Obama seeks $10/bl fee for oil companies: Update

OREANDA-NEWS. February 08, 2016. President Barack Obama today proposed a plan to charge oil companies a \\$10/bl "fee" on oil to pay for a cleaner transportation system and wean US consumers off of their reliance on crude.

But the US administration today offered few further details on how the plan would work. White House economic adviser Jeffrey Zients said the plan would apply to "oil companies" but declined to answer questions from reporters about which segment of the industry would pay the \\$10/bl fee.

The oil surcharge has almost no chance of advancing in the Republican-controlled Congress. US House speaker Paul Ryan (R-Wisconsin) said the surcharge proposal was "dead on arrival," and other Republicans condemned the proposal as a new tax on consumers.

But the plan might inject fresh debate over US energy and climate policy into the presidential elections and in Congress.

Obama plans to formally propose the surcharge on 9 February in his budget request for fiscal year 2017. The US administration estimates the new fee would raise more than \\$30bn/yr for investments in "clean" transportation, public transit and modernized freight infrastructure. It would be phased in over five years, the White House said.

The fee is equivalent to about 22?/USG, which if passed along to consumers would more than double an existing 18?/USG federal tax on gasoline that pays for highways and bridges. Republicans last year declined to increase the gasoline tax, which has not increased since 1993, when they negotiated and approved a six-year transportation funding bill.

Oil industry groups are heavily opposed to the proposal, particularly with crude prices hovering around \\$30/bl.

The \\$10/bl fee would cover imported products and crude, the White House said, but would not apply to exports. Zients said this would prevent the fee from putting domestic oil producers at a competitive disadvantage, while ensuring all users of the US transportation system fund infrastructure investments.

Even so, the Independent Petroleum Association of America, a US producer group, called the proposed fee a "tax on American consumers." American Petroleum Institute president Jack Gerard said the fee would harm consumers, destroy jobs and make the US less competitive.