Obama proposes $10/bl fee for oil companies

OREANDA-NEWS. February 05, 2016. President Barack Obama today proposed charging a \\$10/bl "fee" on oil companies to pay to build a cleaner transportation system and wean Americans off of their reliance on crude.

The proposed oil surcharge has little chance of advancing in the Republican-controlled Congress, which would have to approve legislation approving the plan. But the proposal will likely inject fresh debate over US energy and climate policy into the presidential elections and in Congress, which is considering making the first update to energy policy since 2007.

Obama plans to formally propose the \\$10/bl surcharge next week in his budget request for fiscal year 2017. The White House said oil companies would pay the fee but did not specify if it would be paid by producers, importers or refiners. The US administration estimates the fee would raise \\$20bn/yr in additional revenue that would go toward investments in "clean" transportation infrastructure, along with an additional \\$10bn/yr that would help states and cities pay for regional transit systems.

The US administration today said the fee would provide a "clear incentive" for cutting reliance on oil. The White House also said it would increase investments in needed "clean energy technologies," such as expanded public transit systems, high-speed rail and modernized freight systems.

The fee proposal also offers a rebuke to Republican lawmakers that declined to increase the \\$0.18/gallon federal gasoline tax when they negotiated and approved a six-year highway funding bill last year. The federal gasoline tax has not changed since 1993, despite inflation and rising fuel economy. Congress instead paid for the highway bill through new fees on banks and selling crude from the US Strategic Petroleum Reserve.

Oil industry groups are likely to fiercely oppose having to pay a \\$10/bl fee, particularly with crude prices hovering around \\$30/bl. The Independent Petroleum Association of America, a producer group, called the proposed fee a "tax on American consumers" and said it made little sense to charge the fee when the oil industry was going through its "largest financial crisis" in more than 25 years.