White House says new oil fee would raise $41bn/yr

OREANDA-NEWS. February 11, 2016. President Barack Obama's proposal to assess new fees on petroleum products would collect more than \\$41bn/yr by fiscal year 2022 from US oil companies, according to White House budget estimates.

The White House, as part of its fiscal year 2017 budget plan announced today, is calling for an "oil fee" on domestically produced and imported petroleum products equivalent to \\$10.25/bl of crude. That figure is slightly higher than the \\$10/bl fee administration officials had suggested last week.

The fee would help pay for more than \\$32bn/yr in additional transportation investments.

Republicans leaders in Congress and industry officials have declared the idea dead on arrival. House speaker Paul Ryan (R-Wisconsin) today said the fee would push up gasoline prices by 24?/USG, hurt consumers and cut energy sector jobs. American Petroleum Institute president Jack Gerard said the proposal was "extreme" and intended to keep fossil fuels in the ground.

The non-partisan research wing of Congress this week lent support to those concerns. The US Congressional Research Service yesterday said the fee would likely exacerbate "weakening employment availability" in an oil sector already hurting from low crude prices. It also said the fee would likely cut consumer purchasing power and translate into lower economic growth.

But the White House today pushed forward with the idea in its budget request for the next fiscal year. President Barack Obama on 5 February said it was the right time to create the fee because gasoline prices remain low. The US Energy Information Agency yesterday said the average retail price for gasoline was \\$1.76/USG, down from \\$3.26/USG in February 2014.

The budget request seeks to phase in the fee starting on 1 October, so it would collect \\$7bn/yr in the first year and \\$41bn/yr after it is fully phased by in October 2021. The administration said the fee would be equivalent to \\$10.25/bl of crude but did not say how it would translate into specific fees on gasoline, diesel and other petroleum products. The fee would not apply to exported products, and home heating fuels would be temporarily exempt from the fee.

The administration wants to use 15pc of the revenue from the fee to help families struggling with high energy costs, particularly households in the northeast US transitioning away from using fuel oil for heating. The remaining funds would help pay for \\$32bn/yr for transportation grants and investments, including \\$7bn/yr for high-speed rail and \\$1bn/yr on a multimodal freight program.

The White House in the budget request renewed its longstanding effort to eliminate more than \\$4bn/yr of existing tax credits that benefit oil and gas producers, a request Congress is unlikely to embrace. The US administration said those tax credits were "inefficient fossil fuel subsidies" that would undermine efforts to reduce greenhouse gas emissions.

The budget also seeks to increase by 1?/bl, an existing 9?/bl excise tax used to fund the Oil Spill Liability Trust Fund, while reinstating a 9.7?/bl tax to remediate Superfund sites.