Due to the steep drop in oil prices countrywide, President Obama will announce a plan to add an oil barrel tax, but is meeting harsh opposition from Congressional Republicans.
(TNS) -- President Obama will propose a $10-per-barrel tax on oil in next year’s budget to modernize the U.S. transportation system, using the fossil fuels tax to pay for a transition to clean energy, administration officials said Thursday.
A leading Republican immediately said the plan, to be included in Obama’s final budget proposal Tuesday, will go nowhere in Congress.
House Majority Leader Kevin McCarthy, R-Bakersfield, whose district produces oil, said the tax “would undoubtedly be passed along to consumers, adding that much more to every energy bill and trip to the gas station. ... It goes without saying that the House has no intention of adding more costs on the American people."
The administration’s proposal includes another run at making high-speed rail a “viable alternative to flying” in major regional corridors, a big element of Obama’s 2009 stimulus known as the American Recovery and Reinvestment Act. California was one of the few states to accept the stimulus money for high-speed rail and moved forward with a plan to connect San Francisco and Los Angeles by bullet train. But Republicans have cut off further funding to the project, which is two years behind schedule.
National Economic Council director Jeff Zients said Obama’s overall proposal reflects his promise to “tackle problems that have been simmering for decades,” in this case, chronic transportation underinvestment that loads businesses with higher freight expenses and costs Americans 7 billion hours in wasted time as they sit in cars and trucks snarled in traffic. Zients called these costs a hidden $160 billion annual tax, $960 for each commuter, that is harming U.S. competitiveness.
The $10-per-barrel fee on oil, levied on imports but not exports, represents a limited version of a carbon tax that would discourage greenhouse gas emissions and encourage cleaner fuels. The fee, to be paid by oil companies, would be much broader than the current gasoline tax paid by drivers. Reluctance by both parties in Congress to raise the gas tax has led to chronic funding shortfalls for highways and transit.
The plan calls for big new investments in rail and other non-car options for urban commuters, technologies to support driverless cars, and regional refueling systems for low-carbon vehicles.
Over five years, the Obama plan would boost investment by 50 percent over the bipartisan transportation bill that Congress passed last year after 36 short-term extensions.
Transportation Secretary Anthony Foxx said the plan would change federal funding programs by rewarding states that cut carbon pollution from transportation, a provision that would aid California disproportionately since the state has more electric vehicles than the other 49 states combined. The program would also reward such things as better land-use planning and investments in transit.
Foxx called the proposal a “bold new plan that will create a clean transportation system and increase overall investment in ways that give America communities more climate friendly choices.”
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