Obama Expected To Propose $10/Barrel Tax On Oil

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In a bold move in the final months of his presidency, US President Barack Obama is believed to be plotting a move against big oil in the form of a $10 per barrel tax that would be paid by oil companies. With 2016 being an election year and US politics as polarized as they are, the tax is not likely to make it past the podium, but the move sends a powerful message to the world that the current administration is serious about attacking one of the cruxes of the climate change issue — oil.

This news comes to us via Politico, which talked with Obama aides about the plan, which would use the oil-funded income — estimated to be $300 billion — to build a “21st century clean transportation system.” Stepping back and looking at Obama’s presidency, he has really pushed on all the issues he built both campaigns on.

Since taking office just over 7 years ago, he has turned the economy around with over 13 million new jobs, achieved bi-partisan support of the budget, established a baseline of healthcare in the US, and perhaps most importantly, stepped up to the challenge of climate change with aggressive action to combat it.

Image Credit: Shutterstock

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With climate change being one of the key focal points of this administration, and the political climate all but deadlocked with the polarized election on the horizon, one possible reason for the tax proposal seems probable to me — to send a message.

Dropping an extra tax on oil or gasoline is nothing new. Proposals are tossed around by journalists, politicians from both parties, and environmentalists almost every time the price of oil drops. Whether the resulting funds are used to make up the gap to pay for roads, to fund EVs, to discourage oil consumption… it is nothing new.

Image Credit: Shutterstock

Having said that, there are a few things that make this proposal
unique. First off, there’s almost no way that it would pass in any form. It’s not because it’s too expensive… in fact, that may be the great irony of the proposal. With oil having fallen from the high of over $110 per barrel to around $30 per barrel today, a $10 addition would hardly phase markets, adding around $0.25 to $0.30 per gallon of gasoline at the pump. With oil prices riding a perpetual roller coaster, an increase at these levels would hardly be noticed.

While that’s easy enough to say, the real issue a $10 per barrel tax on oil would run into would be in the sticky politics of oil. Oil prices are extremely partisan and attempting to levy a new tax like this in an election year presents a huge target for candidates from either side to toss flaming arrows at — and boy would they.

This might normally seem like a huge problem but for the fact that Obama is still pushing his agenda. The fact that a proposal like this would quickly come front and center for any and all debates is perfect. It puts the 800-pound gorilla right on the table and forces candidates to talk about it, to pick sides, and to present a case for their decision. In short, it would force the hands of candidates and get the public talking about climate change.

Image Credit: Shutterstock

Beyond the discussion, getting people talking about the tax hits on two key discussion points — increasing the price of oil provides additional incentive for consumers to conserve oil and, at the same time, funds the clean transportation systems of the future in a big way.

With the current transportation network in the US representing 30% of emissions in the US, this plan aims straight at the heart of the issue from both sides. Whether the plan sees the light of day as a flat $10 tax on oil or surfaces some other way, it is great to see Obama continuing the push for solutions to the climate change crisis all the way up to the finish line.

It is evident from what little we know about this new tax on oil that Obama is not intent on riding out his last year as president as just another lame duck president but is making a strategic push to enact a critical new tax and get the nation talking about climate change.

Editor’s Note: Also, let’s remember that oil is actually massively subsidized in the US (and elsewhere). It is only logical to cut these subsidies and/or tax oil a great deal. Alas, society isn’t often logical….

$5.3 Trillion A Year In Fossil Fuel Subsidies Is Idiotic

Oil Subsidies & Natural Gas Subsidies — Subsidies For The Big Boys (Not For Society)

Oil & Gas — Over 13 Times More in Historical Subsidies than Clean Energy

Fossil Fuels Subsidies Cost World $5.3 Trillion A Year – $10 Million A Minute

Big Oil Spends Millions Lobbying For Its Subsidies

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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