Obama budget calls for $10.25 tax on crude oil

Bloomberg News

P resident Ba rack Obama has proposed to raise $319 billion over the next decade for transportation and other needs with a $10. 25-per-barrel tax on crude — up from $10 that was announced last week.

The higher a mount, along with other details, were released Tuesday as part of the president’s $4.1 trillion budget request to Congress.

While major questions still remain unanswered, including how and when the fee would be charged, the White House envisions collecting the tax from an estimated 4 billion barrels of domestic and imported oil in 2022, once it is fully phased in.

The money would be steered to a “21st Century Clean Transportation Plan to upgrade the nation’s t ra nsportation system , improve resilience and reduce emissions,” according to budget documents released Tuesday.

“Meeting future challenges wil l requi re a long-term vision for the transportation sector that includes more and cleaner options,” Transportation Secretary Anthony Foxx said in a statement. “This budget brings us closer to that vision.”

Expor ted pet roleu m products would not be subject to the fee, and home heating oil would be temporarily exempted. After a five-year phase in, the fee would apply to all petroleum produced or imported beginning Oct. 1, 2021.

The White House Office of Management and Budget did not explain the higher fee or share details on the modeling and assumptions it used to estimate money it would raise — as much as $319 billion from fiscal 2017 to fiscal 2026. But the $41 billion estimated to come in during fiscal 2022 would reflect about 10.9 million barrels per day of oil.

Nat ion a l E conom ic Counci l Di rector Jef f Zients told repor ters Feb. 4 that oil companies would pay the fee, though it would not be charged at the wellhead. He said the fee would be $10 per barrel.

On Tuesday, Zients said the fee “will save consumers and commuters time and energy costs.”

Republicans in charge of Congress — which decides whether, and how, to act on Obama’s budget blueprint — have already declared his proposed oil fee “dead on arrival.”

And it has been angrily denounced by oil industry leaders, who say the fee would be passed on to consumers, hitting poor and middle-income families especially hard.