Obama’s proposed $10-a-barrel oil tax draws harsh criticism

Barack Obama
Source: WikiCommons

A new $10-per-barrel tax on oil proposed by the White House has been met with a barrage of criticism from the oil industry and the Republican Party – making it unlikely to get through Republican-controlled Congress. The new fee, levied on the 7.4 million barrels of oil imported into the U.S. as of November (source: EIA), and designed to fund clean transportation infrastructure and the Highway Trust Fund, was quickly deemed by House Speaker Paul Ryan “dead on arrival in Congress”

The new levy could pay for the 100% increase in funding for clean energy research and development by 2020, President Obama promised in his weekly address on 6th February.

Jeffrey Zients, Obama’s chief economic adviser, explained that the tax would be imposed only on the oil imported into the United States, not on the oil pumped domestically, ensuring a “level playing field” for American Producers.

“Our transportation system is too dependent on oil. The system was not designed to handle the realities of changing climate,” Zients said.

The initiative is controversial non the least because of its timing. The rock-bottom oil prices have put immense pressure on the producers, forcing many of them into bankruptcy.

Jack Gerard, American Petroleum Institute (API) president and CEO told reporters during a news conference that: “We’re trying to be competitive in the global marketplace. We’re trying to compete for opportunities with the Iranians and others, which the administration now allows to freely export into the global marketplace, so when you look at this $10 tax, it’s almost as if they believe the American people aren’t paying enough for their gasoline,” he continued. “Why would you arbitrarily—at a time of challenging economics—go back and tell everybody in society that we’re going to raise your energy costs?”

Gerard also noted that increased use of natural gas in the U.S. has brought down the country’s CO2 emissions to a record 20-year low.

“We ought to embrace that opportunity and promote it around the world if we’re serious about carbon reductions,” he said.

House Speaker Paul Ryan further commented: “Once again, the president expects hardworking consumers to pay for his out of touch climate agenda. A $10 tax for every barrel of oil produced would raise energy prices—hurting poor Americans the most.”

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