Obama Plan to End Oil Tax Breaks Taps Controversy

President Obama is earning both praise and criticism for suggesting in his State of the Union address that gas and oil companies are "doing just fine on their own" and don't need the tax breaks they currently enjoy.

Oil industry experts suggest the president, by singling out oil companies, could be defeating two of his stated goals: creating jobs and boosting renewable energy research.

"The administration seems poised to stifle one of the best ways to create jobs," said Jack Gerard, president of the American Petroleum Institute, citing potential job growth in new petroleum exploration.

"We need policies that help the 9.2 million hardworking men and women in the industry, not hurt them," Gerard said.

Gerard also says the industry invested over $58 billion dollars from 2000 to 2008 in "zero carbon emission technologies."

But others question those figures. According to the American Council on Renewable Energy, the five largest oil companies have spent $5 billion or $6 billion to develop renewable energy over the past 15 years.

"I don't buy the argument that removing tax breaks will discourage oil companies from investing in renewable energies," said Deron Lovaas of the Natural Resources Defense Council.

Whether it's the result of oil company investment, or government research spending, the president said Tuesday that he hopes that by 2035, "80 percent of America's electricity will come from clean energy sources."

And the president said in his speech, "With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015."

As for tax breaks enjoyed by the oil companies, Gerard said other industries enjoy similar exemptions and the oil companies already provide nearly $100 million a day in taxes, royalties and fees.

But Loraas said the oil companies are "wildly profitable."

"In an era of $3-per-gallon gasoline, which could rise to $4 or $5 dollars within a few years, the oil companies enjoy ample profits without getting taxpayer help," Loraas said.

Michael Eckhart, president of the American Council on Renewable Energy, suggested it was unfair for the government to give special breaks to the oil industry and instead help those companies that aspire to loftier social and ecological goals.

"Taxpayers should offer incentives to energy producers who provide the best benefit in terms of environment, health and economic growth," Eckhart said.

According to filings with the Securities and Exchange Commission, the five largest oil companies made a combined profit of $64 billion in 2009. They have invested in a variety of renewable energy projects, including batteries, solar cells and even the use of algae as a potential fuel.

Obama said on Tuesday that he is seeking a comprehensive approach to energy development.

"Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all -- and I urge Democrats and Republicans to work together to make it happen."