Obama wants to end oil industry tax breaks

President Obama

President Barack Obama on Saturday kept pressure on the Congress to end tax breaks for oil and gas companies, saying they were enjoying huge profits, as he sought to limit political fallout from rising gasoline prices.

With public anger over costs at the pump hitting Obama’s popularity as he revs up his 2012 re-election bid, he pressed his call for rolling back $4 billion in “unwarranted tax subsidies” at a time of budget belt-tightening in Washington.

But opposition Republicans continued their efforts to cast blame on the Democratic president for a surge in gas prices that is straining Americans’ pocketbooks at a time of stubbornly high unemployment and sluggish economic recovery.

“When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said in his weekly radio and Internet address. “They aren’t smart. And we need to end them.”

Oil companies posted sharply higher first-quarter earnings this week with oil prices above $100 a barrel on unrest in the Middle East and growing global demand for energy.

Leading the way, Exxon Mobil, the world’s most valuable publicly listed company, beat analysts’ forecasts by posting a 69 percent rise in earnings to $10.65 billion, its biggest profit since the third quarter of 2008.

Obama insisted he remained committed to “safe and responsible oil production here at home” but said the money from oil industry tax subsidies would be better invested in developing alternative energy sources.


Delivering the Republicans’ response, Congressman James Lankford of Oklahoma, an oil state, said Americans were looking for leadership in tackling gas prices but that Obama “has only offered a tax increase on energy and the prospect of reduced supply” and had smothered the industry in new regulations.

He said Obama’s proposal to revoke oil industry tax breaks would be counterproductive, and vowed that Republicans in the House of Representatives would try to pass their own job-creating energy initiative next week.

“The president may think he’s punishing CEOs of big companies, but his plan will hurt the everyday consumer of energy and imperil the jobs of millions of hard-working people in American-based companies,” Lankford said.

But the Republican stance is far from uniform. House Budget Committee Chairman Paul Ryan said on Thursday he supports cutting tax breaks for the oil industry in the search for ways to battle rising gasoline prices and close corporate tax loopholes.

Gasoline prices have become a highly charged political issue after pushing toward $4 a gallon nationally, and Republicans see it as a weak point for Obama in their efforts to defeat him in the 2012 election.

In a Washington Post-ABC News poll published on Tuesday, 71 percent of those surveyed said gasoline prices were causing them serious financial hardship, while 55 percent disapproved of the way Obama was handling his job as president.

Obama has insisted there is no “magic bullet” for bringing down gas prices. But the White House is worried that if gas prices continue rising, the issue could drown out the economic recovery message at the heart of his re-election strategy.
Source: Reuters

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