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Taxes on Big Oil Could Cause Headache for Democrats

Senate Democrats unveiled their energy package last week, but provisions to roll back $17 billion in tax breaks on oil companies and slap a windfall tax on their revenues have drawn a prominent foe.

Sen. Jeff Bingaman (D-N.M.), chairman of the Energy and Natural Resources Committee, opposes both provisions, reflecting a possible problem for the package among moderate Senate Democrats.

According to a spokesman for the Energy Committee, Bingaman has been a longtime opponent of the windfall tax and liability provisions. But the aide stressed that the Energy chairman does support the overall Democratic package, which is expected to get a vote before the Memorial Day recess.

“There is no big controversy. It is not breaking news that Bingaman opposes it. It’s a small part of a much larger bill,” the Democratic aide said. “[Minority Leader Mitch] McConnell made a big deal about it on the floor. It was sort of like ‘yawn, whatever.’”

But Bingaman’s opposition to those key provisions may herald the reservations of other moderate Democrats –– such as Sen. Mary Landrieu (D-La.) –– who are hesitant to support tax increases, even on oil companies. The intraparty debate could ultimately change the shape of the energy package eventually brought to the floor.

Bingaman dismissed any notion that Majority Leader Harry Reid (D-Nev.) tried to undercut the Senator’s opinion on energy policy, declaring that Reid crafted a package based on support from within the entire Democratic Caucus.

In hopes of decreasing soaring gas prices, the Democratic plan would roll back $17 billion in tax breaks for big oil companies, as well as cut into their record revenues with a windfall profit tax and a pause in donations to the national oil reserve.

Last week, Reid offered an amendment to the flood insurance bill that would suspend contributions to the Strategic Petroleum Reserve. The amendment has received widespread support among Democrats and Republicans, likely assuring its passage.

The Senate is expected to vote on the Reid amendment Tuesday, along with a Republican energy plan that was introduced by McConnell. McConnell’s amendment would open the Arctic National Wildlife Refuge and other coastal areas for oil drilling.

Nonetheless, Democratic Policy Committee Chairman Byron Dorgan (D-N.D.) maintained that he still plans to attach a strategic petroleum reserve amendment to the war supplemental bill during the Senate Appropriations markup, which is slated for Thursday.

Dorgan said inserting that language into the supplemental limits the roadblocks that it must surmount in order for it to get to the president’s desk.

Reid said he is likely to bring the full energy package to the floor before the Memorial Day recess on May 23.

Republicans are already crowing about the Democratic divisions.

On the Senate floor last week, McConnell quoted a news report where Bingaman called the windfall tax “arbitrary.”

Bingaman’s aide said the Senator does not support the liability provisions because the Energy chairman thinks they are “not enforceable. The aide questioned how the U.S. government could sue or force a foreign country to produce more oil through legal action, saying that such an action may even be “illegal.”

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