Obama seeks $10 US-a-barrel oil tax to fund clean transport

U.S. President Barack Obama is proposing to implement a $10 US-a-barrel tax on oil in the 2017 budget he presents to Congress next week, the White House says. The proposed fee would fund a range of green transportation initiatives.

Would require Congressional approval, which is considered unlikely

U.S. President Barack Obama wants to bring in a $10 US-a-barrel fee on oil companies to fund a variety of clean transportation initiatives, the White House announced Thursday. The fee proposal will be included in the president's final 2017 budget plan he'll send to Congress next week. (Carolyn Kaster/Associated Press)

U.S. President Barack Obama is proposing to implement a $10 US-a-barrel tax on oil in the 2017 budget he presents to Congress next week, the White House confirmed on Thursday.

The proposed fee, which would be paid by oil companies, would be used to develop a range of clean transportation initiatives like mass transit, high-speed rail and the development of self-driving cars. 

"The president's plan would increase American investments in clean transportation infrastructure by roughly 50 per cent while reforming the investments we already make to help reduce carbon pollution, cut oil consumption, and create new jobs," said a statement issued by the White House.

"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."

One industry group was quick to criticize the proposal, saying it couldn't come at a worse time for energy companies.

"At a time when oil companies are going through the largest financial crisis in over 25 years, it makes little sense to 
raise costs on the industry," said Neal Kirby, a spokesman for the Independent Petroleum Association of America. 

"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."

Unlikely to pass Congress

The website Politico estimates the fee, should it be implemented, would add about 25 cents US a gallon to the cost of fuel, assuming that oil companies passed the whole fee along to consumers.

But the likelihood of that fee ever becoming law appears to be remote, since Congress ultimately controls the purse strings and Republicans control the Congress.

Republicans have never been fans of the president's energy policies. They've often accused him of not doing enough to support domestic energy producers. 

The White House hopes the proposal will spark a debate about the need to get energy producers to help fund efforts to fight climate change. Obama is spending the last year of his presidency trying to focus attention on clean, renewable fuels that don't make climate change worse.

Among other things, the White House says the fee would provide an additional $20 billion US a year to help expand transit systems across the U.S.   


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