US President Barack Obama yesterday called on Congress to cut $4 billion in oil firm subsidies, intensifying an assault on the industry as he faces political heat over higher gasoline prices.
“There are steps we can take to ensure the American people don’t fall victim to skyrocketing gas prices over the long term,” said President Obama in a letter to top Republican and Democratic leaders on Capitol Hill.
“One of these steps is to eliminate unwarranted tax breaks to the oil and gas industry and invest that revenue into clean energy to reduce our dependence on foreign oil.”
Republicans, however, counter that Mr Obama’s budget prescriptions would in fact send gas prices even higher and would reduce US domestic drilling.
The vast oil and gas industry has also warned that cutting tax breaks for exploration and subsidies will cost jobs at a time of high unemployment after the worst economic crisis in decades.
Brendan Buck, a spokesman for Boehner, said his boss wanted to reduce dependence on foreign oil by tapping increased American energy resources.
“Unfortunately, what the President has suggested so far would simply raise taxes and increase the price at the pump,” Mr Buck said.
President Obama’s offensive comes in a week when several oil firms are poised to release quarterly results expected to show big profit increases at a time when American motorists are being squeezed by rising prices at the pumps.
He sent the letter after Democrats pounced on remarks made by Republican House of Representatives speaker John Boehner on Monday – in which he appeared to indicate he might be open to some action on subsidies.
“It’s certainly something we should be looking at,” Boehner told ABC News. “We’re in a time when the federal government’s short on revenues. They ought to be paying their fair share.”
“Everybody wants to go after the oil companies and, frankly, they’ve got some part of this to blame,” Boehner said.
The White House appears acutely aware of the damage gasoline price hikes could do to Obama’s political prospects, and the danger that increasing fuel costs could dampen recent growth in jobs and economic growth.
According to the US Energy Information Administration, the average cost of a gallon of gasoline in the United States is close to four dollars, a rise of nearly a dollar over a year ago.