President Barack Obama's budget outline calls for eliminating substantial tax breaks and increasing fees for the oil and natural gas industry.

Obama's plan, which must still be approved by Congress, would levy an excise tax on Gulf of Mexico oil and gas that would provide the government with $5.3 billion in revenue from 2011 to 2019.

The new tax would close a loophole that the administration says has given oil companies excessive royalty relief.

The proposal would also place a fee on nonproducing energy leases on federal lands expected to raise $1.2 billion between 2010 to 2019.

Many Democratic lawmakers have complained that oil and gas companies lobby to open more land to energy development but are not diligently developing the nearly 68 million acres to which they already have rights.

Several use it or lose it energy bills failed to pass Congress last year during a heated debate between lawmakers over whether to open the Outer Continental Shelf to oil and gas drilling.

The tax breaks Obama intends to repeal for the oil and natural gas industry include the manufacturing tax credit, the enhanced oil recovery tax credit and the marginal well tax credit.

Obama has made transforming the way Americans use energy a key priority for his presidency. He has pledged to double U.S. renewable energy production in three years and wants 10 percent of electricity to come from clean energy sources by 2012.

His budget includes more than $50 million in increased funding for the Interior Department to conduct environmental studies necessary to assess alternative energy resources and bolster clean energy development.

(Reporting by Ayesha Rascoe; editing by Jim Marshall)

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