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Obama’s Oil Tax Is Politically Unfeasible, But It’s Still An Important Discussion To Have

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Obama’s Oil Tax Is Politically Unfeasible, But It’s Still An Important Discussion To Have

Oil barrels are stacked at a storage facility in Seattle, Washington

When President Barack Obama proposed a $10.25-per-barrel oil tax, the offending industry wasted little time attacking his plan as detrimental to consumers, saying that it would hurt the middle class and raise food prices. Even though the plan has zero likelihood of passing in a Republican-controlled Congress during an election year, the motivations behind Obama’s proposal deserve a closer look.

The U.S. consumes 19.11 million barrels of oil a day at a current cost of $27 per barrel of crude oil. According to the BBC, the tax would raise $319 billion over 10 years. Most of the revenue raised would go towards Obama’s “Clean Transportation Plan,” which would allocate funds for clean technology and infrastructure projects. Our bridges are collapsing, remember?

A 2013 report on the state of America’s infrastructure by the American Society of Engineers concluded with a D+ grade. Between the 600,000 bridges, 144,000 miles of freight rail track, 7,300 power plants12,000 miles of inland waterways, 100,000 miles of levees, and 15,000 water treatment facilities scattered across the country, the cost of simply maintaining infrastructure is massive. Due to decades of negligence, the ASE estimated in 2013 that the federal government would have to spend $3.6 trillion on infrastructure by 2020.

The oil industry is promising to pass the barrel fee on to consumers. “The $10 per-barrel tax hike – which would add about 30 percent to the cost of a barrel of oil and potentially about 25 cents to the cost of a gallon of gasoline, according to reports – should be a wake-up call,” said American Petroleum Institute’s President Jack Gerard, in a statement released shortly after Obama’s announcement. “The proposed tax hikes could also have an impact on food prices and all sorts of goods that rely on transportation to reach consumers. Lower-income and middle class Americans, for whom essentials like transportation and grocery bills consume a greater percentage of their income, would be harmed the most by these outrageous tax proposals.”

Even the White House said oil companies would probably pass on the costs to consumers. Still, the tax would only apply to domestic oil production and oil imports, and domestic producers exporting American oil won’t face similar fees. But the proposal has to pass Congress. And it won’t. Republican lawmakers are vehemently against any new taxes, and certainly against implementing them in a sector with profit margins like the oil industry’s.

In his last years in office, Obama has embarked on several progressive political projects in an attempt to set the tone for his successor. This tax is one in a series of Obama proposals aimed at pricing environmentally destructive products “accurately,” or, accounting for the costs associated with climate change. While his opponents may still think climate change is a hoax made up by the Chinese to thwart American economic growth, their grandchildren certainly won’t think so when New York City’s three airports are all underwater.

Photo: Used oil barrels are stacked at a storage facility in Seattle, Washington February 12, 2015. REUTERS/Jason Redmond  


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  1. itsfun February 12, 2016

    As soon as the middle class gets a break in the price of gas, Obama wants to take it away. Does anyone actually believe the tax wouldn’t be passed on the the car owners?
    It seems we would realize that these kind of taxes just get passed to us, the middle class. Instead of having a few extra bucks to purchase something for our families we will just be handing the government the money we have been saving on gas. What happens when the price of oil goes back up, will the new tax disappear? I think not.

    1. Eleanore Whitaker February 12, 2016

      You don’t need gasoline anymore…That’s WHY it the price is going down. Get the facts, not the BS. OPEC has consistently refused since 2012 to lower their oil price per barrel and refused to decrease their production. Now, that Iran will be allowed to put their oil on world markets, the price of U.S. piggy Big Oil boys oil would naturally come down.

      And, in case you missed it, you don’t just pay for gasoline…you also pay for oil spill clean ups, oil spill fines and the 1.6 million miles of pipelines throughout the US…time for you oil suck ups to face reality. Three US states lead the nation in the production of solar and wind energy…that means…Oil like coal and gas…2 other major pollutants we also end up paying to clean up in our air and soil, are on their way out…

      If the dimwits who live in the oil, coal and gas states didn’t hang onto to a relic industry they knew was one day going to die for longer than rational, they’d have seen the handwriting on the wall.

      Why the hell should all of the other states moving to Clean Energy have to contribute to pig boy Big Oil states too stupid to get with the 2016 times.

    2. johninPCFL February 12, 2016

      The last time oil was below $30 per barrel, the cost of gasoline was $1. It’s now $1.60, so apparently the OilCos have increased their margins by 60%. But I guess buying OilCo CEOs new yachts every month beats having safe roads.

      1. itsfun February 12, 2016

        The costs of refining the oil has risen. Also now we have more regulations that cost money. I’m not defending oil companies, but I am complaining about Obama requesting a new tax of over $10.00 a barrel is uncalled for. Give us a break instead of jumping all over us because the cost is down now. All I hear is how the middle class is being destroyed and hurting, so Obama wants to tax us more instead of letting us have a small break.

  2. Eleanore Whitaker February 12, 2016

    It’s is so refreshing to be putting Big Oil out of business once and for all time. When the price of gasoline dropped here in NJ to $1.53, it was barely noticed because most people in NJ drive hybrids or electric cars. Yawn….so who does all the whining and bitching? Those you knew would…the Corn Pones and Mutton Chops who have relied far longer than sensible on oil.

    These idiot states have the kinds of climates that would be best served by solar energy…which in NJ is doing great..not only does NJ now have many small solar panel manufacturers but those once badly polluted brown fields are huge solar farms.

    So whine whine whine….the oil boy suck ups all sound like leftovers from the Great Depression…too bad this is 2016 and life has already moved so far past these nut jobs.

  3. ralphkr February 13, 2016

    I am amazed that the Oil boys say that gasoline will only go up about a quarter if there is a $10 barrel tax. I remember when the price of wheat went up $0.10 a bushel and bread went up $0.10 a loaf. Considering that a bushel of wheat yields from 42 to 90 loaves of bread it appeared that someone was making a small fortune from the price increase and it wasn’t the farmers.

  4. da6675 February 18, 2016

    Gasoline tax is always regressive. This is a chance for Obama and Wall St to get in another cheap shot at the 99% as he fades into lame duck territory.


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