Obama calls on Boehner to follow through on cutting oil subsidies

AP Photo/Jeff Chiu

Responding to remarks from House Speaker John Boehner, who said in a recent interview that he could be open to cutting subsidies to gas and oil companies, President Obama sent a letter to the leaders of Congress today urging them to take "immediate action to eliminate unwarranted tax breaks for the oil and gas industry." Mr. Obama said he was "heartened" to hear Boehner's position on the issue.

"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," Mr. Obama wrote to Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.

As Republicans have compelled Congress to accept historic spending cuts, Democrats have persistently complained that the cuts are unwarranted while the oil and gas industry continues to benefit from large subsidies. "Will we stand with big oil or big bird?" Democratic Rep. Ed Markey asked on the House floor earlier this year, referring to the GOP's interest in cutting funding for the Corporation for Public Broadcasting.

In an interview with ABC News yesterday, Boehner said that oil and gas companies are "gonna pay their fair share in taxes - and they should." However, he added that some small, independent oil and gas producers could need subsidies as an incentive to pursue more domestic production.

Boehner argued that Mr. Obama is disproportionately focused on cultivating alternative sources of energy and is "not doing anything to make the situation better" regarding sky-high gas prices.

In his letter today, Mr. Obama said, "While there is no silver bullet to address rising gas prices in the short term, there are steps we can take to ensure the American people don't fall victim to skyrocketing gas prices over the long term."

As the president pointed out in his letter, the oil and gas industry receives about $4 billion in subsidies per year, even as the industry continues to bring in profits. Oilfield services giant Halliburton announced earlier this month that its first quarter results set a company record of $5.3 billion in overall revenue.

Mr. Obama said that the subsidies given to oil companies should be invested in alternative energy. In addition, he called for a comprehensive energy strategy. Without one, he said, "we will stay stuck in the same old pattern of heated political rhetoric when [gas] prices rise and apathy and neglect when they fall again."

He summarized his ideas for an energy strategy, which include investing in a range of energy sources from domestic oil to wind, solar, biofuels and natural gas. He also called for "doubling down on fuel efficiency in the transportation sector."

Brendan Buck, a spokesperson for Boehner, said in response to Mr. Obama's letter that the president's suggestions "would simply raise taxes and increase the price at the pump."

"The speaker wants to increase the supply of American energy and reduce our dependence on foreign oil, and he is only interested in reforms that actually lower energy costs and create American jobs," Buck said.

With gas prices nationwide averaging close to $4 per gallon, Mr. Obama last week announced that the U.S. attorney general is creating a task force to root out any cases of fraud or manipulation in the oil and gas markets that might affect gas prices.

[SueDinNY]

Are you kidding me? Get rid of the oil subsidies and WE have HIGHER OIL PRICES. Then, Obama can blame higher oil prices on Boehner instead of his war on oil drilling. Notice: the EPA just shut down Shell drilling in Alaska - a possible 27 BILLION gallons of oil. This problem is devaluing the dollar so our $$ is worthless plus the war against the oil companies by our President and his cohorts.

[simpleconservative]

Isn't this great, class warfare politics will transfer these 4 billion dollars to the price we pay at the pump. Is there no end to economic illiteracy in America. The President and the Speaker of the house agree to hide another tax on the general public under the guise of attacking big oil. Here is a news flash to all thinking Americans. We pay all the corporate taxes levied. Corporations simply pass them on as a cost of doing business and include them in the prices we pay for goods and services. The corporate tax rates should be zero and the economy would fly like the eagle that is the symbol of our great nation. Unemployment would exist only for those that refuse to work and prosperity would be the natural order!

[abbe91]

First, this is not about taxes or tax cuts, but subsidies.
Second, corporate taxes are practically zero and the economy doesn't "fly like the eagle", nor does the trickle down politics work.

[san850]

Eliminating oil subsidies will NOT increase what we pay at the pump...that is driven up by speculators...supply & demand. Even some oil execs have stated that since oil companies are making RECORD profits now, there is no need for the subsidies (entitlements). The Big Five oil companies together recorded profits of $77 billion last year alone. They obviously do not need our tax dollars and our blood at the pump.

At a time when we have a record deficit, it makes no sense to keep rewarding oil companies for socking it to consumers at the pump. These subsidies are a relic of a time when oil was $17 per barrel. That time has long since ended.

As far as corporate taxes, most intelligent, free-thinking Americans know that no matter what the corporate tax rate is...they do not pay anywhere near what their rate is. They have been gifted with so many loopholes, tax rates do not matter. That, plus offshore banking shelters even more from taxation. They are given ALL these perks yet they have been, and will be, still outsourcing our jobs overseas to increase their bottom line even more. Politicians should cease "gifts" to these corporate thieves and worry about the extinction of the middle class.

[carolo43]

Can't get too excited about Boehner finally thinking straight because an hour later he was thinking like a Tea Partier again. I almost thought there for a minute he was one of the few Republicans who still have some thoughts of his own.

[san850]

It's a shame Boehner wasn't "thinking straight" in February when he and all Repubs voted UNANIMOUSLY against President Obama's proposal to end these subsidies. I guess he got lots of mail on that one and now he's flip-flopping because it's "politically expedient" for him.

[randysparisi]

Mabamo has no clue what to do and could care less about the average person. Broken promises and lies is what he is all about. Four more years of this guy and we can kiss our crack and cheeks goodbye.

[Smokey75]

by san850 April 26, 2011 5:51 PM EDT Keep up Smokey....oil prices will NOT go up by eliminating subsidies. They are driven up by speculators...supply & demand. Sorry, but you cannot legitimately blame this one on Obama.

Oil companies are making record profits now and even some oil execs have said that due to these record profits, they DO NOT NEED subsidizing.

Never once did I say oil prices would rise due to the subsidies being canceled. I said the price at the pump would go up so that Oil companies could continue their record profits. What do you idiots think you can take billions from the oil company and they will say "oh well I guess we'll just make less now".

I cannot believe people can be that stupid to think companies work that way. I guess that is why you see very few true liberal business leaders because liberals are too stupid to run a business.

[san850]

@Smokey...I cannot believe people can be stupid enough to think that our hard-earned tax dollars should be gifted to oil companies who are making record profits.

The Big Five oil companies together recorded profits of $77 billion last year alone. They obviously do not need our tax dollars and our blood at the pump. Even some oil execs agree.

At a time when we have a record deficit, it makes no sense to keep rewarding oil companies for socking it to consumers at the pump. These subsidies are a relic of a time when oil was $17 per barrel...many, many years ago. That time has long since ended.

[noloyalisti]

It is WAY past time for the government to nationalize the American oil industry. Energy supply and energy policy is far too important to be left in the hands of greedy right wingers who deny man made global climate change.

I think this is a good time to start planning a tax strike for next year and demand the government end the overseas occupations and tax the rich. It will only work if millions of us do it. I need someone to start a website to take pledges to do this. We CAN and SHOULD bring the military-industrial complex to it's knees.

[gedrury1852]

You have to be a Fing IDIOT. The government can not manage the government must less the oilfields.

[EricUeland]

First of all the oil industry as a whole has made and has always profits, as well they should as they provide a highly demanded product used by everyone. You could make a case therefore that govt. subsidies if they should go anywhere should go to them as they actually produce something viable. I don't wish to make that case however, I don't think they need the subsidies, and to be sure eliminating them might cause prices on oil based products to go up a little bit I have to say that's life! Govt. needs to get back to fundamentals of working simply, specifically and exclusively at preserving the social compact (Hobbes, Locke, etc.) which has nothing to do with providing for anybody or any industry, it only has to do with being protected and not killing each other, basically. This is a golden opportunity for the House, Senate and Obama to actuall work together and do soemthing good. Boehner should get a bill together to eliminate all subsidies, appeasements and grants to all private businessess period! If that's too much to ask, too impractical in other words, just limit it to all energy companies, be it alternative or conventional, there would be a quid pro quo there at least and it seems unfortunately that's what it takes these days to get things done. Unfortunately I am probably dreaming huh?

[dr.gonzo79]

the oil companies have boner in there back pocket . he will back track and say he didn't mean what he said and start crying . wa wa wa the oil companies need that money . tear snifle tear tear tear , waaaaaaaaa!

[Smokey75]

I have no problem taking the subsidies away but with gas at $3.89 a gallon what do you think will happen if you take the subsidies away.

Do you think oil companies will take less profit because of their new expenses or do you think they will pass those new costs onto consumers in the form of higher prices at the pump?

I do not see how raising oil company's costs will lower the price at the pump? I am a little confused at Obama's economic understanding if he has any. Usually when company's cost go up so does the price of their product.

[Smokey75]

Oh never mind I forgot Obama's goal is to price us out of the Oil market so we will start riding bikes and putting solar panels on our cars.

[san850]

Keep up Smokey....oil prices will NOT go up by eliminating subsidies. They are driven up by speculators...supply & demand. Sorry, but you cannot legitimately blame this one on Obama.

Oil companies are making record profits now and even some oil execs have said that due to these record profits, they DO NOT NEED subsidizing.

[stephand]

It's all fine an well to end the oil subsidies. I am not sure how they do it without some very industry specific legislation, which is a whole separate debate...

The issue is I am not sure what problem it solves. Yes it makes the democratic base feel good about themselves, but it will not do much for the deficit and it will increase the price of gas, so what's the point?

[san850]

Duh, it will save BILLIONS of dollars that could better be spent on important things, you know, like maybe EDUCATION?