Democrats Drill Oil Companies in Their Energy Plan

Posted May 7, 2008 at 3:21pm

After weeks of playing defense on soaring gas prices, Senate Democrats finally released their own plan to combat high fuel costs on Wednesday afternoon.

Democrats had been scrambling to come up with a package that would receive widespread support in their Caucus. Many ideas were floated, but the only thing that received an abundance of support was a pause on filling the Strategic Petroleum Reserve.

Called the Consumer-First Energy Act, the proposal would suspend distributions to the petroleum reserve until the price of oil averaged $75 a barrel for three months. The plan would further revoke $17 billion in tax breaks currently provided to big oil companies.

The Democratic proposal also includes a 25 percent tax on oil companies that don’t invest in alternative energy sources. The windfall tax was initially introduced by Democratic Senatorial Campaign Committee Chairman Charles Schumer (N.Y.) and would funnel the revenue into an account for alternative energy.

One thing the Democratic proposal did not contain: a “gas tax holiday” this summer, a proposal advocated by presumptive GOP presidential nominee Sen. John McCain (Ariz.) and Democratic candidate Sen. Hillary Rodham Clinton (N.Y.), but opposed by her rival, Sen. Barack Obama (Ill.).

However, Republicans have pounded Democrats on what they contend is a losing strategy to tax oil companies with an expectation that they will respond favorably and not raise prices.

“When was the last time, just ask yourselves, that you taxed something and you got more of it? That’s exactly what the Democrats are proposing. They want to tax it more. Is that going to increase supply? The answer is obviously no. So we brought forward a proposal to increase supply,” said National Republican Senatorial Committee Chairman John Ensign (Nev.).

Earlier in the day, Senate Minority Leader Mitch McConnell (R-Ky.) introduced an amendment to the flood insurance measure that would open Alaska’s Arctic National Wildlife Refuge to drilling.

Majority Leader Harry Reid (D-Nev.) said he expected that his Republican counterparts would try to block some or all of the Democratic plan.

“We have been able to go around a lot of the procedural hurdles that they have set up,” Reid said.