G8 to look at tax breaks to spur refinery investment

Next month the Group of Eight industrialized nations will consider tax breaks for oil companies to stimulate investment in new refineries in the United States and other western countries, the Financial Times reported June 7.

The information, garnered from an unnamed senior energy official by the FT, follows International Monetary Fund warnings about the lack of spare refinery capacity. The issue is expected to be on the agenda for the G8 meeting in Scotland in July.

The G8 consists of leaders from the United States, Japan, Germany, Britain, France, Italy, Canada and Russia.

News reports said the proposal would likely encounter opposition from environmentalists and advocates of poverty relief.

No new oil refineries have been built in the United States since the 1970s due to poor financial returns for their owners and strong local and environmental opposition.

The Bush administration is also looking to encourage new refineries, possibly on military bases, but oil companies say it makes more financial sense to expand capacity at existing facilities.

—Petroleum News