WASHINGTON — When he releases his new budget in two weeks, President Obama will propose doing away with roughly $4 billion a year in subsidies and tax breaks for oil companies, in his third effort to eliminate federal support for an industry that remains hugely profitable.
Previous efforts have run up against bipartisan opposition in Congress and heavy lobbying from producers of oil, natural gas and coal. The head of the oil and gas lobby in Washington contends that the president has it backward — that the industry subsidizes the government, through billions of dollars in taxes and royalties, not the other way around.
But even as the president says he wants to do away with incentives for fossil fuels, his policies continue to provide for substantial aid to oil and gas companies as well as billions of dollars in subsidies for coal, nuclear and other energy sources with large and long-lasting environmental impacts.
Mr. Obama’s proposal rekindles a long-running debate over federal subsidies for energy of all kinds, including petroleum, coal, hydropower, wind, solar and biofuels. Opposition to such subsidies — often euphemistically referred to as incentives, tax credits, preferences or loan guarantees — spans the ideological spectrum, from conservative economists who believe such breaks distort the marketplace to environmentalists who believe that renewable energy sources will always lose out in subsidy fights because of the power of the entrenched fossil fuel industries.