In a speech assessing the country's energy future, Obama called for a $7,000 tax credit to help consumers buy fuel-efficient cars, set a goal of 1 million plug-in hybrid cars on U.S. roads by 2015 and proposed a requirement that 10 percent of U.S. energy comes from renewable sources by the end of his first term.
Obama, celebrating his 47th birthday, also unveiled a package of steps designed to end U.S. reliance on oil imports from the Middle East and Venezuela within 10 years, including tax credits for buyers of fuel-efficient hybrid cars.
In a speech in Michigan, a battleground in November's White House election and home to the struggling U.S. auto industry, he proposed releasing 70 million barrels of light oil, easier to refine into gasoline, from the emergency U.S. stockpile.
The Democratic senator from Illinois said the light oil could be replaced later with heavier crude in a swap designed to bring quick relief from high gasoline prices.
"We have to make a serious, nationwide commitment to developing new sources of energy and we have to do it right away," Obama said.
McCain fired back in Pennsylvania, criticizing Obama's opposition to nuclear power and offshore drilling and calling on Congress and Obama to return to Washington from their summer break to try to solve the country's energy challenges.
"Anybody who says that we can achieve energy independence without using and increasing these existing energy resources either doesn't have the experience to meet the challenges we face or isn't giving the American people straight talk," McCain said in Lafayette Hill, a suburb of Philadelphia.
The Obama campaign responded with a challenge.
"If Senator McCain is willing to pass a compromise that provides immediate relief to consumers in the form of a $1,000 energy rebate and makes a serious investment in renewable energy, Senator Obama would be happy to join him in calling on Congress to return," said Obama spokesman Bill Burton.
"But if he continues to reject any compromise that takes away tax breaks for the same oil companies that have given millions to his campaign ... we'd rather not waste the American people's tax dollars,"
Two daily tracking polls show McCain, a Republican senator from Arizona, has in the past week wiped out Obama's narrow national lead in the campaign for the Nov. 4 election.
The faltering U.S. economy, including rising gas prices, rank as the top issue for American voters in most polls.
AD SAYS MCCAIN 'IN OIL'S POCKET'
Obama's new television advertisement said McCain was "in the pocket" of oil companies. The ad pictured McCain standing with President George W. Bush. "After one president in the pocket of Big Oil -- we can't afford another," it says.
The McCain camp said the ad failed to mention McCain opposed a 2005 energy bill that provided billions in tax breaks for energy producers, including oil companies. Obama voted for the bill, which was backed by the Republican president.
The McCain campaign also blasted Obama's proposal on the strategic oil reserve, noting he said just weeks ago that it should be used only for genuine emergencies.
"Tapping the strategic oil reserve is not a substitute for a real plan to increase supply through additional drilling and nuclear power," McCain spokesman Tucker Bounds said.
"The last release of oil from the strategic reserve came in response to Hurricane Katrina, but the only crisis that has developed since Barack Obama last rejected this idea two months ago is a slide in his poll numbers," he said.
Obama's reversal on tapping the emergency oil stockpile is his second shift on energy issues in recent days.
On Friday he dropped his blanket opposition to offshore oil drilling and signaled he would be open to limited drilling as part of a compromise energy package in Congress aimed at reining in prices.
But Obama said in Michigan that oil companies should first focus on drilling on 68 million acres to which they have access but have not touched.
McCain has called for opening new areas of U.S. coastline to offshore oil drilling, which polls show is supported by a majority of Americans, and nuclear power. McCain plans a visit to a nuclear power plant on Tuesday.
In Michigan, Obama also pushed his proposal for a windfall tax on the soaring profits of big oil firms, which will pay for a $1,000 tax rebate for low- and middle-income families.