A bill seeking to take billions of dollars of tax breaks away from oil companies cleared a hurdle in the Senate on Monday, as Republicans decided to back a procedural motion and open a full debate on the measure.
Most Republicans and the oil industry bitterly oppose the bill, and it isn’t ultimately expected to pass the Senate. But Senate Republican Leader Mitch McConnell of Kentucky said the country deserves a debate over energy policy.
“We’re going to use this opportunity to explain how out of touch Democrats are on high gas prices, and put a spotlight on the common-sense ideas Republicans have been urging for years,” McConnell said on the Senate floor.
The bill would take away a domestic manufacturing tax deduction and other breaks, and deny the five big oil companies the option of expensing some drilling costs.
The bill required 60 votes to advance, and it garnered 92, with only four senators voting against advancing the bill. Monday’s vote allows for up to 30 hours of debate on the bill.
The Joint Committee on Taxation estimates that taking away the tax breaks would save $24 billion over 10 years. Democrats would apply about half of the savings to expiring credits for alternative energy sources, including biodiesel and wind power. The other half would be used for deficit reduction.
“That money is better spent on keeping our economy going and developing alternatives to oil,” said Sen. Bob Menendez, the New Jersey Democrat who sponsored the bill.
President Barack Obama has urged Congress to repeal the tax provisions, saying oil companies don’t need help.
The oil industry, meanwhile, says that taxing companies won’t result in lower gasoline prices, and that expanded drilling would net the government more revenue than taking away tax breaks would.
Regular gasoline prices averaged just under $3.90 a gallon Monday, up from $3.84 a week ago, and $3.58 one year ago, according to AAA’s Daily Fuel Gauge Report.
Menendez said the bill would apply to five companies: BP PLC, Chevron Corp., ConocoPhillips, Exxon Mobil Corp. and Royal Dutch Shell PLC.
Robert Schroeder is a reporter for MarketWatch in Washington.