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

April 26, 2011 |  3:43 pm

Gas prices 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"Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies, even though oil prices are high and the industry is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.


Pump prices continue relentless climb

Environmentalists still face uphill battle on Gulf Coast

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

-- Tony Pierce

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