Senate takes up bill repealing $2B oil tax breaks

Five Democratic senators, led by Missouri's Sen. Claire McCaskill, asked the Federal Trade Commission Tuesday to investigate "potential price fixing of gasoline by U.S. refiners." The senators said U.S refineries have cut back production even as gas prices rose, increasing their profit margins.

Obama has called for eliminating tax breaks for all oil and gas companies every year since he took office in 2009, a proposal that would raise an estimated $44 billion over the next decade. Lawmakers, including Democrats from oil-producing states, complained that Obama's proposal would raise taxes on many small and medium-sized businesses involved in oil production.

The bill being voted on Tuesday would target only the five largest oil companies, raising about $21 billion over the same period. The White House issued a statement supporting the tax bill Tuesday, calling the tax breaks "wasteful subsidies."

The most generous tax break is a deduction available to U.S. manufacturers across industries. Under the provision, oil and gas companies were classified as manufacturers, but their deduction was capped at a lower rate than other industries.

Another subsidy, established in 1913 to encourage domestic drilling, allows oil companies to deduct more quickly the costs of preparing a site for drilling. Another allows oil companies to reduce their American taxes by deducting royalties paid to foreign governments.

Associated Press writer Dina Cappiello contributed to this report.