White House economic adviser makes the case for cutting oil tax breaks

White House economic adviser Gene Sperling made the case Tuesday for eliminating a series of oil industry tax breaks, part of a ramped-up push by the administration to focus on the issue in light of rising gas prices.

“At a time when we are asking our entire country to engage in shared sacrifice, we have to ask ourselves whether we can still afford $43 billion over 10 years on subsidies that do not seem to be efficient or needed or consistent with our G20 commitments and obligations,” Sperling said during an energy conference on Washington on Tuesday afternoon.

Sperling’s comments came about an hour after President Obama sent a letter to congressional leaders calling for quick passage of legislation eliminating the tax breaks.

The White House is hoping to capitalize on remarks by Speaker John Boehner (R-Ohio) Monday in which he appeared to open the door to supporting the elimination of the tax breaks. Boehner said he may be open to cutting the tax breaks for some of the larger oil companies.

But a Boehner spokesman walked back those comments Tuesday.

Still, Sperling expressed hope that lawmakers will be able to compromise on the issue.

“We’re very hopeful and we’ve seen some signs that there may be greater bipartisan openness to this,” Sperling told reporters following his remarks at the Energy Information Administration’s (EIA) annual conference.

Sperling would not expand on which signs of bipartisanship the White House is seeing. When a reporter pointed out that Boehner’s office walked back his comments on subsidies, Sperling said, “I’m only empowered to speak on what the administration is thinking and saying.”

Democrats in Congress also pounced on Boehner’s comments Tuesday. "Gas hitting four dollars per gallon seems to have finally caused Speaker Boehner to see the light on the insanity of providing subsidies to profit-soaked big oil companies," Sen. Charles Schumer (D-N.Y.) said in a statement.

“Having to face these types of higher gas prices has affected their consumer confidence even though the payroll tax cut does provide and has provided a significant cushion to the economy. But perhaps not to the psyches of American families who have to pay $50, $60 to fill up at the pump.”

Meanwhile, Sperling argued in his remarks Tuesday that high gas prices provide an opportunity to develop a long-term energy policy that would make the country less dependent on oil.

“We as a country have never up to this point really capitalized on using these moments to force us to take the sort of long-term actions to prevent us from being in this situation again,” Sperling said.

U.S. dependence on oil forces the country to send money overseas, rather than investing it in the economy, Sperling said.

“Our dependence on oil gives us less control over our economic destiny,” Sperling said. “If the price of movies go up, you pay a little more, but probably the people running the movie theater get that money and it stays in the economy. When the price of oil goes up, half of that money goes out of our economy and it often, particularly in the case of Iran, does not go to those we necessarily want to support.”

But Sperling maintained that there are “no quick fixes to higher gas prices,” an assertion supported by most energy analysts, including the EIA, the analytical arm of the Energy Department.

Instead, Sperling said it’s important to ensure “that we’re giving consumers the confidence that prices are not being artificially boosted by fraud and manipulation.” The Justice Department is launching a probe into fraud and manipulation of gas prices.

Obama outlined a proposal in his fiscal 2012 budget proposal to eliminate a series of oil industry tax breaks, including the industry’s ability to claim a domestic manufacturing deduction. The budget request says the elimination of the tax breaks would save about $44 billion from 2012 to 2021.