Gannett News Service
WASHINGTON — Pressure is mounting on Congress to help Americans whose pocketbooks are being stretched by higher gas prices while oil companies are reaping record profits.
Consumer groups and Democrats started pushing for a windfall-profits tax after gas topped $3 a gallon in September. But even some Republicans, who traditionally have opposed tax increases, are joining the call for a tax on oil companies’ profits.
Sen. Chuck Grassley, R-Iowa, on Tuesday wrote to oil companies urging them to donate some of their record profits to fund a program that aids low-income families in paying their heating bills this winter. Sen. Judd Gregg, R-N.H., wants to use windfall-profit tax revenues to bolster Low Income Heating Assistance Program.
“Some might call this a novel approach for me,” Gregg said, “but I cannot sit back in good conscience while those in our society struggling to heat their homes are being left in the cold by oil companies.”
While some are calling for a windfall-profits tax, Senate Majority Leader Bill Frist, R-Tenn., has asked for a Senate investigation of whether oil companies have engaged in price gouging.
All of this comes as the nation’s major oil companies announced huge profits for the third quarter of 2005, including Exxon Mobil’s report on Thursday that it had earned $9.9 billion.
But oil company executives defend their profits as necessary, because exploring and developing new sources of energy is hugely expensive.
Red Caveney, president of the American Petroleum Institute, a trade association for oil companies, said his group is trying to quash any return to a windfall-profits tax that the companies paid from 1980-1988.
Caveney said his members worry that several “goofball and non-market” proposals being thrown around in Washington could make the energy situation worse. While hurricanes Katrina and Rita caused gas prices to spike, he said, the situation is returning to normal.
Caveney warned that congressional decisions made during previous energy crises led to further problems down the road. For example, he said, the windfall-profit tax imposed during the 1980s led to more investment overseas by oil companies and increased oil imports.
“The wrong policies in place really caused the problem,” Caveney said.
Although gas prices have dropped almost 50 cents a gallon in the past month, ExxonMobil’s announcement increased the suspicions of price gouging among consumers.
“I don’t think there’s any possible excuse for this,” said Tom Gibson, a retiree from Zanesville, Ohio. “I just think they’re ripping me off and the American consumer.”
Thomas Davis, a retiree from Barre, Vt., said the government should do something to help consumers cope with fluctuating gas prices and expected higher home heating costs this winter, even if it means taxing oil companies’ profits.
“We have a free market, but there should be limits,” he said.
Since 2001, most efforts by the Bush administration and Congress to lower gas prices centered on easing restrictions on energy production and offering tax breaks to help increase supplies of gas, oil and wind power.
Republican leaders support a provision in a pending budget blueprint that would allow drilling for oil in Alaska’s Arctic National Wildlife Refuge and opening up some coastal areas to gas exploration.
Other proposals include a bill by Sen. Byron Dorgan, D-N.D., for a windfall-profits tax on oil companies unless they invest their profits in building more refineries or producing more U.S. energy. Dorgan envisions rebating some of those profits back to consumers.
Consumer groups are convinced that Americans have been victims of profit-mongering by the oil companies.
“The proof of price gouging is in the profit reports,” said Jamie Court, who heads the Foundation for Taxpayer and Consumer Rights. “Exxon knows that by making less gasoline it makes more money. Now Exxon needs to invest that money in making more gasoline.”