White House proposes oil tax to fund 'clean transportation'

By Tyson Fisher, Land Line staff writer | Friday, February 05, 2016

Citing the threat of climate change and the transportation sector accounting for 30 percent of U.S. greenhouse gas emissions, President Obama introduced a plan that would reduce carbon pollution while having the oil industry foot the bill.

Dubbed 21st Century Clean Transportation System, the budget plan suggests a 50 percent increase in investments that would reduce greenhouse gases in the transportation industry. Investments are already being “reformed” to help reduce carbon pollution, cut oil consumption and create new jobs is also called for.

The White House plans on funding this mission by adding a new fee on oil. A $10-per-barrel fee will be paid by oil companies under the proposed plan. The new fee will be incrementally phased in over a span of five years. According to a White House press release, the fee will not only fund new investments, but also provide for the long-term financial needs of the Highway Trust Fund.

In addition to adding funds, the new fee will essentially disincentivize investments and innovations that require crude oil.

Goals within the budget plan include:

  • Accelerating the transition to cleaner vehicle fleets, including expanding Diesel Emissions Reduction Act Grant Program funding.
  • “Modernization” of the freight system.
  • Expansion of Transportation Investment Generating Economic Recovery (TIGER) program.
  • Quick and safe deployment of clean autonomous vehicles on the road.
  • Charging infrastructure and technology for electric/alternative vehicles.
  • Cleaner public transit and rail transportation.

Total costs of the budget request amount to $35 billion annually over a decade.

The call for an oil tax comes at an opportune time for the White House. An international supply glut has dragged down the price of crude oil to near 13-year lows. Gasoline and diesel fuel are reaching prices last seen in 2009 during the recession.

Despite bipartisan support achieved with the Fixing America's Surface Transportation Act, the White House can expect resistance in the Republican-led Congress. House Speaker Paul Ryan has expressed his opposition.

“As this lame-duck president knows, it’s dead on arrival in Congress, because House Republicans are committed to affordable American energy and a strong U.S. economy,” House Speaker Ryan said in a statement.

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