Senate tax bill would 'seriously harm' competitiveness: O'Reilly

Washington (Platts)--14Mar2006

In the current business environment for petroleum companies, it would be "unwise for Congress to take steps that disadvantage US companies and their ability to compete globally," David O'Reilly, Chevron chairman and CEO, was to testify Tuesday before the Senate Judiciary Committee.

O'Reilly, in prepared remarks, was to cite provisions in the Senate version of the tax reconciliation bill that would limit the ability of some oil companies to use Last In-First Out accounting, and a second provision that would limit the same companies from taking a tax credit for income taxes paid to foreign governments.

"Both of these provisions are, in effect, punitive tax increases that would restrict the capital available to petroleum companies for investing in creating additional energy supplies," O'Reilly said. "This would seriously harm their ability to compete, especially overseas."

He was also to defend oil industry mergers, which he said have made the industry more efficient and allowed the companies to achieve economies of scale "to compete effectively in the global marketplace and manage the complexities and risks that are inherent in the energy industry."

O'Reilly and the heads of other US oil majors were to appear before the committee Tuesday to discuss consolidation in the energy industry and its effect on oil prices. --Gerald Karey, gerry_karey@platts.com

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