Will the House bill repealing Big Oil tax breaks really go through?
Photo:ariwriter, Creative Commons, Flickr
Tax breaks that Big Oil has continued to enjoy throughout the last couple of very profitable years are in danger right now. Big Oil companies like Exxon (XOM), Chevron (CVX) and others are in trouble. Well…sort of. Okay, not really.
The Washington Post reports on those who (predictably) oppose repealing tax cuts for Big Oil:
The Bush administration, Republican lawmakers and big oil companies condemned the bill, which they said would raise fuel prices for consumers, discourage oil and gas exploration in the United States and unfairly discriminate against a single industry while other manufacturers continue to enjoy tax breaks.
As one might guess, this fight is far from over. The Senate doesn't have nearly the margin in favor of Democrats that the House does. And if the Democrats do manage to bring this to the floor and vote and it does pass, a veto is practically assured from President Bush.
The bill takes about $18 billion in Big Oil tax breaks and uses that revenue to create incentives for developing alternative energy. Big Oil companies have been reluctant to invest in other energy sources, mainly because they haven't had to. If by some miracle this does become law, Big Oil might be forced to diversify in a meaningful way in order to maintain tax breaks and to maintain profitability. After all, oil exploration is becoming more expensive and challenging.
In the meantime, oil prices approaching $103 a barrel will cause a little ruckus on the stock market now, but Big Oil usually manages to recover from such things.
Disclosure: I do not own any Big Oil stocks.