Obama to seek new tax on oil in bud­get pro­posal

The Pak Banker - - MARKETS/SPORTS -

US Pres­i­dent Barack Obama will launch a long-shot bid next week to im­pose a $10-a-bar­rel tax on crude oil that would fund the over­haul of the na­tion's ag­ing trans­porta­tion in­fra­struc­ture, the White House said to­day.

The pro­posed fee, which would be paid by oil com­pa­nies and phased in over five years, was quickly met with scorn by law­mak­ers in the Repub­li­can­con­trolled Congress.

In the last year of his pres­i­dency, Obama has said the coun­try must stop sub­si­diz­ing the "dirty" fos­sil fu­els of the past and fo­cus on clean, re­new­able fu­els that do not ex­ac­er­bate cli­mate change.

"By plac­ing a fee on oil, the Pres­i­dent's plan creates a clear in­cen­tive for pri­vate sec­tor in­no­va­tion to re­duce our re­liance on oil and at the same time in­vests in clean en­ergy tech­nolo­gies that will power our fu­ture," the White House said in a state­ment.

Set to be of­fi­cially an­nounced in Obama's fis­cal 2017 bud­get plan on Tues­day, the fee would pro­vide nearly $20 bil­lion a year to help ex­pand tran­sit sys­tems across the coun­try and more than $2 bil­lion a year to sup­port the re­search and de­vel­op­ment of self-driv­ing ve­hi­cles and other low-car­bon tech­nolo­gies.

Repub­li­can law­mak­ers, who have re­peat­edly clashed with the Obama ad­min­is­tra­tion over en­ergy pol­icy, panned the pro­posal on so­cial me­dia. House of Rep­re­sen­ta­tives Ma­jor­ity Whip Steve Scalise asked on Twit­ter whether the pro­posal was "Obama's worst idea yet?"

The $10 tax would come at a time of tum­bling oil prices. Oil prices fell last month to below $30 a bar­rel, the low­est level since 2003, as de­mand fails to keep pace with a glut of new sup­ply and the world's big­gest oil pro­duc­ers re­sist cut­ting pro­duc­tion. "At a time when oil com­pa­nies are go­ing through the largest fi­nan­cial cri­sis in over 25 years, it makes lit­tle sense to raise costs on the in­dus­try," Neal Kirby, a spokesman for the In­de­pen­dent Pe­tro­leum As­so­ci­a­tion of Amer­ica, said in a state­ment.

Kirby said the tax would ul­ti­mately be passed along to U.S. con­sumers, who have ben­e­fited from low gaso­line prices. Jeff Zients, di­rec­tor of the White House Na­tional Eco­nomic Coun­cil, pushed back against as­ser­tions the oil tax would place U.S. crude pro­duc­ers at a dis­ad­van­tage. He told re­porters on a call that the fee would be ap­plied to do­mes­ti­cally pro­duced and im­ported bar­rels of oil but not to crude ex­ported from the United States.

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