President Barack Obama on Thursday waded into the politically charged debate over gasoline prices, saying he knows high prices at the pump cause pain and criticizing Republican calls for more drilling as a "bumper sticker."
"Just like last year, gas prices are climbing across the country, except this time even earlier. And that hurts everyone," Obama said while speaking at the University of Miami. He accused Republicans of seizing the high gasoline prices to call for more drilling.
"And you can bet that since it's an election year, they're already dusting off their three-point plan for $2 gas. I'll save you the suspense: Step 1 is 'Drill,' Step 2 is 'Drill,' and then Step 3 is 'Keep drilling,'" he said. "Well, the American people aren't stupid. They know that's not a plan, especially since we're already drilling. That's a bumper sticker."
The president's remarks come as the average price of a gallon of regular gasoline in the U.S. has risen about 22 cents in the last month to $3.61, mostly because of fears of a supply disruption due to increased tension with Iran. Republicans, including those running for president, have blamed the increasing costs on Obama and said he needs to expand domestic drilling.
Obama sought to deflect blame and tout his own energy policy. To avoid "these annual gas price spikes," Obama said, the U.S. needs to develop oil, natural gas, wind, solar, nuclear, biofuels and other energy resources.
He said U.S. oil production last year reached its highest level in eight years.
He also used the gasoline prices to bolster his case for ending tax breaks for oil and natural gas companies. A tax plan the president released Wednesday calls for eliminating the tax breaks, while proposing to continue and expand tax incentives for clean-energy production.
Obama said giving tax breaks to oil and natural gas companies is "outrageous. It's inexcusable."
Senate Minority Leader Mitch McConnell (R., Ky.) said he doesn't think anyone could show him how raising taxes on energy companies would lower gasoline prices. "But since nobody can, and the president doesn't, this is merely an attempt to deflect from his failed policies," McConnell said.
Republicans have said the Obama administration should open up more land and offshore areas to drilling. Republican presidential hopeful Newt Gingrich, at a debate Wednesday in Arizona, said increased drilling could bring gasoline prices down to $2.50 a gallon.
Obama said the amount of oil drilled in the U.S. doesn't set the price of gasoline. He said the situation with Iran is creating uncertainty. "When uncertainty increases, speculative trading on Wall Street increases and that drives up prices even more. So those are short-term factors at work," he said.
He said increasing demand for oil in countries such as China and Brazil will be the main long-term factor in driving up prices. "So what does that mean for us? It means that anyone who tells you that we can drill our way out of this problem doesn't know what they're talking about, or just isn't telling you the truth," he said.
Copyright (c) 2012 Dow Jones & Company, Inc.
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