US Govt may step in to Buy Oil..WASHINGTON, Feb 4 (Reuters) - The
chairman of the powerful House Ways and Means Committee said on Thursday
he would support allowing U.S. oil producers, suffering from low energy
prices and competing crude imports, to write off their losses for the
previous five years.
"The oil industry is facing low cost imports...The economic impact is
that low cost imports, that are a major portion of the market, are
undermining the ability of the oil and gas industry to be profitable,"
Rep. Bill Archer, a Texas Republican, said.
A so-called "five-year carryback" would be similar to what President
Clinton has proposed to steel companies, permitting them to write off
losses against taxes paid in the previous five years, instead of two
years as allowed under current law.
Archer is considering including such a tax break for oil producers in a
much bigger tax relief bill he is working on, a spokesman for the Ways
and Means Committee said.
"If the government's going to take from you when you are prosperous and
then say you can't deduct your losses when you lose money, that's an
unfair situation," Archer said.
The price of oil is at the lowest level in a generation, making a gallon
of gasoline the cheapest liquid sold at many service stations.
Worldwide crude oil prices fell below $13 a barrel in 1998 and are still
hovering there, down from an average of $17 to $21 a barrel in the
previous 10 years.
While consumers are benefiting from lower energy prices, oil producers
and related industry workers are suffering as a result.
Big U.S. oil companies cited plunging oil prices as the reason why their
1998 fourth-quarter earnings were whacked by special charges, leading to
net losses, in some cases.
The U.S. oil industry, including support services, lost 21,000 jobs in
the 12 months to October 1998, a decline of about 6 percent of the total
oil workforce, according to the latest U.S. Department of Labor data.
In addition, there are thousands of employees whose jobs are still to be
cut in layoffs already announced by major oil companies.
Oil producers have been begging Congress and the Clinton administration
for some kind of relief.
The White House responded on Thursday when the Interior Department
announced that low-volume oil producers would be able to suspend their
operations while crude prices are low and not lose their leases on
federal lands.
Normal policy requires operators to promptly plug wells that are not
producing and not paying royalty fees to the federal government.
The relief will apply to wells that produce less than 15 barrels a day,
and would be in effect for two years or until the cash price for West
Texas crude stays at $15 a barrel for 90 consecutive days.
In addition, the Energy Department is expected to unveil a plan later
this month for filling the nation's Strategic Petroleum Reserve with oil
Oil producers hope removing extra crude from the market may boost oil
prices.
A number of bills are also pending in Congress to provide tax credits
for producers and authorize $300 million to buy oil for the nation's
emergency crude stockpile. |
