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White House wants to replace gasline tax credit plan

Posted: Sunday, July 21, 2002

FAIRBANKS (AP) -- The Bush administration wants to replace a proposed tax credit for Alaska natural gas sales with some other type of incentive that doesn't set a gas price floor, Sen. Frank Murkowski said Thursday after a meeting at the White House.

Sen. Ted Stevens and Rep. Don Young also attended the meeting.

The Senate version of a national energy bill proposes a tax credit that would kick in when gas prices fall below $3.25 per million British thermal units at a hub in Alberta, Canada. The amount taken off the gas owners' tax bill would be the difference between $3.25 and the actual sale price.

Murkowski said the Alaska delegation pointed out that the tax credit would have to be paid back when prices rose, but that didn't allay the administration's worry. He said other gas producers fear they won't have the same safeguard that Alaska gas would have.

The gas provisions will be the subject of negotiation in a conference committee formed to work out differences between the House and Senate versions of the energy bill.

Administration officials suggested that a combination of other incentives would be less harmful to other gas sellers, Murkowski said. Those incentives could include:

--Tax credits similar to those already in place for development of oil and gas that is technologically difficult to extract.

--Loan guarantees.

--Changes that allow the value of the pipeline to depreciate faster than normal for tax purposes.

''What we agreed is to continue to work in an expeditious manner to address the various ways the federal government could participate in this process,'' Murkowski said.

''The feeling was that, yes, it's in the national interest,'' Murkowski said. ''The question was 'What is the meaningful role of the government?' Is it limited to tax incentives, accelerated depreciation, tax credits and so forth?''

Stevens had to cut his White House visit short because of work on spending bills Thursday, so he declined comment on the meeting.

Murkowski said White House officials attending the meeting included Larry Lindsey, the president's top economic adviser; Glenn Hubbard, chairman of the Council of Economic Advisors; Karen Knutson, an aide to Vice President Dick Cheney who used to work for Murkowski and hails from Ketchikan; and Marcus Peacock, associate director for natural resources in the Office of Management and Budget.

Agency officials attending included Energy Secretary Spencer Abraham; Alan P. Larson, undersecretary of state for economic affairs; Pam Olson, deputy assistant treasury secretary for tax policy; and Ted Kassinger, general counsel for the Commerce Department.



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