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Congress wary of oil-market speculation

After a failed effort to boost taxes on oil companies, lawmakers turn attention to role of speculators in driving up oil prices.

By Staff writer of The Christian Science Monitor / June 13, 2008


As energy prices soar, Congress is under the gun to find a way out for American consumers – or, failing that, someone to blame: Big Oil, speculators, or the other political party.

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Oil companies dodged a bullet in the Senate this week, as Republicans blocked an energy bill that would have imposed a windfall profits tax on them and ended billions in tax breaks. But Democrats, who control both the House and Senate, plan to bring the issue up again, even as bipartisan scrutiny shifts to the role of speculators in contributing to sticker shock at the pump.

The Senate bill, which fell nine votes short on a procedural vote, proposed a 25 percent windfall profits tax for companies that made more than 10 percent above a past average. It also would have created an Energy Independence and Security Trust Fund – and used the $17 billion in discontinued Big Oil tax breaks to fund it.

Senate GOP leaders dubbed the legislation a "no energy" bill because it produced no new domestic sources of energy. The White House threatened a veto on grounds that it would reduce oil supply and increase energy costs. It's "exactly the opposite of what the Congress should be doing at a time when consumers are already burdened with record high energy prices," President Bush said in a statement.

Democrats countered that Republicans had obstructed all measures to ease prices for US consumers. Soaring oil industry profits – and CEO salaries – are sparking so much resentment among voters that Republicans may be forced to change their votes as the issue comes up again closer to the November election, they added.

"This idea that we [Democrats] don't want any production is patently incorrect," said Sen. Charles Schumer (D) of New York, flanked by a poster claiming that Republicans are blocking lower energy prices, in a floor speech on Thursday. "We're willing to increase production, but we do not believe that we can drill our way out of this problem.

"The minority [party] is filibustering themselves right out of their seats when three-quarters of Americans demand dramatic change and the minority says no change. That is not a formula of political success," he added.

On the House side, similar partisan fireworks broke out Wednesday in a hearing on oil supply and demand in the Select Energy Independence and Global Warming Committee. Chairman Edward Markey (D) of Massachusetts blasted the "oil president and the Republican Congress" for the rise in oil prices. Republicans blamed Democrats for blocking exploration in the Arctic National Wildlife Refuge in Alaska and the Outer Continental Shelf.