Guest essay by Eric Worrall
President Obama has proposed a $10 per barrel carbon tax to fund renewable energy, and to “encourage” people to stop using oil.
From the Whitehouse Statement;
For too long, bipartisan support for innovative and expansive transportation investment has not been accompanied by a long-term plan for paying for it. We need a sustainable funding solution that takes into account the integrated, interdependent nature of our transportation system. Travelers choose between walking, biking, driving, flying, and taking the train; and companies choose between trucks, barges, airplanes and rail lines. So to meet our needs in the future, we have to make significant investments across all modes of transportation. And our transportation system is heavily dependent on oil. That is why we are proposing to fund these investments through a new $10 per barrel fee on oil paid by oil companies, which would be gradually phased in over five years. The fee raises the funding necessary to make these new investments, while also providing for the long-term solvency of the Highway Trust Fund to ensure we maintain the infrastructure we have. 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.
Why does the green version of “encouragement” always seem to involve beating ordinary people with price hikes until they comply?
If the President really wants to encourage green energy, why doesn’t he announce a tax holiday for profits made from green innovations? I doubt there would be any worthwhile innovations; making renewables affordable is an intractable problem. But at least a tax holiday wouldn’t hurt anyone. A tax holiday would stimulate interest and investment, while allowing ordinary people to continue to enjoy low oil prices.
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Urban people will benefit from public transportation. Middle and upper classes won’t change much because of this tax, so who’s hurt? Oh yeah, it’s the poor who cling to their bibles and guns who will suffer most.
Regardless of the merits of energy taxes, if your going to do it, then the tax should be at the pump, not on crude oil. First, the bureaucracy to collect the tax is already in place; just raise the existing federal excise tax on gasoline. Ten dollars per barrel on crude is about 30 cents per gallon at the pump. Not such a big deal with gas prices where they currently sit. Taxing crude oil is much more complicated and requires new bureaucracy (ugh!). Second, the tax is placed directly on consumers, who must ultimately pay any taxes. Third, the tax on oil producers will hurt the marginal producers, since they do not set the price of oil It will force some of them out of business. This is especially the case with the low prices for crude we now have. That said, none of this is going anywhere. It’s just politically convenient to be seen as beating up on oil companies.
The key is to tax all crudes. This includes imported oils. In such a case the internal market price will be uniformly higher. Imported refined fuels will have to be taxed at $25 per barrel.
Fernando,
I heard this proposal reported on the news last night as a tax on imported oil. So it might be presented as a protective tariff. Don’t see how that would make it palatable to the large international oil producers, but domestic companies might like it. Like most protective tariffs, it implies higher domestic prices.
The tax could be used to set up a fund to pay for nuclear plants, these can be used to supply baseload capacity.
Don’t forget to tax electric and hybrid cars, who are getting away scot-free currently.
Request Eric Worrall next time please place a photo of President Obama in your articles not smiling at me. He reminds me of a kid getting away with something.
No not a kid. But a man who is taking liberties. His eyes in his video speech about “energy price rises” spook me!
This will go down well with the thousands of oil employees across the nation who fear losing their jobs through the crashing oil price. The comments above support my long held view that people, in any profession, go into local authority employment because they do not have the intelligence, work ethic or ability to hold a job down in private industry or commerce where their skills or otherwise are judged by bottom line profit.
How about before we add another new tax we insist that the states and the Federal government use the existing gasoline taxes only for their original intended purpose?
Perhaps the oil companies should deliver the actual product instead of the $$ to the Whitehouse.
I am sure a few hundred thousand barrels of crude oil wouldn’t pose any sort of storage hazard, it isn’t like the stuff is flammable or toxic or anything.
And Obama can trumpet how he is saving the world by not letting that oil be burned.
Transportation is not just transportation. It is a base cost for every product or service we use, including food. Oil by-products are part of just about every product we use from pens to autos. And let’s not forget heating.
In effect, the chief is recommending increasing the overall cost of living for every man, woman, and child in America. Like the middle class has not been being hammered enough, let’s increase their cost of living and really throw sand in their gears.
Cannot describe how maliciousness this proposal is.
What bipartisan support? Read yesterday where even Paul Boehner Jr has stated that any such tax will be DOA in the House! That is IF he will actually do that, which I’ll believe when I see it!
Tax Hollywood – they are the biggest backers of this crap. Tax $10 on every movie ticket and see how quickly that gets changed.
Not a bad idea, Djozar.
…Everything that Obama touches turns to Shiite’ !
This of course is DOA. Can’t do a “Presidential Mandade” to get it around the Senate.
Unless it is the payoff for looking the other way while government officials got insider info to short oil futures.
“If the President really wants to encourage green energy, why doesn’t he announce a tax holiday for profits made from green innovations?”
Because the idea isn’t about Climate Change or legitimate plans to mitigate AGW. I’m afraid its much more sinister than that. Obama knows everything you know about CO2, he just chooses to support the Agenda 21 misdirection of humanity, away from the impending consequences of the quiet sun.
However.. If the tax model was changed 1:1 from that based on profit over to one based on consumption, (so abolish corporate taxes on oil company profits and dividends etc. for an initially zero net revenue change over to tax per volume sold) – the government would then have an incentive to INCREASE oil consumption!
Hey kids! .. you should be driving a heavier SUV with a V8! Miles per gallon? .. why bother, look how cheap gasoline is! And we will starting drilling offshore both coasts to make it even cheaper!
Note his method of skirting the end user tax on gasoline. This is a replay of Waxman Markey indirect tax strategies thinly veiled. A $10 tax per month on electric cars would be better.
How is it that most every trophy on this president’s mantle is also a nail in this country’s coffin?
Fire up the legal armada to ram it through as another executive order.
It is mind boggling how stupid some people are who gain high office. As others have noted, the claim that this tax would be levied on Oil Companies is nonsense. In all cases it is the consumer who pays, and they will always pay no matter what is claimed. All the tax would do is increase the rate of decline of the US economy. Having achieved that how much revenue can government hope to glean to fund its growing aspirations as the nation grows poorer, and everyone will become poorer, and that includes the rich who largely fund all this idiotic thinking.
What a great legacy Mr Obama is going to leave, 8 wasted years never learning how work with Congress, or the free world. I would hope Americans would be able to find a better prospect to take over as President, but those making the headlines do not offer much hope.
So government insiders started shorting oil futures well in advance of the decline in price in cahoots with the Feds who were thinking if we force the price low enough no one will mind a new tax. If it gets passed the insiders will start going long on oil futures and in the end when oil goes back up we are still stuck with the tax. Insiders get rich both ways, government gets it’s new tax. They all win.
exactly….also higher gas prices will raise the price of everything else…which will also raise the amount of taxes taken in
Speaking of taxes, think how much more in SS taxes the government will collect when they raise the minimum wage to $12/hr. And they never had to pass a tax increase!
Nothing wrong with a user tax to adeuately fund highway and bridge repair.
Everything wrong with a tax to perpetrate the funding of crony capitalism (can we all say ‘Elon Musk’ together?).
On the Good Morning America show this morning (02/05/16) they said President Obama was proposing a $10 per barrel tax on oil to be used for rail and transportation purposes. No mention was made of clean energy or reducing our reliance on oil. Sometimes I think the media intentionally tries to mislead the public.
The only thing that’s missing is a glistening white star sparkle on one of his teeth assaulting us through that sucker punch smile.
I’ve got a slightly different take on all this.
The US government has been overtly and passively following a policy of increasing the global natural gas and oil supplies. The purpose is to reduce the soft power of Russia and to a lesser extent certain Middle East countries.
The grand plan is to have the US be a reliable exporter and minimal consumer.
Chess moves.
Dwight D. Eisenhower and Khalid of Saudi Arabia in the early 50’s made an agreement to keep the oil price very very low. This to stop the USSR from obtaining any wealth from their vast amounts of OIL which would have financed their system. This is what lead to the collapse of communism. In return the US agreed to and will protect Saudi at all cost regardless of how non democratic they are. This policy remains today. It’s the Saudi’s who are presently over supplying the world. Yes James you are smack on.
Here’s a good analysis of just how President Obama’s proposed $10 per barrel oil tax would seriously hurt the poor:
Indeed. Energy tax is the most regressive tax imaginable, for the reason the author points out. The poorer you are, the more of your money that goes to energy. It is a horrible tax.
And the author of the above analysis?
Barack Obama, March 30, 2011
Go figure …
w.
The only reason they are floating the idea is because prices are low, which is a reflection of the weak economy.
Anyone who has been paying attention for the last 40 or so years realises that the western economies have thrived when energy is cheap and faltered when cost soared. I see this tax as a seizure of opportunity on the part of the big players in power to keep a chokehold on the masses and drive commerce down so that real estate can be gobbled up by the elite.
I’m probably mistaken, but I see it oppositely, low prices indicate nobody is lining up to transport the oil gushing out of the spigots, until the world economy returns to growth there will be an oil glut.
God help the oil companies.
But, despite record low oil, gas, coal transport, consumer prices are sky high and rising. What gives
What is missing here are the budget cuts that are suppose to go along with any new taxes as part of the President’s balanced approach to deficit reduction. The President is already years late with the budget cuts that are suppose to have gone along with the tax hike on the rich and the ACA taxes. According to the President’s economic “plan” The savings from the troops coming home in FY 2014 are suppose to enough to fund infrastructure improvements and to insure that the federal government will start posting annual debt lowering surpluses starting in FY 2015. No additional taxes should be required. The President needs to follow his own economic “plan”. Congress should not be a problem because the President said that he would bring the nation together and that he would solve problems between the parties by reaching across the isle. Apparently reaching across the isle with middle finger extended has not worked very well.
It’s great politics. First you raise taxes on a barrel of oil then you blame big oil for a rise is gas prices. You get the money, they get the anger directed at them.