April 27, 2006
Thursday

WASHINGTON - Sen. Pete Domenici, upset that oil companies are spending big profits on big payments for executives instead of exploration and investment, says he will back repealing $2 billion in tax incentives for the industry, authorizing tougher fuel economy standards and expanding federal authority to investigate price gouging.

"We're not going to let them get away with any kind of illegal activity," the New Mexico Republican said.

In the past, Domenici has let market-driven gasoline price spikes come and go without joining the usual chorus of politicians demanding federal intervention.

But recently, Exxon reported $36 billion in profits last year, a corporate record, and then bestowed a nearly $400 million retirement package on its departing chairman, Lee Raymond.

"It was outrageous," and the political impact is "absolutely devastating," Domenici said.

He said energy companies must start showing they're investing profits in American's energy future, including the development of alternatives to oil-based fuel such as ethanol.

Domenici said he would support President Bush's call for repeal of $2 billion in tax breaks for oil and gas producers even though some argue they help small companies drilling in New Mexico.

Many Democrats, including Sen. John Kerry of Massachusetts and House Minority Leader Nancy Pelosi of California, were calling for repeal of those tax breaks, too, but Sen. Jeff Bingaman, a New Mexico Democrat and ranking minority member on the Energy Committee, was not among them.

"I haven't heard anybody argue that the high price of gasoline now is the result of anything we did in the energy bill," said Bingaman. "What I think is valid is to criticize the energy bill for not doing anything serious about vehicle fuel efficiency."

Domenici said he would support giving federal officials more authority to raise fuel efficiency standards. He said he also agrees with Bush that all purchases of hybrid cars should get a tax break. The break is now limited to the first 60,000 cars sold by each automaker.

Bingaman said most of the price increase is due to supply and demand, but he also said in a Senate speech that Congress should pass legislation to make price gouging a federal crime.

"I hope we can come to the aid of the American consumer," said Bingaman, who conceded it would be difficult to affect prices in the short term.

The Federal Trade Commission and the Justice Department are investigating oil company pricing, but they can prosecute only if they find evidence two or more companies are colluding to fix prices.

U.S. Attorney General Alberto Gonzales and FTC Chairwoman Deborah Majoras wrote to 50 state attorneys general Tuesday, urging them to "enforce vigorously" their state laws against anti-competitive behavior.

"We stand ready to investigate and prosecute any violations of the federal antitrust laws that are revealed during the course of your state's law enforcement investigations," they wrote.

Domenici said price gouging often has been a province of the states, not the federal government, but some expansion of federal powers is warranted.

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