A vote was expected in the U.S. Senate Tuesday on S.940, the Close Big Oil Tax Loopholes Act. The Obama Administration voiced its strong support for passage of the bill, which would repeal tens of billions of dollars in special tax breaks for oil and gas companies over the next decade. The bill was written by Senator Robert Menendez. D-N.J., and has 28 cosponsors, but a motion to proceed to the consideration of the measure failed on a 52 to 48 vote.
President Obama expressed disappointment in Tuesday's outcome and stated the Administration will continue to pursue this reform. According to the Administration, the nation’s outdated tax laws currently provide the oil and gas industry billions of dollars per year in subsidies even though oil and gas prices are high and the industry is reporting outsized profits. Furthermore, heads of the major oil and gas companies have in the past made it clear that high oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks.
The Administration believes these resources are better used for efforts that will help the American people, such as deficit reduction or investments in clean home-grown sources of energy. The Administration’s plan includes increasing domestic production in the short-term, while investing in domestic alternative fuels and increasing efficiency in the vehicles Americans drive.
But even as Democratic leaders had been strongly pushing the measure, it was expected that the bill would fall short. That’s the case, too, with a separate energy-related measure that will be on the Senate floor Wednesday, a Republican-sponsored bill aimed at increasing domestic energy production. The end result is that the Congressional debate over addressing rising gas prices will have little changed by week's end.
Senate Majority Leader Harry Reid, D-Nev., said Tuesday that the subsidy issue will continue to play a role in the debate over raising the debt ceiling. Asked what he expected to come from the vote on the Democratic measure, Reid told reporters that he expected that a final deal on the debt ceiling would include a repeal of tax subsidies for the top five oil companies.