A resolution opposing a $10.25/bbl. tax on crude oil was approved last week in the House of Representatives. The Obama administration had first proposed a $10 tax, but later upped the price to $10.25. The tax would be used to finance the plan for the “21st Century Clean Transportation System.”
Louisiana Republican Charles Boustany, who introduced the bill that would become the resolution earlier this year called the tax an “over-the-top-attack” that will pass on an extra cost at the tank to the same people who have been laid off from the industry.
The vote was largely along party lines.
Chet Thompson, president of the American Fuel & Petrochemical Manufacturers supported the tax’s opposition, stating that a crude oil tax would ultimately mean less disposable income for Americans. Thompson called the proposed tax disruptive to families and the nation’s economy.
Daniel Naatz of the Independent Petroleum Association of America said the proposal puts the nation at “a clear disadvantage against global oil cartels and unfriendly nations.” The American Petroleum Institute’s Stephen Comstock, citing the Congressional Research Service, claims that the proposal would harm consumers, destroy jobs and “reverse America’s emergence as a global energy leader.”
The tax, referred to by T. Boone Pickens as “the dumbest idea ever” could potentially add $32 billion per year to the federal coffers. Steven Kopits, who is the Managing Director of Princeton Energy Advisors, opined that if WTI were to hit $115 per barrel, an additional $10 per barrel tax could push the economy towards a recession. Related: How Far From An Electric World Are We?
Federal gas prices have not seen a hike since 1993, and some analysts contend that the extra 22 to 25 cents would not be a great burden to consumers. However, some analysts also note that if prices climb higher, the strain would be felt by the poor, even if it went unnoticed by the rich.
The Administration’s proposal would have redirected 15 percent of the revenues to help poorer households defray the increase in energy costs.
By Lincoln Brown for Oilprice.com
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