U.S. President Barack Obama speaks about rising gas prices and oil company… (Chip Somodevilla/Getty…)
WASHINGTON — The Senate blocked an effort to end billions of dollars in tax breaks for the oil industry, brushing aside President Obama's argument that the five big oil companies were doing "just fine" while consumers were struggling with painfully high gasoline prices.
The measure to kill the industry tax preferences failed on a 51-47 procedural vote Thursday. It needed 60 votes to overcome a Republican-led filibuster that was supported by some Democrats from oil-rich states.
Both parties used the election-year debate to try to deflect voter anger about steep pump prices.
Democrats repeatedly pointed to big oil company profits as evidence that the industry no longer needs federal subsidies, while Republicans argued that the tax breaks would encourage continued oil-drilling development and griped that the industry was being unfairly targeted.
At a White House appearance before the vote, Obama said members of Congress had a choice. They either can "stand with the big oil companies," he said, "or they can stand with the American people."
"Right now, the biggest oil companies are raking in record profits," the president said. "On top of these record profits, oil companies are also getting billions a year in taxpayer subsidies."
In an election year, with a divided government unlikely to approve other measures, there is little that the government can do to lower gas prices.
The most significant tool at Obama's disposal is the release of oil from the nation's Strategic Petroleum Reserve, which probably would not affect prices at the pump for very long.
A lack of bipartisan agreement isn't the fundamental problem. Experts said gas prices are fluctuating because of a variety of factors over which Washington has no control, such as rising demand and geopolitical pressures on the price of oil.
The current "psychology of the market" will keep oil prices elevated in the near term, said Frank Verrastro, director of the energy and national security program at the Center for Strategic and International Studies.
If history is a guide, Verrastro said, U.S. gasoline prices tend to decline after July — at least if there isn't a massive global disruption or market tightening.
"Unfortunately for consumers, little can be done in the near term," he said. "In a free-market system, price is the final allocator of scarce resources."
"For most Americans, the focus of energy policy right now is all about gasoline prices," Verrastro said. "The reality is that presidents have very little to do with near-term fluctuations in gasoline prices."
Obama's effort to end the subsidies faced resistance within his own party from those who have long been hesitant to halt subsidies for oil companies. Four Democrats voted to block the measure. Two Republicans voted to push the bill forward.
The GOP leader, Sen. Mitch McConnell of Kentucky, ridiculed the Democrats' energy policy, saying that stripping the oil companies of tax breaks would do little to ease consumers' pain at the pump.
"Their brilliant plan on how to deal with gas prices: Raise taxes on energy companies," he said.
The legislation, sponsored by Sen. Robert Menendez (D-N.J.), would target more than $2 billion in annual tax subsidies to the so-called Big Five oil companies — BP, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell and ConocoPhillips.
Had the measure passed Congress, about half of the $24 billion in savings over 10 years would have been reinvested in tax breaks for biodiesel, wind, cellulosic ethanol and energy-efficiency programs. The other half would have been used to reduce the federal deficit.