Washington (Platts)--27Feb2008

The US House on Wednesday again passed a bill that would extend a series
of tax credits for renewable energy and energy efficiency and pay for them by
eliminating or scaling back oil and natural gas industry tax breaks.

The bill (H.R. 5351), would extend a variety of tax credits beyond 2008
and create new ones, including a credit for cellulosic ethanol production and
an incentive for plug-in hybrid vehicles. The measure passed the chamber by a
vote of 236 to 182.

The bill would pay for its $18.1 billion cost by excluding five large
integrated oil companies from a major manufacturer's tax incentive, and
by capping the incentive at 6% for the rest of the industry. It also would
change foreign tax rules for oil producers.

Democrats pointed to record profits posted by companies like ExxonMobil
in 2007 as support for their argument that producers can afford to lose some
federal tax subsidies. They said greater investment in renewable
energy and energy efficiency could alleviate some of the demand for oil that
has kept crude oil prices at about $100 a barrel this week.

Representative Rahm Emanuel, an Illinois Democrat, said it might have
made good economic sense to give oil companies breaks when prices were low,
but "at $100 [per barrel]...You've got to join the free market at some point
here."

Republicans argued on the floor that the measure would have less impact
on "Big Oil's" profit margins than on consumers' wallets. Republican Whip Roy
Blunt of Missouri said that seeking to cut oil prices by reducing production
"never has worked" in the past.

Blunt added that it's unlikely the bill will become law given that
earlier efforts by the House were turned back in the Senate.
to become law.

"This is a Congress that never gets tired of a forgone conclusion," he
said. Even if Democrats in the Senate get around a Republican filibuster by
inserting extensions and offsets into a budget reconciliation measure, Blunt
said, "that still doesn't mean the bill happens" because the president would
veto it.

--Jean Chemnick, jean_chemnick@platts.com