President Obama has written to congressional leaders encouraging them to eliminate special tax breaks for the oil and gas industry.
With rising gasoline prices around the country and record profits among the major oil producers, along with growing pressure in Congress to cut the budget deficit, Obama said that eliminating those tax breaks is “certainly something we should be looking at.”
“We’re in a time when the federal government's short on revenues,” he wrote in a letter Tuesday to Speaker of the House John Boehner, R-Ohio; Senate Majority Leader Harry Reid, D-Nev.; Senate Minority Leader Mitch McConnell, R-Ken., and House Minority Leader Nancy Pelosi, D-Calif. “They ought to be paying their fair share."
The letter comes a few weeks after the President included the proposal as part of his Blueprint for a Secure Energy Future.
In the letter, Obama noted the effect of higher gas prices on the U.S. economy. “High oil and gasoline prices are weighing on the minds and pocketbooks of every American family,” he wrote. “While our economy has begun to recover, with 1.8 million private sector jobs created over the last 13 months, too many Americans are still struggling to find a job or simply just to pay the bills. The recent steep increase in gas prices, driven by increased global demand and compounded by unrest and supply disruptions in the Middle East, has only added to those struggles. 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.”
He noted that there is “no silver bullet” to address rising gas prices in the short term, but added that there are steps that can be taken over the long term.
“One of those 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,” Obama wrote. “Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies, even though oil prices are high and the industry is projected to report outsized profits this quarter. In fact, in the past CEOs of the major oil companies made it clear that high oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks. As we work together to reduce our deficits, we simply can’t afford these wasteful subsidies, and that is why I proposed to eliminate them in my FY11 and FY12 budgets.”
Obama said he was “heartened” that Boehner had expressed some openness on Monday to eliminating 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,” said Obama.
He also said that he wanted to work with Congress on developing a comprehensive energy strategy for the future to reduce U.S. dependence on foreign oil. The administration’s “Blueprint for a Secure Energy Future” includes provisions for production of domestic oil and gas resources and calls for doubling fuel efficiency in the transportation sector while investing in alternative energy sources such as wind, solar, biofuels and natural gas.
“None of you will agree with every aspect of this strategy,” Obama added. “But I am confident that, in many areas, we can work together to help show the American people that we can make progress on an energy policy that creates jobs and makes our country more secure.”
Republicans, however, were critical of eliminating the tax breaks. “The President called on Congress to increase taxes on American energy producers in an attempt to distract from his failure to put forward a realistic energy agenda,” said Sen. Orrin Hatch, R-Utah, ranking member of the Senate Finance Committee. “We’ve sadly seen this page from his playbook before, but the American people won’t be fooled by such stale and empty rhetoric. Tax hikes on domestic energy producers will yield higher prices at the pump for consumers in the long run and further impede our nation’s ability to achieve energy security and independence.”
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