By Daniel Whitten and Tina Seeley
Feb. 26 (Bloomberg) -- President Barack Obama is seeking to raise at least $31.5 billion over 10 years by raising royalty fees and imposing new taxes on oil companies. Exxon Mobil Corp., Chevron Corp., and ConocoPhillips would be among companies subject to new costs under the plan.
Obama’s fiscal 2010 budget proposal, released today, would apply new excise taxes on Gulf of Mexico oil and gas leases, end oil company benefits from a U.S. manufacturing tax credit and repeal credits for older drilling projects.
“The public receives over $12 billion annually from fees, royalties, and other federal payments related to oil, gas, coal, and other mineral development,” according to the Obama budget document. “That return could be improved by closing loopholes, charging appropriate fees, and reforming how royalties are set.”
During his campaign, Obama proposed a windfall-profits tax on oil companies to pay for clean-energy programs. He backed off of that plan as oil plummeted below the $80 per barrel level that would have triggered the tax.
The new taxes “could reduce our nation’s energy security by discouraging new investment in domestic oil and natural gas production and refining capacity and pushing those investments - -and American jobs -- abroad,” said Jack Gerard, president of the Washington-based American Petroleum Institute, the oil and gas industry’s biggest trade group.
Crude oil for April delivery rose $2.50, or 5.7 percent, to $45.07 a barrel at 11:15 a.m. on the New York Mercantile Exchange. Futures touched $45.25, the highest since Jan. 27. Prices are down 69 percent from their record of $147.27 a barrel last July.
Spending More
Without offering details, the budget says there’s a need to spend more on clean and renewable energy and reduce U.S. reliance on foreign oil.
The budget proposal includes a $5.28 billion “excise tax on Gulf of Mexico oil and gas.” The tax, which would begin in 2011, would raise at least $500 million a year through 2019 “to close loopholes that have given oil companies excessive royalty relief,” according to the spending plan.
Congress has tried to close a loophole in leases issued in 1998 and 1999 that had the effect of allowing oil companies to produce oil and gas without paying royalties.
The plan would repeal $13.3 billion over 10 years in benefits for oil companies for a manufacturing tax credit still available to other U.S. industries and an $8.25 billion tax break for production in depleting oil and gas wells.
New Leases
It also would impose a $1.16 billion fee for companies that have “non-producing leases.” Congress failed last year to approve legislation preventing companies from getting new leases to drill for oil and gas until they can certify they are developing on 68 million acres of already-leased areas.
Obama’s budget plan would end payments to coal-producing states that no longer need funds to clean up abandoned coal mines, saving $1.52 billion through 2019.
It proposes charging user fees to oil companies for processing the permits for operations on federal lands, and would increase returns from development of oil and gas by “reforming royalties and adjusting rates.”
Energy, Interior Spending
Overall, the new administration proposes $26.3 billion in spending for the Energy Department, a 5 percent increase from the Bush administration’s request for the 2009 year, which began last October. It calls for a 13 percent increase in spending for the Interior Department, to $12 billion from the $10.6 billion Bush sought.
Funding for the Interior Department includes $100 million for national parks and a $75 million fund to fight wildfires.
The budget also proposes increasing funding for the Commodity Futures Trading Commission more than 44 percent from 2008, when funding was $111 million.
To contact the reporters on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net; Tina Seeley in Washington at tseeley@bloomberg.net.
READ MORE - Exxon, Chevron Would Pay More Under Obama’s Plan
Feb. 26 (Bloomberg) -- President Barack Obama is seeking to raise at least $31.5 billion over 10 years by raising royalty fees and imposing new taxes on oil companies. Exxon Mobil Corp., Chevron Corp., and ConocoPhillips would be among companies subject to new costs under the plan.
Obama’s fiscal 2010 budget proposal, released today, would apply new excise taxes on Gulf of Mexico oil and gas leases, end oil company benefits from a U.S. manufacturing tax credit and repeal credits for older drilling projects.
“The public receives over $12 billion annually from fees, royalties, and other federal payments related to oil, gas, coal, and other mineral development,” according to the Obama budget document. “That return could be improved by closing loopholes, charging appropriate fees, and reforming how royalties are set.”
During his campaign, Obama proposed a windfall-profits tax on oil companies to pay for clean-energy programs. He backed off of that plan as oil plummeted below the $80 per barrel level that would have triggered the tax.
The new taxes “could reduce our nation’s energy security by discouraging new investment in domestic oil and natural gas production and refining capacity and pushing those investments - -and American jobs -- abroad,” said Jack Gerard, president of the Washington-based American Petroleum Institute, the oil and gas industry’s biggest trade group.
Crude oil for April delivery rose $2.50, or 5.7 percent, to $45.07 a barrel at 11:15 a.m. on the New York Mercantile Exchange. Futures touched $45.25, the highest since Jan. 27. Prices are down 69 percent from their record of $147.27 a barrel last July.
Spending More
Without offering details, the budget says there’s a need to spend more on clean and renewable energy and reduce U.S. reliance on foreign oil.
The budget proposal includes a $5.28 billion “excise tax on Gulf of Mexico oil and gas.” The tax, which would begin in 2011, would raise at least $500 million a year through 2019 “to close loopholes that have given oil companies excessive royalty relief,” according to the spending plan.
Congress has tried to close a loophole in leases issued in 1998 and 1999 that had the effect of allowing oil companies to produce oil and gas without paying royalties.
The plan would repeal $13.3 billion over 10 years in benefits for oil companies for a manufacturing tax credit still available to other U.S. industries and an $8.25 billion tax break for production in depleting oil and gas wells.
New Leases
It also would impose a $1.16 billion fee for companies that have “non-producing leases.” Congress failed last year to approve legislation preventing companies from getting new leases to drill for oil and gas until they can certify they are developing on 68 million acres of already-leased areas.
Obama’s budget plan would end payments to coal-producing states that no longer need funds to clean up abandoned coal mines, saving $1.52 billion through 2019.
It proposes charging user fees to oil companies for processing the permits for operations on federal lands, and would increase returns from development of oil and gas by “reforming royalties and adjusting rates.”
Energy, Interior Spending
Overall, the new administration proposes $26.3 billion in spending for the Energy Department, a 5 percent increase from the Bush administration’s request for the 2009 year, which began last October. It calls for a 13 percent increase in spending for the Interior Department, to $12 billion from the $10.6 billion Bush sought.
Funding for the Interior Department includes $100 million for national parks and a $75 million fund to fight wildfires.
The budget also proposes increasing funding for the Commodity Futures Trading Commission more than 44 percent from 2008, when funding was $111 million.
To contact the reporters on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net; Tina Seeley in Washington at tseeley@bloomberg.net.
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