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Investor's Business Daily - Congress is more willing to empower dictators than to get serious about America's energy supply . ” — I. B. D. Editors

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Tax Cut For Hugo ?

By INVESTOR'S BUSINESS DAILY | Posted Friday , February 29 , 2008 4:20 PM PT

Energy : If there's anything more dumbfounding than the House's imposition of higher taxes on Oil Companies , thereby guaranteeing higher prices at the pump , it's the EXEMPTION voted For Venezuela 's state Oil firm .

It goes to show that Congress is more willing to empower dictators than to get serious about America 's Energy supply .

On the surface , H. R. 5321 is awful all by itself . Passing 236 - 182 last week , the Bill scrapped the tax deduction routinely given to the Major integrated oil companies — Exxon , Chevron , B.P., Shell and Conoco Phillips — that helps them explore , extract , refine and Market the Energy that drives our Economy .

This will make it $ 18 Billion more costly for those Companies to produce Oil . To the 'House' this is a good thing , because large oil companies with large market capitalizations already earn too much .

" The Big Five Oil companies recently reported record profits for 2007 , with Exxon Mobil earning $ 40.6 Billion last year alone — the largest Corporate profit in American history , " Speaker, Nancy Pelosi said, Friday . " While Oil company profits have quadrupled , high Energy prices continue to squeeze American Families . "

Don't worry , the $ 18 Billion will still be spent . It'll just be turned into "pork" for so - called Alternatives and Renewables that thus far have failed to produce energy in a Free Market.

Congress made this even worse by ensuring that its discrimination against the big oils would benefit Citgo , which 'happens to be' owned by those Same companies' Worst tormentor abroad — the brutal Leftist Dictatorship of Venezuela's Hugo Chavez .

Under this Bill , the dictator's Oil subsidiary keeps its 6 % deduction for U.S. Domestic manufacturing — the one the American oil companies lose — because Citgo , technically buys from Chavez .

How's that for Logic? Worse , the Bill includes distorted Incentives that will do exactly the Opposite of what Congress intends .

• By taxing big oil companies , Congress gives them less cash to develop New sources of Supply that would bring these prices down . America's large integrated oil companies are profitable , but they also are the Biggest spenders on Exploration and R & D Technologies . They have the greatest capacity to reach into the Earth's remotest regions to produce energy ; now , they'll do less of that .

• The bill will force these Five companies to pass $ 18 Billion in Costs on To buyers . Energy companies , like all Private enterprises , don't 'eat' new Taxes — their Consumers do . We'll Pay at the pump .

•Meanwhile , U. S. Oil companies will have a long-term Incentive to locate Operations Abroad , if only to match the advantage enjoyed by Companies such as Citgo . When that happens , America will be more dependent than ever on the whims of Foreign petro -tyrants like Chavez .

" The Democrats' blustery rhetoric on energy couldn't be more wrongheaded or insulting . " One angry GOP House aide told I.B.D.: " Raising taxes on Producers of American energy here at Home will only send good-paying Jobs overseas , further increase Our dependence on Foreign oil and make gasoline even more expensive . "

Last year , by the way , Venezuela confiscated Assets worth about $ 6 Billion from All Five of these same American Companies .

Congress seems unmoved by the attack on U. S. companies' sovereignty . Exxon executives recently charged that Congress' rabid rhetoric against American oil producers had undermined their efforts to 'reason' with Caracas .

With this Bill , Congress only shows its unwillingness to face up to reality . While it Passed in the House , there's still hope that It will Die in the Senate . If not , President Bush vows a Veto .

Such bone-headed Legislation , however , should Never have been introduced . At a Time when we're trying to stave off Recession and bring down the record-high Price of crude , Congress is only making matters worse by casting U. S. Companies as the enemy .

" If we ever forget that we're one nation under God, then we will be a nation gone under " - Ronald Reagan