Obama to Propose a $10-a-Barrel Fee on Oil

Source: By CORAL DAVENPORT, New York Times • Posted: Friday, February 5, 2016

WASHINGTON — President Obama’s budget request to Congress will include a new fee on oil companies, requiring them to pay $10 to the federal government for every barrel of oil they produce, the White House said on Thursday.

The money, which could bring in up to $32 billion in new federal revenue annually, would be spent on a variety of transportation and infrastructure projects, including bridges and highways, high-speed rail and research on advanced vehicles such as electric and self-driving cars.

The proposal to further increase costs for fossil fuel production is part of a broader effort by Mr. Obama to fight climate change. The goal is to make it more expensive to produce and consume energy sources that emit planet-warming greenhouse gases while stoking the market for clean, renewable sources of energy such as wind and solar.

About 30 percent of the nation’s greenhouse gas emissions come from vehicles, and investing in high-speed rail and cleaner vehicles could help lower those emissions.

“This new approach to investment and funding is one that places a priority on reducing greenhouse gases, while working to develop a more integrated, sophisticated and sustainable transportation sector,” the White House said in a statement. The latest climate change moves are aimed particularly at slowing fossil fuel production. Last month, the Interior Department announced plans to halt new leases of coal mines on public lands while it conducts a study that could result in higher fees for companies that extract coal on federal property.

Oil prices are at their lowest point in more than a decade, which some policy makers believe provides an opportunity to minimize the impact of such a fee on consumers. But oil companies, whose profits have declined significantly with the price of oil, are likely to fight back hard, as will Republicans in Congress, who have consistently blocked any efforts to raise taxes.

The House speaker, Paul D. Ryan of Wisconsin, attacked the proposal. “Once again, the president expects hardworking consumers to pay for his out-of-touch climate agenda,” he said in a statement. “The good news is this plan is little more than an election-year distraction. As this lame-duck president knows, it’s dead on arrival in Congress.”

Neal Kirby, a spokesman for the Independent Petroleum Association of America, said, “Make no mistake, this is an energy consumer tax disguised as an oil company fee.”

Still, the proposal could have some backers who are concerned about the federal Highway Trust Fund, which pays for construction and maintenance of the nation’s roads and bridges and has been on the brink of insolvency. The highway fund comes from an 18.4-cent-per-gallon tax on gasoline, which Congress has not raised since 1993.

“The fee raises the funding necessary to make these new investments, while also providing for the long-term solvency of the Highway Trust Fund to ensure we maintain the infrastructure we have,” the White House statement said.

Jeffrey D. Zients, the director of the White House’s National Economic Council, noted that there had been growing bipartisan interest in shoring up the nation’s crumbling infrastructure.

“People call for more transportation investment but never talk about how they’ll pay for it,” he said. “We need major new investments and a long-term funding solution.”