US President Barack Obama declared yesterday that oil companies are profiting from rising gasoline prices and urged the US Congress once again to end US$4 billion a year in oil and gas company tax breaks.
“These tax giveaways aren’t right,” Obama said in his weekly radio and Internet address. “They aren’t smart and we need to end them.”
Obama has been sparring with congressional Republicans over the skyrocketing cost of gasoline, which has topped US$4 a gallon (US$1.06 a liter) in some regions of the country, more than US$1 higher than a year ago. The rising prices have contributed to a slowdown in economic growth and have hurt Obama’s public approval ratings.
Exxon this week reported nearly US$11 billion in profits for the first quarter of this year, but said it had no control over oil prices. Other oil companies also reported huge gains.
Democratic US Senate Majority Leader Harry Reid says he plans to consider Obama’s proposal as early as next week.
The president said money recouped from ending the oil and gas tax subsidies should be used on new energy resources and research. He said he refuses to cut spending on clean energy initiatives.
“An investment in clean energy today is an investment in a better tomorrow and I think that’s an investment worth making,” he said.
Obama’s critics say his call to end such subsidies is merely support for new tax increases that would end up costing jobs.
“The president may think he’s punishing CEOs of big companies, but his plan will hurt the everyday consumer of energy and imperil the jobs of millions of hardworking people in American-based companies,” said US Represenative James Lankford, a first-term congressman from Oklahoma, said in the Republicans’ weekly address.
In his address, Obama said the economy was growing again and took note of nearly 2 million new private sector jobs in the past 13 months. However, the president did not mention that the pace of the recovery slowed significantly in the first three months of this year.
The nation’s economy grew at a 1.8 percent annual rate during that quarter, a much slower pace than the 3.1 percent rate reported in the previous three months.
High gas prices, bad winter weather and steep government spending cuts were responsible for the slowdown.
Eager to show action on gas costs, Obama has repeatedly called for ending the tax subsidies to oil and gas companies, even while conceding that they would not have an immediate effect on prices. He has also called for the US Department of Justice to investigate possible price fixing and said this week that he was also prodding OPEC nations such as Saudi Arabia to increase production.
“I also believe that instead of subsidizing yesterday’s energy, we should invest in tomorrow’s,” he said.