Gas costs offsetting tax cut, Obama says
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WASHINGTON -- President Barack Obama acknowledged Friday that the fast-rising cost of gasoline could diminish the effect of policies designed to stimulate economic growth, but warned that he is not yet prepared to unleash the nation's energy reserves to bring down the price of oil.
In a news conference, Mr. Obama said a payroll tax cut signed into law in December as part of the tax package would now go to cushion the impact of a recent spike in oil prices and allow for continued economic growth.
An Energy Department analysis released this week says the average U.S. household will pay $700 more in fuel costs this year, cutting into the $1,000 per year savings per family that Mr. Obama cited as a result of the payroll tax cut.
"Gas prices are hurting individuals right now and obviously taking some of that tax cut that we gave them and forcing them to use it on gas, as opposed to buying other items," the president said.
Oil prices have been rising fast in recent weeks as disruptions in Libya have shut down about 1 million barrels a day of production and spooked energy markets about the possibility of wider upheaval in Middle Eastern petroleum exporting nations. But the actual impact on oil supplies has so far been modest, as Saudi Arabia has offered to fill in the shortfall by increasing its own oil output.
On Friday, oil fell slightly to $101.16 after hitting a 2 1/2-year high of $105.44 earlier this week. The nationwide average cost of a gallon of gasoline has jumped to $3.54, up 42 cents in just a month.
As pump prices have risen, so has pressure on Mr. Obama from both sides of the political aisle to take more steps to drive down energy costs.
Some Democrats have called upon the president to open the Strategic Petroleum Reserve, a stockpile of 727 million barrels of crude oil available for emergencies. Some Republicans have said Mr. Obama, kowtowing to environmental interests, has frustrated the development of domestic oil sources.
First Published March 12, 2011 12:00 am
