Mindful of the political dangers of high gas prices, he said shrinking demand for oil must drive the solution.
Obama, promoting his energy policies in a politically prominent state that will host the Democratic National Convention, called on Congress to provide $1 billion in grants to local communities to encourage greater use of fuel-efficient technologies. The administration's goal is to make electric vehicles as affordable and convenient as gasoline-powered vehicles by 2020.
The president also proposed greater tax incentives to encourage the purchase and use of more fuel-efficient vehicles.
Gasoline prices are at their highest levels for this time of year, and Obama has been traveling in recent weeks to promote energy proposals he says will reduce foreign oil dependency over the long term.
"We need to invest in the technology that will help us use less oil in our cars and our trucks, and our buildings, and our factories," Obama said. "That's the only solution to the challenge. Because as we start using less, that lowers the demand, prices come down."
The president spoke in North Carolina, a state with political implications for his re-election. He traveled there as the Republican field seeking to defeat him in November remains unsettled. Mitt Romney squeezed out a win in pivotal Ohio on Tuesday, captured five other states and padded his delegate lead in the race for the Republican nomination. But the front-runner was forced to share the Super Tuesday spotlight with a resurgent Rick Santorum.
Selecting North Carolina for his energy message has a strong election-year undertone. Obama won North Carolina by only 14,000 votes in 2008, the slimmest margin of all the states he carried.
He called on Congress to end tax subsidies to the oil and gas industry, which amount to about $4 billion a year.
"We can place our bets on the fuel of the past or we can place our bets on American know-how and American ingenuity and the American workers just like the ones right here," he told plant workers at Daimler's Freightliner plant.
Obama's $1 billion incentive for local communities is designed to promote use of advanced technologies such as more charging stations for electric vehicles. Obama has called for 1 million plug-in vehicles on American roads by 2015.
Obama also was calling for increasing a tax incentive to $10,000 from $7,500 for people who purchase certain advanced vehicles.
But Republicans have questioned the worthiness of such tax credits. General Motors Co., for example, recently suspended production of its Chevrolet Volt electric car for five weeks amid sluggish sales, idling 1,300 workers at its Detroit area assembly plant.
GM sold more than 7,600 Volts last year, below its original goal of 10,000 cars. The company has sold more than 1,600 Volts through the end of February.
In Congress Wednesday, Republicans and oil industry leaders called for more US gas production to combat rising prices while Democrats focused on conservation and the role of Wall Street speculators in driving up prices.
