Obama says he wants oil producers to boost output

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Associated Press

Posted on April 27, 2011 at 8:01 AM

WASHINGTON (AP) — As the high cost of gasoline takes a toll on politics and pocket books, President Barack Obama says he is calling on major oil producers such as Saudi Arabia to increase their oil supplies to help stabilize prices, warning starkly that lack of relief would harm the global economy.

"We are in a lot of conversations with the major oil producers like Saudi Arabia to let them know that it's not going to be good for them if our economy is hobbled because of high oil prices," Obama told a Detroit TV station.

His remarks signaled a broad new appeal in the face of skyrocketing gasoline prices in the United States and they came as he reiterated a call for Congress to repeal oil industry tax breaks.

In interviews Tuesday with WXYZ in Detroit and in WTKR in Hampton Roads, Va., Obama said the message to major oil producers like Saudi Arabia is that an economy that buckles because of high oil prices won't grow and won't be good for them or for the U.S.

Obama acknowledged disruptions in oil production because of the war in Libya. But he said others can make up the difference and "we're pushing them to do so." Libya supplied less than 2 percent of world demand. Saudi Arabia and other OPEC countries already are covering some of that shortage by boosting production.

The president's effort to compel more overseas production echoed calls by President George W. Bush in 2008 urging Saudi Arabia to increase supplies during that year's spike in gasoline prices. The Saudis rebuffed Bush's efforts.

Obama said he has stressed the self-interest of oil producing nations, arguing that "if we're not growing, they're not going to be making money either.

"And so they need to increase supplies," he told WTKR.

Gas pump prices have climbed for 35 consecutive days. The national average rose by a penny to hit $3.87 a gallon on Tuesday, more than a dollar than a year ago. The price already has exceeded $4 a gallon in some regions of the country.

In a letter to congressional leaders Tuesday, Obama urged them to take steps to repeal oil industry tax breaks, reiterating a call he made in his 2012 budget proposal earlier this year. The White House conceded that plan would do nothing in the short term to lower gasoline prices.

The president wrote a day after House Speaker John Boehner, R-Ohio, said he was willing to "take a look at" repealing the multibillion-dollar tax subsidies enjoyed by the major oil companies. Boehner aides on Tuesday sought to clarify Boehner's stance, stressing that he was not advocating repeal of the tax breaks.

"He has said all along that he is opposed to raising taxes," Boehner spokesman Kevin Smith said. "That's his position."

Rising gas prices have become a political weight for the White House, with polls showing that as the cost rises at the pump, the president's approval ratings have slipped. Obama increasingly has sought to display action on oil, even as he acknowledges that there is no immediate way to stem costs.

"High oil and gasoline prices are weighing on the minds and pocketbooks of every American family," Obama wrote. But he also added that "there is no silver bullet to address rising gas prices in the short term."

Obama's proposal, spelled out in his past two budget plans, would eliminate a number of tax breaks for oil companies that would generate an estimated $4 billion a year in additional revenue.

The tax breaks — some in place since the 1920s — have survived multiple attempts to repeal them in the face of heavy oil industry lobbying.

The Republican response to the president's letter was dismissive.

Another Boehner spokesman, Brendan Buck, said Obama's suggestions "would simply raise taxes and increase the price at the pump." And Senate Republican leader Mitch McConnell said: "The president's latest call to raise taxes on U.S. energy is as predictable as it is counterproductive."

Obama's letter was addressed to Boehner, McConnell, House Democratic leader Nancy Pelosi, and Senate Majority Leader Harry Reid.

Blaming the subsidies on "outdated tax laws," Obama said money obtained from repealing the breaks should be spent on clean energy initiatives to reduce dependence on foreign oil.

On Monday, Boehner told ABC News that the government is low on revenues and that oil companies "ought to be paying their fair share."

"We certainly ought to take a look at it," Boehner said about repealing tax subsidies for major oil companies. "We're at a time when the federal government's short on revenues. We need to control spending but we need to have revenues to keep the government moving."

But Boehner made no commitment to repealing the subsidies. "I want to know what impact this is going to have on job creation in America," he told ABC.

Obama, in his letter, said he was "heartened" by Boehner's remarks. "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."

White House spokesman Jay Carney dismissed suggestions that Obama's letter was motivated by the potential effect of rising gas prices on the president's political prospects.

"I don't think when somebody sticks the credit card in the pump or pays a cashier the cash for a tank of gas that they're thinking about an election in 2012," he said.

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AP Special Correspondent David Espo contributed to this report.

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