Democrats criticize oil industry subsidies

Reuters

Democrats criticize oil industry subsidies

By Julie Vorman

WASHINGTON (Reuters) - House Republicans recently pushed through legislation that would give more federal subsidies to the oil industry instead of trying to help U.S. consumers cope with sharply higher energy prices, the top Democrat on the House Commerce Committee said on Saturday.

Rep. John Dingell of Michigan said Congress should focus on Democratic proposals to punish gasoline profiteering, invest in new energy technology, and encourage more energy efficiency.

"We must respond to the needs of the American consumers who are seeing the prospect of $4 a gallon gas and $1,000 monthly heating bills," he said in the Democrats's weekly radio address.

On October 7, the U.S. House of Representatives narrowly passed a bill that would give federal insurance to oil refiners whose expansion projects are delayed by lawsuits or regulatory snags. It also put the Energy Department in charge of permits for new refinery projects as a way to speed up approvals.

The bill was approved, 212-210, after Republican leaders held a five-minute vote open for more than 40 minutes to persuade some party members to change their votes.

Democrats opposed the bill, saying the industry had plenty of its own money to pay for new refineries and did not deserve a government hand-out.

A similar Senate bill was blocked by Democrats.

"What was the Republican answer to the hurricanes? More subsidies to the oil industry," Dingell said, referring to the bill's sponsors who said the help was needed because of damage to refineries from recent Hurricanes Katrina and Rita.

Democrats are targeting "the immediate problems of gasoline prices and the anticipated increases in natural gas and home heating oil prices," Dingell said.

Long an ally of the energy industry, senior Republican lawmakers reversed direction during the past week and began calling for possible new controls on oil companies.

Their change in views came the same week that Exxon Mobil reported a $9.9 billion quarterly profit and other major oil companies also saw big increases.

The head of the Senate Budget Committee, Republican Judd Gregg said he look at some kind of windfall profit tax on the oil industry.

Senate Majority Leader Bill Frist ordered a November 8 hearing for top executives of major oil companies to explain why prices are so high. Frist also said he might endorse a bill banning oil price profiteering -- an approach favored by Democrats -- if evidence of wrongdoing was found.

U.S. President George W. Bush has said he opposed any new tax on the oil industry. But his energy secretary, Sam Bodman, said the energy industry had a "responsibility" to expand refineries to make more U.S. gasoline and heating oil.

Dingell said Democrats were concerned that high crude oil, natural gas, gasoline, and heating oil prices have a ripple effect throughout the U.S. economy.

"To meet our energy needs, we do not need to weaken protections for clean air and clean water, or spend your tax dollars to help out the oil companies," he said.

"We need to start investing more in energy innovation and stop showering tax cuts upon the wealthy. And we must protect consumers against price gouging ... while fully funding the low-income home energy assistance program," he said.

The U.S. government recently forecast that natural gas heating costs in the U.S. Midwest this winter will soar by 61 percent to an average $1,377. Heating oil bills in the Northeast will rise by nearly 30 percent to an average $1,607.

Less than three months ago, the president signed into law a Republican-written energy bill giving $14.5 billion in tax breaks and incentives to the energy industry.