President Barack Obama's administration poured more fuel on a delicate political debate, which is certain to be a key issue and driver of voter sentiment as his 2012 reelection campaign gathers pace.
Obama is pushing for four billion dollars of government subsidies paid to giant firms to be diverted to investment in clean energy development, which he says is key to weaning America from oil produced in volatile regions of the world.
"Major oil and gas companies are going to report this week, significant, if not record profits," said White House spokesman Jay Carney.
"Given the constraints that we are under, given the need to tighten our belts, given the need to reduce the deficit, this president feels very strongly that it is inappropriate to continue those subsidies."
"When Americans are going every day of the week to their local gas station and filling up and seeing a tank of gas costs 60, 70, 80 dollars, I think they would be appalled to learn that major oil and gas companies would be announcing record profits this week," Carney said.
"It's good for American companies to have profit. What is not necessary is for the taxpayers to subsidize companies that are experiencing those kind of record or substantial profits."
The vast oil and gas industry benefits for a range of tax breaks and incentives focusing on the prospecting and exploration of new fields.
The industry has warned that any drop in government subsidies will cost jobs at a time when the administration is battling to bring down high unemployment after the worst economic crisis in decades.
Obama, who knows that consumer pain over rising gasoline prices can exert a painful political cost for incumbents, launched the latest administration assault on the oil and gas industry last week in Nevada.
"Four billion dollars a year are going to companies that are making record profits -- even during the recession they were making big profits," the president said in a town hall meeting in Reno.
"These folks don't need further incentives by getting a better deal than the mom-and-pop shop down the street are getting when it comes to their taxes.
"Instead of subsidizing yesterday's energy sources, let's invest in tomorrow's."
Markets are awaiting quarterly results from firms including ExxonMobil, ConocoPhillips and Chevron this week.
First-quarter earnings at four of the largest oil companies are expected to improve by 22 percent to 56 percent, according to the latest poll of analysts by Thomson Financial.
According to the US Energy Information Administration, the average cost of a gallon of gasoline in the United States is close to four dollars, a rise of nearly a dollar over a year ago.
Copyright AFP 2008
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