Bloomberg News

Obama Seeks Tax Break for Natural-Gas Trucks, Oil Lease Sale

February 01, 2012

(Updates with Obama remarks, details of trip beginning in third paragraph.)

Jan. 26 (Bloomberg) -- President Barack Obama said tax breaks for natural-gas powered trucks will help the U.S. cut its dependence on imported oil.

Obama, in his second day promoting policies laid out in his State of the Union address on Jan. 24, proposes a credit equivalent of 50 percent of the extra cost of purchasing a natural gas-powered truck compared with one that runs on diesel or gasoline.

“We have a supply of natural gas that can last America nearly a hundred years,” Obama said in the text of remarks in Las Vegas at a United Parcel Service Inc. natural gas refueling station built with the aid of money from the economic stimulus. “Developing it could power our cars, our homes, and our factories in a cleaner and cheaper way.”

The initiative grows out of speech on U.S. energy policy that Obama delivered last March, in which he called for cutting oil imports by a third in a decade. The U.S. is the world’s largest oil-consuming country.

U.S. energy production, manufacturing and education are shaping up to be the main themes of Obama’s economic message in his re-election campaign. His trip this week runs through five electoral battleground states that the president’s political advisers have targeted for the November vote.

The five, Iowa, Arizona, Nevada, Colorado and Michigan, have a total of 48 of the 270 Electoral College votes needed to claim the White House. Obama won all of them except Arizona in 2008.

Pickens’ Plan

Billionaire investor Boone Pickens has been lobbying for incentives to stimulate greater use of natural gas as a vehicle fuel to replace imported oil. During the 2008 campaign he met with Obama and Arizona Senator John McCain, the Republican presidential candidate, to discuss the proposal. Pickens also promoted wind and solar sources to generate electricity.

Pickens, founder and chairman of Dallas-based BP Capital LLC, is the largest shareholder of Clean Energy Fuels, a natural-gas supplier for bus and truck fleets. Obama’s audience included employees from UPS and Clean Energy Fuels, according to the White House.

The measure faces resistance in Congress from some Republicans, who oppose energy-specific subsidies.

Obama also highlighted a previously proposed lease sale for oil and gas production in the central Gulf of Mexico to take place on June 20.

Lease Sales

The administration plans to make approximately 38 million acres available in a lease sale that could result in production of 1 billion barrels of oil and 4 trillion cubic feet of natural gas, according to the Department of Interior.

“The Central Gulf of Mexico remains the area with the greatest offshore oil and gas potential in the entire United States outer continental shelf,” said Tommy P. Beaudreau, director of the Bureau of Ocean Energy Management, in a statement.

Obama pointed to natural gas production in his State of the Union address, his last before he faces voters in November, as a way to support thousands of jobs and reduce oil use.

He also promoted more spending on clean energy development.

From Las Vegas, Obama will travel to Buckley Air Force Base in Aurora, Colorado, to highlight a U.S. Navy plan to purchase one gigawatt of electricity from solar, wind and other renewable energy sources. A gigawatt can power 250,000 homes, the administration said.

--With assistance from Margot Habiby in Dallas and Joe Sobczyk in Washington. Editors: Joe Sobczyk, Bob Drummond

To contact the reporters on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net; Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net; Jon Morgan at jmorgan97@bloomberg.net


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