19 Jun 2007 Rising Gas Prices, Tony Soprano-Style

The Senate Finance Committee today approved $29 billion in new taxes on the oil industry. Some of the funds will be given to corn growers, who will continue to receive new taxpayer monies as long as the Iowa Caucus lives.

(If the first presidential primary were in Texas, what a different world this would be.)

The AP reports:

Sen. Jon Kyl, R-Ariz., said the taxes on the large oil companies – most of the provisions exempt smaller producers – “will almost certainly lead to gas price increases” as oil companies pass on the added cost. “You can’t raise taxes… by $29 billion and not expect gas prices to increase,” he said.The American Petroleum Institute, the oil company trade group, said in a statement that the taxes “will discourage new domestic production, discourage new investments in refinery capacity and would lead to the loss of good-paying U.S. jobs.”

Interestingly, $10.7 billion in new taxes approved were a punitive measure against the oil companies because the Finance Committee is retroactively opposed to oil leasing contracts for the Gulf of Mexico the Clinton-era Interior Department signed with the oil companies in the late 1990s.

The government signs a contract — and then extorts a $10 billion penalty because it decides later that it doesn’t like the terms.