Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Here's The Real Impact Of A $10 Oil Tax

By Ellen R. Wald, Ph.D.CommoditiesFeb 10, 2016 08:05AM ET
www.investing.com/analysis/content-submission-384074
Here's The Real Impact Of A $10 Oil Tax
By Ellen R. Wald, Ph.D.   |  Feb 10, 2016 08:05AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Late last week, President Obama unveiled a $300 billion transportation infrastructure plan. According to information released by the White House, this plan is part of the budget that the President will soon present to Congress, and it includes billions of dollars of money earmarked for “investments” in mass transit, high-speed rail, self-driving cars, and other clean transportation initiatives.

The nation’s transportation infrastructure has long been in need of improvement – both physically and financially – but the big news is how the White House proposes to pay for it.

The plan calls for the government to charge a $10 fee on every barrel of oil. The White House described it as a “surcharge that would be paid by oil companies.” Politicians have already started calling it an increase in the gasoline tax. Currently, the federal gasoline tax is 18.4 cents/gallon with states levying anywhere from 7.5 cents per gallon to 39 cents per gallon (the national average is 26.49 cents per gallon). In fact, a fee per barrel of oil is not the same as the gasoline tax.

It is unclear how a fee per barrel of oil revenue raising program would work. The White House seems not to have thought through the logistics at all and when asked, officials have only said that, “the fee would fall on oil companies” but that “it wouldn’t be charged at the wellhead.” In fact, it seems like the fee would actually be levied on refined products rather than crude oil. According to the National Economic Council, exported oil products would not be subjected to the fee, although it would apply to all imported oil products.

If the plan is actually to charge a $10/barrel fee on refined petroleum products, then the plan would essentially cripple the American economy because it would incentivize American oil companies to export crude oil (which is now permitted since the crude oil export ban was revoked in December, 2015) at discounted prices on the global market in order to avoid paying the $10/barrel fee to refine the petroleum in the United States. The cost of gasoline and other refined products in the United States would rise. Essentially, the American people would find themselves in a situation in which oil would be everywhere, but with not a drop to drink (or put in their cars).

The economic impact of this plan makes clear that the intent behind this so-called fee is not to fund transportation infrastructure but really to raise the cost of gasoline in order to encourage widespread adoption of alternative energy technologies and fossil fuel-less methods of transportation.

Here's The Real Impact Of A $10 Oil Tax
 

Related Articles

Tim Knight
Gold Approaches Key Support By Tim Knight - Jul 01, 2022 2

Precious metals haven’t basked in glory days since 2011, over a full decade ago. Earlier this year, gold had a brief day in the sun due to the Ukraine war, but it has tumbled about...

Arkadiusz Sieron
Stagflation Could Make Gold Happy By Arkadiusz Sieron - Jul 01, 2022

The upcoming stagflation might be less severe than in the 1970s. So is the Fed’s reaction, which could mean good news for gold. There are many terrifying statements you can...

Here's The Real Impact Of A $10 Oil Tax

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
fritz huss
fritz huss Feb 12, 2016 9:21AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It sounds like the intent is to promote alternative clean fuels like LNG, hydrogen, and electric in doing so reducing oil production.
fritz huss
fritz huss Feb 12, 2016 9:18AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
And how much tax do oil companies actually pay?
Peter Verbeke
Peter Verbeke Feb 10, 2016 10:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"If the plan is actually to charge a $10/barrel fee on refined petroleum products, then the plan would essentially cripple the American economy because it would incentivize American oil companies to export crude oil (which is now permitted since the crude oil export ban was revoked in December, 2015) at discounted prices on the global market in order to avoid paying the $10/barrel fee to refine the petroleum in the United States. ". . Wow, that reasoning does not make any sense at all. American oil producers would simply sell their oil domestically at $10 higher than the oil they export (if any). Since the tax would also apply to imported oil, it does not impact the competitive position on the domestic market.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email