By Jennifer Martinez |Staff Writer|
President Barack Obama proposed a $10 per-barrel charge on oil, which will be addressed in his final budget request next week, according to CNBC.com.
This new tax on oil would be gradually introduced over the next five years if it is approved by Congress. Oil companies will be responsible for paying these fees.
“I think we will look back and say, “that was a smart investment,” said Obama during a news conference on Feb. 5.
The main priority of this new oil charge is to reduce carbon emissions and the use of fossil fuels from the nation’s transportation system.
About 30 percent of the nation’s greenhouse gas emissions come from vehicles, and investing in high-speed rail and cleaner vehicles could help lower those emissions, according to The New York Times.
The White House mentioned that the oil-fee proposal would invest an additional $20 billion per year to cut traffic and “provide new ways for families to get to work and school,” according to CNBC.
The United States government would use the revenue to fund projects such as high-speed railways, self-sufficient cars, and travel systems.
The White House said the new oil tax would encourage clean energy improvement and reduce the country’s dependence on oil.
It would also put about $10 billion per year into regional travel systems and another $2 billion annually into clean transportation research, according to CNN.
Although it is unlikely for this new tax to get through Republican-controlled Congress, Obama has mentioned that the investments would put the country in a “much stronger position,” according to CNN.com.
House Speaker Paul Ryan called the tax “dead on arrival in Congress” and cautioned it would hurt lower income Americans by raising energy prices.
Another factor that can contribute to disapproval is the energy industry having been affected by a dramatic crash in oil prices.
They have fallen nearly 50 percent in the last year to just below $32 per barrel, pressuring profits in the sector, according to CNBC.
Almost all oil companies have cut jobs, many have filed for bankruptcy, and others have failed to pay their loans, according to CNN.
The fee could also add as much as 25 cents a gallon to the cost of gasoline, even with petroleum prices at historic lows, according to Politico.com.
“I think Obama’s intention to improve our transportation system is good, but I don’t want to pay more for gas, especially since I commute to school every day,” said student Isis Fuentes.
It makes more sense to implement this new tax charge now while gas prices are low for consumers, according to CNBC.com.
Obama’s chief economic advisor, Jeffrey Zients, told reporters that the $10 per-barrel fee would apply to oil that is imported into the U.S., according to CNN.
“Oil that is exported would not be taxed, ensuring a “level playing field” for American producers,” said Zients. “Our transportation system is too dependent on oil.”