Obama's energy policy takes center stage as $4 gas prices loom
Obama's energy policy will be the subject of the president's three-stop tour starting Wednesday. He wants to deflect criticism that he's not doing enough to fight rising gas prices.
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On top of that, Mr. Henke says the federal government could decide not to list dunes sagebrush lizard as an endangered species. Listing the lizard as endangered could reduce drilling and production in New Mexico, says Henke.Skip to next paragraph
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Third stop: oil pipeline
On Thursday, Obama will travel to Cushing, Okla., which is a gigantic storage area for oil. Obama will use the occasion to highlight his approval of a new pipeline that will move petroleum from Cushing to refineries and export facilities around the Gulf of Mexico. The White House says this will help relieve some of the bottleneck of oil produced in the Midwest.
But the oil industry has been incensed over Obama’s opposition to the Keystone XL pipeline, which would bring 700,000 barrels a day of oil from Canada and Montana and North Dakota. “To assure we have energy for decades to come, the president needs to approve the Keystone XL pipeline,” says Jack Gerard, the president of the American Petroleum Institute (API), the industry lobbying group in Washington.
On Tuesday, the API released a poll conducted by Harris Interactive that asked registered voters if they felt increasing energy taxes would increase consumer costs. Not surprisingly, 76 percent of the 1,009 respondents said they thought higher taxes would lead to higher gasoline prices.
Obama and the oil industry have been at odds over the issue for the last three years. The president blasts the oil industry on a regular basis, particularly over their use of tax-reduction items such intangible drilling expenses.
For example, when an oil company drills for oil, many of the efforts are unsuccessful. However, instead of depreciating the effort over five years, the oil companies can expense the effort all at once, reducing their taxes. According to a US Treasury estimate, repeal of the intangible drilling expense would net the government $14 billion between 2013 and 2022. Repeal of other tax deductions used by the industry would add another $11.5 billion over the same period.
Obama has tried to get Congress to change the tax code as it applies to the oil industry.
“It has gone nowhere, there has not even been a hearing on his proposals the last few years,” says Pete Davis of Davis Capital Investment Ideas, which provides Wall Street with information. “If there is no hearing, you don’t have a prayer.”
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