In his FY 2017 budget plan released this week, President Obama proposed a $10 per barrel oil tax as a way to fund a 21st Century Clean Transportation Plan and reduce fossil fuel emissions. However, Obama fails to acknowledge that the burden of his oil tax will be passed on to the American consumer, a costly blow to the U.S. economy and energy industry dealing with the consequences of record low oil prices.
Over the years, our nation has been experiencing an energy renaissance that has resulted in Americans benefiting from lower energy prices. Consequently, the United States’ standard of living has increased as households are able to spend their new source of disposable income elsewhere. But a tax on American oil threatens this new paradigm by increasing prices at the pump. According to the nonpartisan Congressional Research Service, the average cost of gas will increase by 24 cents per gallon, when fully implemented. This isn’t a tax so much as an aggressive attack on energy companies that would in turn raise the cost of living for Americans.
But the burden doesn’t stop there. The oil tax would be instilled on all domestically produced crude oil as well as imported crude and petroleum products into the U.S., placing further stress on an industry that’s seeing one of its worse recessions in years. As a result, energy companies will be forced to lower wages and cut jobs even more than the current environment. Senator Lisa Murkowski (R-AK), Chairman of the Senate Committee on Energy and Natural Resources, expressed her disapproval for attempting to single out the oil industry: “The President should be looking at ways to make our energy sector more competitive, not pushing new policies that will cost jobs and raise prices.”
As the budget review process begins, Congress should take into account the effects this oil tax will have on our nation. Not only would it be detrimental to a suffering industry, but also to the nation as a whole.