ConocoPhillips (COP.N: Quote, Profile, Research) on Thursday warned the U.S. Congress against imposing new taxes on big oil companies, and called for federal incentives to encourage new types of fuel production.
In a wide-ranging policy speech at the U.S. Chamber of Commerce, James Mulva, chairman of the third-biggest U.S. oil company, said tax hikes being weighed by Congress would hurt consumers by discouraging production from U.S. oil basins.
"Too often our government works to punish American companies," Mulva said, warning that such proposals would "cut into the funds needed for investment by the very companies that can lead the way on energy development."
Democrats in the House of Representatives want to offer about $16 billion worth of incentives to produce energy from renewable sources like solar and wind. Big Oil would foot most of the bill in the form of higher taxes, and a repeal of some favorable tax treatment.
Instead, for companies that build plants to get liquid fuel from coal, oil shale, methane hydrates or other unconventional liquid fuel sources, Congress should extend federal price guarantees over 10 years up to a limit of 1 million barrels per day of production, Mulva said. The United States currently uses about 9 million bpd of gasoline.
"This would offer the fiscal certainty that would enable new projects to be built," Mulva said.
Mulva also warned Congress against pressing ahead with a Senate-approved plan that would allow the federal government to sue the OPEC producers group for price manipulation. "We should not antagonize or threaten these countries," Mulva said.Still, he stressed that U.S. oil companies are increasingly competing against national oil companies that benefit from the friendly policies of their own governments.
TALKS CONTINUE WITH VENEZUELA
ConocoPhillips felt the effects of "resource nationalism" first-hand in Venezuela, where President Hugo Chavez pushed the company and Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) out of their oil operations there after they failed to strike deals to stay in huge projects that the anti-U.S. leader wanted to take over.
Before the speech, Mulva told reporters he would negotiate with Venezuela over compensation for the seized Orinoco Belt assets and turn to arbitration only as a "last resort."
Mulva also suggested in his speech that the government phase out a 54-cent-per-gallon tariff on imported ethanol, saying such a move would allow more ethanol supplies to reach the East Coast.