Obama Urges An End to Oil-Gas Subsidies as Gas Price Nears $4

Gas prices are within a few whiffs of $4 per gallon and President Obama is urging Congress to end the $4 billion in taxpayer subsidies that the oil and gas industry enjoys each year.

“When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said in his weekly radio address and on his White House blog. “They aren’t smart. And we need to end them.”

In their weekly response, Republicans blamed Obama for high gas prices, saying he hasn't done enough to open up other domestic oil sources.

“Americans are looking for leadership to tackle the rising gas prices, but President Obama has only offered a tax increase on energy and the prospect of reduced supply,” Rep. James Lankford (R-Okla.) said. 

Senate Democrats are likely to introduce legislation cutting the gas and oil subsidies this week but it's unlikely the bill will go anywhere in the Republican-controlled House, at least initially. For that matter, it's not clear that cutting the subsidies would do anything to reduce prices at the pump and might actually increase them.

In his address, Obama turned aside GOP proposals that he cut spending on alternative energy.

“I refuse to cut things like clean energy that will help America win the future by growing our economy and creating good-paying jobs; that will help make America more secure; and that will help clean up our planet in the process,” he said. “An investment in clean energy today is an investment in a better tomorrow.”

Surging prices

The average price of self-serve regular gas was $3.909 a gallon Friday, up from $3.846 the previous week, according to AAA's Fuel Gauge Survey. The price is up more than 31 cents a gallon in the last month.

Diesel fuel prices rose a penny a gallon, with the average price at $4.146.

“Crude oil flirting with $115 per barrel coupled with the change from winter-blend to summer-blend gasoline taking place in many parts of the country means drivers have seen the price of gasoline at the pump continue to rise,” said Andrew Delmege, AAA's manager of regulatory affairs.

Surging profits

Oil companies’ reports of surging profits couldn’t have come at a worse time.

Exxon Mobil Corp.’s report that its first-quarter earnings surged 69% came just as Wal-Mart CEO Mike Duke said shoppers are running out of money and buying less as their family budgets are depleted by higher gas and food prices – and just as the U.S. Commerce Department said economic growth slowed more than expected in the first quarter, to 1.8%, sharply below the previous quarter’s 3.1%.

Republicans have been quietly warning the oil companies that, with an election approaching, they may not be able to take the political risk that would be involved in publicly opposing repeal of the oil and gas subsidies.

House Speaker John Boehner (R.-Ohio) took the first step late last week, expressing he was open to discussing ending the subsidies. Obama said he was “heartened” by that.

“Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done,” Obama said.