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Sen. Hutchison Urges Refinery Expansion to Help Alleviate Gas Prices
Provision, which Passed in 2005, will Help Increase Domestic Refinery Capacity through Tax Deduction
WASHINGTON – U.S. Senator Kay Bailey Hutchison (R-TX), Texas’ senior senator, today sent a letter to Treasury Secretary Henry Paulson urging his department to expedite the regulation process for tax deductions to spur domestic refinery expansions.
Sen. Hutchison included a provision in the Energy Policy Act of 2005 (EPACT), which provides a 50 percent tax deduction for domestic refineries that increase existing capacity by five percent or more. Although EPACT became law in 2005, the Treasury Department has not approved the pending regulation, also known as Section 179 C.
“At this time when Americans are paying record high prices for fuel, the U.S. government is standing in the way of increasing supply,” said Sen. Hutchison. “This regulation, which encourages expansion of domestic refinery capacity, will increase the supply of fuel to alleviate prices at the pump.”
Sen. Hutchison sent a similar letter to Treasury in April 2007 when gasoline was $2.86 a gallon. Today, the national average is $3.94 a gallon.
TEXT OF THE LETTER
May 28, 2008
The Honorable Henry M. Paulson
U.S. Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Dear Secretary Paulson:
I write today to express my continued support for expedited approval of a pending regulation which awaits final approval at the U.S. Department of the Treasury. Almost three years have passed since the Energy Policy Act of 2005 mandated that this regulation be finalized. American families need the relief that this regulation will provide now more than ever.
Specifically, this regulation, Sec. 179C of the Internal Revenue Code, allows a refinery to expense up to 50 percent of the cost of a refinery expansion if the project increases overall capacity by at least five percent. As you may recall, I wrote to you in April 2007 when gasoline was $2.86 a gallon, diesel was $2.79 a gallon, and a barrel of oil was $64. Today, gasoline is $3.94 a gallon, diesel is $4.72 a gallon, and a barrel of oil exceeds $127.
At this time when Americans are paying record high prices for gasoline and diesel, the U.S. Government should do all it can to reduce these prices. This regulation, which encourages expansion of domestic refining capacity, will increase the supply of fuel to alleviate prices at the pump. Moreover, the longer refineries must wait for these regulations, the more uncertainty is added to their investment decisions to expand capacity. These regulations must be finalized as soon as possible to allow companies to plan for future construction.
I appreciate your efforts to date to finalize this regulation and encourage you to expedite its approval.
Kay Bailey Hutchison