MARCH 28 2012 14:25h

Showdown looming over U.S. oil subsidies

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WASHINGTON, March 28 (UPI) -- Republican leaders in the U.S. Senate allowed an energy tax subsidy bill to move toward debate so as to highlight differences in U.S. policy, an aide said.

The Senate voted this week to debate a bill meant to eliminate tax subsidies for oil and natural gas companies. A Republican aide told the Platts news service on condition of anonymity that his party backed the measure to bring the gasoline debate in the United States to the forefront.

"If Dem(ocrat)s want to talk about raising taxes on American energy manufacturers, Republicans will have better ideas," the aide was quoted as saying.

U.S. gasoline prices are close to $4 per gallon on average. The U.S. Energy Department said gasoline prices were moving in parity with crude oil costs.

Senate Majority Leader Harry Reid, D-Nev., said the measure on subsidies would end what he described as "corporate welfare." Sen. John Cornyn, R-Texas, said pulling the $2 billion in tax benefits would make the problem of high energy prices "worse, not better" because of production costs.

The measure, if passed, would transfer money saved by ending the subsidy to help back wind energy and other low-carbon energy technology through 2014.