Big Oil Tax Bill Voted Down in Senate

The Democrat-sponsored Consumer-First Energy Act falls nine votes shy of passing the Senate.
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A Democrat-backed package of new energy laws that included a windfall profits tax on major oil and gas companies was voted down Tuesday in the U.S. Senate.

Fifty-one senators voted for the bill, named the Consumer-First Energy Act, falling short by nine votes of the required number of votes for passage.

The proposal would have allowed the U.S. Attorney General to sue the Organization of the Petroleum Exporting Countries (OPEC) in U.S. courts for its monopoly powers. It also would have given the president the power to declare a state of "energy emergency" in order to fend off price gougers.

The act would have also slapped a windfall profits tax on major oil companies that failed to reinvest their profits in new exploration activity or renewable energy projects. The tax would have amounted to about $10 billion in 2008, according to Democrats.

The bill was written hastily last spring against an alternate-energy bill written by Republicans. The Republican version focused more on easing drilling restrictions in places like the Arctic Wildlife Refuge and federally controlled waters off U.S. coasts.

Political jawboning between the two political camps was swift after the bill failed to pass. Democrats said that Republicans are pandering to the oil lobby at the expense of U.S. consumers who are struggling under the weight of $4-a-gallon gasoline. Republicans countered that the Democrats' plan would have undermined domestic energy security by reducing incentives for oil and gas companies to seek out new reserves.

The failure of the bill didn't translate into benefits in the publicly traded stocks of the integrated oil group, which was instead fixated on a bearish energy demand forecast from the International Energy Agency and sharp price drops for energy commodities Tuesday.

BP

(BP) - Get Report

lost 3% to close at $68.50;

ConocoPhillips

(COP) - Get Report

dropped 2.5% to $92.87;

Chevron

(CVX) - Get Report

declined 2.4% to $98.78; and

Exxon Mobil

(XOM) - Get Report

fell 1.3% to $87.89.