I 
109TH CONGRESS 
2D SESSION 
H. R. 5234 
To amend the Internal Revenue Code of 1986 to repeal certain tax incentives 
for oil companies. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 27, 2006 
Mr. LARSON of Connecticut (for himself, Mr. MCDERMOTT, Mr. HINCHEY, 
Mr. ALLEN, Ms. HOOLEY, Mr. GRIJALVA, Ms. DELAURO, Mr. HONDA, 
Mr. NADLER, and Ms. LEE) introduced the following bill; which was re-
ferred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to repeal 
certain tax incentives for oil companies. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Oil Subsidy Elimi-
nation Act of 2006’’. 
SEC. 2. FINDINGS. 
The Congress finds the following: 
(1) On Friday April 21, 2006, the trading price 
for a barrel of oil reached a new record high of 
VerDate Aug 31 2005 
03:17 May 02, 2006
Jkt 049200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
rfake on PROD1PC77 with BILLS
$75.17. As a result the price of gasoline in many 
areas around the country jumped to $3 per gallon 
or higher. 
(2) According to the Energy Information Ad-
ministration (EIA) of the Department of Energy, 
gas prices are expected to rise nationally by at least 
another 25 cents in the short term. 
(3) Oil companies are receiving record profits 
as 
a 
result 
of 
high 
gas 
prices. 
In 
2005, 
ExxonMobil—the Nation’s largest oil company— 
earned a net income of $36.1 billion, up 31 percent 
from the year before. In the fourth quarter of 2005 
alone, ExxonMobile earned $10 billion, up from the 
previous record of $9.92 billion set by ExxonMobile 
in the third quarter of 2005. 
(4) While high energy prices are squeezing the 
American middle class, oil executives are receiving 
record compensation and retirement packages. For 
example, the retiring chairman of ExxonMobil was 
recently given a $400 million retirement package— 
one of the largest in history. 
(5) In the 108th and 109th Congresses, the 
United States Congress passed, and the President 
signed, legislation giving billions in taxpayer dollars 
away to the oil industry in the form of tax breaks— 
VerDate Aug 31 2005 
03:17 May 02, 2006
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
rfake on PROD1PC77 with BILLS
even as this industry continues to garner record 
breaking profits. 
(6) At a November 9, 2005, joint hearing of the 
Committee on Energy and Natural Resources and 
the Committee on Environment and Public Works of 
the Senate, the chief executive officers of the top five 
oil companies testified that their companies did not 
need the Federal tax incentives included in the En-
ergy Policy Act of 2005 (Public Law 109–58). 
(7) On April 25, 2006, President Bush stated 
‘‘Record oil prices and large cash flows also mean 
that Congress has got to understand that these en-
ergy companies don’t need unnecessary tax breaks 
like the write-offs of certain geological and geo-
physical expenditures, or the use of taxpayers’ 
money to subsidize energy companies research into 
deep water drilling. I’m looking forward to Congress 
to take about $2 billion of these tax breaks out of 
the budget over a 10-year period of time. Cash flows 
are up. Taxpayers don’t need to be paying for cer-
tain of these expenses on behalf of the energy com-
panies.’’. 
VerDate Aug 31 2005 
03:17 May 02, 2006
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
rfake on PROD1PC77 with BILLS
SEC. 2. REQUIREMENTS FOR CERTAIN LARGE INTEGRATED 
OIL COMPANIES. 
(a) REVALUATION OF LIFO INVENTORIES OF LARGE 
INTEGRATED OIL COMPANIES.— 
(1) GENERAL
RULE.—Notwithstanding any 
other provision of law, if a taxpayer is an applicable 
integrated oil company for its last taxable year end-
ing in calendar year 2005, the taxpayer shall— 
(A) increase, effective as of the close of 
such taxable year, the value of each historic 
LIFO layer of inventories of crude oil, natural 
gas, or any other petroleum product (within the 
meaning of section 4611) by the layer adjust-
ment amount, and 
(B) decrease its cost of goods sold for such 
taxable year by the aggregate amount of the in-
creases under paragraph (1). 
If the aggregate amount of the increases under 
paragraph (1) exceed the taxpayer’s cost of goods 
sold for such taxable year, the taxpayer’s gross in-
come for such taxable year shall be increased by the 
amount of such excess. 
(2) LAYER ADJUSTMENT AMOUNT.—For pur-
poses of this section— 
VerDate Aug 31 2005 
03:17 May 02, 2006
Jkt 049200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5234.IH
H5234
rfake on PROD1PC77 with BILLS