Obama: Tax cuts offset gas-price pinch

President Obama said Thursday that the White House is monitoring rising gasoline prices “very closely” while adding that last year’s tax-cut extension deal will help ease the strain on families paying more at the pump.

Average gasoline prices nationwide are in the $3.80-per-gallon range, almost $1 more than this time last year, and climbing.

“That’s tough. You know, if you’ve got to drive to work every day and you don’t have an option, in terms of the car that you’re driving, and it’s taking more and more out of your budget, that’s a problem,” Obama said in an interview with ABC World News.

But he said the deal struck with Republicans in December for a two-year extension of Bush-era tax rates is offsetting the costs for drivers.

“Now, one good thing that we did was in December, an example of compromise that a lot of people didn’t think was going to be possible, with Republicans — we were able to pass a package of tax cuts that has helped to buffer some of that strain on families. So the total amount of tax cuts that we passed to boost the economy this year will probably be higher than the additional gas costs,” Obama said.

The $858 billion package extended cuts for middle-income and wealthy filers for two years, and included several other provisions, including an extension of unemployment benefits and a cut in payroll taxes through 2011.

Obama spoke about gas prices as they climb daily.

The federal Energy Information Administration (EIA) reported Monday that prices surged 11 cents over the prior week to reach $3.79 per gallon, the highest April prices since the agency began tracking weekly data in 1990. Average prices on the West Coast have already climbed above $4 per gallon.

EIA’s short-term outlook, released Tuesday, predicts that nationwide prices during the so-called summer driving season (April 1-Sept. 30) will average $3.86 per gallon, and could average above $4 nationwide in July.

“Current market prices of futures and options contracts for gasoline suggest a 33-percent probability that the national monthly average retail price for regular gasoline could exceed $4 per gallon during July 2011,” states EIA, which is the Energy Department’s statistical forecasting arm.

Gasoline prices have climbed as the turmoil in North Africa and the Middle East has sent crude oil prices up sharply. The White House hasn’t ruled out a release of oil from the Strategic Petroleum Reserve, but hasn’t shown much appetite for it either.

Obama noted again in the interview that the reserve — 727 million barrels of oil stored in salt caverns along the Gulf Coast — is meant to address oil supply disruptions, not expand supplies as a way to temper costs.

“What we don’t want to do is catch ourselves in a situation, particularly when things are uncertain in the Middle East, where we’re using it now and it turns out we need more later,” Obama said.

He also used the interview to plug his energy proposals.

“We have to make sure that we are improving fuel efficiency standards on cars, which we’ve already done. We’ve got to make sure that we’re developing alternative fuels like electric cars and biofuels and natural gas as a strategy for reducing our consumption of oil. We have to increase oil production here. But we’ve got to do it carefully,” Obama said.

“So we’re going to have to have a comprehensive package. We’ve got to keep on pushing on that,” he added.