House OKs bill to tax Big Oil, help renewables

WASHINGTON Wed Feb 27, 2008 4:57pm EST

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WASHINGTON (Reuters) - The U.S. House of Representatives on Wednesday voted to repeal $18 billion in tax breaks for big oil companies to help pay for developing renewable energy sources.

The bill, which the White House has threatened to veto on grounds that it unfairly targets the oil industry, would extend tax credits for producing energy from wind, solar, geothermal, cellulosic ethanol, biofuels and other renewable sources.

The measure passed in a 236-to-182 vote.

House Democrats said oil companies that have earned record profits off $100-a-barrel oil did not need the tax breaks, and the money could be better used to promote alternative energy supplies for the future.

"It will spur the production of clean renewable energy sources and provide business with the certainty necessary to make long-term plans to build viable and sustaining markets for these technologies," said House Speaker Nancy Pelosi of California, a state that heavily promotes energy conservation and alternative energies.

"We simply must begin to break our addiction to fossil fuels, particularly our addiction to foreign sources of oil," said Rep. Steny Hoyer of Maryland, the House Democratic majority leader.

House Republicans argued the legislation would discourage domestic production of oil and gas, which they pointed out still provide much of America's energy.

Renewable energy sources now account for "a drop in the bucket" of U.S. energy supplies and will for the foreseeable future, said Rep. Jim McCrery of Louisiana, a major oil and gas producing state.

Republicans also slammed the bill for taxing U.S. oil companies, but not foreign firms that operate in the United States, like Citgo, which is owned by the government of Venezuelan President Hugo Chavez, who has threatened to cut off oil exports to the U.S. market.

The Senate must still vote on the measure, but Republicans in that chamber blocked a similar bill last year. There is talk of adding the House language to spending legislation in the Senate, which would be easier to pass.

Many of the renewable energy tax credits will expire at the end of this year.

Under the bill, energy companies would no longer be able to exclude a certain portion of their oil and gas production income from U.S. taxes and would also have to pay U.S. taxes on some foreign income that also was taxed in the country where it was earned.

The bill also would give consumers $4,000 tax credits for buying plug-in hybrid vehicles, extend tax credits for installing certain energy-efficient appliances and increase tax credits for gas stations that install pumps for dispensing alternative fuels.

(Reporting by Tom Doggett, editing by Matthew Lewis)

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