Wyden's Long Talk Fails to Persuade

By Jeff Kosseff and Jim Barnett
The Oregonian

Friday 28 April 2006

The Democrat's filibuster to curb oil industry subsidies angers GOP leaders.

Washington - Oregon Democrat Ron Wyden seized control of the Senate floor for more than four hours Thursday in an attempt to reduce subsidies to oil companies.

Enraging Republican leaders, his filibuster stalled debate on an emergency appropriations bill.

At a time gasoline prices and oil company profits are at record highs, Wyden proposed an amendment that would give the federal government greater authority to collect royalties from oil companies that drill on public property. Republicans would not commit to allowing an up-or-down vote on his amendment.

"I would stay here all night," Wyden said. "I would stay here until they literally had to take me off the floor because I couldn't stay here any longer, to save taxpayers billions and billions of dollars on what amounts to the biggest giveaway - the biggest giveaway - to the oil industry."

The filibuster is a classic privilege, allowing senators to halt proceedings for as long as they'd like. The tactic was immortalized in a 1939 Frank Capra film, "Mr. Smith Goes to Washington."

"It's one of the ultimate powers of a senator to say, 'We're not moving until I'm through saying what I have to say,' " said Richard Baker, the Senate historian.

Baker said there is no technical definition of filibuster, so his office doesn't maintain a count of the times the procedure has been used.

In an interview outside the Senate chamber, Wyden said he did not plan to tie up the Senate for most of the day - and had only a bowl of cereal for breakfast. But he suspected by midmorning that he might be in for a fight.

Wyden filed his amendment Wednesday evening, making it the first order of business Thursday morning. Shortly after he started speaking at 10:51 a.m., it became clear that oil-industry allies planned either to block a vote or to attach a secondary amendment that Wyden would find intolerable.

Wyden held the floor for about four hours, talking about his amendment or yielding to questions from colleagues. Shortly after 3 p.m., one of them lost his cool.

Domenici Challenge

Sen. Pete Domenici, R-NM, challenged Wyden's assertion he could save taxpayers billions of dollars. Citing a Congressional Budget Office report, Domenici said Wyden's offering would have no effect, mocking it as "this great amendment."

"It's going to yield zero because the amendment is meaningless the way it's drawn," Domenici roared, his face reddening and his voice cracking.

Wyden quickly rebutted: "If this is so meaningless, it seems to me we could have disposed of this at 10 o'clock this morning."

With that, Domenici stormed off the floor.

The political theater delighted Rep. Edward Markey, D-Mass., who had offered a similar amendment in the House and sat at the edge of the Senate chamber. Markey could be heard chuckling and then made a cell phone call.

But by then, even Wyden's Democratic leaders had had enough.

About 3:20 p.m., Minority Leader Harry Reid, D-Nev., said he was disappointed that there would not be a vote on "this most-important amendment." However, Reid pointed out that other senators had amendments to offer.

Wyden acknowledged that Republicans would not allow a vote on his amendment and yielded the floor, ending his filibuster.

"It will not be possible to get an up-or-down vote at any point on rolling back this outrageous boondoggle that wastes taxpayer money," he said.

Handshakes Afterward

Wyden yielded the floor at 3:27 p.m. And when the cameras turned away, he was congratulated with handshakes and back pats from several colleagues, including Reid and Sen. Tom Coburn, R-Okla., a renowned maverick.

The brouhaha was over a federal program administered by the Interior Department that reduces the amount the government charges oil companies that drill on public property.

Wyden's amendment would prohibit the government from reducing the payments from oil companies when the average price of crude oil is greater than $55 a barrel. Currently, oil prices are above $70.

Republicans criticized Wyden's plan as unnecessary, pointing out that the Interior Department will not grant royalty relief if oil prices exceed $35.86.

"It sets a threshold that is higher than the existing threshold," said Domenici, chairman of the Senate Energy Committee. "Why should we let you have a vote on that?"

Wyden was attempting to place a $55 cap into law instead of leaving it to the discretion of the Interior Department. Also, his amendment has an exemption if the oil supply is disrupted because of a natural disaster.

In an interview after the filibuster, Wyden said he made people more aware of the issue.

"You get up every morning; you fight as hard as you possibly can for the people from Oregon," Wyden said. "You fight for what they care about.

"Oregonians work really hard for their money. And all the middle-class folks I'm seeing at home are seeing billions of dollars squandered away on this pork-barrel rip-off."



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Tax the Windfall
By Michael Kinsley
The Washington Post

Friday 28 April 2006

In, I guess, the early 1990s, when I worked for CNN, I found myself one evening at a Washington reception, chatting with an oil company executive and one from a defense contractor. The oilman said, "How's business?" How's business! Delighted and emboldened by the discovery that businessmen actually say this to one another, I arched a conspiratorial eyebrow and said, "Well, we could use another war."

The defense contractor said, "So could we."

The oilman said, "So could we - as long as it's in the Middle East."

I was joking, and I'm pretty sure the other two were as well. Corporate executives are human beings (except for Ken Lay). They profit from war, but that doesn't mean they want it. Well, maybe a few of them have mixed feelings about that. But until I see hard evidence, I am not going to believe that American business executives would induce the government to start a war, even if they had the power to do so.

These days even President Bush is dissing the oil companies. He doesn't accuse them of starting the Iraq war, of course, but he does now favor looking into other possible misdeeds, such as antitrust violations. For Republican Sen. Arlen Specter and a chorus of Democrats, oil company misdeeds are enough to justify a tax on their "excess profits."

This hunt for a smoking gun misses the point. Taxes are not a form of punishment. And you don't need to find wrongdoing to justify a special tax on their profits. You only need a pocket calculator - to figure out how much they owe.

The math is rough, but it's not complicated. About a third of the oil consumed in the United States comes from wells in the United States. That's about 150 million barrels a month. The oil industry refers to this as "production," but a more accurate term would be "extraction." Nature produced the oil and charges nothing for it.

Oil is oil, no matter where it comes from, so the price of those 150 million barrels will go up and down with the price of the 300 million or so barrels we import every month. A year ago, that price was about $46 a barrel. Now it's over $70 a barrel. The cost of extracting those 150 million American barrels depends a lot on how you figure and varies well by well. But we can make a few reasonable simplifying assumptions. First, no one was forced to pump oil at gunpoint a year ago. So, however you figure, in April 2005 it must have been possible to extract 150 million barrels of oil from American ground for less than $46 a barrel, including a reasonable profit.

Costs change: Wells have to be pumped harder, or they run dry. Gradually, we are running out of oil and need to import more and more. But these changes are nothing like the fluctuations in the price that oil can be sold for. If 150 million barrels could be extracted a year ago for $46 a barrel, it shouldn't cost much more than that to extract another 150 million barrels in 2006.

Let's round a bit and say that American oil extractors are getting an extra $25 a barrel. For 150 million barrels a month, that's $45 billion a year. And that's just for the oil that's extracted. The oil that remains in the ground also is about $25 a barrel more valuable. Other energy resources, used and unused, are more valuable by a similar amount.

To get this windfall, the oil companies didn't have to conspire with the Bush administration to start a war in Iraq. They didn't have to conspire among themselves to raise prices at the pump. If you own oil anywhere in the world, you didn't have to do a damn thing. Just close your eyes, make a wish, open them and - surprise - you're getting an extra $25 a barrel.

Ordinarily, and wisely, the US government doesn't try to guess what is or is not a reasonable profit, and it doesn't try to tax away profit that is unreasonable. As a general principle, the government tries to tax all business profits at a rate that will produce enough revenue to help cover the cost of government without unduly destroying the incentive to produce. Under Republican administrations, the government usually goes further and gives business a bunch of absurd tax breaks. The oil industry has been a special pet over the years.

Ordinarily, we shouldn't want the government to decide when profits become "excess." But the case of huge profits from the run-up in oil prices is different, for two reasons. First, it is unusually clear that these profits have nothing to do with productivity. Diverting them to the Treasury would have no effect on the incentive to extract more oil from American ground. Second, some or all of these profits are directly related to a situation that is imposing huge sacrifices - financial and otherwise - on others: that is, the Iraq war.

Because of the war, the government is adding hundreds of billions to the burden of debt that all taxpayers, including other businesses, will have to pay off. Because of the war, American soldiers by the hundreds, and Iraqis by the thousands, are paying the ultimate tax of death by government policy. And because of the war, American oil companies are raking in extra billions in profits.

The oil companies, like other big corporations, are mostly owned by ordinary citizens, either directly or through mutual and retirement funds. Presumably some of them support the war and others don't. Do any of these shareholders, pro-war or antiwar, want to pocket $45 billion (or whatever number you choose) from a war that is costing others so much?



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Gas Prices: Buying Votes
The Seattle Post-Intelligencer | Editorial

Friday 28 April 2006

Senate Republicans' proposal to send millions of Americans $100 checks to "ease the burden" of gasoline prices is an embarrassingly bad idea.

It's obviously little more than a desperate election-year gesture by a party whose majority status is threatened by any number of presidential policy blunders. At best, it's a lame stunt to allow finger pointing on the campaign trail.

It accomplishes no relevant change in public behavior. Some folks might use the hundred bucks - about two fill-ups - to augment their gasoline purchases; others may spend it on cigarettes, or beer or a few music CDs. It will have no effect on gas prices or gas consumption.

Even if everyone does spend it on gas, it amounts to a windfall pass-through for the oil industry, a sort of taxpayer-funded validation of pump price increases.

It's shackled to the oft-rejected notion of opening the Arctic National Wildlife Refuge to oil exploration, which means Republicans aren't really serious about passing it anyway.