March 29 (Bloomberg) -- President Barack Obama said oil company profits justify abolishing $4 billion in annual oil and natural gas subsidies and shifting those savings to research on clean-energy fuels.
With the Senate scheduled to vote on the matter later today, Obama again urged Congress to repeal the tax breaks. The measure is opposed by Republicans, who have the votes to block the legislation.
“It’s not like these are companies that can’t stand on their own,” Obama said in prepared remarks delivered in the White House Rose Garden. Last year, the three biggest U.S. oil companies took home more than $80 billion in profit, with Exxon Mobil Corp. collecting almost $4.7 million each hour, he said.
“And when the price of oil goes up, prices at the pump go up, and so do these companies’ profits,” he said. “Meanwhile, these companies pay a lower tax rate than most other companies on their investments -- partly because we’re giving them billions in tax giveaways every year.”
Energy company subsidies are a staple of Obama’s re-election campaign rhetoric, meant to highlight the differences between himself and Republican presidential candidates and cast them as defenders of such spending as they propose cuts in health and other social programs to reduce a deficit forecast at $1.3 trillion this year.
In his Feb. 13 budget, Obama said existing tax “loopholes and expenditures” for the oil and natural gas companies amount to an unwarranted “preference” of these industries over others.
Criticism of Republicans
At Ohio State University March 22, Obama ridiculed Republican presidential candidates as the “flat Earth crowd,” who’d “rather give $4 billion in taxpayer subsidies to oil companies this year than to invest in clean energy.”
“We have been subsidizing oil companies for a century. That’s long enough,” he said.
Republicans today cited a March 3 Congressional Research Service report that found repealing $22.8 billion in tax breaks over five years would reduce the tax breaks for independent companies and, on a small scale, “would make oil and natural gas more expensive for U.S. consumers and likely increase foreign dependence.”
Senate Republican Leader Mitch McConnell of Kentucky, in an e-mailed statement, said Obama’s proposal is a political gambit in an election year and called the plan a “tax hike on American energy manufacturers” that he’d oppose.
Brendan Buck, a spokesman for House Republican Speaker John Boehner, said today in an e-mail that the president is giving a speech “with gas prices at $3.92 per gallon, calling for policy that would make gas more expensive and increase foreign dependence on oil. You wouldn’t believe it, right? Yet this is happening.”
Ending such breaks would reduce the deficit by $41 billion over a decade, according to Obama’s budget for fiscal 2013.
Subsidies were worth $24 billion for the five largest oil companies operating in the U.S., including Irving, Texas’s Exxon Mobil Corp. and Chevron Corp. in San Ramon, California, Senate Democrats said.
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