House Passes $16 Billion in Alternative Fuel Incentives

The House of Representatives challenged President Bush by passing a $16 billion bill which provides incentives for alternate fuels (such as a $4,000 tax credit for plug-in hybrid cars). A major part of paying for the bill is the disallowance of a manufacturing tax deduction for oil companies on domestic production. Speaker Nancy Pelosi (D-CA) claims that the deduction does not pass muster with the World Trade Organization, but the Bush administration claims that the elimination of the deduction will lead to less petroleum production and higher taxes. The Senate bill includes no similar provisions--it is unclear how the House provision will hold up in conference.

Certainly, going after Big Oil cannot hurt Congressional approval ratings. The big question--what will be the impact on overall energy production if this provision passes?