The President is urging Congress to "take immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil." That was the message the President sent to House Speaker John Boehner, R-Ohio; House Minority Leader Nancy Pelosi, D-Calif.; Senate Majority Leader Harry Reid, D-Nev.; and Senate Minority Leader Mitch McConnell, R-Ky., in a letter addressing energy problems.
"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," wrote the President. "Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies, even though oil prices are high and the industry is projected to report outsized profits this quarter."
Boehner, in an interview Monday with ABC, said big oil companies don't need the oil depletion allowance but that smaller, independent companies do. He also said proposals to end other oil and gas subsidies are certainly something that should be taken a look at at a time when the federal government needs more revenue.
The depletion allowance, one of the most controversial of government preferences for the industry, dates back to 1926. Much like depreciation in other businesses, it enables producers to recover the cost of capital investment. In his letter, Obama said he was heartened by Boehner's comments.
Obama concluded his letter by saying, "I hope we can all agree that, instead of continuing to subsidize yesterday's energy sources, we need to invest in tomorrow's. We need to invest in a 21st century clean energy economy that will keep America competitive. In the long term, that's the answer. That's the key to helping families avoid pain at the pump and reducing our dependence on foreign oil."