President Obama asks Congress to eliminate tax breaks for the oil industry

President Obama wrote a letter Tuesday to leaders on both sides of the aisle to start solving the pressing issue of rising energy costs.

In a letter to House Speaker John A. Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.) Sen. Mitch McConnell (R-Ky.)  and former House Speaker Nancy Pelosi (D-San Francisco), Obama followed up on a statement Boehner made Monday when the speaker agreed that ending billions of dollars of tax breaks for hugely profitable oil companies is "certainly something we should be looking at".

"We're in a time when the federal government's short on revenues," Boehner told ABC News. "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."

Obama began his letter by saying that he wants the leaders to "take immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil."

The president blamed the spike in gasoline prices on increased demand and Middle East unrest. He added that old laws that benefit companies earning billions a year in profits aren't helping the average citizen or the recovery.

"Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies, even though oil prices are high and the industry is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," Obama wrote. "In fact, in the past, CEO’s 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's letter came on a day when the national average for unleaded gasoline rose by a penny to hit $3.87 per gallon. It was the 35th straight day that gasoline prices have risen in the U.S. Since March 22, prices nationally have risen 32 cents a gallon.

In California, New York, Michigan, Illinois, Connecticut, Washington, D.C., Alaska and Hawaii, motorists pay over $4 a gallon on average.

"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," Boehner spokesman Michael Steel said in a statement Tuesday. "Unfortunately, what the president has suggested so far would simply raise taxes and increase the price at the pump."

California drivers last week saw the average price of a gallon of gas climb closer to the state's all-time high of $4.588 a gallon, increasing 1.2 cents to $4.217.

RELATED:

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Environmentalists still face uphill battle on Gulf Coast

U.S. to investigate energy markets for possible gas price manipulation

-- Tony Pierce
twitter.com/busblog

Photo: Gasoline and diesel prices are posted at a local gas station in Miami, Wednesday, April 20, 2011. Oil climbed above $111 per barrel Wednesday as the dollar weakened and the government reported an unexpected drop in U.S. crude supplies. Credit: AP Photo/Alan Diaz

Comments

[Jefferson_Not_Hamilton]

This is priceless! We're heading into an energy crisis in this country and these economic geniuses want to remove subsidies from the oil companies, while keeping all of the others, like sugar and who knows what. Washington is full of fools.

[releggneh]

Hey Obama, how come GE didn't pay no taxes but yet they are getting millions is subsidies? You're trying to make the oil co's out to be the bad guys, when it is you that won't let the american people drill! You will give Soros's co billions of our money to drill but not us? Why is that? You want us driving your clown cars!You already charged Shell billions for their permit to drill, but then you canceled the permit because of a small town 70 miles away? No refund either. Hang on people, the gas prices our going to go sky high because of Obummer taking away the subsidies and now he is talking about the tax credits for oil & gas co's too! More will get unemployed and they have to make up their money somewhere, so who is going to get stuck with this tab?? Come on 2012, get this &*&^&^%% out of OUR Office!

[Ironweed]

No, I do not like Obama, but the man has an extremely valid point here.

[Jeanne]

Boener is nuts to agree with MaObama

[Tom Birchfield]

"Criminal"

The President right to call upon the U.S. Justice Department to look into "who's behind these high gas prices, and they need to hurry!

The Republican run Congress need to be "BOOTED OUT IN 2012! "They are giving the Oil Companies over $4 Billion dollars in U.S. Tax Payer Subsidies "FOR WHAT? As the Oil Companies "RAKE IN RECORD PROFITS!

The U.S. Justice Department needs to do it's damn job, and put a stop to these "SPECULATORS" who are behind the high costs of rising gas prices and anyone else who's behind high gas prices, and they need to hurry!

This is damaging America's economic recovery! The President is right to call on them who need to issue warrants as well as arrests! This is "CRIMINAL" at it's worse, and injustice at it's best!

As a registered VOter/Vet USAF, I am disgusted the Republcians are givng the Oil Companies $4 BILLION DOLLARS, as they "GUT/CUT" Education, Meidcare and other vital programs that help America's Middle Class and working poor!

In conclusion, "True Patriotism; "Hates Injustice; "In It's Own Land; "More than anywhere else."--Clarence Darrow

Either the Republicans put a stop to this giveaway to the Oil Companies or the American people will in 2012!

Who's ever behind this racket/scam of high Gas Prices NEED TO GO TO JAIL! This Injustice is ruining U.S. This is nothing less than Criminal!

[alamodefender]

obama knows that his voters,his "sheep" have been taught to blame the oil companies,not OPEC, for high oil prices and will cheer him on to punish american companies instead of obama having to stand up to the ones who are setting the price for oil.

[Lisa]

Why should the oil industry be allowed to keep this tax break? Think for yourself people, they've had this since 1994 and has gas gone down? NO, so why should we continue to reward an industry which doesn't pass on their windfall to the consumer.

[jay11]

Are the Obama people out of their collective minds?!!! It is a nice idea having the big oil companies pay their fair share of the burden, but even if they manage to get them to pay up, the democrats instead of using it to pay down the debt that hangs over us these morons want to spend it! The oil companies will raise gas prices to compensate and once again the American people will in essence paying a new bill (THRU HIGHER GAS PRICES) THAT MONEY WOULD THEN BE IMMEDITELY SPENT BY OBAMA ......

[Z Besheni]

This is a good move in the right direction, no matter how painful. Someday it will be illegal to use oil, and the intelligent people will be getting their energy for free from the sun.

[truthy]

If government takes over the oil industry than we will only have to pay $2.00 per gallon, Oil exploration does not cost much but its only market speculations and private interests which are keeping prices of oil high. First turmoil in middle east and than Japan's nuclear crisis has made it worst.

[NickFun]

Of ccourse, eliminating tax breaks for the oil industry would mean higher prices for consumers. They have us by the proverbial ...you know.

[EyeGore]

This man can't be serious. How is raising taxes on the oil companies going to reduce the price of gas? It isn't. Mr. Obama does not want the price of gas to go down. He is on record wanting higher prices to drive demand for his green energy. His Secretary of Energy has stated we need gas prices similar to Europe. Both would love to see $10 a gallon gas. Their only dissatisfaction with the prices going up is that it wasn't due to cap and tax and that the federal government's profits aren't going up. The speculators are betting on prices rising - the trouble in the middle east is part of it - but the energy policies of this President make it a sure bet prices will rise. He is the one most responsible for the prices rising. I for one am tired of paying for this clown's growing programs.

Oh, and will they punish GE who saw profits rise astronomically and paid no taxes. Don't hear much about his friends.

[glueless lace wigs]

Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies

[Ray Yurick]

Does Mitch McConnell fail to see the irony of his remarks? What is predictable is the Republican philosophy of tax breaks for oil companies. Corporatism is the central idea of their party.

[alan]

leave the oil companies alone.
so America is on the verge of total collapse so what ...
the oil guys don't care as long as we make huge profits and the money every cent goes to banks over sea's