Obama's $319 Billion Oil Tax Plan Raised to $10.25 a Barrel
(Bloomberg) -- President Barack Obama proposed Tuesday to raise $319 billion over the next decade for transportation and other needs with a $10.25-per-barrel tax on crude - up from $10 that was announced last week.
The higher amount, along with other details, were released Tuesday as part of the president’s $4.1 trillion budget request to Congress, including a proposed increase in the oil tax that Republicans swiftly rejected.
While major questions still remain unanswered, including how and when the fee would be charged, the White House envisions collecting the tax from an estimated 4 billion barrels of domestic and imported oil in 2022, once it is fully phased in.
The money would be steered to a "21st Century Clean Transportation Plan to upgrade the nation’s transportation system, improve resilience and reduce emissions," according to budget documents released Tuesday.
Exported petroleum products would not be subject to the fee, and home heating oil would be temporarily exempted. After a five-year phase in, the fee would apply to all petroleum produced or imported beginning Oct. 1, 2021.
The White House Office of Management and Budget did not explain the higher fee or share details on the modeling and assumptions it used to estimate money it would raise - as much as $319 billion from fiscal 2017 to fiscal 2026. But the $41 billion estimated to come in during fiscal 2022 would reflect about 10.9 million barrels per day of oil.
The Energy Information Administration projects the U.S. will produce 10.44 million barrels of crude oil per day in 2022.
Republicans in charge of Congress - which decides whether, and how, to act on Obama’s budget blueprint - have already declared his proposed oil fee "dead on arrival." And it has been angrily denounced by oil industry leaders, who say the fee would be passed on to consumers, hitting poor and middle-income families especially hard.
American Petroleum Institute President Jack Gerard called it an "unprecedented tax hike" in remarks to reporters Monday.
"We know that this tax hike could also have an impact on food prices and all sorts of consumer goods - everything that relies on transportation to get to consumers," Gerard said in a teleconference. "Only extremists whose goals ignore the concerns of consumers and lower-income families could welcome such an approach."
National Economic Council Director Jeff Zients told reporters Feb. 4 that oil companies would pay the fee, though it would not be charged at the wellhead. He said the fee would be $10 per barrel.
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