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Congress Tries To Drink Big Oil's Milkshake

If Daniel Plainview weren't fictional, he'd be howling bloody hell. Congress on Wednesday passed a bill that would yank $17.65 billion in tax breaks to oil companies and reallocate the savings to fund tax incentives for wind, solar, and other renewable energy technologies.

Plainview is the lead character in There Will Be Blood, a film inspired by Upton Sinclair's novel Oil. Actor Daniel Day-Lewis won an Academy Award on Sunday for his portrayal of the ruthless oilman with a talent for squeezing profit out of the ground.

The House bill passed by a vote of 236-182. Plainview would take only slight comfort in knowing that the bill faces a tough slog through the Senate and a probable White House veto.

As written, the bill would:

• Extend tax credits for newly built wind farms and other facilities that generate power from renewable sources through 2011;


• Extend tax credits for energy produced by wind turbines, cellulosic ethanol, biofuels, and geothermal and certain other renewable sources;


• Extend the 30% tax credit that companies may claim for investments in solar products and fuel cells through 2016;


• Extend tax breaks for homeowners, including a $300 consumer tax credit for buying certain Energy Star-rated appliances (existing tax credits are set to expire Dec. 31);


• Grant consumers $4,000 tax credits for buying plug-in hybrid vehicles.

Since new sources don't come along every day, oil companies have been making their own investments in renewable energy sources for some time. But the pain they face is that renewable sources of energy -- solar, wind, geothermal, etc. -- aren't yet as profitable as the black, gooey stuff on which Daniel Plainview built his fortune.

Today's Wall Street Journal has a story about how BP's CEO, Tony Hayward, is dealing with BP's weak green energy division:

Mr. Hayward signaled a more-pragmatic view of BP's alternative-energy business, which his predecessor as CEO, Lord John Browne, had taken pains to promote. "We intend to grow this business predominantly for its equity value," he said in a statement.

"What we will be doing over the course of the year will be looking at ways of realizing that value for shareholders, because none of us believes that there's very much of that, if anything, in our share price today," he later said in a Webcast for investors. He added that he thought the alternative energy unit was valued at between $5 billion and $7 billion. Analysts said they assumed that BP might try to unlock their value through a flotation or sale of some of the business, or by seeking other strategic investors as partners.

Hayward is simply doing his job -- maximizing profits for BP shareholders. And now the renewable-energy industry needs to do the same, and quickly. To get there, it will need tax breaks on par with what the oil industry has enjoyed for years.

It could also use a few Daniel Plainviews. Big Oil has been drinking the renewable-energy industry's milkshake for too long.

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