| WASHINGTON, March 4
WASHINGTON, March 4 U.S. oil and natural gas
producing companies should not receive federal subsidies in the
form of tax breaks because their businesses contribute to
global warming, U.S. Treasury Secretary Timothy Geithner told
Congress on Wednesday.
It was one of the sharpest attacks yet on the oil and gas
industry by a top Obama administration official, reinforcing
the White House stance that new U.S. energy policy will focus
on promoting renewable energy sources like wind and solar power
and rely less on traditional fossil fuels like oil as America
tackles climate change.
"We don't believe it makes sense to significantly subsidize
the production and use of sources of energy (like oil and gas)
that are dramatically going to add to our climate change
(problem). We don't think that's good economic policy and we
think changing those incentives is good for the country,"
Geithner told the Senate Finance Committee at a hearing on the
White House's proposed budget for the 2010 spending year.
The Obama administration's budget would levy an excise tax
on oil and natural gas produced in the Gulf of Mexico, raising
$5.3 billion in revenue from 2011 to 2019.
This new 13 percent tax on all oil and gas production in
the Gulf would only affect those companies enjoying a loophole
that allows them to avoid paying royalties on the energy
supplies they drill. Companies already paying royalties would
get a tax credit.
Obama's budget would also place a $4 per acre annual fee on
energy leases in the Gulf that are designated as nonproducing.
The budget proposal projects the fee would generate $1.2
billion from 2010 to 2019.
Senator John Cornyn of Texas criticized the tax increases,
saying they would hurt independent energy companies that
provide a large share of U.S. oil and gas supplies.
"My view is that higher taxes on small and independent
producers here in America will make us more dependent on
imported oil and gas while we transition to cleaner energy
alternatives, a goal we all share," said Cornyn. "And it will
also hurt job retention and job creation in the energy sector,
which provides an awful lot of jobs in this country."
Geithner said the additional taxes "can be absorbed" by the
oil and gas companies, given the billions of dollars they have
earned from high energy prices.
"The impact of these subsidies are very small relative to
revenues produced by U.S. oil and gas producers," he said.
(Reporting by Tom Doggett; editing by Jim Marshall)