Obama proposes big new tax on oil

File photo: Wikimedia
File photo: Wikimedia

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President Obama wants to impose a $10-per-barrel tax on crude oil. The White House says the tax is included in the budget the president will propose next week.

Jeff Zients, director of the National Economic Council at the White House, says the revenue would be used to move the country to a cleaner transportation system, and also boost spending on highways, transit and high-speed rail.

“The 10-barrel fee is paid for by the oil companies,” he said. “The fee is designed to support investment in innovation … by reducing greenhouse gas emissions.”

Zients says the fee would be phased in over five years.

Sarah Erkmann, external affairs manager for the Alaska Oil and Gas Association trade group, says the tax amounts to “punishing” oil companies.

“Any kind of additional tax to the oil industry, at a time when companies are posting huge losses — they’re cash-flow negative and are just trying to survive — is a horrible idea and would have huge consequences, particularly for the State of Alaska, which depends to such a high degree on the health of the oil industry,” Erkmann said.

Sen. Lisa Murkowski says it would be bad for the nation, but a disproportional hit to Alaska.

“How do I explain that to Alaskans?” she said, calling from a Washington airport, on her way back to the state Thursday night. “How do I explain that to the people who have just their jobs with the layoffs from Conoco … or some of the projects that have now been put on hold?”

Murkowski says the idea won’t go over well on Capitol Hill, either.

“Well, I think there’s absolutely no chance that a tax of this proportion laid down by this president has a chance of passing in this Congress,” she said.

The American Petroleum Institute estimates the tax would add 25 cents to the price consumers pay for a gallon of gasoline.

Rachel Waldholz contributed to this story.