly through the remainder of the week.” Andrew Restuccia noted, “The legislation is not expected to ultimately pass the Senate and is unlikely to move in the House.” The smart money is on the bill falling short of the 51 votes needed for passage even without a GOP filibuster. There are only 53 senators in the Democratic caucus, and several of them represent oil-rich states. Three Democrats (Mark Begich of Alaska, Mary Landrieu of Louisiana, and Ben Nelson of Nebraska) opposed yesterday’s motion to proceed with debate on the bill.

Nevertheless, the bill could squeak through the Senate if a handful of Republicans go along. Last May, Republicans Olympia Snowe and Susan Collins broke with the rest of their caucus to support proceeding with a similar bill. They or others could posture against oil companies by supporting this bill without fear of it becoming law, since the policies are a non-starter in the U.S. House.

Democratic polling indicates public support for ending these tax breaks.

[T]he Center for American Progress Action Fund commissioned a [nationwide] poll by Hart Research Associates, from March 9-13, 2012. It found that 59 percent of Americans say high gas prices have caused them financial hardship, with large majorities of the public assigning a significant share of the blame to the major oil companies and Wall Street speculators.[…]

Across the political spectrum, voters place the greatest blame for high gas prices on the oil industry. Seventy-three percent of voters are inclined to believe that the major oil companies are manipulating the price and supply of gasoline to increase their profits. This widely held skepticism is confirmed and deepened when presented with key facts laid out in the following message:

“The Big Five oil companies made a record $137 billion in profits in 2011, and every penny more at the pump increases their profits by another $200 million. U.S. gasoline prices are rising quickly now, despite the fact that domestic production of oil is at an eight-year high, and domestic demand for oil and oil products is down significantly from the past. Oil companies are reducing the supplies of gasoline available for U.S. markets by closing refineries in the Northeast and increase the exports of diesel and other refined petroleum products overseas.”

Sixty-five percent of all voters found the above statement very or fairly convincing, including 70 percent of Independent voters. […]

The four policies that voters most believe can help a lot with addressing gas prices are:

* American Oil for American Soil. Require oil companies to use the oil that is produced here in the United States from public lands and offshore to meet energy needs here at home, and stop oil companies from exporting oil from our public lands and waters to overseas markets. (60 percent)

* End Oil Subsidies. Repeal the four billion dollars per year in federal subsidies that currently are given to the oil companies, and use that money instead to fund investments that will make us less dependent on oil. (55 percent)

* Crack Down on Excessive speculation. Tighter oversight and regulation of Wall Street speculators to prevent them from artificially driving up the price of gasoline. (54 percent)

* More Fuel Efficient Cars and Trucks. Increase fuel-efficiency stancards for cars and trucks, so they get more miles per gallon and consumers will save on their gasoline costs (49 percent)

I don’t see any prospect of Grassley voting for final passage of S. 2204. He has generally backed subsidies for corporations in the energy sector. In contrast, Harkin supported last year’s effort to end the oil tax breaks and has voted against other government policies favoring oil company interests.

On a related note, all three Iowa Democrats in the U.S. House support ending tax breaks for oil companies and have criticized speculation that increases gasoline prices. Representative Dave Loebsack (IA-02) took up this call last week. From an e-mail Loebsack’s office sent to constituents on March 21:

Dear Friend,

As gas prices continue to dominate the news and hit your pocketbook, I wanted to take a minute to let you know the results of the survey I conducted on what steps Iowans think should be taken to lower gas prices. I want to thank the over 3,500 Iowans who participated in the survey.

Your voices are important in the ongoing debate over energy issues and deserve to be heard. This is why I shared the survey results with the Speaker of the House, John Boehner (R-OH), and urged him to move forward common-sense policies in the House to address the priorities that you shared with me.

You overwhelming[ly] said the first thing Congress should do to lower gas prices is crack down on manipulative oil price speculation and price gouging. Following that, there was a fairly even split among four other proposals, including increasing investments in U.S. made renewable energy, raising the mile-per-gallon standard for vehicles, opening more U.S. land for oil drilling and expanding the availability and production of hybrid/electric vehicles.

This is why I support an “all of the above” approach to energy policy which includes new areas for exploration with any new revenue, and additional support, dedicated to renewable energy research and development, in addition to consideration of releasing oil from the strategic petroleum reserve. I will also be urging support for the Commodity Futures Trading Commission (CFTC) in the FY 2013 budget so they have the resources needed to combat speculation in the oil market as required through the Wall Street Reform and Consumer Protection Act.

I hope Speaker Boehner heeds my call and the opinion of Iowans and moves forward policies to increase U.S. energy independence. Only if we work together and put politics aside will we be able to move further toward energy independence and an economy that works for all Iowans.

Representative Bruce Braley (IA-01) alluded to speculation as a major cause of gasoline price increases in a February 29 statement calling on President Barack Obama to tap the Strategic Petroleum Reserve (emphasis in original).

Gas prices have increased for 22 consecutive days; some analysts forecast $5 by summer

Washington, DC – Rep. Bruce Braley (IA-01) today called on President Barack Obama to open the Strategic Petroleum Reserve to help reduce spiking gasoline prices.

Gas prices have increased for 22 consecutive days nationally, and according to AAA, the average price for a gallon of gas in Iowa today is $3.53.  The average price has spiked 20 cents in the past two weeks alone.  Some analysts have projected that gas prices could reach $5 per gallon in some parts of the country by summertime.



“Rising gas prices stretch Iowans’ pocketbooks and threaten our fragile economic recovery,” Braley said.  “We should nip this problem in the bud right now.

“Rather than waiting for politicians in Congress to bicker endlessly and take no action, I’m calling on President Obama to take decisive action now and release oil from the Strategic Petroleum Reserve.  Each time it’s been opened in the past, its lowered gas prices – up to 33 percent in some cases.”

Federal Reserve Chairman Ben Bernanke said in testimony before a Congressional panel earlier today that spiking gas prices are a temporary threat to the economic recovery.

Gas prices are increasing because of speculation and Iran saber-rattling, not increased demand.  In fact, gasoline demand is at its lowest level in the US since 1997.

Obama released 30 million barrels of oil from the Strategic Petroleum Reserve last year in response to disruptions in oil supplies caused by conflict in Libya.  

Although Leonard Boswell (IA-03) has advocated more oil drilling, he has also repeatedly bashed current U.S. policy toward oil companies. Boswell commented in a February 15 press release, “I hear from Iowans everyday who are struggling with these high gas prices. They want to end our bondage to OPEC, speculation in the market and the tax breaks we’re giving to oil companies that are making record profits. We’re not doing any of that because of Republican stonewalling […].”

Last year Boswell publicly called for a House Agriculture Committee investigation of Wall Street trading practices in the energy futures market:

Investigate Wall Street’s Role in Skyrocketing Gas Prices

Wednesday, May 11, 2011

As gas prices rise to nearly $4/gallon across our nation, I am leading an effort in Congress and within the House Agriculture Committee to investigate every contributing factor to the skyrocketing price of oil – including the role of Wall Street speculators in driving up the price at the pump.

There is little question that until we reduce our nation’s dependence on foreign oil, we will be subject to price swings caused by instability and political unrest in heavy oil-producing nations. That is one of the many reasons I have advocated for renewable energy sources that can be created right here in Iowa.

However, there is mounting evidence that market speculators and hedge funds are manipulating commodities markets. I have been joined by eight of my colleagues in a letter that calls on the House Agriculture Committee to conduct a hearing and investigation into whether or not Wall Street may be compounding consumer pain at the pump.

In my role as Ranking Member of the Agriculture Subcommittee that oversees the U.S. Commodity Futures Trading Commission (CFTC), I have a responsibility to ensure that Wall Street traders are not exploiting oil supply fears to make big profits. Just like in 2008, evidence is growing that indicates this is exactly what is taking place. Investment bank Goldman Sachs reported in April that the price of oil has been driven up at least $20 higher than regular supply and demand dictates, and admits speculation has been excessive and is harming our nation’s economic recovery.

There are laws on the books that should prevent this from happening. Congress passed the Wall Street Reform and Consumer Protection Act to give the CFTC more power in regulating excessive speculation in the commodity markets and directed them to implement strong position limits on the amount of oil Wall Street speculators could trade in the energy futures market by January 22, 2011. Unfortunately, the CFTC has yet to implement position limits as directed, and House Republicans have done everything in their power to stall and chip away at regulations designed to keep Wall Street under control and prevent another financial collapse.

We know what happens when Wall Street is allowed to go unchecked. The problems are compounded when the cost of so many other commodities are affected by the price of fuel, especially with agricultural products and production. I hope to shine daylight on who is really behind the increasing cost of oil and gas and making a quick buck off the backs of working Americans. I will continue to fight for every Iowa family who does not have room in their budget for $4/gallon gas, for agricultural producers who are seeing their profits eroded with the high cost of inputs, and for industries trying to get their goods to market. We all deserve better.

Any relevant comments are welcome in this thread.