Feeling the political heat from high gas prices, President Obama Thursday demanded that Congress end “inexcusable” tax breaks for oil and gas companies — a step that independent researchers say would lead to even higher gas prices.
“I am asking Congress to eliminate this oil industry giveaway right away,” Mr. Obama said at a community college in Nashua, N.H. “You can either stand up for the oil companies, or you can stand up for the American people.”
Mr. Obama’s proposed budget for fiscal 2013 would end about $4 billion in annual tax breaks for fossil fuel production. He would direct some of those savings to the development of clean energy, what he termed “our future.”
The president’s visit to a battleground state was intended to show he’s on the side of average Americans who are feeling pain at the pump. Republicans said Mr. Obama was attempting to deflect attention from his failed energy policy.
“In 2008, Barack Obama promised he would solve our nation’s energy crisis and lower gas prices ‘once and for all,’” said Andrea Saul, spokeswoman for GOP presidential candidate Mitt Romney. “Four years later, with record gas prices and an economy struggling for growth, we’re still waiting for him to deliver. Americans deserve a president who can deliver real energy solutions and pro-growth policies, not more empty rhetoric and broken promises.”
Sen. Jeff Sessions, Alabama Republican, called the president’s speech “another defeatist address on soaring gas prices.”
“We are sitting on a huge treasure of untapped reserves,” Mr. Sessions said. “Most if this is located on federal lands that are managed at the president’s discretion. The president could begin lowering prices now — and keep them low in the future — by firmly announcing to the world that he will end the moratorium on new leases and dramatically expedite domestic permitting at once. But the Obama Administration has made clear that they would rather tax Americans and domestic producers to pay for more Solyndras and other uneconomical energy schemes than utilize our natural resources to enrich the country and grow the private sector. It’s social engineering, and people in Alabama and across the country are paying the price.”
The nationwide average for gasoline prices approached $3.74 a gallon Thursday, having risen for the 23rd consecutive day, according to the motorist group AAA. A month ago, the nationwide average was $3.44 per gallon.
In his speech, the president solicited boos from the audience directed at oil and gas companies.
“Four billion of your tax dollars subsidize the oil industry every year,” Mr. Obama said. “Every time gas prices go up, and you fill up your car, they make even more. Does anyone really think Congress should give them another four billion dollars this year? Of course not. That’s outrageous. It’s inexcusable.”
But the nonpartisan Congressional Research Service issued a report in March 2011 that said ending the tax breaks would result in even higher gas prices in the short term.
“On what would likely be a small scale, the proposals also would make oil and natural gas more expensive for U.S. consumers and likely increase foreign dependence,” the CRS report said.
Jack Gerard, president and CEO of the American Petroleum Institute, a trade association, said the administration’s budget calls for a total of $85 billion in tax increases on the industry. He said the result “would mean less domestic energy, fewer jobs, less energy security, and far less government revenue.”
An aide to Speaker John A. Boehner, Ohio Republican, said ending the tax breaks is the wrong policy.
“A freshman-year economics student could tell you that increasing taxes on energy production would make gas prices go up, not down,” the aide said. “With energy costs already threatening our recovery, that’s not a very good idea.”
Mr. Obama accused Republicans of “licking their chops” in an election year to exploit high gas prices for political gain.
“Only in politics do people respond to bad news with such enthusiasm,” Mr. Obama said. “And you can bet we’ll be hearing more about those magic, three-point plans for $2 gas. You know the plans I’m talking about: Step one is drill, step two is drill, and step three is keep drilling. Well, if there’s one thing I know about New Hampshire, it’s that your political bull detector is pretty keen. You know we can’t just drill our way to lower gas prices.”
He said “it’s the easiest thing in the world make phony election-year promises about lower gas prices.” But Mr. Obama said the solution involves a diversified strategy that develops oil, gas, solar, wind energy and biofuels.
Mr. Boehner and other Republicans are criticizing the administration for not focusing on efforts to lower gas prices. Mr. Boehner pointed to the congressional testimony earlier this week of Energy Secretary Steven Chu, saying Mr. Chu “made it pretty clear that his goal is to have higher energy prices.”
At a House hearing on Tuesday, Mr. Chu was asked if it was the administration’s “overall goal” to lower gas prices.
“No,” Mr. Chu said. “The overall goal is to decrease our dependency on oil, to build and strengthen our economy.”
Presidential press secretary Jay Carney essentially agreed with that assessment.
“The president is not focused on a policy, and is not making promises to the American people, that, if I do this, you will be paying a certain price at the pump, because he is not insulting the American people’s intelligence,” Mr. Carney said Wednesday. “He is simply saying that his commitment is to pursue a policy that enhances American energy security and enhances American energy independence.”
But on Thursday, Mr. Chu told another congressional panel, “We very much want to not only slow the price, but reverse” the rising cost of gasoline.
“We definitely feel the pain that every American and every business feels when the price of gas goes up,” he said.
In New Hampshire, Mr. Obama said there are no quick fixes to the spike in gas prices.
“We may not have a silver bullet to bring down gas prices tomorrow, or reduce our dependence on foreign oil overnight,” he said. “But what we do have in this country are limitless sources of energy, and a boundless supply of ingenuity and imagination that we can put to work developing that energy.”
The president was heading later in the day to New York City, where he will attend a series of campaign fundraisers expected to reap at least $4 million.