Congressional Bill Proposes Quadrupling Oil Tax


U.S. congressional negotiators on Thursday proposed quadrupling an oil tax that finances a federal oil-spill trust fund, the latest fallout for the industry following a vast oil spill in the Gulf of Mexico.

The tax would increase to 32 cents a barrel, from 8 cents currently, under a plan worked out between House and Senate tax-writing committees. The Oil Spill Liability Trust Fund is a source of funding for oil-spill cleanups.

The $1.6 billion that the fund holds is estimated to be less than what will be needed to clean up a BP Plc (BP, BP.LN) spill that followed an April 20 oil-rig explosion. Though BP has indicated that it will pay all "legitimate costs" related to the spill, the disaster is focusing attention on the issue.

The tax increase, which was included as part of a broader package to extend tax breaks including jobless benefits, would be effective through the end of 2020.

The increase would take place in the first quarter that begins 60 days after the bill is enacted, or as early as October of this year.

Copyright (c) 2010 Dow Jones & Company, Inc.