Obama to propose $10 tax per-barrel of oil

PRESIDENT Barack Obama is set to propose a $10-per-barrel oil tax as a means of funding a “21st century clean transportation system,” the White House announced Thursday, Feb. 4.

The new tax could bring in up to $32 billion in federal revenue each year, which would be used to fund various transportation and infrastructure projects, such as high-speed rail, bridges and highways.

Obama’s move to boost the cost of producing fossil fuels is another step in his effort to combat climate change, and more specifically to slow down production.

Under the proposal, the tax would apply to both domestic and imported oil, as well as jet and train fuel. But unlike the tax on gasoline, which is paid for directly by consumers, the levy would be shouldered by oil companies.

“This is a per-barrel fee on oil paid for by oil companies,” said White House economic adviser Jeff Zients, according to USA Today. “So they’re the ones paying the fee. We recognize that oil companies would likely be passing along the cost.”

The new tax could add up to 25 cents per gallon of gasoline, which has a federal tax of 18.4 cents per gallon. And according to MarketWatch, the impact of the tax could grow.

The plan will be released when the president presents his final budget request next week, Obama aides told POLITICO. However, it would require approval from the Republican Congress, which is unlikely.

“Once again, the president expects hardworking consumers to pay for his out-of-touch climate agenda,” House Speaker Paul Ryan said in a statement. “As this lame-duck president knows, it’s dead on arrival in Congress, because House Republicans are committed to affordable energy and a strong U.S. economy.”

Although the idea has received backlash from the GOP, it has been praised by environmental groups. Former Pennsylvania governor Ed Rendell, a Democrat who has often criticized Obama, said it was the boldest transportation plan since Eisenhower’s blueprint of the interstates, POLITICO reported.

“Since then we’ve just been bumping along, doing short-term fixes, and I give them a lot of credit for laying out this kind of long-term investment. I also give them credit for having the guts to say how they would pay for all of it. That’s very unusual in this area.” Rendell said.