Posted 2/09/16 (Tue)
By Neal A. Shipman
At a time when this nation’s oil industry is struggling as a result of low oil prices, President Obama is proposing to include a $10 a barrel oil tax in his new budget proposal.
As would be expected, oil companies are seeing the President’s proposal as just another step to cripple America’s oil industry in the same way that he has attacked the nation’s coal industry. And they are right.
One only has to look at how President Obama is proposing to spend the $65 billion a year that the new tax would generate when fully phased in over the next five years to realize that this is a move to cripple America’s oil industry. If the tax is funded by the U.S. Congress, a portion of the new taxes would go to worthy transportation projects such as new rail corridors, highway projects, and pilot projects for self-driving cars. But a significant portion of those new tax dollars would go toward projects that the administration claims would fall under the goal of moving the United States away from the use of oil. In other words, Obama is proposing to throw billions of American taxpayer dollars toward more solar and wind projects that can never be economical unless they are heavily subsidized by the government.
But make no mistake, it is not only going to be oil companies that are going to be hurt by this proposed tax. In the end, that $10 a barrel tax is going to be paid by the American consumer every time that they buy gasoline, diesel fuel, home-heating fuel, tires, or any of the million products that they use every day. While the President is hoping that the oil companies will somehow just magically absorb that new tax, that is as much a fantasy as seeing the U.S. energy needs being filled by solar or wind energy.
So how much is it going to cost Americans every time they stop at the pump? The simple math puts the added cost at about 24 cents per gallon, which will go on top of the national average of 48 cents a gallon that motorists are already paying in federal and state fuel taxes. You do the math. Obama is talking of tacking on a 50 percent increase to the national average and the states haven’t even had a chance to figure out how much they want to increase their gas taxes yet.
Fortunately, the majority of Republicans as well as some Democrats in Congress are saying that Obama’s $10 a barrel tax is dead on arrival. Let’s hope so.