Iowa’s congressmen split their votes down party lines on a bill that would impose 15 billion dollars worth of new fees, taxes and royalties on oil companies. Democrats who proposed and passed the bill in the U.S. House yesterday say that 15 billion would then be shifted to help develop the renewable fuel industry. Congressman Leonard Boswell, a Democrat from Des Moines, says promoting the ethanol and biodiesel industries will help reduce America’s dependence on foreign oil.
"Farmers across Iowa, across the Midwest, across the country realize that this is an opportunity for us to be more self-sufficient," Boswell says. Iowa’s two other Democratic congressmen, Bruce Braley of Waterloo and Dave Loebsack of Mount Vernon, also voted for the bill. Braley says the oil industry has been the beneficiary of billions of dollars worth of tax breaks and federal incentives."According to the GAO, the United States has spent $130 billion in the past 32 years in government subsidies to the oil industry," Braley says.
According to Braley, Americans believe it’s now time for the federal government to invest in alternative, renewable fuels. "(There’s) a desire to reduce our dependence on foreign oil by shifting our energy emphasis from the Middle East to the Midwest," Braley says. But critics of the bill say hiking taxes on the oil industry will depress domestic oil production and increase dependence on foreign oil — leading to higher gasoline prices.
Congressmen Steve King, a Republican from Kiron, was a "no" vote on the bill. "I, for one, don’t object to profits that go into companies like Exxon, Chevron, Shell — companies that take their profits and reinvest them back into research and development and exploration. That’s why oil went from $75 down to $53 and the trend is on back down, King says. "This bill sends it the other way." King says ethanol plants in Iowa produced just over one-quarter of the ethanol in the U.S. last year, without the kind of federal intervention in the fuel industry that Democrats seek.
"We have over a billion dollars in private capital investment just in my congressional district for the 2006 construction season for renewable energies. That tells me that research and development’s coming in the private sector," King says. "…The government does a poor job of investing those dollars." Iowa’s other Republican congressman, Tom Latham of Alexander, voted "no" as well.
"What this does is (enact) a huge tax increase that is going to be paid for by the American consumers at the gas pump," Latham says. The bill would raise the amount of royalties oil companies must pay the U.S. government for the right to drill for oil in the Gulf of Mexico and Latham calls that unfair.
"It breaks contracts that the federal government has knowingly entered into…which is illegal and like the Washington Post talks about, being something that you would expect in Russia or Bolivia somewhere," Latham says. The bill faces an uncertain future. The Bush Administration has expressed support for some of the bill’s provisions, but raised objections about others.