(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
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.
“Meeting future challenges will require a long-term vision
for the transportation sector that includes more and cleaner
options,” Transportation Secretary Anthony Foxx said in a
statement. “This budget brings us closer to that vision.”
Exported petroleum products would not be subject to the
fee, and home heating oil would be temporarily exempted. The fee
would apply to all petroleum produced or imported beginning Oct.
Administration officials cited the fee as $10 per barrel
when describing it to reporters on Feb. 4. On Tuesday, Jason
Furman, chairman of the Council of Economic Advisers, said the
proposal calls for a fee that will phase in over five years and
then be indexed to inflation. The $10 figure is the average over
the phase-in period.
The White House Office of Management and Budget did not
share details on the modeling and assumptions it used to
estimate the 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.
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. On Tuesday, Zients said
the fee “will save consumers and commuters time and energy
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.
Oil companies would probably pass on the added cost to
consumers, resulting higher prices for gasoline and other
products, the non-partisan Congressional Research Service said
in a report commissioned by the Republican staff of the Senate
Energy and Natural Resources Committee.
“In general, the fee would likely result in decreased
discretionary consumer purchasing power which may translate into
lower expected economic growth,” according to the report.
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
Conservationists supported the move. Rhea Suh, president of
the Natural Resources Defense Council, said the budget “sets
important priorities to continue the historic progress achieved
in recent years on protecting our climate, air, land, water and
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