White House budget would kill $38.8B in tax breaks for oil, gas and coal industry

The White House calls for the end of nearly $40 billion in tax beaks for oil, gas and coal companies in its budget proposal released on Monday.

The tax effort is sure to prompt outcry from industry groups, which have long argued that ending the subsidies will stymie investments in domestic energy production.

The fiscal year 2011 budget plan calls for repealing $38.8 billion worth of tax breaks for oil, natural gas and coal companies over a decade, according to the White House.

President Barack Obama’s first budget plan a year ago called for cutting $31.5 billion in oil and gas industry incentives, including a repeal of the industry’s ability to claim a lucrative domestic manufacturing tax break.

Congress did not act on the proposals, which are opposed by a mix of Republicans and Democrats representing oil- and gas-producing states.

The call for ending the tax breaks comes after the White House signaled concessions to the oil and nuclear lobbies — and their Capitol Hill allies — in an effort to advance a bipartisan climate and energy bill.

Obama’s State of the Union speech last week called for “tough decisions” about opening new offshore areas for oil and gas drilling.

The administration is also proposing over $54 billion in loan guarantees for building new nuclear reactors — triple the $18.5 billion now available, an administration official said Friday.

Obama has called for a three-year freeze on non-defense discretionary spending, but it’s not across-the-board. The budget plan includes $6 billion for development of "clean" energy technologies, White House Office of Management and Budget Director Peter Orszag told reporters Sunday.

“We also expand research and development funding to spur innovation by ... roughly 6 percent, reaching a level of more than $60 billion in fiscal year 2011, and include more than $6 billion in funding to spur clean energy, most of which is intended to, again, move us towards that clean energy future and work in concert with the elimination of the subsidies for fossil fuels to move us aggressively there,” he said.