Oil industry pounces on Obama’s budget request

But the Obama administration counters that the proposal to cut oil industry tax breaks, included in the budget request sent to Congress Monday, will save billions of dollars. The Department of Energy estimates that such a repeal will save $3.6 billion in fiscal year 2012 and a total of $46.2 billion during the next decade.

Still, the proposal faces major obstacles on Capitol Hill. Obama has called for eliminating the tax breaks before and the proposal has yet to gain traction, even after last year’s massive Gulf of Mexico oil spill.

House Republicans, who last week unveiled a bill to fund the government through the end of the fiscal year that would cut spending $100 billion below Obama’s 2011 budget request, have been hesitant to endorse the proposal, raising concerns about jobs and the economy.

But Obama’s proposal does not go far enough for some environmentalists. Friends of the Earth President Erich Pica said the administration should make deeper cuts.

“Friends of the Earth strongly supports President Obama’s proposal to end $46 billion in fossil fuel giveaways, but the President is still leaving tens of billions of dollars in the hands of the fossil fuel industry,” Pica said in a statement. “We urge him to save this money by ending royalty giveaways to oil companies, refinery tax credits, and production credits for refined coal.”