TAX CUT FOR HUGO?

If there's anything more dumbfounding than the House's imposition of $18 billion in taxes on oil companies, thereby guaranteeing higher prices at the pump, it's the exemption voted for Venezuela's state oil firm:

* H.R. 5321 scrapped the tax deduction routinely given to the major integrated oil companies -- Exxon, Chevron, BP, Shell and ConocoPhillips -- that helps them explore, extract, refine and market the energy that drives our economy.

* However, Congress ensured that its discrimination against the big oils would benefit Citgo,
which happens to be owned by Venezuela's Hugo Chavez.

* Under the bill, Citgo keeps its 6 percent deduction for U.S. domestic manufacturing -- the one the American oil companies lose -- because Citgo, technically, buys from Chavez.

Worse, the bill includes distorted incentives that will do exactly the opposite of what Congress intends:

* By taxing big oil companies, Congress gives them less cash to develop new sources of supply that would bring these prices down.

* America's large integrated oil companies are profitable, but they also are the biggest spenders on exploration and R&D technologies.

* Now U.S. oil companies have a long-term incentive to locate operations abroad, if only to match the advantage enjoyed by companies such as Citgo.

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