Obama hits oil giants over pump prices
  • | AFP | April 27, 2011 11:50 AM

US President Barack Obama called on Congress Tuesday to cut USD4 billion in subsidies to profit-churning oil firms, as higher gasoline prices squeeze families and harm his political prospects.

US President Barack Obama, pictured on April 21, on Tuesday stepped up his campaign over politically damaging high gasoline prices, calling on Congress to eliminate USD4 billion dollars in subsidies to oil industry giants.

"We have got a real problem here. Families day-to-day, they are driving to work. They are just watching their paychecks get whittled away. They need some relief," Obama told WXYZ television, Detroit.

The president wrote to Republican and Democratic leaders on Capitol Hill, calling on them to "eliminate unwarranted tax breaks" to the oil and gas industry and to reinvest in clean energy to cut US dependence on foreign oil.

Republicans countered that Obama\'s budget prescriptions would in fact send gas prices even higher and reduce US domestic drilling.

"If someone in the administration can show me that raising taxes on American energy production will lower gas prices and create jobs, then I will gladly take a look," said Senate Republican minority leader Mitch McConnell.

"But since nobody can, and the president\'s letter to Congress today doesn\'t, this is merely an attempt to deflect from the policies of the past two years."

The oil and gas industry has also warned that cutting tax breaks for exploration and subsidies will cost jobs at a time of high unemployment after the worst economic crisis in decades.

Obama\'s offensive comes in a week when several oil firms are poised to release quarterly results expected to show big profit increases at a time when American motorists are being squeezed by rising prices at the pumps.

He sent the letter after Republican House of Representatives speaker John Boehner on Monday hinted he may be open to some action on subsidies.

"It\'s certainly something we should be looking at," Boehner told ABC News. "We\'re in a time when the federal government\'s short on revenues. 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," Boehner said.

The White House appears acutely aware of the damage gasoline price hikes could do to Obama\'s political prospects, and the danger that increasing fuel costs could dampen recent growth in jobs and the economy.

While presidents often have few options to lower gasoline prices, which are at the mercy of global price fluctuations, they often pay a political price when voters get hit in their wallets.

In a Washington Post and ABC News opinion poll this month, which saw Obama\'s personal job approval rating slip to 47 percent, more than seven in 10 voters said rising gasoline costs were causing them financial hardship.

The president sought to allay growing anger at the high gas prices -- now close to four dollars a gallon, a dollar higher than a year ago -- with a series of interviews with local television stations around the country.

Obama said his government was in talks with oil producers to increase supplies but warned that the global recovery had hiked demand and so raised prices.

White House spokesman Jay Carney denied the president\'s offensive was driven by politics, even though Obama has just launched his campaign to win a second White House term in 2012.

"We are 18 months from that election. The fact that he, as every candidate does, has political events does not mean... that every action he takes here has to do with the election," Carney said.

In his letter to congressional leaders, Obama said subsidies paid to oil firms to develop new sources of energy were "wasteful" and should be diverted to subsidies for alternative energy.

"That\'s the key to helping families avoid pain at the pump and reducing our dependence on foreign oil," Obama said in the letter to leaders including Boehner, McConnell and Democratic Senate leader Harry Reid.

Markets are awaiting quarterly results from firms including ExxonMobil, ConocoPhillips and Chevron this week.

First-quarter earnings at four of the largest oil companies are expected to improve by 22 percent to 56 percent, according to the latest poll of analysts by Thomson Financial.

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