Obama's Proposal for Budget 2017: $10/bbl Crude Oil Tax for Funding Transportation
Current situation in the crude oil market cannot be considered stable or encouraging. According to recent reports, crude oil prices keep falling, so even the experts find it difficult to make any predictions. As of today, the cost of oil does not exceed the $30 mark and this is the major reason of financial losses reported by the leading oil production companies. Regardless of the complicated situation, the US crude oil production still remains “healthy”. One of the facts that confirm the statement is the recent decision of the US President, Barack Obama, to offer a $10/bbl crude oil tax for more efficient transportation funding. The proposal was made in the terms of the development of the US Budget 2017 and became the main cause of the ongoing hot debates in the oil and gas sector.
New Changes in the US Budget 2017
The new US budget 2017 is not officially approved by the US Сongress yet, so it still can be changed and improved. Meanwhile, the President of the country, for whom this federal budget will become final because of the end of his presidency term, still insists on the proposal approval. He does not agree on the fact that suggested crude oil taxes will put the country’s position of a leading global energy producer at risk. Instead, he believes that this proposal will speed up the transition of the United States to the clean, affordable and sound energy system the country has always struggled for.
Barack Obama also underlined that the improvements made to the federal budget will make it easier to implement the 21st Century Clean Transportation initiative, the major objective of which is to help the US residents working in the infrastructure modernizing sector of economy apply advanced technologies in order to improve the delivery of goods to the US market. These processes can be enhanced by making use of the high speed railway systems, autonomous autos, highways maintenance and other improvements, the financing of which will depend upon the taxes paid by the oil companies. This is what makes the suggested budget changes essential and crucial.
Apart from the crude oil tax proposal, the changes made in the new federal budget aim at offering help to the families that need energy costs relief. This especially concerns the Northeast residents, who require the transition to the cleaner energy forms to feel more comfortable in winter.
Finally, President Obama told that the newly suggested tax is expected to bring over $7 in 2017. The price will gradually grow to reach $319 billion in 2027.
The Reaction of Congress
Right after the new tax proposal to the federal budget 2017 was made, the reaction of Congress was not long in coming. Representatives of the Republican party claimed it senseless and accused Barack Obama of infringing the rights of the US working class, who will be bound to pay for his new climate agenda, the efficacy of which is still under the question.
To reveal the reaction, the Congressional Research Service Report was published a few days after the proposal was made. The report enlisted all the negative effects of the suggested oil tax upon the macroeconomic sector. According to the opinion of the Congress, the new budget can place the United States at a disadvantage against the world-famous oil and gas associations, which agreed to follow the 5-year program of transition to the safe energy systems. The representatives of some of these associations have already claimed the proposal of the US President “anticonsumer, antigrowth and job-killing”.
Tax Associated Concerns
The American Petroleum Institute also expressed its concerns associated with the suggested crude oil tax and the intentions of the US President to change the dual capacity rule that enables the US companies working overseas to stick to the tax credit they currently pay to the governments of those countries they operate in. They are sure that budget improvements will not bring the expected “clean energy” effect and profits associated with it. Instead, they country will encounter additional expenses related to the modification and extension of the renewable production of energy, extra investment tax credits for property maintenance as well as production of biofuel and advanced vehicles.
The representatives of oil and gas associations and the API underline that if the new federal budget is approved, the country will eventually go from recession to depression. They are sure that Barack Obama underestimates the leading role of the US in the global oil and gas production sector. His deeds may hold back the energy independence of the country instead of strengthening the US economy by encouraging different energy forms and making them affordable for all the US consumers.
