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The Honolulu Advertiser
Posted on: Wednesday, June 11, 2008

Senate Republicans block 'windfall' taxes on Big Oil

By H. Josef Hebert
Associated Press

Hawaii news photo - The Honolulu Advertiser

Senators fielded reporters' questions after the failed Senate vote on a "windfall" tax for oil companies. From left: Sen. Jeff Bingaman, D-N.M.; Sen. Charles Schumer, D-N.Y.; Senate Finance Committee Chairman Sen. Max Baucus, D-Mont.; Sen. Bernard Sanders, I-Vt.; and Sen. Claire McCaskill, D-Mo.

SUSAN WALSH | Associated Press

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WASHINGTON — The outcome of the vote was hardly a surprise. Democrats knew they probably couldn't overcome a Republican filibuster on a plan to tax billions of dollars in "windfall" profits by the country's biggest oil companies.

Still, plenty of anger was on display. After all, the bill was meant to respond to what has the nation fuming — gasoline costing $4 a gallon and going up.

Republican leaders were refusing to even debate a proposal to address "the biggest problem confronting the American people," said Sen. Claire McCaskill, D-Mo.

"That takes nerve," she said.

Democratic leaders fell nine votes short of the 60 needed to take up the energy package. Its centerpiece was a 25 percent tax on Big Oil's windfall profits and the stripping away of tax breaks the oil companies have enjoyed. The tax could be avoided if the money were put into alternative fuel projects.

"The American people must be wondering what in God's name is going on in their nation's capital," proclaimed Sen. Bernard Sanders, an independent from Vermont. Expensive gasoline is sending economic waves across the country, threatening everything from summer vacations to Meals on Wheels deliveries to the elderly.

The GOP senators argued that punishing big oil companies won't do a thing to lower prices at the pump. They also said it could curtail domestic oil production and maybe even cause prices to go up, not down.

On world markets, oil prices retreated a bit yesterday but remained above $131 a barrel. Gasoline prices edged even higher to a nationwide record average of $4.04 a gallon.

The proposed windfall tax would have been triggered on any "unreasonable" profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year. The bill also would have given the government more power to address oil market speculation, opened the way for antitrust actions against countries belonging to the OPEC oil cartel, and made energy price gouging a federal crime.

Democratic leaders needed 60 votes and they got only 51 senators' support, including seven Republicans who bucked their party leaders. Sen. Mary Landrieu of Louisiana, a state tied closely to the oil industry, was the only Democrat opposing the bill. Senate Majority Leader Harry Reid voted in favor of the measure, but for procedural reasons changed his vote to "no" so that he could bring it up again.

"Americans are furious about what's going on," declared Sen. Byron Dorgan, D-N.D. He said they want Congress to do something about oil company profits and the "orgy of speculation" on oil markets.

But Republican leaders said little was to be gained by imposing new taxes on the five U.S. oil giants: Exxon Mobil Corp., Chevron Corp., Shell Oil Co., BP America Inc. and ConocoPhillips Co.

"In the middle of what some are calling the biggest energy shock in a generation ... they proposed as a solution, of all things, a windfall profits tax," Republican leader Mitch McConnell of Kentucky chided the Democrats. He called their proposal "a gimmick" that would not lower gasoline prices and only hold back domestic oil production.