Obama Says Rising Pump Prices Reminder of Why U.S. Must Go Beyond Drilling

President Barack Obama said rising gasoline prices are a “painful reminder” of why the U.S. must develop alternative energy sources, and he criticized Republicans who he said were offering slogans rather than strategy.

Obama, in Miami promoting his administration’s energy and economic policies as the Republican presidential candidates have ramped up attacks on him over prices at the pump, said the U.S. must go beyond focusing on domestic gas and oil exploration.

Without naming any of his Republican critics, Obama mocked “their three-point plans for $2 gas,” which amounts to more drilling for oil on U.S. territory.

“Anyone who tells you we can drill our way out of this problem doesn’t know what they’re talking about -- or isn’t telling you the truth,” Obama said at the University of Miami after touring an industrial machine lab at the school.

The rising cost of gasoline threatens to crimp consumer spending, which accounts for 70 percent of the U.S. economy, at a time the recovery is gaining strength. Economic concerns loom as the top issue in the November election.

The average price for regular gasoline at the pump has risen to the highest ever for this time of year -- $3.61 a gallon, according to AAA data. The average price is nine cents higher in Florida, a swing state targeted by both parties in the presidential election. Today marks Obama’s 14th visit to Florida since his inauguration in 2009.

Mideast Instability

Obama said the recent bump in oil prices is caused by instability in the Middle East, including an increasing tense confrontation with Iran over its nuclear program. That has sparked some “speculative trading on Wall Street” that has added to the cost of oil, he said.

Rapid growth is spurring greater demand from countries such as China, India and Brazil, which will cause prices to rise over the long term, Obama said.

Crude oil for April delivery gained $1.55 cents, or 1.5 percent, to $107.83 a barrel on the New York Mercantile Exchange, the highest settlement since May 4. Crude increased for a sixth day after the Labor Department reported applications for jobless benefits were unchanged last week at 351,000, the fewest since March 2008, and German business confidence surpassed forecasts.

U.S. Production

U.S. production of crude oil is at the highest level in eight years and oil imports as a share of total consumption have declined to 45 percent in 2011 from 57 percent in 2005, according to a White House fact sheet. Both trends were under way before Obama took office, according to data from the U.S. Energy Information Administration.

Brendan Buck, a spokesman for U.S. House Speaker John Boehner, an Ohio Republican, said Obama “would like everyone to forget that gas prices have doubled over the past three years while he consistently blocked and slowed the production of American-made energy.”

Obama said that while he supports increased domestic exploration, his administration also is working to increase vehicle fuel efficiency and bolstering use of alternatives to crude oil, including natural gas.

In conjunction with the speech, the White House said the government will make $30 million available to advance research into fueling more vehicles with natural gas and another $14 million to make fuel out of algae.

No ‘Silver Bullet’

“There is not a silver bullet, there never has been,” Obama said.

Obama didn’t identify the Republicans who he said were offering “bumper sticker” slogans on energy.

Republican presidential candidate Newt Gingrich promised yesterday at a debate in Arizona that he’s developed an energy program “so every American can look forward to $2.50 a gallon gasoline.”

Responding to Obama today, Gingrich said the U.S. could add 2.4 million new barrels of oil per day to supplies by approving TransCanada Corp. (TRP)’s Keystone XL oil pipeline, re-opening areas of the Gulf of Mexico to drilling and permitting exploration and production in certain regions of Alaska.

“Blaming instability in the Middle East for high gas prices is not leadership,” Gingrich said in an e-mailed statement.

The two leading Republicans in the race, former Senator Rick Santorum and former Massachusetts Governor Mitt Romney also have criticized Obama’s policies, particularly his administration’s denial of a permit to build the Keystone pipeline from Canada’s oil sands to refineries on the Gulf of Mexico.

Tax Plan

Obama’s remarks followed the administration’s release yesterday of a plan to revamp the tax code that would reduce the corporate tax rate to 28 percent from 35 percent and keep incentives for renewable energy while eliminating some tax breaks for the oil and gas industries.

An oil industry executive said that while the industry supports a reduction in tax rates, Obama’s plan increases taxes on the oil and gas industry by $86 billion and his energy policies

“The actions don’t match the words,” Jack Gerard, the president of the American Petroleum Institute, said today in a phone interview from Washington after Obama spoke. “They’re not taking actions to put downward pressure on prices, instead of making public statements trying to suggest they are.”

Florida Fundraisers

Obama also is using his Florida visit to attend three fundraisers, two in the Miami area and one in the Orlando area at the home of Dallas Mavericks basketball player Vince Carter, according to a Democratic National Committee official who wasn’t authorized to discuss the events on the record.

The Miami-area events include a reception for 450 people at the Biltmore Hotel in Coral Gables, with tickets ranging from $1,000 to $5,000, as well as some $500 tickets for younger voters.

“Your country needs your help,” Obama told donors at the Biltmore. He said they should follow the Republican presidential contest “in case you need an incentive.”

A fundraiser at the home of lawyer and real estate developer Chris Korge, with tickets ranging from $15,000 to $30,000, was expected to draw 100 supporters, the DNC official said.

The event at Carter’s home in Windermere is expected to draw 70 supporters, with tickets at $30,000.

Florida is a major prize in the presidential election, with 29 of the 270 electoral votes needed to win the White House and a recent history of swinging between the Democratic and Republican candidates. Obama won the state in 2008 while Republican George W. Bush won in 2000 and 2004.

To contact the reporter on this story: Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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