Republicans Reject Democrats' Effort to Cut Oil Tax Breaks

Obama's call to end subsidies fails.

Senate Republicans on Thursday shot down a proposal to slash subsidies for big oil companies, barely an hour after a plea by President Barack Obama to end such breaks to firms which are "raking in record profits."

A narrow majority voted 51-47 for Democratic Sen. Robert Menendez's measure, but 60 votes were needed to move it forward.

Obama, under election-year pressure over a surge in fuel costs, used a Rose Garden address to say the nation cannot afford the subsidies at a time of record budget deficits.

"The biggest oil companies are raking in record profits -- profits that go up every time folks pull into a gas station," Obama said."But on top of these record profits, oil companies are also getting billions a year in taxpayer subsidies -- a subsidy they've enjoyed year after year for the last century."

Shortly after the bill failed, the White House decried the "unfortunate vote."

Press secretary Jay Carney said senators "chose to side with oil and gas companies instead of the American people, who overwhelmingly support the notion that... at a time of record profits, at a time when a company like Exxon Mobil (IW 500/1) is pulling down -- was it $4.7 million an hour in profits -- that the American taxpayer should not be subsidizing oil and gas companies."

Menendez has said that the top five oil companies made $137 billion last year, while producing 4% less oil than the year before. Senators urging passage of the bill have noted how the big five earned a combined trillion dollars in profits in the past decade.

Obama sought to portray Republicans as supportive of subsidies that impose a double burden on the average American.

"You're already paying a premium at the pump right now. And on top of that, Congress thinks it's a good idea to send billions more of your tax dollars to the oil industry."

Obama is blamed by Republicans for doing too little to encourage domestic oil production, but the president argues that more drilling will not bring down prices.

"Instead of taxpayer giveaways to an industry that's never been more profitable, we should be using that money to double-down on investments in clean energy technologies that have never been more promising," Obama said.

Republicans quickly responded that Obama is out of touch with the problems of Americans and that his actions would be an effective tax increase.

"As smart as he is, the president still doesn't grasp the difference between a subsidy and a true business expense," Texas Representative Kevin Brady said.

"Raising taxes on our energy manufacturers -- and make no mistake this is what he's calling for -- will only mean less American-made energy, fewer American jobs and more expensive fuel at the pump. No wonder the Obama economy continues to struggle."

Obama repeated his view that the United States should pursue a variety of energy initiatives -- a so-called "all-of-the-above" policy which includes oil and many alternative sources.

Senate Republican leader Mitch McConnell said Wednesday that the plan would offer no relief for Americans hurt by rising fuel prices -- which have hit around $4 per gallon.

"Gas prices have more than doubled under President Obama and the Democrat-controlled Senate," McConnell said.

"At a time when gas prices are at a national average of nearly $4 a gallon, this is what passes for a response to high gas prices for Washington Democrats -- a bill that does nothing about it... because they've got nothing -- nothing but a phony proposal aimed at distracting people from the fact that they have nothing to offer."

Environmental protection group the Natural Resources Defense Council called the Senate vote "mindboggling."

"Rather than continuing to subsidize the richest companies in the world, we should be supporting policies that encourage more choices for Americans beyond the oil industry's monopoly on our transportation system," said NRDC legislative director Scott Slesinger.

Copyright Agence France-Presse, 2012

See also:

Obama Trip Focuses on Energy Amid Soaring Prices

The Road to More Natural Gas Cars Starts With Infrastructure

Obama: Oil Drilling Not the Only Solution

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