The Obama administration proposed a $10/bbl tax on crude oil to help pay for its plan to create a 21st Century Clean Transportation System. Officials from national oil and gas associations immediately said it was a serious mistake.
“The president’s plan would increase American investments in clean transportation infrastructure by roughly 50% while reforming the investments we already make to help reduce carbon pollution, cut oil consumption, and create new jobs,” the White House said in a Feb. 4 fact sheet.
“The new fee on oil will also encourage American innovation and leadership in clean technologies to help reshape our transportation landscape for the decades ahead,” it added.
The plan would make public investments and create incentives for private sector innovation to reduce US transportation reliance on oil and cut carbon pollution, the fact sheet said.
“Investments in vehicle research and deployment would get clean autonomous vehicles on the road more quickly and more safely, while ensuring electric cars and other alternative vehicles have the technology and the charging infrastructure they need,” it indicated.
The administration justified the proposed tax on crude by saying significant investments need to be made in all forms of US transportation, which now depends heavily on petroleum products. “That is why we are proposing to fund these investments through a new $10/bbl fee on oil paid by oil companies, which would be gradually phased in over 5 years,” it said.
Revenue from the proposed levy would raise funding necessary to make new investments while providing long-term solvency for the Highway Trust Fund, the fact sheet said. “By placing a fee on oil, the president’s plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future,” it suggested.
American Petroleum Institute Pres. Jack N. Gerard saw the proposal differently. “The White House thinks Americans are not paying enough for gasoline, so they have proposed a new tax that could raise the cost of gasoline by 25¢/gal, harm consumers that are enjoying low energy prices, destroy American jobs, and reverse America’s emergence as a global energy leader,” he said on Feb. 4.
“On his way out of office, President Obama now has proposed making the US less competitive,” Gerard added.
“Make no mistake, this is an energy consumer tax disguised as an oil company fee,” Independent Petroleum Association of America spokesman Neal Kirby responded. “At a time when oil companies are going through the largest financial crisis in more than 25 years, it makes little sense to raise costs on the industry. This isn’t simply a tax on oil companies, it’s a tax on American consumers who are currently benefiting from low home heating and transportation costs.”