Sunday, May 07, 2006

Democrats push to end tax breaks for oil companies

Democrats push to end tax breaks for oil companies

WASHINGTON (Reuters) - Democrats on Saturday pressed the U.S. Congress to slash tax breaks for profit-flush oil companies amid record high gasoline prices and quickly pass legislation aimed at protecting consumers from price-gouging.

Sen. Maria Cantwell, a Washington Democrat up for reelection this fall, said the tax breaks for oil companies should be changed to offer incentives for vehicles that can run on ethanol and for more energy-efficient goods.

"It's time to end the huge tax breaks for big oil, and replace them with new incentives for lightweight, efficient materials and for cars that can run on either ethanol or gasoline," she said in the Democrats' weekly radio address.

The national retail price for gasoline hit an average of $2.92 a gallon in the last week, up 42 cents a gallon in the last month. Some oil companies have been reporting hefty profits recently.

Democrats, who believe they could wrest majority control of Congress from Republicans in the November election because of soaring gasoline costs, earlier this week offered legislation that they said would slash at least $28 billion in tax breaks and subsidies for oil and natural gas companies.

Republicans have been scrambling for other ideas on how to ease the gas price burden, but an initial idea of handing out $100 checks to U.S. consumers flopped.

President George W. Bush held a brainstorming session with lawmakers this week and proposals ranged from building better battery-powered gas-electric hybrid cars to building new refineries and producing more fuel from sources like corn.

"The president has outlined a plan that will really transform the way we power our cars and trucks and make us less dependent on oil," White House spokesman Scott McClellan said on Friday.

Tucker Bounds, spokesman for the Republican National Committee, criticized Cantwell for not working together with the Republican majority in the House of Representatives.

"Maria Cantwell promotes a number of policies that Republicans are already pursuing, but doesn't mention any real intention to work with the majority of her colleagues to find solutions," he said in a statement.

Cantwell also called for Congress to pass legislation to criminalize price-gouging before the Memorial Day holiday at the end of May, considered the start of Americans' summer vacation period.

The House passed a measure this week to make it a federal crime for companies to profiteer on pricing gasoline, diesel fuel, crude oil, heating oil and biofuel.

"Democrats believe that supply and demand are basic forces that guide our economy," she said. "But even those forces demand real transparency to make sure that markets are functioning the way they're supposed to."

Bush has ordered the Federal Trade Commission further examine whether there has been any price-gouging.

(Additional reporting by Andrea Shalal-Esa)