Obama challenges Senate to repeal billions in oil industry tax breaks

President Obama used a Rose Garden speech Thursday to ratchet up pressure on Congress to repeal billions of dollars in tax breaks for the largest oil companies, casting Republican opponents of the measure as pawns of Big Oil.

“Today, members of Congress have a simple choice to make,” Obama said. “They can stand with the big oil companies, or they can stand with the American people.”

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The Senate is slated to vote later Thursday morning on Democrat-backed legislation to eliminate over the next decade $24 billion in tax deductions granted to major integrated oil companies. The bill would also extend several green-energy and energy-efficiency tax breaks.

The legislation, authored by Sen. Robert Menendez (D-N.J.), is expected to fail, amid opposition from Republicans and oil-state Democrats. But Obama and Senate Democrats have rallied around the bill as gas prices are soaring, reaching a national average of $3.92 per gallon on Thursday.

In his speech Thursday, Obama argued that oil companies no longer need the tax breaks they’ve enjoyed for decades, pointing to the industry’s massive profits. He also appealed to consumers who are angry about high pump prices, arguing that oil companies are profiting as the public is struggling.

“Right now, the biggest oil companies are raking in record profits –- profits that go up every time folks pull up into a gas station.  But on top of these record profits, oil companies are also getting billions a year, billions a year in taxpayer subsidies, a subsidy that they’ve enjoyed year after year for the last century,” Obama said.
 
“Think about that. It’s like hitting the American people twice. You’re already paying a premium at the pump right now. And on top of that, Congress, up until this point, has thought it was a good idea to send billions of dollars more in tax dollars to the oil industry.”

Obama’s remarks touched on common themes repeated in a slew of recent energy speeches, part of an aggressive White House campaign to counter GOP attacks on the president over rising gas prices as he makes his reelection bid.

The president highlighted his administration’s efforts to expand domestic oil-and-gas production.

“American oil is booming,” Obama said, a response to Republican claims that he’s not doing enough to green-light drilling on federal land.

“The oil industry is doing just fine. With record profits and rising production, I’m not worried about the big oil companies. With high oil prices around the world, they’ve got more than enough incentive to produce even more oil,” he said.

“That’s why I think it’s time they got by without more help from taxpayers who are already having a tough enough time paying the bills and filling up their gas tank.”

The president took aim at opponents of the measure, who argue that the bill will burden the oil industry with higher taxes, cost jobs and potentially raise gas prices higher.

“I think it’s curious that some folks in Congress, who are the first to belittle investments in new sources of energy, are the ones that are fighting the hardest to maintain these giveaways for the oil companies,” Obama said.

The money saved from repealing the tax breaks should go to “investments in wind power and solar power and biofuels, investments in fuel-efficient cars and trucks and in energy-efficient homes and buildings,” the president said.

“That’s the future. That’s the only way we're going to break this cycle of high gas prices that happen year after year after year. As the economy is growing, the only time you start seeing lower gas prices is when the economy is doing badly.”

Obama again called for an “all-of-the-above” energy strategy that includes expanding domestic production, reducing foreign oil imports, improving vehicle fuel efficiency and investing in renewable energy.

"That’s the choice that we face. And that’s the choice that’s facing Congress today," Obama said. "They can either vote to spend billions of dollars more in oil subsidies that keep us trapped in the past, or they can vote to end these taxpayer subsidies that aren’t needed to boost oil production so that we can invest in the future. It’s that simple."

The president walked back into the Oval Office after his brief remarks, ignoring reporters' questions about the Supreme Court oral arguments on his healthcare law.

Republicans have spent the week bashing the bill to repeal oil industry tax breaks, arguing that the legislation is a distraction from efforts to rein in high gas prices.

Hoping to use a public floor fight to pummel Democrats over the legislation, the Senate GOP backed a procedural motion Monday that enabled continued debate on the measure. But Senate Majority Leader Harry Reid (D-Nev.) cut the debate short Tuesday by blocking votes on a handful of amendments to the bill.

While lawmakers spent the week arguing about the bill, the floor debate fell short of the epic battle Republicans had been hoping for.

Opponents of stripping the incentives have highlighted a March 2011 Congressional Research Service report that says a wide-ranging repeal of oil industry tax breaks could raise oil prices “on what would likely be a small scale.”

But a separate May 2011 Congressional Research Service report that analyzed legislation similar to the Menendez bill found that the repeal of five key oil-industry tax breaks would have little to no impact on gasoline prices.