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White House Proposal Of $10-Per-Barrel Oil Tax Likely Dead On Arrival In Congress

The Obama administration says the tax is needed to pay for clean transportation infrastructure.

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President Obama's proposal of a $10-a-barrel tax on crude oil is drawing sharp criticism from congressional Republicans and Texas energy producers.

The White House is expected to send the proposal to Congress next week, as part of the president's final budget. Administration officials say the tax is needed to cut greenhouse gas emissions and to pay for the construction of clean transportation systems.

"If it were imposed as the White House fact sheet indicates, spotting foreign producers a $10 a barrel advantage while they already have a significant cost advantage over most U.S. producers, [it] would be a serious negative impact for the industry in the United States as it would be for Houston," says Ed Hirs, an energy economist at the University of Houston. Hirs says this was precisely the effect of a crude oil windfall profit tax that Congress passed in 1980 and repealed in 1988.

The Obama administration's proposal frames the new tax as a fee to be paid by oil companies. But Hirs says those companies would likely pass along the full increase to consumers, in the form of higher gasoline prices. "Anything that would go through Congress and increase the cost of living for consumers really just doesn't work in an election year," he says.

Houston Congressman Kevin Brady chairs the House Ways and Means Committee, which is in charge of writing new tax legislation. Brady released a statement rejecting the White House proposal as "ridiculous" and an attack on Texas energy jobs.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas Legislature and county and city governments across Greater Houston. Before taking up his current post, Andrew spent five years as Houston Public Media’s business reporter, covering the oil...

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