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No oil tax to pay for US heating program: Bodman

Posted on: Thursday, 27 October 2005, 13:10 CDT

By Chris Baltimore

WASHINGTON (Reuters) - The Bush administration will not impose a tax or fee on the oil industry to double to $5 billion the funding for a government program that helps poor families pay winter heating bills, Energy Secretary Sam Bodman said on Thursday .

Republicans in Congress have blocked repeated attempts by Democrats to boost funding for the Low Income Home Energy Assistance Program (LIHEAP) to around $5 billion at a time when Congress is trying to cut government spending. Last year, the program spent $2.2 billion to help poor and elderly Americans pay their heating bills.

With energy costs sharply higher than they were last year, Democrats say some poor families will be forced to choose between food or heat this winter unless LIHEAP funding is expanded.

Earlier on Thursday, a Deutsche Bank analyst said in a research note that the Bush administration was preparing a proposal to impose a tax or fee on the oil industry to help fund the $5 billion LIHEAP program. Such a fee would be a relatively small price for the industry to pay amid record profits, the analyst said, and the cost could be passed through to customers.

Bodman told a Senate Energy Committee hearing he opposed such an approach.

"That is not something I would be in favor of. That would be the equivalent of some kind of windfall profits tax," he said. After the hearing, Bodman told reporters that such a proposal is not under consideration by the White House.

However, Bodman said the administration was looking into ways to pay for the LIHEAP program, and would offer a proposal soon. He did not elaborate.

On Thursday, Exxon Mobil reported a record quarterly profit of $9.9 billion. Other oil companies also have reported big jumps in third-quarter earnings.

Several Senate Democrats have endorsed a proposal to create a windfall profits tax on oil companies' earnings.

"I find it outrageous that as the Republicans in Congress vote down the heating assistance that we know low-income families will need this winter, their oil company cronies are sitting on record profits," said Sen. Hillary Clinton of New York.

Clinton introduced a bill earlier this week that would assess oil companies up to $20 billion annually to create a fund to help consumers pay for heating costs and promote new energy technologies.

Natural gas heating costs in the U.S. Midwest this winter are forecast to soar by 61 percent to an average $1,377, according to the Energy Information Administration. Northeastern households, which depend mostly on heating oil, will spend nearly 30 percent more, or an average $1,607, it said.

U.S. crude oil and natural gas prices hit record highs after hurricanes Katrina and Rita swept through the Gulf of Mexico, disrupting offshore production, pipelines and refineries.

In fiscal 2005, which ended last month, LIHEAP distributed $2.2 billion to nearly 5 million poor American households.

Source: REUTERS

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