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Lawmakers try to score points on high gas prices

By Ayesha Rascoe and Timothy Gardner

WASHINGTON (Reuters) - With U.S. gasoline prices surging to $4 a gallon, lawmakers will be scrambling this week to assure voters they are working to ease their pain.

From the White House to Congress, politicians facing election next year are eager to appear active on an issue that could prove difficult to fix in the short run.

"The political pressure is very strong and the need to do something is very strong, but I don't expect there are many things they can do that will give immediate relief," said David Pumphrey, of the Center for Strategic and International Studies, who once worked at the Department of Energy.

Democrats, led by President Barack Obama, want to crack down on big tax breaks for oil majors, especially after the firms posted soaring first-quarter earnings last week.

"When oil companies are making huge profits and you're struggling at the pump, and we're scouring the federal budget for spending we can afford to do without, these tax giveaways aren't right," Obama said in his radio address on Saturday.

Exxon Mobil, the world's most valuable traded company, led the way posting a 69 percent rise in earnings to $10.65 billion, trumping Wall street expectations.

Republicans want to throw open offshore and other areas to more drilling to boost domestic production and cut dependence on foreign oil.

There will be two votes in the Republican-led House of Representatives on two measures that will speed up permitting for offshore oil exploration and allow drilling off the Virginia coast.

Republicans have blasted the Obama administration for slowing the pace of granting permits for offshore oil development and for halting a proposal to allow drilling off the East Coast after last year's massive BP oil spill.

They argue those moves have left the United States more vulnerable to oil price shocks and more dependent on foreign sources for fuel.

ENDING TAX BREAKS FOR BIG OIL

With rising fuel prices cutting into Obama's poll numbers as he starts his 2012 election bid, the White House seized on comments from Republican House Speaker John Boehner that seemed to open the door to cutting tax breaks for oil companies.

Boehner backtracked quickly when the White House pressed for action, and he said ending the tax breaks them would only lead to higher gasoline prices.

The White House has pushed ahead with its appeal to end the tax breaks, saying the funds could be diverted to cut the deficit and to invest in renewable energy.

Senate Majority Leader Harry Reid said last week he would move quickly to bring the tax legislation to the floor for a vote, but the bill's timing is unclear.

Even if it loses in the Republican-controlled House, the campaign to end tax breaks could embarrass Republicans who could be seen as siding with Big Oil during a big spike in gasoline prices -- votes the Democrats could use to their advantage in debates before the November 2012 election.

HIGH PRICES CURE FOR HIGH PRICES

All of the measures will likely have little impact on gasoline prices, which hit $3.88 last week as unrest in the Middle East and weak dollar pushed oil to more than $112 a barrel, analysts said.

"From the point of view of immediate gasoline prices, nothing that anybody is talking about makes any sense," said Amy Myers Jaffe, of the Baker Institute at Rice University.

"Taxing the oil industry isn't going to lower gasoline prices. Doing something about drilling even now is not going to lower gasoline prices now," Jaffe said.

Ironically, high gasoline prices will likely do more to lower fuel costs than any congressional action, said commodity analyst Matt Smith, at Summit Energy.

"Perhaps high prices are the ultimate remedy for high prices," Smith said, saying high prices will lead to either less driving and more fuel-efficient vehicles, or consumers will spend less in other areas to maintain driving habits.

"Both situations will likely lead to lower gasoline prices ... but the pain at the pump has to be felt first, unfortunately," Smith said.

(Editing by Russell Blinch and Peter Cooney)

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