Reuters

(Reuters)

Obama to Congress: End Oil Company Tax Breaks

Politics Reuters

President Barack Obama on Tuesday urged Congress to immediately end tax breaks for oil and gas firms, seeking to deflect the public anger over high gasoline prices that is hurting his popularity among voters.

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U.S. gasoline prices have become a highly charged political issue after pushing toward $4 a gallon nationally, and higher in some cities, spurred by the soaring world price of crude oil amid turmoil in the Middle East and North Africa.

The president, in a letter to congressional leaders released by the White House, hailed what he called bipartisan support for closing the tax breaks.

But Republicans, who feel rising gas prices could help them defeat Obama in the 2012 election, said it would "raise taxes and increase the price at the pump."

This opposition to Obama's approach appeared at odds with a signal of openness from the top Republican in the House of Representatives, Speaker John Boehner, on Monday.

Some energy analysts also appeared unimpressed by Obama's latest move.

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"Obama has said no there's no silver bullet to help push down gasoline prices in the short term, but now it seems he's grasping at straws in last couple of days to find policies to do the trick," said Matt Smith, an analyst at Summit Energy in Kentucky.

White House economic adviser Gene Sperling argued that billions of dollars used to subsidize oil and gas firms could be used instead to help reduce a ballooning U.S. deficit.

"In this type of fiscal moment, you have to ask yourself whether that $4 billion is worth taxpayer spending," he said, "compared to using perhaps some of that for deficit reduction, and some of it ... in the areas that could lead us to a brighter and cleaner and more secure energy future."

U.S. Attorney General Eric Holder, meanwhile, told reporters he saw some "disturbing" things in the energy markets. He said this supported the formation of a task force unveiled last week to probe possible fraud and manipulation of gasoline prices.

"There are at least a couple of things that are I think disturbing and I think we'll look into those," Holder told reporters when asked if he believed people were illegally manipulating the market. He declined to identify his concerns.

A Washington Post-ABC News poll on Tuesday found that 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.

The White House rejected suggestions Obama's letter was designed to deflect gas price ire away from the president and toward oil companies, which it has repeatedly pointed out have made huge profits and yet continue to enjoy tax subsidies.

"We don't look at this as an issue of electoral politics in 18 months," White House press secretary Jay Carney said.

BOEHNER BACKTRACKING?

Obama, repeating a line he has repeatedly deployed in his two annual budget proposals, said more than $4 billion saved by closing the tax breaks could be invested in clean energy that would help to ease U.S. dependence on foreign oil.

In a nod toward the economic anxiety many Americans continue to feel amid still-high U.S. unemployment -- which is sure to weigh heavily on his hopes of re-election in 2012 -- Obama linked the energy companies to the country's recovery.

"If sustained, these high prices have the potential to slow down the pace of our economy's growth at precisely the moment when we need to be accelerating it," Obama said in the letter.

He has repeatedly suggested diverting revenue saved from closing the tax breaks to clean energy investment, and stresses the issue as part of his response to fuel prices.

Boehner said on Monday that Congress could look at cutting multibillion dollar tax subsidies to oil companies. Obama pounced on this as welcome evidence of bipartisan support.

"I was heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies for the oil and gas industry. Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done," Obama said.

However, a Boehner spokesman said the Republican leader had simply said he would look at the facts.

"The Speaker wants to increase the supply of American energy and reduce our dependence on foreign oil, and he is only interested in reforms that actually lower energy costs and create American jobs," said Brendan Buck. "Unfortunately, what the President has suggested so far would simply raise taxes and increase the price at the pump."

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