Democrats take away incentive for domestic production

NY Times:

Senate Democrats are seeking a major reversal of energy tax policies that would take billions of dollars in tax breaks and other benefits from the oil industry to underwrite renewable fuels.

The tax increases would reverse incentives passed as recently as three years ago to increase domestic exploration and production of oil and gas. The change reflects a shift from the Republican focus on expanding oil production to the Democratic concern about reducing global warming.

On Tuesday, the Senate Finance Committee will take up a bill that would raise about $14 billion from oil companies over 10 years and would give about the same amount of money on new incentives for solar power, wind power, cellulosic ethanol and numerous other renewable energy sources. The bill is one of the signature issues this year for Democrats, along with immigration and the war in Iraq, and one in which they hope to clearly distinguish themselves from the Republicans.

But Senate Democrats are expected to go beyond the $14 billion in tax changes in the draft bill. Democratic officials said the committee is all but certain to adopt a proposal by Senator Jeff Bingaman of New Mexico that would raise $10 billion from companies that drill for oil and gas in federal waters but do not currently pay royalties to the government.

“We are cutting back subsidies for the oil and gas industry and using that money to finance the development of new and cleaner sources of energy,” said Mr. Bingaman, who plans to attach the entire tax package to the energy bill on the Senate floor next week.

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It is hard to see how changing which fuel you burn is going to have that much effect on global warming. If those fuels were competitive they would not need the subsidies. Oil and gas incentives are worth it because they help to compensate for the inherent risk of looking for new sources. If you take away that incentive you will get fewer people taking the dry hole risk, which means you will have fewer new fields found. There is enough oil and gas to the US and its territorial waters to completely do away with imports, if Congress would get out of the way and stop voting with the environmental wackos who don't wont to drill anywhere. The wackos don't wont wind power either but the Dems are bucking them for now unless the windmills block the view from the Kennedy compound.

Meanwhile oil companies which are already having to import refined gasoline to meet demand are cutting back on the expansion of refineries because they expect demand to shrink?