Sen. Domenici attaches energy tax package to bill repealing export tax breaks

By OGJ editors

HOUSTON, Apr. 7 -- Senate Energy & Natural Resources Chairman Pete V. Domenici (R-NM) plans to attach the tax portions of the stalled energy bill to a bill that repeals export tax breaks.

Sen. Majority Leader Frist (R-Tenn.) sponsored the bill to repeal export taxes. The World Trade Organization has called the export tax breaks illegal, and that prompted retaliatory tariffs to make it harder for US companies to sell products abroad.

Domenici described the attachment as his "new strategy for getting the energy bill through the Senate. . . . These provisions are necessary to spur new investment in transmission lines, build the Alaska Natural Gas Pipeline, expand tenfold our production of wind energy and an array of other steps critical to diversifying our energy supply."

He said he does not believe that gasoline or natural gas prices will drop without an energy bill.

"As prices climb and public pressure builds—I will get this done," he said. "Some will ask how we are going to solve our differences with the House. We'll work them out."

The energy tax package includes tax breaks for renewable energy, alternate fuel vehicles, conservation, and clean coal incentives. Its oil and gas provisions include:

-- Incentives for development of the Alaska natural gas pipeline through an enhanced oil recovery credit, accelerated depreciation, and a floor price provision.

-- A new credit for the production of crude oil and natural gas from marginal wells. The credit is not available if the market prices for oil and gas exceed certain levels.

-- Accelerated depreciation for natural gas gathering lines.

-- An allowance for small refiners to claim an immediate deduction for up to 75% of the qualified capital costs to comply with the highway diesel fuel sulfur requirements.

-- A 5¢/gal credit for low sulfur diesel fuel produced by a small business refiner.

-- An increased b/d limit for special tax rules governing independent producers.