"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," the letter states.
But Jerry Taylor, a senior fellow at the Cato Institute, said eliminating subsidies for oil and gas will show little effect on either lowering or increasing prices at the pump because of the nature of the U.S.'s role in global prices in the crude oil market. Domestically, Taylor said, there is only so much the United States can do.
The president's budget proposal estimates the government will free up $4 billion dollars by eliminating these tax breaks.
"Based on what we know, you have companies making billions of dollars in profit, $100 million a day in profit, that’s great, okay? That’s good. That’s fine. We should not be taxed. We -- the American taxpayers should not be subsidizing that profit, "said White House Press Secretary Jay Carney during a press briefing Tuesday.Taylor said however, that any rhetoric that oil and gas companies are getting off easy is hot air. Taylor said they pay 41 percent of their gross revenue to the government, while the S & P 500 average is merely 25.6 percent of gross revenue.
"They pay more than their fair share," Taylor said of the oil and gas industry.
What the White House does think taxpayers should be subsidizing, however, is renewable energy, which it proposes to give $5 billion in new tax credits in its 2012 budget, according to the Novogradac Journal of Tax Credits.
"I am writing to urge you 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 dependency on foreign oil," the president began his letter to congressional leaders.
But Taylor doesn't think any energy companies should be getting government help.
There are still a few steps the government could take tax-wise to bring down prices at the pump, Taylor said, although he cautioned these would only have a "modest" impact on price because some of it is based on the global supply and demand curve, which the U.S. cannot necessarily control. One of these steps is waving royalties on oil and gas production, royalties Taylor said basically amount to a "special tax." He also recommends eliminating the corporate income taxes period, since he feels that's double taxation.
The president's letter came, according to White House Press Secretary Jay Carney in Tuesday's briefing, because House Speaker John Boehner signaled he may be open to ending the subsidies for oil companies, though a spokesperson from his office later told the AP that Boehner's statements weren't necessarily a condoning of the president's plan.